### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-18-00278- CV

Ge rald McM illan , Appellan t

v. Kar y Aycoc k, Jerad Kolar ik, an d Li ttle C ity Investm ents, Inc., Appellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 250 TH JUDICI AL DISTRICT NO. D-1 -GN-1 7-0 0672 9, H ONO RAB LE AMY CLARK MEACH UM, J UDGE P RESIDING

M E M O R A N D U M O P I N I O N

Ger ald McMilla n appea ls from the trial court’s order g ranting a plea to the jurisdictio n fi led by Kar

y Ay cock, J era d Kolarik, and L ittle City I nvestments, I nc. (collec tively , “L ittle City ”) and dismiss ing his suit with prejudice

. We will modify the judgme nt and, as modified, aff irm it.

BACK GR OUND

I n October 2014, L ittle City loaned money to SOCO Real Est ate, L L C, (SOCO) t o purcha se rea l proper

ty located at 808 Avondale Road in Austin (the Property ). McMillan, on behalf 1
of SOCO, executed a promissory note in the orig inal principal amount of $960,000. The note was

secur ed by a deed of trust. Approxim ately one y ear later SOCO defa ulted, and L ittle City decla red
t h e n o t e due on November 1, 2015. Rather than proce ed with fore closure, L ittle City and SOCO

Acc ording to McMillan, he and his wife , Be rit McMillan, are the member s of SOCO. 1enter ed into a Reinstatement Ag ree ment, extending the maturity date of the note and providing for

new pay ment terms. The parties ag ree d that t h e R ei n s t atement Ag ree ment did not “in any way prejudice [L ittle Ci ty ’s] rights re g arding future de faults spec ified in the note a nd deed of

trust.” The note matured on the extended date of Dec ember 31, 2016. L ittle City decla red SOCO in defa

ult f or nonpay ment. I n Fe bruar

y 2017, McMillan filed suit in Travis County district
court seeking a restra ini n g o rd er p reve nting fore closure. The trial court g rante d a temporar y ex 2 parte restra ining order preve nting the sale, afte r which McMillan voluntarily dismiss ed the suit. I n Marc h 2017, McMillan filed another suit in Travis County district court ag ain seeking to re s t ra in
L ittle City from fore closing on the Property

. McMillan alleg ed various cause s of action including 3
fra ud , n eglig ent misrepre sentation, and brea ch of contra ct, and soug ht to restra in L ittle City from fore closing on the Property

. The trial court g rante d L ittle City ’s motion for summary judgme nt and dismiss ed the suit in November 2017. The t ri al court expressly found that McMillan failed to
prese nt evidenc e “su ff

i ci ent to show that he has standing to asser t any claims ag ainst any party in [t he] lit iga tion.”

Meanw hile, SOCO had filed for C h ap t er 11 bankruptc y protec tion in April 2017. 4
I n J uly 2017, the United States Ba nkruptcy Court for the W es t er n District of Texas lifted the

The named plaintiffs in this suit wer e McMillan, his wi fe Berit McMillan, and SOCO 2 Real Estate, L L C. As in the previously filed suit, the named plaintiffs in this suit wer e McMill an , Be ri t 3 McMillan, and SOCO Real Estate, L L C. The trial co u rt gra n ted L ittle City ’s motion to strike all claims broug ht by

Be rit McMillan and SOCO on the ground that McMillan, who is not a licensed attorney , could not bring claims on beha lf of either SOCO or Be rit McMillan. The c ase w as conve rted to Chapter 7 in November

2017. 4 2bankruptc y stay to allow L ittle Ci ty

to forec lose on the Proper ty . After the fore closure, Mc Millan

re fu s ed to vaca

te the Property , and L ittle City filed a forc ible detainer action in a Travis Coun t y justice court. The J ustice of the Peace rende red judgme nt g ranting L ittle C i t y possession of the Property

. This judgme nt was appea led to a Travis County coun t y co u rt at law, which awa rded possession of the Proper

ty to L ittle Ci ty

. 5
The und er l y i n g proce eding was filed on Dec ember 13, 2017. McMillan soug ht to
set aside the fore closure and sale of the Property

. L ittle City filed a plea to the jurisdiction asser ting,
among other things, that McMillan lacke d standing to challeng e the fore closure beca use he was not the mortg ag or on the deed of trust pursuant to which L ittle City fore closed on the Property

. The trial court g rante d the plea to the jur isdiction in March 2018, and Mc Millan perfe cted this appe al.

DISCUSSIO N On appea l, L ittle City asser ts that the tri al co urt proper ly g rante d its plea to the jurisdiction beca

use McMil lan had no standing to bring the wrongf ul fore closure sui t

. L ittle City also filed a motion to dismiss the appea l for lack of subject-matter jur i s d i ct i on. Standing is a component of subject-matter jurisdiction. DaimlerChrysler Corp. v. Inman , 252 S.W .3d 299, 304 (Tex. 2008) (“A court has no jurisdiction over a claim made by a plaintiff without standing to asser t it.”); Texas Dep’ t of Parks & W ildlif e v. Miranda , 133 S.W .3d 217, 228 (Tex

. 2004) (“[A] court
must not proce ed on the merits of a case until leg itimate challeng es to its jurisdictio n h ave been

McMillan appea led the county court judgme nt to the Texas Court of Ap peals for the 5 Four teenth District of Tex as , wh i ch dismiss ed the appea l on McMillan’s motion in J uly 2018. See McM illan v. Litt le City Invs., LLC , No. 14-18-00286- CV, 2018 WL 3235428, at * 1 (T ex . App.—Houston [14th Dis t.] J uly 3, 2018, no pet.) (me m. op.); see also Tex. R. App. P . 42.1.

3decide d.”). Standing must exis t at the time a plaintiff files suit and must continue to exis t betwee n

the parties at ever

y stag e of the leg al proce eding s, including the appea l; if the plaintiff lacks standing
at the time suit is filed, t h e ca s e must be dismiss ed, even if the plaintiff later acquir es an interest sufficie nt to support standing

. Martin v. Clini cal Pathology Labs., Inc. , 343 S.W .3d 885, 888 (Tex. App.—Dallas 2011, pet. denied) ; Bell v. Moores , 832 S.W .2d 749, 754 (Tex. App.—Houston [14t h Dist.] 1992, writ denied) (“A trial court deter mines its jurisdiction at the time a suit is filed. At that time, the cour

t either has jurisdiction or i t does not

. J urisdiction cannot subsequently be acquired while the suit is pending .”); see also Texas Ass’n of Bus. v. Texas Air Control Bd. , 852 S.W .2d 440,
446 n.9 (Tex. 1993) (“O ur conce rn is with a party ’s rig ht to in itiate a lawsuit and the trial court’s

corr esponding power to hear the ca s e ab initio. Standing is deter mined at the time suit is filed in the trial cour

t . . . .”).
St a n d in g ma y b e r a is e d in a p le a to th e ju r is d ic ti o n . S

e e B r o wn v
. To d

d , 5 3 S. W. 3 d 2 9 7 , 305 n.3 (Tex. 2001) (“B eca use standing is a component of subject matter jurisdiction, we consider [t he plaintiff’s] standing as we would a plea to the jurisdiction.”). “A plea to the jurisdiction is a dilatory plea.” See Bland Indep. Sch. Dist. v. Blue , 34 S.W .3d 547, 554 (Tex. 2000). I ts purpose is “to def eat a cause of ac tion without re g ard to w hether the claims asser ted have merit.” Id. A plea
to the j urisdiction may challenge wh et h er the pl aintiff has alleg ed facts s ufficie nt to aff irmatively demonstrate jurisdiction or whether the jurisdictional fac ts alleged b y t h e plaintiff actua lly exis t. See City of W

aco v. Lopez , 259 S.W .3d 147, 150 (Tex. 2009). When a plea to the jurisdi ct i o n ch al leng es the exis tence of jurisdictional fac ts, the trial court must consider the rele vant evidenc e submitted by the parties when necessa ry to resolve
t h e jurisdictional issue. Miranda , 133 S.W .3d at 227. The proper arbiter of the evidence an d t h e 4corr esponding standards of appellate revie w depend on whether the exis tence of jurisdictional fac ts

implicates the merits of the plaintiff’s case . University of Tex. v. Poindexte r , 306 S.W .3d 798, 806 (T ex . App.—Austin 2009, no pet.). Be cause the jurisdictional issue in the prese nt case does n o t implicate t he merits of McMil lan’s wrong fu l fore closure claim, we will confine our di scussion to the standards applicable in such case s. When the jurisdictional fac ts are undisputed, the trial court rules on the plea to the jurisdiction as a matter o f l aw , an d o n appea l the trial court’s ruling is revie wed de novo. Id

. I f t he fac ts are disputed, the court, not a jury , will make nece ssary fac t finding s to resolve the j u ri s d i ct i o n al issue. Id. On appea l, such finding s—whether expli cit or implicit—m ay be challeng ed for lega l o r fac tual sufficie ncy . Id. I n the prese nt case , the issue is whether McMillan had standing to bring a claim of wrong ful fore closure, and the evidenc e bear ing on that issue is not disput ed. Thus, whether McMillan has standing to bring this suit is a question of law tha t we re view de novo.

The issue of who proper ly has standing to contest a fore closure sale in Texas is well settl ed

. Goswami v. Metropolitan Sav. & Loan Ass’n , 751 S.W .2d 487, 489 (Tex. 1988). “As a
g ener al rule, only the mortg ag or or a party who is in privity with the mortg ag or has standing to
contest the validity of a fore closure sale pursuant to the mortg ag or’s deed of trust.” Id. (citing Estelle
v. Hart , 55 S.W .2d 510, 513 (Tex. C o m m ’n App. 1932, opinion adopted) ); Merc er v. Bludworth , 715 S.W .2d 693, 698 (Tex. App.—Houston [1st Dist.] 1986, writ ref ’d n.r.e.)

. McMillan’s petition

6

An exception to the g ener al rule is when a third party has a proper ty interest, whether leg al 6 or equitable, that would be aff ecte d by such a sale. I n that case , t h e t h i rd party has standing to challeng e the sale to the extent that its rig hts would be aff ecte d by the sale. American Sav. & Loan Ass’n of Houston v. Musick , 531 S.W .2d 581, 586 (Tex. 1975); Estelle v. Hart , 55 S.W .2d 510, 513 (Tex. Comm ’n App. 1932, opinion adopted)

. 5does not a lleg e that he is the mortg ag or of the Prope rty . Thus, his pleading does not aff irmatively demonstrate jurisdiction. I n its plea to the j urisdiction, L ittle City prese nted ev i d ence that SOCO

was the rec ord title holder of the Property and the mortg ag or, not McMillan. This evidenc e consisted of the aff idavi t s o f Ka ry Ay cock and J era d Kolarik, and a copy of the Reinstatement Ag ree ment identify ing SOCO as t he owner of the P roper ty , the m aker of t he note and the g rantor o f t h e d ee d of trust. This eviden ce wa s undisputed by McMillan and establishes that McMillan was not the mortg ag or. C o n s equently , he did not have standing to challeng e the fore closure pursuant to the deed of trust. See Goswami , 751 S.W .2d at 489. Thus, the trial court lac ked jurisdiction over this
appea l and prope rly

dismiss ed it.
On appea l, McMillan asser ts that the trial court should have provided him with an opportunity to amend his pleading s rathe r than dismiss his case . See Miranda , 133 S.W .3d at 226. Amendment of pleading s is permitted i f t he plainti ff’ s pleading s do not contain s u fficient fac ts to aff irmatively demonstrate jurisdiction, but do not aff irmatively demonstrate incura ble defe cts in jurisdiction. Id. Her e, howeve r, the issue is not one of pleading s u ff i ciency but, rathe r, that the undisputed evidenc e submitt ed by L ittle City demonstrates that, when this suit was filed, McMillan did not have standing to pursue a claim of wrong ful forecl o s u re . S ee Bell , 832 S.W .2d at 754 (“A trial court deter

mines its jurisdiction at the time a suit is filed

. ”)

. Moreove r, the additional jurisdictional fac ts that McMillan seeks to include in an amende d p l ea d i n g ar e t hat the trustee in
S OCO’s bankruptc y case has approve d an ag ree ment to sell to McMillan all cause s of acti o n
ag ainst L ittle City that the bankrupt estate may have. Pleading additional fac ts that descr ibe events

occur ring afte r suit was filed and, indeed, after the plea to the j urisdiction was gra nted, would not

6opera te to cure the jurisdictional defe ct. A trial court’s jurisdiction is deter mined when a suit is filed;
at that time the court either has jurisdiction or it does not. “Jurisdi ction cann o t s u b s eq uently be acquir ed while the suit is pending .” Id. ; see also Texas Ass’n of Bus. , 852 S.W .2d at 446 n.9 (standing is deter

mined at t ime suit is filed i n trial court). Remanding this cause to the t ri al court for amendment would serv e n o l egit imate purpose. The trial court did not err in dismiss ing McMillan’s case without aff ording him an opportun i t y t o amend his petition. See Texas A & M Univ. Sys. v . Koseoglu , 233 S.W .3d 835, 846 (Tex. 2007) (whe n amending pleading s would serve no leg itimate purpose dismissal without affording opportunity to amend is proper ). Finally , McMi l l an asser

ts that the dismiss al of his suit should have been without prejudice

. We ag ree . A plea to the jurisdiction does not challeng e the merits of a claim, but simply challeng es the trial court’s subject-matter jurisdiction without reg ard to the merits. Thus, dismiss al with prejudice is improper if a plaintiff is capa ble of reme dy ing the jurisdictional defe ct. See Dahl

v. S t a t e , 9 2 S

. W.3d 856, 862 (Tex. App.—Houston [14t h Dist.] 2002, no pet.); cf. Harris Cty. v. S yk es , 1 3 6 S.W .3d 635, 639 (Tex. 2004) (dism issal with prejudice is appropr iate when trial court l ac ks subject matter jurisdiction beca use of sovere ign immunit y bar)

. Whil e McMillan’s alleg ed acquisition of rig hts to claims belong ing to SOCO cannot cure the jurisdictional defe ct as it rela tes
to the prese nt case —i.e., that when this suit was filed, McMillan did not have s t an d i n g to asser t

a claim for wrong ful fore closure of the Property —it mig ht the oretica lly opera te to c onfer standing

on him to file suit in the future. Thus, while the trial court proper ly dismiss ed McMillan’s suit 7

We express no opinion as to the eff ect of any sale or assig nment o f SOCO’s rig hts to 7 McMillan by the trustee in bankruptc y or otherwise. That matter is not befor e us. See Texas Ass’n of Bus. v. T

ex a s A i r Control Bd. , 852 S.W .2d 440, 444 (Tex. 1993) (Texas courts have no 7without permitting him an opportunity to amend his pleading s, the d ismiss al should have been

without prejudice.

CONCLUSION

For the rea sons stated in this opinion, we modify the trial court’s order to ref lect that McMillan’s claims aga inst L ittle Ci ty are dismiss ed without prejudice . As modified, the trial
court’s or der dismissing Mc Millan’s claims is affirme d.

__________________________________________ Thomas J . Ba

ker, Justi ce Be fore J ustices Goodwin, B aker , and Tria na Modified and, a s Modified, Aff irmed Filed: Apr il 3, 2019

jurisdiction to render a dvisory opinions). 8