Court Opinion

ID: 3125509
Source: CourtListenerOpinion
Date Created: 2015-10-16 15:10:14.702691+00
Date Added: 2024-06-11T11:53:22.964445
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-10-00169-CV

MORTGAGE ELECTRONIC                                                APPELLANT
REGISTRATION SYSTEMS, INC.

                                        V.

MARK DISANTI                                                        APPELLEE

                                     ----------

          FROM THE 16TH DISTRICT COURT OF DENTON COUNTY

                                     ----------

                        MEMORANDUM OPINION1
                                     ----------

                                  I. Introduction

      In three issues, Appellant Mortgage Electronic Registration Systems, Inc.

(MERS) appeals the trial court’s grant of default judgment in favor of Appellee

Mark DiSanti. We vacate the trial court’s judgment and dismiss the case.

      1
      See Tex. R. App. P. 47.4.
                      II. Factual and Procedural History

      In April 2009, DiSanti, a real-estate investor, purchased property located in

a subdivision in Denton County, Texas, at a foreclosure sale initiated by the

subdivision’s Homeowner’s Association.2      Linda Leal, who initially owned the

property—2356 Jaguar Drive in Frisco, Texas—had signed a promissory note

and deed of trust (collectively the Note)3 with First Horizon Home Loans4 to fund

her purchase.    The Note listed the property as security and named MERS

“beneficiary” of the agreement.5

      On December 1, 2009, DiSanti filed a petition seeking a declaration of

MERS’s rights relative to the property and requesting that a lien in favor of MERS

based on the Note be discharged and extinguished if MERS failed to answer or

to verify the Note’s validity. On February 8, 2010, after MERS failed to timely

respond, DiSanti moved for a default judgment. On February 10, 2010, the trial

court signed a default judgment ordering that MERS’s interest in the property be

      2
       The record indicates that the deed conveying the property to DiSanti was
recorded in Denton County, Texas, on April 13, 2009.
      3
       The Note was recorded in Denton County, Texas, on September 7, 2007.
      4
       First Horizon is a division of Tennessee Bank National Association.
      5
        MERS, developed by the “real estate finance industry,” facilitates the sale
and resale of instruments in the secondary mortgage market. See MERSCORP,
Inc. v. Romaine, 861 N.E.2d 81, 83 (N.Y. 2006). MERS contracts with lenders to
track security instruments in return for an annual fee. Id.

                                    2
extinguished, awarding DiSanti $2,500 in trial attorneys’ fees, and outlining

prospective attorneys’ fees for appeals.

      On March 5, MERS filed a motion for new trial and to set aside the default

judgment.6 In its motion, MERS asserts that it is First Horizon’s nominee, but it

also indicates that it transferred its interest to Met Life Home Loans, a division of

Met Life Bank, at some point after Leal’s June, 22, 2009 default. 7 Specifically

MERS states,

      On or about June 22, 2009, Leal defaulted under the Note and Deed
      of Trust and a Notice of Substitute Trustee’s Sale (“Notice”) was filed
      of record in the Denton County Deed Records. Pursuant to the
      terms of the Notice, the note and liens had been transferred and
      assigned from MERS to Met[L]ife Home Loans[,] a division of Met
      Life Bank N.A. (“Met Life”). [DiSanti] is held to have constructive and
      actual notice of this transfer as it was filed of record. However,
      [DiSanti] failed to give notice to MetLife of its lawsuit. 8 [Emphasis
      added.]
      6
       In its motion, MERS asserts that it is First Horizon’s nominee, but at the
time DiSanti filed suit, the Note had already been transferred to Met Life.
      7
        Both MERS and Met Life indicate that the Note was assigned to Met Life
prior to DiSanti’s December 1, 2009 filing date.
      8
        MERS also made this argument at the hearing on its motion for new trial,
stating,

      One other very important thing to note here, Your Honor—one other
      very important thing to note that is quite significant is that when Mr.
      DiSanti filed this lawsuit last year, December of ’09, MERS had
      actually—there was a Notice of Substitute Trustee’s Deed that had
      been filed of record here in Denton County back in June of ’09
      stating on that Notice of Substitute Trustee’s Deed that the loan had
      been assigned from MERS to MetLife . . . . In this instance, it
      actually should have been MetLife, but instead he sued MERS.

Per the trial court’s docket entry on May 25, 2010, MERS’s motion was denied.

                                     3
In its opening brief to this court, MERS states that it assigned the deed of trust to

Met Life in April 2009 “before DiSanti filed his petition against MERS and before

default was entered against MERS.” In its reply brief, MERS admits that the

deed of trust assignment was not recorded until April 13, 2010, more than two

months after the trial court signed the default judgment. The date the substitute

trustee deed and deed of trust were recorded are referenced in the parties’

testimony and briefs, but copies of the deeds are not included in the record.

      Met Life, which attempted to intervene after the trial court signed the

default judgment, stated in its plea in intervention that it was the current

noteholder when DiSanti filed suit on December 1, 2009, and that it should have

been the proper party served by DiSanti “since there was a notice of substitute

trustee sale that had been filed of record, stating [Met Life] was the noteholder at

the time [DiSanti] filed its Original Petition.” The trial court did not rule on Met

Life’s plea in intervention.9 This appeal followed.

                             III. Mootness Doctrine

      The mootness doctrine prevents courts from rendering advisory opinions,

which are outside the jurisdiction conferred by article II, section 1 of the Texas

Constitution. See Valley Baptist Med. Ctr. v. Gonzalez, 33 S.W.3d 821, 822

(Tex. 2000). A controversy must exist between the parties at every stage of the

      9
       The trial court also did not rule on the plea in intervention filed by Kingman
Holdings, L.L.C. Kingman asserted an interest as purchaser of the property from
DiSanti on February 15, 2010. Kingman is not party to this appeal.

                                     4
legal proceeding, including the appeal. Bd. of Adjustment of City of San Antonio

v. Wende, 92 S.W.3d 424, 427 (Tex. 2002); McClure v. JPMorgan Chase Bank,

147 S.W.3d 648, 651 (Tex. App.—Fort Worth 2004, pet. denied). An issue may

become moot when a party seeks a ruling on some matter that, when rendered,

would not have any practical legal effect on a then-existing controversy. See In

re H&R Block Fin. Advisors, Inc., 262 S.W.3d 896, 900 (Tex. App.—Houston

[14th Dist.] 2008, orig. proceeding); City of Farmers Branch v. Ramos, 235
S.W.3d 462, 469 (Tex. App.—Dallas 2007, no pet.). When an appeal is moot,

we must set aside the judgment and dismiss the cause. McClure, 147 S.W.3d at

651; City of Fort Worth v. Pastusek Indus., Inc., 48 S.W.3d 366, 371 (Tex. App.—

Fort Worth 2001, no pet.).

                                   IV. Analysis

      Though at the time of DiSanti’s purchase MERS held an interest in the

property, all three parties involved—MERS, Met Life, and DiSanti—agree that at

the time DiSanti filed suit, MERS had assigned its interest to Met Life. See Tex.

R. App. P. 38.1(g) (“In a civil case, the court will accept as true the facts stated

unless another party contradicts them.”). The assignment extinguished MERS’s

rights in the property. MG Bldg. Materials, Ltd. v. Moses Lopez Custom Homes,

Inc., 179 S.W.3d 51, 57 (Tex. App.—San Antonio 2005, pet. denied) (recognizing

that an assignment transfers a right or interest from one party to another); Luker

v. Arnold, 843 S.W.2d 108, 120 (Tex. App.—Fort Worth 1992, no writ) (noting

that absent a specified effective date, an assignment is effective upon signing).

                                     5
Because MERS no longer had any right to the property at the time DiSanti filed

suit, DiSanti’s requests for declaratory and default judgments against MERS,

even if granted, have no practical legal effect on DiSanti’s rights to the property.

Thus, the issue between the parties is moot. See Meeker v. Tarrant Cnty. Coll.

Dist., 317 S.W.3d 754, 760 (Tex. App.—Fort Worth 2010, pet. filed) (stating an

issue is moot when “one seeks judgment on some matter which, when rendered

for any reason, cannot have any practical legal effect on a then-existing

controversy.”); see also Love Terminal Partners, L.P. v. City of Dallas, 256
S.W.3d 893, 896 (Tex. App.—Dallas 2008, no pet.) (same). We therefore hold

that MERS’s appeal is moot.

                                 V. Conclusion

      Having held that MERS's appeal is moot, we vacate and set aside the trial

court's judgment, and dismiss this case for lack of subject-matter jurisdiction. See

Tex. Foundries, Inc. v. Int'l Moulders & Foundry Workers' Union, 151 Tex. 239,

241, 248 S.W.2d 460, 461 (1952) (stating that “when a case becomes moot on

appeal, all previous orders are set aside by the appellate court and the case is

dismissed” and that merely dismissing the appeal “would have the effect of

affirming the judgment of the lower court without considering any assignments of

error thereto”).

                                     6
                                      BOB MCCOY
                                      JUSTICE

PANEL: DAUPHINOT, WALKER, and MCCOY, JJ.

DELIVERED: January 27, 2011

                              7