TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-11-00335-CV
John H. Thomas, M.D., Appellant
v.
Graham Mortgage Corporation and Christopher Norris, Substitute Trustee, Appellees
FROM THE DISTRICT COURT OF BURNET COUNTY, 33RD JUDICIAL DISTRICT
NO. 36424, HONORABLE GUILFORD L. JONES III, JUDGE PRESIDING
OPINION
The suit underlying this appeal concerns the nonjudicial foreclosure of certain
ranch property located in Burnet and Llano Counties (“the Property”). Prior to the foreclosure,
the Property was owned by appellant John H. Thomas, M.D. Asserting various claims, Thomas
contends that the foreclosure by Graham Mortgage Corporation (“the Bank”) and Christopher Norris,
substitute trustee, (collectively, “the Bank Defendants”) was wrongful because the Property is his
homestead and thus exempt from forced sale. See Tex. Const. art. XVI, § 50. The Bank Defendants
moved for summary judgment on all of Thomas’s claims and argued that, as a matter of law, Thomas
cannot establish that the Property was his homestead when he executed a loan secured by the Property.
Thomas appeals from the trial court’s grant of summary judgment in favor of the
Bank Defendants. Thomas also appeals from the trial court’s orders striking his amended motion
for summary judgment, striking his motion for an appraisal, and denying his motion for continuance.
We will affirm the orders striking Thomas’s amended motion and denying his motion for continuance.
We will reverse the trial court’s order striking Thomas’s motion for appraisal. Consequently, we
will affirm the trial court’s summary judgment in part, and we will reverse and remand in part.
BACKGROUND
On August 14, 2007, Thomas entered into a written loan agreement with the Bank,
borrowing 3.4 million dollars. The loan agreement signed by Thomas included, as security on the
loan, a deed of trust covering 618 acres of the Property.
A few weeks before closing on the loan, a proposed title insurance policy identified
200 acres of the Property as Thomas’s homestead. The identification was based on a homestead
designation filed by Thomas in 2005, and upon learning of the problem, Thomas sent an e-mail to
the Bank loan officer, Dean Castelhano, regarding the issue. In his June 2007 e-mail, Thomas stated
that the title insurance policy’s homestead exception “was unexpected as the attorney with whom
[he] spoke advised this could be avoided.” Thomas also proposed three options for addressing the
issue: (1) a loan for $2.5 million with the Property reduced by 200 acres, (2) “proceed as planned
with the [proposed loan for $3.7 million ] and reduced collateral,” or (3) “no deal.” According to
Castelhano, his initial reaction to the discovery of the 2005 homestead designation was not to make
the loan, but he decided to proceed after Thomas argued that the Property was not his homestead.
Conversely, Thomas contends that he never had any discussions with any representative from the
Bank about the homestead character of the Property, aside from his June 2007 e-mail.
2
In any event, in closing on the loan, Thomas signed a documented entitled
“Non-Homestead Affidavit and Contingent Designation of Homestead.” In this document, Thomas
declared under oath:
1. “That he has never occupied the dwelling house located on the [Property] for
residence purposes, but has instead allowed such dwelling house at all time
to be utilized by a ranch foreman in his employ.”
2. “That he has no present intent to occupy such dwelling house, or any other
dwelling house to be constructed on the [Property] as his residence in the
future.”
3. “That he does not now claim either a business or residence homestead in the
[Property] and hereby renounces and disclaims any homestead right interest
or exemption in the property.”
Thomas also swore and acknowledged that the affidavit and contingent designation was “made
to induce Graham Mortgage Corporation to fund a mortgage loan secured by a Deed of Trust on
the [Property].”1
According to the Bank, by May 2009, Thomas had defaulted on his obligations under
the agreement by failing to make payments. Consequently, the Bank sought to foreclose on its
security interest and eventually posted the Property for sale. However, before the foreclosure sale
could be conducted, Thomas sued the Bank Defendants, claiming that he had been fraudulently
1
Thomas also declared the following: “That, contingently, to the extent and only to the
extent that the above renunciation and disclaimer is ineffective by his current use of the property for
grazing cattle owned by him, or any other reason, he designates the portion of the property . . .
consisting of 100 acres as described in Exhibit B as attached hereto as the portion of such property
to which he and/or his family is entitled under the constitution and laws of the State of Texas as a
homestead . . . .”
3
induced into the loan agreement. Thomas also sought a temporary restraining order and temporary
injunction to prevent the sale of the Property pending suit, both of which the trial court granted.
In July 2009, Thomas amended his petition, alleging for the first time that 200 acres
of the Property had been designated and continually maintained as his homestead. Based on these
new allegations, Thomas omitted his claim for fraudulent inducement and instead claimed that as
a result of the Property’s homestead status, the Bank Defendants had violated the Texas Constitution,
home equity lending laws, and the Texas Debt Collection Act. See Tex. Const. art. XVI, § 50; Tex.
Fin. Code Ann. §§ 392.001-.404 (West 2006) (debt collection act). In addition to monetary relief,
Thomas sought declarations that (1) the lien held by the Bank was void, (2) the Bank had forfeited
the entire note on the Property, and (3) the Bank was in violation of the Texas Debt Collection Act.
See Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001-37.009 (West 2008) (uniform declaratory
judgment act). That same month, the Bank filed a counterclaim against Thomas for breach of contract.
In August 2009, following a hearing on the Bank Defendants’ motion to reconsider
temporary injunction, the trial court dissolved the temporary injunction prohibiting foreclosure on
the Property. The next month, the Bank foreclosed on its security interest in the Property.2
In December 2010, Thomas filed a motion for summary judgment on all of his
claims. In February 2011, the Bank amended its counterclaim against Thomas and, after applying
2
In response to the allegations in Thomas’s amended petition regarding the homestead
status of the Property, and in an effort to avoid coming within the Texas Constitution’s home equity
lending provisions, the Bank sent a letter to Thomas modifying the loan agreement. Specifically,
the Bank credited Thomas with $1,000 toward the amounts due under the note and informed Thomas
that the note would no longer be secured by the 100 acres that Thomas had conditionally designated
as his homestead in the non-homestead affidavit. The eventual foreclosure did not include these
100 acres.
4
the proceeds from the foreclosure sale to the balance on the loan, sought to recover the remaining
deficiency on the loan balance. The Bank Defendants also filed their own motion for summary
judgment, seeking a declaration that the Property was not a homestead, recovery of the deficiency,
attorney’s fees, and dismissal of all of Thomas’s claims. Both summary-judgment motions were set
for hearing on April 21, 2012.
Ten days before the summary-judgment hearing, Thomas filed a first amended motion
for summary judgment, to which the Bank Defendants filed a written objection on the ground that
the amended motion was untimely. Two days before the hearing on the summary-judgment motions,
Thomas filed an answer to the Bank’s counterclaim and, in the alternative, a motion for an appraisal.
In response, the Bank Defendants filed a motion to strike Thomas’s motion for appraisal. One day
before the hearing, Thomas filed a motion for continuance of the hearing.
On the day of the hearing, the parties appeared, and the trial court denied Thomas’s
motion for continuance. Following a hearing on the remaining motions, the trial court granted
the Bank Defendants’ motion to strike Thomas’s motion for appraisal and the Bank Defendants’
objection to Thomas’s amended motion for summary judgment. Finally, the trial court denied
Thomas’s original motion for summary judgment and granted summary judgment in the Bank
Defendants’ favor, declaring that none of the Property was Thomas’s “homestead property as of
August 14, 2007.”3 Consistent with its orders, the trial court subsequently signed a final judgment
3
The trial court also sustained the Bank Defendants’ objections to summary-judgment
evidence filed by Thomas, in connection with both his own motion for summary judgment and in
response to the Bank Defendants’ motion for summary judgment. In this appeal, Thomas does not
challenge these rulings or the trial court’s denial of his motion for summary judgment.
5
in favor of the Bank Defendants, ordering that Thomas take nothing on his claims and awarding the
Bank $1,434,999.28, plus postjudgment interest and attorney’s fees.
Thomas now raises seven issues on appeal. In these issues, Thomas argues that the
trial court erred in granting summary judgment in favor of the Bank Defendants. In addition,
Thomas argues that the trial court abused its discretion in denying his motion for continuance,
striking his amended motion for summary judgment, and striking his motion for appraisal.
DISCUSSION
Summary judgment on Thomas’s claims for affirmative relief
Standard of review
In his first and fifth issues on appeal, Thomas asserts that the trial court erred in
granting the Bank Defendants’ motion for summary judgment with respect to his claims for
affirmative relief. Summary judgments are reviewed de novo. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005). A movant is entitled to traditional summary judgment if (1) there
are no genuine issues as to any material fact and (2) the moving party is entitled to judgment as a
matter of law. Tex. R. Civ. P. 166a(c). To obtain traditional summary judgment on an opposing
party’s claims, the movant must conclusively negate at least one element of each of the claims or
conclusively establish each element of an affirmative defense. See Centeq Realty, Inc. v. Siegler,
899 S.W.2d 195, 197 (Tex. 1995).
On appeal, we review the evidence presented in the motion and the response in
the light most favorable to the party against whom the summary judgment was rendered,
6
crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary
evidence unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844, 848 (Tex. 2009). Where, as here, the motion for summary judgment asserts
multiple grounds and the summary judgment order does not specify a ground for the ruling, we will
affirm the summary judgment if any ground presented in the motion is meritorious. See Pickett v.
Texas Mut. Ins. Co., 239 S.W.3d 826, 840 (Tex. App.—Austin 2007, no pet.).
In this case, the Bank Defendants moved for traditional summary judgment on all of
Thomas’s claims, each of which requires Thomas to prove that at least a portion of the Property
securing the loan agreement was his homestead at the time the loan agreement was executed. In their
summary-judgment motion, the Bank Defendants asserted that, as a matter of law, Thomas cannot
prove the homestead status of the Property. In response, Thomas argued that (1) there are material
issues of fact regarding the Property’s homestead status that preclude summary judgment and (2) the
Bank has previously taken the position that the Property is Thomas’s homestead and therefore is now
estopped from claiming otherwise.
Homestead status of the property
In deciding whether the trial court erred in granting summary judgment on Thomas’s
claims, we first consider whether a genuine issue as to any material fact exists with respect to the
homestead status of the Property. Homestead properties are afforded special and unique protections
under the Texas Constitution. See Tex. Const. art. XVI, § 50. Relevant to this appeal, Texas
homesteads are generally exempt from “forced sale, for the payments of all debts,” except for those
debts specifically enumerated in the constitution. See id. When a lien that is not constitutionally
7
permitted is placed on homestead property, the lien on the property is void. Laster v. First Huntsville
Props. Co., 826 S.W.2d 125, 129-30 (Tex. 1991). Because constitutional homestead rights protect
citizens from losing their home, courts liberally construe constitutional and statutory homestead
provisions to protect the homestead. Kendall Builders, Inc. v. Chesson, 149 S.W.3d 796, 807
(Tex. App.—Austin 2004, pet. denied). To establish a piece of property as homestead property “the
claimant must show a combination of both overt acts of homestead usage and the intention on the
part of the owner to claim the land as a homestead.” Sims v. Beeson, 545 S.W.2d 262, 263 (Tex.
Civ. App.—Tyler 1976, writ ref’d n.r.e.). Once property is designated as homestead property, it can
lose that character only through abandonment, death, or alienation. Majeski v. Estate of Majeski,
163 S.W.3d 102, 107 (Tex. App.—Austin 2005, no pet.).
One of the grounds upon which the Bank Defendants moved for summary judgment
was abandonment. Specifically, the Bank Defendants argued that, to the extent the Property was
ever Thomas’s homestead property, the undisputed evidence conclusively establishes that Thomas
had abandoned the Property as a homestead at the time the loan agreement was executed and the
deed-of-trust lien was acquired. See Inwood N. Homeowners’ Ass’n, Inc. v. Harris, 736 S.W.2d 632,
635 (Tex. 1987) (explaining that “when the property has not become a homestead at the execution
of the mortgage, deed of trust or other lien, the homestead protections have no application even if
the property later becomes a homestead”). Similarly, the Bank Defendants argued that Thomas is
estopped from claiming the Property as his homestead as a result of the contrary declarations by
Thomas in his “Non-Homestead Affidavit and Contingent Designation of Homestead.”
A property owner does not necessarily abandon homestead property by changing
residence. Rancho Oil Co. v. Powell, 175 S.W.2d 960, 963 (1943) (“The acquiring of a new home
8
is not always the acquiring of a new homestead, and one does not necessarily abandon a homestead
merely by moving his home.”). Even the temporary renting of the homestead does not change the
homestead character of the property, when no other homestead has been established. Id. Rather,
evidence establishing abandonment of a homestead “must be undeniably clear” and show “beyond
almost the shadow, at least of all reasonable ground of dispute, that there has been a total
abandonment with an intention not to return and claim the exemption.” Id. That is, it must be clear
that there has been a discontinuance of the use of the property coupled with an intention not to use
it as a homestead again. See Kendall Builders, 149 S.W.3d at 808.
Though a change of residence does not necessarily equate to abandonment, a change
in residence coupled with a disclaimer of the homestead may form the basis of a claim of
abandonment by estoppel. Estoppel is a doctrine recognized and applied in a variety of contexts, but
generally prevents a party from asserting rights, claims, and matters of fact that are inconsistent
with those previously asserted by the party. See, e.g., Pleasant Glade Assembly of God v. Schubert,
264 S.W.3d 1, 6 (Tex. 2008) (“The doctrine of judicial estoppel ‘precludes a party from adopting
a position inconsistent with one successfully maintained in an earlier proceeding.’”(quoting 2 Roy
W. McDonald & Elaine G. Carlson, Texas Civil Practice § 951 at 576 (2d ed. 2003))); Lopez v.
Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000) (explaining that affirmative
defense of quasi-estoppel “precludes a party from asserting, to another’s disadvantage, a right
inconsistent with a position he or she has previously taken”). Applying estoppel principles in the
context of homestead disclaimers, Texas courts have sought to balance the importance of
constitutional homestead protection with “policy considerations which abhor the perpetration of
fraud on creditors.” See First Interstate Bank of Bedford v. Bland, 810 S.W.2d 277, 284-85
9
(Tex. App.—Fort Worth 1991, no writ). As a result, it is well established that when physical facts
open to observation lead to a conclusion that the property is not the homestead of the mortgagor, and
its use is not inconsistent with the declarations made that the property is disclaimed as a homestead,
and these declarations were intended to be and were actually relied upon by the lender, then the
owner is estopped from asserting a homestead claim. Bland, 810 S.W.2d at 284-85; Shearer v.
Allied Live Oak Bank, 758 S.W.2d 940, 945 (Tex. App.—Corpus Christi 1988, writ denied);
Prince v. North State Bank of Amarillo, 484 S.W.2d 405, 411 (Tex. Civ. App.—Amarillo 1972,
writ ref’d n.r.e.). On the other hand, if the circumstances are such that a lender should have known
or suspected that a homestead disclaimer is false—such as or when a property owner is in actual
possession of a piece of property, occupying and using the property—then courts will not enforce
the disclaimer against the debtor. See Bland, 810 S.W.2d at 287 (holding that facts did not support
estoppel because record indicated that claimant was occupying and using homestead when he
executed disclaimer); Prince, 484 S.W.2d at 405 (noting that the “determining factor is whether the
claimant’s acts were such as to put a reasonable person on notice that the tract constituted part of
the homestead”).
In support of its motion for summary judgment, the Bank Defendants attached the
affidavit of Dean Castelhano, vice president of the Bank and loan officer for the Thomas loan.
Castelhano averred that during their initial conversation, Thomas informed Castelhano that he was
a doctor in Van Horn, that the Property was currently for sale, and that he wanted to borrow against
the Property so that he could buy a ranch in New Mexico. Further, Castelhano explained in his
affidavit that he had conducted a visual inspection of the Property with Thomas’s real estate agent
10
in the month before the closing. Castlehano stated that during this inspection, he did not observe
any dwellings or living structures on the subject property except a cabin and that the real estate agent
told Castelhano that “employees who worked on the [P]roperty lived there and, for that reason,
[he] could not inspect it.” The agent also informed Castelhano that “Dr. Thomas had not lived on
the [Property].”
Thomas has not directly disputed any of these underlying facts, including Castelhano’s
visual inspection or conversations with the real estate agent. Instead, in his affidavit submitted with
his response to the Bank Defendants’ summary-judgment motion, Thomas averred additional
underlying facts that he contends preclude summary judgment in favor of the Bank Defendants.
For example, according to Thomas, he acquired the Property in 1996 and resided on it full-time in a
travel trailer from 1996 to 2002 and again from 2004 to 2006. In addition, in 2006 Thomas completed
construction of a three-bedroom cabin on the Property, which has been occupied by the Property’s
caretaker.4 In his affidavit, Thomas admits that when the loan agreement was executed he was
working and renting a house in Van Horn; however, he asserts that he never intended to abandon the
Property as his homestead. And although the Property was for sale at the time of the loan agreement,
Thomas points out that he continued to make regular visits to the Property, making improvements
on it and using it for grazing cattle, sheep, and horses. Finally, Thomas contends that (1) he designated
the Property as his homestead in 1996, 2001, and 2005 and since then has never designated any
4
Thomas also contends that the caretaker is his fiancé. Thomas did not aver that he has ever
resided in the cabin.
11
other Property as a homestead, and (2) the Property remains his homestead even today. Thomas
asserts that this evidence, at the very least, creates material issues of fact regarding the Property’s
homestead status.
The facts and issues in this case are similar to those presented to the Texas Supreme
Court in Alexander v. Wilson, 77 S.W.2d 873 (Tex. 1935). In that case, the Wilsons had lived on
a rural tract of land as their home for several years before moving to a property owned by their son.
Id. at 874. After the move, the Wilsons continued to own the rural property and used it for farming
and livestock. Two years later, the Wilsons executed a note and secured the note with a mortgage
on the property. The mortgage document signed by the Wilsons contained a recitation that the rural
property was not their homestead. Id. However, when the lenders sought to foreclose, the Wilsons
claimed that the rural property was protected as their homestead. Id. The trial court disagreed, granting
a directed verdict in favor of the lender on the ground that the Wilsons were estopped by the recitation
from asserting their homestead claim. Id. The supreme court upheld the ruling, explaining:
The particular point to be considered is whether the mortgagee had the right to rely
on the declaration, in making the loan and taking the mortgage. He had such right,
unless the visible circumstances existing at the time, were of such import as to
apprise him of the fact that the farm was the home of the mortgagors. That the
circumstances were deficient in this respect, is plain. The mortgagors resided in
town. The use being made of the farm was not appurtenant to their residence there.
...
Even if known to the mortgagee in the instant case, the circumstances that the place
in town did not belong to the mortgagors, would not prevent an estoppel from arising
against them. This circumstance, too, was consistent with an abandonment of the
home on the farm.
Id.
12
Here, the pertinent undisputed facts—the information conveyed to Castelhano by
Thomas during their initial conversation before the loan, along with Castelhano’s visual observations
of the Property—lead to the conclusion that Thomas was not occupying the premises as his home
at the time the loan was made. Although Thomas asserts that he continued to use the Property for
agricultural purposes after moving to Van Horn, including at the time of the loan agreement, this use
is not inconsistent with an abandonment of the homestead. See id. (“Where homestead claimants
reside in a city or town, the law does not regard a use of rural land as being a use for the purposes
of a home.”). Similarly, the fact that the Property may have been previously used and designated by
Thomas as his homestead, even if made known to the Bank, is not necessarily inconsistent with a
subsequent abandonment. Under these circumstances, the Bank was justified in relying on Thomas’s
representation that he was disclaiming any constitutional homestead rights in the Property. Upon
review of the record, we conclude that Thomas is estopped from denying the truth of his homestead
disclaimer. Consequently, we also conclude that the evidence conclusively establishes that Thomas
abandoned any homestead rights in the Property at the time of the loan agreement.
Thomas’s estoppel claim
Next, we examine whether the trial court erred in granting summary judgment on
Thomas’s claims because the Bank is estopped from asserting that the Property was not Thomas’s
homestead or that Thomas abandoned his homestead rights. In response to the Bank Defendants’
motion for summary judgment, Thomas argued that the Bank had previously recognized that
the Property was his homestead property when it implemented Thomas’s contingent homestead
13
designation and released 100 acres of the Property as security on the note. Because the Bank’s
decision to release the 100 acres is not inconsistent with its position that Thomas did not have any
homestead rights in the property at the time the loan agreement was executed, we disagree.
As previously discussed, estoppel generally prevents a party from asserting rights,
claims, and matters of fact that are inconsistent with those previously asserted by the party. See, e.g.,
Pleasant Glade Assembly of God, 264 S.W.3d at 6 (judicial estoppel); Lopez, 22 S.W.3d at 864
(quasi-estoppel). In this case, the Bank has never taken the position that the Property was Thomas’s
homestead at the time the loan agreement was executed. In fact, the record establishes that the Bank
released the 100 acres in order to avoid liability in the event the Property is ultimately determined
to be homestead property. The Bank’s release of the 100 acres is not inconsistent with its position
that the Property was not Thomas’s homestead at the time the loan agreement was executed. Instead,
the action represents an alternative defensive position in response to Thomas’s claim that the Bank
had violated home equity provisions of the Texas Constitution.
The summary-judgment record conclusively establishes that, when the loan agreement
was executed, Thomas abandoned any homestead rights he had in the Property. Further, there is
nothing in the record supporting Thomas’s claim that the Bank Defendants are estopped from
asserting that Thomas abandoned his homestead rights. Accordingly, we conclude that the trial court
did not err in granting the Bank Defendants’ motion for summary judgment on Thomas’s claims for
affirmative relief. Thomas’s first issue on appeal, to the extent he complains of the trial court’s grant
of summary judgment on his claims, and fifth issue on appeal are overruled.
14
Summary judgment on the Bank’s deficiency claim and Thomas’s request for an appraisal
under section 51.003 of the Texas Property Code
In his first and fourth issues on appeal, Thomas complains that the trial court erred
in denying him an appraisal of the Property and in granting summary judgment on the Bank’s
deficiency claim. A claim for deficiency arises when real property is sold at foreclosure for a price
that is less than the unpaid balance of indebtedness secured by the real property. See Tex. Prop.
Code Ann. § 51.003(a) (West 2007). When a deficiency claim is pursued by a lender, section 51.003
of the Texas Property Code provides that the borrower may request that “the court in which the
action is pending determine the fair market value of the real property as of the date of the foreclosure
sale.” Id. § 51.003(b). If the court determines that the fair market value is greater than the price paid
at the foreclosure sale, the borrower is “entitled to an offset against the deficiency amount in the
amount by which the fair market value . . . exceeds the sale price.” Id. § 51.003(c). If a request to
determine fair market value is not made, or if no competent evidence of fair market value is
introduced, the foreclosure sale price is used to compute the deficiency amount. Id.
A request for an offset against a deficiency claim under section 51.003 is an
affirmative defense that must be pleaded. Cabot Capital Corp. v. USDR, Inc., 346 S.W.3d 634, 639
(Tex. App.—El Paso 2009, pet. denied) (section 51.003 offset is affirmative defense). This pleading
requirement, however, is met when the offset is requested by motion. Winfield v. Dosohs I, Ltd.,
No. 01-97-00997-CV, 1998 WL 436895, *4 (Tex. App.—Houston [1st Dist.] July 30, 1998, no pet.)
(mem. op., not designated for publication) (noting that it considered motion for appraisal under
section 51.003 of property code to be part of defendant’s answer). Accordingly, for an offset defense
under section 51.003 to be considered in response to a motion for summary judgment on a deficiency
15
claim, the request must be on file at the time of the summary-judgment hearing. See Tex. R. Civ.
P. 166a(c). In addition, the timeliness of a request for an offset under section 51.003 is governed by
rule 63 of the Texas Rules of Civil Procedure. Id., 1998 WL 436895, at *4.
Rule 63 provides that parties may amend their pleadings “provided, that any
pleadings, responses, or pleas offered for filing within seven days of the date of trial or thereafter,
or after such time as may be ordered by the judge under rule 166, shall be filed only after leave
of the judge is obtained.” Tex. R. Civ. P. 63. A summary-judgment proceeding is a trial within the
meaning of rule 63; thus, a party must seek leave of court before filing an amended pleading within
seven days of a summary-judgment hearing. See IKB Indus. (Nigeria), Ltd. v Pro-Line Corp.,
938 S.W.2d 440, 441 (Tex. 1997). The trial court, however, must grant leave to amend “unless there
is a showing that such filing will operate as a surprise to the opposite party.” Tex. R. Civ. P. 63.
The burden to show surprise or prejudice is on the party resisting the amendment. See Greenhalgh
v. Service Lloyds Ins. Co., 787 S.W.2d 938, 939-40 (Tex. 1990). This required showing may be
(1) made by presenting evidence of surprise or prejudice or (2) based on the trial court’s conclusion
that the amendment on its face is calculated to surprise or prejudice. See id. at 940; Hardin v. Hardin,
597 S.W.2d 347, 350-51 (Tex. 1980). An amendment adding a new cause of action or defense
operates as a surprise and is prejudicial on its face if it (1) reshapes the nature of the case, (2) could
not have been anticipated, and (3) prejudices the plaintiff’s presentation of the case. Deutsch v.
Hoover, Bax & Slovacek, L.L.P., 97 S.W.3d 179, 186 (Tex. App.—Houston [14th Dist.] 2002, no pet.).
The Bank foreclosed on the Property, pleaded a deficiency counterclaim against
Thomas, and subsequently moved for summary judgment on its claim. Two days before the
16
summary-judgment hearing, Thomas filed an answer to the Bank’s counterclaim for deficiency and
alternative motion for appraisal, requesting an appraisal and offset under section 51.003 of the
property code. In support of his motion for appraisal, Thomas asserted that (1) a month before
execution of the loan agreement in 2007, the Property had been appraised at more than $6 million,
far in excess of the amount of the loan, and (2) the Bank purchased the Property at the foreclosure
sale in 2009 for approximately $2.2 million. There is no document in the record indicating that
Thomas requested or obtained leave of court before filing his amended answer and alternative
motion. However, the Bank Defendants moved to strike the motion for appraisal on the ground that
it operated as an unfair surprise under rule 63, and the court granted the motion to strike by written
order. Thus, it is clear from the record that the trial court was made aware of Thomas’s amended
pleading and expressly refused to consider it as part of the summary-judgment record. Cf. Goswami
v. Metropolitan Sav. & Loan Ass’n, 751 S.W.2d 487, 490-91 (Tex. 1988) (presuming, in absence of
contrary evidence, that amended pleading filed four days before summary-judgment hearing was
before the court, even though record did not show that leave was requested). We review the trial
court’s decision to strike Thomas’s motion for appraisal for an abuse of discretion. See State Bar
of Tex. v. Kilpatrick, 874 S.W.2d 656, 658 (Tex. 1994) (“If the trial amendment is not mandatory,
then the decision to permit the amendment rests within the sound discretion of the trial court.”);
Perez v. Embree Constr. Group, Inc., 228 S.W.3d 875, 88-83 (Tex. App.—Austin 2007, pet. denied).
The Bank Defendants argue that the trial court did not abuse its discretion in striking
Thomas’s motion for appraisal solely because the pleading is prejudicial on its face. The Bank
Defendants presented no evidence of surprise or prejudice with regard to their motion to strike,
and we find that no such evidence appears in the record. Although the Bank foreclosed on the
17
Property in September 2009, it waited until February 2011 to amend its pleadings to assert its
deficiency counterclaim. Three days after asserting its deficiency claim, the Bank Defendants moved
for summary judgment on the claim, and less than two months later, Thomas amended his pleadings
and requested an offset under section 53.001. Under these circumstances, we cannot conclude that
surprise or prejudice is apparent on the face of the pleadings, given that the Bank could have
anticipated that Thomas would assert a section 53.001 offset defense. See Hardin, 597 S.W.2d at 350
(concluding that amendment was prejudicial on its face where “[the] amendments could not have
been anticipated by the plaintiff, and had they been permitted, they would have prejudiced the
plaintiff’s presentation of the case and resulted in unnecessary delay”).
Based on the record before us, including the lack of evidence of surprise or prejudice
to the Bank, we conclude that the trial court abused its discretion in striking Thomas’s motion for
appraisal. See Greenhalgh, 787 S.W.2d at 939 (noting that trial court has no discretion to refuse
amendment under rule 63 unless (1) opposing party presents evidence of surprise or prejudice or
(2) amendment is prejudicial on its face). As a result, the trial court erred by granting summary
judgment on the Bank’s deficiency claim based solely upon evidence of the Property’s foreclosure
sale price. Thomas’s first issue on appeal, to the extent he complains of the trial court’s grant of
summary judgment on the Bank’s deficiency claim and related attorney’s fees, and fourth issue on
appeal are sustained.
Thomas’s amended motion for summary judgment
In his second, third, and sixth issues on appeal, Thomas complains of the trial court’s
refusal to consider his amended motion for summary judgment. In that amended motion, Thomas
18
added estoppel as a ground for summary judgment in his favor. That is, Thomas argued that
summary judgment should be granted in his favor because the Bank is estopped from arguing that
the Property is not his homestead or that it has been abandoned. As previously discussed, Thomas’s
estoppel claim fails as a matter of law. In addition, rule 166a of the Texas Rules of Civil Procedure
requires that a nonmovant receive at least twenty-one days’ notice of each motion for summary
judgment. See Tex. R. Civ. P. 166a. Thus, Thomas’s amended motion for summary judgment, filed
ten days before the summary-judgment hearing, was untimely. The trial court properly sustained
the Bank Defendants’ objection to Thomas’s amended motion for summary judgment and correctly
declined to consider the amended motion for purposes of the April 21 hearing. We overrule Thomas’s
second, third, and sixth issues on appeal.
Thomas’s claim of “fraud on the court”
Finally, in his seventh issue on appeal, Thomas asserts that the Bank Defendants’
actions amount to a “fraud on the court.” Thomas contends that the Bank Defendants violated
multiple rules of procedure and that the trial court (1) “allowed objection and new evidence in
violation of the rules of procedure,” (2) “denied Thomas’s motion for continuance despite a clear
indication in the interest of justice for a continuance,” (3) “denied Thomas the privilege of oral
argument in support of his motion for summary judgment,” (4) “curtailed Thomas’s argument against
[the Bank Defendants’] motion for summary judgment,” (5) “overlooked the clear standard for
denying a summary judgment motion,” and (6) “denied Thomas’s statutory right to an appraisal of
the property at the time of taking.” Thomas argues, in essence, that the trial court’s erroneous legal
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rulings on these matters establish that the court was biased against him, and therefore, he was
“unable to obtain a fair and impartial hearing.”
Before determining whether the record establishes that Thomas did not obtain a fair
and impartial hearing, generally, we first consider Thomas’s specific argument that the trial court
erred in denying his motion for continuance of the summary-judgment hearing. In his motion,
Thomas argued that a continuance of the hearing was necessary because he had recently received
“36 pages of new information and evidence” in response to his motion for summary judgment
and the various objections presented by the Bank Defendants. Thomas contended that he was “in
the process of hiring new legal counsel to represent him” and had “not had time to research the
information and adequately represent himself.” A decision on a motion for continuance lies within
the discretion of the trial court, and an appellate court will not disturb a trial court’s denial of a
motion for continuance unless the record reveals a clear abuse of discretion. BMC Software Belg.
v. Marchand, 83 S.W.3d 789, 800 (Tex. 2002).
Based on the record before us, including (1) the fact that no additional discovery was
requested by Thomas, (2) the amount of time that the case had been on file, and (3) the amount of
time that the summary-judgment motion had been on file, we cannot conclude that the trial court
abused its discretion in denying Thomas’s motion for continuance. See Perotta v. Farmers Ins.
Exch., 47 S.W.3d 569, 576 (Tex. App.—Houston [1st Dist.] 2001, no pet.) (factors for deciding
whether trial court abused its discretion in denying motion for continuance); Green v. Cook, No. 02-
08-00087-CV, 2009 WL 279384, *17-18 (Tex. App.—Fort Worth Feb. 5, 2009, no pet.) (mem. op.)
(court reviewing ruling on motion for continuance considers “nature and complexity of the case, the
nature of the evidence required to address the motion, how long the motion has been on file, and if
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the absence of counsel is an issue, whether the absence is the fault of the continuance-requesting
party”). Similarly, we cannot conclude that the trial court’s refusal to allow Thomas to orally argue
his motion for summary judgment or to present additional argument in response to the Bank
Defendants’ summary-judgment motion represents an abuse of discretion. See Long v. Yurrick, 319
S.W.3d 944, 948 (Tex. App.—Austin 2010, no pet.) (citing Martin v. Martin, Martin & Richards,
Inc., 989 S.W.2d 357, 359 (Tex. 1998) (per curiam)) (“Due process does not require an oral hearing
on a motion for summary judgment, but notice of hearing or submission of the motion is required.”).
Finally, we examine whether the record as a whole demonstrates that Thomas did
not receive a fair trial as a result of judicial bias. The United States Supreme Court has determined
that “judicial rulings alone almost never constitute a valid basis for a bias or partiality motion.”
Liteky v. United States, 510 U.S. 540, 555 (1994). To the extent Thomas complains of judicial
rulings, we have separately considered the merits of each argument that Thomas has adequately
briefed and have concluded that the rulings are not in error or an abuse of discretion.5 Aside from
judicial rulings, Thomas points to nothing in the record as evidence of bias against him. See id.
(recognizing that “judicial remarks during the course of a trial that are critical or disapproving of, or
even hostile to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality
challenge”). In any event, we have reviewed the record and conclude that there is no evidence of
judicial bias. Thomas’s seventh issue on appeal is overruled.
5
Thomas does not present any argument, authorities, or citation to the record in support of
his contention that the trial court “allowed objection and new evidence in violation of the rules of
procedure.” Accordingly, we conclude that this argument is waived as inadequately briefed. See
Tex. R. App. P. 38.1(I) (appellant’s brief must contain clear and concise argument for contentions
made, with appropriate citations to authorities and to record).
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CONCLUSION
Having sustained Thomas’s fourth issue on appeal and, in part, his first issue on
appeal, we reverse the trial court’s summary judgment with respect to the Bank’s claims for a
deficiency judgment and for attorney’s fees, and we remand those portions of the cause to the trial
court for further proceedings consistent with this opinion. We affirm the remainder of the trial
court’s summary judgment.
__________________________________________
Scott K. Field, Justice
Before Justices Puryear, Goodwin and Field
Affirmed in Part, Reversed and Remanded in Part
Filed: April 4, 2013
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John H. Thomas, M.D. v. Graham Mortgage Corporation and Chris Norris, Substitute Trustee
Combined Opinion