Opinion
No. 05-07-01539-CV
Opinion issued August 7, 2009.
On Appeal from the County Court at Law Dallas County, Texas, Trial Court Cause No. cc-07-05244-A.
Before Justices BRIDGES, FITZGERALD, and LANG.
MEMORANDUM OPINION
U.S. Bank National Association, as trustee for the certificate holders of Terwin Mortgage Trust 2004-5HE asset-backed certificates, TMTS series 2004-5HE, appeals the trial court's judgment awarding possession of the underlying property and attorney's fees to Deborah Ann Farhi and Jasper C. Rowe, as trustee for 1-A and 1-B Vertol Trusts. In three issues, U.S. Bank argues the trial court erred in not granting possession of the property to U.S. Bank and granting possession of the property and attorney's fees to Farhi. We reverse the trial court's judgment and render judgment that U.S. Bank is entitled to possession of the underlying property, appellee take nothing on its claim for attorney's fees, and U.S. Bank recover its attorney's fees.
On February 20, 2004, Deborah Ann Farhi executed a note and deed of trust on the subject property. The deed of trust required Farhi to immediately surrender possession of the property to U.S. Bank as the purchaser at the sale and further provided that failure to surrender possession would cause any person in possession of the property to become a "tenant at sufferance." The deed of trust was foreclosed, and the property was sold on December 5, 2006. A substitute trustee's deed was issued which conveyed the property to U.S. Bank. On January 24, 2007, U.S. Bank served notice to vacate the subject property by certified mail to Farhi. U.S. Bank instituted a forcible detainer suit in justice court, and the justice court awarded possession of the underlying property to U.S. Bank. Rowe, claiming to be an occupant of the property, appealed to county court. Farhi did not appeal the justice court's ruling or appear at the county court or justice court proceedings. Following a trial de novo, the county court judge awarded possession of the property and attorney's fees to Farhi and Rowe. This appeal followed.
I. RIGHT TO POSSESSION OF PROPERTY
In its first issue, U.S. Bank asserts the trial court erred in not granting it possession of the property. U.S. Bank argues it established it is entitled to possession of the property as a matter of law. See Holley v. Watts, 629 S.W.2d 694, 696 (Tex. 1982) (where litigant does not specify evidentiary complaints intended, we look to wording of issues and argument under each issue to best determine intent of litigant). In its second issue, U.S. Bank contends the trial court erred in granting possession of the property to Farhi and Rowe. In its argument in support of that issue, U.S. Bank appears to challenge the legal sufficiency of the evidence to support the award of possession to Farhi and Rowe. See id. We address U.S. Bank's first and second issues together.
A. Standard of Review
If a trial court does not issue findings of fact, we imply all such findings necessary to support the judgment that are supported by the evidence. Olympia Capital Assocs., L.P. v. Jackson, 247 S.W.3d 399, 407 (Tex.App.-Dallas 2008, no pet.) (citing BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002)). However, when a reporter's record is included in the appellate record, the trial court's findings of fact-express or implied-are not conclusive, and are subject to challenge on evidentiary sufficiency grounds. Id.
A party challenging the legal sufficiency of an adverse finding on an issue on which that party had the burden of proof at trial must demonstrate on appeal that the evidence conclusively established, as a matter of law, all vital facts in support of that issue. U.S. Bank Nat'l Ass'n v. Freeney, 266 S.W.3d 623, 625 (Tex.App.-Dallas 2008, no pet.) (citing Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001)). In reviewing a matter of law challenge, we first examine the record for evidence that supports the adverse finding, while ignoring all evidence to the contrary. Id. (citing Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989)). We indulge every reasonable inference to support the finding, crediting favorable evidence if a reasonable jury could and disregarding contrary evidence unless a reasonable jury could not. City of Keller v. Wilson, 168 S.W.3d 802, 807, 822 (Tex. 2005). If there is no evidence to support the adverse finding, we then examine the entire record to determine if the contrary proposition is established as a matter of law. Dow Chem. Co., 46 S.W.3d at 241 (citing Sterner, 767 S.W.2d at 690). We sustain the issue only if the contrary proposition is conclusively established. Dow Chem. Co., 46 S.W.3d at 241 (citing Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983)).
B. Applicable Law
Under Texas law, a tenant at will or by sufferance who refuses to surrender possession of real property on demand commits a forcible detainer. See Tex. Prop. Code Ann. § 24.002(a)(2) (Vernon 2000). A forcible detainer action is intended to be a speedy, simple, and inexpensive means to obtain possession without resort to an action on the title. Scott v. Hewitt, 127 Tex. 31, 90 S.W.2d 816, 818-19 (1936). The only issue in an action for forcible detainer is the right to actual possession, and the merits of title shall not be adjudicated. Tex. R. Civ. P. 746; U.S. Bank, 266 S.W.3d at 625.
To prevail in a forcible detainer action, a plaintiff is not required to prove title, but is only required to show sufficient evidence of ownership to demonstrate a superior right to immediate possession. U.S. Bank, 266 S.W.3d at 625. If the right to immediate possession necessarily requires the resolution of a title dispute, justice and county courts do not have jurisdiction over the matter. Rice v. Pinney, 51 S.W.3d 705, 713 (Tex.App.-Dallas 2001, no pet.); Dormady v. Dinero Land Cattle Co., L.C., 61 S.W.3d 555, 557-58 (Tex.App.-San Antonio 2001, pet. dism'd w.o.j.); see also Scott, 90 S.W.2d at 818-19 (forcible detainer actions are cumulative of any other remedy a party may have in Texas courts, and displaced party is entitled to bring separate suit in district court to determine questions of title). However, the fact that it might be necessary to introduce evidence of title in order to prove a landlord-tenant relationship does not deprive justice and county courts of jurisdiction "since the validity of the title so developed is not in issue." Haith v. Drake, 596 S.W.2d 194, 197 (Tex. App-Houston [1st Dist.] 1980, writ ref'd n.r.e.). "It is equally well settled that the defendant, in an action of forcible detainer, may prove any facts not inconsistent with the title under which he went into possession of the premises which show that his right to occupancy existed when the suit was brought, although such facts may be connected to the title." Id.
C. Application of Law to Facts
In this case, in order to prevail on its forcible detainer action, U.S. Bank was required to show: (1) the substitute trustee conveyed the property by deed to U.S. Bank after the foreclosure sale, (2) the persons against whom action is sought are tenants at sufferance, (3) U.S. Bank gave the persons against whom action is sought proper notice requiring them to vacate the premises, and (4) the persons against whom action is sought have refused to surrender possession of the property. See Tex. Prop. Code Ann. § 24.002; Elwell v. Countrywide Home Loans, Inc., 267 S.W.3d 566, 568-69 (Tex.App.-Dallas 2008, pet. dism'd w.o.j.); U.S. Bank, 266 S.W.3d at 625. Because the trial court did not issue any findings of fact regarding its determination Farhi and Rowe were entitled to possess the property, we infer all necessary facts to support that ruling if the evidence supports such inferred facts. See Olympia Capital Assocs., L.P., 247 S.W.3d at 413. We begin our analysis by examining the record for evidence that supports the trial court's implied finding that Farhi and Rowe were entitled to possession, while ignoring all evidence to the contrary. See Dow Chem. Corp., 46 S.W.3d at 241; Sterner, 767 S.W.2d at 690; U.S. Bank, 266 S.W.3d at 625.
The trial court admitted into evidence deeds offered by Rowe purportedly showing the property was conveyed to him by Farhi after the deed of trust was executed, but prior to the foreclosure. According to Rowe's argument in the trial court, as a result of that purported conveyance to him, no title was transferred to U.S. Bank through the December 2006 substitute trustee's deed. Alternatively, Rowe contended in his reply to U.S. Bank's motion for new trial such evidence raises a title issue that must be resolved in order to determine possession, and the justice and county courts therefore lacked jurisdiction. We disagree. "When a mortgagor executes a deed of trust the legal and equitable estates in the property are severed. The mortgagor retains the legal title and the mortgagee holds the equitable title." Flag-Redfern Oil Co. v. Humble Exploration Co., 744 S.W.2d 6, 8 (Tex. 1987). An intervening purchaser of the legal interest is granted legal title, which is superior to the mortgage but subject to the mortgagee's rights. Id. at 9; see also Motel Enterprises, Inc. v. Nobani, 784 S.W.2d 545, 547 (Tex.App.-Houston [1st Dist.] 1990, no writ) (foreclosure and sale under valid deed of trust lien has effect of passing all right, title, and interest that the mortgagor held at the time the deed of trust was executed, free and clear of rights of any subsequent purchaser) (citing Hampshire v. Greeves, 104 Tex. 620, 626, 143 S.W. 147, 150 (1912)). Here, assuming the facts asserted by Rowe are true, Rowe was an intervening purchaser of the property. See Ford v. U.S. Bank Nat'l Ass'n, No. 01-07-00183-CV, 2008 WL 4670514, at *3 (Tex.App.-Houston [1st Dist.] Oct. 23, 2008, no pet.) (person who purchased property at sheriff's sale after deed of trust was executed, but prior to foreclosure sale at issue, was intervening purchaser with rights subject to deed of trust). Therefore, any rights of Rowe are subject to the deed of trust executed by Farhi. See Flag-Redfern Oil Co., 744 S.W.2d at 8; Motel Enterprises, Inc., 784 S.W.2d at 547. Accordingly, Rowe's argument regarding the ineffectiveness of the conveyance pursuant to the substitute trustee's deed is without merit. Further, the deed of trust provided
At the hearing on U.S. Bank's motion for new trial, Rowe cited Apex Financial Corp. v. Garza, 155 S.W.3d 230 (Tex.App.-Dallas 2004, pet. denied), in support of his proposition that a "subsequent purchaser could retain title to the property" in the event of a foreclosure. However, Apex did not involve a mortgage. See id. at 233. Further, Apex involved a foreclosed upon lien created after, rather than before, the property was conveyed by the lienor. See id. Rowe did not explain in the trial court how Apex applies to the facts of this case. Therefore, we conclude Apex is inapposite.
If the Property is sold pursuant to this Section 22, Borrower or any person holding possession of the Property through Borrower shall immediately surrender possession of the Property to the purchaser at that sale. If possession is not surrendered, Borrower or such person shall be a tenant at sufferance and may be removed by writ of possession or other court proceeding.
Thus, the deed of trust established a landlord-tenant relationship that made Rowe and/or Farhi tenants at sufferance when the property was foreclosed. See Ford, 2008 WL 4670514, at *3. "The landlord-tenant relationship provides a basis for determining the right to immediate possession without resolving the ultimate issue of title to the property." Id.; Dormady, 61 S.W.3d at 559.
Additionally, Rowe testified in the trial court he did not receive notice of foreclosure. He argued the foreclosure sale was therefore invalid and his title is superior. However, Texas courts have specifically held that in forcible detainer cases where, as here, a deed of trust contains a clause by which an occupant becomes a tenant at sufferance upon foreclosure, a claim attacking the validity of the foreclosure sale based on lack of notice of foreclosure is independent of the determination of the right to immediate possession. See Reynolds v. Wells Fargo Bank Nat'l Ass'n, 245 S.W.3d 57, 61 (Tex.App.-El Paso 2008, no pet.) (citing Dormady, 61 S.W.3d at 559). Moreover, Rowe cited no authority in the trial court, and we have found none, supporting the proposition he was entitled to notice of the foreclosure. Cf. Tex. Prop. Code Ann. § 51.002(b)-(e) (Vernon Supp. 2008) (providing debtor must be given notice of default and sale); American Sav. Loan Ass'n of Houston v. Musick, 531 S.W.2d 581, 588 (Tex. 1975) (there is no requirement personal notice of foreclosure sale be given to persons who were not parties to deed of trust); Nat'l Commerce Bank v. Stiehl, 866 S.W.2d 706, 708 (Tex.App.-Houston [1st Dist.] 1993, no pet.) (holder of debt is only required to serve debtor in default under deed of trust with requisite written notice of foreclosure sale). Accordingly, evidence that Rowe had no notice of the foreclosure is not relevant to the issue of possession in this case. We conclude the record contains no evidence supporting the trial court's implied finding that Farhi and Rowe were entitled to possession of the property.
Next, we examine the entire record to determine if the contrary proposition, that U.S. Bank is entitled to possession of the property, is established as a matter of law. See Dow Chem. Corp., 46 S.W.3d at 241; U.S. Bank, 266 S.W.3rd at 625. A certified copy of the substitute trustee's deed was admitted into evidence at trial. That deed established the substitute trustee conveyed the property to U.S. Bank and U.S. Bank was entitled to possession of the property. See U.S. Bank, 266 S.W.3d at 625. In addition, the deed of trust executed by Farhi was admitted into evidence. As discussed above, Rowe and/or Farhi became tenants at sufferance of U.S. Bank pursuant to section 22 of the deed of trust. See Ford, 2008 WL 4670514, at *3. The trial court admitted into evidence notices to vacate sent to the property via certified mail. That evidence showed U.S. Bank advised any person in possession of the premises they were a "tenant at sufferance" and required all tenants to vacate the premises. See Tex. Prop. Code Ann. §§ 24.002(b), 24.005; U.S. Bank, 266 S.W.3d at 626. Nothing in the record controverts the documents U.S. Bank entered into evidence. See U.S. Bank, 266 S.W.3d at 626. Finally, the record shows Rowe has refused to vacate the premises. See id. at 625. Rowe stated during his argument at trial he is an "occupant" seeking to "remain in the property." Further, in his motion for clerical correction of the judgment, Rowe requested the judgment be corrected to identify as a defendant "Occupant, Jasper C. Rowe, Trustee for 1-A and 1-B Vertol Trusts." Accordingly, on this record, we conclude U.S. Bank established as a matter of law it has "a superior right to immediate possession" of the property. See id. at 625-26. We decide in favor of U.S. Bank on its first and second issues.
II. ATTORNEY'S FEES
In its third issue, U.S. Bank contends the trial court erred in awarding attorney's fees to Farhi and Rowe and not awarding attorney's fees to U.S. Bank. Specifically, U.S. Bank argues there is no evidence to support the award of attorney's fees to Farhi and Rowe, yet U.S. Bank's attorney testified without objection that his attorney's fees through trial were $1000, an additional $2000 if a defendant or occupant was unsuccessful in an appeal to the court of appeals, and an additional $3500 if a defendant or occupant was unsuccessful in appealing to the Supreme Court of Texas.
A party seeking to recover attorney's fees carries the burden of proof. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991). Although courts should consider several factors when awarding attorney's fees, a short hand version of these considerations is that the trial court may award those fees that are "reasonable and necessary" for the prosecution of the suit. Id. To be eligible to recover attorney's fees in an eviction suit, a landlord must give a tenant who is unlawfully retaining possession of the landlord's premises a written demand to vacate stating that, if the tenant does not vacate the premises before the eleventh day after the date of receipt of the notice and if the landlord files suit, the landlord may recover attorney's fees. Tex. Prop. Code Ann. § 24.006(a) (Vernon 2000). The demand must be sent by registered mail or by certified mail, return receipt requested, at least ten days before the date the suit is filed. Id. If the landlord provides the tenant such notice or if a written lease entitles the landlord to recover attorney's fees, a prevailing landlord is entitled to recover reasonable attorney's fees from the tenant. Id. § 24.006(b).
Here, Farhi and Rowe presented no evidence concerning their attorney's fees. Moreover, they are no longer prevailing parties. In contrast, U.S. Bank is now the prevailing party, and the record contains evidence of reasonable attorney's fees in the amounts of $1000 for trial, $2000 additional for appeal to the court of appeals, and $3500 additional in the event of appeal to the supreme court. The record also shows U.S. Bank provided notice to vacate by certified mail, return receipt requested, and notified all tenants at the property that they might "be liable for the attorney's fees and costs of court which have been incurred." Thus, while no evidence supports the count court's award of attorney's fees to Farhi and Rowe, the record does support an award of reasonable and necessary attorney's fees to U.S. Bank. See Tex. Prop. Code Ann. § 24.006 (Vernon 2000); Stewart Title, 822 S.W.2d at 10. We sustain U.S. Bank's third issue.
We reverse the trial court's judgment and render judgment that U.S. Bank is entitled to possession of the underlying property, appellee take nothing on its claim for attorney's fees, and U.S. Bank recover its attorney's fees.