Wendy Kyle v. H.T. Strasburger, Shirley Strasburger, Terry Whitley, Fidelity Bank of Texas, and Tuition Llc
522 S.W.3d 461
| Tex. | 2017Background
- In 2004 Wendy Kyle alleges her then-husband forged her signature to obtain a $1.1M home‑equity loan secured by a deed of trust on the couple’s homestead. Kyle later conveyed her interest to him in the divorce, claiming she was induced by misrepresentations.
- Kyle sued the bank (Fidelity) and related individuals and entities seeking: forfeiture of principal and interest under Tex. Const. art. XVI, §50(a)(6)(Q)(xi); declaratory relief that the deed of trust is void under §50(c); invalidation of the special warranty deed to Mark; and statutory fraud, Finance Code, and DTPA claims based on alleged misrepresentations in a foreclosure application.
- Fidelity moved for summary judgment on multiple grounds, including that the forfeiture and declaratory‑judgment claims were barred by the four‑year statute of limitations. The trial court granted summary judgment; the court of appeals affirmed.
- After the court of appeals issued its decision, the Texas Supreme Court decided Garofolo v. Ocwen and Wood v. HSBC, which clarified that (1) §50(a) creates defenses to foreclosure and contractual remedies rather than independent constitutional causes of action (Garofolo), and (2) liens securing constitutionally noncompliant home‑equity loans are invalid under §50(c) unless and until cured, with no limitations period for quiet‑title claims (Wood).
- Applying those decisions, the Supreme Court reversed the court of appeals in part: it held Kyle’s §50(c) claim to declare the lien invalid is not time‑barred and remanded other unresolved issues; it affirmed summary judgment only as to the constitutional forfeiture claim (Garofolo forecloses an independent constitutional forfeiture cause of action).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kyle’s claim to declare the deed of trust void under Tex. Const. art. XVI, §50(c) is barred by limitations | Kyle: lien is constitutionally invalid for lack of spousal consent; §50(c) renders lien invalid and no limitations period applies | Fidelity: claim is time‑barred under the residual four‑year statute; alleged defect is curable/voidable | Court: Reversed court of appeals; under Wood §50(c) makes such liens invalid until cured, so no statute of limitations bars the claim |
| Validity of special warranty deed conveying Kyle’s interest to Mark and whether Kyle waived challenge on appeal | Kyle: deed invalid because transfer was induced by misrepresentations and premised on an invalid lien; she responded to limitations argument | Fidelity: Kyle failed to challenge limitations ruling on deed claim on appeal (waiver) | Court: Court of appeals erred to affirm on waiver; Kyle adequately responded to limitations argument so deed claim should be reconsidered on remand |
| Whether Kyle may pursue forfeiture of principal and interest as a constitutional remedy under §50(a)(6)(Q)(xi) | Kyle: constitutional forfeiture provision was incorporated into loan terms and supports an independent constitutional cause of action or at least contractual claim; requests remand if pleading insufficient | Fidelity: forfeiture is not an independent constitutional cause of action | Court: Affirmed summary judgment as to constitutional forfeiture claim—Garofolo holds forfeiture is a contractual/loan term remedy, not an independent constitutional cause of action; remand to consider pleaded contractual forfeiture claim if raised |
| Statutory fraud, Finance Code, and DTPA claims premised on alleged misrepresentations about lien validity; whether they survive summary judgment/mootness | Kyle: those claims are based on misrepresentations that the lien and deed were valid; they survive because declaratory claims underpin them | Fidelity: underlying declaratory claims are time‑barred or moot (property sold and loan paid) so statutory claims fail or are moot | Court: Reversed court of appeals as to these claims because statute‑of‑limitations ruling on the declaratory claim was erroneous; declaratory claims not moot to the extent they underlie other claims; remand for further consideration |
Key Cases Cited
- Garofolo v. Ocwen Loan Servicing, 497 S.W.3d 474 (Tex. 2016) (§50 home‑equity forfeiture is a loan term/contractual remedy, not an independent constitutional cause of action)
- Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542 (Tex. 2016) (a lien securing a constitutionally noncompliant home‑equity loan is invalid under §50(c) until cured; no statute of limitations for a claim to quiet title against such a lien)