Wells Fargo Bank, N.A. as Trustee v. Robinson, RayWells Fargo Bank, N.A. as Trustee v. Robinson, Ray
Before
OPINION
Opinion By Justice MORRIS.
In this appeal following a trial to the court without a jury, Wells Fargo Bank, N.A. challenges the trial court’s 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 propеr 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 forfeit all of the principal and interest collected on his home еquity note. After reviewing the evidence and applicable law, we conclude the trial court erred in awarding Robinson damages and attorney’s fees. We further conclude Robinson is not entitled to a forfeiture of the principal and interest paid on his note. We reverse the trial court’s judgment and render judgment that Robinson take nothing by his claims.
I
On May 24, 1999, Ray Robinson executed a home equity note in the principal amount of $72,800. The note was secured by a dеed of trust on the property. It is undisputed that Robinson defaulted under the terms of the note by failing to make his monthly payments. As a result, Wells Fargo accelerated the note and it became due and payable. Although Robinson stated at trial that he made some payments on the note through 2007 pursuant to a bankruptcy court proceeding, he conceded that he did not make all the necessary payments
Wells Fargo filed an application with the trial court for an expedited foreclosure under
Approximately two months after the sale, Robinson brought this suit contending Wells Fargo was not authоrized to foreclose on his property because it did not comply with the agreed court order. Robinson asserted claims including wrongful foreclosure and breach of contract as well as requesting declaratory relief. A trial was conducted before the court without a jury. Based on the evidence presented, the trial court stated in its findings of fact and conclusions of law that the foreclosure on June 3, 2008 was wrongful and in breach of the deеd of trust because Wells Fargo’s substitute trustee did not have a valid court order to foreclose on the property on the date the foreclosure occurred. The judgment awarded Robinson $47,007.37 in damages representing the diffеrence 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 Wеlls 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.
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 trustee’s deed. See University Savs. Ass‘n v. Springwoods Shopping Ctr., 644 S.W.2d 705, 706 (Tex. 1983). The trial court did not set aside the trustee’s deed however, but instead awarded damages.1 For a party to recover damages for wrongful foreclosure and breach of the deed of trust, he must show that he has suffered a loss or material injury as the result of an irregularity in the foreclosure sale. See 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 inadequatе price. See American Savs. & Loan Assoc. v. Musick, 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 Mut. Life Ins. Co. v. Howard, 85 S.W.2d 986, 988-89 (Tex.Civ.App.-Waco 1935, writ ref‘d).
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 v. CPR Corp., 623 S.W.2d 733, 738 (Tеx.App.-Houston [1st Dist.] 1982, writ ref‘d n.r.e.); see also Peterson v. Black, 980 S.W.2d 818, 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 Janes, 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 borrower has suffered no compensable injury. See Peterson, 980 S.W.2d at 823.
In this case, Robinson presented no evidencе that the property at issue was sold for an inadequate price or that he was otherwise harmed by the delay in the foreclosure sale. Furthermore, it is undisputed that Wells Fargo purchased the property at the foreclosure and, as of the date of trial, Robinson continued to occupy the premises. Based on the record before us, we conclude Robinson failed to present any evidence of a compensable injury. The triаl court erred, therefore, in awarding Robinson monetary damages under either his wrongful foreclosure or his breach of contract cause of action. We resolve Wells Fargo’s first two issues in its favor.
In its third issue, Wells Fargo contends thе trial court erred in awarding Robinson attorney’s fees. Robinson responds that he is entitled to recover the fees under the
Furthermore, Robinson’s request for declaratory relief is merеly duplicative
Robinson’s petition requested the trial court to declare that Wells Fargo did not have a valid court order authorizing it to foreclose on the property on June 3, 2008 and that its foreclosure was wrongful and a breach of the deed of trust. These requests are nothing more than a reassertion of the issues underlying Robinson’s claims for wrongful foreclosure and breach of contract. All of the relief sought under Robinson’s declaratory judgment action could have been sought in connection with his other claims. The only apparent benefit to Robinson of the declaratory judgment action was to providе a basis for an award of attorney’s fees. As such, an award of attorney’s fees under the declaratory judgment act is improper. See Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620, 624 (Tex. 2011). We resolve Wells Fargo’s third issue in its favor.
Finally, we address Robinson’s cross-appeal contending the trial court erred in failing to order Wells Fargo to forfeit all principal and interest collected on his home equity note. Robinson bases his argument on
As stated above,
Base on the fоregoing, we conclude there is no evidence to support the award of monetary damages and attorney’s fees to Robinson based on his claims for wrongful foreclosure and breach of contract. We further conclude the trial court did not err in denying Robinson’s request for forfeiture. Accordingly, we reverse the trial court’s judgment and render judgment that Robinson take nothing by his claims.
JOSEPH B. MORRIS
JUSTICE