please the court apologize in advance for the quality of my voice the coverage from the cold which seems to be aggravated by the flight i took yesterday please let me know if you have any trouble hearing me not bourbon street not bourbon street about this time that maybe afterward what's undisputed in this case is the prospect had a money judgment against michael and then before the mutual of omaha bank extended any credit but prospect did not abstract to record the judgment until after m o b made its loan and took steps to perfect its collateral interest what the bank and the district court believe is that there is a bright line rule in unseated by texas law that says that because prospect did not abstract and record its money judgment before moby made its loan the prospect cannot take priority over  they've adopted a bright line and in fact the district court in this decision wrote quote it is irrelevant what m o b o could have discovered if it search for more information because prospect did not record its judgement until after m o p had loaned the money and perfected its security interest in the collateral that you should you have any evidence showing that mutually in bad faith that they knew about the fraud is quite a bit of evidence in the record showing they had actually more constructive notice and constructive notice under the hon case in the black case that are discussed in our briefs is the actual notice the actual notice that they had as part of his lo application but there are two things first as part of his initial loan application mr and disclosed his tax records which include three references to a breach of contract dispute that was given to mutual of omaha me there was a lawsuit pending or they should pending at least a dispute pending that is clear from the tax records they collected secondly the mutual of omaha loan did not occur only once and then done an initial load of nearly two million was made at subsequent lot of three hundred thousand that loan was subsequently refinance into a small business administration backed loan and the refinancing occurred after mutual of omaha had been subpoenaed for its records in connection with prospects fraudulent transfer case against the engines and the prior judgment and under section thirteen point zero one of the texas property code they do not have a good lien if they take with notice that there is a money judgment against the debtor  subsequent purchaser or mortgage or and it says that a an interest in real property is void as to a creditor who takes without notice of the instrument that's thirteen point zero on ebay and thirty two point zero and be clarifies it notices important that even and unrecorded interest is binding on the law that connects the money judgment to the lino property the specific law if they may have noticed known there was a money judgment up in new twenty the ellis decision makes clear all creditors have a general unsecured right to the property of the debtor it says all creditors have the same right to have their debts paid out of the property of the debtor unsecured right th unsecured and that continues unless by contract with the debtor or by legal process one or more acquire a right to be paid out of the proceeds of some particular property or to have some particular thing and that's the questionnaire assumes prost but had a money judgment it was an unsecured creditor as soon as m o be handed money over to the engines it was also an unsecured creditors they both had to take some steps and legal process by which they could take priority and that is where m o b s claim fails because section thirteen point zero zero one prescribes the legal process by which a bank may take priority over a prior unrecorded instrument and it specifies very clearly that it must take it without notice or else the unrecorded interest is binding upon the bank and that is how the texas appellate courts have applied section thirteen point zero and if there is one case that the panel reads should read in this in this matter it is the noble kicks in the noble case there was a default judgment against an individual similar to the judge in the prospect had against mike and then in this case and the allegation was that despite the fact that that judgment was never abstracted and recorded that nonetheless noble mortgage should be charged with actual or constructive knowledge of the judgment of the noble court also  to create and forcibly against real property owned by the judgment debtor of the judgment creditor must comply with the requirements of chapter fifty two with three that's correct it said that with respect to a lien that there is a difference between a general  secured interest and a lien and what section thirteen point zero one says is that you can't get that lead you cannot you cannot receive priority unless you comply with the statute which means you take without notice of the unreported interest in the noble case after the section where they say that the abstract of your judgment statute is irrelevant because the because the judgment was never abstract in that case they then asked the question and there's entire section on it is there other evidence to support the finding of notice in the very first paragraph of that section this is on page eighty two of the noble decision the court addressed whether there was anything that would put noble on on all of the facts that were presented after a full bench trial of the issues whether there was evidence of actual or constructive knowledge and only after assessing all of that evidence did the court come to the conclusion that there was no evidence they said they held that none of the evidence pointed to was evidence that would put a mortgage your purchaser on inquiry notice that an unrecorded money judgment in the county court of law records existed rather the evidence conclusively demonstrates that noble took its interesting good and there in lies the rub when the texas courts apply section thirteen point zero zero one to a case in which there is an  the money judgment as in noble they look at it on all of the facts they review the record and summary judgment is only appropriate if there is no dispute of material fact as to notice the noble case came down in favor of the mortgage or but it came down to favor the mortgage or after taking all of the evidence into account and finding that it conclusively established that there was no notice now in this case discovery was severely curtailed a discovery schedule of fifteen months was initially entered but at the very beginning of discovery the day before the first conference the chill of omaha bank filed this motion for summary judgment and prospect asked for an extension but it was only granted an extension until january of two thousand and fourteen so before it had the chance to oppose that motion for summary judgment only about two months of the fifteen month discovery period had elapsed and prospect preserved its objection and asked for the consideration of the motion to be delayed and its time to oppose to be continued until discovery was closed when your judgment in or which judgment the the fraudulent several counties i'd have to check the record to see what what is here but the land that has the mineral rights to your knowledge is in harris shelby both you recorded in both for the best of my knowledge it's in harris county but i could be wrong on that i don't also in the record one we tried to collect in the past the initial response by kick it was to file bankruptcy which imo be mutual of omaha bank participated in an effort to take priority over all of that and there was an issue in the court below which came up on reconsideration about whether the court appropriately dismissed the entire case as to personal as well as real property because the statute by its terms refers only to real property interest that's not an  issue that i think we need to have decided up here but to do just to clear up one little minor discrepancy i believe that one point the district court may have mistakenly said that the file for a record f twelve and that should be twenty thirteen that is correct speed about it was twenty third could if he wanted twelve but it was in fact twenty thirty so the argument that mutual of omaha bank had notice of the money judgment before the refinancing in tw relies on the two thousand and eleven subpoena to mutual of omaha bank in the fraudulent transfer action seeking to unwind the transfers that sought to evade the money judgment what i don't get after you had any or your client had any interest in any particular property with a record and you're correct the the law that meets of omaha bank relies on is very clear that you have a priority lien on particular property you have to go through the steps prescribed by law and until february fourth two thousand and thirteen prospected not abstract his judgment a record so until that point there's no existence of a priority lien against all subsequent creditors however for any what is also clear is that as of two thousand and eight prospect had a general and secure property interest in all of my kin one's property contribution entry right and for mutual of omaha bank to exceed to a higher priority interest to take priority they must follow section thirteen point zero zero one which says they must take without notice and the flat case and the hon case have clarified that means you either actual or constructive notice and every time that we've urged the equitable argument behind fla to the district court the not specifically i don't think you put your principle brief here either no flack would we raised again on reply because it is discussed i have women noble case that both mutual omaha bank proposes were taken to its extreme because in the hon case you had knowing and deliberate circumvention of a prior existing right based on a known technical defect in that case the judgment was obstruct recorded and that was good for ten years and then just ten days after it expired there was a sham transaction allegedly between being owner answer and a company put together with some of his family members in order to defeat the interest relating to got a five year old judgement out there they can't get a good mortgage on that they will take it subject to the prior unrecorded interest under section thirteen point zero zero one b that's correct and the and your best authority for that is the noble case where it addressed whether there was notice of the prior unrecorded judgment and in that case it found that there was not but in this case there certainly is evidence that a trier of fact could use to determine if there constructive or actual notice mike and left blank the questions on his form that asked are you subject to any prior money judgments that's exactly what happened in slack when the when the banker went down yes you described mutual of omaha's equal willing accomplice in the fraudulent transfer ski but you had no record support for that which there were specific records citation for that proposition by two thousand and twelve they certainly did because by the record support for them being a willing accomplice in a joint transfer scheme the record support is that they had a notice of the money judgment when the subpoena came in two thousand and eleven before refinancing in two thousand and twelve before that to the extent they had notice it was either actual constructive and the evidence of failing to keep or to either make or preserve their lexis nexis search was their own credit policy required in a lot of this size of failing to follow up on the multiple references to breach of contract dispute in the tax filing submitted by mike and lynn and the failure to follow up on the points that he left blank on the loan application asking pacifically about judgment all lead to a their all create issues a disputed fact you  may please the court i'm chris dove on behalf of mutual of omaha back and if this truly is an appeal that is resolved by one undisputed long settled principles of texas lien law as this court has noted this morning a judgment creditor holding a money judgment has no right to be paid out of any particular property of the debtor for that reason many cases sense then have noted that if you wish to have any sort of in forcible lien at all you must take other steps you must either record an abstract of judgment or in this is a principle that didn't get briefed because it's irrelevant here it never happened you can actually get a writ of execution and have an officer levy on the property but one of those two things must happen i mean what do we do with thirteen point zero zero one about without notice thirteen point zero zero one only applies to and unrecorded instrument that contains a conveyance of real property or an interest in real property a money judgment is not an instrument conveying an interest in real property it conveys no interest in any property whatsoever the abstract of judgment is the thing that creates that interest and this is a distinction that my colleague glosses over consistently in talking about the case law but it's one that is critical for this court to notice in homme which he has just talked about hon involved a prior abstract of judgment that had gone dormant and was ultimately revived by the court fine you created the interest as you were supposed to work the cow case i don't think  is harder it's more obscure but the legal principles are the same because everybody agrees that the cals belonged to the petitioners there's no doubt well they the problem was that they were not br cows in dispute did not belong to the person that had taken up the more and the question so the question was given that it's undisputed that somebody has a prior interest in this personal property t cattle now you start to look at whether somebody that took the mortgage after that had knowledge of it and apparently until you texas in one nine hundred fifty if you see unbranded cattle that suspicious i will take the texas supreme court's word on that that is not what we're dealing with here because they did not have a prior interest in any property of michael linden noble mortgage is i think the case that is most dispositive of this case when read correctly and fully one thing that mr huff is done is he keeps saying it was about notice of this unrecorded default judgment in that he is mistaken the distinctive point of noble mortgage is whether they had notice of a return of execution remembering that under texas law it is a quirk that you can make create that lean in one of two ways through the abstract of judgment that was belatedly filed in this case or through getting a writ of execution having an officer levy on the property in that case the chain of events was the default judgment  rid of execution sale of property recording of mortgage on property by noble and then the recording of the constables did because the only thing anywhere in any recording system that could have possibly given noble mortgage notice was the return of execution filed in the county court of law the question was does that give the mortgage or notice held absolutely not you are not required to even go hunting for information outside the ordinary chain of title and certainly not in the county court of law that's not where you keep real estate records and then this is the part that is devastating to their position when the petitioners have complained but that leaves a gap in the law they said there's no gap file an abstract of judgment that's what it's there for that's how you protect your interest in these  had you done that non of this would have come up we're not going to distort the law to give you a remedy when you already had one which is exactly the problem here they have a remedy they had many remedies that they chose not to follow they didn't record the judgement they didn't report it to the credit agencies they didn't file financing statements they didn't register it even in the southern district of texas and try to get rid of execution this is they had the lights  well or new of knowledge of what the interest has to be a preexisting right there has to be an interest otherwise there is nothing to know that principle disposes of the entire case when we moved for summary judgment and this is  a touchy issue we've vehemently denied that we did anything wrong in issuing this long we much prefer prospects arguments that it made during the fraudulent transfer case when it called us one of michael inman's victims that was utterly tricked by them now that they are claiming we're somehow collaborating with him because we should have found something through a highly one sided description of the record we moved for summary judgment under fraudulent transfer law but they came back and said no no that we're not pursuing anything in a fraudulent transfer a law this is under ordinary title law and we intend to show that you should have had notice of our money judgment i remember when we received that the associate coming into my office and saying can you believe this that means they just pleaded themselves out of court and that is precisely what they did i think  cause having taken the vigorous position that we were not involved in any fraudulent transfer they had no option other than to try to say well maybe a money judgment is more than every other case is that it is but it's not in the same principle applies to the refinancing of the two thousand and ten loan in two thousand and twelve there's two problems with this argument as well the first is the abstract of judgment was recorded in two thousand and thirteen it does not matter they had no interest until after the refinancing and so we don't even have to get into it if this court wanted to i recognized as i was going back through the briefs and preparing for today that it probably not sufficient to just say they have no law explaining why this would matter that we refinanced in two thousand and twelve along that was in two thousand and ten if this court is looking for authority a good case is shepherd versus interba funding three o five southwest third one and two two thousand and nine first district case explaining the universal principle it's based on the restatement that when a lender refinances a mortgage and exchanges the same debt for another debt in one transaction the prior lien priority is maintained that's why we were flabbergasted why on earth do you think it even matters that we refinanced this to the original loan that had been intended all along one in which the small business administration was satisfied the same principle takes care of that the same principle also takes care of their complaints about discovery simply put there is only one fact under texas law that matters in this case when was the abstract of judgment recorded february fourth two thousand and thirteen is the answer we are done there is no need for further discovery there will be nothing to undermine the recording date the abstract of judgment is in the record to address a question you had asked your chickens and all i know is that the harris county abstract of judgment is in the record if it was recorded in other counties that's not in the record to my knowledge and i don't know if it was or not i don't think it's relevant under this law because everybody agrees there is not an abstract of judgment filed before we perfected arlene's in two thousand and nine and two thousand and ten you did that show because yes i believe so furthermore on this discovery that they're complaining about we laid out in our brief this court has repeatedly held if you object to the fact that somebody has moved for summary judgment before the end of the discovery period rule fifty sixty is your remedy not waving your hands and saying but i still have more time you have to lay out precisely what it is that you think you need and why it will make a difference they have only ever tried to make that claim that will fifty sixty claim about one category of information electronically stored information the magistrate judge found based on our filings that we had disclosed and provide up provided everything we had there is no other form other than what we gave thousands of is now binding on the district court and on the court of appeals as the district court noted you say you have the full fifty six motion for more discovery but the magistrates already overruled that and they've identified nothing else that they need that they've received everything they needed it was irrelevant to begin with and so i think it really is that simple you without that you think noble says everything that needs to be said if if we were to agree with your position in this case i'm not saying we won't if we were to agree with that in your view are there any lucien's in texas love that need to be reconciled or tied up here or is is noble absolutely all that anyone needs to understand the law in the us in this area i don't believe there are any loosens certainly i reading what i believe is every case on point i didn't see anyone recognizing a dispute or an uncertain situation everybody to write on the subject has said a money judgment doesn't create any interest in any particular property of the debtor  i suppose in one sense this may be the first time that this particular fact situation has come up but i believe this court will resolve it using settled law it will not be making new law in any way  and if this court wants citations noble mortgage is chock full of citations for every proposition of law that disposes of the case ok mr dove thank you very much  would not apply to notice the notice of the prior unrecorded judgment as a reference in this section on page eighty two of noble mortgage to the interest held by financial holdings financial holdings held a default judgment that was the a return of execution there was a return of execution in that case the issuer had noticed that certainly not according to at least not based on the discussion that's in this case the facts that are pointed out by the court as relevant are whether noble required a credit report or payment history whether it knew that in two and a half years there have been many transfers back and forth between parties or whether the applicant filled out part of the application asking whether he was party to any judgment these are the facts that they cited and they found that based on the evidence they were not supported but it certainly did not say this is related so we to a return of execution that is a gloss that my opponent has put onto the record in fact if you read the last section of noble you'll see that it clearly assesses whether there was actual or import notice because i asked mr mr dove about thirteen point zero one because you had mentioned in his statement was that section applies only t instruments that convey an interest in property and that's no we have here what is your response to his representation my response to that is that the ellis case is absolutely clear that any interest in includes a general  secured interest in any property belonging to the debtor i think that is undisputed and you convey yes it does not have to be a conveyance and that is why the noble court assessed whether an unrecorded judgment was adequately disclose or was notice unsecured interest is in all property and if you want to perfect an interest in a particular piece of property you got to go through legal process a little process is thirteen point zero one and that says that you cannot take it without being subject to the prior interest could include an unsecured money judgment if you have notice of the instruments in the texas legislature has said if you want to step up as a lending bank and take priority over a prior unsecured creditor then you must follow this law  this law says you cannot have notice and hon and flattered and noble address inquiry notice and constructive  the central question in this case is did mitchell of omaha bank comply with section thirteen point zero zero one and the question for discovery is is there evidence showing that they were in actual or constructive knowledge that there was a prior money judgment which created an  secured interest even prior to whether it was abstracted or recorded the evidence already showed and is in the record below that mutual of omaha bank violated its own credit policy contrary to the assertions in the affidavit by its corporate representative in support of his motion for summary judgment that it either did not search or did not keep the records of a lexis nexis search that would have turned up the prospect money judgment that it ignored red flags in the loan application that ignored specific references to a breach of contract dispute in mr emmons own tax returns provided as part of mutual of omaha bank's due diligence and mutual of omaha is not seen it cited a single case stating that prospect never had any interest as soon as they got that money judgment it had an unsecured interest for mutual of omaha bank to trump that interest it had to follow section thirteen point zero one and to determine whether it followed section thirteen point zero zero one the court was required as the court in noble did to assess the facts and determine whether mutual of omaha was on actual or inquiry notice of the preexisting judge