COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-09-00330-CV
LUREA HORNBUCKLE AND APPELLANTS
WILLIAM HORNBUCKLE, SR.
ESTATE
V.
COUNTRYWIDE HOME LOANS, APPELLEES
INC. AND MASSACHUSETTS
MUTUAL LIFE INSURANCE
COMPANY
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FROM THE 153RD DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION1
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This is an appeal from the trial court’s summary judgment in favor of
appellees Countrywide Home Loans, Inc. and Massachusetts Mutual Life
Insurance Company dismissing with prejudice all of the claims asserted against
1
See Tex. R. App. P. 47.4.
them by appellants Lurea Hornbuckle and the estate of William Hornbuckle, Sr.
(collectively, appellant) and allowing appellees to judicially foreclose their loan on
appellant’s residence. We affirm.
Background
Appellant Lurea and her now-deceased husband, William, purchased a
home in Arlington on March 1, 2002. To purchase the home, they obtained an
FHA loan from Principal Residential Mortgage, Inc. (PRMI). The Hornbuckles
signed a note and deed of trust both dated March 1, 2002. The lender was
identified in both documents as PRMI, but the beneficiary in the deed of trust is
Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee for
PRMI.
In late 2003 or early 2004, servicing of the loan was transferred to
Countrywide. Nothing in the record shows that the Hornbuckles were informed
that PRMI sold the note and deed of trust to Massachusetts Mutual. But a letter
to the Hornbuckles from Countrywide shows that the Hornbuckles knew PRMI
had transferred servicing of the loan as of at least February 10, 2004 and that
they knew Countrywide was the new servicer as of at least March 29, 2004.
Countrywide began crediting payments from the Hornbuckles in March 2004
although the Hornbuckles expressed their dissatisfaction with the transfer of the
servicing and questioned whether PRMI had transferred, or Countrywide had
credited, their entire escrow account. Countrywide’s records show that the
2
March 2004 payment was credited to the January 2004 note installment due, but
because PRMI transferred only $21.60 for the escrow account and Countrywide
paid the Hornbuckles’ home insurance in March, the escrow account had a
negative balance at that time. Accordingly, the Hornbuckles were two months
behind in payments until January 2005, when they brought their account current.
However, they still had a negative escrow balance, and they failed to make their
February 2005 payment. After that, they were at least one month past due on all
of their payments throughout 2005. Countrywide sent the Hornbuckles a letter
on November 16, 2005, telling them it would accelerate the note if they did not
cure the default by paying $6,417.49 on or before December 21, 2005.
Countrywide did not foreclose at that time.
William died intestate2 in late 2005, and Lurea filed a petition for
bankruptcy on May 1, 2006. Throughout 2006 and 2007, Lurea fell further and
further behind in making payments on the note; Countrywide’s records show that
she stopped making payments altogether in June 2007. Lurea’s bankruptcy was
dismissed on October 11, 2007 without discharging any debts that were
outstanding at that time.
On September 24, 2007, appellant sued appellees in the 17th District
Court of Tarrant County for DTPA violations and fraud, seeking an injunction
2
Appellant does not contest that William died intestate. Under the probate
code, his interest in the property immediately vested in his heirs at law subject,
however, to the outstanding debt. See Tex. Prob. Code Ann. §§ 37, 38 (Vernon
2003).
3
against them foreclosing on the residence. She accused appellees of wrongful
acceleration of the note, wrongful debt collection practices, and wrongful refusal
to give her an accurate amount required to cure the default. Appellant did not
ask for a hearing, and the trial court never issued an injunction.
On December 5, 2007, Countrywide sent appellant a second letter stating
its intention to accelerate the note if appellant failed to cure a default of now
$35,839.393 by December 25, 2007. Instead of attempting to foreclose, however,
Countrywide, for the benefit of Massachusetts Mutual as lender, filed suit in the
48th District Court of Tarrant County, seeking judicial foreclosure of the lien
secured by appellant’s residence. Appellant answered and counterclaimed with
the same matters raised in her prior petition. Both appellant’s and appellees’
suits were transferred to the 153rd District Court and consolidated into one cause
number.
Appellees filed a traditional motion for summary judgment on their claim for
judicial foreclosure and both traditional and no-evidence motions on appellant’s
claims against them. Appellant responded, but the trial court granted a final and
appealable summary judgment for appellees on both their foreclosure claim and
appellant’s counterclaims. Appellant then perfected this appeal.
3
The $35,839.39 represents approximately eighteen months of
nonpayment and includes $2174.36 in late charges and $2824.80 in other
charges.
4
Standards 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 doubts in the nonmovant’s favor. 20801,
Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A plaintiff is entitled to
summary judgment on a cause of action if it conclusively proves all essential
elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986). 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); see
Tex. R. Civ. P. 166a(b), (c).
When reviewing a no-evidence summary judgment, we examine the entire
record in the light most favorable to the nonmovant, indulging every reasonable
inference and resolving any doubts against the motion. Sudan v. Sudan, 199
S.W.3d 291, 292 (Tex. 2006). We review a no-evidence summary judgment for
evidence that would enable reasonable and fair-minded jurors to differ in their
conclusions. Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008) (citing City of
5
Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005)). We credit evidence
favorable to the nonmovant if reasonable jurors could, and we disregard
evidence contrary to the nonmovant unless reasonable jurors could not. Timpte
Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009) (quoting Mack Trucks, Inc.
v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006)). If the nonmovant brings forward
more than a scintilla of probative evidence that raises a genuine issue of material
fact, then a no-evidence summary judgment is not proper. Smith v. O’Donnell,
288 S.W.3d 417, 424 (Tex. 2009); King Ranch, Inc. v. Chapman, 118 S.W.3d
742, 751 (Tex. 2003), cert. denied, 541 U.S. 1030 (2004).
Analysis
To obtain judicial foreclosure, appellees had to show that the note sued on
is a purchase money note, that a part of the purchase money is due and unpaid,
and that the property on which the lien is to be enforced is the same property
subject to the lien. Kyle v. Countrywide Home Loans, Inc., 232 S.W.3d 355, 362
(Tex. App.––Dallas 2007, pet. denied); 63 Tex. Jur. 3d Real Estate Sales §§ 436,
441 (2002). This they did through their summary judgment evidence, which
included a copy of the note endorsed to Countrywide; the deed of trust; an
assignment of the note and deed of trust to “Countrywide Home Loans, Inc. for
the benefit of the purchaser, Massachusetts Mutual Life Insurance Company”; a
statement showing payments and debits related to appellant’s loan number from
2/12/04 to 1/16/09; and an affidavit from a Countrywide senior paralegal averring
6
that appellant was in arrearage $64,351.92 as of June 2009. Accordingly, it was
appellant’s burden to raise a fact issue as to any defenses to foreclosure that she
had alleged. See Dashiel v. Lott, 243 S.W. 1072, 1072–74 (Tex. Comm’n App.
1922); Leone v. Valiant Ins. Co., 461 S.W.2d 426, 427–28 (Tex. App.––El Paso
1970, no writ).
In her brief, appellant has alleged that she raised a fact issue as to the
following defenses and counterclaims: lack of evidence of ownership of the note
and deed of trust, wrongful foreclosure, forgery of documents, misconduct by
appellees’ counsel, and breach of the deed of trust by appellees.4 Appellant’s
issues present argument as to whether she raised a fact issue on any of these
defenses and counterclaims.
In her first and second issues, appellant contends that foreclosure is
improper, and that appellees committed fraud by attempting to institute
foreclosure proceedings,5 because appellees have not shown sufficient
4
Appellant alleged in the trial court that appellees violated the Fair Debt
Collection Practices Act. Although she mentions the phrase, “fair debt collection
practices,” in her brief, she provides no argument or authority to show she raised
a fact issue on that ground. See Tex. R. App. P. 38.1(i); Clifton v. Walters, 308
S.W.3d 94, 99 (Tex. App.––Fort Worth 2010, pet. denied).
5
Appellant contended in the trial court that appellees did not provide the
proper information in a foreclosure notice under section 51.0025 of the property
code. But because appellees did not move forward with a foreclosure under the
power of sale provision in the deed of trust and sought a judicial foreclosure
instead, appellant’s argument is premature. See Tex. Prop. Code Ann. §
51.0025 (Vernon 2007). Appellant also contends that because the deed of trust
provides for a nonjudicial foreclosure, appellees cannot seek a judicial
7
ownership in the note and deed of trust and because appellees have attempted
to conceal the identity of the owner of the note and deed of trust. Appellant
claims that appellees are required to produce the original, unaltered note as
proof.
As a federal court of appeals has explained,
In 2009, a foreclosure defense colloquially termed “show me
the note” began circulating through courts across the country.
Advocates of this theory believe “that only the holder of an original
wet-ink signature note has the lawful power to initiate a non judicial
foreclosure.” Courts have routinely rejected the defense on the
ground that foreclosure statutes simply do not require production of
the original note at any point during the proceedings.
Stein v. Chase Home Fin., LLC, No. 09-1995 (MJD/JJG), 2010 WL 4736828, at
*3 (D. Minn. Aug. 13, 2010), adopted, 2010 WL 4736233 (D. Minn. Nov. 16,
2010) (citations omitted). Appellees were not required to produce the original
note; they provided a copy of the note containing an endorsement to
Countrywide as payee as well as the assignment of the note and deed of trust to
Countrywide for the benefit of Massachusetts Mutual, with recording information
attached. See Alexander v. Wells Fargo Bank, N.A., No. 02-10-00005-CV, 2011
WL 1331519, at *3 (Tex. App.––Fort Worth Apr. 7, 2011, no pet. h.) (mem. op.).
Accordingly, they provided sufficient summary judgment proof of the loan
servicing arrangement authorizing Countrywide to service the loan for
foreclosure of the deed of trust. But the deed of trust authorizes the lender to
invoke the power of sale or “any other remedies permitted by applicable law.”
8
Massachusetts Mutual as the owner. See Tex. Bus. & Com. Code Ann.
§§ 3.205, 3.301 (Vernon 2002). We overrule appellant’s first and second issues.
In her third issue, appellant claims that appellees committed fraud by
fabricating the assignment of the note and deed of trust because the assignment
was not recorded until 2006 and because it is not signed by the lender.
Appellant also claims the copies of the note and deed of trust attached to
appellees’ summary judgment motion as evidence were altered, forged, or both.
Appellant complains about barcodes and “squiggles” on the assignment;
however, these appear to be identifications generated by either electronic
recording of the documents or an electronic identification system. She provides
no authority indicating that the additions of such indentifying barcodes voids the
documents. See Tex. Bus. & Com. Code Ann. § 3.407 (Vernon 2002) (providing
that alteration must be material and fraudulent to void instrument). The
assignment of the deed of trust was signed on behalf of MERS, the beneficiary in
the deed of trust. See Athey v. Mortg. Elec. Registration Sys., Inc., 314 S.W.3d
161, 166 (Tex. App.––Eastland 2010, pet. denied). As a Texas federal court has
explained,
The MERS system is merely an electronic mortgage
registration system and clearinghouse that tracks beneficial
ownerships in, and servicing rights to, mortgage loans. The system
is designed to track transfers and avoid recording and other transfer
fees that are otherwise associated with the sale. MERS is defined in
Texas Property Code § 51.0001(1) as a “book entry system.”
9
Richardson v. CitiMortgage, Inc., No. 6:10cv119, 2010 WL 4818556, at *5 (E.D.
Tex. Nov. 22, 2010) (mem. op. and order) (citations omitted). “Book entry
system” is defined as “a national book entry system for registering a beneficial
interest in a security instrument that acts as a nominee for the grantee,
beneficiary, owner, or holder of the security instrument and its successors and
assigns.” Tex. Prop. Code Ann. § 51.0001(1) (Vernon Supp. 2010). A book
entry system such as MERS is included within the definition of “mortgagee”
under Texas law. Id. § 51.0001(4). Thus, although the transfer to appellees
through MERS took place in 2004, the actual assignment was not recorded until
2006, in anticipation of foreclosure proceedings. Appellant has not provided any
authority showing how this later recording affected the validity of the assignment.
Moreover, contrary to appellant’s contentions, the lender to whom a note and
deed of trust are assigned is not required to sign the assignment. See id. §
5.021 (Vernon 2004).
Appellant likewise failed to bring forward any evidence raising a fact issue
as to her claims of forgery. The signatures of appellant on the note and deed of
trust are consistent with the signatures on the copies of the other loan closing
documents provided by appellant. And appellant brought forward no evidence
that the endorsements on the note and the signature on the assignment of the
deed of trust were not authorized. See Tex. Bus. & Com. Code Ann. § 3.308
(Vernon 2002); Pool v. Diana, No. 03-08-00363-CV, 2010 WL 1170234, at *9
10
(Tex. App.––Austin Mar. 24, 2010, pet. denied) (mem. op.). Accordingly, we
overrule appellant’s third issue.
In her fourth and sixth issues, appellant alleges that appellees’ counsel
committed misconduct by concealing the identity of the lender during discovery
and by withholding discovery, in particular the original of the note. She also
contends that appellees’ continued pursuit of foreclosure with knowledge that
they lack such ownership is a breach of the deed of trust. Appellant never
established in the trial court that she was entitled to any additional discovery, nor
did she provide evidence that appellees refused to answer discovery. See In re
Lesikar, 285 S.W.3d 577, 587–88 (Tex. App.––Houston [14th Dist.] 2009, orig.
proceeding). Appellant’s original petition names both Countrywide and
Massachusetts Mutual as defendants and identifies Countrywide as the servicer.
Massachusetts Mutual attached a copy of the assignment of the note and deed
of trust, with recording information attached, to its motion for summary judgment.
Moreover, appellees were not required to produce the original note as proof that
Massachusetts Mutual was the current owner. See Alexander, 2011 WL
1331519, at *3. Accordingly, we conclude and hold that appellees were entitled
to summary judgment on appellant’s claims regarding actions by their counsel.
We overrule appellant’s fourth and sixth issues.
In her fifth issue, appellant claims that appellees breached the deed of
trust by interfering with her performance under it (in the trial court she alleged
11
that appellees did not credit payments she had made, and even returned some
payments) and by failing to obtain HUD approval before attempting to foreclose.
Although appellant presented evidence that Countrywide did return a payment to
her, the letter evidencing that return shows that appellant was already in default
at the time and that the payment was not enough to bring the account current.
Moreover, appellant failed to present any evidence disputing appellees’ affidavit
evidence that she has failed to make any payments since June 14, 2007, yet she
has still been living in the house secured by appellees’ lien while appellees have
continued to pay the property taxes and insurance. See id. Additionally,
appellant has no private right of action regarding any alleged failure by appellees
to follow HUD regulations, even those incorporated in the deed of trust. See,
e.g., Mitchell v. Chase Home Fin. LLC, No. 3:06-CV-2099-K, 2008 WL 623395,
at *4 (N.D. Tex. Mar. 4, 2008) (mem. op. and order). Accordingly, we conclude
and hold that appellees were entitled to summary judgment on appellant’s breach
of contract claims. We overrule her fifth issue.
In her seventh issue, appellant contends generally that she raised a fact
issue or issues sufficient to defeat appellees’ motions for summary judgment.
After a thorough review of the entire record, we conclude and hold that the trial
court did not err by granting summary judgment to appellees; appellant failed to
raise a fact issue on appellees’ claim for judicial foreclosure and on her
counterclaims. We overrule appellant’s seventh issue.
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Conclusion
Having overruled appellant’s seven issues, we affirm the trial court’s
judgment.
PER CURIAM
PANEL: LIVINGSTON, C.J.; DAUPHINOT and WALKER, JJ.
DELIVERED: May 19, 2011
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