John W. HANKINS, Appellant v. Sarah T. HARRIS, Appellee
No. 01-15-00396-CV
Court of Appeals of Texas, Houston (1st Dist.).
Opinion issued July 26, 2016
Michael Massengale, Justice
Panel consists of Justices Jennings, Massengale, and Huddle.
Summary
Because Trinidad was not required to indemnify Laredo under the indemnity provisions of section 14.7 of the Laredo/Trinidad Contract, it did not “assume liability” under insurance provisions of section 13 of the Laredo/Trinidad Contract. Because Trinidad did not “assume liability” for the damages alleged in this suit, it was not contractually obligated to cause its insurer to waive its subrogation rights. Because the Laredo/Trinidad contract did not require Trinidad to obtain a waiver of subrogation from NHIC under these circumstances, the policy endorsement containing the waiver by NHIC is not applicable. Thus, we conclude that NHIC has not waived its right to seek subrogation, and the trial court erred in holding otherwise. We sustain NHIC‘s second issue on appeal. In light of our disposition of NHIC‘s second issue, we need not address its remaining two issues, and we decline to do so.
CONCLUSION
We reverse the judgment and remand for further proceedings.
Michael Massengale, Justice
Appellant John W. Hankins appeals from a grant of summary judgment in appellee Sarah T. Harris‘s suit to quiet title to real property. Hankins claims that he has had an undivided one-half interest in the property since he foreclosed on a judicial lien and recorded an execution deed in 1980. Hankins also asserts counterclaims for conversion, partition, and trespass to try title.
Harris argues that Hankins had no valid interest in the property at any time. She claims that the foreclosure sale was void due to both Texas‘s constitutional homestead protections and an automatic bankruptcy stay. In the alternative, Harris asserts that if Hankins had an interest in the property, she acquired that interest through adverse possession.
The trial court granted Harris‘s motion for summary judgment and found that: she owns the entire property in fee simple; Hankins has no interest in the property; the foreclosure sale and execution deed were null and void; and Hankins‘s counterclaims failed as a matter of law. Hankins appeals, arguing (1) the homestead exemption did not apply to void the execution sale; (2) the automatic bankruptcy stay did not apply; (3) Harris did not adversely possess the property; and (4) the trial court erred by dismissing his counterclaims for conversion, partition, and trespass to try title.
We conclude that the homestead exemption applied to the whole property at all relevant times and that the foreclosure sale and execution deed were therefore unconstitutional and void. We affirm the trial court‘s judgment accordingly.
Sean M. Reagan, Leyh, Payne & Mallia, PLLC, Jarrett L. Ellzey, W. Craft Hughes, Hughes Ellzey, LLP, Brian B. Kilpatrick, H. Fred Cook, Wilson, Cribbs & Goren, P.C., Houston, TX, for Appellant.
William Feldman, Michael T. Powell, Michael J. Mazzone, Haynes and Boone, LLP, Houston, TX, for Appellee.
Sarah Harris‘s parents, Roy and Norma, acquired a home in West University Place in 1966, and they used it as their primary residence. In 1978, John Hankins obtained a judgment against Norma Harris and another party in an action for slander. Hankins recorded an abstract of the judgment against Norma.
In March 1980, Roy and Norma separated. Norma moved to Brownsville, Texas, and she later testified that after she left she did not intend to return to her former residence. Roy and Norma divorced on June 17, 1980. They executed a marriage settlement agreement which was approved by the family district court and incorporated in its final divorce decree as a just and right division. That agreement included the following language regarding the disposition of the home:
(1) Title to the house shall be transferred to and vested solely in Husband as his separate property.
(2) In return for the disposition of this asset to Husband, Husband agrees to pay Wife the sum of Fifty Thousand Dollars ($50,000.00) on the following terms and conditions: Fifty Thousand Dollars ($50,000.00) shall be paid in cash by Husband to Wife within six (6) months after the date of execution of this Agreement. As evidence of this obligation, Husband agrees to execute to Wife a promissory note in the principal sum . . . . The parties further stipulate and agree that payment of these sums to Wife represents an equitable division and distribution of the community property estate of the parties . . .
On August 6, 1980, Hankins requested a writ of execution and asked the constable to levy his interest in the property, with the prospective date of sale set for September 2. On August 29, Norma and Roy requested a temporary restraining order to prevent the execution sale. The district court set bond at $50,000, and Hankins alleges that the bond was never paid and the temporary restraining order was not issued. On September 1, Norma executed a special warranty deed to show that she had conveyed the property to Roy. Roy gave Norma a deed of trust to secure the purchase for $50,000, as stated in the marriage settlement agreement.
On the morning of September 2, Roy filed for bankruptcy, and the bankruptcy court issued an order specifically prohibiting the scheduled sale of the property due to the automatic bankruptcy stay. Nevertheless, the constable proceeded with the sale, and Hankins bought the levied portion and recorded an execution deed.
The Harris family continued to live on the property after the execution sale, and on several occasions Roy and Sarah transferred ownership of the property between them. Roy and Norma reconciled in 1981, and Norma eventually moved back to the property. Hankins asserted an interest in the property through four different sets of attorneys, each of whom sent a demand letter in 1984, 1990, 2005, and 2009, respectively. Harris‘s counsel responded each time by repudiating Hankins‘s purported interest, and each set of attorneys withdrew. Harris alleges that Hankins never took any other action to claim the property or exercise his alleged rights.
Sarah inherited all of Roy‘s remaining interest in the property pursuant to a survivorship agreement after he passed away in 1999. After Hankins sent another demand letter in 2013, she filed suit to quiet title to the property. In response, Hankins filed counterclaims for, among other causes, partition, a declaratory judgment, and trespass to try title.
Analysis
We review a trial court‘s grant of summary judgment de novo. Buck v. Palmer, 381 S.W.3d 525, 527 (Tex.2012). We must reverse if there is more than a scintilla of probative evidence that raises a genuine issue of material fact. Id.; see also
In his first issue, Hankins claims that Harris failed to establish as a matter of law that the homestead exemption invalidated the execution sale. Hankins argues that after the divorce, Norma possessed a co-tenancy in the property that she abandoned, allowing his lien to attach. Hankins claims Roy no longer had a family homestead but rather a single-adult homestead that would protect only his half-interest in the community property. Hankins also argues that Roy did not own the entire property on the execution date, because the marital settlement agreement anticipated only a future transfer rather than a final division of the property.
Harris responds that Norma did not abandon her interest in the property, and Roy‘s homestead interest alone was able to protect the entire property from levy and foreclosure. In the alternative, she argues that at the time of the levy, Norma owned no interest in the property that she could abandon or that Hankins could purchase.
When an abstract of judgment is recorded and indexed it constitutes a lien and attaches to any real property owned by the defendant that is not exempt. See
The homestead exemption exists to provide a secure home for the family against creditors. See Jones v. Goff, 63 Tex. 248, 254 (1885); Ball, Hutchings & Co. v. Lowell, 56 Tex. 579, 583 (1882). The exemption is liberally construed to further its purposes. See Inwood N. Homeowners’ Ass‘n, 736 S.W.2d at 635; Andrews v. Sec. Nat‘l Bank of Wichita Falls, 121 Tex. 409, 417, 50 S.W.2d 253, 256 (1932). No specific writing is needed to claim a homestead exemption, but instead merely “proof of concurrence of usage and intent on the part of the owner to claim the land as a homestead.” Dodd v. Harper, 670 S.W.2d 646, 649 (Tex.App.-Houston [1st Dist.] 1983, no writ).
A homestead can belong to either a family or to a “single adult person.”
Once a property has been established as a homestead, the property remains exempt unless it ceases to be a homestead due to abandonment, alienation, or death. Denmon, 285 S.W.3d at 595; Wilcox v. Marriott, 103 S.W.3d 469, 472 (Tex.App.-San Antonio 2003, pet. denied). “Abandonment of a homestead occurs when the homestead claimant ceases to use the property and intends not to use it as a home again.” Churchill v. Mayo, 224 S.W.3d 340, 345 (Tex.App.-Houston [1st Dist.] 2006, pet. denied). “[A]nyone asserting abandonment [of a homestead] has the burden of proving it by competent evidence.” Caulley v. Caulley, 806 S.W.2d 795, 797 (Tex.1991).
If a property is exempt because it is the debtor‘s homestead, a lien will attach only if the property interest loses its homestead character. See Fairfield Fin. Grp. Inc. v. Synnott, 300 S.W.3d 316, 321 (Tex.App.-Austin 2009, no pet.); Wilcox, 103 S.W.3d at 473; Posey v. Commercial Nat‘l Bank, 55 S.W.2d 515, 517 (Tex.Comm‘n App.1932, judgm‘t adopted). A judgment debtor may sell a homestead “and pass title free of any judgment lien, and the purchaser may assert that title against the judgment creditor.” Cadle Co. v. Harvey, 46 S.W.3d 282, 285 (Tex.App.-Fort Worth 2001, pet. denied). If the lien attaches, the lienholder may acquire an interest no greater than that held by the judgment debtor. See Laster v. First Huntsville Props. Co., 826 S.W.2d 125, 131 (Tex.1991); Johnson v. Darr, 114 Tex. 516, 520-21, 272 S.W. 1098, 1099 (1925).
In Texas, spouses may divide their community property through a “marital property settlement agreement” that can “direct the payment of money as consideration for the conveyance of an interest in real estate.” McGoodwin v. McGoodwin, 671 S.W.2d 880, 882 (Tex.1984). When such an agreement is reached, even though
In Fairfield Financial Group, Inc. v. Synnott, 300 S.W.3d 316 (Tex.App.-Austin 2009, no pet.), the appellant had obtained a judgment solely against the husband of the appellee and abstracted it. Id. at 319. The husband and appellee divorced. Id. The husband moved out of their shared homestead, and he later executed a special warranty deed conveying the entire homestead to the appellee. Id. After the appellant sought to attach a lien to the house, appellee filed a suit to quiet title based on the homestead exemption, and the trial court granted her motion for summary judgment. Id. The appellant appealed, claiming a genuine issue of material fact regarding whether the husband abandoned the homestead and allowed its lien to attach. Id. at 319-20. The Third Court of Appeals concluded that regardless of whether and when the husband had abandoned the property, it remained protected at all times by the appellee‘s undivided homestead interest. Id. at 321. Accordingly, it affirmed the judgment and stated that the appellant‘s liens did not attach. Id. at 323.
In Laster v. First Huntsville Properties Co., 826 S.W.2d 125 (Tex.1991), the appellant and her husband entered into a divorce agreement which divided the community property residence, giving the appellant a 73.83% interest and the husband a 26.17% interest. Id. at 127. The appellant and her children also were given the right to use and occupy the residence until the younger of the children reached eighteen years of age or was no longer in school. Id. at 127-28. The husband used his post-divorce interest to secure a promissory note. Id. at 128. He defaulted on the note, and the appellee bought that interest and sought to partition the residence. Id. The Supreme Court of Texas held that the divorce created a homestead interest for the appellant, but only a vested future interest for her husband. See id. at 130. Because a vested future interest can be freely mortgaged or alienated, the husband was able to use it to secure the promissory note. See id. The Supreme Court concluded that after the children had reached the age of eighteen, the homestead right only protected the portion of the homestead in which the appellant had a possessory interest—the 73.83% of the property that she owned. Id. at 131-32. As a result, the appellee was able to partition the residence. See id. at 132.
Hankins generally relies on Laster for the proposition that a divorce creates a co-tenancy that can lead to a portion of the home being non-exempt and allowing a lien to attach. He argues that because divorce precludes the property from being a family homestead, Synnott was wrongly decided and should not be followed. However, Laster is readily distinguishable from both Synnott and this case. In Laster, the husband mortgaged a future interest in the home, not a homestead interest. See id. at 130. The co-tenancy caused by the husband‘s alienation was thus a result of the
In contrast, in both Synnott and the appeal before us, the divorce agreements that were incorporated into the final decrees included stipulations that the entire property would be transferred to the other spouse in exchange for financial consideration. See Synnott, 300 S.W.3d at 319. Before the divorce, each spouse had an undivided homestead interest as a family member. See id. at 321; see also Salomon, 369 S.W.3d at 555 (“[S]o long as real property is a family homestead by virtue of one spouse‘s intention and use, that property is protected by the homestead exemption, unless abandonment is pleaded and proved.“). After the divorce, the remaining spouse received the full homestead interest pursuant to the divorce decree and transfer of land. See Synnott, 300 S.W.3d at 323; see also Karigan, 239 S.W.3d at 439 (equitable lien is not estate in property).
Therefore, both before and after the divorce, the spouse that received the transfer had an undivided, possessory homestead interest that prevented a judgment lien from attaching, unlike the divided interest in Laster. See Laster, 826 S.W.2d at 131-32; Synnott, 300 S.W.3d at 323; Salomon, 369 S.W.3d at 556. Hankins contends that the conversion of the homestead from a family to a single-adult homestead prevented Roy from claiming a homestead interest in the whole property. However, as in Laster, this is irrelevant, as “the result would be the same under either classification.” Laster, 826 S.W.2d at 131. The issue of whether and when Norma abandoned her homestead interest is similarly immaterial, because as in Synnott, Roy‘s homestead interest protected the property at all times. See Synnott, 300 S.W.3d at 321-22.
We conclude that Roy‘s undivided homestead interest protected the property at all relevant times and prevented Hankins‘s lien from attaching, rendering the foreclosure sale and execution deed unconstitutional and void. See Salomon, 369 S.W.3d at 556. We overrule Hankins‘s first issue.
Because the foreclosure sale and execution deed were void, Hankins never possessed a valid interest in the property, and we need not reach the questions raised in his second and third issues of whether the automatic bankruptcy stay applied or Harris adversely possessed the property. Given our conclusion that Hankins does not have a valid interest in the property, he cannot prove title, and his counterclaims for conversion of rent, partition, and trespass to try title are also barred as a matter of law for lack of standing. See
Conclusion
We conclude that the trial court correctly granted summary judgment for Harris, and we affirm the judgment of the trial court.
MICHAEL MASSENGALE
JUSTICE