Court Opinion

ID: 4328397
Source: CourtListenerOpinion
Date Created: 2018-11-07 00:44:00.514113+00
Date Added: 2024-06-11T14:06:28.866425
License: Public Domain

Affirmed and Memorandum Opinion filed November 6, 2018.

                                       In The

                     Fourteenth Court of Appeals

                               NO. 14-17-00541-CV

                         AMELIA V. KELLY, Appellant
                                         V.
     MATTHEW D. WIGGINS, JR. AND D. L. HAMMAKER, Appellees

                    On Appeal from the 122nd District Court
                           Galveston County, Texas
                      Trial Court Cause No. 13-CV-1392

                  MEMORANDUM OPINION

      This is an appeal from a final judgment entered in favor of appellees Matthew
D. Wiggins, Jr. and D. L. Hammaker concerning possession of a piece of real
property, and the denial of the appellant’s alternative motion for factual
determination. Appellant Amelia Kelly sought declaratory judgment as well as legal
and equitable claims arising from the entry of a 2012 final judgment and a 2014 post-
judgment judicial foreclosure order. In a joint motion in the trial court, the parties
sought entry of judgment and Kelly also sought, alternatively, a motion for
determination of contested issues. Concluding the claims in this case are collateral
attacks on the validity of a prior adverse judgment, we affirm.

                                 I.     Background

A.    Factual

                                      The Property

      In 2006, Kelly purchased a large house being operated as a bed and breakfast
at 701 Bay Avenue in Kemah, Texas. To purchase the property, Kelly executed a
mortgage note, payable to First Franklin Bank, in the amount of $693,750, which
was secured by a deed of trust on the property. She did not reside in the property
and did not designate the property as her homestead. Because the property needed
updating, Kelly began renovation, tearing out walls, and removing appliances.
Shortly thereafter, in an attempt to obtain additional financing, Kelly conveyed by
deed the property to William Kelleher.

      Three years later, in June 2009, Kelly sought to buy out Kelleher’s interest in
the property and approached Wiggins for a loan. Wiggins became her partner in the
bed and breakfast enterprise. Kelly executed a promissory note in the original
principal amount of $400,000, payable on demand to Wiggins. Kelly executed a
deed of trust with respect to the property, to secure payment of the note. With funds
borrowed from Wiggins, Kelly repurchased the property from Kelleher.

      Kelly never paid Wiggins anything. In December 2009, Wiggins gave notice
of a foreclosure sale for default on the promissory note, to take place on January 5,
2010. On January 5, 2010, Wiggins’ designee, D. L. Hammaker, conducted a
nonjudicial foreclosure sale of Kelly’s interest in the property, and sold the property

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to Wiggins. Wiggins took possession of the property and began paying the monthly
mortgage to First Franklin Bank.

      In February 2011, Wiggins refinanced the property through Texas Citizens
Bank (TCB). Wiggins executed a note for $1,000,000 and a deed of trust on the
property in favor of TCB. He used approximately $706,000 of the loan amount to
pay off Kelly’s First Franklin Bank note.

                          The Original Case Tried to Jury

      After Wiggins executed the note payable to TCB, in February 2011, Kelly
sued Wiggins in the 122nd District Court in Galveston County, Cause No. 11-CV-
325, seeking, inter alia, a court decree voiding the foreclosure. Trial commenced in
February 2012, and the trial court issued its final judgment on June 22, 2012,
declaring the January 2010 foreclosure void and decreeing there were no valid
agreements between Kelly and Wiggins. The trial court awarded title and possession
to Kelly but granted Wiggins a $660,000 judgment lien on the property in
recognition of the money Wiggins had spent to purchase, preserve, and improve the
property.

      Both parties filed a notice of appeal from the 2012 judgment. The appeals,
which were assigned to this Court, were subsequently dismissed on the motion of
the respective parties.

      After issuance of this court’s mandate, the trial court entered orders that the
judgment be carried into execution. Wiggins thereafter sought to enforce the
judgment issued. Specifically, Wiggins requested entry of an order of judicial
foreclosure as to the property. After several hearings, briefing, and two petitions
for mandamus in the court of appeals, on June 23, 2014, the trial court signed an
order of judicial foreclosure of the lien created in the June 22, 2012 final judgment.

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      In August 2014, Kelly filed a notice of appeal in this Court, contesting the
trial court’s order of judicial foreclosure of the property.

      On January 12, 2015, a sheriff’s execution sale deed to Wiggins for the
property was filed in the real property records of Galveston County.

      This Court held on May 15, 2015, that the judicial foreclosure order was a
post-judgment enforcement order rather than a final appealable order; thus, we
dismissed the appeal for lack of jurisdiction.

                                 The Bankruptcy Case

      In October 2012, Kelly filed a voluntary petition for relief under chapter 13
of the Bankruptcy Code, which subsequently was converted to a liquidation under
chapter 7 in November 2012. Janet Northrup was appointed as the trustee of Kelly’s
chapter 7 bankruptcy estate. Before the conversion, on October 29, 2012, Wiggins
moved for, and received, relief from the bankruptcy court automatic stay and
Wiggins and Kelly were permitted to “exercise their rights and remedies under state
law” as to the property. Northrup did not object. Subsequently, the bankruptcy court
entered an order the property was abandoned by the bankruptcy estate.           The
bankruptcy court also noted the existence and validity of the lien on the property
created by the final judgment in the original case, in Wiggins’ favor.

      Despite the 2012 judgment, Wiggins remained in possession of the property
and operated it as a bed and breakfast called “Captain’s Quarters.” Wiggins
maintained the property, paid insurance, and paid the ad valorem taxes on the
property.

      In January 2013, Northrup filed an adversary proceeding, demanding that
Wiggins vacate the property and seeking trespass damages against him. After
conducting a trial in November 2013, the bankruptcy court found that the property

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was owned by the bankruptcy estate. The court also found that Wiggins was liable
for trespass from the date he took possession of the property following his purchase
at the voided foreclosure sale until the present, awarding damages from January
2010 until February 2014, allowing Wiggins an offset, and reducing the judgment to
$155,502.

         Wiggins appealed to the district court, which affirmed. Wiggins, in turn,
appealed to the Fifth Circuit Court of Appeals. On April 12, 2016, the Fifth Circuit
modified the judgment of the bankruptcy court to award $0 to Northrup as damages
for trespass. To the extent Wiggins challenged other aspects of the judgment he
waived those challenges by failing to raise them with the bankruptcy court; thus, in
all other respects, the judgment of the district court affirming the judgment of the
bankruptcy court was affirmed. See In re Kelly, 643 Fed. Appx 400, 401–403, 405
(5th Cir. 2016).

                                  The Current Case

         On October 31, 2013, Kelly and Northrup filed an original petition and
application for temporary restraining order, and temporary and permanent
injunctions in the 405th District Court in Galveston County, Cause No. 13-CV-1392,
against Wiggins and Hammaker. In their petition, they asserted “Defendants have
successfully argued in bankruptcy court that jurisdiction lies in the state courts.”
Wiggins filed a notice of removal to the pending adversary proceeding in bankruptcy
court.

         In March 2014, after the bankruptcy estate’s interest in the property was
abandoned, the case was remanded back to the 405th District Court in Galveston
County, Cause No. 13-CV-1392, and was transferred to the 122nd District Court in
Galveston, for further proceedings. In July 2014, Northrup filed in the state trial
court a motion to dismiss, declaring she no longer desires to prosecute the
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bankruptcy estate’s claims against Wiggins and Hammaker, and she sought
dismissal of their counterclaims against the bankruptcy estate. The trial court
dismissed Northrup in all respects from the litigation on July 31, 2014.

      On June 10, 2015, Wiggins and Hammaker moved to dismiss Kelly’s claims
for trespass, abuse of process, negligence, waste, nuisance, and declaratory judgment
quieting title. The record before us does not reflect a hearing was either requested
or set on the motion to dismiss.

      After two trial settings were passed and several status conferences were held,
the case was reset for trial on a two-week docket call beginning on June 13, 2016.
At the pre-trial hearing, the trial court and counsel conferred, and the parties agreed
to reduce the contested issues to ones of law and to drop all claims other than title
claims, to prepare the case for an appeal on the main issue of title. Wiggins and
Hammaker continued to contest that the property was Kelly’s homestead at the time
the court rendered judgment in the original case in 2012. In February 2017, the trial
court held another status conference.

      Thereafter, in March 2017, the parties filed a joint motion for entry of final
judgment after determination on contested issues, if necessary. In the factual
background of the joint motion, the parties provide:

      Among the issues present in this case are Declaratory Judgment Act,
      legal, and equitable claims arising from the entry of a final judgment in
      Cause No. 11 CV 0325, Amelia V. Kelly v. Matthew D. Wiggins, Jr. and
      D.L. Hammaker, in the 122d Judicial District, Galveston County, Texas
      (the “2012 Final Judgment”), and the entry of a 2014 post-judgment
      Order of Judicial Foreclosure in that same cause (the “Foreclosure
      Order”). This case, the 2012 Final Judgment, and the Foreclosure
      Order all concern the “Property” referenced as 701 Bay in Kemah,
      Texas.”

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In the joint motion, Kelly voluntarily dismissed, without prejudice, her claims for
abuse of process and/or malicious prosecution, negligence, waste, wrongful eviction,
and nuisance alleged to arise from Wiggins’ possession of the property (“possession
claims”). The parties sought a determination as a matter of law on Kelly’s claims
for wrongful foreclosure, to quiet title, to try title, for permanent injunction, and for
declaratory judgment (“title claims”). The contested issues in the joint motion
addressed homestead and purchase money as follows:

      Homestead
      Plaintiff contends that whether the Property was her residence was at
      issue in Cause No. 11CV0325 and that the jury’s verdict and the Final
      Judgment established that the Property was her residence and, although
      homestead was not directly at issue, established the Property as her
      homestead as well. Plaintiff contends that the Court may enter
      judgment as a matter of law in this case that the Property was Plaintiff’s
      protected homestead at the time the Final Judgment was entered.
      Defendants contend that the jury’s verdict in Cause No. 11CV0325
      and the Final Judgment establish only that the Property was Plaintiff’s
      residence but not that the Property was her homestead. Nevertheless,
      Defendants contend that any homestead issue is immaterial in this case
      because the Court’s Foreclosure Order in Cause No. 11CV0325 was
      based, in part, on the jury’s verdict that Defendant Wiggins spent
      $660,000 to “purchase, preserve, and improve the [P]roperty.”
      Purchase Money
      Plaintiff contends that no part of the $660,000 lien created by the Final
      Judgment was for her purchase of the property and that the homestead
      protections against forced sale prevented the entry of the Foreclosure
      Order in Cause No. 11CV0325, the Sheriff’s foreclosure sale, and the
      delivery and effectiveness of the Sheriff’s Deed. Alternatively,
      Plaintiff contends that any exception to homestead protection would
      only apply to that undetermined part of the $660,000 lien created by the
      Final Judgment that was spent for “purchase” and not for that
      undetermined portion that was spent for “preservation” or
      “improvement.” Plaintiff contends that, if an issue at all, that a factual
      determination must be made of the amount of the $660,000 lien created

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      by the Final Judgment is for “purchase” money and an exception to the
      homestead protection against forced sale.
      Defendants contend that the issue of homestead is immaterial in this
      case. Moreover, Defendants contend that Plaintiff is now precluded by
      claim preclusion and issue preclusion doctrines from obtaining a factual
      determination, redetermination, or allocation of the jury’s findings in
      Cause No. 11CV325 that Defendant Wiggins spent $660,000 to
      “purchase, preserve, and improve the [P]roperty.” Defendants contend
      that this Court may rule as a matter of law that any homestead
      protection would not prevent the entry of the Foreclosure under the
      purchase money exception.
Attached to the joint motion were two stipulated exhibits:

      Exhibit A (stipulated facts)
      Exhibit B (stipulated record)
             exhibit 1 (jury verdicts in Cause No. 11CV0325),
             exhibit 2 (final judgment in Cause No. 11CV0325),
             exhibit 3 (Fourteenth Court of Appeals’ dismissal of Kelly’s
             appeal from final judgment in Cause No. 11CV325),
             exhibit 4 (Fourteenth Court of Appeals’ dismissal of Wiggins’
             appeal from final judgment in Cause No. 11CV325),
             exhibit 5 (order of judicial foreclosure in Cause No. 11CV325
             dated June 12, 2014),
             exhibit 6 (trial court’s findings of fact and conclusions of law in
             Cause No. 11CV325), and
             exhibit 7 (sheriff’s deed to Wiggins dated January 12, 2015).
Also, in March 2017, Kelly filed an alternative motion for factual determination on
the remaining title issues. In that motion, Kelly restated the contested issues filed in
the joint motion for judgment.

      On May 15, 2017, the trial court entered Final Judgment against Kelly and in
favor of Wiggins and Hammaker, stating as follows:

            (1) The June, 2014 post-judgment Order of Judicial Foreclosure
      was entered by the Court to foreclose the lien on the Property created
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       by the June 22, 2102 Final Judgment in Cause No. 11CV0325, Amelia
       V. Kelly v. Matthew D. Wiggins, Jr. and D.L. Hammaker, in the 122nd
       Judicial District, Galveston County, Texas;
             (2) Since the lien was determined to be for the purchase,
       preservation, and improvement of the Property, no “homestead
       protection” precluded entry of the 2014 post-judgment Order of
       Judicial Foreclosure and the Court need make no determination of fact
       and may rule as a matter of law.
Additionally, Kelly’s possession claims and Wiggins’ and Hammaker’s
counterclaims were dismissed without prejudice as per the parties’ stipulations.
Kelly’s alternative motion for factual determination on the title issues was denied.

       In June 2017, Kelly filed this appeal, challenging the Final Judgment and the
denial of her alternative motion for factual determination.

B.     Proceedings concerning the property

       The disputes between the parties have reached several different forums over
the course of six years, including:

      Amelia V. Kelly v. Matthew D. Wiggins, Jr. and D.L. Hammaker, Cause No.
       11-CV-0325, in the 122d Judicial District, Galveston (final judgment).
          o Amelia V. Kelly v. Matthew D. Wiggins, Jr. and D.L. Hammaker, Cause
            No. 14-12-00687-CV, 2012 WL 5247354, at *1 (Tex. App.—Houston
            [14th Dist.] Oct. 23, 2012) (appeal dismissed).
          o Matthew D. Wiggins, Jr. and D.L. Hammaker v. Amelia V. Kelly, Cause
            No. 14-12-00710-CV, 2013 WL 85083, at *1 (Tex. App.—Houston
            [14th Dist.] Jan. 8, 2013) (appeal dismissed).
          o In re Amelia V. Kelly, Cause No. 14-14-00789, 2014 WL 5492809, at
            *1 (Tex. App.—Houston [14th Dist.] Oct. 30, 2014, orig. proceeding)
            (relator’s request to compel trial judge to vacate orders pertaining to
            motion by real party in interest to enforce final judgment in underlying
            litigation by foreclosure of relator’s property was denied).
          o In re Amelia V. Kelly, Cause No. 14-14-00944-CV, 2014 WL 7524979,
            at *1 (Tex. App.—Houston [14th Dist.] Nov. 26, 2014, orig.

                                          9
              proceeding) (relator’s second petition for mandamus, which challenged
              the same orders as in prior petition, was denied).
           o Amelia V. Kelly v. Matthew D. Wiggins, Jr. and D.L. Hammaker, Cause
             No. 14-14-00605-CV, 466 S.W.3d 324, 327-330 (Tex. App.—Houston
             [14th Dist.] 2015, no pet.) (dismissing appeal for lack of jurisdiction
             because “post-judgment orders made for the purpose of enforcing or
             carrying into effect a prior judgment are not subject to appeal because
             they are not final judgments”).
      In re Amelia V. Kelly, Cause No. 12-80534, in the United States Bankruptcy
       Court for the Southern District of Texas, Galveston Division.
           o In re Kelly, Cause No. 12-80534-G3-7, 2013 WL 6798894, at **5-6
             (S.D. Tex. Dec. 19, 2013), supplemented by 2014 WL 1330897, at **2-
             3 (S.D. Tex. Apr. 1, 2014) (bankruptcy court held Wiggins liable to
             estate for $155,502, which represented reasonable rental total, less
             taxes paid).
           o In re Kelly, 643 Fed. Appx. 400, 404-05 (5th Cir. Apr. 12, 2016)
             (affirmed bankruptcy court’s opinion, as modified, to award $0 to
             trustee as damages for trespass and all other aspects affirmed after
             noting Wiggins waived res judicata defense by failing to raise before
             bankruptcy court).
      Amelia V. Kelly v. Matthew D. Wiggins, Jr. and D.L. Hammaker, Cause No.
       13-cv-1392, in the 122nd Judicial District, Galveston (final judgment entered
       May 15, 2017, in favor of Wiggins and Hammaker and that Kelly take
       nothing).
           o Amelia V. Kelly v. Matthew D. Wiggins, Jr. and D.L. Hammaker, Cause
           No. 14-17-00541-CV (Tex. App.—Houston [14th Dist.] 2017) (current
           pending appeal).
                                    II.    Analysis

A.      Appellant’s Issues

        In her brief, Kelly presents the following eight issues:

        1.     Because the new, judicial [sic] created lien was imposed upon
        the property years after Ms. Kelly’s claim to homestead protection
        arose, did the trial court err in granting summary judgment as a matter
        of law in the instant case without allowing Ms. Kelly to present her

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homestead defense?
2.    Because Wiggins’ deed of trust was expressly voided by the prior
judgment and replaced by a new, judicially created lien subject to a
homestead defense, was the trial court’s order granting summary
judgment as a matter of law error because the judicially created lien did
not include exempted amounts or, alternatively, because the amounts
that might qualify under an exemption to the bar on forced sale was not
determined?
3.     Because no exception to the Texas Constitution’s bar on the
forced sale of a homestead was established, did the trial court err in
ruling as a matter of law that an exemption from the constitutional bar
applied?
4.    Did the trial court err in granting summary judgment as a matter
of law because fact issues remained regarding homestead and what
amount, if any, of the new, judicially created lien was solely attributable
to “purchase” money and not attributable to “preservation” or
“improvement”?
5.     Did the trial court err by impermissibly aiding the [sic] Wiggins
to reach what was exempt property of Ms. Kelly or to reach property
subject to a claim of exemption without a trial on the merits of the claim
of exemption?
6.     Did the trial court err in allowing the judicial foreclosure to stand
without requiring Wiggins to remove the $1,000,000 mortgage lien
Wiggins had caused to burden title to Ms. Kelly’s homestead, which
would effectively chill any foreclosure sale upon the $660,000.00
judicially created lien?
7.     Did the trial court err in granting judgment as a matter of law in
favor of Defendants because the stipulated facts and record were legally
and factually insufficient to support the judgment?
8.     Did the trial court deprive Ms. Kelly of her constitutional right
to a jury trial on contested facts and deprive her of her right to own
property in violation of her procedural and substantive due process
rights?

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B.    Collateral Attacks

      Kelly’s issues constitute collateral attacks on the 2012 final judgment in 11-
CV-325. “A collateral attack is an attempt to avoid the binding force of a judgment
in a proceeding not instituted for the purpose of correcting, modifying, or vacating
the judgment, but in order to obtain some specific relief which the judgment
currently stands as a bar against.” Browning v. Prostok, 165 S.W.3d 336, 345–46
(Tex. 2005). A collateral attack is impermissible if it is instituted to interpret a prior
judgment entered by the same court or another court of coordinate jurisdiction. See,
e.g., Martin v. Dosohs I, Ltd., 2 S.W.3d 350, 352 (Tex. App.—San Antonio 1999,
pet. denied) (holding that, in Texas, a litigant may not use a declaratory judgment
suit to interpret a judgment of the same or another court); see also Cohen v. Cohen,
632 S.W.2d 172, 173 (Tex. App.—Waco 1982, no writ) (adhering to the Texas rule
that use of a declaratory judgment suit to interpret a judgment of the same or another
court is an impermissible collateral attack on the previous judgment). Kelly may not
challenge the validity of the 2012 final judgment in 11-CV-325 in this proceeding.
A direct appeal would have been the avenue to challenge the 2012 final judgment in
11-CV 325, but Kelly chose not to appeal, and the time for appealing that judgment
has long passed.

      Kelly has attempted to revisit title issues related to the property in multiple
forums. Kelly cannot raise these same issues by a new suit seeking declaratory
judgment as to issues in the 2012 final judgment in 11-CV-325. Accordingly, we
conclude that Kelly’s arguments regarding title to the property in this declaratory
judgment suit constitute impermissible collateral attacks on the final judgment made
in 2012 in 11-CV-325. See, e.g., Martin, 2 S.W.3d at 352; see also Cohen, 632
S.W.2d at 173. Therefore, the trial court properly granted judgment in favor of

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Wiggins and Hammaker, and properly denied Kelly’s alternative motion for factual
determination. As such, we overrule Kelly’s issues.

                                  III.     Conclusion

      The judgment of the trial court is affirmed.

                                         /s/    John Donovan
                                                Justice

Panel consists of Chief Justice Frost and Justices Donovan and Brown.

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