Dayton Reavis Corporation v. Rampart Capital Corporation and Brian Gibson, Substitute Trustee--Appeal from 77th District Court of Limestone County

Dayton Reavis Corp v. Rampart Capital Corp, et al. /**/

IN THE

TENTH COURT OF APPEALS

 

No. 10-00-293-CV

 

DAYTON REAVIS CORPORATION,

Appellant

v.

 

RAMPART CAPITAL CORPORATION

AND BRIAN GIBSON, SUBSTITUTE TRUSTEE,

Appellees

 

From the 77th District Court

Limestone County, Texas

Trial Court # 25,217-A

O P I N I O N

DRC filed suit asking for declaratory judgment to prevent a non-judicial foreclosure on real property. The trial court denied all relief requested by DRC. DRC appealed. We affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

DRC took out a loan and secured the note with a deed of trust. The note was originally payable to the First National Bank of Wortham. On February 14, 1991, the bank failed; it was put into receivership and its assets were taken over by the FDIC. The note went into default on its maturity date, May 15, 1992. In 1994, the FDIC sold and assigned the note and deed of trust to Insource Financial Corporation, which sold and assigned the note and deed of trust to Rampart on April 7, 1995. On June 13, 1995, Rampart first posted notice of foreclosure on the subject property.

DRC filed suit in a previous cause concerning the note. Rampart cross petitioned. The case was then restyled with Rampart as the plaintiff. The trial court found for Rampart on all matters. DRC appealed, and this Court overruled all its issues on appeal. The mandate issued on January 10, 2000. On February 11, 2000, Rampart again posted the subject property for foreclosure. DRC again filed suit. The trial court again denied DRC all relief requested. DRC then filed this appeal.FOUR OR SIX YEAR LIMITATIONS PERIOD

DRC and Rampart push the issue of limitations back and forth in their briefs. In particular, DRC argues that the state four year statute of limitations must be applied. Tex. Civ. Prac. & Rem. Code Ann. 16.035 (Vernon 1986 & Supp. 2002). Rampart argues it is the federal six year statute of limitations that applies. 12 U.S.C. 1821 (d)(14). Each then proceeds to apply the statute they believe is applicable to the facts of this case. DRC argues the notice of non-judicial foreclosure was not posted until after the four year limitations period had expired, whereas, Rampart argues it was posted within the six year limitations period.

While the parties have vigorously argued whether application of the federal six year limitations is an extension, like the discovery rule, and must be pled and proved by the person claiming the benefit of the extension; or whether it is a preemptive defense where federal law preempts application of state law and must be pled and proved by the party asserting the defense; or whether the party seeking declaration that the non-judicial foreclosure was barred by limitations has the burden to pled and prove which limitations period applies, we believe the issue can be resolved much more directly. When factual issues are not raised in an appeal, and the only issue is the law question of which statute of limitations applies, the court of appeals should apply the correct limitations statute even if the appellee does not file any brief. Williams v. Khalaf, 802 S.W.2d 651, 658 (Tex. 1990). The same logic would apply at the trial court level.

DRC sought a judicial declaration that Rampart s non-judicial foreclosure was barred by limitations. Thus, the question of limitations was before the trial court. The facts are undisputed that Rampart owned the note as a successor to the FDIC after the First National Bank of Wortham failed. Therefore, the issue to be decided is the legal question: On these facts, which statute of limitations applies?

LAW

FIRREA, provides a six year statute of limitations for causes of actions on debts and foreclosures asserted by the FDIC. 12 U.S.C. 1821 (d)(14); Holy Cross Church v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001); National Asset Placement Corp. v. Western Securities, 49 S.W.3d 420, 423 (Tex. App. San Antonio 2001, pet. denied). Even though FIRREA s express terms only grant the six year limitations period to the FDIC, the Texas Supreme Court held that FDIC s successors in interest are entitled to the benefit of the six year statute of limitations. Jackson v. Thweatt, 883 S.W.2d 171, 174 (Tex. 1994). In Trunkhill, this Court stated that FIRREA applies to all actions that could have been brought by the FDIC, not just to an action on the note; thus, foreclosures are included under the FIRREA six year statute of limitations. Trunkhill Capital, Inc. v. Jansma, 905 S.W.2d 464, 466 (Tex. App. Waco 1995, writ denied). Further, the Fifth Circuit Court of Appeals stated that FIRREA applies to foreclosure actions when it upheld a trial court s finding that a sale was valid because the non-judicial foreclosure took place within the six year limitations period. Davidson v. FDIC, 44 F.3d 246, 255 (5th Cir. 1995).

APPLICATION

Because the cause of action accrued while the FDIC possessed the lien, and Rampart is a successor in interest to the FDIC, Rampart is entitled to the six year statute of limitations period provided by FIRREA.

TOLLING OF LIMITATIONS

But the foreclosure at issue took place more than six years after the cause of action accrued on May 15, 1992, so we must also determine whether tolling of the limitations period extended the time in which Rampart could foreclose to at least February 11, 2000, the date Rampart again posted the property for foreclosure.

Based upon DRC s argument that the four year statute of limitations applies, and giving credit only for events DRC concedes tolled the limitations period, DRC calculated limitations ran on March 9, 1998. App. Brf. p. 15-6; App. Brf. Appdx 6; Plaintiff s Exhibit 29. Because we have determined that the applicable limitations period is six years, not four, using only the tolling events conceded by DRC, this would extend the limitations period to at least March 9, 2000, beyond the February 11, 2000, date when Rampart again posted the property for non-judicial foreclosure.

CONCLUSION REGARDING LIMITATIONS

We hold the FIRREA six year statute of limitations period applies to this non-judicial foreclosure, and the limitations period was tolled to extend the time in which Rampart could foreclose on the property to after February 11, 2000. Because we were not required to consider any of the additional arguments regarding periods that may have tolled limitations during the relevant time frame in order to reach our holding, we do not hold that limitations ran on March 9, 2000, nor do we reject Rampart s arguments regarding other events that may have tolled limitations. It is simply unnecessary for us to address those arguments. Accordingly, we overrule DRC s first issue.

We also find there is legally sufficient evidence to support the trial court s finding that limitations does not bar Rampart s claim for non-judicial foreclosure; and the evidence is factually sufficient in that the great weight and preponderance of the evidence is not contrary to the trial court s finding. Accordingly, we overrule the portion of DRC s fifth issue regarding the legal and factual sufficiency of the evidence concerning limitations.

RES JUDICATA

In its second issue, DRC argues that Rampart s and Gibson s (the trustee of the deed of trust) right to non-judicial foreclosure was barred by res judicata or the concept of merger and bar. Rampart argues it is DRC that is barred from re-litigating Rampart s right to non-judicial foreclosure by res judicata.

LAW

The doctrine of res judicata holds that a final judgment in an action bars the parties from bringing a second suit on matters actually litigated and on causes of action or defenses which arise out of the same subject matter and which might have been litigated in the first suit. Compania Financiara Libano v. Simmons, 53 S.W.3d 365, 367 (Tex. 2001).

The doctrine of merger is actually a principle underlying res judicata. Id. Claim preclusion, or res judicata, involves the dual principles of merger and bar. Id. If a plaintiff prevails in a lawsuit, the cause of action merges into the judgment and the cause of action dissolves, barring further litigation of the matter. Id.

APPLICATION

In the first cause, Rampart s claims regarding the validity of the lien were reduced to judgment. Dayton Reavis Corp. v. Rampart Capital Corp., No. 10-98-007-CV, at 4 (Tex. App. Waco 1999, pet. denied) (not designated for publication) (Dayton Reavis Corp. I). That left Rampart with the remedy of collecting on the judgment, including judicial or non-judicial foreclosure on the property. National Asset Placement Corp. v. Western Securities, 49 S.W.3d 420, 424 (Tex. App. San Antonio 2001, pet. denied). The right to non-judicial foreclosure, exercisable without respect to the judicial process, is not a cause of action under Texas law. Id. at 425. Because non-judicial foreclosure is not a cause of action it could not be barred by res judicata. Rampart s right to non-judicial foreclosure under the deed of trust is, therefore, not a cause of action for which judicial relief could have been granted or that would have merged into the judgment of the first cause. Thus, non-judicial foreclosure is not barred by res judicata.

One of the issues in Dayton Reavis Corp. I was whether Rampart was precluded from foreclosing on the subject property because it had, at one time, elected judicial foreclosure. Dayton Reavis Corp. I, at 21. As was previously found by this court, Rampart effectively dismissed its claim for judicial foreclosure before final judgment and thus, was not precluded from pursuing non-judicial foreclosure on the subject property. Dayton Reavis Corp. I, at 21. If either party is to be barred by res judicata or merger, it is DRC, because this Court previously stated Rampart s temporary pursuit of judicial foreclosure did not bar its pursuit of non-judicial foreclosure.

Neither res judicata, nor the underlying principle of merger, bar Rampart s claim for non-judicial foreclosure. Therefore, we overrule DRC s second issue and the portion of its fifth issue regarding the legal sufficiency of the evidence concerning res judicata. Because the issues of res judicata and merger are questions of law, not questions of fact, the portion of DRC s fifth issue regarding the factual sufficiency of the evidence concerning res judicata and merger is moot; thus we do not address it.

FINDINGS OF FACTS AND CONCLUSIONS OF LAWIn its third issue, DRC argues the trial court erred in not filing findings of facts or conclusions of law. Rampart argues DRC suffered no harm from the trial court s failure to file findings of facts or conclusions of law.

LAW

When a trial court does not issue findings of facts and conclusions of law, all facts necessary to support the judgment and supported by the record are implied. See Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990). The judgment can only be reversed on appeal if the error probably caused the rendition of an improper judgment or the error prevents a party from properly presenting a case to the appellate court. Tex. R. App. P. 44.1.

An appellant is harmed by a trial court s refusal to file findings of facts and conclusions of law when the appellant would be required to guess the reason or reasons the court ruled against the appellant. Beard v. Beard, 49 S.W.3d 40 (Tex. App. Waco 2001, pet. denied). But, it is not harmful error if the record before the appellate court affirmatively shows that the complaining party suffered no injury. Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996) (quoting Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex. 1989)).

APPLICATION

DRC stated in its brief that the record was sufficient for this court to decide the case on the merits without having to give any deference to any implied findings in support of the trial court s judgment. Thus, DRC was not required to guess the reason or reasons the trial court ruled against it. The evidence in the record supports the trial court s judgment. The trial court s failure to file findings of facts and conclusions of law did not cause the rendition of an improper judgment or prevent DRC from properly presenting its case to this court. Because DRC suffered no harm, we overrule DRC s third issue.

ADMISSION OF EVIDENCE

DRC argues in its fourth issue that the trial court erred by admitting Rampart s evidence and argument concerning the tolling effect of Atlantic Western Corporation s bankruptcy; and in its sixth issue argues the trial court erred in admitting certain documentary evidence. Rampart argues that because DRC introduced evidence regarding the tolling of the limitations period, Rampart s evidence was appropriately admitted and the documentary evidence was also properly admitted.

Because we do not use the time period called into question by AWC s filing of bankruptcy in our calculation of limitations, we need not decide DRC s fourth issue. Further, our analysis does not rely upon any of the documentary evidence admitted over objection by DRC. Accordingly, we need not address DRC s sixth issue.

ENFORCEMENT OF THE DEED OF TRUST

DRC argues in its seventh issue that the deed of trust cannot be enforced without a validly extended power of sale. Rampart argues that this issue was fully and finally determined in favor of Rampart in the judgment of the first cause and cannot now be re-litigated.

LAW

A lien exists by reason of the debt. As the debt continues and can be enforced, the lien can be foreclosed. Davidson v. FDIC, 44 F.3d 246, 253 (5th Cir., 1995). If the creditor s cause of action against the debtor upon the debt is not barred, the creditor maintains its right to foreclose. Jolly v. Fidelity Union Trust Co., 118 Tex. 58, 10 S.W.2d 539, 541 (1928). The rule has long been established in this state that the lien by which a debt is secured is incident to the debt; and that a written extension of the maturity of the debt, by the debtor, operates as an extension of the lien also, unless the extension agreement shows otherwise. Id.

APPLICATION

The jury in the first cause decided the parties agreed to extend the note and the lien. DRC s debt was reduced to judgment which left Rampart with the remedies of collecting on the judgment, one of which is foreclosing on the property. National Asset Placement Corp. v. Western Securities, 49 S.W.3d 420, 424 (Tex. App. San Antonio 2001, pet. denied).

That Rampart s power of sale is derived from the deed of trust that was originally signed in 1983 to secure the 1983 Note is not at issue. In Dayton Reavis Corp. I, this Court stated that the jury s determination in the first cause, that the parties agreed to extend the note and so the lien, was not so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Dayton Reavis Corp. I, at 12. In the words of this court:

The 1983 note was the Bank s note number 6641. The 1985 note, number 8936, states that it was a renewal of 6641. It provides: collateral securing other debts with you may also secure this note. It further refers to a Previous Deed of Trust on Real Estate. Finally, it states that the purpose of the loan is to renew and extend. Cathy Oliver, an employee of the Bank, testified that the notation previous deed of trust on real estate meant [t]he real estate that was used as collateral on the original note would be extended to this particular extension. She also said that the previous note was note number 6641.

 

Id.

This court previously affirmed the judgment in the prior cause which relied on the determination that the parties agreed to extend the lien, and that the note was secured by the deed of trust. The deed of trust securing the note gives rise to the power of sale, thus the power of sale was also extended with the lien. We overrule DRC s seventh issue.

CONCLUSION

We have overruled each of DRC s issues necessary for a disposition of this appeal. We dismissed as moot the portion of its fifth issue regarding the factual sufficiency of the evidence concerning res judicata and merger, and we did not decide its fourth and sixth issues because of our disposition of other issues. Because Rampart requested its two cross points be considered only if we sustained any of DRC s issues, we need not address either cross point. Accordingly, the judgment of the trial court is affirmed.

TOM GRAY

Justice

 

Before Chief Justice Davis,

Justice Vance, and

Justice Gray

Affirmed

Opinion delivered and filed November 6, 2002

Do not publish

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