Opinion

Ernest R. Koonce v. Homeq Servicing, Wells Fargo Bank

Court: Texas Court of Appeals, 1st District (Houston)
Filed: Dec 22, 2011
Status: Published
Cited by: 0 cases
Authority: More cited than 42.2%

“More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, ‘rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.’” (quoting Burroughs Wellcome Co. v. Crye , 907 S.W.2d 497, 499 (Tex. 1995))

How later courts described this case

“More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, ‘rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.’” (quoting Burroughs Wellcome Co. v. Crye , 907 S.W.2d 497, 499 (Tex. 1995))
holding that non-breaching party waived right to partially rescind contract when it chose to treat contract for sale of business as continuing, by retaining all assets of business, and continuing its operation after other party’s breach of covenant not to compete

Written by the judges who cited it.

The opinion

Opinion issued December 22, 2011

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-10-00194-CV

———————————

Ernest Ray Koonce , Appellant

Barclays Capital Real Estate

Inc.

D/B/A HomEq Servicing and

Wells Fargo Bank, N.A. AS TRUSTEE

UNDER POOLING AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2005

ASSET-BACKED PASS-THROUGH

CERTIFICATES SERIES 2005-WHQ2 , Appellees

On Appeal from the 127th District

Court

Harris County, Texas

Trial Court Case No. 2007-30212

MEMORANDUM OPINION

Ernest

Ray Koonce appeals from the no-evidence and

traditional summary judgment in favor of Barclays Capital Real Estate Inc.

d/b/a HomEq Servicing (“ HomEq ”)

and Wells Fargo Bank, N.A. as Trustee under Pooling and Servicing Agreement

Dated as of April 1, 2005 Asset-Backed Pass-Through Certificates Series

2005-WHQ2 (“Wells Fargo”), in his suit as a borrower against the noteholder for damages arising out of alleged violations of

the Texas Deceptive Trade Practices Act, common-law fraud, negligence, and

breach of contract. In three issues, Koonce challenges (1) whether the trial court erred in

granting a final summary judgment based on substantively defective summary

judgment evidence; (2) whether appellees owned the

note and deed of trust and thus had standing to enforce them; and (3) whether appellees breached or anticipatorily breached the note and

deed of trust and are, therefore, precluded from enforcing them against Koonce .

We affirm.

BACKGROUND

In February

2005, Koonce obtained a home loan from Argent Mortgage

Company (“Argent”) which was evidenced by a promissory note and secured by a

deed of trust executed by Koonce .

In January

2007, Argent executed a Limited Power of Attorney that appointed HomEq , as its mortgage servicer. Although disputed, Wells Fargo appears to be the

holder of the note, the owner of the note, or both. Koonce’s last live

pleading recites: “[t]he note has since been sold to Wells Fargo Bank, N.A.

with HomEq Servicing as the loan servicer.”

April 2006, Koonce sought and was granted a deferral

of his property taxes. See Tex.

Tax Code § 33.06 (West

2008) (authorizing elderly and disabled property owners to defer collection of

property taxes). That same month was the first

month he was late paying the house note, followed thereafter by late payments

in June, July, August, and September 2006.

Each late payment resulted in late charges accruing to his future

payments as set forth in the Deed of Trust.

Koonce accrued yet another fee for his August

payment when his check for the loan payment was denied for insufficient funds.

Koonce failed entirely to make his payment due October 1,

2006. On November 13, forty-four days

after Koonce’s default, HomEq

paid Koonce’s unpaid property taxes for the first

time. On November 15, HomEq sent Koonce a letter

demanding that he cure the October 1, 2006 default by December 20, 2006. Koonce wrote a

check for the November payment, but according to his response to appellees ’ motion for summary judgment, he elected to

withhold funds for the November payment and that check, too, was denied by the

bank. The last payment Koonce made on his loan was September 9, 2006.

The amount Koonce was required to pay increased due to late payments

as well as two bounced checks. Appellees claim, however, that the first fee applied to Koonce’s loan as a result of unpaid property taxes did not

occur until after December 20, 2006, Koonce’s deadline

to cure the default. Koonce ,

on the other hand, insists that, by means of an escrow account disclosure

statement dated November 17, 2006, appellees notified

him that his monthly payments were being adjusted to cover the increase for the

payment of taxes and insurance and the future payment of taxes and insurance.

In May 2007, Koonce filed a pro se

action against appellees asking for a declaratory

judgment “uphold[ ing ] the provisions of the Texas

Property Tax Code, in particular Section 33.06, and instruct[ ing ] Defendant HomEq , Et . Al., to return to the original amount

of the Plaintiff’s mortgage” and for injunctive relief preventing appellees from pursuing foreclosure. Koonce also asked

for unspecified “real and punitive” damages of $250,000. Appellees filed a

general denial in response. In March

2009, Koonce amended his original petition. He removed his request for declaratory

judgment and injunctive relief and instead sought damages under the Texas

Deceptive Trade Practices Act, for common law fraud, negligence, and breach of

contract. He asked for treble damages,

exemplary damages, and attorneys’ fees.

In June 2009, appellees

filed a motion for summary judgment. Koonce filed a response to appellees ’

motion. The trial court granted appellees ’ motion for summary judgment on July 17,

2009. Koonce

then moved for a new trial on August 17, 2009.

The trial court granted the motion for new trial on October 21,

2009. Thereafter, in February 2010, appellees filed an amended no-evidence and traditional

motion for summary judgment, to which Koonce

responded. The trial court granted this

motion on February 26, 2010, and this appeal followed.

STANDARD OF REVIEW

We review the

trial court’s grant of summary judgment de

novo . Valence Operating Co. v. Dorsett , 164

S.W.3d 656, 661 (Tex. 2005). After

an adequate time for discovery, a party may move for a no-evidence summary

judgment on the ground that no evidence exists of one or more essential

elements of a claim on which the adverse party bears the burden of proof at

trial. Tex.

R. Civ. P. 166a( i ); see Flameout Design & Fabrication, Inc.

v. Pennzoil Caspian Corp. , 994 S.W.2d 830, 834 (Tex. App.—Houston [1st

Dist.] 1999, no pet.). The burden then

shifts to the nonmovant to produce evidence raising a

genuine issue of material fact on the elements specified in the motion. Tex. R.

Civ. P. 166a( i ); Mack Trucks, Inc. v. Tamez ,

206 S.W.3d 572, 582 (Tex. 2006). The

trial court must grant the motion unless the nonmovant

presents more than a scintilla of evidence raising a fact issue on the

challenged elements. Flameout Design & Fabrication , 994

S.W.2d at 834 ; see also Merrell Dow Pharms ., Inc. v. Havner , 953

S.W.2d 706, 711 (Tex. 1997) (“More than a scintilla of evidence exists when the

evidence supporting the finding, as a whole, ‘rises to a level that would

enable reasonable and fair-minded people to differ in their conclusions.’” (quoting Burroughs

Wellcome Co. v. Crye ,

907 S.W.2d 497, 499 (Tex. 1995))). To

determine if the nonmovant has raised a fact issue,

we review the evidence in the light most favorable to the nonmovant ,

crediting favorable evidence if reasonable jurors could do so, and disregarding

contrary evidence unless reasonable jurors could not. See

Mann Frankfort Stein & Lipp Advisors, Inc. v.

Fielding , 289 S.W.3d 844, 848 (Tex. 2009) (citing City of Keller v. Wilson , 168 S.W.3d 802, 827 (Tex. 2005)).

To prevail

on a traditional summary judgment motion, a movant

has the burden of proving that it is entitled to judgment as a matter of law

and that there is no genuine issue of material fact. Tex. R. Civ. P . 166a(c); Cathey v. Booth , 900 S.W.2d 339, 341 (Tex.

1995). When

deciding whether there is a disputed, material fact issue precluding summary

judgment, evidence favorable to the non- movant will

be taken as true. Nixon v. Mr. Prop. Mgmt. Co. , 690 S.W.2d 546 , 548–49 (Tex. 1985). Every reasonable inference must be indulged

in favor of the non- movant and any doubts must be

resolved in its favor. Id. at 549 . W hen, as here, the trial court’s summary

judgment does not state the basis for the court’s decision, we must uphold the

judgment if any of the theories advanced in the motion are meritorious. Provident Life & Accident Ins. Co. v. Knott , 128 S.W.3d 211,

216 (Tex. 2003).

The Summary Judgment Evidence

his first issue, Koonce challenges the trial court’s

grant of final summary judgment for appellees on the

basis that the summary judgment evidence was substantively defective. He claims that the affidavit of Jill Orrison , the custodian of records for HomeEq ,

is defective because it fails to state how she has personal knowledge of the

facts stated therein. Furthermore, Koonce claims that the fact that the copies of the exhibits

referenced in Orrison’s affidavit were attached to

the motion for summary judgment, and not the affidavit itself, amounts to a

substantive defect in the summary judgment evidence. On this basis, Koonce

asks that we reverse the trial court’s rendition of summary judgment.

The

Law

In a summary judgment hearing, the

trial court’s decision is based upon written pleadings and written evidence

rather than live testimony. See Tex.

R. Civ. P. 166a(c). “To constitute competent summary judgment

evidence, affidavits must be made on personal knowledge, setting forth such

facts as would be admissible in evidence, and must affirmatively show that the

affiant is competent to testify to matters stated therein.” Patrick

v. McGowan , 104 S.W.3d 219, 222 (Tex. App.—Texarkana 2003, no pet.); see Tex.

R. Civ. P. 166a( f); United Blood Servs . v. Longoria , 938

S.W.2d 29, 30 (Tex. 1997).

Standard of Review for Admission or Exclusion of

Summary Judgment Evidence

We review the trial court’s rulings

concerning the admission or exclusion of summary judgment evidence for an abuse

of discretion. See, e.g. , Fairfield Fin. Group, Inc. v. Synnott ,

300 S.W.3d 316, 319 (Tex. App.—Austin 2009, no pet.) ( admission

of summary judgment evidence); Cruikshank

v. Consumer Direct Mortgage, Inc. , 138 S.W.3d 497, 499 (Tex. App.—Houston

[14th Dist.] 2004, pet. denied) (exclusion of summary judgment evidence). An abuse of discretion exists when the

court’s decision is made without reference to any guiding rules and principles

or is arbitrary or unreasonable. Downer v. Aquamarine

Operators, Inc. , 701 S.W.2d 238 , 241 – 42

(Tex. 1985). We must uphold the

trial court’s evidentiary ruling if there is any legitimate basis for it. See Owens-Corning Fiberglass Corp. v. Malone , 972 S.W.2d 35, 43

(Tex. 1998). Furthermore, we will

not reverse a judgment based on a claimed error in admitting or excluding

evidence unless the complaining party shows that the error probably resulted in

an improper judgment. Tex. R. App. P. 44.1; Malone , 972 S.W.2d at

42 . A successful challenge to a

trial court’s evidentiary ruling requires the complaining party to demonstrate

that the judgment turns on the particular evidence excluded or admitted. Texas Dep’t of Transp. v. Able , 35 S.W.3d 608, 617 (Tex. 2000).

Defects in Substance

Defects in affidavits may be either

defects in “form” or “substance.” Stone v. Midland Multifamily

Equity REIT , 334 S.W.3d 371, 374 (Tex. App.—Dallas 2011, no pet.). Defects in the substance of an affidavit are

not waived by failure to obtain a ruling from the trial court on an objection

and may be raised for the first time on appeal.

McMahon v.

Greenwood , 108 S.W.3d 467, 498 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). A substantive defect is one that leaves the

evidence legally insufficient. See Marks v. St. Luke’s

Episcopal Hosp. , 319 S.W.3d 658, 666 (Tex. 2010) (plurality op.). An affidavit showing no basis for personal

knowledge is legally insufficient. Kerlin v. Arias , 274 S.W.3d

666, 668 (Tex. 2008) (per curiam).

An affidavit must disclose the basis

on which the affiant has personal knowledge of the facts asserted. Radio

Station KSCS v. Jennings , 750 S.W.2d 760, 762 (Tex. 1988). An affiant’s position or job responsibilities

can qualify the affiant to have personal knowledge of facts and establish how

the affiant learned of the facts. Valenzuela v. State & Cnty . Mut . Fire Ins. Co. , 317 S.W.3d 550, 553

(Tex. App.—Houston [14th Dist.] 2010, no pet.). A summary judgment affidavit’s failure to

demonstrate a basis for personal knowledge renders it incompetent summary

judgment evidence. Stone , 334 S.W.3d at 377 . Moreover, conclusory

statements, not supported by factual allegations, are insufficient to support

summary judgment. Anderson v. Snider , 808 S.W.2d 54, 55 (Tex. 1991); Paselk v. Rabun , 293 S.W.3d 600, 611 (Tex.

App.—Texarkana 2009, pet. denied).

Defects in Form

A defect in the form of an affidavit,

on the other hand, must be objected to in the trial court and the opposing

party must have the opportunity to amend the affidavit. See Tex. R. Civ. P. 166a( f);

Stone , 334 S.W.3d at 374 . A complaint that an affidavit contains

hearsay, for example, is an objection to the form of an affidavit. Green v. Indus. Specialty Contractors , 1 S.W.3d 126, 130 (Tex.

App.—Houston [1st Dist.] 1999, no pet.).

This includes a complaint that an affidavit of a custodian of records is

insufficient to prove up business records, which amounts to a complaint that

the trial court admitted documents which were hearsay. To preserve such complaints, it is necessary

to obtain a written ruling overruling the objections. See, e.g. , Dulong v. Citibank (S.D.), N.A. , 261 S.W.3d 890, 893

(Tex. App.—Dallas 2009, no pet.).

The rules of evidence do not require that the qualified witness who lays the predicate for the admission of business records be

the creator of, or have personal knowledge of, the contents of the records; the

witness is only required to have personal knowledge of the manner in which the

records were kept. See Tex. R. Evid . 803(6), 902(10); see also In re K.C.P. , 142 S.W.3d 574, 578 (Tex. App.—Texarkana

2004, no pet.).

Application of Law to Facts

Here, appellees ’

summary judgment was supported by the affidavit of Jill Orrison . Koonce challenges

this affidavit on the basis that it fails to state how Orrison

obtained personal knowledge of the facts stated therein, and that the exhibits

to which her affidavit makes reference were attached to Defendants’ Amended

Motion for Summary Judgment, and not directly to her affidavit.

Personal Knowledge of Affiant

Orrison’s affidavit reflects that she was

employed as a Litigation Management Liaison for HomEq

and as a mortgage servicer and attorney in fact for Wells Fargo. It states further that she is fully qualified

and authorized to make the affidavit; that she is the custodian of records for HomEq as servicing agent for Wells Fargo relating to Koonce’s home loan; and that she has personal knowledge of

the facts stated therein. She then goes

on to state that exhibits A, B, C, D, E and G attached to Defendants’ Amended

Motion for Summary Judgment:

are true

and correct copies of such documents found in HomEq’s

records. These pages of records are kept

by HomEq in the regular course of business, and it

was the regular course of business of HomEq for an

employee or representative of HomEq , with knowledge

of the act, event, condition, opinion or diagnosis recorded to make the record

or to transmit information thereof to be included in such record, and the

record was made at or near the time or reasonably thereafter. The records attached hereto are the originals

or exact duplicates of the originals.

Orrison next testifies in her affidavit to

the events reflected in the individual documents. From paragraphs 3 to 8, she states what the

individual documents reflect and references the pertinent exhibit in each

paragraph. Only the last paragraph, 9,

contains statements that are not summaries of events reflected by

exhibits. In that paragraph, she states

that, “Plaintiff failed to remedy the default in accordance with the demands of

HomEq and Well[s] Fargo. Accordingly, Wells Fargo and HomEq elected to accelerate the entire debt secured by the

Note and Deed of Trust.”

In her affidavit, Orrison

provides both her position with HomEq (Litigation

Management Liason ) and one of her pertinent functions

(custodian of records). An affiant’s

position with a company can qualify the affiant to have personal knowledge of

facts and establish how the affiant learned of the facts. See

Stone, 334 S.W.3d at 376 . As Orrison was

Litigation Management Liaison and custodian of records for HomEq

“as servicing agent for Wells Fargo relating to the home loan owed by

Plaintiff, Ernest Ray Koonce ,” the evidence is

sufficient to demonstrate that she did, indeed, have personal knowledge of the

exhibits referenced in her affidavit. To

the extent that her statements in the affidavit reflect knowledge gained from a

reading of the documents to which she makes reference, we overrule Koonce’s issue on this point.

The last two sentences of Orrison’s affidavit, however, do not reference documents as

to which she is the custodian and state facts without affirmatively showing her

basis for personal knowledge of these facts.

Nevertheless, a reversal of the judgment is not warranted in this case

because Koonce has not demonstrated that the error

resulted in the rendition of an improper judgment. See

Tex. R. App. P. 44.1. We overrule this portion of Koonce’s first issue.

Exhibits Attached to Motion for

Summary Judgment

Koonce also complains that, because the

exhibits as to which Orrison swears in her affidavit

are attached to Defendants’ Amended Motion for Summary Judgment, as is her

affidavit, and not directly to the affidavit itself, then “the summary judgment

evidence relied upon by the Appellee’s Motion is

substantively defective.” Koonce seems to argue that this fact makes the actual

documents inappropriate summary judgment evidence. He also contends, based on this same fact,

that Orrison’s statements in her affidavit regarding

these documents are hearsay and conclusory . We disagree.

Rule 166a( f)

states that “[s]worn or certified copies of all papers or parts thereof

referred to in an affidavit shall be attached thereto or served

therewith.” Tex. R. Civ. P. 166a( f). Orrison’s affidavit

made reference to Exhibits A, B, C, D, E and G “[a] ttached

to Defendants’ Amended Motion for Summary Judgment.” The affidavit was likewise attached to

Defendants’ Amended Motion for Summary Judgment. Nothing in the record reflects that the

affidavit, marked Exhibit F, was detached from the exhibits to which it made

reference or in some way separate from them, or was not “served

therewith.” We conclude that the fact

that the referenced exhibits were served with the affidavit as part of the

motion for summary judgment, and not specifically attached to the affidavit,

does not preclude them from being effective summary judgment evidence. Accordingly, references to these exhibits

and/or statements of fact made by Orrison on the

basis of these exhibits are neither conclusory nor

hearsay.

We overrule this portion of Koonce’s first issue.

Standing to Enforce the Note

In his second issue, Koonce claims that the trial court erred in granting

summary judgment for appellees because appellees did not have standing to enforce the Note and

Deed of Trust.

The petition as to which summary

judgment was granted, however, was filed by Koonce ,

not appellees , and in that petition Koonce obviously did not attempt to enforce the Note and

Deed of Trust against himself. Nor did appellees make any such attempt by way of a counter-claim. Instead, Koonce

brought suit against appellees , in their position as

owner/holder of the Note and Deed of Trust (or, in the case of HomEq , loan servicer for the owner of the note), for

damages. [1]

Furthermore, the petition alleges (1)

violations of the DTPA; (2) common law fraud; (3) negligence; and (4) breach of

contract. None of these causes of action

turns on any finding that appellees had standing to

enforce the Note and Deed of Trust.

Instead, each involves damages allegedly suffered by Koonce

and caused by appellees , without reference to appellees ’ standing to enforce the Note and Deed of

Trust. We fail to see how appellees ’ standing to enforce the Note and Deed of trust,

or lack thereof, bears on the issue of whether the trial court erred in

granting summary judgment as to Koonce’s claims

against appellees .

We overrule Koonce’s

second issue.

Evidence Concerning Breach or Anticipatory Breach of Contract

In his third issue, Koonce claims that, even if appellees

had standing to enforce the Note and Deed of Trust, the trial court nevertheless

erred in granting summary judgment for appellees

because there was evidence in the record that appellees

breached and/or repudiated the Note and/or Deed of Trust first, thereby

excusing Koonce’s subsequent performance.

The Law

To prevail on a breach of contract

claim, a plaintiff must establish that (1) there is a valid, enforceable

contract; (2) the plaintiff performed, tendered performance of, or was excused

from performing its contractual obligations; (3) the defendant breached the

contract; and (4) the defendant’s breach caused the plaintiff injury. Wincheck v. American

Express Travel Related Servs . Co. , 232 S.W.3d

197, 202 (Tex. App.—Houston [1st Dist.] 2007, no pet.).

One such excuse for performing

contractual obligations is the other party’s breach of contract. “It is a fundamental principle of contract

law that when one party to a contract commits a material breach of that

contract, the other party is discharged or excused from further performance.” BFI Waste Sys. of N. Am. v. N. Alamo Water Supply Corp ., 251 S.W.3d 30 ,

30 – 31 (Tex.

2008) (per curiam). However, if after

the breach, the non-breaching party continues to insist on performance by the

party in default, “the previous breach constitutes no excuse for nonperformance

on the part of the party not in default and the contract continues in force for

the benefit of both parties . ” Chilton Ins. Co. v. Pate & Pate Enters.,

Inc ., 930 S.W.2d 877, 887 (Tex. App.—San Antonio 1996, writ denied)

(quoting Houston Belt & Terminal Ry.

Co. v. J. Weingarten, Inc. , 421 S.W.2d 431, 435 (Tex. Civ. App.—Houston

[1st Dist.] 1967, writ ref’d n.r.e .));