in Re a Purported Lien or Claim Against Hai Quang La and Theresa Thorn Nguyen , 2013 Tex. App. LEXIS 13031 ( 2013 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00110-CV
IN RE A PURPORTED LIEN OR
CLAIM AGAINST HAI QUANG LA
AND THERESA THORN NGUYEN
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FROM THE 342ND DISTRICT COURT OF TARRANT COUNTY
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OPINION
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Bernadotte Loomis appeals from the trial court’s order granting a “Motion
for Judicial Review of Documentation or Instrument Purporting to Create a Lien
or Claim” filed under section 51.903 of the Texas Government Code by Hai
Quang La and Theresa Thorn Nguyen. See Tex. Gov’t Code Ann. § 51.903
(West 2013). Because we conclude the trial court erred in applying section
51.903 of the government code to restrictive covenants, we reverse the trial
court’s order and dismiss the underlying motion.
Background
La and Nguyen, home owners in the Carson Ranch Estates-Phase I
(Carson Ranch Estates), filed a verified motion under section 51.903 of the
Texas Government Code seeking a judicial determination that a certain
document filed in the Tarrant County real property records and impacting the
Carson Ranch Estates was a fraudulent lien or claim that should not be accorded
any status. See id. La and Nguyen attached the document at issue to their
motion—a six page document entitled “Reservations, Restrictions and
Covenants” (restrictive covenants). They alleged that because the restrictive
covenants was not signed by the true owner of the property, West Comm.
Investments, LP, and because the document lacked a notary’s signature on the
acknowledgment, the document was fraudulent as defined by Texas Government
Code section 51.901(c)(2). See id. § 51.901(c)(2) (West 2013). La and Nguyen
asked the trial judge to conduct an ex parte review of the documents attached to
their motion and to enter a proposed order styled “Finding of Facts and
Conclusion of Law Regarding a Documentation or Instrument Purporting to
Create a Lien or Claim.” See id. §51.903(c). The Honorable J. Wade Birdwell
did enter the proposed order after a review of the motion and the attached
documents. 1
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Judge Birdwell’s order includes the following findings:
The documentation or instrument attached as
Exhibit B to the motion and hereto, herein is asserted
against real property and:
2
Thirty-one days later, Loomis, also a home owner in Carson Ranch
Estates, filed a plea in intervention, a motion to set aside or vacate findings of
facts and conclusions of law, and a motion for new trial alleging that the trial
court’s order improperly took her property rights without due process. Loomis
(1) IS NOT provided for by specific state or
federal statutes or constitutional provisions,
as not signed by the notary public as
requested by Section 121.004(b)(2) of the
Tex. Civ. Prac. & Rem. Codes;
(2) IS NOT created by implied or express
consent or agreement of the
Movants/Owners of the real property,
required under the law of this state or by
implied or express consent or agreement of
an agent, fiduciary, or other representative
of the Movants/Owners;
(3) IS NOT an equitable, constructive, or other
lien imposed by a court of competent
jurisdiction created by or established under
the constitution or laws of this state or the
United States; or
(4) IS NOT asserted against real property or
an interest in real property. There is no
valid lien or claim created by this
documentation or instrument.
This court makes no finding as to any underlying
claims of the parties involved, and expressly limits its
finding of fact and conclusion of law to the review of a
ministerial act. The county clerk shall file this finding of
fact and conclusion of law in the same class of records
as the subject documentation or instrument was
originally filed, and the court directs the county clerk to
index it using the same names that were used in
indexing the subject documentation or instrument.
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further argued that the issues presented by La and Nguyen in their ex parte
motion were the identical issues pending since 2012 in a different suit in another
Tarrant County district court.
Judge Birdwell held a hearing on Loomis’s motions. At that hearing he
stated that he had set the hearing “primarily to make a record for purposes of
what I’m anticipating will be an appeal in this case.” Judge Birdwell also stated
that at the time that he entered his finding of facts and conclusions of law, he had
not been advised and was not aware that litigation involving the same property
was pending in another district court. Judge Birdwell then noted that he lacked
jurisdiction to rule on Loomis’s motions because they were filed after his
judgment had become final. This appeal followed.
Standing
As an initial matter, La and Nguyen challenge Loomis’s standing to bring
this appeal. Their sole argument is that the Court’s ruling does not affect
Loomis’s property rights. Standing is a component of subject matter jurisdiction
and is a constitutional prerequisite to maintaining a lawsuit under Texas law.
Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993).
Standing requires “a real controversy between the parties” that “will be actually
determined by the judicial declaration sought.” Austin Nursing Ctr., Inc. v.
Lovato, 171 S.W.3d 845, 849 (Tex. 2005); Tex. Ass’n. of Bus., 852 S.W.2d at
446. A determination of standing focuses on whether a party has a “justiciable
interest” in the outcome of the lawsuit, such as when it is personally aggrieved or
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has an enforceable right or interest. Lovato, 171 S.W.3d at 849. Standing is a
legal question reviewed de novo. Heckman v. Williamson Cnty, 369 S.W.3d 137,
150 (Tex. 2012).
Generally, any person whose property was intended to benefit under a
restrictive covenant has standing to bring a suit to enforce the covenant.
Anderson v. New Prop. Owners’ Ass’n of Newport, Inc., 122 S.W.3d 378, 384
(Tex. App.—Texarkana 2003, pet. denied). In cases where many property
owners have an interest in the restrictive covenant, any one of them can enforce
it. See Ski Masters of Tex., LLC v. Heinemeyer, 269 S.W.3d 662, 667–68 (Tex.
App.—San Antonio 2008, no pet.); Giles v. Cardenas, 697 S.W.2d 422, 427 (Tex.
App.—San Antonio 1985, writ ref’d n.r.e.).
Here, La and Nguyen sought by their ex parte motion for judicial review to
have the restrictive covenants governing the Carson Ranch Estates declared
fraudulent. As a property owner in the Carson Ranch Estates, subject to the
same restrictive covenants, Loomis clearly has standing to defend against such
action. See Ski Masters, 269 S.W.3d at 668. Therefore, we now proceed to
consider the merits of Loomis’s issues on appeal.
Standard of Review
A trial court may determine whether a challenged document or instrument
under section 51.903 is “fraudulent” based “solely on a review of the
documentation or instrument attached to the motion and without hearing any
testimonial evidence.” Tex. Gov’t Code Ann. § 51.903(c). Here, the trial court
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considered only the documents attached by La and Nguyen to their motion for
judicial review in deciding whether the restrictive covenants were fraudulent as
that is defined in section 51.901(c)(2). See id. § 51.901(c)(2). Where facts are
undisputed, the question of whether something meets a statutory definition is a
question of law that we review de novo. See David Powers Homes, Inc. v. M.L.
Rendleman Co., Inc., 355 S.W.3d 327, 335 (Tex. App.—Houston [1st Dist.] 2011,
no pet.) (citing State ex rel. Dep’t of Criminal Justice v. VitaPro Foods, Inc., 8
S.W.3d 316, 323 (Tex. 1999)).
Analysis
In three issues on appeal, Loomis argues the trial court erred when it
granted La’s and Nguyen’s motion for judicial review and issued its order under
section 51.903. We begin our analysis by examining the applicable statutory
provisions.
Government Code
The Texas Government Code provides an expedited proceeding for
challenging a fraudulent lien or claim against real or personal property, the
foundation of which is found in section 51.903. That section, which is largely a
suggested form motion and order, allows a purported debtor or obligor or a
person who owns an interest in real or personal property to ask for a judicial
determination of the legitimacy of a filed or recorded document or instrument
purporting to create a lien or interest in real or personal property. Tex. Gov’t
Code Ann. § 51.903(a), (c). A motion under that section requests the court to
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review the subject document and determine “whether it should be accorded lien
status.” Id. at § 51.903(a). The motion for judicial review must be filed with the
district clerk in the county where the subject document was filed and “may” be
ruled on by a district judge having jurisdiction over real property matters in that
county. Id. § 51.903(a), (c). The trial court’s finding may be made solely on a
review of the documents attached to the motion for judicial review and without
hearing testimony. Id. § 51.903(c). “The court’s review may be made ex parte
without delay or notice of any kind.” Id. The motion for judicial review must be
verified and must acknowledge that it is not requesting a finding as to the
underlying claim of the parties and that it is not seeking to invalidate a legitimate
lien. Id. § 51.903(a), (b), (g).
The motion for judicial review must allege that the document or instrument
at issue is fraudulent as that term is defined in section 51.901(c)(2). Id. §
51.903(a), § 51.901(c)(2). For purposes of a section 51.903 action, a document
or instrument is presumed to be fraudulent if:
[T]he document or instrument purports to create a lien
or assert a claim against real or personal property or an
interest in real or personal property and:
(A) is not a document or instrument provided for by the
constitution or laws of this state or of the United States;
(B) is not created by implied or express consent or
agreement of the obligor, debtor, or the owner of the
real or personal property or an interest in the real or
personal property, if required under the laws of this
state, or by implied or express consent or agreement of
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an agent, fiduciary, or other representative of that
person; or
(C) is not an equitable, constructive, or other lien
imposed by a court with jurisdiction created or
established under the constitution or laws of this state or
of the United States.
Id. § 51.901(c)(2). Thus, the court may presume the document is fraudulent
under this section if the court makes one positive and three negative findings
about the subject document. Id. The court must affirmatively find that the
document purports to create a lien or claim against real or personal property. Id.
Additionally, in order to find the subject document fraudulent, the court must
determine that the document is not one of the following three types of legitimate
liens or claims: (1) a document or instrument provided for by state or federal law
or constitutional provision; (2) created by implied or express consent or
agreement of the obligor, debtor, or the owner of the real or personal property; or
(3) imposed by a court as an equitable, constructive, or other lien. See id. §
51.901(c)(2)(A)–(C).
Finally, a proceeding under section 51.903 is limited in scope. See id. §
51.903(a), (g). A trial court may only determine whether the subject document is
fraudulent as defined by section 51.901(c)(2); it may not rule on any underlying
claims of the parties involved. See id. § 51.903(g) (“suggested form order” states
that “[t]his court makes no finding as to any underlying claims of the parties
involved, and expressly limits its finding of fact and conclusion of law to the
review of a ministerial act”); see also David Powers Homes, 355 S.W.3d at 338
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(statute not created to determine legitimacy and validity of claimed interest, but
instead enacted to expeditiously determine legitimacy of document manifesting
purported lien or interest) (quoting In re Hart, No. 07-98-0292-CV, 1999 WL
225956, at *2 (Tex. App.—Amarillo Apr. 15, 1999, no pet.) (not designated for
publication); In re Purported Liens or Claims Against Samshi Homes, L.L.C., 321
S.W.3d 665, 667 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (substantive
evidentiary claims are beyond the scope of section 51.903 proceedings).
Purports to Create a Lien or Claim
Based on the plain language of the statute, a proceeding under section
51.903 of the government code must first involve a document or instrument that
purports to create a lien or assert a claim against real or personal property or an
interest in real or personal property. See Tex. Gov’t Code Ann. § 51.903(a). La
and Nguyen plead in their motion for judicial determination that the restrictive
covenants governing Carson Ranch Estates purported to create a lien or claim
and should be declared fraudulent and given no status. Id. Restrictive
covenants, however, are not liens or claims against real property, and therefore,
are not subject to a section 51.903 proceeding. Id. The Texas Civil Practice and
Remedies Code defines a “lien” as “a claim in property for the payment of a debt
and includes a security interest.” Tex. Civ. Prac. & Rem. Code Ann. § 12.001(3)
(West Supp. 2012). 2 Black’s Law Dictionary defines a “lien” as “[a] legal right or
2
Chapter 12 of the Texas Civil Practice and Remedies Code also deals
with liability related to a fraudulent court document or a fraudulent lien or claim
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interest that a creditor has in another’s property, lasting usu[ally] until a debt or
duty that it secures is satisfied.” Black’s Law Dictionary 1006 (9th ed. 2009).
By contrast, the Texas Property Code defines a “restrictive covenant” as
“any covenant, condition, or restriction contained in a dedicatory instrument,
whether mandatory, prohibitive, permissive or administrative.” See Tex. Prop.
Code Ann. § 202.001(4) (West 2007 & Supp. 2012). Black’s Law Dictionary
defines a “restrictive covenant” as a “private agreement, usu[ally] in a deed or
lease, that restricts the use or occupancy of real property, esp[ecially] by
specifying lot sizes, building lines, architectural styles, and the uses to which the
property may be put.” Black’s Law Dictionary 421 (9th ed. 2009). Additionally, at
least one court has held that a restrictive covenant is a negative covenant that
“limits permissible uses of land.” See In Voice of the Cornerstone Church Corp.
v. Pizza Prop. Partners, 160 S.W.3d 657, 665 (Tex. App.—Austin 2005, no pet.);
accord Restatement (Third) of Prop.: Servitudes § 1.3(3) (2000) (restrictive
covenant is “a negative covenant that limits permissible uses of land”). Thus,
although restrictive covenants restrict or otherwise limit permissible uses of the
land, they do not create or purport to create a “lien or a claim” on the owner’s
property within the meaning of section 51.903. See Tex. Gov’t Code Ann. §
51.903; see also Marsh v. JPMorgan Chase Bank, N.A., 888 F. Supp. 2d 805,
811 (W.D. Tex. 2012) (mortgage assignment not “lien” within meaning of statute
filed against real or personal property. See Tex. Civ. Prac. & Rem.Code Ann. §
12.001–12.007 (West 2002 & Supp. 2012).
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prohibiting filing of fraudulent liens against real property; assignment did not
purport to create lien or claim against property but rather merely purported to
transfer existing deed of trust from one entity to another).
La’s and Nguyen’s reliance on government code section 51.903 to
challenge a restrictive covenant is misplaced. A section 51.903(a) ex parte
proceeding was never meant to determine issues of creation, enforcement,
validity, or construction of a restrictive covenant. Tex. Gov’t Code Ann. §
51.903(a), (g). Because a section 51.903 proceeding applies only to documents
or instruments “purporting to create a lien or a claim” against property, and
because the restrictive covenant at issue in La’s and Nguyen’s motion for judicial
determination does not purport to create a lien or claim against real property, the
trial court erred when it granted La’s and Nguyen’s motion. Id. § 51.903(a). We
sustain Loomis’s first issue in part. Because this part of Loomis’s first issue is
dispositive, we do not reach the remainder of Loomis’s first issue or her two other
issues. 3
Conclusion
For the reasons stated above, we reverse the trial court order and dismiss
the underlying motion for judicial review. 4
3
See Tex. R. App. P. 47.4.
4
The trial court is directed to have a copy of this court’s opinion and
judgment recorded “in the same class of records as the subject documentation or
instrument was originally filed.”
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PHYLIS J. SPEEDLIN
JUSTICE
PANEL: MCCOY and MEIER, JJ.; and PHYLIS J. SPEEDLIN (Senior Justice,
Retired, Sitting by Assignment)
DELIVERED: October 17, 2013
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