Opinion
No. 05-19-01172-CV
05-21-2020
SATFRAZ TAJ AND ZUBEDA TAJ, Appellants v. HIGHLANDER COMMUNITY SERVICES AND INVESTMENT, LLC, Appellee
On Appeal from the 366th Judicial District Court Collin County, Texas
Trial Court Cause No. 366-02669-2018
MEMORANDUM OPINION
Before Justices Myers, Partida-Kipness, and Reichek
Opinion by Justice Myers
Satfraz Taj and Zubeda Taj appeal the summary judgment in favor of Highlander Community Services and Investment, LLC. The trial court's judgment ordered that the Tajs take nothing on their claims against Highlander and that Highlander recover $59,002.86 plus attorney's fees on its counterclaim against the Tajs. The trial court also ordered judicial foreclosure of Highlander's lien on the Tajs' property. The Tajs bring three issues on appeal contending (1) the trial court erred by granting Highlander's motion for summary judgment because its claim for foreclosure was barred by limitations; (2) the trial court abused its discretion by deeming admitted the requests for admissions the Tajs failed to answer and by striking the Tajs' pleadings; and (3) the trial court abused its discretion by denying the Tajs' motion for temporary injunction. We affirm the trial court's judgment.
BACKGROUND
In 2000, the Tajs borrowed $20,132.15 at 12.55 percent interest from Woodhaven National Bank to have a swimming pool installed at their house. The loan had a maturity date of May 22, 2015. The loan was secured with a deed of trust on their house. Woodhaven assigned the loan to Bank One, which assigned the loan to GMAC Mortgage Corp.
On May 4, 2005, GMAC sent a letter to the Tajs stating they were in default, they had failed to reinstate their account, and "your account may be sent to an attorney to initiate foreclosure action." On May 24, 2005, an attorney representing GMAC sent the Tajs a letter stating that if the Tajs did not pay the reinstatement amount by June 24, 2005, "GMAC will 'accelerate' your debt." The letter also stated, "This is the last letter you will receive from GMAC." GMAC did not foreclose. The Tajs made no payments on the note after August 22, 2005.
From 2012 to 2014, the note was assigned to different holders until acquired by Highlander.
In 2017, Highlander began attempting to foreclose. Over the next two years, Highlander posted the loan for foreclosure four times, but the Tajs filed for bankruptcy protection each time. Their bankruptcies were dismissed after the date of the scheduled foreclosure sales.
On June 4, 2018, the Tajs filed this suit against Highlander and received a temporary restraining order barring Highlander from foreclosing. The Tajs' cause of action was for a declaratory judgment "to prevent a wrongful foreclosure or wrongful trustee's sale." In their brief in support of a temporary injunction, the Tajs stated their declaratory judgment action was "whether or not the statute of limitations have [sic] run for the enforcement of the debt covered in the note held by [Highlander]." The trial court denied the Tajs' request for a temporary injunction, and the Tajs filed an interlocutory appeal of this ruling.
On June 14, 2018, the parties, in open court, read a settlement agreement into the record. The agreement called for a "Reaffirmation Renewal Extension" of the original note. The Tajs were to pay Highlander the outstanding amount on the note, minus any payments they had made to previous noteholders. Highlander estimated the amount of the debt would be about $50,000. The new note would be paid over thirty years at five percent interest, with monthly payments of $268.48 per month. The Tajs agreed to present proof of their prior payments, and Highlander agreed to prepare the loan documents. They agreed that "upon the papers being signed, the first payment being made, the case will be dismissed with prejudice at [the Tajs'] cost." The Tajs' first payment was due October 1, 2018.
According to Highlander's attorney, "immediately" after the June 14, 2018, agreement, he requested the Tajs provide documentation showing the Tajs' prior payments so Highlander could calculate the amount of the new note. The Tajs refused to provide this information. As a result, no new documents were signed. Highlander considered the June 14, 2018 agreement to have been rejected by the Tajs. On July 11, 2018, Highlander posted the loan for foreclosure sale on August 3, 2018, and the Tajs again filed for bankruptcy. The Tajs sent Highlander checks dated October 29, 2018, for the first payments under the June 14, 2018 agreement, but Highlander did not accept the payments.
On May 10, 2019, Highlander filed its counterclaim for breach of the original note and for judicial foreclosure of the deed of trust. On June 27, 2019, Highlander moved for summary judgment on its claims as well as the Tajs' claims. The next day, June 28, 2019, Highlander served the Tajs with discovery requests, including interrogatories and requests for disclosure, production, and admissions. The Tajs' responses were due Monday, July 29, 2019. See TEX. R. CIV. P. 4 (weekend rule); id. 194.3, 196.2(a), 197.2(a), 198.2(a) (discovery response due 30 days after service of request). The Tajs did not respond to the discovery requests. On July 24, 2019, the day before the summary judgment hearing, the Tajs filed their second amended petition, which added a claim alleging Highlander breached the June 14, 2018 agreement by posting the loan for foreclosure less than a month after the settlement agreement.
The Tajs styled this pleading as their "Amended Petition for Declaratory Judgment, Breach of Contract, Suit to Quiet Title[,] Suit to Trespass to Try Title, & Request for Disclosure." Because it followed their first amended petition, we refer to it as their second amended petition. See TEX. R. CIV. P. 64.
On July 25, 2019, the trial court began hearing argument on Highlander's motion for summary judgment but then continued the hearing for the parties to obtain clarification from this Court whether the pending interlocutory appeal of the denial of the temporary injunction affected the trial court proceedings. The Tajs then moved in this Court for an emergency stay of the trial proceedings. We denied the Tajs' request for a stay of the trial court proceedings.
On August 8, 2019, the trial court ruled that the Tajs' second amended petition would not be considered and that their prior live pleadings would control.
On August 9, 2019, Highlander moved in the trial court to strike the Tajs' responsive arguments and evidence because the Tajs did not respond to the discovery requests. Highlander also moved to deem admitted the requests for admissions.
The summary judgment hearing resumed on August 12, 2019. The trial court granted Highlander's motion to strike the Tajs' evidence and responsive arguments due to their failure to answer discovery timely. The court also ordered that Highlanders' requests for admissions were deemed admitted. The court then granted Highlander's motion for summary judgment and ordered that Highlander recover damages of $59,002.86 from the Tajs as well as recover its reasonable attorney's fees. The trial court also ordered foreclosure of Highlander's lien.
DISCOVERY
In their second issue, the Tajs contend the trial court abused its discretion by deeming admitted the requests for admissions the Tajs failed to answer and by striking the Tajs pleadings when no factors justified the striking of all their pleadings.
Even if the trial court had abused its discretion by striking the Tajs' second amended petition, evidence, and legal theories, and by deeming admitted Highlander's requests for admissions, the Tajs would not be entitled to reversal unless the record showed the error probably caused the rendition of an improper judgment. TEX. R. APP. P. 44.1(a)(1).
In their second amended petition, the Tajs sought declaratory judgment that Highlander's deed of trust was barred by limitations and that Highlander did not follow section 51.002(d) of the Texas Property Code. They also alleged that Highlander breached the June 14, 2018 agreement. They also sued for quiet title and trespass to try title because limitations barred Highlander's lien. Finally, they sought unspecified injunctive relief. In their answer to Highlander's counterclaims, they raised the affirmative defenses of lack of consideration and prior breach by Highlander of the June 14, 2018, agreement. Thus, the Tajs' legal theories are: (1) Highlander's lien is barred by limitations; (2) Highlander did not comply with Property Code section 51.002(d); (3) Highlander breached the June 14, 2018 agreement; and (4) no consideration supported the June 14, 2018 agreement. We will determine whether the trial court erred by granting the motion for summary judgment even if it had not stricken the Tajs' pleadings, evidence, and legal theories and deemed admitted the requests for admissions.
Summary Judgment Standard of Review
The standard for reviewing a traditional summary judgment is well established. See McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.). The movant has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). The movant meets this burden by "conclusively proving all elements of his cause of action or defense as a matter of law." City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). If the party opposing summary judgment relies on an affirmative defense, it must come forward with summary judgment evidence on each element of the defense to avoid summary judgment. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984). In deciding whether a disputed material fact issue exists precluding summary judgment, evidence favorable to the nonmovant will be taken as true. In re Estate of Berry, 280 S.W.3d 478, 480 (Tex. App.—Dallas 2009, no pet.). Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). We review a summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dickey v. Club Corp., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied).
Limitations
The Tajs sought a declaratory judgment that Highlander's lien was barred by limitations. The expiration of the limitations period was also the basis for the Tajs' suit to quiet title and trespass to try title and of their affirmative defense to Highlander's suit for breach of contract and for foreclosure of its lien.
In their first issue, the Tajs contend the trial court erred by granting Highlander's motion for summary judgment because its causes of action for breach of the note and judicial foreclosure were barred by the statute of limitations. Because we conclude the trial court did not err by determining enforcement of the lien was not barred by limitations, we overrule the Tajs' first issue.
The Texas Civil Practice and Remedies Code provides that a person must bring suit for debt or for the foreclosure of a real property lien "not later than four years after the day the cause of action accrues." TEX. CIV. PRAC. & REM. CODE ANN. §§ 16.004(a)(3), 16.035(a). "On the expiration of the four-year limitations period, the real property lien and a power of sale to enforce the real property lien become void." Id. § 16.035(d). The debtor's "default does not ipso facto start limitations running on the note." Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). Instead, the holder's cause of action accrues when the note reaches its maturity date or the holder exercises its option to accelerate the note's maturity date. Id. Acceleration is a two-step process requiring (1) notice of intent to accelerate, and (2) notice of acceleration. Id. "Both notices must be clear and unequivocal." Id. (internal quotation marks omitted). Even when the noteholder has accelerated the note after default, the holder may abandon the acceleration. See id. "If acceleration is abandoned before the limitations period expires, the note's original maturity date is restored and the noteholder is no longer required to foreclose within four years from the date of acceleration." Bracken v. Wells Fargo Bank, N.A., No. 05-16-01334-CV, 2018 WL 1026268, at *3 (Tex. App.—Dallas Feb. 23, 2018, pet. denied) (mem. op.) (quoting Leonard v. Ocwen Loan Servicing, L.L.C., 616 F. App'x. 677, 679 (5th Cir. 2015) (per curiam)).
The Tajs assert that GMAC accelerated the maturity date of the loan in 2005 and that no noteholder attempted to foreclose the loan for twelve years. Thus, they argue, Highlander's right to foreclose the mortgage is barred by limitations, and the trial court erred by granting Highlander's motion for summary judgment. Highlander argued the cause of action accrued on the maturity date of the note, May 22, 2015, and that it brought suit for breach of the note and judicial foreclosure less than four years later on May 10, 2019.
The Tajs argue that the following letter from GMAC on May 4, 2005, constituted notice of intent to accelerate:
You were previously notified of your default and the demand for reinstatement on the above account.
Because you have failed to reinstate, your account may be sent to an attorney to initiate foreclosure action. Upon referral, you may incur substantial fees and costs, and the foreclosure status will be reported to credit agencies.
Upon completion of the foreclosure:
The Tajs assert this letter from GMAC's attorney on May 24, 2005, constituted notice of acceleration:* You will lose title to the property.
* You may be liable for the foreclosure costs, including attorney fees.
* You may be personally liable for any remaining balance due.
* The foreclosure will be reported to credit agencies and to the Internal Revenue Service.
YOUR SITUATION IS SERIOUS!!!!! YOU COULD LOSE YOUR PROPERTY!!!!!
The purpose of this letter is to inform you of the following:
1) This firm represents GMAC Mortgage Corporation.
2) Your monthly mortgage payments are due from February 22, 2005. This means you have "breached" your Mortgage Promissory Note by failing to do what you promised when you signed your Mortgage Promissory Note and Mortgage.
3) In order to 'cure' this breach you must pay all of the monthly payments plus late charges, default interest and attorney fees, which are now due from February 22, 2005 to the present (The Reinstatement Amount). This amount must be sent by you and received by GMAC on or before June 24, 2005, at the following address.
. . . .Even if the May 4 letter constitutes notice of intent to accelerate, which is an issue we need not decide, the May 24 letter does not constitute notice of acceleration. Instead, it is clear and unequivocal notice of intent to accelerate if the Tajs did not pay the reinstatement amount by June 24. The letter does not state that acceleration has occurred. See Cain v. Bank United of Tex., FSB, No. 14-95-00601-CV, 1997 WL 428054, at *4 (Tex. App.—Houston [14th Dist.] July 31, 1997, pet. denied) (notice that bank "will accelerate" if borrower failed to pay amount due by specific date was notice of intent to accelerate, not notice of acceleration). The Tajs assert that the May 24 letter constitutes notice of acceleration because of the statement, "This is the last letter you will receive from GMAC." The Tajs argue, "This signaled 'clearly and unambiguously' that all measures necessary [for] notice of acceleration and foreclosure were complete." We disagree. That sentence did not transform a clear and unequivocal notice of intent to accelerate in the future into notice of acceleration.
4) If you have any questions regarding your amount due, please call GMAC toll free at . . . and ask to speak with a collection agent.
5) If you do not pay this Reinstatement Amount by June 24, 2005, GMAC will "accelerate" your debt. This means that the entire principal balance of the Mortgage must be paid plus all accrued interest, late charges, attorney fees, default interest and all costs will become due immediately. Then, if you cannot repay the entire debt in full, GMAC will foreclose your Mortgage and after expiration of redemption, sell your Property.
6) Under the Mortgage, you will be able to "reinstate" your loan after we have accelerated, but you must do so exactly as described in your Mortgage.
I strongly urge you to consider this information and realize the seriousness of your situation. By refusing to fulfill your obligation to GMAC, you have left them no other option. This is the last letter you will receive from GMAC.
The record conclusively establishes that limitations had not expired when Highlander filed its counterclaim for breach of the note and foreclosure of its lien. The Tajs' have not raised a genuine issue of material fact concerning limitations. We conclude the trial court did not err by granting Highlander's motion for summary judgment on the Tajs' claims for declaratory judgment that Highlander's claims were barred by limitations, their claims for quiet title and trespass to try title, and their affirmative defense of limitations.
Section 51.002(d)The Tajs' sought a declaratory judgment that Highlander had not followed section 51.002(d) of the Property Code. Section 51.002 is titled, "Sale of Real Property under Contract Lien." Paragraph (d) requires the mortgage servicer to provide the debtor written notice "stating that the debtor is in default under the deed of trust or other contract lien and giving the debtor at least 20 days to cure the default before notice of sale can be given." TEX. PROP. CODE ANN. § 51.002(d). Paragraph (a) shows section 51.002 concerns nonjudicial foreclosures "under a power of sale conferred by a deed of trust or other contract lien." Id. § 51.002(a); see also Myerhoff v. Pac. Union Fin., LLC, No. 02-18-00393-CV, 2019 WL 5089760, at *8 (Tex. App.—Fort Worth Oct. 10, 2019, no pet.) (mem. op.) ("Section 51.002 governs nonjudicial foreclosures."). Highlander had tried multiple times to foreclose nonjudicially, only to have the sales barred by the automatic stay from the Tajs' bankruptcy filings. Highlander's counterclaim, however, sought judicial foreclosure. Therefore, section 51.002(d) did not apply.
Highlander moved for summary judgment on the ground that, because it is not seeking nonjudicial foreclosure, there was no justiciable controversy concerning section 51.002(d).
The supreme court has stated:
A declaratory judgment is appropriate only if a justiciable controversy exists as to the rights and status of the parties and the controversy will be resolved by the declaration sought. To constitute a justiciable controversy, there must exist a real and substantial controversy involving genuine conflict of tangible interests and not merely a theoretical dispute.Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995) (internal punctuation omitted). Because Highlander sought judicial foreclosure, whether it followed section 51.002(d) is, at most, "merely a theoretical dispute" and not "a real and substantial controversy involving genuine conflict of tangible interests." Therefore, whether Highlander failed to follow section 51.002(d) was not a justiciable controversy.
We conclude the trial court did not err by granting Highlander's motion for summary judgment on the Tajs' request for a declaratory judgment that Highlander had not followed section 51.002(d).
The June 14, 2018 Agreement
The Tajs' claim for breach of contract and their defense to Highlander's suit for breach of contract alleged Highlander breached the June 14, 2018 agreement by posting the property for foreclosure on July 11, 2018. They also argue Highlander breached the agreement by not preparing the new note and written agreement as agreed to at the hearing. The Tajs alleged that Highlander's posting the property for foreclosure caused them to file for bankruptcy, suffer damage to their credit rating, incur attorney's fees, and suffer mental anguish and suffering. Highlander argues that before it posted the property for foreclosure, the Tajs had already breached the agreement because they had refused to provide documentation of past payments, which were necessary for Highlander to prepare the note and written agreement.
"It is a fundamental principle of contract law that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance." Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432, 436 (Tex. 2017) (quoting Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004)).
The parties recited the agreement into the record as follows:
[Highlander's attorney]: May it please the Court. Now comes counsel for the defendant in the presence of opposing counsel and the parties, and notifies the Court that the parties have agreed to eventually dismiss this case on or about October 1, of this year. And in response to that, there will be a new agreement entered called a Renewal—Reaffirmation Renewal Extension of the underlying note that will—and reinstatement that will have a 30-year term, five percent interest, with a [monthly payment] of $268.48. [There] will be due on sale provision in the agreement as well.Mr. Taj testified that he agreed to that agreement, and the trial court approved the agreement.
The $50,000 is a plus-minus figure because what we will do is go back to the amount that's currently owed, subtract from that any payments that were made to prior holders of this note because they're entitled to receive the credit for any payments that they have made. But we estimate at this point is 50,000. Counsel has agreed to work[] with us and provide the documentation of proof of payment of that amount.
In addition, there will be $1,000 that will be payable at $85 a month—well, 12 months of $85, and it will begin October 1, as well as the payment on this 30-year note, beginning October 1.
. . . .
. . . [W]e will prepare the documents between now and October 1. And upon the papers being signed, the first payment being made, the case will be dismissed with prejudice at plaintiffs' cost.
On July 11, 2018, Highlander posted the property for foreclosure. We must determine whether Highlander conclusively proved that the Tajs materially breached the agreement before that.
Highlander's attorney testified in his affidavit to the terms of the June 14, 2018 agreement. He then stated:
After entering into the above-described agreement in open court, the Tajs almost immediately refused to perform as promised. In order to calculate the amount of the new proposed note, Highlander immediately requested bank records, statements from prior holders of the original note, or other documentary evidence showing the Tajs' alleged prior payments—which the Tajs were required to provide pursuant to the agreement in order to calculate the new note amount. As Highlander's counsel, I communicated this request. The Tajs refused to furnish these required records. As a result, Highlander could not apply the credits the Tajs alleged were due, making calculation of the new note amount impossible. Due to the Tajs' failure to provide the required information, no new note and deed of trust were signed by the Tajs, no payments were made by the Tajs by the October 1 deadline, and the Tajs did not dismiss their claims—all in violation of the agreement. Due to the Tajs' failure to perform, Highlander considered the agreement to have been breached and rejected by the Tajs.Highlander's account manager attorney testified in his affidavit that after the June 14, 2018 hearing,
the Plaintiffs repudiated the agreement. As a result the property was posted for sale again.The Tajs did not present any evidence controverting this testimony. We conclude Highlander conclusively proved the Tajs committed a material breach of the June 14, 2018 agreement by not providing Highlander with documentation of their prior payments, which was necessary for fulfillment of the agreement, and that this breach occurred before Highlander posted the property for foreclosure on July 11, 2018. The Tajs' breach of the agreement excused Highlander from further performance under the agreement.
We conclude the trial court did not err by granting Highlander's motion for summary judgment on the Tajs' claim for breach of the June 14, 2018 agreement.
The Taj's also asserted that Highlander's prior breach of the June 14, 2018 agreement and lack of consideration to support the agreement were affirmative defenses to Highlander's suit for breach of the note and judicial foreclosure. As discussed above, the record establishes that the Tajs' breached the June 14, 2018 agreement first. Furthermore, Highlander's claims for breach of the note and judicial foreclosure were based on the Tajs' failure to pay the 2005 note. Whether Highlander breached the June 14, 2018 agreement and whether there was consideration to support that agreement are not relevant to Highlander's entitlement to summary judgment on its causes of action for breach of the 2005 note and judicial foreclosure of that note. Therefore, the trial court did not err by granting Highlander's motion for summary judgment on the Tajs' affirmative defenses.
Injunctive Relief
Highlander moved for summary judgment on the Tajs' claim for injunctive relief on the ground that the Tajs were not entitled to a permanent injunction because they cannot prevail on the merits of their underlying claims.
An applicant for injunctive relief must demonstrate (1) the existence of a wrongful act; (2) the existence of imminent harm; (3) the existence of irreparable injury; and (4) the absence of an adequate remedy at law. Webb v. Glenbrook Owners Ass'n, Inc., 298 S.W.3d 374, 384 (Tex. App.—Dallas 2009, no pet.). The record conclusively establishes that the Tajs did not prove the existence of a wrongful act by Highlander. Therefore, they were not entitled to injunctive relief.
We conclude the trial court did not err by granting Highlander's motion for summary judgment on the Tajs' request for injunctive relief.
The record shows the trial court's granting Highlander's motion for summary judgment would have been appropriate even if the trial court had not struck the Tajs' second amended petition, had not granted Highlander's motion to strike the Tajs' evidence and legal theories, and had not deemed admitted the requests for admissions. Therefore, even if these orders were erroneous, they did not probably cause the rendition of an improper judgment and were not reversible error. See TEX. R. APP. P. 44.1(a)(1). We overrule the Tajs' second issue.
TEMPORARY INJUNCTION
In their third issue, the Tajs contend the trial court abused its discretion by denying their motion for temporary injunction. The purpose of a temporary injunction is to maintain the status quo of the litigation's subject matter pending a trial on the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). Thus, after the final judgment is signed, the temporary injunction is moot. See, e.g., Isuani v. Manske-Sheffield Radiology Group, P.A., 802 S.W.2d 235, 236 (Tex. 1991) (per curiam) (interlocutory appeal from grant or denial of temporary injunction is moot following trial court's rendition of final judgment).
In this case, the trial court denied the Tajs' request for a temporary injunction, and the Tajs brought an interlocutory appeal of that order. See CIV. PRAC. § 51.014(a)(4). While the interlocutory appeal was pending, the trial court rendered the final judgment in this case. Because the final judgment mooted the interlocutory appeal, we dismissed the appeal as moot. Taj v. Highlander Cmty. Servs. & Inv., LLC, No. 05-19-00369-CV, 2019 WL 4033946 (Tex. App.—Dallas Aug. 27, 2019, no pet.) (mem. op.).
Whether the trial court abused its discretion by denying the temporary injunction is moot after the rendition of the final judgment. We overrule the Tajs' third issue.
CONCLUSION
We affirm the trial court's judgment.
/Lana Myers/
LANA MYERS
JUSTICE 191172F.P05
JUDGMENT
On Appeal from the 366th Judicial District Court, Collin County, Texas
Trial Court Cause No. 366-02669-2018.
Opinion delivered by Justice Myers. Justices Partida-Kipness and Reichek participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee HIGHLANDER COMMUNITY SERVICES AND INVESTMENT, LLC recover its costs of this appeal from appellants SATFRAZ TAJ AND ZUBEDA TAJ. Judgment entered this 21st day of May, 2020.