Opinion ID: 615427
Heading Depth: 2
Heading Rank: 1

Heading: The Deed of Trust

Text: As the bankruptcy court noted, [a] home lender's ability to collect fees and costs from a Chapter 13 debtor's bankruptcy estate is governed, in the first instance, by the language of its loan documents. In re Rangel, 408 B.R. at 655. Texas state law governs the interpretation of the Deed of Trust. The primary concern of a court in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument. Nat'l Union Fire Ins. Co. of Pittsburgh v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995) (citations omitted). When interpreting a contract, a court should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983) (emphasis omitted). No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id. Countrywide argues that the bankruptcy and district courts misconstrued the language in Sections 9 and 14 of the Deed of Trust. Section 9 of the Deed of Trust entitles Countrywide to do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument.... [3] The district and bankruptcy courts interpreted this phrase as providing for the recovery of fees only for the limited set of activities that simultaneously protect both Countrywide's interest in the property and its rights under the Deed of Trust. Countrywide, No. 09-CV-02084, at 6; In re Rangel, 408 B.R. at 675-76. Countrywide, on the other hand, maintains that and should be interpreted as either or both. In other words, Countrywide interprets Section 9 as entitling it to do or pay for activities that protect its interest in the property, protect its rights under the Deed of Trust, or protect both its interest in the property and its rights under the Deed of Trust. At the outset, we note that the word and is often construed as conjunctive and interpreted in a manner consistent with the rulings of the bankruptcy and district courts. See Bruce v. First Fed. Sav. & Loan Ass'n of Conroe, Inc., 837 F.2d 712, 715-16 (5th Cir.1988) (noting that [t]he word `and' is ... to be accepted for its conjunctive connotation rather than as a word interchangeable with `or' except where strict grammatical construction will frustrate clear legislative intent but holding that and should be given a disjunctive rather than conjunctive meaning in the statute at issue); Bd. of Ins. Comm'rs of Tex. v. Guardian Life Ins. Co. of Tex., 142 Tex. 630, 180 S.W.2d 906, 908 (1944) (noting that and and or are typically not interchangeable). However, and can be interpreted as disjunctive when the context requires. See Leon Ltd. v. Albuquerque Commons P'ship, 862 S.W.2d 693, 703-04 (Tex.App.El Paso, 1993, no writ) (interpreting and in the context of a provision listing a partnership's purposes as permitting the partnership to engage in any one or all of the activities listed); Aerospatiale Helicopter Corp. v. Universal Health Servs. Inc., 778 S.W.2d 492, 502 (Tex.App.Dallas 1989) (Although in common usage `and' is conjunctive and `or' is disjunctive, and, therefore, the two are not usually interchangeable, they are interpreted as synonymous when the context so requires in order to give effect to the manifest intent.); see also Bd. of Ins. Comm'rs, 180 S.W.2d at 908 (stating that and may be interpreted as or where necessary to effectuate the manifest intention of the user) (internal quotation marks and citation omitted). One of the recognized uses of `and' is to refer to `either or both' of two alternatives.... Aerospatiale Helicopter Corp., 778 S.W.2d at 502. We note that a Texas appellate court interpreted very similar language to that found in Section 9 of the Deed of Trust in Lanier v. Spring Cypress Investments and found that and meant either or both. 1995 WL 489427, at  (Tex.App.Houston [1st Dist.], August 17, 1995, no writ) (not designated for publication). In Lanier, a note provided that Maker shall be fully liable to Payee or other holder of this note ... for: (a) ad valorem and other taxes, assessments and impositions paid by Payee to protect its interest and the lien of the Deed of Trust securing this note .... Id. at  (emphasis added). The related deed of trust contained a similar provision. Id. Appellees defaulted on their payment obligations, and the appellant foreclosed his lien on the property on March 6, 1990. Id. at . After the foreclosure, appellants paid $42,173.24 in past-due taxes for 1988 and 1989 and sought to recover this amount under the note and the deed of trust. Id. Appellees, however, argued that they were not liable for any taxes paid by the appellants after the foreclosure. Id. According to appellees, their liability only existed when the note holder paid taxes to protect its interest and the lien of the Deed of Trust. Id. Because the lien was extinguished following foreclosure, the appellees reasoned, the payment of taxes could not have protected the appellant's lien. Id. The court, however, rejected this argument and interpreted the language of the note as imposing liability for any taxes paid by Lanier to protect either or both his interest and the lien. Id. at  (emphasis added). [4] Although Lanier, being unpublished, is not binding precedent, the similarity of the provision at issue in Lanier and Section 9 of the Deed of Trust, as well as the applicability of Texas law in both instances, militates in favor of interpreting and as either or both in Section 9. Moreover, in the instant case, we find that consideration of Section 9 as a whole requires construing and to mean either or both to effectuate the clear intent of the parties. [5] Section 9 specifically lists contemplated actions that can be undertaken by the lender. It states that Lender's actions can include, but are not limited to ... paying reasonable attorneys' fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding. (emphasis added). In light of this language, it is clear that the Deed of Trust contemplates entitlement to attorney's fees incurred to protect Countrywide's interest in the property or rights under the Deed of Trust. Consequently, and does not strictly mean both in the phrase Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument. (emphasis added). To interpret Section 9 otherwise would impermissibly render portions of the agreement meaningless and frustrate the intentions of the parties as made clear by Section 9 as a whole. See Phoenix Holdings, Ltd. v. Circle C Land Corp., 987 S.W.2d 933, 937 (Tex.App. Austin 1999, pet. denied) (stating that courts are required to interpret the contract in its entirety, to harmonize its various provisions, and to reject where possible an interpretation that would render any provision meaningless because it is presumed the parties intended each provision to have effect). Further, we find that all the requirements for the recovery of attorney's fees set out by Section 9 have been satisfied. It is not disputed that the Velazquezes were in default on their obligations under the Note and Deed of Trust. Further, as the bankruptcy court noted, the Velazquezes' Chapter 13 case was a proceeding that could significantly affect Countrywide's rights under the Deed of Trust, meaning that the triggering event under Section 9 had occurred. In re Rangel, 408 B.R. at 675. Countrywide incurred fees for acts that were reasonable or appropriate to preserve its rights under the Deed of Trust. [6] See id. at 667 (determining that the fees incurred were reasonable for the services rendered); Countrywide, No. 09-CV-02084, at 8 (stating that the bankruptcy court concluded that the Proof of Claim protected Countrywide's rights under the Deed of Trust). In addition, at least under the interpretation of Rule 2016 adopted by the bankruptcy judge, compliance with Rule 2016 was required by the bankruptcy court for Countrywide to recover its attorney's fees from the estate. As a consequence, the fees resulting from filing and prosecuting the Fee Application were reasonably and appropriately incurred to protect Countrywide's rights under the Deed of Trust. Thus, we hold that Countrywide was entitled to recover the attorney's fees sought in its Fee Application. Therefore, we reverse the judgment of the district court and remand for entry by the bankruptcy court of an order allowing such fees.