Patrick Griffith and Connie Griffith v. Federal National Mortgage Association

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-18-00095-CV
___________________________
PATRICK GRIFFITH AND CONNIE GRIFFITH, Appellants
V.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, Appellee
On Appeal from the 442nd District Court
Denton County, Texas
Trial Court No. 2011-20256-158
Before Walker, Gabriel, and Birdwell, JJ.
Memorandum Opinion by Justice Birdwell
MEMORANDUM OPINION
Patrick and Connie Griffith appeal from a final judgment dismissing all of their
claims against Federal National Mortgage Association (Fannie Mae) after granting
Fannie Mae’s motion for summary judgment. In three issues, the Griffiths contend
that the trial court improperly granted summary judgment on their pleadings, that
summary judgment was not proper on Fannie Mae’s argument that it is shielded from
liability because GMAC Mortgage, LLC, a nonsuited codefendant, acted properly
under the Griffiths’ deed of trust, and that summary judgment could not have been
properly based on the Griffiths’ release of their claims against GMAC. We reverse
and remand.
Background
The Griffiths took out a home equity loan in 2004. Their lender waived its
right to require them to pay their taxes and home insurance into escrow on the
condition that the Griffiths (1) pay their taxes and insurance on or before the due
dates and (2) provide the lender with proof of payment. But the deed of trust also
provided that if the Griffiths failed to pay their taxes and insurance when due, the
lender could pay them on their behalf, and any amount so paid would be added as
additional debt secured by the deed of trust. The deed of trust and waiver also
provided that the lender could revoke the escrow waiver by written notice if the
Griffiths ever defaulted. According to the Griffiths, sometime after origination,
Fannie Mae became the holder of the note, and GMAC became the servicer.
2
The Griffiths were unable to pay their 2006 property taxes when they became
due in January 2007. GMAC purportedly sent Connie1 a notice in April 2007 stating
that the taxes were past due, warning her that the failure to pay the taxes was a
default, and giving her thirty days to pay the taxes and provide GMAC a receipt or to
work out a payment plan and notify GMAC. GMAC warned Connie that if she failed
to do so, it would “advance the delinquent taxes and penalties, and begin escrowing
for future taxes.” The Griffiths worked out a payment plan with the Denton County
tax department, paying $500 in June 2007 and an additional $3,000 on August 6, 2007,
thus reducing the amount owed to $1,061.75. GMAC nevertheless paid the remaining
$1,061.75 in August 2007, set up an escrow account for taxes and insurance, and
increased the Griffiths’ monthly payment by $789.90.2
Over the next four years, the Griffiths attempted to contact and work with
GMAC to determine the correct amount they owed and to dispute the establishment
of the escrow account, all to no avail. In December 2010, GMAC filed a foreclosure
application, and the Griffiths sued GMAC and Fannie Mae seeking a temporary
restraining order to stop any sale. See Tex. R. Civ. P. 736.11(a). In their petition, the
1
The Griffiths divorced in May 2008.
2
GMAC’s notice was dated April 17, 2007. The record casts no light on why
GMAC waited until August 2007––well past the thirty days it gave Connie to provide
proof of payment or the existence of a payment plan and after the Griffiths had
already paid $3,500 of the 2006 property taxes, which GMAC must have known had
occurred––to pay the remaining $1,061.75.
3
Griffiths alleged that GMAC was the servicer of their mortgage loan and that Fannie
Mae was the current note holder. The Griffiths also raised claims for breach of
contract, anticipatory breach of contract, violations of the Texas Debt Collections
Practice Act and Finance Code, and common law defamation of their credit
reputation. They further sought an accounting and a declaratory judgment that the
“Defendants” had waived their right to foreclose.
While the suit was pending, GMAC filed for bankruptcy. The Griffiths filed a
proof of claim, which they settled. As a result, they released GMAC (and other
unidentified debtors referenced in an instrument not included in this record) from
“any and all claims (as defined in section 101(5) of the Bankruptcy Code) and rights
that the Griffiths assert, have or may have against the Debtors, their estates, the
Borrower Trust, and the Liquidating Trust.” The Borrower Trust is defined as the
ResCap Borrower Claims Trust, and the Liquidating Trust definition references
another document not in this record. After settling the claim, the Griffiths nonsuited
GMAC in this suit.
Fannie Mae then filed a traditional motion for summary judgment raising three
grounds: (1) that even though the Griffiths had named it as a defendant in their
petition, all of their claims assert wrongdoing by GMAC only; therefore, “[a]bsent any
concrete claims that Fannie Mae committed some independent wrongdoing against
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them, [the Griffiths’] petition against Fannie Mae fails as a matter of law”3; (2) “[t]o
the extent [the Griffiths] seek to hold Fannie Mae liable for GMAC’s actions
regarding property taxes, those claims fail as a matter of law” because the deed of
trust authorized GMAC to pay those taxes; and (3) the Griffiths’ “split the note”
claim fails as a matter of law.4 Fannie Mae did not file a no-evidence motion for
summary judgment.
The trial judge signed an order granting Fannie Mae’s motion for summary
judgment and dismissing the Griffiths’ claims against Fannie Mae with prejudice. Ten
days later, the trial judge signed a final judgment also dismissing all of the Griffiths’
claims against Fannie Mae with prejudice. The Griffiths timely filed this appeal.
Standard of Review
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315
S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the light most
favorable to the nonmovant, crediting evidence favorable to the nonmovant if
reasonable jurors could, and disregarding evidence contrary to the nonmovant unless
reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289
S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable inference and resolve any
3
Fannie Mae neither confirmed nor denied that it was the note holder.
4
The Griffiths do not dispute the summary judgment on this theory, which they
pleaded only as one of several reasons neither GMAC nor Fannie Mae was entitled to
foreclose. Fannie Mae moved for summary judgment on this ground only “[t]o the
extent Plaintiffs make claims against [it] based on this widely discredited theory.”
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doubts in the nonmovant’s favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex.
2008). A defendant who conclusively negates at least one essential element of a cause
of action is entitled to summary judgment on that claim. Frost Nat’l Bank v. Fernandez,
315 S.W.3d 494, 508 (Tex. 2010), cert. denied, 562 U.S. 1180 (2011); see Tex. R. Civ. P.
166a(b), (c).
In general, a trial court should not grant a summary judgment on a pleading
deficiency that can be cured by amendment. In re B.I.V., 870 S.W.2d 12, 13 (Tex.
1994). But it may properly do so if the party refuses to amend, if an amended pleading
fails to state a cause of action, or when the pleading deficiency cannot be cured by an
amendment. See Friesenhahn v. Ryan, 960 S.W.2d 656, 658 (Tex. 1998).
Summary Judgment Not Proper on Deficient-Petition Claims
In their first issue, the Griffiths argue that summary judgment on their
pleadings was improper. Fannie Mae’s first ground in its motion for summary
judgment was that the Griffiths failed to assert any independent claims against it and
had only asserted claims against GMAC; therefore, “[a]bsent any concrete claims that
Fannie Mae committed some independent wrongdoing against [the Griffiths],
Plaintiffs’ petition against Fannie Mae fails as a matter of law.” [Emphasis added.]
Fannie Mae did not file any special exceptions to the Griffiths’ pleadings. The
Griffiths’ petition, which they attached to their summary-judgment response,5 alleged
Fannie Mae’s argument that pleadings are not proper summary judgment
5
evidence is not persuasive in this context; Fannie Mae’s entire argument on this
6
a lender-servicer relationship between Fannie Mae and GMAC and contained the
following paragraph:
Ill. AGENCY AND RESPONDEAT SUPERIOR
Whenever in this petition it is alleged that a Defendant did, or failed to
do, any act, thing and/or omission, it is meant that Defendant itself or
its agents, officers, servants, employees, vice principals, or
representatives either did or failed to do such act, thing and/or omission,
and it was done with the full authorization or ratification of Defendant,
and/or done in the normal routine, course and scope of the agency or
employment of Defendant or its agents, officers, servants, employees,
vice principals, or representatives and/or with actual and/or apparent
authority of Defendant.
The Griffiths also alleged in their petition (1) that GMAC’s attempt to provide notice
of acceleration and foreclosure was ineffective because GMAC was not the holder of
the note, seeking to halt the foreclosure because “GMAC, not the lender Fannie Mae,
[was] attempting to obtain an order of foreclosure”6 and (2) that both “Defendants”
had waived the right to foreclose, citing authority that the lender’s acceptance of
payment after notice of default raises the issue of waiver. Throughout the petition,
they use the plural “Defendants” in ascribing liability for each of their claims. They
ground is that the petition itself did not allege an independent complaint against it as a
matter of law.
6
Property code section 51.0025 provides that a mortgage servicer may
administer a foreclosure of property if it has entered into an agreement with the
mortgagee giving it authority to service the mortgage and the notices of foreclosure
disclose the servicer is “representing the mortgagee under a servicing agreement with the
mortgagee,” the name of the mortgagee, and either the mortgagee’s address or the
servicer’s address. Tex. Property Code Ann. § 51.0025 (West 2014) (emphasis added).
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further allege that although they tried to correct GMAC’s errors in their loan account
themselves, “Defendants [the servicer and the lender] have failed to correct the errors.”7
Construing the Griffiths’ petition liberally, as the law says we must in the
absence of special exceptions, see Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887,
897 (Tex. 2000), we hold that the petition alleges claims against Fannie Mae for
GMAC’s actions as its representative. Although the language in the petition is not a
model of clarity, taken in context, we can discern that the Griffiths were not only
attempting to forestall imminent and future foreclosure by GMAC, but also by Fannie
Mae, and that they were seeking to attribute GMAC’s wrongful conduct as the loan
servicer to Fannie Mae as the lender on whose behalf GMAC was allegedly servicing
the loan. In fact, Fannie Mae relies on the alleged propriety of GMAC’s payment of
the past due property taxes as a defense to the Griffiths’ claims. At the very least, the
Griffiths’ petition could be amended to more clearly state that GMAC’s allegedly
wrongful actions were taken in a representative or agency capacity on Fannie Mae’s
behalf.
In its brief, Fannie Mae argues that the Griffiths “produced no evidence that
GMAC acted as [its] agent,” that it “identified record evidence that it had no
independent involvement with the Griffiths, and [that] the Griffiths offered no
7
The Griffiths’ specific factual allegations against Fannie Mae distinguish the
pleadings in this case from those in Bos v. Smith, No. 16-0341, 2018 WL 2749714, at *9
(Tex. June 8, 2018).
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evidence to controvert it.” It also asserts in a footnote that its “motion turned on
record evidence, not the pleadings.” But these assertions directly conflict with the
record. Fannie Mae did not move for summary judgment on the ground that, as a
matter of law, it did not engage in any independent conduct as to the Griffiths, nor
did it seek a no-evidence summary judgment on the issue of agency. Instead, it moved
for summary judgment on the ground that the Griffiths did not allege it had committed
any independent conduct against them and that their petition failed as a matter of law.
We cannot uphold summary judgment on a ground not raised. See Tex. R. Civ. P.
166a(c); State Farm Lloyds v. Page, 315 S.W.3d 525, 532 (Tex. 2010).
We hold that the trial court erred by granting summary judgment and
dismissing all of the Griffiths’ claims on Fannie Mae’s first ground. We sustain the
Griffiths’ first issue.
Summary Judgment Not Proper Because of GMAC’s Payment of Taxes
In its second ground for summary judgment, Fannie Mae argued that GMAC
properly paid the delinquent property taxes in accordance with the deed of trust
because the Griffiths admit failing to pay them in full and because the Griffiths failed
to notify GMAC with proof that they had entered into an agreement with the Denton
County tax department. Therefore, Fannie Mae contends that it cannot be held liable
for GMAC’s “actions regarding property taxes.”
The Griffiths’ breach of contract claim is not based on the wrongful payment
of the property taxes. Instead, the Griffiths allege that
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• the “Defendants” deliberately or negligently delayed action and misled them
about the amounts due on the note “to the point of foreclosure,” thus violating
the duty of good faith and fair dealing under the deed of trust;
• the “Defendants” waived the right to foreclose on the property; and
• the Griffiths “remain in default only because GMAC failed to provide [them]
with an accounting and . . . failed to give [them] an opportunity to pay the past
due installments before acceleration of the entire indebtedness.”
These contentions do not depend on the invalidity of GMAC’s initial payment of the
taxes; instead, they complain about GMAC’s post-tax-payment failure to assist the
Griffiths in obtaining accurate information about their loan amount, giving them
misleading information about their loan account, and taking actions showing a waiver
of the right to foreclose. All of these alleged acts or omissions occurred after GMAC
paid the taxes.8
The Griffiths’ common law and statutory debt collection claims likewise do not
depend on the validity of GMAC’s payment of the property taxes. They claim that
after GMAC paid the taxes, the “Defendants” used deceptive means to collect the
debt, wrongfully attempted to foreclose, slandered their credit reputation, defamed
8
We note that the initial lender’s escrow waiver requires the lender to revoke
the waiver in writing to establish an escrow account. The record is devoid of any
express written revocation of the escrow waiver. The deed of trust does not provide
for the automatic establishment of an escrow account when the lender pays past-due
taxes, insurance, or other assessments; instead, it provides that the amount paid will
be added to the amount due on the note.
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their credit and exposed them to ridicule in the community, and imposed “numerous
additional charges” on their account.
Finally, the request for a declaratory judgment that “Defendants” have waived
the right to accelerate and foreclose and the request for an accounting do not hinge
upon the validity of GMAC’s payment of the Griffiths’ delinquent property taxes in
2007. Therefore, the trial court erred by granting summary judgment on all of the
Griffiths’ claims on Fannie Mae’s second ground for summary judgment. We sustain
the Griffiths’ second issue.
Release of Claims Against GMAC Does Not Support Summary Judgment
In their third issue, the Griffiths argue––in an abundance of caution––that the
trial court erred by granting summary judgment on all of Fannie Mae’s claims to the
extent that Fannie Mae sought summary judgment on the ground that the Griffiths’
release of claims against GMAC also effected a release of their claims against Fannie
Mae. Not only did Fannie Mae not move for summary judgment on that ground, it
did not present any evidence that the release applied to it, so summary judgment
would not have been proper for that reason. See Tex. R. Civ. P. 166a(c); State Farm
Lloyds, 315 S.W.3d at 532. We sustain the Griffiths’ third issue.
Conclusion
Having sustained the Griffiths’ three issues, we reverse the trial court’s
summary judgment on all of the Griffiths’ claims except the part of their breach of
contract claim pleading the “split the note” theory as an argument against foreclosure,
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reverse the trial court’s final judgment, and remand this case to the trial court for
further proceedings consistent with this opinion.
/s/ Wade Birdwell
Wade Birdwell
Justice
Delivered: October 11, 2018
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