Court Opinion

ID: 3154454
Source: CourtListenerOpinion
Date Created: 2015-11-13 12:09:55.941369+00
Date Added: 2024-06-11T12:47:21.305784
License: Public Domain

COURT OF APPEALS
                       SECOND DISTRICT OF TEXAS
                            FORT WORTH

                           NO. 02-14-00368-CV

DOUGLAS ARNOLD HINES                               APPELLANT

                                    V.

DEUTSCHE BANK NATIONAL                             APPELLEES
TRUST COMPANY AS TRUSTEE
FOR CERTIFICATEHOLDERS OF
THE MORGAN STANLEY ABS
CAPITAL I INC. - TRUST 2003-
NC10 AND ITS MORTGAGE
SERVICERS, BANK OF AMERICA,
N.A., AND SELECT PORTFOLIO
SERVICING, INC.

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        FROM THE 153RD DISTRICT COURT OF TARRANT COUNTY
                   TRIAL COURT NO. 153-251485-11

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                      MEMORANDUM OPINION1

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    1
     See Tex. R. App. P. 47.4.
                                 I. INTRODUCTION

      This is a summary judgment appeal.        Appellant Douglas Arnold Hines

brought suit against Appellees Deutsche Bank National Trust Company, as

trustee for the Certificateholders of the Morgan Stanley ABS Capital I Inc., Trust

2003-NC10 (Deutsche Bank), and its mortgage servicers, Bank of America, N.A.

(BOA) and Select Portfolio Servicing, Inc. (Select Portfolio), alleging conversion

and fraud claims.    BOA, as the mortgage servicer for Deutsch Bank, filed a

counterclaim seeking foreclosure of Deutsch Bank’s lien on Hines’s property.

Appellees filed both a no-evidence motion for summary judgment and a

traditional motion for summary judgment as to Hines’s conversion and fraud

claims. Select Portfolio, as the successor mortgage servicer for Deutsch Bank,

filed a traditional motion for summary judgment on the foreclosure counterclaim.2

The trial court granted all three of Appellees’ motions for summary judgment. In

four issues, Hines argues that the trial court erred by granting the three motions

for summary judgment and abused its discretion by denying his motion for new

trial and plea in abatement. We will affirm.

      2
       BOA was Deutsch Bank’s mortgage servicer when BOA filed the
foreclosure counterclaim.     Select Portfolio was Deutsch Bank’s mortgage
servicer when Select Portfolio filed the traditional motion for summary judgment
on the foreclosure counterclaim.

                                         2
                   II. FACTUAL AND PROCEDURAL BACKGROUND

      On June 25, 2003, Hines took out a home equity loan with New Century

Mortgage Corporation (New Century) in the principal amount of $137,600. Hines

signed a note promising to repay that amount with interest and also signed a

security instrument granting a first lien to New Century against his property. New

Century subsequently assigned the note and security instrument to Deutsche

Bank. Countrywide Home Loans Servicing, LP (Countrywide) originally serviced

the loan for Deutsche Bank. BOA, and then later Select Portfolio, also serviced

the loan on behalf of Deutsch Bank.

      The security instrument required that Hines insure his home against

hazards. It also provided that if Hines failed to maintain the required insurance

coverage, the lender could obtain its own policy at Hines’s expense. Through the

security instrument, Hines agreed that a lender-placed policy “shall cover lender,

but might or might not protect [Hines], [Hines’s] equity in the Property, or the

contents of the Property, against any risk, hazard or liability.”

      Hines did not obtain his own insurance policy covering his property.

Therefore, Countrywide obtained a lender-placed policy with Balboa Insurance

Group (Balboa) to protect the lender’s interest in Hines’s property. Countrywide

specifically warned Hines that the policy “will only protect Countrywide’s interest

in [Hines’s] property” and that “[i]n the event of a claim, all payments will be made

to Countrywide.”

                                           3
      In June 2006, Hines’s home suffered water damage due to a ruptured

pipe. Hines paid a contractor $28,820 to repair the damage. Hines did not

provide Countrywide—Deutsch Bank’s mortgage servicer at the time—with a

copy of the contractor’s estimate, nor did he provide Countrywide a copy of the

contract between himself and the contractor. Hines admits that Countrywide

never told him that he would be reimbursed for the amount he paid the

contractor. Meanwhile, Balboa paid Countrywide $16,822.03 under the lender-

placed policy.

      Over a year after the water damage occurred, Hines stopped making

payments on the loan, ostensibly due to Countrywide and Deutsch Bank’s refusal

to reimburse him for the money he spent repairing his home.3 On September 12,

2007, Countrywide sent Hines a default notice and provided him an opportunity

to cure the default. As Hines did not cure the default, Countrywide accelerated

the note, as allowed under the terms of the note.

      On March 8, 2011, over four years after Balboa paid the insurance

proceeds to Countrywide, Hines sued Deutsch Bank alleging conversion and

fraud arising out of the payment of the insurance proceeds to Countrywide.

Hines later amended his petition to add BOA and Select Portfolio as defendants.

When BOA, acting as the mortgage servicer for Deutsch Bank, filed a

      3
      Appellees point out that Hines was also out of work during much of the
time period between the water damage and the date he stopped making
payments on the loan.

                                        4
counterclaim seeking to foreclose on Deutsch Bank’s lien on Hines’s property,

Hines answered, asserting the affirmative defenses of estoppel, quasi-estoppel,

waiver, and payment.

      Appellees filed traditional and no-evidence motions for summary judgment

as to Hines’s conversion and fraud claims, arguing that Hines was not entitled to

the insurance proceeds and that his claims were barred by limitations. Select

Portfolio, on behalf of Deutsch Bank, filed a traditional motion for summary

judgment on Deutsch Bank’s foreclosure counterclaim. Hines filed responses to

Appellees’ no-evidence motion for summary judgment and Select Portfolio’s

traditional motion for summary judgment, but he did not file a response to

Appellees’ traditional motion for summary judgment on his conversion and fraud

claims.   The trial court granted all three motions for summary judgment and

denied Hines’s plea in abatement that argued that Select Portfolio and its

counsel lacked standing to file the traditional motion for summary judgment on

the foreclosure counterclaim. The trial court then denied Hines’s motion for new

trial that was based upon the existence of newly discovered evidence.          This

appeal ensued.

          III. SUMMARY JUDGMENT AS TO THE FORECLOSURE COUNTERCLAIM

      In his first issue, Hines argues that the trial court erred in granting Select

Portfolio’s traditional motion for summary judgment that sought an order

authorizing the foreclosure of Deutsch Bank’s lien.

                                         5
                             A. Standard of Review

      We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,

315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the

light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could and disregarding evidence contrary to the

nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every

reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,

Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008).        A plaintiff is entitled to

summary judgment on a cause of action if it conclusively proves all essential

elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986).

      When the movant has established the absence of any genuine issue of

material fact as to its own cause of action, the nonmovant cannot defeat the

granting of a motion for summary judgment by merely pleading an affirmative

defense. Holmes v. Graham Mortg. Corp., 449 S.W.3d 257, 264 (Tex. App.—

Dallas 2014, pet. denied); Jones v. Legal Copy, Inc., 846 S.W.2d 922, 924 (Tex.

App.—Houston [1st Dist.] 1993, no pet.). Instead, the nonmovant “must come

forward with evidence sufficient to raise an issue of fact on each element of the

defense to avoid summary judgment.” Holmes, 449 S.W.3d at 264. Thus, once

the movant produces evidence entitling it to summary judgment on its own cause

of action, the burden shifts to the nonmovant to raise a fact issue on its

                                       6
affirmative defense. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984);

Tarrant Restoration v. TX Arlington Oaks Apartments, Ltd., 225 S.W.3d 721, 730

(Tex. App.—Dallas 2007, pet. dism’d w.o.j.).

                                    B. Analysis

       Hines does not contest that Select Portfolio conclusively proved all

essential elements of the foreclosure counterclaim. Rather, Hines argues that he

raised a fact issue on his affirmative defenses of estoppel, quasi-estoppel,

waiver, and payment.

       Hines’s first three affirmative defenses—estoppel, quasi-estoppel, and

waiver—are all predicated on the argument that Hines was entitled to the

proceeds of the lender-placed insurance policy. In short, Hines argues that the

fact that the insurance proceeds were not turned over to him should preclude

foreclosure. This argument fails because Hines was not entitled to the insurance

proceeds.      The security instrument—that was signed by Hines—specifically

provided that a lender-placed policy “shall cover lender, but might or might not

protect [Hines], [Hines’s] equity in the Property, or the contents of the Property,

against any risk, hazard or liability.” When it obtained the lender-placed policy,

Countrywide specifically warned Hines that the policy “will only protect

Countrywide’s interest in [Hines’s] property” and that “[i]n the event of a claim, all

payments will be made to Countrywide.”          As Hines was not entitled to the

insurance proceeds, his affirmative defenses of estoppel, quasi-estoppel, and

waiver fail.

                                          7
         Hines next contends that he raised a fact issue on his affirmative defense

of payment, pointing to the $28,820 that he paid for repairs and $19,535.37 that

was deposited by Hines into the registry of the 342nd District Court in a related

proceeding.4 The summary judgment evidence establishes that the amount due

on the loan as of the date Select Portfolio moved for summary judgment was

$244,646.28; thus, even if Hines was entitled to some type of credit for these

amounts, a deficiency would exist authorizing the order of foreclosure.

Consequently, we hold that Hines did not raise a fact issue on his affirmative

defense of payment.

         Because Hines did not raise a fact issue on any of his affirmative

defenses, the trial court properly granted Select Portfolio’s traditional motion for

summary judgment on the foreclosure counterclaim. We overrule Hines’s first

issue.

                   IV. SUMMARY JUDGMENT AS TO HINES’S CLAIMS

         In his second issue, Hines argues that the trial court erred by granting

Appellees’ no-evidence motion for summary judgment on his conversion and

fraud claims.      Appellees’ no-evidence motion for summary judgment and

Appellees’ traditional motion for summary judgment both sought judgment on

Hines’s claims for conversion and fraud, but Hines failed to file a response in the

         4
         During oral argument, all parties confirmed that they were not seeking any
relief from this court regarding the distribution of funds held in the registry of the
342nd District Court.

                                          8
trial court to Appellees’ traditional motion for summary judgment and makes no

argument on appeal challenging Appellees’ traditional motion for summary

judgment. Accordingly, because the granting of Appellee’s traditional motion for

summary judgment is not challenged on appeal, any trial court error in granting

Appellees’ no-evidence motion is harmless.5          That is, in the absence of a

challenge to the traditional summary judgment granted to Appellees on Hines’s

conversion and fraud claims, any error in the granting of a no-evidence motion

for summary judgment on Hines’s conversion and fraud claims is harmless. See

Tex. R. App. P. 44.1(a); accord Perez-Montes v. Live Oak Constr., Inc., No. 13-

13-00674-CV, 2015 WL 2352423, at *2 (Tex. App.—San Antonio May 14, 2015,

no pet.) (mem. op.) (holding that because the plaintiff failed to challenge the

grant of summary judgment based on no-evidence grounds, any error with regard

to the grant of summary judgment based on traditional grounds was harmless,

where both no-evidence and traditional motions sought the same relief). We

overrule Hines’s second issue.

      5
        At times in his briefing, Hines refers to “Appellees’ traditional motion for
summary judgment.” The context of those references makes clear, however, that
Hines is really discussing Select Portfolio’s traditional motion for summary
judgment on the foreclosure counterclaim. See, e.g., Hines’s Brief, p. 11 (“The
trial court granted Appellees’ Motion for a Traditional Summary Judgment on
their counterclaim for foreclosure . . . .”); Hines’s Reply Brief, p. 10 (“[I]n support
of his affirmative defenses serving to defeat the Appellees’ Traditional Motion for
Summary Judgment thereby precluding foreclosure . . . .”). Apart from these and
similar mischaracterized references, Hines does not discuss Appellees’
traditional motion for summary judgment in his briefing.

                                          9
                       V. HINES’S MOTION FOR NEW TRIAL

      In his third issue, Hines argues that the trial court abused its discretion by

denying his motion for new trial asserting the existence of newly discovered

evidence.

                                   A. The Law

      A party seeking a new trial based upon the existence of newly discovered

evidence must show: (1) the evidence has come to light since trial, (2) the failure

to discover the evidence sooner was not due to lack of diligence, (3) the

evidence is not cumulative, and (4) the evidence is so material it would probably

produce a different result if a new trial were granted.     Waffle House, Inc. v.

Williams, 313 S.W.3d 796, 813 (Tex. 2010). We review the denial of a motion for

new trial under an abuse of discretion standard. Id. A trial court abuses its

discretion if the court acts without reference to any guiding rules or principles,

that is, if the act is arbitrary or unreasonable. Low v. Henry, 221 S.W.3d 609,

614 (Tex. 2007); Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004).

                                   B. Analysis

      In his motion for new trial, Hines argued that he recently discovered

evidence of a class-action lawsuit against BOA and Balboa that involved alleged

kickbacks between the two entities as it related to lender-placed insurance

policies. Hines attached to his motion for new trial certain pleadings from the

class-action case as well as certain press releases relating to the settlement of

the class action. According to Hines, this evidence necessitated a new trial.

                                        10
       Appellees point out that the class action was filed over two years prior to

the court’s ruling on the summary judgment motions and therefore does not

constitute newly-discovered evidence. Appellees also argue that Hines has not

established that the “newly discovered” evidence is so material that it would

probably produce a different result if a new trial were granted.       See Waffle

House, 313 S.W.3d at 813.           The facts surrounding the class action do not

change the fact that Hines was not entitled to the insurance proceeds of the

lender-placed policy; his assertion that he was so entitled forms the basis of his

affirmative and defensive claims in this case. Hines expressed his desire during

oral argument to use the evidence in the class action to assert additional claims

against Appellees; but a motion for new trial based on newly-discovered

evidence may not be used for such a purpose.6 See Loera v. Interstate Inv.

Corp., 93 S.W.3d 224, 228 (Tex. App.—Houston [14th Dist.] 2002, pet. denied)

(“Appellants cannot rewrite their pleadings to allege new causes of action for the

first time in a motion for new trial.”).

       We hold that the trial court did not abuse its discretion by denying Hines’s

motion for new trial. We overrule Hines’s third issue.

       6
       Moreover, Hines conceded that he is a member of the class action and
intends to submit a claim pursuant to the class-action settlement.

                                           11
                         VI. HINES’S PLEA IN ABATEMENT

      In his fourth issue, Hines argues that the trial court erred by denying his

plea in abatement contending that Select Portfolio and its counsel lacked

standing to file any motion for summary judgment on behalf of Deutsch Bank.7

                             A. Standard of Review

      We review a trial court’s decision on a plea in abatement for an abuse of

discretion. Griffith v. Griffith, 341 S.W.3d 43, 53 (Tex. App.—San Antonio 2011,

no pet.); Shutter v. Wells Fargo Bank, N.A., 318 S.W.3d 467, 469 (Tex. App.—

Dallas 2010, pet. dism’d w.o.j.).    As stated above, a trial court abuses its

discretion if the court acts without reference to any guiding rules or principles,

that is, if the act is arbitrary or unreasonable. Low, 221 S.W.3d at 614; Cire, 134
S.W.3d at 838–39.

                                 B. Application

      Hines first argues that Select Portfolio lacked standing to file a motion for

summary judgment on behalf of Deutsch Bank.           Hines acknowledges in his

pleadings and brief, however, that Select Portfolio is the current mortgage

servicer for Deutsch Bank. As the mortgage servicer for Deutsch Bank, Select

Portfolio was authorized to administer foreclosure proceedings on behalf of

Deutsch Bank. See Tex. Prop. Code Ann. § 51.0025 (West 2014) (authorizing a

      7
        Although Hines’s plea in abatement is not in the record, the record
contains the reporter’s record of the hearing on Hines’s plea in abatement, and
the arguments contained in the plea in abatement can be gleaned from that
record.

                                        12
mortgage servicer to administer foreclosure proceedings on behalf of a

mortgagee).

         Hines next argues that Select Portfolio’s counsel did not have the authority

to file any motion for summary judgment on behalf of Deutsch Bank, as Deutsch

Bank had other counsel in this case.            According to Hines, Select Portfolio’s

counsel was required to obtain an order substituting it as counsel for Deutsch

Bank before it could file any motion on behalf of Deutsch Bank. Select Portfolio’s

counsel, however, was not acting on behalf of Deutsch Bank when it filed the

traditional motion for summary judgment, but was acting as counsel for Select

Portfolio, who was itself acting as the mortgage servicer for Deutsch Bank.

Moreover, if Hines did not believe that Select Portfolio’s counsel had the authority

to file any of the motions for summary judgment, Hines was required to file a

motion to show authority in accordance with Rule 12 of the Texas Rules of Civil

Procedure. See Tex. R. Civ. P. 12; Tanner v. Black, 464 S.W.3d 23, 26 (Tex.

App.—Houston [1st Dist.] 2015, no pet.) (“Rule 12 has long been the exclusive

method for questioning the authority of an attorney to bring a suit.”).

         Based on the foregoing, we hold that the trial court did not abuse its

discretion in denying Hines’s plea in abatement. We thus overrule Hines’s fourth

issue.

                                   VII. CONCLUSION

         Having overruled Hines’s four issues, we affirm the trial court’s judgment.

                                           13
                                       /s/ Sue Walker
                                       SUE WALKER
                                       JUSTICE

PANEL: GARDNER, WALKER, and GABRIEL, JJ.

DELIVERED: November 12, 2015

                               14