Court Opinion

ID: 3097913
Source: CourtListenerOpinion
Date Created: 2015-10-16 04:47:46.661999+00
Date Added: 2024-06-11T09:45:10.653621
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-13-00110-CV

IN RE A PURPORTED LIEN OR
CLAIM AGAINST HAI QUANG LA
AND THERESA THORN NGUYEN

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        FROM THE 342ND DISTRICT COURT OF TARRANT COUNTY

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                                   OPINION

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      Bernadotte Loomis appeals from the trial court’s order granting a “Motion

for Judicial Review of Documentation or Instrument Purporting to Create a Lien

or Claim” filed under section 51.903 of the Texas Government Code by Hai

Quang La and Theresa Thorn Nguyen. See Tex. Gov’t Code Ann. § 51.903

(West 2013).   Because we conclude the trial court erred in applying section

51.903 of the government code to restrictive covenants, we reverse the trial

court’s order and dismiss the underlying motion.
                                      Background

      La and Nguyen, home owners in the Carson Ranch Estates-Phase I

(Carson Ranch Estates), filed a verified motion under section 51.903 of the

Texas Government Code seeking a judicial determination that a certain

document filed in the Tarrant County real property records and impacting the

Carson Ranch Estates was a fraudulent lien or claim that should not be accorded

any status. See id. La and Nguyen attached the document at issue to their

motion—a    six   page   document     entitled   “Reservations,   Restrictions   and

Covenants” (restrictive covenants).    They alleged that because the restrictive

covenants was not signed by the true owner of the property, West Comm.

Investments, LP, and because the document lacked a notary’s signature on the

acknowledgment, the document was fraudulent as defined by Texas Government

Code section 51.901(c)(2). See id. § 51.901(c)(2) (West 2013). La and Nguyen

asked the trial judge to conduct an ex parte review of the documents attached to

their motion and to enter a proposed order styled “Finding of Facts and

Conclusion of Law Regarding a Documentation or Instrument Purporting to

Create a Lien or Claim.” See id. §51.903(c). The Honorable J. Wade Birdwell

did enter the proposed order after a review of the motion and the attached

documents. 1

      1
      Judge Birdwell’s order includes the following findings:
                 The documentation or instrument attached as
          Exhibit B to the motion and hereto, herein is asserted
          against real property and:

                                         2
      Thirty-one days later, Loomis, also a home owner in Carson Ranch

Estates, filed a plea in intervention, a motion to set aside or vacate findings of

facts and conclusions of law, and a motion for new trial alleging that the trial

court’s order improperly took her property rights without due process. Loomis

                  (1)    IS NOT provided for by specific state or
                         federal statutes or constitutional provisions,
                         as not signed by the notary public as
                         requested by Section 121.004(b)(2) of the
                         Tex. Civ. Prac. & Rem. Codes;

                  (2)    IS NOT created by implied or express
                         consent      or    agreement       of    the
                         Movants/Owners of the real property,
                         required under the law of this state or by
                         implied or express consent or agreement of
                         an agent, fiduciary, or other representative
                         of the Movants/Owners;

                  (3)    IS NOT an equitable, constructive, or other
                         lien imposed by a court of competent
                         jurisdiction created by or established under
                         the constitution or laws of this state or the
                         United States; or

                  (4)    IS NOT asserted against real property or
                         an interest in real property. There is no
                         valid lien or claim created by this
                         documentation or instrument.

                   This court makes no finding as to any underlying
            claims of the parties involved, and expressly limits its
            finding of fact and conclusion of law to the review of a
            ministerial act. The county clerk shall file this finding of
            fact and conclusion of law in the same class of records
            as the subject documentation or instrument was
            originally filed, and the court directs the county clerk to
            index it using the same names that were used in
            indexing the subject documentation or instrument.

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further argued that the issues presented by La and Nguyen in their ex parte

motion were the identical issues pending since 2012 in a different suit in another

Tarrant County district court.

      Judge Birdwell held a hearing on Loomis’s motions. At that hearing he

stated that he had set the hearing “primarily to make a record for purposes of

what I’m anticipating will be an appeal in this case.” Judge Birdwell also stated

that at the time that he entered his finding of facts and conclusions of law, he had

not been advised and was not aware that litigation involving the same property

was pending in another district court. Judge Birdwell then noted that he lacked

jurisdiction to rule on Loomis’s motions because they were filed after his

judgment had become final. This appeal followed.

                                    Standing

      As an initial matter, La and Nguyen challenge Loomis’s standing to bring

this appeal.   Their sole argument is that the Court’s ruling does not affect

Loomis’s property rights. Standing is a component of subject matter jurisdiction

and is a constitutional prerequisite to maintaining a lawsuit under Texas law.

Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993).

Standing requires “a real controversy between the parties” that “will be actually

determined by the judicial declaration sought.”      Austin Nursing Ctr., Inc. v.

Lovato, 171 S.W.3d 845, 849 (Tex. 2005); Tex. Ass’n. of Bus., 852 S.W.2d at

446. A determination of standing focuses on whether a party has a “justiciable

interest” in the outcome of the lawsuit, such as when it is personally aggrieved or

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has an enforceable right or interest. Lovato, 171 S.W.3d at 849. Standing is a

legal question reviewed de novo. Heckman v. Williamson Cnty, 369 S.W.3d 137,

150 (Tex. 2012).

      Generally, any person whose property was intended to benefit under a

restrictive covenant has standing to bring a suit to enforce the covenant.

Anderson v. New Prop. Owners’ Ass’n of Newport, Inc., 122 S.W.3d 378, 384

(Tex. App.—Texarkana 2003, pet. denied).       In cases where many property

owners have an interest in the restrictive covenant, any one of them can enforce

it. See Ski Masters of Tex., LLC v. Heinemeyer, 269 S.W.3d 662, 667–68 (Tex.

App.—San Antonio 2008, no pet.); Giles v. Cardenas, 697 S.W.2d 422, 427 (Tex.

App.—San Antonio 1985, writ ref’d n.r.e.).

      Here, La and Nguyen sought by their ex parte motion for judicial review to

have the restrictive covenants governing the Carson Ranch Estates declared

fraudulent. As a property owner in the Carson Ranch Estates, subject to the

same restrictive covenants, Loomis clearly has standing to defend against such

action. See Ski Masters, 269 S.W.3d at 668. Therefore, we now proceed to

consider the merits of Loomis’s issues on appeal.

                                 Standard of Review

      A trial court may determine whether a challenged document or instrument

under section 51.903 is “fraudulent” based “solely on a review of the

documentation or instrument attached to the motion and without hearing any

testimonial evidence.” Tex. Gov’t Code Ann. § 51.903(c). Here, the trial court

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considered only the documents attached by La and Nguyen to their motion for

judicial review in deciding whether the restrictive covenants were fraudulent as

that is defined in section 51.901(c)(2). See id. § 51.901(c)(2). Where facts are

undisputed, the question of whether something meets a statutory definition is a

question of law that we review de novo. See David Powers Homes, Inc. v. M.L.

Rendleman Co., Inc., 355 S.W.3d 327, 335 (Tex. App.—Houston [1st Dist.] 2011,

no pet.) (citing State ex rel. Dep’t of Criminal Justice v. VitaPro Foods, Inc., 8
S.W.3d 316, 323 (Tex. 1999)).

                                       Analysis

      In three issues on appeal, Loomis argues the trial court erred when it

granted La’s and Nguyen’s motion for judicial review and issued its order under

section 51.903. We begin our analysis by examining the applicable statutory

provisions.

Government Code

      The Texas Government Code provides an expedited proceeding for

challenging a fraudulent lien or claim against real or personal property, the

foundation of which is found in section 51.903. That section, which is largely a

suggested form motion and order, allows a purported debtor or obligor or a

person who owns an interest in real or personal property to ask for a judicial

determination of the legitimacy of a filed or recorded document or instrument

purporting to create a lien or interest in real or personal property. Tex. Gov’t

Code Ann. § 51.903(a), (c). A motion under that section requests the court to

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review the subject document and determine “whether it should be accorded lien

status.” Id. at § 51.903(a). The motion for judicial review must be filed with the

district clerk in the county where the subject document was filed and “may” be

ruled on by a district judge having jurisdiction over real property matters in that

county. Id. § 51.903(a), (c). The trial court’s finding may be made solely on a

review of the documents attached to the motion for judicial review and without

hearing testimony. Id. § 51.903(c). “The court’s review may be made ex parte

without delay or notice of any kind.” Id. The motion for judicial review must be

verified and must acknowledge that it is not requesting a finding as to the

underlying claim of the parties and that it is not seeking to invalidate a legitimate

lien. Id. § 51.903(a), (b), (g).

      The motion for judicial review must allege that the document or instrument

at issue is fraudulent as that term is defined in section 51.901(c)(2).        Id. §

51.903(a), § 51.901(c)(2). For purposes of a section 51.903 action, a document

or instrument is presumed to be fraudulent if:

             [T]he document or instrument purports to create a lien
             or assert a claim against real or personal property or an
             interest in real or personal property and:

             (A) is not a document or instrument provided for by the
             constitution or laws of this state or of the United States;

             (B) is not created by implied or express consent or
             agreement of the obligor, debtor, or the owner of the
             real or personal property or an interest in the real or
             personal property, if required under the laws of this
             state, or by implied or express consent or agreement of

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            an agent, fiduciary, or other representative of that
            person; or

            (C) is not an equitable, constructive, or other lien
            imposed by a court with jurisdiction created or
            established under the constitution or laws of this state or
            of the United States.

Id. § 51.901(c)(2). Thus, the court may presume the document is fraudulent

under this section if the court makes one positive and three negative findings

about the subject document.      Id.   The court must affirmatively find that the

document purports to create a lien or claim against real or personal property. Id.

Additionally, in order to find the subject document fraudulent, the court must

determine that the document is not one of the following three types of legitimate

liens or claims: (1) a document or instrument provided for by state or federal law

or constitutional provision; (2) created by implied or express consent or

agreement of the obligor, debtor, or the owner of the real or personal property; or

(3) imposed by a court as an equitable, constructive, or other lien. See id. §

51.901(c)(2)(A)–(C).

      Finally, a proceeding under section 51.903 is limited in scope. See id. §

51.903(a), (g). A trial court may only determine whether the subject document is

fraudulent as defined by section 51.901(c)(2); it may not rule on any underlying

claims of the parties involved. See id. § 51.903(g) (“suggested form order” states

that “[t]his court makes no finding as to any underlying claims of the parties

involved, and expressly limits its finding of fact and conclusion of law to the

review of a ministerial act”); see also David Powers Homes, 355 S.W.3d at 338

                                         8
(statute not created to determine legitimacy and validity of claimed interest, but

instead enacted to expeditiously determine legitimacy of document manifesting

purported lien or interest) (quoting In re Hart, No. 07-98-0292-CV, 1999 WL
225956, at *2 (Tex. App.—Amarillo Apr. 15, 1999, no pet.) (not designated for

publication); In re Purported Liens or Claims Against Samshi Homes, L.L.C., 321
S.W.3d 665, 667 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (substantive

evidentiary claims are beyond the scope of section 51.903 proceedings).

Purports to Create a Lien or Claim

      Based on the plain language of the statute, a proceeding under section

51.903 of the government code must first involve a document or instrument that

purports to create a lien or assert a claim against real or personal property or an

interest in real or personal property. See Tex. Gov’t Code Ann. § 51.903(a). La

and Nguyen plead in their motion for judicial determination that the restrictive

covenants governing Carson Ranch Estates purported to create a lien or claim

and should be declared fraudulent and given no status.            Id.   Restrictive

covenants, however, are not liens or claims against real property, and therefore,

are not subject to a section 51.903 proceeding. Id. The Texas Civil Practice and

Remedies Code defines a “lien” as “a claim in property for the payment of a debt

and includes a security interest.” Tex. Civ. Prac. & Rem. Code Ann. § 12.001(3)

(West Supp. 2012). 2 Black’s Law Dictionary defines a “lien” as “[a] legal right or

      2
        Chapter 12 of the Texas Civil Practice and Remedies Code also deals
with liability related to a fraudulent court document or a fraudulent lien or claim

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interest that a creditor has in another’s property, lasting usu[ally] until a debt or

duty that it secures is satisfied.” Black’s Law Dictionary 1006 (9th ed. 2009).

      By contrast, the Texas Property Code defines a “restrictive covenant” as

“any covenant, condition, or restriction contained in a dedicatory instrument,

whether mandatory, prohibitive, permissive or administrative.” See Tex. Prop.

Code Ann. § 202.001(4) (West 2007 & Supp. 2012). Black’s Law Dictionary

defines a “restrictive covenant” as a “private agreement, usu[ally] in a deed or

lease, that restricts the use or occupancy of real property, esp[ecially] by

specifying lot sizes, building lines, architectural styles, and the uses to which the

property may be put.” Black’s Law Dictionary 421 (9th ed. 2009). Additionally, at

least one court has held that a restrictive covenant is a negative covenant that

“limits permissible uses of land.” See In Voice of the Cornerstone Church Corp.

v. Pizza Prop. Partners, 160 S.W.3d 657, 665 (Tex. App.—Austin 2005, no pet.);

accord Restatement (Third) of Prop.: Servitudes § 1.3(3) (2000) (restrictive

covenant is “a negative covenant that limits permissible uses of land”). Thus,

although restrictive covenants restrict or otherwise limit permissible uses of the

land, they do not create or purport to create a “lien or a claim” on the owner’s

property within the meaning of section 51.903. See Tex. Gov’t Code Ann. §

51.903; see also Marsh v. JPMorgan Chase Bank, N.A., 888 F. Supp. 2d 805,

811 (W.D. Tex. 2012) (mortgage assignment not “lien” within meaning of statute

filed against real or personal property. See Tex. Civ. Prac. & Rem.Code Ann. §
12.001–12.007 (West 2002 & Supp. 2012).

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prohibiting filing of fraudulent liens against real property; assignment did not

purport to create lien or claim against property but rather merely purported to

transfer existing deed of trust from one entity to another).

       La’s and Nguyen’s reliance on government code section 51.903 to

challenge a restrictive covenant is misplaced.       A section 51.903(a) ex parte

proceeding was never meant to determine issues of creation, enforcement,

validity, or construction of a restrictive covenant.      Tex. Gov’t Code Ann. §

51.903(a), (g). Because a section 51.903 proceeding applies only to documents

or instruments “purporting to create a lien or a claim” against property, and

because the restrictive covenant at issue in La’s and Nguyen’s motion for judicial

determination does not purport to create a lien or claim against real property, the

trial court erred when it granted La’s and Nguyen’s motion. Id. § 51.903(a). We

sustain Loomis’s first issue in part. Because this part of Loomis’s first issue is

dispositive, we do not reach the remainder of Loomis’s first issue or her two other

issues. 3

                                    Conclusion

       For the reasons stated above, we reverse the trial court order and dismiss

the underlying motion for judicial review. 4

       3
        See Tex. R. App. P. 47.4.
       4
       The trial court is directed to have a copy of this court’s opinion and
judgment recorded “in the same class of records as the subject documentation or
instrument was originally filed.”

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                                       PHYLIS J. SPEEDLIN
                                       JUSTICE

PANEL: MCCOY and MEIER, JJ.; and PHYLIS J. SPEEDLIN (Senior Justice,
Retired, Sitting by Assignment)

DELIVERED: October 17, 2013

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