Morlock, L.L.C. v. the Bank of New York, as Trustee on Behalf of the Certificate Holders of CWABS, Inc., Asset- Backed Certificates, Series 2004-13

claim, Lawson taking the and thus City’s immunity Appel- to settle Because the convey taking the claim’s waiver action was does breach of contract cause of lees’ Lawson, City’s immunity Appellees’ to the trial court of waived under contract cause of action. Be- City’s plea ab- breach of required grant was any not assert other City’s Appellees’ immu- cause did other waiver of sent some (cit- Holland, the trial immunity, at 643 for waiver of nity. See basis 227-28) (“[I]f Miranda, by denying City’s plea erred ing undisputed negates evidence jurisdiction. the relevant jurisdic- plea then the jurisdiction, reaching Appel- the merits of Without be granted.”). tion must claims, lees’ breach of the PUA we reverse judg- trial court’s order and render Immunity by D. Waiver of Statute dismissing Appellees’ preju- suit with ment jurisdiction City to the plea In its refiling dice to a breach of PUA suit immunity was not waived contended district court. statute. See Tex. Ann. Loc. Code Gov’t (West 2013). Supp. §§ 271.151-160 2005 & copy of the and cited It attached a PUA Antonio v. Reed S. Lehman

City San of Gram, Ltd., 04-04-00930-CV, No. Antonio (Tex.App.-San

WL 752197 denied) (mem. op. reh’g) on for the

pet. in- proposition any conveyance of an MORLOCK, L.L.C., Appellant contract terest in real was not a goods for or services. response City’s ground to the YORK, BANK The OF NEW as Trustee (1) evidence, Appellees argue did not on Behalf of the Holders Certificate City’s immunity their of breach Cwabs, Inc., of Asset-Backed Certifi- (2) was waived statute or contract suit cates, 2004-13, Appellee. Series summary judgment evidence. See

provide No. 01-13-00949-CV. (waiv- Tex. Loo. Gov’t Code Ann. 271.152 city’s immunity enter- ing from suit for Texas, Appeals Court services); ing goods into a contract for or (1st Dist.). Houston Holland, 221 S.W.3d at 643. Aug. 2014. Appellees to raise a We conclude failed Supplemental Opinion Rehearing on genuine issue of material fact on a waiver Dec. 2014. immunity by City’s al- statute Miranda, leged breach of the PUA. See at 228.

Conclusion immunity City of San Antonio’s liability in its

from suit and was waived against Appellees’

condemnation suits However,

properties. the PUA did not waived, Singer applies. nity and neither nor was Lawson Schutza, Houston, TX,

Jerry Ap- L. for pellant. Morgan, Pringle, Lara D. Jones

Philip J. Houston, TX, LLP, Appellee. Walker JENNINGS, consists of Justices Panel BLAND, MASSENGALE. OPINION MASSENGALE, Justice. MICHAEL Morlock, sued The L.L.C. Appellant on a stop foreclosure Bank of New York alleged County house. Harris house, and that the bank that it owned the that it property, lien on Morlock’s authority to a valid interest in it and no had no trust, and counterclaimed, owner of the deed of was the re- The bank foreclose. BONY that it had the to foreclose. acknowl- declaratory judgment questing summary judg- then moved for traditional mortgagee in the rights edging ment, Mor- asking the court to dismiss successfully moved then home. The bank declaratory lock’s claims and to enter summary judgment, obtain- for traditional argued BONY judgment sought. that it and of Morlock’s claims ing both dismissal challenge standing that Morlock lacked sought. it Find- declaratory judgment Country- assignment from MILA to error, affirm. ing no reversible we it unautho- grounds wide on the that was Background that it by argued MILA. BONY also rized it was the owner did not need to show that bor- Jigar and Sandesara Harshidaben its right or a holder of the note to establish home in Har- money purchase rowed granted to foreclose. The trial giving a County, making a note and ris motion, notice of timely and Morlock filed Invest- Mortgage of trust to recorded deed appeal. (“MILA”). Associates, Inc. Lending ment assigned the deed of trust to Coun- MILA Analysis Services, a Di- trywide Custody Document brief, argues Morlock appellate In its Bank, This as- Treasury vision of N.A. challenge it whether standing has records of signment public was filed in the of the note BONY is the owner and holder in County. Countrywide turn as- Harris summaiy- of trust and that the and deed to The Bank of signed the deed of trust conclusively evidence does not judgment (“BONY”), assignment New York and establish that BONY is owner in record. public was also filed holder of the note and deed of trust. located in a The Sandesaras’ home was summary judgment review a de We associa- neighborhood with a homeowner’s novo. Provident & Accident Ins. Co. Life a lien on the tion. The association held (Tex.2003). Knott, 211, 215 payment home to secure of assessments summary judgment properly Traditional is covenants. neighborhood owed under granted only when a movant establishes arrears, these assessments fell into When genuine that there are no issues of materi- gave the association foreclosed its lien and judgment al fact and that it is entitled to Morlock, purchaser, a trustee’s deed. 166a(c); of law. P. as matter Tex.R. Civ. terms, By its the lien held the home- Cnty. Peat Marwick v. Hamson KPMG pur- was inferior to a owner’s association Corp., Fin. Hous. money mortgage. chase (Tex.1999). To determine whether there subsequently posted BONY notice of fact, genuine is a issue of material we nonjudicial response, In Mor- foreclosure. to the nonmov- consider evidence favorable al- stop lock sued to the foreclosure. It every reasonable ant as true and draw leged that BONY did not have an interest favor, resolving all doubts inference BONY in the for two reasons: of the nonmovant. Nixon v. on the side or holder of the note was not the .owner Co., Prop. Mgmt. Mr. assign- executed the person and the who (Tex.1985). 548-49 Countrywide was not ment from MILA to Standing authorized to do so. I. counterclaimed, seeking appellate a declar- Morlock’s first issue ad

BONY standing. petition, In its amended of trust was dresses atory judgment that the deed standing challenge this void- who exe- lacks person that “the alleged assignment assignment. trust] deed able defect See id. at [of cuted the assign- to execute the was not authorized 927. Mila, Country- Inc.” to on behalf of ment on two cases from the Morlock relies sum, challenge to the Morlock’s

wide. Appeals for the United States Court executed was that it was assignment Circuit, Reinagel Fifth v. Deutsche Bank authority have to exe- who did not person (5th Co., 735 F.3d 220 National Trust an of MILA. assignment agent cute Cir.2013), Fargo and Reeves Wells an this case does not concern Notably, (5th Mortgage, Fed.Appx. Home Morlock did not forgery. accusation of — Cir.2013) denied, curiam), cert. (per signed who the doc- allege person U.S.-, 2668, 189 L.Ed.2d 216 134 S.Ct. to act as someone else. purported ument (2014). case, however, supports Neither charge that some- example, For it did to an unau standing challenge Morlock’s name of a MILA executive signed one the Reinagel court assignment. thorized approval. that executive’s without Cf. authority to enter an held that lack of Co., Bank Nat’l Trust Vazquez v. Deutsche of a deed of trust on behalf of assignment N.A., 783, (Tex.App.-Hous- 441 S.W.3d 789 corporate principal a was a voidable defect h.). 2014, Such an pet. no [1st Dist.] ton mortgagor lacked stand plaintiff for- would have been a claim of allegation challenge. 735 F.3d at 226. The ing to Marcus, v. 533 gery. See Nobles S.W.2d plaintiff in Reeves was whether a who issue (“[T]o (Tex.1976) 923, forgery be á 925-26 acquired property subject had to a deed of purports must be one who signing through quitclaim a deed had stand trust another.”). to act as validity to contest the of a ing subsequent to an A who is not a plaintiff trust. 544 foreclosure under the deed of standing challenge to assignment lacks FedAppx. at 568. The Reeves did it grounds on which render assignment property a owner has not consider whether the election of one of merely voidable at as standing challenge to an unauthorized at Vazquez, See 441 S.W.3d parties. signment. See id. 786; Reinagel v. Deutsche Bank see also nonparty we hold that as a Accordingly, (5th 220, Co., F.3d 225 Nat. Trust 735 transaction, standing lacks to the Morlock Cir.2013) law); (applying Texas Tri-Cities MILA assignment from to claim that Co., Constr., Nat’l 523 Inc. v. Am. Ins. without au- Countrywide was executed to 426, (Tex.Civ.App.-Houston 430 S.W.2d first issue is over- thorization. Morlock’s 1975, writ); Carpen no Glass [1st Dist.] ruled. ter, 530, (Tex.Civ.App.-San n.r.e.). 1959, Antonio writ ref d trust deed Right to foreclose under II. procured by fraud are “Deeds issue, argues In its second void, only, not at the election voidable fails summary-judgment evidence that the Marcus, grantor.” Nobles that BONY is the owner to establish (Tex.1976) 923, (distinguishing the deed of trust. holder of the note and upon based fraud and challenges between it response that whether argues BONY authori forgery). someone without When irrele of the note is is the owner or holder conveyance on behalf of a signs zation a interest in the real vant to its action for corporation, the cause of grantor foreclose, both belongs issue and its assignment fraud to set aside of trust. by the deed A third which are established grantor. See id. at 926-27. 1901975, CV, (Tex.App.- at *3 2011 WL argues presented that it evi- BONY also (mem. 2011, 19, pet.) the deed of trust no May it received Fort Worth dence an unbroken chain of recorded through op.). assignments. this explained, As the Bierwirth court to its motion for sum- BONY attached principle from the conclusion follows both copy a of the recorded mary judgment are the note and deed of trust severa- MILA, copy trust of the deed of provisions of the ble and the fact that of deed of trust from assignment recorded governing nonjudi Property Texas Code Countrywide, copy and a of the MILA to require possession cial foreclosure do of deed of trust from assignment recorded original note. See production or Bank thus Countrywide to BONY. The at n 3. The Bierwirth, 2012 WL that it is the owner of the deed established for “a sale of real sets conditions Code Mills, Leavings v. of trust. Cf. power of sale conferred property under (Tex.App.-Houston [1st Dist.] by a of trust or other contract lien.” deed summary judg- pet.) (reversing no 51.002(a) (West Ann. Prop.Code Tex. assignments chain of in evi- ment when 2013). “mortgagee” It defines a Supp. defendant). Neither dence did not reach “beneficiary” “grantee” or of “securi a copy BONY nor Morlock has introduced person “the last ty instrument” or as the note into the record. security interest has been as whom “It is so well settled as not to -be 51.0001(4). § Id. Al signed of record.” right to recover a controverted mortgagee give a must notice and though judgment for a debt secured a personal procedures, other there is specified follow to have a fore right lien on land and the requirement mortgagee pos no ” .... closure of lien are severable Carter produce or the note that the deed of sess 647, 219, 221, Gray, 125 Tex. v. nonju trust secures in order to conduct a (1935); v. LPP Stephens 648 accord dicial foreclose. See id. 51.002. (Tex. Ltd., 742,

Mortg., 746 recently also The Fifth Circuit consid- 2010, denied); App.-Austin pet. Poston mortgagee whether a Texas must ered Mortg. Corp., No. 14-11-00485- Wachovia ownership of the note to execute its show CV, 1606340, *2 (Tex.App. 2012 at WL Martins, lien. 722 F.3d at 254-55. The 8, 2012, May pet. Houston [14th Dist.] “weight that the correctly recognized (mem. denied) op.). “Consequently, a authority” supports proposi- of Texas may deed of trust be enforced party owning tion that the deed of mortgagee, regardless of whether trust need not also show that it is the mortgagee Lowery also holds the note.” in owner or holder of the note order to Am., N.A., No. 04-12-00729- v. Bank of Yet, in foreclose. Id. at 255. its-review of 5762227, CV, *2 (Tex.App.-San 2013 at WL cases, this (mem. Texas that court characterized 23, 2013, pet.) op.); Oct. no Antonio Mills, Leavings in court’s decision accord Martins v. BAC Home Loans Ser (Tex.App.-Houston (5th Dist.] S.W.3d 301 L.P., 249, [1st vicing, F.3d Cir. 2004, 2013) “weight law); pet.), opposing no as (applying Texas Bierwirth v. L.P., authority.” Texas Id. at 254-55. It de- Servicing, Home Loans No. 03- BAC 11-00644-CV, 3793190, Leavings holding scribed that “to fore- at *3 2012 WL 30, 2012, a through close a deed of trust or sue on (Tex.App.-Austin Aug. pet. de nied) (mem. (cid:127)note, prove must that it owns and op.); Country Hombuckle v. Loans, Inc., the note.” Id. at 254. wide Home No. 02-09-00330- holds Lowery, the Mar of the note. See 2013 WL disagree with respectfully We 5762227, *2; Bienvirth, holding of the at 2012 WL characterization tins court’s *3; Hombuckle, Leavings, in reasoning WL Leavings. in petition a retail installment contract at *3. Morlock’s did not which involved system independent and an relief in relation to the heating water seek solar “a only judgment mechanic’s and materialman’s note but which deter- associated lien, support a. mines whether Defendant Bank of New cannot be construed any to foreclose in holding party seeking Property that a York has interest additionally must whether Defendant Bank of New York has through a deed of trust Mills, any ownership right property.” of the note. to foreclose on the prove Likewise, sought owner of the note the Bank’s counterclaim putative defendant and case, to only declaratory judgment recognizing trust in that failed and deed of in assignments right its interest the house and to fore- complete establish a chain Accordingly, or the note. the trial court did not for either the deed of trust close. 307-08, in fa- granting summary judgment 175 S.W.3d at 313-14. err Leavings, fail remaining court faulted Mills for his vor of the Bank. Morloek’s is- When this note, ownership id. at sues are overruled. ure to show necessary conditions stating it was not grounds alternative for fore ruling but out Conclusion id. The discussion affirmed closure. See judgment affirm the of the trial We failed to establish Mills’s that the evidence court. foreclose, through either owner ownership of ship through of the note or This court did

the deed of trust. See id. OPINION ON SUPPLEMENTAL Leavings ownership not hold REHEARING MOTION FOR See id. note was essential to foreclosure. 19, 2014, we opinion August In our dated (“Since that he is Mills has failed to show in favor of summary judgment affirmed a of the note either the owner or the holder Morlock, The Bank of New York. See deed, Mills has or of the trust we hold that York, v. Bank New No. 01-13- L.L.C. of entitlement to sum failed to establish his 00949-CV, 514, 448 S.W.3d 2014 WL mary judgment.”).* (Tex.App.-Houston Dist.] 4085771 [1st 2014). Morlock, 19, Appellant L.L.C. Aug. Bank it is the proved Since the trust, rehearing. sug- a motion for It of it established has filed owner of the deed in gests opinion split that our created a in the and its interest authority with the Fourteenth Court of regardless matter of law of foreclose as a standing, as a third Appeals regarding the owner whether it was also a holder or * 20, 2003, R.S., Leg., materially ch. Leavings a different and Act of June 78th also involved 1897, distinguishable pattern. 554, 1, fact Unlike and § 1898 2003 Tex. Gen. Laws Martins, in see 722 F.3d at 254- Fifth Circuit Code). (adding Property section 51.0025 to 55, interpreting Leavings was not this court in words, upon by relied In other the statute Code, Property autho- 51.0025 of the section Leavings as opinion to characterize Martins servicer, rizing by mortgage as foreclosure "weight holding contrary to the of Texas au- provision yet had been enacted at the not thority" apply to the circumstances did putative assignment in the time of the at issue Leavings, a factual mat- addressed in both as Compare Leavings, S.W.3d at 306 case. 175 (no "mortgage Leavings party in was a ter challenging assignee’s au- (litigation putative servicer") enact- and because it had not been 1997), thority to foreclose initiated with (West 2007), ed the relevant time. 51.0025 at Prop.Code Tex. Ann.

520 Nobles, at issue, 533 S.W.2d grantor.” to chal- of the transactions at to the in this of the Nobles rule assignment 926. The effect allegedly fraudulent lenge an is deny to the extent Morlock property. appeal We is that clouding its title to assignment by the fol- a fraudulent rehearing, provide aggrieved and motion (MILA) grantee to the grantor for our conclusion from the lowing explanation no conflict. the substantive law does (Countrywide), there is stranger to the transaction provide because the al- held that previously We Morlock) (such any cause of action to as render fraud in this case would legation of assignment. challenge that fraudulent assignment merely voidable challenged alle- assuming the truth of Morlock’s Even grantor, at the election of not void. It is assignment is gations, it a third “standing” challenge lacked MILA, only, voidable at the election Bank New that transaction. party to by It is not voidable Mor- grantor. 517-18, York, 2014 WL 448 S.W.3d lock. at *2-3. The Fourteenth Court 4085771 days issued twelve

Appeals, a decision pertinent this further provided Nobles similar apparently with before ours and for the rule: explanation facts, “standing” Morlock had held that is valid and It is settled that such a deed challenge assignment, precisely a different title prima facie evidence of represents assign- invalidate the sought it because there has been a successful suit to until Morlock, title. ment as a cloud on its Osage Meiners v. Texas set it aside. L.L.C., Mortg., 447 v. Nationstar L.L.C. Pool, Cooperative Royalty (Tex.App.-Houston [14th S.W.3d 1958, writ (Tex.Civ.App.-El Paso struck). 2014, pet. Despite prevail- Dist.] Richardson, n.r.e.); refd Whalen standing issue in the Four- ing on the (Tex.Civ.App.-Amarillo Court, Morlock nevertheless lost its teenth n.w.h.). effect is Deaton v. To the same merits of that case. appeal on the Rush, 113 Tex. 252 S.W. 1025 (1923), stated that: Nationstar, wherein this court an the Fourteenth Court ru alyzed standing question using by not void A deed obtained fraud is Center, Nursing Inc. v. bric Austin only. but voidable As between (Tex.2005), i.e., Lovato, original parties prima Rush’s title is controversy” a “real whether there existed only it be avoid- good, facie and could “actually that would parties between the annulling ed a suit and decree judicial be declaration determined canceling the deed. Lovato,

sought.” See 171 S.W.3d at 849 only It is a fundamental rule of law that Nootsie, Cnty. Ltd. v. (quoting Williamson legal right person primary whose (Tex. Dist., 925 S.W.2d Appraisal may seek redress for has been breached 1996)). contrast, opinion In our did not In Nat. Ins. Co. v. injury. an American question issue or specific address that Hicks, ([Tex.]Com.App. 35 S.W.2d “standing” particular Morlock’s in that right of action judgm. adopted), a sense. was defined as follows:

Rather, right The to maintain an action de- oür decision was based on a law, upon the existence of what is by pends of established Nobles different rule (Tex.1976). action, in- Marcus, termed a cause of which v. 533 S.W.2d on Nobles, right volves the combination of a Supreme Court of Texas ex- and a violation procured by part plaintiff fraud plained “[d]eeds void, by at the election of such defendant. only, are voidable by to set aside a deed obtained fraud legal right belong suit breach of Without by only of action can can be maintained the defrauded plaintiff no cause ing to A to set aside party.” his benefit. suit Id. accrue to only can be by fraud

a deed obtained party. by the defrauded

maintained (Tex.Civ. Carter,

Smith dism’d); 1932, writ

App.-Texarkana Osage Cooperative

Meiners Texas Pool, who was supra. party A

Royalty conveyance has not by defrauded legal right and an invasion of suffered K.S., a In the Interest of Child. standing not have therefore does No. 12-14-00061-CV. based on that fraud. bring suit Thus, Nobles, at 926-27. Texas, Appeals Court of decision, even if Mor- explained we our Tyler. by a cloud of title stem- aggrieved lock is 21, 2014. Aug. assignment from from a fraudulent ming Countrywide, the substantive law MILA to provide does not

nevertheless the current against cause of action

with a title. clouding of the deed Morlock’s holder ,may be voida- challenged assignment

The MILA, that would have by party

ble directly by alleged harmed fraud.

been of action MILA to chal-

In the absence void, assignment as the deed is

lenge the MILA and

“prima good” facie as between

Countrywide. Supreme

The resolution of Court’s lack directly was cast terms

Nobles analysis opin of our “standing,” and holding. Supreme

ion echoed stated: “A who was not de

Court conveyance

frauded has not suf legal right an invasion of a

fered standing bring not have

therefore does on that fraud.” Id. at 927.

suit based rehearing motion for does not

Morlock’s continuing validity of No

question fact, mention the motion does not

bles—in Nor did Fourteenth Court’s

Nobles. opinion. Regardless of wheth

Nationstar today Supreme

er the Court still would the sub “standing” the label of

apply Nobles,

stantive rule of law announced “A

the outcome is the same for Morlock:

Case Details

Case Name: Morlock, L.L.C. v. the Bank of New York, as Trustee on Behalf of the Certificate Holders of CWABS, Inc., Asset- Backed Certificates, Series 2004-13

Court Name: Court of Appeals of Texas

Date Published: Aug 19, 2014

Citation: 448 S.W.3d 514

Docket Number: 01-13-00949-CV

Court Abbreviation: Tex. App.