RVFRSE and IWNI)ER; Opinion issued December 11,2012

in The

Quurt of 441JZt1

iftI! Jttrirt of 1rxa at )a1hui

No. 05-1 1-00700-CV

WELLS FARGO BANK, N.A., AS TRUSTEE, Appellant

RAY ROBINSON, Appellee

On Appeal from the 296th Judicial District Court

Collin County, Texas

Trial Court Cause No. 296-02231-2008

OPINION

Before Justices Morris, Francis, and Murphy

Opinion By Justice Morris

In this appeal following a trial to the court without ajury, Wells Fargo Bank. N .A. challenges

the trial courts judgment in favor of Ray Robinson on his claims for wrongful foreclosure and

breach of contract. In three issues. Wells Fargo contends the evidence is legally and factually

insufficient to support the trial court’s award of damages under either theory ofrecovery asserted by

Robinson and there is no proper basis to support the award of attorney’s fees. Robinson brings a

cross-appeal contending the trial court erred in failing to order Wells Fargo to lhrfeit all of the

principal and interest collected on his home equity note. After reviewing the evidence and applicable

law. we conclude the trial court erred in awarding Robinson damages and attorneys fees. We further

conclude Robinson is not entitled to a foiteiture of the principal and interest paid on his note We
reverse the trial courts judgment and render judgment that Robinson take nothing by his claims.

On May 24. 1 999. Ray Robinson executed a home equity note in the principal amount of

$71800. The note was secured h a deed of trust on the property. It is undisputed that Robinson

defaulted under the terins of the note by failing to make his monthly payments. As a result, Wells

Fargo accelerated the note and it became due and payable. Although Robinson stated at trial that he

made some payments on the note through 2007 pursuant to a bankruptcy court proceeding. he

conceded that he did not make all the necessary payments and had not made any payments on the

note for more than three years before trial despite the fact that he was still living on the property.

Wells Fargo filed an application with the trial court for an expedited Ibreclosure under rule

736 of the Texas Rules of Civil Procedure. Robinson did not contest the hanLs right to foreclose.

hut requested additional time to try to sell the house. The parties later reached an agreement and.

on March 12, 2008, the trial court signed an agreed order stating that Wells Fargo was authorized

to proceed with a foreclosure and directed the hank to “post [the] property on or before April 14.

2008 for the May 6. foreclosure sale.’ Contrary to the order, the substitute trustee for Wells Fargo

did not post the property fbr sale until May 12. 2008 and did not conduct the foreclosure until June

3. Wells Fargo purchased the property at the June 3 foreclosure sale.

Approximately two months after the sale. Robinson brought this suit contending Wells Fargo

was not authorized to foreclose on his property because it did not comply with the agreed court

order. Robinson asserted claims including wrongful foreclosure and breach of contract as well as

requesting declaratory relieI A trial was conducted before the court without ajury. Based on the

evidence presented. the trial court stated in its findings of fact and conclusions of law that the

foreclosure on June 3, 2008 was wrongful and in breach of the deed of trust because Wells Fargo’s
substitute trustee did not have a valid court order to kreclose on the property on the date the

hueclosurc occurred. The judgment awarded Robinson S47.007.37 in damaucs represcntine the

difference between the fair market value of the property on the foreclosure date and the unpaid

balance of the note. The judgment also awarded attorney’s fees and additional fees in the event of

appeals. All other relief was denied. This appeal ensued.

II.

In its first two points of error, Wells Fargo contends the evidence is legally and factually

insufficient to support the damages awarded by the trial court. Wells Fargo argues there is no

evidence of a causal connection between the alleged wrongful foreclosure or the alleged breach of

the deed of trust and the monetary damages asserted by Robinson. According to Wells Fargo.

Robinson suffered neither prejudice nor harm as a result of the delay in the foreclosure sale.

Robinson responds that he is entitled to damages based solely on the fact that the sale was conducted

in violation of both the deed of trust and the Texas Constitution. We disagree with Robinson.

Article 16. Section 50(a)(6) of the Texas Constitution sets forth the requirements for an

extension of credit secured by a lien on the borrower’s homestead. TEx. CoxsT. art XVI. S 50(a)(6).

Among these is the requirement that the lien may be foreclosed upon only by a court order. id. §

50(a)(6)(D). The deed of trust signed by the parties incorporated this requirement by stating that

Wells Fargo must obtain a court order before foreclosing on the property. The court order in this

case authorized Wells Fargo to foreclose on the property only on May 6. 2008. Because the

foreclosure sale was conducted on a different date. it was not authorized by a court order and,

therefore, violated the constitutional requirement set forth in the deed of trust.

A foreclosure sale not conducted in accordance with the terms ofthe deed oftrust gives rise

to a cause of action to set aside the sale and the resulting trustees deed. See University Says. Ass ‘a
v. Soringivoacl.s Shopping ( ‘ir. . 644 S.\V.2d 705. 706 ( [cx. 1983). I’hc trial court did not set aside

the trustee’s deed however. hut instead awarded damages. For a party to recover damages lbr

wrongful toreclosure and breach of the deed ol trust. he must show that he has suttered a loss or

material injury as the result of an irregularity in the foreclosure sale. .S’ee Id.; see also Gainesville

Oil & Gas Co., Inc. v, Farm Credit Bank of Tex., 847 S.W.2d 655, 659 (Tex. App.—Texarkana

1993. no writ). In general, this is shown where the actions of the lender or note holder have caused

the property to be sold for a grossly inadequate price. See American Says. & Loan Assoc, v. 4iusick.

531 S.W.2d 581. 587 (Tex. 1975). in such a case, the damages are measured by the difference

between the market value of the land and the remaining balance on the outstanding mortgage debt.

See John Hancock Mu!. Life Ins. Co. v, Howard, 85 S.W.2d 986, 988-89 (Tex. Civ. App.—Waco

1981, writ refd).

The recovery of damages is not appropriate, however, where title to the property has not

passed to a third party and the borrower’s possession of the property has not been materially

disturbed. See .Janes i’. CPR Corp..623 S.W.2d 733. 738 (Tex. App-—Houston [1° Dist.] 1982. writ

ref d n.r.c.): see also Peterson v. Black, 980 S.W.2d XIX, 823 (Tex. App.—San Antonio 1998, no

pet.). Where the note holder obtains title to the property at the foreclosure sale and the borrower

retains possession. the proper remedy is to set aside the trustee’s deed and to restore the borrower’s

title. subject to the note holder’s right to establish the debt owed and foreclose its lien. See Jones,

623 S.W.2d at 738. The reason for this is that ‘the law undertakes to award just compensation — no

more and no less — for the injuries sustained.” See Howard. 85 S.W.2d at 989. If the borrower’s

possession has not been disturbed and no third party rights to the property have been created, the

Although Robinson’s petition seeks reliefincluding quiet title to the property and a ‘declaration” that the substitute trustee’s deed be canceled,

the petition does not directly requestthat the foreclosure sale be set aside. To the extentthe petition can he read to request this reliek the trial court

did not order the deed set aside and Robinson does not appeal from such ruling.
borrower has sufThred no compensable injury. See Peterson. 980 S.W.2d at 823.

In this case. Robinson presented no evidence that the property it iSSUe was sold for an

inadcqtiate price or that he as other\ ise harmed by the delay in the foreclosure sale. lurthermure,

it is undisputed that Wells Fargo purchased the property at the foreclosure and, as ol the date oftrial,

Robinson continued to occupy the premises. l3ased on the record hethre us. we conclude Robinson

failed to present any evidence of a compensable injury. The trial court erred, therefore, in awarding

Robinson monetary damages under either his wrongful foreclosure or his breach of contract cause

olaction. We resolve Wells Fargo’s Iirst two issues in its favor.

In its third issue, Wells Fargo contends the trial court erred in awarding Robinson attorney’s

fees. Robinson responds that he is entitled to recover the fees under the [‘exas Uniform Declaratory

Judgment Act. An examination of the trial court’s judgment, however, shows that Robinson was

not awarded any declaratory relief. The judgment merely ordered that Robinson recover monetary

damages. fees, and Wells Fargo. All relief not specifically granted in the judgment was

denied.

Furthermore. Robinson’s request for declaratory reliefis merely duplicative ofhis claims for

wrongful foreclosure and breach of contract. A plaintiff may not use the declaratory judgment act

to recover attorney’s fees that are not otherwise available by simply seeking a declaratory judgment

on issues already before the court as part of the oher claims asserted. See MBM Fin. Corp. v.

If oodlands Operating Co., L.P., 292 S.W.3d 660, 669 (Tex. 2009). As the Texas Supreme Court

has stated. “[iif repleading a claim as a declaratory judgment could justify a fee award, attorney’s

fees would be available for all parties in all cases.”

Robinson’s petition requested the trial court to declare that Wells Fargo did not have a valid

court order authorizing it to foreclose on the property on June 3, 2008 and that its foreclosure was
wrongltil and a breach of the deed of trust. lhese requests are nothing more than a reassertion of the

issues underlying Robinson’s claims for wrongful foreclosure and breach of contract. All of the

relief sought tinder Robinson s declaratory judgment action could have been sought in connection

with his other claims. The only apparent benefit to Robinson of the declaratory judgment action was

to provide a basis for an award of attorney’s fees. As such, an award of attorney’s les under the

declaratory judgment act is improper. 5cc Elan Indus, Inc. i’. Lch,nunn. 359 S.W.3d 620. 624 (Fex.

2011). We resolve Wells Fargo’s third issue in its favor.

Finally, we address Robinson’s cross-appeal contending the trial court erred in failing to

order Wells Fargo to forfeit all principal and interest collected on his home equity note. Robinson

bases his argument on Article 16, section 50(a)(6)(Q)(x) of the Texas Constitution that states if a

lender Ihils to comply with the requirements for an extension of credit found in section 50(a)(6). the

lender forfits all principal and interest ofthe loan. See TEx. CONST. art. XVI. § 50(a)(6)(Q)(x): see

also Vincent v. Bunk ofAm., NA., 109 S.W.3d 856, 862 (Tex. App.—Dallas 2003. pet. denied). But,

as this Court has held, so long as the loan agreement originally entered into by the parties complies

with the constitutional requirements. forfeiture is not an appropriate remedy. See Vincent. 109

S.W.3d at 862. A borrower’s recourse for a lender’s failure to abide by the terms of his loan

agreement is to assert traditional tort and breach of contract causes of action, not constitutionally

mandated forfeiture. See id.

As stated above, section 50(a)(6)(D) requires that a home equity note be secured by a lien that

may only be foreclosed upon by court order. The deed of trust at issue here required a court order

for foreclosure. Because the loan agreement entered into by the parties complied with the

constitutional requirements, the trial court did not err in denying forfeiture. We resolve Robinson’s

sole issue against him.
Base on the foregoing, we conclude there is no evidence to support the award of monetary

damages and attornevs tees to Robinson based on his claims [or wrongful foreclosure and breach

of contract. We further conclude the trial court did not err in denying Robinsons request for

forfeiture. Accordingly. we reverse the trial court’s judgment and render judgment that Robinson

take nothing by his claims.

-

_________________

------- JOSEIORRlS /

JUS1’icI

1 I0700F.P05
Enitrt nf .ppiahi

iifth 3iitrirt uf rxa at 1allai

JUDGMENT

WELL FARGO E3ANK. N.A., AS

TRUSTEE, Appellant

No. 05-1 1-00700-CV

RAY ROBINSON, Appellee

V.

Appeal from the 296 th Judicial District Court

of Collin County, Texas. (Tr.Ct.No, 296-

02231-2008).

Opinion delivered by Justice Morris,

Justices Francis and Murphy participating.

In accordance with this Court’s opinion of this date, the judgment of the trial court is

REVERSED and judgment is RENDERED that Ray Robinson take nothing by his claims. It is

ORDERED that appellant Well Fargo Bank, N.A., as Trustee recover its costs of this appeal

from appellee Ray Robinson.

Judgment entered December 11, 2012.