### 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. 03-14-0029- CV

Oscar M elendez and Conni e Me lendez, Appellants

v. Citim ortgage , Inc.; Ernestine Williams; and Wend y Alexander, Appellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 261 ST JUDICI AL DISTRICT NO. D-1 -GN-1 2-0 0255 5, H ONO RAB LE TIM SULAK , JUDGE P RESIDING

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

Osca r and Connie Melende z appea l from summary judgme nt of their lawsuit ag ainst Citi mortg ag e, I nc. (Citi), Ernestine Wil liams, and Wendy Alexander (collec tively , “def endants” ). 1 The Mele ndezes sued the de fenda nts a fter Citi soug ht to fore close on the Melende zes’ proper ty in Pfluge rville, Texas. The Melende zes broug ht a varie ty of claims related to the fo re cl o s u re and soug ht damag es as well as a decla ration that they hold superior title to the proper ty

. The trial court gra n t ed C i ti’s and Wil liams’s summary -judg ment motions. For the rea sons that follow, we wil l aff irm the trial cour

t’s order s g ranting summary judgme nt.

W en d y Al ex ander was dismiss ed from the lawsuit befor e Citi and Wil liams filed their 1 s u mm a r y - ju d g me nt mo tions. The Melende zes are not appea ling the order dismiss ing Alexander, an d she is not a par

ty to the appea l.BACK GR OUND I n Aug ust 2005, Osca

r Melende z ex ecute d a note for $179,249.00, pay able to Amtrust Mortg ag e Corporation (Amtrust) as lender “and its succe ssors and assig ns.” As part of the 2 loan transac tion, both Melende zes signe d a deed of trust, dated t h e same day as the note, which

cre ated a lien on the prope rty

to secure pay

ment of the note. About two wee ks later, Amtrust sent the Mel en d ez es a letter notify ing them that Amtrust had transfe rre d the servicing rig hts of their

m ortg ag e to Citi and instructing them to make their mortg ag e pay ments to Citi

. Am t ru s t subsequently

assig ned the note to Citi by specia l endorseme nt. The deed’ s benef

iciary is “Mortg ag e Electronic Reg istration Sy stems, I nc. (MERS) (solely as nominee for L ender , as here inafter define d, and L ender ’s succ essors and a ssigns).” The deed pr ovides that:

Bor rowe r understands and ag ree s that MERS holds only leg al title to the interests g rante d by Bor

rowe r in this Security I nstrument; but, if nece ssary to comply with law or custom, MERS ( as nominee for Lender and Lender’s succe ssors and assigns ) has the rig ht to exercise any or al l o f those interests, including, but not limit ed to, the right to fo r ec l o s e a nd sell the Property and to take any action required of Lender including , but not limited to, releasing, cance ling or assigning this Security Instrument

. (Emphasis adde d.) I n May 2011, MERS assigned the deed to Citi. The Melendezes defa

ulted on the loan in 2011. They have not made a pay

ment on the loan since November 2011. I n Dec ember 2011, Ci ti sent written notice of defa ult to the

Unless o t h er wi se noted, the fac ts cited here in are taken from the 2 summary -judg ment evidenc e. 2Melende zes, war ning them that failure to cure their defa ult would result in acc eler ation of the loan and potential sale of the proper ty under the terms of the deed. I n May 2012, Citi removed the orig inal trustee and appointed Wendy Alexander as substitut e trustee. On J une 8, 2012, Citi sent the Melende zes notice that their loan had been acc eler ated and that Citi intended to eff ect a fore closure sale on J uly 3, 2012. Citi filed a copy of the posting of fore closure sale with the county cler k on J une 11, 20 12. Alexander ex ecute d a subst itute trustee’ s deed on J uly 3, 2012, convey ing the proper

ty to Cit i. Appellee Williams is t he af fiant on the substitute trustee’s de ed. After the fore closure sale, the Melende zes filed this suit, asser ting claims for brea ch of contra ct; quiet title; violations of Texas Civil Practice s and Remedies Code Section 12.002; and neg lige nce per se, based on alleg ed brea ches of Texas Property Code Sections 51.001(3), 51.001(7), 51.000(b)( 2), and 51.0025. The Melende zes asser ted in their petition that “any document purporting to allow MERS to transfe r any document is fra udulent” beca

use MERS never had any interest in the

no t e i tself, which they asser ted undermines the deed assig nment and all subsequent appointments and tra nsactions. Citi filed a traditional and no-evide nce summary -judg ment motion. Citi contende d that the deed assig nment was valid and g ave it authority to fore close under the terms of the deed and

as mortg ag ee under the Texas Proper t y C o d e. S ee Tex. Prop. Code. §§ 51.001(4)( C) (def ining mortg ag ee as the “last person to whom the secur ity interest has been assig ned of rec ord”) , .0075(c) (mortg ag ee o r mortg ag e servicer may appoint substitut e trustee to conduct forec losure). Citi also explain ed that Amtrust had notified the Melende zes in 2005 that Amtrust had assig ned, sold, or transfe rre d the mortg ag e-se rvicing rig hts to Citi and had instructed t he Melende zes to make

3pay

ments to Citi

. See id. § 51.001(3) (“‘ Mortg ag e service r’ means t h e l as t person to whom a mortg ag or has been instructed by the current mortgag ee to send pay m en t s fo r t he debt secur ed by

a mortg ag ee instrument. A mortg ag ee may be the mortg ag e service r.”)

. Citi ’s summary -judg ment evidenc e included the note, bear ing a spec i al en dorsement to Citi ; the deed; the deed assig nment from MERS to Citi ; the substitut e trustee’ s deed; the letter from Amtrust to the Melende zes notify ing them that Citi is the mortg ag e service r; an aff idavit of Citi ’s employ ee, Carlos Arguedas, stating that Citi is the mortg ag e service r; the g ener al notice of the substitut e trustee’ s sale; and Citi ’s notices to the Melende zes reg ardingacc eler ation, fore closure, a nd the trustee’ s sale. Citi urg ed t h e t ri al co u rt to g rant summary judgme nt as to all claims premised on defe cts in the assig nment of the loan, deed, or servicing rig hts beca use the Melende zes lack standing to challeng e an assig nment to which they wer e not a party

. Citi argued that this l ac k o f standing disposed of all of the Melende zes’ claims except the brea ch-of -contra ct claim, which fails due to the Melende zes’ materia l brea ch of nonpay ment. I n addition, Citi asser ted that its summary -judg ment evidenc e demonstrated that it is the curr ent mortg ag ee of the loan, and there fore , as a matter of law, it has authority to fore close ag ainst the property

. Citi also argued that the M elende zes’ alleg ation that Citi had violated Section 51.0025 beca us e i t l ac k ed a servicing ag ree ment with the curr ent

m o rt gag ee failed to state a valid claim, g iven that Citi was both the mortg ag e service r and t h e mortg ag ee. See Tex. Prop. Code § 51.0025 (establishing conditions under which mortg ag e service r may administer fore closure on behalf of mortg ag ee)

. Finally , Citi u rge d the trial court to g rant summary judgme nt on a no-evide nce basis beca use the Mel en d ezes had no evidenc e to support

cer tain elements of the ir claims.

4The Melende zes responde d to Ci ti ’ s s u mm a r y - ju d g me nt mo ti o n a

n d f ile d an amende d petition, adding new claims for violations of the Texas Debt Collection Act, wrong ful fore closure, and wrong ful eviction, and for a decla ratory judgme nt voiding the substitut e trustee’ s deed and sale of the prope rty . They

also amende d their brea ch-of -contra ct claim. I n their ame nded petition, the Melende zes relied more heavily on their theory that the deed assig nment to Citi was invalid, arguing that the assig nment was defic ient not only beca use MERS had no interest in the note, but also beca use M E RS’s assistant secr etar y lacke d authority to sign the assig nment. The Melende zes’ summary -judg ment evidenc e included an aff idavit of their attorney , a deposition of an office r of MERS, and a l et t er from the Ohio Secre tary of State to a United States Attorney

. I n both their

a me n d e d p e ti tion and their response to Citi ’s summary -judg ment motion, the Me le n d e ze s a r g u e d th a t they have standing to c halleng e assig nments and that the deed assig nment’s defe cts preve nted Citi from being a mortg ag ee or mortg ag e ser

vicer entitled to f

orec lose under the Texas Prope rty Code. Citi filed a re ply to the Melende zes’ response arguing that all of the Melende zes’ claims, including the newly added claims and the amende d brea ch-of -contra ct claim, stem from their

err oneous theory that the deed assig nment was not valid. Citi reiter ated that its summary -judg ment evidenc e established that MERS had assig ned its interest under the deed to Citi and that Citi was the mortg ag e ser

vicer on the loan, meaning that it ha d authority to f orec lose both a s mortg ag ee a nd as mortg ag e ser

vicer . Citi did not amend its summary -judg ment motion. Wil liams filed a no-evide nce summary -judg ment motion. The Melende zes did not file a r esponse to Willi ams’s motion.

5The trial court g rante d both Citi ’s sum mary -judg ment motion and Wil liams’s

summary -judg ment motion. The Melende zes filed a motion to vaca te j u d gm en t, which was

overr uled by operation of law. This appe al followed.

STANDARD OF REVIEW When a party moves for summ ary judgme nt under Te x as Rules of C ivil Procedur e 166a(c ) and 166a(i) and the trial court g rants the motion without specify ing the g rounds, we usually conduct our initial revie w under the no-evide nce stand ar d o f Rule 166a(i). See Ford Motor Co.

v. Ridgway , 135 S.W .3d 598, 600 (Tex. 2004). I f the nonmovant is unable to produce evidenc e that raises a g enuine is s u e of materia l fac t, then we need not analy ze whether the movant’s evidenc e satisfied Rule 166a(c ). Id. I n the interest of ef fi ci en cy , howeve r, we may revie w under the traditional standard of Rule 166a(c ) first if that standard is dispositi ve, as it is in this case for Citi ’s summary -judg ment m o t i o n . See Poag v. Flories , 317 S.W .3d 820, 825 (Tex. App.—For t Worth 2010, pet. denied) ; see also Tex. R. App. P. 47.1 (appe llate courts must hand down opinions that are as brief as pra cticable but that addre ss ever y issue raised a

nd nece ssary

to disposit ion of appe als).
We revie w traditional summary -judg ment mo t i o ns de novo, taking all evidenc e favor able to the nonmovant as true, indulging ever y rea sonable infere nce, and resolving any doubts in the nonm o v an t ’s favor

. Provident Life & Acc ident Ins. Co. v. Knott , 128 S.W .3d 211, 215-16 (Tex. 2003). I n a traditional summary -judg ment motion, the movant bear s the initial burden to show that it is entitled to judg ment as a matter of law beca use there is no g enuine issue of materia l f act. Id. (citing Tex. R. Civ. P. 166a(c )). A defe ndant need neg ate only one essential element of a cause

6of action to be entitled to summary judgme nt on that claim. Randall’s Food Mkts., Inc. v. Johnson ,

891 S.W .2d 640, 644 (Tex. 1995). Once the m o v ant produce s evidenc e entitling it to summary judgme nt, the burden shifts to the nonmovant to prese nt evidenc e that raises a fac t issue. See Phan Son Van v. Pe na , 990 S.W .2d 751, 754 (Tex. 1999).

Wi ll ia ms f il e d h e r s u mm a r y - ju d g me nt mo ti on under the no-evide nce standard of Rule 166a(i) alone. A no-evide nce summary -judg ment motion can be g rante d if, afte r adequate time for discovery , the movant asser ts that there is no evidenc e of an essential claim or defe nse for which the nonmovant bear s the burden of proof and the nonmovant fails to respond with evidenc e raising a fac t issue on the challeng ed elements. LMB, Ltd. v. Moreno , 201 S.W .3d 6 8 6 , 688 (Tex. 2006) (per curiam) (citing Tex. R. C iv. P. 166(a)(i))

.

ANALYSIS
I n three issues on appea l, the Melende zes argue that the trial court err ed by g ranting

sum m ar y j u d gm ent beca use (1) Citi did not addre ss all of the Melende zes’ claims in its summary -judg ment motion, (2) there was suffi c ie n t s ummary -judg ment evidenc e to raise a fac t issue

on one or more claims, and (3) the summary -judg men t re co rd shows that Wil liams was acting without capa city

. Citi re sponds that (1) its summary -judg ment motion ref utes any claims not addre ssed in its motion by establishing the deed assig nment’s validity and (2) its summary -judg ment evidenc e conclusively established that it was entitled to fore close on the proper ty

. Wil liams responds that the tria l court properly g rante d her no-evidenc e sum mary -judg ment motion because the Melende zes failed to re spond to it.

7Citi und erm ined the Melendeze s’ claim s I n their first point of err or, the Melendez es ar gue that the trial court should have denied summary judgme nt on the claims that they added in their amende d petitio n b ecause Citi ’s summary -judg ment motion did not addre ss these claims. Citi challeng ed the new claims in its reply but did not amend its summary -judg ment motion to addre ss them. I t is g ener ally reve rsible error for a trial court to g rant summary judgme nt on a claim not expli citly addre ssed within the summary judgme nt motion, but there is a limit ed exception to this rule when the err or is harmless beca use the motion raises g rounds that undermine the unaddre ssed claim. G & H Towi ng Co. v. Magee , 347 S.W .3d 293, 297-98 (Tex. 2011). This exception applies “(1) when the movant has conclusively proved or disproved a matter (usually corr esponding to a claim’s element or t o an af fi rmative defe nse) that would also prec lude the unaddre ssed claim as a matter o f law or (2) when the unaddre ssed claim is deriva tive of t h e ad d resse d claim, and the movant proved entitlement to summary judgme nt on that addre ssed cl ai m . ” W i lson v. Davis , 305 S.W .3d 57, 73 (Tex. App.—Houston [1st Dist.] 2009, no pet.).

As we will discuss in more detail below, Citi proved as a matter of law that the deed assig nment was valid, which disproved most of the Melende zes’ claims. Citi raised this g round for

sum m ar y j u d gm en t in its motion. The Melende zes’ claims for (1) filing a fra udulent lien, (2)

n egl i g ence per se based on violations of Property Code Chapter 51, (3) brea ch of contra ct , (4 ) violations of the Texas Debt Collection Act , an d (5 ) relief for wrong ful fore closure, wrong ful eviction, and forc ible detainer are all based on their alleg ation that the deed assig nment was invalid and there for e C i t i lacke d authority to notice and conduct the fore closure sale. Their other claims

8seeking to quiet title and to obtain injunctive relief and decla ratory judgme nt are derivative of these addre ssed claims. Consequently , Citi adequately proved its entitlement to summary j u d gm en t o n the basis of the deed assig nment, and the trial court did not err by g ranting Citi ’s summary -judg ment motion. Simi larly , to the extent the Mel en d ez es ra i s ed any new claims in their amende d petition

asser ting that C iti had not provided proper notice of the fore closure (on a basis other than Citi ’s alleg ed lack of authority to provide notice), C i t i h ad addre ssed these claims with its summary -judg ment evidenc e of the notices provided to the M el endezes. We overr ule the Melende zes’ first issue.

Citi’s sum m ary-j udgme nt evidence e stablish ed its authority to foreclose

Virtually all of the Melende zes’ claims rest on their contention that Citi lacke d authority to fore close as the mortg ag ee beca use M E R S ’s as s ignme nt of the deed to Citi was not valid. Either a mortg ag ee or a mortgag e servicer may initiat e a nonjudicial fore closure under the Texas Property Code. Tex. Prop. Code §§ 51.0025 (mortg ag e service r may administer fore closure

on behalf of m ortg ag ee) , .0075(c) (mortg ag ee or mortg ag e servicer may appoint substitut e trustee to conduct fore closure)

. The Property Code define s a mortg ag e service r as “the last person to whom

a mortg ag or has been instructed by the curr ent mortg ag ee to send pay ments for the debt secur ed by

a secur ity instrument,” and a mortg ag ee as “(A ) the g rante e, benef ici ar y , o wn er, or holder of

a secur ity instrument; (B ) a book entry sy stem; or (C) if the securi t y i n t erest has been assig ned of rec ord, the last person to whom the secur ity interest has been assi gn ed o f re co rd.” Id . § 51.0001(3), ( 4).

9Citi attache d evidenc e of the mortg ag e-se rvicing -rig hts tran s fe r and the deed

assig nment to its summary -judg me nt motion. Amtrust’s letter to the Melende zes informed them that Amtrust had transfe rre d the servicing rig hts to Citi and instructed the Mel en d ez es to make future pay ments to Citi

. Acc ording ly , in September 2005, Citi beca me t h e mortgag e servicer as defined b y t h e Property Code, reg ardle ss of whether it later beca me the mortg ag ee. Id. § 51.0001 (3 ) (“‘ Mortg ag e service r’ means the last person to whom a mortg ag or has been instructed by the curr ent mortg ag ee to send pay

ments for the debt secur ed by a secur ity instrument.”). Citi also submitt ed the deed assig nment as summary -judg ment evidenc e, which established it as the m o rt gagee. Id. § 51.0001(4)( C) (“[I ]f the secur ity interest has been assig ned of rec ord, the last person to whom the secur ity interest has been assi gn ed o f record” is the mortg ag ee.)

. This summary -judg ment evidenc e put the onus on the Melende zes to ref ute Citi ’s status as mortg ag e service r and mortg ag ee. See Aye ni v. State , 440 S.W .3d 707, 7 0 9 (T ex. App.—Austin 2013, no pet.) (mem. op.) (whe n movant meets initial burden of demonstrating that there is no g enuine issue of materia l fac t, burden of ra ising g enuine issue of materia l fac t shifts to nonm ovant). The Melende ze s d id n o t s u b mi t a n y s u mm a r y -judg ment evidenc e ref

uting the validity of either Amtrust’s transfe r of the m ortg ag e-se rvicing rig hts to Citi or MER S’s as s i g nment of t he deed to Citi

. I n their summary -judg ment response , the M el en d ez es’ only argument about Citi ’s status as the mortg ag e service r is that it could not appoint itself as the mortg ag e service r beca use it

was not the mortg ag ee. Citi , howeve r, was alre ady the mortg age service r befor e it beca me the mortg ag ee, and the Melende zes offe red no evidenc e to ref ute the 2005 letter from Amtrust instructing them to send pay ments to Citi

. L ikewise, the only evidenc e submitt ed by the Melende zes

10with their summary -judg ment response

— t h ei r attorney ’s aff idavit, the Ohio Secre tary of State’s letter, and the deposition of Wil liam Hultman—does not raise a fact i s s u e about the validity of MERS’s assig nment of t he deed t o Citi

. The letter and depositi on ref er to s u s p ected notary fra ud in Ohio, not the s pecif

ic facts of t his case . The de p o s i t i o n was taken for an unrelated case before MERS ever assig ned the de ed in this case. Moreove r, the Melende zes do not expl ain how or w hy these do cu m en t s show that MERS’s assistant secr etar y lacke d authority to sign the assig nment. 3 Consequently , Citi established as a matter of law that it had authority to fore close as both mortg ag e service r and mortg ag ee.

Even if the Melende zes had submi t t ed summary -judg ment evidenc e raising a fac t issue 3 about the validity of the assig nment, they do not have standing to challeng e the assig nment. They did not alleg e any

g rounds that would re nder the assig nment void, which is the onl y circ umstance in which mortgag ors who are not a par ty to a deed-of- trust assig nment have standing to challeng e that assig nment. Tri-Ci ties Constr., Inc. v. A me r i ca n Nat’l Ins. Co. , 523 S.W .2d 426, 430 (Tex. App.—Houston [1st Dist.] 1975, no writ) (“The law is settled that the obligor s of a claim may defe nd the suit broug ht the reon on any g round which r ender s the assig nment void, but may not defe nd on any g round which rende rs the assig nment voidable only , beca use the only interest or rig ht which an obligor of a claim has in the instrument of assig nment is to insure him self that he will not have to pay the same claim twice.” ). The Melende zes contende d the assig nm en t was defe ctive beca use (1) Amtrust had forf

eited its corpor ate privileg es in Texas befor e the assig nment, rende ring MERS incapa ble of assig ning the deed as Amtrust’s nominee or ag ent, (2) MERS lacke d authority to assig n the deed beca

use it had no i n t er est in the note, and (3) the assistant secr etar y who signe d the assig nment lacke d authority

. All of these arguments would rende r the assig nment mere ly voidable, not void. See Hinkle v. Adams , 74 S.W .3d 189, 193 (T ex . App.—Texarkana 2002, no pet.) (for feiture of corpor ate privileg es does not exti ng uish corpor ation as entity); Bierwirth v. BAC Home Loans Ser vi ci n g

, L.P. , No. 03-11-00644- CV, 2012 WL 3793190, at *3-4 (Tex. App.—Austin Aug

. 30, 2012, pet. denied) (mem. op.) (n o m i n ee u nder deed of trust can assig n deed of trust separ ately from note); Morlock, L.L.C

. v. Bank of New Y ork, 448 S.W .3d 514 , 5 1 7 (Tex. App.—Houston [1st Dist.] 2014, pet. filed) (“When someone wi t h o ut authorization signs a conveyance on behalf of a g rantor corpor ation, the cause of action for fra ud to set aside the assig nment belong s to the g rantor. A third party lacks standing to challeng e this voidable defe ct in the assig nment.” (citations omitted)). As a result, the Melende zes lack standing to challeng e the assig nment. 11I n addition, Citi ’s summary -judg ment evide n ce conclusively established that it

provided proper notice under the Property Code. The 2005 letter from Amtrust to the Melende zes instructing them to send pay ments to Citi satisfies the require ments of both Sections 51.0001(3) and 51.0025(1). See Tex. Prop. Code §§ 51.0001(3) (def ining “mortg ag e service r”) ; .0025(1) (re quiring ag ree ment betw ee n m o rtg ag e service r and mortg ag ee allowing mortg ag e service r to sever ice mortg ag e). Citi ’s summary -judg men t ev i dence also included a cer tified copy of the notice of the substitut e trustee’ s sale, which indicated that the sale was to occur at the Travis County Courthouse, and bear s the Travis County Clerk’s stamp that it was filed and rec orded. This notice complies with Section 51.002(b)( 2). See id. § 51.002(b)( 2) (e stablishing notice require ments). There fore , Citi ’s summary -judg ment evidenc e established as a matter of law that it complied with the Property Code’s notice re quirements. We over rule the Me lendezes’ se cond issue.

The Melendeze s did not respond to Will iam s’s no-evidence sum m ary-j udgme nt m otion

Wil liams was the aff

iant on the statement of fac ts attache d to the substitut e trustee’ s deed executed afte r the fore closure sale. On appea l, the Melend ez es argue that Wil liams was char g ed with knowledg e of the public rec ord, i.e., with knowledg e of the deed assig nment’s defe cts. Co n s eq u en tly , they asser t, her actions on behalf of Citi violated the Texas Civil Practice s and Remedies Co d e an d the Texas Debt Collections Act, wer e a brea ch of contra ct, and constituted a wrong ful fore closure.

The Melende zes failed to respond in the trial court afte r W i l l i ams filed her noe v id ence summary -judg ment motion. Wil liams asser ts that this failure to respond is fata l. We a g r e e .
12“In response to a no-evide nce g round for summary judgme nt, the nonmovants need not marshal their

proof; howeve r, their summary -judg ment response needs to point out evidenc e that raises a g enuine issue of fac t as to the challeng ed elements.” San Saba Energy, L.P. v. Crawf ord , 171 S.W .3d 323, 330 (Tex. App.—Houston [14t h Dist.] 2005, no pet.). Under Rule 166a(i), the trial court “ must g rant the motion unless the responde nt produce d summary -judg ment evidenc e raising a g enuine issue of materia l fac t.” Tex. R. Civ. P. 166a(i) (emphasis added). The Melende zes produced no evidence in response to Willi ams’s motion. W e over rule the Me lendezes’ third issue.

CONCLUSION Having overr

uled the Melende zes’ issues, we aff irm the trial court’s order s g ranting summary judgme nt for Citi and Wi lliams.

_________________________________________ Cindy Olson Bour land, J ustice Be fore Chief J ustice Rose, Jus tices Goodwin a nd Bour land Affir med Filed: June 25, 2015

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