Mortgage Electronic Registration Systems, Inc. v. Lorie H. Knight--Appeal from County Court at Law No 2 of Montgomery County

In The
Court of Appeals
Ninth District of Texas at Beaumont
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NO. 09-04-452 CV
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MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Appellant
V.
LORIE H. KNIGHT, Appellee
On Appeal from the County Court at Law No. 2
Montgomery County, Texas
Trial Cause No. 04-18,044
MEMORANDUM OPINION

This appeal arises from a forcible detainer action initiated in justice court by a lender. The justice court determined that the lender, who had foreclosed on real property pursuant to a deed of trust, was entitled to possession of the property. The borrower appealed to county court, which found that the borrower was entitled to possession. The lender brings this appeal. We reverse and render judgment in favor of the lender.

 
Background

The events pertinent to this appeal began with Lorie H. Knight's purchase of real property in Montgomery County, Texas. Knight purchased the property with the proceeds of a loan from Mortgage Electronic Registration Systems, Inc. ("MERS"), and she secured her loan with a deed of trust. Knight defaulted on the loan and MERS foreclosed as allowed by the deed of trust. After purchasing the property at the substitute trustee's sale, MERS sent Knight written notice to vacate the premises, but Knight failed to do so.

Subsequently, MERS sued Knight and all occupants, seeking possession of the premises. The justice court entered a default judgment against Knight and "all occupants" and awarded possession of the premises to MERS. Knight appealed the judgment to the county court at law and it awarded possession of the premises to her. (1)

On appeal from the judgment in county court, MERS brings two issues. We begin our review with the second issue as its resolution is determinative of this appeal. The second issue attacks the legal and factual sufficiency of the evidence supporting the county court's judgment in Knight's favor. As Knight did not file an appellate brief, we have no response opposing issue two's arguments.

 
Forcible Detainer

"A forcible detainer action is a special proceeding governed by particular statutes and rules." Rice v. Pinney, 51 S.W.3d 705, 709 (Tex. App.- Dallas 2001, no pet.). The proceeding exists "to provide a speedy, simple, and inexpensive means for resolving the question of the right to possession of premises." Id. The Texas Property Code allows forcible detainer actions against persons (often tenants) who refuse to surrender possession of real property when demanded to do so by one entitled to possession. See Tex. Prop. Code Ann. 24.002, 24.0051, 24.0061 (Vernon 2000 & Supp. 2005).

Our procedural rules highlight the action's limited purpose; Rule 746 provides that the "only issue" in a forcible detainer action is "the right to actual possession; and the merits of the title shall not be adjudicated." Tex. R. Civ. P. 746. Thus, the sole question for the trial court is who has the right to immediate possession of the property. See Villalon v. Bank One, 176 S.W.3d 66, 70 (Tex. App.- Houston [1st Dist.] 2004, pet. denied); Ward v. Malone, 115 S.W.3d 267, 270 (Tex. App.- Corpus Christi 2003, pet. denied); Dormady v. Dinero Land & Cattle Co., L.C., 61 S.W.3d 555, 557 (Tex. App.- San Antonio 2001, pet. dism'd w.o.j.).

In a forcible detainer action, the law requires the plaintiff to introduce sufficient evidence of ownership to show a superior right to immediate possession; the plaintiff, however, does not have to prove that he holds title to the property. See Rice, 51 S.W.3d at 709. For example, a superior right to possession may occur in the context of a landlord-tenant relationship arising after a foreclosure sale under a deed of trust. See Villalon, 176 S.W.3d at 71. A deed of trust may establish a landlord-tenant relationship between the buyer at foreclosure and the current possessor of the property, as it does here. See id. Though the possessor may question the validity of a foreclosure sale and the quality of the buyer's title, the court hearing a forcible detainer action retains the power to decide which of the parties is entitled to the immediate right of possession. Id.

An exception to the court's forcible detainer jurisdiction may occur, however, when the title issue is "so intertwined" with the possession issue that "possession may not be adjudicated without first determining title." Dormady, 61 S.W.3d at 557. Still, this exception to the justice court's jurisdiction occurs "only when the justice or county court must determine title issues. . . ." Rice, 51 S.W.3d at 713. (2)

A forcible detainer action is not an exclusive remedy and is cumulative of other remedies. Scott v. Hewitt, 127 Tex. 31, 90 S.W.2d 816, 818-19 (1936); Villalon, 176 S.W.3d at 70. A party who loses possession in a detainer action may sue in the district court to decide who has legal title to the property. Scott, 90 S.W.2d at 818; Villalon, 176 S.W.3d at 70. Also, a party may bring a separate detainer action in justice court and prosecute it concurrently with a suit to try title pending in district court. Villalon, 176 S.W.3d at 70-71.

Standard of Review

When reviewing the legal sufficiency of the evidence, we "view the evidence in the light most favorable to the verdict, crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not." City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005). Legally insufficient evidence or "no evidence" of a vital fact exists when (a) the record contains a complete absence of evidence of a vital fact; (b) rules of law or rules of evidence bar the court from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence conclusively establishes the opposite of the vital fact. See Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). If someone attacks the legal sufficiency of an adverse finding on an issue for which he has the burden of proof, and if there is no evidence to support the finding, we review all the evidence to decide whether the record shows that the party attacking the finding established the contrary proposition as a matter of law. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001).

The county court did not issue any findings of fact or conclusions of law regarding its determination that Knight was entitled to possess the property. Thus, we infer all necessary facts to support the trial court's ruling if the evidence supports the inferred facts. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). However, if "the appellate record includes the reporter's and clerk's records, these implied findings are not conclusive and may be challenged for legal and factual sufficiency in the appropriate appellate court." Id.

After admitting documentary evidence and hearing counsels' arguments, the county court determined that Knight was entitled to possession. In support of her request for possession, Knight offered only one document - a certified copy of a petition filed in district court by many home-buyer plaintiffs, including Knight, against many mortgage-lender defendants. However, the named defendants did not include MERS. At the hearing, Knight's attorney asserted that MERS was "being served now," but did not offer a copy of the citation the court issued against MERS.

The county court admitted the certified plaintiffs' petition as proof that there was "a lawsuit pending in District Court on the legality of the foreclosure." Knight's attorney argued that entitlement to possession involves "title." During the trial, Knight's attorney asked the court "to enforce the law which says that this Court has no subject matter [] jurisdiction pending the outcome of that other trial, and [] therefore to abate the proceeding until that time."

After hearing arguments from both sides, the court stated that in similar cases, it granted requests to abate cases pending resolution by the district court of the title question and would do so here unless MERS "chooses that I find in favor of the Defendant." The court informed MERS that it could either acquiesce in the court's abatement of the detainer action, pending resolution of the district court case, or suffer an award by the court of possession to Knight so that MERS could appeal. MERS asked for twenty-four hours to decide. The record shows that the court ultimately awarded possession to Knight.

While plaintiffs' allegations in the district court case included one of wrongful foreclosure, (3) Knight's pending wrongful foreclosure suit does not deprive the county court of jurisdiction. See Villalon, 176 S.W.3d at 71. To affect the county court's jurisdiction of the detainer action under these circumstances, the district court lawsuit must involve a question of title "so intertwined with the issue of possession" that the county court could not determine possession without first determining title. Dormady, 61 S.W.3d at 557. MERS's forcible detainer action does not necessarily require a determination of title. Here, as in Villalon, a landlord-tenant relationship resulting from the foreclosure sale arose between MERS and Knight. Because MERS and Knight had a landlord-tenant relationship, the county court had jurisdiction to decide whether MERS was entitled to "immediate possession" without also determining whether MERS wrongfully foreclosed against Knight, an issue directly related to property title. See id. Even if MERS prevailed on its forcible detainer action, Knight retains the right to pursue a wrongful foreclosure action in district court. See id. at 558.

We find that a reasonable fact-finder could not resolve the disputed issues of fact in Knight's favor based solely on the certified copy of the plaintiffs' petition. The evidence offered by Knight does not show that the court lacked jurisdiction in MERS's forcible detainer action against Knight. Further, we have reviewed the clerk's and reporter's records

and find no evidence that would support the award of possession to Knight.

Next, we review all of the evidence to decide whether MERS established the contrary proposition - that it is entitled to possession - as a matter of law. See Francis, 46 S.W.3d at 241. For MERS to prevail and obtain possession in its forcible detainer action against Knight, the law requires MERS to show that: (1) the substitute trustee conveyed the property by deed to MERS after the foreclosure sale; (2) the deed of trust signed by Knight established a landlord-tenant relationship between MERS and Knight; (3) MERS gave proper notice to Knight that it required her to vacate the premises; and (4) Knight refused to vacate the premises. Tex. Prop. Code Ann. 24.002(a)(2), 24.002(b), 24.005 (Vernon 2000); see Villalon, 176 S.W.3d at 71; Dormady, 61 S.W.3d at 558.

As no witnesses testified for either party, the evidence supporting MERS's position consists of the attorneys' stipulations and certain documents that the court admitted into evidence as well. The stipulation of Knight's attorney provided evidence of Knight's possession of the property and her refusal to vacate. Counsel agreed that Knight bought the property, was a homeowner there, and still occupied the premises. (4)

MERS further relied on three documents: (1) a certified copy of the deed of trust; (2) a certified copy of the substitute trustee's deed; and (3) a copy of the certified notice to vacate sent to Knight. First, the deed of trust signed by Knight established a landlord-tenant relationship between MERS and Knight. The deed of trust required Knight, or any person holding possession through her, to "immediately surrender possession of the Property to the purchaser at [the foreclosure] sale." The deed of trust further provided that failure to surrender possession would cause Knight, or anyone possessing through her, to become a "tenant at sufferance." Second, the substitute trustee's deed established that MERS was entitled to possession of the property. The substitute trustee conveyed the property by deed to MERS after it purchased the property at the foreclosure sale. Finally, the notice to vacate provided proof of proper notice to Knight that MERS required her to vacate the premises. See Tex. Prop. Code Ann. 24.002(b); 24.005 (Vernon 2000). Nothing in the record controverts these three legal documents. Thus, on this record, MERS established its entitlement to possession as a matter of law.

We find the evidence is legally insufficient to support the award of possession to Knight and find that MERS established as a matter of law that it is legally entitled to possession of the premises. We find the county court erred in awarding possession to Knight. Accordingly, we reverse the court's judgment and render judgment that MERS is entitled to possession.

REVERSED AND RENDERED.

 

___________________________

HOLLIS HORTON

Justice

 

Submitted on October 10, 2005

Opinion Delivered March 2, 2006

Before McKeithen, C.J., Kreger, and Horton, JJ.

1. No appeal was brought by any occupants other than Knight.

2. As shown below, the Rice Court collected cases illustrating when the necessity of determining title deprives the justice or county court of jurisdiction in a forcible detainer action:

 

See, e.g., Guyer v. Rose, 601 S.W.2d 205, 205-206 (Tex. Civ. App.- Dallas 1980, writ ref'd n.r.e.) (enjoinder of forcible detainer suit proper when right to possession depended on compliance with contract for sale); Gentry v. Marburger, 596 S.W.2d 201, 203 (Tex. Civ. App.- Houston [1st Dist.] 1980, writ ref'd n.r.e.) (justice court without jurisdiction when possession based on assertion of life estate or adverse possession because "title to premises was directly involved"); Rodriguez [v. Sullivan], 484 S.W.2d [592,] 593 [(Tex. Civ. App. - El Paso 1972, no writ)] (justice court judgment void when possession depended on construction of real estate "purchase-sale contract"); Dent v. Pines, 394 S.W.2d 266, 268-69 (Tex. Civ. App.- Houston [1st Dist.] 1965, no writ) (justice court without jurisdiction when possession required resolution of claims under competing wills and intestacy statutes because "title necessarily involved"); [American Spiritualist Ass'n v.] Ravkind, 313 S.W.2d [121,] 125 [(Tex. Civ. App.- Dallas 1958, writ ref'd n.r.e.)] (no jurisdiction when right to possession depended on disputed compliance with "contract to purchase").

 

Rice, 51 S.W.3d at 713.

 

3. Other allegations included deceptive trade practices, common law fraud, negligence, and usury.

4. During the proceedings, the court requested that the attorneys listen "carefully" to its recitation of facts and determine if the parties could stipulate to those facts. The court stated:

 

Defendant homeowner bought a lot, financed the purchase with a loan from the Plaintiff. Plaintiff probably signed a deed of trust or a mortgage or something . . . . The . . . Defendant homeowner probably defaulted in their payments. The Plaintiff foreclosed their deed of trust, their mortgage. The Defendant homeowner then filed a lawsuit in District Court, which is still pending, challenging the legality of the foreclosure. And the Defendant still occupies the premises. (Emphasis added.)

 

Knight's attorney agreed that the trial court correctly stated the facts and MERS's attorney agreed that the trial court had not omitted any facts.