Elbar Investments, Inc v. Joel Wilkinson, E. Lorene Byles, Wayne M. Byles, Catherine Byles and Chase Manhattan Mortgage Corporation--Appeal from 269th District Court of Harris County

Affirmed and Memorandum Opinion filed September 23, 2003

Affirmedand Memorandum Opinion filed September 23, 2003.

In The

Fourteenth Court of Appeals

____________

NO. 14-99-00297-CV

____________

ELBAR INVESTMENTS, INC., Appellant

V.

JOEL WILKINSON, E. LORENE BYLES, WAYNE M. BYLES, CATHERINE BYLES, AND CHASE MANHATTAN MORTGAGE CORPORATION, Appellees

On Appeal from the 269th District Court

Harris  County, Texas

Trial Court Cause No. 96-58443

M E M O R A N D U M O P I N I O N

This appeal stems from a directed verdict granted in favor of Joel Wilkinson, E. Lorene Byles, Wayne M. Byles, Catherine Byles, and Chase Manhattan Mortgage Corp., in a trespass-to-try-title suit. Appellant Elbar Investments, Inc. (AElbar@) claims in two points of error that the trial court erred in (1) granting appellees= motion for directed verdict; and (2) awarding attorney=s fees to appellees E. Lorene Byles and Chase Manhattan Mortgage Corporation (AChase@). We affirm.

Relevant Factual and Procedural Background

The real property constituting the basis of this appeal is a home located at 10125 Chadwick, Jacinto City, Texas. Two liens encumbered the property. The senior lien, a home mortgage, was the subject of a foreclosure sale. The junior lien was a judgment lien stemming from a personal judgment against Wayne Byles.

Appellees Wayne and Catherine Byles purchased the subject property in Harris County for $31,400. They secured financing from Norwest Mortgage, which took a first lien on the property. Norwest subsequently assigned its interest to GMAC Mortgage. Wayne and Catherine conveyed their interest in the property by quitclaim deed to John Byles in December 1994. John assumed liability on the mortgage. He defaulted in payments on the mortgage in May 1996. Appellee Joel Wilkinson purchased the first lien and note from GMAC for $15,881.61, and subsequently appointed a substitute trustee.

The substitute trustee prepared and recorded a notice of sale on the property. He filed notice in the Harris County Real Property Records and posted it in the Family Law Center. The notice incorrectly stated the date of sale would be July 2, 1991, at the Dallas County Courthouse. In actuality, the foreclosure sale occurred on September 3, 1996, at the Harris County Family Law Center. Wilkinson purchased the property for $15,881.61. One month later, in October 1996, Wilkinson sold the property to Wayne=s mother, appellee Lorene Byles, who had been residing at the property continuously since its original purchase in 1985.

As noted above, the junior lien was the result of a personal judgment against appellee, Wayne Byles. In 1988, a personal judgment was entered against Wayne in favor of Fish Oil Well, which then assigned its interest in the judgment to Elbar in June 1996. Elbar purchased a constable=s deed of property subject to any senior liens, for $970.00. Elbar tendered no payments toward the senior lien.

After learning of the September 3, 1996 foreclosure sale, Elbar brought suit seeking declaratory relief to obtain title and damages for conspiracy against all defendants, except Chase. Lorene counterclaimed, seeking to quiet title to the property and to recover attorney=s fees. The trial court granted appellees=directed verdict, finding Elbar did not have standing to challenge the foreclosure sale. Further, the trial court quieted title as to Lorene and granted attorney=s fees to Lorene and Chase. This appeal followed.

Directed Verdict

In its first point of error, Elbar contends the directed verdict granted in favor of appellees was improper. A directed verdict is proper when (1) a defect in the opponent=s pleadings make them insufficient to support a judgment; (2) the evidence conclusively proves a fact that establishes a party=s right to judgment as a matter of law; or (3) the evidence offered on a cause of action is insufficient to raise an issue of fact. M.N. Dannenbaum, Inc. v. Brummerhop, 840 S.W.2d 624, 629 (Tex. App.CHouston [14th Dist.] 1992, writ denied); McCarley v. Hopkins, 687 S.W.2d 510, 512 (Tex. App.CHouston [1st Dist.] 1985, no writ). In reviewing a directed verdict, we must consider all of the evidence in its most favorable light in support of the party against whom the verdict was instructed. Henderson v. Travelers Ins. Co., 544 S.W.2d 649, 650 (Tex. 1976). If there is any conflicting evidence of probative value on any theory of recovery, the issue must go to the jury. White v. S.W. Bell Tel. Co., 651 S.W.2d 260, 262 (Tex. 1983).

Elbar challenges the trial court=s determination that Elbar lacked standing to challenge the foreclosure sale. A junior lienholder takes an interest in the property subordinate to the interests of the senior lienholder, and a foreclosure sale of the senior lien extinguishes that interest. See Diversified Mortgage Investors v. Lloyd D. Blaylock Gen. Contractor, Inc., 576 S.W.2d 794, 806 (Tex. 1978); First Nat=l Bank in Dallas v. Whirlpool Corp. 517 S.W.2d 262, 269 (Tex. 1975). As a general rule, only the mortgagor or parties in privity with the mortgagor may contest the validity of a foreclosure sale under the mortgagor=s deed of trust. Estelle v. Hart, 55 S.W.2d 510, 513 (Tex. Comm=n App. 1932, judgm=t adopted); Mercer v. Bludworth, 715 S.W.2d 693, 698 (Tex. App.CHouston [1st Dist.] 1986, writ ref=d n.r.e.), overruled on other grounds, 801 S.W.2d 890 (Tex. 1991). A subsequent purchaser or junior lienholder may collaterally attack the sale only if it is entirely void. Estelle, 55 S.W.2d at 513. A party having no privity with the mortgagor may not complain of irregularities that would render the sale merely voidable,[1] including complaints regarding the manner of notice. See Tex. Osage Coop. Royalty Pool v. Crighton, 188 S.W.2d 230, 233 (Tex. Civ. App. 1945, writ ref. w.o.m.).

Elbar complains that it did not receive notice of the sale and that the posted notice was defective. However, there is no requirement that personal notice be given to those who were not parties to the deed of trust. Am. Sav. & Loan Ass=n v. Musick, 531 S.W.2d 581, 588 (Tex. 1975). Notice of sale is primarily for the mortgagor=s benefit and the Astrictness required in following the terms of the power granted by the deed of trust is to protect the property of the mortgagor, and when he is satisfied no one else can with reason complain.@ Texas Osage, 188 S.W.2d at 233 (quoting Walker v. Taylor, 142 S.W. 31, 33 (Tex. Civ. App. 1911, writ. ref=d)). A junior lienholder is not entitled to notice of a foreclosure by a prior incumbrance or senior lienholder. Jones v. Bank United of Texas, FSB, 51 S.W.3d 341, 344 (Tex. App.CHouston [1st Dist.] 2001, pet. denied). Because Elbar is an inferior lienholder, it was not entitled to notice of the sale and has no standing to challenge irregularities in the notice.

Elbar relies upon our holding in Elder v. Calvery Credit Corporation, No. 14-94-01175-CV, 1996 WL 183954 (Tex. App.CHouston [14th Dist.] 1996, no writ) (not designated for publication) to support its claim that it has standing. Elder, however, does not support Elbar=s position because in that case the substitute trustee=s deed was found to be void, as opposed to voidable due to an irregularity, because the note secured by the senior lien was not in default. Id. at *3, n. 1. In contrast, a substitute trustee owes no duty to a junior lienholder, not even a duty to send notice of a foreclosure sale. Id.

To bolster its standing argument, at oral argument before this court and in its original petition in the trial court, Elbar alleged the appellees, except Chase, conspired to deprive Elbar of title and possession of the subject property. However, Elbar failed to properly brief this issue on appeal. Elbar makes no reference to the conspiracy claim other than two general references to appellees=foreclosing with the Aexpress purpose@of cutting off Elbar=s interest. Elbar provides no citations to the record and cites no authority supporting its conspiracy claim. Where an appellant=s point of error is not supported by authorities, contains no citations to the record, and makes only conclusory arguments, that point is waived. Tex. R. App. P. 38.1(h); Tacon Mech. Contractors, Inc. v. Grant Sheet Metal, Inc. 889 S.W.2d 666, 671 (Tex. App.CHouston [14th Dist.] 1994, writ denied). We do not have a duty to perform an independent review of the record and applicable law to determine whether the error complained of occurred. See Karen Corp. v. Burlington N. and Santa Fe Ry. Co., 107 S.W.3d 118, 125 (Tex. App.CFort Worth 2003, pet. denied).

We find that Elbar, as a junior lienholder, was not entitled to notice of the foreclosure sale and does not have standing to challenge the sale because of defective notice, which merely renders a foreclosure sale voidable, not void. We overrule Elbar=s first point of error.

Equity of Redemption

Elbar also complains that the district court erred in concluding that it possessed no equitable right of redemption. The doctrine provides a mortgagor with a reasonable time to cure a default and require a reconveyance of the mortgaged property. Louisville Joint Stockland Bank v. Radford, 295 U.S. 555, 579 (1935); Scott v. Schneider Estate Trust, 783 S.W.2d 26, 28 (Tex. App.CAustin 1990, no writ).

To enforce an equity of redemption, a party must sue for that purpose and plead such equities that would authorize recovery. Parks v. Worthington, 87 S.W. 720, 721 (Tex. Civ. App. 1905, no writ). A party must (1) prove that he has a legal or equitable interest in the property subject to the mortgage; (2) prove that he is Aready, able or willing to redeem the properties in controversy by paying off the amount of valid and subsisting liens to which the properties [are] subject@; and (3) assert the claim before a foreclosure sale because the equity of redemption terminates once a foreclosure sale occurs. Scott, 783 S.W.2d at 28 (citing Houston v. Shear, 210 S.W. 976, 981 (Tex. Civ. App. 1919, writ dism=d)).

The trial court properly found that Elbar did not have an equitable right of redemption. Elbar acknowledged at trial that it had not paid any amount to satisfy the first lien; this failure constitutes a waiver of any equitable remedy. Vincent Bustamante, corporate representative of Elbar, testified that Elbar never attempted to pay any moneys with reference to the first lien while maintaining a junior interest in the property. Without showing that it stood ready, willing, and able to redeem the property by satisfying the superior lien, Elbar has no equitable right of redemption. For this additional reason, we overrule Elbar=s first point of error.

  Attorney=s Fees

In its second point of error, Elbar complains of the trial court=s award of attorney=s fees to appellees Lorene Byles and Chase. Elbar contends, that absent a justiciable controversy, a party cannot recover attorney=s fees in a declaratory relief action. Chase argues, however, that under the Texas Uniform Declaratory Judgments Act, the trial court was authorized to award attorney=s fees.

Under Texas law, attorney=s fees are not recoverable unless authorized by statute or by contract. New Amsterdam Cas. Co. v. Tex. Indus. Inc., 414 S.W.2d 914, 915 (Tex. 1967); see Tex. Civ. Prac. & Rem. Code Ann. ' 37.009 (Vernon 1997). Section 37.009 of the Texas Civil Practice and Remedies Code provides, Ain any proceeding under this chapter, the court may award costs and reasonable and necessary attorney=s fees as are equitable and just.@ Tex. Civ. Prac. & Rem. Code Ann. ' 37.009 (Vernon 1997). Where a claimant has properly invoked the declaratory judgment statute, either party may plead for and obtain attorney=s fees. Hartford Cas. Ins. Co. v. Budget Rent-A-Car, 796 S.W.2d 763, 771 (Tex. App.CDallas 1990, writ denied). The award of attorney=s fees is neither limited to the plaintiff nor to the party affirmatively seeking relief. Id.

A grant or denial of attorney=s fees in a declaratory judgment action lies within the sound discretion of the trial court. Oake v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985). The court=s judgment will not be reversed on appeal absent a clear showing that it abused that discretion. Id.; Texstar N. Am., Inc. v. Ladd Petroleum Corp., 809 S.W.2d 672, 679 (Tex. App.CCorpus Christi 1991, writ denied). The trial court=s discretion has been construed broadly. Fuqua v. Fuqua, 750 S.W.2d 238, 246 (Tex. App.CDallas 1988, writ denied).

The trial court granted Lorene and Chase $15,000 in attorney=s fees for services rendered through trial. In addition, it granted Lorene $22,000 to cover the costs of appeals through the Supreme Court of Texas. Elbar cites City of Houston v. Harris County Outdoor Advertising Association, 732 S.W.2d 42, 56 (Tex. App.CHouston [14th Dist.] 1987, no writ) and Kenneth Leventhal & Company v. Reeves, 978 S.W.2d 253 (Tex. App.CHouston [14th Dist.] 1998, no writ), to support the proposition that the granting of attorney=s fees constituted an abuse of discretion. We, however, find these cases distinguishable. In Houston, the trial court erred in granting attorney=s fees to a party that was not entitled to any relief. Houston, 732 S.W.2d at 56. Leventhal also does not support Elbar=s contention. There, the trial court granted attorney=s fees to the plaintiff and this court reversed, holding the case should have been dismissed as moot because the plaintiff received nothing of value and attorney=s fees could not be awarded as the sole relief. Leventhal, 978 S.W.2d at 258. Here, the trial court granted Lorene declaratory relief by quieting title to her property. It also granted her attorney=s fees as the prevailing party.

Elbar=s second point of error is overruled and the trial court=s judgment is affirmed.

/s/ Leslie Brock Yates

Justice

Judgment rendered and Memorandum Opinion filed September 23, 2003.

Panel consists of Justices Yates, Hudson, and Frost.

[1] The distinction between Avoid@ and Avoidable@ is essential to our determination. Unfortunately, courts and practitioners often interchange the phrases. AVoid@ means the sale has no legal efficacy and is incapable of being enforced by law, such as a foreclosure sale of a lien not in default. Black=s Law Dictionary 1411 (5th ed. 1979); see Elder, 1996 WL 183954 at *3, n. 1. AVoidable@ describes a sale that may be avoided, but is not until the Afatal vice in the transaction has been judicially ascertained and declared.@ Black=s Law Dictionary 1411 (5th ed. 1979) (citing Slaughter v. Qualls, 139 Tex. 340, 162 S.W.2d 671, 674 (Tex. 1942)).