475 S.W.3d 507
Tex. App.2015Background
- Cathy Lewis executed a note and deed of trust in 2003; the deed was recorded and later assigned to Stewardship Fund No. 3, LP (SF3).
- In August 2010 taxing authorities sued for delinquent taxes naming Lewis and MERS but not SF3; court entered judgment authorizing a tax sale and the property was sold to Brian Pirkle in August 2012; constable’s deed was recorded.
- Three months after the sale SF3 assigned its rights to American Homeowner Preservation Fund, LP (American); American admitted it had notice of the recorded constable’s deed and tax suit before or shortly after the assignment.
- American claimed its deed-of-trust rights survived the tax sale, accelerated the note, prepared to foreclose, and was enjoined by Pirkle; competing summary-judgment motions followed.
- Trial court declared the constable’s deed valid, that American’s lien and note rights were extinguished by the tax sale, and awarded Pirkle attorney’s fees; American appealed.
Issues
| Issue | American's Argument | Pirkle's Argument | Held |
|---|---|---|---|
| Did the trial court improperly declare Lewis’s note void against Pirkle? | American: Pirkle has no interest in the note so no justiciable controversy; declaration improper. | Pirkle: declaration unnecessary to resolve title/lien issues but court ruled broadly. | Court: Declaration about Lewis’s note was improper (no justiciable controversy); judgment modified to delete that declaration. |
| Whether American’s lien survived the tax sale when SF3 (record lienholder at sale) was not joined in tax suit and later assigned to American | American: SF3 was a necessary party under Rule 39; as assignee American stands in SF3’s shoes and can attack the tax sale / foreclose. | Pirkle: American acquired interest with constructive/actual notice of the deed and sale and failed to use statutory challenge procedures; thus it cannot collaterally attack the sale. | Court: SF3 (as record lienholder at time of sale) could have collaterally attacked, but American (a subsequent assignee who took with notice) has no standing to assert SF3’s due-process claim; American’s lien extinguished by the tax sale. |
| Whether taxing authorities committed a compensable taking (PRPRPA) and whether plea to jurisdiction was erroneous | American: taxing authorities’ failure to join SF3 took/ extinguished its property interest; claim timely and actionable. | Taxing authorities: American lacked standing, claim time-barred under Gov’t Code §2007.021, and they are immune. | Court: Even assuming standing, PRPRPA requires suit within 180 days after owner knew/should have known; American knew by Jan 15, 2013 so claim filed March 2014 was untimely; plea to jurisdiction properly granted. |
| Whether the trial court erred in awarding attorney’s fees without segregation evidence | American: trial court awarded fees without proof of segregation among claims/parties. | Pirkle: award was proper and any objection was not preserved in a reporter’s record. | Court: No reporter’s record; cannot review preservation of complaint—issue overruled. |
Key Cases Cited
- Bonham State Bank v. Beadle, 907 S.W.2d 465 (Tex. 1995) (declaratory-judgment justiciability principles)
- Security State Bank & Trust v. Bexar County, 397 S.W.3d 715 (Tex. App.—San Antonio 2012, pet. denied) (record lienholder deprived of notice may collaterally attack tax sale)
- Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615 (Tex. 2007) (recording creates constructive notice)
- HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998) (record notice starts limitations running)
- State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696 (Tex. 1996) (equitable limits on assignability of causes of action)
- Williamson Cnty. Regional Planning Comm’n v. Hamilton Bank, 473 U.S. 172 (U.S. 1985) (ripeness for regulatory takings claims)