Opinion ID: 699275
Heading Depth: 2
Heading Rank: 3

Heading: Compliance With Texas Law.

Text: 39 The bankruptcy court found that the foreclosure sale complied with Texas law. It found that the sale was noncollusive, and notice was proper. Under Texas law, if that is so, the foreclosure stands. 40 In Texas [m]ere inadequacy of consideration alone does not render a foreclosure sale void if the sale was legally and fairly made. Tarrant Sav. Ass'n. v. Lucky Homes, Inc., 390 S.W.2d 473, 475 (Tex.1965). The Fifth Circuit has held that under Texas law, for inadequacy of consideration to invalidate the foreclosure sale, there must also be some irregularity in the foreclosure which caused or contributed to cause the real property to be sold for a grossly inadequate price. Savers Federal Sav. & Loan Ass'n v. Reetz, 888 F.2d 1497, 1503 (5th Cir.1989). 41 The only issue on appeal before us, regarding compliance with Texas law, is whether notice of the foreclosure sale should have been mailed to the debtors' new address. 1 This issue is material to whether the foreclosure sale was conducted legally and fairly under Texas law. The bankruptcy court found that the notice was proper, but the district court reversed and remanded for additional findings. The facts are not at issue. The bankruptcy court and district court determinations of Texas law are reviewed de novo. In re Qintex Entertainment, Inc., 8 F.3d 1353, 1355 (9th Cir.1993). 42 The deed of trust requires that notice be posted on the courthouse door and mailed to the debtors, or as might otherwise be required by Texas law. The courthouse door notice is not at issue, nor did the debtors dispute Beneficial's claim that it had mailed notice of the foreclosure sale. The only issue relates to the address to which Beneficial mailed the notice. The deed of trust says that Beneficial should mail the notice of foreclosure to the most recent address for such parties in the records of the Beneficiary. The deed of trust provides that the debtors all share the address of 3456 Camino Del Rio North, Suite 101, San Diego, California 92108. Beneficial mailed notice to that address. 43 The debtors were no longer at this address, and did not receive the notice. Their new address was 9225 Mira Mesa Boulevard, Suite 208, P.O. Box 261249, San Diego, California 92126. Mr. Lindsay's address was used for all the debtors, and he had moved. The debtors provided evidence that Beneficial's lawyers, one of whom was the trustee on the deed of trust, had, about six months before the foreclosure, sent mail in a different case to others of the limited partnerships in which Mr. Lindsay was general partner at the new address. The limited partnerships to which mail was sent at the new address were IMA 79-8, 78-1, 77-4, and 76-2. The limited partnerships involved in the case at bar are IMA 79-6 and IMA 81-3. The district court held that its lawyer's knowledge of the debtors' new address would be imputed to Beneficial, and remanded so that the bankruptcy court could determine whether the lawyer's knowledge of the new address of others of the limited partnerships constituted knowledge of the new address of the limited partnerships which were involved in the case at bar. 44 We conclude that the notice was adequate as a matter of Texas law. The deed of trust specified that notice should be sent to the most recent address for such parties in the records of Beneficiary, not in the records of the trustee. There was no evidence that Beneficial, the beneficiary, had the debtor's new address in its records. The deed of trust provided that the debtors could change the address to which notices thereunder would have to be sent by Beneficial, by mailing Beneficial a written notice of change of address. Although they could have assured themselves of notice of foreclosure by sending Beneficial a notice of change of address, and knew that foreclosure was the likely consequence of Greenway's bankruptcy and their own, the debtors never, so far as the record reveals, sent Beneficial notice of change of address. 45 After the case was tried and the decision was made in bankruptcy court, the debtors moved to reopen the case so that they could do additional discovery of Beneficial's records to determine whether it had some indication of their new address. The judge denied the motion because the debtor's request for production had been vague and whatever they had not obtained was their own fault, especially because of the general access Beneficial had given debtors' lawyer to its files. The district court affirmed this denial of the motion to reopen, and so do we. The standard of review is clear abuse of discretion, and the ruling was eminently reasonable. United States v. Bransen, 142 F.2d 232, 235 (9th Cir.1944); Coastal Transfer Co. v. Toyota Motor Sales, 833 F.2d 208, 211-12 (9th Cir.1987). 46 The Texas statute, like the deed of trust, makes the address for notice the address as shown by the records of the holder of the debt. Tex.Prop.Code Ann. Sec. 51.002(e) (West 1993) (formerly Article 3810). That means, in the context of a deed of trust, the beneficiary's records, not the trustee's. Texas law, according to its intermediate court of appeals, does not allow notice in the trustee's records, or in the records of the beneficiary's lawyer, to substitute for notice in the records of the beneficiary. See Dillard v. Broyles, 633 S.W.2d 636, 641 (Tex.Ct.App.1982). The general rule that a party is charged with knowledge of his lawyer, Carter v. Converse, 550 S.W.2d 322, 329 (Tex.Civ.App.1977), does not apply to this case, because the Texas statute and the language of the deed of trust make the beneficiary responsible to mail notice only to the address in its file. The debtors provided no evidence from which an inference could be drawn that Beneficial had their new address in its records. Cf. Lido Int'l, Inc. v. Lambeth, 611 S.W.2d 622, 624 (Tex.1981). 47 Even if the Texas Supreme Court were to adopt the proposition that if the trustee or the beneficiary's lawyer knew of the debtor's new address, then notice of foreclosure would have to be sent to that address under Texas law, the debtors still could not prevail. The lawyer-trustee did not have their address shown as such in his file. Lindsay was the general partner for numerous similarly named limited partnerships. The debtors' evidence showed only that some others of the Lindsay-related limited partnerships, not the ones involved in the case at bar, had their new addresses in the lawyers' files. The limited partnerships foreclosed upon in this case did not have their new address in the lawyer-trustee's files. 48 Thus neither the beneficiary, as required by the deed of trust and the Texas statute, nor the beneficiary's lawyer and trustee, had the debtors' new address in their records. At best, they had other debtors' addresses in their files, and they might have inferred that the debtors at issue should be sent mail at that same address. It might have been prudent, for purposes of avoiding years of litigation on the notice issue, as well as courteous, to cross copy the debtors' lawyer on the notice of foreclosure, and to mail the notice of foreclosure to the new address of other Lindsay limited partnerships as well as the address in Beneficial's records, but Texas law did not require it. Beneficial had no duty, under the deed of trust and Texas law, to have its lawyer infer that if some of Lindsay's limited partnerships had new addresses, probably the ones at issue did too, and mail notice to the new address. Beneficial and its lawyer-trustee were acting as an unpaid creditor with a deed of trust, not as private detectives, and did all they were obligated to do under Texas law. Accordingly, the bankruptcy court correctly determined that the foreclosure sale was conducted in accord with Texas law. 49