Nationstar Mortgage LLC HSBC Bank USA, N.A Bank of America, N.A And Fidelity National Title Insurance Company v. Joan Mauri Barefoot ( 2021 )

Affirmed in Part, Reversed in Part, and Remanded; Remittitur Suggested;
and Majority Opinion in Part, Memorandum Majority Opinion in Part, and
Concurring and Dissenting Opinion filed October 28, 2021.
In The
Fourteenth Court of Appeals
NO. 14-19-00750-CV
NATIONSTAR MORTGAGE LLC; HSBC BANK USA, N.A; BANK OF
AMERICA, N.A; AND FIDELITY NATIONAL TITLE INSURANCE
COMPANY, Appellants
V.
JOAN MAURI BAREFOOT, Appellee
On Appeal from the 295th District Court
Harris County, Texas
Trial Court Cause No. 2014-39628
C O N C U R R I N G A N D D I S S E N T I N G
O P I N I O N
I respectfully concur in the majority’s opinion in part and dissent in part.
I concur with the majority in overruling Fidelity’s first issue, but I write
separately based on my disagreement with the majority’s analysis of Fidelity’s
intent to cause financial injury and analysis of loss-of-market value damages. I
dissent to the majority’s opinion reversing Barefoot’s mental-anguish damages
from Fidelity ($225,000) and HSBC ($100,000), and I would affirm the judgment
of the trial court as to these damages for the reasons discussed below.
Fidelity’s Appeal - Issue One
A. Fidelity’s Intent to Cause Financial Injury
I agree with the majority’s conclusion overruling Fidelity’s first issue;
however, I disagree with the majority’s analysis.
In enacting § 12.002, “the Legislature intended to provide a civil action for
injunctive relief and monetary damages to all persons owning an interest in real or
personal property against which a fraudulent lien is filed.” Centurion Planning
Corp., Inc. v. Seabrook Venture II, 176 S.W.3d 498, 505 (Tex. App.—Houston [1st
Dist.] 2004, no pet.). Consistent with this purpose, § 12.002(a)(3) requires “intent”
to cause “another person” to suffer, inter alia, “physical injury,” “financial injury,”
or “mental anguish or emotional distress.” Tex. Civ. Prac. & Rem. Code Ann.
§ 12.002(a)(3).
Fidelity closed two home-equity loan transactions, referred to as the 2005
and 2007 Instruments, knowing that title to the property did not belong solely to
Barefoot. Fidelity did not share this information with Barefoot. Fidelity recorded
both the 2005 and the 2007 Instruments with the Harris County Clerk. As part of
the closing on the 2005 transaction, Fidelity issued a title commitment that stated
that title to the property appeared to be vested in both Barefoot and Robert, but did
not share this document with Barefoot, and as part of the closing on the 2007
Instrument, Fidelity issued, but did not share with Barefoot, a title commitment
policy stating that title to the property was vested in Barefoot, Robert, and Joan. In
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closing the 2005 and 2007 transactions, Fidelity did not disclose to Barefoot any
information indicating that she was not the sole owner of the property. All of the
documents Fidelity provided to Barefoot at the closings indicated that she was the
sole owner of the property.
Despite these facts, the majority concludes:
While Barefoot was assessed these charges, Fidelity’s actions also
enabled Barefoot to procure the loans in question, which presumably
she would not have sought were they against her financial interest.
Under these circumstances, the mere fact that Fidelity charged
premiums and costs does not permit an inference that, in so doing, it
intended to cause Barefoot financial harm by preparing and filing
fraudulent liens in conjunction with the 2005 and 2007 transactions.
See Suarez v. City of Tex. City, 465 S.W.3d 623, 634 (Tex. 2015)
(inference is not reasonable if evidence is susceptible to multiple,
equally probable inferences, requiring factfinder to guess to reach
conclusion).
The term “intent” generally means that “the actor desires to cause the
consequences of his act or that he believes the consequences are substantially
certain to result from his act.” Crosstex N. Tex. Pipeline, L.P. v. Gardiner, 505
S.W.3d 580, 605 (Tex. 2016).
The “intent” element of § 12.002 requires only that the person filing the
fraudulent lien be aware of the harmful effect that filing such a lien could have on
a landowner. See Taylor Elec. Servs., Inc. v. Armstrong Elec. Supply Co., 167
S.W.3d 522, 531–32 (Tex. App.—Ft. Worth 2005, no pet.); see also Barron v. Al
Shmainsani, No. 02-19-00064-CV, 2021 WL 2253301, at *16–18 (Tex. App.—
Fort Worth June 3, 2021, pet. filed) (mem. op.); Vanderbilt Mortg. & Fin., Inc. v.
Flores, 735 F. Supp. 2d 679, 689 (S.D. Tex. 2010) (order). Whether Fidelity’s
actions enabled Barefoot to procure the loans is not the question; the issue is
whether Fidelity, a title company, was aware of the harmful effect the fraudulent
liens would have on Barefoot. Fidelity knew that the liens it filed in the Harris
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County Clerk’s records were void, and Fidelity knew that the filing of the liens
could prevent both the sale of the property and the transfer of good title to the
property. This could constitute a financial injury to Barefoot. See Tex. Civ. Prac. &
Rem. Code Ann. § 12.002(a)(3)(B). Because Fidelity was aware of the harmful
effect that the filing of the invalid liens could have on Barefoot, the trial court
could have inferred that Fidelity intended to cause Barefoot financial injury when
it filed fraudulent liens with the Harris County Clerk. See id.; Crosstex N. Tex.
Pipeline, 505 S.W.3d at 605; Taylor Elec. Servs., 167 S.W.3d at 531–32; see also
Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986) (“Intent is a
fact question uniquely within the realm of the trier of fact because it so depends
upon the credibility of the witnesses and the weight to be given to their
testimony.”).
B. Loss-of-market-value damages
The majority reaches the correct conclusion in reversing Barefoot’s recovery
for loss-of-market damages from Fidelity; however Barefoot cannot recover loss-
of-market-value damages for a reason other than that stated by the majority:
foreseeability.
Section 12.002 provides that a person who violates the statute is liable to
each injured person for the actual damages caused by the violation. Tex. Civ. Prac.
& Rem. Code Ann. § 12.002(b)(1)(B). Actual or compensatory damages are
intended to compensate a plaintiff for the injury she incurred and include general
damages (which are non-economic damages such as loss of reputation or mental
anguish) and special damages (which are economic damages such as lost income).
Hancock v. Variyam, 400 S.W.3d 59, 65 (Tex. 2013); see Tex. Prac. & Rem. Code
Ann. § 41.001(4), (8).
Although it is foreseeable that Barefoot would suffer loss of value of the
property due to the actions or inactions of Fidelity, it was not foreseeable that
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Barefoot would suffer flood damage to the property due to the City of Houston
reconnecting water service to the property, which flooded because of an undetected
leaking uncapped refrigerator line. See Arthur Andersen & Co. v. Perry Equip.
Corp., 945 S.W.2d 812, 816 (Tex. 1997); see also Fazio v. Cypress/GR Hous. I,
L.P., 403 S.W.3d 390, 395 (Tex. App.—Houston [1st Dist.] 2013, pet. denied)
(“Consequential damages must be foreseeable and directly traceable to the
misrepresentation and result from it.”); Language People, Inc. v. Barish, No. 03-
18-00538-CV, 2019 WL 5057659, at *7 (Tex. App.—Austin Oct. 9, 2019, no pet.)
(mem. op.) (“Special damages are those foreseeable damages that are the natural
result of the defendant’s wrongful acts.”).
Fidelity’s Issue Three - Mental Anguish Damages
The majority concludes that the record does not support Barefoot’s award of
mental anguish damages against Fidelity. In so doing, the majority concludes that
Barefoot did not specifically produce any evidence of mental anguish she suffered
as a result of Fidelity’s actions in 2014 or later, which is when the Fidelity was
involved in the lawsuit against Barefoot. I disagree that the filing of the lawsuit is
the only conduct for which Fidelity was properly held liable. As noted above,
Fidelity was also properly held liable for the filing of the fraudulent liens with the
Harris County Clerk in 2005 and 2007. Thus, the majority errs in disregarding the
testimony and evidence of mental anguish damages preceding the filing of the
lawsuit in 2014; the question then becomes whether there was sufficient evidence
supporting the award of mental anguish damages.
A damages award for mental anguish will survive a legal-sufficiency
challenge when the record bears direct evidence of the nature, duration, and
severity of the plaintiff’s mental anguish, thus establishing a substantial disruption
in the plaintiff’s daily routine, or when the record demonstrates evidence of a high
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degree of mental pain and distress that is more than mere worry, anxiety, vexation,
embarrassment, or anger. Anderson v. Durant, 550 S.W.3d 605, 618–19 (Tex.
2018). Mental anguish is a “relatively high degree of mental pain and distress that
is more than mere disappointment, anger, resentment or embarrassment, although it
may include all of these.” Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex.
1995). There must be both evidence of the existence of compensable mental
anguish and evidence to justify the amount awarded.” Hancock, 400 S.W.3d at 68.
Mental anguish is only compensable if it causes a “substantial disruption in . . .
daily routine” or “a high degree of mental pain and distress.” Parkway, 901 S.W.2d
at 444. “Even when an occurrence is of the type for which mental anguish damages
are recoverable, evidence of the nature, duration, and severity of the mental
anguish is required.” Serv. Corp. Intern. v. Guerra, 348 S.W.3d 221, 231 (Tex.
2011). “Generalized, conclusory descriptions of how an event affected a person are
insufficient evidence on which to base mental anguish damages.” Anderson, 550
S.W.3d at 619.
The record reveals that Barefoot endured a high degree of mental pain and
distress that was more than mere worry, anxiety, vexation, embarrassment, or
anger. See Parkway, 901 S.W.2d at 444. Here, Barefoot testified that when she was
first informed of the prospect that the property could be foreclosed on, “my
reaction was that—that’s when everything became even—it was panic.” Barefoot
explained that she was “very upset about losing my life’s work and my home,
which was like my sanctuary, and . . . the history with myself and my daughter, my
family, my friends.” Barefoot also testified that, after she was informed by Stewart
Title that she was not the sole owner of the home, she called Fidelity, and she
ended the call with a Fidelity escrow officer “so upset that it was like, okay, I just
have to go higher up.” Barefoot explained that resolving this “horrible mess” “had
become a full-time job” when she spoke with Warren Miller, a vice-president for
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Fidelity. According to Barefoot, Miller was initially very patient and told her that
Fidelity would fix the issue, “even if it means paying off the loan”; however,
Miller’s position on the matter later changed and he told Barefoot to “sue Fidelity.”
Barefoot explained that she was “shocked” and “now my head was just spinning
every just way you could imagine.”
Additionally, after receiving an email from Fidelity in 2012 with a title
commitment showing she did not own the home, Barefoot was “enraged.” Barefoot
testified that she felt “hopeless” regarding her ability to complete the short sale of
the property. Barefoot was “completely devastated” after receiving a letter from
Bank of America “completely disregarding everything I had been talking about for
months now.” Barefoot explained she “was really very embarrassed and
humiliated” that her neighbors saw “Vacancy” and “For Sale” notices on her home,
and she “was furious about the this [sic] house is for sale and it wasn’t for sale.”
Barefoot explained that trying to sell the house “was literally a nightmare” and that
“I felt like I was pulling my hair out and I was going crazy, literally.” Barefoot
stated she felt “absolute exhaustion” and did not “feel physically well.” Barefoot
felt “for the first time in my life . . . like I just can’t trust anyone . . . and something
changed during that time . . . something inside of me, yeah.” Finally, Barefoot also
testified that, when she saw the water damage to her house in 2012, which the trial
court attributed to Fidelity in awarding actual damages, she felt “[l]ike just I can’t
take another thing” and “overwhelmed.”
Barefoot’s distress during her attempts to sell the house, which preceded the
filing of the 2014 lawsuit, resulted from her erroneous belief that there was a valid
security interest on her property that could be foreclosed on to collect on the loan.
There is sufficient evidence that Fidelity’s actions in filing the fraudulent
liens in 2005 and 2007 created a substantial disruption of Barefoot’s daily routine
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and a high degree of mental distress. See Anderson, 550 S.W.3d at 618–19. The
majority errs in reversing the trial court’s award to Barefoot of mental-anguish
damages as to Fidelity and suggesting a remittitur. The judgment of the trial court
as to Barefoot’s mental anguish damages as to Fidelity should be affirmed.
Bank of America’s Appeal – Issue B
The majority concludes there is legally insufficient evidence that Bank of
America violated § 12.002 regarding fraudulent liens. However, Bank of America
knew that the liens filed on the property were fraudulent because (1) it knew that
Barefoot was not the sole owner, and (2) it knew that Fidelity filed the lien despite
Fidelity’s knowledge that Barefoot was not the sole owner of the home. Thus,
Bank of America knew that the liens were created with dishonesty or a lack of
integrity. See Tex. Civ. Prac. & Rem. Code Ann. § 12.002(a)(1).
Barefoot testified to an email admitted into evidence that she sent to Bank of
America on May 22, 2012, informing Bank of America that she had acquired
paperwork showing that the 2007 Instrument “ was fraud”; that Fidelity admitted
she was not the sole owner; and that Fidelity admitted the loan should have never
been funded. Nevertheless, Bank of America and HSBC initiated a foreclosure
action based on the void and fraudulent lien in November of 2012. This is legally
sufficient evidence that Bank of America violated § 12.002. The question then
becomes whether the record demonstrates there was sufficient evidence supporting
the trial court’s award to Barefoot of $75,000 in mental anguish damages as to
Bank of America. I agree with the majority’s analysis and conclusion that Barefoot
presented sufficient evidence of mental anguish as to Bank of America, and I
would remand the attorney fee award for reconsideration of attorney’s fees.
HSBC’s Appeal - Issue Five
The majority concludes that the evidence is legally insufficient to support a
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judgment against HSBC for violations of Civil Practice and Remedies Code
§ 12.002. In doing so, the majority concludes that there is legally insufficient
evidence that “they knew the liens were fraudulent.” The trial court made the
following findings of fact relevant to HSBC:
48. Following the Court denial of the TRCP 736 application,
Hayden Hooper, an attorney with Barrett Daffin—counsel for
HSBC, BoA, and Nationstar—admitted in written
correspondence that the Property could not be foreclosed on
because there was no conveyance of record of Robert’s interest
in the Property to Barefoot.
...
52. During the pendency of this lawsuit, Defendants have presented
the 2007 Instrument with knowledge that it is a fraudulent lien,
intending it to be given legal effect, with the intent for the
Property to be foreclosed.
(emphasis added).
I disagree with the majority’s conclusion that there is legally insufficient
evidence as to HSBC. HSBC was the owner and holder of both the 2005 and 2007
instruments. The record establishes that HSBC knew that the liens created by the
instruments were void and fraudulent at the time it filed suit to foreclose on the
home and enforce the fraudulent lien in 2012. Furthermore, our record shows a
January 16, 2013, letter admitted into evidence from Barefoot’s counsel informing
HSBC’s counsel, Barrett Daffin Frappier Turner & Engel, LLP, of the fraudulent
nature of the liens. Nevertheless, HSBC filed the underlying suit for declaratory
judgment seeking a declaration that an instrument it knew was void was a valid
and enforceable lien. Thus, there is legally sufficient evidence that HSBC violated
§ 12.002. Finally, for the same reasons noted above detailing Barefoot’s mental
anguish as to Fidelity, there is legally sufficient evidence that Barefoot suffered
mental anguish from HSBC’s violation of § 12.002. Barefoot testified to a
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continuous course of conduct by Fidelity, Bank of America, and HSBC: Fidelity,
which provided attorneys to HSBC to seek enforcement of the liens; Bank of
America, with whom Barefoot communicated by telephone, email, and letter, and
in person, informing BOA of the issues with the loan, and providing to the BOA
representatives the Stewart Title and Fidelity 2012 title commitments showing she
did not own the home, after which BOA attempted to foreclose on the home; and
HSBC, the entity that continued to attempt to enforce the fraudulent lien knowing
the lien to be fraudulent. This Court should affirm the trial court’s finding that
HSBC violated § 12.002 and uphold the award of mental anguish assessed against
it.
/s/ Margaret “Meg” Poissant
Justice
Panel consists of Justices Spain, Hassan, and Poissant. (Spain, J., majority).
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