Court: District Court, W.D. Texas; February 12, 2019; Federal District Court
Plaintiff Brenda J. Kirwan's Motion for Partial Summary Judgment (Doc. 15) and several related motions were considered by the court along with Defendant Sheryl Garber's Motion for Summary Judgment (Doc. 51). The court granted in part and denied in part Defendant's motion and granted in part Plaintiff's motion concerning Defendant's defenses of estoppel and unjust enrichment. However, it denied all other motions filed by Plaintiff, including those for partial summary judgment on various issues (Docs. 15, 53), a motion to strike Defendant's evidence (Doc. 54), and an unopposed motion for hearing (Doc. 58).
The background involves a Special Warranty Deed executed on December 5, 2002, by William Ouzts, which named Plaintiff as the grantee of several condominium units. The deed included a clause stipulating that the property would not vest in the grantee until the grantor's demise. This deed was recorded on June 3, 2003. Subsequently, on August 15, 2003, Ouzts executed a Deed of Rescission, cancelling the previous deed without Plaintiff's consent, which was recorded on August 25, 2003. On December 23, 2004, Ouzts sold the same property to Defendant and her deceased husband through a Warranty Deed, recorded on January 4, 2005. Following Ouzts' death on July 29, 2017, Plaintiff sought possession of the property, but Defendant claimed ownership based on the Warranty Deed.
On February 9, 2018, the Plaintiff initiated a lawsuit in the 441st District Court of Midland, Texas, asserting claims for declaratory judgment, trespass to try title, and assumpsit. The Defendant removed the case to federal court on April 3, 2018, based on diversity jurisdiction. On May 25, 2018, the Plaintiff filed a Motion for Partial Summary Judgment, contending that the alleged Deed conferred a remainder interest in the property to the Plaintiff, that Ouzts retained only a life estate, and that upon Ouzts's death on July 29, 2018, the Plaintiff became the owner of the fee simple title.
The Defendant opposed the motion, arguing that genuine factual disputes existed regarding the nature of the alleged Deed, questioning whether it was a valid deed or testamentary in character. Additionally, the Defendant raised concerns about the delivery and acknowledgment of the alleged Deed. After the discovery deadline, both parties filed several motions, including:
1. The Defendant's Motion for Summary Judgment, asserting that the alleged Deed was testamentary and thus revoked by Ouzts, that it was a terminable instrument, and that the Defendant, as a bona fide purchaser, cut off any interest the Plaintiff might have.
2. The Plaintiff's Motion for Summary Judgment addressing the Defendant's defenses of estoppel and unjust enrichment, claiming a lack of evidence for these defenses and reasserting her earlier motion.
3. The Plaintiff's Motion for Summary Judgment regarding delivery and the bona fide purchaser status, arguing that evidence contradicts the Defendant's claims.
4. A Motion for Hearing on all pending motions, which was ultimately denied by the Court.
The key issues before the Court include the characterization of the alleged Deed, the bona fide purchaser status of the Defendant, the viability of the Defendant's defenses, and the validity of the Plaintiff's declaratory judgment claim. The Court determined it could rule on the motions without a hearing.
Summary judgment is appropriate when there are no genuine disputes regarding material facts, allowing the moving party to obtain judgment as a matter of law under Fed. R. Civ. P. 56(c). A genuine issue exists if a reasonable jury could find for the nonmoving party, requiring the court to assess if the evidence warrants a jury's consideration or if it overwhelmingly favors one party. The court reviews the entire record, including pleadings and affidavits, drawing inferences in favor of the opposing party without weighing evidence or assessing witness credibility. The moving party must initially demonstrate the absence of a genuine issue of material fact. If successful, the burden shifts to the nonmoving party to present specific facts indicating that a genuine trial issue exists, rather than relying merely on allegations. Summary judgment will be granted if, after the nonmoving party has had the opportunity to present evidence, no reasonable juror could rule in their favor. Only factual disputes impacting the outcome under applicable law can prevent summary judgment.
In the case at hand, the plaintiff's claims of trespass to try title, declaratory judgment, and money had and received are centered on a land dispute with the defendant. A trespass to try title action seeks to determine real property ownership by establishing superior title from a common source. The plaintiff asserts superior title through an alleged Deed from Ouzts, while the defendant contends that the Deed was testamentary and rescinded with the recording of a Rescission Deed, or alternatively, that it was a terminable non-testamentary instrument that lost effect when Ouzts sold the property to the defendant in 2004. The defendant further argues that as a bona fide purchaser, they have cut off the plaintiff's interest, seeking summary judgment for all claims.
Plaintiff seeks partial summary judgment to affirm the validity of the alleged Deed, claiming it conveys title and entitles her to recover possession of the Property from Defendant. Additionally, Plaintiff requests summary judgment against Defendant's defenses of estoppel, unjust enrichment, and bona fide purchaser. The Court determines that the alleged Deed is valid and not testamentary or terminable. However, genuine issues of material fact regarding delivery and Defendant's status as a bona fide purchaser prevent the Court from granting summary judgment to either party on the trespass to try title claim. The Court dismisses Plaintiff's declaratory judgment claim with prejudice, citing the trespass to try title statute as governing. Furthermore, since Defendant has withdrawn her estoppel defense, the Court grants summary judgment in favor of Plaintiff on that matter. The Court emphasizes that the interpretation of the deed is a legal question, centered on the parties' intent as evident from the deed's language. A key point of contention is the last sentence of the alleged Deed, which states that the Property "shall not vest unto Grantee until the demise of the Grantor," leading Plaintiff to assert it conveys fee simple title while Defendant argues it indicates a testamentary intent or suggests application of the Transfer on Death Deed statute.
Under the Texas Property Code, individuals can create inter vivos conveyances of estates that take effect in the future, akin to wills. The Supreme Court of Texas, in Brown, clarified that a deed conveys a present interest, even if possession is delayed, while a will takes effect only upon the testator's death and is revocable until then. In the present case, the alleged Deed confers a present interest in the Property, intended to begin upon the death of Ouzts, thus qualifying as a deed rather than a testamentary instrument. The Court noted critical factors supporting this classification: the Deed was notarized (typical for deeds), lacked necessary witnesses (required for wills), and included standard conveyance language and clauses indicative of a deed. Previous cases, such as McLain and Turner, reinforce that documents executed without witnesses and containing conveyance language are deeds, even if their effect is delayed until the grantor's death. The Defendant's cited case, Wise, is distinguishable as it involved language indicating the retention of control over the property, unlike the present Deed, which only states when the Property will vest without reserving rights to sell or convey during Ouzts' lifetime.
In Wren, the court examined a deed that included a consideration of one dollar and natural love and affection, containing standard granting, habendum, and tenendum clauses, along with a general warranty. The grantors reserved the right to sell or dispose of the homestead before death, leading the court to classify the instrument as testamentary. In contrast, the alleged Deed in the current case does not include such a reservation. Similarly, in Carlton, the court found that the instrument was testamentary due to its terms and the grantor's intent to create an estate effective only upon death, as it involved both real and personal property and was witnessed. The current case lacks witnesses and only addresses the Property, distinguishing it from Carlton. The Garrison case supported the classification of instruments as deeds rather than testamentary, noting that they were written by a notary, acknowledged by one witness, and did not contain language indicating they were to take effect upon death. Lastly, in Turner, the court ruled that the document's structure and language did not indicate it was a will, affirming it as a deed despite references to the timing of the estate's commencement.
In Bruce, the court determined that a document, although not written by the grantor and lacking two witnesses, constituted a deed based on the grantor's clear intention, despite a clause stating it would not be recorded or become absolute until after the grantor's death. The court noted that the absence of explicit language allowing the grantor to revoke or impair the act supported this conclusion. Similarly, the alleged Deed in the current case includes all necessary elements of a deed, was drafted by a notary, acknowledged, recorded, and lacked witnesses. The language suggests that Ouzts intended for the property to vest only after his death, aligning with previous court interpretations that found similar documents to be deeds rather than testamentary instruments. The court referenced Texas cases, such as Irvin and Abney, to illustrate that language reserving control during the grantor's lifetime does not negate intent to convey an immediate right. Ultimately, the court concludes that the alleged Deed is a valid deed and not a testamentary document.
Delivery is vital for the validity of a deed, as established in Younge v. Guilbeau and further supported by Texas law. To pass title, the delivery of the deed is necessary, which can be proven through circumstantial evidence. The Plaintiff must demonstrate that the grantor relinquished control of the deed with the intent for it to serve as a conveyance. Although delivery is a legal question, its determination is fact-based. Filing a deed creates a presumption of delivery, but this presumption is not definitive. Delivery doesn’t require physical transfer of the deed; rather, it is assessed based on the grantor's intent and the surrounding circumstances.
The Defendant presents evidence challenging the Plaintiff's claim of delivery, including a letter from Ouzts' attorney demanding return of trust documents and contradictory statements made by the Plaintiff regarding instructions from Ouzts at the time of the deed’s execution. The Defendant also argues that the Rescission Deed indicates Ouzts did not intend for the alleged Deed to convey property, as he believed he had not properly executed it before a notary.
In contrast, the Plaintiff asserts that the notarization and recording of the alleged Deed serve as conclusive proof of its delivery and acceptance. She also claims to have witnessed her father's delivery of the deed and his request for it to be recorded. Due to the factual disputes surrounding the delivery, the Court declines to grant the Plaintiff's motion for summary judgment regarding delivery and her claimed superior title under the alleged Deed. Furthermore, the Court cannot determine the impact of the Rescission Deed on the Plaintiff's interest in the Property until the validity of the alleged Deed is established, leading to the denial of the Plaintiff's request.
Defendant claims bona fide purchaser status, arguing that her acquisition of the Property from Ouzts in 2004 nullifies any rights Plaintiff holds. Both parties seek summary judgment on this matter. Under Texas law, a bona fide purchaser must demonstrate acquisition of the land for value and without actual or constructive notice of any competing interests. Plaintiff recorded the Deed on June 3, 2003, which implies that Defendant should be aware of its contents. Defendant disputes this by asserting that the Deed was improperly acknowledged since it was notarized by Plaintiff's husband, an interested party. Plaintiff counters that her husband was not an interested party as the Property was designated as her "sole and separate property," and even if he were, his interest was not disclosed in the Deed. Consequently, Plaintiff argues that Defendant had constructive knowledge of the Deed, thus negating her bona fide purchaser claim. Texas law stipulates that a deed not properly acknowledged by an unconflicted notary does not confer constructive knowledge on subsequent purchasers. However, if the notary's acknowledgment appears valid on its face and does not reveal any interest in the transaction, it remains valid for those without notice of defects. The determination of a notary's interest is a factual issue.
The facts of the case are undisputed, with the Plaintiff's husband acknowledging a Deed that purportedly granted the Property to Plaintiff as her sole and separate property. The key issue is whether the husband had a financial interest in the transaction that would disqualify him from acknowledging it. Under Texas law, income generated from separate property is considered community property, meaning the husband would be entitled to rental income from the Property, which consists of condominiums. Consequently, the Court finds that the husband has a direct financial interest in the conveyance of rental property to Plaintiff.
The Court must also evaluate whether the alleged Deed was valid on its face. Texas courts assess the validity of a deed’s acknowledgment by examining any disclosed relationships between the notary and the grantee. The acknowledgment in the Runnells deed did not show any such relationship or financial interest of the notary, rendering it valid. However, in this case, the acknowledgment reveals a potential relationship between Plaintiff, Brenda J. Kirwan, and the notary, Thomas J. Kirwan, due to their shared last name. Following the precedent in Dyson, if the Defendant knew about this relationship, the alleged Deed would not be valid.
The Defendant contends that a defectively acknowledged instrument does not bind a purchaser who has notice of the defect. The dispute over whether the Defendant was aware of the defect is a factual question, preventing the Court from granting summary judgment to either party regarding the Defendant's status as a bona fide purchaser or whether the Defendant had constructive knowledge of the alleged Deed. Thus, the Court denies both parties' motions for summary judgment.
Defendant's motion for summary judgment on Plaintiff's declaratory judgment claim is granted. Defendant contends that the claim is duplicative of Plaintiff's trespass to try title claim and argues that Plaintiff cannot use the declaratory judgment claim to secure attorney fees. Plaintiff did not respond to these arguments. The Texas Uniform Declaratory Judgment Act allows parties to seek judicial declarations regarding rights under contracts, but here, Plaintiff's request pertains to possessory rights over the Property, which falls under the trespass-to-try title statute. As established in case law, when the trespass-to-try title statute governs, the plaintiff cannot alternatively seek attorney fees through the Declaratory Judgments Act. Consequently, Plaintiff's motion for partial summary judgment is also denied.
Regarding the claim for money had and received, Defendant asserts that the alleged Deed is testamentary and that Ouzts' death did not affect her title. Defendant argues that receipt of rental income does not constitute unjust enrichment. A plaintiff must demonstrate that the defendant possesses money which, in equity, belongs to them. Since the alleged Deed's status is contested, the Court finds there is a genuine dispute of material fact regarding its delivery and the bona fide purchaser defense, leading to the denial of Defendant's summary judgment motion on this claim.
For the estoppel by deed argument, Plaintiff claims Defendant cannot deny the validity of the alleged Deed due to a warranty clause. However, since the validity of the alleged Deed is in question, the Court declines to apply the estoppel doctrine, resulting in the denial of Plaintiff's request.
Defendant has withdrawn her estoppel defense, leading the Court to grant Plaintiff's motion for summary judgment regarding this defense. However, the Court denies Plaintiff's request for summary judgment on Defendant's unjust enrichment defense, which is based on improvements made and taxes paid on the property. The Court references legal precedent, indicating that individuals who improve property under a mistaken but good faith belief of ownership may recover costs from the true owner if the improvements enhance property value. The determination of good faith is typically a factual issue for the jury.
The Court also denies Plaintiff's motions to strike certain exhibits and to grant partial summary judgment related to various claims, including delivery and constructive notice. It grants in part and denies in part Defendant's motion for summary judgment, dismissing Plaintiff's declaratory judgment claim with prejudice while allowing the trespass to try title and money had and received claims to proceed. The Court finds that Defendant's argument regarding the alleged Deed as a terminable, non-testamentary instrument is unpersuasive, noting that the relevant Texas statutes were not in effect at the time of the alleged Deed's execution. Therefore, the Court concludes that Defendant's position does not apply, and the motion for a hearing is also denied.
The Court determined that the document in question is relevant to the delivery issue, and the Plaintiff failed to demonstrate that the document's probative value is significantly outweighed by potential risks such as unfair prejudice, confusion, or undue delay, as per Federal Rules of Evidence 401 and 403. The letter is not considered inadmissible hearsay under Rule 803(3) because it indicates Ouzts' intention to retrieve previously given documents. Therefore, the Plaintiff's Motion to Strike Exhibit B-1 is denied. Additionally, the Plaintiff sought to strike Defendant's Exhibit C, which is the Last Will and Testament of William Roy Ouzts, citing relevancy and hearsay concerns. However, this exhibit is deemed relevant for showing Ouzts' intent regarding the delivery of the alleged Deed and qualifies for an exception to hearsay under Rule 803(15) due to its statements affecting property interests. Consequently, the Motion to Strike Exhibit C is also denied. The Court noted a separate property exception concerning oil-and-gas royalties from Norris v. Vaughan but found it inapplicable in this case. The Plaintiff argued that the recorded Rescission Deed, which references the alleged Deed, provided constructive notice of the Plaintiff's interest in the property, although the proper recordation of the alleged Deed remains in question.
