Court Opinion

ID: 3104837
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:41:14.548282+00
Date Added: 2024-06-11T11:44:41.474704
License: Public Domain

Fourth Court of Appeals
                                      San Antonio, Texas
                                  MEMORANDUM OPINION
                                          No. 04-13-00380-CV

                               Floyd LEEDER II and Kimberly Leeder,
                                          Appellants

                                         v.
      Wells Fargo Bank N.A. as Trustee and Capital Real Estate, Inc. d/b/a HomeQ
 WELLS FARGO BANK N.A. as Trustee and Barclays Capital Real Estate, Inc. d/b/a HomEq
                                     Servicing,
                                     Appellees

                     From the 216th Judicial District Court, Kendall County, Texas
                                       Trial Court No. 09-364
                            Honorable N. Keith Williams, Judge Presiding

Opinion by:       Marialyn Barnard, Justice

Sitting:          Marialyn Barnard, Justice
                  Rebeca C. Martinez, Justice
                  Patricia O. Alvarez, Justice

Delivered and Filed: April 30, 2014

AFFIRMED

           This is an appeal from a trial court’s order granting summary judgment in favor of appellees

Wells Fargo Bank, N.A. (“Wells Fargo”) and Barclays Capital Real Estate, Inc. d/b/a HomEq

Servicing (“HomEq”) against appellants Floyd Leeder II and Kimberly Leeder. On appeal, the

Leeders raise four issues contending: (1) the trial court’s summary judgment order was not final

because it did not dispose of all causes of action plead; (2) the trial court erred in granting summary

judgment as to their claims; (3) the trial court erroneously permitted Wells Fargo to amend its
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counterclaims after granting a plea to the jurisdiction; and (4) the trial court erred in granting

summary judgment on Wells Fargo’s counterclaims. We affirm the trial court’s judgment.

                                           BACKGROUND

       In 2004, the Leeders borrowed $650,000.00 from Argent Mortgage Company, LLC. The

loan was secured by an adjustable rate home equity lien on their property near Boerne, Texas. The

note securing the lien was subsequently indorsed to Ameriquest Mortgage Company and then

finally to Wells Fargo. The exact date of these indorsements is contested by the parties.

       However, it is uncontested that HomEq began servicing the Leeders loan in 2005. By the

end of 2006, the Leeders were behind over $1,700.00 in payments. By April 2007, the Leeders

had fallen further behind on their loan payments and were offered a forbearance agreement by

HomEq, which required continued payment of the loan’s monthly amount in addition to

$25,411.45 in arrearages. Although the Leeders contend they complied with the agreement

between April and November 2007, HomEq alleges the Leeders breached the agreement by

making late and insufficient payments. Thereafter, the Leeders entered into successive repayment

plans with HomEq in an attempt to resolve the issues with regard to repayment of the original loan.

However, all attempts were unsuccessful and the Leeders made their last payment in September

of 2008. In response, Wells Fargo filed an application for judicial foreclosure of the lien in

November 2008 in a separate lawsuit.

       In August 2009, the Leeders first sued Wells Fargo and HomEq for negligently servicing

their loan. Since that time, the Leeders’ petition has gone through multiple amendments, adding

causes of action against Wells Fargo and HomEq.

       In addition to answering the petitions, Wells Fargo and HomEq responded to the Leeders’

lawsuit in March 2010 by counterclaiming for judicial foreclosure of the lien. Over two years

later, in October 2012, the Leeders filed a plea to the jurisdiction with the trial court, challenging
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Wells Fargo’s standing to foreclose as a holder of the note. The trial court granted the Leeders’

plea to the jurisdiction, but also granted Wells Fargo leave to amend its counterclaim to address

the lack of standing at the time the counterclaim was filed.

         Wells Fargo subsequently amended its counterclaim to address the lack of standing and

moved for summary judgment on the counterclaim, as well as summary judgment on the claims

asserted by the Leeders in their Second Amended Petition. The trial court granted the dual motions

for summary judgment against the Leeders and they subsequently perfected this appeal.

                                                     ANALYSIS

         As noted above, the Leeders raise four issues on appeal, contending: (1) the trial court’s

order granting summary judgment was not final because it did not dispose of all of the causes of

action pled in the Leeders’ Fourth Amended Petition; (2) the trial court erred in granting summary

judgment in favor of Wells Fargo on the Leeders’ claims; (3) the trial court erroneously permitted

Wells Fargo to amend its counterclaims after granting a plea to the jurisdiction instead of

dismissing the counterclaims without prejudice; and (4) the trial court erred by granting summary

judgment in favor of Wells Fargo on its counterclaims.

                                           Fourth Amended Petition

         Wells Fargo and HomEq filed a motion for summary judgment based on the causes of

action alleged in the Leeders’ Second Amended Petition. However, the Leeders filed a Fourth

Amended Petition 1 with their response to the motion for summary judgment. The Leeders contend

they timely filed the Fourth Amended Petition, the petition added new causes of action not

addressed in the motion for summary judgment, and we must presume the trial court considered

1
  The record does not contain the Leeders’ Third Amended Petition and it does not appear such a petition was ever
properly filed with the trial court. Even if the Leeders did in fact properly file a Third Amended Petition, counsel for
the Leeders conceded at the hearing on the motion to strike the Fourth Amended Petition that the Third Amended
Petition did not add a new cause of action.

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the Fourth Amended Petition when ruling on the motion for summary judgment. Accordingly, the

Leeders believe the “order granting the summary judgment motions was not a final order since it

did not dispose of all causes of action plead.” We disagree.

       The central tenet of the Leeders’ argument is that the trial court considered their Fourth

Amended Petition. However, the record reflects Wells Fargo and HomEq filed a motion to strike

that petition, and the trial court orally granted the motion. Despite the Leeders contentions to the

contrary, a trial court’s order made in open court is rendered when it is officially announced and

is valid from that time forward because formal entry of a written order is only a ministerial act.

See In re Bill Heard Chevrolet, Ltd., 209 S.W.3d 311, 314 (Tex. App.—Houston [1st Dist.] 2006,

no pet.) (citing Dunn v. Dunn, 439 S.W.2d 830, 832 (Tex. 1969). Therefore, we do not presume

the trial court considered the Fourth Amended Petition because the trial court ordered it struck.

       Because the trial court struck the Fourth Amended Petition, the Leeders’ argument that the

summary judgment order is not final is without merit. Accordingly, we overrule this issue.

                     Summary Judgment on the Second Amended Petition

       The Leeders next contend the trial court erred in granting Wells Fargo’s and HomEq’s

traditional and no evidence motions for summary judgment. In Texas, a party may combine both

traditional and no evidence summary judgment claims into a single motion. Binur v. Jacobo, 135
S.W.3d 646, 650 (Tex. 2004); Strandberg v. Spectrum Office Bldg., 293 S.W.3d 736, 738 (Tex.

App.—San Antonio 2009, no pet.). A trial court’s order granting either a traditional or no evidence

motion for summary judgment is reviewed de novo. See Valence Operating Co. v. Dorsett, 164
S.W.3d 656, 661 (Tex. 2005). When a party files a combined traditional and no evidence motion

for summary judgment, we review the no evidence grounds of the motion first. See Ford Motor

Co. v. Ridgeway, 135 S.W.3d 598, 600 (Tex. 2004). If the trial court properly granted the no

evidence motion there is no need to review the traditional motion. Id.
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       A no evidence motion for summary judgment under Texas Rule of Civil Procedure 166a(i)

is essentially a motion for pretrial directed verdict and requires the nonmoving party to present

evidence raising a genuine issue of material fact supporting each element specifically contested in

the motion. Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009); TEX. R. CIV. P. 166a(i).

The trial court is required to grant the motion unless the nonmovant produces more than a scintilla

of summary judgment evidence to raise a genuine issue of material fact. TEX. R. CIV. P. 166a(i).

More than a scintilla of evidence exists where the evidence “rises to a level that would enable

reasonable and fair-minded people to differ in their conclusions.” Merrell Dow Pharm., Inc. v.

Havner, 953 S.W.2d 706, 711 (Tex. 1997).

       Here, Wells Fargo and HomEq moved for no evidence and traditional summary judgment

as to the claims asserted in the Leeders’ Second Amended Petition. We will review the no evidence

motion first. See Ridgeway, 135 S.W.3d at 600.

       The Leeders’ Second Amended Petition: (1) asserted eleven negligence claims against

HomEq; (2) accused HomEq of breaching the forbearance agreement entered into in April 2007;

(3) accused HomEq of breaching a fiduciary duty owed to the Leeders; (4) accused Wells Fargo

of “improperly and unlawfully institut[ing] foreclosure proceedings” between February 2008 and

March 2010; (5) sought “a declaration that HomEq mishandled and/or mismanaged collection of

the note during the time it was the loan servicer between March 2005 and August 2010;” and (6)

sought multiple declarations against Wells Fargo regarding ownership of the home equity note and

Wells Fargo’s foreclosure action. We will address the no evidence challenges to the Leeders’

petition below; however, we need not address the declaratory actions against either HomEq or

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Wells Fargo as they were not challenged in the motion for summary judgment and were dismissed

by another order that is not before us for review. 2

Negligence Claims

         The Leeders’ petition alleged eleven separate negligent actions by HomEq in servicing the

home equity loan. Specifically, the Leeders accused HomEq of negligently:

         (1) failing to timely post or apply many of the Leeders’ loan payments;
         (2) assessing “numerous” late fees for timely received payments;
         (3) failing “to apply some of the Leeders’ payments to the note in any respect;”
         (4) failing “to pay property taxes and/or hazard insurance by the due date;”
         (5) “misrepresenting amounts it paid from the Leeders’ escrow account for property
         taxes and/or hazard insurance;”
         (6) miscalculating “amounts it paid from the Leeders’ escrow account for property
         taxes and/or hazard insurance;”
         (7) paying property taxes from the Leeders’ escrow account for real property not
         secured by the loan;
         (8) miscalculating the amount of escrow deposits the Leeders were required to
         make;
         (9) calculating an escrow shortage in excess of $38,000.00;
         (10) assessing unauthorized miscellaneous fees to the balance of the Leeders’ note;
         and
         (11) miscalculating “the correct interest rate and/or the correct amount of interest
         accrued.”

Essentially, the Leeders sued HomEq for negligently servicing the home equity loan.

         In Texas, negligence actions require proof of: (1) a legal duty owed by one person to

another; (2) a breach of that duty; and (3) damages proximately caused by the breach. Nabors

Drilling, U.S.A., Inc. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009). HomEq asserts the Leeders’

negligence claims are barred by the economic loss rule. In general, the rule precludes recovery in

tort for economic losses resulting from a party’s failure to perform under a contract. See Lamar

2
  The trial court dismissed the Leeders’ declaratory action claims for lack of jurisdiction in a separate order signed on
May 9, 2013. The Leeders did not appeal from that order, nor do they raise issues relevant to the dismissal order in
this appeal.

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Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 12 (Tex. 2007) (citing Sw. Bell Tel. Co. v.

DeLanney, 809 S.W.2d 493, 494–95 (Tex. 1991)).

       Although the Leeders ask the court to apply the broad standard set out by the Texas

Supreme Court in Montgomery Ward & Co. v. Scharrenbeck, 204 S.W.2d 508, 510 (Tex. 1947),

to determine whether a cause of action sounds in tort, contract, or both, we apply the two-part test

found in DeLanney. See Flying J Inc. v. Meda, Inc., 373 S.W.3d 680, 685 (Tex. App.—San

Antonio 2012, no pet.). Under DeLanney, we look at (1) the source of the duty giving rise to the

injury, and (2) the nature of the injury. Id. Regarding the source of the duty, DeLanney advised:

       If the defendant’s conduct . . . would give rise to liability independent of the fact
       that a contract exists between the parties, the plaintiff’s claim may also sound in
       tort. Conversely, if the defendant’s conduct . . . would give rise to liability only
       because it breaches the parties’ agreement, the plaintiff’s claim ordinarily sounds
       only in contract.
809 S.W.2d at 494.

       Here, it is apparent none of HomEq’s allegedly “negligent” actions would give rise to

liability outside of the parties’ agreement. After reviewing the record, we hold the Leeders

presented no evidence their negligence claims accused HomEq of anything other than

mismanaging its duties as the loan servicer pursuant to the contract. HomEq’s duty to service the

Leeders’ home equity loan arose only under contract. Accordingly, we overrule this issue and

hold the Leeders did not present even a scintilla of evidence in response to the no evidence motion

to show they were entitled to recover from HomEq on anything other than the contractual duty to

service the loan. See DeLanney, 809 S.W.2d 494–95.

Breach of Forbearance Agreement

       In the plain language of the Second Amended Petition, the Leeders allege “HomEq

breached its written forbearance agreement that it entered into with [the] Leeders’ [sic] on or about

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April 6, 2007.” However, in their brief the Leeders twice concede they did not intend to assert this

breach of contract claim against HomEq in the Second Amended Petition.

       Initially, the Leeders’ brief asserts “[t]he Leeders’ Second Amended Petition does not

specifically assert a breach of contract claim.” Then in their reply brief: “[t]he Leeders agree they

did not specifically assert a breach of contract claim in their Second Amended Original Petition.”

It is clear to the court the Leeders did not intend to assert a breach of contract claim against HomEq

based on the April 6, 2007 forbearance agreement. Accordingly, we hold review of the summary

judgment on that issue was affirmatively waived by the Leeders in their brief.

Fiduciary Duty

       The Leeders’ also alleged HomEq breached a fiduciary duty owed to them. However, in

the no evidence motion for summary judgment, HomEq’s asserted there is no evidence of a

fiduciary relationship between HomEq and the Leeders. We agree.

       There are two categories of relationships that give rise to a fiduciary duty: formal and

informal. See Meyer v. Cathey, 167 S.W.3d 327, 330–31 (Tex. 2005). “In certain formal

relationships, such as an attorney-client or trustee relationship, a fiduciary duty arises as a matter

of law.” Id. at 330. An informal fiduciary relationship can arise from “a moral, social, domestic

or purely personal relationship of trust and confidence.” Id. at 331 (quoting Associated Indem.

Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998).

       Here, the Leeders have not produced even a scintilla of evidence of the existence of either

a formal or informal fiduciary relationship with HomEq. In fact, the Leeders do not even refer to

the fiduciary duty claim in either their response to HomEq’s no evidence motion or any of their

briefing with this court. Accordingly, we overrule the Leeders challenge and hold HomEq was

entitled to no evidence summary judgment on the Leeders’ breach of fiduciary duty claim. See

TEX. R. CIV. P. 166a(i).
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Wrongful Foreclosure

       The Leeders, in their Second Amended Petition, further alleged Wells Fargo “improperly

and unlawfully instituted foreclosure proceedings since it was not the legal owner or holder of the

note and/or deed of trust.” All parties interpreted this allegation as a claim for wrongful

foreclosure. To prevail on a wrongful foreclosure claim, a party must prove: (1) a defect in the

foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection

between the defect and the grossly inadequate selling price. Sauceda v. GMAC Mortg. Corp., 268
S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008, no pet.). Wells Fargo, in the no evidence

motion, specifically challenged the Leeders to present more than a scintilla of evidence supporting

any of the required elements for wrongful foreclosure.

       A review of the record establishes the Leeders have failed to present any evidence of a

foreclosure on the lien, much less any of the elements set out above. Accordingly, we hold the

trial court properly granted summary judgment in favor of Wells Fargo on the Leeders’ wrongful

foreclosure claim. See TEX. R. CIV. P. 166a(i).

Traditional Motion For Summary Judgment

       Because the Leeders’ claims in the Second Amended Petition were properly disposed of

by the no evidence motion for summary judgment, we need not analyze HomEq’s and Wells

Fargo’s traditional motion on the same causes of action. Accordingly, we also need not address

the Leeders’ objections to the summary judgment evidence relied upon by HomEq and Wells

Fargo in their traditional motion.

                            Plea to the Jurisdiction – Counterclaims

       In their third issue on appeal, the Leeders challenge the trial court’s actions with regard to

their plea to the jurisdiction regarding Wells Fargo’s counterclaims. Specifically, the Leeders

contend the trial court improperly permitted Wells Fargo to amend its counterclaim to address its
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alleged lack of standing at the time the counterclaim was filed. The Leeders contend the trial court

should not have permitted the amendment; rather, the trial court should have dismissed the

counterclaims without prejudice. We review the trial court’s ruling on a plea to the jurisdiction de

novo. See City of Houston v. Guthrie, 332 S.W.3d 578, 586 (Tex. App.—Houston [1st Dist.] 2009,

no pet).

       After reviewing the record, we hold that even if the trial court erred by granting Wells

Fargo leave to amend the counterclaims instead of dismissing the claims without prejudice, such

error is harmless. See TEX. R. APP. P. 44.1. An unadjudicated cause of action dismissed without

prejudice is not barred by res judicata or collateral estoppel. See Sahagun v. Ibarra, 90 S.W.3d
860, 863 (Tex. App.—San Antonio 2002, no pet.); Swearingin v. Estate of Swearingin, No. 02-05-

132-CV, 2006 WL 1653294, at *6 (Tex. App.—Fort Worth June 15, 2006, no pet.); Brown v.

Prairie View A & M Univ., 630 S.W.2d 405, 408 (Tex. App.—Houston [14th Dist.] 1982, writ

ref’d n.r.e.), abrogated on other grounds, Harris County v. Sykes, 136 S.W.3d 635, 640 (Tex.

2004). Therefore, dismissing a cause of action without prejudice is the functional equivalent of

allowing a party to amend its pleading to properly invoke a trial court’s subject-matter jurisdiction.

Because of this equivalency, we hold the trial court’s decision to grant Wells Fargo leave to amend

its counterclaim did not result in reversible error. See TEX. R. APP. P. 44.1.

                                   Wells Fargo’s Counterclaims

       In their last appellate issue, the Leeders contend the trial court erred in granting Wells

Fargo’s traditional motion for summary judgment on its amended counterclaim. The counterclaim

sought, among other things, a court order authorizing judicial foreclosure.

       A traditional motion for summary judgment is properly granted only when the movant

establishes there are no genuine issues of material fact and the movant is entitled to judgment as a

matter of law. Lesieur v. Fryar, 325 S.W.3d 242, 246 (Tex. App.—San Antonio 2010, pet. denied)
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(citing Browning v. Prostok, 165 S.W.3d 336, 244 (Tex.2005)). When reviewing a traditional

summary judgment, we take as true evidence favorable to the nonmovant and indulge every

reasonable inference from the evidence in its favor. Lesieur, 325 S.W.3d at 246 (citing Am.

Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997)). Further, in deciding whether there is

a material fact issue precluding summary judgment, all conflicts in the evidence are disregarded

and evidence favorable to the nonmovant is accepted as true. Cole v. Johnson, 157 S.W.3d 856,

859 (Tex. App.—Fort Worth 2005, no pet.) (citing Harwell v. State Farm Mut. Auto. Ins. Co., 896
S.W.2d 170, 173 (Tex. 1995)).

       Here, the Leeders contend:

       The trial court erred in granting summary judgment on Wells Fargo’s amended
       counterclaim to foreclose . . . because [there is] a genuine issue of material fact as
       to when Wells Fargo became the owner or holder of the note and whether it was
       authorized to pursue foreclosure at any time before February 1, 2012.

The Leeders’ claim is based on the confusing assignment history of their note from the loan

originator, Argent Mortgage Company, to Ameriquest Mortgage Company, and eventually to

Wells Fargo.

       The record includes documents purporting to show an assignment of the note from

Ameriquest to Wells Fargo in either 2004, 2008, or at the very latest February 1, 2012. Meanwhile,

Wells Fargo emphatically insists it “has been the owner, holder, and mortgagee since 2005,” based

on its role as trustee of a home loan pooling and servicing agreement that included the Leeders’

loan. We agree with the Leeders that a material fact issue exists as to when Wells Fargo became

the owner and holder of their note and whether it could pursue foreclosure at any time before

February 1, 2012. However, we hold the fact issue created by the assignment history prior to

February 1, 2012 is irrelevant to the summary judgment granting judicial foreclosure in favor of

Wells Fargo.

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       Wells Fargo’s amended counterclaim seeking judicial foreclosure, upon which the trial

court granted summary judgment, was filed on January 4, 2013. Therefore, even if we accept the

latest possible date of transfer on February 1, 2012, there is no genuine issue of material fact as to

whether Wells Fargo was the owner and holder of the note at the time it sought judicial foreclosure

of the lien. Accordingly, we overrule the Leeders’ issue challenging summary judgment as to

Wells Fargo’s counterclaim for judicial foreclosure.

                                           CONCLUSION

       Based on the foregoing, we overrule the Leeders’ issues and affirm the trial court’s

judgment.

                                                   Marialyn Barnard, Justice

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