douglas-arnold-hines-v-deutsche-bank-national-trust-company-as-trustee-for ( 2015 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-14-00368-CV
DOUGLAS ARNOLD HINES APPELLANT
V.
DEUTSCHE BANK NATIONAL APPELLEES
TRUST COMPANY AS TRUSTEE
FOR CERTIFICATEHOLDERS OF
THE MORGAN STANLEY ABS
CAPITAL I INC. - TRUST 2003-
NC10 AND ITS MORTGAGE
SERVICERS, BANK OF AMERICA,
N.A., AND SELECT PORTFOLIO
SERVICING, INC.
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FROM THE 153RD DISTRICT COURT OF TARRANT COUNTY
TRIAL COURT NO. 153-251485-11
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MEMORANDUM OPINION1
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1
See Tex. R. App. P. 47.4.
I. INTRODUCTION
This is a summary judgment appeal. Appellant Douglas Arnold Hines
brought suit against Appellees Deutsche Bank National Trust Company, as
trustee for the Certificateholders of the Morgan Stanley ABS Capital I Inc., Trust
2003-NC10 (Deutsche Bank), and its mortgage servicers, Bank of America, N.A.
(BOA) and Select Portfolio Servicing, Inc. (Select Portfolio), alleging conversion
and fraud claims. BOA, as the mortgage servicer for Deutsch Bank, filed a
counterclaim seeking foreclosure of Deutsch Bank’s lien on Hines’s property.
Appellees filed both a no-evidence motion for summary judgment and a
traditional motion for summary judgment as to Hines’s conversion and fraud
claims. Select Portfolio, as the successor mortgage servicer for Deutsch Bank,
filed a traditional motion for summary judgment on the foreclosure counterclaim.2
The trial court granted all three of Appellees’ motions for summary judgment. In
four issues, Hines argues that the trial court erred by granting the three motions
for summary judgment and abused its discretion by denying his motion for new
trial and plea in abatement. We will affirm.
2
BOA was Deutsch Bank’s mortgage servicer when BOA filed the
foreclosure counterclaim. Select Portfolio was Deutsch Bank’s mortgage
servicer when Select Portfolio filed the traditional motion for summary judgment
on the foreclosure counterclaim.
2
II. FACTUAL AND PROCEDURAL BACKGROUND
On June 25, 2003, Hines took out a home equity loan with New Century
Mortgage Corporation (New Century) in the principal amount of $137,600. Hines
signed a note promising to repay that amount with interest and also signed a
security instrument granting a first lien to New Century against his property. New
Century subsequently assigned the note and security instrument to Deutsche
Bank. Countrywide Home Loans Servicing, LP (Countrywide) originally serviced
the loan for Deutsche Bank. BOA, and then later Select Portfolio, also serviced
the loan on behalf of Deutsch Bank.
The security instrument required that Hines insure his home against
hazards. It also provided that if Hines failed to maintain the required insurance
coverage, the lender could obtain its own policy at Hines’s expense. Through the
security instrument, Hines agreed that a lender-placed policy “shall cover lender,
but might or might not protect [Hines], [Hines’s] equity in the Property, or the
contents of the Property, against any risk, hazard or liability.”
Hines did not obtain his own insurance policy covering his property.
Therefore, Countrywide obtained a lender-placed policy with Balboa Insurance
Group (Balboa) to protect the lender’s interest in Hines’s property. Countrywide
specifically warned Hines that the policy “will only protect Countrywide’s interest
in [Hines’s] property” and that “[i]n the event of a claim, all payments will be made
to Countrywide.”
3
In June 2006, Hines’s home suffered water damage due to a ruptured
pipe. Hines paid a contractor $28,820 to repair the damage. Hines did not
provide Countrywide—Deutsch Bank’s mortgage servicer at the time—with a
copy of the contractor’s estimate, nor did he provide Countrywide a copy of the
contract between himself and the contractor. Hines admits that Countrywide
never told him that he would be reimbursed for the amount he paid the
contractor. Meanwhile, Balboa paid Countrywide $16,822.03 under the lender-
placed policy.
Over a year after the water damage occurred, Hines stopped making
payments on the loan, ostensibly due to Countrywide and Deutsch Bank’s refusal
to reimburse him for the money he spent repairing his home.3 On September 12,
2007, Countrywide sent Hines a default notice and provided him an opportunity
to cure the default. As Hines did not cure the default, Countrywide accelerated
the note, as allowed under the terms of the note.
On March 8, 2011, over four years after Balboa paid the insurance
proceeds to Countrywide, Hines sued Deutsch Bank alleging conversion and
fraud arising out of the payment of the insurance proceeds to Countrywide.
Hines later amended his petition to add BOA and Select Portfolio as defendants.
When BOA, acting as the mortgage servicer for Deutsch Bank, filed a
3
Appellees point out that Hines was also out of work during much of the
time period between the water damage and the date he stopped making
payments on the loan.
4
counterclaim seeking to foreclose on Deutsch Bank’s lien on Hines’s property,
Hines answered, asserting the affirmative defenses of estoppel, quasi-estoppel,
waiver, and payment.
Appellees filed traditional and no-evidence motions for summary judgment
as to Hines’s conversion and fraud claims, arguing that Hines was not entitled to
the insurance proceeds and that his claims were barred by limitations. Select
Portfolio, on behalf of Deutsch Bank, filed a traditional motion for summary
judgment on Deutsch Bank’s foreclosure counterclaim. Hines filed responses to
Appellees’ no-evidence motion for summary judgment and Select Portfolio’s
traditional motion for summary judgment, but he did not file a response to
Appellees’ traditional motion for summary judgment on his conversion and fraud
claims. The trial court granted all three motions for summary judgment and
denied Hines’s plea in abatement that argued that Select Portfolio and its
counsel lacked standing to file the traditional motion for summary judgment on
the foreclosure counterclaim. The trial court then denied Hines’s motion for new
trial that was based upon the existence of newly discovered evidence. This
appeal ensued.
III. SUMMARY JUDGMENT AS TO THE FORECLOSURE COUNTERCLAIM
In his first issue, Hines argues that the trial court erred in granting Select
Portfolio’s traditional motion for summary judgment that sought an order
authorizing the foreclosure of Deutsch Bank’s lien.
5
A. Standard of Review
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,
315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the
light most favorable to the nonmovant, crediting evidence favorable to the
nonmovant if reasonable jurors could and disregarding evidence contrary to the
nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every
reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,
Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A plaintiff is entitled to
summary judgment on a cause of action if it conclusively proves all essential
elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986).
When the movant has established the absence of any genuine issue of
material fact as to its own cause of action, the nonmovant cannot defeat the
granting of a motion for summary judgment by merely pleading an affirmative
defense. Holmes v. Graham Mortg. Corp., 449 S.W.3d 257, 264 (Tex. App.—
Dallas 2014, pet. denied); Jones v. Legal Copy, Inc., 846 S.W.2d 922, 924 (Tex.
App.—Houston [1st Dist.] 1993, no pet.). Instead, the nonmovant “must come
forward with evidence sufficient to raise an issue of fact on each element of the
defense to avoid summary judgment.” Holmes, 449 S.W.3d at 264. Thus, once
the movant produces evidence entitling it to summary judgment on its own cause
of action, the burden shifts to the nonmovant to raise a fact issue on its
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affirmative defense. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984);
Tarrant Restoration v. TX Arlington Oaks Apartments, Ltd., 225 S.W.3d 721, 730
(Tex. App.—Dallas 2007, pet. dism’d w.o.j.).
B. Analysis
Hines does not contest that Select Portfolio conclusively proved all
essential elements of the foreclosure counterclaim. Rather, Hines argues that he
raised a fact issue on his affirmative defenses of estoppel, quasi-estoppel,
waiver, and payment.
Hines’s first three affirmative defenses—estoppel, quasi-estoppel, and
waiver—are all predicated on the argument that Hines was entitled to the
proceeds of the lender-placed insurance policy. In short, Hines argues that the
fact that the insurance proceeds were not turned over to him should preclude
foreclosure. This argument fails because Hines was not entitled to the insurance
proceeds. The security instrument—that was signed by Hines—specifically
provided that a lender-placed policy “shall cover lender, but might or might not
protect [Hines], [Hines’s] equity in the Property, or the contents of the Property,
against any risk, hazard or liability.” When it obtained the lender-placed policy,
Countrywide specifically warned Hines that the policy “will only protect
Countrywide’s interest in [Hines’s] property” and that “[i]n the event of a claim, all
payments will be made to Countrywide.” As Hines was not entitled to the
insurance proceeds, his affirmative defenses of estoppel, quasi-estoppel, and
waiver fail.
7
Hines next contends that he raised a fact issue on his affirmative defense
of payment, pointing to the $28,820 that he paid for repairs and $19,535.37 that
was deposited by Hines into the registry of the 342nd District Court in a related
proceeding.4 The summary judgment evidence establishes that the amount due
on the loan as of the date Select Portfolio moved for summary judgment was
$244,646.28; thus, even if Hines was entitled to some type of credit for these
amounts, a deficiency would exist authorizing the order of foreclosure.
Consequently, we hold that Hines did not raise a fact issue on his affirmative
defense of payment.
Because Hines did not raise a fact issue on any of his affirmative
defenses, the trial court properly granted Select Portfolio’s traditional motion for
summary judgment on the foreclosure counterclaim. We overrule Hines’s first
issue.
IV. SUMMARY JUDGMENT AS TO HINES’S CLAIMS
In his second issue, Hines argues that the trial court erred by granting
Appellees’ no-evidence motion for summary judgment on his conversion and
fraud claims. Appellees’ no-evidence motion for summary judgment and
Appellees’ traditional motion for summary judgment both sought judgment on
Hines’s claims for conversion and fraud, but Hines failed to file a response in the
4
During oral argument, all parties confirmed that they were not seeking any
relief from this court regarding the distribution of funds held in the registry of the
342nd District Court.
8
trial court to Appellees’ traditional motion for summary judgment and makes no
argument on appeal challenging Appellees’ traditional motion for summary
judgment. Accordingly, because the granting of Appellee’s traditional motion for
summary judgment is not challenged on appeal, any trial court error in granting
Appellees’ no-evidence motion is harmless.5 That is, in the absence of a
challenge to the traditional summary judgment granted to Appellees on Hines’s
conversion and fraud claims, any error in the granting of a no-evidence motion
for summary judgment on Hines’s conversion and fraud claims is harmless. See
Tex. R. App. P. 44.1(a); accord Perez-Montes v. Live Oak Constr., Inc., No. 13-
13-00674-CV, 2015 WL 2352423, at *2 (Tex. App.—San Antonio May 14, 2015,
no pet.) (mem. op.) (holding that because the plaintiff failed to challenge the
grant of summary judgment based on no-evidence grounds, any error with regard
to the grant of summary judgment based on traditional grounds was harmless,
where both no-evidence and traditional motions sought the same relief). We
overrule Hines’s second issue.
5
At times in his briefing, Hines refers to “Appellees’ traditional motion for
summary judgment.” The context of those references makes clear, however, that
Hines is really discussing Select Portfolio’s traditional motion for summary
judgment on the foreclosure counterclaim. See, e.g., Hines’s Brief, p. 11 (“The
trial court granted Appellees’ Motion for a Traditional Summary Judgment on
their counterclaim for foreclosure . . . .”); Hines’s Reply Brief, p. 10 (“[I]n support
of his affirmative defenses serving to defeat the Appellees’ Traditional Motion for
Summary Judgment thereby precluding foreclosure . . . .”). Apart from these and
similar mischaracterized references, Hines does not discuss Appellees’
traditional motion for summary judgment in his briefing.
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V. HINES’S MOTION FOR NEW TRIAL
In his third issue, Hines argues that the trial court abused its discretion by
denying his motion for new trial asserting the existence of newly discovered
evidence.
A. The Law
A party seeking a new trial based upon the existence of newly discovered
evidence must show: (1) the evidence has come to light since trial, (2) the failure
to discover the evidence sooner was not due to lack of diligence, (3) the
evidence is not cumulative, and (4) the evidence is so material it would probably
produce a different result if a new trial were granted. Waffle House, Inc. v.
Williams, 313 S.W.3d 796, 813 (Tex. 2010). We review the denial of a motion for
new trial under an abuse of discretion standard. Id. A trial court abuses its
discretion if the court acts without reference to any guiding rules or principles,
that is, if the act is arbitrary or unreasonable. Low v. Henry, 221 S.W.3d 609,
614 (Tex. 2007); Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004).
B. Analysis
In his motion for new trial, Hines argued that he recently discovered
evidence of a class-action lawsuit against BOA and Balboa that involved alleged
kickbacks between the two entities as it related to lender-placed insurance
policies. Hines attached to his motion for new trial certain pleadings from the
class-action case as well as certain press releases relating to the settlement of
the class action. According to Hines, this evidence necessitated a new trial.
10
Appellees point out that the class action was filed over two years prior to
the court’s ruling on the summary judgment motions and therefore does not
constitute newly-discovered evidence. Appellees also argue that Hines has not
established that the “newly discovered” evidence is so material that it would
probably produce a different result if a new trial were granted. See Waffle
House, 313 S.W.3d at 813. The facts surrounding the class action do not
change the fact that Hines was not entitled to the insurance proceeds of the
lender-placed policy; his assertion that he was so entitled forms the basis of his
affirmative and defensive claims in this case. Hines expressed his desire during
oral argument to use the evidence in the class action to assert additional claims
against Appellees; but a motion for new trial based on newly-discovered
evidence may not be used for such a purpose.6 See Loera v. Interstate Inv.
Corp., 93 S.W.3d 224, 228 (Tex. App.—Houston [14th Dist.] 2002, pet. denied)
(“Appellants cannot rewrite their pleadings to allege new causes of action for the
first time in a motion for new trial.”).
We hold that the trial court did not abuse its discretion by denying Hines’s
motion for new trial. We overrule Hines’s third issue.
6
Moreover, Hines conceded that he is a member of the class action and
intends to submit a claim pursuant to the class-action settlement.
11
VI. HINES’S PLEA IN ABATEMENT
In his fourth issue, Hines argues that the trial court erred by denying his
plea in abatement contending that Select Portfolio and its counsel lacked
standing to file any motion for summary judgment on behalf of Deutsch Bank.7
A. Standard of Review
We review a trial court’s decision on a plea in abatement for an abuse of
discretion. Griffith v. Griffith, 341 S.W.3d 43, 53 (Tex. App.—San Antonio 2011,
no pet.); Shutter v. Wells Fargo Bank, N.A., 318 S.W.3d 467, 469 (Tex. App.—
Dallas 2010, pet. dism’d w.o.j.). As stated above, a trial court abuses its
discretion if the court acts without reference to any guiding rules or principles,
that is, if the act is arbitrary or unreasonable. Low, 221 S.W.3d at 614; Cire, 134
S.W.3d at 838–39.
B. Application
Hines first argues that Select Portfolio lacked standing to file a motion for
summary judgment on behalf of Deutsch Bank. Hines acknowledges in his
pleadings and brief, however, that Select Portfolio is the current mortgage
servicer for Deutsch Bank. As the mortgage servicer for Deutsch Bank, Select
Portfolio was authorized to administer foreclosure proceedings on behalf of
Deutsch Bank. See Tex. Prop. Code Ann. § 51.0025 (West 2014) (authorizing a
7
Although Hines’s plea in abatement is not in the record, the record
contains the reporter’s record of the hearing on Hines’s plea in abatement, and
the arguments contained in the plea in abatement can be gleaned from that
record.
12
mortgage servicer to administer foreclosure proceedings on behalf of a
mortgagee).
Hines next argues that Select Portfolio’s counsel did not have the authority
to file any motion for summary judgment on behalf of Deutsch Bank, as Deutsch
Bank had other counsel in this case. According to Hines, Select Portfolio’s
counsel was required to obtain an order substituting it as counsel for Deutsch
Bank before it could file any motion on behalf of Deutsch Bank. Select Portfolio’s
counsel, however, was not acting on behalf of Deutsch Bank when it filed the
traditional motion for summary judgment, but was acting as counsel for Select
Portfolio, who was itself acting as the mortgage servicer for Deutsch Bank.
Moreover, if Hines did not believe that Select Portfolio’s counsel had the authority
to file any of the motions for summary judgment, Hines was required to file a
motion to show authority in accordance with Rule 12 of the Texas Rules of Civil
Procedure. See Tex. R. Civ. P. 12; Tanner v. Black, 464 S.W.3d 23, 26 (Tex.
App.—Houston [1st Dist.] 2015, no pet.) (“Rule 12 has long been the exclusive
method for questioning the authority of an attorney to bring a suit.”).
Based on the foregoing, we hold that the trial court did not abuse its
discretion in denying Hines’s plea in abatement. We thus overrule Hines’s fourth
issue.
VII. CONCLUSION
Having overruled Hines’s four issues, we affirm the trial court’s judgment.
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/s/ Sue Walker
SUE WALKER
JUSTICE
PANEL: GARDNER, WALKER, and GABRIEL, JJ.
DELIVERED: November 12, 2015
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