541 S.W.3d 331
Tex. App.2017Background
- Maria Reynoso purchased the property in 2001 and executed a deed of trust that included a clause stating that, upon foreclosure sale, her right to occupy the property ceases and she would have no right to occupy without the new owner's written consent (tenancy-at-sufferance clause).
- Wells Fargo conducted a nonjudicial foreclosure in 2015; substitute trustee executed a deed conveying the property to Dibs US, Inc., the highest bidder.
- Dibs served a written demand to vacate; Reynoso did not vacate and Dibs sued for forcible detainer in justice court. Justice court awarded possession to Dibs; Reynoso appealed to county court at law, lost after de novo trial, and appealed.
- Reynoso also filed wrongful-foreclosure and related claims against Wells Fargo in district court (removed to federal court), and argued possession is intertwined with title so justice/county courts lacked jurisdiction.
- Reynoso argued the tenancy-at-sufferance clause and Texas’s forcible-detainer statutory scheme violated procedural and substantive due process by allowing expedited eviction before resolution of her foreclosure challenge.
Issues
| Issue | Plaintiff's Argument (Reynoso) | Defendant's Argument (Dibs / State) | Held |
|---|---|---|---|
| Jurisdiction of justice court over forcible-detainer when title is disputed | Possession is intertwined with title because she challenges foreclosure; therefore justice court lacks jurisdiction | Deed’s tenancy-at-sufferance clause creates an independent basis to determine possession without resolving title | Court: Justice and county courts had jurisdiction because clause made Reynoso a tenant at sufferance; possession could be decided without deciding title |
| Validity/enforceability of the tenancy-at-sufferance clause as an "unbargained-for" term | Clause was undisclosed and unbargained-for, so its use to defeat access to district court violates due process and contract norms | Reynoso signed the deed; law presumes knowledge and acceptance of contract terms absent trick or artifice | Court: Presumed Reynoso accepted the clause; no trick/artifice shown; clause not invalid as "unbargained-for" |
| Procedural due process challenge to Property Code §24.002 and expedited eviction | Statute and procedures deprive homeowners of meaningful time/manner to litigate wrongful-foreclosure claims before eviction; strict scrutiny should apply | Statutory scheme rationally balances interests of creditors, purchasers, and homeowners; due process does not guarantee choice of forum or consolidation of title and possession claims | Court: Procedural due process satisfied; homeowner received notice and opportunity to be heard; rational-basis review applies and statute is constitutional |
| Right to litigate possession in district court or stay eviction pending resolution of title challenge | Homeowner has right to litigate possession concurrently in district court with foreclosure challenge; eviction procedures prematurely deprive possession | No constitutional right to a particular state forum or to litigate possession and title together; state may assign possession to justice court | Court: No constitutional right to litigate in district court or to consolidate; enforcement of clause/statute does not violate substantive due process |
Key Cases Cited
- Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (subject-matter jurisdiction cannot be waived and may be raised on appeal)
- Graber v. Fuqua, 279 S.W.3d 608 (Tex. App.—Houston [14th Dist.] 2009) (subject-matter jurisdiction reviewed de novo)
- Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909 (Tex. 2013) (defining tenancy at sufferance)
- Nat'l Collegiate Athletic Ass'n v. Tarkanian, 488 U.S. 179 (U.S. 1988) (Fourteenth Amendment due process applies only to state action)
- Mitchell v. W.T. Grant Co., 416 U.S. 600 (U.S. 1974) (Due Process Clause does not guarantee litigants a particular state forum)
- Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419 (Tex. 2015) (presumption that a signer knows and accepts written contract terms)