LendingHome Funding Corporation v. Tuesday Real Estate, LLC, Kevin Miller, Harva Dale Miller, and Roxanne L. Miller ( 2021 )

AFFIRMED and Opinion Filed December 28, 2021
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-20-00071-CV
LENDINGHOME FUNDING CORPORATION, Appellant
V.
TUESDAY REAL ESTATE, LLC, KEVIN MILLER, HARVA DALE
MILLER, AND ROXANE L. MILLER, Appellees
On Appeal from the 134th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-18-00266
MEMORANDUM OPINION
Before Justices Schenck, Pedersen, III, and Garcia
Opinion by Justice Pedersen, III
Appellant LendingHome Funding Corporation (LendingHome) appeals the
trial court’s judgment, which (i) found Kevin Miller and Roxane Miller had a valid
homestead interest in a house located at 10643 Saint Lazare Drive, Dallas, Texas,
75229 (the Property) and (ii) ordered LendingHome to pay $637,000.00 to Tuesday
Real Estate, LLC (Tuesday). In six issues, LendingHome asserts the trial court erred:
(i) in finding the Millers had a valid homestead interest in the Property; (ii) in failing
to find that LendingHome was a bona fide mortgagee; (iii) in failing to find that
Tuesday was a bona fide purchaser; (iv) in failing to find Kevin engaged in fraud;
(v) in failing to find Kevin breached loan terms; and (vi) in entering an
impermissibly vague, confusing, and uncertain final judgment. We affirm the
judgment of the trial court.
I. BACKGROUND
A. Transfers Regarding the Property
Delmo Johnson owned the Property in 2015. On May 12, 2015, Delmo
transferred his interest in the Property to Harva Dale Miller by warranty deed.1 On
that same date, Delmo gave the executed warranty deed to his real estate broker,
Gardine Froman. Gardine did not record the warranty deed at that time. Neither
Delmo nor Gardine informed Harva of this executed warranty deed at the time of
this transfer.
Delmo died on May 14, 2015. Delmo’s Last Will and Testament left the
Property to Kevin, who completed probating Delmo’s will on June 22, 2015. At that
time, Kevin was married to Roxane, and Kevin testified that they moved into the
Property with their children in August 2015. Kevin also testified that he believed he
owned the Property and that he had no knowledge of Delmo’s warranty deed to
Harva.
On December 1, 2015, Kevin borrowed $405,000.00 from LendingHome,
through a commercial loan secured by a deed of trust on the Property. Roxane did
1
Harva is Kevin’s mother.
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not sign or execute the promissory note or deed of trust. Kevin defaulted on the note.
LendingHome posted the Property for foreclosure sale on June 12, 2017, and sold it
to Tuesday on July 4, 2017 for $637,000.00. In July 2017, Gardine found Delmo’s
May 12, 2015 warranty deed to Harva, and Gardine informed Kevin of the earlier
transfer of the Property. On July 11, 2017, Gardine recorded this warranty deed.
B. Litigation on the Property
On January 8, 2018, Tuesday sued Kevin, Harva, and LendingHome for
trespass to try title, to quiet title, to recover its purchase price, and for declaratory
judgment. Roxane intervened in the lawsuit—asserting counterclaims “based on an
unlawful and illegal transaction” against LendingHome. LendingHome raised cross
claims of fraud and breach of contract against Kevin. The parties filed answers to
the respective claims raised. LendingHome pled no affirmative defenses at any time.
Tuesday pled the affirmative defense of estoppel against Kevin and Harva.
The trial court held a nonjury trial on October 8, 2019, at which (i) Harva,
(ii) Kevin, and (iii) Arturo Singer—who is a member of Tuesday—testified.
LendingHome called no trial witnesses. Gardine’s deposition testimony was read
into the record. Several documents related to the Property and Kevin’s loan
agreement were admitted into the record—including Kevin’s complete declaration,
which testified as to his use and occupation of the Property as a homestead. On
October 18, 2019, the trial court entered a final judgment, which provides, in
pertinent part:
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The Court received, heard, examined and considered the evidence,
exhibits, trial transcript, and based on the evidence, adjudges the
following:
1. The real property, the subject of this cause, is legally described
to wit: Being Lot 7, in Block 3/5535, LES JARDINS ADDITION,
SECOND INSTALLMENT, an Addition to the City of Dallas, Texas,
according to the Map thereof recorded in Volume 42, Page 99, of the
Map Records of Dallas County, Texas (the “Premises”).2
2. The Premises was the statutory and constitutional homestead of
Kevin Miller and Roxane L. Miller at all times relevant and relating to
the claims and defenses at issue in this cause.
3. The Deed of Trust executed by Kevin Miller and LendingHome
Funding Corporation, and filed of record in the Deed Records of Dallas
County, Texas on December 1 2015, is not in compliance with the
mandate of the Texas Constitution, Article XVI, Section 50 and the
Texas Property Code, Chapter 41 governing the creation of a lien upon
a Texas family homestead; and, is therefore void and of no force and
effect as a lien upon the Premises for the purpose of securing the
payment of the loan between Kevin Miller and LendingHome Funding
Corporation.
....
5. LendingHome Funding Corporation’s claims against Kevin
Miller are DISMISSED and LendingHome Funding Corporation shall
take nothing against Kevin Miller.
....
8. Harva Dale Miller obtained all title, rights, and interests in the
Premises based upon a conveyance by Warranty Deed from Delmo L.
Johnson to Harva Dale Miller signed the 12th day of May, 2015 and
filed of record in the deed records of Dallas County, Texas, on the 11th
day of July, 2017.
9. Tuesday Real Estate, LLC shall recover from LendingHome
Funding Corporation the sum of $637,000.00 with prejudgment interest
at the rate of 5.25 percent (5.25%) per annum beginning on the date of
the filing of this suit and ending the day preceding the signing of this
Final Judgment and post judgment interest from the date of the signing
of this Final Judgment until paid at the rate of 5.25 percent (5.25%) per
annum.
2
This is the legal description of the Property.
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10. All right, title, and interest to the Premises, as between the
parties to this cause, is vested and quieted in Kevin Miller and Roxane
Miller.
....
IT IS SO ORDERED.
The trial court further entered numerous findings of fact and conclusions of law,
including LendingHome’s inspection of the Property, and that LendingHome had no
valid or enforceable lien or security interest in the Property. On October 18, 2019.
LendingHome moved for new trial; the motion was denied; and this appeal followed.
II. ISSUES RAISED
LendingHome raises six issues to our Court, which we reproduce verbatim:
1. Whether the Trial Court erred in finding that the Millers had a valid
homestead interest in the Property, despite never having legal or
equitable title to the Property.
2. Whether the Trial Court erred when, contrary to Texas Supreme
Court precedent, it failed to find that LendingHome was a bona fide
mortgagee.
3. Whether the Trial Court erred when, contrary to Texas Supreme
Court precedent, it failed to find that Tuesday was a bona fide
purchaser.
4. Whether the Trial Court erred when it failed to find that Kevin
engaged in fraud by making false representations to LendingHome
to induce LendingHome to make the Loan to Kevin.
5. Whether the Trial Court erred when it failed to find that Kevin
breached the terms of the Loan by occupying the Property and
defaulting on his repayment obligations under the Loan.
6. Whether the Trial Court’s Final Judgment is impermissibly vague,
confusing, and uncertain.
III. STANDARDS OF REVIEW
A. Findings of Fact
A party appealing from a nonjury trial in which the trial court made findings
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of fact should direct its attack on the sufficiency of the evidence to specific findings
of fact, rather than to the judgment generally. See Thompson & Knight L.L.P. v.
Patriot Expl. L.L.C., 444 S.W.3d 157, 162 (Tex. App.–Dallas 2014, no pet.).3
Here, LendingHome’s briefing does not specify whether it challenges the
legal sufficiency or the factual sufficiency of the evidence. When a party challenges
the legal sufficiency of the evidence supporting an adverse finding on an issue on
which the party had the burden of proof, it must show that the evidence establishes
as a matter of law all vital facts in support of the issue. Dow Chem. Co. v. Francis,
46 S.W.3d 237, 241 (Tex. 2001) (per curiam). When addressing a legal sufficiency
challenge, we view the evidence in the light most favorable to the challenged finding
—crediting favorable evidence if a reasonable fact-finder could and disregarding
contrary evidence unless a reasonable fact-finder could not. City of Keller v. Wilson,
168 S.W.3d 802, 827 (Tex. 2005). Anything more than a scintilla of evidence is
legally sufficient to support the finding. Formosa Plastics Corp. USA v. Presidio
Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998).
“When an appellant challenges the factual sufficiency of the evidence on an
issue, we consider all the evidence supporting and contradicting the finding.”
Fulgham v. Fischer, 349 S.W.3d 153, 157 (Tex. App.—Dallas 2011, no pet.) (citing
Plas–Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989)). “We set aside
3
“Texas Rule of Appellate Procedure 33.1(d) provides that ‘[i]n a nonjury case, a complaint regarding
the legal or factual insufficiency of the evidence ... may be made for the first time on appeal in the
complaining party’s brief.’” Office of Atty. Gen. of Tex. v. Burton, 369 S.W.3d 173, 175 (Tex. 2012).
–6–
the finding for factual insufficiency only if the finding is so contrary to the evidence
as to be clearly wrong and manifestly unjust.” Id. (citing Cain v. Bain, 709 S.W.2d
175, 176 (Tex. 1986) (per curiam)). In a bench trial, the trial court, as factfinder, is
the sole judge of the credibility of the witnesses. Id. As long as the evidence falls
‘within the zone of reasonable disagreement,’ we will not substitute our judgment
for that of the fact-finder. Id. (quoting City of Keller, 168 S.W.3d at 822). In
conducting a factual sufficiency review, we should detail the evidence relevant to
the issue in consideration and clearly state why the finding is factually insufficient
or is so against the great weight and preponderance of the evidence as to be
manifestly unjust, shock the conscience, or clearly demonstrate bias. Windrum v.
Kareh, 581 S.W.3d 761, 781 (Tex. 2019).
B. Vague, Confusing, or Uncertain Judgment
“A judgment must be sufficiently definite and certain to define and protect the
rights of all litigants, or it should provide a definite means of ascertaining such rights,
to the end that ministerial officers can carry the judgment into execution without
ascertainment of facts not therein stated.” Stewart v. USA Custom Paint & Body
Shop, Inc., 870 S.W.2d 18, 20 (Tex. 1994). (citing Steed v. State, 143 Tex. 82, 183
S.W.2d 458, 460 (1944) (quoting 25 TEX. JUR. § 84 & (Supp. 1939)). A judgment
should be construed as a whole toward the end of harmonizing and giving effect to
all the court has written. Point Lookout W., Inc. v. Whorton, 742 S.W.2d 277, 278
(Tex. 1987) (citing Constance v. Constance, 544 S.W.2d 659, 660 (Tex. 1976)).
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IV. HOMESTEAD
In Texas, single adults and heads of families may designate a certain amount
of real property as their homestead. TEX. CONST. art. XVI § 51. The designation of
real property as a homestead has many benefits, most notably the protection of the
property from seizure and sale for the payment of most debts. TEX. CONST. art. XVI
§ 50(a). Homestead protections were intended to protect families from the “miseries
and dangers of destitution” and to foster home ownership and independence.
Franklin v. Coffee, 18 Tex. 413, 415–16 (1857). We have previously addressed
homestead:
Homestead rights have traditionally enjoyed great protection, and
statutes that affect such rights are liberally construed to protect
the homestead. Id.; see also Florey v. Estate of McConnell, 212
S.W.3d 439, 443 (Tex. App.—Austin 2006, pet. denied). The burden of
proving homestead is on the party claiming such a homestead. Burk
Royalty Co. v. Riley, 475 S.W.2d 566, 568 (Tex. 1972). To sustain
a homestead claim, there must be proof of overt acts
of homestead usage and intent on the part of the owner to claim the
land as homestead. Stewart v. Clark, 677 S.W.2d 246, 250 (Tex.
App.—Corpus Christi 1984, no writ).
Denmon v. Atlas Leasing, L.L.C., 285 S.W.3d 591, 595 (Tex. App.—Dallas 2009,
no pet.) (emphasis added).
V. DISCUSSION
Issue One: Whether the Trial Court Erred in Finding that the Millers Had a
Valid Homestead Interest in the Property
LendingHome asserts the trial court erred when it found:
–8–
The Deed of Trust executed by Kevin Miller and LendingHome
Funding Corporation, and filed of record in the Deed Records of Dallas
County, Texas on December 1 2015, is not in compliance with the
mandate of the Texas Constitution, Article XVI, Section 50 and the
Texas Property Code, Chapter 41 governing the creation of a lien upon
a Texas family homestead; and, is therefore void and of no force and
effect as a lien upon the Premises for the purpose of securing the
payment of the loan between Kevin Miller and LendingHome Funding
Corporation.
First, LendingHome asserts that the Millers could not have a valid homestead
interest in the Property because they held no legal title to the property. Relying on
Garrard v. Henderson, LendingHome suggests that a homestead is limited to those
who both own and possess real estate as a residence. 209 S.W.2d 225, 230 (Tex. Civ.
App.—Dallas 1948, no writ) (“We think that there is no better law established in
Texas than that the possession and used [sic] of real estate by one who owns it, and
who, with his family, resides upon it, makes it the homestead of the family in law
and in fact.”). Relying on Purdin v. Jenkins, LendingHome asserts that mere
occupancy does not transform a property into a homestead. 337 S.W.2d 418, 421
(Tex. Civ. App.—Dallas 1960, no writ) (“Occupancy of property does not ipso facto
make the property a homestead.”). The Millers and Tuesday respond that a party can
have a homestead on property that it does not own. We agree with the appellees.
“Texas law is clear that possession of a homestead interest is not dependent
upon ownership.” Denmon, 285 S.W.3d at 595.
There is nothing in the constitution or laws of this state which prevents
the homestead right of the wife from attaching to any interest in land
which may be owned by the husband or wife, or by the community, and
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be used as homestead; and the great current of authority is to the effect
that the homestead right will attach to an equitable estate, an estate for
life, or even to a leasehold interest.
Wheatley v. Griffin, 60 Tex. 209, 211 (1883) (emphasis added); see also Beckner v.
Barrett, 81 S.W.2d 719, 725 (Tex. Civ. App.—Dallas 1935, writ dism’d) (“It is now
definitely settled in this state that a homestead right will attach to a leasehold interest
in land.”). Indeed, the Texas Supreme Court has held: “[A] house can be a homestead
even if the owner has no ownership interest in the land.” Norris v. Thomas, 215
S.W.3d 851, 854 (Tex. 2007).
Here, the record shows that—at the time of Delmo’s death—neither Kevin,
Harva, nor Roxane knew of Delmo’s warranty deed granting the interest in the
Property to Harva. Kevin and Harva both testified they learned of this warranty deed
in 2017. At trial, the parties disputed whether Kevin, Roxane, and their family used
and occupied the Property as their homestead. The record contains Kevin’s affidavit,
which was unobjected-to, and states:
3. . . . . I became the sole heir of Delmo Johnson, Jr.
4. Among the assets I inherited was real property, including a home,
located at 10643 Saint Lazare Drive, Dallas, Texas 75229 (the
“Home’”). The Home contains all of the amenities of a habitable
home. At the time of this inheritance, I was unaware that my mother,
Harva Dale Miller, had any interest in the Home since neither she
nor Delmo Johnson ever informed me or my wife of that fact. I did
not learn of my mother’s interest in the Home until 2017 when the
deed was recorded by which time I had already move into the Home
and established my homestead interest in the real property and the
Home as had my wife, Roxane L. Miller.
5. In August 2015, the [sic] Roxane L. Miller, my children and I moved
into the Home. Since August 2015, Roxane L. Miller, my children
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and I have continuous [sic] used and occupied the Home as our
homestead and neither I nor Roxane L. Miller has [sic] another
homestead. Since August 2015, all of the personal possessions,
personal books and records, and pets of Roxane L. Miller my
children and me have been located at the Home. The driver’s
licenses of Roxane L. Miller and me both reflect the address of the
Home, we both receive our mail at the Home, and our personal bank
accounts reflect the Home as our address. Beginning in August
2015, a renovation of the Home began and continued for
approximately one (1) year and Roxane L. Miller, my children and
me all occupied and used the Home during the entire renovation
period.
LendingHome directs us to Harva’s testimony during trial:
Q. Okay. So the year before that Delmo died, there was no one living
at that Saint Lazare house, was there?
A. Nobody lived there at all after I left.
Q. Okay.
A. Except Delmo.
Q. Okay.
A. And Kevin, if he’d go over and spend the night with him.
Q. Okay. But he wasn’t actually living continually there, it would be on
and off?
A. Not that I know of, honey. I really don’t really know if he
stayed there, if he roomed there or whatever, because I wasn’t—
no.
....
Q. Okay. All right. And Kevin and Roxane weren’t living in the house
while it was being renovated, correct? I think you told me in the
deposition –
A. No. They had it tore up so bad, they could not have lived there.
....
Q. And then while [Kevin and Roxane] were in Dallas, that they would
live in one of the houses that Roxane’s parents own; is that correct?
A. That’s right.
The record contains the loan documents, one of which is a “Business Purpose &
Occupancy Statement” that Kevin signed on December 1, 2015, and provides:
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BORROWER(S): Kevin Miller, a married person
....
Before me. the undersigned duly authorized to take acknowledgments
and administer oaths, personally appeared the undersigned
Borrower(s), who upon being duly sworn on oath stated the following:
1. Property is/will not be owner occupied. The property will not be
occupied or claimed as a Primary or Secondary Residence by any of the
Borrowers, and may produce revenue. Each Borrower(s) now owns,
resides, uses and claims another property or properties as Borrower(s)
Primary Residence.
2. Lender is originating the loan in reliance upon the occupancy
status indicated above . . .
3. Borrower(s) also understands that any false statements,
misrepresentations or material omissions may result in civil and
criminal penalties . . .
....
5. The undersigned Borrower further hereby states and warrants that the
above transaction is for a business or commercial purpose . . .
(emphasis in original). The promissory note and deed of trust between Kevin and
LendingHome both state “Borrower represents and warrants that the proceeds of this
loan will be used by Borrower for business purposes and that Borrower does not
intend to, and will not occupy or reside on the Property[.]” During trial, the parties
asked Kevin about the loan application and loan documents:
Q. All right. How much experience do you have in the real estate
business, in the financing business?
A. Absolutely none at all.
Q. All right. And when you were doing all these -- this loan and
everything, how were you proceeding it? Who helped you through all
this?
A. The group with LendingHome, with paperwork, telling me
what to sign, where to sign, et cetera.
Q. Okay. Did they ever question you about your wife, Roxane’s,
signature?
A. No.
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....
Q. All right. Let me ask you: Have you ever seen one of these
documents, business purpose and occupancy statements, before?
A. No, I haven’t.
Q. Do you even know what it’s all about?
A. I—I don’t. And that’s what I was just sitting here thinking
about, just by sitting here looking at this.
Q. All right. Was everybody aware of the fact that you were living in
the house?
A. Meaning who?
Q. Pardon?
A. Meaning who? Who all was –
Q. Well, I mean, did you make any secret to that?
A. No.
Q. Okay.
A. And we even -- we even still had furniture in the house.
Q. All right.
A. It even shows in several photos while the house was being
renovated.
....
Q. When you completed your loan application, what address did you
list as your home address?
A. That was a long time ago. I can’t remember if I had listed my
Jacksonville address at the time. I’m pretty sure that I listed the
Jacksonville address at the time because I’m—I got the loan right
after my father passed away. And then we moved from east
Texas to Dallas into this house so that I could be over the estate
and take care of the estate. And I was not—I did not own the
house in east Texas, I was renting it. So from that point on, after
I got the loan and took care of what I needed to take care of in
east Texas, myself and my family and my kids moved to Dallas
into this house.
In discussing the December 1, 2015 loan and where he lived, Kevin testified:
A. . . . I had to have moved to Dallas not long after my father
passed away. So I think I did—I think I was living in the house
at that time, because that’s quite a ways past my father being
passed away. Because he passed away in July—June. June.
Q. When you’re talking about your “father”, who are you talking about?
A. My stepfather.
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Q. You’re talking about Delmo?
A. Uh-huh.
Q. Okay.
A. Yeah, he was a father to me.
In viewing the evidence in the light most favorable to the challenged finding,
we conclude that more than a scintilla of evidence existed to support the trial court’s
finding that Kevin and Roxane had a valid homestead interest in the Property.
Formosa Plastics, 960 S.W.2d at 48. In viewing the entire record supporting and
contradicting the finding of the trial court, we cannot conclude its finding was so
contrary to the evidence as to be clearly wrong and manifestly unjust. Fulgham, 349
S.W.3d at 157; see Windrum, 581 S.W.3d at 781. Accordingly, we conclude the
evidence in the record was both legally and factually sufficient to support the trial
court’s finding that Kevin and Roxane Miller had a valid homestead interest in the
Property.
LendingHome next asserts that Kevin is estopped from claiming the Property
as a homestead. Estoppel is an affirmative defense, which must be pleaded. Tex. R.
Civ. P. 94 (“In pleading to a preceding pleading, a party shall set forth affirmatively
. . . estoppel . . . and any other matter constituting an avoidance or affirmative
defense.”) Here, LendingHome failed to plead estoppel and pled no other affirmative
defenses. “Generally, an affirmative defense is waived if not raised in a defendant’s
responsive pleading.” Willacy County Appraisal Dist. v. Sebastian Cotton & Grain,
Ltd., 555 S.W.3d 29, 50 (Tex. 2018), opinion corrected on reh’g (Sept. 28, 2018).
–14–
However, “an unpleaded affirmative defense ‘may be deemed tried by consent when
evidence on the issue is developed under circumstances indicating both parties
understood the issue was in the case, and the other party fails to make an appropriate
complaint.’” Tenet Health Sys. Hosps. Dallas, Inc. v. N. Tex. Hosp. Physicians
Group, P.A., 438 S.W.3d 190, 204 (Tex. App.—Dallas 2014, no pet.) (quoting
Frazier v. Havens, 102 S.W.3d 406, 411 (Tex. App.—Houston [14th Dist.] 2003, no
pet.)).
Although LendingHome asserts that its estoppel affirmative defense was tried
by consent, such is not reflected in the record. To the contrary, LendingHome directs
us to Tuesday’s pleadings and its affirmative defense pleadings of estoppel. Here,
Tuesday and LendingHome were not aligned parties—instead, Tuesday sued
LendingHome as a defendant. As such, we disagree that Tuesday’s pleading of its
affirmative defense applies to LendingHome. LendingHome next directs us to
portions of the reporter’s record to assert that “estoppel was therefore tried by
consent in light of the evidence establishing Kevin’s varying positions with respect
to his occupancy and ownership of the Property, in tandem with Tuesday’s
pleading.” But, such evidence was not developed under circumstances indicating
that the parties understood the issue of LendingHome’s affirmative defense of
estoppel was in the case. See Tenet Health, 438 S.W.3d at 204. To the contrary,
neither the judgment nor the findings of fact and conclusions of law contain any
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discussion, findings, or conclusions regarding estoppel.4 We conclude the issue of
LendingHome’s affirmative defense of estoppel was not tried by consent and was,
therefore, waived. Willacy County Appraisal Dist., 555 S.W.3d at 50. For those
reasons, we overrule LendingHome’s first issue.
Issue Two: Whether the Trial Court Erred in Failing to Find that
LendingHome Was a Bona Fide Mortgagee
Although LendingHome failed to plead its affirmative defense of its status as
a bona fide mortgagee, it is evident from the record that the parties and trial court
tried this affirmative defense by consent. See Cooksey v. Sinder, 682 S.W.2d 252,
253 (Tex. 1984) (per curiam) (discussing bona fide purchasers as an affirmative
defense). The trial court explicitly found “LendingHome was not a ‘bona fide
mortgagee’ of the Premises at any time relevant to this cause of action.”
LendingHome asserts this finding was error and instead argues it acquired its lien
interest in the Property in good faith, for value, and without notice of: (i) Kevin and
Roxane’s homestead rights or (ii) Delmo’s warranty deed to Harva. In response, the
Millers assert that LendingHome’s alleged status as bona fide mortgagee does not
4
During trial, estoppel was explicitly mentioned only once, during Tuesday’s closing argument:
Kevin inherited nothing. He didn’t inherit any title, he didn’t inherit any right to possession,
he didn’t inherit any right to occupy. And he should be estopped now because of the
Plaintiff’s Exhibit Number 11 for claiming that he did. And I’m not sure he is claiming it
now. Apparently he’s claiming he didn’t inherit any interest in the property.
We note the record contains neither a request for findings of fact and conclusions of law from
LendingHome, nor objections to the trial court’s findings of fact and conclusions of law.
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defeat Kevin and Roxane’s homestead rights. Tuesday responds that LendingHome
waived its bona fide mortgagee affirmative defense.
When spouses have a homestead together, the property cannot be sold,
conveyed, or encumbered without both spouses joining in the transaction. TEX. FAM.
CODE ANN. § 5.001; see TEX. CONST. art. XVI, § 50(b) (one spouse may not sell or
abandon homestead without consent of other spouse), § 50(k)(1) (one spouse may
not secure a reverse mortgage without consent of other spouse); TEX. PROP. CODE
ANN. § 41.0021(c) (spouse cannot transfer homestead to trustee of qualifying trust
without other spouse joining in transaction). Here, it is undisputed that Kevin was
married when he entered into the December 1, 2015 loan agreement. It is further
undisputed that his wife, Roxane, did not enter into the loan agreement or otherwise
consent to encumbering the Property. As we have concluded above, the trial court
did not err in finding that Kevin and Roxane held a homestead interest in the
Property. It is undisputed that LendingHome knew Kevin was married, and he is
indicated as “married” on the loan documents.
A bona fide mortgagee acquires its interest in the property in good faith, for
value and without notice of the claim or interest of a third party. Houston First Am.
Sav. v. Musick, 650 S.W.2d 764, 769 (Tex. 1983) (citing Houston Oil Co. of Texas
v. Hayden, 104 Tex. 175, 135 S.W. 1149 (1911)). A bona fide mortgagee is typically
entitled to the same protections as a bona fide purchaser. Noble Mortg. &
Investments, LLC v. D & M Vision Investments, LLC, 340 S.W.3d 65, 76 (Tex.
–17–
App.—Houston [1st Dist.] 2011, no pet.) (citing Graves v. Guar. Bond State Bank,
161 S.W.2d 118, 120 (Tex. Civ. App.—Texarkana 1942, no writ)).
Here, LendingHome failed to obtain consent from Roxane on the loan. The
loan was an encumbrance on the Property. As the Property was Kevin and Roxane’s
homestead, any encumbrance on the Property required Roxane’s consent. See FAM.
§ 5.001. As LendingHome failed to obtain Roxane’s consent, the lien on the Property
and resulting foreclosure are void. Denmon, 285 S.W.3d at 596.
A void instrument has no effect, even as to persons not parties to it, and
a contention that a document is void under homestead law may be
asserted by anyone whose rights are affected by the
instrument. Florey, 212 S.W.3d at 444 (concluding an estate had
standing to contest the validity of a lien placed on a
homestead); Patterson v. First Nat’l Bank of Lake Jackson, 921 S.W.2d
240, 247 (Tex. App.—Houston [14th Dist.] 1996, no writ) (concluding
wife had standing to assert homestead claim on behalf of ex-husband
without his joinder).
Id. at 597. Because LendingHome’s lien was void, LendingHome acquired no
interest in the Property and, therefore, was not a bona fide mortgagee. We conclude
the trial court did not err in its finding that LendingHome was not a bona fide
mortgagee. We overrule LendingHome’s second issue.
Issue Three: Whether the Trial Court Erred When It Failed to Find that
Tuesday Was a Bona Fide Purchaser
LendingHome next argues that the trial court erred in finding that Tuesday did
not obtain a valid interest in the Property by virtue of the July 4, 2017 foreclosure
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sale.5 LendingHome attributes Tuesday’s bona fide purchaser status from its own
bona fide mortgagee status. In response, Tuesday asserts the trial court did not err in
finding that it was not a bona fide purchaser. Tuesday argues that because
LendingHome’s lien was void, its consequent deed of trust on the Property, which
derived from LendingHome’s foreclosure sale, was also void. We agree with
Tuesday.
A bona fide purchaser is one who acquires property in good faith, for value,
and without notice, constructive or actual, of any third-party claim or
interest. Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001). As we have
concluded above, the trial court did not err in finding that LendingHome was not a
bona fide mortgagee. “Typically, a void deed in the chain of title would foreclose
the bona-fide purchaser defense.” Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542,
549 (Tex. 2016).6 As LendingHome acquired no interest in the Property, the trustee’s
5
The trial court’s findings of fact and conclusions of law state:
3. The Substitute Trustee’s Deed relating to the Premises, electronically recorded 0n
July 17, 2017 is void and unenforceable.
4. Tuesday Real Estate has no right, title, claim, or interest in the Premises arising
from or conveyed by the void Substitute Trustee’s Deed, filed July 17, 2017.
....
9. Tuesday Real Estate acquired and has no legal right, title, or interest in the
Premises
6
The Texas Supreme Court includes the following parenthetical:
See, e.g., Bellaire Kirkpatrick Joint Venture v. Loots, 826 S.W.2d 205, 210 (Tex. App.—
Fort Worth 1992, writ denied) (“A void instrument passes no title, and the mere fact that
the grantee–mortgagee is an innocent purchaser makes no difference.”); Wall v. Lubbock,
52 Tex. Civ. App. 405, 118 S.W. 886, 888 (1909, writ ref’d) (“One holding under a void
title cannot claim protection as an innocent purchaser.”); Henderson v. Lindley, 75 Tex.
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deed that LendingHome used to transfer the Property to Tuesday was, consequently,
void. Laster v. First Huntsville Properties Co., 826 S.W.2d 125, 130 (Tex. 1991)
(“A mortgage or lien that is void because it was illegally levied against homestead
property can never have any effect, even after the property is no longer impressed
with the homestead character.”); see, e.g., Diversified, Inc. v. Walker, 702 S.W.2d
717, 723 (Tex. App.—Houston [1st Dist.] 1985, writ ref’d n.r.e.).7 We conclude the
trial court did not err in finding that Tuesday was not a bona fide purchaser. We
overrule LendingHome’s third issue.
Issues Four and Five: Whether the Trial Court Erred in Dismissing
LendingHome’s Fraud and Breach of Contract Cross Claims against Kevin
LendingHome’s fourth and fifth issues first raise whether the trial court “erred
when it failed to find” facts relating to its fraud and breach of contract claims. The
Millers assert LendingHome waived these issues because—if LendingHome’s
challenges are to the absence of specific findings of fact—LendingHome requested
no additional or amended findings after the trial court’s made findings of fact and
conclusions of law that did not expressly mention LendingHome’s cross claims. See
185, 12 S.W. 979, 980 (1889) (noting that a purchaser “could not be an innocent purchaser
under a void sale”).
Wood v. HSBC Bank USA, N.A., 505 S.W.3d at 549–50.
7
In Diversified, Inc. v. Walker, our sister court explained:
One who bids on property at a foreclosure sale does so “at his peril.” Purchasers
assume that the trustee has power to make the sale at their peril, and where he is without
power, or there is other defect or irregularity that would render the foreclosure sale void,
then the purchaser cannot acquire title to the property.
Diversified, Inc., 702 S.W.2d at 723–24 (internal citations omitted).
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TEX. R. CIV. P. 298.8 In its briefing, LendingHome asserts the trial court erred when
it dismissed LendingHome’s cross claims against Kevin. The trial court’s final
judgment states:
5. LendingHome Funding Corporation’s claims against Kevin Miller
are DISMISSED and LendingHome Funding Corporation shall take
nothing against Kevin Miller.
The trial court further entered findings that (i) Kevin borrowed $405,000.00 from
LendingHome, (ii) Kevin executed a deed of trust securing a promissory note in that
amount payable to LendingHome, (iii) Kevin represented that he was not residing in
the property, would not reside at the property, and that the loan was for commercial
purposes, and (iv) Kevin executed a “Business Purpose & Occupancy Statement”
discussed above. We disagree that LendingHome waived these issues on appeal by
failing to request additional findings. See TEX. R. CIV. P. 298. Given the trial court’s
findings and LendingHome’s briefing, we understand these issues to challenge the
8
Texas Rule of Civil Procedure 298 provides:
After the court files original findings of fact and conclusions of law, any party may file
with the clerk of the court a request for specified additional or amended findings or
conclusions. The request for these findings shall be made within ten days after the filing of
the original findings and conclusions by the court. Each request made pursuant to this rule
shall be served on each party to the suit in accordance with Rule 21a.
The court shall file any additional or amended findings and conclusions that are appropriate
within ten days after such request is filed, and cause a copy to be mailed to each party to
the suit. No findings or conclusions shall be deemed or presumed by any failure of the court
to make any additional findings or conclusions.
TEX. R. CIV. P. 298. A party asserting an independent ground or theory of recovery or affirmative defense
in a trial before the court must request findings in support thereof in order to avoid waiver, as waiver is
effected if findings by the trial court do not include any elements of the ground of recovery or defense
asserted. Augusta Dev. Co. v. Fish Oil Well Servicing Co, Inc., 761 S.W.2d 538, 542 (Tex. App.—Corpus
Christi 1988, no writ); MBank Abilene, N.A. v. Westwood Energy, Inc., 723 S.W.2d 246, 253 (Tex. App.—
Eastland 1986, no writ).
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legal and factual sufficiency of the evidence to support LendingHome’s fraud and
breach of contract claims.
The Texas Supreme Court has enumerated the elements of fraud as follows:
A plaintiff seeking to prevail on a fraud claim must prove that (1) the
defendant made a material misrepresentation; (2) the defendant knew
the representation was false or made the representation recklessly
without any knowledge of its truth; (3) the defendant made the
representation with the intent that the other party would act on that
representation or intended to induce the party’s reliance on the
representation; and (4) the plaintiff suffered an injury by actively and
justifiably relying on that representation.
Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 217 (Tex. 2011). We
have enumerated the elements of a breach of contract claim as follows:
A successful breach of contract claim requires proof of the following
essential elements: (1) the existence of a valid contract, (2) performance
or tendered performance by the plaintiff, (3) breach of the contract by
the defendant, and (4) damages sustained by the plaintiff as a result of
the defendant’s breach.
Best Buy Stores, L.P. v. Shops at Pinnacle Park, LLC, No. 05-17-01054-CV, 2018
WL 6716620, at *4 (Tex. App.—Dallas Dec. 21, 2018, no pet.). Here, the trial court
entered no express findings of fact and conclusions of law on injuries or damages
that LendingHome sustained. When the trial court does not file express findings of
fact and conclusions of law, we presume the trial court made all necessary findings
to support the judgment. See Ad Villarai, LLC v. Chan Il Pak, 519 S.W.3d 132, 135
(Tex. 2017). If those implied findings are supported by the evidence, we must uphold
the judgment on any theory of law applicable to the case. Sink v. Sink, 364 S.W.3d
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340, 344–345 (Tex. App.—Dallas 2012, no pet.). Regarding its request for damages
in its claims against Kevin, LendingHome pled:
18. As a result of LendingHome making the loan to Defendant Kevin
Miller based on his intentional false statements and ultimate default on
the loan, LendingHome has suffered, and continues to suffer damages
including but not limited to, out-of-pocket expenses, lost profits and
attorney’s fees necessary to defend this action.
....
23. LendingHome has suffered, [sic] and continues to suffer damages
including but not limited to, out-of-pocket expenses, lost profits and
attorney’s fees necessary to defend this action as a result of Defendant
Kevin Miller’s breach.
....
25. As a result of Defendant Kevin Miller’s fraud, LendingHome has
suffered economic damages in the form of, out-of-pocket expenses, lost
profits and attorney’s fees necessary to defend this action in an amount
not less than Seven Hundred Thousand Dollars ($700,000).
26. As a result of Defendant Kevin Miller’s fraud, LendingHome is
entitled to recover exemplary damages in the amount of Seven Hundred
Fifty Thousand Dollars ($750,000). 27. Pursuant to Section 38.001 of
the Texas Civil Practice and Remedies Code, LendingHome is entitled
to recover its reasonable and necessary attorneys’ fees and costs
associated with prosecuting this action. 28. Pursuant to Cavnar v.
Quality Control Parking, Inc., 696 S.W.2d 549 (Tex. 1985),
LendingHome is entitled to recover pre-and post-judgment interest, at
the applicable rate as set by this Court.
To recover lost profits, a party must introduce “objective facts, figures, or data
from which the amount of lost profits can be ascertained.” Holt Atherton Indus., Inc.
v. Heine, 835 S.W.2d 80, 84 (Tex. 1992). Reasonable certainty is required to prove
lost profits. E.g., Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002). “Out-of-pocket
damages are determined by comparing the value paid to the value received.” Stover
v. ADM Milling Co., No. 05-17-00778-CV, 2018 WL 6818561, at *10 (Tex. App.—
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Dallas Dec. 28, 2018, pet. denied) (citing Formosa Plastics Corp. USA v. Presidio
Engineers & Contractors, Inc., 960 S.W.2d 41, 49 (Tex. 1998)).9
During trial, no witness testified as to LendingHome’s injuries or damages.
The record contains no documents as to LendingHome’s out-of-pocket expenses,
lost profits, or attorney’s fees. Although there is no dispute Kevin defaulted on the
note, there is no evidence as to when or how he defaulted. There is no evidence in
the record as to whether Kevin paid the note down or not. The record is devoid of
evidence that shows (i) objective facts, figures, or data from which LendingHome's
alleged lost profits can be ascertained and (ii) the difference between the value of
what LendingHome paid and the value it received. Thus, we must conclude neither
factually nor legally sufficient evidence existed in the record as to LendingHome’s
injuries and damages. Accordingly, the trial court did not err (i) in its implied finding
that LendingHome sustained no injuries or damages as to its claims against Kevin
for fraud and breach of contract and (ii) in its according dismissal of those claims.
Accordingly, we overrule LendingHome’s fourth and fifth issues.
Issue Six: Whether the Trial Court’s Final Judgment Is Impermissibly Vague,
Confusing, and Uncertain
In its final issue, LendingHome asserts the final judgment is impermissibly
vague, confusing, and uncertain. The Millers respond that LendingHome failed to
9
See also Morriss–Buick Co. v. Pondrom, 131 Tex. 98, 113 S.W.2d 889, 890 (1938) (because out-of-
pocket fraud damages are intended to provide actual compensation for the injury rather than profit, the
proper measure of damages is the difference between the value of what was parted with and what was
received).
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raise this argument with the trial court and has, therefore, waived error. Tuesday
responds that the final judgment is not impermissibly vague, confusing, and
uncertain as to Tuesday. We agree with the Millers.
Here, the record shows LendingHome did not raise the issue of an
impermissibly vague, confusing, and uncertain final judgment with the trial court.
The record contains no objections to the final judgment, and LendingHome’s motion
for new trial raised no such issues. Thus, as this issue was not presented to or
adjudicated by the trial court, we cannot consider this new argument. See TEX. R.
APP. 33.1; see also Tex. Dep’t of Protective & Regulatory Services v. Sherry, 46
S.W.3d 857, 861 (Tex. 2001) (“[a]s a rule, a claim, including a constitutional claim,
must have been asserted in the trial court in order to be raised on appeal.”). Thus,
LendingHome waived this issue. We overrule LendingHome’s sixth issue.
VI. CONCLUSION
Having overruled LendingHome’s six issues, we affirm the judgment of the
trial court.
/Bill Pedersen, III/
BILL PEDERSEN, III
JUSTICE
Dissenting, J. Schenck
200071F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
LENDINGHOME FUNDING On Appeal from the 134th Judicial
CORPORATION, Appellant District Court, Dallas County, Texas
Trial Court Cause No. DC-18-00266.
No. 05-20-00071-CV V. Opinion delivered by Justice
Pedersen, III. Justices Schenck and
TUESDAY REAL ESTATE, LLC, Garcia participating.
KEVIN MILLER, HARVA DALE
MILLER, AND ROXANNE L.
MILLER, Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED.
It is ORDERED that appellee TUESDAY REAL ESTATE, LLC, KEVIN
MILLER, HARVA DALE MILLER, AND ROXANNE L. MILLER recover their
costs of this appeal from appellant LENDINGHOME FUNDING
CORPORATION.
Judgment entered December 28, 2021.
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