David Gordan Schmidt (d/B/A ABC Bonding Company) and Greenbrier Equities, LLC v. Brenda Crawford ( 2019 )

Opinion issued August 20, 2019
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00846-CV
———————————
DAVID GORDON SCHMIDT D/B/A ABC BONDING COMPANY AND
GREENBRIER EQUITIES, LLC, Appellants
V.
BRENDA CRAWFORD, CARLOS PEREZ, ANTHONY WILLIAMS,
ANNIE J. BUTLER, ANTHONY FRANCO, AMBRIA FIKE, DEBRA
JOHNSON, VICTORIA WELLS, MILDRED ENGLISH, OTTIS
WILLIAMS, RANDY L. LASTER, PABLE MURILLO, EMMA MURILLO,
CRAIG COOPER, NELSON MARTIN ARMSTRONG, MAZEN BREIR,
BENITO MARTINEZ, TANYA PEDROZA, SERGIO PEDROZA,
CAROLYN ETHERIDGE, LOUISE SEALS, TERRY MOORE, MARIA
RAMIREZ, PETE GARCIA, DENISE BALDWIN, WILLIAM T.
ETHERTON, PATRICIA ETHERTON, SHARON WILLIAMS,
HELEODORA CRUZ, HATTIE HEMPHILL, AGUSTINA ROBERTS,
LOUIS ROBERTS, EMILY JOHNSON, IRIS EDITH SEGUNDO, JOANNA
LOAEZA, KEVIN WILLIAMS, RITA WILLIAMS, YOLANDA
CARRIERE, ANTHONY CITTI, JUAN CISNEROS, BRANDY JOHNSON,
JOHN GHOLSTON, ANSON FURMAN, IVIE BELL, LAURA DIAZ,
DARLENE ALEJANDRO, JESSE DELEON, CYNTHIA DELEON, JESUS
VEGA, BEVERLY VEGA, RAY PERFECTO, BRIDGET NWOKO,
NEMIAH CLARK, EARLEAN WILLIAMS, LAKESHEA CLARK, PETE
GONZALES, PAT LEE, MARY VICTORIAN, TIFFANY JOHNSON,
ELIAS GAMINO, TIFFANY CHENIER, MURALINE PETER, VICTOR
REYES, VERONICA SMITH, JIMMIE ENGLETT, VELVET HILTON,
STEPHEN LACY, LEROY VANTERPOOL, PATRICIA WESLEY,
SAMMIE L. ABRAHAM, EDITH M. ABRAHAM, BRENDA BROWN,
JESUS SILVESTRE, FELICITA AGUILAR, GABINO SALAZAR,
JOSEFINA M. NOWLIN, SANDRA DORRON, JESUS VELAZQUEZ,
BONNIE CEPHUS, JOSEPHINE ROCHA, LEON JACOBSON, LINDA
JACOBSON, OLIVIA SIMS, CONSTANCE GAY, ENSLEY CLINTON,
LLEWEL WALTERS, MAURO REYNERIO FERNANDEZ CRUZ,
ANTHONY THOMPSON, JUAN CARLOS RIOS RAMIREZ, PHILLIP C.
CLARK, BEATRICE PENA, CAROL ASKEW, BRIAN CORMIER,
STEVEN CRUZ, LEROY WELLS, HAROLD KINNARD, PLUSHATTE
DAVIS, DEIDRE DOBBINS, DAVID SPAULDING, MICHAEL KOSSA,
DIANA KOSAS, SERAFIN LUNA, DEBORAH BERRYHILL, O’KEEFE
ALLEN, CHRISTOPHER P. VANA, SR., GRACE HAMILTON, BELINDA
SPENCER, RENORA RIGGINS, IVONNE JACKSON, EDITH ORDONEZ,
WILBER ORDONEZ, TESSIE LYNCH, KATHERINE SANDERS,
CHARLES MOURNING, ILIANA PEREZ, TIBURCIA ZAYALA,
CHRISTOPHER GREEN, DONALD SHELTON, DONALD CREDEUR,
AVIS BATTLE, GRACE PHILLIPS, DAROLYN LEWIS, RAYMOND
LEWIS, JR., MICHAEL MILLER, ESTHER DOUBLIN, MARCOS ORTIZ,
ROBERT SANCHEZ, ROSALINDA SANCHEZ, TIFFANY SHANNON,
ALTHA DAVIS, HERMAN DAVIS, NELSON HEBERT, MELVIN
HERRERA, JUANITA CANO, PATRICE BOYCE, EDSON
DRONBERGER, CHARLOTTE WYNN, JACQUELINE HILL, ATANACIO
RUIZ, ELOISA RUIZ, ROBERTO HERNANDEZ, CLEMENTINA
HERNANDEZ, JIM SILVA, LUZ BATALLA, ISMAEL MEDINA,
HORTENCIA RODRIGUEZ, ALFRED WATSON, JERRY ESCALANTE,
LLOYD CASTILOW, LUIS PENA, CAREY MURRAY, LUZ WILDMAN,
CARL EARL, ISMAEL AVELLANEDA, KENDALIA DAVIS, GAIL FRITZ,
LEE CARTWRIGHT, ORFILIA MIRANDA, JAINELL LETRYCE
VELAZQUEZ BUTLER, COURTNEY MITCHELL, TRAVIS WATERS,
DEBBIE WATERS, ANTHONY NORRIS, SHARON A. NORRIS,
ADELMIRA SALINAS, SARAH LANDRY, GLORIA GARCIA, JOEL
ZAMARRIPA, GERARDO ROMO, PHILLIP ROSS, LAKEISHA ROSS,
EARLINE DURANT WATKINS, GERARDO MARQUEZ, NILZA
RODRIGUEZ, JANNETTE BROWN, VICTOR H. ESTRADA, BLANCA A.
ESTRADA, ANNE CLARE, JAMES CLARE, CHARLENE TALBOTT,
MARIA VELEZ, GREG HILLIGIEST, RANDY WILSON, SAUL
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AGUILERA, HARLENE BRADY, MARY FLOWERS, JIMMIE SMITH,
BETTY R. SMITH, CYNTHIA JENKINS, CLARENCE MCDADE,
CHARLES O. MCDONALD, LARS WESTERBERG, ETHEL O’QUINN,
JEFFREY GLOVER, KATRINA GLOVER, LAURA LIGGETT, BRENDA
TRUSSEL, DALE TRUSSELL, CECELIA ROSE, VANESSA BOURDA,
FRANCISCO CAMPOS, CONNIE CAMPOS, SAMMY J. COLLINS,
FELICIA BOWMAN, KENDALL WILKINS, TYRONSA WILKINS,
ANDREW TAYLOR, MARQUE JOHNSON, BEVERLY HENSLEY,
YVONNEYA BROWN, COURTNEY HERNANDEZ, ALBERT ROWAN,
TONI OWENS, JIMMY KIRKENDOLL, JOAN L. KIRKENDOLL, MARY
ANN EDJEREN, THELMA HOUSLEY, KENNETH JOHNSON, JUDITH
ANN WALKER, LESLIE BROWN, DEBORAH EATON, STUART
WILLETT, JOSE TORRES, DIANA SALINAS, ERSKINE VANDERBILT,
CAROLINE TUNSEL, CATHY JONES, GAIL UDOSEN, REGINA
FULTON, HECTOR REYES, LUCIO TORRES, JR., ERNESTO LARA,
JACKIE THORNTON, ALFREDO DIMAS, NANCY TAYLOR, REGINALD
COLE, CATHLYN COLE, GERALD SMITH FOR THE ESTATE OF
EARNEST D. SMITH, FAUCINDA VENCES, THUYVI VINH, MAIDA
KHATCHIKIAN, CARL EARL, TROY KING, DIANA ROMERO, SANDRA
PYLE, GARY DIAL, MARIA MENDEZ, ANTHONY HARRIS, KEENA
HARRIS, KATHERINE STEWART, MARY CURRIE, SIVERAND
STERLING, JR., LARRY TANKERSLEY, LESLIE JONES, GONZALO
PENA, JOHN LONG, BEVERLY LONG, TERRY RANDLE, AND FELICIA
FRANK, Appellees
On Appeal from the 55th District Court
Harris County, Texas
Trial Court Case No. 2018-31381
O P I N I O N
Hundreds of plaintiffs sued David Gordon Schmidt, doing business as ABC
Bonding Company, and Greenbrier Equities, LLC, contending that Schmidt and
Greenbrier filed illegal liens on the plaintiffs’ homesteads. Schmidt and Greenbrier
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moved to dismiss the plaintiffs’ claims under the Citizens Participation Act. The trial
court denied the motion on the ground that the Act did not apply to the plaintiffs’
claims. We affirm in part, reverse in part, and remand for further proceedings.
BACKGROUND
The plaintiffs allege multiple causes of action. The gravamen of their claims
is that Schmidt and Greenbrier had the plaintiffs sign deeds of trust as to their homes
as security for bail bond loans, fraudulently altered these deeds to inflate the amount
of indebtedness, and later filed the deeds in Harris County’s real property records,
thereby creating illegal liens on the plaintiffs’ homesteads. Among other relief, the
plaintiffs sought statutory damages of at least $10,000 per illegal lien. See TEX. CIV.
PRAC. & REM. CODE §§ 12.001–.007. They also sought to quiet title and a declaration
that the liens are invalid because they violate various provisions of article XVI,
section 50 of the Texas Constitution.
Schmidt and Greenbrier filed general denials. They also moved to dismiss the
suit under the Citizens Participation Act. See TEX. CIV. PRAC. & REM. CODE
§§ 27.001–.011. In their motion, Schmidt and Greenbrier stated that the plaintiffs
represented in the deeds of trust they signed that the homes they pledged as security
were not homesteads. Schmidt and Greenbrier contended that the plaintiffs’ claims
should be dismissed under the Act because the claims were based on, related to, or
were made in response to Schmidt and Greenbrier’s exercise of their right to free
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speech or right to petition—specifically, the filing of the deeds of trust in Harris
County’s real property records.
The trial court denied the motion to dismiss. The court reasoned:
The Plaintiffs’ claims do not impact a matter of public concern
as defined in CPRC 27.001(7) simply because they relate to public
filings, or because those filings may be “false.” Imagine the havoc if
every routine public filing was “a matter of public concern” simply
because it was a public filing. Further, if filing suit under Chapter 12 of
the CPRC implicates the anti-SLAPP statute, then Chapter 12 is
essentially abrogated.
DISCUSSION
Schmidt and Greenbrier contend that the trial court erred in denying their
motion to dismiss under the Act. The plaintiffs respond with three counterarguments.
First, they argue that their claims fall outside the scope of the Act because their
claims are not based on, related to, or made in response to Schmidt and Greenbrier’s
exercise of their right to free speech or right to petition. Second, they contend that
even if their claims did come within the scope of the Act, their claims come within
a statutory exemption for commercial speech. Third, the plaintiffs contend that
application of the Act to their claims abrogates their rights under article XVI, section
50 of the Texas Constitution, which governs homestead liens.
Standard of Review and Applicable Law
We review de novo a trial court’s denial of a motion to dismiss under the
Citizens Participation Act. Holcomb v. Waller Cty., 546 S.W.3d 833, 839 (Tex.
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App.—Houston [1st Dist.] 2018, pet. denied). We likewise interpret the Act and
decide whether it applies to a suit de novo. See Youngkin v. Hines, 546 S.W.3d 675,
680 (Tex. 2018); Better Bus. Bureau of Metro. Houston v. John Moore Servs., 500
S.W.3d 26, 39 (Tex. App.—Houston [1st Dist.] 2016, pet. denied).
In assessing whether a suit or challenged claim comes within the Act’s scope,
we rely on the Act’s language, interpreting it as a whole rather than reading its
individual provisions in isolation from one another. Youngkin, 546 S.W.3d at 680.
We interpret the Act according to the plain, common meaning of its words, unless a
contrary purpose is evident from the context or a plain reading of its text leads to
absurd results. Id. We cannot judicially amend the Act by imposing requirements
that the Act does not or by narrowing its scope contrary to its terms. Cadena
Comercial USA Corp. v. Tex. Alcoholic Beverage Comm’n, 518 S.W.3d 318, 337
(Tex. 2017); see ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 899 (Tex.
2017) (per curiam) (court presumes that Legislature purposely omitted words that
are not included in Act). Nor can we substitute the words of the Act to give effect to
what we think the Act should say. ExxonMobil, 512 S.W.3d at 901.
The Act directs us to liberally interpret its provisions to fully effectuate its
purpose, which “is to encourage and safeguard the constitutional rights of persons
to petition, speak freely, associate freely, and otherwise participate in government to
the maximum extent permitted by law and, at the same time, protect the rights of a
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person to file meritorious lawsuits for demonstrable injury.” TEX. CIV. PRAC. & REM.
CODE §§ 27.002, 27.011(b). To accomplish this purpose, the Act provides a
summary procedure in which a party may move for dismissal on the basis that the
claims made against it are based on, relate to, or are in response to the party’s
exercise of the right of free speech, right to petition, or right of association. TEX.
CIV. PRAC. & REM. CODE § 27.003(a); see In re Lipsky, 460 S.W.3d 579, 589–90
(Tex. 2015). This summary procedure requires a trial court to dismiss a suit, or
particular claims within a suit, that demonstrably implicate these rights, unless the
non-moving party can at the threshold make a prima facie showing that its claims
have merit. Sullivan v. Abraham, 488 S.W.3d 294, 295 (Tex. 2016).
A motion to dismiss made under the Act generally entails a three-step
analysis. Youngkin, 546 S.W.3d at 679. The movant first must prove by a
preponderance of the evidence that the challenged claims are based on, relate to, or
are in response to its exercise of the right of free speech, right to petition, or right of
association. TEX. CIV. PRAC. & REM. CODE § 27.005(b). The non-movant’s pleading
is the best evidence of the nature of its claims. Hersh v. Tatum, 526 S.W.3d 462, 467
(Tex. 2017). When it is clear from the non-movant’s pleadings that the claims are
covered by the Act, the movant need not show more. Adams v. Starside Custom
Bldrs., 547 S.W.3d 890, 897 (Tex. 2018).
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The Act defines the rights of free speech, petition, and free association. TEX.
CIV. PRAC. & REM. CODE § 27.001(2)–(4). We are bound by these statutory
definitions. Youngkin, 546 S.W.3d at 680. Relevant to this appeal, the exercise of
free-speech rights is defined as “a communication made in connection with a matter
of public concern.” TEX. CIV. PRAC. & REM. CODE § 27.001(3). Communications
include statements or documents made or submitted in any form or medium. Id.
§ 27.001(1). Matters of public concern include issues relating to health or safety;
environmental, economic, or community well-being; the government, a public
official or figure; or a good, product, or service in the marketplace. Id. § 27.001(7).
Taken together, these statutory definitions safeguard an expansive right to free
speech. See Lippincott v. Whisenhunt, 462 S.W.3d 507, 509 (Tex. 2015) (per curiam)
(Act “broadly defines” free speech); see also Adams, 547 S.W.3d at 896 (Act’s list
of matters of public concern is non-exclusive).
If the movant carries its burden by showing that the challenged claims are
based on, relate to, or are in response to the exercise of its rights to speak, petition,
or associate, the trial court must dismiss the claims unless the non-movant makes by
clear and specific evidence a prima facie case for each element of the challenged
claims. TEX. CIV. PRAC. & REM. CODE § 27.005(c); Youngkin, 546 S.W.3d at 679. A
prima facie case is the minimum evidence necessary to support a rational inference
that a factual allegation is true; in other words, a prima facie case requires the non-
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movant to come forward with evidence that, if uncontradicted, is legally sufficient
to establish that a claim is true. S & S Emergency Training Sols. v. Elliott, 564
S.W.3d 843, 847 (Tex. 2018). Mere notice pleading is not sufficient to satisfy the
prima facie standard. Bedford v. Spassoff, 520 S.W.3d 901, 904 (Tex. 2017) (per
curiam).
If the non-movant makes a prima facie case in support of the challenged
claims, the burden then shifts back to the movant to prove by a preponderance of the
evidence each element of a valid defense to these claims. TEX. CIV. PRAC. & REM.
CODE § 27.005(d); Youngkin, 546 S.W.3d at 679–80. If the movant carries this
burden, the trial court must dismiss the claims. Youngkin, 546 S.W.3d at 681.
Analysis
A. Schmidt and Greenbrier did not waive their arguments under the
Citizens Participation Act as to any of the plaintiffs’ claims.
The plaintiffs initially contend that Schmidt and Greenbrier waived the right
to seek dismissal of the plaintiffs’ claims to quiet title and for declaratory judgment
by not separately addressing these claims in their appellate brief. We disagree.
In the trial court, Schmidt and Greenbrier moved to dismiss the entire suit,
and they appeal from the trial court’s denial of their motion. The same allegations
underlie all of the plaintiffs’ claims. Assuming that the Citizens Participation Act
applies, the plaintiffs have not explained how the Act could apply to some of their
claims but not others.
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Thus, we reject the plaintiffs’ waiver argument. See TEX. R. APP. P. 38.1(f)
(statement of issue or point in brief covers every subsidiary question fairly included);
see also Adams, 547 S.W.3d at 896–97 (defendant who contended in trial court that
it was entitled to dismissal under Act because its speech was on a matter of public
concern preserved subsidiary issues for appeal).
B. The plaintiffs’ claims were made in response to Schmidt and
Greenbrier’s exercise of their right to free speech, and the plaintiffs have
not made a prima facie case in support of their claims.
1. Schmidt and Greenbrier’s exercise of the right to free speech
Schmidt and Greenbrier’s filing of the deeds of trust and the resulting liens
form the underlying factual basis for all of the plaintiffs’ claims. The relief the
plaintiffs seek similarly concerns the liens; they seek removal of the liens, recovery
of lien payments, and $10,000 in statutory damages per lien. The claims made
against Schmidt and Greenbrier therefore are based on, relate to, or are in response
to their filing of the deeds of trust and resulting liens. The dispositive question as to
whether the plaintiffs’ claims come within the Act’s scope therefore is whether these
filings constitute the exercise of free speech under the Act.
Schmidt and Greenbrier contend that instruments filed in a county’s real
property records constitute the exercise of free speech because they are “a
communication made in connection with a matter of public concern.” TEX. CIV.
PRAC. & REM. CODE § 27.001(3). These filings are “communications,” as that term
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“includes the making or submitting of a statement or document in any form or
medium, including oral, visual, written, audiovisual, or electronic.” Id. § 27.001(1).
Schmidt and Greenbrier contend that these communications are made in connection
with a matter of public concern because they are intended to inform the public of
encumbrances affecting the transferability of real property and thus concern goods
and services in the marketplace as well as economic or community well-being. See
id. § 27.001(7)(B), (E) (“matter of public concern” includes issues related to
“environmental, economic, or community well-being” or “a good, product, or
service in the marketplace”); TEX. PROP. CODE § 13.002(1) (properly recorded
instruments provide “notice to all persons of the existence of the instrument”).
Schmidt and Greenbrier rely in part on the Fourth Court’s application of the
Citizens Participation Act to financing statements in Quintanilla v. West, 534
S.W.3d 34 (Tex. App.—San Antonio 2017), rev’d on other grounds, 573 S.W.3d
237 (Tex. 2019). In that case, the court of appeals held that a defendant’s filing of
financing statements in the real property records to perfect a security interest fell
within the scope of the Act’s definition of the exercise of free speech. Id. at 37–38.
The court thus held that the plaintiff’s claims for slander of title and fraudulent liens
were subject to dismissal. See id. The court reasoned that the financing statements
related to real property sellable in the marketplace and therefore qualified as a matter
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of public concern under subsection (7)(E)’s provision for issues relating to goods in
the marketplace. See id. at 43–46.
We disagree that the plain, common meaning of “good” is broad enough to
embrace real property. “Goods” ordinarily refer to tangible or moveable personal
property, as opposed to realty. See Goods, NEW OXFORD AMERICAN DICTIONARY (3d
ed. 2010) (defining term as “merchandise or possessions”); Goods, BLACK’S LAW
DICTIONARY (11th ed. 2019) (defining term to include tangible or moveable personal
property other than money, particularly merchandise, and referring to “goods and
services” as an illustration of the term’s ordinary usage); see also Realty, BLACK’S
LAW DICTIONARY (11th ed. 2019) (defining “realty” or “real property” as “land and
anything growing on, attached to, or erected on it”). The Legislature has included
real property within the definition of “goods” in at least one other context; under the
Deceptive Trade Practices Act, both tangible chattels and real property are “goods.”
See TEX. BUS. & COM. CODE § 17.45(1). But the Deceptive Trade Practices Act is an
instance in which the Legislature intentionally and explicitly defined “goods”
beyond its ordinary usage. See Aetna Cas. & Sur. Co. v. Martin Surgical Supply Co.,
689 S.W.2d 263, 268 (Tex. App.—Houston [1st Dist.] 1985, writ ref’d n.r.e.) (noting
that DTPA initially defined “goods” as “tangible chattels” but was later amended to
include real property). The Citizens Participation Act, in contrast, does not expand
the definition of “good” beyond its ordinary usage, and we cannot judicially amend
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its language to give the term a more expansive meaning than it ordinarily bears. See
ExxonMobil, 512 S.W.3d at 901. Thus, we reject Quintanilla’s holding that real-
property filings relate to goods in the marketplace.
This court has held on different facts that communications affecting the sale
or transferability of real property were on a matter of public concern, as they came
within subsection (7)(B)’s issues relating to economic or community well-being. See
Schimmel v. McGregor, 438 S.W.3d 847, 859 (Tex. App.—Houston [1st Dist.] 2014,
pet. denied). In Schimmel, the plaintiffs, who were trying to sell their hurricane-
damaged homes to the city, sued an attorney who represented their homeowners
association, alleging that he tortiously interfered with their prospective business
relations with the city by making misrepresentations about the proposed sale. See id.
at 849–50. The attorney filed a motion to dismiss under the Act, which the trial court
denied. Id. at 851, 854. We reversed the trial court, holding that the attorney’s
statements related to economic or community well-being and thus were an exercise
of free speech covered by the Act. Id. at 859. We held that the attorney’s statements
qualified as speech relating to economic and community well-being because his
statements concerned the city’s possible purchase of homes within a small
subdivision, which allegedly would have lowered the value of neighboring
properties and impaired the revenue of the homeowners association. Id.
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In contrast, the deeds of trust filed by Schmidt and Greenbrier do not have any
apparent bearing on economic well-being. The plaintiffs allege that Schmidt and
Greenbrier’s fraudulent communications—filings in the real property records—
affected their own financial well-being—specifically, by subjecting them to double
the amount of indebtedness ostensibly owed on the bail bond loans and the
corresponding possibility of foreclosure and wrongful eviction for non-payment. But
that is not enough to bring Schmidt and Greenbrier’s filings in the real property
records within subsection (7)(B)’s provision for economic well-being. If it were,
then any plaintiff who alleged damages based on another’s communications would
find their claims swept up by the Act. The common meanings of “economic” are not
so all-encompassing as that. See Economic, NEW OXFORD AMERICAN DICTIONARY
(3d ed. 2010) (defining term as “of or relating to economics or the economy”);
Economics, NEW OXFORD AMERICAN DICTIONARY (3d ed. 2010) (defining term as
“the condition of a region or group as regards material prosperity”); Economy, NEW
OXFORD AMERICAN DICTIONARY (3d ed. 2010) (defining term as “the wealth and
resources of a country or region,” especially “in terms of the production and
consumption of goods and services”); see also Economics, BLACK’S LAW
DICTIONARY (11th ed. 2019) (“The social science dealing with the production,
distribution, and consumption of goods and services.”); Economy, BLACK’S LAW
DICTIONARY (11th ed. 2019) (“management or administration of the wealth and
14
resources of a community (such as a city, state, or country)” or “sociopolitical
organization of a community’s wealth and resources”).
The plaintiffs, however, do allege that Schmidt and Greenbrier’s conduct
adversely impacts many people other than themselves. They allege that Schmidt and
Greenbrier have engaged in an ongoing scheme to defraud their customers for
decades. According to the plaintiffs, the Harris County property records reveal more
than 5,300 instances of this fraudulent scheme. They further allege that Schmidt and
Greenbrier have foreclosed on some illegal liens and wrongfully evicted some
homeowners, not necessarily all of whom are plaintiffs. In other words, the plaintiffs
themselves allege that Schmidt and Greenbrier’s filings have adversely affected the
well-being of Harris County at large or at least the subset of its residents who require
bail bond loans. Accordingly, we conclude that subsection (7)(B)’s provision for
statements relating to community well-being is satisfied. See Community, NEW
OXFORD AMERICAN DICTIONARY (3d ed. 2010) (“a group of people living in the
same place or having a particular characteristic in common” or “a particular area or
place considered together with its inhabitants”); Community, BLACK’S LAW
DICTIONARY (11th ed. 2019) (“neighborhood, vicinity, or locality” or “society or
group of people with similar rights or interests”); see also Cadena, 518 S.W.3d at
327 (“If an undefined word used in a statute has multiple and broad definitions, we
15
presume—unless there is clear statutory language to the contrary—that the
Legislature intended it to have equally broad applicability.”).
We thus hold that the trial court erred in ruling that the plaintiffs’ claims were
outside the scope of the Act. Because Schmidt and Greenbrier proved by a
preponderance of the evidence that their filings were communications made in
connection with a matter of public concern, the Act applies to the plaintiffs’ claims.
The plaintiffs try to avoid this holding by arguing that the deeds of trust are
not communications made by Schmidt and Greenbrier even though they filed them.
The plaintiffs reason that because they filled out the deed forms, the deeds are
communications made by themselves, not Schmidt and Greenbrier. But the
definition of “communication” encompasses both “the making or submitting of”
documents. See TEX. CIV. PRAC. & REM. CODE § 27.001(1). Whoever made the
deeds, the plaintiffs agree that Schmidt and Greenbrier filed them in the county’s
real property records, which qualifies as submitting them. See File, NEW OXFORD
AMERICAN DICTIONARY (3d ed. 2010) (defining “file” to include submission of legal
documents); File, BLACK’S LAW DICTIONARY (11th ed. 2019) (term’s meanings
include “to deliver a legal document to the court clerk or record custodian for
placement into the official record” and “to record or deposit something in an
organized retention system or container for preservation and future reference”).
Moreover, the plaintiffs complain of material alterations—specifically,
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misrepresentations as to the loan amounts—that Schmidt and Greenbrier allegedly
made to the deeds of trust before filing them in the real property records. These
alleged alterations are Schmidt and Greenbrier’s speech, not the plaintiffs’ speech.
We therefore reject the plaintiffs’ argument that the communications at issue were
not made by the defendants.
2. Plaintiffs’ failure to make a prima facie case as to their claims
Because the plaintiffs’ pleading shows that their claims are based on, related
to, or are in response to Schmidt and Greenbrier’s exercise of their right to free
speech, the burden shifted to the plaintiffs to make by clear and specific evidence a
prima facie case in support of each element of their claims. TEX. CIV. PRAC. & REM.
CODE § 27.005(c); Youngkin, 546 S.W.3d at 679. They did not do so.
In their appellate brief, the plaintiffs implicitly concede that they did not make
a prima facie case. They argue that they “can show” and “will show” that their claims
have merit by making a prima facie showing. But they did not do so in the trial court.
The record is devoid of clear and specific evidence supporting each element of their
several claims, and the portion of their brief dedicated to the issue of prima facie
evidence contains a single record citation—to their petition. That is not enough, as
notice pleading does not make out a prima facie case. See Bedford, 520 S.W.3d at
904. Instead of citing clear and specific evidence supporting their claims in their
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appellate brief, the plaintiffs’ devote their argument about prima facie evidence to
the legal significance of the proof that they say they eventually will produce.
The plaintiffs have included several documents as attachments to their
appellate brief: three bail bonds, respectively purchased by Brenda Crawford, Carlos
Perez, and Anthony Williams; three foreclosure notices, respectively sent to Randy
Laster, Pablo Murillo, and Altha Davis; and a foreclosure deed relating to a property
owned by Earnest Smith. These documents concerning disparate persons cannot be
cobbled together to support any one plaintiff’s claims; nor would a mere bail bond,
foreclosure notice, and foreclosure deed be prima facie evidence of any claim even
if these documents all related to the same person or property. Of the hundreds of
plaintiffs, not one has submitted an affidavit substantiating his or her claims.
Moreover, Schmidt and Greenbrier have moved to strike the documents
attached to the plaintiffs’ appellate brief on the basis that they are not in the record.
The defendants are correct that submission of documents with an appellate brief does
not make them part of the record on appeal and that we cannot consider such
documents unless they also are in the record. TEX. R. APP. P. 34.1; Tex. Windstorm
Ins. Ass’n v. Jones, 512 S.W.3d 545, 552 (Tex. App.—Houston [1st Dist.] 2016, no
pet.). Accordingly, even if these documents sufficed to make a prima facie case as
to the plaintiffs’ claims, we could not credit them. Tex. Windstorm, 512 S.W.3d at
18
552. We deny Schmidt and Greenbrier’s motion, however, because the documents
in question are not part of the appellate record and thus cannot be stricken from it.
We hold that the plaintiffs have not made a prima facie case supporting each
element of their claims. Because Schmidt and Greenbrier have shown that their
speech is covered by the Act and the plaintiffs have not responded by making a prima
facie showing that their claims have merit, we do not need to consider whether
Schmidt and Greenbrier have proved any defenses to the plaintiffs’ claims.
C. The plaintiffs’ claims do not fall within the Citizen Participation Act’s
exemption for commercial speech, and their claims therefore remain
subject to dismissal under the Act.
The plaintiffs also argue that the Act’s exemption for commercial speech
applies to Schmidt and Greenbrier’s filings. We disagree that the exemption applies.
The Citizens Participation Act does not apply to a suit against a defendant
who is “primarily engaged in the business of selling or leasing goods or services, if
the statement or conduct arises out of the sale or lease of goods, services, or an
insurance product, insurance services, or a commercial transaction in which the
intended audience is an actual or potential buyer or customer.” TEX. CIV. PRAC. &
REM. CODE § 27.010(b). This exemption applies if four elements are met:
(1) the defendant was primarily engaged in the business of selling or leasing
goods or services;
(2) the defendant made the communication on which the claim is based in its
capacity as a seller or lessor of those goods and services;
19
(3) the communication at issue arose out of a commercial transaction
involving the kind of goods or services that the defendant provides; and
(4) the intended audience of the communication was actual or potential
customers of the defendant for the defendant’s kind of goods or services.
Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018) (per curiam).
The party asserting the commercial-speech exemption has the burden to prove that
the exemption applies to the communications at issue. Schimmel, 438 S.W.3d at 857.
Schmidt and Greenbrier’s communications—filings made in Harris County’s
real property records—do not satisfy the fourth element. These filings were made to
put the general public on notice that certain properties were subject to liens. See TEX.
PROP. CODE § 13.002(1). As the plaintiffs acknowledge, “one effect of a lien filed in
the property records is to put the entire world on notice of the purported indebtedness
and to interfere with any real estate transaction until the lien is released.” Thus, the
intended audience of Schmidt and Greenbrier’s filings was the public at large or
potential buyers of the encumbered properties, not Schmidt and Greenbrier’s
potential or actual customers—persons who have obtained or need to obtain bail
bond loans, which makes the commercial-speech exemption inapplicable. See Better
Bus. Bureau of Metro. Houston v. John Moore Servs., 441 S.W.3d 345, 354 (Tex.
App.—Houston [1st Dist.] 2013, pet. denied) (commercial-speech exemption didn’t
apply, as intended audience was general public, not defendant’s potential
20
customers); Better Bus. Bureau of Metro. Dallas v. BH DFW, Inc., 402 S.W.3d 299,
309 (Tex. App.—Dallas 2013, pet. denied) (same).
The plaintiffs, who are the defendants’ actual customers, argue that they were
the intended audience of the communications. The plaintiffs reason that they were
the intended audience because the deeds of trust they signed were used as a means
to let them know that their debt was secured by their homestead.
The execution of the deeds of trust, however, is not the gravamen of the
plaintiffs’ claims. Their claims hinge on Schmidt and Greenbrier’s alleged
fraudulent alteration of the deeds, the filing of the deeds in the county’s real property
records, and the resulting liens on the plaintiffs’ properties. Moreover, in their
petition, the plaintiffs disavow any notion that the defendants used the deeds of trust
to communicate with the plaintiffs. The plaintiffs allege that they only recently
learned that Schmidt and Greenbrier had filed the deeds. The plaintiffs also state in
their petition that they were unaware that they had pledged their homes as security,
alleging that they were neither “asked if they wished to use their home as collateral”
nor informed that the loan would cloud “the title of their homestead properties.”
According to the plaintiffs’ petition, Schmidt and Greenbrier intended that the
plaintiffs, who are “unsophisticated borrowers, simply sign” the deeds of trust based
on the defendants’ representations about the bail bond loans. Indeed, the plaintiffs
21
allege that they were not even aware that they had signed deeds of trust as part of
the loan process.
In conclusion, the allegations of the petition are inconsistent with the
plaintiffs’ position on appeal that they were the intended audience of Schmidt and
Greenbrier’s communications. The plaintiffs’ petition therefore negates the
applicability of commercial-speech exemption. See Hersh, 526 S.W.3d at 467–68
(Act’s applicability can be ascertained from petition).
Justice Countiss would hold that the plaintiffs are part of the intended
audience of Schmidt and Greenbriar’s communications. In support, she relies on our
decision in North Cypress Medical Center Operating Co. v. Norvil, No. 01-18-
00582-CV, 2019 WL 2292630 (Tex. App.—Houston [1st Dist.] May 30, 2019, pet.
filed), in which we held that the plaintiff was a member of the intended audience of
a hospital lien filed against her under Chapter 55 of the Property Code. See id. at *4
(relying on ETX Successor Tyler v. Pridgeon, 570 S.W.3d 392, 398–99 (Tex. App.—
Tyler 2019, no pet.), and Berry v. ETX Successor Tyler, No. 12-18-00095-CV, 2019
WL 968528, at *3–4 (Tex. App.—Tyler Feb. 28, 2019, no pet.) (mem. op.)).
North Cypress, however, is distinguishable. The result in that case turned on
the nature of statutory hospital liens. Chapter 55 creates a lien in favor of hospitals
who treat certain persons allegedly injured by the negligence of a third party. See
TEX. PROP. CODE §§ 55.001–.008. These liens attach to the injured person’s claim
22
against the third party, any judgment arising out of a suit against the third party, or
a settlement with the third party. Id. §§ 55.002(a), 55.003(a). They do not attach to
any real property that the injured person owns. Id. §§ 55.002(a), 55.005(d)(2).
Chapter 55 expressly requires the hospital to give the injured person notice of the
lien shortly after it has been recorded. Id. § 55.005(a)(1), (d). The injured person’s
attorney is entitled to access to the hospital’s underlying medical records so that he
can evaluate the basis for the lien and its amount. See id. § 55.008(a); see also id.
§ 55.004 (specifying permissible charges for services subject to lien).
Chapter 55 has several key features that show the injured person is a member
of the intended audience of any hospital lien—specifically, its provisions requiring
that she receive notice of the lien, allowing her attorney access to the underlying
medical records, and limiting the lien’s attachment to any claim made against the
third party who allegedly injured her as well as any corresponding judgment or
settlement. The statute necessarily makes the injured person a member of the
hospital lien’s intended audience in order to effectuate its purpose, which is to ensure
that the hospital gets paid from any funds that she may recover from the third party
who allegedly made her medical treatment necessary. See McAllen Hosps. v. State
Farm Cty. Mut. Ins. Co. of Tex., 433 S.W.3d 535, 537–38 (Tex. 2014).
Consistent with Chapter 55, the facts in North Cypress reflect that the plaintiff
was a member of the hospital lien’s intended audience. That lawsuit arose out of
23
unsuccessful negotiations between the plaintiff and the hospital as to the amount
needed to discharge the lien that ensued after the hospital notified her that the lien
had been filed. See 2019 WL 2292630, at *1–2. In contrast, the plaintiffs in this suit
disclaim notice, alleging that they did not know that the defendants had filed liens
and were shocked by the terms of the liens when they became aware of their
existence. The record also lacks any evidence of pre-suit negotiations or other
communications between the plaintiffs and the defendants akin to those in North
Cypress that would support a conclusion that the plaintiffs were the intended
audience. The plaintiffs allege that they were unaware that they had signed deeds of
trust when they sought bail bond loans and could not easily have discovered that
they had done so absent a search of the county’s property records.
In sum, unlike North Cypress, this suit does not involve hospital liens or a
statutory framework comparable to Chapter 55 of the Property Code. Nor is the
present record comparable to the one in North Cypress. The plaintiffs in this suit
have pleaded themselves outside the scope of the commercial-speech exemption.
D. Application of the Citizens Participation Act to fraudulent-lien claims
does not abrogate Chapter 12 of the Civil Practice and Remedies Code
but does contravene the Texas Constitution’s homestead lien provisions.
In denying Schmidt and Greenbrier’s motion to dismiss, the trial court
reasoned that the Act could not apply to the plaintiffs’ claims without effectively
undoing the statutory scheme imposing civil liability for filing fraudulent liens. See
24
TEX. CIV. PRAC. & REM. CODE §§ 12.001–.007. The plaintiffs similarly maintain that
if the Act applies to fraudulent liens, then the Texas Constitution’s provisions on
homestead liens would become a “dead letter.” They urge that “illegal and invalid
deeds of trust are not protected free speech.”
1. Chapter 12
With respect to Chapter 12, the trial court’s ruling misapprehends the purpose
of the Citizens Participation Act and how the Act operates to achieve its purpose.
Like the filing of a fraudulent lien, defamation may result in civil liability.
Nevertheless, allegedly defamatory statements may qualify as communications on a
matter of public concern and thus come within the Act’s ambit. See Lippincott, 462
S.W.3d at 509–10. The Act does not abrogate these defamation claims, however; it
merely imposes a procedural hurdle—a threshold showing of merit. See id. at 510
(defendants had shown that Act applied to defamation suit, thereby requiring
plaintiff to prove a prima facie case). Whether communications subject to the Act
ultimately prove to be protected free speech therefore is beside the point; the Act
does not “only apply to constitutionally guaranteed activities.” Youngkin, 546
S.W.3d at 681. It purposely casts a wider net to safeguard the rights of speech,
petition, and association. See id.
That which is true of defamation claims is equally true of the plaintiffs’ claims
under Chapter 12. In general, statutory claims are just as subject to the Citizens
25
Participation Act as common-law claims. See D. Magazine Partners v. Rosenthal,
529 S.W.3d 429, 432, 441–42 (Tex. 2017) (holding that magazine was entitled to
award of fees under Act based on dismissal of claims plaintiff made under Deceptive
Trade Practices Act and Identity Theft Enforcement and Protection Act). The Act
does expressly exclude several statutory causes of action from its scope, but Chapter
12 claims are not excluded. See TEX. CIV. PRAC. & REM. CODE § 27.010(c), (d); see
also Serafine v. Blunt, 466 S.W.3d 352, 388 (Tex. App.—Austin 2015, no pet.)
(Pemberton, J., concurring) (Act’s exclusion of specific statutory claims reflects
legislative intent that Act otherwise apply “to statutory claims to the same extent as
other kinds”). Irreconcilable statutory conflicts can render one statute inapplicable
in deference to another. See In re Xerox Corp., 555 S.W.3d 518, 536–39 (Tex. 2018)
(proportionate liability statute did not apply to suits under Texas Medicaid Fraud
Prevention Act because the two statutory schemes conflicted with each other).
However, the trial court did not identify any particular conflict between the
provisions of Chapter 12 and the Citizens Participation Act and we cannot see one.
See State ex rel. Best v. Harper, 562 S.W.3d 1, 9–10 (Tex. 2018) (rejecting claim
that Act and statute authorizing suit to remove county official from elected office
could not both apply to suit because litigant didn’t identify and court couldn’t discern
actual conflict between Act and removal statute). Accordingly, we hold that the Act
applies to the plaintiffs’ Chapter 12 claims.
26
2. Texas Constitution
The plaintiffs’ complaint under the Texas Constitution is a different matter.
Article XVI, section 50 of the Texas Constitution strictly limits the types of loans
that may be secured by a homestead lien. Wood v. HSBC Bank USA, 505 S.W.3d
542, 545 (Tex. 2016). Homestead liens that transgress these strict constitutional
limits are invalid. See TEX. CONST. art. XVI, § 50(c); Wood, 505 S.W.3d at 545,
548–50. Under our constitution, bail bond loans made on the undisputed terms that
apply to the credit Schmidt and Greenbrier extended to the plaintiffs are not among
the debts that may be secured by a homestead lien. See TEX. CONST. art. XVI, §
50(a)(6).
When, as here, an invalid homestead lien clouds title, the homeowner is
entitled to bring an equitable action to remove the cloud and quiet title. See Wood,
505 S.W.3d at 550; Ditta v. Conte, 298 S.W.3d 187, 192 (Tex. 2009). The
homeowner likewise is entitled to seek declaratory relief as to the invalidity of the
lien. Kyle v. Strasburger, 522 S.W.3d 461, 465 (Tex. 2017) (per curiam). In some
instances, the lienholder may cure defects that render a homestead lien invalid. See
Wood, 505 S.W.3d at 548–51 (discussing home-equity loans and liens). But because
these bail bond loans categorically cannot be secured by homestead liens under our
constitution, cure is not possible. See TEX. CONST. art. XVI, § 50(a); Doody v.
Ameriquest Mortg. Co., 49 S.W.3d 342, 344–45 (Tex. 2001) (homestead lien “valid
27
only if the loan is one recognized in section 50(a)”). Categorically invalid homestead
liens “can never have any effect.” Laster v. First Huntsville Props. Co., 826 S.W.2d
125, 130 (Tex. 1991); Paull & Partners Invs. v. Berry, 558 S.W.3d 802, 809 (Tex.
App.—Houston [14th Dist.] 2018, no pet.) (quoting Laster, 826 S.W.2d at 130).
“Section 50(c) starts with the premise that a lien securing a noncompliant loan
is never valid.” Wood, 505 S.W.3d at 549. Thus, even if cure was possible, Schmidt
and Greenbrier would bear the burden of proof to show that they had done so because
liens that are invalid when made remain invalid until cured. Id. Application of the
Citizens Participation Act to the plaintiffs’ quiet-title and declaratory-judgment
claims would reverse this burden by requiring the plaintiffs to produce prima facie
evidence supporting these claims first, rather than requiring the lienholders to show
that the liens are valid or that they had cured the alleged invalidity. The Act,
however, cannot trump the Texas Constitution in this manner. See Neeley v. W.
Orange-Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746, 782 (Tex. 2005)
(constitutional provisions prohibit conflicting laws); Salomon v. Lesay, 369 S.W.3d
540, 556–57 (Tex. App.—Houston [1st Dist.] 2012, no pet.) (if application of statute
would abridge constitutional rights, statute must yield). As the Supreme Court has
explained, constitutional mandates like Article XVI, section 50 supersede contrary
common-law rules. Wood, 505 S.W.3d at 549. These mandates also supersede
statutes like the Citizens Participation Act. In Wood, the Court held that “no statute
28
of limitations applies to cut off a homeowner’s right to quiet title to real property
encumbered by an invalid lien” because “the constitutional protections” embodied
in article XVI, section 50 “do not contemplate such a limitation.” Id. at 550. Article
XVI, section 50 likewise does not contemplate the limitations that the Act would
impose on the plaintiffs’ claims to quiet title and for declaratory relief.
Because the homestead liens are invalid, dismissal of the plaintiffs’ quiet-title
and declaratory-relief claims under the Citizens Participation Act would impair the
rights guaranteed in article XVI, section 50 of the Texas Constitution. These claims
therefore are not subject to dismissal under the Act.
Chief Justice Radack’s dissent contends that article XVI, section 50 of the
Texas Constitution does not place the plaintiffs’ quiet-title and declaratory claims
outside the scope of the Act and its requirement that the plaintiffs make a prima facie
case. The Constitution and the Act can be reconciled, she posits, because when a
plaintiff asserts the invalidity of a lien under article XVI, section 50, the plaintiff
still bears the burden of proof to first establish that the real property is the plaintiff’s
homestead. I think this position is mistaken for two independent reasons.
First, it understates the significance of the Supreme Court’s decision in Wood.
The Court indicated in Wood that the starting point in any analysis under section
50(c) is that liens securing noncompliant loans are not valid. See 505 S.W.3d at 549.
29
Second, even if one assumes that the plaintiffs bear the burden of first proving
homestead status, the Citizens Participation Act impermissibly impedes their ability
to do so. Under the Act, a motion to dismiss must be filed no later than 60 days after
service of the petition. TEX. CIV. PRAC. & REM. CODE § 27.003(b). The filing of the
motion suspends ordinarily all discovery. Id. §§ 27.003(c), 27.006(b). In addition,
when required to make a prima facie case, the nonmovant must do so with respect
to every essential element of the challenged claims. Id. § 27.005(c). Absent the Act,
none of this is true. A plaintiff ordinarily is entitled to adequate time for discovery
before the defendant may require the plaintiff to support his claims with evidence.
See TEX. R. CIV. P. 91a.6 (no evidence may be considered by court in ruling on
motion to dismiss); TEX. R. CIV. P. 166a(i) (no-evidence summary judgment may
only be sought after adequate time for discovery). The plaintiff may seek discovery
as to any relevant, non-privileged matter via a wide array of discovery devices during
this period. See TEX. R. CIV. P. 192.1, 192.3(a). After the expiration of adequate time
for discovery, the movant must identify specific elements of the plaintiff’s claim for
which it asserts there is no supporting evidence. TEX. R. CIV. P. 166a(i). These
ordinary procedural rules provide a plaintiff with a reasonable opportunity to assert
the invalidity of any lien under article XVI, section 50, and establish homestead
status, assuming that the plaintiff is required to do so. The Act, in contrast, deprives
a plaintiff of a meaningful opportunity to vindicate this constitutional guarantee.
30
Chief Justice Radack further notes that not only did the plaintiffs fail to make
a prima facie showing as to homestead status, Schmidt and Greenbrier secured a
written disavowal of homestead status from the plaintiffs. While true, this does not
affect the constitutional invalidity of the liens. Even when loan documents contain
an express disavowal of homestead status, the resulting liens are invalid if the loan’s
terms do not pass muster under article XVI, section 50. See Tex. Land & Loan Co.
v. Blalock, 13 S.W. 12, 13 (Tex. 1890) (constitutionally noncompliant lien invalid
notwithstanding express disavowal of homestead status in paperwork); see also
Wood, 505 S.W.3d at 545 (citing Blalock for proposition that constitutionally
noncompliant homestead liens historically have been held absolutely void).
CONCLUSION
Because our analysis as to Schmidt and Greenbrier’s exercise of their right to
free speech is dispositive of this appeal, we do not reach their alternative arguments
about their right to petition. See TEX. R. APP. P. 47.1.
We reverse the trial court’s order denying Schmidt and Greenbrier’s motion
to dismiss, except as to the plaintiffs’ constitutional quiet-title and declaratory-relief
claims; with respect to these claims, we affirm the trial court’s order denying
dismissal. We remand this cause for further proceedings consistent with our opinion.
31
Gordon Goodman
Justice
Panel consists of Chief Justice Radack and Justices Goodman and Countiss.
Chief Justice Radack, dissenting in part from the judgment.
Justice Countiss, dissenting in part and concurring in judgment only in part.
32