Affirmed and Memorandum Opinion filed December 7, 2021.
In The
Fourteenth Court of Appeals
NO. 14-20-00299-CV
BETTY C. BRITTON, Appellant
V.
KENNETH K. LAUGHLIN, Appellee
On Appeal from the 355th District Court
Hood County, Texas
Trial Court Cause No. C2018461
MEMORANDUM OPINION
This case is an appeal from a bench trial over competing claims regarding
two land sales between the seller, appellant Betty C. Britton, and the buyer,
appellee Kenneth K. Laughlin. In two issues, Britton contends that the trial court
erred by (1) entering a take-nothing judgment on her claim for breach of a contract
for deed and (2) awarding damages to Laughlin on his claim for breach of the
covenant against encumbrances. We affirm.
I. BACKGROUND
Britton owned seventeen acres of land adjacent to Laughlin’s property.
Bank of America had a lien on five of those acres. Britton and Laughlin entered
into two real estate transactions for Britton to sell tracts of her land to Laughlin. In
the first deal in August 2013, Britton gave Laughlin a general warranty deed
covering a six-acre tract of land secured by a vendor’s lien. Laughlin paid off the
lien in 2015 and obtained a release of the lien from Britton. Meanwhile, in
October 2014, the parties entered into a second deal for Britton to sell 2.99 acres of
her property under a contract for deed. As part of the contract, Laughlin agreed to
pay Britton interest on a principal sum of $60,000 and to pay the principal by
October 2018. Additionally, Laughlin agreed to “[p]ay monthly payments on
[Britton]’s Bank of America note, account #[redacted], with the approximate
balance of $115,000 for the real property that is a part of this Contract for Deed.”
Laughlin intended to build a warehouse on the six-acre tract of land in late
2016 or early 2017. When he tried to get a loan and use the six-acre tract as
collateral, however, he learned that the Bank of America lien extended onto part of
the six-acre tract, and he could not get financing for the warehouse. When Britton
refused to acknowledge that the Bank of America lien encumbered the six-acre
tract that Laughlin purchased in the first deal, Laughlin stopped making payments
to Britton on the $60,000 owed for the second deal; he continued to pay the Bank
of America note. By the time of trial, the total amount due on the Bank of America
note was $98,885.06.
Britton sued Laughlin, serving a “petition for judicial foreclosure.” She
sought relief as follows: “Plaintiff requests Defendant appear and answer, and that
upon hearing the Court a judgment [sic] declaring that the Defendant defaulted
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under the contract and allowing foreclosure of the Defendant’s interest in the
property.”
Laughlin counterclaimed and sought damages for Britton’s “failing to
convey real property free and clear” from the Bank of America lien on the six-acre
tract. Britton filed a trial brief, arguing that Laughlin’s claim was one for breach of
the covenant against encumbrances, and Laughlin’s “damages should be measured
as the cost of removing the incumbrance.”
At trial, Laughlin agreed that his measure of damages was the amount to
remove the encumbrance on the property: the total amount due on the Bank of
America note, i.e., $98,885.06. He also moved for a judgment—in writing and
orally—on Britton’s foreclosure claim because Britton failed to prove that she had
a lien on the 2.99-acre tract. Laughlin argued that Britton held “both equitable and
legal title to the 2.99 acres,” and she did not have a lien on the property “because
she owns it.” At trial, Britton did not request any damages on her claim; she
argued that she was “entitled to foreclose on the property.”1 She argued that
Laughlin sustained no damages for breach of the covenant against encumbrances
because Laughlin subsequently “assumed the encumbrance” by agreeing to pay the
Bank of America note in the second deal for the 2.99 acres.
The trial court signed a final judgment ordering that Britton take nothing on
her claim and that Laughlin recover from Britton $98,885.06 in damages, interest,
court costs, and attorney’s fees. Britton appeals.
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Britton also asked the trial court to appoint a receiver to “sell all of these tracts and
apportion the money out.”
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II. BRITTON’S CLAIM
In her first issue, Britton contends that the “evidence established that
[Laughlin] breached the contract for deed, and the court erred in not canceling the
contract and forfeiting [Laughlin’s] interest in the property.”
Britton’s petition requested “foreclosure” of the 2.99-acre tract, not a
declaration “canceling the contract” or “forfeiting” Laughlin’s interest in the
property. And Britton has not identified what “interest” Laughlin holds in the
property. “A contract for deed, unlike a typical secured transaction involving a
deed of trust, is a financing arrangement that allows the seller to maintain title to
the property until the buyer has paid for the property in full.” Morton v. Nguyen,
412 S.W.3d 506, 509–10 (Tex. 2013); see also Flores v. Millennium Interests, Ltd.,
185 S.W.3d 427, 429 (Tex. 2005). To foreclose on a property, however, the
plaintiff must show the existence of a deed of trust, among other things. See
Chalker v. Nationstar Mortg., LLC, No. 02-17-0025-CV, 2018 WL 4140739, at *4
(Tex. App.—Fort Worth Aug. 30, 2018, pet. struck) (mem. op.). Britton has made
no argument, either to the trial court or on appeal, how she could foreclose on a
property for which she holds title and no deed of trust.
A trial court’s judgment must conform to the pleadings, see Tex. R. Civ. P.
301, and a trial court cannot render a judgment on a theory of recovery not
sufficiently set forth in the pleadings or otherwise tried by consent. Herrington v.
Sandcastle Condo. Ass’n, 222 S.W.3d 99, 102 (Tex. App.—Houston [14th Dist.]
2006, no pet.). Britton suggests in her reply brief that her case was “simply a suit
on a note” and she “should have been allowed to enforce the remedies set out in
the contract” because “all issues in the case were tried by consent.” But she cites
to no authority or parts of the record to support her argument that Laughlin had any
interest in the property or that “forfeiture” was tried by consent. Accordingly, she
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waived the trial-by-consent argument. See Gunn v. McCoy, 554 S.W.3d 645, 677
(Tex. 2018) (“Every issue presented by a party must be supported by argument and
authorities in the party's brief on the merits, or it is waived.”); Lujan v. Navistar,
Inc., No. 14-14-00345-CV, 2021 WL 56184, at *4 (Tex. App.—Houston [14th
Dist.] Jan. 7, 2021, pet. denied) (mem. op.) (party waived argument that issues
were tried by consent by failing to cite to any authority in support of argument).
Britton’s first issue is overruled.
III. LAUGHLIN’S CLAIM
In her second issue, Britton contends that the trial court erred by awarding
damages to Laughlin for Britton’s breach of the covenant against encumbrances in
the first land deal because Laughlin assumed payment of the mortgage in the
second deal.
The covenant against encumbrances includes the duty of the seller to pay off
and discharge all liens incurred prior to the conveyance that are not assumed by the
buyer. City of Beaumont v. Moore, 146 Tex. 46, 53–54 (1947). The covenant is
breached upon the execution and delivery of the deed, though damages may not
arise until a later date. Id.
Laughlin’s agreement to pay the Bank of America note was not part of the
agreement for the purchase of the six-acre tract of land. Thus, Laughlin did not
take the six-acre tract “subject to [the encumbrance] and with agreement to
discharge it himself.” See Robinson v. Douthit, 64 Tex. 101, 106 (1885). Britton
does not challenge the trial court’s implied finding that she breached the covenant
upon execution and delivery of the deed to Laughlin. A subsequent assumption of
a lien by the buyer of encumbered property is, if evidence of anything, evidence
that the buyer has incurred damages. See Thomas v. Ellison, 102 Tex. 354, 356
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(1909) (reasoning that the buyer did not have a claim for breach of the warranty
against encumbrances “until he had either paid them, or substituted himself” as the
lien-holder’s debtor).
Accordingly, Britton has not shown that Laughlin’s subsequent agreement
with Britton to pay the Bank of America note negates damages resulting from the
breach of the covenant against encumbrances. Her second issue is overruled.
IV. CONCLUSION
Having overruled both of Britton’s issues, we affirm the trial court’s
judgment.
/s/ Ken Wise
Justice
Panel consists of Justices Wise, Bourliot, and Zimmerer.
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