Morlock, L.L.C. v. Nationstar Mortgage, L.L.C.
2014 Tex. App. LEXIS 8649
Tex. App.2014Background
- Morlock, L.L.C. acquired the Property at a HOA foreclosure sale in December 2011 and paid $3,500, subject to existing liens.
- Arrant signed a Note payable to First Coastal Mortgage and a Deed of Trust; MERS served as nominee for First Coastal and its successors.
- In March 2012, MERS assigned the Deed of Trust to Nationstar; Morlock challenged the Deed of Trust as invalid and sought to remove a cloud on title.
- The trial court granted Nationstar’s traditional summary judgment on the merits and dismissed Morlock’s cloud-title suit with prejudice.
- Morlock argued: (a) Nationstar is not owner/holder of the Note, (b) the Deed of Trust assignment is invalid, (c) Nationstar cannot enforce the Deed of Trust.
- The court held Morlock had standing to challenge the Note/Deed of Trust and affirmed the judgment on standing, proceeding to address the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Morlock have standing to challenge ownership of the Note and Deed of Trust? | Morlock alleges a title cloud; standing exists for those whose property interests are affected. | Morlock lacks standing as a nonparty to the Note/Deed; challenge must be by party or beneficiary. | Morlock has standing; trial court erred re standing |
| Is the Deed of Trust properly assigned to Nationstar and enforceable? | Assignment by MERS as nominee transfers Deed of Trust; Nationstar lacks enforceable right if assignment invalid. | MERS assignment valid as nominee; Deed of Trust properly assigned and enforceable. | Assignment valid; Deed of Trust enforceable |
| Must Nationstar be the owner/holder of the Note to enforce the Deed of Trust? | Without ownership of the Note, Nationstar cannot enforce the Deed of Trust. | Owner/holder status of the Note is not required to foreclose under Chapter 51; mortgagee may enforce as defined. | Nationstar may enforce the Deed of Trust regardless of Note ownership |
Key Cases Cited
- Goswami v. Metropolitan Savings and Loan Ass’n, 751 S.W.2d 487 (Tex. 1988) (standing doctrine for third-party interests in foreclosure)
- American Savings and Loan Ass’n of Houston v. Musick, 531 S.W.2d 581 (Tex. 1975) (standing to challenge foreclosure under a deed of trust)
- Henry v. Mr. M Convenience Stores, Inc., 543 S.W.2d 393 (Tex. Civ. App.—Houston [14th Dist.] 1976) (holders of equitable interests have standing to challenge deed of trust)
- Florey v. Estate of McConnell, 212 S.W.3d 439 (Tex. App.—Austin 2006) (joint owner may challenge cloud on title arising from a deed of trust)
- Stiles v. Resolution Trust Corp., 867 S.W.2d 24 (Tex. 1993) (treats issues of enforceability and standing in foreclosure-related disputes)