Trinie A. Hellmann v. Circle C Properties I, Ltd.--Appeal from 407th Judicial District Court of Bexar County

MEMORANDUM OPINION
No. 04-03-00217-CV
Trinie A. HELLMANN,
Appellant
v.
CIRCLE C PROPERTIES I, LTD.,
Appellee
From the 407th Judicial District Court, Bexar County, Texas
Trial Court No. 2002-CI-06644
Honorable Martha Tanner, Judge Presiding (1)

Opinion by: Catherine Stone, Justice

Sitting: Alma L. L pez, Chief Justice

Catherine Stone, Justice

Paul W. Green, Justice

Delivered and Filed: December 10, 2003

AFFIRMED

Trinie A. Hellmann ("Hellmann") appeals the summary judgment granted in favor of Circle C Properties I, Ltd. ("Circle C") which declares that Circle C is the record title holder of the property generally known as 7347 Grassy Trail, San Antonio, Bexar County, Texas ("Property"). Hellmann contends that the summary judgment was erroneously granted because: (1) record title to the Property was in the name of George L. Alejos ("Alejos") and no superior lien had been recorded when Hellmann abstracted her judgment lien against Alejos; and (2) Circle C should not be permitted to circumvent the recording statutes by asserting a resulting trust. We affirm the trial court's judgment.

Background

On March 22, 2000, Circle C loaned Alejos Interests Inc. ("AII") $60,600.00 to fund the purchase of the Property. Alejos, as president of AII, signed a note payable to Circle C and a deed of trust, granting Circle C a lien against the Property to secure the payment of the note. A special cash warranty deed was executed by BA Mortgage, L.L.C., in connection with the transaction which named Alejos as grantee. The deed and deed of trust were recorded on May 26, 2000.

On June 16, 2000, Hellmann purchased the ownership of a judgment. The assignment states that the judgment was rendered in cause number 96-CI-14061 in the 285th District Court, styled Tony Gomez v. George Alejos. The assignment further states that the judgment was previously assigned to Darlene Luz Alejos as part of a divorce settlement. The judgment was made part of a bankruptcy filed by Darlene Alejos. On August 1, 2000, an abstract of judgment was filed with regard to the judgment in cause number 96-CI-14061. (2)

On September 5, 2001, Alejos executed a deed of trust granting a lien against the Property to Robert L. Barrows, as trustee for Hellmann. The deed of trust recites that the secured obligation was Alejos's performance of "his obligations under his confirmed Plan of Reorganization, as modified as of September 5, 2001, to [Hellman], specifically including his obligations to convey certain properties to [Hellmann] and to pay [Hellmann's] claim." The deed of trust was recorded on October 1, 2001.

On December 3, 2001, the bankruptcy court entered an agreed order, stating that the Property was not an asset of Alejos's bankruptcy estate. The order further stated that it should not be construed as a finding that Alejos or his bankruptcy estate ever owned the Property.

On January 9, 2002, BA Mortgage, L.L.C. executed a correction special warranty deed for the purpose of correcting the name of the grantee to AII. On March 5, 2002, Circle C foreclosed on its lien and purchased the Property at the foreclosure. On May 7, 2002, Hellmann foreclosed on her lien and purchased the Property at the foreclosure.

Hellmann filed suit against Circle C, seeking a declaratory judgment that her deed of trust constituted a first and prior lien on the Property. Circle C later filed suit against Hellmann in a separate cause, seeking a declaratory judgment that Circle C was the record title holder of the Property and that its foreclosure extinguished any lien held by Hellmann. Alternatively, Circle C requested that the court declare that a constructive trust and/or resulting trust existed in Circle C's favor. The trial court subsequently consolidated the two lawsuits.

Circle C filed a traditional motion for summary judgment on two grounds: (1) that Circle C's deed of trust lien was prior in time to Hellmann's deed of trust lien; (3) or (2) that Circle C is the beneficiary of a constructive and/or resulting trust, stepping into the shoes of AII in whose favor the resulting trust was created. Hellmann responded that legal title was vested in her based on the recording statutes and that a resulting trust would only be enforceable against Alejos, not Hellmann.

Standard of Review

Under traditional summary judgment standards, a party moving for summary judgment has the burden of establishing as a matter of law that no genuine issue of material fact exists as to one or more essential elements of the plaintiff's cause of action. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000). In reviewing a summary judgment, an appellate court accepts as true all evidence supporting the non-movant, indulges every reasonable inference in favor of the non-movant, and resolves all doubts in the non-movant's favor. Id. When, as here, a defendant moves for summary judgment on more than one ground, and the judgment does not specify the grounds upon which the trial court relied, we must determine if any of the theories advanced by the parties are meritorious. See Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 79 (Tex. 1989).

Discussion

When title to property is taken in the name of someone other than the person who advances the purchase price, a resulting trust is created in favor of the payor. Tricentrol Oil Trading, Inc. v. Annesley, 809 S.W.2d 218, 220 (Tex. 1991); Sahagun v. Ibarra, 90 S.W.3d 860, 863-64 (Tex. App.--San Antonio 2002, no pet.). However, no resulting trust exists in favor of one who pays the purchase money by way of a mere loan to another. Sahagun, 90 S.W.3d at 864; Lifemark Corp. v. Merritt, 655 S.W.2d 310, 317 (Tex. App.--Houston [14th Dist.] 1983, writ ref'd n.r.e.); Jordan v. Jordan, 154 S.W. 359, 361 (Tex. Civ. App.--Texarkana 1913, writ ref'd). In this case, Circle C does not contend that a resulting trust was created in its favor as a result of the March 2000 transaction. Instead, Circle C contends that a resulting trust was created in favor of AII. Because the summary judgment evidence conclusively established that AII paid the purchase price for the Property while title was taken in Alejos's name, a resulting trust was created in AII's favor. Tricentrol Oil Trading, Inc., 809 S.W.2d at 220; Sahagun, 90 S.W.3d at 864.

The creation of the resulting trust in favor of AII meant that Alejos held bare legal title as a result of the deed while equitable title remained in AII. Hammett v. McIntire, 365 S.W.2d 844, 847 (Tex. Civ. App.--Houston 1962, writ ref'd n.r.e.). Texas courts have uniformly held that the recording statutes do not apply to equitable titles; therefore, the absence of any instrument recording AII's equitable interest does not affect the priority of the parties' liens or make AII's interest in the real property void under section13.001 of the Texas Property Code. Johnson v. Darr, 114 Tex. 516, 272 S.W. 1098 (1925); Tex. Prop. Code Ann. 13.001 (Vernon Supp. 2003). In this case, Circle C's lien against AII's equitable title was superior to Hellmann's judgment lien, and Hellman's deed of trust lien could not attach to AII's equitable interest. (4)

See Cadle Co. v. Harvey, 46 S.W.3d 282, 287 (Tex. App.--Fort Worth 2001, pet. denied) (asserting equitable title is superior to legal title to property and may be asserted as complete defense against the lien of a debtor's judgment creditor); Hammett, 365 S.W.2d at 847 (holding abstract of judgment against holder of legal title does not attach to equitable title). When Circle C foreclosed on its lien, it acquired AII's equitable title and the right to require the conveyance to it of the bare legal title. See Gaona v. Gonzales, 997 S.W.2d 784, 787 (Tex. App.--Austin 1999, no pet.) (noting equitable title owner may require legal title to be conveyed to him); Sahagun, 90 S.W.3d at 864 (noting trustee of resulting trust stands in fiduciary relationship with beneficiary insofar as the trust property is concerned). When Hellmann foreclosed on her lien, she acquired bare legal title which she held in trust for Circle C. See Sahagun, 90 S.W.3d at 864.

Accordingly, the trial court did not err in granting summary judgment on the ground that Circle C had a superior lien on the equitable title to the Property based on the resulting trust in favor of AII and, after its foreclosure, had the right to require Hellmann to convey legal title to the Property to Circle C. As a result, Circle C was the record title holder of the Property.

Catherine Stone, Justice

1. The Honorable Martha Tanner signed the judgment; however, the Honorable Solomon Casseb, Jr.'s name is typed below the signature line. From the docket sheet entries, it appears that Judge Casseb presided over the hearing on the motion for summary judgment.

2. Hellmann attaches an earlier abstract against Alejos to her response to Circle C's motion; however, because that abstract relates to a judgment in cause number 95 CI 16695, the abstract has no effect on the rights acquired by Hellmann arising from cause number 96-CI-14061.

3. Circle C asserts the theory of after-acquired title in its brief to support this theory; however, Circle C's motion for summary judgment did not raise the after-acquired title theory, and we cannot affirm the trial court's summary judgment on a theory not raised in the motion. See Tex. R. Civ. P. 166a(c).

4. Although Hellmann alternatively refers to herself in her brief as a creditor and a bona fide purchaser for valuable consideration, the summary judgment evidence conclusively establishes that the only interest assigned to Hellmann was the interest of a judgment creditor. The subsequent deed of trust also was granted to Hellmann as a creditor. Accordingly, Hellmann never acquired the status of bona fide purchaser.