Jay Kay Bear Ltd v. Patty Martin
04-14-00579-CV
Tex. App.Sep 4, 2015Background
- Jay Kay Bear, Ltd. (Jay Kay) foreclosed on a 2003 Zyco deed of trust and, following an April 6, 2010 foreclosure sale, believed it owned an 8.09-acre tract; Jay Kay later conveyed the property to 281 Property, LLC by Special Warranty Deed.
- Patty Martin sued to set aside Jay Kay’s April 6, 2010 foreclosure, alleging fraud and claiming superiority of her 2008 Martin lien; the trial court set aside the April 6, 2010 foreclosure and found Martin’s lien superior.
- Jay Kay appealed the trial court’s judgment setting aside its foreclosure and challenging the lien-priority determination.
- Central legal disputes on appeal: (1) whether Jay Kay has standing to appeal the order that set aside its foreclosure; (2) whether the trial court could implicitly find the 2003 Zyco lien unenforceable (statute of limitations or payment) without evidence of the maturity date; and (3) whether assignment/transfer of the 2003 Zyco lien to Jay Kay altered its priority relative to the 2008 Martin lien.
- Jay Kay emphasizes its contractual duty in the Special Warranty Deed to “warrant and forever defend” 281 Property’s title as an additional basis for standing and argues the trial court misapplied Texas lien-assignment and evidence law.
Issues
| Issue | Plaintiff's Argument (Martin) | Defendant's Argument (Jay Kay) | Held (as argued by appellant in letter) |
|---|---|---|---|
| Standing to appeal trial court’s order setting aside Jay Kay’s foreclosure | Martin contends Jay Kay lacks a present interest in the foreclosed property and thus lacks standing | Jay Kay argues the trial-court order injuriously affected its rights, it held a property interest at relevant time, and the Special Warranty Deed obligates it to defend 281 Property’s title | Jay Kay urges the court to hold it has standing to appeal because the order divested its title and affected its contractual duties |
| Whether trial court could infer 2003 Zyco lien was unenforceable (maturity/limitations) | Martin relies on statutory presumption under Tex. Civ. Prac. & Rem. Code §16.036 to infer maturity and payment/expiration after four years | Jay Kay argues Martin presented no evidence of a maturity date; evidence showed the 2003 Zyco loan was not in default and could have been extended/renewed | Jay Kay argues the court cannot implicitly find the 2003 Zyco lien unenforceable absent proof of maturity date and contrary evidence admissible at trial |
| Whether transfer/assignment to Jay Kay changed the 2003 Zyco lien’s priority | Martin treats the June 2008 transfer as operative for priority or disputes that transfer preserved Zyco’s original priority | Jay Kay contends the operative date is the original 2003 recording; assignment does not diminish lien character or priority under Property Code and controlling caselaw | Jay Kay argues the trial court misapplied law by disregarding that a validly transferred lien retains its original priority |
| Appropriate date for lien-priority analysis | Martin’s position implicitly supports using events favorable to her claim of superiority | Jay Kay maintains priority should be determined as of April 6, 2010 (last foreclosure date in dispute) and on the lien chain beginning in 2003 | Jay Kay asks the court to review lien priority as of April 6, 2010 and reverse the trial court’s ruling that set aside its foreclosure |
Key Cases Cited
- Goswami v. Metro. Sav. & Loan Ass’n, 751 S.W.2d 487 (Tex. 1988) (identifies who has standing to contest a foreclosure sale and recognizes mortgagor and those in privity may challenge foreclosure)
- Sierra Club v. Morton, 405 U.S. 727 (1972) (standing requires a threatened or actual injury)
- Allstate Indemn. Co. v. Forth, 204 S.W.3d 795 (Tex. 2006) (party must have suffered threatened or actual injury to have standing)
- Torrington Co. v. Stutzman, 46 S.W.3d 829 (Tex. 2000) (party may appeal to vindicate rights of another when a contractual obligation creates a justiciable interest; standing analysis can follow merits review)
- Montenegro v. Ocwen Loan Servicing, LLC, 419 S.W.3d 561 (Tex. App.—Amarillo 2013) (third party has standing to challenge a foreclosure when it has a legal or equitable property interest affected by the sale)
- Anthony v. Langford, 152 S.W.2d 935 (Tex. Civ. App.—San Antonio 1941) (assignment of liens is permitted and does not change their priority)
- Morlock, L.L.C. v. Nationstar Mortg. L.L.C., 447 S.W.3d 42 (Tex. App.—Houston [14th Dist.] 2014) (reinforces that lien assignment does not necessarily alter priority)
- Castano v. Wells Fargo Bank, N.A., 82 S.W.3d 40 (Tex. App.—San Antonio 2002) (appellate review of implied findings considers only evidence favorable to those findings)