DocketNumber: Case No. MO:18-CV-00060-DC
Citation Numbers: 366 F. Supp. 3d 818
Judges: Counts
Filed Date: 2/13/2019
Status: Precedential
Modified Date: 7/25/2022
BEFORE THE COURT is Plaintiff Brenda J. Kirwan's Motion for Partial Summary Judgment filed on May 25, 2018 (Doc. 15), Defendant Sheryl Garber's Motion for Summary Judgment filed on December 7, 2018 (Doc. 51), Plaintiff's Motion for Summary Judgment on Defendant's Defenses of Estoppel and Unjust Enrichment filed December 7, 2018 (Doc. 52), Plaintiff's Motion for Partial Summary Judgment on Delivery, Constructive Notice, and Bona Fide Purchaser filed December 7, 2018 (Doc. 53), Plaintiff's Motion to Strike Defendant's Summary Judgment Evidence filed December 21, 2018 (Doc. 54), and Plaintiff's Unopposed Motion for Hearing filed January 29, 2019 (Doc. 58).
*824The parties have timely filed responses and replies to all motions.
After due consideration of the pleadings, the applicable law, and the record, the Court GRANTS IN PART and DENIES IN PART Defendant's Motion for Summary Judgment (Doc. 51) and Plaintiff's Motion for Summary Judgment on Defendant's Defenses (Doc. 52). Moreover, the Court DENIES Plaintiff's Motion for Partial Summary Judgement (Doc. 15), Plaintiff's Motion for Partial Summary Judgment on Delivery, Constructive Notice, and Bona Fide Purchaser (Doc. 53), Plaintiff's Motion to Strike Defendant's Summary Judgment Evidence (Doc. 54), and Plaintiff's Unopposed Motion for Hearing (Doc. 58). Id.
I. BACKGROUND
On December 5, 2002, William Ouzts (Ouzts) executed a document titled Special Warranty Deed (the alleged Deed), which was typed and printed by Thomas J. Kirwan, a notary public and Plaintiff Brenda J. Kirwan's husband, naming Plaintiff, Ouzts' daughter, as the grantee to several condominium units (the Property). (Doc. 15 at 23). Plaintiff's husband acknowledged the alleged Deed on the same date it was executed. Id. The alleged Deed contains the following words of conveyance, habendum clause, and warranty clause:
Grantor, grants, sells, and conveys to Grantee as her sole and separate property all of Grantor's interest in the Property described in Exhibit "A" attached hereto, together with all and singular the rights and appurtenances thereto in any wise belonging, to have and hold to Grantee, Grantee's heirs, executors, administrators, successors, or assigns forever. Grantor binds Grantor and Grantor's heirs, executors, administrators, and successors to warrant and forever defend all and singular the property to Grantee and Grantee's heirs, executors, administrators, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof.
It is specifically understood and agreed however that the property described in Exhibit "A" shall not vest unto Grantee until the demise of the Grantor.
On August 15, 2003, Ouzts unilaterally executed a document titled Deed of Rescission (Rescission Deed), which states that Ouzts "cancels, rescinds and nullifies" the alleged Deed, and filed it for record in Midland County on August 25, 2003, without Plaintiff's signature. Id. On December 23, 2004, Ouzts executed another document titled Warranty Deed with Vendor's Lien (Warranty Deed) selling the same property described in the alleged Deed to Defendant and her now deceased husband, Lloyd Garber. (Doc. 15 at 34). The Warranty Deed was filed for record in Midland County on January 4, 2005. Id.
On July 29, 2017, Ouzts died. (Docs. 51, 54). Thereafter, Plaintiff requested that Defendant relinquish possession, custody, and control of the Property. (Doc. 54 at 4). Defendant refused, claiming title to the Property under the Warranty Deed. Id. On February 9, 2018, Plaintiff filed suit in the 441st District Court of Midland, Texas, raising claims for declaratory judgment, trespass to try title, and assumpsit (money had and received). (Doc. 1-3 at 11-12). Defendant removed the case to this Court on diversity grounds on April 3, 2018. (Doc. 1 at 2).
On May 25, 2018, Plaintiff filed a Motion for Partial Summary Judgment, almost five months before the discovery deadline.
*825(Doc. 15). Plaintiff argues that: (1) the alleged Deed, once executed and delivered to Plaintiff, gave Plaintiff a remainder interest in the fee simple title to the property described therein; (2) Ouzts, via the final provision in the alleged Deed, reserved for himself no more than a life estate; and (3) when Ouzts passed away on July 29, 2018, Plaintiff became the owner of a fee simple title to the Property. Id. at 1. Defendant counters that partial summary judgment is not warranted because there are genuine and material factual disputes regarding whether the alleged Deed is actually a deed or testamentary in character. (Doc. 19). Further, Defendant argues that even if the alleged Deed is, in fact, a deed, there is a genuine and material factual dispute as to whether the alleged Deed was delivered to Plaintiff and adequately acknowledged. Id.
After the discovery deadline, the parties filed a series of Motions:
1. Defendant's Motion for Summary Judgement. Defendant's Motion raises three points: (1) that because the alleged deed is testamentary in nature, not a deed, Ouzts effectively revoked or canceled conveyance; thus, Plaintiff has no interest in the Property; (2) alternatively, that the alleged Deed is a terminable, non-testamentary instrument, and Plaintiff's rights terminated when Defendant took title; and (3) that Defendant is a bona fide purchaser who cuts off Plaintiff's interest under the alleged Deed. Moreover, that Plaintiff cannot bring a declaratory judgment claim. (Doc. 51).
2. Plaintiff's Motion for Summary Judgement on Defendant's Defenses of Estoppel and Unjust Enrichment. Plaintiff's Motion argues that: (1) there is no evidence supporting Defendant's defenses for estoppel and unjust enrichment; (2) alternatively, that the summary judgment evidence negates the elements of Defendant's estoppel and unjust enrichment defenses; and (3) Plaintiff reasserts her Motion for Partial Summary Judgment filed on May 25, 2018. (Doc. 52).
3. Plaintiff's Motion for Summary Judgment on Delivery, Constructive Notice, and Bona Fide Purchaser. Plaintiff argues that the evidence contradicts Defendant's assertions that Ouzts did not deliver the alleged Deed, that Defendant lacked notice of the alleged Deed, and that Defendant was a bona fide purchaser. (Doc. 53).
4. Plaintiff's Motion for Hearing. Plaintiff requests a hearing on all pending motions. (Doc. 58).
Both parties have timely responded and replied to all Motions--the final reply was filed on December 28, 2018. (See Docs. 54, 55, 56, 57). Based on the parties' Motions, the issues before the Court are the following: (1) whether the alleged Deed is testamentary in character, a terminable, non-testamentary instrument, or a valid deed of conveyance; (2) whether Defendant was a bona fide purchaser; (3) whether Defendant's defenses are viable; and (4) whether Plaintiff's declaratory judgment cause of action is viable.
As a preliminary matter, the Court finds that it is able to rule on the motions absent a hearing; thus, the Court DENIES Plaintiff's Unopposed Motion for Hearing. (Doc. 58).
II. LEGAL STANDARD
Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A genuine issue exists "if the *826evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. ,
The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett ,
III. DISCUSSION
Plaintiff's claims for trespass to try title, declaratory judgment, and money had and received are premised on a dispute of land between Plaintiff and Defendant. A trespass to try title claim "is a method of determining title to ... real property." Tex. Prop. Code § 22.001. To prevail a party may "establish superior title out of a common source." Martin v. Amerman ,
Defendant counters that Plaintiff is unable to show a chain from a common source first because the alleged Deed was testamentary in character and rescinded when Ouzts recorded the Rescission Deed. Alternatively, Defendant argues the alleged Deed was a terminable, non-testamentary instrument, and that Plaintiff's rights terminated when Ouzts sold the Property to Defendant in 2004. Finally, Defendant argues that regardless of how this Court interprets the alleged Deed, Defendant cut off Plaintiff's interest as a bona fide purchaser. Thus, Defendant argues the Court should grant summary judgment in her favor as to all claims. Plaintiff also moves for partial summary judgment, but requests the Court to declare that the alleged Deed is a valid deed that passed title to Plaintiff and which entitles Plaintiff to recover possession of the Property, which has been withheld by Defendant. Plaintiff further asks the Court to grant summary judgment in her favor as to Defendant's estoppel, unjust enrichment, and bona fide purchaser defenses.
As detailed below, the Court finds that the alleged Deed is a deed and not testamentary in character nor a terminable, non-testamentary instrument. Nonetheless, because there are genuine issues of *827material fact regarding the issues of delivery and whether Defendant is a bona fide purchaser, the Court cannot find at this stage of the case that Plaintiff has established superior title out of a common source. Thus, the Court cannot grant summary judgment to either party on the trespass to try title claim. However, the Court dismisses with prejudice Plaintiff's claim for declaratory judgment, as the trespass to try title statute governs the parties' substantive claims. Finally, because the Defendant withdrew her estoppel defense, the Court grants Plaintiff's request for summary judgment on that issue.
A. Whether the Special Warranty Deed is Testamentary in Character, a Terminable, Non-Testamentary Instrument, or a Valid Deed of Conveyance
When a written instrument is not ambiguous, "the construction of the written instrument is for the court, and moreover, even in those cases of ambiguous instruments, if the parol evidence is undisputed as to the circumstances, the construction is yet a question of law for the court." Brown v. Payne ,
The parties dispute the effect the last sentence of the alleged Deed has on the entire document. (Docs. 15, 51). The final sentence dictates that the Property "shall not vest unto Grantee until the demise of the Grantor." (Doc. 15 at 23). It is the only sentence in bold type in the alleged Deed.
1. Deed or Testamentary Instrument
Under the Texas Property Code, "[a] person may make an inter vivos conveyance of an estate of freehold or inheritance that commences in the future, in the same manner as by a will." Tex. Prop. Code § 5.041. Moreover, in Brown , the Supreme Court of Texas clarified the distinction between deeds and wills. Brown ,
If the instrument passes a present interest, although the right of its possession and enjoyment may not occur until some future time, it is a deed or contract; but if the instrument does not pass an interest or right until the death of the maker, it is a will or testamentary paper.
The fact that a deed passes a present interest, even though the possession or enjoyment thereof may be postponed, *828while a will passes no present interest at the time of its execution, but takes effect only upon the death of the testator, and until such time is ambulatory and revocable, establishes the essential difference between the two instruments.
In the case at bar, the alleged Deed passes a present interest in the Property with the intent that the estate commences in the future by deed. Thus, despite the restriction that the Property shall not vest until Ouzts' death, the alleged Deed is not testamentary.
The cases cited by Defendant in urging the Court to hold that the alleged Deed is testamentary in character are distinguishable. First, in Wise , the court found that the "express retention of the power to control and convey the property indicates the decedent did not intend to immediately convey the property to Wise." Wise v. Mitchell , No. 05-15-00610-CV,
Next, in Wren , the instrument "was filled out on a printed form of deed of conveyance of lands. It recited a consideration of one dollar, and natural love and affection for their son, and contained all the usual words and terms of a present grant in the granting clause; concluded with the usual habendum and tenendum clauses, and a covenant of general warranty; was signed by the grantors, and acknowledged before a notary public, delivered to the grantee, and recorded." Wren v. Coffey ,
Similarly, in Carlton , the instrument was in the form of a deed, recorded, was witnessed by a third party, and contained the following language: "The said Abner Lee holding and reserving all the within named estates, both real and personal, during the natural life of the said Abner Lee." Carlton v. Cameron ,
The Court finds this case is more like Garrison , where the issue before the court was whether the instruments were testamentary in nature or deeds. Garrison ,
Similarly, the alleged Deed, without the final sentence, contains all the elements of a deed, was written by a notary public, was *830acknowledged
Moreover, Defendant's argument that the definition of "vest" under Merriam-Webster.com "negates an intent to convey an immediate right in the Property to Plaintiff" is unpersuasive. (Doc. 51 at 9). Texas courts have found instruments containing similar language are deeds. For example, in Irvin , the court opined that the instrument was a deed and not testamentary in character despite the following language in the deed: "that the control and management of the property herein conveyed shall remain in the hands of the grantors or either of them so long as either shall live... after the death of both herein the title to, management of, and occupancy of, shall be vested in and to the following..." Irvin v. Smith ,
After examining the totality of the instrument's language, the Court opines that the alleged Deed is a deed and not testamentary in character.
2. Delivery
Delivery is essential to the validity of a deed. Younge v. Guilbeau , 70 U.S. (3 Wall.) 636, 637,
Defendant argues that there is evidence contradicting Plaintiff's assertion that Ouzts requested that Plaintiff record the alleged Deed. (Doc. 55 at 7). Specifically, Defendant points to a letter dated July 8, 2003,
Plaintiff counters that because the alleged Deed was notarized and recorded, there is conclusive evidence that the Deed was signed, delivered and accepted. (Doc. 57 at 4). Further, Plaintiff claims that she witnessed her father deliver to her the alleged Deed and that he requested that she record the document. Id. at 6-7. Thus, there has been a delivery. Id. It seems *832Plaintiff attempts to establish delivery first by relying on the recordation of the alleged Deed and second based on her statement that she witnessed her father deliver the alleged Deed to her. Because there is a dispute as to the facts surrounding the issue of delivery, the Court cannot grant Plaintiff's motion for summary judgment on the issue of delivery. Nor can it decide whether Plaintiff has a superior title under the alleged Deed whose delivery and thus validity is in question.
3. Effect of Rescission Deed
Plaintiff asks the Court to declare that the Rescission Deed did not affect Plaintiff's interest in the Property under the alleged Deed. However, because the Court cannot at this stage determine whether the alleged Deed was delivered to Plaintiff and consequently whether there was a valid conveyance of property, Plaintiff's interest in the Property remains in question. Therefore, the Court denies Plaintiff's request.
4. Bona Fide Purchaser Argument
Defendant argues that she is a bona fide purchaser that cut off any rights Plaintiff had to the Property when Ouzts sold Defendant the Property in 2004. Both parties move for summary judgment on the issue.
Under Texas law, a party may claim bona fide purchaser status as an affirmative defense in a trespass to try title cause of action. Madison v. Gordon ,
Plaintiff recorded the alleged Deed on June 3, 2003. (Doc. 15). Thus, Defendant is charged with knowledge of the provisions and contents of the document. Cooksey ,
Defendant is correct that when a deed is not properly acknowledged by one qualified to do so, constructive knowledge is not imputed on a subsequent purchaser. See Dyson Descendant Corp. v. Sonat Expl. Co. ,
One who is financially and beneficially interested in a transaction is disqualified from taking an acknowledgment concerning the transaction. However, if the instrument and the notary's certificate are regular on their face, and in no way disclose the interest of the notary in the transaction, the instrument is valid to *833subsequent purchasers without notice of the defect.
The records indicate that despite Ouzts conveying to Plaintiff the Property--which includes several condominiums producing rental income--as her "sole and separate" Property, Plaintiff's husband would be entitled to rental income produced by the Property under Texas law.
In determining whether a deed was regular on its face, a Texas court looked at whether the deed and its acknowledgment disclosed a relationship between the notary and the grantee. Dyson Descendant Corp. v. Sonat Expl. Co. ,
As stated by the Defendant, "a defectively acknowledged instrument does not bind a purchaser with notice of a defect." (Doc. 51 at 12); see also Wells v. Laird ,
B. Declaratory Judgment
Defendant moves for summary judgment as to Plaintiff's declaratory judgment claim. (Doc. 51 at 13). Defendant also raised this argument in its Response to Plaintiff's Motion for Partial Summary Judgment. (Docs. 15, 19). According to Defendant, the declaratory judgment claim is duplicative of Plaintiff's trespass to try title claim. (Doc. 51 at 13). Defendant argues that Plaintiff 'cannot use the declaratory judgment claim as a vehicle to obtain attorney fees." Id. at 14. Plaintiff did not respond to Defendant's arguments.
The Texas Uniform Declaratory Judgment Act "permits parties to obtain judicial declarations of their rights, status, and legal relations under contracts and other written agreement." Coinmach Corp. v. Aspenwood Apartment Corp. ,
C. Money Had and Received
Defendant argues that because the alleged Deed is testamentary in character and thus "Ouzts' death had no impact on her title," Defendant's "receipt of rental income from the Property does not result in unjust enrichment." (Doc. 51 at 15). Thus, Defendant argues Plaintiff's money had and received claim fails.
"To prove a claim for money had and received, a plaintiff must show that a defendant holds money which in equity and good conscience belongs to him. In defending against such a claim, a defendant may present any facts and raise any defenses that would deny a claimant's right under this theory." MGA Ins. Co. v. Charles R. Chesnutt, P.C. ,
D. Estoppel by Deed
Plaintiff argues that Defendant is estopped from disclaiming the alleged Deed because as Ouzts' successor, Defendant is bound by the warranty clause in the alleged Deed. (Doc. 15). "Estoppel by deed or contract precludes parties to a valid instrument from denying its force and effect." Schroeder v. Texas Iron Works, Inc. ,
E. Defendant's Estoppel & Unjust Enrichment Defenses
Because Defendant withdrew her estoppel Defense (Doc. 55 at 10), the Court grants Plaintiff's motion for summary judgment as to said defense. (Doc. 52).
Plaintiff further requests that the Court grant summary judgment in her favor as to Defendant's defense for unjust enrichment--premised on the improvement made and taxes paid by the Defendant on the Property. (Doc. 52). "One who improves real estate under the erroneous but good faith belief that he owns the land is entitled to recover from the true owner the cost of the improvements to the extent they have enhanced the value of the property." Whelan v. Killingsworth ,
F. Plaintiff's Motion to Strike
The Court denies Plaintiff's motion to strike Exhibit B-1 and Exhibit C, as detailed above. Moreover, because the Court did not rely on the remaining exhibits in ruling on the parties' respective motions, the Court denies Plaintiff's remaining requests to strike.
IV. CONCLUSION
For the reasons stated above, the Court GRANTS IN PART and DENIES IN PART Defendant's Motion for Summary Judgment (Doc. 51). Accordingly, Plaintiff's declaratory judgment cause of action is DISMISSED WITH PREJUDICE. Plaintiff's trespass to try title and money had and received claims remain.
The Court further GRANTS IN PART and DENIES IN PART Plaintiff's Motion for Summary Judgment on Defendant's Defenses (Doc. 52). Defendant's estoppel defense is withdrawn while Defendant's unjust enrichment defense remains.
The Court further DENIES Plaintiff's Motion for Partial Summary Judgement. (Doc. 15).
The Court further DENIES Plaintiff's Motion for Partial Summary Judgment on Delivery, Constructive Notice, and Bona Fide Purchaser (Doc. 53).
The Court further DENIES Plaintiff's Motion to Strike Defendant's Summary Judgment Evidence. (Doc. 54)
*836The Court finally DENIES Plaintiff's Unopposed Motion for Hearing. (Doc. 58).
It is so ORDERED.
Whether the alleged Deed was properly acknowledged is discussed below.
Defendant also urges the Court to construe the alleged Deed "to give it the effect of a terminable, non-testamentary instrument." (Doc. 19 at 10). Defendant does not dispute that the Transfer on Death Deed statute does not apply to the alleged Deed because as of the date of the alleged Deed, the statute had not yet been adopted in Texas.
Plaintiff moves to strike Exhibit B-1 under Federal Rule of Evidence 401, 403, and 802 --relevancy and hearsay. (Doc. 54 at 5). However, the Court finds that the document is relevant to the issue of delivery and that Plaintiff has not shown how the relevant exhibit's probative value is substantially outweighed by a danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence. Fed. R. Evid. 401, 403. Further, under Federal Rule of Evidence 803(3), the letter is not inadmissible hearsay because it tends to show Ouzts' plan and intent to retrieve the documents previously given to Plaintiff. Id. at 803(3). Accordingly, Plaintiff's Motion to Strike Exhibit B-1 is denied. (Doc. 54 at 5).
Plaintiff moves to strike Defendant's Exhibit C under Federal Rule of Evidence 401, 403, and 802 --relevancy and hearsay. (Doc. 54 at 6). However, Exhibit C is The Last Will and Testament of William Roy Ouzts. (Doc. 51-1 at 44). Because it contains statements that affect an interest in property, it falls under an exception to hearsay. Fed. R. Evid. 803(15). Further, the document is relevant in determining Ouzts' intent to deliver the alleged Deed. Accordingly, Plaintiff's Motion to Strike Exhibit C is denied.
There exists an exception where the separate property concerns oil-and-gas royalties. Norris v. Vaughan ,
Plaintiff alternatively argues that the Rescission Deed, which was also recorded and references the alleged Deed, placed Defendant on notice of the alleged Deed. (Doc. 54 at 15-16). While this may be correct, the question remains: was the recordation of the alleged Deed proper such that it constitutes constructive notice of Plaintiff's interest in the Property?