Rupa Kothari v. Refugio Oyervidez , 2012 Tex. App. LEXIS 4605 ( 2012 )

Opinion issued June 7, 2012
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-11-00872-CV
———————————
RUPA KOTHARI, Appellant
V.
REFUGIO OYERVIDEZ, Appellee
On Appeal from the 240th District Court
Fort Bend County, Texas
Trial Court Case No. 10-DCV-182037
OPINION
Appellant, Rupa Kothari, challenges the trial court’s rendition of summary
judgment in favor of appellee, Refugio Oyervidez, in Oyervidez’s suit against
Kothari for foreclosure of liens on two properties that Kothari purchased at a tax
sale. In four issues, Kothari contends that the trial court erred in granting summary
judgment in favor of Oyervidez and denying her motions to amend pleadings, for
new trial, and for continuance.
We reverse and remand.
Background
On September 25, 2007, Fort Bend County filed suit in the 434th District
Court of Fort Bend County against Antonio Gonzalez to foreclose on two of his
properties based on property tax liens for unpaid taxes (the “tax suit”). The County
joined in the tax suit all other taxing units that had claims for delinquent taxes on
the properties. It is undisputed that, at the time the County commenced the tax
suit, Oyervidez held no liens on or other interests in the properties. Thus, at this
time, he was not joined1in the tax suit, nor did he intervene.2 There is no evidence
in the summary-judgment record to indicate whether or not the County, at that
time, recorded a notice of lis pendens in the Fort Bend County real property
records or filed any documents to indicate that the tax suit had been filed.
While the tax suit was pending, Gonzalez, who still owned the properties,
executed a real estate lien note on the properties on January 6, 2009. In this note,
Oyervidez agreed to loan Gonzalez $45,000,andGonzalez agreed to repay the loan
1
SeeTEX. R. CIV. P. 39, 40.
2
SeeTEX. R. CIV. P. 60.
2
by making monthly payments of $4,500 for a term of 10 months, with any “unpaid
amounts” due by “the final scheduled payment date.” The note imposed“annual
interest” of 12%, but only on any “matured, unpaid amounts,” andprovided that, as
security for payment, Oyervidez obtained a lien against each property. The
summary-judgment record reveals that Oyervidez filed the note in the real property
records of Fort Bend County on January 16, 2009. It is undisputed that, at the time
the real estate lien note was executed, Gonzalez informed Oyervidez that he owed
outstanding taxes of $10,000 on the properties.
On May 13, 2009, the 434th District Court rendered judgment in the tax suit
in favor of the taxing units, notingthat valid “superior” liens existed on the
properties, and concluding,
that a lien exists againsteach ofthe lots . . . for the amount of the taxes,
interest, penalties, abstractor’s fees and costs of court found to be due
on each particular lot, . . . which lien isprior and superior to all claims,
right, title, interest, or liens asserted by any Defendant(s), and
thatPlaintiff(s)/Intervenor(s) has foreclosure of their liens on each of
the lots . . . as against the Defendant(s) or any person claiming under
the Defendant(s) by any right acquiredduring the pendency of this
suit; . . . . that the officer executing the order of sale shall makeproper
conveyance to the purchaser(s) of the land, as prescribed by law,
subject to such right ofredemption, and shall proceed to place the
purchaser(s) in possession to the purchaser at the sale to the
purchaser’s assigns no sooner than twenty days after the date on
which the purchaser’s deedfrom the officer making the sale is filed
ofrecord.
3
Oyervidez did not intervene in the tax suit prior to judgment, nor was he joined by
any of the taxing units.In August 2009, in accord with the judgment in the tax suit,
a notice of tax sale was issued.
Oyervidez never received any payments from Gonzalez under the January 6,
2009 note. In September 2009, nine months after agreeing to make the loan to
Gonzalez, and five months after the 434th District Court had rendered judgment,
Oyervidez filed in the Fort Bend County real property records a Notice of Lis
Pendens,stating that he had brought suit against Gonzalez in the 400th District
Court of Fort Bend County for foreclosure of liens and order of sale. As discussed
below, in her summary-judgment response, Kothari presented conflicting evidence
on whether Oyervidez had filed any documents in such a manner that would have
allowed for her to have discovered the existence of the real estate lien note, the lis
pendens, or the lawsuitin the 400th District Court prior to her purchase of the
properties at the subsequent tax sale.
Kothari submitted the highest bid at the tax sale and purchased the
propertieson October 6, 2009. And, on December 2, 2009, the Fort Bend County
constable issued two “Deed(s) Under Order of Sale in Tax Suits” granting Kothari
all “right, title, and interest” owned by Gonzalez in the properties. Although
Oyervidez complains that he did not receive notice of the tax sale, he does not raise
4
any other complaints about the procedures surrounding the tax sale, and, in his
reply brief, he contends that he is not challenging the validity of the tax sale.
On July 1, 2010,approximately nine months after Kothari purchased the
properties, Oyervidez filed the instant suit in the 240th District Court of Fort Bend
County. In his “Petition Seeking Foreclosure of Lien as Against Kothari and
Priority Claim to Excess Proceeds, Punitive Damages, and Motion for Sanctions as
Against Gonzalez,” Oyervidez alleged,
At the time of the loan and note Gonzalez informed Oyervidez about a
lien forunpaid property taxes in the amount of $10,000. However,
Gonzalez did not disclose thatFort Bend County had already filed a
foreclosure action of the liens for unpaid taxes.
....
The Note was duly recorded in the Fort Bend County clerk’s records
onJanuary 16, 2009, and represents a valid lien against the Property.
Fort Bend County filed its Tax Suit to collect the delinquent property
taxes dueand constituting a lien on the property against Gonzalez and
it was granted a defaultjudgment against Gonzalez on May 13,2009,
which ordered and authorized the sale oftheproperty to satisfy the
delinquent property taxes due.
Oyervidez was not made a party to Tax Suit and was not given notice
of the taxsale that was held October 6, 2009. Kothari purchased the
Property at the tax sale onOctober 6, 2009 for a total amount
of$61,500.
The Note was not extinguished by the Tax Suit judgment and
subsequent taxsale as a matter of law because Oyervidez was not
made a party to the tax suit and wasnot given adequate and lawful
notice of the tax sale; therefore, the Note remains as avalid lien
against the property.
5
Kothari is not a purchaser for value because constructive knowledge
ofthe preexistingNote and resulting lien is imputed to her as a matter
of law because the Note wasfiled of public record as of the date of
judgment ordering the tax sale, 5/13/09 and theNote was ofpublic
record as ofthe date ofthe tax sale, 10/06/09.
Only a purchaser for value may conclusively presume the validity
ofthe tax saleand take free of any claim of a party with a prior interest
in the property such asOyervidez has based upon the Note; therefore,
Kothari does not take the Property freeand clear ofthe Note and
resulting lien. . . . .
The tax deed only vests title to the property subject to the interest
owned byGonzalez in the property and because the interest in the
property owned by Gonzalez isencumbered by the Note and resulting
lien, the property purchased by Kothari is alsoencumbered by the
Note and resulting lien. . . .
Oyervidez sought to judicially foreclose his liens against the properties, which
were now owned by Kothari.3
In her answer, Kothari generally denied Oyervidez’s allegations, asserting
that she had acquired the properties at a tax sale and they were not “subject to” any
liens; the “notice of the tax foreclosure” was imputed to Oyervidez; Oyervidez had
3
Oyervidez’s claims against Gonzalez, which are not at issue in this appeal, relate,
in part, to the allegation that Gonzalez had wrongfully obtained the “excess
proceeds” from the tax sale of the properties and the excess proceeds should have
instead been distributed to Oyervidez, a lienholder with priority. See TEX. TAX
CODE ANN. § 34.02 (Vernon Supp. 2011) (“Distribution of Excess Proceeds”); §
34.03 (Vernon Supp. 2011) (“Disposition of Excess Proceeds”); § 34.04 (Vernon
Supp. 2011) (“Claims for Excess Proceeds”) (providing that “a person . . . may file
a petition in the court that ordered the seizure or sale setting forth a claim to the
excess proceeds” and, at a hearing on such petition, the court shall order that
proceeds be paid according to specified priorities; placing priority of “any other
lienholder” above “former owner of property”). Oyervidez asserts that he has
obtained a default judgment on his claims against Gonzalez.
6
“constructive notice”;Oyervidez’s suit constituted an impermissible collateral
attack on the court-ordered sale; Oyervidez waived any right to recover against
Kothari by not making a claim for the excess proceeds from the tax sale; she was a
“bonafide purchaser for value without notice of any liens”; Oyervidez failed to
“perfect” his lien; Oyervidez did not file his “deed of trust” until “long after” the
court-ordered sale; Oyervidez did not file his “Notice of Lis Pendens” until after
the court had already ordered the sale;Oyervidez should be estopped from pursuing
his claims because he “had notice and/or should have known of the public
foreclosure” and “did not try to join or intervene”; and Kothari had a “superior
right to any proceeds . . . in the even[t] the court ordere[d] the resell” 4 of the
properties.
Oyervidez filed a summary-judgment motion on his claims for judicial
foreclosure against Kothari. He attached to his summary-judgment motion his
affidavit, in which he testified that,
2. I executed a Real Estate Lien Note on January 6, 2009 wherein
Antonio Gonzalezsigned the note and promised to pay $45,000
plus interest and granted me a lien against his property as
collateral. The encumbered property has been sold to and is
now owned by RupaKothari. . . .
3. I advanced the sum of $45,000 to Antonio Gonzalez in
accordance with the RealEstate Lien Note.
4
In their briefing, neither party addresses the question of whether the original tax
sale could be invalidated and the properties subject to resale. Thus, we do not
address this question.
7
4. I was never paid and have yet to receive any sum of money
from Antonio Gonzalez or Rupa Kothari owed to me under the
Real Estate Lien Note.
5. I was not joined as a party in the tax foreclosure suit on Antonio
Gonzalez’s property encumbered by my real estate lien note
and conducted by Fort Bend County.
6. I was not given actual notice of the tax sale of said property
conducted by Fort BendCounty.
7. I made written demand for payment of amounts due under the
Real Estate Lien Note to defendant, Rupa Kothari on June 4,
2010 and Defendant refused to pay.
Oyervidez argued that the tax sale had not extinguishedhis interest as a
lienholderon the properties because he had not been joined as a party in a tax suit;
he was not given actual notice of the tax sale; “actual notice to a lien holder of the
pendency of a tax action seeking foreclosure of a superior lien is absolutely
required under due process and due course of law”; any “judgment rendered absent
the joinder of such a lienholder is defective” and “does not dispose of the rights of
all of the parties interested in the property”; his liens “survive[d] the tax sale as a
matter of law”; the tax sale deeds obtained by Kothari gave her “good and perfect
title . . . only to the interest” owned by Gonzalez; “[o]nly a bona-fide purchaser for
value may conclusively presume the validity of the tax sale and take free and clear
of any claim [sic]” by a party like Oyervidez; Kothari is not a bona-fide purchaser
for value because she did not buy in good faith “without knowledge, actual or
8
constructive, of outstanding liens”;and Kothari had “constructive knowledge” of
his liens.
Kothari filed a summary-judgment motion,assertingthat, for the same
reasons articulated in her answer, Oyervidez’s liens did not survive the tax sale.
Kothari attached to her summary-judgment motion her affidavit, in which she
testified,
I purchased the subject real property at Sheriff’s auction on October
6,2009, without any knowledge of any liens againstthe subject
property. Ipaid value for the property. I was without any notice of
any liens againstthe subject property.There was nothing in the
Sheriff’s paper work or thereal propertyDeed Records ofFort Bend
County, Texas, to let me knowthat someonemight have a lien on the
subject propertywhen I paidfor it.
I did not know anything about Plaintiff or Plaintiff’s alleged lienuntil
the plaintiffsent me a letter in June of 2010. I would not
havepurchased the subjectreal property if I had known of Plaintiff’s
allegedlien because the lien is for more than the valueof the subject
realproperty. If I had known about Plaintiff’s alleged lien the
Sheriffwouldhavehad to giveme moneyto take the property. A lien
drastically reducesthe amountanyone couldafford to bid on a piece of
property.Howcan I know what to bid on Sheriff’s saleproperty ifthere
are hiddenliens?
Kothari also attached to her motion the affidavit of Roy Parikh, a “real estate
broker and an expert on real estate transactions,” who testified,
Rupa Kothari purchased the subject property directly from the
FortBendCounty, Texas, Sheriff at a public Sheriff’s auctionand she
was highbidder. Rupa Kothari paid the fair market valuefor the
subject property.Therewas nothing in the customary and/or
normalplaces (i.e. Court house postings, Sheriff’s paper work,
DeedRecords) to let Rupa Kothari knowof any outstanding liens
9
against the subject property. Therewere noknownliens
againstthesubject property at the timeof the auction to
areasonablyprudent buyer.
Liens drastically affect the amount a buyer canbid on real estate
atauction. A buyermust discount for the costof any lien(s) tomake a
fairmarketvaluebid on a pieceof real estate. Here, Plaintiff’s
promissorynote was for morethanthe value of the subject property;
therefore, thesubject property wouldnot have beenmarketable
(saleable) with Plaintiff’spromissory note as a lien on the subject real
property at the time, of theauction.
The trial court denied Kothari’s summary-judgment motion, granted
Oyervidez summaryjudgment, and ordered that Oyervidez’s liens be foreclosed on
the properties.
Standard of Review
To prevail on a summary-judgment motion, a movant has the burden of
proving that he is entitled to judgment as a matter of law and there is no genuine
issue of material fact. TEX. R. CIV. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339,
341 (Tex.1995). A plaintiff moving for summary judgment on his claim must
establish his right to summary judgment by conclusively proving all the elements
of his cause of action as a matter of law. Rhone–Poulenc, Inc. v. Steel, 997 S.W.2d
217, 223 (Tex.1999). When a defendant moves for summary judgment, she must
either (1) disprove at least one essential element of the plaintiff’s cause of action or
(2) plead and conclusively establish each essential element of her affirmative
defense, thereby defeating the plaintiff’s cause of action. Cathey, 900 S.W.2d at
10
341; Yazdchi v. Bank One, Tex., N.A., 177 S.W.3d 399, 404 (Tex.App.—Houston
[1st Dist.] 2005, pet. denied). When both parties move for summary judgment and
the trial court grants one motion and denies the other, the reviewing court should
review the summary-judgment evidence presented by both sides and determine all
questions presented and render the judgment that the trial court should have
rendered. Tex. Workers’ Comp. Comm’n v. Patient Advocates of Tex., 136 S.W.3d
643, 648 (Tex.2004). When deciding whether there is a disputed, material fact
issue precluding summary judgment, evidence favorable to the non-movant will be
taken as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex.1985).
Every reasonable inference must be indulged in favor of the non-movant and any
doubts must be resolved in her favor. Id. at 549.
Tax Sale
In her first and second issues, Kothari argues that the trial court erred in
granting summary judgment in favor of Oyervidez because “tax liens are superior
to and foreclose other liens,” “there is no requirement that Oyervidez be joined in
or notified of tax suits or tax sales,” “Oyervidez’s remedy was to redeem the
property,”5“requiring joinder of persons that acquire interests in property tax suits
that were filed before they obtained their interest[s] renders tax foreclosure
5
SeeTEX. TAX CODE ANN. §§ 34.21–23 (Vernon 2008 & Supp. 2011) (addressing
rights of redemption).
11
worthless,” the tax suit judgment constituted a “bar” or an affirmative defense to
Oyervidez’s claim, and the doctrines of res judicata and collateral estoppel
preclude Oyervidez’s claim.
The Tax Code makes clear that tax liens are superior to most other liens,
including liens like those claimed by Oyervidez.6SeeTEX. TAX. CODE ANN. § 32.05
(Vernon 2008).The priority given to tax liens “prevails, regardless of whether the
debt, lien, future interest, or other encumbrance existed before attachment of the
tax lien.” Id. § 32.05(b–1).Thus, the tax liens upon which the foreclosure
proceedings were instituted in the 434th District Court were superior to any liens
claimed by Oyervidez.
Under Texas law, generally, if, after a valid foreclosure of a senior lien, a
junior lien is not satisfied from the proceeds of a sale, then the junior lien is
extinguished. See, e.g., Diversified Mortgage Investors v. Lloyd D. Blaylock Gen.
Contractor, Inc., 576 S.W.2d 794, 808 (Tex. 1978); Jones v. Bank United of Tex.,
FSB, 51 S.W.3d 341, 344 (Tex. App.—Houston [1st Dist.] 2001, pet.
denied);Conseco Fin. Servicing Corp. v. J & J Mobile Homes, Inc., 120 S.W.3d
878, 883 (Tex. App.—Fort Worth 2003, pet. denied); Arnold v. Eaton, 910 S.W.2d
6
The Texas Tax Code does not classify a tax lien as a “first lien.” Rather, the Texas
Constitution classifies a tax lien as an inextinguishable “special lien” which must
be paid to the sovereign. TEX. CONST. art. VIII, § 15. Although there are certain
exceptions to the priority status of tax liens, none are applicable in this case.
SeeTEX. TAX. CODE ANN.§ 32.05(c) (Vernon 2008).
12
181, 184 (Tex.App.—Eastland 1995, no writ); see alsoElbar Invs., Inc. v.
Wilkinson, No. 14-99-00297-CV, 2003 WL 22176624, at *2 (Tex.App.—Houston
[14 Dist.] Sept. 23, 2003, pet. denied) (stating that “junior lienholder takes an
interest in the property subordinate to the interests of the senior lienholder, and a
foreclosure sale of the senior lien extinguishes that interest”). This general rule is
in accord with the Tax Code provisions addressing, at least in normal
circumstances, the distribution of excess proceeds from the purchase of a property,
foreclosed upon as a result of tax liens, at a tax sale. SeeTEX. TAX. CODE ANN. §
34.02 (Vernon Supp. 2011) (“Distribution of Excess Proceeds”); § 34.03 (Vernon
Supp. 2011) (“Disposition of Excess Proceeds”); § 34.04 (Vernon Supp. 2011)
(“Claims for Excess Proceeds”). Theseprovisionsof the Tax Code indicate thattax
liens,like those claimed by a taxing unit such as the County, are given priority,and
inferior or junior liens, like those claimed by Oyervidez, may be satisfied pursuant
to the statutory schedule for the payout of excess proceeds from a tax sale. See id.
§§ 34.02, 34.03, 34.04. Here, the properties were sold for amounts that exceeded
the value of the tax liens and, thus, the tax liens were fully satisfied. It is
undisputed that excess proceeds would be available toany other person, including a
junior lienholderlike Oyervidez, who properly “set[] forth a claim to the excess
proceeds” under the Tax Code provisions.See id. § 34.04. However, for reasons
not fully developed in the summary-judgment record, Gonzalez obtained the
13
excess proceeds from the tax sale, Oyervidez did not obtain any of the excess
proceeds, and Oyervidez subsequently obtained a default judgment against
Gonzalez.
The record establishes that Gonzalez failed to pay taxes on his properties;
the taxing units obtained valid, priority liens on the properties;the properties were
subject to tax lienswhen Gonzalez became delinquent in his tax payments; the
taxing units properly commenced the tax suit seeking foreclosure on the properties;
the taxing units commenced the tax suit before Oyervidez agreed to loan Gonzalez
$45,000 secured by liens against the properties; Oyervidez was made aware of
$10,000 in outstanding tax liabilities at the time he loaned Gonzalez $45,000; a
foreclosure sale was properly conducted at which the properties were sold to
Kothari; Kothari’s purchase price exceeded the value of the tax liens and excess
proceeds were available; and the excess proceeds were distributed to Gonzalez
rather than Oyervidez.
The critical remaining issue, as framed by the parties in their briefing,
concerns whether Oyervidez is entitled to seek foreclosure of his liens against the
properties owned by Kothari on the grounds that(1) he was not joined in the tax
suit and did not receive notice, actual or constructive, of the pending tax suit and
(2) he did not receive notice of the tax sale.
14
In regard to Oyervidez’s second point, which is supported by his affidavit
testimony, that he was not provided any specific notice of the tax sale, we note
thatTexas courts, at least in the general sense, have explained that an inferior or
junior lienholder is not entitled to notice of a foreclosure sale. See Jones, 51
S.W.3d at 344. And, in regard to tax suits, Oyervidez has not cited any specific
statutory provision requiring that he be provided personal service of a notice of the
tax sale. Tax Code section 34.01, entitled “Sale of Property,” describesthe notice
to be provided to a “defendant to the judgment,” which, in this case, was Gonzalez.
SeeTEX. TAX. CODE ANN. § 34.01 (Vernon 2008). The pertinent provision of the
Tax Code states that “[t]he officer charged with the sale [of property] shall give
written notice of the sale in the manner prescribed by Rule 21a, Texas Rules of
Civil Procedure, as amended, . . . to each person who was a defendant to the
judgment or that person’s attorney.”7Id. (emphasis added).Italso addresses
advertising requirements for the tax sale. See id. But section 34.01 does not
contain any express provisions requiring notice for the tax sale to be provided to
any junior lienholders, like Oyervidez, who were not named parties in the
underlying suit.Accordingly, assuming that Oyervidez has established as a matter
of law that he did not receive notice of the tax sale, we conclude that this fact alone
7
Section 34.01 provides that the “failure to send the written notice of sale or a
defendant’s failure to receive that notice is insufficient by itself to invalidate: (1)
the sale of the property; or (2) the title conveyed by that sale.” Id. § 34.01 (c), (d)
(Vernon 2008).
15
does not provide a ground for him to make any claim against Kothari for
foreclosure of liens that he held against the properties.
In regard toOyervidez’s first point, which is not supported by direct affidavit
testimony, that he was not provided notice, actual or constructive, of the pending
tax foreclosure proceedings prior to either the entry of judgment in the tax suit or
the tax sale, we note that, related to this contention is Oyervidez’s complaint,
which is an undisputed fact, that he was not joined as a party to the tax suit. As
noted above, although Oyervidez did testify that he did not receive notice of the tax
sale, he did not provide any direct testimony that he did not receive or obtain actual
notice of the pending foreclosure proceedings. And he agreed that, at the time the
real estate lien note was executed, Gonzalez had informed him about the
outstanding taxes on the property in the amount of at least $10,000. These
outstanding taxes, as a matter of law, established the existence of liens on the
properties. See TEX. TAX CODE ANN.§ 32.01. Oyervidez also did not present any
summary-judgment evidence as to whether the taxing units had filed any notice in
the Fort Bend County real property records regarding the pending tax suit.8SeeTEX.
PROP. CODE ANN. § 12.007 (Vernon Supp. 2011)(“Lis Pendens”); § 13.004
(Vernon Supp. 2011)(“Effect of Recording Lis Pendens”).
8
Neither party filed a no-evidence summary-judgment motion. SeeTEX. R. CIV. P.
166a(i).
16
Faced with this uncertain and undeveloped record, we cannot say that, as a
matter of law, either party has established his or her entitlement to summary
judgment. This is because, as summarized below, Texas law suggests that
whatever relief, if any, may be afforded to Oyervidez in the circumstances
presented here, it is dependent upon facts that are either conflicting or were not
developed in the summary-judgment record.
Specifically, we note that although the Tax Code does not contain any
express provisions regarding what happens to a junior lien like that held by
Oyervidez when a superior tax lien is foreclosed upon, it does address the effect of
a tax sale on other types of junior liens. For example, the Tax Code expressly
addresses under what circumstances a lien held by a property owners’ association
for certain assessments and fees is extinguished by a tax sale. See TEX. TAX CODE
ANN. § 32.05. A tax sale of a property extinguishes the lien held by a property
owners’ association for all amounts that accrued before the date of sale if(1) the
holder of the lien is joined as a party to an action brought under Chapter 33 of the
Tax Code by virtue of a notice of the lien on record at the time the action is
commenced; or (2) the notice of the lien is not on record at the time the action is
commenced, regardless of whether the holder of the lien is made a party to the
17
action.9Id. (emphasis added).This section indicates that the extinguishing of a
junior property owners’ association lien is dependent upon factors such as when
the junior lienholder obtained and recorded the lien, whether notice was provided
to the junior lienholder, and whether the junior lienholder was joined in the tax
suit.
In regard to Overyvidez’s joinder complaint, the relevant Tax Code
provisions for real property tax suits do not contain express joinder requirements
that would have compelled the County to have joined Oyervidez in the tax suit.
The Tax Code requires only that a plaintiff initiating a suit to collect delinquent
taxes allege that the defendant owns the property. Id. § 34.43 (Vernon 2008). And
a “taxing unit filing suit to foreclose a tax lien on real property shall join other
taxing units that have claims for delinquent taxes against all or part of the same
property.”10See id. §§ 34.43, 34.44 (Vernon 2008).
9
Section 32.05 also provides that a property owners’ association is not a necessary
party to an action to enforce the collection of a delinquent tax against property
unless, at the time the action is commenced, notice of the lien in a liquidated
amount is evidenced by a sworn instrument duly executed by an authorized person
and recorded with the clerk of the county in which the property is located. TEX.
TAX CODE ANN.§ 32.05(d).
10
We note that the Tax Code provision related to tax sales for personal property
requires the collector, after a seizure of personal property, to “make a reasonable
inquiry to determine the identity and to ascertain the address of any person having
an interest in the property other than the person against whom the tax warrant is
issued,” and it further requires the peace officer to “deliver as soon as possible a
written notice stating the time and place of the sale and briefly describing the
property seized to the person against whom the warrant is issued and to any other
18
Nevertheless, Texas courts have stated, at least generally, that“a lienholder
must be joined in a delinquent tax suit in order to be bound by it.” Mem’l Park
Med. Ctr., Inc. v. River Bend Dev. Group, L.P., 264 S.W.3d 810, 814 (Tex. App.—
Eastland 2008, no pet.); see also Jordan v. Bustamante, 158 S.W.3d 29, 38 (Tex.
App.—Houston [14th Dist.] 2005, pet. denied) (stating that because State and IRS,
both of which had tax liens against subject property, were not joined in first tax
suit, their lien interests were not disposed and property remained encumbered by
those tax liens); Murphee Prop. Holdings, Ltd. v. Sunbelt Sav. Ass’n of Tex., 817
S.W.2d 850, 852 (Tex. App.—Houston [1st Dist.] 1991, no writ) (“An unbroken
line of decisions by Texas Courts, dealing with a variety of statutes, has uniformly
held that a lienholder must be joined as a party in a suit to enforce a tax lien, and
that any judgment rendered absent the joinder of such a lienholder is defective in
that it does not dispose of the rights of all of the parties interested in the
property.”); Loper v. Meshaw Lumber Co., 104 S.W.2d 597, 599–600
(Tex.Civ.App.—Eastland 1937, writ dism’d) (“A judgment in a tax suit is not void
because all parties who own an interest in the property are not made parties. Such
judgment foreclosing the tax lien is good as against the parties in interest joined in
the suit, and parties not joined are not bound by any such judgment.”); First State
person having an interest in the property whose name and address the collector
provided to the peace officer.” TEX. TAX. CODE ANN.§ 33.25 (Vernon 2008).
There does not appear to be any express companion statutory provision regarding
tax sales of real property.
19
Bank-Keene v. Metroplex Petroleum Inc., 155 F.3d 732, 737(5th Cir. 1998) (stating
that because FDIC, which held lien on property, was not made party to prior tax
foreclosure suit, “its lien interest was not disposed of” and purchasers took
property subject to FDIC’s lien).11
Moreover, we note that the Tax Code provides that,
The deed vests good and perfect title in the purchaser or the
purchaser’s assigns to the interest owned by the defendant in the
property subject to the foreclosure, including the defendant’s right to
the use and possession of the property, subject only to the defendant’s
right of redemption, the terms of a recorded restrictive covenant
running with the land that was recorded before January 1 of the year
in which the tax lien on the property arose, a recorded lien that arose
under that restrictive covenant that was not extinguished in the
judgment foreclosing the tax lien, and each valid easement of record
as of the date of the sale that was recorded before January 1 of the
year the tax lien arose. The deed may be impeached only for fraud.
TEX. TAX CODE ANN. § 34.01(n).
11
We note that the Tax Code provides that “[i]f, in a suit to collect a delinquent tax,
a court renders a judgment for foreclosure of a tax lien on behalf of a taxing unit,
any taxing unit that was a party to the judgment may file a petition to vacate the
judgment” for, among other things, “failure to join a person needed for just
adjudication under the Texas Rules of Civil Procedure, including a taxing unit
required to be joined under Section 33.44(a),” and “failure to serve a person
needed for just adjudication under the Texas Rules of Civil Procedure, including a
taxing unit required to be joined under Section 33.44(a).” TEX. TAX CODE ANN.§
33.56 (Vernon 2008).
20
Additionally, the Tax Code requires that a person challenging the validity of
a tax sale deposit certain funds into the registry of the court,12 bring any such
action within a limitations period, and further provides,
The purchaser may conclusively presume that the tax sale was valid
and shall have full title to the property free and clear of the right, title,
and interest of any person that arose before the tax sale, subject only
to recorded restrictive covenants and valid easements of record set
forth in Section 34.01(n) and subject to applicable rights of
redemption.
Id. § 34.08 (Vernon 2008).
Having considered the above statutes and cases,13 we conclude that the
summary-judgment record does not address critical fact issues concerning notice
and filing that are necessary for us determine whether Oyervidez, as a matter of
law, was entitled to foreclosure of his liens upon Kothari’s property. Accordingly,
we hold that the trial court erred in granting Oyervidez summary judgment.
We sustain Kothari’s first two issues.14
Conclusion
12
The County argues that the trial court’s summary judgment must be reversed
because there is no evidence that Oyervidez deposited the necessary funds into the
registry of the trial court. However, this issue was not raised in the trial court and,
because we reverse the summary judgment on other grounds, we need not address
this issue.
13
In light of our conclusion that the factual record is both conflicting and
undeveloped, we cannot directly address the applicability of sections 34.01 and
34.08 to the present case.
14
Having sustained Kothari’s first two issues, we need not address her third and
fourth issues.
21
We reverse the judgment of the trial court and remand for proceedings
consistent with this opinion.
Terry Jennings
Justice
Panel consists of Chief Justice Radack and Justices Jennings and Keyes.
22