Jerry Hofrock v. Nationstar Mortgage, LLC Federal National Mortgage Association (Fannie Mae) And Jonathan Kantor ( 2016 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-16-00114-CV
Jerry Hofrock, Appellant
v.
Nationstar Mortgage, LLC; Federal National Mortgage Association (Fannie Mae); and
Jonathan Kantor, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT
NO. D-1-GN-15-000128, HONORABLE ORLINDA NARANJO, JUDGE PRESIDING
MEMORANDUM OPINION
Jerry Hofrock, proceeding pro se, appeals from the trial court’s final order granting
appellees’ traditional and no-evidence motion for summary judgment on Hofrock’s petition for bill
of review. Hofrock’s petition for bill of review sought to void the trial court’s “Order to Proceed
with Notice of Foreclosure Sale and Foreclosure Sale” from an expedited foreclosure proceeding in
the trial court’s cause number D-1-GN-11-001674, which proceeding was brought by appellee
Nationstar Mortgage, LLC, pursuant to Texas Rule of Civil Procedure 736. See Tex. R. Civ. P. 736
(eff. Apr. 15, 2000).1 Because we conclude that the trial court did not err when it granted summary
judgment, we affirm.
1
Unless otherwise stated, we cite and apply the version of Texas Rule of Civil Procedure
736 as it existed in 2011 in our analysis of this appeal.
BACKGROUND2
In 2007, Hofrock signed a home-equity note and security instrument on property
located in Travis County. Hofrock defaulted under the terms of the note and security instrument, and
Nationstar, as the assignee of the deed of trust, filed an application for expedited foreclosure in 2011
pursuant to Texas Rule of Civil Procedure 736. See id. The expedited foreclosure proceeding was
assigned cause number D-1-GN-11-001674, and the trial court ultimately entered the order that is
the subject of Hofrock’s petition for bill of review—“the Order to Proceed with Notice of
Foreclosure Sale and Foreclosure Sale” (the Order to Proceed)—in August 2011. Nationstar
thereafter sold the property to appellee Federal National Mortgage Association (Fannie Mae) at
a foreclosure sale, and, after evicting Hofrock, Fannie Mae then sold the property to appellee
Jonathan Kantor.
Hofrock filed his petition for bill of review in January 2015, primarily challenging
the Order to Proceed based on his allegation that he was not properly served in the expedited
foreclosure proceeding. Appellees answered and filed a traditional and no-evidence motion for
summary judgment. They sought traditional summary judgment on multiple grounds, including that:
(i) Hofrock’s petition for bill of review was barred by res judicata; (ii) the petition for bill of review
was not proper; and (iii) Hofrock’s claims were “baseless and otherwise refuted by summary
judgment evidence.” Appellees’ summary judgment evidence included copies of pleadings from the
expedited foreclosure proceeding and several other related lawsuits.
2
Because the parties are familiar with the facts of the case and its procedural history, we do
not recite them in this opinion except as necessary to advise the parties of the Court’s decision and
the basic reasons for it. See Tex. R. App. P. 47.1, 47.4.
2
Hofrock filed a response to appellees’ motion, urging that he met the criteria for a bill
of review. See Katy Venture, Ltd. v. Cremona Bistro Corp., 469 S.W.3d 160, 164 (Tex. 2015) (per
curiam) (describing required elements of bill of review); Caldwell v. Barnes, 154 S.W.3d 93, 96
(Tex. 2004) (per curiam) (same). He primarily argued that the Order to Proceed was void because
he was never properly served with citation pursuant to Texas Rule of Civil Procedure 99, see Tex.
R. Civ. P. 99 (addressing issuance and form of citation), and, thus, that the trial court in the
expedited foreclosure proceeding did not have jurisdiction to enter the Order to Proceed. His
summary judgment evidence included copies of pleadings from the 2011 expedited foreclosure
proceeding and copies of discovery.
Following a hearing, the trial court signed the final order granting appellees’
traditional and no-evidence motion for summary judgment without specifying the grounds for its
ruling. Hofrock filed a motion for new trial, which was overruled by operation of law. This
appeal followed.
ANALYSIS
Hofrock brings three issues challenging the trial court’s summary judgment in favor
of appellees on his petition for bill of review.3 He argues that (i) no citation was ever issued or
served on him “as required by law” in the expedited foreclosure proceeding, (ii) the trial court did
not have jurisdiction in that proceeding to issue the Order to Proceed, and (iii) the trial court in this
3
On the same day that the trial court signed its final order granting summary judgment, the
trial court also signed an order granting the motion for sanctions and request for pre-filing injunction
that was filed by appellees Nationstar and Federal National Mortgage Association (Fannie Mae).
Hofrock has not appealed from the order granting sanctions and pre-filing injunctive relief.
3
case erred because “there were material facts in dispute, namely, was he ever served with citation”
in the expedited foreclosure proceeding.
Bill of Review Requirements and Standards of Review
“A bill of review is an equitable proceeding, brought by a party seeking to set aside
a prior judgment that is no longer subject to challenge by a motion for new trial or direct appeal.”
Katy Venture, 469 S.W.3d at 164. Traditionally, a bill of review requires proof of three elements:
(1) a meritorious defense to the underlying cause of action, (2) which the plaintiff was prevented
from making by the fraud, accident or wrongful act of the opposing party or official mistake,
(3) unmixed with any fault or negligence by the movant. Id.; Caldwell, 154 S.W.3d at 96. However,
a bill of review plaintiff claiming no service is relieved of the obligation to prove the first two
elements because a judgment rendered without service is constitutionally infirm. Peralta v. Heights
Med. Ctr., Inc., 485 U.S. 80, 84–85 (1988); Katy Venture, 469 S.W.3d at 164; Caldwell, 154 S.W.3d
at 96–97. We generally review a trial court’s denial of a bill of review for an abuse of discretion.
Morris v. O’Neal, 464 S.W.3d 801, 806 (Tex. App.—Houston [14th Dist.] 2015, no pet.).
This appeal, however, is from a summary judgment ruling, which we review de novo.
Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). To prevail on a
traditional summary judgment motion, the movant must demonstrate that there are no genuine issues
of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Knott,
128 S.W.3d at 215–16. “When the trial court does not specify the grounds for its ruling,” as is the
case here, “a summary judgment must be affirmed if any of the grounds on which judgment is sought
are meritorious.” Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013) (citing State
4
v. Ninety Thousand Two Hundred Thirty-Five Dollars & No Cents in U.S. Currency ($90,235),
390 S.W.3d 289, 292 (Tex. 2013)).
Service in the Expedited Foreclosure Proceeding
The focus of Hofrock’s issues is a challenge to Nationstar’s service on him in the
2011 expedited foreclosure proceeding. He contends that the Order to Proceed is void because no
citation was entered or served on him in the expedited foreclosure proceeding that complied with
Texas Rule of Civil Procedure 99, see Tex. R. Civ. P. 99, and further argues that there are material
facts in dispute as to whether he was served in the expedited foreclosure proceeding, which
precluded summary judgment in favor of appellees.
Texas Rule of Civil Procedure 736, however, addresses the procedures for obtaining
a court order to allow the foreclosure of a home equity loan and provides its own requirements for
service. See Tex. R. Civ. P. 736(2) (addressing service and form of notice), 736(7) (“The only issue
to be determined under Rule 736 shall be the right of the applicant to obtain an order to proceed with
foreclosure under the security instrument and Tex. Prop. Code § 51.002.”); see also Tex. Const. art.
XVI, § 50(a)(6) (addressing home-equity-loan exception to Texas Constitution’s protection from
forced sales of homesteads for payment of debts), 50(r) (directing Texas Supreme Court to
“promulgate rules of civil procedure for expedited foreclosure proceedings related to the foreclosure
of liens under Subsection (a)(6) of this section”); Tex. Prop. Code § 51.002 (addressing sale of real
property under contract lien). As it existed in 2011, Rule 736 required service of the application and
notice “by delivery of a copy to the party to be served by certified and first class mail addressed to
each party who, according to the records of the holder of the debt [was] obligated to pay the debt.
5
Service [was] complete upon the deposit of the application and notice, enclosed in a postage prepaid
and properly addressed wrapper, in a post office or official depository under the care and custody of
the United State Postal Service.”4 See Tex. R. Civ. P. 736(2)(A) (addressing service of notice and
application). Rule 736(2)(C) also specified the required form of the notice by providing a template
and stating that notice was “sufficient if it [was] in substantially” the same form as the template. See
id. R. 736(2)(C) (providing form of notice).
Hofrock does not dispute and the record reflects that Nationstar mailed the notice and
its application for expedited foreclosure pursuant to Rule 736 to Hofrock by certified and first class
mail. The summary judgment evidence included the certificate of service in which Nationstar’s
counsel certified that a copy of the notice and application were sent via certified and regular mail to
Hofrock. See id. R. 736(2)(B) (“The certificate of service shall be prima facie evidence of the fact
of service.”). The record also conclusively establishes that Hofrock actually received the notice and
application. Among other summary judgment evidence was a letter dated August 24, 2011, that was
signed by Hofrock and addressed to and filed in the trial court on August 25, 2011. In the letter,
Hofrock identified the address of the property, referred to the expedited foreclosure proceeding by
the trial court’s cause number in the subject line of the letter, and stated in the body of the letter that
he “just received notice of this today and am responding” and “contest[ed] any Default Judgment
4
Although not relevant to this appeal, the service provision of Rule 736 as it existed in 2011
also required an additional copy of the application and notice to be sent to the respondent’s attorney
when the respondent was represented by an attorney and the applicant’s attorney had knowledge of
the attorney’s name and address. See Tex. R. Civ. P. 736(2)(A) (eff. Apr. 15, 2000). The current
version of the rule directs the clerk of the court to issue and serve citation in an expedited foreclosure
proceeding. See Tex. R. Civ. P. 736.3 (eff. Jan. 1, 2012) (addressing issuance of citation).
6
in this matter.” At the time that he filed this letter, there was a motion for default judgment pending
before the trial court. Nationstar had filed the motion for default judgment on August 22, 2011, and
the certificate of service to this motion certified that a copy of the motion was sent to Hofrock. In
his letter that was filed with the trial court on August 25, 2011, Hofrock also referred to and attached
a letter dated August 8, 2011, that was signed by Hofrock and addressed to Nationstar’s counsel.
In that letter, Hofrock identified the address of the property and stated that he was “responding to
a letter demanding a response today.” As to the form of Nationstar’s notice, the summary evidence
also included a copy of the notice. Based on our review of Nationstar’s notice, we conclude that
it substantially followed the template for the form of notice provided in Rule 736. See id.
R. 736(2)(C). Thus, we conclude that Nationstar properly served Hofrock with notice of the
expedited foreclosure proceeding pursuant to Rule 736.
Further, even if we were to conclude that Hofrock was not properly served with notice
in the expedited foreclosure proceeding, we would conclude that the trial court did not err in granting
summary judgment in favor of appellees. When a party files an answer, the answer “constitute[s]
an appearance of the defendant so as to dispense with the necessity for the issuance or service of
citation upon him.” Tex. R. Civ. P. 121. Here, the record reflects that Hofrock appeared in the
expedited foreclosure proceeding by filing an answer—his letter dated August 24, 2011, signed by
him and addressed to the trial court, that referred to the expedited foreclosure proceeding by its
assigned cause number, “contest[ed] any Default Judgment in this matter,” and attached Hofrock’s
letter dated August 8, 2011, signed by him and addressed to Nationstar’s counsel—prior
to the trial court’s entry of the Order to Proceed. See Owusu v. Citibank (S. Dakota), N.A.,
7
No. 05-10-00175-CV, 2011 Tex. App. LEXIS 4800, at *5–6 (Tex. App.—Dallas June 22, 2011, no
pet.) (mem. op.) (concluding that pro se letter that “bore his name, address, and signature” and
referred to parties and trial court’s cause number was properly treated as answer when filed with trial
court and, based on this conclusion, overruling appellant’s issue contending that he did not receive
service of citation). Thus, Hofrock waived any complaints about service by making an appearance
in the expedited foreclosure proceeding. See id.; see also Tex. R. Civ. P. 121; Phillips v. Dallas Cty.
Child Protective Servs. Unit, 197 S.W.3d 862, 865 (Tex. App.—Dallas 2006, pet. denied) (“[F]iling
an answer waives any complaints about service.”).
We also observe that appellees raised other independent grounds for summary
judgment in their motion, including that a petition for bill of review was not an available avenue for
Hofrock to challenge the Order to Proceed that was granted pursuant to Rule 736. Rule 736(8)(A)
provided that “[t]he granting or denial of the application [was] not an appealable order.” See Tex.
R. Civ. P. 736(8)(A).5 Rather, the rule allowed the filing of a separate suit. See id. R. 736(9) (“The
granting of an application under these rules shall be without prejudice to the right of the respondent
to seek relief at law or in equity in any court of competent jurisdiction.”); see also McLane
v. Washington Mut. Bank, No. 02-07-00460-CV, 2008 Tex. App. LEXIS 5360, at *2 (Tex.
App.—Fort Worth July 17, 2008, no pet.) (mem. op.) (per curiam) (concluding that appellant could
not circumvent prohibition of appeal in Rule 736 by challenging denial of motion for new trial
5
The current version of Rule 736 expressly precludes a challenge to an order granting an
application for expedited foreclosure by bill of review. See Tex. R. Civ. P. 736.8(c) (“An order
granting or denying the application is not subject to a motion for rehearing, new trial, bill of review,
or appeal. Any challenge to a Rule 736 order must be made in a suit filed in a separate, independent,
original proceeding in a court of competent jurisdiction.”).
8
instead of order granting foreclosure application and dismissing appeal for want of jurisdiction).
This independent ground standing alone was sufficient to support the trial court’s summary judgment
ruling. Thus, we need go no further in our analysis in this appeal. See Merriman, 407 S.W.3d at 248
(requiring summary judgment to be affirmed “if any of the grounds on which judgment is sought
are meritorious”).
CONCLUSION
For these reasons, we overrule Hofrock’s issues and affirm the trial court’s final order
granting appellees’ traditional and no-evidence motion for summary judgment on Hofrock’s petition
for bill of review.
__________________________________________
Melissa Goodwin, Justice
Before Chief Justice Rose, Justices Goodwin and Bourland
Affirmed
Filed: November 22, 2016
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