Betty R. Watkins v. First National Bank, Glen Rose, et al.--Appeal from 18th District Court of Somervell County

IN THE

TENTH COURT OF APPEALS

No. 10-96-084-CV

BETTY R. WATKINS,

Appellant

v.

FIRST NATIONAL BANK, GLEN ROSE, ET AL.,

Appellees

From the 18th District Court

Somervell County, Texas

Trial Court # 95-5040

O P I N I O N

This is an appeal from a summary judgment in a wrongful foreclosure suit. The trial court granted summary judgment in favor of the defendant, First National Bank, Glen Rose, and ordered that the plaintiff, Betty R. Watkins, take nothing and the Bank recover all costs incurred in defending the action. On appeal, Watkins, pro se, alleges the trial court erred in granting the Bank's motion for summary judgment for the following reasons: (1) the affidavit of James H. Easter, which was attached to the Bank's motion for summary judgment, contained inaccurate information; (2) the affidavit of John D. Hughes, which was attached to the Bank's motion for summary judgment, was defective; (3) the foreclosure action was invalid because Hughes was not properly appointed substitute trustee; (4) the foreclosure action was invalid because the substitute trustee recorded a second "substitute trustee's deed" when a valid deed was already on file; (5) the foreclosure action was invalid because the Bank did not give Watkins proper notice of homeowners' counseling as required by federal law; (6) the foreclosure action was invalid because the notices sent to Watkins by the Bank referred only to the deed of trust without mentioning the note; (7) the foreclosure action is invalid because the Bank did not send the "Notice to Vacate" to Watkins' last known address; and (8) the foreclosure action is invalid because the Bank violated federal law in post-foreclosure dealings with Watkins. //

I. FACTUAL AND PROCEDURAL BACKGROUND

The record indicates that on February 17, 1991, Watkins executed a real estate note, secured by a deed of trust, in favor of First National Bank, Glen Rose, in the amount of $67,582.45, for the purchase of a house and approximately 6 acres of land located in Somervell County. // According to the terms of the note, Watkins was to make 59 monthly payments of $855.08, payable on the 17th of each month, beginning in February 1991 and continuing until January 1996, when the entire balance was due. Problems between the Bank and Watkins arose when Watkins failed to make the complete $855.08 payment due in April 1994. The Bank, claiming that Watkins' failure to make the full payment due was a default on the note, initiated foreclosure proceedings pursuant to section 51.002 of the Property Code. Tex. Prop. Code Ann. 51.002 (Vernon 1995). The record is unclear as to why the Bank did not immediately proceed with its foreclosure of the property upon Watkins' defaulting on her loan in April 1994. // The record further indicates that the Bank, acting through James H. Easter, appointed John D. Hughes as substitute trustee on August 2, 1994. Hughes was given authority to commence foreclosure proceedings against the property to satisfy Watkins' debt to the Bank. Thereafter, several unsuccessful attempts were made to foreclose on the property.

The substitute trustee foreclosed on the property on August 1, 1995, when the Bank purchased the property. The Bank filed a forcible detainer action against Watkins after she refused to vacate the premises. Both the justice court and, on appeal, the county court ruled that the Bank was entitled to possession. On October 13, 1995, prior to the judgment of the county court in the forcible detainer case, Watkins filed this wrongful foreclosure action against the Bank. // The district court, after hearing the Bank's motion, granted summary judgment. Watkins appeals from that judgment.

II. STANDARD OF REVIEW FOR SUMMARY JUDGMENTS

To prevail on a motion for summary judgment, the movant has the burden of establishing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995); Hall v. Oklahoma Factors, Inc., 935 S.W.2d 504, 506 (Tex. App. Waco 1996, n.w.h.); Allen v. City of Midlothian, 927 S.W.2d 316, 319 (Tex. App. Waco 1996, no writ). Therefore, the question on appeal is not whether the summary judgment proof raises fact issues as to the required elements of the plaintiff's cause of action, but whether a defendant's summary judgment proof establishes, as a matter of law, that there is no genuine issue of material fact as to one or more elements of the plaintiff's cause of action. See Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex. 1970). In resolving the issue of whether the movant has carried the requisite burden, all evidence favorable to the non-movant must be taken as true and all reasonable inferences, including any doubts, must be resolved in the non-movant's favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). When a summary judgment order does not state the specific grounds upon which it is granted, a party appealing from the judgment must show that each of the theories alleged in the motion for summary judgment is insufficient to support the order. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989). If any of the theories advanced by the movant demonstrates a right to judgment as a matter of law, the court's summary judgment will be affirmed. Id.

III. THE FORECLOSURE

To prevail on its motion for summary judgment, the Bank had to prove that it precisely followed the requirements set forth in section 51.002 in foreclosing on Watkins' property. See Tex. Prop. Code Ann. 51.002; see also University Savings Assoc. v. Springwoods Shopping Center, 644 S.W.2d 705, 706 (Tex. 1982); Durkay v. Madco Oil Co., Inc., 862 S.W.2d 14, 17 (Tex. App. Corpus Christi 1993, writ denied). Despite several unsuccessful attempts to foreclose on Watkins' property, the Bank, on August 1, 1995, foreclosed on the property. Consequently, only that sale and the notices pertaining to it are relevant. //

Watkins defaulted on her note in April 1994. // In a letter dated April 17, 1995, the Bank provided Watkins with notice of her default, informing her that she had until May 9, 1995, to cure the default and that failure to do so would result in the Bank's accelerating the note and instituting foreclosure proceedings. On May 19, 1995, Hughes sent Watkins the following notice of the foreclosure sale:

NOW, THEREFORE, notice is hereby given that on Tuesday, the 1st day of August, 1995, between the hours of 10:00 a.m. and 4:00 p.m. [John D. Hughes, substitute trustee,] will sell, for cash, the property, at the area designated by the County Commissioners Court of Somervell County, Texas, to the highest bidder for cash. The sale will begin at the earliest at 1:00 p.m. and will take place not later than three hours after that time.

The record indicates that the sale took place on August 1, 1995, at 1:06 p.m.

We now turn to Watkins' complaints to determine if the trial court erred in granting the Bank's motion for summary judgment.

IV. WATKINS' COMPLAINTS

A. Was the Bank's Summary Judgment Proof Sufficient?

As summary judgment proof that the foreclosure sale was proper, the Bank attached affidavits from James H. Easter and John D. Hughes to its motion. In Easter's affidavit, he stated that he was the president of the First National Bank, Glen Rose, and that Watkins had defaulted on her note. He further stated that he had appointed Hughes substitute trustee and attached a copy of the written appointment to his affidavit. In his affidavit, Hughes stated that he had sent both the notice of default and the notice of the foreclosure sale to Watkins via certified mail which is considered prima facie evidence that the notices were served. See Tex. Prop. Code Ann. 51.002(e) ("The affidavit of a person knowledgeable of the facts to the effect that service was completed is prima facie evidence of service.").

Watkins complains that the summary judgment proof submitted by the Bank is insufficient to disprove her wrongful foreclosure action as a matter of law. Specifically, Watkins alleges that Easter's affidavit is invalid because it contains inaccurate information and that Hughes' affidavit is defective because it does not bear the notary public's seal.

1. Substitute Trustee

Watkins alleges the foreclosure action is invalid because Hughes was not properly appointed as the substitute trustee of the deed of trust for the Bank. Specifically, Watkins complains that: (1) there is no evidence the original trustee, Easter, refused or declined to act as trustee; (2) the appointment of the substitute trustee was not recorded in the property records of Somervell County; (3) the appointment of the substitute trustee was not filed with the county clerk of Somervell County; and (4) no notice was provided to Watkins even after a request for such notice was made.

The deed of trust contains the following provision:

Beneficiary's Rights

1. Beneficiary may appoint in writing a substitute or successor trustee, succeeding to all rights and responsibilities of Trustee.

It is well-settled that "the terms set out in a deed of trust must be strictly followed." University Savings, 644 S.W.2d at 706. The only requirement for appointing a substitute trustee that the Bank had to satisfy in order to properly appoint a substitute trustee is that the appointment had to be in writing. The Bank attached a copy of the "Appointment of Substitute Trustee" to its motion for summary judgment thereby proving that the appointment of Hughes as substitute trustee was in compliance with the terms of the deed of trust. See id. Consequently, all of Watkins' complaints regarding Hughes' appointment as substitute trustee are overruled.

2. Substitute Trustee's Deed

Watkins maintains that the substitute trustee's deed, dated August 1, 1995, filed in the deed records of Somervell County is not valid because there was already a substitute trustee's deed on file. We fail to follow Watkins' reasoning that having one substitute trustee's deed on file in the deed records makes any later-filed deed invalid. We find Watkins' complaint to be without merit and overrule it.

3. Notice of Homeowners' Counseling

Watkins argues that because the Bank failed to properly provide her with notice of homeowners' counseling as required by 12 U.S.C.A. 1701x (West 1989 & Pamph. 1996), the foreclosure is invalid. However, the record failed to indicate that she was entitled to the notice. Consequently, because Watkins has failed to satisfy her burden on appeal, her complaint is overruled. See Tex. R. App. P. 50(d).

4. Failure to Refer to Both the Deed of Trust and the Note

Watkins maintains that the foreclosure is invalid because the Bank, in its letters and notices to her, fails to mention the "Real Estate Lien Note." According to Watkins, the note and the deed of trust must always be construed together. We fail to see any harm in the Bank's failure, if any, to reference both the note and the deed of trust. Consequently, Watkins' complaint is overruled. See Tex. R. App. P. 74(d), (f).

5. Notice to Vacate

Watkins alleges that the foreclosure is invalid because the Bank did not send the notice to vacate the premises, dated August 4, 1995, to her last known address. The statute governing nonjudicial foreclosure proceedings for property subject to a deed of trust does not require that the holder of the debt send any type of notice to the debtor in default demanding that the debtor vacate the premises. See Tex. Prop. Code Ann. 51.002. Consequently, whether the Bank did or did not properly send a notice to Watkins demanding that she vacate the premises is irrelevant. Watkins' complaint regarding the notice to vacate is overruled.

6. Post-Foreclosure Negotiations

Watkins further complains that the foreclosure is wrongful because the Bank violated various federal laws prohibiting usury, fraud, and lack of good faith dealing in its post-foreclosure negotiations with Watkins. However, there is no evidence of those negotiations in the record before us. Consequently, because Watkins has failed to satisfy her burden on appeal, her complaint regarding any post-foreclosure negotiations is overruled. See Tex. R. App. P. 50(d).

V. CONCLUSION

Viewing the summary judgment evidence, we conclude that the Bank properly foreclosed on Watkins' property and that the trial court did not err in granting summary judgment in favor of the Bank. All of Watkins' points are thereby overruled.

The judgment is affirmed.

BOBBY L. CUMMINGS

Justice

Before Chief Justice Davis,

Justice Cummings, and

Justice Vance

Affirmed

Opinion delivered and filed February 19, 1997

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