Court Opinion

ID: 2762252
Source: CourtListenerOpinion
Date Created: 2014-12-18 12:09:46.856373+00
Date Added: 2024-06-11T11:27:11.041233
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                      NO. 03-13-00584-CV

                                  Kyle Lynn Ashley, Appellant

                                                v.

                                  Citimortgage, Inc., Appellee

            FROM THE COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY
       NO. C-1-CV-13-005947, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING

                           MEMORANDUM OPINION

               This is an appeal from a judgment signed by the county court at law in a forcible

detainer suit brought by appellee Citimortgage, Inc. against appellant Kyle Lynn Ashley. We affirm

the county court’s judgment.

                               Factual and Procedural Background

               In 2009, Ashley refinanced his home, obtaining a mortgage from Colonial Bank

and signing a deed of trust and note in Colonial Bank’s favor.1 Mortgage Electronic Registration

Systems, Inc. (MERS) was named as a beneficiary under the deed and as nominee for Colonial Bank

and its “successors and assigns.” Soon after, Colonial Bank declared bankruptcy and was placed

into receivership. In August 2009, the Federal Deposit Insurance Corporation (FDIC), acting as

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          Ashley bought and refinanced the house along with his then-wife, but upon their divorce
shortly after the house was refinanced, Ashley became sole owner of the property. Ashley’s ex-wife
was named as a party to the underlying suit but did not appeal.
Colonial Bank’s receiver, transferred Colonial Bank’s rights, title, and interests in the mortgages

and deeds of trust owned and held by Colonial Bank to Branch Banking and Trust. The assignment

expressly excluded all mortgages and deeds of trust “registered under or by use of [MERS]

regardless of Colonial Bank’s ownership or beneficial interest therein.”

                In April 2012, MERS filed an assignment purporting to transfer Ashley’s deed of

trust and attendant notes from Colonial Bank to Bank of America. In January 2013, after Ashley

defaulted on his payments, the property was sold to Citimortgage at a foreclosure sale conducted

on Bank of America’s behalf. Citimortgage then filed this forcible detainer suit in the justice court.

Ashley asserted that Citimortgage was not the owner of the property and that because title was in

dispute, the justice court lacked jurisdiction over the suit. See Tex. Gov’t Code § 27.031(b) (justice

court lacks jurisdiction over suit to determine title to land); Rice v. Pinney, 51 S.W.3d 705, 708

(Tex. App.—Dallas 2001, no pet.). He asserted that Citimortgage had not produced evidence showing

a link between Colonial Bank and Bank of America and noted that Colonial Bank had filed for

bankruptcy and was closed in 2009. The justice court ruled in Citimortgage’s favor. Shortly

thereafter, Ashley filed suit to quiet title in the district court.2

                Meanwhile, Ashley appealed the justice court’s forcible detainer judgment to the

county court at law, asserting that because he disputed Citimortgage’s ownership of the property,

the justice court lacked jurisdiction over the suit. The county court held a bench trial and ruled in

Citimortgage’s favor, and Ashley appealed to this Court.

        2
         Ashley also alleged violations of section 12.002 of the civil practice and remedies code,
which governs the fraudulent filing of documents, and of the Texas Debt Collection Act and sought
a temporary restraining order and a declaration that the foreclosure proceeding was void.

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                                              Discussion

                On appeal, Ashley asserts that: (1) the county court and justice court both improperly

adjudicated title to the property, exceeding their jurisdictional authority; (2) MERS’s nominee status

did not survive Colonial Bank’s bankruptcy, and therefore MERS lacked authority to transfer the

property to Bank of America; (3) the county court improperly interpreted the FDIC’s assignment that

transferred some of Colonial Bank’s assets to Branch Banking and Trust; (4) MERS, as “holder” of

the deed of trust, had no authority to transfer the note to Bank of America; and (5) there was no

evidence to show that Wendy Alexander, who signed the substitute trustee deed after the foreclosure

sale, was ever appointed as substitute trustee.

                At trial, the county court said that it appeared that MERS “continue[d] as nominee

and later gave the property to [Bank of America], and [Bank of America] foreclosed and here we

are.” Ashley asserted that the court was ruling on title, and the county court stated, “I have made a

ruling that there is no question of title. Everything appears to be in order.” Ashley asserts that by

making that statement, the county court “specifically ruled on the question of title, holding that title

was properly vested in Citimortgage,” that such a ruling was outside the court’s jurisdiction, and

that we must therefore reverse. He further contends that the county court erred in determining that

MERS’s nominee status under the deed of trust survived the bankruptcy of Colonial Bank and that

MERS had the power to transfer the deed and note to Bank of America.

                The county court did not make any findings of fact or conclusions of law determining

title. The county court’s verbal statements that there was “no question of title” and that “[e]verything

appears to be in order” were not rulings on the question of title but instead were observations

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that title was not in dispute for purposes of the forcible detainer suit. Further, the fact that Ashley

disputed the propriety of Citimortgage’s ownership and had filed suit to quiet title in the district

court did not mean that the justice court or county court lacked jurisdiction in the forcible detainer

proceeding. See Schlichting v. Lehman Bros. Bank FSB, 346 S.W.3d 196, 199 (Tex. App.—Dallas

2011, pet. dism’d); Rice, 51 S.W.3d at 711, 713. A justice court or county court is not deprived of

jurisdiction by the mere existence of a title dispute; the court will only lack jurisdiction if the right

to immediate possession necessarily requires the court to resolve the title dispute. Rice, 51 S.W.3d

at 713. In other words, “it is only when the justice or county court must determine title issues that

it is without jurisdiction to adjudicate a forcible detainer case.” Id.

                As for Ashley’s issues related to whether MERS’s nominee status survived Colonial

Bank’s bankruptcy, the extent of MERS’s authority as a holder of the deed of trust, and the propriety

of the transfer of the mortgage to Bank of America, “defects in the foreclosure process or with the

purchaser’s title to the property may not be considered in a forcible detainer action.” Schlichting,
346 S.W.3d at 199. The deed of trust provided that, in the event of a foreclosure sale, Ashley was

to immediately surrender possession and, if possession was not surrendered, Ashley would be a

tenant at sufferance who could be removed by a court proceeding. Thus, the county court had an

independent basis to determine the issue of immediate possession without having to resolve any

title issues. See id.; see also Wilder v. Citicorp Trust Bank, F.S.B., No. 03-13-00324-CV, 2014 WL
1207979, at *2 (Tex. App.—Austin Mar. 18, 2014, pet. filed) (mem. op.) (landlord-tenant relationship

created by deed of trust provided independent basis to award immediate possession in forcible

detainer suit without need to resolve title dispute).

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                We reject Ashley’s issues related to MERS’s authority to transfer the note and deed

of trust and his assertion that a title dispute stripped the county court and justice court of jurisdiction

over the forcible detainer suit. See Wilder, 2014 WL 1207979, at *2 (“The Wilders’ attack on the

validity of the foreclosure sale through which Citicorp Trust acquired ownership of the Property—a

challenge to Citicorp Trust’s title—cannot be raised in this proceeding.”).

                As for Ashley’s argument related to the appointment of the substitute trustee, the

deed of trust provided that the lender could, “by power of attorney or otherwise,” appoint a successor

trustee “without the necessity or any formality other than a designation by Lender in writing.” The

deed further provided that “recitals in the Trustee’s deed shall be prima facie evidence of the truth

of the statements made therein.” The substitute trustee’s deed stated that “Current Mortgagee of the

Note, through the Mortgage Servicer, accordingly has appointed Substitute Trustee and requested

Substitute Trustee to enforce the trust.” Thus, the documents provided by Citimortgage established

the substitute trustee’s authority to conduct the sale.3 See Texas Osage Co-op. Royalty Pool, Inc. v.

Crighton, 188 S.W.2d 230, 234 (Tex. Civ. App. 1945, writ ref’d) (deed of trust authorized note

holder to appoint substitute trustee and provided that trustee’s recitals in conveyance was prima facie

evidence that recited facts were true; substitute trustee’s deed recited that original trustee had refused

to act and had been replaced by substitute trustee; “In the absence of testimony tending to show

that the named trustee was not properly requested to act, the foregoing evidence was sufficient proof

that proper request was made of the named trustee to act and his refusal so to do and thereby, under

        3
        We note that Ashley attached his district court petition as an exhibit to his first amended
answer. That petition included copies of two Appointments of Substitute Trustee from May and
December 2012, both of which named Wendy Alexander as one of three possible substitute trustees.

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the terms of the deed of trust, authorized the holder of the note to appoint a substitute trustee.”);

Stone v. Watt, 81 S.W.2d 552, 555 (Tex. Civ. App.—Eastland 1935, writ ref’d) (no statutory

requirement that documentation related to appointment of substitute trustee be recorded in public

records). We overrule Ashley’s issue related to the authority of the substitute trustee to conduct the

foreclosure sale.

                                            Conclusion

               Having overruled Ashley’s issues, we affirm the county court’s judgment.

                                               __________________________________________

                                               David Puryear, Justice

Before Justices Puryear, Goodwin, and Field

Affirmed

Filed: December 18, 2014

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