EVICTION SUIT DIFFERS FROM SUIT TO RESOLVE OWNERSHIP ISSUES (TITLE TO REAL ESTATE)
A forcible detainer action is an expedited proceeding intended to "provide a speedy, simple, and inexpensive means for resolving the question of the right to possession of premises" where no unlawful entry occurs. Rice v. Pinney, 51 S.W.3d 705, 709 (Tex.App.-Dallas 2001, no pet.). The right to immediately possess real property is not necessarily contingent on proving full title, and "[t]he Texas Legislative has specifically bifurcated the questions of possession and title and placed jurisdiction for adjudicating those issues in separate courts." Murray v. U.S. Bank Nat'l Ass'n, 411 S.W.3d 926, 928 (Tex.App.-El Paso 2013, no pet.).
The justice courts have original jurisdiction over forcible detainer cases, which deal with the question of who has the superior right of immediate possession over real property. TEX.GOV'T CODE ANN. § 27.031(a)(2)(West Supp. 2015); Murray, 411 S.W.3d at 928. The justice court and, by extension, the county court sitting as an appellate court on trial de novo only have jurisdiction to consider the issue of possession, not title. See TEX.GOV'T CODE ANN. § 27.031(b)(4); TEX.R.CIV.P. 501.1; Padilla v. NCJ Dev., Inc., 218 S.W.3d 811, 814-15 (Tex.App.-El Paso 2007, pet. dism'd w.o.j.).
 Formerly TEX.R.CIV.P. 746 (1983, repealed by Supreme Court Order of April 15, 2013, eff. Aug. 31, 2013, Misc. Docket No. 13-9049, 76 TEX.B.J. 440). We note that the Texas Supreme Court repealed previous forcible detainer provisions of the Texas Rules of Civil Procedure and implemented new rules for eviction suits at TEX.R.CIV.P. 510 et seq. Fannie Mae filed its forcible detainer suit on February 8, 2013, before the changes to the Texas Rules of Civil Procedure took effect. We will nevertheless cite to the new Rules of Civil Procedure unless a material divergence requires us to cite to the rules effective at the time of suit.
Where the issue of immediate possession necessarily involves resolution of a title dispute, the justice court is divested of subject-matter jurisdiction and has no power to render judgment. Padilla, 218 S.W.3d at 815. Cases in which possession and title are inextricably intertwined are reserved for districts courts, which have the power to resolve title disputes. Id. However, where the issue of the superior right of possession can be determined separately from title issues, the justice court has jurisdiction to decide the case. Id.
"To prevail in a forcible detainer action, a plaintiff is not required to prove title, but is only required to show sufficient evidence of ownership to demonstrate a superior right to immediate possession." Rice, 51 S.W.3d at 709. "Specific evidence of a title dispute is required to raise an issue of a justice court's jurisdiction." Padilla, 218 S.W.3d at 815. "If the right of recovery in a suit depends, at least in part, upon the title to land, but there is no real dispute between the parties over the question of title, the question of title is incidental." Merit Mgmt. Partners I, L.P. v. Noelke, 266 S.W.3d 637, 648 (Tex.App.-Austin 2008, no pet.).
SOURCE: EL PASO COURT OF APPEALS No. 08-13-00331-CV. - 11/18/2015
"The validity of a foreclosure sale may not be determined in a suit for forcible detainer[.]" Tehuti v. Trans-Atlas Fin., Inc., No. 05-14-00126-CV, 2015 WL 1111400, at *2 (Tex.App.-Dallas March 12, 2015, pet. dism'd. w.o.j)(mem. op.); see also Mekeel v. U.S. Bank Nat'l Ass'n, 355 S.W.3d 349, 352-53 (Tex.App.-El Paso 2011, pet. dism'd). "When the party to be evicted is subject to a tenant-at-sufferance clause and the party seeking possession purchased the property at a foreclosure sale and gave proper notice requiring the occupants to vacate the premises, defects in the foreclosure process are not relevant to possession." Pinnacle Premier Props., Inc. v. Breton, 447 S.W.3d 558, 564 (Tex.App.-Houston [14th Dist.] 2014, no pet.).
FORCIBLE DETAINER ACTION SHOULD HAVE GONE FORWARD
A forcible detainer action is a special proceeding created to provide a speedy, simple and inexpensive means for resolving the question of right to immediate possession of real property. Rice v. Pinney, 51 S.W.3d 705, 710 (Tex. App.-Dallas 2001, no pet.). To preserve the simplicity and speedy nature of the remedy, the applicable civil rules provide that "the court must adjudicate actual possession and not title." See TEX. R. CIV. P. 510.3(e).
Woods and Southern Home argue that the county court lacked jurisdiction because the facts established that the issue of ownership was so intertwined with title that the county court could not determine who had the right to immediate possession. We disagree. A justice court or county court at law is not deprived of jurisdiction in a forcible detainer lawsuit merely because of the existence of a title dispute. Rice, 51 S.W.3d at 712. In fact, in most cases the right to immediate possession can be determined separately from the right to title. Id. at 710 (legislature contemplated concurrent actions in the district and justice courts [or on appeal to county courts at law] to resolve issue of title and immediate possession in cases challenging the validity of a trustee deed). The trial court is only deprived of jurisdiction if the determination of the right to immediate possession necessarily requires the resolution of a title dispute. Id. at 712; Schlichting v. Lehman Bros. Bank FSB, 346 S.W.3d 196, 199 (Tex. App.-Dallas 2011, pet. dism'd).
In this case, American Homes attached the deed of trust, the substitute trustee's deed, and the notice to Woods to vacate the property to its response and amended response to Woods's plea to the jurisdiction. The substitute trustee's deed showed that American Homes purchased the property in a non-judicial foreclosure sale after Woods defaulted under the terms of the deed of trust. The deed of trust states that Woods became a tenant-at-sufferance when she did not vacate the property after American Homes purchased it. The notice sent by American Homes to Woods informed her that her tenancy was being terminated and she was required to vacate the property. Where a foreclosure pursuant to a deed of trust creates a landlord and tenant-at-sufferance relationship between the parties, the trial court has an independent basis to determine the issue of immediate possession without resolving the issue of title. Schlichting, 346 S.W.3d at 199. Here, the foreclosure of this property pursuant to the deed of trust created a landlord and tenant-at-sufferance relationship between Woods and American Homes. Thus, the trial court could determine the right of immediate possession. Rice, 51 S.W.3d at 711.
Woods and Southern Home argue that their case is distinguishable from the facts in Rice because that case only involved one party claiming ownership pursuant to one deed of trust from which a landlord-tenant relationship could be established. In this case, two different deeds of trust are involved for the same property. Therefore, they argue that the county court properly abated the forcible detainer case because it could not determine whether American Homes or Southern Home had the right to immediate possession of the property. Again, we disagree.
Woods and Southern Home are mistaken in their conclusion that Woods' conveyance of the property to Southern Home created a question of title. When a grantor executes a deed of trust, the legal and equitable estates in the property are severed. See Flag-Redfern Oil Co. v. Humble Exploration Co., Inc., 744 S.W.2d 6, 8 (Tex. 1987). The grantor in the deed of trust retains the legal title and the grantee holds equitable title. Id.
When the owner of real estate executes a valid deed of trust and then conveys an interest in the mortgaged property to a third party, the rights of the grantor's vendee (Southern Home) are subject to the rights held by the beneficiary of the deed of trust (American Homes). Motel Enters., Inc. v. Nobani, 784 S.W.2d 545, 547 (Tex. App.-Houston [1st Dist.] 1990, no pet.). Thus, a grantor subject to a tenant-at-sufferance clause in a mortgage cannot convey an interest in property free of that clause. Pinnacle Premier Props., Inc. v. Breton, 447 S.W.3d 558, 565 (Tex. App.-Houston [14th Dist.] 2014, no pet.). Both the grantor under the deed of trust and any occupant who holds the property pursuant to a conveyance from the party who agreed to the deed of trust become tenants-at-sufferance following foreclosure of the deed of trust. Id. Accordingly, Southern Home, as a tenant-in-sufferance, was not entitled to possession of the property after foreclosure. As the questions of possession and title were not intertwined in this case, the trial court erred in abating the lawsuit.
We conclude the trial court abused its discretion by abating this case until the title issues were resolved by a district court in a separate lawsuit. On April 26, 2016 we conditionally granted the petition for writ of mandamus. The trial court has since complied with our April 26, 2016 order.
SOURCE: DALLAS COURT OF APPEALS - No. 05-16-00087-CV. - 5/25/2016
JURISDICTIONAL ISSUE AND COUNTY COURT APPEAL
Whether a court has subject matter jurisdiction is a question of law we review de novo. Salaymeh v. Plaza Centro, LLC, 264 S.W.3d 431, 435 (Tex. App.-Houston [14th Dist.] 2008, no pet.). Subject matter jurisdiction can be raised at any time, including for the first time on appeal. Black v. Wash. Mut. Bank, 318 S.W.3d 414, 416 (Tex. App.-Houston [1st Dist.] 2010, pet. dism'd w.o.j.). The proper forum for a forcible detainer suit is the justice court of the precinct where the property is located. Tex. Prop. Code § 24.004(a). The decision of the justice court may be appealed to the county court for a trial de novo. Black, 318 S.W.3d at 416. A county court's jurisdiction on appeal extends only as far as the justice court's jurisdiction. Ward v. Malone, 115 S.W.3d 267, 269 (Tex. App.-Corpus Christi 2003, pet. denied).
An action for forcible detainer is a "summary, speedy, and inexpensive remedy for the determination of who is entitled to the possession of premises." Scott v. Hewitt, 127 Tex. 31, 90 S.W.2d 816, 818-19 (1936). The only issue to be resolved in a forcible detainer action is the right to actual and immediate possession of the property; the merits of title are not adjudicated. Salaymeh, 264 S.W.3d at 435. Justice courts do not have jurisdiction to determine or adjudicate title to land, and neither does a county court exercising appellate jurisdiction in a forcible detainer action. Id.
When there are issues concerning both title and possession, the issues may be litigated in separate proceedings in different courts with appropriate jurisdiction. Id. at 436. However, when a forcible detainer action presents a genuine issue of title so intertwined with the issue of possession that a trial court would be required to determine title before awarding possession, then a justice court lacks jurisdiction to resolve the matter. See Pinnacle Premier Props., Inc. v. Breton, 447 S.W.3d 558, 564 (Tex. App.-Houston [14th Dist.] 2014, no pet.) (op. on reh'g); Mitchell v. Armstrong Capital Corp., 911 S.W.2d 169, 171 (Tex. App.-Houston [1st Dist.] 1995, writ denied). A justice court is not deprived of jurisdiction merely by the existence of a title dispute; it is deprived of jurisdiction only if resolution of a title dispute is a prerequisite to determination of the right to immediate possession. See Salaymeh, 264 S.W.3d at 436.
To prevail in a forcible detainer action, the plaintiff must present sufficient evidence of ownership to demonstrate a superior right to immediate possession. Dormady v. Dinero Land & Cattle Co., 61 S.W.3d 555, 557 (Tex. App.-San Antonio 2001, pet. dism'd w.o.j.). Ordinarily, a forcible detainer action requires proof of a landlord-tenant relationship. Haith v. Drake, 596 S.W.2d 194, 196 (Tex. Civ. App.-Houston [1st Dist.] 1980, writ ref'd n.r.e.). Although such a relationship is not a prerequisite to jurisdiction, the lack of such a relationship indicates that the case may present a title issue. See Pinnacle Premier Props., Inc., 447 S.W.3d at 564 n.9.
JUSTICE COURT LACKED JURISDICTION
The Lower Courts Lacked Jurisdiction over the Forcible Detainer Action
In their motion to dismiss for lack of jurisdiction, Espinoza and Sanchez contended that they were purchasing the Property from Lopez, not renting it. In support of their contention, Espinoza and Sanchez argue that they entered into an oral agreement with Lopez to purchase the Property and that they have a claim for equitable title under the doctrine of partial performance. In response, Lopez argues that the title issue is moot because the possession issue is moot and, in the alternative, Espinoza and Sanchez cannot show they have equitable title because they have not paid the full purchase price for the Property.
Generally, a contract for the sale of real estate is unenforceable unless it is in writing and signed by the person charged with the promise. Tex. Bus. & Com. Code § 26.01. Partial performance, however, will operate to exempt an oral contract for the sale or transfer of real property from the statute of frauds. Boyert v. Tauber, 834 S.W.2d 60, 63 (Tex. 1992). Under the doctrine of partial performance, an oral contract for the purchase of real property is sufficiently corroborated and enforceable if the purchaser:
(1) pays consideration;
(2) takes possession of the property; and
(3) makes permanent and valuable improvements on the property with the consent of the seller, or, without such improvements, other facts are shown that would make the transaction a fraud on the purchaser if the oral contract was not enforced.
Id. (citing Hooks v. Bridgewater, 111 Tex. 122, 229 S.W. 1114, 1116 (1921)); Fandey v. Lee, 880 S.W.2d 164, 170 (Tex. App.-El Paso 1994, writ denied). Equity may enforce an otherwise unenforceable oral agreement when nonenforcement of the agreement would itself amount to fraud. See Dodson v. Kung, 717 S.W.2d 385, 388 (Tex. App.-Houston [14th Dist.] 1986, writ ref'd n.r.e.). Payment of consideration in full is not required to render a parole sale of real property enforceable if the other two elements, regarding possession and improvements, have been met. Cheatwood v. De Los Santos, 561 S.W.2d 273, 277 (Tex. Civ. App.-Eastland 1978, writ ref'd n.r.e.).
Espinoza and Sanchez contend that they have raised a genuine issue of material fact with respect to each element. Specifically, they assert that (1) they gave Lopez consideration for the Property; (2) they resided at the Property from March 2010 to August 2013; and (3) they made valuable and permanent improvements to the Property with Lopez's consent. In support of their contention, Espinoza and Sanchez attached two affidavits and two deposition excerpts to their motion to dismiss.
In his affidavit, Espinoza stated that Lopez knew he was looking for a house and showed him two properties with mobile homes. Espinoza stated that he orally agreed to purchase the Property for $70,000, with a $1,000 down payment, and seven percent interest owner financed. Lopez accepted and cashed the check for the down payment, even though it said "down payment for house" in the memo line. Espinoza stated that Lopez informed him that payment for the house would be $620.19 per month for fifteen years. Lopez sent Espinoza and Sanchez a written earnest money contract, entitled "One to Four Family Residential Contract (Resale)," stating the terms and conditions of the sale. This written contract was never signed because Espinoza and Sanchez had issues with several provisions in the contract. Lopez also delivered a temporary lease, a seller financing addendum, a seller's disclosure sheet, a partial settlement sheet, and an amortization schedule.
Espinoza and Sanchez took possession of the Property in March 2010 and began making monthly payments in the amount of $620.19. The memo line for the checks stated, "House Payment" or "payment for house we're buying." Espinoza and Sanchez also tendered a check to Lopez in 2010 for that year's property taxes. The check for the property taxes was in the amount of $781.55 and the memo line stated, "for house yearly Taxes we're buying." In return, Lopez gave Espinoza and Sanchez copies of the property tax statements as a form of receipt.
While living in the Property, Espinoza and Sanchez planted trees, changed fixtures, replaced the carpet, repaired holes in the walls, painted, and installed blacktop on some of the gravel driveway. In July 2011, Espinoza asked Lopez for proof of residence and purchase of the Property so that Espinoza and Sanchez could register their children for school in the Waller School District. Lopez told Espinoza that he could obtain the information from his wife, Norma Lopez. On July 29, 2011, Norma provided Sanchez with a letter that stated "[t]his is to inform you that Hector Espinoza and Elizabeth Sanchez are living at 18908 Jasperwood, Waller, Texas 77484. I am selling the property to them and we are waiting on the realtor for paper work." Espinoza and Sanchez also filed an affidavit by Sanchez, in which she stated that they made monthly payments in the amount of $620.19 pursuant to their verbal agreement with Lopez to purchase the Property.
Lopez filed an affidavit in which he stated that Espinoza and Sanchez were renting the property and paying $620.19 per month. Lopez stated that he initially discussed an agreement to purchase the Property over fifteen years with Espinoza and Sanchez, but they never signed the written contract. Lopez stated that he attempted to collect property taxes from them but they only paid them for the first year and then refused all other attempts. Lopez also stated that Espinoza and Sanchez refused to pay for the septic maintenance contract and other services on the Property.
Based on a review of the entire record, we conclude that the right to possession cannot be determined without first resolving issues regarding title to the Property. See Bynum v. Lewis, 393 S.W.3d 916, 919 (Tex. App.-Tyler 2013, no pet.) (holding that county court lacked jurisdiction to determine possession because appellant raised the affirmative defense of adverse possession and "the title issue became an integral part of the proceeding"); Yarto v. Gilliland, 287 S.W.3d 83, 89-90 (Tex. App.-Corpus Christi 2009, no pet.) (holding that justice court lacked jurisdiction to determine possession because appellants "raised a claim of equitable title to the residence, which, if supported by evidence and law, would provide them with a superior right of possession despite [appellee's] retained legal title"). Because the evidence raised genuine fact issues regarding title to the Property, the justice court, and county court on appeal, lacked jurisdiction to determine the right to possession.
Lopez also argues that Espinoza and Sanchez's appeal is moot because they abandoned possession of the Property. Espinoza and Sanchez concede in their reply brief that the issue of possession is moot. However, they argue that the issues regarding rent and attorney's fees prevent their appeal from being moot. Although the issue of possession is moot, issues independent of possession are still reviewable on appeal. Cavazos v. San Antonio Hous. Auth., No. 04-09-00659-CV, 2010 WL 2772450, at *2 (Tex. App.-San Antonio July 14, 2010, no pet.) (mem. op.) (citing Rice v. Pinney, 51 S.W.3d 705, 707 (Tex. App.-Dallas 2001, no pet.)). The county court issued a final judgment in which it ordered that Espinoza and Sanchez were required to pay Lopez $2,480.76 in back-owed rent and attorney's fees of $20,579.22. Because the county court's judgment ordered Espinoza and Sanchez to pay rent and attorney's fees, this appeal is not moot.
We sustain Espinoza and Sanchez's first issue. Because this issue is dispositive, we need not address their remaining issues.
We hold that the lower courts lacked jurisdiction to render judgment. We reverse the county court's judgment and dismiss the underlying case for want of jurisdiction.
SOURCE: HOUSTON COURT OF APPEALS - No. 14-14-00846-CV. - 6/9/2015
SOURCE: HOUSTON COURT OF APPEALS - No. 14-14-00846-CV. - 6/9/2015
INJUNCTIVE RELIEF AGAINST JP COURT EVICTION IN COUNTY COURT - WHEN PROPER, WHEN NOT - COURT OF APPEALS REVERSES INJUNCTION
In one issue, Premiere contends the district court exceeded its jurisdiction in granting the temporary injunction. Appellees argue this is not a true jurisdictional challenge; rather, it is a challenge to the district court's grant of the temporary injunction, which we generally review for an abuse of discretion. See, e.g., Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) ("The decision to grant or deny a temporary writ of injunction lies in the sound discretion of the trial court, and the court's grant or denial is subject to reversal only for a clear abuse of that discretion."). We agree that Premiere's complaint is viewed more properly as a challenge to the district court's grant of the injunction, but conclude that the trial court erred in granting the injunctive relief.
I. Although there are some jurisdictional issues involved in our analysis, this appeal is properly characterized as a challenge to the district court's order granting the temporary injunction.
Jurisdiction to hear a forcible detainer action is expressly given to the justice court of the precinct where the property is located. Maxwell v. U.S. Bank Nat'l Ass'n, No. 14-12-00209-CV, 2013 WL 3580621, at *2 (Tex. App.-Houston [14th Dist.] July 11, 2013, pet. dism'd w.o.j.) (mem. op.). A justice court has exclusive jurisdiction to decide the issue of immediate possession, which may not be infringed upon as long as the justice court merely determines possession. Rice v. Pinney, 51 S.W.3d 705, 713 (Tex. App.-Dallas 2001, no pet.). Although a justice court has exclusive jurisdiction to hear a forcible detainer action, a district court may enjoin the exercise of the justice court's jurisdiction in a forcible detainer action when there is a showing that the justice court is without jurisdiction to proceed in the cause or the defendant has no adequate remedy at law. McGlothlin v. Kliebert, 672 S.W.2d 231, 232 (Tex. 1984).
We generally review a district court's grant of such an injunction for an abuse of discretion. See id. Although an abuse of discretion does not occur when the trial court heard conflicting evidence and substantive, probative evidence reasonably supports the trial court's decision, we will apply a de novo standard of review when the issue turns on a pure question of law. See Tenet Health Ltd. v. Zamora, 13 S.W.3d 464, 468-69 (Tex. App.-Corpus Christi 2000, pet. dism'd w.o.j.) (citing State v. Heal, 917 S.W.2d 6, 9 (Tex. 1996)); see also Sharma v. Vinmar Int'l, Ltd., 231 S.W.3d 405, 419 (Tex. App.-Houston [14th Dist.] 2007, no pet.) ("[A]s the trial court functions as the fact finder in a temporary injunction hearing, an abuse of discretion does not exist where the trial court bases its decision on conflicting evidence."). We review questions of law without deference to a lower court's conclusion. See Heal, 917 S.W.2d at 9; Burris v. Metro. Transit Auth. of Harris Cnty., 266 S.W.3d 16, 20 (Tex. App.-Houston [1st Dist.] 2008, no pet.). When, as here, no findings of fact or conclusions of law are filed, the trial court's determination of whether to grant or deny a temporary injunction must be upheld on any legal theory supported by the record. LasikPlus of Tex., P.C. v. Mattioli, 418 S.W.3d 210, 216 (Tex. App.-Houston [14th Dist.] 2013, no pet.).
Appellees argue that Pinnacle's "failure to brief an abuse of discretion review" resulted in a failure to carry its burden to show an abuse of discretion. We disagree. As discussed, we review questions of law de novo and not for an abuse of discretion. In this case, the relevant facts are not disputed, but we are presented with questions of law regarding the effect of the tenant-at-sufferance clause in the deed of trust, discussed below, and whether appellees, under the undisputed facts, had an adequate remedy at law through their wrongful foreclosure claim. See Glapion v. AH4R I TX, LLC, No. 14-13-00705-CV, 2014 WL 2158161, at *1 (Tex. App.-Houston [14th Dist.] May 22, 2014, no pet.) (mem. op.) (acknowledging whether justice court could exercise jurisdiction over question regarding possession of property is a question of law subject to de novo review); see also 8100 N. Freeway, Ltd. v. City of Houston, 363 S.W.3d 849, 854 (Tex. App.-Houston [14th Dist.] 2012, no pet.) ("A trial court abuses its discretion when it . . . misapplies the law to the established facts of the case."). Pinnacle cited the proper case law for us to determine as a matter of law whether the trial court erred in granting the injunction. See Perry v. Cohen, 272 S.W.3d 585, 588 (Tex. 2008) ("[W]e liberally construe issues presented to obtain a just, fair, and equitable adjudication of the rights of the litigants."). With these standards in mind, we turn to Pinnacle's challenge to the district court's order granting the temporary injunction.
II. Defects in the foreclosure process are not relevant to possession when, as here, the parties to be evicted are subject to a tenant-at-sufferance clause in the deed of trust.
Although a justice court has subject matter jurisdiction over forcible detainers, the justice court lacks jurisdiction to resolve title disputes. Maxwell, 2013 WL 3580621, at *2; Black v. Wash. Mut. Bank, 318 S.W.3d 414, 417 (Tex. App.-Houston [1st Dist.] 2010, pet. dism'd w.o.j.). Thus, a forcible detainer only addresses who has the right to possess the property, not who has title to it. Maxwell, 2013 WL 3580621, at *2; Salaymeh v. Plaza Centro, LLC, 264 S.W.3d 431, 435 (Tex. App.-Houston [14th Dist.] 2008, no pet.); see Tex. R. Civ. P. 510.3(e). As a result, when the right to possession cannot be determined without resolving a title dispute, the justice court does not have jurisdiction. Maxwell,2013 WL 3580621, at *2; Rice, 51 S.W.3d at 709.
Of course, the mere existence of a title dispute does not deprive the justice court of jurisdiction. Maxwell, 2013 WL 3580621, at *2. If the title issue does not control the right to possession, it is of no moment. Id.; Black, 318 S.W.3d at 417. Instead, the issue is whether "the question of title is so intertwined with the issue of possession, th[at] possession may not be adjudicated without first determining title." Maxwell, 2013 WL 3580621, at *2 (quoting Villalon v. Bank One, 176 S.W.3d 66, 70 (Tex. App.-Houston [1st Dist.] 2004, pet. denied)).
The deed of trust in this case contained the following tenant-at-sufferance clause:
Borrower or any person holding possession of the Property through Borrower shall immediately surrender possession of the Property to the purchaser at [the foreclosure] sale. If possession is not surrendered, Borrower or such person shall be a tenant at sufferance and may be removed by writ of possession or other court proceeding.
Tenant-at-sufferance clauses separate the issue of possession from the issue of title. Id. at *3. Under these provisions, a foreclosure sale transforms the borrower into a tenant at sufferance who must immediately relinquish possession to the foreclosure-sale purchaser. Id.
Appellees articulate a title dispute, but it is based entirely on their contention that the foreclosure was improper, i.e., both that the foreclosure was conducted improperly and that Pinnacle previously had assigned the note to another bank. However, because the deed of trust contained a valid tenant-at-sufferance clause, appellees do not allege a title dispute that is intertwined with the right of immediate possession. See Glapion, 2014 WL 2158161, at *2; Maxwell, 2013 WL 3580621, at *3. When the party to be evicted is subject to a tenant-at-sufferance clause and the party seeking possession purchased the property at a foreclosure sale and gave proper notice requiring the occupants to vacate the premises, defects in the foreclosure process are not relevant to possession. Glapion,2014 WL 2158161, at *2; Williams v. Bank of N.Y. Mellon, 315 S.W.3d 925, 927 (Tex. App.-Dallas 2010, no pet.). Of course, the displaced party can still dispute the purchaser's title, but it must bring a separate suit to do so. Maxwell, 2013 WL 3580621, at *3.
Appellees argue they are not subject to the tenant-at-sufferance clause because they are not parties to the deed of trust. However, we have held that a deed of trust's tenant-at-sufferance clause binds subsequent occupants whose interests are junior to the deed of trust. Id. at *4; see also U.S. Bank Nat'l Ass'n v. Farhi, No. 05-07-01539-CV, 2009 WL 2414484, at *3-4 (Tex. App.-Dallas Aug. 7, 2009, no pet.) (mem. op.) (holding intervening purchaser of property was subject to tenant-at-sufferance clause in deed of trust). Appellees argue that Maxwell was wrongly decided as to this issue and "[l]ittle analysis was conducted to reach this conclusion." To the contrary, we thoroughly explained our reasoning in Maxwell. Although such subsequent occupants may not have agreed to the tenant-at-sufferance clause, the grantor cannot convey more than he has. Maxwell, 2013 WL 3580621, at *4. Thus, a grantor subject to a tenant-at-sufferance clause cannot convey an interest in the property free of the clause. Id. In this regard, both the party who agreed to the deed of trust initially and any subsequent occupants become tenants-at-sufferance following foreclosure. Id.
The facts in Farhi are similar to those presented here. Farhi executed a note and deed of trust on the subject property, and U.S. Bank subsequently foreclosed on the property, served a notice to vacate the property, and filed a forcible detainer suit in justice court. Farhi, 2009 WL 2414484, at *1. The justice court awarded possession to the bank, but Rowe, claiming to be an occupant of the property, appealed to the county court at law, which, after a trial de novo, awarded possession to Rowe. Id. During the trial in the county court, Rowe presented evidence that the property had been conveyed to him by Farhi after the deed of trust was executed but before the foreclosure. Id. at *3. Our sister court held that Rowe's rights were subject to the deed of trust executed by Farhi because Rowe was an intervening purchaser of the property. Id. This was based on the fact that "[w]hen a mortgagor executes a deed of trust[,] the legal and equitable estates in the property are severed. The mortgagor retains the legal title and the mortgagee holds the equitable title." Id. An intervening purchaser of the legal interest is granted legal title that is superior to the mortgage but subject to the mortgagee's rights. Id.
The deed of trust in Farhi included a tenant-at-sufferance clause that was identical to the one presented here. See id. at *4. The court held that the deed of trust established a landlord-tenant relationship that made Rowe a tenant-at-sufferance upon foreclosure because Rowe's rights were subject to the terms of the deed of trust, just as Farhi's had been. Id. Accordingly, Rowe, as a tenant-at-sufferance, was not entitled to possession of the property after the foreclosure. Id.
This case is no different. The appellees purchased the properties subject to the deed of trust, which contained the above-referenced tenant-at-sufferance clause. E.g., id.
We conclude that appellees are subject to the tenant-at-sufferance clause in the deed of trust. Accordingly, the questions of possession and title are not intertwined, and the justice court had exclusive jurisdiction over the issue of possession. See Glapion, 2014 WL 2158161, at *2; Maxwell, 2013 WL 3580621, at *3.
Appellees argue they do not have an adequate remedy at law because real estate is unique. However, the cases they cite for this proposition all involved injunctions to stop foreclosures. Here, the foreclosure has already occurred, and appellees' available remedies for wrongful foreclosure are money damages or rescission of the sale. Diversified, Inc. v. Gibraltar Sav. Ass'n, 762 S.W.2d 620, 623 (Tex. App.-Houston [14th Dist.] 1988, writ denied) ("[F]ollowing a wrongful foreclosure sale conducted pursuant to a power of sale contained within a deed of trust, the mortgagor . . . may elect to: (1) set aside the void trustee's deed; or (2) recover damages in the amount of the value of the property less indebtedness."). Thus, under the undisputed facts, as a matter of law, appellees have an adequate remedy at law through rescission of the sale if their wrongful foreclosure claim is meritorious.
Appellees also testified they could not pay their mortgages in addition to rent for temporary residences. They did not present evidence, however, regarding why money damages could not properly account for any losses resulting from having to relocate. They further argue that Andreis, a foreign national, must have proof of home ownership to maintain his United States residency. At the time of the temporary injunction hearing, Andreis was working overseas, and a tenant was living in his home. Andreis testified that he travels abroad often for work and that owning a home "helps" show the United States Citizenship and Immigration Services that he intends to "keep his residency" in the United States. However, after the foreclosure, Pinnacle became the record owner of the property. There is no evidence that proceeding with an eviction would alter Andreis's immigration status. Obviously, if he prevails on the wrongful foreclosure claim, Andreis would be able to rescind the sale and reinstate his home ownership status.
We conclude as a matter of law that the trial court erred in granting the temporary injunction because, based on the undisputed facts, the alleged title dispute is not intertwined with the right of immediate possession and appellees have an adequate remedy at law through their wrongful foreclosure claim. See McGlothlin, 672 S.W.2d at 232; Glapion, 2014 WL 2158161, at *2.
We conclude the trial court erred in enjoining appellants from pursuing the eviction proceedings in justice court. The justice court had exclusive jurisdiction in this case over the question of possession because the issues of title and possession were not intertwined, and appellees have an adequate remedy at law if their wrongful foreclosure claim is meritorious. We sustain Pinnacle's issue complaining of the trial court's order granting injunctive relief. We reverse the trial court's order and render judgment denying appellees' request for a temporary injunction.
SOURCE: HOUSTON COURT OF APPEALS No. 14-14-00194-CV. - 11/6/2014