Court Opinion

ID: 4071581
Source: CourtListenerOpinion
Date Created: 2016-09-30 02:10:22.296371+00
Date Added: 2024-06-11T14:32:17.200407
License: Public Domain

ACCEPTED
                                                                                         03-13-00123-cv
                                                                                                6244464
                                                                             THIRD COURT OF APPEALS
                                                                                        AUSTIN, TEXAS
August 11, 2015                                                                    7/27/2015 9:32:05 PM
                                                                                      JEFFREY D. KYLE
                                                                                                 CLERK

                              No. 03 – 13 – 00123 - CV
                                                                      RECEIVED IN
                                                                 3rd COURT OF APPEALS
                                                                     AUSTIN, TEXAS
                              In The Court Of Appeals            7/27/2015 9:32:05 PM
                       For The Third Court Of Appeals District     JEFFREY D. KYLE
                                   Austin, Texas                         Clerk

                      FRANCIS WILLIAMS MONTENEGRO
                          And LYNDA WILLIAMS,
                                 Appellants

                                           v.

                           WELLS FARGO BANK, N.A.
                                  Appellee.

                     On Appeal from County Court at Law No. 2
                                Travis County, Texas
                      Trial Court Cause No. C-1-CV-12-006182

                  APPELLANT’S MOTION FOR REHEARING

                             Francis Williams Montenegro
             Counsel for Francis Williams Montenegro and Lynda Williams
                               Texas Bar No. 21533500
                                  1503-A E. 13th St.
                                 Austin, Texas 78702
                              Telephone: (512) 554-2812
                          email: montenegrolaw@gmail.com

                        ORAL ARGUMENT REQUESTED

                             Motion for Rehearing, p. 1 of 18
                    Identity of Parties and Counsel

Appellants:
Francis Williams Montenegro
Lynda Williams
Appellants’ Counsel:
Francis Williams Montenegro
State Bar No. 21533500
1503-A E. 13th Street
Austin, Texas 78702
Telephone: (512) 554-2812
Email:       Montenegrolaw@gmail.com

Appellee:
Wells Fargo Bank, NA
Appellee’s Counsel:
Kirk A. Schwartz
Blake Henshaw
H. Gray Burks, IV
SHAPIRO SCHWARTZ, LLP
State Bar No. 24004908
5450 Northwest Central, Suite 307
Houston, TX 77092
Telephone: (713) 933-1541
            (713) 933-1542
Facsimile: (847) 879-4854
Email:      Kschwartz@logs.com
            bhenshaw@logs.com
            gburks@logs.com

                       Motion for Rehearing, p. 2 of 18
                        CAUSE NO. 03-13-00123-CV

FRANCIS WILLIAMS MONTENEGRO §                    IN THE COURT OF APPEALS
 and LYNDA WILLIAMS,                               §
      Appellants            §
                            §
vs.                         §                    THIRD APPEALS DISTRICT
                            §
WELLS FARGO BANK, N.A.      §
      Appellee              §                    AUSTIN, TEXAS

              APPELLANT’S MOTION FOR REHEARING

TO THE HONORABLE THIRD COURT OF APPEALS:

      Appellants Francis Williams Montenegro and Lynda Williams, by and

through their undersigned attorney of record, move this court to reconsider

its original opinion which affirmed the judgment of the trial court. The trial

court had granted Appellees’ Amended Motion for Summary Judgment in

their action for forcible detainer.

                   INTRODUCTION: Questions Presented

      1.     The case presents two important questions. One, whether the

trial court could determine which party had the superior right of possession

without resolving the title dispute between the parties. If not, the trial court

did not have subject matter jurisdiction, because the justice court, and hence

the county court-at-law on appeal, do not have jurisdiction to resolve title

                          Motion for Rehearing, p. 3 of 18
disputes, Aguilar v. Weber, 72 S.W.3d 729, 731 (Tex.App.--Waco 2002, no

pet.). Two, whether a reasonable juror could have found that Wells Fargo

failed to prove that it had the superior right to possession. If so, it was

unlawful for the trial court to grant summary judgment, thereby denying the

litigants the right to have a jury hear their case (Tex.R.Civ.Proc 744).

            “If the property is sold pursuant to this Section 22....”

      2.     The court of appeals states that the trial court had jurisdiction,

despite the title dispute in this case, “[b]ecause the deed of deed of trust

permitted nonjudicial foreclosure and because the foreclosure under the deed

of trust created a landlord and tenant-by-sufferance relationship between the

parties.” Yet the deed of trust permits nonjudicial foreclosure only if certain

conditions, including one that the Lender must offer the Borrower the

opportunity to cure, are first first met. The applicable provision, Section 22,

provides:

      “Lender shall give notice to Borrower prior to acceleration
      following Borrower's breach … The notice shall specify: (a) the
      default; (b) the action required to cure the default; (c) a date … by
      which the default must be cured; and (d) that failure to cure the
      default on or before the date specified in the notice will result in
      acceleration of the sums secured by the Security Instrument and
      the Sale of the Property. The notice shall further inform Borrower
      of the right to reinstate after acceleration.... If the default is not
      cured on or before the date specified in the notice, Lender … may
      … invoke the power of sale....”
                         Motion for Rehearing, p. 4 of 18
      “If the property is sold pursuant to this Section 22, Borrower or
      any person holding possession of the Property through Borrower
      shall immediately surrender possession of the Property to the
      purchaser at that sale. If possession is not surrendered, Borrower
      or such other person shall be a tenant at sufferance and may be
      removed by writ of possession or other court proceeding.”
      (Emphasis added.) [C.R. 59]

The plain language of Section 22 is that the Lender shall give the borrower

an opportunity to cure an alleged default prior to foreclosure. An ordinary

person—a juror, or a party to the agreement—may reasonably interpret the

clause, “If the property is sold pursuant to this Section 22...,” to mean, “if

the provisions of Section 22 regarding the sale are followed.” A reasonable

understanding of Section 22 is that if notices of alleged default are provided,

and if opportunity to cure the default is made, but there still remains a

default, then, and only then, the lender may foreclose upon the property.

      3.     Courts have interpreted this clause however, to mean that even

if the provisions of Section 22 are not followed, even an unlawful

foreclosure could still be “pursuant to Section 22” for purposes of eviction,

see, for example, Bierwirth v. AH4R I TX, LLLC, No. 01-13-00459-CV

(Tex.App.--Houston [1st], October 30, 2014. And what's more, in granting

summary judgment, the court has interpreted the clause as a matter of law,

                         Motion for Rehearing, p. 5 of 18
without reference to what the parties may have meant. Courts in such cases

in are effect saying, there is no other reasonable way to interpret it.

      4.     What borrower with the legal capacity to contract would agree

to such an unconscionable provision? If before they signed, the lender

spelled it out: “Now, Section 22 here says that we will give you notice

before we foreclose, and that you'll have an opportunity to get caught up if

you're behind in your payments. But after that, if we still have to foreclose,

you're going to have to move out, and if you don't, you'll be what's called a

'tenant at sufferance,' and we can have you evicted. Now that's what it says.

But, that's not really what it means. See, even if we don't have the legal right

to foreclose, we have the power to. And if we exercise that power, no matter

how unlawful we're being, it doesn't matter if we let you get caught up on

your payments or not. We can kick you out if we don't tell you we think

your behind in your payments or not. Please go ahead and sign here, and

what you're saying we can evict you anyway. We might be wrong, but we're

not going to have to prove it before we kick you out. We can get you and

your family out of your home in three days.” Where do I sign?

      5.     In what other areas of law are contract provisions interpreted by

courts so contrary to their plain language, and so contrary to what a

                         Motion for Rehearing, p. 6 of 18
reasonable person would agree to? Generally, what the parties understand a

contractual provision to mean, as manifested by the language of the

provision, determines its meaning; if the language is subject to more than

one interpretation, determining the parties’ intent is a question for the trier of

fact, and summary judgment should not be granted, Coker v. Coker, 650
S.W.2d 391 (Tex. 1983); Chapman v. Abbot, 251 S.W.3d 612 (Tex.App.—

Houston [1st Dist.] 2007).

      6.     In the context of foreclosures, the Texas Supreme Court has

written, “If the meaning of a term in an acceleration clause is open to

reasonable doubt, it should be construed to avoid acceleration…” Shumway

v. Horizon Credit Corporation, 801 S.W.2d 890, 893 (Tex. 1991). There is

no reason to demand a far lesser standard when the acceleration clause is

used for the purposes of eviction. In a concurring opinion in Shumway,

Justice Mauzy, writing that “equity demands … a reasonable opportunity to

cure any default” before a mortgage note is accelerated, wrote: “To hold

otherwise places this court in the position of enforcing a contract that ‘no

man in his senses and not under delusion would make on the one hand, and

[which] no honest and fair man would accept on the other,’” Id. at 896.

                          Motion for Rehearing, p. 7 of 18
      7.     The summary judgment process should not be used to deprive

litigants of their right to a jury to resolve disputed questions of fact, Cedyco

Corp. v. Whitehead, 253 S.W.3d 877, 879 (Tex.App.—Beaumont 2008). It

should be noted that Montenegro v. Ocwen, 419 S.W.3d 561 (Tex.App—

Amarillo 2014, pet. den'd), the title case parallel to the present one, did not

hold that the foreclosure in the present case was lawful, because the court

did not settle the issue as to whether Nguyen had been provided the

foreclosure notices required by Section 22 or by the law. The court instead

held that Montenegro had waived the issue on appeal, Id. at 571, 572.

Appellant Williams was not a party to Montenegro v. Ocwen. The issue,

then, has not been fully and fairly litigated.

      8.     When a court grants summary judgment because of the very

existence of such a clause in the deed of trust, without regard to how the

parties understood the clause; when the court reads out essential parts of the

clause and refuses to consider whether the foreclosure sale was even legal—

as if someone would agree to be evicted based upon an illegal sale of their

home!--courts have deprived litigants of their right to have a jury hear the

facts of their cases. Without due process of law, they have allowed people to

be dispossessed of their homes.

                          Motion for Rehearing, p. 8 of 18
       Montenegro v. Ocwen Loan Servicing, LLC: Montenegro's ownership

           interest derived from his payment relationship with Ocwen.

      9.      In Montenegro v. Ocwen Loan Servicing, LLC, 419 S.W.3d 561

(Tex.App—Amarillo 2014, pet. den'd), the title case parallel to this one, the

Seventh Court of Appeals did not hold that Appellant Montenegro had not

shown an ownership interest in the property. Rather that court determined

that his ownership interest derived directly from his payment relationship

with Ocwen, the lender’s agent, rather than as a successor in interest to Vinh

Nguyen, Id. at 568.

      10.     This is significant on the disputed issue in the present case as to

whether or not Appellants were tenants at sufferance. The court in the

present case found it “indisputable” that Appellants held possession of the

property through Vinh Nguyen, and thus were tenants at sufferance per

Section 22 of the deed of trust. However, the court in Montenegro v. Ocwen

found that Montenegro's warranty deed merely purported to be a transfer

from Nguyen; the court found that the power of attorney which purported to

authorize Diem Thi Nguyen to execute the deed of trust for Nguyen was

ineffective, Id. at 568.     The court did find, however, that Montenegro

provided sufficient evidence of ownership based upon his making payments

                           Motion for Rehearing, p. 9 of 18
for the property directly to Ocwen, Id. A reasonable inference is that

Appellant's did not hold possession from Vinh but from Ocwen.

      11.    Movant/ Appellee itself raised this issue by a judicial admission

—a “waiver of proof” --in its summary judgment pleadings. In its Amended

Motion for Summary Judgment, Appellee alleged, “On July 3, 2003, some

individual, not Vinh Nguyen, purported to convey the Property to Francis

Williams Montenegro,” C.R. 34. A judicial admission, even in the pleadings,

is a “waiver of proof,” Galvan v. Public Utilities Bd, 778 S.W.2d 580, 583

(Tex.App.--Corpus Christi 1989), and thus Appellants were relieved of any

obligation to offer their own evidence on the issue, Id.

      12.    As nonmovants for summary judgment, Appellants on this

issue, and as nonmovants for summary judgment, they are to be given the

benefit of the admission and of the inference, Nixon v. Mr. Property

Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). A reasonable juror

could find that Movant/Appellee did not prove that Appellants possessed the

property through the Borrower rather than directly through Montenegro's

relationship with Ocwen.

     There is no evidence that Wells Fargo had obtained a security lien

                        Motion for Rehearing, p. 10 of 18
      13.    Movant/Appellees offered no evidence to show that Wells

Fargo had the power to foreclose the security lien of the deed of trust,

because there is no evidence that Wells Fargo obtained such a lien. The

substitute trustee's deed, which purported to convey the property to Wells

Fargo Bank, provides, “Whereas, it is provided in the deed of trust that

failure to make any of the payments … shall, at the option of Wells Fargo

Bank, N.A. …” (emphasis added). A reasonable juror after reading that

provision may then look at the deed of trust, but would look in vain for any

mention of Wells Fargo Bank. No matter how thoroughly the juror reviewed

Appellee's/Movant's evidence, the juror would find no evidence in the record

that Wells Fargo Bank acquired a security lien or any other interest in the

property giving it the power to foreclose. A reasonable juror may that there

is insufficient evidence to conclude that a foreclosure by Wells Fargo Bank

was of a lien superior to Appellants' rights to possession.

       The trial court had no jurisdiction over Williams’s adverse possession

                                    claim.

      14.    Montenegro v. Ocwen, supra, did not address Lynda Williams’s

adverse possession claim at all. The court in the present case skirts this title

issue by stating that she failed to point to evidence which raised a fact issue

                        Motion for Rehearing, p. 11 of 18
on the claim. That is not true. The summary judgment response dated

December 17, 2012, filed with leave of the trial court, C.R. 225, points out:

      “Wells Fargo avers that the Property was purportedly [emphasis
      added] conveyed to Montenegro 'without receiving permission
      from Wells Fargo' (Plaintiffs Amended Motion for Summary
      Judgment, paragraph 2). Wells Fargo further argues that 'his'
      [Montenegro's] Warranty Deed from the borrower, Vinh Nguyen'
      is evidence that Montenegro and/or Williams occupied the
      Property'. (Id, paragraph 12).... Under Wells Fargo's analysis, a
      reasonable inference is that Montenegro and/or Williams
      occupied the Property since 2003 'without receiving permission
      from Wells Fargo.'”

      15.    Moreover, by focusing on whether Appellants raised fact issues

on the affirmative defense, the court of appeals is attempting to resolve the

merits of the adverse possession claim, which it was without jurisdiction to

do, Bynum v. Lewis, 393 S.W.3d 916 (Tex.App.--Tyler 2013).

               The resolution of title issues in the present case

      16.    Appellee Wells Fargo, in arguing that the trial court did not

have jurisdiction of the case until February 16, 2012 (over a year after it

filed the case), pointed out that the issues of title and possession were

“intertwined” because Appellant Montenegro was “claiming title through a

deed separate from the deed foreclosed by Plaintiff [Appellee Wells Fargo]”,

C.R. 127, citing Dormady v. Dinero Land & Cattle Co., LC, 61 S.W.3d 555,

557 (Tex.App.--San Antonio 2001, pet. dism'd w.o.j.). Indeed, there were no
                        Motion for Rehearing, p. 12 of 18
disputed elements of material fact, the court of appeals was continually

required to resolve title questions in Wells Fargo's favor. In determining

whether Wells Fargo had presented sufficient evidence of ownership of the

property, the court implicitly sanctions the validity of the contested

Substitute Trustee's Deed. The court further determines that Wells Fargo's

right to possession derived from a lien superior to Montenegro's warranty

deed or Williams' possession of the property, resolving those title questions

in Appellee's favor (even in the absence of evidence showing that Wells

Fargo had ever obtained that lien).

  The court cannot determine if there was sufficient evidence of ownership

     without resolving the contested title issue in favor of Wells Fargo.

      17.    The court states that Wells Fargo did not have to prove its own

deed was valid, merely that its deed provided evidence of an ownership

interest. The basis of the title contest was whether the substitute trustee's

deed was valid or whether it was not. It was not “partially” valid. The very

question of whether a deed can be “partially” valid, or if an invalid deed can

itself provide only a partial ownership interest, requires consideration of

issues not within the jurisdiction of a forcible detainer case.

                         Motion for Rehearing, p. 13 of 18
       18.    Are the courts saying that in a forcible detainer case, any

recorded deed, whether lawful or not, provides unassailable evidence of an

ownership interest—evidence that cannot be challenged by the other party?

If the recorded substitute trustee's deed is erroneous or simply fraudulent, are

the homeowners defenseless in an eviction action?

       19.    The better rule, if the trial court is to have jurisdiction at all,

was stated in Haith v. Drake, 596 S.W.2d 194, 197 (Tex.App.--Houston [1st

Dist] 1980): “It is ... well settled that the defendant, in an action of forcible

detainer, may prove any facts not inconsistent with the title under which he

went into possession of the premises which show that his right to occupancy

existed when the suit was brought, although such facts may be connected to

the title.”

       20.    Even if the substitute trustee's deed is sufficient evidence of

ownership, it alone cannot prove of ownership as a matter of law. Summary

judgment is inappropriate when there is evidence that the substitute trustee's

deed title was invalid, either because the court is without jurisdiction or

because the disputed fact matter should be given to the jury in a court with

jurisdiction, such as a trespass to try title case.

                          Motion for Rehearing, p. 14 of 18
      21.   In determining that Wells Fargo's right to possession derived

from a lien superior to Montenegro's warranty deed or Williams' possession

of the property, the court implicitly determined that the original lien was

valid; that Wells Fargo obtained its interest in that lien lawfully; and that

Appellants respective claims to the property were inferior. To determine a

rule for priority of interest, the court of appeals must reference a case,

Cervantes v. Bayview Loan Servicing, LLC, No. 14-12-00157-CV, 2012 WL
6017712, at *2 (Tex.App.--Houston [14th Dist.] Dec. 4, 2012, no pet.), which

involved only title, not right to possession. But Cervantes does not describe

an immutable law to be rigidly applied in every case; there may not be

distinctions among various cases. Even Cervantes acknowledges that the

“first in time, first in sight” rule applies “ordinarily” (emphasis added),

implying there may be exceptions. Cervantes itself is distinguishable from

the present one because there is no evidence until after foreclosure that

Appellee Wells Fargo had any lien on the property.

      22.   The trial court in a forcible detainer action does not have

jurisdiction to consider the exceptions and distinctions among title cases,

Texas Rules of Civil Procedure 510.3(e) (former Rule 746); Texas Const.

Art. V, Sec. 8; Tex. Gov't Code, Section 26.043. If a court cannot perform

                        Motion for Rehearing, p. 15 of 18
its duty to consider how a rule of law applies to the particular facts of a

case, it does not have jurisdiction of the issues; if the court does consider

how the law applies to a case, it has assumed jurisdiction of the issues.

       23.    It's a one-two punch for homeowners in eviction cases after

foreclosure: the court may not resolve a title dispute, but summary judgment

is granted presuming as a matter of law the validity of the title and the

superiority of the foreclosing lien to the residents' possession. When the

superiority of the foreclosing lien can only be determined by implicitly

deciding that the occupants' title claim is inferior, as in the present case, a

trespass to try title action in the district court, rather than forcible detainer in

the justice court, should be the appropriate action. At the very least, courts in

forcible detainer actions should not decide as a matter of law that the

language of the deed of trust makes the occupants tenants at sufferance as a

matter of law, without reference to the plain language of the provision or to

what the parties could reasonably have understood. That issue should go to

the jury.

                                    PRAYER

       Wherefore, premises considered, Appellant prays this honorable court

to reconsider its original opinion in this case, and reverse the order of the

                          Motion for Rehearing, p. 16 of 18
trial court granting Appellees' motions for no-evidence and traditional

summary judgment, and to remand the cause to the trial court for new trial.

                                        Respectfully submitted,

                                        /s/ Francis Williams Montenegro
                                        Francis Williams Montenegro
                                        Counsel for Appellants
                                        Texas Bar No. 21533500
                                        1503-A E. 13th Street
                                        Austin, TX 78702
                                        (512) 554-2812
                                        email: montenegrolaw@gmail.com

                        Motion for Rehearing, p. 17 of 18
                  CERTIFICATE OF COMPLIANCE

      I, Francis Williams Montenegro, Appellant, hereby certify that the

word count for this document, excluding the title page, identity of counsel

page, and certificates, as counted by Microsoft Word, is 3101.

                                        /s/ Francis Williams Montenegro
                                        Francis Williams Montenegro

                     CERTIFICATE OF SERVICE

      I, Francis Williams Montenegro, Appellant, hereby certify that a true

and correct copy of this Appellant’s Motion for Rehearing was on this 27th

day of July, 2015, delivered to counsel for Appellee, Shapiro Schwartz LLP,

by electronic service through CaseFileExpress, and by email to

bhenshaw@logs.com, Attn: Blake Henshaw.

                                        /s/ Francis Williams Montenegro

                                        Francis Williams Montenegro, Pro Se
                                        Counsel for Appellants
                                        Texas Bar No. 21533500
                                        1503-A E. 13th Street
                                        Austin, TX 78702
                                        (512) 476-1212
                                        Fax: (512) 476-3178
                                        email: montenegrolaw@gmail.com

                        Motion for Rehearing, p. 18 of 18