James Eric Melton and Kimberly Ann Melton v. Ed Smith

NO. 12-18-00036-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
JAMES ERIC MELTON AND § APPEAL FROM THE
KIMBERLY ANN MELTON,
APPELLANTS
§ COUNTY COURT AT LAW
V.
ED SMITH, § VAN ZANDT COUNTY, TEXAS
APPELLEE
MEMORANDUM OPINION
James Eric Melton and Kimberly Ann Melton appeal from the trial court’s judgment in a
forcible detainer action filed against them by Ed Smith. In their sole issue, the Meltons contend
that the trial court lacked jurisdiction. We vacate the judgment of the county court at law and
dismiss the forcible detainer action for want of jurisdiction.
BACKGROUND
The Meltons purchased property from Smith in late 2015. They signed a warranty deed
with vendor’s lien providing that in exchange for cash and a note in the amount of $35,000 the
Meltons purchased five lots in the Tall Oaks Subdivision in Van Zandt County and a single-wide
manufactured home. The promissory note identified Smith as the lender and provided that the
note is secured by the land and manufactured home. The accompanying deed of trust included
the same property description as the warranty deed and promissory note. The Meltons defaulted
on the note and Smith purchased the land, minus 3.035 acres that had erroneously been included
in the warranty deed and deed of trust, and a 2002 Powerhouse manufactured home at a non-
judicial foreclosure sale in September 2017.
Shortly thereafter, Smith filed a petition for forcible detainer against the Meltons in
justice court asserting that the Meltons have no right to possession of the real property located at
110 VZ CR 2426, Canton, Texas. The Meltons argued that neither the land nor the
manufactured home described in the foreclosure deed is the same property that is described in
their warranty deed or deed of trust. Therefore, their argument continued, the dispute between
the parties involves the necessary resolution of a question of title to real estate and the justice
court lacks jurisdiction over the suit.
While the forcible detainer action was pending in justice court, the Meltons filed suit
against Smith in district court alleging that they paid Smith in full for the real property and
asking the court to award title to the real property to them. They asserted numerous causes of
action including violations of the Texas Deceptive Trade Practices Act, breach of contract, and
wrongful foreclosure.1
On October 12, 2017, the justice court rendered judgment that Smith is entitled to
possession of the premises described as 110 VZ CR 2426, in Canton Texas. The court
determined that the Meltons failed to prove that their property description was different from
Smith’s property description. The Meltons appealed that order to the county court at law arguing
that the right to immediate possession of the real property necessarily requires resolution of the
title dispute and the county court at law does not have jurisdiction.
In December 2017, the county court at law determined that it has jurisdiction over the
cause and rendered judgment in favor of Smith, granting him possession of the premises located
at 110 VZ CR 2426, Canton, Texas. The judgment incorporated the property description
contained in the foreclosure sale deed, which excepted the specifically described 3.035 acres, and
included the 2002 Powerhouse manufactured home. The court ordered the Meltons to surrender
possession of the premises to Smith. This appeal of the possession order ensued.
JURISDICTION
In their sole issue, the Meltons assert that the county court at law did not have jurisdiction
over this case because the questions of title and possession are intertwined. They argue that they
paid the purchase price of the real property in full and therefore there can be no lien on the real
property. They further argue that they did not agree to create a tenancy at sufferance in the
manufactured home, and the deed of trust did not give Smith the right to conduct a nonjudicial
foreclosure of the manufactured home.
1 As of this writing, the district court case remains pending.
2
Standard of Review
Whether a court has subject matter jurisdiction is a question of law which is reviewed de
novo. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). When
conducting a de novo review, because the question is of law and not of facts, the reviewing court
exercises its own judgment and accords the original tribunal’s decision absolutely no deference.
Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998).
Applicable Law
The procedure to determine the right to immediate possession of real property, if there
was no unlawful entry, is the action of forcible detainer. See TEX. PROP. CODE ANN.
§ 24.002(a)(1), (2) (West 2014); Rice v. Pinney, 51 S.W.3d 705, 709 (Tex. App.−Dallas 2001,
no pet.). A justice court in the precinct in which real property is located has jurisdiction in an
eviction suit. TEX. PROP. CODE ANN. § 24.004(a) (West 2014). Appeal by the aggrieved party is
de novo in the county court. TEX. R. CIV. P. 510.10; Dormady v. Dinero Land & Cattle Co.,
L.C., 61 S.W.3d 555, 557 (Tex. App.−San Antonio 2001, pet. dism’d w.o.j.) (op. on reh’g). The
only issue in an eviction case, and the sole question for the trial court, is who has the right to
immediate, actual possession of the real property under Chapter 24 of the Texas Property Code.
TEX. R. CIV. P. 510.1, 510.3(e); Wells Fargo Bank, N.A. v. Ezell, 410 S.W.3d 919, 921 (Tex.
App.−El Paso 2013, no pet.).
Neither a justice court, nor a statutory county court on appeal, has jurisdiction to
adjudicate title. TEX. R. CIV. P. 510.3(e); Ward v. Malone, 115 S.W.3d 267, 269 (Tex.
App.−Corpus Christi 2003, pet. denied). The existence of a title dispute does not deprive a
justice court of jurisdiction over the forcible detainer action. Trimble v. Fed. Nat’l Mortg.
Ass’n, 516 S.W.3d 24, 28 (Tex. App.−Houston [1st Dist.] 2016, pet. denied). However, if the
question of title is so integrally linked to the issue of possession that possession may not be
determined without first determining title, justice and county courts lack jurisdiction over the
forcible detainer action. Falcon v. Ensignia, 976 S.W.2d 336, 338 (Tex. App.−Corpus Christi
1998, no pet.).
Yet, where there is an independent basis on which the justice or county court could
determine the issue of immediate possession without resolving the issue of title, that court retains
jurisdiction. Rice, 51 S.W.3d at 712. When there is no dispute that the parties agreed to a
tenancy relationship in the event of foreclosure, the tenancy relationship provides an independent
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basis for resolving the issue of possession. See Yarbrough v. Household Fin. Corp. III, 455
S.W.3d 277, 282 (Tex. App.−Houston [14th Dist.] 2015, no pet.). The existence of a landlord-
tenant relationship between the purchaser at foreclosure and the current possessor of the property
provides a basis for the trial court to determine the right to immediate possession, even if the
possessor questions the validity of a foreclosure sale and the quality of the buyer’s title. Ezell,
410 S.W.3d at 921.
Analysis
We first address the fate of the manufactured home. Pursuant to the contract, the Meltons
agreed to purchase the land and an unidentified “trailer” which would be moved onto the real
property. At some point, Smith moved a 2002 Powerhouse double-wide manufactured home,
serial number CV02AL0260076, onto the real property. The warranty deed with vendor’s lien,
deed of trust, and promissory note, all dated December 28, 2015, identify the property at issue as:
All those certain lots or parcels of land, being Lots 788, 789, 848, 849, and 850,
of the TALL OAKS SUBDIVISION, Van Zandt County, Texas, according to
the plat of said subdivision as the same appears of record in Glide 238-A, Plat
Records of Van Zandt County, Texas.
And the 16’ x 68’ single-wide manufactured home located thereon and more
fully described as Label No. TEX0373719, Serial No. 50203025.
Being the same land described in Warranty Deed dated April 16, 2007 from
Trisha Louise Siegrist to Ed Smith, recorded in Volume 2226, Page 335, Real
Records, Van Zandt County, Texas.
The foreclosure sale deed recites the same lot information, but in place of the second
paragraph describing a single-wide manufactured home, it states:
Together with the 2002 POWERHOUSE manufactured home, Serial No.
CV02AL0260076 A & B situated on the herein above described real property.
The record shows that the 2002 Powerhouse is the double-wide manufactured home
currently located on the real property at issue. The description of the single-wide manufactured
home was erroneously included in the 2015 documents and inconsequential to this court’s
determination of the status of the manufactured home.
A manufactured home is personal property unless a statement of ownership for the home,
issued under Section 1201.207 of the Occupations Code, reflects that the owner has elected to
4
treat the home as real property, and a certified copy of the statement of ownership and location
has been filed in the real property records in the county in which the home is located. TEX.
PROP. CODE ANN. § 2.001 (West 2014); TEX. OCC. CODE ANN. § 1201.222 (West Supp. 2017).
If the manufactured home is personal property, the proper cause of action to recover possession
is not a forcible detainer, it is a trial of the right of property. TEX. PROP. CODE ANN. § 25.001
(West 2014).
The record includes the statement of ownership and location regarding the 2002
Powerhouse that Smith filed in compliance with the property and occupations codes. It states
that the owner elected to declare the manufactured home as personal property. Because the
manufactured home is personal property, the county court at law did not have jurisdiction to
dispose of it in a forcible detainer action. See id. The trial court erred in awarding possession of
the manufactured home to Smith in this suit.
We now consider whether the county court had jurisdiction to resolve the issue of
possession of the real property. The deed of trust authorizes a foreclosure sale of the real
property upon the Meltons’ default. It also provides that if the property is sold under the deed of
trust, the Meltons must immediately surrender possession to the purchaser. It further provides
that if they fail to do so, they become tenants at sufferance of the purchaser, subject to an action
for forcible detainer.
Smith asserted that he is the owner of the property because he purchased it at the
foreclosure sale and that the landlord-tenant relationship between Smith and the Meltons was
established in the deed of trust. On this basis, he claims the right to possession. See Ezell, 410
S.W.3d at 921-22 (held that purchaser at foreclosure sale shows superior right to immediate
possession by establishing that he has a landlord-tenant relationship with the borrower, he
purchased the property at foreclosure, he gave proper notice to the occupants of the property to
vacate, and the occupants refused to vacate the premises).
We acknowledge that, when there is no dispute that the parties agreed to a tenancy
relationship in the event of foreclosure, the tenancy relationship provides an independent basis
on which the trial court could determine the issue of immediate possession without resolving the
issue of title to the property. See Rice, 51 S.W.3d at 712. Furthermore, a defendant’s complaints
about defects in the foreclosure process generally do not require a justice court to resolve a title
dispute before determining the right to immediate possession. See Trimble, 516 S.W.3d at 30;
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see also e.g., Pinnacle Premier Props., Inc. v. Breton, 447 S.W.3d 558, 564 (Tex.
App.−Houston [14th Dist.] 2014, no pet.) (held no intertwined title issue when the defendants’
title dispute was based on contentions that the foreclosure sale was conducted improperly and the
lender had assigned the note to another bank); Gardocki v. Fed. Nat’l Mortg. Ass’n, No. 14-12-
00921-CV, 2013 WL 6568765, at *4 (Tex. App.−Houston [14th Dist.] Dec. 12, 2013, no pet.)
(mem. op.) (held no intertwined title issue when the defendant alleged that conditions precedent
to the foreclosure were not satisfied); Bittinger v. Wells Fargo, N.A., 14-10-00698-CV, 2011
WL 4793828, at *2-3 (Tex. App.−Houston [14th Dist.] Oct. 11, 2011, no pet.) (mem. op.) (held
no intertwined title issue when the defendant alleged defects regarding the foreclosure sale such
as the bank’s lack of authority to foreclose).
However, in our estimation, the Meltons do not complain about defects in the foreclosure
process. The Meltons assert that they paid in full for the land and dispute the validity of the
documents that indicate that the lien attaches to the real property. Thus, they challenge the
validity of the vendor’s lien and the deed of trust, and the existence of a landlord-tenant
relationship. They argue that when a contract provides for the payment of consideration partly
for land and partly for personal property, a vendor’s lien does not arise on the land where it is
shown that the part of the consideration required for the land was paid.
The Meltons presented testimony that they agreed to pay, and Smith agreed to accept,
$57,000 as full payment for the land. Prior to signing the contract that called for the Meltons to
pay a total of $92,000, the parties drafted a contract pursuant to which the Meltons would
purchase the land for $57,000. This contract did not mention a manufactured home and was
never signed. Smith testified that the first contract was torn up and replaced with the new
agreement whereby the Meltons would purchase the land and a manufactured home in “one
packaged deal.” The contract did not specify that the land and home were each assigned a
specific portion of the total price. Smith attributed the monetary break down to a $57,000 down
payment with the $35,000 to be paid later in a lump sum. The Meltons paid Smith $57,000
approximately three weeks before the warranty deed, promissory note, and deed of trust were
signed.
The record also shows that, at the time the Powerhouse was moved onto the property, the
Meltons were living on the property in a camper provided by Smith. The Meltons paid monthly
rent for the use of the camper. They moved into the Powerhouse when law enforcement seized
6
the camper, which was stolen property. We note that, in the petition the Meltons filed in district
court, they asserted that they signed the contract after the Powerhouse was moved onto the
property. At trial, they testified that they never wanted to buy a manufactured home from Smith
but they felt they had no choice. At the time, they had nowhere else to live and were afraid they
would lose the land. There appears to be a question regarding whether the parties intended for
the $57,000 to go toward the manufactured home or only the real property.
Courts have found intertwined title and possession issues in cases where the parties
disputed the existence of a landlord-tenant relationship. See Anderson v. Chandler, No. 12-16-
00299-CV, 2017 WL 2829329, at *3-4 (Tex. App.−Tyler June 30, 2017, no pet.) (mem. op.)
(held that Appellant’s assertion of title through gift of property and absence of landlord-tenant
relationship raised title issue that required resolution before a determination of right to
immediate possession); Yarbrough, 455 S.W.3d at 283 (held that, because Appellants contend
the deed of trust and substitute trustee’s deed are void due to forgery, they raised an issue of title
so intertwined with the issue of possession as to preclude jurisdiction in justice court);
Goodman-Delaney v. Grantham, 484 S.W.3d 171, 175 (Tex. App.−Houston [14th Dist.] 2015,
no pet.) (held that where Appellee attempted to evict her step-mother after inheriting home step-
mother had shared with Appellee’s father, in absence of landlord-tenant relationship, justice
court did not have jurisdiction).
The Meltons have shown there is a fact dispute over whether they paid for the land in
full, whether they pledged the land as security, and thus whether there was a landlord-tenant
relationship. See Anderson, 2017 WL 2829329 at *3-4. We conclude that the right to
possession of the real property cannot be determined without first resolving issues regarding title
to the real property. The justice and county courts lacked jurisdiction over this matter because
the issue of immediate possession necessarily implicates issues of title on these particular facts.
We sustain the Meltons’ sole issue.
DISPOSITION
Having sustained the Meltons’ sole issue, we vacate the judgment of the county court at
law and dismiss the forcible detainer action for want of jurisdiction.
7
GREG NEELEY
Justice
Opinion delivered August 22, 2018.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
(PUBLISH)
8
COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
AUGUST 22, 2018
NO. 12-18-00036-CV
JAMES ERIC MELTON AND KIMBERLY ANN MELTON,
Appellants
V.
ED SMITH,
Appellee
Appeal from the County Court at Law
of Van Zandt County, Texas (Tr.Ct.No. CV-05737)
THIS CAUSE came to be heard on the appellate record and briefs filed
herein, and the same being considered, it is the opinion of this court that there was error in the
judgment of the court below.
It is therefore ORDERED, ADJUDGED and DECREED that the judgment of
the court below be vacated and the forcible detainer action be dismissed for want of
jurisdiction. It is further ORDERED that all costs of this appeal are hereby adjudged against the
Appellee, ED SMITH, for which execution may issue; and that this decision be certified to the
court below for observance.
Greg Neeley, Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.