Court Opinion

ID: 4078070
Source: CourtListenerOpinion
Date Created: 2016-09-30 23:02:02.280928+00
Date Added: 2024-06-11T14:32:56.809674
License: Public Domain

ACCEPTED
                                                                                    03-15-00522-CV
                                                                                            8023248
                                                                         THIRD COURT OF APPEALS
                                                                                    AUSTIN, TEXAS
                                                                             11/30/2015 11:04:37 PM
                                                                                  JEFFREY D. KYLE
                                                                                             CLERK

          No. 03-15-00522-CV                                      FILED IN
                                                           3rd COURT OF APPEALS
                                                               AUSTIN, TEXAS
                                                           12/2/2015 9:03:00 AM
                                                             JEFFREY D. KYLE

          In The Third Court of Appeals                            Clerk

       MICHAEL W. SCHUETZ AND JAMIE K. SCHUETZ,
                                     Appellants,
                         v.

   SOURCE ONE MORTGAGE SERVICES CORPORATION;
 MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.;
  CITIMORTGAGE, INC.; AND BARRETT DAFFIN FRAPPIER
  TURNER & ENGLE, ROBERT FERGUSON, AND BARBARA
                    FERGUSON,
                                   Appellees,
                     Appeal from Cause No. C2013-1445C,
   274th Judicial District Court, Comal County; Hon. Dib Waldrip, Presiding

              APPELLANTS’ BRIEF
CASEY LAW OFFICE, P.C.
   Stephen D. Casey
   State Bar No. 24065015
   info@caseylawoffice.us
595 Round Rock West Drive, Suite 102
Round Rock, Texas 78681
                 STATEMENT REGARDING ORAL ARGUMENT

      The legal question here—applicability of the federal prohibition of

foreclosure without face-to-face counseling, appears to be a matter of first

impression for this Court. Second, the lower court misapplied the standard of

review in a specific way to the facts. For those two reasons, oral argument is

requested.

                                      ii
                  IDENTITIES OF PARTIES AND COUNSEL

Petitioners:                   Michael and Jamie Schuetz

Counsel for Petitioners:       Casey Law Office, P.C.
                               Stephen D. Casey
                               info@caseylawoffice.us
                               State Bar No. 24065015
                               595 Round Rock West Drive, Suite 102
                               Round Rock, Texas 78681

Respondents:                   Citimortgage, Inc., as successor to Source
                               One Mortgage Corporation;
                               Mortgage Electronic Registration Systems,
                               Inc. (“Citi and MERS”)

                               Barret, Daffin, Frappier, Turner & Engel
                               (“BDFTE”)

                               Robert and Barbara Ferguson (“Fergusons”)

Counsel for Respondents:       Citi and MERS
                                John Ellis
                               dfoster@lockelord.com
                               jellis@lockelord.com
                               jthomason@lockelord.com
                               LOCKE LORD LLP
                               600 Congress Avenue, Ste 2200
                               Austin, TX 78701

                               BDFTE
                               Mark Hopkins
                               mark@hopkinswilliams.com
                               12117 Bee Caves Road, Ste 260
                               Austin, TX 78738

                                 iii
               Fergusons
               David Pfeuffer
               170 E. San Antonio Street
               New Braunfels, TX 78130

Trial Court:   Hon. Dib Waldrip,
               374th District Court
               Comal County

                 iv
                                            TABLE OF CONTENTS

INDEX OF AUTHORITIES .................................................................................. x	
STATEMENT OF THE CASE ........................................................................... xiv	
ISSUES PRESENTED .......................................................................................... xv

        1. 	    The standard of review on summary judgment prohibits
                the trial court’s decision, in which a disputed factual
                question arose regarding the identity of several directly
                related corporate entities. Because factual disputes
                require resolution at trial, should the trial court’s decision
                be reversed? ........................................................................................ xv

        2.	 Strict construction of the deed of trust demands that
              Appellees follow federal law. As a question of first
              impression, strict construction should have required the
              Appellees follow HUD statutes to conduct a face-to-face
              interview prior to foreclosure. Because a fact issue existed
              as to whether such interview was required, should the
              trial court be reversed on summary judgment? .................................. xv

        3.	 The standard of review on summary judgment prohibits the
              trial court’s decision, in which a nine-year gap in the
              chain of title, admitted by Appellees, blocked any claim
              to the property. Should the trial court be reversed on this
              issue both as a matter of law and for a factual inquiry at
              trial? .................................................................................................... xv

        4.	 Appellee law firm constructed documents during the
              foreclosure process that did not require the skill of an
              attorney. Even broadly interpreted, the admissions by
              BDFTE declared that BDFTE was not “retained” until
              2013, more than 10 years after it fabricated the allegedly
              fraudulent documents. Should the trial court be reversed
              to determine the nature of the relationship between
              BDFTE and foreclosing Appellees prior to 2013 under a
              summary judgment standard of review? ............................................ xv

                                                            v
5.	 Appellant’s live pleading contained a claim under the Texas
      DTPA tie-in statute. Because the tie-in has no
      requirement to be brought under its tie-in Code as a
      “consumer,” should the lower court be reversed on
      summary judgment to permit a trial of the DTPA claim
      brought through the Finance Code? .................................................. xv

6.	 The trial court erred in denying the motion to strike the
      Nurse declaration and other inadmissible documents,
      under this Court’s precedent, because such statements
      must be made from personal knowledge and none was
      presented. Should the motion to strike be granted and the
      case reversed? ..................................................................................... xv

Issue 1: 	 Deeds of trust are strictly construed in Texas and
       have been for more than a century. Because this was a
       HUD loan that must comply with FHA statutes, the
       Appellee bank should have conducted face-to-face
       counseling prior to foreclosure. As both the standard of
       review and the deed of trust are construed against
       Appellees below, this Court should reverse the lower
       court as no Congressionally-mandated counseling
       occurred prior to foreclosure. ............................................................... 3

Issue 2: 	 Here, proper evidence submitted below raised a
       factual question as to the full identity of Citimortgage vs.
       Citibank as it pertains to federal pre-foreclosure
       counseling requirements. The trial court should have
       held the case for trial and this Court should remand for
       trial on this narrow issue as it applies to the counseling
       requirement under the summary judgment standard. ......................... 4

Issue 3:	 Texas law, being debtor friendly, requires a creditor
       to prove the entire chain of title when challenged by a
       debtor. Here, admissions in the record demonstrate a 9-
       year gap in the chain of title. Given that gap, even on
       summary judgment, the trial court should have resolved
       the factual inference in Appellant’s favor. Thus, this
       Court should reverse and remand the case. ......................................... 4

                                                vi
         Issue 4: 	    Attorney immunity is not absolute. BDFTE
                admitted below to only being retained in 2013, which
                was 10 years after the alleged fraud; however, it was
                manufacturing documents that did not require the skill of
                an attorney. The lower court should not have granted
                summary judgment on this issue. ......................................................... 5

         Issue 5:	 The DTPA tie-in statutes derive their authority from
                other sections of the Texas Code. As those sections do
                not require a party be a “consumer,” only a “claimant,”
                the trial court should not have dismissed those claims as a
                matter of law. ........................................................................................ 5

         Issue 6:	 The trial court erred in permitting the Nurse
                declaration and other conclusory documents when their
                use contradicts this Court’s decision in Preismeyer v. Pacific
                Southwest Bank; namely, the Nurse declarant had no
                personal knowledge and the affidavits and other
                documents should have been struck, requiring reversal by
                this Court. ............................................................................................. 5

STANDARD OF REVIEW..................................................................................... 7

ARGUMENT ........................................................................................................... 8

         I.	 Texas strictly construes deeds of trust. The trial court failed
               to apply the standard of review when a factual question
               arose regarding the relationship between Citibank and
               Citimortgage as this determined, in part, relevance of
               federal pre-foreclosure counseling statutes. This Court
               should reverse the trial court and remand............................................ 8

                  A. 	 The strict construction of the deed of trust, as well as
                  the standard of review, both favor reversal as they are
                  construed against the Appellees, movants below.................................. 8

                  B. 	 FHA regulations at 24 CFR 203.604 demand a
                  face-to-face interview. This never happened with the
                  Schuetz, an undisputed fact that requires reversal. ............................ 10

                                                           vii
        2. 	 A fact issue below precluded summary judgment when the
              Schuetz’ supplemental motion showed a question
              regarding the corporate nature of Citi. .............................................. 13

                 A. 	 Appellant Citi offered judicial admissions elsewhere
                 that its identity is a fusion of Citibank and Citimortgage;
                 htus, it is judicially estopped from claiming they are
                 unrelated. ............................................................................................ 13

                 B. 	 The Schuetz’ affidavits demonstrated the material
                 fact needed to preclude summary judgment. ..................................... 14

        3. 	 Texas law permits challenges by debtors to the chain of
              assignments of an alleged creditor. Here, that challenge
              revealed a 9-year gap in the chain of title. This Court
              should reverse the lower court’s ruling on summary
              judgment. ............................................................................................ 15

        4. 	 Attorney immunity is not absolute; that counsel below
              conducted actions for years without being retained,
              actions that did not necessarily require the skill of an
              attorney did not permit immunity to attach as a matter of
              law, a situation requiring reversal....................................................... 16

        5.	 The DTPA tie-in statutes derive their authority from other
              sections of the Texas Code. As those sections do not
              require a party be a “consumer,” only a “claimant,” the
              trial court should not have dismissed those claims as a
              matter of law. ...................................................................................... 18

        6.	 The trial court erred in permitting the Nurse declaration
              and other conclusory documents when their use
              contradicts this Court’s decision in Preismeyer v. Pacific
              Southwest Bank; namely, the Nurse declarant had no
              personal knowledge and the affidavits and other
              documents should have been struck, requiring reversal by
              this Court. ........................................................................................... 18

PRAYER FOR RELIEF ........................................................................................ 20	

                                                          viii
CERTIFICATE OF COMPLIANCE ................................................................... 21

CERTIFICATE OF SERVICE ............................................................................. 22	

                                                  ix
                                         INDEX OF AUTHORITIES

CASES
20801, Inc. v. Parker,
      249 S.W.3d 392 (Tex. 2008).................................................................................... 7

Anderson v. U.S. Dep't of Hous. & Urban Dev.,
      701 F.2d 112 (10th Cir. 1983) ............................................................................... 12

Austin v. Countrywide Home Loans,
       261 S.W.3d 68 (Tex. App.—Houston [1st Dist.] 2008) ........................................ 16

Bierwirth v. BAC Home Loans Servicing, L.P.,
      2012 Tex. App. LEXIS 7506 (Tex. App.—Austin 2014)...................................... 18

Brownlee v. Brownlee,
     665 S.W.2d 111 (Tex. 1984).................................................................................. 22

Centeq Rlty., Inc. v. Siegler,
      899 S.W.2d 195 (Tex. 1995).................................................................................... 8

Daughters of Charity Health Servs. of Waco v. Linnstaedter,
     226 S.W.3d 409 (Tex. 2007).................................................................................. 18

Faine v. Wilson,
      192 S.W.2d 456 (Tex. App.—Galveston 1946) ................................................... 10

Fin. Comm'n of Tex. v. Norwood,
      ___ S.W.3d ___, 2013 Tex. LEXIS 491, at *4 (Tex. 2013) .................................... 9

Ford v. Emerich,
      343 S.W.2d 527 (Tex. App.—Houston 1961, writ ref’d n.r.e.) .............................. 9

Fuller v. O'Neal,
       69 Tex. 349, 6 S.W. 181 (1887)............................................................................... 9

Gaines v. Hammon,
      358 S.W.2d 557 (Tex. 1962).................................................................................... 8

Glass v. Carpenter,
       330 S.W.2d 530 (Tex. Civ. App.—San Antonio 1959, writ ref’d n.r.e.) .............. 17

                                                          x
Harrell v. Patel,
      225 S.W.3d 1 (Tex. App.—El Paso 2005, pet. denied). ........................................ 22

Henke v. First Southern Properties, Inc.,
      586 S.W.2d 617 (Tex. App.—Waco 1979, writ ref’d n.r.e.). .............................. 10

Leavings v. Mills,
      175 S.W.3d 301 (Tex. App.—Houston [1st Dist.] 2004, no pet.) ......................... 17

Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
     289 S.W.3d 844 (Tex. 2009).................................................................................... 7
Mart. v. New Century Mortgage Co.,
      2012 Tex. App. LEXIS 4705 (Tex. App.—Houston [1st Dist.] 2012) .................. 16

Mers. v. Nebraska Dept. of Finance,
      704 N.W.2d 784 (Neb. 2005) ................................................................................ 17

Michael v. Crawford,
     108 Tex. 352, 193 S.W. 1070 (1917)..................................................................... 11

Murchison v. Freeman,
     127 S.W.2d 369 (Tex. App.—El Paso 1939, writ ref’d) ...................................... 10

Perkins v. Sterne,
      23 Tex. 561, 1859 Tex. LEXIS 106 (Tex. 1859) (same) ....................................... 18

Pope v. Beauchamp,
      219 S.W. 447 (Tex. 1920)...................................................................................... 18

Priesmeyer v. Pacific Southwest Bank, F.S.B.,
      917 S.W.2d 937 (Tex. App.—Austin 1996) .................................................... 16, 22

Provident Life & Acc. Ins. v. Knott,
      128 S.W.3d 211 (Tex. 2003).................................................................................... 7

Radio Station KSCS v. Jennings,
      750 S.W.2d 760 (Tex. 1988).................................................................................. 22

Rizkallah v. Conner,
       952 S.W.2d 580 (Tex. App.—Houston [1st Dist.] 1997). ..................................... 21

                                                          xi
Duty v. Graham,
       12 Tex. 427 (Tex. 1854) ........................................................................................ 18

Shepard v. Boone,
      99 S.W.3d 263 (Tex. App.—Eastland 2003) ......................................................... 17

Slaughter v. Qualls,
      139 Tex. 340 (Tex. 1942) .................................................................................. 9, 11
Taylor v. Brennan,
      621 S.W.2d 592 (Tex. 1981).................................................................................. 10

Travelers Ins. Co. v. Joachim,
      315 S.W.3d 860 (Tex. 2010).................................................................................... 7

Tri-Cities Const., Inc. v. American Nat. Ins. Co.,
       523 S.W.2d 426 (Tex. Civ. App.—Houston [1st Dist.] 1975, no writ .................. 17

Turner v. Church of Jesus Christ of Latter-Day Saints,
      18 S.W.3d 877 (Tex. App.—Dallas 2000, pet. denied) ........................................... 8

University Savings & Loan Ass’n v. Texas Lumber,
      423 S.W.2d 287 (Tex. 1967).................................................................................. 18

University Savings Assoc. v. Springwood Shopping Center,
      644 S.W.2d 705 (Tex. 1982).................................................................................. 10

West v. First Baptist Church,
       71 S.W.2d 1090 (Tex. 1934).................................................................................. 18

STATUTES
24 C.F.R. §§ 203 ......................................................................................................... 13, 14
Art. § 51; Decree no. 70 (1829) (State of Coahuila and Texas), reprinted in 1 Early Laws
       of Texas, at 77-78 (St. Louis, The Gilbert Book Co. 1891) .................................... 8

LEGAL ENCYCLOPEDIAS
28 Tex. Jur. Liens § 16 ...................................................................................................... 18
30 Tex. Jur. 2d Deeds of Trust and Mortgages § 119 ....................................................... 18
30 Tex. Jur. 3d Deeds of Trust and Mortgages § 119 ....................................................... 18

BOOKS

                                                              xii
Margaret Swett Henson, Samuel May Williams: Early Texas Entrepreneur (1976) .......... 9

                                          xiii
                            STATEMENT OF THE CASE

Nature of the case:            A homeowner behind on a mortgage sought a
                               modification on a FHA loan. The bank
                               foreclosed. The homeowners alleged failure to
                               comply with federal prerequisites under FHA
                               rules prior to foreclosure, and gaps in the chain of
                               title against the foreclosing bank; document
                               fabrication claims against the law firm, and void
                               sale against the alleged foreclosure purchasers.

Course of Proceedings:         The trial court denied the original law firm
                               motion for summary judgment. Then all parties
                               moved in cross-motions for summary judgment.

Trial Court’s Disposition      The district court signed a final appealable order
                               in favor of Appellees. Appellant filed a notice of
                               appeal, and this case is now properly before this
                               Court.

                                      xiv
                          ISSUES PRESENTED

1.   The standard of review on summary judgment prohibits the trial
     court’s decision, in which a disputed factual question arose
     regarding the identity of several directly related corporate
     entities. Because factual disputes require resolution at trial,
     should the trial court’s decision be reversed?

2.   Strict construction of the deed of trust demands that Appellees
     follow federal law. As a question of first impression, strict
     construction should have required the Appellees follow HUD
     statutes to conduct a face-to-face interview prior to foreclosure.
     Because a fact issue existed as to whether such interview was
     required, should the trial court be reversed on summary
     judgment?

3.   The standard of review on summary judgment prohibits the trial
     court’s decision, in which a nine-year gap in the chain of title,
     admitted by Appellees, blocked any claim to the property. Should
     the trial court be reversed on this issue both as a matter of law
     and for a factual inquiry at trial?

4.   Appellee law firm constructed documents during the foreclosure
     process that did not require the skill of an attorney. Even broadly
     interpreted, the admissions by BDFTE declared that BDFTE was
     not “retained” until 2013, more than 10 years after it fabricated
     the allegedly fraudulent documents. Should the trial court be
     reversed to determine the nature of the relationship between
     BDFTE and foreclosing Appellees prior to 2013 under a summary
     judgment standard of review?

5.   Appellant’s live pleading contained a claim under the Texas
     DTPA tie-in statute. Because the tie-in has no requirement to be
     brought under its tie-in Code as a “consumer,” should the lower
     court be reversed on summary judgment to permit a trial of the
     DTPA claim brought through the Finance Code?

6.   The trial court erred in denying the motion to strike the Nurse
     declaration and other inadmissible documents, under this

                                  xv
Court’s precedent, because such statements must be made from
personal knowledge and none was presented. Should the motion
to strike be granted and the case reversed?

                          xvi
                                  STATEMENT OF FACTS

      Appellants Michael and Jamie Schuetz filed suit alleging wrongful

foreclosure for Defendant Citi’s failure to conduct counseling face-to-face as

required under federal statute. CR.402. Under the Schuetz’ theory of recovery, a

borrower in default on an FHA loan must receive a face-to-face interview under 24

CFR 203.606 at least 30 days prior to foreclosure. CR.402, 404. Based on this

theory of recovery, the foreclosure was void. CR.402, 404.

      The Schuetz filed under other claims, identifying that when the foreclosure

law firm had conducted actions that, as alleged, did not require the skill of an

attorney, that the firm was liable under the Texas Finance Code tie-in statute to

the Texas Deceptive Trade Practices Act. CR.403-04. The Schuetz claimed that

the attorneys were not retained as legal counsel until after the fraudulent

documents were prepared. CR.403.

      The Schuetz further claimed violations of Texas Civil Practices & Remedies

Code 12.002 and declaratory relief in identifying what is alleged to be a nine (9)

year gap in the chain of title.

      Appellants also claimed a 9-year gap in the chain of title. CR.399-402. This

is because the lawsuit alleges, in the First Amended Petition, that Ginnie Mae

(GNMA) had the loan early on in the process and thus no assignments made, or

recorded, that purport another owner are or were possible as they had nothing to

                                          1
grant. CR.165-67.

      Lastly, Appellants claimed DTPA claims and a claim under the Texas

Finance Code. CR.403-04.

      The attorney defendants filed a motion for summary judgment which was

denied. Then all parties filed cross-motions for summary judgment. CR.2-4

(Docket sheet).

      The Schuetz filed affidavits raising a fact issue as to the identity and

corporate connectedness of CitiBank and Citimortgage, as well as the location of

those entities and the use of each other’s facilities and websites. CR.246-264. The

affidavits were supplied to the trial court again in the motion for new trial as they

had been part of the motions for summary judgment but one internal page was

missing from each when efiled. CR.506-525.

                                         2
                           SUMMARY OF THE ARGUMENT

        Consumer debtor cases present an undeniable challenge for courts because

of the lack of sympathy for a debtor plaintiff in default, who is generally thought

undeserving of exacting legal protection having not paid on a debt. Yet even before

statehood, though, Texas law showed debtors favor and protection, applying

various debtor-friendly common law principles, and strictly requiring creditors to

prove their authority to collect and to rigorously follow the law. This is the case

here.

Issue 1:      Deeds of trust are strictly construed in Texas and have been
              for more than a century. Because this was a HUD loan that
              must comply with FHA statutes, the Appellee bank should
              have conducted face-to-face counseling prior to foreclosure.
              As both the standard of review and the deed of trust are
              construed against Appellees below, this Court should
              reverse the lower court as no Congressionally-mandated
              counseling occurred prior to foreclosure.

        Texas law strictly construes deeds of trust, and has for more than 125 years.

It is a harsh remedy, but in a lien theory state, title remains in the hands of the

homeowner who is entitled to have the terms in the deed of trust followed. The

power of sale, here, incorporated HUD regulations under federal law that required

face-to-face counseling prior to foreclosure. That counseling never happened even

though Appellee had several branch locations within the 200 mile limit of

Appellant’s house. This Court should reverse the lower court because no

counseling was attempted.

                                          3
Issue 2:    Here, proper evidence submitted below raised a factual
            question as to the full identity of Citimortgage vs. Citibank
            as it pertains to federal pre-foreclosure counseling
            requirements. The trial court should have held the case for
            trial and this Court should remand for trial on this narrow
            issue as it applies to the counseling requirement under the
            summary judgment standard.

      Reversal here turns on one clear, distinct legal question: in the summary

judgment context—where inferences are resolved against the non-movant—is it a

factual matter whether Citimortgage and Citibank are so closely related as to be

considered the same entity when Appellees presented the trial court with evidence

of judicial admissions by Appellees that the entities were closely related? The

answer is yes, and this ties directly to Issue 1 regarding face-to-face counseling.

Thus, the judgment should be reversed and remanded.

Issue 3:    Texas law, being debtor friendly, requires a creditor to
            prove the entire chain of title when challenged by a debtor.
            Here, admissions in the record demonstrate a 9-year gap in
            the chain of title. Given that gap, even on summary
            judgment, the trial court should have resolved the factual
            inference in Appellant’s favor. Thus, this Court should
            reverse and remand the case.

      Texas follows the common law rule where a debtor may challenge the chain

of assignments regarding the right of a party to foreclose. Here, Appellees admit to

a 9-year gap in the chain of title. The very motion of Appellees alleges that from

2000 until 2009 the loan was assigned to MERS. But MERS does not and cannot

own a loan of a deed of trust. That admission was provided below. That fact can be

                                         4
decided without revisiting this Court’s decision in Bierwirth v. BAC Home Loans

Servicing, but should this Court believe that decision is implicated, it should reverse

Bierwirth.

Issue 4:     Attorney immunity is not absolute. BDFTE admitted below
             to only being retained in 2013, which was 10 years after the
             alleged fraud; however, it was manufacturing documents
             that did not require the skill of an attorney. The lower court
             should not have granted summary judgment on this issue.

        A bar card, while giving great privilege and requiring high levels of

integrity, is not an absolute grant of immunity. When actions taken by a licensed

attorney do not require the skill of attorney (i.e., they can be done by non-attorneys

without oversight as a matter of law), there is no immunity and the fraud claim

should not be dismissed on summary judgment.

Issue 5:     The DTPA tie-in statutes derive their authority from other
             sections of the Texas Code. As those sections do not require
             a party be a “consumer,” only a “claimant,” the trial court
             should not have dismissed those claims as a matter of law.

       Texas consumer protection statutes are broadly construed. Unlike bringing a

DTPA claim, a tie-in statute speaks in terms of “claimant” rather than “consumer.”

The enabling statutes in other parts of the Code, such as the Finance Code, do not

require consumer status; thus, the trial court should be reversed as a matter of law.

Issue 6:     The trial court erred in permitting the Nurse declaration
             and other conclusory documents when their use contradicts
             this Court’s decision in Preismeyer v. Pacific Southwest
             Bank; namely, the Nurse declarant had no personal
             knowledge and the affidavits and other documents should

                                          5
              have been struck, requiring reversal by this Court.

       All declarations must be made by personal knowledge. That must be

demonstrated by showing how the declarant arrived at that personal knowledge:

the basis of that knowledge. The Nurse affidavit clearly lacked that critical part that

this Court’s precedent requires. This Court should reverse the lower court on the

basis of that failed affidavit.

                                          6
                               STANDARD OF REVIEW

      A trial court’s summary judgment is reviewed de novo. Travelers Ins. Co. v.

Joachim, 315 S.W.3d 860, 862 (Tex. 2010). The evidence presented must be

considered by the Court in the light most favorable to the non-movants, i.e., the

Schuetz, crediting evidence favorable to the Schuetzif reasonable jurors could, and

disregarding evidence contrary to the Schuetz, unless reasonable jurors could not.

see Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.

2009). The Court must indulge every reasonable inference in favor of the Schuetz,

see Provident Life & Acc. Ins. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003), and resolve

any doubts of the existence of a material fact in their favor. See 20801, Inc. v. Parker,

249 S.W.3d 392, 399 (Tex. 2008).

      There must be no issues of material fact. Tex. R. Civ. P. 166a(c). “The

purpose of Rule 166a(c),” the Dallas Court of Appeals explained in Turner v. Church

of Jesus Christ of Latter-Day Saints, 18 S.W.3d 877, 885-86 (Tex. App.—Dallas 2000,

pet. denied), citing Gaines v. Hammon, 358 S.W.2d 557, 563 (Tex. 1962), “is not to

provide either a trial by deposition or a trial by affidavit, but to provide a method

of summarily terminating a case when it clearly appears that only a question of law

is involved and no genuine issue of material fact remains.” If a fact issue exists that

is raised by the Schuetz in their motion or in defense of Appellees’ motions,

summary judgment may not issue as a matter of law. See Centeq Rlty., Inc. v. Siegler,

                                           7
899 S.W.2d 195, 197 (Tex. 1995). It is the most important appellate concept. See

Jacques L. Wiener, Ruminations from the Bench: Brief Writing and Oral Argument at the

Fifth Circuit, 70 TUL. L. REV. 187, 189 (1995).

                                           ARGUMENT

       Texas garnered many people at its founding based on its debtor-protective

context. Early immigrants used to flee to Texas to avoid harsh debtor laws for these

protections, writing “G.T.T.” (Gone To Texas) on their doors.1

I.     Texas strictly construes deeds of trust. The trial court failed to
       apply the standard of review when a factual question arose
       regarding the relationship between Citibank and Citimortgage
       as this determined, in part, relevance of federal pre-foreclosure
       counseling statutes. This Court should reverse the trial court and
       remand.

       A.      The strict construction of the deed of trust, as well as the
               standard of review, both favor reversal as they are
               construed against the Appellees, movants below.

       Texas law strictly construes deeds of trust, and has for more than 125 years.

“The course marked out for the trustee to pursue must be strictly followed by him

for the method of enforcing the collection through such deeds is a harsh one. The

1
 See, e.g., Art. § 51; Decree no. 70 (1829) (State of Coahuila and Texas), reprinted in 1 Early
Laws of Texas, at 77-78 (St. Louis, The Gilbert Book Co. 1891) (protecting debtors’ homes in
Texas from any debts acquired prior to purchase of the land); Margaret Swett Henson, Samuel
May Williams: Early Texas Entrepreneur 3 (1976) (describing early flight of immigrants in the Panic of
1819, who often scrawled “G.T.T.”—Gone to Texas—on their door before they left); see also Fin.
Comm'n of Tex. v. Norwood, 418 S.W.3d 566, 570 (Tex. 2013) (discussing the debtor protective
context of Texas home lien laws).

                                                  8
grantor of the power is entitled to have his directions obeyed . . . .”2 Any irregularity making

the act void passed no title.3 And because Texas is a lien theory state, title remains

in the hands of the homeowner. Taylor v. Brennan, 621 S.W.2d 592, 593 (Tex. 1981).

       In University Savings Assoc. v. Springwood Shopping Center,4 the Texas Supreme

Court held:

               Texas courts have consistently held that the terms set out in a
       deed of trust must be strictly followed. Slaughter v. Qualls, 139 Tex.
340, 162 S.W.2d 671 (1942); Michael v. Crawford, 108 Tex. 352, 193
S.W. 1070 (1917). As this Court has stated, “[a] trustee has no power
       to sell the debtor's property, except such as may be found in the deed
       of trust.” Slaughter v. Qualls, supra at 675. . . . . The reason that
       “strictness” is required in following the terms of the power granted by
       the deed of trust is to protect the property of the debtor. Walker v.
       Taylor, 142 S.W. 31, 33 (Tex. Civ. App. -- San Antonio 1911, writ
       ref'd). Failure to follow the terms of the deed of trust will give rise to a
       cause of action to set aside the trustee's deed. Slaughter v. Qualls, supra.5

       The required strict construction of the Deed of Trust may seem harsh. Strict

construction, though, does not leave the lender without remedies. The lender may

sue on the note or seek a judicial order of foreclosure. It is only the contractual

remedy of non-judicial foreclosure that is lost by the lender’s failure to abide by the

2 Fuller v. O'Neal, 69 Tex. 349, 6 S.W. 181 (1887) (emphasis added; see also University
Savings Assoc. v. Springwood Shopping Center, 644 S.W.2d 705 (Tex. 1982) (same strict
construction); Slaughter v. Qualls, 139 Tex. 340 (Tex. 1942) (same); Ford v. Emerich,
343 S.W.2d 527, 531 (Tex. App.—Houston 1961, writ ref’d n.r.e.) (same); Faine v.
Wilson, 192 S.W.2d 456, 458 (Tex. App.—Galveston 1946) (same); Murchison v.
Freeman, 127 S.W.2d 369, 372 (Tex. App.—El Paso 1939, writ ref’d) (same).
3 Henke v. First Southern Properties, Inc., 586 S.W.2d 617, 620 (Tex. App.—Waco

1979, writ ref’d n.r.e.).
4 644 S.W.2d 705 (Tex. 1982).
5 Id. at 706.

                                               9
contract.

       Thus, if the conditions and limitations on the trustee’s power to sell a note

and deed of trust at foreclosure, as set forth in the deed of trust, were never fulfilled,

then the trustee’s power to sell never lawfully came into being, and the foreclosure

sale and trustee’s deed are void.6 The trustee must strictly adhere to the terms of

the power for the power “admits of no substitution and no equivalent.”7

       The deed of trust, recorded at multiple locations in the record, CR.22-26

wholly incorporates the provisions of FHA and HUD regulations. These demand

strict adherence. CR.179-183, esp. 181 at ¶9.d.

       B.       FHA regulations at 24 CFR 203.604 demand a face-to-face
                interview. This never happened with the Schuetz, an
                undisputed fact that requires reversal.

       The Federal Housing Authority (FHA), which was created by the National

Housing Act of 1934, “is the largest government insurer of mortgages in the

world.”8 The FHA, which is a part of the Department of Housing and Urban

Development (HUD), provides mortgage insurance on, inter alia, single-family

homes made by FHA-approved lenders throughout the United States and its

territories.9

       Under this program, mortgagee/lenders are induced to make essentially risk-

6 Slaughter v. Qualls, 162 S.W.2d 671, 675 (Tex. 1942).
7 Michael v. Crawford, 108 Tex. 352, 193 S.W. 1070 (1917).
8 http://portal.hud.gov (last visited February 3, 2015).
9 Id.

                                           10
free mortgages by being guaranteed against loss in the event of default by the

mortgagor.10 This program allows mortgagees to offer loans to low-income families

at a more favorable rate than would otherwise be available in the market. Id. The

availability of affordable mortgages, in turn, promotes Congress's “national goal” of

“a decent home and suitable living environment for every American family.” 12

U.S.C. § 1701t.

       Pursuant to the authority conferred by Congress, HUD promulgated

regulations pertaining to HUD-insured mortgages. The regulations regarding a

mortgagee's servicing responsibilities of such mortgages are codified in Title 24,

Part   203   (Single   Family    Mortgage      Insurance),   Subpart    C    (Servicing

Responsibilities) (“Subpart C”) of the Code of Federal Regulations (“CFR”).11

       In addition, “[i]t is the intent of the Department [HUD] that no mortgagee

shall commence foreclosure or acquire title to a property until the requirements of this

subpart [C] have been followed.” 12 To that end, 24 CFR 203.604 mandates that a

lender or servicer must provide face-to-face counseling before accelerating a home

loan and conducting foreclosure. In relevant part, 203.604 states:

       . . . . The mortgagee must have a face-to-face interview with the
       mortgagor, or make a reasonable effort to arrange such a meeting,
       before three full monthly installments due on the mortgage are

10 Anderson v. U.S. Dep't of Hous. & Urban Dev., 701 F.2d 112, 113-14 (10th Cir.
1983).
11 24 C.F.R. §§ 203.500-.681.
12 24 C.F.R. § 203.500 (emphasis added).

                                          11
         unpaid. If default occurs in a repayment plan arranged other than
         during a personal interview, the mortgagee must have a face-to-face
         meeting with the mortgagor, or make a reasonable attempt to arrange
         such a meeting within 30 days after such default and at least 30 days
         before foreclosure is commenced, . . . .13

         Further, this regulation only permits five (5) exceptions, none of which are

met here. A face-to-face meeting is not required if (1) the mortgagor does not reside

in the property, (2) the property is “not within 200 miles of the mortgagee, its

servicer, or a branch office of either,” (3) the mortgagor has indicated he will not

cooperate in this interview, (4) the mortgagor is consistent with payments on a

situational based repayment plan, or (5) a reasonable effort to arrange a meeting is

not successful. 14

         Here, the Schuetz resided in the property. No evidence has been offered at

this point by Defendant Citi that is has made a reasonable effort to arrange a

meeting prior to foreclosure. (Reasonableness is defined as at least one certified

letter to the mortgagor and a drive to the residence. See 24 C.F.R. 203.604(d).).

Neither does Citi have any evidence that Schuetz had indicated they would not

cooperate in an interview, nor that Schuetz were consistent with payments on a

situational based repayment plan.

         Lastly, and most compelling, is the plain evidence in the record that

13   24 C.F.R. 203.604(a).
14   See 203.604(c).

                                          12
Appellee Citi never interviewed nor attempted to contact the Schuetz despite there

being multiple branches of Citi 200 miles of the residence. CR. 246-54; 514-25.

Citi had the duty and the ability to follow federal law. CR.255-56. For this reason

the case should be reversed and remanded.

2.     A fact issue below precluded summary judgment when the
       Schuetz’ supplemental motion showed a question regarding the
       corporate nature of Citi.

       In their primary motion, the Schuetz identified to the trial court multiple

publicly known locations of Citi branches. CR.246-54; 514-525. At the summary

judgment hearing, Appellee’s counsel objected as to the separate nature of the

entities. The clerk’s record provided to Appellant’s counsel does not contain any

affidavits that refute this fact.

       A.     Appellant Citi offered judicial admissions elsewhere that its
              identity is a fusion of Citibank and Citimortgage; thus, it is
              judicially estopped from claiming they are unrelated.

       At the summary judgment hearing Citi attempted to deny there was any

relationship between Citibank and Citimortgage. Yet the Schuetz provided to the

trial court judicial admissions by Appellee that Citi’s business arrangement

functionally intertwines Citibank and Citimortgage.15 This arrangement makes

them show up on common “Citi” government HAMP websites, 16 corporate

15 CR.511-513; Supp. CR. (forthcoming by way of a request to the Comal County
Clerk).
16 Id.

                                        13
websites,17 parallel displays within Citi websites showing corporate structure,18 and

they even have mortgage payment options on a common website.19 This at a

minimum raised a fact issue regarding Citi’s identity in its circular corporate

“family tree,” enough to preclude the high burden of summary judgment when

construed against Citi both (1) under strict construction of the deed of trust, and (2)

the proper application of the standard of review. Further, the motion for new trial

also contained Citimortgage’s corporate disclosure statement in federal court, in

the case of Debish, et al. v. Fannie Mae and Citimortgage, Inc., that its corporate structure

and operations are wholly owned by CitiBank, N.A.20 This Court should reverse

the trial court.

       B.     The Schuetz’ affidavits demonstrated the material fact
              needed to preclude summary judgment.

       Citimortgage has a branch locator online. CR. 515-19. It also has phone

reception at its branches where the Schuetz contacted Citimortgage. CR. 515-19.

The Schuetz identified thirteen (13) separate locations within 200 miles of their

home whereby Citi had a duty to conduct a face-to-face interview. CR.514-25.

This at a minimum raised a genuine issue of material fact that precluded summary

judgment.

17 Id.
18 Id.
19 Id.
20 See CR.508, 511-12.

                                             14
3.    Texas law permits challenges by debtors to the chain of
      assignments of an alleged creditor. Here, that challenge revealed
      a 9-year gap in the chain of title. This Court should reverse the
      lower court’s ruling on summary judgment.

      Texas law permits challenging the chain of assignments regarding the right

of a party to foreclose.21 This stems from, in part, the settled Texas precedent

following the common law rule where a debtor may bring any ground against an

assignee to challenge an assignment as void or invalid.22 This is true regardless of

whether the Schuetz are third parties to the assignment. See Priesmeyer v. Pacific

Southwest Bank, F.S.B., 917 S.W.2d 937 (Tex. App.—Austin 1996). It simply raises a

disputed issue of material fact, one which cannot survive the standard of review.

      The chain of title has an 9-year gap. CR.187-90. The very motion of

Appellees alleges that from 2000 until 2009 the loan was assigned to MERS. But

MERS does not and cannot own a loan or a deed of trust. MERS admitted

judicially in MERS v. Nebraska Department of Banking and Finance, where MERS denied

ever having ownership interests in any mortgage note.23 Thus, the mortgage could

21 See Priesmeyer v. Pacific Southwest Bank, F.S.B., 917 S.W.2d 937 (Tex. App.—Austin
1996); see also Martin v. New Century Mortgage Co., 2012 Tex. App. LEXIS 4705 (Tex.
App.—Houston [1st Dist.] 2012); Austin v. Countrywide Home Loans, 261 S.W.3d 68
(Tex. App.—Houston [1st Dist.] 2008); Leavings v. Mills, 175 S.W.3d 301 (Tex.
App.—Houston [1st Dist.] 2004, no pet.); Shepard v. Boone, 99 S.W.3d 263 (Tex.
App.—Eastland 2003).
22 See Tri-Cities Const., Inc. v. American Nat. Ins. Co., 523 S.W.2d 426, 430 (Tex. Civ.

App.—Houston [1st Dist.] 1975, no writ); Glass v. Carpenter, 330 S.W.2d 530, 537
(Tex. Civ. App.—San Antonio 1959, writ ref’d n.r.e.).
23 CR. 192-219; See 704 N.W.2d 784 (Neb. 2005). Here, MERS stated it could not

                                          15
never have been assigned to MERS.

      This Court may require addressing its precedent in Bierwirth v. BAC Home

Loans Servicing, LP.24 To the degree this Court believes itself bound by that decision,

the Schuetz pray this Court reverse that decision as it contradicts 160 years of

Texas case law25 and all three editions of Texas Jurisprudence,26 abrogating the

common law without any citation to this vast precedent.

4.    Attorney immunity is not absolute; that counsel below conducted
      actions for years without being retained, actions that did not
      necessarily require the skill of an attorney did not permit
      immunity to attach as a matter of law, a situation requiring
      reversal.

      This Court should follow the learned reasoning of the Dallas Court of

Appeals, which explained the analysis well:

            An attorney can be held liable by a third party for actions that
      are not part of the discharge of his duties to his client. See Alpert, 178
S.W.3d at 406; see also Bradt, 892 S.W.2d at 71. As such, attorneys

acquire mortgage loans.
24 , 2012 Tex. App. LEXIS 7506 (Tex. App.—Austin 2014).

25 See Duty v. Graham, 12 Tex. 427, 434 (Tex. 1854) (“The assignment of the interest

of the mortgagee in the land, without an assignment of the debt, is considered to be
without meaning or use.”); see also Daughters of Charity Health Servs. of Waco v.
Linnstaedter, 226 S.W.3d 409, 411 n.10 (Tex. 2007) (lien is incident to debt);
University Savings & Loan Ass’n v. Texas Lumber, 423 S.W.2d 287, 292 (Tex. 1967)
(assignment is a nullity); West v. First Baptist Church, 71 S.W.2d 1090, 1098-1100
(Tex. 1934) (same, “settled principle”); Pope v. Beauchamp, 219 S.W. 447, 448-49
(Tex. 1920) (same); Perkins v. Sterne, 23 Tex. 561, 1859 Tex. LEXIS 106 (Tex. 1859)
(same).
26 30 Tex. Jur. 3d Deeds of Trust and Mortgages § 119; 30 Tex. Jur. 2d Deeds of Trust and

Mortgages § 119; 28 Tex. Jur. Liens § 16. Each edition states that a deed follows a
note and not vice versa.

                                           16
      acting on behalf of their clients are not shielded from
      liability for their fraudulent conduct because fraudulent acts are
      entirely "foreign to the duties of an attorney." Poole, 58 Tex. at 137
      (fraudulent assignment of bill of lading); see also Toles, 113 S.W.3d at
      911-912 (holding that attorney who represented former husband in
      divorce action was not immune from claim of former wife alleging
      attorney aided and abetted a breach of fiduciary duty).
      Furthermore, an attorney is also liable if he knowingly
      enters into a conspiracy to defraud a third person in the
      course of representing his client. See Likover, 696 S.W.2d at 472
      (conspiracy to defraud purchaser of apartment complex). And under
      certain circumstances, attorneys may also be liable to a third party for
      other torts, [7] such as negligent misrepresentation, despite the
      absence of a general negligence duty to non-clients. See McCamish,
      Martin, Brown & Loeffler, 991 S.W.2d at 793-94. Thus, if the only
      ground for summary judgment is attorney immunity, and
      the plaintiff alleges claims that could arguably involve
      fraudulent conduct, the trial court should deny a motion for
      summary judgment based on attorney immunity as to those
      claims. See Toles, 113 S.W.3d at 912 (argument that actions were
      taken during representation of client was not sufficient to support
      summary judgment on claim for aiding and abetting, breach of
      fiduciary duty, and conspiracy).27

      Further, the Houston Court of Appeals (1st Dist.) has never regarded

immunity absolute, but only in actions that “require[] the office, professional

training, skill, and authority of an attorney the skill of an attorney.”28

      Filing documents, activities identified by Appellee BDFTE at CR. 456, are

by no means actions that require the skill of an attorney. Thus, the immunity claim

should be reversed.

27 Santiago v. Mackie Wolf Zientz & Mann, P.C., 2014 Tex. App. LEXIS 9165, 6-7
(Tex. App. Dallas Aug. 19, 2014) (emphasis added).
28 Dixon Fin. Servs. v. Greenberg, Peden, Siegmyer & Oshman, P.C., 2008 Tex. App.

LEXIS 2064, 21-22 (Tex. App. Houston 1st Dist. Mar. 20, 2008) (emphasis added).

                                           17
5.       The DTPA tie-in statutes derive their authority from other
         sections of the Texas Code. As those sections do not require a
         party be a “consumer,” only a “claimant,” the trial court should
         not have dismissed those claims as a matter of law.

         Unlike bringing a claim pursuant Texas Business and Commerce Code §

17.50(a), a tie-in claim under 17.50(h) has no requirement that it be brought by a

consumer. Section 17.50(h) speaks in terms of a “claimant.”29 There is not a single

use of the word “consumer” in subsection (h), but the word “claimant” is used three

times.

         The Legislature knew what the term “consumer” meant because it was

defined within the Act and used so many times, and yet it chose to use another

term, “claimant,” in granting the enhanced rights of section 17.50 (h). The scheme

shows remarkable forethought by the Legislature in that by a change to the

enabling language in the tie-in statute, the legislature can and did change who

could bring an action and expand or diminish the claims that could be made while

still maintaining a basic consumer protection law for the benefit of its citizens. The

lower court should have granted a trial on the claim as a matter of law and should

be reversed.

6.       The trial court erred in permitting the Nurse declaration and
         other conclusory documents when their use contradicts this
         Court’s decision in Preismeyer v. Pacific Southwest Bank;
         namely, the Nurse declarant had no personal knowledge and the
         affidavits and other documents should have been struck,

29   See TEX. BUS. & COMM. CODE § 17.50(h).

                                         18
      requiring reversal by this Court.

      Affidavits must not only (1) claim to be made on personal knowledge, but

also must (2) demonstrate the facts by which the party came to that personal

knowledge. “A conclusory statement is one that does not provide the underlying

facts to support the conclusion. Conclusory statements in affidavits are not proper

as summary judgment proof if there are no facts to support the conclusions.

Conclusory statements without factual support are not credible, and are not

susceptible to being readily controverted.”30

      Further, “to obtain a summary judgment, affidavit testimony must

affirmatively show that it is based on personal knowledge.31 “The mere recitation

that the affidavit is based on personal knowledge is inadequate if the affidavit does

not positively show a basis for such knowledge.”32

      Lastly, Exhibits J-4, J-5, and J-6 of Appellee’s MSJ were not certified records,

were not under seal, and did not come from any Texas entity. They were not

admissible.33 This Court should reverse the trial court’s denial of the Schuetz’

30 Rizkallah v. Conner, 952 S.W.2d 580, 587 (Tex. App.—Houston [1st Dist.] 1997).
31 Tex. R. Civ. P. 166a(f); see Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984).
32 Priesmeyer, 917 S.W.2d at 939 (finding that bank Vice-President could not opine

as to any transfers or assignments generally without proving the basis for personal
knowledge of that exact assignment or acquisition)(citing to Radio Station KSCS v.
Jennings, 750 S.W.2d 760, 761-62 (Tex. 1988).
33 See Tex. R. Civ. P. 166(a)(f) (MSJ proof “shall set forth such facts as would be

admissible in evidence”). They are pure hearsay and should not be admitted. See
Harrell v. Patel, 225 S.W.3d 1, 6 (Tex. App.—El Paso 2005, pet. denied).

                                         19
motion to strike and reverse the trial court.

                                PRAYER FOR RELIEF

      Based on the foregoing, this Court should:

          Ø Reverse the trial court on the grounds presented herein as a matter of
            law;

          Ø Where factual matters were raised below, this Court should remand
            for a trial on the merits.

                                        Respectfully submitted,

                                        CASEY LAW OFFICE, P.C.

                                        By:   /s/ Stephen Casey
                                              Stephen Casey
                                              State Bar No. 24065015
                                              stephen@caseylawoffice.us
                                        595 Round Rock West Drive, Suite 102
                                        Round Rock, Texas 78681
                                        Telephone: 512-257-1324
                                        Fax: 512-853-4098

                                        COUNSEL FOR APPELLANTS

                                          20
                       CERTIFICATE OF COMPLIANCE

      The preceding brief contains 4,493 words within the sections identified
under Tex. R. App. P. 9.4, typed upon Microsoft Word for Mac 2011, Baskerville
14 point font.

                                    /s/ Stephen Casey

                                     21
                           CERTIFICATE OF SERVICE

       I hereby certify that a true and correct copy of the foregoing Petition for
Review and Appendix were served on Monday, November 30, 2015, on the
following via electronic transmission and/or first class mail:
                                     John Ellis
                                     dfoster@lockelord.com
                                     jellis@lockelord.com
                                     jthomason@lockelord.com
                                     LOCKE LORD LLP
                                     600 Congress Avenue, Ste 2200
                                     Austin, TX 78701

                                     Mark Hopkins
                                     mark@hopkinswilliams.com
                                     12117 Bee Caves Road, Ste 260
                                     Austin, TX 78738

                                     David Pfeuffer
                                     170 E. San Antonio Street
                                     New Braunfels, TX 78130

                                            /s/ Stephen Casey

                                       22
        No. 03-15-00522-CV

        In The Third Court of Appeals
     MICHAEL W. SCHUETZ AND JAMIE K. SCHUETZ,
                                   Appellants,
                       v.

  SOURCE ONE MORTGAGE SERVICES CORPORATION;
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.;
 CITIMORTGAGE, INC.; AND BARRETT DAFFIN FRAPPIER
 TURNER & ENGLE, ROBERT FERGUSON, AND BARBARA
                   FERGUSON,
                                  Appellees,
                   Appeal from Cause No. C2013-1445C,
 274th Judicial District Court, Comal County; Hon. Dib Waldrip, Presiding

        APPELLANTS’ APPENDIX
                       TABLE OF CONTENTS

Tab   Name

A     Trial Court judgment

B     24 CFR 203.604

C     Deed of Trust incorporating 24 CFR 203.604
Tab A
500
501
502
503
504
Tab B
221
222
Tab C
22
23
24
25
26