Kenneth D. Eichner, P.C. v. Ben Dominguez, II, PARC Condominium Association, and Association Management Incorporated ( 2020 )

Dismissed and Memorandum Opinion filed March 3, 2020.
In The
Fourteenth Court of Appeals
NO. 14-18-00399-CV
KENNETH D. EICHNER, P.C., Appellant
V.
BEN DOMINGUEZ, II, PARC CONDOMINIUM ASSOCIATION, AND
ASSOCIATION MANAGEMENT INCORPORATED, Appellees
On Appeal from the 125th District Court
Harris County, Texas
Trial Court Cause No. 2013-21379
MEMORANDUM OPINION
This dispute began when appellee Ben Dominguez, a condominium owner,
sued appellees Parc Condominium Association, the condominium homeowners’
association, and Association Management Incorporated, the condominium property
manager (collectively, the “Condominium Association”). In a previous lawsuit, the
Condominium Association had foreclosed on a lien against the condominium due to
Dominguez’s nonpayment of fees. Dominguez sued the homeowners’ association
and the management company for wrongful foreclosure. Appellant Kenneth D.
Eichner, P.C., Dominguez’s accounting firm, intervened in the suit, asserting lien
rights acquired under a promissory note for services rendered to Dominguez and
secured by Dominguez’s condominium. Eichner’s intervention asserted a contract
claim against Dominguez for Dominguez’s default on the note and asserted rights
against all parties due to Eichner’s superior lien.
On February 5, 2015, the trial court signed a summary judgment in which the
court found that Eichner’s lien was inferior to the Condominium Association’s lien
and that Eichner’s lien was extinguished by the previous foreclosure. On Eichner’s
appeal of that decision, this court held that Eichner’s lien was superior to the
Condominium Association’s lien. Kenneth D. Eichner, P.C. v. Dominguez, No. 14-
16-00192-CV, 2017 WL 2561334, at *9 (Tex. App.—Houston [14th Dist.] June 13,
2017, no pet.) (mem. op.). We sustained Eichner’s issue with regard to the
superiority of his lien and remanded the case to the trial court for further proceedings.
Id.
On remand, Dominguez and the Condominium Association entered into an
agreement pursuant to Texas Rule of Civil Procedure 11 in which Dominguez agreed
to pay the homeowners’ association fees and the Condominium Association agreed
to return the condominium to Dominguez. On February 16, 2018, the trial court
signed a final judgment based on the parties’ agreement. On the same day, before
rendering final judgment, the trial court granted the Condominium Association’s
motion to strike Eichner’s intervention. On March 16, 2018, Eichner filed a timely
motion for new trial challenging the striking of his intervention and the final
judgment. Eichner filed a notice of appeal on May 14, 2018.
Eichner appeals the trial court’s order striking his intervention and the court’s
judgment based on appellees’ Rule 11 agreement. In six issues Eichner argues the
trial court erred in striking his intervention and in rendering judgment based on the
Rule 11 agreement between Dominguez and the Condominium Association.
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Concluding we lack jurisdiction over Eichner’s appeal, we dismiss the appeal.
JURISDICTION
Before we address the issues Eichner raises in its appeal, we must first
consider our jurisdiction. See Nunu v. Risk, 567 S.W.3d 462, 465 (Tex. App.—
Houston [14th Dist.] 2019, pet. denied) (“An appellate court must determine de novo
whether it has jurisdiction over an appeal, even if it must do so sua sponte.”). We
begin the analysis with the timeliness of Eichner’s appeal. It is undisputed that the
trial court signed a final judgment in this cause on February 16, 2018. It is further
undisputed that Eichner filed its notice of appeal on May 14, 2018, more than thirty
days after the trial court’s final judgment.
The trial court granted the Condominium Association’s motion to strike
Eichner’s intervention before the trial court signed the final judgment. The trial
court’s order striking Eichner’s intervention was not appealable before the rendition
of final judgment. See Barrett v. Barrett, No. 14-03-00373-CV, 2004 WL 1925972,
at *1 (Tex. App.—Houston [14th Dist.] Aug. 31, 2004, no pet.) (mem. op.). Under
the general rule, Eichner’s notice of appeal was due 30 days after the signing of the
final judgment. See Tex. R. App. P. 26.1 (“The notice of appeal must be filed within
30 days after the judgment is signed, except as follows[.]”).
Texas Rule of Appellate Procedure 26.1 extends the time to appeal to 90 days
if “any party” timely files a motion for new trial, a motion to modify the judgment,
a motion to reinstate, or a request for findings of fact or conclusions of law. See Tex.
R. App. P. 26.1. Although Eichner filed a timely motion for new trial, because it was
not a party to the judgment, its motion for new trial was ineffective to extend the
appellate timetable because it was not a party below. See Lapiner v. Maimon, 429
S.W.3d 816, 820–21 (Tex. App.—Houston [14th Dist.] 2014, pet. denied).
Generally, named parties may appeal the trial court’s judgment. City of San
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Benito v. Rio Grande Valley Gas Co., 109 S.W.3d 750, 754 (Tex. 2003); see Tex. R.
App. P. 25.1 (“The filing of a notice of appeal by any party invokes the appellate
court’s jurisdiction over all parties to the trial court’s judgment or order appealed
from.”). Eichner is a nonparty. Eichner filed a petition in intervention in the action.
The Condominium Association moved to strike the intervention, and the trial court
granted the motion and struck Eichner’s intervention. Eichner’s intervention was
struck before the trial court signed the final judgment.
Where, as here, a nonparty has the right to appeal a decision of the trial court
granting a motion to strike, such nonparty nonetheless cannot extend the appellate
timetable by assailing the final judgment with a motion for new trial. See Lapiner,
429 S.W.3d at 821; see also Cent. Mut. Ins. Co. v. Dunker, 799 S.W.2d 334, 336
(Tex. App.—Houston [14th Dist.] 1990, writ denied) (holding that, because
appellant did not become a party by intervention before judgment was rendered,
appellant may not extend the time to appeal by filing a motion for new trial); State
& Cnty. Mut. Fire Ins. Co. v. Kelly, 915 S.W.2d 224, 227 (Tex. App.—Austin 1996,
no pet.) (holding that a nonparty’s motion for new trial and petition for intervention
filed after the trial court signed a final judgment did not extend the court’s plenary
jurisdiction).
On December 9, 2019, notification was transmitted to all parties of the court’s
intention to dismiss the appeal for want of jurisdiction. See Tex. R. App. P. 42.3(a).
On December 18, 2019, Eichner filed a response in which it alleges that under the
doctrine of virtual representation Eichner is deemed to be a party. Specifically,
Eichner argues the Security Agreement between Eichner and Dominguez provided
that Eichner may act as attorney-in-fact for Dominguez; therefore, because
Dominguez was a party to the judgment Eichner argues it is virtually represented
through Dominguez. Although we have found no authority that the “deemed party”
analysis would apply to Texas Rule of Appellate Procedure 26.1 for purposes of
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extending the appellate timetable, we address Eichner’s argument and find Eichner
does not qualify as a deemed party under the doctrine.
I. Eichner is not a “deemed party” under the virtual representation
doctrine.
Texas recognizes that one may be a “deemed party” under the doctrine of
virtual representation. City of San Benito, 109 S.W.3d at 754–55. To be a deemed
party, (1) the appellant must be bound by the judgment; (2) its privity of estate, title,
or interest must appear from the record; and (3) there must be an identity of interest
between the appellant and a party to the judgment. Lapiner, 429 S.W.3d at 755
(citing Motor Vehicle Bd. of the Tex. Dep’t of Transp. v. El Paso Indep. Auto.
Dealers Ass’n, 1 S.W.3d 108, 110 (Tex.1999)). The Texas Supreme Court has noted
that, in determining whether an appellant should be considered a “party” for
purposes of appeal, “the most important consideration is whether the appellant is
bound by the judgment.” City of San Benito, 109 S.W.3d at 754–55.
Eichner is not bound by the judgment; Dominguez and the Condominium
Association are bound. The judgment ordered the Condominium Association to
prepare all documents necessary to deliver title of the property to Dominguez. The
judgment further ordered Dominguez to pay $36,000 in satisfaction of the Rule 11
Agreement between the parties and $6,267 in satisfaction of the special assessment.
The judgment did not address any claims Eichner asserted in its intervention.
Nor has Eichner established identity of interest. In an attempt to do so Eichner
argues that as Dominguez’s attorney-in-fact, it could have brought all or part of the
same action that Dominguez brought against the Condominium Association.
However, Eichner did not allege a cause of action that would satisfy the privity
element of the virtual representation doctrine. See BJVSD Bird Family P’ship, L.P.
v. Star Elec., L.L.C., 413 S.W.3d 780, 785–86 (Tex. App.—Houston [1st Dist.] 2013,
no pet.) (holding that the appellant’s interest as a stakeholder in an entity did not
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satisfy the privity element of the virtual representation doctrine). The injury Eichner
alleged was to Eichner, not Dominguez. Dominguez sued the Condominium
Association for wrongful foreclosure. Eichner, in its plea in intervention, did not
plead a wrongful foreclosure action. Eichner did not attempt to intervene as
Dominguez’s attorney-in-fact but attempted to intervene on its own behalf.
In Eichner’s second-amended petition in intervention, its live pleading,
Eichner sought to assert its lien against Dominguez. Eichner did not seek to assert a
wrongful foreclosure on behalf of Dominguez. This court has found the elements of
a wrongful foreclosure claim are (1) a defect in the foreclosure sale proceedings; (2)
a grossly inadequate selling price; and (3) a causal connection between the defect
and the grossly inadequate selling price. Collins v. Bayview Loan Servicing, LLC,
416 S.W.3d 682, 687 n. 7 (Tex. App.—Houston [14th Dist.] 2013, no pet.). While
the necessity of a “grossly inadequate selling price” has been questioned, courts
agree that an irregularity in the foreclosure must be plead and damages must be either
the difference between the value of the property and the indebtedness or the setting
aside of the foreclosure sale. See Charter Nat. Bank—Houston v. Stevens, 781
S.W.2d 368, 371 (Tex. App.—Houston [14th Dist.] 1989, writ denied) (“Texas law
conforms with the general rule found in other jurisdictions that mere irregularities in
the conduct of the foreclosure sale will not vitiate the sale unless the irregularities
result in injury to the mortgagor.”).
Eichner alleged the Condominium Association conducted the foreclosure sale
without notice to Eichner as the superior lienholder. While Eichner was not entitled
to notice as the superior lienholder,1 even if it were entitled to notice, that is one
element of a wrongful foreclosure claim. Eichner did not allege an inadequate selling
price or a causal connection between the defect and the inadequate selling price. As
1
See Tex. Prop. Code Ann. § 51.002(b) (lienholder must send written notice only to the
property owner).
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damages Eichner sought foreclosure on the property and assertion of its superior
lien. The irregularity Eichner alleged in its petition in intervention was not asserted
as Dominguez’s attorney-in-fact but was unique to Eichner’s interest.
Finally, there is no identity of interest between Eichner and Dominguez.
Eichner does not have a cause of action against the Condominium Association nor
is it bound by the judgment in the trial court. Eichner’s attempted intervention was
one for breach of contract against Dominguez.
In this action Eichner is not a deemed party because (1) it is not bound by the
judgment; (2) its privity of estate, title, or interest does not appear from the record;
and (3) on the live pleadings there is not an identity of interest between Eichner and
Dominguez. See City of San Benito, 109 S.W.3d at 754–55.2
II. This court’s prior opinion does not affect Eichner’s status as a nonparty
in this appeal.
Eichner further argues that because this court adjudicated part of Eichner’s
claim in its first appeal, Eichner is a party in this appeal as well. At the time this
court issued its opinion in Eichner’s prior appeal Eichner had intervened and the trial
court had not struck Eichner’s intervention. See Eichner, 2017 WL 2561334, at *1.
2
We note that Eichner is not left without a legal remedy. Cf. BASF Fina Petrochemicals Ltd.
P’ship v. H.B. Zachry Co., 168 S.W.3d 867, 871 (Tex. App.—Houston [1st Dist.] 2004, pet.
denied) (noting that to hold a party was not virtually represented would leave that party without a
legal remedy). Eichner sued Dominguez for money owed for accounting services and recovered a
judgment after arbitration. See Dominguez v. Kenneth D. Eichner, P.C., No. 01-17-00332-CV,
2018 WL 3117873, at *3 (Tex. App.—Houston [1st Dist.] June 26, 2018, no pet.) (mem. op.).
When the property was originally foreclosed Eichner did not lose a substantial property interest
because foreclosure does not terminate interests in the foreclosed real estate that are senior to the
mortgage being foreclosed. See Atu v. Slaughter, No. 14-06-00771-CV, 2007 WL 2682198, at *3
(Tex. App.—Houston [14th Dist.] Sept. 13, 2007, no pet.) (mem. op.). In general, the successful
bidder at a foreclosure takes title subject to prior liens. Conversion Props., L.L.C. v. Kessler, 994
S.W.2d 810, 813 (Tex. App.—Dallas 1999, pet. denied). A foreclosure does not terminate the
senior interest in the foreclosed real estate. Atu, 2007 WL 2682198, at *3. Rather, the purchaser is
charged with the primary liability for the payment of prior liens and must service them to avoid
loss of the property. Id.
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Texas Rule of Civil Procedure 60 provides that “[a]ny party may intervene by
filing a pleading subject to being stricken out by the court for sufficient cause on the
motion of any party.” The rule authorizes a party with a justiciable interest in a
pending suit to intervene in the suit as a matter of right. In re Union Carbide Corp.,
273 S.W.3d 152, 154 (Tex. 2008). At the time of Eichner’s previous appeal it was a
party to the judgment and this court had jurisdiction over its appeal. See Lapiner,
429 S.W.3d at 755. In its first appeal to this court Eichner was a party and filed a
timely notice of appeal from the trial court’s judgment. See Eichner, 2017 WL
2561334, at *1. Therefore, this court’s jurisdiction over Eichner’s first appeal does
not confer jurisdiction over the instant appeal.
CONCLUSION
The plain language of Texas Rule of Appellate Procedure 26.1 and binding
authority of this court deprives Eichner—a nonparty—of the right to extend the time
for filing a notice of appeal. See Lapiner, 429 S.W.3d at 821. As such, this court
lacks jurisdiction over Eichner’s appeal. Because we determine that Eichner did not
timely file its notice of appeal we dismiss this appeal for want of jurisdiction.
/s/ Jerry Zimmerer
Justice
Panel consists of Justices Wise, Zimmerer, and Spain.
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