I-10 Colony, Inc. v. Chao Kuan Lee, Li Yang Lee, Li Hsiang Chang, 393 S.W.3d 467

Lee and I-10 were equal partners in South Territory Ltd. to own hotel property; partnership purchased property in 1995.
In 1997 property sold to Blue Bonnet; Blue Bonnet assumed Metro Bank loan; Lee and I-10 each issued $150,000 notes secured by deeds of trust.
In 1999 Blue Bonnet defaulted; I-10 foreclosed; Lee did not foreclose; Lee later foreclosed on his lien and filed suit alleging ownership and other claims.
Court determined liens were of equal dignity and that after foreclosure the parties had equal rights to ownership; Lee foreclosed and later pursued an accounting claim for hotel income.
Judgments at trial and on appeal addressed ownership, attorney’s fees under the Declaratory Judgments Act, and prejudgment interest; on appeal, prejudgment interest start date was corrected to March 5, 2010.
The court ultimately affirmed the judgment as modified to reflect the corrected prejudgment interest start date.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Lee owns 50% of the hotel after foreclosure	Lee’s lien remained co-equal; foreclosing lien did not extinguish Lee’s equal-dignity lien.	I-10 contends Lee’s lien extinguished; foreclosure gives I-10 100% title free of Lee’s lien.	Lee owns 50%; I-10's extinguishment claim rejected.
Whether DJA action properly determined ownership vs trespass to try title	Lee sought a declaration of ownership under DJA after nonsuiting trespass to try title.	I-10 argues such claims should be trespass to try title, not DJA.	DJA allowable for lien declarations; ownership issue treated as DJA but improper for fees tied to trespass claim; overall issues resolved.
Attorney’s fees recoverable for DJA declarations; and for ownership issues	Lee entitled to fees for 2002 DJA declarations regarding liens.	Fees not warranted for later ownership determinations.	Attorney’s fees proper for 2002 lien declarations; not for 2008 ownership determination.
Whether court properly instructed on subtracting improvements	Jury should subtract all improvements’ costs regardless of consent.	Only improvements Lee consented to should be subtracted.	Court properly instructed; exclude non-consented improvements.
Whether salaries paid to Wu should be deducted from income	Salaries are deductible management expenses from income.	No deduction for non-consenting cotenant’s personal services absent agreement.	No deduction for Wu salaries; instruction upheld.

Diversified Mortgage Investors v. Lloyd D. Blaylock Gen. Contractor, Inc., 576 S.W.2d 794 (Tex. 1978) (foreclosure on senior lien extinguishes junior lien when proceeds insufficient to satisfy it)
Kothari v. Oyervidez, 373 S.W.3d 801 (Tex. App.—Houston (1st Dist.) 2012) (equal-dignity liens and foreclosure effects)
Matthews v. First State Bank, 312 S.W.2d 571 (Tex. Civ. App.—Beaumont 1958) (more than one equal-dignity lien; purchaser takes subject to remaining liens)
Douglass v. Blount, 67 S.W. 484 (Tex. 1902) (foreclosure of one equal-d dignity lien does not impair others)
Goidl v. N. Am. Mortg. Investors, 564 S.W.2d 493 (Tex. Civ. App.—Dallas 1978) (subrogation of equal-dignity lien to foreclosed lien not presumed)
Roberson v. City of Austin, 157 S.W.3d 130 (Tex. App.—Austin 2005) (Martin v. Amerman framework for DJA vs trespass in title disputes)
Cadle Co. v. Ortiz, 227 S.W.3d 831 (Tex. App.—Corpus Christi 2007) (lien validity disputes may be DJA with title implications)