German Marlon Saravia v. Sherman Benson and Ricky J. Gandy
2014 Tex. App. LEXIS 3359
| Tex. App. | 2014Background
- Benson sold commercial property to Halco with a deed of trust, a lien, due-on-sale and an assumption-with-consent clause.
- Halco leased part of the property to Saravia in 2004; Halco defaulted on the loan.
- Gandy purchased Halco’s interest in 2005, assumed Halco’s debt, and filed bankruptcy soon after.
- Lannie, as substitute trustee, foreclosed in 2005; Saravia paid rent to Halco/Gandy through mid-2005.
- Gandy sued for wrongful foreclosure in 2007; the trial court set aside the foreclosures and divested Saravia of title, then awarded title to Gandy and ordered Saravia to take nothing.
- The appellate court reverses, finding the foreclosures proper and Saravia’s title valid, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in setting aside foreclosures and divesting Saravia of title | Saravia contends foreclosures complied with law and title passed | Gandy/Benson argue the foreclosures were defective and title improper | Trial court erred; title restored to Saravia and remand ordered |
| Whether the second foreclosure notice and procedure complied with statute | Saravia argues notices were defective (location, timing, notice) | Gandy argues notices complied or were not properly challenged | Second foreclosure valid; trial court erred in voiding it |
| Whether Saravia had standing to challenge the sale despite lis pendens | Saravia claims standing as bona fide purchaser or aggrieved title holder | Gandy argues Lis Pendens negates bona fide purchaser status | Saravia has standing to challenge title; lis pendens affects bona fide purchaser defense but not standing |
| Whether Benson breached the general warranty deed or equitable subrogation applies | Saravia asserts breach of warranty; equity subrogation applicable against Gandy | Benson did not counter; subrogation not necessary given Saravia’s title | Remand for claims on warranty; equitable subrogation moot due to Saravia’s title |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standard for legal sufficiency and deference to fact-finder credibility)
- Fillion v. David Silvers Co., 709 S.W.2d 240 (Tex. App.—Houston [14th Dist.] 1986) (tender and payment requirements for defeating foreclosure presumption)
- Madison v. Gordon, 39 S.W.3d 604 (Tex. 2001) (lis pendens and bona fide purchaser concepts in title disputes)
- Cadle Co. v. Caamano, 930 S.W.2d 917 (Tex. App.—Houston [14th Dist.] 1996) (notice of lis pendens and record-chain notice obligations)
- In re Cohen, 340 S.W.3d 889 (Tex. App.—Houston [1st Dist.] 2011) (constructive notice and lis pendens impact on title disputes)