Ireland Family Limited Partnership v. Brent Soloway and Anna Liu ( 2023 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-22-00192-CV
__________________
IRELAND FAMILY LIMITED PARTNERSHIP, Appellant
V.
BRENT SOLOWAY AND ANNA LIU, Appellees
__________________________________________________________________
On Appeal from the 457th District Court
Montgomery County, Texas
Trial Cause No. 22-03-03970-CV
__________________________________________________________________
MEMORANDUM OPINION
In this accelerated interlocutory appeal Appellant Ireland Family Limited
Partnership (“Ireland”) appeals the trial court’s order denying its motion to dismiss
claims filed by Appellees Brent Soloway and Anna Liu. Ireland filed its motion to
dismiss pursuant to the Texas Citizen’s Participation Act (“TCPA”). See Tex. Civ.
Prac. & Rem. Code Ann. §§ 27.001–27.011, 51.014(a)(12) (authorizing
interlocutory appeal for an order denying motion to dismiss filed under TCPA
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section 27.003). We reverse the trial court’s Order on Defendants’ TCPA Motion
and remand for proceedings consistent with this opinion.
BACKGROUND
The underlying dispute arises out of a purchase of real property between
Appellees and Ireland. After the parties entered into a Residential Condominium
Contract (RESALE) (“the Contract”) for the purchase of a condominium unit (“the
Property”), Ireland filed an Original Petition against Covenant Clearinghouse, LLC
(“Covenant”), alleging causes of action for suit to quiet title to the Property and
declaratory relief. Ireland alleged that in 2007, Blaketree, L.P. (“Blaketree”)
acquired a large property in Montgomery County (“the Montgomery County
Property”), and in 2009, Blaketree entered into a Declaration of Covenant (“the
Declaration”), which was recorded in Montgomery County, Texas. In 2011, a Notice
of Transfer Fee Obligation was filed pursuant to section 5.203 of the Texas Property
Code, which pertained to any property that was part of the Montgomery County
Property and stated that the payee under the Declaration was Covenant. See Tex.
Prop. Code Ann. § 5.203. The Notice of Transfer Fee alleged that all owners of
property that was once part of the Montgomery County Property owed transfer fees
and other charges every time a property is sold between August 20, 2009, and
December 31, 2110. The Notice of Transfer Fee was recorded in the Montgomery
County Recorder’s Office.
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After the Declaration was recorded, the Montgomery County Property was
subdivided into hundreds of smaller properties, which are affected by the Notice of
Transfer Fee. In 2015, Covenant filed a Notice of Private Transfer Fee for any
property that was part of the Montgomery County Property, and in 2021, Covenant
filed a Notice of Assessment, which stated that failing to satisfy assessments may
result in a senior claim against the property and violate lender closing instructions.
In its Original Petition against Covenant, Ireland alleged that it owns properties that
were part of the Montgomery County Property and that are affected by the
Declaration, Notice of Transfer Fee, Notice of Private Transfer Fee, and Notice of
Assessment, and one of those properties is the Property subject to the Contract
between Appellees and Ireland. Ireland alleged that the Declaration, Notice of
Transfer Fee, Notice of Private Transfer Fee, and Notice of Assessment are either
void, voidable, illegal, or unenforceable and that its equitable action was appropriate
to remove a cloud from the title of its properties. Ireland requested that the trial court
confirm that the Declaration, Notice of Transfer Fee, Notice of Private Transfer Fee,
and Notice of Assessment are either void, voidable, illegal, or unenforceable. On
March 24, 2022, Ireland filed a Notice of Lis Pendens of Real Property owned by
Ireland in Montgomery County, Texas, which included the Property subject to the
Contract between Appellees and Ireland, and the Notice stated that the purpose of
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the civil action was to, among other things, obtain a determination and ruling from
the court on the legality of the documents and their charges.
On March 30, 2022, Appellees filed an Original Petition against Ireland for
breach of contract and filing a fraudulent claim against real property, alleging that
Ireland breached the Contract by creating a fictitious dispute related to the payment
of transfer fees as a condition to issuance of title insurance to avoid its contractual
obligation to close on the sale by March 25, 2022, and by recording a Notice of Lis
Pendens. Appellees alleged that Old Republic National Title Insurance Company
(“Old Republic”) committed to issuing title insurance to Appellees upon receipt of
payment and compliance with the requirements in Schedule C, which did not include
the payment of transfer fees as a condition to issuance of title insurance. However,
due to Ireland’s actions, Old Republic issued a revised Commitment for title
insurance requiring the satisfactory disposition of Ireland’s lawsuit against Covenant
and the release of the Lis Pendens. Appellees sought specific performance under the
Contract, damages, and attorney’s fees. Appellees also requested that the trial court
expunge the Lis Pendens that Ireland recorded against the Property.
On April 8, 2022, Ireland filed a Motion to Dismiss Pursuant to the TCPA,
arguing the Appellees’ lawsuit is clearly intended to restrict its exercise of its right
to petition. Ireland argued that it filed a lawsuit against Covenant to challenge the
validity of the transfer-fee lien and the Lis Pendens against the Property because it
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believed there were title objections under the Contract, and Appellees filed suit when
Ireland declined to dismiss the lawsuit and Lis Pendens. Ireland argued that
Appellees’ suit, which alleged that it breached the Contract and filed a fraudulent
lien, was based on and in response to Ireland’s exercise of its right to petition and
that Appellees had the burden to establish a prima facie case as to each element of
their claims to avoid dismissal under the TCPA. Ireland also argued that since it
established the affirmative defense of privilege, the TCPA requires the trial court to
dismiss Appellees’ claims. Ireland sought sanctions and to recover its attorney’s
fees.
On April 11, 2022, Appellees filed a First Amended Petition, arguing that on
February 17, 2022, Old Republic had committed to issuing title insurance to
Appellees upon payment and compliance with the requirements in Schedule C, and
there were no requirements to pay transfer fees. Appellees alleged that Ireland
created a fictitious dispute regarding the payment of transfer fees by filing a lawsuit
against Covenant, which caused Old Republic to issue a revised Commitment for
Title Insurance which contained a Schedule C requirement that the lawsuit be
satisfactorily disposed, the Lis Pendens released, and any transfer fees paid.
Appellees alleged that they offered to pay transfer fees if assessed, but Ireland
refused their request to release the Property from the lawsuit and Lis Pendens so the
closing could proceed. Appellees also alleged that when they objected to the
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Schedule C requirements and requested that Ireland cure the defect, exception,
and/or encumbrance to title, Ireland stated it was not required to cure. Appellees
alleged that they were ready to close on the Property when Ireland signed and
recorded the Lis Pendens with intent to cause them financial injury, and Ireland
breached the Contract by refusing to close.
On April 22, 2022, Appellees filed a Second Amended Petition, alleging that
Bluejack National Condominium, the condominium regime the Property was located
in, and three other title companies had determined the transfer fee claim was void,
and those title companies were willing to underwrite a title policy for the Property
without taking exception to the transfer fee encumbrance. Appellees alleged there
was nothing preventing Ireland from fulfilling its contractual requirements to close
by March 25, 2022, furnish title insurance, and convey title to the Property with no
additional exceptions than those permitted in Paragraph 6 of the Contract. Appellees
alleged that they could have timely closed with another title company, but Ireland
refused to cooperate and filed a lawsuit and recorded a Notice of Lis Pendens.
Appellees stated that after Ireland learned a comparable property sold for a higher
price, on March 15, 2022, Ireland notified them and Riverway Title that it was unable
to move forward with the sale because there was a title matter that affected the
Property. Appellees alleged that when they reached out to another title company for
assistance, Ireland refused to cooperate.
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Appellees explained that Ireland filed suit even though Bluejack National
Condominium and other title companies had already determined the instruments to
be invalid and of no affect upon title to the Property. Appellees further explained
that at Ireland’s request, Old Republic issued a revised Commitment for Title
Insurance on March 23, 2022 (“March 23 Commitment”), which required Ireland to
dismiss its lawsuit without prejudice as a condition of issuing title insurance to
Appellees. Appellees alleged that after they complained that the condition to
issuance of title was improper since no lis pendens had been recorded, Ireland filed
a Notice of Lis Pendens against its own Property. Appellees explained that Old
Republic revised the Commitment for Title Insurance again on March 24, 2022
(“March 24 Commitment”), including under Schedule C’s requirements the
satisfactory disposition of Ireland’s lawsuit and release of the Lis Pendens, as well
as payment of any transfer fees. Appellees objected to those Schedule C
requirements and demanded that Ireland cure the defect, exception, and/or
encumbrance to title, but Ireland refused. Appellees alleged they signed all closing
documents and tendered payment to Riverway Title and that Ireland objected to the
Lis Pendens and settlement statement. According to Appellees, Ireland breached the
Contract by failing to: furnish title insurance as required by the Contract; execute
and deliver a general warranty deed conveying title to the Property which showed
no additional exceptions than those permitted in Contract; and close on the sale.
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Appellees filed a Response to Ireland’s Motion to Dismiss pursuant to the
TCPA, arguing that Ireland attempted to shield itself from liability using the TCPA
under the guise that it was pursuing its constitutional right to petition by filing the
lawsuit and Lis Pendens against its own Property. Appellees argued that this case is
about a seller breaching a contract to timely close and about that seller’s intentional
efforts to cloud title to its own Property that is subject to the Contract. Appellees
maintained that their evidence showed Ireland manipulated the TCPA, and despite
its rush to file the lawsuit prior to the closing date, Ireland had not requested issuance
of citation upon or effectuated service upon Covenant. Appellees evidence includes:
the Affidavit of Ann Liu; the Contract; February 17, 2022 Commitment for Title
Insurance; March 23 Commitment; March 24 Commitment; email from Black
National Condominium; email regarding no Lis Pendens; Objection; Ireland’s
lawsuit against Covenant with attached Notice of Assessment, 2015 Notice of
Private Transfer Fee, 2011 Notice of Transfer Fee, 2009 Declaration of Covenant;
Lis Pendens; Affidavit of Misty Gasiorowski concerning attorney’s fees; and emails
from Gasiorowski.
The parties’ Contract provided that Ireland shall furnish Appellees a title policy
issued by Riverway Title subject to nine specified exceptions, which are not subject
to objection. The exceptions listed under Paragraph 6A include the following:
(1) Restrictive covenants common to the platted subdivision in which the
Property is located.
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(2) The standard printed exception for standby fees, taxes, and
assessments.
(3) Liens created as part of the financing described in Paragraph 3.
(4) Terms and provisions of the Documents including the assessments and
platted easements.
(5) Reservations or exceptions otherwise permitted by this contract or as
may be approved by Buyer in writing.
(6) The standard printed exceptions as to marital rights.
(7) The standard printed exception as to waters, tidelands, beaches,
streams, and related matters.
(8) The standard printed exceptions as to discrepancies, conflicts, shortages
in area or boundary lines, encroachments or protrusions, or overlapping
improvements.
(9) The exception or exclusion regarding minerals approved by the Texas
Department of Insurance.
The Contract also required Ireland to notify the Appellees if the Property is subject
to a transfer fee obligation. At closing, the Contract provided that Ireland shall
execute and deliver a general warranty deed conveying title to the Property to
Appellees showing no additional exceptions to those permitted in Paragraph 6.
The Schedule C requirements in the March 24 Commitment:
Your Policy will not cover loss, costs, attorneys’ fees, and expenses
resulting from the following requirements that will appear as
Exceptions in Schedule B of the Policy, unless you dispose of these
matters to our satisfaction, before the date the Policy is issued:
...
11. Notice of Lis Pendens stated March 24, 2022, filed for record in
the office of the County Clerk of Montgomery County, Texas,
on March 24, 2022, under Clerk’s file No. 2022036995, in
connection with a pending action in the 284 th Judicial Court of
Montgomery County, Texas under Cause No. 22-03-03697,
styled IRELAND FAMILY LIMITED PARTNERSHIP vs.
COVENANT CLEARINHOUSE, LLC, involving the herein
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described property. We require satisfactory disposition of said
Suit and the Notice of Lis Pendens must be released of record.
12. We require the payment of Transfer fees, if any, as set out under
County Clerk’s File No. 2009076172 and 2021116010, and any
amendments thereto, recorded in the Official Public Records of
Montgomery County, Texas.
In her affidavit, Liu stated that she and her husband, Brent Soloway,
contracted to purchase the Property from Ireland, and the title work showed that in
2021, Covenant filed a Notice of Assessment, which stated the Property may be
subject to a transfer fee and that if unpaid it could result in a senior claim against the
Property and violate lending closing instructions. Liu stated that to her knowledge a
transfer had not been assessed against the Property, and there was no violation of
lending closing instructions. Liu explained that three title companies agreed to
underwrite title policies for the Property without taking exception to the transfer fee
encumbrance, and she was unaware of any legal impediments related to the transfer
fee that would have prevented Ireland from fulfilling its obligations under the
Contract. Liu further explained that after Ireland filed its lawsuit and Notice of Lis
Pendens, Old Republic revised its Commitments for Title requiring the satisfactory
disposition of the lawsuit and Lis Pendens and payment of any transfer fees as a
condition of issuance of title insurance.
Liu averred that Ireland refused to release the Property from the lawsuit and
Lis Pendens and proceed as owner of another property and allow her and Brent to
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pay any transfer fee if assessed. Liu stated that she and Brent were able to close on
the Property on March 25, 2022, and they signed all closing documents and tendered
payment, but Ireland objected to the Lis Pendens and settlement statement. Liu
explained that due to Ireland’s effort to get out of the Contract, she and Brent
suffered damages, including attorney’s fees and court costs.
Ireland filed a Reply in Support of its Motion to Dismiss Pursuant to the
TCPA, arguing that the TCPA applies to Appellees’ fraudulent lien claim because it
is based on its filing of the Lis Pendens which constitutes the right to petition. Ireland
argued that the initial threshold inquiry under the TCPA is whether it applies and
does not hinge on whether a party exercised its constitutional rights in an allegedly
rightful or wrongful manner. Ireland argued that its filing of the Lis Pendens
constituted an exercise of its right to petition regardless of Appellees’ allegations
that it did so with an improper motive. Ireland further argued that Appellees failed
to meet their burden to establish a prima facie case as to each element of their
fraudulent lien claim and that it established its affirmative defense of the judicial
proceedings privilege as a matter of law. Ireland disputed Appellees’ contention that
parties are only absolutely privileged to file lis pendens against properties they did
not own, and Ireland argued that no Texas Court had ever made that distinction.
Regarding Appellees’ amended breach of contract claim, Ireland argued that
it is based on its filing of the lawsuit and Lis Pendens, and Appellees failed to submit
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any evidence showing Ireland breached the Contract, which only allows certain title
exceptions under paragraph 6A, by filing its lawsuit and Lis Pendens to create non-
permissible title exceptions on the title commitment. Ireland argued that the Contract
provided that if the title commitment contains additional exceptions not permitted
under Paragraph 6A, Paragraph 6B specifies that: (1) Appellees must object to the
particular exception; (2) Ireland is permitted to cure the objection; (3) if Ireland
refuses to cure, Appellees can either waive the objection and proceed with closing
or terminate the Contract; and (4) if Appellees decline to do either, then they will
have been considered to have waived all objections and proceed to closing. Ireland
claimed it was not obligated to cure the objections, and since it refused to cure, the
Contract only allowed Appellees to terminate the Contract or waive the objections
and did not allow Appellees to sue for breach of contract. Ireland requested the trial
court grant its TCPA Motion to Dismiss and set a separate hearing to determine
attorney’s fees and sanctions.
After considering the parties’ arguments, the trial court denied Ireland’s
TCPA Motion to Dismiss, and this interlocutory appeal followed. See id. §§
27.008(b), 51.014(a)(12). Specifically in its Order on Defendants’ TCPA Motion,
the trial court found that Appellees’ claims were not based on or in response to
Ireland’s filing of the lawsuit and Lis Pendens. The trial court found that Appellees’
breach of contract claim was based on Ireland’s failure to take certain affirmative
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actions that the Contract obligated it to take including furnishing title insurance,
conveying the general warranty deed, and timely closing. The trial court found that
Appellees established a prima facie case for each element of their breach of contract
claim, noting that an email Ireland sent Appellees stating that it would not be able to
go forward with the planned sale showed that Ireland anticipatorily breached the
Contract, and the trial court also found that Ireland failed to establish an affirmative
defense to its breach.
Regarding Appellees’ fraudulent lien claim, the trial court noted that
Appellees admitted their claim was based on Ireland’s recording of the Lis Pendens,
and the trial court found that Appellees established a prima facie case for each
essential element of that claim. The trial court noted that Ireland could have avoided
the title policy problem by obtaining the policy from one of the title companies that
had recognized that Covenant’s claim was invalid, and Ireland could have litigated
its claim against Covenant without affecting the sale. The trial court was not
persuaded that there is a privilege to file a fraudulent lis pendens.
ANALYSIS
In issue one, Ireland argues the trial court erred by denying its TCPA Motion
to Dismiss because its filing of the Transfer-Fee lawsuit and the Lis Pendens was an
exercise of its right to petition. Ireland argues that Appellees’ Original Petition was
clearly based on or in response to its right to petition, and Appellees did not moot its
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TCPA Motion to Dismiss by filing their amended petitions because they are still
based on its filing of the lawsuit and Lis Pendens. Ireland argues that: (1) it met its
burden to demonstrate that Appellees’ breach of contract and fraudulent lien claims
were based on or in response to its filing of a lawsuit and Lis Pendens, which each
constitute an exercise of its right to petition; (2) Appellees failed to meet their burden
to establish a prima facie case as to each element of their claims; and (3) it met its
burden to establish its affirmative defense of the judicial proceedings privilege as a
matter of law. In issue two, Ireland argues this Court should remand the case back
to the trial court and instruct the trial court to award it attorney’s fees, costs, other
expenses, and sanctions in accordance with the TCPA.
We review the trial court’s denial of a TCPA motion to dismiss de novo. See
Walker v. Hartman, 516 S.W.3d 71, 79–80 (Tex. App.—Beaumont 2017, pet.
denied); see also Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 897
(Tex. 2018); Smith v. Crestview NuV, LLC, 565 S.W.3d 793, 796 (Tex. App.—Fort
Worth 2018, pet. denied). “In conducting this review, we consider, in the light most
favorable to the non-movant, the pleadings and any supporting and opposing
affidavits stating the facts on which the claim or defense is based.” Dyer v. Medoc
Health Servs., LLC, 573 S.W.3d 418, 424 (Tex. App.—Dallas 2019, pet. denied)
(citations omitted); see also Tex. Civ. Prac. & Rem. Code Ann. § 27.006(a).
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The TCPA “protects citizens who petition or speak on matters of public
concern from retaliatory lawsuits that seek to intimidate or silence them.” In re
Lipsky, 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding) (citing Tex. Civ. Prac.
& Rem. Code Ann. §§ 27.001–.011). The TCPA is a statutory mechanism that
permits a party to move for dismissal of a “legal action” that is “based on or is in
response to a party’s exercise of the right of free speech, right to petition, or right of
association[.]” See Tex. Civ. Prac. & Rem. Code Ann. § 27.003(a). Its purpose “is
to encourage and safeguard the constitutional rights of persons to petition, speak
freely, associate freely, and otherwise participate in government to the maximum
extent permitted by law and, at the same time, protect the rights of a person to file
meritorious lawsuits for demonstrable injury.” Id. § 27.002. To effectuate the
statute’s purpose, “the Legislature has provided a [multi-step] procedure to expedite
the dismissal of claims brought to intimidate or to silence a defendant’s exercise of
these First Amendment rights.” ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d
895, 898 (Tex. 2017) (citations omitted); see Tex. Civ. Prac. & Rem. Code Ann. §§
27.003, 27.005. The multi-step procedure provides a burden-shifting framework. See
In re Lipsky, 460 S.W.3d at 586–87.
Under the first step, the movant of the TCPA motion to dismiss has the burden
to show by a preponderance of the evidence that the legal action is based on or is in
response to the exercise of (1) the right of free speech, (2) the right to petition, or (3)
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the right of association.1 Tex. Civ. Prac. & Rem. Code Ann. § 27.005(b); see also
Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, 591 S.W.3d 127, 132 (Tex.
2019). The TCPA directs that it is to be “construed liberally to effectuate its purpose
and intent fully.” Tex. Civ. Prac. & Rem. Code Ann. § 27.011(b).
The statute defines the “[e]xercise of the right to petition” as, among other
things, “a communication in or pertaining to . . . a judicial proceeding[.]” Id. §
27.001(4)(A)(i). Under the TCPA, a “‘[c]ommunication’ includes the making or
submitting of a statement or document in any form or medium, including oral, visual,
written, audiovisual, or electronic.” Id. § 27.001(1). As recognized by the Texas
Supreme Court, the plain language of this definition extends the application of the
TCPA to “[a]lmost every imaginable form of communication, in any medium[.]”
Adams, 547 S.W.3d at 894. Assuming the movant meets his burden under step one
to show by a preponderance of the evidence that the TCPA applies, then under step
two the burden shifts to the nonmovant to establish by “clear and specific evidence
a prima facie case for each essential element of the claim in question.” Tex. Civ.
Prac. & Rem. Code Ann. § 27.005(c). A “prima facie case” refers to “evidence
sufficient as a matter of law to establish a given fact if it is not rebutted or
1It is undisputed that Appellant’s lawsuit against Appellees is a “legal action,”
a term that the TCPA defines to include “a lawsuit, cause of action, petition . . . or
any other judicial proceeding or filing that requests legal, declaratory, or equitable
relief.” See Tex. Civ. Prac. & Rem. Code Ann. § 27.001(6).
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contradicted.” In re Lipsky, 460 S.W.3d at 590 (citation omitted). It is the
“‘minimum quantum of evidence necessary to support a rational inference that the
allegation of fact is true.’” Id. (quoting In re E.I. DuPont de Nemours & Co., 136
S.W.3d 218, 223 (Tex. 2004)). Clear and specific evidence means that the “plaintiff
must provide enough detail to show the factual basis for its claim.” Id. at 591. Even
if plaintiff satisfies their burden in the second step, the court may still dismiss the
action if the defendant “establishes an affirmative defense or other grounds on which
the moving party is entitled to judgment as a matter of law.” Tex. Civ. Prac. & Rem.
Code Ann. § 27.005(d).
Applicability of the TCPA to Appellees’ claims
Appellees did not dispute that their lawsuit is a “legal action” or that Ireland’s
filing of the lawsuit and Lis Pendens constitutes an exercise of its “right to petition.”
Instead, Appellees complained that Ireland failed to show their legal action is “based
on” or “in response to” Ireland’s right to petition because it is based on Ireland’s
breach of contract and failure to furnish title insurance and convey title.
Appellees argued that the “right to petition” does not include Ireland’s lawsuit to
quiet title regarding a declaration, assessment, or other restrictive covenant that did
not affect or impair title to the Property, because there was not a cloud on the title
until Ireland filed the lawsuit and Lis Pendens. Appellees further argued that their
legal action was based on or in response to the triggering of their own contractual
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rights and remedies upon Ireland’s default under the Contract by intentionally
creating a “fictitious, non-waivable ‘Schedule C’ encumbrance” to escape its
contractual obligations. Appellees claimed they were seeking specific performance
and damages and were not seeking to prohibit Ireland’s right to petition or otherwise
dispute the transfer fee covenant. Appellees argued that Ireland could maintain its
lawsuit against Covenant based on its standing as owner of another property that was
subject to the transfer fee.
To determine the TCPA’s applicability, the trial court shall consider the
pleadings, evidence a court could consider under Rule 166a of the Texas Rules of
Civil Procedure and supporting and opposing affidavits. Id. § 27.006(a); Hersh v.
Tatum, 526 S.W.3d 462, 467 (Tex. 2017); see also Tex. R. Civ. P. 166a. When the
plaintiff’s pleadings clearly show that the action is covered by the TCPA, the
defendant need show no more. Hersh, 526 S.W.3d at 467. “When a legal action is in
response to both expression protected by the TCPA and other unprotected activity,
the legal action is subject to dismissal only to the extent that it is in response to the
protected conduct, as opposed to be subject to dismissal in its entirety.” Walker, 516
S.W.3d at 81 (citation omitted); see also Gaskamp v. WSP USA, Inc., 596 S.W.3d
459, 469 (Tex. App.—Houston [1st Dist.] 2020, pet. dism’d) (holding that TCPA
motion to dismiss was not rendered moot by filing of amended petition).
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Appellees’ Original Petition alleged that to avoid its contractual obligation to
close on the sale, Ireland breached the Contract by filing a lawsuit against Covenant
to invalidate the Declaration of Covenant and Notice of Assessment and by
recording a Lis Pendens. Appellees also alleged that Ireland filed a fraudulent claim
against real property by recording the Lis Pendens with knowledge the document
was a fraudulent claim and intending for the document to evidence a valid claim
against real property and cause them financial injury. In their Second Amended
Petition, the live pleading, Appellees allege that Ireland breached the Contract by
failing to furnish title insurance as required by the Contract; execute and deliver a
general warranty deed conveying title to the Property which showed no additional
exceptions than those permitted in the Contract; and close on the sale. Appellees
allege that Ireland filed the lawsuit and recorded the Lis Pendens with intent to cause
them financial injury and based on those actions and the terms of the Contract,
Ireland breached the Contract. Regarding their fraudulent lien claim, Appellees
allege that Ireland presented the lawsuit and Lis Pendens to the title company with
knowledge that the document or record is a fraudulent lien or claim against real
property and with intent that the document or record be treated as a valid lien.
The allegations in Appellees’ live pleading show their breach of contract and
fraudulent lien claims were based on or in response to Ireland’s filing of its lawsuit
and Lis Pendens. See Tex. Civ. Prac. & Rem. Code Ann. § 27.001(4)(A)(i) (broadly
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defining the “[e]xercise of the right to petition” to include “a communication in or
pertaining to . . . a judicial proceeding”); River Plantation Cmty. Improvement Ass’n
v. River Plantation Props., LLC, No. 09-17-00451-CV, 2018 WL 4120252, at *4
(Tex. App.—Beaumont 2018, no pet.) (mem. op) (citations omitted). In its Order on
Defendants’ TCPA Motion, the trial court noted that Appellees admitted their
fraudulent lien claim was based on Ireland’s recording of the Lis Pendens. The trial
court concluded that Appellees’ breach of contract claim was not based on or in
response to Ireland’s right to petition because they did not allege that Ireland
breached the contract by filing the lawsuit and Lis Pendens but by failing to take
actions required by the Contract. The Appellees’ live pleadings do not support the
trial court’s conclusion. We conclude that Ireland met its burden to show Appellees’
breach of contract and fraudulent lien claims were based on or in response to its
filing of a lawsuit and Lis Pendens, which each constitute an exercise of its right to
petition.
Prima Facie Case
Having concluded that Ireland made the initial showing required under the
TCPA, the burden shifted to Appellees to establish by clear and specific evidence a
prima facie case for each essential element of their claims. See Tex. Civ. Prac. &
Rem. Code Ann. § 27.005(c); see also In re Lipsky, 460 S.W.3d at 590–91 (requiring
a plaintiff to “provide enough detail to show the factual basis for its claim”). “Prima
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facie evidence” is that “minimum quantum of evidence necessary to support a
rational inference that the allegation of fact is true.” In re Lipsky, 460 S.W.3d at 590
(internal quotations omitted). A prima facie case may be established through
circumstantial evidence. See id. at 591. However, conclusory statements are not
probative evidence and will not suffice to establish a prima facie case. Better Bus.
Bureau of Metro. Hous., Inc. v. John Moore Servs., Inc., 441 S.W.3d 345, 355 (Tex.
App.—Houston [1st Dist.] 2013, pet. denied); see also In re Lipsky, 460 S.W.3d at
592 (explaining that “[b]are, baseless opinions” are not “a sufficient substitute to the
clear and specific evidence required to establish a prima facie case under the
TCPA”).
Breach of Contract Claim
To prevail on a breach of contract claim, a party must show: (1) a valid
contract existed between the parties; (2) the plaintiff performed or offered to perform
the contract; (3) the defendant breached the agreement; and (4) the plaintiff was
damaged by the breach. S & S Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d
843, 847 (Tex. 2018); see also Sullivan v. Smith, 110 S.W.3d 545, 546 (Tex. App.—
Beaumont 2003, no pet.). In their Original Petition, Appellees alleged that Ireland
breached the Contract by filing a lawsuit and recording a Lis Pendens, and in their
Response to Ireland’s TCPA Motion to Dismiss, Appellees argued that Ireland filed
a lawsuit and Lis Pendens to create a non-waivable Schedule C encumbrance and
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defaulted by creating that Schedule C encumbrance notwithstanding its contractual
obligations. In their Second Amended Petition, Appellees allege Ireland breached
the Contract by failing to furnish title insurance as required by the Contract, execute
and deliver a general warranty deed conveying title to the Property which showed
no additional exceptions than those permitted in Paragraph 6 of the Contract as
required by Paragraph 9, and timely close on the sale. During the hearing on
Ireland’s TCPA Motion to dismiss, Appellees argued that their amended petition
clarified that their breach of contract claim was based on the presentation of the
lawsuit and Lis Pendens to the title company to get out of the Contract.
In its Order on Defendants’ TCPA Motion, the trial court noted that neither
party directed the trial court to any provision in the Contract that obligates Ireland
to refrain from filing a lawsuit or Lis Pendens. The trial court further noted that an
email Ireland sent to one of the Appellees stating that it was not able to go forward
with the sale showed Ireland anticipatorily breached the Contract. The evidence
shows the email from John Quinlan of Ireland to Brent stating that a title matter had
emerged related to the Property was part of a string of emails that was attached to
Appellees’ Response to Ireland’s TCPA Motion to Dismiss, and during the hearing
on Ireland’s TCPA Motion to Dismiss, Appellees’ counsel agreed that hearsay
testimony was not admissible because the trial court could only consider evidence
that would be admissible under Rule 166a.
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In determining whether Appellees proved a prima facie case for each essential
element of their claims, our focus is on the element of breach and whether Appellees
presented clear and specific evidence that Ireland breached the contract. See Tex.
Civ. Prac. & Rem. Code Ann. § 27.005(c); In re Lipsky, 460 S.W.3d at 590–91. First,
we note that any conclusory statements in Liu’s affidavit are not probative evidence
and will not suffice to establish a prima facie case. See Better Bus. Bureau of Metro.
Hous., Inc., 441 S.W.3d at 355; see also In re Lipsky, 460 S.W.3d at 592. Secondly,
Liu’s statement in her affidavit that other title companies were willing to underwrite
a policy without taking exception to the transfer fee is not evidence that Ireland
breached the Contract, because the Contract specifically provides that Ireland shall
furnish Appellees a title policy issued by Riverway Title insuring loss under the
provision of the title policy subject to the promulgated exclusions and nine specified
exceptions, which are not subject to objection or waiver.
The Contract states that Buyer “may object in writing to defects, exceptions,
or encumbrances to title disclosed in the Commitment other than items listed in
6A(1) through (9)[,]” and if Seller fails to cure objections, Buyer may terminate the
Contract or waive the objections. The Contract provides that if the Commitment is
revised, Buyer may object to any new exceptions. The Contract further provides that
closing will be on or before March 25, 2022, or within seven days after objections
to matters disclosed in the Commitment have been cured, whichever date is later.
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The Contract did not forbid new title exceptions; instead, it gave Appellees the right
to object to exceptions that appeared on the Commitment other than those listed in
6A(1) through (9), and if Ireland failed to cure, Appellees could terminate the
Contract or waive the objections. The Contract states that the failure to timely object
constitutes a waiver of the right to object, except for the requirements in Schedule
C.
The Schedule C requirements in the March 24 Commitment included the
Notice of Lis Pendens, Ireland’s lawsuit against Covenant, and the payment of any
transfer fees. The March 24 Commitment specifically stated that the policy will not
cover loss, cost, or attorney’s fees resulting from the Lis Pendens or lawsuit, unless
the Lis Pendens is released and the lawsuit is satisfactorily disposed of before the
date the Policy is issued. The March 24 Commitment of Title states the following:
Before issuing a Commitment for Title Insurance . . . , the Title
Insurance Company (the Company) determines whether the title is
insurable. This determination has already been made. Part of that
determination involves the Company’s decision to insure the title
except for certain risks that will not be covered by the Policy. Some of
these risks are listed in Schedule B of the attached Commitment as
Exceptions. Other risks are stated in the Policy as Exclusions. These
risks will not be covered by the Policy. . . .
Another part of the determination involves whether the promise to
insure is conditioned upon certain requirements being met. Schedule C
of the Commitment lists these requirements that must be satisfied or the
Company will refuse to cover them. You may want to discuss any
matters shown in Schedules B and C of the Commitment with an
attorney. These matters will affect your title and your use of the land.
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When your Policy is issued, the coverage will be limited by the Policy’s
Exceptions, Exclusions and Conditions, defined below.
EXCEPTIONS are title risks that a Policy generally covers but
does not cover in a particular instance. Exceptions are shown on
Schedule B or discussed in Schedule C of the Commitment. They can
also be added if you do not comply with the Conditions section of the
Commitment. When the Policy is issued, all Exceptions will be on
Schedule B of the Policy.
EXCLUSIONS are title risks that a Policy generally does not
cover. Exclusions are contained in the Policy but not shown or
discussed in the Commitment.
...
In her affidavit, Liu averred that after the title company issued the March 24
Commitment, which included the Schedule C requirement for the “satisfactory
disposition” of the lawsuit and Lis Pendens, she and Brent “objected and demanded
that Ireland comply with the requirements of Schedule C[,]” but Ireland refused and
objected to the Lis Pendens and settlement statement. Liu further averred that she
and Brent requested that Ireland release the Property from the lawsuit and Lis
Pendens so that the Schedule C items would be cleared, and the sale of the Property
could proceed, and Ireland refused. Liu stated that she and Brent signed all closing
documents and tendered payment to the title company, but she understood that
Ireland signed some closing documents and objected to the Lis Pendens and
settlement statement.
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The Contract did not require Ireland to cure Appellees’ objection and request
to satisfactorily dispose of the lawsuit and Lis Pendens. Based on the language of
the Contract, after Ireland refused to cure, Appellees could terminate the contract or
waive their objections and accept the March 24 Commitment which determined that
the title was insurable but excluded coverage for any loss, cost, or attorney’s fees
resulting from the Lis Pendens or lawsuit. The evidence shows Ireland provided
Appellees a policy of title insurance issued by Riverway Title that complied with the
Contract. Appellees presented no evidence showing they had waived the Schedule
C requirements regarding the lawsuit and Lis Pendens and were willing to accept the
title policy Ireland provided, which would have allowed Ireland to deliver a general
warranty deed conveying title and close on the Property. We conclude Appellees
presented no evidence of breach. Accordingly, Appellees failed to meet their burden
to adduce clear and specific evidence to support each element of their breach of
contract claim. See Tex. Civ. Prac. & Rem. Code Ann. § 27.005(c); see also S & S
Emergency, 564 S.W.3d at 847; Sullivan, 110 S.W.3d at 546.
Fraudulent Lien Claim
Appellees filed a fraudulent lien claim against Ireland under section 12.002 of
the Texas Civil Practice and Remedies Code for filing an invalid notice of Lis
Pendens. See id. § 12.002. Section 12.002 states:
(a) A person may not make, present, or use a document or other record
with:
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(1) knowledge that the document or other record is a fraudulent court
record or a fraudulent lien or claim against real or personal property
or an interest in real or personal property;
(2) intent that the document or other record be given the same legal
effect as a court record or document of a court created by or
established under the constitution or laws of this state or the United
States or another entity . . . , evidencing a valid lien or claim against
real or personal property or an interest in real or personal property;
and
(3) intent to cause another person to suffer:
(A) physical injury;
(B) financial injury; or
(C) mental anguish or emotional distress.
Id. § 12.002(a). To prevail on their fraudulent lien claim, Appellees must show that
Ireland made, presented, or used a document or other record with knowledge that
the document or other record is a fraudulent court record or fraudulent lien or claim
against real property. See id.
Appellees’ Second Amended Petition alleges that Ireland violated section
12.002 by presenting a copy of the lawsuit and Lis Pendens to the title company with
knowledge that the document or record is a fraudulent court record or a fraudulent
lien or claim against the Property. Appellees further alleged that Ireland intended for
the document or record to be given the same legal effect as a valid lien or claim
against the Property and to cause Appellees financial injury. Appellees asserted in
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their live pleadings and their Response to Ireland’s Motion to Dismiss that Ireland
presented a copy of the lawsuit and Lis Pendens to the title company with knowledge
that the documents or records were a fraudulent lien or claim against real property,
but there is no evidence supporting their assertions, and conclusory statements will
not suffice to establish a prima facie case. See Better Bus. Bureau of Metro. Hous.,
Inc., 441 S.W.3d at 355; see also In re Lipsky, 460 S.W.3d at 592.
The evidence shows that the Lis Pendens provided notice of the pendency of
Ireland’s lawsuit against Covenant, which sought a declaratory judgment confirming
that the Declaration, Notice of Transfer Fee, Notice of Private Transfer Fee, and
Notice of Assessment are void, voidable, illegal or unenforceable as to Ireland’s
properties that were once part of the Montgomery County Property.
There is no evidence showing that Ireland or its lawyers believed that lawsuit
and Lis Pendens were fraudulent. In her affidavit Liu explained that the title work
uncovered that Covenant had filed a Notice of Assessment in 2021 claiming that the
Property may be subject to a transfer fee upon the sale. Since Appellees failed to
adduce any evidence that showed Ireland knew that the lawsuit and Lis Pendens
were fraudulent, we conclude Appellees failed to adduce clear and specific evidence
to support each element of their fraudulent lien claim. See Tex. Civ. Prac. & Rem.
Code Ann. §§ 12.002(a)(1), 27.005(c); James v. Calkins, 446 S.W.3d 135, 150 (Tex.
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App.—Houston [1st Dist.] 2014, pet. denied), abrogated on other grounds by
Montelongo v. Abrea, 622 S.W.3d 209 (Tex. 2021).
Conclusion
Ireland established that it was entitled to a ruling dismissing Appellees’ breach
of contract and fraudulent lien claims. See Tex. Civ. Prac. & Rem. Code Ann. §
27.005. We sustain issues one and two. We reverse the trial court’s Order on
Defendants’ TCPA Motion, remand the case to the trial court so that it can enter a
judgment dismissing Appellees’ breach of contract and fraudulent lien claims, and
instruct the trial court to award Ireland reasonable attorney’s fees, costs, and other
expenses incurred as allowed under the TCPA. See id. §§ 27.005, 27.009(a); River
Plantation Cmty. Improvement Ass’n, 2018 WL 4120252 at *7.
REVERSED AND REMANDED.
_________________________
W. SCOTT GOLEMON
Chief Justice
Submitted on February 23, 2023
Opinion Delivered March 16, 2023
Before Golemon, C.J., Horton and Wright, JJ.
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