### 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. 03-12-00126- CV

Gr een Tre e Servic ing, L LC, Appellan t

v. ICA Wholesale, Ltd. d/b /a A-1 Hom es, Appellee

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 250 TH JUDICI AL DISTRICT NO. D-1 -GN-0 9-0 0087 2, H ONO RAB LE RHO NDA HURLEY , JUDGE P RESIDING

O P I N I O N

Gre en Tree Servicing , L L C appea ls the trial c o u r t’ s f in a l ju d g me nt awa

rding damag es and attorne y ’s fe es to I CA Whol esale , L td. d/b/a A-1 Home s (A-1) for Gr een T ree ’s bre ach of the implied war

ranty of title in connec tion with its s ale to A-1 of a used manufa cture d home. Gre en Tree asser

ts that the tri al co u rt er red in deny ing its plea to the jurisdiction, in g ranting judgme nt ag ainst it for brea ch of the war ranty , and in awa

rding damag es and attorney ’s fee s to A-1. Be cause we conclude that Gre en Tree did not brea ch the war ranty of title as a m at t er o f l aw, we

reve rse the trial court’s judgment and rende r j udg ment that A-1 take nothing on its claims ag ainst Gre en Tre e.

BACK GR OUND

A-1 orig inally filed a decla ratory -ju d gm en t action ag ainst Ruben V. Alba and Stella G. Alba, individually and d/b/a Paloma B lanca Mobile Home Park (the Albas). A- 1 soug hta deter

mination of the owner ship of a particula r manufa cture d home for which the Texas D epar tment of Housing and Communi ty Affairs (TDHCA) ref used to issue a “stateme nt of owner ship and location” (SOL ). I n the ordinary course of its business, A-1 had purcha sed the manufa cture d home 1 from Gre en Tree and had applied for an SOL

. The TDHCA ref used to issue the SOL , advising A-1 that it had “re ason to believe that the manufa cture d home is stolen or unlawfully conver ted” and that “issuance of a statement of owner ship a nd location would defr aud the owner or a lienholder of the manufa cture d home.” The TDHCA informed A-1 that it had thirty day s to reque st a hear ing on the 2 ref usal to issue an SOL

. See Tex. Occ. Code §§ 1201.209( 2), .210(b)

.

I n the m eanti me, A-1 filed a lawsuit ag ainst Gre en Tree in Ector Count y , claiming that Gre en Tre e had ha

rmed it by

failing to deliver mar

ketable title to the manuf actur ed home a

nd

asser ting claims for damag es and attorney ’s fe es under the Texas Dec eptive Trade Practice s Act (DTPA) and the Texas Business and Commerce Code for brea ch of the implied war ranty of t i t l e.

An SOL eff

ectively opera tes like a title cer tificate to a manufa cture d home and is define d 1 by the applicable st at u t es as “a statement issued by the [TDHCA] and setting forth: (A) the owner ship and location of a manufa cture d home in this state as provided by Section 1201.205; and (B ) other information require d by this chapte r.” Tex. Occ

. Code §§ 1201.003(30), .214(a) (ef fec tive September 1, 2003, “all outstanding documents of title are considere d to be statements of owner ship and location”)

. To be entitled to an S OL, a party must submit a form setting forth, among other things, the na

mes and a ddresse s of the seller and new owner and whether the owner has ele cted to trea t the home as re al or pe rsonal prope rty

. See id. § 1201.205. The Albas had been corr es p o n d ing with the TDHCA, asser ting owner ship rig hts to the 2 manufa cture d home. They had preva iled on trespass claims in an ear lier New Mexi co lawsuit they broug ht ag ainst Gre en Tree’ s prede cessor -in-intere st that arose o u t o f t hat party ’s repossession of the manufa cture d home. Although the Albas also asser ted claims for conver sion in that suit, the final judgme nt in that suit did not a djudicate owner ship of the home or awa rd any relief for c onversion. I t does not appea

r fr om the rec ord that the Alba s provided the f inal judgme nt to the TDHCA. 2See Tex. Bus. & Com. Code §§ 2.312, 17.50. Pursuant to a Rule 11 ag ree ment, A-1 and Gre en Tree

consolidated the Ec tor County action with the Tra

vis County

action ag ainst the Albas. Gre en Tree then filed a plea to t he jurisdiction, asser ting that A-1 had failed to exhaust it s administrative reme dies with the TDHCA be fore filing suit. The tria l court denie d the plea, and Gr een T ree filed a ma ndamus with this C ourt on the issue, which we denied. The Albas and Gre en Tree then eac h filed motions for summary judgme nt, which the trial court denied. After

a bench trial, the trial court deter mined that Gre en Tree brea ched the war ranty of title and awa

rded A-1 $3,549.11 in economic damag es and $40,000 in attorney ’s fee s, plus additional amounts in the event of an unconte sted appe al. Despite finding that Gre en Tree brea ched t h e wa rr anty of title, the trial court also found that the manuf

actur ed home “ is neither owne d by the Albas nor enc umbere d by any prese nt char g e or lien interest in their favor ” and that th e h o me is “now owned by and should be titled exclusively to A-1 Homes or a person of A-1 Homes’ desig nation. ” Additionally , the trial court 3 found that Gre en Tree sold the manufa cture d home to A-1 “without an acc ompany ing g ood and marke table title” and that “A- 1 Homes was unable to obtain a title cer tificate [S OL ]” for the home. Gre en Tree filed a motion for new trial, which was overr uled by opera tion of law, and then perf ecte d this appeal.

A-1 had alre ady resold the home to a third party befor e filing its lawsuit ag ainst the Albas, 3 notwithstanding the fac t that it had not rec eived an SOL from the TDHCA. Acc ording to the rec ord, that third party

has not asser

ted any claims ag ainst A-1 base d on the abse nce of an SOL

. 3DISCUSSIO N Gre en Tree challeng es the trial court’s judgme nt ag ainst it for brea ch of the implied

war ranty of title in connec tion with its sale of the manufa cture d home to A-1. The Business an d Commerce Code outlines an implicit war ranty by the seller of g oods that (1) the title convey ed shall be g ood, and its transfe r rig htful; and (2) the g oods shall be delivere d fre e from any secur ity interest

or other lien or encumbr ance of which the buy er at the time of contra cting has no knowledg e. Tex. Bus. & C om. Code § 2.312(a) . A bre ach of this im plied war

ranty of title is actionable under the DTPA, and a party preva iling on its DTPA claim is entit l ed t o re co very of its attorney ’s fee s. Id. § 17.50(a) (2), (d); Saenz Motors v. B i g H. A uto Auction, Inc. , 653 S.W .2d 521, 524-25 (Tex. App.—Corpus Christi 1983), aff’d , 665 S.W .2d 756 (Tex. 1984).

Gre en Tree arg

ues that beca

use the trial court ultimately found that the Albas had no

o wn er s h i p interest in or lien on the manufa cture d home, the title that Gre en Tree convey ed was indeed “g ood” and “unenc umbere d,” and there fore Gre en Tree ’s actions could not have constituted

a brea ch as a matter of law. A-1 cites the TDHCA’s ref usal to issue the SOL as evidenc e of Gre en Tree ’s failure to c onvey g ood title. A-1 arg ues that a brea ch of the implied war ranty of title
may be found not only when the seller’ s title is not g ood in fac t, but also under circ umstances when

a third party ’s asser

tion of a colora

ble, nonspurious owner ship claim subjects the buy er to a lawsuit to protect its owner ship interest.

A-1 cites case law from other jurisdictions upholding brea ch of the war ranty of title when a third party has asser ted a colora

ble owner ship claim to the subject proper ty even when that

owner ship claim ultimately proves meritless; howeve r, n o Texas court has so expanded the plain

4lang uag e of section 2.312 of the Business and Commerce Code. Compare Tex. Bus. & Com. Code

§ 2.312(a) (providing that seller wa rra nts that title is g ood, transfe r is rig htful, and g oods are fre e of secur ity interests and other encumbr ance s and liens), with, e.g. , Frank Arnold Contractors, Inc.

v. Vilsmeier Auction Co. , 806 F.2d 462, 464-65 (3d Cir. 1986) (dete rmining that Pennsy lvania law

wo u l d allow purcha ser “to rec over for a brea ch of war ranty of title when he demonstrates t h e exis tence of a cloud on his title, reg ardle ss of whether it eventua lly develops that the t hird party ’s title is superior”). Rathe r, Tex as courts have require d disturbance of a buy er’ s “quiet possession” for the buy er to succe ed on i t s claim for brea ch of the war ranty of title. See Saenz Motors , 653 S.W .2d at 524-25 (seizure of vehicle by DPS on alleg ation that it wa s stolen held sufficie nt to support brea ch reg ardle ss of whether alleg ation was proven true); Trial v. McCoy , 553 S.W .2d 199, 200-01 (Tex. Civ. App.—El Paso 1977, no writ) (police’ s seizure of pistol on alleg ation that it was stolen held sufficie nt t o es t abli sh brea ch reg ardle ss of whether buy er could prove it was stolen);

see also Ammons v. Nissan , No. 14-00-01286- CV, 2001 WL 1013384, at *2 (Tex. App.—Houston [ 1 4 t h Dist.] Sept. 6, 2001, no pet.) (not desig nated for publication) (noting “common threa d” in Texas case s finding brea ch due to disturbance of qui et pos session is that item at i ssue “was never
returne d to the buy er” ).

Texas case s wher e a brea ch of the war ranty of title has been found due to the seller’ s failure to provide a title cer tificate have also involved disturbanc e o f t h e b uy er’ s possession by seizure or other depriva tion of the phy sical item by a third party

. See Horta v. Tennison , 671 S.W .2d 720, 723-24 (Tex. App.—Houston [1st Dist.] 1984, no writ) (police’ s impoundment of vehicle plus seller’ s failure to provide title cer tificate constituted brea ch of war ranty ); H.E.D. Sales, Inc. v. Szelc ,

5596 S.W .2d 299, 300-01 (T ex. Civ. App.—Houston [14t h Dist.] 1980), rev’ d in part on other

grounds , 603 S.W .2d 803 (Tex. 19 8 0 ) (c ar deale r’s failure to provide buy er title cer tificate plus bank’s seizure of car constituted brea ch of war ranty of title). No Texas court has held that a buy er whose quiet possession ha s not be en disturbed may preva il on a claim ag ainst the seller for brea ch of the wa rra nty of title outlined in section 2.312(a). 4
Her e, A-1 cannot point to any action, incl u d i n g t h e TDHCA’s failure to issue the SOL , that disturbed its quiet possession of the manufa cture d home. I n fac t, A-1 was able to

rese ll the home to y et another purcha ser who, as of the trial date, had not r aised any claims ag ainst A-1 for its failure to provide an SOL

. Fur thermore , althoug h the trial court made a fac t finding that 5 Gre en Tree sold the home to A-1 “without an accom panying g ood and marke table title ” (empha sis added) , section 2.312 does not contain the expli cit require ment that a seller’s c o n v ey ance include

a title cer tificate or other documentar y proof of owner ship. See Tex. Bus. & Com. Code § 2.312(a) 6
By analog y , case s involving real property that have found brea ch of the warranty of t itle 4 have simil arly require d some form of eviction, either actua l or constructive, o f the purcha ser from the proper ty rathe r than the mere exis tence of a cloud on the proper ty ’s title. See Schneide r v. Lipscomb Cnty. Nat’l Farm Loan Ass’n , 202 S.W .2d 832, 834 (Tex. 1947) ; French v. Bank of the S.W

. Nat’l Ass’n , 422 S.W .2d 1, 6 (Tex. Civ. App.—Houston [1st Dist.] 1967, writ ref ’d n.r.e.) ; Schell v. Black , 321 S.W .2d 373, 375 (Tex. Civ. App.—Eastland 1959, no writ); see also Sun Exploration & Prod. Co. v

. Benton , 728 S.W .2d 35, 37 (Tex. 1987) (prope r measure of damag es for brea ch of war ranty of g ood title is considera

tion paid for rea l proper

ty , and absent evidenc e of such damag e, there can be no bre ach)

. Although the trial court’s awa rd to A-1 of $3,549.11 in economic damag es was supported 5 by a finding of fac t, it i s n o t cl ea r from the rec ord what evidentiar y support there was for actua l economic damag es. Howeve r, Gre en Tree does not a ssert any evidentiar y challeng es to the awa

rd of these da

mag es. Whil e the Business and Commerce Code does not define the term “title,” it does define the 6 term “docume nt of title” as being a “re cord that in the reg ular course of business or financ ing is trea ted as adequately evidenc ing that the person in possession or control of the rec ord is entitled to 6(seller war rants that “the title convey ed shall be g ood, and its transfe r rig htful”); see also American Petrofina, Inc. v. PPG Indus., Inc. , 679 S.W .2d 740, 749 (Tex. App.—For t Worth 1984, writ dism’d) (re fusing to broade n war

ranty of title to cre ate war

ranty of delivery of g oods wher e statute rea ds that “g oods shall be deliver ed fr ee f rom any secur ity interest or other lien or encumbr ance ” and noting that defe ndant could not ha ve brea ched war

ranty of g ood title “since there was no showing [i t] did
not have g ood title” to items sold). Whil e the statute does not define “title,” we conclude that its use of the term, m o d ified by the adjec tive “g ood,” countena nces leg al owner ship rathe r than a documentar

y rec ord, espec ially since the statute applies to the sale of g oods, which often as a matter of course do not have title cer tificates or simil ar documentation. Cf. Doyle v. Harben , 660 S.W .2d 586, 588 (Tex. App.—San Antonio 1983, no writ) (noting that even though seller had acquir ed title

cer tif ic a te s to c a r s f r o m D epar

tment of Hig hway s and Public Transpor tation, it nonetheless had never acquir ed “g ood title” to them beca use they wer e stolen). The trial court’s fac t finding s that the Albas lacke d an owner ship interest in the home, that the home is not encumbe red by any lien or ch ar ge i n t h e Albas’ favor , and that the home is owned exclusively by A-1 support the conclusion, as a matter of law, that Gre en Tree did not brea ch the war ranty of title beca

use (1) Gre en Tree in fac t had “g ood” title to the manufa cture d home at the time of the sale, (2) the transfe r to A-1 was acc ording ly “rig htful,” and (3) Gre en Tree delivere d the h o m e to A-1 “fr ee” of any secur ity interest or other lien or encumbr ance . See Tex. Bus. & Com. Code § 2.312(a)

. On thes e fac ts, and in light of Texas case law requiring a disturbance of

rec eive, control, hold, and dispose of the rec ord and the g oods the rec ord cover s.” Tex. Bus. & Com. Code § 1.201(b)( 16). The war ranty statute at issue here ref ers g ener ally to “title,” not a “docume nt of title.” See id. § 2.312(a)

. 7quiet possession fo r actionable brea ch of the warranty of t itle, we hold that the t rial court err ed in

deter mining that Gre en Tree brea ched the implied wa rra nty of title in the sale of the manufa cture d home to A-1. Acc ording ly , we reve rse the trial court’s judgme nt awa rding damag es and attorney ’s fee s to A-1 and r ender

judgme nt that A-1 take nothing on its claims ag ainst Gree n Tree

. 7

__________________________________________ J eff Rose, J ustice Be fore Chief J ustice Jones, J ustices Rose and Goodw in Reverse d and Rende red Filed: Aug ust 7, 2014

Be cause of our dispositi on o n this issue, we need not addre ss Gre en Tree ’s additional 7 issues. See Tex. R. App. P . 47.1. 8