Court Opinion

ID: 5122297
Source: CourtListenerOpinion
Date Created: 2021-11-01 07:18:08.400914+00
Date Added: 2024-06-11T08:22:27.377846
License: Public Domain

Affirmed in Part, Reversed in Part, and Remanded; Remittitur Suggested;
and Majority Opinion in Part, Memorandum Majority Opinion in Part, and
Concurring and Dissenting Opinion filed October 28, 2021.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-19-00750-CV

  NATIONSTAR MORTGAGE LLC; HSBC BANK USA, N.A; BANK OF
   AMERICA, N.A; AND FIDELITY NATIONAL TITLE INSURANCE
                    COMPANY, Appellants
                                        V.
                    JOAN MAURI BAREFOOT, Appellee

                   On Appeal from the 295th District Court
                           Harris County, Texas
                     Trial Court Cause No. 2014-39628

                    M A J O R I T Y          O P I N I O N

      This appeal requires this court to address in detail what makes a lien on real
property “fraudulent” for purposes of Civil Practice and Remedies Code section
12.002 and decide for the first time what limitations period applies to claims for
prohibited debt collection under Finance Code chapter 392. Tex. Fin. Code
Ann. §§ 392.001–.404. We address these discrete issues in the “opinion,” and as
the other issues in the case are not of significant interest to the public and
practicing members of the bar, we address them in the “memorandum opinion.”
Tex. R. App. P. 47.2(a), 47.4.1

       This case centers on the making and enforcement of liens on the homestead
of appellant Joan Mauri Barefoot, and her counterclaims against the four appellants
in this case: Nationstar Mortgage LLC; HSBC Bank USA, N.A.; Bank of America,
N.A.; and Fidelity National Title Insurance Company. The trial court granted
Barefoot relief on her counterclaims for (1) declaratory judgments, (2) claims
involving fraudulent liens against all appellants, and (3) claims of unfair debt
collection against Bank of America and Nationstar. As specifically explained in the
memorandum portion of this opinion, we affirm in part and reverse in part the trial
court’s declaratory judgments. As to Bank of America, we affirm the trial court’s
award of $75,000 in mental-anguish damages. As to Fidelity, we reverse the trial
court’s awards of $104,000 in actual damages and $225,000 in mental-anguish
damages and suggest a remittitur; if the remittitur is not timely filed, Barefoot’s
claims against Fidelity for fraudulent liens will be remanded for a new trial. As to
HSBC and Nationstar, we reverse the trial court’s awards of $100,000 and
$50,000, respectively, on legal-insufficiency grounds, and remand with
instructions that Barefoot take nothing in mental-anguish damages from HSBC and
Nationstar. We also reverse the trial court’s awards of attorney’s fees and costs and
remand for reconsideration.

       1
          We realize that in civil appeals there are no unpublished, nonprecedential opinions since
the promulgation of the 1997 Texas Rules of Appellate Procedure. See Tex. R. App. P. 47.2. But
nothing prohibits the court from distinguishing discussion of a topic of general interest as an
“opinion” and the remainder as a “memorandum opinion.” While it is all precedent, it does not
all need to be included in the South Western Reporter as “opinions” generally are.

                                                2
                        I.    WHAT IS A “FRAUDULENT” LIEN?

       What makes a lien “fraudulent” for purposes of Civil Practice and Remedies
Code section 12.002? See Tex. Civ. Prac. & Rem. Code Ann. § 12.002(a) (“A
person may not make, present, or use a document or other record with . . .
knowledge that the document or other record is . . .                  a fraudulent lien[.]”).
“Fraudulent” is not defined in the statute. When construing a code, “[w]ords and
phrases shall be read in context and construed according to the rules of grammar
and common usage.” Code Construction Act, Tex. Gov’t Code Ann. § 311.011(a).
Black’s Law Dictionary provides two definitions of a “fraudulent act”: “1. Conduct
involving bad faith, dishonesty, a lack of integrity, or moral turpitude. 2. Conduct
satisfying the elements of a claim for actual or constructive fraud.”2 Fraudulent
Act, Black’s Law Dictionary (11th ed. 2019).

       In practice, courts applying the statute, including this court and our sister
court in Houston, have applied a standard consistent with Black’s first definition,
i.e., a lien is fraudulent if created in bad faith or with dishonesty, a lack of
integrity, or moral turpitude. Compare Young v. Neatherlin, 102 S.W.3d 415, 421–
22 (Tex. App.—Houston [14th Dist.] 2003, no pet.) (even if incorrect, lien was not
“fraudulent” when testimony showed filer believed it to be accurate) with
Centurion Planning Corp., Inc. v. Seabrook Venture II, 176 S.W.3d 498, 507 (Tex.
App.—Houston [1st Dist.] 2004, no pet.) (lien “fraudulent” when created by filer
“knowing . . . that the lien was invalid and intending that it be given the same legal
effect as a valid lien”); see also In re Cowin, 492 B.R. 858, 900 (Bankr. S.D. Tex.
2013) (surveying Texas cases and concluding that liens were “fraudulent” when,

       2
         Black’s defines “actual fraud” as “[a] concealment or false representation through an
intentional or reckless statement or conduct that injures another who relies on it in acting” and
“constructive fraud” as “[u]nintentional deception or misrepresentation that causes injury to
another.” See Fraud, Black’s Law Dictionary (11th ed. 2019).

                                               3
among other things, they “were created with a fraudulent purpose”).3 Accordingly,
when analyzing whether a lien is fraudulent, we will consider whether it was

       3
           See also Walker & Assocs. Surveying, Inc. v. Roberts, 306 S.W.3d 839, 849 (Tex.
App.—Texarkana 2010, no pet.) (drawing distinction between document that is “factually
inaccurate in some respect and one that is attempting to perpetrate a fraud” and explaining that
lien is not necessarily fraudulent even if it is “invalid and unenforceable as filed”); Taylor Elec.
Servs., Inc. v. Armstrong Elec. Supply Co., 167 S.W.3d 522, 531 (Tex. App.—Fort Worth 2005,
no pet.) (making lien for knowingly inflated amount is fraudulent under section 12.002). At
various points in their briefing, Fidelity and the other appellants argue for a definition of
“fraudulent” that includes the elements of certain causes of action for fraud, including
detrimental reliance and a duty to disclose. It makes little sense, however, to graft the elements
of a fraud cause of action onto section 12.002. The statute provides the elements to satisfy
liability for a claim involving a fraudulent lien; if the legislature had intended that additional
elements must be proven, we would expect it to have said so. See Code Construction Act, Tex.
Gov’t Code Ann. § 311.011(a) “Words and phrases shall be read in context . . .”) (emphasis
added). Likewise, applying a strict definition of “fraudulent” would be at odds with the purpose
of the statute. According to the House Research Organization’s bill analysis:
                CSHB 1185 is needed to help combat persons who have clogged the
       state’s legal system with fraudulent documents causing innocent victims to spend
       time and money to clear their names and property. This “paper terrorism” is a
       growing statewide problem, estimated to have already cost hundreds of thousands
       of dollars. It must be addressed both in criminal and civil law.
               Individuals and groups, some denying the authority of the state
       government and Texas courts, have issued bogus judgments from nonexistent
       courts and filed fraudulent liens and other documents in legitimate courts and with
       the secretary of state. Liens and judgments that have been filed against both real
       and personal property can go unnoticed until a person tries to sell property or
       obtain credit. Having the judgments or liens removed usually involves hiring a
       lawyer and incurring considerable trouble and expense. CSHB 1185 would
       provide tools for fighting this problem and remedies for persons who have been
       harmed.
House Research Org., Bill Analysis, Tex. H.B. 1185, 75th Leg., R.S. (1997). The legislative
history addresses liens that are fraudulent in the sense that they are made in bad faith, as opposed
to fraudulent in the sense they strictly comply with the elements of a fraud claim. While fraud
occurs when (1) a party makes a material misrepresentation, (2) the misrepresentation is made
with knowledge of its falsity or made recklessly without any knowledge of the truth and as a
positive assertion, (3) the misrepresentation is made with the intention that it should be acted on
by the other party, and (4) the other party justifiably relies on the misrepresentation and thereby
suffers injury, Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges:
Business, Consumer, Insurance & Employment PJC 105.2 (2018), elements such as justifiable
reliance are not included in section 12.002 and will not necessarily be relevant to whether a lien
is “fraudulent” for purposes of the statute.

                                                 4
created in bad faith or with dishonesty, a lack of integrity, or moral turpitude. See
Fraudulent Act, Black’s Law Dictionary (11th ed. 2019) (fraudulent act
“involve[es] bad faith, dishonesty, a lack of integrity, or moral turpitude”).

            II.   LIMITATIONS PERIOD FOR CHAPTER-392 CLAIMS

      As it appears to be a matter of first impression in this court, we next address
Bank of America’s argument that a two-year statute of limitations applies to claims
of improper debt collection under Finance Code chapter 392 which does not
specify a limitations period. Bank of America cites cases, discussed further below,
applying to chapter 392 the two-year limitations period found in Civil Practice and
Remedies Code section 16.003(a), which states:

      Except as provided by Sections 16.010, 16.0031, and 16.0045, a
      person must bring suit for trespass for injury to the estate or to the
      property of another, conversion of personal property, taking or
      detaining the personal property of another, personal injury, forcible
      entry and detainer, and forcible detainer not later than two years after
      the day the cause of action accrues.
Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a). The plain language of section
16.003(a), however, does not explicitly mention debt collection or otherwise
include debt collection in its scope. As the United States District Court for the
Western District of Texas explains, “[o]n its face” the language of section 16.003
does not apply to a suit for unlawful debt collection under chapter 392: “Unless the
legislature intended ‘debt collection’ to be defined enormously broadly, debt
collection is not properly characterized as a ‘trespass,’ ‘conversion of personal
property,’ ‘personal injury,’ ‘forcible entry,’ or ‘forcible detainer.’” Vine v. PLS
Fin. Services, Inc., No. EP-16-CV-31-PRM, 2018 WL 456031, at *17 (W.D. Tex.
Jan. 16, 2018). Based on this analysis, the Vine court applied the residual four-year
limitations period to chapter 392 claims. See Tex. Civ. Prac. & Rem. Code Ann.

                                           5
§ 16.051 (“Every action for which there is no express limitations period, except an
action for the recovery of real property, must be brought not later than four years
after the day the cause of action accrues.”).

      By contrast, the cases cited by Bank of America applying a two-year
limitations period do not contain a substantive analysis of the language of section
16.003 and its applicability to chapter 392. In Duzich v. Marine Office of America
Corp., a case decided before the enactment of chapter 392, the Corpus Christi–
Edinburgh Court of Appeals listed claims for “unfair debt collection practices”
among other causes of action before simply stating, “Each of these causes have
two year statutes of limitations.” 980 S.W.2d 857, 872 (Tex. App.—Corpus
Christi–Edinburgh 1998, pet. denied) (citing, inter alia, Tex. Civ. Prac. & Rem.
Code Ann. § 16.003). Bank of America also cites Onabajo v. Household Financial
Corp. III, No. A-18-CV-233-LY-ML, 2018 WL 6739070, at *9 (W.D. Tex. Nov.
19, 2018).4 The Onabajo court concluded that a two-year limitations period applied
to chapter-392 claims, again without substantive analysis and citing section 16.003
along with Galindo v Snoddy, 415 S.W.3d 905, 911 (Tex. App.—Texarkana 2013,
no pet.) and Clark v. Deutsche Bank National Trust Co., 719 F. App’x 341, 343
(5th Cir. 2018). Neither Galindo nor Clark, however, contains any substantive
analysis either. Galindo simply stated that “[t]he parties agree that the two-year
statute of limitations applies to all of Galindo’s claims,” including chapter-392
claims, before citing section 16.003(a). 415 S.W.3d at 911. Likewise, Clark
applied a two-year limitations period to chapter-392 claims without explanation,
simply citing section 16.003(a) and Galindo. Clark, 719 F. App’x at 343 & n.1.

      Agreeing with the Vine court that, by its plain terms, the two-year limitations

      4
        Report and recommendation adopted, No. 1:18-CV-233-LY, 2019 WL 2565247 (W.D.
Tex. Mar. 26, 2019), aff’d, 795 Fed. App’x 258 (5th Cir. 2020).

                                           6
period in Civil Practice and Remedies Code section 16.003 does not apply to
prohibited-debt-collection claims under Finance Code chapter 392, we conclude
the residual four-year statute of limitations applies to chapter-392 claims. See Tex.
Civ. Prac. & Rem. Code Ann. § 16.051.

       We address the remainder of the parties’ issues in the form of a
memorandum opinion. Tex. R. App. P. 47.2(a), 47.4. As explained in further detail
below, we reverse the trial court’s judgment in part, remanding both with
instructions and for further proceedings; we affirm in part; and we suggest a
remittitur. See Tex. R. App. P. 46.3 (“The court of appeals may suggest a
remittitur.”).

                                     *       *       *   *

     M E M O R A N D U M                   M A J O R I T Y    O P I N I O N

       After the first phase of a bifurcated trial, the trial court signed an
interlocutory judgment granting relief on Barefoot’s claims for declaratory
judgments under the Uniform Declaratory Judgments Act (UDJA)5 against all
appellants, violations of Civil Practice and Remedies Code section 12.0026
governing fraudulent liens against all appellants, and violations of Finance Code
chapter 3927 governing prohibited debt collection against appellants Bank of
America and Nationstar. After the second phase of trial, the trial court signed a
final judgment assessing attorney’s fees, prejudgment interest, and costs against all
appellants.

       In three separate briefs, the four appellants challenge the above judgments.
We take the following action on the trial court’s final judgment:
       5
           Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001–.011.
       6
           Tex. Civ. Prac. & Rem. Code Ann. § 12.002.
       7
           Tex. Fin. Code Ann. §§ 392.301, .303, .304.

                                                 7
           • Regarding declaratory relief, we (1) affirm the trial court’s
             determination that the security instruments at issue are void but
             construe this claim as a quiet-title action instead of a UDJA
             action, (2) reverse the trial court’s declaratory judgment that
             defendants forfeit the principal and interest associated with the
             security instruments and remand with instructions that Barefoot
             take nothing by this claim,8 and (3) affirm the trial court’s
             declaratory judgment that HSBC is not entitled to subrogation
             but reverse as to the other appellants for want of a justiciable
             controversy, with instructions that Barefoot take nothing on this
             claim from Fidelity, HSBC, and Nationstar.
           • As to Fidelity, we affirm as to liability under section 12.002
             (fraudulent liens), reverse as to actual damages under section
             12.002, and suggest a remittitur; if the suggested remittitur is
             not filed, this claim will be remanded for a new trial.
           • As to Bank of America, we reverse as to liability under section
             12.002 (fraudulent liens) and remand with instructions that
             Barefoot take nothing from Bank of America by this claim,
             affirm as to liability under chapter 392 (prohibited debt
             collection), and affirm as to actual damages.
           • As to HSBC, we reverse as to liability under section 12.002
             (fraudulent liens) and remand with instructions that Barefoot
             take nothing from HSBC by this claim.
           • As to Nationstar, we reverse as to liability under section 12.002
             (fraudulent liens) and chapter 392 (prohibited debt collection)
             and remand with instructions that Barefoot take nothing from
             Nationstar by these claims.
           • We reverse the trial court’s awards of attorney’s fees, with
             instructions on remand that the trial court reconsider the awards
             of fees as to Fidelity, HSBC, and Bank of America, and that
             Barefoot take nothing from Nationstar in attorney’s fees.
           • We reverse the trial court’s awards of costs and remand for
       8
         While this court is authorized to render the judgment that the trial court should have
rendered, under circumstances when remand is necessary for additional proceedings and for
efficiency’s sake, we remand with instructions for the trial court to render partial judgment in
accordance with our judgment and conduct such additional proceedings. See Tex. R. App. P.
43.2, 43.3.

                                               8
               reconsideration.

                                  III.     BACKGROUND

A. Findings of fact and conclusions of law

       The following is taken primarily from the trial court’s findings of fact and
conclusions of law.9 In 1986, the property in question was conveyed by warranty
deed to Barefoot, Barefoot’s mother Joan Maynord, and Joan’s husband Robert
Maynord, each with an undivided one-third interest in the property as tenants in
common. Barefoot moved into the property and treated it as her homestead. When
Robert died in 1993, his one-third interest in the property passed to his three
children. In 2004, Joan conveyed by quitclaim deed10 her one-third interest in the
property to Barefoot. Joan also executed, as trustee of the Maynord Family 1986
Trust, a trust set up by Robert and Joan, a quitclaim deed transferring Robert’s
interest in the property. Unbeknownst to Barefoot, however, Robert’s interest in
the property had never been conveyed to the Maynord Family Trust; rather, it had
passed to Robert’s three children.

       Believing she was the sole owner of the property as a result of the quitclaim
deeds, Barefoot took out a home-equity loan on the property in 2005. In
conjunction with the loan, Barefoot executed a “TEXAS HOME EQUITY

       9
          As above, trial was bifurcated into two phases, with the first phase addressing liability
and damages, and the second phase addressing attorney’s fees. Judge Caroline Baker presided
over the first phase. After she signed the interlocutory judgment on the first phase, her term of
office ended. Judge Baker later signed findings of fact and conclusions of law concerning the
first phase of trial, as authorized by Civil Practice and Remedies Code section 30.002(a). Tex.
Civ. Prac. & Rem. Code Ann. § 30.002(a) (“If a . . . judge’s term of office expires . . . during the
period prescribed for filing . . . findings of fact and conclusions of law, the judge may . . .
file findings of fact and conclusions of law in the case.”).
       10
           “A warranty deed to land conveys property; a quitclaim deed conveys the grantor’s
rights in that property, if any.” Geodyne Energy Income Prod. P’ship I-E v. Newton Corp., 161
S.W.3d 482, 486 (Tex. 2005). Quitclaim deeds “are commonly used to convey interests of an
unknown extent or claims having a dubious basis.” Id. (quotation and footnote omitted).

                                                 9
SECURITY INSTRUMENT (First Lien),” which the parties and trial court refer to
as the 2005 Instrument. As part of the closing on the 2005 transaction, Fidelity
issued a title commitment that stated that title to the property appeared to be vested
in both Barefoot and Robert, but did not share this document with Barefoot.
Despite its knowledge that Barefoot was the sole borrower on the loan but not the
sole owner of the property, Fidelity closed the 2005 transaction and recorded the
2005 Instrument with the Harris County Clerk.

      In 2007, Barefoot took out a second home-equity loan on the property. As
part of the transaction, the 2005 loan was paid off. Barefoot again executed a
“TEXAS HOME EQUITY SECURITY INSTRUMENT (First Lien),” which the
parties and trial court refer to as the 2007 Instrument. Fidelity issued, but did not
share with Barefoot, a title commitment stating that title to the property was vested
in Barefoot, Robert, and Joan. Nonetheless, Fidelity closed the 2007 transaction
and recorded the 2007 Instrument with the Harris County Clerk.

      In closing the 2005 and 2007 transactions, Fidelity did not disclose to
Barefoot any information indicating that she was not the sole owner of the
property. All of the documents Fidelity provided to Barefoot at the closings
indicated that she was the sole owner of the property.

      In 2011, Barefoot was unable to continue making payments on the 2007
loan. The servicer of the loan at this time was Bank of America. Bank of America
advised Barefoot to sell the property. Barefoot located a real-estate agent, moved
out of the property, and found a buyer. She also turned off the water at the
property. As part of the sale, the buyer attempted to obtain title insurance, but
Stewart Title Guarantee Company would not issue a policy because title in the
property was not vested solely in Barefoot. Barefoot contacted Fidelity to issue a
title-insurance policy so the sale could be completed, but Fidelity refused on the

                                         10
grounds that title was not solely vested in Barefoot. In March 2012, Fidelity issued
a title commitment for the property showing that title was not solely vested in
Barefoot.

      Barefoot informed multiple employees of Bank of America that a sale could
not be conducted because she was not the sole owner of the property. Despite this
knowledge, Bank of America sent Barefoot letters attempting to collect loan
payments, including communications from its counsel threatening foreclosure. In
November 2012, Bank of America along with lender HSBC initiated a foreclosure
action on the property under Texas Rule of Civil Procedure 736. Tex. R. Civ. P.
736. The trial court denied the application for foreclosure.

      Nationstar took over from Bank of America as the loan servicer in 2013 and
continued to attempt to enforce the 2005 and 2007 Instruments. In 2014, HSBC, by
and through counsel retained for it by Fidelity, filed this lawsuit seeking
declarations concerning enforceability of the 2007 Instrument and subrogation;
Barefoot filed the counterclaims discussed above. The morning of trial, HSBC
abandoned its claims, and trial proceeded solely on Barefoot’s counterclaims.

B. Judgment

      As to ownership of the property, the trial court determined that Barefoot and
three of Robert’s children own the property as tenants in common, with Barefoot
owning a two-thirds undivided interest and each of Robert’s three children owning
a one-ninth undivided interest. As these determinations have not been challenged
by appellants, ownership of the property is not at issue in this appeal.

      In addition, as relevant to this appeal, the trial court’s judgment granted the
following relief:

            • Declaratory judgments that (1) the 2005 and 2007 Instruments

                                          11
            are void, (2) appellants forfeit the principal and interest in
            connection with the 2005 and 2007 Instruments, and
            (3) appellants are not entitled to subrogation.
         • Judgments that the appellants each violated Civil Practice and
           Remedies Code section 12.002 governing fraudulent liens.
         • Judgments that Bank of America and Nationstar each violated
           Finance Code chapter 392 prohibiting certain debt-collection
           practices.
         • Actual damages from Fidelity in the amount of $104,000 for
           loss of market value to the property due to water damage
           following the unsuccessful sale.
         • Mental-anguish damages from Fidelity ($225,000), Bank of
           America ($75,000), HSBC ($100,000), and Nationstar
           ($50,000).
         • Attorney’s fees, costs, and prejudgment interest from all
           appellants.

                          IV.   STANDARD OF REVIEW

      A trial court’s findings of fact are reviewable for legal and factual
sufficiency of the evidence by the same standards that are applied in reviewing
evidence supporting a jury’s answer. Catalina v. Blasdel, 881 S.W.2d 295, 297
(Tex. 1994). Conclusions of law are reviewed de novo and will be upheld if the
judgment can be sustained on any legal theory supported by the evidence. BMC
Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Aguiar v.
Segal, 167 S.W.3d 443, 450 (Tex. App.—Houston [14th Dist.] 2005, pet. denied).

                     V.     ARE THE INSTRUMENTS VOID?

      We next address an argument common to each appeal. In one form or
another, each appellant challenges the trial court’s determination, couched as a
declaratory judgment, that the 2005 and 2007 Instruments are “void ab initio

                                      12
because the[y] violate the Texas Constitution.”11

       Article XVI, section 50 of the constitution protects the homestead from
foreclosure for the payment of debts subject to eight exceptions. See Tex. Const.
art. XVI, § 50(a). Relevant to this case, section 50(a) provides:

       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:
       ...
              (6) an extension of credit that:
                      (A) is secured by a voluntary lien on the homestead
                      created under a written agreement with the consent of
                      each owner and each owner’s spouse[.]
Id. (emphasis added). Each appellant argues that Barefoot did not meet her burden
to prove the instruments are void because she presented no evidence that the other
owners of the property did not consent to either instrument.

       It is undisputed that Barefoot was the sole borrower listed on the instruments
and the sole signatory to the instruments, even though she was not the sole owner
of the property. The evidence also shows that Barefoot believed herself to be the
sole owner of the property at the time she signed the instruments. This is, at the
very least, some evidence that the co-owners of the property did not consent to the
instruments; the trial court could reasonably infer from this evidence that the
co-owners never knew about Barefoot’s home-equity loans, and accordingly had
no opportunity to consent (or object) to the instruments. Indeed, a 2012 email from
Stewart Title to Barefoot’s real-estate agent states, “When talking to Ms. Barefoot

       11
          The supreme court has explained that “a lien securing a constitutionally noncompliant
home-equity loan is not merely voidable; under section 50(c), such a lien is not valid unless and
until the defect in the loan is cured.” Kyle v. Strasburger, 522 S.W.3d 461, 465 (Tex. 2017)
(citing Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542, 548 (Tex. 2016)).

                                               13
she indicated that she didn’t have any idea where any of [Robert’s] children[, the
co-owners,] were.”

      Appellants argue it is not enough to offer evidence of an absence of consent
of co-owners; instead, they contend that Barefoot was required to show some
affirmative non-consent by the other owners. However, no such requirement is
found in the text of the constitution, and we decline to impose it absent literal
authority to do so. See Garofolo v. Ocwen Loan Servicing, LLC, 497 S.W.3d 474,
477 (Tex. 2016) (“[W]hen interpreting our state constitution, we rely heavily on its
literal text and give effect to its plain language.”). Rather, section 50(a) simply
states that a voluntary lien on the homestead must be “created under a written
agreement with the consent of each owner.” The evidence here is legally sufficient
to show that not all owners consented.

      The only contrary evidence that appellants point to is language in affidavits
signed by Barefoot in closing on the 2005 and 2007 loans that “[t]he extension of
credit is secured by a voluntary lien on the property created under a written
agreement with the consent of all owners and all spouses of owners, and execution
of this Texas home equity affidavit and agreement is deemed evidence of such
consent.” However, the evidence also shows that, during the period between
preparation of the quitclaim deeds in 2004 and the attempted sale of the property in
2012, Barefoot believed herself to be the sole owner of the property. Under these
circumstances, the trial court could have determined that the affidavits do not show
that the other owners consented, but rather simply reflect that Barefoot believed
herself to be the sole owner of the property.

      We conclude the trial court did not reversibly err in its judgment that the
2005 and 2007 Instruments are void. We turn next to whether this judgment is
properly characterized as a UDJA declaratory judgment. Appellants argue it

                                         14
instead should be construed as a quiet-title action, for which attorney’s fees are not
recoverable. We agree. Our court has previously held that a claim that another
party’s purported right to a property is “void” is properly characterized as a
quiet-title claim for which attorney’s fees are not recoverable, precluding an award
of attorney’s fees under the UDJA. Gutierrez v. Lorenz, No. 14-18-00608-CV,
2020 WL 1951606, at *6 (Tex. App.—Houston [14th Dist.] Apr. 23, 2020, no pet.)
(mem. op.); see also Starbranch v. Crowell, No. 01-15-00429-CV, 2016 WL
796836, at *2 (Tex. App.—Houston [1st Dist.] Mar. 1, 2016, no pet.) (mem. op.)
(“Attorney’s fees are not available in a suit to quiet title or remove cloud from title,
and . . . a declaratory judgment action may not be used solely to obtain attorney’s
fees that are not otherwise authorized by statute.”). We conclude that attorney’s
fees are not recoverable concerning the trial court’s determination that the 2005
and 2007 Instruments are void.

        We next address each appellant’s issues.

                             VI.    FIDELITY’S APPEAL

        In four issues on appeal, Fidelity contends the trial court reversibly erred by
(1) determining Fidelity violated Civil Practice and Remedies Code section 12.002
governing fraudulent liens, (2) awarding actual damages for the property’s loss of
market value, (3) awarding mental-anguish damages, and (4) awarding attorney’s
fees.

A. Fraudulent liens under Civil Practice and Remedies Code section 12.002

        In issue 1, Fidelity argues that the evidence is insufficient to support the trial
court’s determination that Fidelity violated Civil Practice and Remedies Code
section 12.002(a). Section 12.002(a) provides:

        A person may not make, present, or use a document or other record
        with:
                                            15
               (1) knowledge that the document or other record is a fraudulent
               court record or a fraudulent lien or claim against real or
               personal property or an interest in real or personal property;
               (2) intent that the document or other record be given the same
               legal effect as a court record or document of a court created by
               or established under the constitution or laws of this state or the
               United States or another entity listed in Section 37.01, Penal
               Code, evidencing a valid lien or claim against real or personal
               property or an interest in real or personal property; and
               (3) intent to cause another person to suffer:
                      (A) physical injury;
                      (B) financial injury; or
                      (C) mental anguish or emotional distress.

Tex. Civ. Prac. & Rem. Code Ann. § 12.002(a). As explained above, when
analyzing whether a lien is fraudulent, we will consider whether it was created in
bad faith or with dishonesty, a lack of integrity, or moral turpitude. See section I,
supra.

         Fidelity argues that the evidence is insufficient to support the trial court’s
determination that Fidelity violated Civil Practice and Remedies Code section
12.002(a) governing fraudulent liens. Fidelity does not contest the trial court’s
findings that it knew there were other owners of the property yet closed the
home-loan transactions and filed the 2005 and 2007 Instruments12 which listed
Barefoot as the sole owner in violation of the Texas Constitution. Likewise,
Fidelity does not challenge the trial court’s findings that it concealed this
information from Barefoot and showed her only documents indicating she was the
sole owner of the property when closing the 2005 and 2007 transactions. These
findings indicate that the liens were fraudulent, that is, created in bad faith or with

         12
          Neither Fidelity nor the other appellants contest that the 2005 and 2007 Instruments are
“liens” for purposes of section 12.002.

                                               16
dishonesty, a lack of integrity, or moral turpitude. See Fraudulent Act, Black’s
Law Dictionary (11th ed. 2019); see also Centurion Planning Corp., 176 S.W.3d at
507.

       Instead, Fidelity first argues that it did not have a duty to disclose to
Barefoot there were other owners of the property. As explained in footnote 3,
supra, it is not necessary to analyze the elements of a claim of fraud by
nondisclosure to determine whether Fidelity violated section 12.002. Whether or
not Fidelity had a duty to disclose the existence of other owners to Barefoot is not
dispositive of whether it made, presented, or used a fraudulent lien. See Tex. Civ.
Prac. & Rem. Code Ann. § 12.002(a).

       Fidelity next argues that the liens at issue were not void, and accordingly not
fraudulent, because Barefoot did not present evidence of the affirmative
nonconsent of the other owners of the property. As addressed in section V, supra,
we conclude the constitution contains no requirement that Barefoot prove the
affirmative nonconsent of other owners to show the instruments were void. Rather,
it was enough that she presented some evidence that she was the only one of the
owners that consented to the instruments. See Tex. Civ. Prac. & Rem. Code Ann.
§ 12.002(a).

       Fidelity next argues that, even if it knowingly made, presented, or used a
fraudulent lien, Barefoot did not prove that Fidelity did so with the intent to cause
her injury as required by the third element of section 12.002(a). See Tex. Civ. Prac.
& Rem. Code Ann. § 12.002(a)(3). Specifically, Fidelity contends the trial court’s
“conclusion that Fidelity intended to cause Barefoot financial injury or mental
anguish is unsupported by the evidence.” Fidelity does not challenge any specific
finding or conclusion in this regard.

       The trial court determined in two conclusions of law that Fidelity intended to
                                          17
cause Barefoot financial injury:

       81. Fidelity intended to cause Barefoot financial injury by having her
       go forward with closing on the two transactions so Fidelity could
       collect title insurance premiums and closing costs, which became part
       of the balance of each of the fraudulent loans.
       82. Fidelity additionally intended to cause Barefoot financial injury by
       seeking to give the 2005 and 2007 Instruments legal effect and
       foreclose on the Property by filing the Lawsuit on HSBC’s behalf
       despite Fidelity’s knowledge that both instruments are fraudulent liens
       against the Property.13

       While Fidelity does not explicitly challenge either conclusion in its brief, as
relevant to conclusion 81, Fidelity argues that the fact that it collected
title-insurance premiums and closing costs as part of the 2005 and 2007
transactions is no evidence that it intended to cause Barefoot financial injury. We
agree. While Barefoot was assessed these charges, Fidelity’s actions also enabled
Barefoot to procure the loans in question, which presumably she would not have
sought were they against her financial interest. Under these circumstances, the
mere fact that Fidelity charged premiums and costs does not permit an inference
that, in so doing, it intended to cause Barefoot financial harm by preparing and
filing fraudulent liens in conjunction with the 2005 and 2007 transactions. See
Suarez v. City of Tex. City, 465 S.W.3d 623, 634 (Tex. 2015) (inference is not
reasonable if evidence is susceptible to multiple, equally probable inferences,
requiring factfinder to guess to reach conclusion).

       Fidelity, however, does not sufficiently challenge conclusion 82, in which
the trial court determined that Fidelity “intended to cause Barefoot financial injury
by seeking to give the 2005 and 2007 Instruments legal effect and foreclose on the

       13
            While categorized as “conclusions of law,” these determinations may be better
categorized as findings of fact, given that “[i]ntent is a fact question uniquely within the realm of
the trier of fact.” Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986).

                                                 18
Property by filing the Lawsuit on HSBC’s behalf despite Fidelity’s knowledge that
both instruments are fraudulent liens against the Property.” Fidelity does not
address this conclusion at all in its discussion of section 12.002, and only obliquely
challenges the conclusion in the section of its brief addressing mental-anguish
damages, in which Fidelity states, “no evidence was adduced, and no findings of
fact identify Fidelity as being involved in 2012 onward with any collection
process, failed short sale, foreclosure, or attempts to enforce or collect on the
liens.” This argument disregards conclusion 82, which addresses Fidelity’s
involvement in the filing of the instant lawsuit.14 Moreover, Fidelity’s argument
that there is no evidence of its involvement in enforcement of the instruments or
foreclosure contradicts the evidence, at least as to the 2007 Instrument.15 The
record includes a letter from Fidelity, dated December 24, 2014, to the Texas
Department of Insurance. In the letter, Fidelity represents that HSBC, as holder of
the 2007 Instrument, had filed a claim with Fidelity based on HSBC’s unsuccessful
attempt to foreclose on Barefoot’s property, and that Fidelity had, “as an
accommodation, retained counsel on behalf of the insured lender [HSBC] to
establish the enforceability of the 2007 [instrument].” This evidence rebuts
Fidelity’s argument that it had no involvement in any enforcement or foreclosure
proceedings relating to the liens at issue, and Fidelity does not otherwise challenge
conclusion 82. Cf. Britton v. Tex. Dep’t of Criminal Justice, 95 S.W.3d 676, 682
(Tex. App.—Houston [1st Dist.] 2002, no pet.) (appellate court will overrule
challenge “when more than one legal conclusion independently supports a
       14
           Fidelity does not challenge this finding as barred by the judicial-proceedings privilege,
and accordingly we do not address the potential applicability of that defense. See Landry’s, Inc.
v. Animal Legal Def. Fund, No. 19-0036, 2021 WL 2021130, at *3–6 (Tex. May 21, 2021)
(judicial-proceedings privilege is “defense” that may be waived).
       15
         To the extent the trial court erred by including the 2005 Instrument in conclusion 82,
any such error is immaterial, given that, by the time this lawsuit was initiated in 2014, the 2005
Instrument had been paid off by the 2007 Instrument.

                                                19
judgment or ruling, but the appellant challenges only one of those legal
conclusions on appeal”) (citing Midway Nat’l Bank v. West Texas Wholesale
Supply Co., 453 S.W.2d 460, 460–61 (Tex. 1970)).

      Likewise, Fidelity does not challenge finding of fact 52, which states that
“Defendants,” including Fidelity, pursued this lawsuit “with the intent for the
Property to be foreclosed.” Under these circumstances, the trial court could have
inferred that intent to foreclose on the property constitutes intent to cause financial
harm, given that foreclosure would necessarily cause Barefoot to lose her
homestead. See Taylor Elec. Services, Inc. v. Armstrong Elec. Supply Co., 167
S.W.3d 522, 528 (Tex. App.—Fort Worth 2005, no pet.) (intent to cause injury
under section 12.002 can be proven by direct or circumstantial evidence). We
conclude that Fidelity has not met its burden to show the trial court reversibly erred
by concluding Fidelity intended to cause Barefoot financial injury. See Tex. Civ.
Prac. & Rem. Code Ann. § 12.002(a)(3)(B).

      We overrule Fidelity’s issue 1.

B. Loss-of-market-value damages

      In its issue 2, Fidelity challenges the trial court’s award against it for actual
damages for loss of market value to the property. Section 12.002(b) provides for
recovery of actual damages for violations of subsection (a). Tex. Civ. Prac. &
Rem. Code Ann. § 12.002(b). Actual damages are those damages recoverable
under common law. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d
812, 816 (Tex. 1997). At common law, actual damages are either “direct” or
“consequential.” Id. Direct damages are the necessary and usual result of the
defendant’s wrongful act; they flow naturally and necessarily from the wrong. Id.
Direct damages compensate the plaintiff for the loss that is conclusively presumed
to have been foreseen by the defendant from his wrongful act. Id. Consequential
                                          20
damages, on the other hand, result naturally, but not necessarily, from the
defendant’s wrongful acts. Id.

       The trial court determined that Fidelity was liable for actual damages of
$104,000 for loss of market value to Barefoot’s property due to water damage
following the attempted 2012 sale based on Barefoot’s claims that the sale would
not have been attempted, and accordingly the water damage would not have
occurred, had Fidelity not facilitated the void liens in 2005 and 2007. As explained
above, the conduct giving rise to Fidelity’s liability is set forth in conclusion of law
82, which addresses Fidelity’s involvement in the instant lawsuit beginning in
2014. We conclude the 2012 water damage could not have “resulted from”
Fidelity’s conduct in 2014 and later. See Arthur Andersen & Co., 945 S.W.2d at
816.

       We sustain Fidelity’s issue 2 challenging the trial court’s award of $104,000
in actual damages for loss of market value.

C. Mental anguish

       In its issue 3, Fidelity challenges the trial court’s award against it of
$225,000 in mental-anguish damages. To support an award of actual damages for
mental anguish, there must be both evidence of the existence of compensable
mental anguish and evidence to justify the amount awarded. Saenz v. Fidelity &
Guar. Ins. Underwriters, 925 S.W.2d 607, 614 (Tex. 1996). Mental anguish is only
compensable if it causes a “substantial disruption in . . . daily routine” or “a high
degree of mental pain and distress.” Parkway Co. v. Woodruff, 901 S.W.2d 434,
444 (Tex. 1995). “Even when an occurrence is of the type for which mental
anguish damages are recoverable, evidence of the nature, duration, and severity of
the mental anguish is required.” Service Corp. Intern. v. Guerra, 348 S.W.3d 221,
231 (Tex. 2011).
                                          21
       Barefoot cites numerous portions of her testimony in support of her recovery
for mental anguish. The following examples involve Fidelity:

            • after an “ugly” conversation with a Fidelity representative in
              the midst of the attempted sale in 2012, she so felt “so upset
              that it was like, okay, I just have to go higher up”; and

            • when she received an email from Fidelity with its 2012 title
              commitment showing she was not the sole owner of the
              property, she felt “enraged.”

       Barefoot also testified that, when she saw the water damage to her house in
2012, which the trial court attributed to Fidelity in awarding actual damages, she
felt “[l]ike just I can’t take another thing” and “overwhelmed.”

       As above, we view the trial court’s award of mental-anguish damages in
light of the conduct for which Fidelity was properly held liable. Here, that conduct
was involvement in this lawsuit beginning in 2014. In the testimony summarized
above, however, Barefoot does not offer any evidence of mental anguish resulting
from Fidelity’s actions in 2014 or later. See Gunn Infiniti, Inc. v. O’Byrne, 996
S.W.2d 854, 861 (Tex. 1999) (mental anguish must be caused by defendant’s
conduct).

       We sustain Fidelity’s issue 3.

D. Remittitur

       As a result of our determinations that Barefoot is not entitled to actual
damages from Fidelity for either loss of market value or mental anguish, we
necessarily reverse the total award of actual damages stemming from Fidelity’s
violation of Civil Practice and Remedies Code section 12.002(a).16 Section 12.002,

       16
          While not specifically requested by Fidelity, we also reverse the trial court’s award of
prejudgment interest on the damages award, as this relief is fairly encompassed by Fidelity’s
issues challenging damages. See Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 898
                                               22
however, does not require a plaintiff to prove damages to recover. Instead, “[a]
person who violates Subsection (a) . . . is liable to each injured person for: (1) the
greater of: (A) $10,000; or (B) the actual damages caused by the violation[.]” Tex.
Civ. Prac. & Rem. Code Ann. § 12.002(b)(1).

       A court of appeals may exercise its authority to suggest a remittitur when
there is insufficient evidence to support the full amount of an award, but sufficient
evidence to support a lesser award. Tex. R. App. P. 46.3; see Larson v. Cactus Util.
Co., 730 S.W.2d 640, 641 (Tex. 1987) (“If part of a damage verdict lacks sufficient
evidentiary support, the proper course is to suggest a remittitur of that part of the
verdict. The party prevailing in the trial court should be given the option of
accepting the remittitur or having the case remanded.”).

       Here, the evidence is legally insufficient to support the trial court’s
combined award of $329,000 in loss-of-market-value and mental-anguish damages
for Fidelity’s violation of section 12.002(a). The evidence that Fidelity violated
section 12.002(a), however, is sufficient to support an award of $10,000 by the
statute’s express terms. See Tex. Civ. Prac. & Rem. Code Ann. § 12.002(b)(1).
Accordingly, we suggest to Barefoot a remittitur of $319,000. If timely accepted,
we will modify the trial court’s judgment to reflect the remittitur and an award of
$10,000; otherwise, Barefoot’s claim against Fidelity for violation of section
12.002 shall be reversed and remanded for a new trial as to liability and damages.
Tex. R. App. P. 46.3; see Larson, 730 S.W.2d at 641; see also Tex. R. App. P.
44.1(b) (appellate court “may not order a separate trial solely on unliquidated
damages if liability is contested”); Rancho La Valencia, Inc. v. Aquaplex, Inc., 383

(Tex. 2000) (“Prejudgment interest falls within the common-law meaning of ‘damages.’”); see
also Royal Maccabees Life Ins. Co. v. James, 146 S.W.3d 340, 353 (Tex. App.—Dallas 2004,
pet. denied) (“[B]ecause the Court is reversing the award of mental anguish damages, we remand
the award of pre-judgment interest to the trial court for recalculation.”).

                                             23
S.W.3d 150, 152 (Tex. 2012) (applying Rule 44.1(b)).

E. Attorney’s fees

       In its issue 4, Fidelity challenges the trial court’s award of attorney’s fees
against it.

       1. Statutes authorizing fees

       We first address Fidelity’s argument concerning the statutory bases for
attorney’s fees. As pertaining to Fidelity, the trial court’s judgment grants Barefoot
relief under two statutes authorizing an award of attorney’s fees, the UDJA and
section 12.002. See Tex. Civ. & Rem. Code Ann. §§ 12.002(b)(3), 37.009.

       As above, under the UDJA, the trial court granted Barefoot the following
declarations: (1) the 2005 and 2007 Instruments are void; (2) “Defendants” forfeit
all principal and interest in the 2005 and 2007 Instruments; and (3) “Defendants”
are not entitled to subrogation pertaining to the 2005 and 2007 Instruments.

       As explained in section V, supra, we conclude attorney’s fees are not
recoverable for the first of the trial court’s declarations. Fidelity also argues that,
while the trial court’s second and third UDJA declarations are made against
“Defendants,” these declarations do not apply to Fidelity. We discern no justiciable
controversy between Fidelity and Barefoot as to the principal and interest on the
2005 and 2007 Instruments or subrogation regarding the instruments, given that
Fidelity was neither the lender nor servicer for the loans associated with the
instruments. Accordingly, we reverse the trial court’s second and third declaratory
judgments as to Fidelity and conclude that Fidelity is not liable for attorney’s fees
under the UDJA. Cf. Brooks v. Northglen Ass’n, 141 S.W.3d 158, 163–64 (Tex.
2004) (under UDJA, subject-matter jurisdiction only vested if there is justiciable
controversy as to rights and status of parties before court).

                                          24
      As above, however, we conclude that Fidelity is liable under section
12.002(a), which also authorizes an award of attorney’s fees. Tex. Civ. Prac. &
Rem. Code Ann. § 12.002(b)(3). Accordingly, we reject Fidelity’s argument that
no statute applies under which it may be assessed fees.

      2. Fee segregation

      We next address Fidelity’s argument that Barefoot was required to segregate
her attorney’s fees. Our court has previously determined that, when unsegregated
attorney’s-fees claims are affirmed in part and reversed in part, the proper
disposition is to reverse the fee award and remand for reconsideration of attorney’s
fees. See O.C.T.G., LLP v. Laguna Tubular Prods. Corp., 557 S.W.3d 175, 193
(Tex. App.—Houston [14th Dist.] 2018, pet. dism’d by agr.). Given the disposition
of the issues in this case, we reverse both the fee award and costs against Fidelity
and remand the case for reconsideration. See Tex. R. Civ. P. 131 (awarding costs to
“successful party to a suit”); O.C.T.G., LLP, 557 S.W.3d at 193; see also Tex. R.
App. P. 44.1(b) (court must consider whether issues on remand are “separable
without unfairness to the parties”).

      We sustain Fidelity’s issue 4 as to reversal of the fee award; otherwise, the
issue is overruled.

                      VII.   BANK OF AMERICA’S APPEAL

      In five issues, Bank of America contends the trial court reversibly erred by
(A) granting Barefoot a declaration as to forfeiture, (B) determining Bank of
America violated Civil Practice and Remedies Code section 12.002 (fraudulent
liens), (C) determining Bank of America violated Finance Code chapter 392
(prohibited debt collection), and (D) awarding mental-anguish damages, and

                                        25
(E) awarding attorney’s fees, costs, and prejudgment interest.17

A. Forfeiture declaration

       In its issue A, Bank of America argues that the trial court reversibly erred by
declaring that “Defendants forfeit all principal and interest for the extensions of
credit associated with the 2005 Instrument and the 2007 Instrument.” Bank of
America argues that forfeiture may not be awarded by a declaratory judgment.

       The constitution provides that “the lender or any holder of the note for the
extension of credit shall forfeit all principal and interest of the extension of credit
. . . if the lien was not created under a written agreement with the consent of each
owner and each owner’s spouse, unless each owner and each owner’s spouse who
did not initially consent subsequently consents.” See Tex. Const. art. XVI,
§ 50(a)(6)(Q)(xi). However, the supreme court has determined that “[a]
declaratory-judgment action based on a constitutional right to forfeiture is not
available to access the forfeiture remedy.” Wood v. HSBC Bank USA, N.A., 505
S.W.3d 542, 551 (Tex. 2016). Instead, “just as the terms and conditions in section
50(a)(6) are not constitutional rights unto themselves, nor is the forfeiture remedy a
constitutional remedy unto itself. Rather, it is just one of the terms and conditions a
home-equity loan must include to be foreclosure-eligible.” Garofolo, 497 S.W.3d
at 478–79. As such, “section 50(a) does not create substantive rights beyond a
defense to a foreclosure action on a home-equity lien securing a constitutionally
noncompliant loan.” Wood, 505 S.W.3d at 551.

       We conclude the trial court reversibly erred in granting Barefoot declaratory
relief for forfeiture under section 50(a). We sustain Bank of America’s issue A.

       17
          We identify Bank of America’s issues by the lettering in its table of contents as
opposed to its separate listing of issues, as the lettering more closely tracks the arguments.

                                             26
B. Section 12.002 (fraudulent liens)

      In its issue B, Bank of America challenges the trial court’s determination
that it violated Civil Practice and Remedies Code section 12.002. We first address
Bank of America’s argument that, even if the 2005 and 2007 Instruments were
fraudulent liens, there is legally-insufficient evidence that Bank of America knew
the liens were fraudulent. Section 12.002(a)(1) provides that a “person may not
make, present, or use a document or other record with . . . knowledge that the
document . . . is . . . a fraudulent lien.” Tex. Civ. Prac. & Rem. Code Ann.
§ 12.002(a)(1) (emphasis added). Barefoot did not present evidence that Bank of
America knew that the instruments were “fraudulent,” that is, created by Fidelity in
bad faith or with dishonesty, a lack of integrity, or moral turpitude. See id.; see also
Fraudulent Act, Black’s Law Dictionary (11th ed. 2019). Accordingly, there is
legally-insufficient evidence that Bank of America presented or used the
instruments with the knowledge that they were an attempt by Fidelity to
“perpetrate a fraud,” as opposed to made with an honest or even negligent belief in
their accuracy. See Walker & Assocs. Surveying, Inc. v. Roberts, 306 S.W.3d 839,
849 (Tex. App.—Texarkana 2010, no pet.) (drawing distinction between document
that is “factually inaccurate in some respect and one that is attempting to perpetrate
a fraud”); Young, 102 S.W.3d at 421–22 (filing incorrect or invalid lien does not
violate section 12.002 absent knowledge of fraudulence); see also L’Amoreaux v.
Wells Fargo Bank, N.A., 755 F.3d 748, 751 (5th Cir. 2014) (“negligence on the
part of [the maker or presenter of a lien] hardly satisf[ies] the standards of
§ 12.002”); In re AFGO Dev. Co., Inc., 625 B.R. 324, 342 (Bankr. S.D. Tex. 2020)
(“Subjective knowledge that the document filed is fraudulent, not merely
incorrect, is required to impose [section-12.002] liability on a filer.”).

      Concluding the evidence is legally insufficient to support the trial court’s

                                           27
judgment against Bank of America for violations of Civil Practice and Remedies
Code section 12.002, we sustain Bank of America’s issue B.

C. Finance Code chapter 392 (prohibited debt collection)

       In its issue C, Bank of America challenges the trial court’s determination
that it violated Finance Code chapter 392, which prohibits certain debt-collection
practices. See Tex. Fin. Code Ann. §§ 392.301–.307. The trial court determined
that Bank of America and Nationstar violated the following provisions of chapter
392:

       (a) In debt collection, a debt collector may not use threats, coercion,
       or attempts to coerce that employ any of the following practices:
       ...
             (8) threatening to take an action prohibited by law.

Tex. Fin. Code Ann. § 392.301(a)(8).

       (a) In debt collection, a debt collector may not use unfair or
       unconscionable means that employ the following practices:
       ...
             (2) collecting or attempting to collect interest or a charge, fee,
             or expense incidental to the obligation unless the interest or
             incidental charge, fee, or expense is expressly authorized by the
             agreement creating the obligation or legally chargeable to the
             consumer[.]

Tex. Fin. Code Ann. § 392.303(a)(2).

       (a) Except as otherwise provided by this section, in debt collection or
       obtaining information concerning a consumer, a debt collector may
       not use a fraudulent, deceptive, or misleading representation that
       employs the following practices:
       ...
             (8) misrepresenting the character, extent, or amount of a
             consumer debt, or misrepresenting the consumer debt’s status in

                                         28
             a judicial or governmental proceeding; [or]
      ...
             (12) representing that a consumer debt may be increased by the
             addition of attorney’s fees, investigation fees, service fees, or
             other charges if a written contract or statute does not authorize
             the additional fees or charges[.]

Tex. Fin. Code Ann. § 392.304(a)(8), (12).

      Bank of America argues that Barefoot’s claim is barred by limitations, the
trial court improperly admitted two letters Barefoot relies on, and Bank of America
did not send Barefoot communications concerning “debt collection” as required
under chapter 392.

             a. Limitations

      Bank of America first contends Barefoot’s chapter-392 claim is barred by
limitations. As explained in section II, supra, we conclude the residual four-year
statute of limitations applies to chapter-392 claims. See Tex. Civ. Prac. & Rem.
Code Ann. § 16.051. Barefoot filed her chapter-392 counterclaim on June 8, 2015;
accordingly, we will consider actions of Bank of America beginning June 8, 2011.

             b. Evidentiary objections

      We next consider Bank of America’s objections to two letters from law firm
Barrett Daffin Frappier Turner & Engel, LLP, sent on behalf of Bank of America.
The first letter, dated September 24, 2012, gives Barefoot notice that Barrett Daffin
had been retained to pursue foreclosure on her property for default on the
home-equity loans. The letter begins by stating, “This law firm represents BANK
OF AMERICA, N.A.” In the second letter, dated October 22, 2012, Barrett Daffin
responds to correspondence from Barefoot “[a]s counsel for Bank of America.”
Bank of America objected at trial, and argues on appeal, that these documents are

                                         29
inadmissible hearsay and do not fall within the exception for admissions of a
party-opponent.

      An admission by a party-opponent is offered against a party and is a
statement by his agent or servant concerning a matter within the scope of his
agency or employment, made during the existence of the relationship; it is not
hearsay. Tex. R. Evid. 801(e)(2). For a statement of an agent to be admitted as an
admission of a party-opponent, the proponent of the evidence must establish an
agency relationship. State v. Buckner Const. Co., 704 S.W.2d 837, 846 (Tex.
App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.). The existence of an agency
relationship may be implied from the conduct of the parties or from facts and
circumstances surrounding the transaction in question. See Walker Ins. Servs. v.
Bottle Rock Power Corp., 108 S.W.3d 538, 550 (Tex. App.—Houston [14th Dist.]
2003, no pet.).

      Bank of America argues that Barefoot did not prove any agency relationship
between Bank of America and Barrett Daffin. The record shows otherwise. The
2012 foreclosure action filed by Barrett Daffin attaches an “Affidavit in Support of
Order for Foreclosure” executed by a Bank of America employee, indicating that
Bank of America was represented by Barrett Daffin for purposes of foreclosing on
Barefoot’s property, as asserted by Barrett Daffin in its letters to Barefoot.
Likewise, the 2012 action is brought on behalf of HSBC with a listed address of
“C/O BANK OF AMERICA, N.A.” In addition, Barefoot testified at trial that she
sent Barrett Daffin’s notice of foreclosure to a Bank of America employee in an
attempt to resolve the situation. Finally, there is no evidence in the record that
Bank of America either disputed the Barrett Daffin letter to Barefoot stating in its
first line that “[t]his law firm represents BANK OF AMERICA, N.A.,” or
presented any evidence at trial contesting this evidence that Barrett Daffin was its

                                        30
counsel.

       We conclude there is sufficient evidence of an agency relationship between
Bank of America and Barrett Daffin. See Walker Ins. Servs., 108 S.W.3d at 550.
Accordingly, the trial court did not err in admitting the letters as admissions of a
party-opponent. Tex. R. Evid. 801(e)(2).

              c. Communications to collect a debt

       We next consider Bank of America’s argument that it did not violate chapter
392 because it did not send Barefoot communications intended to collect a debt.
Instead, Bank of America contends that the communications from the Bank to
Barefoot admitted at trial “merely responded to Barefoot’s various requests for
payment and did not demand payment,” and accordingly fall outside the scope of
chapter 392.18

       As above, Bank of America, through its agent, Barrett Daffin, sent Barefoot
the October 2012 notice of foreclosure, which (1) stated Barefoot’s account was in
default, (2) provided information about the amount due on her loan, (3) advised her
that the firm had been retained “to obtain the court order required to foreclose on
real property pursuant to Texas Constitution article XVI, §50(a)(6)(D),”
(4) provided a telephone number for information about reinstating the home-equity
loan, and (5) advised that Barefoot had the right to contest the default, acceleration,
or foreclosure. After providing this information, the letter unequivocally states,
“THIS FIRM IS A DEBT COLLECTOR ATTEMPTING TO COLLECT
THE DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR
THAT PURPOSE.” We conclude this letter involves “debt collection” for

       18
           Under chapter 392, “‘Debt collection’ means an action, conduct, or practice in
collecting, or in soliciting for collection, consumer debts that are due or alleged to be due a
creditor.” Tex. Fin. Code Ann. § 392.001(5).

                                              31
purposes of chapter 392. See Tex. Fin. Code Ann. §§ 392.301(a), .303(a), .304(a).

      We overrule Bank of America’s issue C.

D. Mental anguish

      In its issue D, Bank of America argues that Barefoot did not present
sufficient evidence of mental-anguish damages, preventing her from recovering on
her claim under chapter 392. See Tex. Fin. Code Ann. § 392.403(a) (“a person may
sue for (1) injunctive relief to prevent or restrain a violation of this chapter; and
(2) actual damages sustained as a result of a violation of this chapter”); Hingst v.
Providian Nat. Bank, No. 14-02-01150-CV, 2003 WL 21467093, at *1 n.6 (Tex.
App.—Houston [14th Dist.] June 26, 2003, no pet.) (mem. op.) (citing section
392.403(a) and stating that actual damages are element of chapter-392 claim).

      As above, there must be both evidence of the existence of compensable
mental anguish and evidence to justify the amount awarded. Saenz, 925 S.W.2d at
614. Mental anguish is only compensable if it causes a “substantial disruption in
. . . daily routine” or “a high degree of mental pain and distress” that is “more than
mere worry, anxiety, vexation, embarrassment, or anger.” Parkway, 901 S.W.2d at
444. Even when an occurrence is of the type for which mental-anguish damages
are recoverable, evidence of the nature, duration, and severity of the mental
anguish is required. Guerra, 348 S.W.3d at 231.

      Barefoot testified that Bank of America first raised the possibility of
foreclosure during a March 2012 phone call following the unsuccessful sale of the
property:

      Q. Did you return any signed short sale agreement by an April 2nd
      deadline?
      A. No.
      Q. Were you aware—had anybody told you at Bank of America that
                                         32
      there was going to be a short sale that was in the process of
      happening?
      A. No.
      Q. What did you understand would be the repercussion, though, after
      reading this letter if you didn’t return those documents signed?
      A. By this time there had already been some discussion about
      foreclosure. So this was—
      Q. When was the first time that you recall anybody bringing up the
      prospect of a foreclosure on your home?
      A. In March of 2012.
      Q. Who did you hear that from?
      A. That was someone from Bank of America calling me. By this time
      there were so many different—there were contractors, there were
      people calling me, there were me calling them, there were letters,
      there were—I mean, it was just a whirlwind at this point.
      Q. What was your reaction when you heard a foreclosure may be in
      the air for your home?
      A. Well, my reaction was that—that’s when everything became
      even—it was panic. It was like a panic. And so I just—now just kind
      of ramped up, trying to document everything. And, quite frankly,
      because I had never been through this before, I was just trying to learn
      as I went, trying to learn what I needed to do, where I might get help
      because obviously Bank of America wasn’t helping me.

      The factfinder could conclude from this testimony that Bank of America
began threatening foreclosure in March 2012 as a “repercussion” of Barefoot not
signing sale documents. Because the 2007 Instrument was void for not being
signed by all owners of the property, Bank of America’s threats that it could
foreclose based on that instrument violate section 392.301(a)(8), which prohibits
“threatening to take an action prohibited by law.” Tex. Fin. Code Ann.
§ 392.301(a)(8); see McCaig v. Wells Fargo Bank (Tex.), N.A., 788 F.3d 463, 477
(5th Cir. 2015) (“threatening to foreclose absent any right to do so” is “an action
prohibited by law” under section 392.301(a)(8)).
                                        33
      Barefoot testified as to the following incidents in the following months:

         • When she received a letter from Bank of America in May 2012
           that she felt did not address her concerns, she felt “devastated,”
           “felt like I was pulling my hair out and I was going crazy,
           literally,” and characterized the process as a “complete
           nightmare”;

         • She felt so “angry” and “exhausted” after she received the May
           2012 letter that she went to a Bank of America branch to speak
           to someone in person; and

         • After further interactions with Bank of America in June 2012,
           she felt “deflated,” “[a]bsolute exhaustion,” not “physically
           well,” and “like I just can’t trust anyone.”
      This chain of events culminated in the September 2012 foreclosure notice
sent by Barrett Daffin on behalf of Bank of America. Barefoot testified that, after
receiving the notice, she “went into complete panic. My basic survival skills that
are human to us, just having some type of shelter, something, went into overdrive
and panic. And what do I do now?”

      We conclude Barefoot met her burden to prove “a high degree of mental
pain and distress” that is “more than mere worry, anxiety, vexation,
embarrassment, or anger.” Parkway, 901 S.W.2d at 444; see Patel v. Hussain, 485
S.W.3d 153, 178 (Tex. App.—Houston [14th Dist.] 2016, no pet.) (“Proof of
mental anguish may include painful emotions such as grief, severe disappointment,
indignation, wounded pride, shame, despair, public humiliation, or a combination
of any or all of those feelings.”) (quotation omitted); see also McCaig, 788 F.3d at
483 (“panic” over threat of foreclosure supported award of mental-anguish
damages under chapter 392). Likewise, the evidence above concerning Barefoot’s
months-long ordeal is sufficient to show the nature, duration, and severity of
Barefoot’s mental anguish, see Guerra, 348 S.W.3d at 231, and the trial court’s

                                        34
award of $75,000 “fairly and reasonably” compensates Barefoot for that anguish.
Saenz, 925 S.W.2d at 614; see McCaig, 788 F.3d at 484 (affirming mental-anguish
award of $75,000 to each of two plaintiffs for mental anguish stemming from
prohibited debt collection relating to foreclosure). Finally, we note that Barefoot
was the only witness at trial, and no evidence was presented challenging her
account of her mental anguish. We defer to the credibility determinations of the
factfinder, particularly when it comes to mental anguish. See Golden Eagle
Archery, Inc. v. Jackson, 116 S.W.3d 757, 772 (Tex. 2003) (“[W]hether to award
[mental-anguish] damages and how much is uniquely within the factfinder’s
discretion.”). We overrule Bank of America’s issue D.

E. Attorney’s fees, costs, and prejudgment interest

      In its issue E, Bank of America argues the trial court’s awards of attorney’s
fees, costs, and prejudgment interest should be reversed. As explained in section
VI.E.2, supra, we reverse the award of attorney’s fees and costs and remand to the
trial court for reconsideration. As for prejudgment interest, Bank of America
argues this award should be reversed because Barefoot is not the prevailing party
as to any of her claims. We disagree, having affirmed the trial court’s judgment
against Bank of America on Barefoot’s chapter-392 claim.

      We sustain Bank of America’s issue E as to attorney’s fees and costs and
overrule it as to prejudgment interest.

                 VIII.    HSBC AND NATIONSTAR’S APPEAL

      In eight issues in their joint appellate brief, HSBC and Nationstar argue the
trial court reversibly erred by (1) declaring the instruments void, (2) declaring
HSBC and Nationstar must forfeit any principal and interest associated with the
instruments, (3) declaring HSBC and Nationstar are not entitled to be subrogated to

                                          35
the 2005 Instrument, (4) determining Nationstar violated chapter 392 (prohibited
debt collection), (5) determining HSBC and Nationstar violated section 12.002
(fraudulent liens), (6) awarding attorney’s fees, (7) awarding costs, and
(8) awarding prejudgment interest.

A. Declaration that 2005 and 2007 Instruments are void

         In their issue 1, HSBC and Nationstar argue that the trial court reversibly
erred in declaring the 2005 and 2007 Instruments void for noncompliance with the
Texas Constitution. For the reasons stated in section V, supra, we overrule this
issue.

B. Declaration regarding forfeiture of principal and interest

         In their issue 2, HSBC and Nationstar argue that the trial court reversibly
erred by declaring that “Defendants forfeit all principal and interest for the
extensions of credit associated with the 2005 Instrument and the 2007 Instrument.”
For the reasons stated in section VII.A, supra, we sustain this issue.

C. Declaration regarding subrogation

         In their issue 3, HSBC and Nationstar argue the trial court reversibly erred
by granting Barefoot a declaratory judgment that “Defendants are not entitled to
contractual or equitable subrogation based on the transactions associated with the
2005 Instrument and the 2007 Instrument.” In its original petition in this lawsuit,
HSBC sought declaratory relief regarding subrogation on the grounds that “the
[2007 Instrument] is contractually subrogated the rights, superior title, liens and
equities of the [2005 Instrument] in favor of [HSBC].”

         HSBC contends the trial court reversibly erred by declaring HSBC is not
entitled to subrogation, basing its issue on arguments that the instruments are not
void. We have already rejected these arguments in section V, supra, and we

                                          36
likewise overrule HSBC’s challenge to the subrogation declaration on the same
grounds.

      Nationstar argues there is no justiciable controversy as to Nationstar. We
agree. Only HSBC sought subrogation as part of this action, and we discern no
justiciable controversy between Nationstar and Barefoot on that issue.

      We overrule HSBC and Nationstar’s issue 3 as to HSBC and sustain it as to
Nationstar.

D. Finance Code chapter 392 (prohibited debt collection)

      In its issue 4, Nationstar challenges the trial court’s determination that it
violated Finance Code chapter 392.19 We first address Nationstar’s argument that
Barefoot cannot recover against it for prohibited debt collection because she has
shown no evidence of damages. See Tex. Fin. Code Ann. § 392.403(a) (plaintiff
may seek injunctive relief or “actual damages”); Hingst, 2003 WL 21467093, at *1
n.6 (actual damages are element of chapter-392 claim).

      The trial court awarded mental-anguish damages against Nationstar for
violations of chapter 392. The only evidence Barefoot cites as supporting her claim
for mental anguish caused by Nationstar is her testimony that she felt like her
“head is exploding” and felt “sick, like I am going to throw up” after she received,
as part of a file of documents she requested from Nationstar, a letter from Barrett
Daffin to Nationstar stating that Barefoot was not the sole owner of the property.
Nationstar’s letter to Barefoot enclosing the documents, however, simply states it
is sending Barefoot documents per her request, and the Barrett Daffin letter
included in the documents is not a communication to Barefoot. Neither of these is a
communication involving “debt collection” or a request for information from a

      19
           This claim was not asserted against HSBC.

                                              37
consumer as required by the relevant provisions of chapter 392. See Tex. Fin. Code
Ann. §§ 392.301(a), .303(a), .304(a).

      Concluding the evidence is legally insufficient to support the trial court’s
award of mental-anguish damages against Nationstar for violations of chapter 392,
we sustain Nationstar’s issue 4.

E. Civil Practice and Remedies Code section 12.002 (fraudulent liens)

      In their issue 5, HSBC and Nationstar challenge the trial court’s
determination that they violated Civil Practice and Remedies Code section 12.002.
We first address their argument that, even if the 2005 and 2007 Instruments were
fraudulent liens, there is legally-insufficient evidence that they knew the liens were
fraudulent. See Tex. Civ. Prac. & Rem. Code Ann. § 12.002(a)(1). As discussed in
section VII.B, supra, we agree. Barefoot did not present evidence that HSBC and
Nationstar knew that the instruments were “fraudulent,” that is, created by Fidelity
in bad faith or with dishonesty, a lack of integrity, or moral turpitude. See id.; see
also Fraudulent Act, Black’s Law Dictionary (11th ed. 2019). Accordingly, there is
legally-insufficient evidence that HSBC or Nationstar presented or used the
instruments with the knowledge that they were an attempt by Fidelity to
“perpetrate a fraud.” See Walker & Assocs. Surveying, 306 S.W.3d at 849 (drawing
distinction between document that is “factually inaccurate in some respect and one
that is attempting to perpetrate a fraud”); see also L’Amoreaux, 755 F.3d at 751
(“negligence on the part of [the maker or presenter of a lien] hardly satisf[ies] the
standards of § 12.002”); AFGO Dev. Co., 625 B.R. at 342 (“Subjective knowledge
that the document filed is fraudulent, not merely incorrect, is required to impose
[section-12.002] liability on a filer.”).

      Concluding the evidence is legally insufficient to support the trial court’s
judgment against HSBC and Nationstar for violations of Civil Practice and
                                            38
Remedies Code section 12.002, we sustain their issue 5.

F. Attorney’s fees, costs, and prejudgment interest

      In issues 6, 7, and 8, HSBC and Nationstar challenge the trial court’s awards
of attorney’s fees, costs, and prejudgment interest. Regarding fees, as we have
affirmed the trial court’s declaratory judgment against HSBC concerning
subrogation, for the reasons explained in section VI.E.2, supra, we reverse and
remand the awards of attorney’s fees against HSBC for reconsideration. As we
have reversed all claims against Nationstar supporting an award of attorney’s fees,
we reverse the award of fees and remand with instructions that Barefoot take
nothing in attorney’s fees from Nationstar.

      As to costs, as explained in section VI.E.2, supra, we reverse the awards of
costs against HSBC and Nationstar and remand for reconsideration. And having
reversed the trial court’s award of actual damages against HSBC and Nationstar,
we likewise reverse the trial court’s awards of prejudgment interest, and remand
with instructions that Barefoot take nothing in prejudgment interest from HSBC or
Nationstar.

      We sustain issues 6, 7, and 8 in part as explained above; the issues are
otherwise overruled.

                                         39
                             IX.    CONCLUSION

      Having sustained, in whole or in part, Fidelity’s issues 2, 3, and 4, Bank of
America’s issues A, B, and E, and HSBC and Nationstar’s issues 2 through 8, we:

         • reverse the trial court’s judgment as to its declaration that
           “Defendants forfeit all principal and interest for the extensions
           of credit associated with the 2005 Instrument and the 2007
           Instrument”;
         • reverse, as to Fidelity, Bank of America, and Nationstar, the
           trial court’s judgment as to its declaration that “Defendants are
           not entitled to contractual or equitable subrogation based on the
           transactions associated with the 2005 Instrument and the 2007
           Instrument”;
         • reverse the trial court’s judgment that Bank of America, HSBC,
           and Nationstar violated Civil Practice and Remedies Code
           section 12.002 (fraudulent liens);
         • reverse the trial court’s judgment that Nationstar violated
           Finance Code chapter 392 (prohibited debt collection);
         • reverse the trial court’s judgment as to its award of $104,000
           against Fidelity in actual damages;
         • reverse the trial court’s judgment as to its awards of
           mental-anguish damages against Fidelity ($225,000), HSBC
           ($100,000), and Nationstar ($50,000);
         • suggest a remittitur of $319,000 as to damages for Barefoot’s
           claim against Fidelity for violation of Civil Practice and
           Remedies Code section 12.002 (fraudulent liens). If accepted no
           later than November 12, 2021, we will modify the trial court’s
           judgment to reflect an award of $10,000 on this claim against
           Fidelity and affirm that portion of the judgment as so modified;
           otherwise, the trial court’s judgment as to Barefoot’s claim
           against Fidelity for violation of section 12.002 shall be
           reversed;
         • reverse the trial court’s judgment as to its awards of
           prejudgment interest as to Fidelity, HSBC, and Nationstar;
         • reverse the trial court’s judgment as to its awards of attorney’s

                                        40
             fees; and
         • reverse the trial court’s judgment as to its awards of costs.

      We otherwise affirm the trial court’s judgment as challenged on appeal. We
remand the case to the trial court with the following instructions and limited to the
following proceedings:

         • with instructions that the trial court render judgment that
           Barefoot take nothing by her claim for a declaratory judgment
           that “Defendants forfeit all principal and interest for the
           extensions of credit associated with the 2005 Instrument and the
           2007 Instrument”;
         • with instructions that the trial court render judgment that
           Barefoot take nothing from Fidelity, Bank of America, and
           Nationstar by her claim for a declaratory judgment that
           “Defendants are not entitled to contractual or equitable
           subrogation based on the transactions associated with the 2005
           Instrument and the 2007 Instrument”;
         • with instructions that the trial court render judgment that
           Barefoot take nothing from Bank of America, HSBC, and
           Nationstar by her claim for violations of Civil Practice and
           Remedies Code section 12.002 (fraudulent liens);
         • with instructions that the trial court render judgment that
           Barefoot take nothing from Nationstar by her claim that
           Nationstar violated Finance Code chapter 392 (prohibited debt
           collection);
         • for a new trial limited to liability and damages on Barefoot’s
           claim against Fidelity for violation of Civil Practice and
           Remedies Code section 12.002 (fraudulent liens), if Barefoot
           does not timely file our suggested remittitur;
         • for reconsideration and rendition of judgment on the award of
           prejudgment interest as to Fidelity and with instructions that the
           trial court render judgment that Barefoot take nothing from
           HSBC or Nationstar in prejudgment interest;
         • for reconsideration and rendition of judgment on the awards of
           attorney’s fees as to Fidelity, HSBC, and Bank of America, and

                                         41
            with instructions that the trial court render judgment that
            Barefoot take nothing from Nationstar in attorney’s fees; and
         • for reconsideration and rendition of judgment on the trial
           court’s awards of costs.

                                      /s/    Charles A. Spain
                                             Justice

Panel consists of Justices Spain, Hassan, and Poissant (Poissant, J., concurring and
dissenting).

                                        42