Dolores Reynoso and Juan Reynoso v. Loft Concepts, Inc. ( 2015 )

ACCEPTED
04-15-00267-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
8/6/2015 10:37:46 AM
KEITH HOTTLE
CLERK
NO. 04-15-00267-CV
FILED IN
4th COURT OF APPEALS
SAN ANTONIO, TEXAS
IN THE COURT OF APPEALS 08/06/15 10:37:46 AM
THE FOURTH DISTRICT OF TEXAS KEITH E. HOTTLE
Clerk
SAN ANTONIO, TEXAS
DOLORES REYNOSO, and all other OCCUPANTS,
Appellant,
v.
LOFT CONCEPTS, INC.,
Appellee.
Appeal from the County Court at Law Number Three
Bexar County, Texas
Trial Court Case No. 2015CV00936
Hon. David J. Rodriguez, presiding
Identity of the Parties
Appellant/Defendant
DOLORES REYNOSO
Counsel for Appellant/Defendant
James Minerve
State Bar No. 24008692
115 Saddle Blanket Trail
Buda, Texas 78610
(210) 336-5867
(888) 230-6397 (Fax)
Email: jgm@monervelaw.com
(Appellate, Post-trial, and Trail)
Appellee/Plaintiff
LOFT CONCEPTS, INC.
Counsel for Appellee/Plaintiff
RL WILSON LAW FIRM
Trey Wilson
111 W. Olmos Dr.
San Antonio, Texas 78212
(210) 335-2147
(210) 930-9353 Fax
Rwl3d@sa-law.com
(Appellate, Post-trial, and Trail)
Table of Contents
Identity of the Parties .................................................................................................2
Table of Authorities ...................................................................................................4
Statement of the Case.................................................................................................6
Statement Regarding Oral Argument ........................................................................7
Issues Presented .........................................................................................................8
Statement of Facts ......................................................................................................9
Summary of the Argument.........................................................................................9
Prayer .......................................................................................................................19
Appendix ..................................................................................................................22
Table of Authorities
Cases Page
Allied First Nat. Bank of Mesquite v. Jones, 766 S.W.2d 800, 804 (Tex.App.-Dallas
1988, no writ) ........................................................................................................... 11
Beard v. Aurora Loan Services, LLC, 2006 WL 1350286 ...................................... 13
Black v. Washington Mut. Bank, 318 S.W.3d 414, 416 (Tex. App.-Houston [1st
Dist.] 2010, pet. dism'd w.o.j.) ................................................................................. 14
Boggs v. Boggs, 520 U.S. 833, 844, 117 S. Ct. 1754, 138 L. Ed. 2d 45 (1997) ......... 18
Bonilla v. Roberson, 918 S.W.2d 17 (Tex.App.-Corpus Christi 1996, no writ) ..... 12
Bruce v. Fed. Nat'l Mortg. Ass 'n, 352 S.W.3d 891 (Tex. App.-Dallas 2011, pet.
denied) ................................................................................................................16, 17
Diversified, Inc. v. Walker, 702 S.W.2d 717 (Tex.App.-Houston [1st Dist.] 1985,
writ ref’d n.r.e.) ............................................................................................10, 11, 12
Dormady v. Dinero Land & Cattle Co., L.C., 61 S.W.3d 555 (Tex.App.-San
Antonio, 2001, no writ) ......................................................................................13, 17
Elwell v. Countywide Home Loans, Inc., 267 S.W.3d 566 (Tex. App.-Dallas 2008,
pet. dism'd w.o.j.) ..................................................................................................... 17
Field Measurement Serv., Inc. v. Ives, 609 S.W.2d 615 (Tex.App.-Corpus Christi
1980, writ ref’d n.r.e.) .............................................................................................. 11
First Southern Properties, Inc. v. Vallone, 533 S.W.2d 339 (Tex.1976) ..........10, 11
First State Bank v. Keilman, 851 S.W.2d 914, 924 (Tex.App.-Austin 1993, writ
denied) ................................................................................................................12, 13
Goggins v. Leo, 849 S.W.2d 373 (Tex. App.-Houston [14th Dist.] 1993, no writ) 13
Hammonds v. Holmes, 559 S.W.2d 345 (Tex. 1977) .............................................. 11
Henke v. First Southern Properties, Inc., 586 S.W.2d 617 (Tex.Civ.App.—Waco
1979, writ ref'd n.r.e.)............................................................................................... 10
Hopes v. Buckeye Ret. Co., LLC, No. 13-07-00058-CV, 2009 WL 866794 (Tex.
App.-Corpus Christi, Apr. 2, 2009, no pet.) ......................................................16, 17
Mitchell v. Armstrong Capital Corp., 911 S.W.2d 169 (Tex. App.-Houston [1st
Dist.] 1995, writ denied) ..................................................................13, 14, 15, 16, 17
Morris v. American Home Mortgage Servicing, 360 S.W.3d 32 (Tex. App.-Houston
[1st Dist.] 2011, no pet.) ..............................................................................15, 16, 17
Oles v. Curl, 65 S.W.3d 129 (Tex.App.-Amarillo 2001, no pet.) ........................... 11
Pentad Joint Venture v. First Nat. Bank of La Grange, 797 S.W.2d 92, 96 (Tex.App.-
Austin 1990, no writ) ............................................................................................... 12
Peterson v. Black, 980 S.W.2d 818 (Tex.App. 1988) ............................................. 11
Rice v. Pinney, 51 S.W.3d 705, 712-13 (Tex. App.-Dallas 2001, no pet.)........15, 17
Sani v. Powell, 153 S.W.3d 736 (Tex.App.-Dallas 2005, pet. denied) ................... 11
Scarborough v. Winn Residential L.L.P./Atlantic Terrace Apartments, 890 A.2d 249
(2006) ....................................................................................................................... 18
Silliman v. Gammage, 55 Tex. 365, 1881 Tex. LEXIS 127, *9–11, 1881 WL 9787
(1881) ....................................................................................................................... 11
Slaughter v. Qualls, 139 Tex. 340, 162 S.W.2d 671 (1942) .............................10, 11
Spring Branch Independent School Dist. v. Siebert, 100 S.W.3d 520 (Tex.App.-
Houston [1st Dist.] 2003, no pet.) ............................................................................ 11
Villalon v. Bank One, 176 S.W.3d 66, (Tex. App.-Houston [1st Dist.] 2004, no pet.)
.................................................................................................................................. 15
Yarto & DTRJ Invs., L.P. v. Gilliland, 287 S.W.3d 83 (Tex. App.--Corpus Christi
2009, no pet.) .....................................................................................................16, 17
United States Code
12 U.S.C. 2605(k)(C) ............................................................................... 9, 18
Code of Federal Regulations
12 C.F.R. 1024.33(d) ............................................................................................... 18
12 C.F.R.1024.35(b)(9) ....................................................................................... 9, 18
12 C.F.R.1024.35(b) (10) .................................................................................... 9, 18
12 C.F.R 1024.41(f)(2) ....................................................................................... 9, 18
12 C.F.R 1024.41(f) (g) ...................................................................................... 9, 18
24 C.F.R. 3500.21(h) ............................................................................................... 18
Texas Rules of Civil Procedure
Texas Rule of Civil Procedure Section 746 .............................................................13
Texas Rule of Civil Procedure Section 749 ............................................................. 13
Texas Government Code
Texas Government Code Section 27.031(b)(4) ....................................................... 14
Texas Property Code
Texas Property Code Section 24.004 ....................................................................... 13
Texas Property Code Section 51.002 ....................................................................... 13
Statement of the Case
This is a Forcible Detainer Case. On or about October 11, 2014, the Appellee
filed a Forcible Detainer Action. On January 27, 2015 the JP Court issued a judgment
in favor of Appellee.1 The Appellant appealed to the County Court at Law No. 3.
The County Court held a trial de novo and issued a judgment in favor of Appellee
on April 20, 2015.2 This appeal followed.
1 See Exhibit A.
2 See Exhibit B.
Appellant’s Appeal Brief Page 6 of 22
Statement Regarding Oral Argument
Pursuant to Texas Rules of Appellate Procedure 39.1, Dolores Reynoso requests oral
argument and submits that oral argument would materially aid the decisional process
in this case.
Appellant’s Appeal Brief Page 7 of 22
Issues Presented
Appellant respectfully submits the following trial brief which outlines the
legal framework in which the Court should consider the following:
1. Does Appellee’s failure to comply with Federal laws governing foreclosure
of loans secured by a homestead render a Substitute Trustee Deed void ab initio,
necessitating a decision as to title, and thereby deprive the lower courts of
jurisdiction to hear a forcible detainer action?
2. Under these circumstances, do the relevant provision of RESPA and
Regulation X preempt state law?
Appellant’s Appeal Brief Page 8 of 22
Statement of Facts
This is a Forcible Detainer Case. On or about October 11, 2014, the Appellee
filed a Forcible Detainer Action. On January 27, 2015, the JP Court issued a
judgment in favor of Appellee. The Appellant appealed to the County Court at Law
No. 3. The County Court held a trial de novo and issued a judgment in favor of
Appellee on April 20, 2015. This appeal followed.
Summary of the Argument
The purported substitute trustee sale was unlawful because Appellant
submitted a completed loan modification application, well over 37 days before the
foreclosure. The loan servicer never sent Appellant a hard rejection letter as required
by RESPA and Regulation X. Consequently, the purported substitute trustee lacked
authority to conduct the sale, and the purported substitute trustee sale was void ab
initio. Therefore, this court lacks jurisdiction to hear this matter since a title dispute
is inherently raised.
Congress expressed its intent in RESPA and Regulation X that mortgage
servicers must halt foreclosure under certain limited circumstances. Because the
non-judicial foreclosure and forcible detainer scheme under Texas law allows a
mortgage servicer to foreclose on a homestead without any need to prove compliance
with law, and then to remove the homeowner from the property, Texas law stands
as an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.
Argument
The Substitute Trustee Lacked Authority to Foreclose
1. 12 U.S.C. 2605(k) (C) and Regulation X (RESPA), i.e., 12 C.F.R
1024.41(g), prohibit a loan servicer from proceeding with a scheduled foreclosure,
Appellant’s Appeal Brief Page 9 of 22
if the loan servicer received a completed loan modification application and did not
provide the borrower with a rejection letter at least 30 days before the scheduled
foreclosure sale.
2. Appellant submitted a complete loan modification application to their
loan servicer, well over 37 days before the purported substitute trustee sale.
3. Appellant has not received a rejection letter from the loan servicer
regarding the loan modification application.
4. Therefore, the trustee was prohibited from conducting the purported
substitute trustee sale of the property.
5. In the instant case, since the conditions and limitations on the trustee's
power to convey the land were never fulfilled, such power never lawfully came into
being, and the foreclosure sale was void. See Slaughter v. Qualls, 162 S.W.2d at
675. In Henke v. First Southern Properties, Inc., 586 S.W.2d 617 (Tex.Civ.App.—
Waco 1979, writ ref'd n.r.e.). First Southern Properties was a purchaser at a void
foreclosure sale. The court held that the trustee conducting the sale had no lawful
authority to offer the property for sale, and therefore, the purchaser could not acquire
title to the property. Henke, 586 S.W.2d at 620.
6. The general effect of a good faith purchaser for value without notice
does not apply to a purchaser at a void foreclosure sale. A purchaser at a foreclosure
sale obtains only such title as the trustee had authority to convey. First Southern
Properties, Inc. v. Vallone, 533 S.W.2d 339, 341 (Tex.1976).
7. Whether a trustee’s deed at a foreclosure sale is void or voidable
depends on its effect upon the title at the time it was executed and delivered.
Diversified, Inc. v. Walker, 702 S.W.2d 717, 721 (Tex.App.-Houston [1st Dist.]
1985, writ ref’d n.r.e.). If the deed is a mere nullity, passing no title and conferring
Appellant’s Appeal Brief Page 10 of 22
no rights whatsoever to the purchaser, then it is void ab initio. However, if the deed
passed title to the purchaser, subject only to the rights of the grantor to have it set
aside because it was improperly made, then the deed is voidable. Id. (citing Slaughter
v. Qualls, 139 Tex. 340, 162 S.W.2d 671, 674 (1942)). “That which is void is without
vitality or legal effect. That which is voidable operates to accomplish the thing
sought to be accomplished, until the fatal vice in the transaction has been judicially
ascertained and declared.” Slaughter, 162 S.W.2d at 674.
8. A purchaser obtains no greater interest in the property than the debtor
himself could have conveyed at the time of the sale. Allied First Nat. Bank of
Mesquite v. Jones, 766 S.W.2d 800, 804 (Tex.App.-Dallas 1988, no writ) (“Since
the conditions and limitations on the trustee’s power to convey the land were never
fulfilled, such power never lawfully came into being, and the foreclosure sale and
trustee’s deed were therefore void.”); see also Sani v. Powell, 153 S.W.3d 736, 742
(Tex.App.-Dallas 2005, pet. denied) (finding that if the sheriff acts outside his
authority in the foreclosure sale, the sale is void and title does not pass); Spring
Branch Independent School Dist. v. Siebert, 100 S.W.3d 520, 524 (Tex.App.-
Houston [1st Dist.] 2003, no pet.) (finding a foreclosure on a tax lien is void because
it failed to describe a definite tract of land); Oles v. Curl, 65 S.W.3d 129, 131
(Tex.App.-Amarillo 2001, no pet.) (finding foreclosure sale void because it was
conducted in violation of an automatic stay); Field Measurement Serv., Inc. v. Ives,
609 S.W.2d 615, 620 (Tex.App.-Corpus Christi 1980, writ ref’d n.r.e.) (void deed is
neither title nor color of title for purposes of three-year statute of limitations).
9. However, when a foreclosure sale is void, whether the purchaser is a
bona fide purchaser is irrelevant. Diversified, Inc., 702 S.W.2d at 721 (“The general
effect of a “good faith purchaser for value without notice” does not apply to a
Appellant’s Appeal Brief Page 11 of 22
purchaser at a void foreclosure sale.”) (citing First Southern Properties, Inc. v.
Vallone, 533 S.W.2d 339, 343 (Tex.1976)).
10. Because title never passes between parties in a void foreclosure sale,
the remedy is to place the parties in the same position they were before, as if the
foreclosure had never taken place. Silliman v. Gammage, 55 Tex. 365, 1881 Tex.
LEXIS 127, *9–11, 1881 WL 9787 (1881); Diversified, Inc., 702 S.W.2d at 721
(after finding a void foreclosure sale, the court found that “the trial court properly
sought to restore the parties to the same position that they would have been in but
for the wrongful sale”).
11. A trustee exercising the authority to foreclose in accordance with the
terms of a deed of trust does not act merely as an agent or employee of the lienholder
but has a separate capacity with a particular legal responsibility. Peterson v. Black,
980 S.W.2d 818, 822 (Tex.App. 1988) (citing Hammonds v. Holmes, 559 S.W.2d
345, 347 (Tex. 1977).
12. The trustee becomes a special agent for both the debtor and the
lienholder and must act with absolute impartiality and fairness in conducting a
foreclosure. Id. (citing Bonilla v. Roberson, 918 S.W.2d 17, 21 (Tex.App.-Corpus
Christi 1996, no writ)). “Similar to the duties of a mortgagee, the trustee must
conduct a foreclosure sale fairly and not discourage bidding by acts or statements
made before or during the sale.” Id. (citation omitted).
13. However, the trustee has no duty to take affirmative actions beyond that
required by statute or the deed of trust to ensure a fair sale. Id. (citing First State
Bank v. Keilman, 851 S.W.2d 914, 924 (Tex.App.-Austin 1993, writ denied));
Pentad Joint Venture v. First Nat. Bank of La Grange, 797 S.W.2d 92, 96 (Tex.App.-
Austin 1990, no writ).
Appellant’s Appeal Brief Page 12 of 22
14. A trustee’s duties are fulfilled by complying with the deed of trust. Id.
(citing First State Bank v. Keilman, 851 S.W.2d at 925). The trustee does have a
duty, however, to strictly comply with terms of the deed of trust as well as
[applicable Constitutional and statutory provision, regulations and] the notice and
sale provisions of § 51.002 of the Texas Property Code. Beard, 2006 WL 1 350286
*7 (citation omitted).
Lack of Subject Matter Jurisdiction
15. Appellee has no right to possession because the lower Court lacks
subject matter jurisdiction to decide the forcible detainer petition. Justice of the
peace courts and, on appeal, county courts, have jurisdiction of forcible-detainer
suits. TEX. PROP. CODE ANN. § 24.004 (Vernon Supp. 2011); TEX. R. CIV. P.
749.
16. The sole issue in a forcible-detainer action is which party has the right
to immediate possession of the property. TEX. R. CIV. P. 746; Dormady v. Dinero
Land & Cattle Co., L.C., 61 S.W.3d 555, 557 ("[T]he merits of the title shall not be
adjudicated"). Accordingly, to prevail in a forcible-detainer action, the plaintiff need
not prove title but merely present sufficient evidence of ownership to demonstrate a
superior right to immediate possession. Dormady, 61 S.W.3d at 557 (citing Goggins
v. Leo, 849 S.W.2d 373, 377 (Tex. App.-Houston [14th Dist.] 1993, no writ)).
17. Courts have recognized that a question of title may be so intertwined
with the issue of possession so as to preclude adjudication of the right to possession
without first determining title. In such cases, neither the justice court nor the county
court on appeal, has jurisdiction. Dormady, 61 S.W.3d at 557-58; Mitchell v.
Armstrong Capital Corp., 911 S.W.2d 169, 171 (Tex. App.-Houston [1st Dist.]
1995, writ denied). Whether such subject-matter jurisdiction exists "is a question of
Appellant’s Appeal Brief Page 13 of 22
law, subject to de novo review." Black v. Washington Mut. Bank, 318 S.W.3d 414,
416 (Tex. App.-Houston [1st Dist.] 2010, pet. dism'd w.o.j.).
18. A justice court may not adjudicate title to land. TEX. GOV'T CODE
ANN. § 27.031(b)(4) (Vernon Supp 2011). Subject-matter jurisdiction can be raised
at any time, including for the first time on appeal. ld. Whether an existing title
dispute in another court deprives the justice and county courts of jurisdiction to
adjudicate possession in forcible-detainer actions generally turns on whether there
is a basis-independent of the claimed right to title-for the Plaintiff’s claim of superior
possession rights in the property.
19. In Mitchell v. Armstrong Capital Corp., the Court held that a pending
title dispute in state district court deprived the justice courts, county courts, and
courts of appeal of jurisdiction over a claimed right of possession flowing from
rights as the purchaser at a foreclosure sale. 911 S.W.2d at 169. In that case, title to
the property owner's home was burdened with a Builder's and Mechanic's Lien
Contract securing payment on a promissory note to Armstrong Capital Corporation
for repairs. Id. at 170. After the property owner defaulted, Armstrong Capital
requested enforcement of the lien and it purchased the property at the resulting
substitute trustee's sale. Id. After the property owner refused a demand to vacate,
Armstrong Capital filed a forcible-detainer action. Id.
20. Among other defenses, the property owners asserted that the lower
courts, and appellate Court, lacked jurisdiction because they had requested
abatement of the forcible-detainer action pending the outcome of a lawsuit they filed
in state district court seeking to set aside the foreclosure. Id. At 170-71. The Texas
Supreme Court agreed, explaining that "[b'[ecause a 'title issue' was involved in the
courts below, they had no subject matter jurisdiction over the case." Id. at 170.
Appellant’s Appeal Brief Page 14 of 22
21. In contrast, in Morris v. American Home Mortgage Servicing, the Texas
Supreme Court addressed jurisdictional arguments identical to those made by
appellants in Mitchell, but held that the justice court, county court, and appellate
Courts did have jurisdiction. 360 S.W.3d 32, 35 (Tex. App.-Houston [1st Dist.]
2011, no pet.). There the Texas Supreme Court noted that, unlike in Mitchell, "the
original deed of trust contained language establishing a landlord-tenant relationship
between the borrower and the purchaser." Id. The Texas Supreme Court concluded
this was a dispositive difference because it provided a basis to resolve rights to
possession without resolving the ultimate title dispute:
“The existence of a landlord-tenant relationship provides a
basis for the court to determine the right to immediate
possession without resolving the question of title. See
Villalon [v. Bank One], 176 S.W.3d [66,] 71 [(Tex. App.-
Houston [1st Dist.] 2004, no pet.)]. When, however, the right
to possession depends upon the resolution of a question of
title, neither the justice court nor the county court has
jurisdiction. Mitchell v. Armstrong Capital Corp., 911
S.W.2d 169, 171 (Tex. App.- Houston [1st Dist.] 1995, writ
denied).
….
Because the plaintiff in a forcible detainer action is only
required to demonstrate a superior right to immediate
possession, the county court can determine possession
without quieting title if the deed establishes a landlord-tenant
relationship between the borrower and the purchaser of the
property at the foreclosure sale. See Villalon, 176 S.W.3d at
71; Rice v. Pinney, 51 S.W.3d 705, 712-13 (Tex. App.-Dallas
2001, no pet.). At the hearing, AHMS introduced the
substitute trustee's deed, showing that Wells Fargo was the
successor in interest to Option One Mortgage Corporation,
and that it, through its servicing agent, ARMS, had purchased
the property at the foreclosure sale. Evidence presented in the
county court also established that the original deed of trust
Appellant’s Appeal Brief Page 15 of 22
contained language establishing a landlord-tenant
relationship between the borrower and the purchaser. ARMS
also introduced the notice to vacate, which named it as the
successor in interest, as a servicing agent, to Option One
Mortgage Corporation. Because the evidence in the county
court showed that ARMS was the service agent for Wells
Fargo, and there was a landlord tenant-relationship between
Morris and Wells Fargo, the county court could determine
possession without quieting title. Accordingly, we hold that
the justice and county courts were not deprived of subject-
matter jurisdiction.”
Morris, 360 S.W.3d at 34-35; see also Yarto & DTRJ Invs., L.P. v. Gilliland, 287
S.W.3d 83, 89 (Tex. App.--Corpus Christi 2009, no pet.) ("In most situations, the
parties in a forcible detainer suit are in a landlord-tenant relationship. One indication
that a justice court, and a county court on appeal, 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.").
22. Courts have consistently followed or distinguished Mitchell on the
same basis. Compare Yarto, 287 S.W.3d at 89-90 (concluding justice court lacked
subject-matter jurisdiction in forcible-detainer action because determining who had
a superior right of possession required immediate resolution of title dispute) and
Hopes v. Buckeye Ret. Co., LLC, No. 13-07-00058-CV, 2009 WL 866794, at *5
(Tex. App.-Corpus Christi, Apr. 2, 2009, no pet.) ("Without a landlord-tenant
relationship or other basis independent of the Community Improvements contract,
the justice court could not determine the issue of immediate possession without
determining ownership of the property."), with Bruce v. Fed. Nat'l Mortg. Ass 'n,
352 S.W.3d 891, 893-94 (Tex. App.-Dallas 2011, pet. denied) (agreeing that "title
determination was not required to determine the right to possession because the
Appellant’s Appeal Brief Page 16 of 22
landlord-tenant relationship [found within the deed] provided an independent basis
for possession" such that justice court had jurisdiction over forcible-detainer claim);
Elwell v. Countywide Home Loans, Inc., 267 S.W.3d 566, 569 (Tex. App.-Dallas
2008, pet. dism'd w.o.j.) (holding justice and county courts had jurisdiction in
forcible-detainer action because deed of trust rendered appellant a "tenant at
sufferance," giving rise to landlord-tenant relationship between parties and, thus, "it
was not necessary for the trial court to determine whether the foreclosure was valid
before awarding possession to Countrywide"); Rice, 51 S.W.3d at 709-10 (holding
justice and county courts had jurisdiction in forcible- detainer action because deed
of trust established a landlord and tenant-at- sufferance relationship, which, unlike
in Mitchell, provided an "independent basis on which the trial court could determine
the issue of immediate possession without resolving the issue of title to the
property"); Dormady, 61 S.W.3d at 559 (holding justice and county courts had
jurisdiction in forcible-detainer action, observing that the situation in Mitchell was
"not the situation in this case where a landlord-tenant relationship is established in
the original deed of trust" that "provides a basis for determining the right to
immediate possession without resolving the ultimate issue of title to the property.").
23. Plaintiff has not argued that there is any basis for its claimed possession
rights other than the title rights it gained through the disputed foreclosure. Thus, in
this case-unlike the Morris, Bruce, Elwell, Rice and Dormady cases cited above--
there is no independent basis aside from Plaintiff's claim that it has superior title
rights. Rather, like in Mitchell, Yarto, and Hopes, Plaintiff's claim to possession in
this FED proceeding rests solely on its claim to have purchased the Property at a
valid substitute sale. Accordingly, this Court "has no subject matter jurisdiction over
the FED Petition. Therefore, the Court must dismiss this FED Action.
Appellant’s Appeal Brief Page 17 of 22
The Texas Non-Judicial Foreclosure and Forcible Detainer Scheme is
Preempted by Federal Law
24. The United States Supreme Court enumerated three ways in which
federal law can preempt state law: by express preemption, by field preemption, and
by implied or conflict preemption, “which applies “‘where compliance with both
federal and state regulations is a physical impossibility, ... or where state law stands
as an obstacle to the accomplishment and execution of the full purposes and
objecti[ves] of Congress.’” Scarborough v. Winn Residential L.L.P./Atlantic
Terrace Apartments, 890 A.2d 249, 255 (2006), quoting Boggs v. Boggs, 520 U.S.
833, 844, 117 S. Ct. 1754, 138 L. Ed. 2d 45 (1997) (citations omitted).
25. In enacting Regulation X, Congress only specifically addressed
preemption with respect to state laws that created notice obligations. See, 12 C.F.R.
1024.33(d), 24 C.F.R. 3500.21(h) (providing that state law provisions requiring
notice to a borrower under certain circumstances are preempted, while state laws
creating an obligation to notify insurance companies or taxing authorities are not
preempted).
26. The Texas non-judicial foreclosure and forcible detainer scheme
conflicts with the intent of Regulation X, and is therefore preempted. 12 U.S.C.
Regulation X (RESPA), i.e., (10) and 12 C.F.R 1024.41 (g), prohibit a loan servicer
from proceeding with a scheduled foreclosure, if the loan servicer received a
completed loan modification application and did not provide the borrower with a
rejection letter at least 30 days before the scheduled foreclosure sale. Texas law
allows a mortgage servicer to nonjudicially foreclose on a homestead without
complying with Regulation X, and then provides a method by which the mortgage
servicer (or any third party purchaser from the servicer) can remove the homeowner
Appellant’s Appeal Brief Page 18 of 22
from their property, while giving them no opportunity to challenge the failure to
comply with Federal law. In effect, a loan servicer who proceeds with a nonjudicial
foreclosure and eviction in violation of Regulation X is given a quick, easy and
cheap method to deprive a Texas citizen of their homestead in violation of Federal
law, circumventing the clear intent of Congress.
Prayer
27. Appellant prays that this Court find that Appellee’s failure to comply
with Federal laws governing foreclosure of loans secured by a homestead renders
the Substitute Trustee Deed void ab initio, necessitating a decision as to title, and
thereby deprives the lower courts of jurisdiction to hear the forcible detainer action.
28. Appellant prays that this Court find that RESPA and Regulation X
preempt state law, preventing a foreclosure and eviction when: (a) a homeowner has
submitted a loan modification application 37 days before foreclosure; and (b) the
homeowner is not provided a rejection letter prior to foreclosure.
Date: August 6, 2015
Respectfully submitted,
/s/ James Minerve
___________________________
James Minerve
State Bar No. 24008692
115 Saddle Blanket Trail
Buda, Texas 78610
(210) 336-5867
(888) 230-6397 (Fax)
Email: jgm@minervelaw.com
Attorney for Appellant Dolores Reynoso
Appellant’s Appeal Brief Page 19 of 22
CERTIFICATE OF COMPLIANCE
I, James Minerve, counsel for Appellant, DOLORES REYNOSO, certify that
this document was computer-generated, and that the number of words, pursuant to
the terms of Texas Rule of Appellate Procedure 9.4(i), is 3,148.
/s/ James Minerve
______________________________
James Minerve
Appellant’s Appeal Brief Page 20 of 22
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the above and foregoing
document was sent to the Appellee in accordance with the Texas Rules of Civil
Procedure on this 6th day of August, 2015:
RL WILSON LAW FIRM
Trey Wilson
111 W. Olmos Dr.
San Antonio, Texas 78212
(210) 335-2147
(210) 930-9353 Fax
Rwl3d@sa-law.com
/s/ James Minerve
______________________________
James Minerve
Appellant’s Appeal Brief Page 21 of 22
Appendix
1. Judgment, Justice Court Precinct 1, Bexar County, Texas
2. Judgment, Bexar County Court at Law Number Three
Appellant’s Appeal Brief Page 22 of 22