Court Opinion

ID: 9297271
Source: CourtListenerOpinion
Date Created: 2022-11-30 07:08:42.26993+00
Date Added: 2024-06-11T17:13:25.423932
License: Public Domain

Affirmed in part and Reversed in part and Opinion Filed November 28, 2022

                                               In The
                                 Court of Appeals
                          Fifth District of Texas at Dallas
                                      No. 05-19-01558-CV

                  YA QIN TONG AND STEPHEN CHU, Appellants
                                    V.
                    NATIONSTAR MORTGAGE LLC, Appellee

                   On Appeal from the 429th Judicial District Court
                                Collin County, Texas
                       Trial Court Cause No. 429-04255-2015

                            MEMORANDUM OPINION
                     Before Justices Molberg, Nowell, and Goldstein
                               Opinion by Justice Molberg

        In this home equity loan dispute, after a bench trial, the trial court entered a

take nothing judgment on the claims brought by appellants Ya Qin Tong and Stephen

Chu, who are married,1 against appellee Nationstar Mortgage LLC and awarding

Nationstar a total of $683,572.24 with post-judgment interest and a foreclosure of

its lien on the property in satisfaction of the judgment.2

    1
     The fact of Tong and Chu’s marriage was disputed below, but the trial court found that the two were
married prior to July 6, 2007. No party has challenged this finding on appeal.
    2
    See TEX. R. CIV. P. 309. The judgment stated this total amount consisted of $605,602.20 for the
amount due and owing under the note, $75,151.96 for attorney’s fees and expenses as allowed under the
        In five issues, based on what they describe as a constitutionally non-compliant

lien, appellants ask us to reverse the trial court’s judgment, order the trial court to

vacate the final judgment and order of foreclosure, and remand the case back to the

trial court to enter a judgment in their favor.

        For the reasons that follow, we reverse, with respect to both appellants, the

portions of the trial court’s judgment allowing foreclosure and render judgment that

Nationstar take nothing by way of those claims or the attorney’s fees claims

associated with foreclosure; reverse the amount of the attorney’s fee determination

against Chu on Nationstar’s note claim and remand to the trial court for a

redetermination of the amount of reasonable and necessary attorney’s fees due

Nationstar on its suit on a note against Chu; and, in all other respects, affirm the trial

court’s judgment.

                                          I. BACKGROUND
        In October 2015, Tong sued Nationstar and another party, Jane Doe,3

regarding property Tong claimed is a homestead she and Chu shared as husband and

wife since on or about February 16, 2007. Tong claimed that on July 6, 2007,

without her knowledge or consent, Chu obtained a $330,000 home equity loan from

note and security instrument, and $2,818.00 in taxable court costs. The court awarded post-judgment
interest at the yearly interest rate under the note of 7.375 percent.
    3
       Tong’s original petition included a negligence claim against Doe, a person identified as “the loan
officer who was responsible for filling out the forms, deed of trust, note, and for confirming and verifying
the information contained therein, which resulted in the encumbrance currently on [Tong’s] [p]roperty.”
The record contains no information showing Doe was ever served or answered, although the docket sheet
lists Doe as a pro se party and as one of three parties that filed a rule 11 agreement on August 7, 2017.
                                                   –2–
Metro Bank, N.A. and executed a security instrument purportedly establishing a first

lien against the property. Tong identified Nationstar as the current servicer and

purportedly the current holder of the deed of trust on the property.

        Against Nationstar, Tong asserted claims to quiet title and for declaratory

judgment, seeking, among other things, a judgment declaring that the deed of trust

in favor of Metro Bank, N.A. is void and unenforceable against the property and

declaring that the cloud on the property’s title is an invalid or unenforceable

infringement because the loan violates article XVI, section 50(a)(6)(A) of the Texas

Constitution and is void under section 50(a)(6)(Q)(xi) based on her allegation that

the lien was taken against homestead property without both spouses’ consent.

        Nationstar answered, generally denying Tong’s claims and asserting various

affirmative defenses. Later, Nationstar asserted counterclaims against Tong and

third-party claims against Chu.                Against Tong, Nationstar sought declaratory

judgment regarding the judicial foreclosure of an equitable or contractual

subrogation lien in the amount of $24,873.37,4 plus legal interest on that amount

from and after July 11, 2007, along with a related order of sale and judgment for its

    4
      In its original counterclaim against Tong, Nationstar claimed the note was subsequently negotiated to
Nationstar and claimed the lien securing the note was assigned to Nationstar. Nationstar also claimed the
settlement statement for the loan shows that $24,873.37 of the loan proceeds were used to pay off a prior
loan held by Wells Fargo Bank, N.A. and secured by a lien against the property. Nationstar alleged Metro
Bank paid $24,873.37 to satisfy and release that lien and that such payment was not gratuitous but made to
secure to Metro Bank and its successors and assigns a first lien position and the priority and security rights
of the first lienholder—apparently referring to Wells Fargo—which thus entitled Nationstar to be equitably
subrogated to the prior first lienholder’s rights. Additionally, Nationstar claimed that under section 24 of
the security instrument, it was contractually subrogated to the rights of the prior first lienholder.

                                                    –3–
attorney’s fees and collection costs pursuant to the terms of the note and security

instrument and Texas Civil Practice and Remedies Code sections 37.009 and 38.001.

       In Nationstar’s original third-party petition against Chu, Nationstar brought

claims for actual fraud, breach of contract,5 and suit on a note. Attached as exhibits

to that pleading were the note, security instrument, loan applications dated May 31,

2007, and July 6, 2007, and a home equity affidavit and agreement dated July 6,

2007. Nationstar claimed that in the loan applications and in the affidavit and

agreement, Chu stated he was unmarried and swore he did not have a spouse.

       Chu, in turn, filed third-party counterclaims against Nationstar and third-party

claims against two others, Katy Chen and Fiona Cheung. As with defendant Doe,

the record contains no indication that third-party defendants Chen and Cheung were

served or answered. According to Chu’s first amended third-party counterclaim,

Chu asserted against Nationstar counterclaims for negligence, negligent

undertaking, gross negligence, fraud, fraud in the inducement, negligent

misrepresentation, and, in the alternative as necessary, mutual and unilateral

mistake, suit to quiet title and suit to remove cloud on title, and breach of contract.

       About seven weeks before trial, Nationstar filed an amended counterclaim

against Tong and an amended third-party petition against Chu. Each of these

amended pleadings by Nationstar included a specific cause of action for judicial

   5
      In its breach of contract claim, Nationstar claimed Chu breached the affidavit and agreement by
refusing to indemnify and hold it harmless against the claims asserted by Tong in this lawsuit.
                                                –4–
foreclosure of the home equity lien. Tong and Chu moved to strike those pleadings,

and the court granted those motions in two separate orders signed on July 31, 2019.

        The case was tried to the bench on August 14, 2019. Tong, Chu, and

Nationstar appeared through counsel. A total of six attorneys appeared at trial, three

representing Tong and Chu, and three representing Nationstar. No other parties or

counsel participated. Five witnesses testified live or by deposition, and more than

forty exhibits were admitted into evidence.                        The court took the matter under

advisement at the conclusion of trial.

        On October 4, 2019, the trial court signed a final judgment in Nationstar’s

favor, ordering that Tong and Chu take nothing on their claims against Nationstar,

concluding a valid and enforceable lien existed on the property, granting Nationstar

a foreclosure of its lien on appellants’ homestead, and awarding Nationstar a total of

$683,572.24. The judgment stated, “This order disposes of all parties and all claims

and is a final, appealable judgment.”6 Appellants timely filed a motion for new trial,

    6
      Although the judgment does not refer to Tong’s claims against Doe or Chu’s claims against Chen and
Cheung, neither party questions that the judgment is final for purposes of appeal. We agree it is. First, the
judgment clearly and unmistakably pronounces its finality as to all claims and all parties. See Breitling Oil
& Gas Corp. v. Petroleum Newspapers of Alaska, LLC, No. 05-14-00299-CV, 2015 WL 1519667, at *3
(Tex. App.—Dallas Apr. 1, 2015, pet. denied) (mem. op.) (“Under Lehmann, a judgment is final “if and
only if either [1] it actually disposes of all claims and parties then before the court, regardless of its
language, or [2] it states with unmistakable clarity that it is a final judgment as to all claims and all parties.”)
(citing Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192–93 (Tex. 2001)). Second, as far as can be
determined from the record, Doe, Chen, and Cheung were never served with citation and did not answer.
In such circumstances, “the case stands as if there had been a discontinuance as to [the unserved parties],
and the judgment is to be regarded as final for the purposes of appeal.” Youngstown Sheet & Tube Co. v.
Penn, 363 S.W.2d 230, 232 (Tex. 1962) (concluding judgment was to be regarded as final for purposes of
appeal when it expressly disposed of all named parties except one who was never served with citation and
did not answer); see First Dallas Petroleum, Inc. v. Hawkins, 715 S.W.2d 168, 169–70 (Tex. App.—Dallas
1986, no writ) (stating that changes to civil procedure rules 161 and 162 were not intended to change

                                                       –5–
which the trial court denied. At appellants’ request, the court issued both initial and

supplemental findings of fact and conclusions of law, some of which we discuss in

the next section. Appellants timely appealed.

                      II. COURT’S FINDINGS AND CONCLUSIONS OF LAW
          Among the trial court’s findings and conclusions of law are the following:7

          FINDINGS OF FACT

          Establishment of the Lien Against the Property
          1.    On May 31, 2007, Stephen Chu (“Chu”) applied for a home-
          equity loan (the “Loan”) from Metro Bank, N.A. (“Metro Bank”)
          secured against the real property commonly known as 5124 Ambergate
          Lane, Dallas, Texas 75287, and more particularly described as follows:

                   LOT BLOCK 2/8738, OF OAK TREE, PHASE ONE, AN
                   ADDITION TO THE CITY OF DALLAS, COLLIN
                   COUNTY, TEXAS, ACCORDING TO THE PLAT
                   THEREOF RECORDED IN VOLUME H, PAGE 42, OF
                   THE MAP RECORDS OF COLLIN COUNTY, TEXAS
                   (“Property”).

          2.     When applying for the loan, among other things, Chu executed
          an initial Uniform Residential Loan Application (“Initial Application”).

          3.     At the closing of the Loan, Chu executed, among other
          documents, a Texas Home Equity Note (“Note”) payable to Metro Bank
          in the original principal amount of $330,000.00, a Texas Home Equity
          Security Instrument (“Security Instrument”) with Mortgage Electronic
          Registration Systems, Inc. (“MERS”) as the beneficiary.

          4.       Nationstar is the current owner and holder of the Note.

Youngstown rule and court perceived no policy reason to require formal notice of dismissal of an unserved
defendant when plaintiff proceeds to judgment against all other defendants without obtaining a severance).
Third, “any judgment following a conventional trial on the merits creates a presumption that the judgment
is final for purposes of appeal.” Vaughn v. Drennon, 324 S.W.3d 560, 561 (Tex. 2010) (per curiam) (citing
Ne. Indep. Sch. Dist. v. Aldridge, 400 S.W.2d 893, 897–98 (Tex. 1966)).
    7
        We have not included them all. For clarity, we retained the original numbering used by the trial court.
                                                      –6–
5.    The Security Instrument was validly assigned to Nationstar by an
Assignment of Deed of Trust on May 21, 2012.

6.    Chu has not made payments as due under the Note and is in
default.

Tong’s Consent to the Lien
7.    Prior to July 6, 2007, Ya Qin Tong (“Tong”) and Chu were
married, although Chu represented to the lender in several Loan
documents he signed that he was single at the time he obtained the Note.

8.    Regardless of Chu’s representations, Tong consented to the lien
that Chu granted in the Security Instrument.

Damages
20. The total amount owed on the Loan—including principal,
interest, and all other amounts—is $605,602.20.
21. In addition, Nationstar has incurred $75,151.96 in reasonable and
necessary attorney’s fees and $2,818.00 in taxable costs of court.

22. Pursuant to the Loan documents, those attorney’s fees and
taxable costs of court are also owed on the Loan.

23. Nationstar is further entitled to recover post-judgment interest at
the contractual rate of 7.357 percent.
24. Nationstar is entitled to foreclose on the Property to satisfy the
foregoing outstanding Loan debt.

Supplemental Findings of Fact
25. The Security Instrument created a lien against the Property to
secure repayment of the Loan.

26. Nationstar provided Chu timely notice of default under the Note,
and when default was not cured, Nationstar timely accelerated the Note
and made demand for payment in full.

                                  –7–
        CONCLUSIONS OF LAW

        Tong’s and Chu’s Quiet-Title Claims Against Nationstar
        1.    Nationstar has a valid, enforceable lien against the Property
        based upon the Security Instrument.

        ....

        Judicial Foreclosure
        1.    Nationstar is entitled to foreclose on its lien granted in the
        Security Instrument because Chu is in default under the Note.

                                               III. ISSUES
        Appellants raise the following five issues:

        1. Whether the trial court erred in its conclusion that Nationstar has a
        valid and enforceable lien on appellants’ homestead?8
        2. Whether the trial court erred by entering a judgment for foreclosure,
        even though Nationstar did not bring a claim for judicial foreclosure,
        and in the absence of a Rule 736 Application for nonjudicial
        foreclosure?

        3. Whether the trial court erred in rendering judgment in Nationstar’s
        favor because there is legally and factually insufficient evidence to
        support a finding that Nationstar is the current holder of the Note.
        4. Whether the trial court erred in rendering judgment in Nationstar’s
        favor because there is legally and factually insufficient evidence to

    8
      Appellants also claim this issue includes the following sub-issues: (a) there is no evidence to support
the trial court’s conclusion that Tong consented to the lien; (b) there is legally and factually insufficient
evidence to support the trial court’s theory of “constructive” consent, which in and of itself contradicts the
clear language of the Texas Constitution, Texas Supreme Court precedent, and renders the constitutional
protections separately afforded to each spouse meaningless; (c) the trial court’s conclusion that appellants’
suit for quiet title is barred by judicial estoppel defies well-established Texas Supreme Court precedents
that judicial estoppel cannot make an otherwise invalid lien valid; (d) even if judicial estoppel could bar
appellants’ claims in this case, Nationstar failed to present adequate factual and legal evidence to prove all
necessary elements for its judicial estoppel defense; and (e) the trial court’s conclusion that Tong was in
privity with Chu through marriage for purposes of judicial estoppel deprives her of her constitutionally
protected homestead rights and contradicts Texas Supreme Court precedent.
                                                    –8–
      support a finding the Security Instrument was validly assigned to
      Nationstar in May 21, 2012.

      5. Whether the trial court erred by awarding attorney’s fees to
      Nationstar because Nationstar did not prevail on any of its causes of
      action, which it did plead, against appellants.
      Nationstar disputes each of these issues and also presents a cross-point,

arguing, in relation to the second issue, that the trial court erred in striking its

amended pleadings that contained a specific claim for judicial foreclosure.

                             IV. REVIEW STANDARDS
      A party appealing from a nonjury trial in which the trial court made findings

of fact and conclusions of law should direct his attack on the sufficiency of the

evidence at specific findings of fact, rather than at the judgment as a whole. Shaw

v. Cty. of Dallas, 251 S.W.3d 165, 169 (Tex. App.—Dallas 2008, pet. denied)

(citation omitted). If we can fairly determine from the argument the specific finding

of fact which the appellant challenges, a challenge to an unidentified finding of fact

may be sufficient. Id. (citing Tittizer v. Union Gas Corp., 171 S.W.3d 857, 863

(Tex. 2005) (per curiam)). The trial court’s findings of fact “form the basis of the

judgment upon all the grounds of recovery and of defense embraced therein.” TEX.

R. CIV. P. 299.

      We review a trial court’s legal conclusions de novo. Walker v. Anderson, 232

S.W.3d 899, 908 (Tex. App.—Dallas 2007, no pet.). We evaluate those conclusions

independently to determine whether the trial court correctly drew the conclusion

from the facts. Id.
                                         –9–
      “A trial court’s findings of fact issued after a bench trial have the same weight,

and are judged by the same appellate standards, as a jury verdict.” Texas Outfitters

Ltd., LLC v. Nicholson, 572 S.W.3d 647, 653 (Tex. 2019) (citing Anderson v. City

of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991)); see Ramsey v. Davis, 261

S.W.3d 811, 815 (Tex. App.—Dallas 2008, pet. denied) (“In reviewing a trial court’s

findings of fact for legal and factual sufficiency of the evidence, we apply the same

standards we apply in reviewing the evidence supporting a jury’s answer.”) (citation

omitted); Shaw, 251 S.W.3d at 169 (“Findings of fact in an appeal from a nonjury

trial carry the same weight as a jury verdict and are reviewed under the same

standards that are applied in reviewing evidence to support a jury’s verdict.”). When

the appellate record contains a reporter’s record as it does in this case, findings of

fact are not conclusive on appeal if the contrary is established as a matter of law or

if there is no evidence to support the findings. Ramsey, 261 S.W.3d at 815 (citation

omitted).

      A party challenging the legal sufficiency of an adverse finding on an issue on

which it has the burden of proof must demonstrate on appeal that the evidence

establishes, as a matter of law, all vital facts in support of the issue. Dow Chem. Co.

v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam). When a party challenges

the legal sufficiency of the evidence to support an adverse finding on which it did

not have the burden of proof, the party must demonstrate that no evidence supports

                                        –10–
the finding. Graham Cent. Station, Inc. v. Peña, 442 S.W.3d 261, 263 (Tex. 2014)

(per curiam).

      In evaluating the legal sufficiency of the evidence to support a finding, we

view the evidence in the light most favorable to the finding, indulging every

reasonable inference supporting it. City of Keller v. Wilson, 168 S.W.3d 802, 822

(Tex. 2005). We “must credit favorable evidence if reasonable jurors could, and

disregard contrary evidence unless reasonable jurors could not.” Id. at 827. The

“final test for legal sufficiency” is “whether the evidence at trial would enable

reasonable and fair-minded people to reach the verdict under review.” City of Keller,

168 S.W.3d at 827. “A legal sufficiency challenge fails if more than a scintilla of

evidence supports the finding.” Texas Outfitters Ltd., LLC, 572 S.W.3d at 653

(citing Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960

S.W.2d 41, 48 (Tex. 1998)).

      In contrast, in determining factual sufficiency, we “must consider and weigh

all the evidence.” Dow Chem. Co., 46 S.W.3d at 242. A party challenging the

factual sufficiency of an adverse finding on an issue on which it has the burden of

proof must demonstrate on appeal that the evidence is so weak or the adverse finding

“is so against the great weight and preponderance of the evidence that it is clearly

wrong and unjust.” Id. When a party challenges the factual sufficiency of the

evidence on an adverse finding on which it did not have the burden of proof, the

party must demonstrate there is insufficient evidence to support the finding. Hoss v.

                                       –11–
Alardin, 338 S.W.3d 635, 651 (Tex. App.—Dallas 2011, no pet.). If we reverse a

trial court’s judgment for factual insufficiency, we must “detail all the evidence

relevant to the issue and clearly state why the jury’s finding is factually insufficient

or so against the great weight and preponderance of the evidence that it is manifestly

unjust” and “how the contrary evidence greatly outweighs the evidence supporting

the verdict.” Morris v. Wells Fargo Bank, N.A., 334 S.W.3d 838, 842–43 (Tex.

App.—Dallas 2011, no pet.) (citations omitted); see Dow Chem., 46 S.W.3d at 242

(to set aside verdict under these standards, court must “detail the evidence relevant

to the issue” and “state in what regard the contrary evidence greatly outweighs the

evidence in support of the verdict”); Harris Cty. v. Coats, 607 S.W.3d 359, 381 (Tex.

App.—Houston [14th Dist.] 2020, no pet.) (same; also noting court need not do this

when it affirms). The amount of evidence needed to affirm a judgment is far less

than the amount necessary to reverse one. Texas Champps Americana, Inc. v.

Comerica Bank, 643 S.W.3d 738, 744 (Tex. App.—Dallas 2022, pet. denied) (citing

Coats, 607 S.W.3d at 381).

      In applying these sufficiency standards, we remain mindful that this Court is

not a factfinder. See Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex.

1998). In a nonjury trial, the trial court is the sole judge of the credibility of the

witnesses and the testimony’s weight. Tate v. Commodore County Mut. Ins. Co.,

767 S.W.2d 219, 224 (Tex. App.—Dallas 1989, writ denied). The trial court may

                                         –12–
believe one witness and disbelieve others and may resolve any inconsistencies in a

witness’s testimony. McGalliard v. Kuhlmann, 722 S.W.2d 694, 697 (Tex. 1986).

      We will not disturb a trial court’s refusal to consider an amended pleading

unless the complaining party shows an abuse of discretion. European Crossroads’

Shopping Ctr., Ltd. v. Criswell, 910 S.W.2d 45, 53 (Tex. App.—Dallas 1995, writ

denied) (citing Hardin v. Hardin, 597 S.W.2d 347, 349 (Tex.1980); Clade v. Larsen,

838 S.W.2d 277, 280 (Tex. App.—Dallas 1992, writ denied)).

                                    V. ANALYSIS
      A.     Lien Validity and Judicial Foreclosure
      In their first issue, appellants argue, in part, that the lien is invalid because

Tong did not sign the security instrument and, even if Tong’s consent was not

required to be in writing, there is no evidence of her consent to the lien, written or

otherwise. They claim the trial court’s decision regarding the validity of the lien is

contrary to the law and unsupported by legally and factually sufficient evidence and

state, “Because the overwhelming weight of the evidence establishes that Tong had

no knowledge of the [l]ien, and never consented to it, and there’s no evidence to the

contrary, the trial court’s finding of consent is clearly erroneous.”

      In their second issue, appellants argue the trial court erred in entering

judgment in Nationstar’s favor for judicial foreclosure, a claim they argue is not

supported by Nationstar’s pleadings and was not tried by consent. Nationstar

                                         –13–
disputes this by arguing, in a cross-point, that the trial court erred in striking its

amended pleadings.

      Appellants cite Article XVI, section 50 of the Texas Constitution, Title 7,

section 153.2 of the Texas Administrative Code, and various cases discussed below

as support for their arguments that the trial court erred in concluding the lien is valid

and in awarding judicial foreclosure.

      Article XVI, section 50 of the Texas Constitution states, in pertinent part:

      (a) The homestead of a family, or of a single adult person, shall be, and
      is hereby protected from forced sale, for the payment of all debts except
      for:

          (6) an extension of credit that:

             (A) is secured by a voluntary lien on the homestead created under
      a written agreement with the consent of each owner and each owner’s
      spouse[.]
      ....

      (c) No mortgage, trust deed, or other lien on the homestead shall ever
      be valid unless it secures a debt described by this section, whether such
      mortgage, trust deed, or other lien, shall have been created by the owner
      alone, or together with his or her spouse, in case the owner is married.
      All pretended sales of the homestead involving any condition of
      defeasance shall be void.

TEX. CONST. art. XVI, § 50 (emphasis added).

      Title 7, section 153.2 of the Texas Administrative Code states:

      153.2. Voluntary Lien: Section 50(a)(6)(A)
      An equity loan must be secured by a voluntary lien on the homestead
      created under a written agreement with the consent of each owner and
      each owner’s spouse.

                                         –14–
      (1) The consent of each owner and each owner’s spouse must be
      obtained, regardless of whether any owner’s spouse has a community
      property interest or other interest in the homestead.

      (2) An owner or an owner’s spouse who is not a maker of the note may
      consent to the lien by signing a written consent to the mortgage
      instrument. The consent may be included in the mortgage instrument
      or a separate document.
      (3) The lender, at its option, may require each owner and each owner’s
      spouse to consent to the equity loan. This option is in addition to the
      consent required for the lien.

7 TEX. ADMIN. CODE § 153.2 (emphasis added).

      Appellants argue Nationstar had the burden to establish the lien’s validity

under the Texas Constitution and cite, as support, Chase Manhattan Mortgage

Corporation v. Cook, 141 S.W.3d 709, 713 (Tex. App.—Eastland 2004, no pet.).

But, as we have noted, “[t]he prevailing view among both Texas and federal courts

is that a challenge to the validity of a lien based on constitutional non-compliance is

similar in nature to an affirmative defense, and thus the party seeking to void the lien

carries the burden of proof.” Kingman Holdings, LLC as Tr. for Briar Oak 223 Land

Tr. v. Nationstar Mortg. LLC, No. 05-21-00075-CV, 2022 WL 2255726, at *2 (Tex.

App.—Dallas June 23, 2022, no pet.) (citations omitted).

      In arguing there is legally and factually insufficient evidence that Tong

consented to the lien, appellants cite Wood v. HSBC Bank USA, N.A., 505 S.W.3d

542 (Tex. 2016) and Kyle v. Strasburger, 522 S.W.3d 461 (Tex. 2017) (per curiam),

both of which are distinguishable in certain respects.

                                         –15–
      In Wood, the court noted that article XVI, section 50 of the Texas Constitution

“has long protected the homestead, strictly limiting the types of loans that may be

secured by a homestead lien” and that, in 1997, it was amended “to permit homestead

liens to secure home-equity loans” through amendments that “clearly prescribed

very specific and extensive limitations on those encumbrances.” Wood, 505 S.W.3d

at 545 (citing TEX. CONST. art. XVI, § 50(a)(6)(A)–(Q)). Wood states, “Section 50’s

intent is to protect Texas homeowners and the Texas economy by ensuring a stable

lending market.” Id. at 550. Woods also states:

      When interpreting our state Constitution, we rely heavily on its literal
      text and must give effect to its plain language. Stringer v. Cendant
      Mortg. Corp., 23 S.W.3d 353, 355 (Tex. 2000). “We strive to give
      constitutional provisions the effect their makers and adopters
      intended.” Id. We construe constitutional provisions and amendments
      that relate to the same subject matter together and consider those
      amendments and provisions in light of each other. Purcell v. Lindsey,
      158 Tex. 541, 314 S.W.2d 283, 284 (1958). And we strive to “avoid a
      construction that renders any provision meaningless or inoperative.”
      Stringer, 23 S.W.3d at 355.
Id. at 545; see also Patton v. Porterfield, 411 S.W.3d 147, 158 (Tex. App.—Dallas

2013, pet. denied) (“We interpret and give effect to the text and the plain language

of article XVI, section 50(a)(6)” [and] “presume [its] language . . . was carefully

selected and interpret the words as they are generally understood, relying heavily on

the text.”) (citation omitted). As a summary judgment case in which the primary

issue involved a question regarding limitations, Wood is distinguishable and does

not address the sufficiency issues we consider here. See Wood, 505 S.W.3d at 544.

                                        –16–
      In Kyle, the supreme court again considered article XVI, section 50(a)(6), this

time in connection with a suit by an ex-wife against her ex-husband and a home

equity lender, in which she sued for forfeiture and a declaration that the lien was

invalid based on her allegation that her ex-husband forged her signature on the

closing documents for the home equity loan. 522 S.W.3d at 463. The lender moved

for summary judgment on several grounds, including limitations, and the trial court

granted summary judgment without stating its reasons. Id. at 464. The court of

appeals affirmed based on its conclusion that the deed of trust creating the lien was

“voidable and not void” and that the four-year residual statute of limitations applied

and barred the ex-wife’s claims, which were filed more than four years after the loan

closed. Id. The ex-wife appealed, and the supreme court reversed, concluding, in

light of Wood, the court of appeals erred in holding the statute of limitations barred

the ex-wife’s request for a declaration that the disputed deed of trust was invalid. Id.

at 465. Noting the ex-wife submitted some evidence she did not consent to the lien

on her homestead, either at the time of its creation or after the fact, the court stated

the underlying home equity loan did not comply with article XVI, section 50(a)(6)

of the Texas Constitution and reasoned that, because section 50(c) renders liens

securing constitutionally noncompliant home equity loans invalid until cured, no

statute of limitations applied to the ex-wife’s claim to declare the lien invalid. Id.

                                         –17–
Like Wood,9 as a summary judgment case in which the primary issue involved a

question regarding limitations, Kyle is distinguishable and does not address the

sufficiency issues we confront.

          During oral argument, we questioned whether Tong, as an owner’s spouse,

had to consent to the lien in writing, a question that appears to be one of first

impression.10 Appellants’ counsel conceded that the Texas Constitution does not

say that such consent has to be in writing. We allowed post-submission briefing,

and in it, appellants argued title 7, section 153.2 of the Texas Administrative Code

supports a conclusion that the constitutionally required spousal consent to a

homestead lien must be in writing.11 Nationstar disagreed.

          Although neither party cited it, another existing regulation appears to support

appellants’ argument, at least under current law,12 but the current regulation went

into effect well after the closing of the loan in this case, and its prior version was

    9
        See Wood, 505 S.W.3d at 544.
    10
      Though both cases involve questions regarding lien validity, the question we consider here is different
than the issue we considered in Alexander v. Wilmington Savings Fund Society, FSB, 555 S.W.3d 297, 298-
300 (Tex. App.—Dallas 2018, no pet.), where we determined, in a summary judgment case, that a lien was
not invalid where both a husband and wife signed a home equity deed of trust but only the husband signed
the home equity note. Unlike Alexander, where one spouse signed the note but both spouses signed the
security instrument, this case involves a situation where only one spouse signed both documents.
    11
      Title 7, section 153.2(2) of the administrative code states, “An owner or an owner’s spouse who is
not a maker of the note may consent to the lien by signing a written consent to the mortgage instrument.
The consent may be included in the mortgage instrument or a separate document.” 7 TEX. ADMIN. CODE
§ 153.2(2) (2004).
    12
       Beginning January 1, 2015 and continuing to the present, the consent required “must be signed by
the owner and the owner’s spouse.” See 7 TEX. ADMIN. CODE § 153.15(3) (2014) (stating, “The consent
required under Section 50(a)(6)(A) must be signed by the owner and the owner’s spouse, or an attorney-in-
fact described by paragraph (2) of this subsection, at the permanent physical address of an office of the
lender, an attorney at law, or a title company.”).
                                                   –18–
invalidated, in any event. See Finance Comm’n of Tex. v. Norwood, 418 S.W.3d

566, 588–89 (Tex. 2013) (concluding prior provisions in title 7, section 153.15

contradicted purpose & text of constitution and were invalid).

         We need not decide whether Tong’s consent was required to be in writing

because, even if we assume written consent was not required, as Nationstar argues,

we conclude the record contains legally and factually insufficient evidence to

support the trial court’s finding that Tong consented to the lien.

         In determining legal sufficiency, we view the evidence in the light most

favorable to the finding, indulging every reasonable inference supporting it. City of

Keller, 168 S.W.3d at 822. Here, the only evidence even remotely supporting the

finding of Tong’s consent is a home equity affidavit Chu signed at closing which

states, in part, “The Extension of Credit is secured by a voluntary lien on the Property

created under a written agreement with the consent of all owners and all spouses of

owners and execution of this Texas Home Equity Affidavit and Agreement is

deemed evidence of such consent.” While such evidence might lead a fact finder to

reasonably conclude Chu considered himself to be single at the time of signing of

the affidavit,13 we do not believe the affidavit would allow one to reasonably

conclude Tong consented to the lien, particularly when her existence was never

    13
      See Nationstar Mortgage LLC v. Barefoot, No. 14-19-00750-CV, 2021 WL 5001660, at *8 (Tex.
App.—Houston [14th Dist.] Oct. 28, 2021, no pet.) (concluding under somewhat distinguishable
circumstances that a similar signed affidavit merely reflected the borrower believed herself to be the sole
owner, not that the owners consented).
                                                  –19–
acknowledged in the affidavit or other loan documents. To the extent the affidavit

is any evidence at all of Tong’s consent to the lien, we conclude it is nothing more

than a scintilla. See Texas Outfitters Ltd., LLC, 572 S.W.3d at 653 (legal sufficiency

challenge fails when more than a scintilla of evidence supports the finding)

(emphasis added) (citation omitted).

      As appellants point out, the record contains evidence showing Tong did not

sign the note, the security instrument, or any of the related loan documents that were

admitted into evidence. Chu also provided uncontroverted testimony he never

discussed the loan with Tong, and Tong provided uncontroverted testimony she did

not know about the loan in 2007. Tong testified:

      Q. In 2007 did you know your husband applied for a loan with Metro
      Bank?

      A. I didn’t know.

      Q. Is it typical that he would apply for a loan without talking to you
      about it?
      A. I didn’t know, but for this I don’t know it clear. I don’t know what
      my husband was thinking or how, but I didn’t know and I didn’t know.

Tong also testified:

      Q.     But you never objected to any of his financial decisions in the
      past, correct?

      A.     That’s different. I don’t want to get involved in all of his
      companies and his businesses. But for this household, which is my only
      residence and my only home, if he had told me I would have objected
      to it.

                                        –20–
         We conclude this evidence establishes as a matter of law all vital facts to show

Tong did not consent to the lien and thus conclude the evidence to support the trial

court’s finding that Tong consented to the lien is legally insufficient. See Dow

Chem. Co., 46 S.W.3d at 241 (standards regarding legal insufficiency when party

bears burden of proof).

         We also conclude the trial court’s finding regarding Tong’s consent to the lien

is so against the great weight and preponderance of the evidence as to be manifestly

unjust. See TEX. CONST. art. XVI, §§ 50(a)(6)(A), (c); Kyle, 522 S.W.3d at 465

(stating, “In Wood, we held that a lien securing a constitutionally noncompliant

home-equity loan . . . is not valid unless and until the defect in the loan is cured”)

(citing Wood, 505 S.W.3d at 548). Thus, because there is legally and factually

insufficient evidence of Tong’s consent to the lien, we conclude the trial court erred

in entering judgment in Nationstar’s favor for judicial foreclosure.

         We sustain appellants’ first and second issues.14

    14
       In light of our conclusion, we need not reach Nationstar’s cross-point regarding the striking of its
amended pleading or appellants’ other “sub-issues” regarding the trial court’s statements regarding Tong’s
“constructive” consent or its conclusion that appellants’ suit for quiet title is barred by judicial estoppel.
Additionally, we need not consider appellants’ arguments regarding their quiet title claims, as the Texas
Supreme Court has made it clear that section 50(a) “does not create substantive rights beyond a defense to
foreclosure of a lien securing a constitutionally noncompliant loan.” Kyle, 522 S.W.3d at 464 (citing
Garofolo v. Ocwen Loan Servicing, L.L.C., 497 S.W.3d 474, 478 (Tex. 2016)). Kyle stated:
         We note the distinction between the lien at issue and the extension of credit it secures. As
         we explained in Garofolo, section 50(a) “does not directly create, allow, or regulate home-
         equity lending,” nor does it prohibit loans that do not comply with its requirements. 497
         S.W.3d at 478. Rather, section 50(a) “simply describes what a home-equity loan must look
         like if a lender wants the option to foreclose on a homestead upon borrower default.” Id.

Id. at n.7.
                                                   –21–
      B.     Evidence Nationstar was Current Note Holder or Assignee
      Next, we consider appellants’ arguments that there is legally and factually

insufficient evidence showing Nationstar is the current holder of the note (third

issue) and that the security instrument was validly assigned to it (fourth issue).

      The only evidence on these issues at trial was presented through Andrew Jay

Loll, Nationstar’s corporate representative, and various exhibits discussed during his

testimony, including, but not limited to, the note, the home equity affidavit and

agreement, the home equity security instrument, the assignment of deed of trust to

Nationstar, the default disclosure to Chu, and an updated payoff statement showing

the total owed was $605,602.20.

      The note was signed by Chu and contained, on the last page, two

endorsements: one signed by Metro Bank, N.A., stating “pay to the order of Flagstar

Bank, FSB without recourse” and a second one signed by Flagstar Bank, FSB,

stating, “pay to the order of without recourse Flagstar Bank, FSB.” Loll testified the

second endorsement was not made payable to any specific person or entity and that

the note in evidence was a true and correct copy of the original note. Loll also

testified Nationstar is the holder of the note and has unfettered access to it, through

a custodian—the identity of which he had verified but could not recall—had physical

possession of the wet-ink note.

      The security instrument identified the lender as Metro Bank, N.A. and the

mortgagee as Mortgage Electric Registration Systems, Inc. (MERS), a separate

                                         –22–
corporation acting solely as a nominee for lender and its successors and assigns. The

assignment of the deed of trust was endorsed May 21, 2012, by a representative of

MERS, as nominee for Metro Bank, N.A., who assigned and transferred to

Nationstar all its right, title, and interest in and to the deed of trust at issue in this

case.

        As support for their argument that Nationstar’s ownership of the note was not

established, appellants cite First Gibraltar Bank v. Farley, 895 S.W.2d 425, 428–29

(Tex. App.—San Antonio 1995, writ denied), a case in which our sister court

reversed and remanded a summary judgment entered in favor of a guarantor against

a note holder because a fact issue existed concerning ownership of the note, which

precluded summary judgment. First Gibraltar is thus distinguishable and does not

address the sufficiency issues we consider here. See First Gibraltar, 895 S.W.2d

425, 428–29. Appellants also argue Loll’s testimony was not credible, but in a

nonjury trial, the trial court, not this Court, is the sole judge of the credibility of the

witnesses and the testimony’s weight, see Tate, 767 S.W.2d at 224, and the trial

court may believe one witness and disbelieve others and may resolve any

inconsistencies in a witness’s testimony. McGalliard, 722 S.W.2d at 697.

        As to the assignment of the security interest to Nationstar, appellees cite no

cases considering the legal or factual sufficiency issues at issue here or establishing

that the assignment in this case was invalid. The only case appellants cite in their

argument regarding the assignment is Rinard v. Bank of America, 349 S.W.3d 148

                                          –23–
(Tex. App.—El Paso 2011, no pet.), which does not apply here, both because it does

not even involve an assignment and because it involved summary judgment. See id.

at 152 (affirming traditional summary judgment for a mortgagee on a judicial

foreclosure claim against a mortgagor).

         Considering, as we must, the sufficiency standards we are to apply here, see

Graham Cent. Station, 442 S.W.3d at 263; Hoss, 338 S.W.3d at 651, we conclude

there is legally and factually sufficient evidence to support the trial court’s findings

that “Nationstar is the current owner and holder of the Note” and that “[t]he Security

Instrument was validly assigned to Nationstar by an Assignment of Deed of Trust

on May 21, 2012.”

         We overrule appellants’ third and fourth issues.

         C.     Attorney’s Fees
         In their fifth issue, appellants urge us to reverse the attorney’s fees awarded

against them because Nationstar (1) did not prevail on its pleaded claims against

appellants and (2) did not segregate its fees for the claims on which it prevailed.

         We agree Nationstar did not prevail on its claims against Tong and we must

reverse the attorney’s fee award against her and render judgment in her favor.15

         We also agree Nationstar did not prevail on its foreclosure claim against Chu,

but we disagree that there is no basis for the fee award against Chu on Nationstar’s

    15
       Even if, as Nationstar argues, the trial court erred in striking its amended pleading, based on our
resolution of appellants’ first two issues, there exists no basis for a fee award to Nationstar against Tong.

                                                   –24–
note claim.16 Nationstar prevailed on that claim and was entitled to an award of

attorney’s fees as a result.17              But because there is now uncertainty as to the

appropriate amount of those fees in light of our disposition, we must remand for

further proceedings in the trial court to determine the amount of reasonable and

necessary attorney’s fees Nationstar incurred in the prosecution of its note claim

against Chu, the only claim upon which Nationstar has now prevailed.18

    16
         The note states, in part:
           If the Note Holder has required me to pay immediately in full as described above, the Note
           Holder will have the right to be paid back by me for all of its own costs and expenses in
           enforcing this Note to the extent not prohibited by applicable law, including Section
           50(a)(6) Article XVI of the Texas Constitution. Those expenses include, for example,
           reasonable attorney’s fees. I understand that these expenses are not contemplated as fees
           to be incurred in connection with maintaining or servicing this Extension of Credit.

    Consistent with section 50(a)’s requirements, see TEX. CONST. art. XVI, section 50(a)(6)(C), the note
was nonrecourse, in that it was “given without personal liability against each owner of the property
described above and against the spouse of each owner unless the owner or spouse obtained this Extension
of Credit by actual fraud[,]” which by the note’s own terms meant the note holder can enforce its rights
under the note “solely against the property described [in the note] and not personally against any owner of
such property or the spouse of an owner.” Because the attorney’s fees award falls within the note’s terms,
the attorney’s fees award is without recourse for personal liability as well. See Wells Fargo Bank, N.A. v.
Murphy, 458 S.W.3d 912, 917–18 (Tex. 2015) (discussing nonrecourse loans generally and stating, “If the
attorney’s fee award falls within one of these terms [in the parties’ loan agreement], it necessarily falls
within the extension of credit’s scope and must be without recourse for personal liability.”) (citing Sims v.
Carrington Mortg. Servs., L.L.C., 440 S.W.3d 10, 16 (Tex. 2014); TEX. CONST. art. XVI § 50(a)(6)(C)).
    17
       We reject appellants’ argument that Nationstar did not succeed on its suit on a note against Chu.
“A suit on a note has four elements: (1) a note exists, (2) the plaintiff is the note’s legal owner and holder,
(3) the defendant is the maker of the note, and (4) a certain balance is due and owing on the note.” Collins
Asset Grp., LLC v. Ayres, No. 05-21-00295-CV, 2022 WL 951004, at *2 (Tex. App.—Dallas Mar. 30,
2022, no pet.) (mem. op.) (citing Manley v. Wachovia Small Bus. Capital, 349 S.W.3d 233, 237 (Tex.
App.—Dallas 2011, pet. denied); Perkins v. Crittenden, 462 S.W.2d 565, 568 (Tex. 1970)). Here, the trial
court’s judgment states the loan to Chu, as evidenced by the note, is valid and enforceable, states Nationstar
is the current holder of the note, and concludes that the amount due and owing under the note is
$605,602.20.
    18
        See Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 488–89 (Tex. 2019)
(stating, “When a claimant wishes to obtain attorney’s fees from the opposing party, the claimant must
prove that the requested fees are both reasonable and necessary.”); Young v. Qualls, 223 S.W.3d 312, 314
(Tex.2007) (per curiam) (noting need to consider results obtained and concluding case must be remanded
to trial court for new trial on attorney’s fees when court could not be reasonably certain the trial court was
not significantly affected by the error that resulted in reduction of award on appeal); Arthur Andersen &

                                                    –25–
        We sustain appellants’ fifth issue to the extent that we reverse the fee award

as to Tong but remand to the trial court for a redetermination of the reasonable and

necessary amount of attorney’s fees due Nationstar based on its suit on a note against

Chu. Given this, we need not decide the segregation question.

                                          VI. CONCLUSION
        Based on the foregoing, we reverse, with respect to both appellants, the

portions of the trial court’s judgment allowing foreclosure and render judgment that

Nationstar take nothing by way of those claims or the attorney’s fees claims

associated with foreclosure; reverse the amount of the attorney’s fee determination

against Chu on Nationstar’s note claim; and remand to the trial court for a

redetermination of the amount of reasonable and necessary attorney’s fees due

Nationstar on its suit on a note against Chu. In all other respects, we affirm the trial

court’s judgment.

191558f.p05                                            /Ken Molberg/
                                                       KEN MOLBERG
                                                       JUSTICE

Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (stating court is to consider the results obtained
in determining the reasonableness of a fee).
                                                   –26–
                             Court of Appeals
                      Fifth District of Texas at Dallas
                                   JUDGMENT

 YA QIN TONG AND STEPHEN                        On Appeal from the 429th Judicial
 CHU, Appellants                                District Court, Collin County, Texas
                                                Trial Court Cause No. 429-04255-
 No. 05-19-01558-CV           V.                2015.
                                                Opinion delivered by Justice
 NATIONSTAR MORTGAGE LLC,                       Molberg. Justices Nowell and
 Appellee                                       Goldstein participating.

        In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED in part and REVERSED in part. We REVERSE, with
respect to both appellants, the portions of the trial court’s judgment allowing
foreclosure and render judgment that Nationstar take nothing by way of those
claims or the attorney’s fees claims associated with foreclosure; REVERSE the
amount of the attorney’s fee determination against Chu on Nationstar’s note claim
and REMAND to the trial court for a redetermination of the amount of reasonable
and necessary attorney’s fees due Nationstar on its suit on a note against Chu; and,
in all other respects, we AFFIRM the trial court’s judgment.

      It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 28th day of November, 2022.

                                         –27–