### In The C ou rt o f A p p ea ls Si x t h Appe l l at e Di st r i c t o f Te x as a t Te x ar ka na

______________________________ No . 0 6- 07 -0 01 16 -C V

______________________________ ANN CASSTEVENS, I

NDI VI DUAL L Y AND ON B EHAL F OF KENNET H CASSTEVENS, DECEASED, Appellant V. DANI ELSMI TH AND SHANNON SMI TH, Appe llees

On Appea l from the 114th J udicial District Court

Smit h County , Texas Trial Court No. 05-3448- B

B e f o r e M o r r i s s , C

. J. , C a

rt e r an d M o s e l e y , JJ. Opinion by

J ustice Carte rKenne th Casstevens died af ter this controve rsy

arose . 1 2 O P I N I O N Ann Ca sst e ve ns and

he r husba

nd we re de fr a

ud e d b y the ir ne ig hb or s, Rog e r a

nd Nata lie 1 Carroll, wh e n th e y

bo ug ht t he Carr oll s' ho us e . E ve n th ou g h th e Ca sst e ve ns e s p a id t he Carr oll s $34,000 in cash a

nd executed a note for $90,000 to the C arr olls and rece ived a war ranty deed, the y

wer e not informed that the Carr olls sti ll owed two debts on the house—a n orig inal note to a bank for $88,800 and a second lien to the prior owner s, Richard and Mary Campbel l , fo r $ 1 8 , 2 00. Appar ently

no title hist ory

sear ch wa s conducte d. The Casstevenses m ade monthly pay ments to the Carrolls for six y ear s, but the Carrolls did not pay off e ither of the de bts on the house. To make matters worse, in 2004 when the Casstevenses learne d of the Car rolls' ba nk note, the C arr olls preva iled on them to prepa y $64,000 cash purportedly to allow the Carr olls to pay off their bank obligation. But the Carrolls di d not pay off either t heir first or second lien on the house

. Ul tim a te ly , th e Campb e ll n ote wa s f or e c los e d a

nd on May 3, 20 05, Dan iel and

Sha nn on Smith boug ht the proper

ty at the for eclosure sale for approximately

$22,000 owed to the Campbe lls. Ap pe ari ngto r e c og nize the dil e mma of the Ca sst e ve ns e s, the Smit hs ind ic a te d th e y

wo uld " wo rk wi th" the Ca sst e ve ns e s and a tte mpt e d to neg oti a te wi th the m. Th e Ca sst e ve ns e s o ff e re d to reimburse t h e S m i t h s for their investment, but the Smi ths declined a nd attempted to re ach a

n ag r e e me n t f

o r th e Ca s s te v e n s e s to p ay r e n t. I n late A u g u s t 2 0 0 5 , th e Sm it h s p a id the bank approximately

$44,000 and extinguished that lien. B ased on the se owne rship rig hts, the Smi ths

asser ted full owner ship of the house a nd eventua lly

evicted the Casstevenses.3

The Cassteve nses have rec overe d a def ault judgme nt ag ainst Mr. C arr oll based on statutory fra ud, common-law f

raud, violation of the Texas Dec eptive Tra de Prac tices Ac t, and for e x emplary dama g e s; M rs . Ca

rr oll ha s d e c lare d b ank

ru ptc y . T his su it i s b ro ug ht b y Ann Ca sst e ve ns , individually

and on beha lf of Ke nneth C as s t evens, de cea sed, ag ainst the Smit hs. I n it, Ann Casstevens re lies on the t h eorie s of equitable subr og ation, unjust enrichment, common-la w and statut or y fr a ud , fi lin g fr a

ud ule nt c ourt re c or ds , un fa ir de bt c oll e c tio n p ra c tic e s, and su pe ri or tit le to the pr op e rt

y . T he tr ia l c ourt g ra

nte d a tr a dit ion a l and no -e vid e nc e su mma ry jud g me nt t o th e Smiths

. For rea sons stated below, we aff irm the no-evide nce summar y judgme nt except with respec t to an issue conce rning the alleg ed violation of the De bt Coll ection Prac tices Ac t. I. St anda r ds fora N o- Evi de nc e Sum m ar y J udgm e nt I n a no-e vidence motion for summary judgme nt, the movant repr esents that no evi d ence exis ts as to one or more essential ele ments of t he nonmovant's claims, upon which the nonmovant would have the burden of proof at trial. T EX . R. C IV . P. 166a(i). The nonmovant then must present evidenc e ra ising a

g enuine issue of

mat er i al fac t on the challeng ed ele ments. Id. To de fe a t a

no -e vid e nc e mot ion

fo r s umm ary jud g me nt, the re sp on de nt is no t re qu ir e d to mars ha l its pr oo f; its response need only

point out evidence that raises a fac t issue on the challeng ed ele ments. T EX . R. C IV . P. 1 66 a (i ) c mt. A no-e v id e n c e s u mm ar

y ju d g me n t i s e s s e n ti a ll y

a p r e tr ia l d ir e c te d

v e r d ic t. We th e r efor e apply the same le g al suffic i ency standard in r eviewinga no-e vidence summary judgme nt as we4

apply in r eviewing a dire cted ve rdict. W al-Mart Stores, Inc. v . Rodriguez , 9 2 S. W. 3 d 5 0 2 , 5 0 6 ( T e x. 2002). We r e v ie w th e n o n mo v an t' s s u mm ar y ju d g me n t e v id e n c e to d e te r mi n e w h e th e r

the nonmovant produce d any evidenc e of probative forc e to r aise a fac t issue on the materia l questions prese nted. Id. ; W

oodruff v. W

right , 51 S.W .3d 727 (Tex. App.—Texarkana 2001, pet. denied) . A nonmovant will defeat a no-e vidence summary judgme nt motion i f the nonmovant presents more than a sc i n t i l l a of proba

tive evidenc e on ea ch ele ment of his or her claim. King Ranch, Inc. v

. Chapman , 118 S.W .3d 742, 751 (Tex. 2003); Jack son v. Fiesta Mart, Inc

. , 979 S.W .2d 68, 70–71 (T e x. Ap p. —A us tin

19 98 , n o p et. ). In a

su mma ry jud g me nt h e ari ng , th e tr ia l c ourt ' s d e c isi on is based on w ritten pleading s an d wr i t t en evidenc e rather than live te stimony

. See T EX . R. C IV . P. 166a(c ). We first addre ss the issue of equitable subrog ation. II. Equ itable Su brogation Casstevens ar g ues that, by making pay

ments to the Carrolls that the Carr olls used to pay on the first lien to the B ank, Cassteve ns stepped into the shoes of the first lienholder, the ba nk. Th e do c tr ine of

e qu ita ble su br og a tio n a llo ws a

pa rt y wh o w ou ld o the rw ise la c k s tand ingto step into the shoes of and pur sue cla ims belongingto a par ty with standing. Frymire Eng'g Co. v. Jomar Int'l, Ltd. , 2 59 S.W. 3d 14 0 ( Te x. 20 08 ). As the Te xas S up re me Cour t a g a in r e c og nize d in Fr y mi re , Texas courts i n t erpret this doctrine libera lly . Equitable subrog ation applies " in ever y ins tanc e in w hic h o ne pe rs on , n ot a c tin g vo lun tari ly , ha s pa id a de bt fo r wh ic h ano the r wa s p ri mari ly5

l i a b l e andwhi ch i n eq ui ty sh ou ldhav e been pai d b y th e la tt er." Id. at 142. T h u s , a p arty seeking equitable subrog ation must show it i nvoluntarily paid a de bt pr imarily owed by another in a situation that favor s equitable relief

. The doc trine exists to preve nt the unjust enrichment of the debtor who owed the de bt being paid. F ry mir e wa s a

su bc ontr a ctor

wh o in sta lle d a

wate r v a lve that ul tim a te ly fa ile d in a ho te l, causing extensive damag e. Acc ording to Fr y mire' s contra ct, i t was responsible to the hot el for a ny damag e ca

used. F ry mire paid the da

mag e cla im pursuant to its contra ct with the hotel, but later sued the manufa cture r of the va lve in tort. The Tex as Supreme Court r ecog nized that the pay ment fulfilled a debt owed by Fr y mire to the hotel and conclude d that a tort claim ag ainst the

m an u f a c tu r e r s t i l l e x i s t e d , a l o n g w i t h s o m e e v i d e n c e t h a tt h e m an u f a c t u r i n g d e f e c tc a u s e d t h e i n j u r y. Thus, there was some e vidence that Fr y mire paid a debt pr imarily owed by the manufa cture r—and the cou rt fu rt h er found that the pa y ment was involuntary , althoug h made unde r the ter ms of the contra ct—noting that the contract was not with the manufac turer, but with anothe r entity , and thus equitable subrog ation was not for eclose d. The doc trine of e quitable subrog ation "is not applied f or the mer e strang er or

volunteer w ho has paid the de bt of another , without any assig nment or ag ree ment for subrog ation, without being under a ny leg al obligation to m ak e p ay ment, and without being compelled to do so for the pres erva ti on of an y

ri ghts or p rop ert y

of h is own ." Fi rst

Nat 'l Ba nk

of K e rrv ille v . O 'de ll , 856 S.W .2d 410, 415 (Tex. 1993) (q u o t i n g Our yv . S au nd e rs , 77 Tex. 278, 280, 13 S .W. 1030, 10316

(1 89 0) ); Langston v. GMAC Mortgage Corp. , 183 S.W .3d 479, 481 (Tex. App.—Eastland 2005, no pet.). Casstevens ar g ues that her monthly pay ments to the C arr olls, which they in turn paid to the bank on the fi rst lien mortg ag e, cr eate d this equitable rig ht of subrog ation. I t is clear that the Carr oll s n e ve r c omp le te ly pa id o ff the fi rs t mortg a g e . Ca sst e ve ns a sse rt s tha t this al le g e d e qu ita ble subrog ation rig ht was in exis tence when the Smit hs acquir ed title by buy ing the bank' s lien on the pr op e rt y ; th e re fo re , it

is argue d, the Smit

hs ' tit le is s ub

je c t to thi s a lle g e d e qu ita

ble su br og a tio n r ig ht. The rig ht of equitable subr og atio n ar i s es whe n one pay s the debt of a nother for which the oth e r i s p ri mari ly

lia ble . F or ins tanc e , if

Ca sst e ve ns ha d p a id o ff the Ca rrolls ' ba

nk no te in i ts entirety , under this theor

y Casstevens would step into the position of the bank and co u l d re cover from the Car

rolls for the a

mount paid. Here , Casstevens is not attempting to a s s er t a subrog ation rig ht ag ainst the Carrolls, but asser ts that this right defe ats or dilutes the owne rship acquir ed by the Smiths wh e n th e y

a c qu ir e d th e ba

nk ' s li e n. We do not

be lie ve thi s is the purp os e of the e qu ita

ble

s u b r o g a ti o n d o c tr in e

— in s te a d , th e d o c tr in e a ll o w s th e p ay o r to a s s e rt r ig h ts o w n e d by a cr editor ag ainst the party primarily liable—in this case , the C arr olls. Equitable subrogation is a leg al fiction wher eb y an o b li g a ti o n th a t is e xti n g u is h e d b y a th ir d p arty is tr e a te d a s s ti ll e xis ti n g to allow the

cre ditor to seek re cover

y fro m t h e p arty

primarily

liable. Benne tt Tr uck Transport, L.L .C. v. W ill iam s B ro s. Con str

. , 256 S.W .3d 730 (Tex. App.—Houston [14t h Dist.] 2008, no pet.). The purpose is to preve nt the unjust enrichment of the debtor who w as primar ily liable. Smart v. Tower Land & Inv. Co. , 597 S.W .2d 333, 337 (Tex. 1980). Here, an y ri ght of subrog ation owned by7

Casstevens could be asser ted only ag ainst the Carrolls (the parties pr imarily liable), not ag ainst the bank or the Smit hs. A rig ht of subrog ation is not a subst antive, tang ible thing of such nature that it can be se ized and held indepe ndently

of a judicia l proce eding ; it is a rig ht of ac tion only —that is, it m ust be established by

a judicial proc eeding

. D o wn in g v . J e ff rey , 1 7 3 S

. W .2d 241, 246 (Tex. Civ. App.—Galve ston 1943, writ ref' d w.o.m

. ) (o p . o n reh'g ). He re, e ven if Cassteve ns had proof of pay ment on behalf

of the Car

rolls, her e quitable ca

use of action would be ag ainst the Carrolls, not the Smiths . We do not believe this unprosec uted, allege d cause of action that Casstevens may have ag ainst the Carrolls af

fec ts the titl e and ow nership rig hts acquire d by the Smiths

. The Te x as Supreme Court has made it cle ar that the purpose of the doctrine is to prevent the unjust enric hment of t he debtor who owed the debt that is paid. O'd e ll , 856 S.W .2d at 415. Who was unjustly

enric hed? Clearly the Carrolls wer e, and they wer e the debtors. The Smiths were not de btor s, but th e c re dit or s. Al low ingthe do c tr ine of e qu ita ble su br og a tio n to a

pp ly in t he se

c ir c ums tanc e s w ou ld n ot pr e ve nt the un jus t enr ic hme nt of the wr on g do e rs , the Carr oll s. Un de r t he se fa c ts, the do c tr ine of

e qu ita ble su br og a tio n d oe s n ot p ro vid e the re medy Ca sst e ve ns se e ks a g a ins t the Smiths

. Fur ther, the Smiths purchase d the prope rty at a f orec losure sale and re ceive d a trustee ' s deed subject only

to the fi rs t l i en . "A sale re g ularly exercised unde r a pow er is equiva lent to strict for ecl os ure b y a cou rt of eq ui ty pro perl y pu rsu ed. " Hampshire v. G reev es , 104 Tex. 620, 627, 143 S.W . 147, 149–50 (1912).8

"When a regular sale is made under a powe r cont ained in the instrument, not only the

mor tg a g or , b ut a ll p e rs on s c la imi ngany int e res t in th e e qu ity

of re de mpt ion

by a pr ivi ty of e state with him are c onsidered a s parties to the proc eeding , and ar e pre cluded by it as fully as if they had been mad e par ti es d efen dan t b y regul ar s ub po ena i n an ord in ary for ecl os ure s ui t. " Ha mp sh ire , 143 S

. W

. at 1 4 9

– 5 0 (q u o t i n g Aiken v . Bridgeford & Co. , 84 Ala. 295, 4 So. 266 (1887))

. For the rea sons stated above, there is no summary judgme nt e vidence that place s Casstevens i na f ac tu al s i tu at i o nwh er e e qu i t ab l e s u b ro g a t i o n w o u l d

b e a v ai l ab l e. T h u s , t h e t ri al co u rt 's

no -e vid e nc e jud g me nt o n th is the or y is c or re c t. III . Re st it ut ion —U nj ustEnr ic hm e nt We next ex am i n e C asst evens' claim see king r estitution for the unjust enrichment of the Smit hs. Unjust enrichment, itself, is not an indepe ndent ca use of a ction, but rather

"c hara cter izes the re sult of a fa ilure to make r estitution of benefits either wrong fully or passively rec eived unde r cir cum st ances th at give ris e to an im pl ied or quas i- con tr actual ob li gati on to repa y ." Friberg-Cooper W ater Supply Corp. v. Elledge , 197 S.W .3d 826, 832 (Tex. App—For t Worth 2006), rev'd on other grounds , 2 4 0 S

. W

. 3 d 8 6 9 (T ex . 2 0 0 7 ) ( qu o t i n g W alker v . Cotter Props., Inc. , 181 S.W .3d 895, 900 (Tex. App.—Dallas 2006, no pe t.)). The doctrine a pp l i es the princ iples of re stitut ion to disput es wher e ther e is no ac tual contra ct, based on the equitable principle that one who rec eives be nefits that would be unjus t for him or her to reta in ought to make restitution. Ar gy le In de p. Sc h. Di st. v . W olf ,Unjust enrichment is also found unde r circ u m s t an ce s in which one pe rson has obtaine d a 2 benef it from another

by fra ud, duress, or the taking of an undue adva ntag e. Heldenfe ls Bros., Inc. v . Ci ty of C or pu s Ch ris ti , 832 S.W .2d 39, 41 (Tex. 1992). 9 23 4 S. W.3 d 2 29 , 2 46 –4 7 ( Te x. Ap p. —F or t Wor th 200 7, no pe t.) ; Elledge , 197 S.W .3d at 832; Mo wbray v . A v e ry , 76 S.W .3d 663, 679 (Tex. App.—Corpus Christi 2002, pet. denied). 2 Ca sst e ve ns po int s to su mma ry jud g me nt e vid e nc e that th e Smit hs ha d o bta ine d th e be ne fi t of ow ne rs hip of

the ho us e fo r a

fr a c tio n of its a c tua l va lue —a nd that th e y we re a ble to o bta in t

his be ne fi t on ly

be c a us e of the a c tiv e fr a

ud of a thi rd pa rt y . T he re fo re , Ca sst e ve ns argue s th a t it wo uld be un c on sc ion a

ble fo r t he Smiths to r e ta in t

he " e nr ic hme nt. " Al tho ug h ea c h of the se state me nts is lit e ra lly c or re c t, t he y do no t c on tr ol. Th e qu e sti on is w he the r s ome imp lie d c on tr a c t mi g ht e xist betwee n the S miths and C asstevens that would require the Smiths to repa y Casstevens eve n in the absenc e of a

formal wr itten obligation to do so. There is not. The proper

ty was proper ly sold at a

fore closure a

uction, evidently

utiliz ing the methods provid ed b y t h e L egi s lature f or that purpose . I t was purc hased by the Smiths . At that point, they

owned the proper

ty subject to the prior, super ior first lien of the ba nk. Howeve r, bar

ring fore closure by

that bank for

failure to pay

that note, under

their lawf

ul purcha se at fore closure, the Smit hs had an immediate rig ht to possession of the house. Fur ther, we note that the c o n t ro lling statut e s r e qu ir e on ly

that no tic e of su c h pro c e e din g s be g ive n to the pa rt ie s n a me d o n th e re qu isi te d o c u me n ts a s th e d e b to r s , an d n o t t o o th e r

p arti e s , kn o w no r

u n kn own. T EX . P R OP . C ODE ANN . § 5 1. 00 2( b) (3 ) (V e rn on Sup p. 20 08 ) (n oti c e of sa le mus t be g ive n to e a c h d e bto r w ho , a c c or din g to

rec ords of mortg ag e ser

vicer of debt, is obligated to pay debt).See disc ussion Edwards v. Mid-Continent Office Distribs., L.P. , 252 S.W .3d 833, 837–38 3 (T e x. Ap p. —D a lla s 2 00 8, no pe t.)

. Te xas c ourt s have a llo we d re sti tut ion fo r t he se ty pe s o f c la ims in a varie ty of case s: by a defr auded party ag ainst the party who committed the fra ud, see Staats v. Miller , 1 50 Te x. 58 1, 58 3– 85 , 2 43 S.W. 2d 68 6, 68 6– 88 (1 95 1) ; W

iseman v. Bay lor , 69 T ex . 63, 64–66, 6 S.W . 743, 743–44 (1887); by a par ty that made a

n overpa y ment, Be ns on v . Trav e le rs I ns . Co. , 464 S.W .2d 709, 710–13 (Tex. Civ. App.—Dallas 1971, no writ); and by a par ty that paid or cre dited money

t o t h e wr ong person or

acc ount, se e Am oc o P ro d. Co. v . S mi th , 946 S.W .2d 162, 16 3– 65 (T e x. Ap p. —E l Paso 19 97 , n o w ri t) (p ay me nt t o w ro ngpe rs on ); Doss v. Home comings Fin. Network, Inc. , 210 S.W

. 3 d 706, 710–11 (Tex. App.—Corpus Christi 2006, pet. denied) (pa y ment a pp lie d to wr on g a c c ount) ; Lyman D. Robinson Family Ltd. P'shi p v. Mc W

illiams & Thompson, P. L.L. C. , 14 3 S.W. 3d 51 8, 52 0 ( Te x. Ap p. —D a lla s 2 00 4, pe t. d e nie d) (e arn e st m on e y re le a se d to wrongclient). Con ve rs e ly , s ome Te xas c ourt s h a ve re je c te d a c la im fo r re sti tut ion and he ld that mo ne y pa id under a unilatera l mist ake of

fac t cannot be r ecove red. See, e .g. , Pac. Molasses Co. v. G raves , 451 S.W. 2d 29 4, 29 8 ( Te x. Civ . App .— S an An ton io 1 97 0, wr it r e f' d n .r .e .) ; Se llm an v . A m. Nat 'l I ns . Co. , 281 S.W .2d 150, 154 (Tex. Civ. App.—Tex arka na 1955, writ dism'd). And other c ourts have held that, as be tween two innoc ent par ties, the party

that must suffer t h e l o s s is the one that mistake n l y cr ea t ed t h e situation and wa s in the best position t o have a voided it. Se e Ho lde n B us . Forms Co. v. Columbia Med. Ctr. of Arlingt on Subsidiary, L.P. , 8 3 S. W. 3 d 2 74, 278 (T e x. Ap p. —F or

t Wor th 2 00 2, no pe t.) (s e lf

-i ns ur e d e mpl oy e r d e nie d r e sti tut ion of ins u r a n c e be ne fi ts p a id to h os pit a l be fo re e mpl oy e r d isc ov e re d c la im n ot c ov e re d b y pla n) ; Lincoln Nat 'l L ife Ins. Co. v. Rittman , 790 S.W .2d 791, 794 (Tex. App.—Houston [14t h Dist.] 1 9 9 0 , n o writ) (insure r denie d re sti tut ion

of be ne fi ts p a id to ho sp ita l a ft e r c ov e ra g e te rm inate d) ; Lincoln Nat 'l L ife Ins. Co. v. 10 Ultimately , unjust enrichment is not a prope r r em ed y "m ere ly beca use it might appe ar

e xpe die nt o r g e ne ra lly

fa ir that some re c omp e ns e be a ff or de d f or an unf or tun a te los s to the c la ima

nt, or b ecaus e th e ben efi ts to th e per so n s ou ght t o b e char ged am ou nt to a wi nd fal l. " City of Cor pus Christ i v. Helde nfels Bros., Inc. , 802 S.W .2d 35, 40 (Tex. App.—Corpus Christi 1990), a ff 'd , 832 S.W .2d 339 (Tex. 1992). The pr ofit must be "unjust" under pr inciples of equity

. Zapata Corp. v. Zapata Gulf Marine Corp. , 986 S.W .2d 785, 788 (Tex. App.—Houston [1s t Dist.] 1999, no pet.); Burlington N. R.R. Co. v. Sw. Elec. P ower Co. , 925 S.W .2d 92, 97 (Tex. App.—Texarkana 1996),

a ff 'd , 9 66 S.W. 2d

46 7 ( Te x . 19 98 ). Th is is o ne are a in w hic h th e law d oe s n ot r e wa rd mor a lly 3Brown Schs., Inc. , 757 S.W .2d 411, 415 (Tex. A pp.—Houston [14t h Dist.] 1988, no writ) (same). 11 w r o n g b e h a v i o r o r b u s i n e s s d e a l i n g s w h i c h h a p p e nt o b e c l o t h e d

w i t h s o m e i n d i c i a

o f l e g a l i t y. See discussion at Edwards , 2 52 S.W. 3d a t 83 7– 38 . H ow e ve r, the pa rt y mus t ha ve so me c on ne c tio n w ith the wrong doing in or der f or a pla intiff to rec over, a

nd in this case , as the Smiths acted in ac corda nce with controlling statutory law as de signe d by

the L eg islature, we cannot a g ree that this evidence provides any

proof that their

actions we re suc h as to justify the application of the doctrine. Un de r t he se fa c ts, e ve n th ou g h th e Smiths sta nd to m a ke a

su bs tanti a l pr of

it o n th e ir purc ha se , a

nd Ca ssteven s lost a

su bs tanti a l amou

nt o f m on e y

—a s w e ll a s th e ho us e , th e Smiths ' actions followed the require ments of the law, a nd thus no ex trane ous impli ed contr act be tween the part i es can exist . Under the rationale proposed by Casstevens, eve ry

purcha ser at a prope r fo re c los ur e sa le c ou ld b e sa id t o h a ve re c e ive d a n u nju st e nr ic hme nt i f h e or

sh e bo ug ht t

he pr op e rt

y and made a substantial profit while the debtor has lost all equity in the property

. Fur ther, unli ke the situations in t he ca ses summarized in the footnote, in this case, ther e is no evidenc e that the Smiths committed f

r a u d a g a in s t C a s s te v e n s in

e xe r c is in g th e ir

r ig h t o f o w n e r s h ip an d

p o s s e s s io no f

the house. F urther, the re w as no unjust enrichme nt of the Smiths, but only the Carr olls. The c ontention of err or is overr uled. IV . De c lar at or y J udgm e nt —R e im bur se m e nt Casstevens also a

rg ues that, if she obta ins relief unde r either of these theor ies, the trial cour t sh ou ld o rd e r t

he ho us e so ld s o Ca sst e ve ns c an r e c ov e r t he a mou nt p a id, min

us e qu ita ble a dju stm e nts12

appropr iate to re imburse the Smiths. Under our re s olution of the prec eding issues, this arg ument is m oo t, a nd the tr ia l c ourt

pr op e rl y re nd e re d s umm ary

jud g me nt. V. F raud—Com m on-Law and S tatutor y Ca sst e ve ns a lso a lle g e s th a t sh e wa s d e fr a ud e d b y the Smit hs bo th o n a

c omm on -l aw b a sis and for statutory fra ud (T EX . B US . & C OM . C ODE ANN . § 27 .0 1 ( Ve rn on 20 02 ) ( fr a

ud in a re a l e state transac tion)). Common-law fra

ud occur s if (1) a

materia l repre sentation was made; (2) the r epre sentation

wa s f a lse ; (3 ) w he n th e re pr e se ntatio n w a s ma de , th e sp e a ke r k ne w i t w a s f

a lse or ma de it r e c kle ssl y without any

knowledg e of the truth and as a posi tive asser tion; (4) the speaker ma de the repr esentation with the intent that the other party should a ct upon it; (5) the par ty acte d in relianc e on the re prese ntation; and (6) the pa rty there by suffe red injury

. In re First Me r i t Bank, N.A. , 52 S.W .3d 749, 758 (Tex. 2001). Statutory fra ud under the Texas Business and Commerce Code in a re al estate transac tion

occur s when a

party makes a false re p re s en tation of fac t or a fa lse promise to induce the plaintiff to e nte r i nto an a g re e me nt, the pla int if f r e lie s o n th e fa lse pr omi se by e nte ri ngint o th e a g re e me nt, and the r eliance cause s injury to the plaintiff. T EX . B US . & C OM . C ODE ANN . § 27.01. A. Co m m on- Law F r aud Casstevens points to the fo l l owing summary judgme nt evidence to avoid the no-e vidence judgme nt—taken fr om letters mailed to Casstevens by the Smiths —quoted below.13 I f we work tog ether, we m ay be able to resolve the issue of the prior liens a g a i n s tt h i s p r o p e rt y.

. . . . We desire to work toge ther with you to tr y to salvag e something positive out o f th is a p p ar e n t m is u n d e r s ta

n d in g o r w r o n g d o in g o nth e p art o f [th e s e c o n d

o w n e r s ]. L et me first make the point that we are eag er to w ork with y ou in any manner that w e c an to c ome to a

re a so na ble so lut ion

to t his un fo rt un a te pr ob le m.

. . . . As wi th our pre vio us c on ta c t, I wo uld lik e to e mph a size tha

t w e de sir e to wo rk tog ether

with y ou g oing f

orwa rd so that we c an try

to salvag e something p o s it iv e o u t o f

th is a p p ar e n t w r o n g d o in g o nth e p art o f th e [s e c o n d

o w n e r s ]. We do desire to wor

k with the Casstevens in this matter. . . . As a lso po int e d o ut by c ouns e l, Da nie l Smit h s ta te d th a t he int e nd e d f or Ca sst e ve ns to r e ly on those statements, and a ccor ding to C as stevens, base d on these re prese ntations, she took no individual action to obtain the bank' s first lien position. After the Smiths boug ht the proper ty at a fore closure sale based on the Carr olls' de bt to the Campb e lls , th e Smiths po ste d a le tte r a t the ho me a dd re sse d to " Rog e r a

nd Nata lie Carr oll ." Th is le tte r i nf or me d th e m th a t th e Smiths ha d b ou g ht t he pr op e rt

y (1 63 0 B old

t, T y ler , Tex as) a t a fore closure sa le and a sked the Car rolls to contact th em . I nstead, the Cassteve nses contac ted the Smit hs and advised of

their transa ction with t h e C ar rol ls. Following that, Daniel Smith wrote a le tte r t o Ca sst e ve ns e xpre ssi nghis surp ri se a t Ca sst e ve ns ' ow ne rs hip and a sk ing he r to " fi nd the tit le po lic y that y ou state d y ou had fro m the p ur c ha se of the pr op e rt

y fr om R og e r a

nd Nata lie Carr oll , or throug h the re financ e of the proper ty with Reg ions Bank." He t h en s t at ed t hat, " [i ]f we work toge ther, we m ay

be able to resolve the issue of the prior liens a g ainst the proper ty ." Ca sstevens14

alleg es this was a material misrepr esentation which was re lied on by her to he r detriment. A

ma te ri a l mi sr e pr e se ntatio n mu st be a fa lse state me nt. " Mis re pr e se ntatio n" is a fa lse ho od

or un tr uth with the inten t and purpose to de ceive

. Vela v. M arywood , 1 7 S. W.3 d 7 50 (T e x. Ap p. —A us tin 2000), pet. denied , 53 S.W .3d 684 (Tex. 2001). We do not believe there i s evidenc e in the re cord to support a finding that this statement was false w hen it was made . Acc ording to evidence in the rec ord, this statement was made afte r the Smit hs had conve rsed with Mr. or Mrs. Casstevens a

nd was advised a title policy was issued whe n the Casstevense s boug ht the proper ty . I f a title policy

had bee n issued, there woul d h ave been differ ent leg al conse quence s than if no such policy exis ted. For instance, if a

title insurance policy

cover ed Cassteve ns' owner ship claim to the proper ty , it is conceivable that further investigation might re veal that Cassteve ns' owner ship of the prope rty was valid and the Smit h fore closure w as not ba se d o n g oo d ti tle . O r t he tit le po lic y

e xiste nc e c ou ld h a ve me ant C a sst e ve ns wa s e nti tle d to

rec over the fac e amount of t he poli cy . I n this context, we do not find that there is any fac t issue that the Smiths ' state me nt a g re e ingto " re so lve the iss ue of the pr ior lie ns a g a ins t th e pr op e rt

y " wa s a false statement at the time it was made

. We f i n d the other state ments Casstevens alleg es to be misrepr esentations li kewise a re not materia l misreprese ntations of fac ts. Ag ree ing to " work tog ether " to attempt to salvag e something po sit ive fr om t

he dil e mma c a

us e d by the Carr oll s' fr a

ud ule nt a c tiv ity

tow ard Ca sst e ve ns is at mo st a vague stateme nt professingan attitude of g ood faith rather than a repr esentation of a fa ct.15

F ur the r, we fi nd

the re is n o e vid e nc e that, e ve n if Ca sst e ve ns ha d th e op po rt un ity to p ur c ha se the prior lien, a

nd even ha d she done so, that would have improved he r position. At that time, the Smit hs had purc hased the house at the f orec losure of the second lien a nd we re t h e o wn er s of the ho us e su bje c t on ly to t he fi rs t li e n o f t

he ba nk

. Th e Ca

rr oll s n o lo ng e r h a d a

ny ow ne rs hip int e re st in t he ho us e . H a d Ca sst e ve ns purc ha se d th e ba nk ' s fi rs t lie n a

nd a ssume d the ba

nk ' s le g a l st a tus in thi s tr ans a c tio n, the Smiths c ou ld h ave pai d th e m th e $4 4, 00 0 a nd se c ur e d a ll o wn e rs hip ri g hts in the house. In essenc e, Cassteve ns would have n ot benef itted by obtaining the bank' s first lien position. S o Casstevens did not suffe r any injury by any actions of the Smiths. At or a l argume nt, Ca sst e ve ns argue d th a t sh e c ou ld h a ve ob ta ine d o wn e rs hip of the h ou se if sh e ha d p ur c ha se d th e ba nk lie n, the n th e Ca rro lls ha d d e fa ult e d ( wh ic h th e y

sure ly did ) a nd if Ca sst e ve ns ha d th e n f

or e c los e d o n th e lie n—

wi tho ut t he Smit hs havin g the op po rt

un ity to p ur c ha se the lien at auc tion. We acknowle dg e that the lienholder would not have be en re quired to inform the Smit h s ab o u t t he for eclosure sale—a s the Smit hs were not a par ty to that note. But we cannot speculate that somehow Cassteve ns would have be en ab l e t o secr ete f rom the re cord ow ners, the Smiths , th e fact th at a fo re c los ur e no tic e ha d b e e n p os te d in the a uth or ize d p la c e s, pa

rt ic ula rl y in light of the extraordinary

attention the Smiths wer e devotingto this t ransa ction. For all of the a

bove re asons, we hold the tr ial court prope rly g rante d a summary

judgme nt on Casstevens' common-law f raud the ory .16

B. St at ut or y F r aud Another a rg ument set out by

the Smiths is that, as a matter of law, the Texas B usiness and Commerce Code fra

ud claim fa ils because no rea l estate tra nsaction wa s involved. Obviously , a re al estate tra nsaction wa s involved. The Smiths arg ue that, as a matter of l aw, the Texas Business a nd Com me rc e Cod e c la im fa ils be c a us e the Smit

hs and Ca sst e ve ns we re no t in vo lve d in a re a l e state transac tion with each other

. The statute de fines fr aud as a false r epre sentation made " to a per son for the pur pose of inducing that person to enter i nto a contract" which was both relied upon a nd resulted in har

m. T EX . B US . & C OM . C ODE ANN . § 27.01(a) (1). I t d o es n o t specify that the per son making the repr esentation must be the other party to the contra ct (a l t houg h that is certa inly the normal situation), and there are case s in w hich (under ag ency theory ) re al estate broker s and salespe rsons

are held liable for

repr esentations relied on by a pur ch aser. See W

oodlands Land Dev. Co. v. Jenk ins , 48 S.W .3d 415 (Tex. App.—Be aumont 2001, no pet.). Th is c a se do e s n ot f

it wit hi n the se g e ne ra l c a te g or ie s. I t is a pp are nt t hat a re a l e state transac tion was involved, but the re is no evidenc e of false repr esentations made by the Smiths for the purpose of

inducing Casstevens to e nter into a c ontrac t. Thus, as a matter of law, the trial court

corr ectly enter ed a summar

y judgme nt in the Smi ths' f avor on the statutory

fra ud claim.Michelle Clark is listed a s the plaintiff in that action. I t appea rs that she is an e mploy ee of 4 the c omp any

ow ne d b y

the Smiths wh ic h h and le s th e ir re nta l pr op e rt ie s. 17 VI . F als e P le adi ngs —F r audul e nt Co ur t R e c or ds Casstevens also alleg ed that the S miths filed sworn complaints in justi ce of the pea ce c ourt that they knew to be f

alse, thus violating the Tex as C i v i l P ra ct i ce a nd Remedies Code. See T EX . C IV . P R AC . & R EM . C ODE ANN . § 12.002 (Ve rnon Supp. 2008). The Smiths correc tly

state that there is no evidence that they filed a " fra

udulent court

rec ord." That term is def ined as a d ec re e, judg ment, order , subpoena, w arr ant, minutes, or other document is sued by a court. The term can also include a " document or othe r re cord" which mig ht be a " fra udulent lien or cla im ag ainst re al o r per sonal proper ty or an inter est in rea l or persona l pro pert y ; . . . . " T EX . C IV . P R AC . & R EM . C ODE ANN . § 12.002(a) (1) ( Ver non Supp. 2008). These c ode sec tions have bee n utiliz ed seve ral ti m es re ce n t ly in claims ag ainst various pa rt ie s th a t ha d atte mpt e d to e nf or c e lie ns that w e re ult imate ly sh ow n to be fr a

ud ule nt. Th is is i n the nature of the third possible ty pe of action, involving a

fra udulent "c laim ag ainst rea l or persona l pro pert y ." Id. The " sworn co m plaint for for cible deta iner" pleading s demand that Cassteve ns be evic ted from prope rty

owned by the S miths. Casstevens arg ues t hat such a pleadingamounts to the filing 4 of a f raudule nt lien or claim ag ainst the rea l property beca use the Smiths knew they did not have a written or or al lease with Casstevens. We disag ree . At the time the Smit hs filed this plea ding, the y

ow ne d le g a l ti tle to t

he pr op e rt

y su bje c t on ly to the ba

nk ' s fir st lie n. Th e Smit

hs ha d atte mpt e d to18

ob ta in a n a g re e me nt w ith Ca ss tev ens fo r t he a mou nt o f r e nt t o b e pa id. Ca sst e ve ns wa s in possession of the prope rty owned by

the Smiths . Even without a wr itten or oral lea se, one w ho po sse sse s a

no the r' s re a l e state and is re c og nize d a s the te na nt ow e s a re a so na

ble re nta l va lue fo r u se and occ upation of the re al estate

. Ro bb ins v . V os s , 64 S.W

. 313 (Tex. Civ. App. 1901); 64 T EX . J UR . 3 D R ES TI TUTI ON & C ON S TR UCTI VE T R US TS § 36 (2003). We do not believe the Smiths ' asser tion of a leg al rig ht to rent for Cassteve ns' possession of the Smiths' re al prope rty is a fra udulent lien or claim ag ainst rea l estate. The point of err or is overr uled. VI I. Unl awful C oll e c ti on P r ac ti c e s Casstevens also a lleg ed the Smiths v i o l at ed the Tex as F inance Code by using thre ats or

c oe rc ion , h arr a ssm e nt o r a bu se , un fa ir or un c on sc ion a ble me ans , fr a

ud ule nt a c ts, or

de c e pti ve a c ts and ther eby also violated Section 27.01 of the Texas Business and Commerc e Code. See T EX . F IN . C ODE ANN . §§ 392.301–.306 (Ve rnon 2006). Section 392.304(a) states that a c ollector may not use a " fra

udulent, dece ptive, or misleading repr esentation that employ s the following prac tices

. . . ." Ca sstevens states that ther e is summary judgme nt proof of thre e of the prac tices.

(1) using a

name other

than the: (A) true b u s in ess or prof essional name or

the true pe rsonal or le g al name of the debt collec tor while eng ag ed in debt collec tion;

. . . .19 (8 ) mis re pr e se nti ngthe c ha ra c te r, e xten t, or a mou

nt o f a c on su me r d e bt, or misrepre senting the consumer debt' s status in a judicial or g overnme ntal p ro ce ed i n g;

. . . . (1 9) us in g an y

oth e r f a lse re pr e se ntatio n o r d e c e pti ve me ans to c oll e c t a debt or obtain infor

mation conce rning a consume r. T EX . F IN . C ODE ANN . § 392.304. The summary

judgme nt proof in re fer ence to the first claim s hows that the collec tion proce eding was be g un not by those claiming owner ship, or even in the na me of their company , but in the individual name of one of their e mploy ees, Clar k. I n her dep o s i t i o n , C lark said that she signe d it in that fashion as instructed by one of the Smiths . Howeve r, it also appea rs that she wa s using ( as the de bt collector) her true persona l n am e. Although this does have the potential for

c on fu sio n, a s an in div idu a l w ho a pp ears , esse nti a lly

ou t of no wh e re , to c la im t o b e e nti tle d to money —it is nonetheless tech nically within the ambit of the statute. See disc ussion , 28 Stephen Cochran, Texas Practice : C o n s u me r R ights & Reme dies § 1 5. 13 (3 d e d. 20 02 ). Al l th is s ta tut e

re qu ir e s is a fi nd ing that the " tr ue bu sin e ss or pr of

e ssi on a l name or

the tr ue pe rs on a l or

le g a l na me of th e deb t col lec to r whi le engaged in deb t col lec ti on [ was us ed] ." T EX . F IN . C ODE ANN . § 392.304. Whil e this pleading may

have be en subjec t to other exceptions or leg al issues, the prope r name , Michelle Clark, w as listed as the de bt collector. But, by proce eding in this m anner , an issue is raised a s to whether the Smit hs violated a pr ov isi on in t he statut e wh ic h d isa llows "usi ng any oth e r f a lse re pr e se ntatio n . . . to c oll e c t a20

deb t .

. . ." T EX . F IN . C ODE A NN . § 39 2. 30 4. Th e ple a din g fi le d in the justic e c ourt

name s o nly Michelle Clark a s the plaintiff. I n the body of the plea ding, she is identified as the " plaintiff (landlord) ." It is further a lleg ed that the plaintiff (Clark) entere d into an agr eeme nt with Casstevens for the pa y ment of rent, that plaintiff demande d possession of the pre mises, and re quested the c ourt to gr ant her

a judg ment of possession. The plea ding is s i gn ed b y Michelle Clark w ithout any indication that she is acting as an ag ent for or on behalf of the Smiths. The evidenc e is not disputed that Cla rk wa s n ot t

he ow ne r o r l and lor d o f t he pr op e rt

y , d id n ot e nte r a

ny a g re e me nt w ith Casstevens, and c onsequently was not authoriz ed to obtain a judgment as alleg ed. We find the trial court e rre d in disposing of this issue by a summary

judgme nt. VI II. Tr e spa ss t o Tr y Ti tl e Ca sst e ve ns wa s in a c tua l ph y sic a l po sse ssi on c on tin uo us ly sin c e Oc tob e r 1 99 8 unti l r e c e ntl y and ask the court to find her title superior to the Smiths' title. I n a tre spass-to-try -title action, a pla intiff re covers on the streng th of his or her ow n title. Pl um b v . S

tue ssy , 6 17 S.W. 2d

66 7 ( Te x. 19 81 ); Land v. Turner , 3 7 7 S. W. 2 d 1 8 1 (Tex. 1964); W o o d r o w v . Hende rson , 783 S.W .2d 281, 282 (Tex. App.—Texarkana 1989, no writ). Rec overy can be based on pr oof of ( a) title throug h regular c hain of c onvey an ce s from the sove reig n, (b) s u p e r io r ti tl e o u t o f a c o mm o n s o u r c e , ( c ) ti tl e b y li mi tati o n s , o r ( d ) u n a b an d o n e d prior possession of the land. Plumb , 617 S.W. 2d a t 66 8; Session v. W

oods , 2 0 6 S. W. 3 d

7 7 2 , 7 7 4 n . 2 ( T e x. App.—Texarkana

2006, pet. denied)

. Gene rally , the ear lier title e manating from a common sourc e21

is better title and super ior to others. D i v e r s i f i e d , In c . v . H

all , 2 3 S. W. 3 d

4 0 3 , 4 0 6 ( T e x. App.—Houston [1st Dist.] 2000, pet. denied)

. The summary judgme nt e vidence is a s follows. The Casstevenses obta ined title in 1998 from the Carr olls—a warr anty

deed of conveyance —showing a $34,000 cash pay ment and execution of a promissory

note for $90,000 to the Ca rrolls. The de ed wa s d u l y rec orded. In 2004, the Ca sst e ve ns e s b or

ro we d $ 64 ,0 00 fr om t

he ir ba nk to p ay of f t he no te to th e Car

ro lls , s o th e y

c ou ld pa y of f the ir ow n fi rs t lie n no te

. Th e 19 98 wa rr anty de e d, a c c or din g to its own ter ms , b e c a me "a bsolute" upon pa

y ment of that note. The Carrolls executed a rele ase, which was rec orded. The Casstevenses ha d actua l, uninterrupted, a nd exclusive possession of the house for nine y ear s. Cass t ev ens ar g ues that, bef ore a ny of the a ctions involving the Smiths occurre d, she wa s alre ady equitably subrog ated to the f

irst lien positi on, which is a ti tle superior to that c laimed by the Smit hs due to their later

"se cre t" pur chase of the fir st lien from the bank. As a matter

of law, ba sed on the summary judgme nt evidence , the Smiths obtained super ior title when they

purcha sed the lien at a fore closure sale. That proper ty rema ined subject to the lien held by the bank. The Smit hs argue the Car rolls' c hain of title was cu t o ff by the trustees de ed fore closing the vendor ' s lien to the Campbel l s , t h u s l egally the Smiths ' chain is super ior. Ba rring

so me oth e r i ssu e int e rv e nin g in t he ana ly sis , th is i s c or

re c t. I n response to Casstevens' equitable subrog ation claim, we ha ve pre viously

addre ssed and dispos e d o f th a t is s u e in f a v o r o f th e Sm it

h s ' p o s it io n . A c c o r d in g ly , w e c o n c lu d e th a t th e r e is no22

evidenc e to support Casstevens' position t hat her trespass- to-try -title claim should pr evail. The trial court c orre ctly

rende red summar

y judgme nt on this i ssue. IX . The Tr adi ti ona l M ot ion for Sum m ar y J udgm e nt I n revie wing a tra ditional moti on for summary judgme nt, a movant must e stablish that ther e is no ge nuine issue as to any materia l fac t and that the movant is entitled to judg ment as a matter of law. T EX . R. C IV . P. 166a(c ). Summary judgme nt for a de fenda

nt is p ro p er wh en the def endant

ne g a te s at le a st one e le me nt of e a c h of the pla int if f' s th e or ie s o f r e c ov e ry

or ple a ds and

c on c lus ive ly establishes ea ch ele ment of an a ffirmative defe nse. Sci. Spectrum, Inc. v . Martinez , 941 S.W .2d 910, 91 1 ( Te x. 19 97 ); W

ornick Co. v. Casas , 856 S.W .2d 732, 733 (Tex. 1993). The Smiths arg ue that we should uphold the traditional motion for summary judgme nt beca use they proved as a matter of law that the " bona fide purcha ser" defe nse insulates them fr om li a b ility under anyequitable theor y , that Casstevens has " unclea n hands" and that re cover y of

res ti tu tion i s b arr e d b y

lim itatio ns statut e s. We h a ve de c ide d th a t th e tr ia l c ourt did no t e rr in g ranting the no-e vidence motion for summary judgm en t o n b ehalf of the Smiths ex cept in re g ard to Casstevens' claim of violation of the De bt Coll ection Prac tices Ac t

. T h at cl ai m rema ins to be considere d in any event. The ref ore, due to our holding a

nd dispositi on of the no-e vidence summary judgme nt, it is not ne cessa ry to c onsider the Smiths' tra ditional moti on for summary judgme nt issue.23

X. Conclusion We affir m the no-evide nce summar y judgme nt except i n respe ct to the Debt Collection Pract ice s Act is su e . We re ve rs e and re mand that is su e to t

he tr ia l c ourt

fo r i ts c on sid e ra

tio n in

a c c or da nc e wi th t

his op ini on . In a ll o the r r e sp e c ts, the su mma ry jud g me nt o f t

he tr ia l court

is aff irmed.

J ack Ca rter J ustice Date Submitted: September 10, 2008 Date D ecide d: October 23, 2008