Bennie Deweese v. Ocwen Loan Servicing L.L.C. and Mortgage Electronic Registration Systems, Inc. (MERS) as Nominee for Federal Home Loan Mortgage ( 2014 )

Opinion issued December 11, 2014
In The
Court of Appeals
For The
First District of Texas
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NO. 01-13-00861-CV
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BENNIE DEWEESE, Appellant
V.
OCWEN LOAN SERVICING L.L.C. AND MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. AS NOMINEE FOR FEDERAL HOME
LOAN MORTGAGE, Appellees
On Appeal from the 55th District Court
Harris County, Texas
Trial Court Case No. 2011-35077
MEMORANDUM OPINION
Bennie Deweese appeals the trial court’s rendition of summary judgment in
favor of Ocwen Loan Servicing L.L.C. and Mortgage Electronic Registration
Systems, Inc. as nominee for Federal Home Loan Mortgage (MERS). After
Ocwen foreclosed on Deweese’s home, Deweese sued to quiet title, for tortious
interference with contract, statutory fraud, and for a declaratory judgment that the
foreclosure was invalid. Ocwen and MERS filed traditional and no-evidence
motions for summary judgment on all of Deweese’s claims. The trial court granted
summary judgment and rendered a take-nothing judgment against Deweese.
Deweese challenges the summary judgment, contending that he raised fact issues
regarding appellees’ standing to foreclose and failure to comply with the statutory
notice requirements. We affirm.
Background
In August 2006, Deweese executed a note for $93,500 payable to Taylor,
Bean, & Whitaker Mortgage Corporation. The note was secured by property at
14502 Wadebridge Way in Houston, Texas, and Deweese concurrently executed a
deed of trust perfecting a lien interest in the property.
In June 2010, Taylor, Bean, & Whitaker indorsed the note to Ocwen Loan
Servicing L.L.C. On July 17, 2010, Ocwen sent Deweese a notice of default by
first class certified mail, notifying him that more than $5,000 in payments were
past due. The notice was deposited in the mail, postage prepaid, and sent to
Deweese at his last known address. The notice stated that Deweese had 31 days to
cure the default before Ocwen would exercise its right to foreclose and accelerate
the amounts owed.
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Deweese did not cure the default, and on November 9, 2010, Ocwen sent by
certified mail a Notice of Acceleration of Loan Maturity. With that notice, Ocwen
also sent a Notice of Foreclosure Sale, which stated that the sale would occur on
December 7, 2010. The sale was later moved to January 4, 2011, so on December
13, 2010, Ocwen sent by certified mail a Notice of Reposting and Sale notifying
Deweese of the change in the sale date. At the January 4 sale, the property was
sold to the Federal Home Loan Mortgage Corporation.
Deweese initially sued Ocwen in June 2011 to cancel the note based on
alleged fraud. Deweese twice amended his pleadings, to add MERS as a
defendant, and to allege that Ocwen and MERS lacked standing to foreclose
because neither was the holder of his note. The live pleading at the time Ocwen
and MERS moved for summary judgment asserted:
• a claim to quiet title, alleging that neither Ocwen nor MERS could
demonstrate an interest in his property;
• a claim for tortious interference with contract, arguing that Ocwen and
MERS interfered with his contract with Taylor, Bean, & Whitaker by
improperly foreclosing on his property;
• a claim for statutory fraud, alleging that Ocwen and MERS
misrepresented that they had standing to foreclose on his property;
and
• a request for a declaratory judgment that Ocwen and MERS lack
standing to foreclose on his property.
Ocwen and MERS moved for summary judgment on all of Deweese’s
claims. They argued that their summary-judgment evidence conclusively showed
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that Ocwen was the holder of Deweese’s note and was entitled to foreclose on the
property, and therefore all of Deweese’s claims must fail as a matter of law. They
also argued that there was no evidence supporting essential elements of Deweese’s
tortious interference, statutory fraud, and declaratory judgment claims.
In response, Deweese argued that the lien on his property was never
transferred to Ocwen, and thus Ocwen could not foreclose on the property. He
also argued that Ocwen and MERS did not have standing to enforce the note.
Deweese also argued that Ocwen’s summary-judgment evidence did not
conclusively prove that the notice of default was properly served.
The trial court granted Ocwen and MERS’s motion for summary judgment
and rendered a take-nothing judgment against Deweese without specifying its
reason for doing so. Deweese appealed.
Discussion
Deweese contends that the trial court erred in granting summary judgment
because he raised fact issues regarding whether appellees had standing to foreclose
and whether they complied with statutory notice requirements.
A. Standard of Review
We review a trial court’s summary judgment de novo. Travelers Ins. Co. v.
Joachim, 315 S.W.3d 860, 862 (Tex. 2010). If a trial court grants summary
judgment without specifying the grounds for granting the motion, we must uphold
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the trial court’s judgment if any of the grounds are meritorious. Beverick v. Koch
Power, Inc., 186 S.W.3d 145, 148 (Tex. App.—Houston [1st Dist.] 2005, pet.
denied). When reviewing a summary judgment, we take as true all evidence
favorable to the nonmovant, and we indulge every reasonable inference and
resolve any doubts in the nonmovant’s favor. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005).
To prevail on a no-evidence motion for summary judgment, the movant
must establish that there is no evidence to support an essential element of the
nonmovant’s claim on which the nonmovant would have the burden of proof at
trial. See TEX. R. CIV. P. 166a(i); Hahn v. Love, 321 S.W.3d 517, 523–24 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied). The burden then shifts to the
nonmovant to present evidence raising a genuine issue of material fact as to each
of the elements specified in the motion. Mack Trucks, Inc. v. Tamez, 206 S.W.3d
572, 582 (Tex. 2006); Hahn, 321 S.W.3d at 524.
In a traditional summary judgment motion, the movant has the burden to
show that no genuine issue of material fact exists and that the trial court should
grant judgment as a matter of law. TEX. R. CIV. P. 166a(c); KPMG Peat Marwick
v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999).
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B. Did appellees conclusively prove that Ocwen was the holder of the
note? 1
In his first issue, Deweese contends that summary judgment was improper
because the attempted transfer of the note to appellees was improper and appellees
thus lacked standing to foreclose.
1. Applicable Law
A holder is “the person in possession of a negotiable instrument that is
payable either to bearer or to an identified person that is the person in possession.”
TEX. BUS. & COM. CODE ANN. § 1.201(21)(A) (West 2009). A person can become
the holder of an instrument when the instrument is issued to that person, or he can
become a holder by negotiation. TEX. BUS. & COM. CODE ANN. § 3.201 cmt. 1
(West 2002).
Negotiation is the “transfer of possession . . . of an instrument by a person
other than the issuer to a person who thereby becomes its holder.” 2 Id. § 3.201(a).
When the instrument is paid to an identified entity, “negotiation requires transfer of
possession of the instrument and its indorsement by the holder.” Id. § 3.201(b);
1
We typically review the propriety of summary judgment under the no-evidence
standard first. See Parker v. Valerus Compression Servs., LP, 365 S.W.3d 61, 65
(Tex. App.—Houston [1st Dist.] 2011, pet. denied). In this case, however, we
address the ruling on the traditional summary judgment first because it is
dispositive of all of Deweese’s claims. See, e.g., Poag v. Flories, 317 S.W.3d 820,
825 (Tex. App.—Fort Worth 2010, pet. denied).
2
For these purposes, the “issuer” is Deweese, because he is identified in the note as
the person undertaking to pay. See TEX. BUS. & COM. CODE ANN. § 3.103(a)(7)
(West Supp. 2014), § 3.105(c) (West 2002).
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Leavings v. Mills, 175 S.W.3d 301, 309 (Tex. App.—Houston [1st Dist.] 2004, no
pet.). Transfer of an instrument vests in the transferee any right of the transferor to
enforce the instrument. TEX. BUS. & COM. CODE ANN. § 3.203(b) (West 2002).
An “indorsement” is a signature, that alone or accompanied by other words
is made on an instrument for, among other reasons, negotiating the instrument.
TEX. BUS. & COM. CODE ANN. § 3.204(a) (West 2002). The indorsement must be
written on the instrument or on a paper firmly affixed to it. Leavings, 175 S.W.3d
at 309. When specially indorsed, an instrument becomes payable to the identified
person and may be negotiated only by that person’s indorsement. TEX. BUS. &
COM. CODE ANN. § 3.205(a) (West 2002).
When a mortgage note is transferred, the mortgage or deed of trust is also
automatically transferred to the note holder by virtue of the common-law rule that
“the mortgage follows the note.” Campbell v. Mortg. Elec. Registration Sys., Inc.,
No. 03-11-00429-CV, 2012 WL 1839357, at *4 (Tex. App.—Austin May 18,
2012, pet. denied) (mem. op.).
2. Analysis
Appellees’ summary-judgment evidence conclusively proved that Ocwen
was in possession of Deweese’s note since June 2010. See TEX. BUS. & COM.
CODE ANN. § 3.201. The indorsement is written on the note, signed by Taylor,
Bean, & Whitaker, and specifically provides that payment on the note shall be
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made to Ocwen. See TEX. BUS. & COM. CODE ANN. §§ 3.204(a), 3.205(a);
Leavings, 175 S.W.3d at 309. The signed indorsement states: “Without recourse,
pay to the order of Ocwen Loan Servicing LLC By: Taylor, Bean & Whitaker
Mortgage Corp.” Therefore, the summary-judgment evidence conclusively
established that Ocwen is the holder of the note and entitled to enforce it. See TEX.
BUS. & COM. CODE ANN. §§ 3.201(b), 3.203(b); Leavings, 175 S.W.3d at 309.
Deweese concedes that MERS is merely a nominee on the deed of trust with
no corresponding interest in the note. App. Br. 14. But Deweese argues that
MERS was required to indorse the note in order for the transfer to Ocwen to be
valid. App. Br. 25. In other words, he contends that the deed trustee and the
lender must both consent to the transfer of the note. We disagree. “[T]he note and
the deed of trust are separate bundles of rights and obligations, and the deed
trustee, who has the power of sale, need not be the same person or entity to whom
the underlying debt is owed.” Mortg. Elec. Registration Sys., Inc. v. Khyber
Holdings, L.L.C., No. 01-11-00045-CV, 2012 WL 3228717, at *4 (Tex. App.—
Houston [1st Dist.] Aug. 9, 2012, no pet.) (mem. op.) (citing Hammonds v.
Holmes, 559 S.W.2d 345, 347 (Tex. 1977) (deed trustee may be different person or
entity than secured party to whom debt is owed)); see TEX. PROP. CODE ANN.
§ 51.0074 (West 2014) (deed of trust confers on deed trustee power to sell the
property pledged in the deed); Stephens v. LPP Mortg., Ltd., 316 S.W.3d 742, 747
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(Tex. App.—Austin 2010, pet. denied) (when a debt is memorialized by a note and
a lien, the note and the lien constitute two separate bundles of rights and
obligations). Thus, the fact that only Taylor, Bean & Whitaker, and not MERS,
indorsed the note to Ocwen has no impact on the indorsement’s validity. See
Hammonds, 559 S.W.2d at 347; Khyber Holdings, L.L.C., 2012 WL 3228717, at
*4.
We conclude that the summary-judgment evidence conclusively established
that Ocwen had standing to enforce the note and we overrule Deweese’s first
issue. 3
C. Did appellees conclusively prove compliance with the statutory notice
provisions?
In his third issue, Deweese contends that he raised a fact issue regarding
whether the appellees complied with Section 51.002(d) of the Property Code in
mailing the notice of default, and therefore the trial court erred in granting
summary judgment.
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As pleaded, all of Deweese’s claims relied upon his allegation that neither Ocwen
nor MERS had standing to foreclose. Because Ocwen conclusively proved that it
had standing to foreclose and did so, and the summary-judgment evidence proved
and the parties agree that MERS was merely the deed trustee, disposition in the
defendants’ favor on all claims was proper regardless of defendant. Accordingly,
we overrule Deweese’s second and fourth issues, complaining specifically about
judgment on his tortious interference and declaratory judgment claims.
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1. Applicable Law
The Texas Property Code sets forth foreclosure notice requirements. Section
51.002(d) of the Property Code requires that a mortgage servicer “shall serve a
debtor in default under a deed of trust . . . with written notice by certified mail
stating that the debtor is in default under the deed of trust . . . and giv[e] the debtor
at least 20 days to cure the default” before giving notice of a foreclosure sale. See
TEX. PROP. CODE ANN. § 51.002(d) (West 2014). Section 51.002(e) provides:
Service of a notice under this section by certified mail is complete
when the notice is deposited in the United States mail, postage prepaid
and addressed to the debtor at the debtor’s last known address. The
affidavit of a person knowledgeable of the facts to the effect that
service was completed is prima facie evidence of service.
Id. § 51.002(e) (West 2014).
2. Analysis
Appellees’ summary-judgment evidence included a copy of the notice of
default, which indicated that it was sent via first class certified mail on July 17,
2010. The summary-judgment evidence also included an affidavit from Letron
Kelly, a contract manager at Ocwen Loan Servicing L.L.C. Kelly averred that he
was familiar with the business records maintained by Ocwen for the purpose of
servicing mortgage loans and pursuing delinquencies, and that the copy of the
notice of default was an exact copy of the original. Kelly also averred that the
notice of default was “deposited in the United States mail, postage prepaid” and
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was addressed to Deweese at his last known address. This is prima facie evidence
of service of the notice of default on Deweese. See TEX. PROP. CODE ANN.
§ 52.002(d), (e).
In response, Deweese alleged that the certified mail number on the notice of
default “could not be verified” with the U.S. Post Office. However, the only
evidence Deweese adduced regarding the notice of default was an averment in his
responsive affidavit that he did not receive the notice. Whether Deweese received
the notice does not raise a fact issue regarding Ocwen’s proof that the notice was
“deposited in the United States mail, postage prepaid and addressed” to Deweese at
his last known address. TEX. PROP. CODE ANN. § 51.002(e) (“Service of a notice
under this section by certified mail is complete when the notice is deposited in the
United States mail, postage prepaid and addressed to the debtor at the debtor’s last
known address.”); Lambert v. First Nat’l Bank of Bowie, 993 S.W.2d 833, 835
(Tex. App.—Fort Worth 1999, pet. denied) (debtor’s claim that there was no
evidence he received notice of default did not raise fact issue regarding service of
notice because Section 51.002(e) does not require proof of receipt); see also Adebo
v. Litton Loan Serv., L.P., No. 01-07-00708-CV, 2008 WL 2209703, at *4 (Tex.
App.—Houston [1st Dist.] May 29, 2008, no pet.) (mem. op.) (“[T]he dispositive
inquiry under section 51.002(e) . . . is not receipt of notice, but, rather, service of
notice.”) (emphasis in original). Accordingly, because appellees adduced prima
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facie evidence of service of the notice of default, Deweese cannot raise a triable
issue of fact by denying that he received the notice. See Lambert, 993 S.W.2d at
835 (no fact issue regarding service where debtor argued there was no evidence of
receipt of notice); see also Adebo, 2008 WL 2209703, at *3–4 (where mortgage
servicer adduced prima face evidence of service of notice of default, debtor could
not raise fact issue by denying receipt of notice). Deweese argues that the
appellees should have provided additional evidence regarding service, but
appellees met their burden under Section 51.002 to establish prima facie evidence
of service. See TEX. PROP. CODE ANN. § 51.002(e).
Thus, we hold that appellees conclusively showed they satisfied the statutory
notice requirements. We overrule Deweese’s third issue.
Conclusion
We affirm the trial court’s judgment.
Rebeca Huddle
Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
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