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Laredo National Bank D/B/A as BBVA Compass Bank v. Myrna Elizabeth De Luna Morales

Citation: Not availableDocket: 13-14-00644-CV

Court: Court of Appeals of Texas; July 9, 2015; Texas; State Appellate Court

Original Court Document: View Document

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Myrna Elizabeth De Luna Morales is the appellee in a case against Laredo National Bank, doing business as BBVA Compass Bank, which is the appellant. The appeal arises from a temporary injunction issued by the 107th Judicial District Court of Cameron County, Texas, presided over by Judge Benjamin Euresti, Jr. 

The appellee's brief, submitted by attorneys Philip Cowen and Noe Robles, outlines several key issues. First, it supports the district court's decision to issue the temporary injunction to halt a forcible detainer action in Justice Court. Second, it argues that the appellant lacks standing to request a declaration regarding the appellee's cause of action or probable right to recovery, asserting that the appellant is effectively seeking an advisory opinion, which is not permissible. Lastly, the brief notes that the case is set for trial on August 10, 2015, with preliminary motions scheduled for August 6, 2015, rendering any relief from the appellate court moot.

The document includes a comprehensive table of contents, a prayer for relief, and various appendices, such as a deed of trust, hearing transcripts, and relevant sections of the Texas Business and Commerce Code. The appellee does not request oral argument under Texas Rules of Appellate Procedure 39.1.

The document contains a Table of Authorities listing relevant legal cases, statutes, and constitutional provisions cited in a court brief. Key Supreme Court cases referenced include *Alabama State Federation of Labor v. McAdory*, *Allen v. Wright*, and *Warth v. Seldin*, among others, highlighting their significance in supporting legal arguments. Various Texas cases are also cited, such as *Aguilar v. Weber*, *Butnaru v. Ford Motor Co.*, and *Valley Baptist Medical Center v. Gonzalez*, indicating their relevance to the appeal. The brief is submitted by Myrna Elizabeth de Luna Morales, the Appellee, seeking to affirm a Temporary Injunction issued by the 107th Judicial District Court of Cameron County, Texas, under cause number 2014-DCV-2962-A. The brief complies with Texas Rules of Appellate Procedure, emphasizing the request for the court to sustain and affirm the lower court's decision. Key references to Texas Business and Commerce Code sections and Texas rules of civil procedure are noted to establish legal context and support for the arguments presented.

An appeal is being made regarding the denial of Compass Bank's motion to dissolve a temporary injunction related to a foreclosure sale of property owned by the Appellee. This foreclosure, conducted on April 1, 2014, is claimed to be illegal and invalid, as Compass Bank allegedly lacked the authority to execute the sale. The Appellee filed an Original Petition on May 12, 2014, and numerous motions by both parties followed, including a motion for summary judgment and several motions to dismiss. The court granted the Appellee a temporary injunction on June 26, 2014, and ultimately denied Compass Bank's motions to dismiss, for summary judgment, and to dissolve the temporary injunction on October 31, 2014.

Although the appeal focuses on the denial of the motion to dissolve the temporary injunction, other motions were also denied but cannot be appealed. Following the initial court decisions, Compass Bank filed a second motion to dissolve the temporary injunction in March 2015, and both parties amended their pleadings in July 2015.

The facts indicate that Compass Bank conducted the foreclosure sale without having the right to do so, as it did not possess the note or deed of trust negotiated from Laredo Bank. Prior attempts by the Appellee to resolve the property sale were thwarted by Compass Bank's actions and alleged misconduct. The Appellee also did not receive proper notice of the sale, as Compass Bank sent notifications to an incorrect location, leading to claims of detrimental reliance and tortious interference with contract. Compass Bank's pleadings acknowledge these issues.

A Deed of Trust exists between Appellee Myrna Elizabeth de Luna Morales and Laredo National Bank; however, Compass Bank lacks the authority to enforce rights under the agreement because the note has not been negotiated to them, resulting in no contractual relationship with Appellee. Morales signed a 30-year loan agreement for $291,200.00 to purchase property at 6503 Fountain Way, South Padre Island, TX. The foreclosure sale on April 1, 2014, was invalid due to trustees violating terms and granting Morales permission to sell the property, leading to the property being sold at $242,000.00 below market value. Appellee filed her Original Petition on May 12, 2014, with subsequent motions and hearings occurring throughout June and July 2014, including a temporary injunction granted by the Trial Court. On October 31, 2014, the Court denied Appellant Compass Bank’s Motion to Dismiss and Motion for Summary Judgment, prompting the current appeal. The District Court’s decision to grant a one-time bond of $1,000 signals its assessment of Compass Bank's position. Key issues include the propriety of the temporary injunction, Compass Bank’s standing to contest Appellee's claims, and the mootness of the appeal due to the upcoming trial scheduled for August 10, 2015.

The District Court's issuance of a temporary injunction to halt the forcible detainer action in Justice Court was justified and without error. The Appellee demonstrated all necessary grounds for the temporary injunction, as the Appellant's actions risked removing the Appellee from her home, which constitutes irreparable harm not remedied by law. The Appellee possesses a likely right to recover in her case against the Appellant, while the Appellant's claims about tenancy at sufferance do not negate the Appellee's credible legal theories that challenge the Appellant's authority to sell the property or appoint substitute trustees. The Trial Court's decision to deny the Appellant's Motion to Dissolve the Temporary Injunction was appropriate, given the lack of Appellant's right to immediate possession and the existence of genuine title disputes. The core issue revolves around whether the Appellant properly foreclosed on the property, as the Appellee's reliance on the Appellant's prior assurances establishes a fiduciary relationship. Following an unsuccessful foreclosure attempt, the Appellee retained the legal right to remain in the property, thus invalidating the Appellant's forcible detainer action. The injunction from June 26, 2014, accurately reflects the circumstances surrounding the failed foreclosure. Additionally, the appeal may be moot as the trial is set for August 10, 2015, and requesting an advisory opinion is inappropriate at this stage.

The standard of review for a court of appeals assessing a district court's temporary injunction is abuse of discretion. The burden of proof lies with the party seeking the injunction, who must establish three elements: (1) a cause of action against the defendant, (2) a probable right to recovery after trial, and (3) a probable, imminent, and irreparable injury in the interim. A temporary injunction is an extraordinary remedy and is not granted as a matter of right. Irreparable injury is defined as harm for which the injured party cannot be adequately compensated in damages, such as the loss of a home.

In this case, the Appellee claims to have fulfilled the burden of proof for the temporary injunction, countering the Appellant's assertion of no irreparable injury by highlighting that the property in question is Appellee’s home. The potential foreclosure and sale of this property would likely cause Appellee significant injury, supporting the argument for a probable right to recovery.

The Appellant's appeal concerns the denial of a motion to dissolve the temporary injunction rather than the issuance of the injunction itself, raising questions about the court's standing. The court holds that loss of enjoyment or reasonable use of one's home constitutes irreparable injury, affirming that title issues are relevant to the case. The district court's jurisdiction is affirmed due to the title dispute in the pleadings, which provides specific evidence of the claim, as noted in relevant case law. Consequently, the Justice Court lacks jurisdiction in this matter, as these title issues must be resolved in the District Court.

In *Mitchell v. Armstrong Capital Corp.*, the court reinforced that jurisdiction over forcible detainer actions resides with the justice court of the property's precinct and, on appeal, with county courts for a trial de novo, as stipulated by Texas Property Code § 24.004. The *Aguilar* case clarified that justice courts lack authority to adjudicate land title disputes (Tex. Gov't Code Ann. § 27.031(b)). In the current case, the pleadings presented by the Appellees demonstrate a title dispute, thus precluding justice court jurisdiction. The Appellees challenge the right to possession based on claims of lack of authority under the Deed and failure to allow for the cure of alleged deficiencies. The court emphasized that resolving these claims requires a title inquiry, which exceeds the competence of justice courts, as they do not handle trespass to try title cases. Consequently, the District Court rightfully enjoined any eviction actions by the Appellant, affirming that the Appellee's claims are justiciable and suitable for trial. Texas law permits District Courts to stop forcible detainer actions pending in Justice Courts, further supporting the Appellee's position. The Appellant has not submitted the necessary pleadings from the justice court, reinforcing that the forcible detainer proceedings cannot proceed given the evident title dispute.

A temporary injunction was issued, prompting the Appellant to amend its answers, which were recently entered into the record. The amended answer maintains a general denial but does not raise any affirmative defenses concerning wrongful foreclosure, detrimental reliance under the DTPA, or the trespass to try title claim. By amending, the Appellant implicitly acknowledged that these claims were justiciable at the time of filing. Since the appeal began on July 7, 2015, the Appellee has added Selim H. Taherzadeh, now a co-defendant accused of damages from detrimental reliance, tortious interference with contract, breach of fiduciary duty, and negligence. This inclusion positions him as an Appellant in the case. The Appellees’ claims are valid and provide legal remedies, with an ongoing cause of action regarding the property. The Appellant incorrectly asserts that only the Justice Court has jurisdiction over possessory rights. Citing case law, it is clarified that title disputes are not within the Justice Court's jurisdiction and that wrongful foreclosure claims fundamentally involve questions of title. Consequently, the district court's injunction against the Justice Court's jurisdiction was appropriate, as Justice Courts lack the necessary expertise to address title issues.

The Appellee/Plaintiff's pleadings indicate that the justice court lacks jurisdiction to proceed with a title dispute, specifically a trespass to try title case as defined by Texas Property Code, Sec. 22.002. This section establishes that any evidence of title suffices to support the cause of action, and a final judgment confirms title or right to possession, being conclusive against the previous property owner and subsequent claimants. The Plaintiff’s pleadings serve as evidence of this title dispute, distinguishing it from a landlord-tenant matter, which is central to the Appellant's cases. 

Section 22 of the Deed of Trust, referencing the Borrower as a tenant at sufferance post-foreclosure, is seen as a standard clause that does not address the validity of a trustee's sale or clarify title issues for the courts. The District Court acted correctly in preventing the eviction attempt by the Appellant, as a less experienced judge would struggle with title complexities. The legal precedent cited (Pinnacle Premier Props. Inc. v. Breton) emphasizes that valid title disputes exceed mere allegations of improper foreclosure and include claims of illegality.

The Appellee asserts she was willing to cure the default and pay off the mortgage, but the Appellant ignored her requests and proceeded with foreclosure, indicating breaches of contract and further solidifying her claims concerning title. The Appellant's argument regarding tenant status is deemed irrelevant when weighed against the substantive title issues raised by the Appellee.

A title dispute is highlighted in Appellee’s pleadings related to the DTPA claim, specifically regarding reliance and recision issues. The Bank committed to ensuring Appellee's quiet enjoyment of her home and to conducting its fiduciary duties in good faith under the contracts and Deed of Trust. Appellee relied on the Bank's fair treatment, but the Trustee allegedly failed to specify compliance deadlines for the buyer in default. The Bank, through its agents, denied Appellee her rights as a Borrower, constituting a breach of contract. The existence of a title dispute stemming from the contractual relationship between the parties limits the jurisdiction of the justice court, as established in relevant case law (Sparkman v. State). Because a genuine title dispute has emerged in the district court, the justice court's jurisdiction is negated, and the district court appropriately enjoined related actions. Appellant cannot initiate proceedings in the justice court while litigation is ongoing in the district court concerning the non-judicial foreclosure sale. The Appellants have been notified of the pending litigation that challenges the title. The Appellee is likely to prevail, as Appellant lacks the right to execute the power of sale, and no evidence has been presented to establish the negotiation of the note from Laredo National Bank to Appellant. The documentation provided does not demonstrate that the note or deed of trust has been properly negotiated to Appellant, with the note identifying Laredo National Bank as the lender and recognizing the Deed of Trust as a security instrument.

Jose C. Gonzalez serves as the trustee in the Deed of Trust, while Compass Bank, claiming to be a successor by Merger to Laredo National Bank, is involved in the foreclosure proceedings alongside another party, not Jose Gonzalez. The documentation submitted does not comply with Texas Business and Commerce Code Sections 3.203 and 3.204, which pertain to the necessary indorsement for negotiating instruments. According to Section 3.302(2), acquiring holder in due course rights is restricted under certain conditions, such as legal processes or bulk transactions. The Appellant contends that the theories supporting their claims of error by the District Court lack merit, drawing parallels to the case of Yarto v. Gilliland, which emphasizes the importance of formalities in holding the power of sale. In Yarto, the court highlighted the failure of the Gillilands to present evidence of a title dispute, similar to the situation presented here. The case of Falcon v. Ensignia illustrates this point, where the defendants (the Falcons) could not substantiate their claim to the property despite alleging an oral contract, while the plaintiff (Ensignia) provided a warranty deed evidencing ownership, leading to a judgment in favor of Ensignia. The current case mirrors these precedents, suggesting that the trial court's decisions should be upheld.

The Court in Falcon ruled that no genuine title dispute was established, emphasizing that Falcon's reference to an oral agreement with Gonzalez was legally unenforceable. The court highlighted the necessity of specific evidence to substantiate a title dispute to establish jurisdiction for a justice court. Since the Falcons failed to provide such evidence, jurisdiction was not in question. In contrast, the Yarto case presented a genuine title dispute as indicated by the pleadings. The Yarto Court reiterated that prior cases, including Sparkman and Mitchell, required specific evidence of a title dispute before jurisdiction could be considered absent in forcible entry and detainer actions. The Yarto Court analyzed the Mitchell case, where a title dispute was recognized based on assertions made by the parties, and concluded that "specific evidence" could consist of these assertions rather than formal evidence. The court's findings aligned with the Aguilar case, which similarly recognized that assertions can constitute sufficient evidence of a title dispute.

Nothing in the law indicates that Appellee’s pleadings are ineffective. All necessary factors exist to uphold the temporary injunction, supported by multiple causes of action evident in Appellee’s pleadings and the title dispute they reflect. Courts recognize the irreparable nature of Appellee's loss of her South Padre Island home. The trial court acted within its discretion after a comprehensive hearing and should maintain the temporary injunction until the trial, scheduled for August 10, 2015.

Appellant lacks standing to request the court to declare that Appellee has no valid cause of action or probable right to recovery, effectively seeking an advisory opinion on the merits of their defense. The brief should be dismissed as moot, as it merely requests an advisory opinion, which is prohibited under the Texas separation of powers doctrine—governmental authority cannot be exercised across departments without constitutional permission. Texas courts, like federal courts, do not have jurisdiction to give advisory opinions as they only address actual or imminent harm, not hypothetical injuries.

Subject matter jurisdiction, including standing, cannot be waived and can be raised for the first time on appeal. Appellant's brief essentially seeks an advisory opinion by arguing that Appellee has no chance of winning, culminating in a request to overturn the injunction based on perceived superior rights.

The Court is urged to dismiss the Appellant's case with prejudice, arguing it lacks merit and that the District Court's injunction should be lifted to allow pursuit of 30 properties. The Appellee contends the Court lacks jurisdiction as the Appellant's claims have consistently been denied in prior motions. The Appellant's requests are viewed as attempts to obtain an advisory opinion rather than addressing substantive legal issues. With a trial set for August 10, 2015, and pre-trial hearings scheduled for August 6, 2015, any potential relief from the Court is deemed moot, as the case is nearing resolution after one and a half years. The prolonged presence of the temporary injunction and the Appellant's late filing contribute to this mootness. The Appellee suggests that any ruling by the Court would complicate matters further, positing a strong likelihood of prevailing at trial on various issues. The summary discusses the legal principles regarding mootness, emphasizing that a case becomes moot when there is no longer a controversy or legally cognizable interest in the outcome, which would strip the parties of standing to maintain their claims. The passage of time has rendered the question of the injunction's propriety moot, with both parties contributing to the delay.

Trial is imminent, and there are no justiciable issues remaining regarding the temporary injunction's continuation, rendering the case moot. The mootness doctrine prohibits courts from issuing advisory opinions, as established by Texas law. A live controversy must exist at all stages of legal proceedings, including appeals. An issue may become moot if a ruling would have no practical effect on an existing controversy. Given the current circumstances, the case is deemed moot, and the court is urged to dismiss the appeal. The Appellee requests that the court affirm the trial court's issuance of the temporary injunction, deny any relief sought by the appellant, or alternatively, dismiss the appeal as moot or as seeking an unlawful advisory opinion. The document concludes with a certificate of service confirming delivery of the brief to the appellant's counsel and a certificate of compliance regarding word count and formatting. Attached documents include a deed of trust, a transcript from the temporary injunction hearing, the defendant's amended answer, and relevant sections of the Texas Business and Commerce Code.