Steven Steptoe and Patricia Carballo v. JPMorgan Chase Bank, N.A. ( 2015 )


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  •                                                                                 ACCEPTED
    01-14-00813-CV
    FIRST COURT OF APPEALS
    HOUSTON, TEXAS
    1/12/2015 2:34:43 PM
    CHRISTOPHER PRINE
    CLERK
    No. 01-14-00813-CV
    _________________________________________________
    FILED IN
    1st COURT OF APPEALS
    In the                                HOUSTON, TEXAS
    1/12/2015 2:34:43 PM
    First Court of Appeals                   CHRISTOPHER A. PRINE
    Clerk
    Houston, Texas
    _________________________________________________
    STEVEN STEPTOE AND PATRICIA CARBALLO,
    Appellants,
    v.
    JPMORGAN CHASE BANK, N.A.,
    Appellee.
    _________________________________________________
    On Appeal from the 61st District Court of
    Harris County, Texas, Cause No. 2013-32035
    Hon. Al Bennett
    _________________________________________________
    REPLY BRIEF OF APPELLANTS
    Robert Y. Petersen
    Texas Bar No. 24083655
    THE LANE LAW FIRM
    6200 Savoy, Suite 1150
    Houston, Texas 77036
    [Tel.] (713) 595-8200
    [Fax] (713) 595-8201
    Robert.Petersen@lanelaw.com
    ATTORNEYS FOR APPELLANTS STEVEN STEPTOE AND PATRICIA CARBALLO
    1
    TABLE OF CONTENTS
    Index of Authorities ................................................................................................... 3
    Argument In Reply..................................................................................................... 4
    Certificate of Compliance with Tex. R. App. P. 9 ..................................................... 7
    Certificate of Service ................................................................................................. 7
    2
    INDEX OF AUTHORITIES
    CASES
    Douglas v. FNCNB Tex. Nat. Bank, 
    979 F.2d 1128
    , 1130 (5th Cir. 1992) ................ 4
    in re Albert Morris, 2012 Bankr. LEXIS 3656, *4-5 (Bankr. S.D. Tex. Aug.
    8, 2012) ............................................................................................................ 5
    in re Erickson, 566 Fed.Appx. 281, 283 (5th Cir. 2014) ............................................ 4
    Huston v. U.S. Bank National Association, et al., 
    2013 WL 6731988
    *7
    (S.D. Tex. 2013) .............................................................................................. 5
    Kaspar v. Keller, 
    466 S.W.2d 326
    , 329 (Tex.App.—Waco 1971, writ ref’d
    n.r.e.) ............................................................................................................ 5, 6
    Steve Thomas v. Ocwen Loan Servicing, LLC et al, 
    2013 U.S. Dist. LEXIS 630
    , *13 (N.D. Tex. Jan 3, 2013) .................................................................... 5
    STATUTES AND RULES
    Tex. Const. ART. XVI § 50(a)(6)(D) .................................................................... 4, 5
    Tex. R. Civ. P. 735 ..................................................................................................... 5
    SECONDARY SOURCES
    Black’s Law Dictionary (Abridged Eighth Edition) .................................................. 5
    3
    ARGUMENT IN REPLY
    Appellee’s Response seeks to mischaracterize the law on this issue as clear
    and unambiguous in favor of Appellee, yet tellingly, Appellee fails to cite to a
    single case that is controlling or precedential in their favor.
    Furthermore,     Appellants     strenuously     object      to   Appellee’s   blatant
    misattributing of the authority behind their argument. Appellee claims Appellant’s
    argument is contrary to relevant legal authority from the Fifth Circuit and that this
    exact argument was rejected by the Fifth Circuit; when in fact, the Fifth Circuit has
    never rendered an opinion considering this specific issue.
    The Fifth Circuit case of Douglas v. NCNB Texas Nat’l Bank did not deal
    with a home equity loan, which is a crucial factor in Appellants argument.1
    The Fifth Circuit case of Erickson, addressed whether a cause of action for
    judicial foreclosure had to be authorized by the loan documents—a position which
    the court rejected—which has no direct bearing on Appellants’ argument.2
    Appellants’ argument is that because a home equity lien requires “a court
    order,”3 the lender has only one remedy available to it: to seek a court order
    authorizing foreclosure. It is well settled law that home equity loans in Texas
    1
    Douglas v. FNCNB Tex. Nat. Bank, 
    979 F.2d 1128
    (5th Cir. 1992)
    2
    In re Erickson, 566 Fed.Appx. 281, 283 (5th Cir. 2014)
    3
    See Tex. Const. art XVI Section 50(a)(6)(D).
    4
    require a judicial foreclosure i.e. a court order.4 A position Appellee never
    addresses.
    Common sense dictates that a foreclosure requiring a judicial proceeding is a
    “judicial foreclosure” whether or not it is performed as part of a constable’s sale or
    through a trustee sale.5 Either way, it is occurring under the auspices of the Court’s
    authority, hence it is a “judicial foreclosure.”
    To the extent a lender could elect either foreclosure through the power of
    sale, or foreclosure through a sheriff’s or constable’s sale, the application of the
    compulsory counterclaim rule has deprived the lender of nothing. See TEX. R. CIV.
    P. 735.6 In other words, the entire justification for invoking the Kaspar rule no
    longer applies (i.e. preventing the borrower from forcing the lender’s election of
    remedies). Here, the lender has no extra-judicial option.7 Both options are judicial
    4
    Pursuant to the Texas Constitution, a home equity lien may only be foreclosed judicially. See
    TEX. CONST. ART XVI § 50(a)(6)(D)(“is secured by a lien that may be foreclosed upon only by a
    court order”); see also Steve Thomas v. Ocwen Loan Servicing, LLC et al, 2013 U.S. Dist.
    LEXIS 630, *13 (N.D. Tex. Jan 3, 2013)(“It is well settled law that home equity loans in Texas
    must be foreclosed judicially.”); in re Albert Morris, 2012 Bankr. LEXIS 3656, *4-5 (Bankr.
    S.D. Tex. Aug. 8, 2012)
    5
    See Black’s Law Dictionary “Judicial Foreclosure”.
    6
    In other words, assuming arguendo the elements of a compulsory counterclaim are met, the
    lender remains free to choose either: an order authorizing foreclosure via trustee through the
    power of sale granted by the Security Instrument or to seek an order granting a sheriff’s or
    constable’s sale of the property.
    7
    “We adopt the logic of the trial court that the mortgagor should not be permitted to destroy or
    impair the mortgagee's contractual right to foreclosure under the power of sale by the simple
    expedient of instituting a suit, whether groundless or meritorious, thereby compelling the
    mortgagee to abandon the extra-judicial foreclosure which he had the right to elect, nullifying
    his election, and permitting the mortgagor to control the option as to remedies.” Kaspar v.
    Keller, 
    466 S.W.2d 326
    , 329 (Tex.App.—Waco 1971, writ ref’d n.r.e.)
    5
    and require judicial approval. Furthermore, both options remain available
    regardless of the borrower’s action. Therefore, the justification for the Kaspar rule
    is no longer present.
    All the lender has to do is simply file a counterclaim with the court for
    foreclosure seeking either a constable’s sale of trustee’s sale (an action they would
    have to take regardless of the borrower’s actions). Instead, Appellee is seeking this
    Court’s blessing to multiply litigation for the benefit of the attorneys and servicers
    handling the mortgage loans.
    Ironically, the application of the Kaspar rule to home equity loans would
    result in the lien with the most constitutional protections being the only lien on a
    homestead that cannot be challenged for violating the Texas Constitution.
    Respectfully submitted,
    /s/ Robert Y. Petersen
    Robert “Chip” Lane
    State Bar No. 24046263
    Robert Y. Petersen
    State Bar No. 24083655
    THE LANE LAW FIRM
    6200 Savoy Drive, Suite 1150
    Houston, Texas 77036
    [Tel.] (713) 595-8200
    [Fax] (713) 595-8201
    Lane@lanelaw.com
    Robert.Petersen@lanelaw.com
    ATTORNEYS FOR
    STEVEN STEPTOE AND PATRICIA
    CARBALLO
    6
    CERTIFICATE OF COMPLIANCE
    As required by Rule 9 of the Texas Rules of Appellate Procedure, I certify
    that this brief does not exceed 15,000 words and that the aggregate of all briefs
    filed by Appellants does not exceed 27,000 words.
    /s/ Robert Y. Petersen
    Robert Y. Petersen
    CERTIFICATE OF SERVICE
    Pursuant to Rule 6.3 and 9.5(b), (d), and (e), of the Texas Rules of Appellate
    Procedure, I certify that I have served this document on all other parties which are
    listed below on January 12, 2015, as follows:
    Crystal G. Roach
    Barrett Daffin Frappier Turner & Engle, LLP
    15000 Surveyor Blvd.
    Addison, Texas 75001
    972.386.5040
    972.341.0734 (fax)
    /s/ Robert Y. Petersen
    Robert Y. Petersen
    7
    

Document Info

Docket Number: 01-14-00813-CV

Filed Date: 1/12/2015

Precedential Status: Precedential

Modified Date: 9/28/2016