Court Opinion

ID: 16334
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:53:26+00
Date Added: 2024-06-11T15:04:23.322539
License: Public Domain

Revised December 3, 1998

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE FIFTH CIRCUIT

                        _____________________

                             No. 98-50003
                        _____________________

          UNITED STATES OF AMERICA,

                           Plaintiff,

          v.

          RUBEN H JOHNSON, ET AL,

                           Defendants,

          PROPERTY TRADING INCORPORATED,

                           Defendant-Cross Defendant-Appellee,

          v.

          J HIRAM MOORE, LIMITED, A Texas Limited Partnership;

                           Defendant-Cross Plaintiff-Appellant,

          LONGLEY & MAXWELL, LLP,

                           Defendant-Cross Plaintiff-Appellant.

_________________________________________________________________

           Appeal from the United States District Court
                 for the Western District of Texas
_________________________________________________________________
                          December 2, 1998
Before KING, GARWOOD, and HIGGINBOTHAM, Circuit Judges.

KING, Circuit Judge:

     Defendants-cross plaintiffs-appellants J. Hiram Moore,

Limited, and Longley & Maxwell, L.L.P., appeal the district
court’s denial of their motion for summary judgment and grant of

defendant-cross defendant-appellee Property Trading, Inc.’s

motion for summary judgment.   We affirm.

               I.   FACTUAL AND PROCEDURAL BACKGROUND

     The facts of this case are uncontested.   In 1960, Ruben

Johnson (Johnson) purchased a home in Austin, Travis County,

Texas (the Property).   Since that date, Johnson continuously has

claimed the Property as his homestead and has resided in it

except during a period of incarceration for a 1989 criminal

conviction.   In 1986, Davis & Davis, P.C. (Davis) obtained a

judgment against Johnson and on December 24, 1986 recorded the

abstract of judgment in Travis County.   Davis assigned its

interest in the judgment to Longley & Maxwell, L.L.P. (Longley),

and Longley and J. Hiram Moore, Limited (Moore) now own the

judgment.

     On September 23, 1988, Johnson granted the Quadrillion

Corporation an option to purchase the Property.   That same day,

Quadrillion assigned the option to Property Trading, Inc. (PTI).

On August 3, 1989, PTI exercised the option and obtained a one-

half undivided interest in the Property via a general warranty

deed.   PTI did not record the deed until October 28, 1992.

     In 1995, the United States filed suit in federal district

court for the Western District of Texas to obtain a court order

allowing it to enforce an unsatisfied restitution lien, obtained

as part of Johnson’s 1989 conviction and sentence, by foreclosing

                                  2
on the Property.   The United States named as defendants Johnson,

PTI, Longley, Moore, and others.       In 1997, the district court

granted the United States’s motion to dismiss all its causes of

action.   The parties remaining in the case are appellants Longley

and Moore and appellee PTI.   Longley and Moore and PTI each

claims an interest in the portion of the Property that Johnson

sold to PTI.   The issues remaining in the case concern only PTI’s

undivided one-half interest in the Property and not Johnson’s

ownership of the remainder.   Of course, Texas law determines the

parties’ interests in the Property.

     Longley and Moore filed a motion for partial summary

judgment, and PTI filed a countermotion based on essentially the

same facts.    Longley and Moore alleged that under Texas property

law, their judgment lien against Johnson attached to the

undivided one-half interest in the Property conveyed to PTI

during the period between August 3, 1989, when Johnson sold the

one-half interest to PTI, and October 29, 1992, when PTI recorded

its deed.   PTI responded that Longley and Moore’s lien never

attached to the interest it received from Johnson and that its

delay in recording the deed was of no consequence.

     The motions for summary judgment were presented to a

magistrate judge, who entered an interim report and

recommendation determining that Longley and Moore’s judgment lien

did not attach to PTI’s undivided one-half interest in the

Property.   Longley and Moore objected to the interim report.        The

                                   3
district court, however, entered an interlocutory order approving

and accepting the report, denying Longley and Moore’s motion for

summary judgment, and granting PTI’s countermotion for summary

judgment.   On November 20, 1997, the district court entered its

final judgment disposing of all issues.         Longley and Moore timely

appealed.

                      II.    STANDARD OF REVIEW

     The standard of review for entry of summary judgment is de

novo, see Morris v. Covan World Wide Moving, Inc., 144 F.3d 377,

380 (5th Cir. 1998), applying the same standards as the district

court, see Lodge Hall Music, Inc. v. Waco Wrangler Club, Inc.,

831 F.2d 77, 79 (5th Cir. 1987).        After consulting applicable law

in order to ascertain the material factual issues, we consider

the evidence bearing on those issues, viewing the facts and the

inferences to be drawn therefrom in the light most favorable to

the non-movant.   See King v. Chide, 974 F.2d 653, 656 (5th Cir.

1992).   Summary judgment is properly granted if “the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law.”         See FED. R. CIV.

P. 56(c).   We review the district court’s determination of state

law de novo.   See Salve Regina College v. Russell, 499 U.S. 225,

239 (1991).

                            III.   DISCUSSION

                                    4
     On appeal, Longley and Moore argue that the district court

erred in denying their motion for summary judgment and granting

PTI’s countermotion for summary judgment.    They point out that a

recorded judgment gives the judgment holder a lien on all of the

debtor’s real property in the county where the judgment is

recorded.   See TEX. PROP. CODE ANN. § 52.001 (West 1995).   Of

course, such liens normally do not attach to homestead property.

See TEX. CONST. art. XVI § 50.   Longley and Moore contend,

however, that judgment liens do attach to homestead property if

the debtor conveys the property to a third party and there is a

gap between the time of the conveyance and the recordation of the

deed.   Their argument depends primarily on the Texas recording

statute, TEX. PROP. CODE ANN. § 13.001 (West 1984 & Supp. 1998),

and Intertex, Inc. v. Kneisley, 837 S.W.2d 136 (Tex. App.--

Houston [14th Dist.] 1992, writ denied).    The recording statute

provides in pertinent part:

     A conveyance of real property or an interest in real
     property or a mortgage or deed of trust is void as to a
     creditor or to a subsequent purchaser for a valuable
     consideration without notice unless the instrument has been
     acknowledged or proved and filed for record as
     required by law.

                                    5
TEX. PROP. CODE ANN. § 13.001 (West 1984).1   Longley and Moore

contend that the term “creditor” encompasses judgment creditors

and that Johnson’s conveyance of the Property to PTI was

therefore void as to them because it was not recorded for over

three years, during which time Longley and Moore’s lien attached.

Although Longley and Moore acknowledge that ordinarily, under

Texas law, a grantor can convey his homestead free and clear of

preexisting judgment liens, they argue that Intertex, a

controlling case, holds that such liens attach if there is a gap

period between the time of alienation and the time of recordation

of the subsequent purchaser’s deed.

     As a federal court sitting in a case governed by state

substantive law, we consider the holdings of the supreme court of

the state that furnishes the substantive law of the decision--

here, Texas--to be controlling precedent.      See Owen v. United

States, 935 F.2d 734, 738 (5th Cir. 1991).     In the absence of

Texas Supreme Court pronouncements, we generally defer to the

holdings of lesser state courts unless we are convinced by other

     1
         The current version of the recording statute, which
became effective on September 1, 1989, about a month after
Johnson’s conveyance to PTI, is nearly identical to the earlier
one:
      A conveyance of real property or an interest in real
      property or a mortgage or deed of trust is void as to a
      creditor or to a subsequent purchaser for a valuable
      consideration without notice unless the instrument has been
      acknowledged, sworn to, or proved and filed for record as
      required by law.
TEX. PROP. CODE ANN. § 13.001 (West Supp. 1998).

                                  6
evidence that the state law is otherwise.      See id. at 738-39.      In

this case, there is no Texas Supreme Court opinion squarely

addressing the effect of a delay in recording the deed to a valid

homestead.   Nor is there a court of appeals case with a “writ

refused” writ history, which has the same precedential value as

an opinion of the Texas Supreme Court.2     See TEX. R. APP. P.

56.1(c); ‘21' Int’l Holdings, Inc. v. Westinghouse Elec. Corp.,

856 S.W.2d 479, 483 (Tex. App.--San Antonio 1993, no writ).       We

therefore look to lower state court decisions, but we do not

defer to them if it appears from other evidence that they do not

accurately reflect Texas law.

     We begin our analysis by noting a few first principles.

Under the Texas constitution, judgment liens on homestead

property normally are not valid:

     The homestead of a family, or of a single adult person,
     shall be, and is hereby protected from forced sale, for the
     payment of all debts except for the purchase money thereof,
     or a part of such purchase money, the taxes due thereon, or
     for work and material used in constructing improvements
     thereon . . . . No mortgage, trust deed, or other lien on
     the homestead shall ever be valid, except for purchase money
     therefor, or improvements made thereon . . . .

TEX. CONST. art. XVI § 50.    Judgment liens will attach, however,

if the homestead ceases to be homestead property, for example if

the debtor abandons it.      See In re Henderson, 18 F.3d 1305, 1308

     2
        Before March 16, 1927, however, a court of appeals case
with a “writ refused” writ history did not have the same
precedential value as a Texas Supreme Court opinion. See Ohler
v. Trinity Portland Cement Co., 181 S.W.2d 120, 123 (Tex. Civ.
App.--Galveston 1944, no writ).

                                   7
(5th Cir. 1994); Exocet, Inc. v. Cordes, 815 S.W.2d 350, 351, 355

(Tex. App.--Austin 1991, no writ); Walton v. Stinson, 140 S.W.2d

497, 499 (Tex. Civ. App.--Dallas 1940, writ ref’d).       Although

alienation also terminates a homestead interest, see Resolution

Trust Co. v. Olivarez, 29 F.3d 201, 206 (5th Cir. 1994), a

grantee who acquires property that was a homestead at the time of

the conveyance takes free and clear of a prior judgment lien.3

See, e.g., Meyer v. Paxton, 14 S.W. 568, 568-69 (Tex. 1890);

Black v. Epperson, 40 Tex. 162, 188 (1874); Hoffman v. Love, 494

S.W.2d 591, 594 (Tex. Civ. App.--Dallas 1973, writ ref’d n.r.e.);

Englander Co. v. Kennedy, 424 S.W.2d 305, 309 (Tex. Civ. App.--

Dallas 1968, writ ref’d n.r.e.); Soper v. Medford, 258 S.W.2d

118, 121 (Tex. Civ. App.--Eastland 1953, no writ); Johnson v.

Echols, 21 S.W.2d 382, 384 (Tex. Civ. App.--Eastland 1929, writ

ref’d); Howard v. Mayher, 88 S.W. 409, 410 (Tex. Civ. App. 1905,

writ ref’d) (“The judgment lien was no impediment to a valid sale

by the parties asserting the homestead right to a purchaser; and

such purchaser, if he acquired the property at a time when the

homestead right existed, would receive it unaffected by the

judgment lien that might exist generally against the real estate

     3
         This is true in spite of the fact that a recording
statute nearly identical to the current version has been in
effect for well over one hundred years. See TEX. PROP. CODE ANN.
§ 13.001 (West 1984); TEX. CIV. STAT. ANN. arts. 1289, 6627 (West
1980); Acts 1975, 64th Leg., ch. 353, § 14; 1911 TEX. REV. CIV.
STAT. arts. 1104, 6824; 1895 TEX. REV. CIV. STAT. arts. 625, 4640;
1879 TEX. REV. CIV. STAT. arts. 549, 4332; GEORGE W. PASCHAL, A DIGEST
OF THE LAWS OF TEXAS arts. 997, 4988 (2d ed. 1870).

                                   8
of the debtor in the county where the judgment is properly

recorded.”).    Thus, it would appear that because the Property was

uncontestedly Johnson’s homestead at the time he conveyed the

one-half interest, PTI took free and clear of Longley and Moore’s

lien.

       Longley and Moore claim, however, that Intertex, Inc. v.

Kneisley, 837 S.W.2d 136 (Tex. App.--Houston [14th Dist.] 1992,

writ denied), creates an exception to these general rules.

Intertex holds explicitly that even in the case of homestead

property, “the prior lienholder’s interest will attach if there

is a gap in between the time of alienation of the homestead and

the recordation of the subsequent purchaser’s interest.”     Id. at

138.    We conclude that Intertex does not correctly state Texas

law.    First, Intertex has no support in precedent.   Although it

cites Hoffman v. Love, 494 S.W.2d 591, 594 (Tex. Civ. App.--

Dallas 1973, writ ref’d n.r.e.), as the source of its holding

that judgment liens attach to homestead property during a gap

between the conveyance of the homestead and the recordation of

the deed, Hoffman states only that “a judgment lien attaches to

the judgment debtor’s interest if he abandons the property as his

homestead before he sells it,” id., and in fact explicitly holds

that “[n]o lien attaches until [the debtor] abandons [the

property] as his homestead, and if he does not abandon it before

he sells it, his conveyance is free of the judgment lien.”     Id.

Thus, Intertex misreads Hoffman, unless we construe the debtor to

                                  9
“abandon” the homestead when he deeds it to his grantee but not

to “sell” it until the grantee records the deed, a proposition

that is plainly untenable under Texas law.    See Thornton v.

Rains, 299 S.W.2d 287, 288 (Tex. 1957) (“Of course the recording

of a deed is not essential to the conveyance of title . . . .”).

In this case, as Longley and Moore concede, Johnson’s abandonment

of his homestead was effected by his conveyance to PTI.    Johnson

thus never abandoned his homestead until he sold it--indeed, the

abandonment was simultaneous with the sale--and under Hoffman,

his conveyance is free of Longley and Moore’s judgment lien.

     Nor have we been able to find any other authority for

Intertex’s holding.   Although Eagle Lumber Co. v. Trainham, 365

S.W.2d 702, 704 (Tex. Civ. App.--San Antonio 1963, writ ref’d

n.r.e.), appears at first glance to support Intertex, it is in

fact ambiguous at best.   In Eagle Lumber, the landowner filed a

divorce petition alleging that he would convey all his interest

in the couple’s homestead to his wife.    See id. at 703-04.

Subsequently, he executed a deed and delivered it to his

attorney, notifying his wife’s counsel that the attorney was

authorized to deliver the deed when the divorce was granted.       See

id. at 704.   The divorce decree stated simply that “[t]he Court

further finds that the parties hereto have settled their

community property rights,” without making any mention of a

property settlement agreement.   Id.   The wife did not record her

deed until six days after the divorce decree was entered.       See

                                 10
id.   The court held that the grantor abandoned the homestead upon

entry of the divorce decree, at which point the prior judgment

lien attached.   See id.   Longley and Moore contend that the

abandonment and conveyance of the homestead in Eagle Lumber

occurred on the same day--that is, when the divorce decree was

entered, the husband’s attorney became authorized to deliver the

deed--and that the court could only have found that the judgment

lien attached by finding that the delay in recording the deed

allowed the lien to attach.    But this argument ignores the fact

that the parties necessarily abandoned the homestead before it

was conveyed to the wife, because the attorney was not authorized

to deliver the deed until after the divorce decree, which

effected the abandonment, was entered.    The court unequivocally

held that the decree constituted an abandonment but not a

conveyance of the homestead.    See id.   Thus, the property ceased

to be homestead when the divorce decree was entered, at which

point the judgment lien attached, and then it was conveyed to the

wife.   Moreover, the opinion does not address the effect of the

delay in recordation.   Under these circumstances, we cannot say

that Eagle Lumber provides any support for Intertex.     Longley and

Moore’s claim that Intertex has been accepted by Texas courts is

similarly without merit.   Only three cases to date have cited

Intertex, and they do so only in dicta or for some proposition

other than the one at issue in this case.     See Olivarez, 29 F.3d

at 207 (citing Intertex for the rule that a homestead property

                                 11
loses its homestead protection upon the death of the claimants,

abandonment, or alienation); Sanchez v. Telles, 960 S.W.2d 762,

770 (Tex. App.--El Paso 1997, writ denied) (citing Intertex in

dicta); Lawrence v. Lawrence, 911 S.W.2d 450, 452-53 (Tex. App.--

Texarkana 1995, writ denied) (citing Intertex in dicta).

     Intertex runs counter to the overwhelming weight of Texas

law, which evinces a strong preference for insulating homesteads

from judgment liens.   Indeed, Intertex altogether negates the

long line of Texas cases that vindicate the Texas constitution’s

homestead protection by holding that grantors can transfer valid

homestead property free and clear of judgment liens.    Under the

Intertex rule, judgment liens would always attach upon the

transfer of homestead property, because there is inevitably a

gap, however brief, between the alienation of the homestead and

the recordation of the deed.   Although Longley and Moore argue

that the use of an escrow account would close the gap, the

signing of the deed and its recordation can never be

simultaneous, for the simple reason that there is nothing to

record until the homestead is sold.   Intertex thus guts the Texas

constitution’s directive that “[n]o . . . lien on the homestead

shall ever be valid,” TEX. CONST. art. XVI § 50.

     Because Intertex, a decision of a state intermediate court,

has no support in precedent and contravenes the state

constitution and a vast number of established cases, we are

convinced that it cannot be Texas law.   In this case, there was

                                12
no genuine issue as to any material fact, and PTI was entitled to

a judgment as a matter of law because in Texas, a grantor can

convey his homestead free and clear of existing judgment liens if

he does not abandon the homestead prior to the conveyance.   The

district court was therefore correct to grant PTI’s motion for

summary judgment and deny that of Longley and Moore.

                         IV.   CONCLUSION

     For the reasons above, we AFFIRM the judgment of the

district court.

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