Oscar Melendez and Connie Melendez v. Citimortgage, Inc. Ernestine Williams And Wendy Alexander

ACCEPTED

03-14-00029-CV

6244541

THIRD COURT OF APPEALS

AUSTIN, TEXAS

7/27/2015 10:49:19 PM

JEFFREY D. KYLE

CLERK

No. 03-14-00029-CV

In the Court of Appeals July 28, 2015

for the

Third Court of Appeals District of Texas

Sitting at Austin, Texas

________________________________________________________________________

Oscar Melendez and Connie Melendez, Appellants

vs.

Citimortgage, Inc., Ernestine Williams and Wendy Alexander, Appellees

________________________________________________________________________

Appealed from the 261st District Court

of Travis County, Texas

The Honorable Lora Livingston, Presiding

________________________________________________________________________

MOTION FOR REHEARING

________________________________________________________________________

Michael Brinkley

State Bar No. 03004300

BRINKLEY LAW PLLC

P. O. Box 820711

Fort Worth, TX 76182-0711

(817) 284-3535; metro (817) 589-7111

(888) 511-0946

Attorney for Appellant, Oscar Melendez

MOTION FOR REHEARING

No. 03-14-00029-CV

In the Court of Appeals

for the

Third Court of Appeals District of Texas

Sitting at Austin, Texas

________________________________________________________________________

Oscar Melendez and Connie Melendez, Appellants

vs.

Citimortgage, Inc., Ernestine Williams and Wendy Alexander, Appellees

___________________________________________________________________

Appealed from the 261st District Court

of Travis County, Texas

The Honorable Lora Livingston, Presiding

________________________________________________________________________

MOTION FOR REHEARING

_______________________________________________________________________

TO THE HONORABLE COURT OF APPEALS:

Appellant, Oscar Melendez, respectfully submits this Motion for Rehearing under

Texas Rule of Appellate Procedure 49.1 and any other applicable law. Mr. Melendez

acts solely herein, as his wife, Connie Melendez, died after the case was submitted.

I.

On the 25th day of June, 2015, this Court’s panel upheld the judgment of the trial

court in a memorandum opinion signed on behalf of the Court by Justice Bourland (the

“Opinion”).

MOTION FOR REHEARING 2

II.

This Court erred in overruling Appellant’s Points of Error, because the trial court

should have denied summary judgment first, as a matter of fundamental law, and

additionally due to fact questions raised by Appellee’s own summary judgment

evidence–as already explained at length in the Appellants’ response to the motion for

summary judgment, in their motion for new trial, and in briefing to this Court.

III.

The Opinion makes an assumption at several points of something not proven

by the summary judgment evidence: that Amtrust made Citimortgage, Inc. the mortgage

servicer because Amtrust was the mortgagee at the time of such designation of

Citimortgage’s status. However, the Note, even as offered by Citimortgage (page 62

of the Clerk’s Record) does not indicate any date of indorsement, nor is there any other

indication of when Amtrust’s interest might have terminated. Thus, there was not sufficient

proof before the trial court to determine whether or not Citimortgage was properly deemed

the “mortgage servicer” at the times of taking actions preliminary to foreclosure. It is

not enough to rely on a presumptive appointment of Citimortgage as servicer by Amtrust,

because at the time of the giving of all predicate notices to the foreclosure, Citimortgage

was claiming in those notices that Amtrust then held no interest, hence the status of

Citimortgage in relation to the Note and Deed of Trust had to be determined at those

MOTION FOR REHEARING 3

times by means other than a questionably timed appointment as servicer in 2006.

IV.

Melendez clearly can challenge the Assignment to Citimortgage, Inc., and/or

the Appointment of substitute trustees, in the circumstances of (a) a claim involving

the fraudulent nature of all or part of the instrument, or (b) the invalidity of the Assignment

or Appointment due to the lack of capacity of the person executing such instruments,

respectively. A Texas bankruptcy court has noted:

. . . it is axiomatic that an assignee walks in the shoes of the assignor. State

v. Oakley, 181 S.W.3d 855 (Tex. App. -Austin 2005), and other courts in

other jurisdictions have held that when a perfected lien is assigned, no

new lien is created, and therefore, an assignee of a lien which has been

perfected succeeds to the perfected status via the assignment and may assert

the lien. In re Wuerzberger, 284 B.R. 814 (Bankr. W.D. Va. 2002); In

re Field, 263 B.R. 323, 329 (Bankr. D. Idaho 2001).

In Re Kleibrink,346 B.R. 734, 758; 2006 Bankr. LEXIS 1633 *56 (Bankr. N. D. Tex.

2006), affirmed August 28, 2007.

In Green v. JPMorgan Chase Chase Bank, 937 F.Supp.2d 849, 855-856

(N.D.Tex. 2013), a Texas federal district court squarely addressed this issue at length,

and found that debtors such as Melendez can indeed challenge assignments (emphases

supplied):

The Court is aware of no Texas court that has denied standing to

all borrowers to challenge assignments of their mortgages. Rather, as this

Court has previously noted,

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The law is settled that the obligors of a claim may defend

the suit brought thereon on any ground which renders the

assignment void, but may not defend on any ground which

renders the assignment voidable only, because the only interest

or right which an obligor of a claim has in the instrument of

assignment is to insure himself that he will not have to pay

the same claim twice.

Puente v. CitiMortgage, Inc., No. 3:11-CV-2509-N, 2012 WL 4335997,

at *6 (N.D. Tex. Aug. 29, 2012) (quoting Kramer v. Fed. Nat'l Mortg. Ass'n,

No. A-12-CA-276-SS,, 2012 WL 3027990, at *4-5 (W.D. Tex. May 15,

2012)); accord Miller v. Homecomings Fin., LLC, 881 F.Supp.2d 825,

831 (S.D. Tex. 2012) ("Texas has long followed the common law rule

which permits a debtor to assert against an assignee any ground that

renders the assignment [p. 856] void or invalid." ) (citing Tri-Cities

Constr., Inc. v. American Nat'l Ins. Co., 523 S.W.2d 426, 430

(Tex.Civ.App.–Houston [1st Dist.] 1975, no writ); Glass v. Carpenter,

330 S.W.2d 530, 537 (Tex.Civ.App.–San Antonio 1959, writ ref'd n.r.e.)).

As the Glass court observed, "a debtor may, generally, assert against

an assignee all equities or defenses existing against the assignor prior

to notice of the assignment, any matters rendering the assignment

absolutely invalid or ineffective, and the lack of plaintiff's title or right

to sue." 330 S.W.2d at 537 (quoting 6 C.J.S. Assignments § 132 [no ed.

given]) [4] (emphasis added). And, as the Miller court recognized, " Texas

courts routinely allow a homeowner to challenge the chain of assignments

by which a party claims the right to foreclose." 881 F.Supp.2d at 832 (citing

Martin v. New Century Mortg. Co., 377 S.W.3d 79, 2012 WL 2529251

(Tex. App. --Houston [1st Dist.] June 14, 2012, no pet.); Austin v.

Countrywide Homes Loans, 261 S.W.3d 68 (Tex. App.–Houston [1st Dist.]

2008, pet denied); Leavings v. Mills, 175 S.W.3d 301 (Tex. App.–Houston

[1st Dist.] 2004, no pet.); Shepard v. Boone, 99 S.W.3d 263 (Tex. App.–

Eastland 2003, no pet.) ; Priesmeyer v. Pac. Sw. Bank, F.S.B., 917 S.W.2d

937 (Tex. App.–Austin 1996, no writ)).

Some lenders and servicers cite to Reinagel v. Deutsche Bank Nat’l Trust Co.,

735 F.3d 22, 225 and 226 (5th Cir. 2013). But, footnote 8 in the first Reinagel opinion,

MOTION FOR REHEARING 5

at 722 F.3d 700, 705, cited to (emphasis supplied): “Tri-Cities Const., Inc. v. Am. Nat.

Ins. Co., 523 S.W.2d 426, 430 (Tex.Civ.App.1975) (citing Glass v. Carpenter, 330

S.W.2d 530, 537 (Tex.Civ.App.1959)); see also, e.g., 6A C.J.S. ASSIGNMENTS §

132 (2013) ("A debtor may, generally, assert against an assignee ..., any matters rendering

the assignment absolutely invalid ..., such as [] the nonassignability of the right

attempted to be assigned, or a prior revocation of the assignment."); Murphy v.

Aurora Loan Servs., LLC, 699 F.3d 1027, 1033 (8th Cir.2012) (recognizing that mortgagors

can defend against foreclosure by establishing a fatal defect in the purported mortgagee's

chain of title).” In the instant case, there is just such a fatal defect in the chain of title,

where there was the Assignment made without capacity, and all acts from and after

such Assignment are tainted. The Appointment of Substitute Trustees, the notices to

Melendez preceding the foreclosure sale, and the Substitute Trustee’s Deed all relied

on the Assignment for validity, and therefore should be deemed of no effect, and all

acts flowing from and after the Assignment should be held void, the foreclosure acts

disregarded and the substitute trustee’s deed removed from the chain of title to the

Property.

V.

The import of the Hultman deposition transcript offered with the Melendez

response to the Motion for Summary Judgment was that clearly, persons such as the

MOTION FOR REHEARING 6

person executing the Assignment were never actually appointed to their claimed positions

by the board of directors of Mortgage Electronic Registration Systems, Inc. (“MERS”).

Those persons claimed authority to act from certifications issued by Mr. Hultman, but

were never appointed to any MERS office by the MERS board of directors, and hence

lacked authority for instruments such as the Assignment, which was therefore void,

rendering all subsequent actions of Citimortgage with respect to the Melendez Note

and Deed of Trust invalid.

VI.

The Opinion never bridges the gap created by the Assignment being putatively

made by MERS on behalf of a “dead” entity, Amtrust having ceased to exist before

MERS claimed to have acted as its nominee/agent. It is a solidly established principle

that “the law is clear that an agent's authority to bind his principal terminates upon the

principal's death. See Cleveland v. Williams, 29 Tex. 204, 213 (1867); Crawford v. Morris,

228 S.W.2d 364, 366 (Tex. Civ. App.—Eastland 1950, writ ref'd n.r.e.).” Cole v. McWillie,

11-12-00265-CV (Tex.App.–Eastland 2015), p. 9. MERS, by its declared nature and

by the terms of the Deed of Trust, has never been anything but a pure nominee, never

a beneficial interest holder. As such, when Amtrust ceased to exist before the execution

of the Assignment, the ownership of the lien of the Deed of Trust would have had to

have been settled independently of MERS, before MERS could even possibly have

MOTION FOR REHEARING 7

had any interest to convey. There is no evidence of any such disposition.

Conclusion

Rehearing of this case, by the panel or en banc, and vacating of the June 25, 2015

memorandum opinion and judgment, would be consistent with the apparent purpose

of the applicable common law of Texas and the cited statutes and rules. In the interest

of justice in this matter, Appellant asks that the Court grant this motion for rehearing.

Respectfully submitted,

/s/ Michael Brinkley

____________________________________

Michael Brinkley

State Bar No. 03004300

BRINKLEY LAW PLLC

P. O. Box 820711

Fort Worth, Texas 76182-0711

(817) 284-3535

(888) 511-5854; fax (888) 511-0946

michael@brinkleypllc.com

Attorney for Appellant

MOTION FOR REHEARING 8

Certificate of Compliance for T.R.A.P. 9.4(i)(3)

I certify that the word count indicated by my word processing software for the

portions of the Appellant’s Motion for Rehearing covered by Texas Rule of Appellate

Procedure 9.4(i)(1) is 1,489, which, when added to the 2,786 words in Appellant’s brief,

totals 4,275 words.

Dated: July 27, 2015.

/s/ Michael Brinkley

_____________________________________

Michael Brinkley

Certificate of Service

I certify that a true and correct copy of the foregoing has been served on the

following counsel and/or pro se parties of record, by mailing in accordance with Texas

Rule of Appellate Procedure 9.5, on July 27, 2015:

James G. Ruiz

WINSTEAD PC

401 Congress Avenue, Suite 2100

Austin, Texas 78701

fax (512) 370-2850

Attorneys for Appellee.

/s/ Michael Brinkley

_____________________________________

Michael Brinkley

MOTION FOR REHEARING 9