Mark DiSanti v. Wachovia Bank, National Association ( 2009 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-330-CV
MARK DISANTI APPELLANT
V.
WACHOVIA BANK, APPELLEE
NATIONAL ASSOCIATION
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FROM THE 362ND DISTRICT COURT OF DENTON COUNTY
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MEMORANDUM OPINION 1
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I. INTRODUCTION
Appellant Mark DiSanti appeals the summary judgment entered against
him and in favor of Appellee Wachovia Bank, National Association. We will
affirm.
1
… See Tex. R. App. P. 47.4.
II. F ACTUAL AND P ROCEDURAL B ACKGROUND
In 2001, deed restrictions for the housing development known as
Saddlebrook Village in Denton County were recorded in Denton County. The
deed restrictions provided for a property owner’s association that would charge
and collect certain dues from owners of lots within the subdivision.
In 2002, Saddlebrook Homes, L.P. purchased Lot 39, Block 17 in the
subdivision (the “Property”). Washington Mutual Bank, FA subsequently
extended a revolving line of credit to Saddlebrook Homes and other entities
pursuant to a Guidance Line Loan Agreement. The Washington Mutual loan
agreement was secured by a deed of trust and a supplemental deed of trust
(collectively, the “Washington Mutual Deed of Trust”), which created a security
interest in the Property. The Washington Mutual Deed of Trust was properly
recorded in Denton County in 2003.
In April of 2004, Saddlebrook conveyed the Property to Sok Jo Lee and
Kim Sook Young. Lee and Young executed a promissory note secured by a
deed of trust in favor of Argent Mortgage Company, LLC to finance the
purchase of the Property. The deed from Saddlebrook to Lee and Young also
created a vendor’s lien retained for the benefit of Argent. Both the deed of
trust securing the promissory note (the “Argent Deed of Trust”) and the deed
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to Lee and Young were recorded in Collin County, rather than in Denton
County.
In September of 2005, Argent assigned to Ameriquest Mortgage
Company, LLC the note from Lee and Young and the liens securing payment of
that note. Ameriquest then assigned the note and liens securing its payment
to Chase Manhattan Mortgage Corporation. Both of these assignments—to
Ameriquest and to Chase—were incorrectly recorded in Collin County.
Lee and Young failed to pay certain assessments to the homeowners
association as required by the deed restrictions. As a result, on January 24,
2006, the homeowners association foreclosed its assessment lien against the
Property. At the time of the foreclosure sale, Denton County’s real property
records contained the deed to Saddlebrook and the Washington Mutual Deed
of Trust, but not the deed to Lee and Young or the Argent Deed of Trust.
DiSanti purchased the Property at the foreclosure sale, and an Assessment Lien
Trustee’s Deed conveying the Property to him was recorded in Denton County
on May 4, 2006.
On October 31, 2006, the deed to Young and Lee, the Argent Deed of
Trust, and the two assignments of the promissory note and the liens securing
payment of that note were filed in Denton County for the first time. In April of
2007, Chase assigned to Wachovia the promissory note from Lee and Young
3
and the corresponding liens on the Property. This assignment was properly
recorded in Denton County.
Wachovia brought suit against DiSanti,2 requesting a declaration that its
interest in the Property (via assignment of the promissory note from Lee and
Young and corresponding liens) is superior to DiSanti’s interest, that it has the
right to an accounting from DiSanti of amounts past due pursuant to section
209.011(e)(2) of the Texas Property Code, and that it has the right to redeem
the Property.
Wachovia moved for summary judgment on its request for a declaration
that its lien is superior to DiSanti’s interest in the Property.3 Wachovia argued
in its summary judgment motion that DiSanti’s interest was subordinate to
Wachovia’s for three reasons: (1) Wachovia was equitably and contractually
subrogated to Washington Mutual’s superior lien position, (2) the deed to
DiSanti provided that the conveyance was made subject to “any and all rights
of prior lienholders” and, consequently, DiSanti’s interest was subject to
2
… Wachovia also included claims against Lee and Young in its petition;
after Lee and Young failed to answer, the trial court entered default judgment
against them. They are not parties to this appeal.
3
… In its summary judgment motion, Wachovia sought final, rather than
partial, summary judgment because a determination that its interest in the
Property is superior to DiSanti’s interest renders its claims for redemption moot
and fully resolves the case.
4
Wachovia’s lien even though its lien was not of record in Denton County at the
time of the foreclosure sale, and (3) the vendor’s lien reserved in the deed to
Lee and Young and assigned to Wachovia is superior to and prior to DiSanti’s
interest in the Property. DiSanti filed a response to Wachovia’s motion, arguing
that he was a bona fide purchaser for value, without notice of the lien in favor
of Wachovia or any of its predecessors, and that the doctrine of equitable
subrogation did not apply to Wachovia. The trial court, without stating the
specific grounds for its ruling, granted summary judgment for Wachovia, finding
that W achovia’s lien is superior to and prior to DiSanti’s Assessment Lien
Trustee’s Deed.
III. S TANDARD OF R EVIEW
A plaintiff is entitled to summary judgment on a cause of action if it
conclusively proves all essential elements of the claim. See Tex. R. Civ. P.
166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). 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. IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v.
Mason, 143 S.W.3d 794, 798 (Tex. 2004).
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IV. W ACHOVIA’S INTEREST IN THE P ROPERTY
IS S UPERIOR TO D IS ANTI’S INTEREST
In his third issue, DiSanti argues that the trial court erred by granting
summary judgment for Wachovia because Wachovia failed to meet its burden
of proof. Specifically, DiSanti contends that in order for the trial court to grant
summary judgment for Wachovia, it had to find (1) that Wachovia’s lien was
superior to DiSanti’s interest in the Property and that DiSanti had knowledge of
Wachovia’s lien on the day of the foreclosure sale, or (2) that Wachovia was
equitably subrogated to the lien rights of Washington Mutual. DiSanti also
argues in his first issue that he had neither actual nor constructive notice of the
lien claimed by Wachovia. 4
4
… Wachovia contends on appeal that DiSanti waived his appeal because
he failed to challenge every possible ground asserted by Wachovia for summary
judgment. Specifically, Wachovia argues that DiSanti failed to address
Wachovia’s arguments that the Assessment Lien Trustee’s Deed expressly
subordinates DiSanti’s interest to the rights of prior lienholders and that
Wachovia’s vendor’s lien interest is superior to DiSanti’s interest in the
Property. However, DiSanti’s argument that he was a bona fide purchaser
without notice of Wachovia’s interest in the Property adequately challenges
these grounds. See Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001).
Additionally, in his third issue, DiSanti makes a general assertion that the trial
court erred by granting summary judgment for Wachovia and argues all of the
reasons why it erred by doing so. See Malooly Bros. v. Napier, 461 S.W.2d
119, 121 (Tex. 1970). Therefore, we hold that DiSanti did not waive his
appeal.
6
A person who acquires property in good faith, for value, and without
notice of any third-party claim or interest is a bona fide purchaser. Fletcher v.
Minton, 217 S.W.3d 755, 758 (Tex. App.— Dallas 2007, no pet.); City of
Richland Hills v. Bertelsen, 724 S.W.2d 428, 429 (Tex. App.—Fort Worth
1987, no writ). A bona fide purchaser acquires a property interest without
being subject to prior claims. Houston First Am. Sav. v. Musick, 650 S.W.2d
764, 769 (Tex. 1983). Status as a bona fide purchaser is an affirmative
defense to a title dispute. Madison, 39 S.W.3d at 606.
There is no dispute concerning DiSanti’s purchase of the property in good
faith and for value. Thus, the bona fide purchaser issue here centers on
whether DiSanti had actual or constructive notice of Wachovia’s interest. See
Fletcher, 217 S.W.3d at 758–59. “Notice” is broadly defined as information
concerning a fact actually communicated to a person, derived by him from a
proper source, or presumed by law to have been acquired. Flack v. First Nat’l
Bank of Dalhart, 148 Tex. 495, 499, 226 S.W.2d 628, 631 (1950). Notice
may be actual or constructive. Id. Actual notice exists when a person actually
knows the facts or should have known them if he had inquired about them after
learning of facts that put him on inquiry. Bertelsen, 724 S.W.2d at 430.
Constructive notice is notice the law imputes to a person not having personal
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information or knowledge. Madison, 39 S.W.3d at 606; Flack, 226 S.W.2d at
631–32.
As a general rule, an unrecorded interest in real property is binding on
those who have knowledge of the interest. See Tex. Prop. Code Ann. §
13.001(b) (Vernon 2004); Burris v. McDougald, 832 S.W.2d 707, 709 (Tex.
App.—Corpus Christi 1992, no writ). Likewise, an instrument relating to real
property that is not recorded in the deed records of the county in which the
property is located is binding on a subsequent purchaser who has notice of the
instrument. Tex. Prop. Code Ann. § 13.003 (Vernon 2004).
A purchaser is bound by every recital, reference, and reservation
contained in or fairly disclosed by an instrument that forms an essential link in
the chain of title under which he claims. Westland Oil Dev. Corp. v. Gulf Oil
Corp., 637 S.W.2d 903, 908 (Tex. 1982). Thus, every purchaser of land is
charged with knowledge of all facts appearing in the chain of title through
which he claims that would place a reasonably prudent person on inquiry as to
the rights of other parties in the property conveyed. Williams v. Jennings, 755
S.W.2d 874, 882 (Tex. App.—Houston [14th Dist.] 1988, writ denied) (citing
Blocker v. Davis, 241 S.W.2d 698, 700 (Tex. Civ. App.—Fort Worth 1951,
writ ref’d n.r.e.). The rationale of this rule is that any description, recital of
fact, or reference to other documents in an instrument puts the purchaser upon
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inquiry, and he is bound to follow up this inquiry, step by step, from one
discovery to another and from one instrument to another, until the whole series
of title deeds is exhausted and a complete knowledge of all the matters referred
to and affecting the estate is obtained. Waggoner v. Morrow, 932 S.W.2d
627, 632 (Tex. App.—Houston [14th Dist.] 1996, no writ) (citing Westland Oil
Dev. Corp., 637 S.W.2d at 908).
In this case, Wachovia holds a vendor’s lien on the Property through a
series of assignments. If a vendor’s lien encumbers the land, legal title does
not pass to the vendee; instead, the vendee owns the equitable interest along
with a contract for the purchase of land. See Flag-Redfern Oil Co. v. Humble
Exploration Co., 744 S.W.2d 6, 8 (Tex. 1987); see also Walton v. First Nat’l
Bank of Trenton, 956 S.W.2d 647, 651 (Tex. App.—Texarkana 1997, pet.
denied) (noting that when an express vendor’s lien is retained to secure unpaid
purchase money, the vendor retains the superior title). Because Wachovia
claims legal title to the Property by virtue of its vendor’s lien, DiSanti had the
burden of proving that he was a bona fide purchaser for value, without notice
of other claims to the title. See, e.g., Bellaire Kirkpatrick Joint Venture v.
Loots, 826 S.W.2d 205, 209 (Tex. App.—Fort Worth 1992, writ denied);
Phillips v. Latham, 523 S.W.2d 19, 24 (Tex. Civ. App.—Dallas 1975, writ ref’d
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n.r.e.) (noting general rule that one claiming to be a bona fide purchaser has the
burden of proof on that issue).
Certainly, if the deed conveying the Property to Lee and Young and
Wachovia’s deed of trust, as well as the assignments of the promissory note
from Lee and Young and corresponding liens, had been properly recorded in
Denton County prior to the foreclosure sale, DiSanti’s interest in the Property
would have been subject to Wachovia’s vendor’s lien and deed of trust. See
Tex. Prop. Code Ann. §§ 13.001(a)–(b), .003; Walton, 956 S.W.2d at 651.
But because these interests were not of record in Denton County at the time
of the foreclosure sale, we examine the summary judgment evidence to
determine whether DiSanti nonetheless had notice of this interest when he
purchased the Property at the foreclosure sale.5 See Tex. Prop. Code Ann. §§
13.001(a)–(b), .003; Fletcher, 217 S.W.3d at 758 (citing Bertelsen, 724
S.W.2d at 429).
5
… The Assessment Lien Trustee’s Deed provided that DiSanti purchased
the Property subject to “any and all rights of prior lienholders.” Wachovia
argues that because this exception language in DiSanti’s deed is not limited to
the rights of prior lienholders of record, DiSanti’s interest is subject to
Wachovia’s interest. Wachovia’s argument essentially creates an exception to
both the bona fide purchaser defense and the recording requirement, but we
need not address this contention because we hold that DiSanti had notice of
Wachovia’s interest.
10
The Assessment Lien Trustee’s Deed conveying the Property to DiSanti
states, “[A]ccording to the records of the Association, the present owner(s) of
the above described Property [are] Sok Jo Lee and Kim Sook Young (per Collin
County land records) & Saddlebrook Homes, L.P. (per Denton County land
records).” The conveyance language of the deed conveys the Property to
DiSanti “together with all and singular the rights and appurtenances thereto in
anywise belonging unto Sok Jo Lee and wife Kim Sook Young & Saddlebrook
Homes, L.P., the prior owner(s) of [the] Property.”
Because DiSanti is bound by every reference contained in or fairly
disclosed by the Assessment Lien Trustee’s Deed and because that deed
references Lee and Young’s interests in the Property “per Collin County land
records,” DiSanti was placed on inquiry as to the rights of Lee and Young. See
Westland Oil Dev. Corp., 637 S.W.2d at 908; Williams, 755 S.W.2d at 882.
Consequently, DiSanti was charged with constructive notice of Lee and
Young’s interests and, in turn, with notice of every reservation contained in the
deed to Lee and Young. See Waggoner, 932 S.W.2d at 632. Because the
deed to Lee and Young reserved a vendor’s lien for the benefit of Argent,
DiSanti was also charged with constructive notice of that prior and superior
vendor’s lien, which was ultimately assigned to Wachovia. See id. Applying
the appropriate standard of review, indulging every reasonable inference and
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resolving any doubts in DiSanti’s favor, we conclude that the summary
judgment record conclusively demonstrates that DiSanti had constructive notice
of the vendor’s lien in favor of Wachovia, which defeated his bona fide
purchaser status. See Mason, 143 S.W.3d at 798.
For these reasons, we hold that Wachovia conclusively established that
its vendor’s lien interest in the Property is superior to DiSanti’s interest in the
Property.6 Thus, we overrule DiSanti’s first and third issues. Because the trial
court’s order granting summary judgment does not state the ground on which
it was granted, DiSanti was required on appeal to negate every possible ground
asserted by Wachovia for summary judgment. See State Farm Fire & Cas. Co.
v. S.S., 858 S.W.2d 374, 381 (Tex. 1993). Because we have held that the
trial court properly granted Wachovia’s summary judgment on the ground that
Wachovia’s vendor’s lien interest is superior to DiSanti’s interest, we must
affirm the trial court’s summary judgment and need not address DiSanti’s other
challenges to the summary judgment based on contractual and equitable
6
… Regardless of who had the burden of proof on the bona fide purchaser
issue—i.e., whether DiSanti had the burden to prove such status or Wachovia
had the burden to disprove such status—DiSanti’s contention that he was a
bona fide purchaser without notice of Wachovia’s interest in the Property is
defeated as a matter of law by the references and recitals contained in his
Assessment Lien Trustee’s Deed. Thus, the summary judgment record
establishes that DiSanti had constructive notice of Wachovia’s interest and,
consequently, was not a bona fide purchaser. See Tex. R. Civ. P. 166a(c).
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subrogation. See Tex. R. App. P. 47.1; FM Props. Operating Co. v. City of
Austin, 22 S.W.3d 868, 872–73 (Tex. 2000).
V. C ONCLUSION
Having overruled DiSanti’s first and third issues and having held that
Wachovia conclusively established its right to summary judgment, we affirm the
trial court’s judgment.
SUE WALKER
JUSTICE
PANEL: CAYCE, C.J.; LIVINGSTON and WALKER, JJ.
DELIVERED: May 14, 2009
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