John H. Thomas, M.D. v. Graham Mortgage Corporation and Chris Norris, Substitute Trustee, 408 S.W.3d 581

Background

Texas Court of Appeals (Austin) on rehearing; foreclosure suit over ranch property in Burnet/Llano Counties; Thomas claimed the property was his homestead exempt from forced sale; Bank moved for summary judgment asserting lack of homestead; Thomas signed a Non-Homestead Affidavit/Contingent Designation of Homestead; default occurred and foreclosure followed; Thomas amended pleadings to claim homestead status and sought relief under Texas Constitution, Home Equity Lending laws, and Debt Collection Act; trial court granted summary judgment for Bank and issued other adverse rulings, prompting this appeal.
Thomas’s loan: Aug 14, 2007 for $3.4 million, deed of trust on 618 acres; June 2007 title policy flagged 200 acres as homestead; Thomas emailed Bank officer disputing the homestead designation; he included three options for structuring the loan regarding homestead designation.
Thomas swore he never occupied the dwelling as his residence and acknowledged designating/renouncing homestead status to induce fundings; Bank presented Castelhano’s affidavit showing no observed dwelling on property and agent’s statements.
By 2009 the Bank foreclosed after default; Thomas sought TRO/TI to prevent sale; in 2010-2011, Bank and Thomas pursued various motions for summary judgment and amendments; the trial court granted summary judgment for Bank on homestead issue and deficiency, then this appeal followed.
Court ultimately sustained some issues and reversed/remanded on others, specifically reversing the deficiency judgment/attorney’s fees on appeal and remanding for further proceedings while affirming other aspects.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the property was Thomas’s homestead as of the loan date	Thomas contends material facts show homestead; estoppel prevents Bank from denying	Bank contends abandonment and disclosure in Non-Homestead Affidavit foreclose homestead	Yes; Thomas abandoned homestead; Bank’s summary judgment on homestead affirmed
Whether the Bank is entitled to deficiency judgment and whether an appraisal/offset under §51.003 should have been considered	Thomas sought appraisal and offset against deficiency	Offset requires timely pleading; appraisal not properly considered	Yes; court erred in striking appraisal; deficiencies/fees reversed and remanded for consideration of offset
Whether Thomas’s amended summary-judgment motion was timely and properly considered	Amendment should be considered; timely	Amendment untimely under Rule 166a and Rule 63	Amendment untimely; trial court did not err in not considering it
Whether the denial of continuance and denial of oral argument were error	Need continuance due to new information; wants oral argument	Discretionary rulings within permissible limits	No reversible error; no abuse of discretion

Key Cases Cited

Laster v. First Huntsville Props. Co., 826 S.W.2d 125 (Tex. 1991) (voids lien on non-permitted homestead liens; deference to homestead protections)
Inwood N. Homeowners’ Ass’n, Inc. v. Harris, 736 S.W.2d 632 (Tex. 1987) (abandonment focus: if not homestead at execution, protections do not apply)
Alexander v. Wilson, 77 S.W.2d 873 (Tex. 1935) (illustrates estoppel and lender reliance on disclosures regarding homestead status)
Kendall Builders, Inc. v. Chesson, 149 S.W.3d 796 (Tex. App.—Austin 2004) (standard for determining when homestead is abandoned or retained)
Bland (First Interstate Bank) v. Bland, 810 S.W.2d 277 (Tex. App.—Fort Worth 1991) (estoppel balancing against fraud on creditors; when facts show abandonment and reliance, homestead claims may be barred)
Prince v. North State Bank of Amarillo, 484 S.W.2d 405 (Tex. Civ. App.—Amarillo 1972) (factors for estoppel and presumed abandonment of homestead)
Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1 (Tex. 2008) (judicial estoppel principles in various contexts)