Muhammad R. Khan v. Firstmark Credit Union

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-12-00465-CV
Muhammad R. KHAN,
Appellant
v.
FIRSTMARK CREDIT UNION,
Appellee
From the 81st Judicial District Court, Wilson County, Texas
Trial Court No. 12-03-0077-CVW
Honorable Stella Saxon, Judge Presiding
Opinion by: Patricia O. Alvarez, Justice
Sitting: Catherine Stone, Chief Justice
Sandee Bryan Marion, Justice
Patricia O. Alvarez, Justice
Delivered and Filed: May 22, 2013
AFFIRMED
This is an appeal from a summary judgment granted against Muhammad R. Khan, a pro
se litigant. Firstmark Credit Union foreclosed on Khan’s property, and Khan sued Firstmark for
damages based on an alleged wrongful foreclosure. Khan contends that at the time of the
foreclosure he was current in his payments and, therefore, was not in default. The trial court
granted Firstmark’s motion for summary judgment. Khan, who failed to file a response to
Firstmark’s motion for summary judgment, asserts on appeal that the trial court erred by granting
04-12-00465-CV
Firstmark’s summary judgment motion without considering all the facts and evidence contained
in his original petition. We affirm the trial court’s judgment.
BACKGROUND
In August 2003, Khan borrowed $39,200.00 from Firstmark Credit Union to purchase
about 22.51 acres of real property in Wilson County. Khan executed a real estate lien note
payable to Firstmark, which included a vendor’s lien. The note included a provision that allowed
Firstmark to accelerate the payment due if it notified Khan he was in default and the default was
not timely cured. Khan also executed a deed of trust that designated Firstmark as the
beneficiary. The deed of trust required Khan to make all note and tax-escrow fund payments on
time. If he failed to do so, after notification of the default and failure to cure the default, the
deed of trust authorized (1) Firstmark to accelerate the note and (2) the Trustee to foreclose the
lien and sell the property in accordance with the Texas Property Code.
On April 17, 2009, Khan received Firstmark’s notice to him that he was in default on the
note because he failed to timely make his note payments. Firstmark demanded Khan pay the
past due amount of $4,332.73, which included past due principal, late fees, and tax escrow fund
arrearages. Firstmark also notified Khan that the note would be accelerated if his payment was
not received by May 18, 2009.
On June 23, 2009, Khan received Firstmark’s notice advising him that his note had been
accelerated and demanding payment of $28,948.11 plus attorney’s fees. Firstmark also notified
Khan that its trustee was proceeding with a foreclosure sale. On August 4, 2009, the property
was sold to Firstmark at a foreclosure sale at the Wilson County Courthouse. In March 2012,
Khan sued Firstmark for “foreclos[ing] the property without any valid reason.” Khan’s original
petition was verified and contained several exhibits. In it, Khan alleged that the “payments on
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the land loan were made on time without any default.” Khan attached proof that some payments
on the loan were made.
In its traditional motion for summary judgment, Firstmark contended that the summary
judgment evidence conclusively proved the foreclosure was proper in all respects and that it was
entitled to judgment as a matter of law. Khan did not file a response to Firstmark’s motion. The
trial court granted Firstmark’s traditional motion for summary judgment, and Khan appealed.
We construe Khan’s appellate points 1 as complaining that the trial court improperly granted
Firstmark’s summary judgment motion because the evidence in his petition shows Firstmark
conducted a wrongful foreclosure.
STANDARD OF REVIEW
We review the grant of a traditional summary judgment de novo. Mann Frankfort Stein
& Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). “We review the evidence presented in the motion
and response in the light most favorable to the party against whom the summary judgment was
rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding
contrary evidence unless reasonable jurors could not.” Mann Frankfort, 289 S.W.3d at 848; see
City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We “indulg[e] every reasonable
inference in favor of the nonmovant and resolv[e] any doubts against the [movant].” Goodyear
Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007) (per curiam); accord Nixon v.
Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985). A defendant moving for traditional
summary judgment may prevail if he conclusively disproves at least one essential element of
1
In his three-page pro se brief, Khan asserted the facts raise three questions, but he did not cite any authorities to
clarify the legal issue or issues raised by his questions.
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each of the plaintiff’s claims. Elliott-Williams Co. v. Diaz, 9 S.W.3d 801, 803 (Tex. 1999); Doe
v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 476–77 (Tex. 1995).
If the movant meets this burden, the burden of proof shifts to the nonmovant. See City of
Hous. v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). To oppose the motion on
grounds other than the legal sufficiency of the movant’s summary judgment evidence, the
nonmovant must file and serve its response and opposing affidavits no later than seven days
before the hearing. See TEX. R. CIV. P. 166a(c); Clear Creek Basin Auth., 589 S.W.2d at 678.
However, a response is not always required. Clear Creek Basin Auth., 589 S.W.2d at 678. If the
movant defendant does not conclusively meet its burden, the nonmovant does not need to file a
response. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000) (per
curiam). Under these circumstances, the trial court may not grant the motion simply because of
the nonmovant’s default. Rhône–Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); Clear
Creek Basin Auth., 589 S.W.2d at 678. Instead, the trial court must determine whether the
movant’s summary judgment evidence is legally sufficient to support the grounds presented by
the movant. Clear Creek Basin Auth., 589 S.W.2d at 678; see McConnell v. Southside Indep.
Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993).
WRONGFUL FORECLOSURE
In his brief, Khan asserts the facts raise three questions: (1) whether Firstmark had “any
valid reason to foreclose,” (2) whether Firstmark “[chose] to resolve this matter amicably,” and
(3) whether the trial court “consider[ed] all the facts and evidences” in his original petition. We
evaluate Khan’s questions in the context of the judgment on appeal: the trial court’s grant of
Firstmark’s motion for summary judgment. Therefore, we first consider whether the trial court
erred in granting Firstmark’s motion for summary judgment on the ground that there was no
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genuine issue of any material fact pertaining to the legality of the foreclosure sale and Firstmark
was entitled to judgment as a matter of law.
A. Applicable Law
An essential element of a wrongful foreclosure claim is “a defect in the foreclosure sale
proceedings.” See Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.—Corpus
Christi 2008, no pet.) (citing Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368, 371 (Tex.
App.—Houston [14th Dist.] 1989, writ denied)). A defect in the foreclosure proceedings may
occur when there is no default. See Slaughter v. Qualls, 162 S.W.2d 671, 675 (Tex. 1942)
(deciding that a foreclosure sale was void because, inter alia, the note was not in default at the
time of the sale); Lavigne v. Holder, 186 S.W.3d 625, 627–28 (Tex. App.—Fort Worth 2006, no
pet.) (reversing a summary judgment in favor of the creditor because, in the absence of default,
the creditor could not accelerate the debt or foreclose against the property). It may also occur
when the statutory foreclosure procedures are not followed. See Hous. First Am. Sav. v. Musick,
650 S.W.2d 764, 768 (Tex. 1983).
“Section 51.002 [of the Texas Property Code] establishes the procedures for conducting a
foreclosure sale.” Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 569 (Tex. 2001);
see generally TEX. PROP. CODE ANN. § 51.002 (West Supp. 2012). Under section 51.002, if a
lender contends that a debtor is “in default under a deed of trust or other contract lien on real
property used as the debtor’s residence,” the mortgage servicer must give the debtor “written
notice by certified mail stating that the debtor is in default . . . and giv[e] the debtor at least 20
days to cure the default before notice of sale can be given.” TEX. PROP. CODE ANN. § 51.002(d);
see Powell v. Stacy, 117 S.W.3d 70, 73 (Tex. App.—Fort Worth 2003, no pet.). For real
property that is located wholly within a single county, if it is to be sold under a power of sale
created by a deed of trust or contract lien, the sale must be by public auction “held between 10
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a.m. and 4 p.m. on the first Tuesday of a month . . . [in the designated area] at the county
courthouse in the county in which the land is located.” TEX. PROP. CODE ANN. § 51.002(a);
Thompson v. Chrysler First Bus. Credit Corp., 840 S.W.2d 25, 31 (Tex. App.—Dallas 1992, no
writ). At least twenty-one days in advance of the sale, the public must be notified by posting a
written notice on the county courthouse door, with a copy of the written notice filed in the office
of the county clerk, and each debtor must be served with written notice by certified mail. TEX.
PROP. CODE ANN. § 51.002(b); see Thompson, 840 S.W.2d at 31. “The sale must begin at the
time stated in the notice of sale or not later than three hours after that time.” TEX. PROP. CODE
ANN. § 51.002(c); see Sanders v. Shelton, 970 S.W.2d 721, 724 (Tex. App.—Austin 1998, pet.
denied).
B. Analysis
1. Firstmark’s Summary Judgment Evidence
In its motion for summary judgment, Firstmark asserted the loan was in default and that it
fully complied with all the terms of the applicable documents and all applicable laws regarding
the foreclosure sale. It provided sworn affidavits from Edward Muñoz, Firstmark’s vice
president for loan servicing, and Robert P. Sims, a Texas attorney with experience in real
property foreclosure sales. Muñoz’s affidavit averred that after Khan was in default, he was
given notice of the default and an opportunity to cure. Muñoz’s affidavit included exhibits
containing documents pertaining to Khan’s loan records, default and cure notices, and the
foreclosure sale. Sims’s affidavit cited the exhibits in Muñoz’s affidavit, and averred that
Firstmark complied with all the terms of the applicable documents as well as all of the
foreclosure sale provisions required by Texas law.
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2. Did Firstmark Conclusively Disprove an Element of Khan’s Cause of Action?
We now review Firstmark’s summary judgment evidence to determine if it conclusively
disproved Khan’s implied contention that there was a defect in the foreclosure sale proceedings.
See Clear Creek Basin Auth., 589 S.W.2d at 678.
Firstmark’s summary judgment evidence included Muñoz’s sworn affidavit, which
included a copy of the Real Estate Lien Note and Deed of Trust, both signed by Khan. The
affidavit also included a Warranty Deed with Vendor’s Lien showing Khan as grantee. The note
and deed of trust show that Firstmark had a power of sale against Khan’s property. Firstmark’s
affidavit from Muñoz averred that Khan was in default for failure to make timely note payments
and for failure to make timely escrow fund payments.
The exhibits to Muñoz’s affidavit further show Firstmark gave Khan notice that he was in
default, advised him that he could cure his default, and gave him at least twenty days to do so
before it gave him notice of the foreclosure sale. See TEX. PROP. CODE ANN. § 51.002(d);
Powell, 117 S.W.3d at 73; see also Teachout v. Kitchen, No. 14-03-00215-CV, 2004 WL
794383, at *2 (Tex. App.—Houston [14th Dist.] Apr. 15, 2004, no pet.) (mem. op.). The
warranty deed shows that his property was wholly located in Wilson County, and the exhibits
show that, more than twenty-one days before the sale, a copy of the public written notice of the
auction was filed with the Wilson County clerk, and Khan received notice of the foreclosure sale
by certified mail. See TEX. PROP. CODE ANN. § 51.002(b); Thompson, 840 S.W.2d at 31; see
also Stanley v. CitiFinancial Mortg. Co., 121 S.W.3d 811, 817 (Tex. App.—Beaumont 2003,
pet. denied). The Substitute Trustee’s Deed shows that the public auction sale was held on
August 4, 2009, the first Tuesday of August, on the porch and steps of the Wilson County
courthouse as stated in the written notices. See TEX. PROP. CODE ANN. § 51.002(a); Thompson,
840 S.W.2d at 31. The deed shows the sale was transacted at 11:36 a.m.—which was within
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three hours of the time stated in the notice of sale. See TEX. PROP. CODE ANN. § 51.002(c);
Sanders, 970 S.W.2d at 725–26.
Having reviewed Firstmark’s summary judgment evidence in the light most favorable to
Khan, we nevertheless determine that the evidence conclusively proves as a matter of law that
Khan was in default and that Firstmark complied with the foreclosure sale requirements. See
TEX. PROP. CODE ANN. § 51.002; Holy Cross Church of God in Christ, 44 S.W.3d at 569. The
burden then shifted to Kahn to controvert Firstmark’s evidence. See M.D. Anderson Hosp. &
Tumor Inst., 28 S.W.3d at 23.
3. Did Khan Controvert Firstmark’s Summary Judgment Evidence?
On appeal, Khan argues that the trial court should have considered all the facts and the
evidence attached to his original petition as his summary judgment evidence. However, Khan
did not file a response to Firstmark’s motion for summary judgment.
Rule 166a of the Texas Rules of Civil Procedure, which governs summary judgments,
authorizes the trial court to grant summary judgment if
the pleadings . . . [and summary judgment evidence] . . . on file at the time of the
hearing, or filed thereafter and before judgment with permission of the court,
show that . . . there is no genuine issue as to any material fact and the moving
party is entitled to judgment as a matter of law on the issues expressly set out in
the motion or in an answer or any other response. Issues not expressly presented
to the trial court by written motion, answer or other response shall not be
considered on appeal as grounds for reversal.
TEX. R. CIV. P. 166a(c) (emphasis added); see Huddleston v. Tex. Commerce Bank—Dall., N.A.,
756 S.W.2d 343, 346–47 (Tex. App.—Dallas 1988, writ denied). Rule 166a requires a movant
to express its summary judgment contentions in a written motion for summary judgment.
Hammond v. Katy Indep. Sch. Dist., 821 S.W.2d 174, 176 (Tex. App.—Houston [14th Dist.]
1991, no writ). A response, likewise in writing, must fairly appraise the movant and the trial
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court of the issues the nonmovant contends defeat the motion. Clear Creek Basin Auth., 589
S.W.2d at 678.
Khan’s verified petition does not meet Rule 166a’s requirements of a written response to
a motion for summary judgment. See TEX. R. CIV. P. 166a(c); Baker v. John Peter Smith Hosp.,
Inc., 803 S.W.2d 454, 457 (Tex. App.—Fort Worth 1991, writ denied); Terminal-Hudson Realty
Corp. v. Weingarten Realty, Inc., 605 S.W.2d 626, 627 (Tex. Civ. App.—Houston [1st Dist.]
1980, writ ref’d n.r.e.). Likewise, the documents attached to the petition are not competent
summary judgment evidence because they are not part of a summary judgment response and they
are not authenticated or verified. See TEX. R. CIV. P. 166a(c), (f); Laidlaw Waste Sys. (Dall.),
Inc. v. City of Wilmer, 904 S.W.2d 656, 660 (Tex. 1995); Clear Creek Basin Auth., 589 S.W.2d
at 678. Khan simply did not meet his burden under Rule 166a. Therefore, the trial court was
correct in not considering Khan’s original petition and its attachments as his response and
evidence controverting Firstmark’s motion for summary judgment.
4. Summary Judgment Was Proper
Firstmark’s evidence conclusively proves that Khan’s loan was in default and that there
was no defect in the foreclosure sale proceedings. See TEX. PROP. CODE ANN. § 51.002;
Sauceda, 268 S.W.3d at 139. As a matter of law, Firstmark met its burden to disprove an
essential element of Khan’s wrongful foreclosure claim. See Elliott-Williams Co., 9 S.W.3d at
803. The burden then shifted to Khan to present evidence controverting Firstmark’s contentions.
See Clear Creek Basin Auth., 589 S.W.2d at 678. However, Khan did not meet this burden
because he failed to file a response to Firstmark’s motion. See TEX. R. CIV. P. 166a(c). There
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being no controverting evidence, the trial court properly granted Firstmark’s motion for
summary judgment. Therefore, we overrule Khan’s appellate issues. 2
CONCLUSION
As required, we have reviewed the competent summary judgment evidence in the light
most favorable to Khan. See Mann Frankfort, 289 S.W.3d at 848; City of Keller, 168 S.W.3d at
827. We conclude that the summary judgment evidence conclusively proves that there were no
defects in the foreclosure sale proceedings and that Firstmark was entitled to judgment as a
matter of law; the trial court did not err in granting Firstmark’s motion. Therefore, we affirm the
trial court’s judgment.
Patricia O. Alvarez, Justice
2
In his brief, Khan contended Firstmark “chose not to solve this problem amicably.” He provides no argument or
authority to show that Firstmark had any duty to do so. To the extent that Khan’s statement identifies an appellate
issue, the issue is waived. See TEX. R. APP. P. 38.1(i); In re Blankenship, 392 S.W.3d 249, 259 (Tex. App.—San
Antonio 2012, no pet.).
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