In The 

Court of Appeals 

Seventh District of Texas at Amarillo

No. 07-14-00236-CV 

EMILIO ROMERO AND LINDA K. ROMERO, APPELLANTS 

 

V. 

 

STEWART TITLE GUARANTY, APPELLEE 

 

On Appeal from the 222nd District Court 

Deaf Smith County, Texas 

Trial Court No. CI-09C-057, Honorable Roland D. Saul, Presiding 

 

January 27, 2015 

 

MEMORANDUM OPINION 

 

Before QUINN, C.J., and CAMPBELL, and HANCOCK, JJ. 

Emilio Romero and Linda K. Romero (the Romeros) appeal from a judgment 

entered after a bench trial in favor Stewart Title Guaranty (Stewart) for breach of 

warranty. They contend that 1) the evidence is legally and factually insufficient to 

support their breach of the warranty of good title and 2) that the doctrine of equitable 

subrogation is inapplicable. We affirm the judgment. 

In 2002, Magnum Tire Corporation took a judgment against the Romeros and 

placed a valid lien upon certain real property they owned. Several years later, the 

Romeros filed for bankruptcy. They were represented in that proceeding by their trial 
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counsel in this proceeding. In that bankruptcy, the Magnum Tire debt was discharged 

as to the personal liability but apparently a valid lien still remained against the property. 

In 2007, the Romeros sold the property to Raul and Rocio Nevarez (the Nevarezes). 

The attorney representing the Romeros at bar and during the bankruptcy (and who 

knew of the Magnum Tire lien) also drafted the warranty deed by which the Romeros 

were to convey the realty to the Nevarezes. The trial court found that 1) “[t]he Deed 

warranted that there were no liens or encumbrances against the Property at the time of 

sale, and 2) “[t]his warranty was false as the Magnum lien was in fact a valid 

encumbrance against the Property.” The Romeros also executed an “Affidavit as to

Debts, Liens, and Possessions” as part of the transaction; while that document 

mentioned the existence of several liens, nothing was said of the Magnum Tire 

encumbrance.

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Prior to closing, A. O. Thompson Abstract Co. issued a title insurance policy 

underwritten by Stewart in favor of the Nevarezes. The final commitment by Stewart 

referenced the Magnum Tire lien but, having been provided a copy of the bankruptcy 

discharge, stated that a release was not required. However, the Romeros’ counsel

testified that he advised the Romeros prior to closing that he believed the lien was still 

valid. Yet, they went ahead and signed a general warranty deed in which they agreed 

to “warrant and forever defend all and singular the Property to Grantee and Grantee’s 

heirs, successors, and assigns against every person whomsoever lawfully claiming or to 

claim the same or any part thereof . . . .” 

 

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Via the affidavit, they also agreed to indemnify the “PURCHASERS AND/OR LENDER IN THIS 

TRANSACTION, THEIR SUCCESSORS AND ASSIGNS, ALL AMOUNTS SECURED BY ANY AND ALL 

LIENS NOT SHOWN ABOVE . . . .” 
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After closing, the Romeros’ counsel purchased the lien from Magnum Tire for 

$5,000 through Blackmoon Cattle Co. in which he was the only member and asserted a 

claim against Stewart in the amount of $30,000. That claim was paid. Stewart, which 

was contractually subrogated to the claims of the Nevarezes, filed suit against the 

Romeros. The latter did not appear at trial because their attorney did not inform them of 

the trial date; he did not believe their presence was necessary. Among other things, the 

trial court found Stewart Title to be an assignee of the Nevarezes’ claim against the 

Romeros and awarded it damages against the Romeros.

Legal and Factual Sufficiency

The Romeros argue that the evidence is legally and factually insufficient to prove 

that the Nevarezes relied upon any warranty they gave in the deed.

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This argument 

seems to be primarily based on the notion that Stewart knew of the lien and therefore 

could not have been misled by the warranty.3

First, Stewart was not asserting any claim of its own but was subrogated to the 

claims of the Nevarezes. Second, a general warranty deed binds the grantor to defend 

against title defects created by himself and all prior titleholders. Stumhoffer v. Perales, 

No. 01-12-00953-CV, 2014 Tex. App. LEXIS 10730, at *13 (Tex. App.—Houston [1st

Dist.] September 25, 2014, no pet.); Munawar v. Cadle Co., 2 S.W.3d 12, 16 (Tex. 

App.—Corpus Christi 1999, pet. denied); see also Triplett v. Shield, 406 S.W.2d 941, 

947 (Tex. Civ. App.—Eastland 1966, writ ref’d n.r.e.) (stating that a covenant of general 

warranty means that the real property conveyed is free from encumbrances). The 

 

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The Romeros do not challenge any specific findings of fact made by the trial court. 

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At trial, the Romeros contended they were entitled to rely on the title insurance policy even 

though it was obtained and paid for by the Nevarezes as required by their lender. However, the trial court 

found that they were neither insureds nor beneficiaries under the policy, and they did not attack that 

finding. 
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purpose is to indemnify the purchaser against a loss or injury he may sustain by a 

defect in the seller’s title. Stumhoffer v. Perales, 2014 Tex. App. LEXIS 10730, at *14.4 

If the covenant is broken, the breach occurs at the time of delivery of the deed. Jackson 

v. McKenney, 602 S.W.2d 124, 126 (Tex. Civ. App.—Eastland 1980, writ ref’d n.r.e.); 

Compton v. Trico Oil Co., 120 S.W.2d 534, 537 (Tex. Civ. App.—Dallas 1938, writ 

ref’d).

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In none of these cases have we found the requirement of a separate showing of 

reliance. See Farmers Royalty Holding Co. v. Cherry, 142 S.W.2d 255, 258 (Tex. Civ. 

App.—Galveston 1940), aff’d, 160 S.W.2d 908 (Tex. 1942) (stating that if buyers 

acquired their mineral deeds upon a valuable consideration it was clearly the duty of the 

seller to protect appellants against the outstanding vendor’s lien notes against which he 

had given warranties).6Therefore, the lack of evidence of such was not fatal to the 

 

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Stumhoffer stands for the proposition that attorney’s fees cannot be recovered for a breach of 

the warranty of title. Stumhoffer v. Perales, No. 01-02-00953-CV, 2014 Tex. App. LEXIS 10730, at *20-21 

(Tex. App.—Houston [1st Dist.] September 25, 2014, no pet.). Attorney’s fees were awarded to Stewart. 

However, that issue was not raised on appeal. 

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To the extent that an eviction is also required, Stumhoffer v. Perales, 2014 Tex. App. LEXIS at 

*14 (stating that to establish a breach of the warranty of title, the warrantee must show that at the time the 

land was conveyed, there was a superior title outstanding in another person and the warrantee was 

evicted by the superior title holder), constructive eviction, meaning that the facts are such that it would be 

useless to attempt to maintain the title conveyed where suit is threatened, suffices. Compton v. Trico Oil 

Co., 120 S.W.2d 534, 538 (Tex. Civ. App.—Dallas 1938, writ ref’d).

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The opinions cited by the Romeros in support of the contrary position are inapposite. For 

instance, Gibson v. Turner, 156 Tex. 289, 294 S.W.2d 781 (1956) did not involve a claim founded upon a

breached warranty of title implicit in a general warranty deed. An insurance company was not suing, via

subrogation, to recover what it paid (per the terms of a title policy) to satisfy an encumbrance upon

property. Rather, the comments in Gibson cited by the Romeros concern effort by a buyer of realty to

reduce the purchase price (or avoid payment of the full consideration) by claiming that the seller did not

own clear title to the realty. However, the buyer knew that the seller did not own clear title at the time of

purchase. As stated by the court, “‘Had the defendant been deceived as to the title he acquired, by the 

fraud of the vendor, or had he been ignorant of the defect of title, a very different case would have been 

presented. But when he made the purchase and accepted the conveyance with a knowledge of that 

defect, he must, we think be deemed to have waived the objection.’” Id. at 790, quoting Brock v. 

Southwick, 10 Texas 65, 1853 Tex. LEXIS 74 (Tex. 1853). 

As for Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675 (Tex. 2002), the claims there involved 

breach of contract, breach of warranty, fraud, negligent misrepresentation, and violation of the Deceptive 

Trade Practices Act. They arose when the plaintiffs bought purportedly defective computer software 

products sold by Schein. A title insurer was not suing, via subrogation, to recover what it paid (per the

terms of a title policy) to satisfy an encumbrance upon property sold via a generally warranty deed.
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claim of Stewart. Moreover, although Stewart may have had knowledge of the 

existence of the lien, the only evidence at trial indicates that a mistake was made as to 

its validity due to the Romeros’ discharge in bankruptcy. There is no evidence that the 

Nevarezes understood that the lien was still valid in spite of the bankruptcy discharge. 

 Equitable Subrogation

Next, the Romeros claim that Stewart was not entitled to equitable subrogation

and urge several reasons why. Yet, Stewart’s recovery was not founded upon equitable 

but rather contractual subrogation. It stepped into the shoes of the Nevarezes per the 

terms of the title policy once it satisfied the outstanding encumbrance.7 And, the 

Romeros failed to cite authority holding that equitable principles apply to bar claims 

sounding in contract as opposed to equity. 

The Romeros further argue that Stewart was not entitled to subrogation because 

it violated section 2502.003 of the Insurance Code. The statute provides that a title 

insurance company may not “wilfully issue” a binder for title insurance or a title 

insurance policy “showing no outstanding enforceable recorded liens on real property 

against which the company knows an outstanding enforceable recorded lien exists.” 

TEX. INS. CODE ANN. § 2502.003(a) (West 2009). We find the contention of no moment. 

First, one violates the provision by “wilfully” issuing a title policy. To act with such a 

mens rea, the person must be more than negligent. Burnett Ranches, Ltd. v. Cano 

Petroleum, Inc., 289 S.W.3d 862, 866-67 (Tex. App.—Amarillo 2009, pet. denied). That 

is, he must act with purpose and design. Id. We are cited to no evidence of record 

suggesting that Stewart, or the entity it relied on to investigate the status of title, was 

 

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The trial court executed a fact finding stating that: “Pursuant to the terms of the title insurance 

policy, if . . . [Stewart Title Company] was ever required to pay a claim, such as a lien, under the terms of 

the policy then . . . [Stewart Title Company] had the right to pursue reimbursement of the claim through 

the Buyers as such right was assigned to . . . [Stewart Title Company] by the Buyers under the policy.” 

(Emphasis added). The Romeros did not attack this finding.
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anything other than negligent. Indeed, evidence indicates that A. O. Thompson 

mistakenly concluded that the Romeros’ bankruptcy somehow vitiated the need to 

secure a release of the Magnum Tire lien. 

Accordingly, we overrule each issue raised and affirm the judgment of the trial 

court. 

Per Curiam