Roberts & Roberts, LLP - Killeen, TX Attorneys - Legal News

In Collections, Be Specific In Your Threats

Wed, 11 Jan 2012 13:17:10 -0600

APM Enterprises LLC v. National Loan Acquisitions Co. Creditor sued maker and guarantors on a promissory note. The defendants alleged they had not received notice of intent to accelerate or notice of acceleration. A negotiable instrument that is payable at a definite time may provide for the right of acceleration on default. However, because acceleration of a debt is viewed as a harsh remedy any such clause will be strictly construed. Texas law requires clear notice of intent to exercise acceleration rights, followed by notice of actual acceleration if the debtor continues in default. In this case, the loan documents apparently did not waive the required notices. The Court observes that the law does not necessarily require the use of the words "intent to accelerate," in this case the holder's repeated threats to refer the note to legal counsel for collection were not sufficient.

The Wrong Way to Fight Foreclosure of a Home Equity Loan

Tue, 01 Nov 2011 13:50:36 -0500

Huston v. Bank National Association. Lender filed a Rule 736 application for an order allowing foreclosure of a Texas home equity loan. Homeowners countersued, claiming the lender did not have a valid assignment, that the loan violated various provisions of the law, and that the wife did not sign the loan. The Court finds the countersuit is improper in this context; such claims must be brought, if at all, in a separate lawsuit.

How To Terminate a 99 Year Lease in 30 Days

Thu, 13 Oct 2011 13:16:37 -0500

Providence Land Services LLC v. Jones. Starting in the 1970's, the Howells began leasing lakefront lots to tenants on lease forms that the Howells drafted themselves. Many of the leases provided that they were of "indefinite" term. Some of the tenants made substantial improvements under the assumption that they had "long-term" leases. The trial court agreed, and interpreted the leases to be for a term of 99 years. However, on appeal the Court finds that "indefinite" is not ambiguous; it simply means "uncertain." In Texas, a lease for an indefinite and uncertain length of time is an estate at will. The trial court's ruling is reversed.

Unsigned Lease is Still Valid

Tue, 13 Sep 2011 14:12:03 -0500

Thomas J. Sibley, P.C v. Brentwood Investment Development Co. Sibley rented a suite in Brentwood's building in 2001. In 2008, Brentwood sued for past-due rent payments and other sums. Sibley claimed that the lease was not enforceable because it was never signed by a Brentwood representative. The Court holds that the absence of a party's signature does not necessarily destroy an otherwise valid contract. A party may accept a contract and indicate its intent to be bound to the terms by acts and conduct in accordance with the terms. In this case, it is undisputed that Sibley occupied the space defined in the lease, operated a law firm from the premises, and made several partial payments of base rent. Likewise, there is no dispute that Brentwood continually operated and maintained the building in accordance with the lease terms. Because the parties treated the lease as if it were fully executed, the absence of the landlord's signature is not fatal and the lease is enforceable.

Property Remains Restricted to Residential Use

Mon, 18 Jul 2011 13:48:02 -0500

Davis v. Canyon Creek Estates Homeowners Association. Owner sued to invalidate restrictive covenants limiting the use of its property to residential purposes. A court may nullify or void a restrictive covenant limiting property use to residential only when the party seeking to nullify or modify the restriction proves either: (1) the property owners have acquiesced in violations of the residential restriction so as to amount to an abandonment of the covenant or a waiver of the right to enforce it; or (2) there has been "such a change of conditions in the restricted area or surrounding it that it is no longer possible to secure in a substantial degree the benefits sought to be realized through the covenant." To justify voiding a residential restriction based on changed circumstances, the changed conditions must be "radical." In considering whether such a "radical" change has occurred, courts look to: (1) the size of the restricted area; (2) the location of the restricted area with respect to where the change has occurred; (3) the type of change or changes that have occurred; (4) the character and conduct of the parties or their predecessors in title; (5) the purpose of the restrictions; and (6) to some extent, the unexpired term of the restrictions. Greater weight is given to changes that occur within the subdivision than those occurring outside the restricted area. Additionally, Texas courts have recognized a landowner cannot rely on "changed conditions" that have already occurred by the time he acquires the property. In this case, the owner did not meet the required standard of proof, but because the owner had never expressed an absolute refusal to abide by the restrictions it would not be required to pay attorney's fees.

Proceeds From Sale of Homestead are Exempt From Most Creditor Claims for 6 Months

Tue, 24 May 2011 13:33:10 -0500

London v. London. Jeffrey obtained a money judgment against his ex-wife, Leticia. When he learned that she was attempting to sell her Texas homestead, he asked the court to appoint a receiver, and order Leticia to deliver the sales proceeds to the receiver so the receiver could pay the sums owed to Jeffrey. The court holds that a judgment creditor generally cannot foreclose on a homestead to satisfy a debt unrelated to the home, and if a homestead claimant sells the residence, the proceeds are exempt from attachment and execution for six months as a matter of state law. The sales proceeds are to be returned to Leticia.

Fraudulent Lien Suit Falls Short

Tue, 24 May 2011 13:32:30 -0500

Gray v. Entis Mechanical Services L.L.C. Hospital sued electrical subcontractor after the subcontractor refused to cash the hospital's check and release a mechanic's lien the subcontractor had filed on the hospital's property. On appeal, the court holds that in order to establish a fraudulent lien claim under section 12.002 of the Texas Civil Practices and Remedies Code, the hospital had to conclusively prove that the subcontractor (1) made, presented, or used a document with knowledge that it was a fraudulent lien; (2) intended the document be given legal effect; and (3) intended to cause appellee financial injury. In this case, the hospital failed to prove that the subcontractor intended to cause financial harm when he filed the lien affidavit, so the case is sent back to the trial court for further proceedings.

Innocent Bank Prevails Over Innocent Buyer

Tue, 22 Mar 2011 14:42:15 -0500

Noble Mortgage & Investments LLC v. D&M Vision Investments LLC. Banks, the original owner of the property borrowed money from Noble in October, 2007, and the loan was secured by a deed of trust lien against the property. Unknown to Noble, Financial Holdings had obtained a judgment against Banks a year earlier and, although the judgment was never abstracted, succeeded in having the property sold at auction in September, 2007. D&M acquired the property as a result of that sale, but the sheriff's deed was not recorded until December, 2007. D&M subsequently posted "No Trespassing" signs on the property and, for the first time, Noble and D&M became aware of their competing claims to the property. The court holds that a lender can be a bona fide mortgagee if the lender takes a lien in good faith, for valuable consideration, and without actual or constructive notice of outstanding claims. A bona fide mortgagee is entitled to the same protections as a bona fide purchaser. In Texas, a bona fide purchaser prevails over a holder of a prior unrecorded deed or other unrecorded interest in the same property. The court further holds that Noble was not put on notice of the unrecorded judgment by the county's index of the sheriff's sale because that index was not filed in the real property records. Likewise, Nobel did not fail to act in good faith merely because it never obtained a credit report on its borrower, never questioned a series of conveyances back and forth between Banks and a corporation that he owned, and never required Banks to fill out a form disclosing all judgments against him. Accordingly, Noble is not a bona fide purchaser and Noble's bona fide status was proven as a matter of law.

Seller Pays High Price to Save the Cost of a Survey

Fri, 11 Feb 2011 17:12:43 -0600

Smith-Gilbard v. Perry. The seller was approached by the buyer, who sought to purchase land for her husband's pediatric health care facility. The seller agreed, but declined to provide a new survey. Instead, she furnished a copy of her original deed and said there had been no changes to the property since she purchased it in 1965. At closing, the seller signed a deed that described the property using the same metes and bounds as her 1965 deed. Two years later, the seller sued for reformation of the deed, claiming a mistake in that she had only intended to sell part of the property rather than the whole tract. The Court recognizes that a mutual mistake regarding a material fact is grounds for avoiding a contract. A mutual mistake of fact occurs when the parties to an agreement have a common intention, but the written contract does not reflect the intention of the parties due to a mutual mistake. In contrast, a mistake by only one party to an agreement, not known to or induced by acts of the other party, will not constitute grounds for relief. In this case, the evidence indicated that both parties intended to rely on the metes and bounds description in the 1965 deed, and there was no evidence that the seller ever told the buyer that she only wanted to sell part of the property. In addition, the buyer has been paying the taxes on the entire property since the closing. Accordingly, the Court will not reform the deed.

Is It OK to Lie About Your Homestead in Texas?

Tue, 30 Nov 2010 14:26:13 -0600

In re: Villarreal. After their home was foreclosed in 2005, the Villarreals secretly moved into their place of business. Two years later, the Villarreals settled a lawsuit by signing a promissory note and granting a deed of trust lien on the business property. The deed of trust stated that no part of the property was used as a residence. The Villarreals subsequently defaulted on the note and the lien was foreclosed. The Villarreals then sued for wrongful foreclosure, alleging that the property was their exempt homestead. The 5th Circuit asks the Texas Supreme Court to determine whether the Villarreals are estopped from claiming the homestead exemption when their use of the property as a homestead was surreptitious, and they publicly declared at the time that the lien was placed on the property that no such use of the property was being made. The Texas Supreme Court has set the case for oral argument on March 1, 2011.

Who Cares About Title Insurance? You Do.

Fri, 05 Nov 2010 13:36:55 -0500

Do-It-Yourselfers Beware!

Wed, 29 Sep 2010 13:40:32 -0500

Ritchey v. Pinnell. Pinnell purchased a home for investment and made major improvements himself, including electrical and plumbing work. He then sold the home to Ritchey, who filed suit for fraud and breach of real estate contract. Ritchey alleges that she could not obtain obtain a certificate of occupancy because Pinnell's work was not done properly, and because he did not obtain the necessary licenses, permits, and inspections. The Court holds that Ritchey may pursue her fraud claim because: (1) her home inspection does not necessarily preclude her from relying on a statement in Pinnell's disclosure notice that there were no "alterations or repairs made without necessary permits or not in compliance with building codes in effect at the time," and (2) Pinnell did not properly raise the "as is" clause as a defense to the fraud claim. However, the "as is" clause was properly raised as a defense to the breach of contract claim.

Will Admitted to Probate Even Though Original Was Lost and Filing Was Late

Fri, 24 Sep 2010 14:11:53 -0500

In re Estate of Perez. Husband died in 1995. In 2007, his surviving widow filed an application to probate a copy of his Will because she could not find the original. There are two issues on appeal. First, under Texas probate law when the original Last Will & Testament cannot be found the court normally presumes that the Will was revoked. However, this presumption may be overcome by evidence indicating the Will was not revoked, or that some other person fraudulently destroyed the Will. A witness's testimony that he knew of no act of revocation by the testator may be enough to rebut the presumption. In this case, the widow met her burden by (1) testimony from the husband's attorney that he prepared the Will for the husband, and that the husband did not request the attorney to revoke the Will or prepare a new one, and (2) the widow's own testimony that her husband put the Will in a cedar chest with a lock on it prior to his death, and that his adult daughters had removed items from the chest. The second issue is that a Will cannot be admitted to probate more than four years after the testator's death unless the party requesting probate can prove she was not in default in failing to present the Will sooner. In this case, the widow met her burden by showing (1) she could not afford to pay her former counsel, (2) her educational background was limited to grade school, (3) she believed it was unnecessary to probate the Will, and did not know there was a time limit, and (4) she filed for probate within 30 days of learning of the need to do so.

Buyer Waives Fraud Claim

Tue, 07 Sep 2010 13:54:21 -0500

Chambers v. Equity Bank, SSB. Chambers agreed to purchase a resort from the Bank. A "pre-closing" occurred in June, during which some (but not all) closing documents were signed, and Chambers took possession of the property. The next day, Chambers discovered a problem with the septic system. In July, Chambers and the Bank entered into an amended contract that required the Bank to repair the system at a cost not to exceed $32,000. That same day, the deed and the rest of the closing documents were signed, and money changed hands. Before the repairs could be completed, though, Chambers filed bankruptcy. The Bank foreclosed and sued for a deficiency; Chambers counter-sued for fraud. On appeal, the Court holds that an agreement is ratified if a party, by word or conduct, affirms the agreement after becoming aware of any fraud that would otherwise impair the agreement. That is, ratification occurs whenever the parties act in a way that recognizes, in spite of the revealed fraud, the existence of a binding contract. So, although the Bank may have committed fraud by not disclosing the septic system problems at the outset, Chambers ratified the fraud by signing the contract amendment and proceeding to close after learning of the defect. As a result, he has no claim for damages.

Fences Don't Always Make Good Neighbors

Mon, 30 Aug 2010 14:18:23 -0500

Ferrara v. Moore. Hays subdivided an 11-acre tract of land into five lots, and conveyed each of the five lots with an easement for a "non-exclusive right-of-way for purposes of ingress and egress between a public road and the tract conveyed." Ferrera later purchased Lot 2 and blocked the easement by means of a fence and gate, and eventually by laying cut trees across the easement. The Moores, who owned Lot 5, sued. The court notes that the easement was free of any gates, fences or other obstacles for 21 years before Ferrera's actions, and without the easement the other lots are landlocked. Under the circumstances, it was proper to enjoin Ferrara from placing impediments on the easement that that would interfere with the Moore's free and unrestricted use of the easement.

Homeowner Claims Sticker Shock, But Lender May Foreclose

Thu, 05 Aug 2010 12:58:46 -0500

Cerda v. 2004-EQR1 LLC. Homeowners made a verbal application to refinance their home equity loan for $344,000 in order to obtain a lower fixed interest rate, to pay property taxes, and to obtain $10,000 in cash. By the time the loan closed over a month later, the loan amount had increased to $367,500, the interest rate was variable, and the owners received only $768 in cash. The owners never made a payment, and eight years of litigation ensued. On appeal, the Court holds first that the verbal loan application triggered the waiting period for closing the loan, so the waiting period was not violated even though the written application was not signed until closing. Second, the Court holds that the variable interest rate does not violate the requirement that payments be "substantially equal" because the loan is fully amortized over the life of the note without requiring a balloon payment. Finally, the Court holds that a $3,675 yield spread premium and $11,025 in discount points did not cause the loan to exceed the 3% cap on fees. In so holding, the Court observes that the yield spread premium (a bonus paid to the loan broker for selling a loan above market rates) did not count towards the cap because technically the fee is paid by the lender rather than the homeowner. The Court characterizes the discount points as a form of interest rather than fees (expressly disagreeing with the Texas Bankers Association v. Association of Community Organizations for Reform Now case that we discussed on January 15, 2010.) The trial court order dismissing the homeowners' claims and permitting the foreclosure to proceed is affirmed.

Seller's Breach of Fiduciary Duty Results in Partial Forfeiture of Sales Price

Mon, 26 Jul 2010 13:44:04 -0500

ERI Consulting Engineers, Inc. v. Swinnea. Snodgrass agreed to buy out his partner's interest in their asbestos abatement business, ERI. In exchange the partner, Swinnea, agreed to continue to work for ERI and to not compete with the business. Unknown to Snodgrass, Swinnea had already set up a competing business under the name of Swinnea's wife. After the buyout, Swinnea's revenue production for ERI dropped 30-50%. The relationship deteriorated, and eventually Snodgrass sued for statutory fraud in a real estate and stock transaction, common law fraud, breach of the non-compete clause in the contract, and breach of fiduciary duty. The Supreme Court holds that when a partner in a business breached his fiduciary duty by fraudulently inducing another partner to buy out his interest, the consideration received by the breaching party for his interest in the business is subject to forfeiture as a remedy for the breach, in addition to other damages that result from the tortious conduct. The case is returned to the trial court for further proceedings to correctly calculate the award.

Even Judge Posner Doesn't Read His Home Equity Loan Documents

Fri, 25 Jun 2010 13:49:43 -0500

Ok, this isn't actually news, but it's still amusing. Widely recognized as one of the most respected legal minds in the nation, Judge Posner recently admitted that rather than read hundreds of pages of documentation for his home equity loan, he simply signed where he was told.

Plaintiff Fails to Prove His Claim to Property

Fri, 18 Jun 2010 13:45:45 -0500

Plaintiff filed a trespass to try title suit against the defendants concerning certain disputed property. A trespass to try title action is the exclusive remedy by which to resolve competing claims to property. To recover, the plaintiff must establish a prima facie right of title by proving one of the following: (1) a regular chain of conveyances from the sovereign, (2) a superior title out of a common source, (3) title by limitations, or (4) prior possession, which has not been abandoned. Here, the plaintiff asserted only the fourth ground as a basis for recovery. However, to establish entitlement to relief on this ground, the plaintiff had to prove that he actually and exclusively possessed the land, as opposed to merely constructively possessing it. Because the Court finds no proper evidence showing that the plaintiff actually possessed the land at any time, the case is sent back for trial.

Cutting Corners Leaves Buyer Out in the Cold

Wed, 19 May 2010 13:54:12 -0500

Black v. Washington Mutual Bank. Black purchased a home from Lundy by paying $100,000 down and $8,500 per month, and received a quitclaim deed in return. Presumably Black did this without going through a formal closing and without obtaining title insurance, because Black was unaware that Washington Mutual held a mortgage on the home. Washington Mutual later declared Lundy in default on the loan, foreclosed, and filed a suit to evict Black. Black claimed her deed gave her "equitable title" to the property, and no eviction could be ordered until title was resolved. The Court disagrees. The sole issue to be determined in a forcible detainer action is the entitlement to actual and immediate possession, and the merits of the title shall not be adjudicated. The evidence at trial established a default on the note, a notice of eviction, the foreclosure pursuant to the deed of trust, and the sale of the property to Washington Mutual. Based on this evidence, Washington Mutual was entitled to immediate possession as grantee in the trustee's deed. However, Black may seek recourse against Lundy independent of the forcible detainer suit.

It Pays to Read Before You Sign

Tue, 27 Apr 2010 13:34:47 -0500

Athey v. Mortgage Electronic Registration Systems, Inc. Plaintiffs sued for fraud in connection with a home equity loan, claiming they were told their loan would be a fixed rate loan. In fact, their note had a variable rate and contained the following conspicuous disclaimer in the introductory paragraph: "THIS NOTE CONTAINS PROVISIONS ALLOWING FOR CHANGES IN MY INTEREST RATE AND MY MONTHLY PAYMENT. THIS NOTE LIMITS THE AMOUNT MY INTEREST RATE CAN CHANGE AT ANY ONE TIME AND THE MAXIMUM RATE I MUST PAY." The Court does not hold that the contract language will always provide a shield against a fraudulent misrepresentation, but in this case the Plaintiffs could not reasonably rely upon an oral representation that was so plainly contradicted.

Right of First Refusal Was Not All-Or-Nothing Agreement

Fri, 16 Apr 2010 13:45:27 -0500

Hicks v. Castille. Castille purchased 96 acres of a 100 acre tract owned by Hicks. The four acres retained by Hicks included a 0.28-acre tract subject to a tower lease. As part of the transaction, Castille obtained a right of first refusal to purchase the four-acre tract. Hicks later decided to sell the 0.28-acre tract and sent notice to Castille. Castille did not elect to purchase, but rather filed suit to assert that Hicks was required to sell the four-acre tract as one entire parcel. The court observes that the holder of a right of first refusal has no right to compel a sale or to prevent a sale; he or she has only the right to be offered the property at a fixed price or at a price offered by a bona fide purchaser if and when the owner decides to sell. Castille's interpretation is problematic both because it infringes on Hicks's property rights (by restricting him from selling a portion of his property), and because it compels Hicks to sell more land than he desired to sell. As a result, the Court holds that the agreement permitted the sale of a portion of the four acres so long as Hicks gave proper notice, and the third-party offer was commercially reasonable, imposed in good faith, and not specifically designed to defeat the right of first refusal.

Happy Home Sale Turns to Nightmare for Sellers

Tue, 23 Mar 2010 14:01:08 -0500

Barry v. Jackson. After Buyer signed a contract to purchase their home, Sellers entered into a contract to buy a new home. Buyer then reneged on the deal. Sellers lost their deposit on the new home and the cost of having the new home inspected. Over a year later, and after making additional repairs, Sellers finally sold their old home to someone else for $47,000 less than Buyer had agreed to pay. Sellers then sued Buyer for breach of contract. The Court holds that when the breached contract is for real estate, the measure of damages is the difference between the contract price and the property's market value at the time of the breach. The market value may be determined by a fair resale, with notice to the breaching party, within a reasonable time after the breach. However, over a year elapsed in this case between the breach and the ultimate sale, and Sellers did not present testimony by an appraiser or realtor as to whether the real estate market had undergone significant fluctuations during that year. Accordingly, Sellers failed to prove the market value of their property at the time of the breach. As a small consolation, the Sellers are entitled to recover $3,900 in expenses incurred as a result of having to terminate the contract to purchase the new home.

Tenant Escapes Illegal Lease

Thu, 04 Mar 2010 13:39:42 -0600

Merry Homes, Inc. v. Luu. Landlord and tenant entered into a lease that allowed the property to be used for a "nightclub or bar" and "no other" purpose. A month later, the tenant discovered it would be able to obtain a liquor license because the property was too close to a school. The landlord refused to cancel the lease, taking the position that the tenant should have investigated the issue before signing the lease. On appeal, the Court holds that a contract to fulfill an obligation which cannot be performed without violating the law contravenes public policy and is void. Because the only authorized use of the property is illegal under all circumstances, the lease is unenforceable.

Landlord Plays Lawyer; Suffers the Consequences

Wed, 20 Jan 2010 13:47:31 -0600

Taylor v. Carbajal. Landlord entered into a preprinted commercial lease form with tenant. In doing so, Landlord apparently attempted to convert an option to renew into an option to purchase, but did not fill in a blank specifying the deadline for exercising the option. The Tenant remained in the property after the lease expired, and sent notice to exercise the option to purchase approximately 6 months later. On appeal, the Court notes the ambiguity created by Landlord's sloppy drafting. However, because the Landlord continued to accept Tenant's rent after the lease expired, the Court finds that the lease remained in effect and that the Tenant could exercise the option to purchase during the time the parties continued to perform the lease. The dissent correctly notes that to reach this conclusion, the Court must completely ignore language in the lease requiring the option to be exercised "prior to the expiration of the initial lease term."

Court Invalidates Home Equity Loan Rules

Fri, 15 Jan 2010 13:50:44 -0600

Texas Bankers Association v. Association of Community Organizations for Reform Now. ACORN filed suit to invalidate nine regulations adopted by the Finance Commission and the Credit Union Commission relating to Texas home equity loans. On appeal, the Court upholds a couple of the regulations and finds that certain challenges have become moot due to amendments. However, the Court takes issue with Rule 153.5(3), which states, "Charges an owner or an owner's spouse is required to pay that constitute interest under the law, for example per diem interest and points, are not fees subject to the three percent limitation." The Court observes that the constitution prohibits fees (other than interest) exceeding 3% of the loan. In the Court's view, the Commissions' interpretation allows lenders to characterize fees as interest, and essentially renders the cap meaningless. Because the interpretation is contrary to the plain meaning of the constitution, the Rule is invalid.

Company Must Keep Verbal Promise to Employees

Tue, 05 Jan 2010 13:15:27 -0600

Vanegas v. American Energy Services. "At will" employees allege that, as an incentive for them to stay with the company, the Vice President promised the employees would get 5% of the value of the sale or merger in the event of sale or merger of the company. When the company later refused to pay, the employees sued. The Texas Supreme Court holds that, consistent with its recent rulings on covenants not to compete, the company's promise was unenforceable when made because the company could have fired the "at will" employees at any time. However, the promise later became binding when the employees accepted the offer by staying with the company until the sale or merger was finalized.

Right of First Refusal Was "All or Nothing"

Wed, 16 Dec 2009 13:38:28 -0600

FWT, Inc. v. Haskin Wallace Mason Property Managment. Seller sold undeveloped land to Buyer. As part of the deal Buyer gave Seller a right to re-purchase the land "at the same price and under the same terms and conditions offered by [a] prospective purchaser." After establishing a business on the land, Buyer proposed a package sale of the business and a lease of the land together. The Seller attempted to exercise its right of first refusal as to the land only. Buyer sued to obtain a judgment that Seller's rights had been extinguished by its refusal to accept the land and business as a package deal. The Court holds that an exercise of an option to purchase must be positive, unconditional, and unequivocal; any purported acceptance containing a new demand, proposal, condition, or modification of the terms of the offer is not an acceptance but a rejection. The package deal was not commercially unreasonable, imposed in bad faith, or specifically designed to defeat the Seller's rights. Accordingly, the Seller was required to accept the entire package deal in order to exercise its rights under the option.

Entire House Gets Kicked Out of Subdivision

Thu, 19 Nov 2009 13:43:09 -0600

Letkeman v. Reyes. Defendants purchased a house, had it cut in half, and began moving it into a new subdivision. The plaintiff neighbors complained, alleging that the restrictive covenants prohibited "pre-fabricated structures." The defendants contended that "pre-fabricated" meant structures built in a factory and then moved in sections or by wall panels onto a site. The trial court disagreed with the defendants, and entered an injunction requiring them to remove the home within 60 days. On appeal, the Court observes that restrictive covenants must be "liberally construed" to give effect to their purposes and intent, and holds that "pre-fabricated" means simply "previously made." The Court also holds that, although a party must normally prove a threat of irreparable harm before becoming entitled to an injunction, when enforcing restrictive covenants the harm is established simply by showing a distinct or substantial breach.

Court Announces New Community Property Rule Affecting Trust Distributions

Fri, 30 Oct 2009 14:02:35 -0500

Sharma v. Routh. In the context of a spouse who receives distributions of trust income under an irrevocable trust during marriage, the income distributions are community property if the receiving spouse owns the trust corpus, but the distributions are separate property if the receiving spouse does not own the trust corpus. However, the legal standard for determining whether the receiving spouse owns the trust corpus is unclear. On appeal, the Court holds that, when a spouse receives distributions of trust income under an irrevocable trust during marriage, the income distributions are community property only if the recipient has a present possessory right to part of the corpus.

Another Reason to Avoid Quitclaim Deeds in Texas

Fri, 30 Oct 2009 13:57:18 -0500

Enerlex, Inc. v. Amerada Hess, Inc. This dispute involves competing claims to mineral interests. Plaintiff contends that because it filed the mineral deed before Defendant filed her gift deeds, and because it was a bona fide, good-faith purchaser for value, its title is superior to hers. The Court first notes that a warranty deed to land conveys property, but a quitclaim deed conveys the grantor's right in that property, if any, without warranting or professing that the title is valid. In this case, Plaintiff's deed does not purport to convey any specific interest but instead broadly conveys all of the seller's interest. As such, Plaintiff's mineral deed is actually a quitclaim deed, and because Plaintiff had prior notice of defendant's claim, Plaintiff cannot be a bona-fide purchaser.

No Relief for Buyer who Purchased Damaged Property "As Is"

Fri, 09 Oct 2009 14:13:12 -0500

Kim v. Harstan, Ltd. Buyers sued their real estate agents for for fraud, statutory fraud, negligent misrepresentation, and breach of fiduciary duty after purchasing an apartment complex under a contract with an "As Is" provision. Buyers claimed the agents had knowledge of undisclosed defects in the property. The Court observes that by agreeing to purchase the property "as is," the buyer agrees to make his own assessment of the bargain and to accept the risk that he may be wrong. The Court also notes that real estate brokers are fiduciaries and are required to exercise fidelity and good faith toward their principal. However, contracting parties have an obligation to read what they sign, and a broker does not have a duty to disclose the contents of a written agreement that the principal is obligated to read before he or she signs it. Ultimately, the Court finds that the Buyers failed to properly assert their claims, and that the agents are entitled to summary judgment. As of this writing, the Buyers are seeking review in the Texas Supreme Court.

Contractor's Rights Not Affected by Clerk's Wrongful Refusal to Accept Mechanic's Lien Affidavit

Thu, 03 Sep 2009 13:33:16 -0500

Ready Cable, Inc. v. RJP Southern Comfort Homes, Inc. Defendant attempted to file a mechanic's lien affidavit on the last possible day for it to do so. Attached to the affidavit was a set of field notes describing the subject property. The day after the filing deadline, the county clerk rejected the filing because the field notes contained the phrase "Unofficial Document." A month later the defendant filed a modified affidavit. Plaintiff sued, alleging the lien was invalid because it was not timely filed. On appeal, the Court holds that a county clerk must record any document that meets the standards of Tex. Loc. Gov't. Code Sec. 191.007, and nothing in that statute authorizes rejection of a filing simply because it bears the words "unofficial document." Accordingly, where there is no legitimate basis for the clerk's refusal to file the lien affidavit, the affidavit should be deemed to have been filed on the date it was delivered for filing.

Court Invalidates Fraudulent Transfer to Children

Tue, 25 Aug 2009 13:18:36 -0500

Corpus v. Arriaga. Plaintiffs obtained a judgment against the Arriagas after an agreement between them fell apart. Fifteen days later, the Arriagas transferred two properties to their children, the Defendants in this suit. At trial the Defendants presented evidence that pursuant to an oral agreement that predated the original dispute between the Plaintiffs and the Arriagas, the Defendants had made payments equal to approximately 1/2 of the value of one property, and 1/3 of the value of the other property. On appeal, the Court holds the transfers were fraudulent under the Uniform Fraudulent Transfer Act because: (1) notwithstanding any oral agreement the transfer was not effective until the real estate deeds were recorded, and this did not occur until after the Plaintiffs' claim arose; (2) paying approximately 1/2 and 1/3 of the appraised value of the properties was not "reasonably equivalent value" as required by the statute; and (3) in light of the unsatisfied judgment and a prior bankruptcy, the Arriagas were insolvent at the time of the transfers, or became insolvent as a result of the transfers. The case is sent back to the trial court to consider whether the Plaintiffs are entitled to levy execution on the properties, and whether they are entitled to attorney's fees.

Right to Partition Supersedes Homestead Protection

Thu, 03 Sep 2009 13:15:47 -0600

Grant v. Clouser. Judgment creditor obtained judgment debtor's 50% interest in real property, and then brought partition suit against the owners of the other 50% of the property. The property was not the debtor's homestead, but was the homestead of the cotenants. On appeal, the Court recognizes that the essence of "homestead" is a place of residence where the independence and security of a home may be enjoyed, without danger of its loss, or harassment and disturbance. However, Texas homestead rights attaching to property interests held by a cotenant are subordinate to another cotenant's right to partition. Because one cotenant cannot rely upon a homestead right to trump the partition right of a cotenant who acquired his interest from a prior cotenant, the creditor is entitled to a partition and order of sale.

Lender Tripped Up by Statute of Limitations

Mon, 27 Jul 2009 13:27:09 -0500

Financial Freedom Senior Funding Corp. v. Horrocks. In November, 2002, Mullane completed a reverse mortgage transaction with Financial Freedom. The transaction enabled Mullane to convert the equity in her home into income with no personal obligation to repay the note; instead, the loan was to be repaid in a lump sum from the proceeds from the sale of the home only after she died or sold the property. In March, 2003, Mullane died, but Financial Freedom did not attempt to enforce its lien until July, 2007. The Court holds the statute of limitations expired four years after the date of death, so the liens and powers of sale to enforce the liens are unenforceable.

Wells Fargo Sues Itself in Foreclosure Case

Thu, 16 Jul 2009 14:23:04 -0500

Normally we just report court cases, but this was too good to pass up.

Supreme Court Saves the Day for Non-Probate Planning

Thu, 16 Jul 2009 14:21:20 -0500

Beatty v. Holmes. Husband and wife, both deceased, owned a brokerage account as "joint tenants," but never filled out the portion of the account agreement specifying a survivorship account. Likewise, stock certificates held by decedents as "joint tenants with right of survivorship" but were not signed by the decedents. Reversing a decision we reported a year ago, the Supreme Court holds "joint tenancy" or "JT TEN" designation on the investment accounts was sufficient to create rights of survivorship in community property, because precedent, trade usage, and seminal treatises clarified that joint tenancies carried rights of survivorship. In addition, account agreements for spouses' investments created survivorship rights in community property, where one agreement was titled "JOINT ACCOUNT WITH RIGHT OF SURVIVORSHIP" and was signed by both spouses, and other agreement listed spouses' names as "JTWROS" and was signed by both.

Court Gives Guidance on Recoveries in Construction Cases

Tue, 21 Apr 2009 13:23:44 -0500

AMX Enterprises, L.L.P. v. Master Realty Corp. AMX sued MRC for the unpaid balance of a contract to repair flood damage in MRC's hotel. The trial court reduced the amount of interest awarded to AMX because it found that AMX had unnecessarily delayed the lawsuit. On appeal, the court holds that the Prompt Payment to Contractors Act does not allow for tolling the accrual of interest during periods of litigation delay. However, AMX is not entitled to common law prejudgment interest in addition to interest under the Act. Finally, the court holds that the proper measure of attorney's fees for in-house legal counsel is the market value of those services, rather than cost-plus. AMX presented sufficient evidence to support an award of attorney's fees, but the case is remanded to calculate the correct amount.

There Goes the Neighborhood? Subdivision Restrictions Invalidated

Wed, 15 Apr 2009 13:26:51 -0500

Meehl v. Wise. Subdivision restrictions specified that all lots were to be used for single-family residences. Neighbors sought an injunction to prohibit the Meehls from constructing a bed-and-breakfast style retreat and educational center for persons with bipolar disorder. The court finds the restriction violates the Texas Community Homes for Disabled Persons Location Act. The case is remanded to the trial court to determine whether the neighbors should be enjoined from further attempts to enforce the restriction.

Tenant Saved by a Technicality

Fri, 06 Feb 2009 14:39:30 -0600

Moosavideen v. Garrett. In 1928, Landlord granted Tenant a 99-year lease with an option to purchase the property. The lease required each party to notify the other of any change in address. Landlord later died, and her interest passed to various heirs. The lease was assigned to multiple tenants, and eventually came into Moosavideen's hands. In 2001, Moosavideen sent notice to the four heirs of whom he was aware that he wished to exercise the purchase option. Receiving no response, he eventually filed suit against the four heirs. After learning of additional heirs in the discovery process, Moosavideen notified the additional heirs of his desire to exercise the option and joined them as parties to the suit. In 2002, the heirs sent notice to Moosavideen that they would not honor his option because he was in default under the lease for using the property as a service station "in a manner inconsistent with applicable environmental laws/regulations." The trial court ruled in favor of the heirs. On appeal, the Court holds that the heirs breached the lease by failing to notify Moosavideen of their addresses, so he was excused from his initial failure to properly notify all the heirs of his intent to exercise the option. Further, the Court rules that nothing in the wording of this particular agreement prevents Moosavideen from exercising the option while he is in default. The case is sent back to the trial court to determine whether Moosavideen is entitled to recover attorney's fees from the heirs.

No House for You! Grantor Sues to Cancel Deed.

Tue, 03 Feb 2009 14:00:13 -0600

Williams v. Kaufman. Plaintiff, an 87 year-old man whose wife had died a year before, signed a deed conveying the home where he had resided for nearly 40 years to Defendant. Plaintiff subsequently sued to cancel the deed, alleging that he had signed the deed in exchange for Defendant's promise to care for him for life and to never put him in a nursing home. The Plaintiff was the only person who testified about this promise, but on appeal the Court holds there is sufficient evidence to warrant cancellation of the deed. First, Plaintiff had also named Defendant as his agent in a power of attorney, indicating that he expected to have an ongoing relationship with her. Second, the deed recited that it was given in exchange for "ten dollars and other good and valuable consideration," rather than as a gift, indicating that the Plaintiff expected to receive something in return. Finally, Defendant admitted she had never paid the ten dollars. The Court finds that there is enough evidence to conclude that Defendant made a promise to Plaintiff that she did not intend to keep, and that cancellation of a deed is a proper remedy when promises are fraudulently made with no intention of carrying them out at the time of the deed's execution.

Lender Derails Closing at Last Minute; Buyer Pays the Price

Thu, 29 Jan 2009 14:00:02 -0600

Nguyen v. Woodley. On October 3, Buyer signed a real estate purchase contract to buy Seller's home not later than October 21. The night before closing, Buyer's lender notified Buyer that the lender would require roof repairs before making the loan. Buyer sent Seller a memo stating "I would like to notify you that we cannot obtain Financing Approval by now. I ask you to extend the closing date which I will try to find out as soon as I can." On October 24, Buyer satisfied the lender's concerns and requested that the closing be rescheduled, but Seller refused. Buyer sued and lost. On appeal, the Court holds that to be entitled to specific enforcement of a contract, a party must show that the contract in question is valid and enforceable. In this case, the contract specified "If Buyer cannot obtain Financing Approval, Buyer may give written notice to Seller within 20 days after the effective date of this contract and this contract will terminate and the earnest money will be refunded to Buyer." The Court holds that the Buyer's memo was sufficient to invoke this provision, thereby terminating the contract. The contract is not revived by the fact that Buyer subsequently managed to obtain financing approval, so there is no "valid and enforceable" contract to support Buyer's suit. Further, because the Seller prevailed in the suit, Seller is entitled to recover attorney's fees from Buyer.

Unfinished Divorce Leaves New "Wife" in a World of Hurt

Fri, 19 Dec 2008 14:18:12 -0600

Bailey-Mason v. Mason. Edward married Rae and subsequently filed for divorce, but the divorce was never finalized. After he separated from Rae, he bought a house. He later "married" Carlyn, with whom he had two children. Eventually Edward deeded the house to the children, and then he died. The probate court determined that Rae was the surviving spouse because she was never formally divorced from Edward. In a separate partition suit, the court ruled that Rae owned 1/2 of the house and each of the children owned 1/4. On appeal, Carlyn seeks reimbursement of $60,000 expended to improve the property. The court holds that she failed to prove that Rae joined in or consented to the improvements, or that the improvements were necessary to preserve the property. Accordingly, Carlyn gets nothing.

Plaintiff's Proof Insufficient to Set Aside Deed

Wed, 05 Nov 2008 13:25:45 -0600

Turner v. Hendon. While Turner's elderly mother was hospitalized in 1998 for a broken hip, she signed a deed conveying her property to Hendon. Turner did not learn of the deed until 2004, at which time her mother claimed to have no recollection of signing it. Shortly thereafter, Turner's mother died and Turner sued Hendon to establish that her mother lacked sufficient mental capacity to execute the deed, and was under the undue influence of Turner at the time of the deed's execution. On appeal, the Court holds that the law presumes that the grantor of a deed had sufficient mental capacity at the time of its execution to understand his legal rights, and for that reason the burden rests on the person seeking to set aside the deed to show lack of mental capacity of the grantor at the time the deed was made. All of the evidence at trial concerned the mother's mental state after she was released from the hospital; no evidence was offered relating to her mental capacity at or near the time that she executed the deed. In order to establish undue influence, a party has the burden to show: (1) the existence and exertion of influence; (2) the effective operation of an influence so as to subvert the will or overpower the mind of the grantor at the time of the execution of the deed; and (3) the execution of a deed the maker would not have executed, but for such influence. At best, the evidence at trial supports an inference that Turner had an opportunity to exert influence over the mother, but it does not prove that Turner subverted the mother's will or overpowered her mind. Accordingly, both claims fail.

A Costly Mistake: Buyer Defrauded Out of Home and Years of Payments

Tue, 28 Oct 2008 13:58:01 -0500

Casstevens v. Smith. Buyers failed to obtain title insurance upon purchasing their home from Sellers, and Sellers did not disclose that the property was subject to two existing liens. Although Buyers paid Sellers over a period of six years, Sellers failed to discharge the existing liens. The second lien went into foreclosure, and Investor purchased the property subject to the first lien. After Investor was unable to come to agreement with Buyers, Investor paid off the first lien and evicted Buyers. Buyers successfully sued Sellers for fraud, and then sued Investor for various claims, including equitable subrogation, unjust enrichment, and fraud. The Court observes that equitable subrogation applies when one party involuntarily pays a debt primarily owed by another. So, Buyers could have asserted such a claim against the Sellers (who owed the debt secured by the liens) but not against Investor (who was actually a creditor and did not owe any debt paid by Buyers.) Further, Investor purchased the property in the ordinary course of a foreclosure sale, so there was no implied contract between Investor and Buyers that would obligate Investor to reimburse money to Buyers. Consequently, unjust enrichment does not apply. Finally the Court finds that any statements Investor may have made to Buyers regarding a willingness to "work together" with Buyers were too vague to constitute fraud.

Buyer Snatches Defeat from Jaws of Victory; Might Still Recover Earnest Money

Tue, 21 Oct 2008 13:50:25 -0500

Digiuseppe v. Lawler. Buyer and Seller entered into an agreement concerning the sale of some land, contingent upon Buyer obtaining acceptable zoning. After a dispute arose between the parties regarding whether the zoning obtained by Buyer was acceptable, Seller attempted to terminate the contract and retain the earnest money. Buyer sued and won an order for specific performance against Seller. The Texas Supreme Court holds that an essential element in obtaining specific performance is that the party seeking such relief must plead and prove he was ready, willing, and able to timely perform his obligations under the contract. In this case, Buyer made the necessary allegations but offered "equivocal and conflicting" proof, and wholly failed to obtain the necessary finding from the jury. As a result, Buyer is not entitled to specific performance. However, the case is returned to the trial court to determine whether Buyer is entitled to a refund of its $200,000 earnest money deposit.

Nobody Knows What's Going On; Case Sent Back for Trial

Tue, 14 Oct 2008 13:59:34 -0500

Givens v. Ward. Givens agreed to sell land to Ward. The contract provided that "Seller reserves the following mineral, water, royalty, timber, or other interests," and referenced a copy of an oil, gas, and mineral lease attached to the contract. However, the warranty deed signed at closing contains no reservation of mineral interests. When Givens raised the issue after closing, Ward sued for a declaration that Ward owns the disputed interest. Givens countersued for reformation of the deed due to mistake. The Court observes that generally when a deed is delivered and accepted as performance of a contract to convey, the contract is merged in the deed and thereafter the deed alone determines the rights of the parties. However, the merger doctrine applies to deeds only in the absence of fraud, accident, or mistake. After reviewing the evidence, the Court concludes that neither party has clearly proven whether the deed varies from the parties' original agreement, and if so whether the variance was due to a mistake on the part of the Givenses of which the Wards had (or acquired) knowledge. As a result, the case is returned to the trial court for further proceedings.

Neighbors Inherit the Wind: Wind Farm Not a Nuisance

Tue, 23 Sep 2008 13:32:09 -0500

Rankin v. FPL Energy, LLC. Neighbors sued to obtain an injunction against a wind farm operator, alleging that the wind farm was a nuisance. A nuisance is a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities. Trespass to real property occurs when a person enters another's land without consent. In this case, neither has occurred, and the wind farm is operating lawfully. The Court sympathizes with the the plaintiffs' loss of "unobstructed sunsets, panoramic landscapes, and starlit skies," but reiterates that "the law will not declare a thing a nuisance because it is unsightly or disfigured, because it is not in a proper or suitable condition, or because it is unpleasant to the eye and a violation of the rules of propriety and good taste."

No Commission for Broker with Unenforceable Agreement

Fri, 29 Aug 2008 14:09:51 -0500

Duncan v. F-Star Management, LLC. Broker sued to recover unpaid commissions. The Real Estate Licensing Act requires that a commission agreement provide a description of the real estate that would satisfy the statute of frauds, meaning that it must identify the property with reasonable certainty. In this case, the properties were described as "Build-to-Suit for Thomson Consumer Electronics Facility in Socorro, Texas," and "Operation Campus View, Socorro, Texas," both of which the Court holds to be insufficient. Accordingly, the commission agreement was unenforceable. Further, Duncan's fraud claim fails because a real-estate broker may not allege fraud to recover a commission on an unenforceable agreement, even if he can prove the elements of fraud.

Borrower Saves Lender Trouble of Foreclosing; Gets Sued Anyway

Wed, 27 Aug 2008 13:45:37 -0500

Morrison v. Christie. Morrison borrowed money from Christie secured by a lien on property in Wichita Falls. Later, Morrison executed a Deed In Lieu of Foreclosure ("Deed In Lieu") conveying the property to Christie. Christie sold the property to a third party and, after crediting the sales proceeds to Morrison's note, sued Morrison for the deficiency. The Court notes that a Deed In Lieu is not a specific type of deed, such as a special warranty deed or a quitclaim deed, but rather is deed given in satisfaction of a debt. The Court finds no evidence in this case that the Deed In Lieu was intended to be a mortgage. The Court further finds that Morrison received consideration by avoiding a foreclosure on Morisson's credit record. While it is typical that a Deed In Lieu is given in full satisfaction of the debt, there is no law preventing the parties from agreeing that the conveyance is only in partial satisfaction. Finally, because the transaction does not constitute a foreclosure, Morrison is not entitled to a judicial determination of fair market value of the property.

Limited Partners Really Do Have Limited Liability

Thu, 21 Aug 2008 13:51:45 -0500

Asshauer v. Wells Fargo Foothill. Investors formed a series of limited partnerships to construct a commercial project. The original financing was insufficient to complete the project, so Wells Fargo agreed to provide additional financing in exchange for a limited partnership interest in the master limited partnership. Wells Fargo received some money on a subsequent sale. However, the project subsequently failed and when the other investors lost their money they sued Wells Fargo on various fraud theories. The Court holds that (1) a limited partner may not directly sue another limited partner when the alleged injuries damaged the limited partnership; and (2) the investors failed to plead and prove that Wells Fargo was either a de facto general partner or otherwise participated in the control of the partnership for liability purposes. Consequently the plaintiffs lack standing to sue.

LLC Shields Owner from Liability for Contract Debts, but not Owner's Personal Wrongdoing

Mon, 11 Aug 2008 14:00:47 -0500

Sanchez v. Mulvaney. Sanchez hired a limited liability company (LLC) owned by Mulvaney to construct a Sonic Drive-in restaurant. The project ran into trouble and, after paying off mechanic's liens, Sanchez sued both the LLC and Mulvaney individually. On appeal, the Court holds that Sanchez's contract was with the LLC, and Sanchez failed to produce evidence of fraud on Mulvaney's part that would entitle Sanchez to hold Mulvaney liable for a breach by the LLC of its contractual obligations. However, Sanchez also alleged certain wrongdoing by Mulvaney personally, including improper disbursements of construction payments, misrepresentation, breach of warranty, and unconscionable conduct. In an action seeking to hold an agent individually liable for his tortious or fraudulent acts, the corporate veil is not required to be pierced, so such claims could proceed to trial.

Good Title Work Is Always Better Than Equity: First Lienholder Loses Lien Priority

Thu, 17 Jul 2008 14:27:57 -0500

AMC Mortgage Services, Inc. v. Watts. In 1996 Gonzalez bought a home financed by a first lien to Lender 1 and a second lien to Smith, the seller. In 1999 Gonzales refinanced Lender 1's loan with Ameriquest. In 2000 she obtained a first home equity loan from Ameriquest and all prior liens held by Ameriquest were released. In 2003 she obtained a second home equity loan from Ameriquest and the 2000 home equity loan lien was released. Meanwhile, Gonzales defaulted on the 1996 Smith loan. The lender foreclosed and sold the property to Watts, who borrowed money from Argent to make the purchase. Shortly thereafter Ameriquest conducted a foreclosure of its 2003 home equity lien and tried to evict Watts from the property. Watts countersued and won at trial. On appeal, the Court holds that although equitable subrogation would ordinarily allow Ameriquest to succeed to the rights of Lender 1 upon a showing that Ameriquest had satisfied Gonzalez's obligation to Lender 1, in this case nothing in the public real estate records indicates the debt secured by the 1999 deed of trust was paid with the proceeds of the 2000 and 2003 home equity extensions of credit. As a result, Watts was entitled to conclude that the 1996 Smith loan had first priority because the home equity loans were both later in time, and foreclosure of the first lien extinguishes all junior liens. (Interestingly, the Court did not address the fact that a home equity loan cannot be in "renewal and extension" of a prior debt, and did not explain why Ameriquest had made either loan without requiring a release of the Smith lien.) Ameriquest did find one bright spot, though: the Court confirms that Watts is not entitled to recover attorney's fees in a trespass to try title suit.

Poor Drafting Strikes Again

Tue, 15 Jul 2008 13:46:09 -0500

Johnson v. Conner. The Johnsons agreed to sell land to the Conners. The "standard" real estate contract provided space for reservations of minerals, water, royalties, and timber, but the real estate agent noted only that "none of the above are available to be conveyed." At closing, the sellers signed a deed that provided for a reservation of "all presently recorded oil and gas leases, mineral severances, and other instruments ... that affect the property." Upon later learning that the buyers were collecting royalties under an oil and gas lease the sellers sued to reform the deed. Alternatively, they requested the court to avoid the contract on the basis of mutual mistake. The sellers lost on both counts at trial. The appellate court agreed, holding the deed is unambiguous in that it did not reserve the minerals. Further, a mutual mistake of fact occurs when the parties to an agreement have a common intention, but the written contract does not reflect the intention because parties were acting under the same misunderstanding of the same material fact. Although the parties in this case had different understandings of the contract language, they did not have the same misunderstanding.

Subcontractor's Lien Affidavit is Close Enough

Wed, 09 Jul 2008 13:25:16 -0500

Mustang Tractor & Equipment Co. v. Hartford Accident and Indemnity Co. Mustang furnished heavy equipment for the site work on a new Home Depot in Austin. When Mustang's invoices were not timely paid it sent notices to the general contractor and the owner, and timely filed mechanic's lien affidavits. A lawsuit resulted and the trial court invalidated the lien affidavits because they failed to specify the date each notice of the claim was sent to the owner and the method by which the notice was sent. The appellate court disagreed, holding that Mustang substantially complied with the law because: (1) the affidavits were otherwise correct, and (2) the owner and contractor actually received the notices containing the required information, so no one was misled or otherwise prejudiced by the omission.

Probate Remanded to Give the Parties Another Shot

Tue, 08 Jul 2008 13:43:22 -0500

In re Estate of Wilson. Decedent's spouse filed a copy of Decedent's will for probate because she could not find the original. After the will was admitted, Decedent's son challenged the proceedings. The Court observes that when a will was last known to be in the decedent's possession and cannot be located after death, a rebuttable presumption of revocation arises. The presumption can be overcome by proof and circumstances contrary to the presumption, or evidence that the will was fraudulently destroyed by some other person. Likewise, the recognition of a will's continued validity and the testator's continued affection for the chief beneficiary thereunder, without evidence tending to show the decedent's dissatisfaction with the will or any desire to cancel or change the will, is sufficient to rebut the presumption of revocation. However, in this case the widow had produced no evidence at all as to why the will could not be located. In the interest of justice, the Court sends the case back to the trial court to allow the parties another chance to fully explore the issue of whether the original will had been revoked.

Spendthrift Provision Did Not Preclude Trust Beneficiary from Devising His Interest in the Trust by Will

Tue, 08 Jul 2008 13:43:25 -0500

In re Townley Bypass Unified Credit Trust. Decedent's will established a trust for the benefit of his spouse for life, with the remainder to his children, Billy and Jimmy. After Decedent's death, Billy predeceased Decedent's surviving spouse. The Court holds that because Billy was alive when his father died and no condition precedent exists other than the termination of the life estate, his interest was vested. Further, finding no controlling authority, the Court holds that an interest in a trust may be transferred by will or intestacy because a spendthrift provision is to protect the beneficiary from his or her own folly, a purpose that cannot be promoted after the beneficiary's death. As a result, Billy's interest passes to his widow by his will, not to his heirs by intestacy.

Defeat Snatched from Jaws of Victory: Adverse Possession Verdit Overturned

Tue, 08 Jul 2008 13:43:27 -0500

Moore v. Stone. Stone claimed to have acquired title by adverse possession. There are statutory periods of adverse possession of 3, 5, 10, and 25 years, depending on the nature of the plaintiff's claim and how the property is used. In this case, the Court holds that casual or incidental fencing of the property for occasional grazing, and the cutting and gathering of natural crops such as hay, will not amount to such adverse and hostile possession and use as will satisfy the 10-year statute. Further, the 3, 5 and 25 year statutes all require the plaintiff to claim "title or color of title," or a deed. Because of a procedural quirk in this case, the plaintiff had neither. As a result, the jury's verdict of adverse possession is reversed.

Another Reason to Read Contracts Carefully: Easements Don't Have to Be Reasonable

Tue, 08 Jul 2008 13:43:30 -0500

Smith v. Huston. The plaintiffs each bought lots out of a subdivision, which included a "nonexclusive easement for aircraft for flight and taxiway purposes along, over and across" an adjacent airstrip. The easement provided for a $200 per year fee payable to the owner of the airport for use of the airport, such fee to be increased by no more than 10% annually. The plaintiffs eventually sued, alleging that airstrip owner was unlawfully interfering with their use of the easement, and asking the Court to rule that that any fees charged under the runway easements must be used for maintenance purposes only, must be reasonable and necessary for the actual maintenance of the runway, and that the owners are entitled to a detailed accounting of the fees collected and expended. The Court disagreed, holding that the easements are not ambiguous and thus mean exactly what they say. As a result, the owner of the airstrip is entitled to charge the fee set forth in the easements, and may increase the fee by ten percent each year, even though the fee might eventually exceed the value of the plaintiffs' lots. Further, the fees are not subject to a reasonableness limitation, and the owner is not obligated to account for or segregate any payments for the fees from other funds. However, nothing in the easements addresses remedies available to the owner of the airport in the event any lot owner fails to pay the easement fees, so the airport owner has no right to deny access by the lot owners while fees are unpaid.

Court Gives Buyer Another Bite at the Apple

Wed, 09 Jul 2008 13:29:42 -0500

Lovett v. Lovett. Louis alleges he had an oral agreement with Peter under which Louis would pay two-thirds of the monthly mortgage payments for a 26-acre tract, Peter would pay one-third, and title to the property would be divided so that Louis held title to one-half of the acreage along with a house located on the property and Peter would hold title to the other half of the acreage. Peter maintains that Texas real estate law requires an agreement for the sale of real estate to be in writing, so the oral agreement is unenforceable. However, the Court holds that "partial performance" is an exception to this rule. The Court further finds that Louis had paid over $25,000 in mortgage payments, taxes, maintenance and repair costs, and that he has at least raised a fact issue as to whether such sums are partial performance under an oral purchase contract, or merely rent. Accordingly, the case is returned to the trial court for further proceedings.

Updated link to Court's revised opinion.

"AS IS" Clause Doesn't Shield Seller from Liability for Fraud

Tue, 08 Jul 2008 13:43:34 -0500

San Antonio Properties, L.P. v. PSRA Investments, Inc. Agreement for sale of apartment complex stated that buyer accepted the property "as is" and that seller had made no representations or warranties not shown in the contract. However, buyer produced proof that it had relied upon operating statements provided by seller that turned out to be incomplete, as well as promises by the seller that the seller had spent large sums improving the property, and that the property was in good working order. The Court holds that even sophisticated buyers have the right to rely on the veracity of the financial information provided by the sellers, and that the evidence is supported the jury's determination that the seller had defrauded the buyer.

Borrower Fired Up Over Lender's Use of Insurance Proceeds

Tue, 08 Jul 2008 13:43:38 -0500

Lewis v. Wells Fargo. Two weeks after she bought it, Lewis' house burned. Her lender collected the insurance, and used the money to build a new house on the old foundation. Lewis made no payments, so the lender foreclosed. Lewis sued to challenge the foreclosure, complaining that instead of applying the insurance proceeds to the note and releasing her from liability, Wells Fargo had constructed a new house that was substantially different from the original. The Court holds that the lender was within its rights under the loan documents to rebuild rather than credit the note. However, the case is returned to the trial court to determine whether the lender breached an agreement with Lewis by failing to properly restore the home.

Sloppy Drafting Saves Borrower's Land

Tue, 08 Jul 2008 13:43:40 -0500

Fears v. Texas Bank. Borrower's parents gave him a 20-acre tract, which Borrower then conveyed to the Bank to secure payment of a loan. After Borrower defaulted he and his parents sued to recover the land on the basis that the property description in the deed was legally insufficient and therefore void. The Court notes that even when there is little doubt that the parties knew and understood what property was intended to be conveyed, the legal description in a deed must not only describe the location of the land, but also the size, shape, and boundaries of the land. A deed that does not sufficiently describe the land is void and unenforceable. In this case, the deed described the 20-acre tract as "being 20 acres off of the West end of [a certain 100-acre tract], the boundaries of such 20 acres to be located so as not to include any of the waters of Shawnee Creek...." The Court holds that although the deed adequately described the 100-acre tract, it did not provide the length, breadth, or shape of the 20-acre tract. As a result the deed was void and the Bank did not acquire the land from the Borrower.

Lender Lucks Out After Foreclosing with Defective Notice

Tue, 29 Dec 2009 13:48:22 -0600

Myrad Properties, Inc. v. LaSalle Bank Nat. Ass'n. Lender made a loan to Borrower secured by two separate apartment complexes. After Borrower defaulted in payment, Lender initiated foreclosure. Lender's foreclosure notice stated generally that Lender intended to foreclose all the real and personal property described in the Deed of Trust, but incorporated field notes for only one apartment complex. The Trustee's Deed also contained only one set of field notes. After the foreclosure Borrower sued to stop Lender from correcting the Trustee's Deed to include both apartment complexes. On appeal, the Supreme Court holds that using a correction deed to convey an additional, separate parcel of land is beyond the appropriate scope of a correction deed. However, the Court will not allow the Borrower to receive a windfall from the Lender's mistake; the Court orders the defective Trustee's Deed cancelled, and allows the Lender another chance to conduct the foreclosure properly.

Wife Has No Claim to Nearly $7,000,000 in Cash Upon Divorce

Tue, 08 Jul 2008 13:43:52 -0500

Legrand-Brock v. Brock. Husband owned 740 shares of BTH Holdings when he married Wife. Shortly after the marriage, BTH dissolved, and Husband received $6,975,510 in cash distributions. The divorce court determined the distributions were Husband's separate property because they were in redemption or cancellation of his separate property stock. Wife appealed, claiming the distributions were a "liquidating dividend" because the distributions were the corporation's retained earnings. The Court holds that the source of the funds is immaterial; the cash distributions represented an exchange of Husband's separate property stock for BTH's cash assets, and thus were his separate property.

Borrower Not Entitled to Attack Foreclosure Sale in Forcible Detainer Suit

Tue, 08 Jul 2008 13:43:55 -0500

Reynolds v. Wells Fargo Bank, National Association. Lender purchased the property at a foreclosure sale, and then sent notice to Borrowers to vacate. When Borrowers refused, Lender filed a forcible detainer (eviction) suit to obtain possession. Borrowers attempted to defend by challenging the foreclosure notice. The Court holds that the only issue in a forcible detainer action is the right to actual possession. Lender established that it is the owner of the property by virtue of the foreclosure sale, and that Borrower was a tenant at sufferance under the deed of trust. Accordingly, the trial court could determine the issue of immediate possession, and the court properly refused to consider any evidence concerning the notice of foreclosure.

Cry a River: Owner Claims Construction Caused Home to Flood

Tue, 08 Jul 2008 13:43:57 -0500

Royce Homes, L.P. v. Humphrey. Homeowner sued Builder, alleging that the slab Builder constructed on an adjacent property diverted the natural flow of surface water and caused Homeowner's house to flood. The jury agreed, and awarded Homeowner $5,300 in repair costs and another $20,000 for reduction in the value of the home due to the flooding "stigma." On appeal, the Court holds that Homeowner proved his entitlement to repair costs and stigma damages, but that the appraiser's testimony as to the amount of loss was not supported by facts and was too speculative to support the verdict. In the interest of justice, the Court remands the case to the trial court to enable Homeowner another opportunity to make his case.

Common Sense Prevails: Lien Affidavits May be Sent to Owner First and Filed Later

Tue, 08 Jul 2008 13:43:59 -0500

Arias v. Brookstone, L.P. In March, a sub-subcontractor on a construction project executed mechanic's lien affidavits and mailed copies to the required parties. However, the lien affidavits were not actually filed with the county clerk until early April. The appellate court confirms the validity of the liens, holding that "the purpose of the statute is to ensure that the owner receives actual notice that a lien affidavit has been executed with the intent to file the affidavit and create a lien against the owner's property, thus allowing the owner or original contractor to take appropriate action. Nothing in the statute requires that the property owner or original contractor be notified that the affidavit was actually filed."

Court Saves Bank's Bacon (Mostly)

Tue, 08 Jul 2008 13:44:00 -0500

Lasalle Bank National Association v. White. This is an update to a case we first reported in October, 2006. Homeowner took out a home equity loan of $260,000.00, but did not make the payments and the lender sought foreclosure. At trial and on appeal, the courts held that because the land was designated for agricultural use, the Texas Constitution prohibited it from being used as security for a home equity loan. As a result, the lien was to be cancelled and homeowner could keep the money.

However, the Texas Supreme Court notes that over $194,000 of the loan was used to pay off pre-existing valid liens for purchase money and property taxes. Under the doctrine of equitable subrogation, a third party who discharges a lien upon the property of another may step into the original lienholder's shoes and assume the lienholder's right to the security interest against the debtor. Accordingly, while the lender does forfeit the $57,000 cash portion of the loan, it is entitled to equitable subrogation for the refinance portion of the loan proceeds used to extinguish the homeowner's lawful purchase-money and property-tax liens.

Refi Paperwork Causes Wife to Lose 1/2 Separate Property Home

Tue, 08 Jul 2008 13:44:03 -0500

Magness v. Magness. Wife owned home prior to marriage. During marriage, she and Husband refinanced the loan. As part of the refinance Wife signed a deed conveying one-half of the property to Husband. In the subsequent divorce, Wife claimed she only signed the deed because of lender requirements to complete the refinance. However, the Court holds that a deed from one spouse to another is presumed to be a gift, and Wife failed to rebut the presumption. As a result, Husband and Wife each own one-half of the home as separate property.

Bank Bungles Home Equity Loan But Successfully Addresses the Problem

Tue, 08 Jul 2008 13:44:05 -0500

Fix v. Flagstar Bank, FSB. Borrower took out a home equity loan and then refinanced it with a conventional loan less than a year later. Lender acknowledges that it is not allowed to do a second loan within a year of the first, or to impose personal liability on the borrower. Lender offered to fix the problem by making a new home equity loan at the same or better rate at no cost to borrower, and paying an additional $1000. Borrower declined and demanded that lender forfeit the loan. The Court finds that under the version of the law in effect at the time the lender had made a reasonable offer to cure the violation. The Court further finds that because a loan is neither "goods" nor "services," borrower does not qualify as a consumer under the DTPA.

The Perils of Delay: Lender Waits Too Long to Foreclose

Tue, 08 Jul 2008 13:44:09 -0500

Burney v. Citigroup Global Markets Realty Corp. This is an update to an case we first noted in November, 2007. Lender filed an application to foreclose on borrower's home equity loan in April, 2000, but the suit was dismissed for lack of prosecution. In November, 2004, lender filed another application to foreclose. The Court holds that a four-year statute of limitation applies to a suit to recover real property under a real property lien or foreclose on a real property lien. By filing suit in April, 2000, lender is deemed to have accelerated the maturity of the loan and started the limitations period, so the latest date for re-filing the foreclosure application was April, 2004. Because the lender waited until November, 2004, its claim is barred by limitations.

Post-Sale Skirmish Over Liability for Property Taxes

Tue, 08 Jul 2008 13:44:13 -0500

Sefzik v. Mady Development, L.P. After purchasing property, Buyer discontinued the agricultural use that had been maintained by the Seller, and as a result rollback taxes were assessed. Court holds that under the unambiguous language of the contract the rollback taxes are the Buyer's responsibility. However, Seller failed to preserve its complaint regarding other sums awarded to the Buyer. The case is remanded to the trial court to determine who is the "prevailing party" for purposes of winning attorney's fees.

Devise of Land Does Not Automatically Include Contents

Tue, 08 Jul 2008 13:44:16 -0500

Alford v. Alford. Decedent's Will made a gift of a certain business property, but made no express mention of the personal property used in the business, or the business income. The attorney who drafted the Will testified that the Decedent's intent was that the gift would include the personal property. The Court holds that the Will is not ambiguous on its face, so evidence that the Decedent intended something other than what is written is not admissible. Under Texas law a gift of real estate in a Will conveys only the land, appurtenances and fixtures unless the Will specifies otherwise, such as by making reference to "personal property" or "contents."

Temporary Employment Agency Entitled to Mechanic's Lien on Construction Project

Tue, 08 Jul 2008 13:44:19 -0500

Reliance National Indemnity Co. v. Advance'd Temporaries, Inc. Lamar hired Gonzalez to do work on a construction project. Gonzalez did not have enough employees for the job, so he hired Advance'd temporary employment agency to furnish temporary workers. However, Gonzalez did not pay Advance'd, so Advance'd filed a mechanic's lien against the project. The Supreme Court holds that the temporary workers were employed by Advance'd while they worked on the project, and as a result Advance'd "furnished labor" within the meaning of the applicable statutes. Advance'd was thus entitled to a mechanic's lien to secure payment of the sums owed it.

Both Spouses Must Sign to Create Valid Lien Against Homestead

Tue, 08 Jul 2008 13:44:27 -0500

Cadle Co. v. Ortiz. During marriage, Wife purchased property on assumption but Husband's name was not on the deed. Later she took out a home improvement loan, and again Husband did not sign. After default in payments the lender foreclosed. The court holds the foreclosure was wrongful because to have a valid lien against homestead both spouses must sign the home improvement contract, and the lender failed to prove that Wife misrepresented her marital status when the improvement loan was made. As a result, the lien is invalidated and the lender is on the hook for Wife's attorney's fees in excess of $23,000.00.

Only a Lawyer Could Think This Way: A Will is Construed One Way for One Sentence and Another Way for the Next Sentence

Tue, 08 Jul 2008 13:44:30 -0500

In re Estate of Nash. Nash's Will left everything to his wife, or if she predeceased him then to his step-daughter. Nash and his wife later divorced, but he never changed his Will. When Nash died, he was survived by his former spouse and the step-daughter. The Texas Supreme Court acknowledges that under the Probate Code if a testator divorces after executing a Will, provisions that favor the former spouse must be read as if the former spouse predeceased the testator. Accordingly, the former wife does not receive anything under the Will because she is treated as having pre-deceased Nash. However, the alternative gift to the step-daughter is not triggered because the former spouse did not actually pre-decease Nash. As a result, the step-daughter also has no entitlement under the Will, and his estate passes to his heirs at law.

"AS IS" Means What it Says; Landlord Not Liable for Fire

Tue, 08 Jul 2008 13:44:32 -0500

Gym-N-I Playgrounds, Inc. v. Snider. Commercial tenant sued landlord for negligence, fraud, breach of implied warranty of suitability, and violation of the DTPA after a fire destroyed the leased premises. The Texas Supreme Court recognizes that normally commercial landlords impliedly warrant that the premises are suitable for the tenants' intended commercial purposes. However, in this case the tenants expressly disclaimed that warranty and agreed to lease the building “as is.” These two factors eliminate all claims against the landlord based on the property's condition.

Plaintiff Waits Too Long to Enforce Restrictive Covenants

Tue, 08 Jul 2008 13:44:34 -0500

Girsh v. St. John. Defendants moved a mobile home onto their property in the mid-1980's in violation of subdivision restrictions. Approximately 13 years later, Plaintiff filed suit to enforce the restrictions, claiming that an overgrowth of trees and brush prevented her from discovering the violation sooner. The Court holds that the statute of limitations for enforcement of restrictions is four years, and that a full-size mobile home on a residential lot in a highly populated subdivision is not inherently undiscoverable. Accordingly, the Plaintiff waited too long to file suit and is not entitled to any remedy.

Governor Signs HB 2061

Tue, 08 Jul 2008 13:44:37 -0500

On Wednesday, Governor Perry signed H.B. 2061. The law, which is effective immediately, is the Legislature's response to Attorney General Opinion GA-0519, which effectively shut down the entire real estate industry in Texas for several days in late February, 2007. Under the new law, County and District Clerks will not be subject to liability under the Public Information Act for disclosure of social security numbers contained in documents filed in their respective offices.

Look Before You Close: Buyer Had Duty to Investigate Property

Tue, 08 Jul 2008 13:44:39 -0500

Fletcher v. Minton. Fletcher purchased a 12.56 acre parcel. Fletcher's deed purported to include land which had previously been sold to Malecek and Minton. Malecek and Minton had never recorded deeds to their parcels, and as a result Fletcher claimed the prior sales were void as to her because of her status as a "bona fide purchaser for value" without notice of the prior conveyance. However, the court found that Fletcher did have notice before closing of their claims to ownership by virtue of the mobile homes, sheds, vehicles, cows, fences, and other equipment Malecek and Minton had placed on the two tracts, as well as by virtue of discussions between Fletcher's agent and Minton. Because a purchaser of land is charged with notice of all claims of a party in possession of the property that the purchaser might have discovered had she made proper inquiry, Fletcher was not an innocent purchaser and did not acquire title to the tracts previously sold to Malecek and Minton.

Architectural Control Committee Falls Asleep at the Switch

Tue, 08 Jul 2008 13:44:42 -0500

Indian Beach Property Owners' Association v. Linden. Property owner constructed a chain link fence on her property. The Owners Association filed suit, alleging the owner had not obtained approval from the Architectural Control Committee (ACC) as required by the deed restrictions. The Court finds that under the wording of these particular deed restrictions, if the ACC fails to approve or disapprove of an application within forty-five days after it is submitted, approval is presumed. Since the ACC did not timely rule on the owner's application, the application was deemed approved and the fence should be permitted.

A Boat is Not Homestead (Does This Really Require a Supreme Court Opinion?)

Tue, 08 Jul 2008 13:44:44 -0500

Norris v. Thomas. The Texas Supreme Court has ruled that a 68-foot, four-bedroom, three-bathroom yacht with a galley and salons may be a home, but it does not qualify for homestead protection. Even though the boat spends most of its time in dry-dock, receiving utilities through an umbilical line, it has not become sufficiently affixed to real estate to alter its status as movable chattel. As such, the boat is not exempt from forced sale by creditors.

Can't Have Your Cake and Eat It Too: One Party's Breach of Contract Excuses Performance by the Other Parties

Tue, 08 Jul 2008 13:44:46 -0500

Mandell v. Mandell. Three parties each owned part of a 240 acre tract. To settle a prior lawsuit between them, the parties agreed that they would each have a "preferential purchase right" (option to purchase) in the event any of them were to receive a purchase offer. Almost immediately, and without the consent of the other two co-owners, the plaintiff then conveyed a portion of his interest to his lawyer in payment of attorney's fees. About five years later one of the co-owners agreed to buy out the other, and the plaintiff sued to enforce his rights under the preferential purchase right. The court holds that by conveying part of the land to his attorney the plaintiff breached the settlement agreement, and as a result the other two co-owners are no longer bound by that agreement.

Amendment to Master Lease Does Not Amend the Sublease

Tue, 08 Jul 2008 13:44:48 -0500

Four Brothers Boat Works, Inc. v. Tesoro Petroleum Companies, Inc. Defendant entered into a Master Lease with a 10-year term and an option to extend for another 10 years. Defendant then subleased the property to Plaintiff on the same terms (i.e.--a 10-year term with a 10-year option.) Defendant subsequently agreed with the landowner to modify the Master Lease to delete the renewal option, but the Plaintiff was not a party to that amendment and the Sublease was not amended. Upon expiration of the Master Lease Defendant demanded that Plaintiff vacate, but Plaintiff did not do so and sued. The Court holds that the Master Lease amendment had no effect on the Sublease, and that Plaintiff was entitled to prosecute its breach of contract claim against the Defendant.

Title Insurer Not Obligated to Defend Adverse Possession Claim

Tue, 08 Jul 2008 13:44:50 -0500

Koenig v. First American Title Insurance Co. of Texas. Plaintiff's neighbor sued for adverse possession of a disputed strip between their homes. After Plaintiff successfully defended the suit Plaintiff sued the title insurance company for not defending the suit. The Court holds that there is no coverage under the policy for "rights of parties in possession." At the time they purchased their property, the Plaintiffs could plainly see that the neighbors had fenced the disputed strip, planted trees on it, and let their large dogs run on it. Such facts were clearly pleaded in the underlying adverse possession suit, and the insurer was entitled to rely upon those pleadings in determining that the policy exception applied.

Title Insurance Covers Defects in Title--Not Property Condition

Tue, 08 Jul 2008 13:44:52 -0500

Hanson Business Park, L.P. v. First National Title Insurance Co. Plaintiff discovered the land it had purchased lies in a flood plain. When the underwriter denied Plaintiff's claim under the owner's policy of title insurance, Plaintiff sued the underwriter alleging that the flood plain status so profoundly affected the value of the land as to amount to a defect in title. The Court disagreed, saying a title insurance policy imposes a duty to indemnify the insured against losses caused by defects in ownership rights; it is not a guarantee of the condition, value or marketability of the land. Because there is no question that Plaintiff acquired full ownership of the property, the insurer is entitled to judgment as a matter of law.

Effort to Probate Copy of Will Falls Flat

Tue, 08 Jul 2008 13:44:55 -0500

In re Estate of Longron. Decedent's friend attempted to probate a copy of Decedent's will. At trial, the jury determined that the Decedent had revoked the will and that the friend's application for probate had not been filed in good faith. The trial judge disagreed with the jury on the issue of good faith and awarded the friend $45,000 in attorney's fees and expenses to be paid from the estate. After reviewing the evidence (including the testimony of a Decedent's lawyer and another witness who saw Decedent destroy the will) the appellate court ruled that the friend had not conclusively proved that he acted in good faith and that the jury's findings should stand.

Mere Mistaken Ownership Is Not Adverse Possession

Tue, 08 Jul 2008 13:44:57 -0500

Tran v. Macha. Neighboring relatives shared the use of a driveway for many years, thinking it belonged to one of them when in fact it belonged to the other. Upon learning the true facts, Plaintiff claimed to have acquired the driveway by adverse possession. The Texas Supreme Court disagreed, holding that adverse possession requires an actual and visible appropriation of real property, commenced and continued under a claim of right that is inconsistent with and is hostile to the claim of another person. Because the neighbors shared use of the strip by agreement, the use was not inconsistent with or hostile to the rights of the true owner.

The Long & Winding Road: Easement by Necessity Does Not Guarantee Convenient Access

Tue, 08 Jul 2008 13:45:01 -0500

Crone v. Brumley. Brumley's property, originally part of a larger tract, is landlocked. When the larger parcel was originally subdivided, the owner had access to a roadway to the north, but not to the south. Later a road was built to the south, and Brumley wishes to access his property from that direction because only four-wheel drive vehicles can traverse the path to the north roadway. The Court holds that Brumley is entitled to an easement by necessity because he has no other legal access to his land, but he is not entitled to the most convenient access. Since the original access via the north roadway, his access must still be to that direction; the fact that the easement is impassable until it is repaired is of no consequence.

Family Squabble Over Uncle's Estate Turns Case into Procedural Tangle

Tue, 08 Jul 2008 13:45:03 -0500

Fillip v. Till. Despite the best efforts of Uncle and Niece to cut Nephew off, Nephew ended up with a court order awarding him the Uncle's farm. Held: In Texas, an agent under a power of attorney cannot create a trust for the principal. Further, a disclaimer filed more than 9 months after the death of the decedent is ineffective, but can still operate as an assignment of interest. As a result, Niece's daughters have the right to challenge Nephew's ownership of the farm.

One Thing at a Time: Eviction Appeals Should be Streamlined

Tue, 08 Jul 2008 13:45:06 -0500

Hong Kong Development, Inc. v. Nguyen. On appeal of Landlord's eviction suit, Tenant countersued Landlord in County Court for various tort claims. This Court holds that it was error for the County Court to consolidate the eviction suit with the tort claims because eviction suits are intended to provide a speedy, summary, and inexpensive determination of the right to immediate possession of real property. Since the tort claims were unrelated to the issue of possession of the property, the County Court lacked jurisdiction to hear them.

No Free Money For You!

Tue, 08 Jul 2008 13:45:08 -0500

Doss v. Homecomings Financial Network, Inc. Husband and Wife purchased two pieces of land financed through Homecomings. When they later divorced, Husband and Wife were each awarded one tract land and ordered to pay their respective mortgages. Wife subsequently obtained a new loan, and when Homecomings received the payoff funds it mistakenly applied them to Husband's loan. In the process, Husband's land was paid off and he received a refund. Upon discovering the error Homecomings demanded reimbursement but Husband refused. The court holds that Homecomings asserted a valid claim for "money had and received." As a result, it was entitled to reimbursement plus interest, and to reinstatement of its lien against Husband's land, but could not recover attorney's fees from Husband.

Squatter Waits Too Long To Sue

Tue, 08 Jul 2008 13:45:11 -0500

Session v. Woods. Woods purchased the subject property at a tax sale; Session claims he had acquired title by adverse possession ("squatter's rights"), and that such title was superior to Woods' tax deed. The court holds that Session's suit was barred by the statute of limitations. Subject to exceptions not applicable in this case, the Tax Code states that an action for title to property may not be maintained against the purchaser of the property at a tax sale unless the action is commenced "before the first anniversary of the date that the deed executed to the purchaser at the tax sale is filed of record."

Illegal Closed Meeting Invalidates Land Sale

Tue, 08 Jul 2008 13:45:13 -0500

City of Laredo v. Escamilla. City wanted to buy a piece of land, and met in closed meeting to discuss the matter before approving the purchase in an open meeting. The court holds that the City failed to prove that discussion in an open meeting would have impaired its negotiating position with third parties, as required by the "real estate exception" to the Texas Open Meetings Act. As a result, the sale was invalidated.

Slip-Sliding Away: "As Is" Clause Relieves Developer of Liability

Tue, 08 Jul 2008 13:45:15 -0500

Welwood v. Cypress Creek Estates, Inc. Homeowner sued developer for damages caused by failure of the the slope behind his house. The Court finds that the contract contained an "as is" provision, that the homeowner was aware of the provision, and that there is no evidence of misrepresentation or concealment by the developer. The Court questions whether Texas recognizes an implied warranty of good and workmanlike development, but holds that if such a warranty exists the "as is" language was sufficient to disclaim it.

Invalid Non-competition Agreement Can Become Enforceable Later

Tue, 08 Jul 2008 13:45:18 -0500

Alex Sheshunoff Management Services, L.P. v. Johnson (Tex. 10/20/2006). Under prior law, an at-will employer's promise to provide training and access to confidential information would not bind the employee to a non-competition agreement because the employer could avoid the promise by simply firing the employee. Here, the Court modifies the rule to state that an at-will employee's non-compete covenant becomes enforceable when the employer performs the promises it made in exchange for the covenant.

Lawyer Gets an Education in Landlord-Tenant Law

Tue, 08 Jul 2008 13:45:22 -0500

Carrasco v. Stewart. Lawyer remained in possession of premises after his lease expired. At trial he claimed that he was a month-to-month tenant under a verbal lease and thus not subject to late fees. HELD: Under the common law, when a tenant "holds over" after a fixed-term lease expires it is presumed that the tenant will be bound by the original lease terms for a period of one year. In this case, the tenant failed to rebut the presumption, and is liable for late fees because the original lease provided for late fees.

Divorce Awards Life Insurance to Husband; Wife Gets Proceeds Anyway

Tue, 08 Jul 2008 13:45:24 -0500

Dohnalik v. Somner. Divorce decree awarded Husband "all right, title, interest and claim in . . . [a]ll policies of insurance (including cash values) insuring [Husband's] life." However, Husband never changed the beneficiary designation of his Serviceman's Group Life Insurance (SGLI) policy. HELD: If an SGLI policy-holder wishes to change his designated beneficiary, he must communicate that decision to the proper office. Accordingly, ex-wife was entitled to the SGLI proceeds.

Right of First Refusal Invalidated Due to Insufficient Property Description

Tue, 08 Jul 2008 13:45:26 -0500

A right of first refusal described the subject property as 3.0152 acres adjoining a specific tract of land. The court held there were no documents attached to or referenced by the instrument to describe the shape and boundaries of the 3.0152-acre tract. Accordingly, the property description was insufficient as a matter of law and the right of first refusal was invalid.

Texas courts will not create a "marriage-like relationship"

Tue, 08 Jul 2008 13:45:28 -0500

Executor sued Decedent's boyfriend to recover property alleged to belong to Decedent's estate. The boyfriend asked the Court to exercise its equitable authority to adopt a "marriage-like relationship" doctrine in recognition of his relationship with the Decedent. HELD: Texas' public policy is unambiguous, clear, and controlling on the question of creating a new equitable remedy akin to marriage: a Court may not create such a remedy.

Minor defects in annual contract for deed accounting do not trigger liquidated damages

Tue, 08 Jul 2008 13:45:30 -0500

Home buyer under a Contract for Deed is not entitled to liquidated damages unless the annual statement required by the Property Code is so deficient as to be something other than a good faith attempt by the seller to inform the purchaser of the current status of their contractual relationship.

Texas homeowner's policy does not cover mold damage

Tue, 08 Jul 2008 13:45:33 -0500

The mandatory homeowner's policy form promulgated by the Texas Department of Insurance says, "We do not cover loss caused by mold," but it also says, "We do cover ensuing loss caused by water damage." Nevertheless, the Court holds the policy is not ambiguous and does not cover mold damage.

Wife fails to pierce corporate veil in divorce suit

Tue, 08 Jul 2008 13:45:35 -0500

In a divorce, the court may not use the "alter ego" theory to pierce the corporate veil and divide the business' assets unless (1) the corporation has effectively ceased to exist as a separate entity, and (2) the improper use of the corporation harmed the marital estate to such a degree that reimbursement is no longer a viable remedy.