Pinnacle Premier Properties, Inc. and Pinnacle Realty Advisors, Inc v. Ghislain Breton, Catherine Denicourt and David Andreis ( 2014 )

Reversed and Rendered and Substitute Opinion filed November 6, 2014.
In The
Fourteenth Court of Appeals
NO. 14-14-00194-CV
PINNACLE PREMIER PROPERTIES, INC. AND PINNACLE REALTY
ADVISORS, INC., Appellants
V.
GHISLAIN BRETON, CATHERINE DENICOURT AND DAVID ANDREIS,
Appellees
On Appeal from the 165th District Court
Harris County, Texas
Trial Court Cause No. 2014-02397
SUBSTITUTE OPINION
We issued our original opinion in this case on October 9, 2014. Appellees
filed a motion for rehearing. We overrule the motion for rehearing, withdraw our
previous opinion, and issue this substitute opinion.
In one issue in this interlocutory appeal, appellants Pinnacle Properties, Inc.
and Pinnacle Realty Advisors, Inc. (collectively “Pinnacle”) complain that the
district court lacked jurisdiction to enjoin Pinnacle from pursuing two eviction
proceedings that were pending in justice court.1 Although a district court has
jurisdiction to enjoin the exercise of a justice court’s jurisdiction in an eviction
proceeding when certain conditions are met, we conclude the district court erred in
granting the temporary injunction because (1) the issues of title and possession
were not intertwined and thus the justice court has exclusive jurisdiction over the
issue of possession, and (2) appellees have an adequate remedy at law if their
wrongful foreclosure claim is meritorious.
Background
The facts are largely undisputed. Melba and Howard Johnson executed a
deed of trust (which was duly recorded in Harris County) on the subject property,
at the time a vacant lot in the Houston Heights, to secure payment of a $77,500
note signed by Pinnacle Realty Advisors, Inc. and Melba. Four years later, the
Johnsons sold the property to Gold Quest Equity, LLC. One month later, Gold
Quest sold the property to KAVAC, LLC. KAVAC subdivided the property into
two lots, built houses on the lots, and sold one home to appellees Ghislain Breton
and Catherine Denicourt and one home to appellee David Andreis.2 For
unexplained reasons, the note was never paid off.
Melba defaulted under the note. After sending foreclosure notices to the
Johnsons, Pinnacle Realty Advisors assigned the note to Pinnacle Premiere
Properties, which purchased the property at a foreclosure sale.3 Pinnacle Premiere
1
Pinnacle brings this appeal under Texas Civil Practice and Remedies Code section
51.014(a)(4), which allows an appeal from a trial court’s interlocutory order granting or refusing
a temporary injunction.
2
The lots with the homes apparently now are worth over $1,000,000 each.
3
Appellees dispute that the foreclosure was conducted properly or that Pinnacle Realty
Advisors was the holder of the note purportedly assigned to Pinnacle Premiere Properties.
Appellees assert that Pinnacle Realty Advisors had assigned the note to Post Oak Bank and it
2
Properties sent notices to vacate the property to Melba “and All Occupants.”
Appellees contend this was the first time they became aware of the foreclosures.
Pinnacle Premiere Properties then filed eviction (forcible detainer) proceedings in
justice court.
After Pinnacle Premiere Properties filed its lawsuits, appellees filed the
underlying lawsuit, asserting claims for trespass to try title and wrongful
foreclosure and a suit to quiet title, and seeking an injunction preventing Pinnacle
from proceeding with the eviction suits in justice court.4 The district court signed a
temporary restraining order and then a temporary injunction order preventing
Pinnacle from proceeding with the eviction suits.
Discussion
In one issue, Premiere contends the district court exceeded its jurisdiction in
granting the temporary injunction. Appellees argue this is not a true jurisdictional
challenge; rather, it is a challenge to the district court’s grant of the temporary
injunction, which we generally review for an abuse of discretion. See, e.g.,
Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (“The decision to grant or
deny a temporary writ of injunction lies in the sound discretion of the trial court,
and the court’s grant or denial is subject to reversal only for a clear abuse of that
discretion.”). We agree that Premiere’s complaint is viewed more properly as a
challenge to the district court’s grant of the injunction, but conclude that the trial
court erred in granting the injunctive relief.
was never reassigned to Pinnacle Realty Advisors. We note this allegation is relevant only to
appellees’ wrongful foreclosure claim, discussed below. At the temporary injunction hearing,
James Murnane, the owner of Pinnacle, testified he “pledged” or “transferred” the note to Post
Oak Bank as collateral for a credit line. Murnane testified that Post Oak “gave [him] back the
original note,” but he did not remember how that was done. He said, “I believe I picked it up
from them.” It is unclear from the record whether the note was ever reassigned to Pinnacle.
4
Appellees nonsuited their trespass to try title claim after this appeal was filed.
3
I. Although there are some jurisdictional issues involved in our
analysis, this appeal is properly characterized as a challenge to
the district court’s order granting the temporary injunction.
Jurisdiction to hear a forcible detainer action is expressly given to the justice
court of the precinct where the property is located. Maxwell v. U.S. Bank Nat’l
Ass’n, No. 14-12-00209-CV, 2013 WL 3580621, at *2 (Tex. App.—Houston [14th
Dist.] July 11, 2013, pet. dism’d w.o.j.) (mem. op.). A justice court has exclusive
jurisdiction to decide the issue of immediate possession, which may not be
infringed upon as long as the justice court merely determines possession. Rice v.
Pinney, 51 S.W.3d 705, 713 (Tex. App.—Dallas 2001, no pet.). Although a justice
court has exclusive jurisdiction to hear a forcible detainer action, a district court
may enjoin the exercise of the justice court’s jurisdiction in a forcible detainer
action when there is a showing that the justice court is without jurisdiction to
proceed in the cause or the defendant has no adequate remedy at law. McGlothlin
v. Kliebert, 672 S.W.2d 231, 232 (Tex. 1984).
We generally review a district court’s grant of such an injunction for an
abuse of discretion. See id. Although an abuse of discretion does not occur when
the trial court heard conflicting evidence and substantive, probative evidence
reasonably supports the trial court’s decision, we will apply a de novo standard of
review when the issue turns on a pure question of law.5 See Tenet Health Ltd. v.
Zamora, 13 S.W.3d 464, 468-69 (Tex. App.—Corpus Christi 2000, pet. dism’d
w.o.j.) (citing State v. Heal, 917 S.W.2d 6, 9 (Tex. 1996)); see also Sharma v.
Vinmar Int’l, Ltd., 231 S.W.3d 405, 419 (Tex. App.—Houston [14th Dist.] 2007,
5
When consideration of evidence is required, we view it in the light most favorable to the
trial court’s order, indulging every reasonable inference in favor of the trial court’s
determination. LasikPlus of Tex., P.C. v. Mattioli, 418 S.W.3d 210, 216 (Tex. App.—Houston
[14th Dist.] 2013, no pet.).
4
no pet.) (“[A]s the trial court functions as the fact finder in a temporary injunction
hearing, an abuse of discretion does not exist where the trial court bases its
decision on conflicting evidence.”). We review questions of law without deference
to a lower court’s conclusion. See Heal, 917 S.W.2d at 9; Burris v. Metro. Transit
Auth. of Harris Cnty., 266 S.W.3d 16, 20 (Tex. App.—Houston [1st Dist.] 2008,
no pet.). When, as here, no findings of fact or conclusions of law are filed, the trial
court’s determination of whether to grant or deny a temporary injunction must be
upheld on any legal theory supported by the record.6 LasikPlus of Tex., P.C. v.
Mattioli, 418 S.W.3d 210, 216 (Tex. App.—Houston [14th Dist.] 2013, no pet.).
Appellees argue that Pinnacle’s “failure to brief an abuse of discretion
review” resulted in a failure to carry its burden to show an abuse of discretion. We
disagree. As discussed, we review questions of law de novo and not for an abuse
of discretion. In this case, the relevant facts are not disputed, but we are presented
with questions of law regarding the effect of the tenant-at-sufferance clause in the
deed of trust, discussed below, and whether appellees, under the undisputed facts,
had an adequate remedy at law through their wrongful foreclosure claim. See
Glapion v. AH4R I TX, LLC, No. 14-13-00705-CV, 2014 WL 2158161, at *1 (Tex.
App.—Houston [14th Dist.] May 22, 2014, no pet.) (mem. op.) (acknowledging
whether justice court could exercise jurisdiction over question regarding
possession of property is a question of law subject to de novo review); see also
8100 N. Freeway, Ltd. v. City of Houston, 363 S.W.3d 849, 854 (Tex. App.—
Houston [14th Dist.] 2012, no pet.) (“A trial court abuses its discretion when it . . .
6
The trial court made “findings” in the temporary injunction order but did not sign
separate findings of fact and conclusions of law. A trial court may, but need not, file findings of
fact and conclusions of law with respect to an interlocutory order. Tex. R. App. P. 28.1(c).
When no findings of fact or conclusions of law are filed other than those in the order granting
temporary injunction, the trial court’s judgment must be upheld on any legal theory supported by
the record. Boatman v. Lites, 888 S.W.2d 90, 92 (Tex. App.—Tyler 1994, no writ).
5
misapplies the law to the established facts of the case.”). Pinnacle cited the proper
case law for us to determine as a matter of law whether the trial court erred in
granting the injunction. See Perry v. Cohen, 272 S.W.3d 585, 588 (Tex. 2008)
(“[W]e liberally construe issues presented to obtain a just, fair, and equitable
adjudication of the rights of the litigants.”). With these standards in mind, we turn
to Pinnacle’s challenge to the district court’s order granting the temporary
injunction.
II. Defects in the foreclosure process are not relevant to possession
when, as here, the parties to be evicted are subject to a tenant-at-
sufferance clause in the deed of trust.
Although a justice court has subject matter jurisdiction over forcible
detainers, the justice court lacks jurisdiction to resolve title disputes. Maxwell,
2013 WL 3580621, at *2; Black v. Wash. Mut. Bank, 318 S.W.3d 414, 417 (Tex.
App.—Houston [1st Dist.] 2010, pet. dism’d w.o.j.). Thus, a forcible detainer only
addresses who has the right to possess the property, not who has title to it. 7
Maxwell, 2013 WL 3580621, at *2; Salaymeh v. Plaza Centro, LLC, 264 S.W.3d
431, 435 (Tex. App.—Houston [14th Dist.] 2008, no pet.); see Tex. R. Civ. P.
510.3(e). As a result, when the right to possession cannot be determined without
resolving a title dispute, the justice court does not have jurisdiction. Maxwell,
2013 WL 3580621, at *2; Rice, 51 S.W.3d at 709.
Of course, the mere existence of a title dispute does not deprive the justice
court of jurisdiction. Maxwell, 2013 WL 3580621, at *2. If the title issue does not
control the right to possession, it is of no moment. Id.; Black, 318 S.W.3d at 417.
7
Because a forcible detainer action is not exclusive, but cumulative, of any other remedy
that a party may have in the courts of this state, the displaced party is entitled to bring a separate
suit in the district court to determine the question of title. Rice, 51 S.W.3d at 709. Forcible
detainer actions in justice courts may be brought and prosecuted concurrently with suits to try
title in district court. Id.
6
Instead, the issue is whether “the question of title is so intertwined with the issue of
possession, th[at] possession may not be adjudicated without first determining
title.” Maxwell, 2013 WL 3580621, at *2 (quoting Villalon v. Bank One, 176
S.W.3d 66, 70 (Tex. App.—Houston [1st Dist.] 2004, pet. denied)).
The deed of trust in this case contained the following tenant-at-sufferance
clause:
Borrower or any person holding possession of the Property through
Borrower shall immediately surrender possession of the Property to
the purchaser at [the foreclosure] sale. If possession is not
surrendered, Borrower or such person shall be a tenant at sufferance
and may be removed by writ of possession or other court proceeding.
Tenant-at-sufferance clauses separate the issue of possession from the issue
of title. Id. at *3. Under these provisions, a foreclosure sale transforms the
borrower into a tenant at sufferance who must immediately relinquish possession
to the foreclosure-sale purchaser. Id.
Appellees articulate a title dispute, but it is based entirely on their contention
that the foreclosure was improper, i.e., both that the foreclosure was conducted
improperly and that Pinnacle previously had assigned the note to another bank.8
However, because the deed of trust contained a valid tenant-at-sufferance clause,
appellees do not allege a title dispute that is intertwined with the right of
immediate possession.9 See Glapion, 2014 WL 2158161, at *2; Maxwell, 2013
8
Although appellees have asserted a suit to quiet title, it too is based on the allegation
that Pinnacle claims an interest in the property based on an invalid Substitute Trustee’s Deed that
“was not obtained in compliance with the requirements necessary to a proper foreclosure action
under Texas law.” We need not address in this appeal whether the foreclosure was conducted
properly. See Maxwell, 2013 WL 3580621, at *3 (noting defects in foreclosure process may not
be considered in forcible detainer action because they are irrelevant).
9
One indication that a justice court is called on to adjudicate title to real estate in a
forcible detainer case—and, thus, exceed its jurisdiction—is when a landlord tenant relationship
is lacking. Aguilar v. Weber, 72 S.W.3d 729, 733 (Tex. App.—Waco 2002, no pet.).
7
WL 3580621, at *3. When the party to be evicted is subject to a tenant-at-
sufferance clause and the party seeking possession purchased the property at a
foreclosure sale and gave proper notice requiring the occupants to vacate the
premises, defects in the foreclosure process are not relevant to possession.
Glapion, 2014 WL 2158161, at *2; Williams v. Bank of N.Y. Mellon, 315 S.W.3d
925, 927 (Tex. App.—Dallas 2010, no pet.). Of course, the displaced party can
still dispute the purchaser’s title, but it must bring a separate suit to do so.
Maxwell, 2013 WL 3580621, at *3.
Appellees argue they are not subject to the tenant-at-sufferance clause
because they are not parties to the deed of trust. However, we have held that a
deed of trust’s tenant-at-sufferance clause binds subsequent occupants whose
interests are junior to the deed of trust. Id. at *4; see also U.S. Bank Nat’l Ass’n v.
Farhi, No. 05-07-01539-CV, 2009 WL 2414484, at *3-4 (Tex. App.—Dallas Aug.
7, 2009, no pet.) (mem. op.) (holding intervening purchaser of property was subject
to tenant-at-sufferance clause in deed of trust). Appellees argue that Maxwell was
wrongly decided as to this issue and “[l]ittle analysis was conducted to reach this
conclusion.” To the contrary, we thoroughly explained our reasoning in Maxwell.
Although such subsequent occupants may not have agreed to the tenant-at-
sufferance clause, the grantor cannot convey more than he has. Maxwell, 2013 WL
3580621, at *4. Thus, a grantor subject to a tenant-at-sufferance clause cannot
convey an interest in the property free of the clause. Id. In this regard, both the
party who agreed to the deed of trust initially and any subsequent occupants
become tenants-at-sufferance following foreclosure. Id.
The facts in Farhi are similar to those presented here. Farhi executed a note
and deed of trust on the subject property, and U.S. Bank subsequently foreclosed
on the property, served a notice to vacate the property, and filed a forcible detainer
8
suit in justice court. Farhi, 2009 WL 2414484, at *1. The justice court awarded
possession to the bank, but Rowe, claiming to be an occupant of the property,
appealed to the county court at law, which, after a trial de novo, awarded
possession to Rowe. Id. During the trial in the county court, Rowe presented
evidence that the property had been conveyed to him by Farhi after the deed of
trust was executed but before the foreclosure. Id. at *3. Our sister court held that
Rowe’s rights were subject to the deed of trust executed by Farhi because Rowe
was an intervening purchaser of the property. Id. This was based on the fact that
“[w]hen a mortgagor executes a deed of trust[,] the legal and equitable estates in
the property are severed. The mortgagor retains the legal title and the mortgagee
holds the equitable title.” Id. An intervening purchaser of the legal interest is
granted legal title that is superior to the mortgage but subject to the mortgagee’s
rights. Id.
The deed of trust in Farhi included a tenant-at-sufferance clause that was
identical to the one presented here. See id. at *4. The court held that the deed of
trust established a landlord-tenant relationship that made Rowe a tenant-at-
sufferance upon foreclosure because Rowe’s rights were subject to the terms of the
deed of trust, just as Farhi’s had been. Id. Accordingly, Rowe, as a tenant-at-
sufferance, was not entitled to possession of the property after the foreclosure. Id.
This case is no different. The appellees purchased the properties subject to
the deed of trust, which contained the above-referenced tenant-at-sufferance
clause. E.g., id.
We conclude that appellees are subject to the tenant-at-sufferance clause in
the deed of trust. Accordingly, the questions of possession and title are not
intertwined, and the justice court had exclusive jurisdiction over the issue of
possession. See Glapion, 2014 WL 2158161, at *2; Maxwell, 2013 WL 3580621,
9
at *3.
III. Appellees have an adequate remedy at law.
Appellees argue they do not have an adequate remedy at law because real
estate is unique. However, the cases they cite for this proposition all involved
injunctions to stop foreclosures.10 Here, the foreclosure has already occurred, and
appellees’ available remedies for wrongful foreclosure are money damages or
rescission of the sale. Diversified, Inc. v. Gibraltar Sav. Ass’n, 762 S.W.2d 620,
623 (Tex. App.—Houston [14th Dist.] 1988, writ denied) (“[F]ollowing a wrongful
foreclosure sale conducted pursuant to a power of sale contained within a deed of
trust, the mortgagor . . . may elect to: (1) set aside the void trustee’s deed; or
(2) recover damages in the amount of the value of the property less
indebtedness.”). Thus, under the undisputed facts, as a matter of law, appellees
have an adequate remedy at law through rescission of the sale if their wrongful
foreclosure claim is meritorious.
Appellees also testified they could not pay their mortgages in addition to
rent for temporary residences. They did not present evidence, however, regarding
why money damages could not properly account for any losses resulting from
having to relocate. They further argue that Andreis, a foreign national, must have
proof of home ownership to maintain his United States residency. At the time of
the temporary injunction hearing, Andreis was working overseas, and a tenant was
living in his home. Andreis testified that he travels abroad often for work and that
owning a home “helps” show the United States Citizenship and Immigration
10
See Lavigne v. Holder, 186 S.W.3d 625, 629 (Tex. App.—Fort Worth 2006, no pet.)
(“[E]very piece of real estate is unique, and foreclosure can be an irreparable injury for which
there is no adequate remedy at law.”); Guardian Sav. & Loan Ass’n v. Williams, 731 S.W.2d
107, 109 (Tex. App.—Houston [1st Dist.] 1987, no writ); El Paso Dev. Co. v. Berryman, 729
S.W.2d 883, 888 (Tex. App.—Corpus Christi 1987, no writ); Greater Houston Bank v. Conte,
641 S.W.2d 407, 410 (Tex. App.—Houston [14th Dist.] 1982, no writ).
10
Services that he intends to “keep his residency” in the United States. However,
after the foreclosure, Pinnacle became the record owner of the property. There is
no evidence that proceeding with an eviction would alter Andreis’s immigration
status. Obviously, if he prevails on the wrongful foreclosure claim, Andreis would
be able to rescind the sale and reinstate his home ownership status.
We conclude as a matter of law that the trial court erred in granting the
temporary injunction because, based on the undisputed facts, the alleged title
dispute is not intertwined with the right of immediate possession and appellees
have an adequate remedy at law through their wrongful foreclosure claim. See
McGlothlin, 672 S.W.2d at 232; Glapion, 2014 WL 2158161, at *2.
Conclusion
We conclude the trial court erred in enjoining appellants from pursuing the
eviction proceedings in justice court. The justice court had exclusive jurisdiction
in this case over the question of possession because the issues of title and
possession were not intertwined, and appellees have an adequate remedy at law if
their wrongful foreclosure claim is meritorious. We sustain Pinnacle’s issue
complaining of the trial court’s order granting injunctive relief. We reverse the
trial court’s order and render judgment denying appellees’ request for a temporary
injunction.
/s/ Martha Hill Jamison
Justice
Panel consists of Justices Boyce, Jamison, and Donovan.
11