Case Information

*1 V E and IWNI)ER; Opinion issued December 11,2012 in The

Q uu Z 1 I! a a ) 1hu i

No. 05-1 1-00700-CV

WELLS FARGO BANK, N.A., AS TRUSTEE, Appellant

RAY ROBINSON, Appellee

On Appeal from the 296th Judicial District Collin County, Texas Cause No. 296-02231-2008 N ON

Before Justices Morris, Francis, and Murphy Opinion By Justice Morris

In this appeal following a trial to the court without ajury, Wells Fargo Bank. N .A. challenges the trial judgment in favor of Ray Robinson on his claims for wrongful foreclosure and breach of contract. In three issues. Wells Fargo contends the evidence is legally and factually insufficient to support the trial court’s award of damages under either theory of recovery asserted by Robinson and there is no proper basis to support the award of attorney’s fees. Robinson brings a cross-appeal contending the trial court erred in failing to order Wells Fargo to lhrfeit all of the principal and interest collected on his home equity note. After reviewing the evidence and applicable law. we conclude the trial court erred in awarding Robinson damages and attorneys fees. We further conclude Robinson is not entitled to a foiteiture of the principal and interest paid on his note We *2 r e v e r s e t h e t r i a l c ou r t s m e n t a nd r e nd e r j m e n t t h a t R ob i n s on t a k e no t h i ng by h i s c l a i m s . n M a y 24 . 1 . R a y R ob i n s on e x ec u t e d a ho m e e qu it y no t e in t h e p r i n c i p a l a m oun t o f $71800 . T h e no t e w a s s ec u r e d h a d ee d o f t r u s t on t h e p r op e r t y . It is und i s pu t e d t h a t R ob i n s d e f a u lt e d und e r t h e t e r i n s o f t h e no t e by f a ili ng t o m a k e h i s m on t h l y p a y m e n t s . A s a r e s u lt , W e ll s F a r go acce l e r a t e d t h e no t e a nd it b eca m e du e a nd p a y a b l e . A lt hough R ob i n s on s t a t e d a t t r i a l t h a t h e m a d e s o m e p a y m e n t s on t h e no t e t h r ough 2007 pu r s u a n t t o a b a nk r up t c y c ou r t p r o cee d i ng . h e c on ce d e d t h a t h e d i d no t m a k e a ll t h e n ece ss a r y p a y m e n t s a nd h a d no t m a d e a ny p a y m e n t s on t h e no t e f o r m o r e t h a n t h r ee y ea r s b e f o r e t r i a l d e s p it e t h e f ac t t h a t h e w a s s till li i ng on t h e p r op e r t y .

W e ll s F a r go f il e d a n a pp li ca ti on w it h t h e t r i a l c ou r t f o r a n e xp e d it e d b r ec l o s u r e und e r r u l e 736 o f t h e T e a s u l e s o f i il r o ce du r e . R i n s on d i d no t c on t e s t t h e h a n L s r i gh t to f o r ec l o s e . hu t r e qu e s t e d a dd iti on a l ti e t o t r y t o s e ll t h e hou s e . h e p a r ti e s l a t e r r eac h e d a n a g r ee e n t a nd . on M a r c h 12, , t h e t r i a l c ou r t s i gn e d a n a g r ee d o r d e r s t a ti ng t h a t W e ll s F a r go w a s a u t ho r i ze d t o p r o cee d w it h a f o r ec l o s u r e a nd d i r ec t e d t h e h a nk t o “ po s t [ t h e ] p r op e r t y on o r b e f o r e A p r il 14. 2008 f o t h e M a y 6. f o r ec l o s u r e s a l e ’ on t r a r y t o t h e o r d e r t h e s ub s tit u t e t r u s t ee f o r W e ll s F a r go d i d no t po s t t h e p r op e r t y f b s a l e un til M a y 12. 2008 a nd d i d no t c ondu c t t h e f o r ec l o s u r e un til J un e 3. W e ll s F a r go pu r c h a s e d t h p r op e r t y a t t h un e 3 f o r ec l o s u r e s a l e pp r ox a t l y t w t s a f t e t h s a l e . n s on b r ough t t h s s u it c t e nd i ng W e ll s F a r go w a t a u ho r ze d t f o r ec l o s on h s p r op r t y b eca u s it d t o p l y w it h t g r ee d c r o a ss d a l ud w u l o ec l o u r r h o f r ac t a w ll a s ti ng d ec o y li I A ondu d b o it hou u d on e ce p d n ng f f ac nd u f w e n 3, d n b h d b ec u g s *3 substitute trustee did not have a valid court order to kreclose on the property on the date the hueclosurc occurred. The judgment awarded Robinson S47.007.37 in damaucs represcntine the difference between the fair market value of the property on the foreclosure date and the unpaid balance of the note. The judgment also awarded attorney’s fees and additional fees in the event of appeals. All other relief was denied. This appeal ensued.

II.

In its first two points of error, Wells Fargo contends the evidence is legally and factually insufficient to support the damages awarded by the trial court. Wells Fargo argues there is no evidence of a causal connection between the alleged wrongful foreclosure or the alleged breach of the deed of trust and the monetary damages asserted by Robinson. According to Wells Fargo. Robinson suffered neither prejudice nor harm as a result of the delay in the foreclosure sale. Robinson responds that he is entitled to damages based solely on the fact that the sale was conducted in violation of both the deed of trust and the Texas Constitution. We disagree with Robinson.

Article 16. Section 50(a)(6) of the Texas Constitution sets forth the requirements for an extension of credit secured by a lien on the borrower’s homestead. TEx. CoxsT. art XVI. S 50(a)(6). Among these is the requirement that the lien may be foreclosed upon only by a court order. id. § 50(a)(6)(D). The deed of trust signed by the parties incorporated this requirement by stating that Wells Fargo must obtain a court order before foreclosing on the property. The court order in this case authorized Wells Fargo to foreclose on the property only on May 6. 2008. Because the foreclosure sale was conducted on a different date. it was not authorized by a court order and, therefore, violated the constitutional requirement set forth in the deed of trust.

A foreclosure sale not conducted in accordance with the terms of the deed of trust gives rise to a cause of action to set aside the sale and the resulting trustees deed. See University Says. Ass ‘a *4 v. Soringivoacl.s Shopping ( ‘ir. 644 S.\V.2d 705. 706 ( [cx. 1983). I’hc trial court did not set aside the trustee’s deed however. hut instead awarded damages. For a party to recover damages lbr wrongful toreclosure and breach of the deed ol trust. he must show that he has suttered a loss or material injury as the result of an irregularity in the foreclosure sale. .S’ee Id.; see also Gainesville Oil & Gas Co., Inc. v, Farm Credit Bank of Tex., 847 S.W.2d 655, 659 (Tex. App.—Texarkana 1993. no writ). In general, this is shown where the actions of the lender or note holder have caused the property to be sold for a grossly inadequate price. See American Says. & Loan Assoc, v. 4iusick. 531 S.W.2d 581. 587 (Tex. 1975). in such a case, the damages are measured by the difference between the market value of the land and the remaining balance on the outstanding mortgage debt. See John Hancock Mu!. Life Ins. Co. v, Howard, 85 S.W.2d 986, 988-89 (Tex. Civ. App.—Waco 1981, writ refd).

The recovery of damages is not appropriate, however, where title to the property has not passed to a third party and the borrower’s possession of the property has not been materially disturbed. See .Janes i’. CPR Corp..623 S.W.2d 733. 738 (Tex. App-—Houston [1° Dist.] 1982. writ ref d n.r.c.): see also Peterson v. Black, 980 S.W.2d XIX, 823 (Tex. App.—San Antonio 1998, no pet.). Where the note holder obtains title to the property at the foreclosure sale and the borrower retains possession. the proper remedy is to set aside the trustee’s deed and to restore the borrower’s title. subject to the note holder’s right to establish the debt owed and foreclose its lien. See Jones, 623 S.W.2d at 738. The reason for this is that ‘the law undertakes to award just compensation — no more and no less — for the injuries sustained.” See Howard. 85 S.W.2d at 989. If the borrower’s possession has not been disturbed and no third party rights to the property have been created, the

Although Robinson’s petition seeks reliefincluding quiet title to the property and a ‘declaration” that the substitute trustee’s deed be canceled, the petition does not directly requestthat the foreclosure sale be set aside. To the extentthe petition can he read to request this reliek the trial court did not order the deed set aside and Robinson does not appeal from such ruling. *5 bo rr o w e r h a s s u f T h r e d no c o m p e n s a b l e i n j u r y . S ee P e t e r s on . 980 S . W . 2d a t 823 .

I n t h i s ca s e . R ob i n s on p r e s e n t e d no e v i d e n ce t h a t t h e p r op e r t y it i SS U e w a s s o l d f o r a n i n a d c q ti a t e p r i ce o r t h a t h e a s o t h e r \ i s e h a r m e d by t h e d e l a y i n t h e f o r ec l o s u r e s a l e . l u r t h e r m u r e , it i s und i s pu t e d t h a t W e ll s F a r go pu r c h a s e d t h e p r op e r t y a t t h e f o r ec l o s u r e a nd , a s o l t h e d a t e o f t r i a l , R ob i n s on c on ti nu e d t o o cc upy t h e p r e m i s e s . l 3 a s e d on t h e r ec o r d h e t h r e u s . w e c on c l ud e R ob i n s f a il e d t o p r e s e n t a ny e v i d e n ce o f a c o m p e n s a b l e i n j u r y . T h e t r i a l c ou r t e rr e d , t h e r e f o r e , i n a w a r d i ng R ob i n s on m on e t a r y d a m a g e s und e r e it h e r h i s w r ong f u l f o r ec l o s u r e o r h i s b r eac h o f c on t r ac t ca u s e o l ac ti on . W e r e s o l v e W e ll s F a r go ’ s i r s t t w o i ss u e s i n it s f a vo r . n s t h i r d i ss u e , W e ll s F a r go t e nd s t h e t r i a l c ou r t e rr e d i n a w a r d i ng R ob i n s on a tt o r n e y ’ s

f ee s . R ob i n s on r e s pond s t h a t h e i s e n titl e d t o r ec ov e r t h e f ee s und e r t h e [‘ e x a s U n i f o r m D ec l a r a t o r y udg m e n t A t . A n e x a m i n a ti on o f t h e t r i a ou r t ’ s j udg m e n t , ho w e v e r , s ho w s t h a t R ob i n s on w a s no t a w a r d e d a ny d ec l a r a t o r y r e li e f . T h e j udg m e n t m e r e l y o r d e r e d t h a t i n s on r ec ov e r m e t a r y d a m a e s . f ee s , a nd W e ll s F a r go . A ll r e li e f no t s p ec i f i ca ll y g r a n t e d i n t h e j udg m e n t w a s d e n i e d .

F u r t h e r m o r e . n s ’ s r e qu e s t f o r d ec l a r a t o r y r e li e f i s m e r e l y dup li ca ti v e o f h i s l a i m s f o r w r f u f o r ec l o s u r e a r h o t r t . A p l a n ti ff a y no t u s e t h e d ec l a r a t o r y j udg m e n t ac t t r ec ov e r a tt o r n e y ’ s f ee s t h a t a r e t o t h e r v a il a b l e by s p l y s ee k ng a d ec l a r a t o r y j e n t on u s a l ea dy b f o r h ou r t a s p a r t o h oh l a s a ss r t e d . S ee M M F . C o r p . v If ood l a p a ti ng o ., L . ., 292 . W . 3d , 669 ( 2009 ) T x a S up ou a s s a “ [ ii f r p ea a c a m a a ec l a a o y t l d u ti y a ee a a d , a o ’ s d b il b o ll p ti n ll ca ” p titi d o d ec ll go d e a li d z g n p op y n d ec s *6 w r ong ltil a nd a b r eac h o f t h e d ee d o f t r u s t . l h e s e r e qu e s t s a r e no t h i ng m o r e t h a n a r ea ss e r ti on o f t h e i ss u e s und e r l y i ng R ob i n s on ’ s c l a i m s f o r w r f u l f o r ec l o s u r e a nd b r eac h o f c on t r ac t . A ll o f t h e r e li e f s ough t ti nd e r R ob i n s on s d ec l a r a t o r y j udg m e n t ac ti on c ou l d h a e b ee n s ough t i n c onn ec ti on w it h h i s o t h e r c l a i m s . T h e on l y a pp a r e n t b e n e f it t o R ob i n s on o f t h e d ec l a r a t o r y m e n t ac ti on w a s t o p r ov i d e a b a s i s f o r a n a w a r d o f a o r n e y ’ s f ee s . A s s u c h , a n a w a r d o f a tt o r n e y ’ s l e s und e r t h e d ec l a r a t o r y m e n t ac t i s i m p r op e r . 5 cc E l a n ndu s , I n c . i’. L c h , nunn . 359 S . W . 3d 620 . 624 ( F e x . 2011 ) . W e r e s o l e W e ll s F a r go ’ s t h i r d i ss u e i n it s f a vo r .

F i n a ll , w dd r e ss i n s on ’ s c r o ss - a pp ea l c on t e nd i ng t h e t r i a l c ou r t e rr e d i n f a ili ng t o o r d e W e ll s a r go t o f o rf e it a ll p r i n c i p a l a nd i n t e r e s t c o ll ec t e d on h i s ho m e e qu it y no t e . i n s b a s e s h i s a r gu m e n t A r ti c l e 16 , s ec ti on 50 ( a )( 6 )( Q )( x ) o f t h e T e x a s C on s tit u ti on t h a t s t a t e s i f a l e nd e r I h il s t o o m p l y it h t h e r e qu i r e m e n t s f o a n e x t e n s i on o f c r e d it f ound i n s ec ti on 50 ( a )( 6 ) . t h e l e nd e r f o rf it s a ll p r i n i p a l a nd i n t e r e s t o f t h e l o a n . S ee TE x . ON S T . a r t . XV . § 50 ( a )( 6 )( Q )( x ) : s ee a l s o V i n ce n t v. B unk o f A m ., NA ., S . W . 3d , 862 ( T e . A pp . — D a ll a s . p e t . d e n i e d ) . B u t , a s t h i s ou r t h a s h e l d , s o l ong a s t h e l o a n a g r ee m e n t o r i g i n a ll y e n t e r e d i n t o by t h e p a r ti e s o m p li e s it h t h on s tit u ti on a r e qu i r e m e n t s . f o rf e it u r e i no t a n a pp r op r i a t e r e m e dy . S ee V i n ce n t . 109 S W . 3d a t . A bo rr o e r’ r ec ou r s e o a e nd e r’ a il u r e t a b d e by t h e t e r m o f h i l o a n a g r ee m e t i t a ss e r r a d iti a l t o r t a r h o t r t ca u s e o f ac ti on , t on s tit u ti on a ll y m t e d o rf e it u r e . e e d . s s e d bov e , s ec on 50 ( )( )( D ) r e qu e t a ho e e qu it y no t e b e s ec u r e d by a li e n t h y on y b ec o d upon by o ee d o u t t ss u qu d a c t o r r f eca u n g d o by p p li d h e ti rr n d ny rf it s ss

_________________ go ng ud no ce uppo t t d o y nd on b d on h [ h ud rr n d ny r rf cc ng ’ nd k ng by h - ------- S E O RR S

/ U I 05 *8 Enitrt nf .ppiahi

iifth 3iitrirt uf rxa at 1allai

JUDGMENT

WELL FARGO E3ANK. N.A., AS Appeal from the 296th Judicial District Court TRUSTEE, Appellant of Collin County, Texas. (Tr.Ct.No, 296-

02231-2008). No. 05-1 1-00700-CV V. Opinion delivered by Justice Morris,

Justices Francis and Murphy participating.

RAY ROBINSON, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is REVERSED and judgment is RENDERED that Ray Robinson take nothing by his claims. It is ORDERED that appellant Well Fargo Bank, N.A., as Trustee recover its costs of this appeal from appellee Ray Robinson.

Judgment entered December 11, 2012.