Morris v. Deutsche Bank National Trust Co.
528 S.W.3d 187
Tex. App.2017Background
- Mattie and Joseph Morris refinanced their homestead with PHM in 2006; PHM knew the property was a homestead but the deed of trust expressly disclaimed that the loan was a Section 50(a)(6) home‑equity loan and allowed nonjudicial foreclosure.
- The loan was later assigned to Deutsche Bank National Trust Company; the Morrises defaulted and the Bank purchased the property at a nonjudicial foreclosure sale in August 2012 and evicted the Morrises.
- Morrises sued (claims included constitutional violation under Tex. Const. art. XVI, §50(a)(6); wrongful foreclosure; declaratory relief; trespass; conversion/theft; slander of title), and the Bank moved for traditional and no‑evidence summary judgment largely on statute‑of‑limitations grounds.
- The trial court granted summary judgment for the Bank in whole or in part on most claims, finding the Morrises could not sustain causes of action based on alleged violations of Section 50(a)(6), defects in loan documents, or lack of standing to foreclose, and concluded the judgment was final and appealable.
- While the appeal was pending, the Texas Supreme Court decided Wood v. HSBC, holding constitutionally noncompliant home‑equity liens remain invalid until cured and are not subject to any statute of limitations, which prompted the appellate court to reassess the summary judgment rulings.
Issues
| Issue | Plaintiff's Argument (Morrises) | Defendant's Argument (Bank) | Held |
|---|---|---|---|
| Whether homestead was protected from forced sale because lien was constitutionally noncompliant | Loan was a refinance of a home‑equity loan and deed lacked §50(a)(6) prerequisites, so lien is invalid and foreclosure unlawful | Claims are barred by the 4‑year statute of limitations because noncompliant liens are voidable, not void | Reversed: Wood controls — noncompliant lien invalid until cured and not time‑barred; summary judgment erred |
| Wrongful foreclosure (constitutional and common‑law claim) | Foreclosure without court order violated §50(a)(6); common‑law wrongful foreclosure elements satisfied | Statute of limitations bars constitutional claim; no evidence of sale defect or grossly inadequate price for common‑law claim | Partially reversed: summary judgment on §50(a)(6) and defect grounds reversed; affirmed only as to Bank’s standing |
| Declaratory judgment (voidness of sale, authority to foreclose) | Seeks declaration that sale is void and Bank lacks authority; justiciable controversy exists | Action barred by statute of limitations and is duplicative of other claims | Reversed as to statute‑of‑limitations basis (Wood); trial court may address duplicative‑claim argument on remand; affirmed as to standing finding |
| Trespass (entry/possession after eviction) | Eviction following invalid foreclosure gave rise to trespass | No evidence of trespass; Bank had legal title (statute‑of‑limitations argument) | Reversed: to extent trial court relied on §50(a)(6)/limitations, judgment erred under Wood; other grounds not argued cannot sustain judgment |
| Conversion of personal property/theft (possession of items in house) | Because foreclosure was wrongful and title did not pass, Bank wrongfully possessed home and personal property | Conversion barred because Bank obtained lawful title after limitations; Morrises relinquished possession at eviction | Reversed: summary judgment based on limitations/§50(a)(6) cannot stand under Wood; other unraised grounds cannot sustain judgment |
Key Cases Cited
- Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542 (Tex. 2016) (liens securing constitutionally noncompliant home‑equity loans remain invalid until cured and are not subject to any statute of limitations)
- Garofolo v. Ocwen Loan Servicing, L.L.C., 497 S.W.3d 474 (Tex. 2016) (§50(a) does not create an independent substantive cause of action beyond defense to foreclosure)
- Lehmann v. Har‑Con Corp., 39 S.W.3d 191 (Tex. 2001) (final‑judgment rules for appeals; order is final if it disposes of all claims or states unmistakable finality)
- Laster v. First Huntsville Props. Co., 826 S.W.2d 125 (Tex. 1991) (a lien void because it was illegally levied on homestead can never have effect)
- Kyle v. Strasburger, 522 S.W.3d 461 (Tex. 2017) (in light of Wood, statute of limitations did not bar a homeowner’s request for declaration that deed of trust is invalid)