# James C. Mosser and Mosser Law PLLC v. Bob Mims > Texas Court of Appeals, 3rd District (Austin) · November 23, 2015 URL: https://www.frixlaw.com/law-library/cases/4075664 ## Case - **Court:** Texas Court of Appeals, 3rd District (Austin) - **Decided:** November 23, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4075664 ## How later opinions describe it (automated extraction) - affirming joint and several liability for aiding and abetting - holding that appellate courts can take judicial notice for the first time on appeal - holding an attorney, a professional, liable for an unconscionable act or course of action. ## Opinion text ACCEPTED 03-15-00365-CV 7944990 THIRD COURT OF APPEALS AUSTIN, TEXAS November 23, 2015 11/23/2015 11:07:35 AM JEFFREY D. KYLE CLERK No. 03-15-00365-CV IN THE THIRD JUDICIAL DISTRICT COURT OF APPEALS at AUSTIN, TEXAS JAMES C. MOSSER and MOSSER LAW PLLC, Appellants v. BOB MIMS, Appellee APPEALED FROM THE 340th JUDICIAL DISTRICT COURT TOM GREEN COUNTY, TEXAS APPELLANTS’ OPENING BRIEF MOSSER LAW PLLC James C. Mosser Texas Bar No. 00789784 Nicholas D. Mosser Texas Bar No. 24075405 Paul J. Downey Texas Bar No. 24080659 2805 Dallas Parkway, Suite 220 Plano, Texas 75093 Tel. (972) 733-3223 Fax. (469) 626-1073 courtdocuments@mosserlaw.com LAWYERS FOR APPELLANTS, JAMES C. MOSSER AND MOSSER LAW, PLLC APPELLANT REQUESTS ORAL ARGUMENT IDENTITY OF PARTIES AND COUNSEL The following is a complete list of the parties, the attorneys, and any other person who has an interest in the outcome of this appeal. Appellants James C. Mosser MOSSER LAW, PLLC, represented by James C. Mosser Texas Bar No. 00789784 Nicholas D. Mosser Texas Bar No. 24075405 Paul J. Downey Texas Bar No. 24080659 2805 Dallas Parkway, Suite 220 Plano, Texas 75093 Tel. (972) 733-3223 Fax. (469) 626-1073 courtdocuments@mosserlaw.com Appellee Bob Mims, represented by Hay, Wittenburg, Davis, Caldwell & Bale, LLP Larry W. Bale Texas Bar No. 01629830 P.O. Box 271 San Angelo, Texas 76092 Tel. (325) 658-2728 lwb@hwdcb.com ii TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . ii TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v RECORD CITATION KEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x STATEMENT REGARDING ORAL ARGUMENT. . . . . . . . . . . . . . . . . . . xii ISSUES PRESENTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 THE TRIAL COURT ERRED IN IMPOSING SANCTIONS AGAINST MOSSER LAW PLLC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 THE TRIAL COURT ERRED IN SANCTIONING JAMES C. MOSSER FOR THE FILING OF THE SECOND AND THIRD AMENDED PETITIONS.. . . . . . 17 THE TRIAL COURT ERRED IN FINDING THAT THE PLEADINGS AND CLAIMS FILED IN THIS CASE WERE GROUNDLESS.. . . . . . . . . . . . . . . . . 19 MELTON’S CONSTITUTIONAL CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT. . . . . . . . . . . . . . . . . . . . . . 21 MELTON’S FRAUD IN A REAL ESTATE TRANSACTION CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT. . . . 29 iii MELTON’S COMMON LAW FRAUD CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT. . . . . . . . . . . . . . . . . . . 39 MELTON’S DECEPTIVE TRADE PRACTICES ACT CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT. . . . . . . . 43 MELTON’S BREACH OF CONTRACT CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT. . . . . . . . . . . . . . . . . . . 46 MELTON’S NEGLIGENCE CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT. . . . . . . . . . . . . . . . . . . . . . . . . . 49 THE TRIAL COURT ABUSED ITS DISCRETION IN SANCTIONING MOSSER FOR BRINGING ALLEGEDLY TIME-BARRED CLAIMS AGAINST APPELLEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 THE TRIAL COURT ABUSED ITS DISCRETION IN FINDING THAT THE PLEADINGS WERE BROUGHT FOR AN IMPROPER PURPOSE.. . . . 61 PRAYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 CERTIFICATE OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 APPENDIX TO APPELLANT’S BRIEF.. . . . . . . . . . . . . . . . . . . . . . . . . . 71 iv INDEX OF AUTHORITIES CASES American Flood Research, Inc. v. Jones, 192 S.W.3d 581 (Tex. 2006). . 14 Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996).. . . . . . . 43 Bennett v. Grant, 460 S.W.3d 220 (Tex.App.–Austin 2015, pet. filed). . 14, 29, 39, 52, 61, 67 Burleson State Bank v. Plunkett, 27 S.W.3d 605, 610 (Tex.App–Waco 2000, pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 City of Fort Worth v. Pippen, 439 S.W.2d 660 (Tex. 1969). . . . . . . . . 28, 52 City of Keller v. Wilson, 168 S.W.3d 802 (Tex.2005). . . . . . . 15, 41, 60, 67 Dike v. Peltier Chevrolet, Inc., 343 S.W.3d 179 (Tex.App.–Texarkana 2011, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62, 64, 66 Dolenz v. Boundy, 197 S.W.3d 416 (Tex.App.–Dallas 2006, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Dukes v. Philip Johnson/Alan Ritchie Architects, P.C., 252 S.W.3d 586 (Tex.App.–Fort Worth 2008, pet. denied). . . . . . . . . . . . . . . . . . . . . . 50, 51 Ernst & Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573 (Tex. 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 40, 42 Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41 (Tex. 1965). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53, 58 Greenway Bank & Trust v. Smith, 679 S.W.2d 592 (Tex.App.–Houston [1st Dist.] 1984, writ ref’d n.r.e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Hannaway v. Deutsche Bank Nat’l Trust Co., A-10-CV-714-LY, 2011 WL 891669 at *5 (W.D. Tex, Mar. 11, 2011). . . . . . . . . . . . . . . . . . . . . . . . . . 57 v Hansberger v. EMC Mortg. Corp., Docket No. 04-08-00438-CV, 2009 WL 2264996 at *4 (Tex.App.–San Antonio 2009, no pet.).. . . . . . . . . . . . . . . 30 KPMG Peat Marwick v. Harrison County Housing Finance Corp., 988 S.W.2d 746 (Tex. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 59 Lake Travis Indep. Sch. Dist. v. Lovelace, 243 S.W.3d 244 (Tex.App–Austin 2007, no pet). . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 20, 61 Latham v. Castillo, 972 S.W.2d 66 (Tex. 1998).. . . . . . . . . . . . . . . . . . . . 45 Low v. Henry, 221 S.W.3d 609 (Tex. 2007). . . . . . . . . . . . . . . . . . . . 14, 20 Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985). . . . . . . . . . . 53 Office of Pub. Util. Counsel v. Public Util. Com’n of Texas, 878 S.W.2d 598, 600 (Tex. 1994).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 26 Retherford v. Castro, 378 S.W.3d 29 (Tex.App.–Waco 2012, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169 (Tex. 1983). . . . . . . . . . . 44 Robson v. Gilbreath, 267 S.W.3d 401 (Tex.App.–Austin 2013, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 20, 61 S.V. v. R.V. 933 S.W.2d 1 (Tex. 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Schanzle v. JPMC Specialty Mortg. LLC, No. 03-09-00639-CV, 2011 WL 832170 at *4 (Tex.App.–Austin Mar. 11, 2011, no pet.). . . . . . . . . . . . . . 56 Sierra Blanca Indep. Sch. Dist. v. Sierra Blanca Corp., 514 S.W.2d 782 (Tex.Civ.App.–El Paso 1974, writ ref’d.). . . . . . . . . . . . . . . . . . . . 25, 27, 33 Southwestern Bell Tel. Co. V. DeLanney, 809 S.W.2d 493 (Tex. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 State v. PR Investments and Specialty Retailers, Inc., 180 S.W.3d 654 vi (Tex.App.–Houston [14th Dist.] 2005, pet. granted). . . . . . . . . . . . . . . . . . 61 Tarrant County v. Chancey, 942 S.W.2d 151 (Tex.App.–Fort Worth 1997, no writ.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13 Transport Insurance Company v. Faircloth, 898 S.W.2d 269 (Tex. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34, 41 Trenholm v. Ratcliff, 646 S.W.2d 927 (Tex. 1983). . . . . . . . . . . . . . . . . . 34 Walker v. Packer, 827 S.W.2d 833 (Tex. 1992). . . . . . . . . . . . . . 27, 42, 52 Yuen v. Gerson, 342 S.W.3d 824 (Tex.App.–Houston [14th Dist.], pet. denied.).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 16, 39, 46, 50 CONSTITUTIONAL PROVISIONS TEX. CONST. ART. XVI § 50(a)(6). . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 22 TEX. CONST. ART. XVI § 50(h). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 23 FEDERAL STATUTES 28 U.S.C. § 1332(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64, 65 STATE STATUTES TEX. BUS. & COM. CODE § 17.45.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 TEX. BUS. & COM. CODE § 17.49.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 TEX. BUS. & COM. CODE § 27.01.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 TEX. BUS. & COM. CODE §17.565. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 TEX. CIV. PRAC. & REM. CODE § 10.001.. . . . . . . . . . . . . . . . . 20, 32, 62 TEX. TAX. CODE § 23.01(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 33, 45 vii TEX. TAX. CODE § 23.01(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 33 RULES TEX. R. APP. 33.1(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 TEX. R. CIV. P 13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 21, 61 TEX. R. CIV. P. 51(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 TEX. R. EVID. 201(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 TEX. R. EVID. 201(f).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 OTHER AUTHORITIES Act of May 28, 1983, 68th Leg. R.S., ch. 949, 1983 Gen. Laws. 5208. . . . 31 viii RECORD CITATION KEY Citations to the clerk’s record will appear as CR Vol ___, ___. For example, [CR Vol 1:1] means “Clerk’s Record, Volume 1, Page 1. Citations to the reporter’s record will appear as “RR Vol.___, ___:___. For example, RR Vol. 2, 1:1 means “Reporter’s Record, Volume 2, page 1, line 1.” Citations to the Appendix in Support of Brief of Appellants will appear as App.___. For example, [App. 1] means Page One of the appendix. For clarity, each page in the Appendix in Support of Brief of Appellants has been labeled on the bottom right corner of the page. ix STATEMENT OF THE CASE 1. This case arises from the closing of Ben Melton’s home equity loan in violation of Section 50(a) et seq., of Article XVI of the Texas Constitution by lending an amount in excess of 80 percent of the fair market value of Melton’s property. [CR Vol. 1, 7-11]. 2. Melton, by and through attorneys James C. Mosser and Alexis Steinberg, brought suit in Tom Green County, the situs of the property, to declare the lien on Melton’s property void, to cancel the remaining debt secured by Melton’s homestead, and to recover principal and interest paid by Melton. CU Member’s Mortgage, First Western Title Co., and Bob Mims, who appraised Melton’s property, were the named defendants in the case. [Id.]. 3. The trial court granted summary judgment in favor of all defendants as to all of Melton’s claims. [CR Vol. 1, 358-60; 429-30]; [CR Vol. 2, 19]. 4. Additionally, the trial court awarded Bob Mims $15,366.55 in attorney’s fees as sanctions under Rule 13 of the Texas Rules of Civil Procedure and Chapter 10 of the Texas Civil Practices and Remedies Code. [CR Vol. 1, 420-428]. x 5. This appeal from the sanctions order follows. xi STATEMENT REGARDING ORAL ARGUMENT The Court of Appeals should conduct oral argument because this appeal involves the resolution of complex questions of Texas Constitutional Law regarding detailed factual issues. Oral argument will help the Court’s understanding of the factual relationship between the parties and the posture of the case, particularly because the trial court’s ruling conflicts will the applicable law. It will also allow the Appellants to explain the logic undergirding each claim and petition filed in this case, and to show how diversity jurisdiction could not have been established by any party in this case. Finally, it will allow Appellants to demonstrate to the Court that there was no sanctionable conduct upon which the trial court could have based its order. The Appellants therefore respectfully urge the Court to allow oral argument in this case. xii ISSUES PRESENTED 1. Whether the trial court erred in sanctioning Mosser Law PLLC, an entity that cannot be sanctioned. 2. Whether the trial court erred in sanctioning James C. Mosser for filing the Second and Third Amended Petitions, when he did not sign either of those petitions. 3. Whether the trial court erred in finding that the Petitions and Claims filed in this case were groundless and without evidentiary support 4. Whether the trial court erred in finding that the petitions and claims filed against Appellee were filed to defeat diversity jurisdiction in a case with no diverse parties. xiii STATEMENT OF FACTS 1. On March 13, 2009, Ben Melton executed a Home Equity Note with CU Members Mortgage for $223,648.00, a sum secured by his homestead located in Tom Green County, Texas. [CR Vol. 1, 63-68; 70-84]. As part of the same transaction on March 13, 2009, Ben Melton and CU Members Mortgage also executed a statement acknowledging that the fair market value of Melton’s property on that date was $300,000.00. [CR Vol.1, 94]. This acknowledgment states, “The fair market value indicated herein is the value estimated in the appraisal which was prepared in accordance with state or federal requirements applicable to this extension of credit.” [Id.] The box next to this statement is ticked, indicating that this statement applies to this acknowledgment. [Id.] 2. This appraisal was performed by the Appellee on January 30, 2009 and transmitted to CU Members Mortgage on February 3, 2009. [CR Vol. 1, 104-05; RR Vol. 3, 51]. 3. On March 13, 2013, Counsel for Plaintiff, James C. Mosser, filed an Original Petition in Cause No. C130102C, Melton v. CU Members Mortgage, et al. [CR Vol 1, 7]. The suit named Appellee as a party. 1 [Id.] 4. As stated in his Original Petition, Ben Melton is an individual resident of Tom Green County, Texas. [Id. at ¶2]. 5. Defendant CU Member’s Mortgage, a division of Colonial Savings, FA, (hereinafter “Colonial”) was also a resident of Texas, with its home office located at 2600 West Freeway, Fort Worth, Texas 76102. [Id. at ¶3; CR Vol. 1, 59 at ¶ 10]. 6. Defendant First Western Title Company was also a Texas resident, with its home office located at 1500 Norwood Dr., Suite 400, Hurst, Texas 76054. [Id. at ¶5]. 7. Finally, Appellee was also a Texas resident from San Angelo, Texas. [Id. at ¶4]. 8. Plaintiff alleged that Defendant Colonial violated the Texas Constitution by closing a home equity loan sought by Melton for which the principal loan amount exceeded eighty percent of the fair market value of property that secured the loan. [CR Vol. 1, 8]. 9. The Plaintiff specifically alleged that Appellee “aided [co-defendant] Colonial and Defendant Western Title in the execution of this violation by providing a false and fraudulent real estate appraisal.” 2 [CR Vol.1, 8 at ¶11(b); 9 at ¶11(f)]. 10. Based on these factual allegations, Plaintiff sought declaratory relief invalidating the unconstitutional loan, forfeiture of all principal and interest paid on the note up to the point of suit, and forfeiture of all remaining principal and interest on the note. [CR Vol. 1, 9 at ¶13]. Plaintiff also sought exemplary damages for fraud in a real estate transaction under TEX. BUS. & COM. CODE § 27.01. [CR Vol. 1, 10 at ¶21]. 11. In his request for relief, Plaintiff specifically sought to recover “judgment from and against Defendants for the forfeiture of all principal and interest on the Loan, including but not limited to a judgment from and against Defendants for payment of all principal and interest paid by Plaintiffs to Defendant to date...” [CR Vol.1, 11 at ¶27]. 12. Additionally, the plaintiff sought to recover “such other and further relief, both in law and equity to which Plaintiffs may show themselves to be justly entitled.” [CR Vol 1, 11 at ¶31]. 13. The signature block for the Original Petition bears the electronic signature of James C. Mosser. [CR Vol. 1, 11]. 3 14. On May 31, 2013, Defendant Colonial, a Division of Colonial Savings F.A. and Defendant First Western Title Co., filed their original answer in this cause. [CR Vol. 1, 12-15]. On June 27, 2013, these defendants filed their first amended answer. [CR Vol. 1, 16-19]. 15. On July 24, 2013, Appellee filed his Original Answer and Motion for Rule 13 Sanctions seeking sanctions “under Rule 13 against Ben Melton and his attorney of record” for the filing of Plaintiff’s Original Petition. [CR Vol. 1, 20-22]. 16. On August 05, 2013, Plaintiff Ben Melton filed his First Amended Petition in this case, reasserting his claims under the Texas Constitution, its Declaratory Judgment Action, its Fraud in a Real Estate Transaction claim, and adding a claim against Appellee under the Deceptive Trade Practices Act. [CR Vol. 1, 23-27]. Again, Melton stated twice, “Defendant Mims aided Colonial and Defendant Western Title in the execution of this violation by providing a false and fraudulent residential real estate appraisal.” [CR Vol.1, 24 at ¶ 6(b), (f)]. 17. James C. Mosser was the signing attorney on the Plaintiff’s First Amended Petition. [CR Vol. 1, 27]. 4 18. On September 17, 2013, Plaintiff Melton filed his Second Amended Petition, reasserting its previous claims and more fully explicating Appellee’s role in the loan transaction. [CR Vol. 1, 34-40]. Specifically, Plaintiff alleged that on review of the appraisal performed in this case, Appellee failed to follow the Uniform Standards of Professional Appraisal Practice by failing to consider the effect of the terms and conditions of a lease on leasehold property, and failed to refrain from valuing the property solely by adding together the individual values of the various estates. [CR Vol. 1, 35-36 at ¶ 6(d),(e)]. 19. Plaintiff Melton then alleged that Defendant Colonial violated the Texas Constitution when it closed his home equity loan without providing the true fair market value of Mr. Melton’s home on the date the loan closed, and that Appellee “aided in the execution of the violation by providing a false and fraudulent residential real estate appraisal. [CR Vol. 1, 36 at ¶ 6(i)]. 20. Alexis F. Steinberg signed Plaintiff’s Second Amended Petition. [CR Vol. 1, 39]. 21. On September 28, 2013, Defendants Colonial and First Western Title 5 Co. moved for Summary Judgment in this case. In support of their motion, Defendants submitted Exhibit A-9, a copy of the settlement statement generated in connection with the loan, which detailed the transaction costs. [CR Vol. 1, 100-102]. In the section entitled “Settlement Charges,” Line 103 bears the notation POC (B) in reference to the cost of the appraisal, which was paid to “CU Members Mortgage for Mims, Bob.” [CR Vol. 1, 101]. P.O.C. means paid outside of closing. [CR Vol. 1, 100]. An affidavit proving up these records under the business records exception to the hearsay rule accompanied these documents. [CR Vol. 1, 56-61]. Plaintiff raised no objection to the entry of these documents into evidence. [CR Vol. 1, 216-56]. 22. Shortly thereafter, Appellee filed his First Motion for Summary Judgment. [CR Vol. 1, 169-215]. 23. On December 16, 2013, Plaintiff Melton filed his third Amended Petition in this suit, in which he pleaded the discovery rule, reasserted his Texas Constitutional Claim, his request for Declaratory Relief, his request for damages under the Deceptive Trade Practices Act, and added claims for common law fraud, breach 6 of contract, and negligence against all defendants. [CR Vol. 1, 257- 266]. Melton did not include his claim for fraud in a real estate transaction in this pleading. Id. 24. Alexis Steinberg was the signing attorney on Melton’s Third Amended Petition, Plaintiff’s final pleading in this case. [CR Vol. 1, 265]. 25. On December 16, 2013, and January 3, 2014, Melton filed his responses to both defendants’ Motions for Summary Judgment. [CR Vol. 1, 216-256; 267-298]. Melton’s attorneys stated, “Melton has amended his petition to remove the claims for statutory fraud, as Melton has researched Defendant’s arguments and determined that the statutory fraud claims is unsupportable.” [CR Vol. 1, 216.] In support of denying Appellee’s Motion for Summary Judgment, Melton submitted the Settlement Statement included by Defendant Colonial in support of its Motion for Summary Judgment. [CR Vol. 1, 286-292]. 26. Colonial substantively responded to the discovery rule as plead. CR Vol. 3, 9]. Appellee, for his part, merely adopted Colonial’s Argument. [CR Vol. 2, 6-7]. 27. On May 21, 2014, the trial court granted Appellee’s First Motion for 7 Summary Judgment, having sustained Mims’ Objections to Melton’s Evidence in Support of its Response to Mims’ Motion for Summary Judgment. [CR Vol. 2, 19-20]. 28. On May 20, 2014, Appellee filed his Second Motion for Summary Judgment on Melton’s remaining claims. [CR Vol. 1, 307-318] 29. The Court issued a letter ruling granting Appellee’s Second Motion for Summary Judgment on July 10, 2014. [RR Vol. 3, 84]. The court did not sign the judgment until March 12, 2015. [CR Vol. 1, 429-430]. 30. On December 29, 2014, Appellee filed his first Amended Motion for Sanctions, which for the first time included a claim for sanctions under Chapter 10 of the Texas Civil Practices and Remedies Code. [CR Vol. 1, 404-408]. Appellee attached no exhibits in support of the motion. [Id.] 31. The trial court held the hearing via Court Call on Appellee’s First Motion for Sanctions on January 7, 2015. [RR Vol. 2, 1-113]. 32. At the hearing, Counsel for Appellee introduced into evidence a document signed by Melton acknowledging $300,000.00 as fair market value of his property. [RR Vol. 2, 22:14, RR Vol. 3, 34]. The acknowledgment states, “The fair market value indicated herein is 8 the value estimated in the appraisal which was prepared in accordance with state or federal requirements applicable to the extension of credit.” [RR Vol. 3, 34]. 33. Appellee testified from his appraisal package, which was admitted, that the “Intended user of the report is CU Members Mortgage and/or its assigns.” [RR Vol. 2, 48: 18-23; RR Vol. 3:62]. 34. Counsel for Appellee also introduced the Tom Green County Appraisal District tax records for Mr. Melton’s property which the County valued at $171,500.00. [RR Vol. 2, 34-36; RR Vol. 3, 37]. During cross-examination, Appellee testified that the Tax Appraisal District “had a different opinion of value than [he] did” and conceded that the Appraisal District had valued the property at $171,500.00. [RR Vol. 2, 67:4-14]. 35. Appellee further testified that he was appraising the fair market value of the property. [RR Vol. 2, 40: 6-8]. 36. Appellee also testified that he received $350.00 in compensation for the appraisal. [RR Vol. 2, 61: 25 - 62: 1-2]. On cross-examination, Appellee testified that the sum was “Cash on Delivery” and was to be paid at the door. [RR Vol. 2, 65:16-25]. 9 37. Over the relevance objection of Mr. Mosser, the Court then admitted Appellee’s Exhibit 9, documents filed in Priester v. Long Beach Mortgage Company and JP Morgan Chase & Co., et al., 4:10-cv- 00641. [RR Vol 2:84-85]. In response to Mr. Mosser’s objection, Counsel for Appellee stated that the documents were relevant “because it shows a pattern this attorney has used in another case almost identical.” [RR Vol. 2, 85: 15-17]. The trial court agreed, admitting the documents with the caveat that the court would “disregard any testimony about diversity jurisdiction, or that purpose.” [Id.: 18-22]. The trial court would later find that the “primary purpose for naming Bob Mims as a defendant in this case was to defeat diversity jurisdiction and the removal of this cause to federal court.” [CR Vol. 1, 425]. 38. During closing argument, Mr. Mosser requested that the court take judicial notice of Texas Tax Code section 23.01, which requires that all taxable property is appraised at its market value as of January 1 each year. [RR Vol. 2, 107:6-13, 25; 108:1-5]. Counsel for Appellee objected on grounds that this fact had not been admitted into evidence, a sentiment the court appeared to agree with when it 10 directed Mr. Mosser to “stay away from things that have not been admitted.” [RR 2, 107: 14-16, 19-24]. 39. The trial court granted Mims’ First Amended Motion for Sanctions on March 12, 2015. [CR Vol 1, 420-428]. 40. James Mosser and Mosser Law PLLC filed their Motion for New Trial on April 13, 2015 and their Notice of Appeal on June 10, 2015. [CR Vol. 1, 435-442; 495-497]. 11 SUMMARY OF THE ARGUMENT At its heart, this case represents an abuse of the trial court’s authority to sanction a party with whom it disagrees under the Texas Rules of Civil Procedure and the Texas Civil Practices and Remedies Code. Sanctions are tools “that must be available to trial courts in those egregious situations where the worst of the bar uses our honored system for ill motive without regard to reason and the guiding principals of the law.” Tarrant County v. Chancey, 942 S.W.2d 151, 154-55 (Tex.App.–Fort Worth 1997, no writ.). This case was not worthy of the court’s power to punish such offenders. Though both the appellee and the trial court claimed and stated that the purpose of making the appellee appear in court was to defeat Federal Diversity Jurisdiction, nothing could be further from the truth. [CR Vol. 1, 425, ¶ 37]. By filing on behalf of Ben Melton, James C. Mosser put before the trial court a unique constitutional claim seeking the voiding of an extension of credit due to irregularities in the Appellee’s appraisal, as well as other claims related to the preparation of the appraisal. See [CR Vol. 1:8 at ¶11(b), (f); 24 at ¶ 6(b), (f); 34-36 at ¶6(b)-(e), (i); 258 at ¶6(b)-(e), (I)]. Thus, the goal of the suit was not to defeat diversity jurisdiction but to 12 seek recovery from appellee for his role in the making of an unconstitutional extension of credit. Thus, the court had no grounds under either Chapter 10 of the Texas Civil Practices and Remedies Code or Rule 13 of the Texas Rules of Civil Procedure for sanctioning James C. Mosser, or the law firm Mosser Law PLLC. Though the court ultimately disagreed with Mosser and awarded summary judgment against his client, the court was not free to punish Mosser for making claims on which he ultimately did not prevail. See Lake Travis Indep. Sch. Dist. v. Lovelace, 243 S.W.3d 244, 254 (Tex.App–Austin 2007, no pet). Courts have stated of the statutory and rule-based power to sanction: “The rule, however, cannot become a weapon used to punish those with whose intellect or philosophic viewpoint the trial court finds fault.” Chancey, 942 S.W.2d at 155 (citing Dyson Descendant Corp. v. Sonat Exploration Co., 861 S.W.2d 942, 951 (Tex.App.–Houston [1st Dist.] 1993, no writ.). This court should not allow the trial court to use these authorities as weapons, and should reverse the award of sanctions against James C. Mosser and Mosser Law PLLC. 13 ARGUMENT Standard of Review 41. The Court reviews the trial court’s imposition of sanctions under Texas Rule of Civil Procedure 13 and Texas Civil Practices and Remedies Code Chapter 10 for an abuse of discretion. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). In reviewing the sanctions order, the court reviews the entire record to determine whether the trial court abused its discretion. American Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006). 42. An appellate court may reverse the trial court’s ruling only if the trial court acted without any guiding rules and principles, such that its ruling was arbitrary or unreasonable. Low, 221 S.W.3d at 614. At the very least this requires a showing that the trial court based its order on an incorrect interpretation of the law or a clearly erroneous assessment of the evidence. Bennett v. Grant, 460 S.W.3d 220, 255 (Tex.App.–Austin 2015, pet. filed)(citing Robson v. Gilbreath, 267 S.W.3d 401, 405 (Tex.App.–Austin 2008, pet. denied)). Because the trial court is without discretion to decide what the law is or how to apply it, appellate courts review legal issues de novo. Interstate 14 Northborough Prtshp. v. State, 66 S.W.3d 213, 220 (Tex. 2001); Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). 43. The court will sustain a legal sufficiency challenge if the evidence shows a complete absence of a vital fact; rules of law or evidence bar the court from giving weight to the only evidence offered to prove a vital fact; the evidence offered to prove a vital fact is no more than a mere scintilla; or the evidence establishes conclusively the opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005). 44. In a nonjury case, a complaint regarding the legal or factual insufficiency of the evidence may be made for the first time on appeal in the complaining party’s brief. TEX. R. APP. 33.1(d); see also Yuen v. Gerson, 342 S.W.3d 824, 827 at n.3 (Tex.App.–Houston [14th Dist.], pet. denied.). THE TRIAL COURT ERRED IN IMPOSING SANCTIONS AGAINST MOSSER LAW PLLC 45. The trial court erred in sanctioning Mosser Law PLLC under Texas Rule of Civil Procedure 13 or Texas Civil Practice and Remedies Code Section 10.004, as the evidence conclusively establishes that Mosser Law PLLC did not sign any of underlying pleadings in this 15 case, and the law conclusively establishes that Mosser Law PLLC lacked capacity to sign those pleadings. 46. Sanctions under Rule 13 are appropriate against the person who signed the pleading, a represented party or both. TEX. R. CIV. P 13. 47. Likewise, the Civil Practices and Remedies Code restricts pleadings- based sanctions to the person who signed the pleading, a party represented by the person, or both. TEX. CIV. PRAC & REM CODE § 10.004(a). 48. Three courts of appeals have held that the express language of Rule 13 limits sanctions for groundless pleadings to the attorney who actually signed the pleadings, the party represented by that attorney, or both. Yuen v. Gerson, 342 S.W.3d at 828 (citing In re Hill, No. 2- 07-295-CV, 2007 WL 2891059, at *2 (Tex.App.–Fort Worth Oct. 3, 2007, orig. proceeding (mem. op.); Metzger v. Sebek, 892 S.W.2d 20, 52 (Tex.App.–Houston [1st Dist.] 1994, writ denied)(emphasis added). 49. The record evidence establishes that James C. Mosser signed the Original Petition and the First Amended Petition. [CR Vol. 1, 11; 27]. 50. The evidence also establishes that Alexis Steinberg signed the 16 Second and Third Amended Petitions. [CR Vol. 1, 39; 265]. 51. The evidence further establishes that the parties to the suit were Ben Melton; Colonial, a Division of Colonial; First American Title; and Bob Mims. [CR Vol. 1, 7]. 52. Thus, the record conclusively establishes that Mosser Law PLLC was neither a party nor a signatory to any of the pleadings filed in this case, such that the trial court abused its discretion in sanctioning Mosser Law PLLC. [CR Vol. 1, 11; 27; 39; 265]. 53. Additionally, whether Mosser or Steinberg signed on behalf of the firm is irrelevant. Entities, such as law firms, may not be licensed to practice law and therefore cannot sign pleadings as only individuals duly licensed to practice law may sign a pleading. Yuen v. Gerson, 342 S.W.3d at 828-29 (citing TEX. GOVT. CODE §§ 1.051(a); 81.101(a)). 54. Thus, the evidence is legally insufficient to support the trial court’s order of sanctions against Mosser Law PLLC such that the judgment against Mosser Law PLLC should be reversed. THE TRIAL COURT ERRED IN SANCTIONING JAMES C. MOSSER FOR THE FILING OF THE SECOND AND THIRD AMENDED PETITIONS 55. The trial court further abused its discretion in sanctioning James C. 17 Mosser under Rule 13 and Chapter 10 with respect to the Second and Third Amended Petitions as he was not the signatory attorney to either of those petitions. 56. Under the analysis previously stated, supra at ¶ 45-54, Rule 13 and Chapter 10 provide for sanctions against the attorney who actually signed the pleadings and a represented party. Yuen v. Gerson, 342 S.W.3d at 828 (citing In re Hill, No. 2-07-295-CV, 2007 WL 2891059, at *2 (Tex.App.–Fort Worth Oct. 3, 2007, orig. proceeding (mem. op.); Metzger v. Sebek, 892 S.W.2d 20, 52 (Tex.App.–Houston [1st Dist.] 1994, writ denied)(emphasis added) 57. The record evidence establishes that James C. Mosser signed the Original Petition and the First Amended Petition but did not sign the Second and Third Amended Petitions. [CR Vol. 1:11; 27]. 58. The evidence establishes that Alexis Steinberg signed the Second and Third Amended Petitions. [CR Vol. 1, 39; 265]. 59. Thus, the evidence is legally insufficient to support an award of sanctions against James C. Mosser for the filing of the Second and Third Amended Petitions in this case, such that the trial court’s award of sanctions against James C. Mosser should be reversed. 18 THE TRIAL COURT ERRED IN FINDING THAT THE PLEADINGS AND CLAIMS FILED IN THIS CASE WERE GROUNDLESS 60. The Trial Court erred in sanctioning James C. Mosser under Texas Rule of Civil Procedure 13 as neither the evidence nor the law supports the proposition that the pleadings filed in this case were groundless. Furthermore, all claims in this case had some evidentiary support and were warranted by existing law or nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law, such that sanctions under Chapter 10 of the Texas Civil Practice and Remedies Code were improper. Sanctions may only be imposed under Texas Rule of Civil Procedure 13 against an attorney, a represented party, or both who file a pleading that is either groundless and brought in bad faith; or groundless and brought for the purpose of harassment. Robson v. Gilbreath, 267 S.W.3d 401, 405 (Tex.App.–Austin 2013, pet. denied)(citing TEX. R. CIV. P. 13). “Groundless” means no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law. TEX. R. CIV. P. 13. 61. Additionally, courts may impose sanctions under Chapter 10 of the 19 Texas Civil Practices and Remedies Code for filing pleadings with an improper purpose, even if the suit was not frivolous. Lake Travis Indep. Sch. Dist. v. Lovelace, 243 S.W.3d 244, 257 (Tex.App–Austin 2007, no pet); See also Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007)(“Chapters 9 and 10 of the Texas Civil Practices and Remedies Code and rule 13 of the Texas Rules of Civil Procedure allow a trial court to sanction an attorney or party for filing motions or pleadings that lack a reasonable basis in fact or law.”). 62. In determining whether sanctions are appropriate, the trial court must examine the facts available to the litigant and the circumstances existing when the litigant filed the pleading. Robson, 267 S.W.3d at 409. Courts presume that pleadings, motions, and other papers are filed in good faith, and the party moving for sanctions has the burden of overcoming this presumption. Lake Travis Indep. Sch. Dist. v. Lovelace, 243 S.W.3d 244, 256 (Tex.App–Austin 2007, no pet). 63. Because a party may join as many claims legal or equitable or both as he may have against an opposing party in a single petition, evaluating each claim in this case under Chapter 10 also constitutes an evaluation of the pleadings under Rule 13. See TEX. CIV. PRAC. 20 & REM. CODE § 10.001; TEX. R. CIV. P. 13; TEX. R. CIV. P. 51(a). MELTON’S CONSTITUTIONAL CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT 64. The undisputed facts establish that Ben Melton contracted with Colonial for a $223,648.00 extension of credit secured by his homestead. [CR Vol.1, 100]. Ultimately, each claim against Appellee in this case arose out of this loan transaction between Melton and Colonial, which Melton alleged was made in violation of Article 16 Section 50 of the Texas Constitution. [CR Vol. 1, 8; 24; 34-36; 257- 266]. 65. The Texas Constitution authorizes an extension of credit secured by a homestead under a very strict set of conditions designed by the drafters to make homestead alienation extremely difficult. TEX. CONST. ART. XVI § 50(a)(6). The most critical of these conditions is the requirement that any line of credit extended by a lender may not exceed eighty percent of the fair market value of the homestead. TEX. CONST. ART. XVI § 50(a)(6)(B). In furtherance of this requirement, the Constitution requires that both the owner of the homestead and the lender sign a written acknowledgment as to the fair market value of the homestead on the date the extension of 21 credit is made. TEX. CONST. ART. XVI § 50(a)(6)(Q)(ix)(emphasis added). 66. This acknowledgment is not absolute as to the homeowner. Lenders may only conclusively rely on the acknowledgment to act as a bar to recovery if an appraisal has been performed according to state or federal standards, and the lender does not have actual knowledge that the fair market value stated in the acknowledgment was incorrect. TEX. CONST. ART. XVI § 50(h). If an appraisal is not performed according to federal or state appraisal standards, or the lender has actual knowledge that the fair market value of the property stated in the written acknowledgment is incorrect, then the entire principle amount of the loan and the lender’s right to the interest collected is at risk. Compare id. with TEX. CONST. ART. XVI § 50(a)(6)(Q)(x). 67. The appraisal thus is the linchpin of the entire loan transaction, and the appraiser an indispensable party to litigation that seeks to establish that a lender assisted by an appraisal that fails to comply with state and federal appraisal standards extended credit in excess of Texas Constitutional requirements. See TEX. CONST. ART. XVI § 22 50(h)(1). The appraiser’s presence is of even greater importance when the allegation is that the lender received an appraisal it knew to be incorrect so as to mask its actual knowledge of the fair market value of the house, thereby allowing the lender to make an extension of credit secured by the homestead. See TEX. CONST. ART. XVI § 50(h)(2). 68. The undisputed facts known to James C. Mosser about the appraisal as of the date of filing of Melton’s Original Petition establish that Appellee was aware of an appraisal performed by the Tom Green County Central Appraisal District on January 1, 2008 that valued Mr. Melton’s property at $171,500.00. [RR Vol. 2, 67:9-11; RR Vol. 3:37]. Despite this appraisal, Appellee appraised Ben Melton’s homestead for $300,000.00 on January 30, 2009, a increase in value of $128,500.00 in only one year. [CR Vol. 1, 104; RR Vol. 2, 49:9-11]. Appellee further testified at the sanctions hearing that this appraised value, $171,500.00, constituted the fair market value of the property. [RR Vol.2, 40: 6-8]. Because an appellate court can take judicial notice of a fact for the first time on appeal, James C. Mosser requests that this court take judicial notice of the 2009 appraisal 23 performed by the Tom Green County Tax Assessor, valuing the property at $189,500.00 as of January 1, 2009, a mere twenty-nine days prior to Appellee’s appraisal of Melton’s property. [App.38]; Office of Pub. Util. Counsel v. Public Util. Com’n of Texas, 878 S.W.2d 598, 600 (Tex. 1994). 69. The Texas Tax Code requires that county tax assessors appraise all taxable property at its market value as of January 1. TEX. TAX. CODE § 23.01(a). Additionally, the County Tax Assessor is required by law to determine the market value of property by the application of mass appraisal standards that comply with the Uniform Standards of Professional Appraisal Practice. TEX. TAX. CODE § 23.01(b). These are the very same methods and techniques that Appellee Mims certified using in his appraisal of Melton’s property. [RR Vol.3, 59 at ¶3] (“I performed this appraisal in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice...”). 70. The conflict between the Tom Green County Central Appraisal District’s appraisal of Melton’s property and Appellee’s appraisal of the same property forms the basis of each and every allegation made by Melton against the Appellee. The Appraisal District is required by 24 law to appraise all taxable property at its market value as of January 1 and found that Melton’s property was worth $171,500.00 in 2008, and $189,500.00 in 2009. [App. 37-38] Mims’ appraisal is between fifty-eight and seventy-nine percent above the values reported by the Tom Green County Central Appraisal District. Compare TEX. TAX CODE § 23.01(a),(b) with [CR Vol.1, 104; RR Vol.2, 49:9-11]; [App. 37-38]. Property assessments that are thirty-three percent greater than the market value have been held to be grossly excessive. Sierra Blanca Indep. Sch. Dist. v. Sierra Blanca Corp., 514 S.W.2d at 788 (citing Pierce v. City of Jacksonville, 403 S.W.2d 512 (Tex.Civ.App.–Tyler 1966, writ ref’d n.r.e.)). When a grossly excessive valuation has been made, this alone is sufficient to establish such fraud or illegality sufficient to render that valuation void. Sierra Blanca Indep. Sch. Dist. v. Sierra Blanca Corp., 514 S.W.2d 782, 788 (Tex.Civ.App.–El Paso 1974, writ ref’d.). 71. Because Texas Tax Code § 23.01 provides the basis for claims against the Appellee, Mosser requested that the court take judicial notice of these statutes. [RR Vol.2, 107:10-13]. This request drew an objection from the Appellee and was sustained by the court. See [RR 25 Vol.2, 107:19-24]. 72. Thus, the trial court erred in sustaining this objection, as a request for judicial notice may be made and taken at any time during the proceeding. TEX. R. EVID. 201(f); See also Office of Pub. Util. Counsel v. Public Util. Com’n of Texas, 878 S.W.2d 598, 600 (Tex. 1994)(holding that appellate courts can take judicial notice for the first time on appeal). 73. This error constitutes an abuse of discretion, as a court has no discretion to refuse a request for judicial notice if requested by a party and is supplied with the necessary information. See TEX. R. EVID. 201(d); Office of Pub. Util. Counsel v. Public Util. Com’n of Texas, 878 S.W.2d at 600 (Tex. 1994). Mosser made his request during the sanctions proceeding, and provided the judge with a substantial recitation of the statute for which he requested judicial notice. [RR Vol.2, 107: 10-13; 108: 1-5]. 74. This abuse of discretion is compounded by the fact that the court’s refusal to take judicial notice of the statutes caused the court to then fail entirely to apply these statutes to the sanctions question. When determining legal principles, the trial court has no discretion to 26 misinterpret or misapply the law. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). Thus, a clear failure to analyze or apply the law correctly constitutes an abuse of discretion. Id. 75. The failure to take judicial notice was harmful error and grounds for reversal, as the failure to consider the statutes prevented the consideration of facts and the relevant cases which provide the good faith basis for the allegations made by Appellant James Mosser and subsequently Alexis Steinberg on behalf of Ben Melton in all petitions filed in this case. The original petition states that Colonial, a Division of Colonial Savings, F.A. violated the Texas Constitution by lending in excess of eighty percent of the fair market value of the home and that Appellee Mims “aided Colonial and Defendant Western Title in the execution of this violation by providing a false and fraudulent residential real estate appraisal” [CR Vol. 1, 8] (emphasis added). This statement incorporates the Texas Tax Code and the Tom Green County Central Appraisal District’s assessments of Melton’s property as the good faith basis for the extension of per se appraisal fraud to be applied to private appraisers. See TEX. TAX CODE § 23.01(a),(b); see also Sierra Blanca Indep. Sch. Dist., 514 S.W.2d at 27 788. 76. Furthermore, by pleading that the Appellee’s actions were instrumental to the writing of the unconstitutional extension of credit, James C. Mosser put the Appellee on notice of the damages that Melton sought from him: joint liability for the forfeiture of the principal and interest and repayment of sums tendered by Melton to Colonial on the unconstitutional note as well as attorney’s fees. Compare [CR Vol. 1, 9] with TEX. CIV. PRAC & REM CODE § 37.009; See also City of Fort Worth v. Pippen, 439 S.W.2d 660, 668 (Tex. 1969) (affirming joint and several liability for aiding and abetting). All four petitions maintained this claim against the Appellee, with each successive claim expounding on the Appellee’s role in the unconstitutional extension of credit. [CR Vol 1, 8 at ¶11(b), (f); 24 at ¶ 6(b), (f); 34-36 at ¶6(b)-(e), (i); 258 at ¶6(b)-(e), (I)]. As if to drive the point home, the original petition and each successive petition prayed for forfeiture of the principal and interest under the loan, and especially for “a judgment from and against the defendants for payment of all principal and interest paid by the Plaintiffs to the Defendant to date, together with prejudgment and post judgment 28 interest as allowed by law.” [CR Vol. 1, 11 at ¶ 27]. (emphasis added). 77. Thus, the trial court abused its discretion in erroneously finding that “the four petitions filed in this cause have not alleged any claim or cause of action against Mims that would or could have resulted in an award of monetary damages against Bob Mims.” [CR Vol.1, 426 at ¶ 44.] The record evidence clearly and unmistakably demonstrates that Melton sought joint and several liability for Appellee’s role in the making of the unconstitutional extension of credit. See e.g. [CR Vol. 1, 11 at ¶ 27]. This presents a second ground for reversal of the sanctions, as the trial court based its finding on a clearly erroneous assessment of the evidence. See Bennett v. Grant, 460 S.W.3d at 255. MELTON’S FRAUD IN A REAL ESTATE TRANSACTION CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT 78. As a threshold matter, the court also abused its discretion in finding that there was no basis in law or a good-faith argument for the extension or modification of existing law to assert a claim of fraud in a real estate transaction against Appellee. See [CR Vol 1, 426 at ¶ 49]. Relying solely on the one case cited by Appellee in its motion 29 for summary judgment, the court found that fraud in a real estate transaction is not an available remedy in a home equity loan transaction. [CR Vol. 1, 175; 425] (citing Burleson State Bank v. Plunkett, 27 S.W.3d 605, 611 (Tex.App–Waco 2000, pet. denied)). That case is distinguishable from the instant case as it arose out of a construction loan made in 1995, three years prior to the passing of the constitutional amendment that permitted the extension of credit secured by the homestead, which is at issue here. See Burleson State Bank v. Plunkett, 27 S.W.3d 605, 610 (Tex.App–Waco 2000, pet. denied). 79. More importantly, although one other court has found that extensions of credit secured by a homestead are outside the scope of this statute, that court relied on Plunkett which in turn relied on an interpretation of Texas Business and Commerce Code Section 27.01 that had been superseded by legislative amendment. See Hansberger v. EMC Mortg. Corp., Docket No. 04-08-00438-CV, 2009 WL 2264996 at *4 (Tex.App.–San Antonio 2009, no pet.) (citing Burleson State Bank v. Plunkett, 27 S.W.3d 605, 611 (Tex.App–Waco 2000, pet. denied) and Greenway Bank & Trust v. 30 Smith, 679 S.W.2d 592, 596 (Tex.App.–Houston [1st Dist.] 1984, writ ref’d n.r.e)). 80. The Greenway court ruled that the statute did not apply to loan transactions because the measure of actual damages in the statute was defined as “the difference between the value of the real estate or stock as represented or promised, and its actual value in the condition in which it is delivered at the time of contract.” Greenway Bank & Trust v. Smith, 679 S.W.2d 592, 596 (Tex.App.–Houston [1st Dist.] 1984, writ ref’d n.r.e). The prior version of the statute had this language in 1972, when the events giving rise to Greenway took place. See id. (citing (R.S. Art. 4004, sen. 1, 3, and 4) Acts 1967, 60th Leg. vol. 2, p. 2343, ch 785, Sec. 1.). 81. The Texas Legislature struck this language and any other reference to physical real estate from the statute, leaving only the phrase “fraud in a transaction involving real estate or stock...consists of...” Act of May 28, 1983, 68th Leg. R.S., ch. 949, 1983 Gen. Laws. 5208 (current version at TEX. BUS. & COM. CODE § 27.01(b)). This legislative action makes reliance on Greenway untenable, as it was decided based on statutory language that no longer exists. See id. 31 Thus, nothing in the plain language of the statute as it existed in 2013 barred an unconstitutional extension of credit from falling within the ambit of a “transaction involving real estate,” such that there was a good faith basis for arguing for the reversal of those cases whose holdings were based on reading of the law that had been superseded by legislative enactment. See TEX. BUS. & COM. CODE § 27.01; See also TEX. R. CIV. P. 13; TEX. CIV. PRAC. & REM. CODE § 10.001(2). Thus, to the extent that the court granted sanctions on this issue, the court abused its discretion in finding that this cause was groundless when pleaded. 82. Furthermore, the evidence is insufficient to find that Melton’s Fraud in a Real Estate Transaction Claim was “groundless” when raised in the Original, First, and Second Amended Petitions. To prove fraud in a real estate transaction, a plaintiff must show that there was a false representation of a past or existing material fact when the false representation is made to the plaintiff for the purpose of inducing the plaintiff to enter into a contract, and the false representation was relied on by the plaintiff in entering into that contract. TEX. BUS. & COM. CODE § 27.01(a)(1). 32 83. As previously stated, the Appellee’s appraisal was between fifty-eight and seventy-nine percent above the values reported by the Tom Green County Central Appraisal District. Compare TEX. TAX CODE § 23.01(a),(b) with [CR Vol. 1, 104; RR Vol. 2, 49: 9-11]; [Appendix at 37-38]. Property assessments that are thirty-three percent greater than the market value have been held to be grossly excessive, which alone is sufficient to establish such fraud or illegality sufficient to render that valuation void. Sierra Blanca Indep. Sch. Dist. v. Sierra Blanca Corp., 514 S.W.2d at 788. Thus, at the time of the original pleading, Mosser had sufficient grounds for pleading that the appraisal was false and fraudulent and incorrectly represented a then existing material fact. 84. Despite Appellee’s claims to the contrary and the trial court’s ultimate ruling, actions against appraisers can be maintained in Texas as an appraiser’s opinion that he knows to be false is actionable. Compare [CR Vol. 1, 175] (“Ben Melton’s statutory fraud claim is based upon Bob Mims’ opinion of market value in a real estate appraisal, which is not an actionable representation under Texas law.”); [CR Vol. 1, 425] (“no basis in law or fact to assert a claim or cause of action against 33 Mims for fraud in a real estate transaction.”) with Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex. 1983)(“An opinion may constitute fraud if the speaker has knowledge of its falsity.”). Even the authority that Appellee cited for this proposition acknowledges that knowledge of an opinion’s falsity is an exception to the general rule that opinions of value are not actionable. Transport Insurance Company v. Faircloth, 898 S.W.2d 269, 276 (Tex. 1995). Based on the wide disparity between the value reported by Appellee and the Tom Green County CAD, and the fact that Appellee knew about the value reported by the Tom Green County CAD, pursuing this theory of the case was not groundless. Thus, the Trial Court abused its discretion by failing to properly analyze the law as to falsity of opinions in cases involving misrepresentation, warranting reversal on this issue. 85. As to the second element of fraud in a real estate transaction, the appraisal value removed the only impediment to Melton’s extension of credit, such that the appraisal induced his agreement to the terms, and he could not have entered into an extension of credit with Colonial had the value been that reported by the Tom Green County Central Appraisal District. See TEX. CONST. ART. XVI §§ 34 50(a)(6)(Q)(ix); (h); see also [CR Vol. 1, 249 at ¶ 32]. 86. The record evidence also makes it clear that Melton relied on the appraisal in obtaining an extension of credit secured by his homestead. The uncontradicted evidence establishes that Ben Melton paid the Appellee $350.00 by check to perform a property appraisal. CR 1:100-101 (“POC (B)”); [RR Vol. 2, 65:19-22; RR Vol. 3, 75 at ¶ 6-8];. The Appellee may claim to have prepared the appraisal for Colonial alone, but Colonial made Melton its assignee of the information contained in the appraisal when it disclosed the appraisal value to him so that he could sign the acknowledgment of fair market value as $300,000.00. Compare [RR Vol. 2, 47:16-17] with [RR Vol.3, 34]. (“The fair market value indicated herein is the value estimated in the appraisal which was prepared in accordance with state or federal requirements applicable to this extension of credit.”). 87. The Appellee further testified that his appraisal could be relied upon by an assignee of Colonial, yet later testified that Melton was not entitled to rely on the appraisal. Compare [RR Vol.2, 48:21-23] with [RR Vol 2, 56:18-20]. Mosser properly and timely objected to this 35 testimony as misstating the facts. [RR Vol 2, 56:21-22]. In overruling the objection, the court directed Mosser’s attention to language in the appraisal stating, “No other use or users of this report are permitted,” but failed entirely to realize that CU Members Mortgage had the right to divulge the information to any of its assigns. Compare [RR Vol. 2, 57:15-16] with [RR Vol. 3, 62] (“The intended user of the report is CU Members Mortgage and/or its assigns. No other use or users of this report are permitted.”)(emphasis added). 88. To the extent the court adopted Appellee’s argument that Melton could not by law rely on Appellee’s appraisal, the court erred in finding no basis in law for Melton’s fraud in a real estate transaction claim. Appellee cited Westcliff Co. v. Wall, 267 S.W.2d 544, 546 (Tex.1954), for the proposition that only Colonial could rely on the appraisal. [CR Vol.1, 175]. The Supreme Court of Texas has expressly disapproved of using Westcliff in this way, as the jurisprudence of Texas authorizes a fraud claim “if the false representations be made with a view of reaching the third person to whom it is repeated, and for the purpose of influencing him.” Ernst & Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573, 578 (Tex. 36 2001). The Supreme Court of Texas stated that Texas jurisprudence is entirely consistent with the Restatement Second of Torts’s “reason-to-expect” standard, which states that a person who makes a misrepresentation is liable to the class of persons the maker intends or has reason to expect will act in reliance upon the misrepresentation. Id. at 578-79. Furthermore, the Court expressly held that a defendant who acts with knowledge that a result will follow is considered to intend the result. Id. at 579. 89. The facts establish that Ben Melton paid Appellee for the Appraisal, [CR Vol. 1, 100-101 (“POC (B)”); RR Vol. 3, 75 at ¶ 6-8; RR Vol. 2, 65:19-22]; that Appellee submitted the completed Appraisal to Colonial, [RR Vol. 2, 47:13-17]; and that Ben Melton relied on the appraisal when signing the acknowledgment of fair market value, [RR Vol. 3, 34]. It is also clear that the Appellee knew that Colonial would not be the only party relying on the appraisal, as the specific terms of use of the appraisal altered the boiler-plate language of the appraisal to allow for assigns of Colonial to rely on the appraisal. Compare [RR Vol. 3, 58] (“Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting 37 conditions are not permitted”) with [RR Vol. 3, 62] (“The intended user of the report is CU Member’s Mortgage and/or its assigns”). Thus, the record evidence and the case law available to Mosser at the time of the Original, First, and Second Amended Petitions shows that Mosser had a good faith basis in law and fact for pleading under Texas Business Code Section 27.01, such that the court clearly erred in finding otherwise. 90. That Steinberg would ultimately nonsuit this claim in the Third Amended Petition as “unsupportable” does not establish that the claim was groundless and lacked merit when initially brought. [CR Vol. 1, 216]. Her replacement of the claim with a common law fraud claim based on the same facts, substantially the same elements, and substantially the same means of recovery indicates a tactical decision to remove any doubt as to claim being made, rather than an admission that the claim had no merit when brought. Compare [CR Vol.1, 37-38] with [CR Vol. 1, 261-62]; See also TEX. CIV. PRAC & REM. CODE § 41.003(a)(1) (authorizing exemplary damages for common law fraud claims). 91. Thus, this error by the trial court constitutes an abuse of discretion, 38 as the court’s reading of the evidence and the law is clearly erroneous such that it should not have concluded that there was no basis in law or fact to assert a claim of fraud in a real estate transaction. See Bennett v. Grant, 460 S.W.3d at 255. This court should sustain this point, and reverse the trial court’s award of sanctions on this issue. MELTON’S COMMON LAW FRAUD CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT 92. As a threshold matter, neither James C. Mosser nor Mosser Law, PLLC, signed a pleading that contained this cause of action and therefore may not be sanctioned under either Chapter 10 or Rule 13, as only the attorney that signed the offensive pleading may be sanctioned. Yuen v. Gerson, 342 S.W.3d 824, 828 (Tex.App.–Houston [14th Dist.], pet. denied.). If this court declines to follow Yuen v. Gerson, then Mosser argues alternatively that sanctions awarded pursuant to Melton’s common law fraud claim, like the sanctions awarded for Melton’s fraud in a real estate transaction, fail because the claim was not groundless when made. 93. A plaintiff proves common law fraud by establishing that the defendant made a material representation that was false; the 39 defendant knew the representation was false or made it recklessly as a positive assertion without any knowledge of its truth; the defendant intended to induce the plaintiff to act upon the representation, and the plaintiff actually and justifiably relied upon the representation and thereby suffered injury. Ernst & Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d at 577. As stated above, the facts establish that Ben Melton paid Appellee for the Appraisal, [CR Vol. 1, 100-101 (“POC (B)”); RR Vol. 3, 75 at ¶ 6-8; RR Vol. 2, 65: 19-22; that Appellee submitted the completed Appraisal which valued Melton’s property at $300,000.00 to Colonial, [RR Vol. 2, 47:13-17]; that Appellee knew of widely conflicting appraisal values required by law to be the fair market value of Melton’s property, [RR Vol. 2, 67:9-11; RR Vol.3, 37]; and that Ben Melton relied on the appraisal when signing the acknowledgment of fair market value, [RR Vol. 3, 34]. These facts, which constitute prima facie fraud, were known by Steinberg at the time she filed the Third Amended Petition. [CR Vol. 1, 257-266]. 94. In its sanctions order, the trial court ruled that Ben Melton did not have a viable claim or cause of action against Bob Mims for common law fraud because Bob Mims did not make a false representation of a 40 material fact. [CR Vol. 1, 425 at ¶41]. To the extent that the trial court heard Appellee’s testimony and made this determination, it erred because it ruled on the merits of the fraud claim and considered evidence that was not available to Steinberg at the time she filed the Third Amended Petition. See Robson v. Gilbreath, 267 S.W.3d 401, 409 (Tex.App.–Austin 2008, pet. denied). This error constitutes an abuse of discretion warranting reversal because the evidence is legally insufficient to establish that Steinberg knew the Appellee’s representation was not factually false when she filed the Third Amended Petition. See City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005). 95. Conversely, if the trial court ruled as a matter of law that the appraisal could not have constituted an actionable misrepresentation of a material fact, as Appellee argued in its Second Motion for Summary Judgment, the trial court erroneously interpreted the law by failing to consider that statements of opinion are actionable if the speaker knows that they are false at the time they are made. Transport Insurance Company v. Faircloth, 898 S.W.2d 269, 276 (Tex. 1995). This also constitutes an abuse of discretion warranting 41 reversal, as the court clearly failed to analyze or apply the law as it failed to consider this legal theory when considering whether to sanction Mosser. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). 96. Finally, to the extent that the court granted summary judgment and subsequently Appellee’s motion for sanctions on the basis of Appellee’s erroneous application of Westcliff to this case, the trial court abused its discretion by reaching an erroneous legal conclusion as to who may properly plead fraud. Again, the Texas Supreme Court has stated that persons who rely on misrepresentations transmitted to them by an intermediary have a cause of action against the person who originally made the misrepresentation if that person knew or should have known that others would rely on the misrepresentations. Ernst & Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d at 578. Because Melton fit this definition, Steinberg had a good faith basis for pleading common law fraud on his behalf in the Third Amended Petition, such that the trial court’s finding that there was no basis in law or fact to assert a common law fraud claim constitutes an abuse of discretion warranting reversal. 42 MELTON’S DECEPTIVE TRADE PRACTICES ACT CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT 97. The trial court further abused its discretion in awarding sanctions on the basis that Melton’s Deceptive Trade Practices Act (DTPA) claim was “groundless.” [CR Vol. 1, 425 at ¶ 40]. Under the DTPA, a plaintiff may recover if the plaintiff is a consumer; if the defendant may be sued under the DTPA; the defendant’s action or course of action was unconscionable; and the defendant’s action was a producing cause of the plaintiff’s damages. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996). 98. The trial court incorrectly concluded that sanctions were appropriate against Mosser on the basis that Melton could never qualify as a consumer. [CR Vol 1, 425]. Under the act, an individual who seeks or acquires goods or services by purchase or lease. TEX. BUS. & COM. CODE § 17.45(4). As previously stated, the facts establish that Ben Melton paid Appellee for the appraisal, thereby acquiring his services. [CR Vol. 1, 100-101 (“POC (B)”); RR Vol. 3, 75 at ¶ 6-8; RR Vol. 2, 65:19-22]. 99. Furthermore, the goods or services acquired were of a type that were actionable. Mosser agrees that extensions of credit are too intangible 43 to constitute goods or services for the purposes of the DTPA. Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 174 (Tex. 1983). However, as stated in Melton’s reply to Appellee’s Motion for Summary Judgment, Melton did not seek an extension of credit from Appellee; rather, Melton sought an appraisal of his homestead, for which he paid Appellee $350.00. [CR Vol. 1, 270-271]. In fact, Mosser never raised the DTPA claim in connection with the extension of credit, instead focusing the claim entirely on Appellee and his appraisal services. [CR Vol. 1, 26-27; 38; 262-63]. 100. Appellee also had capacity to be sued because the claim as pleaded places him outside the ambit of the professional services exemption to the DTPA. The Act exempts “claims for damages based on rendering of professional services, the essence of which is providing advice, judgment, opinion, or similar professional skill.” TEX. BUS. & COM. CODE § 17.49(c). This exemption however does not apply to an express misrepresentation of a material fact that cannot be characterized as advice, judgment or opinion; or an unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion. TEX. BUS. & COM. CODE § 17.49(c)(1),(3). 44 101. Mosser pleaded the exceptions to the exemption, as facts known to him at the time of the pleading establish that Appellee’s appraisal was between fifty-eight and seventy-nine percent above the values reported by the Tom Green County Central Appraisal District, so as to render the opinion rendered potentially false and unconscionable. Compare TEX. TAX CODE § 23.01(a),(b) with [CR Vol. 1, 104; RR Vol. 2, 49:9-11]; [App. 37-38]. Appellee never addressed the exceptions to the exemption in his motion for summary judgment, instead arguing for an extension of the exemption to appraisers which, even if it were available to real estate appraisers, would have no preclusive effect on a claim raised on Appellee’s knowledge that his opinion of the value of Melton’s homestead was severely inflated. See Latham v. Castillo, 972 S.W.2d 66, 68 (Tex. 1998) (holding an attorney, a professional, liable for an unconscionable act or course of action.). Even Appellee’s case law cited in his motion for summary judgment for an extension of the professional services exemption to appraisers acknowledges that there are exceptions to the exemption. See Retherford v. Castro, 378 S.W.3d 29, 37 (Tex.App.–Waco 2012, pet. denied) (In determining whether the Castro’s misrepresentation 45 claim is barred by the professional services exemption or meets one of the exceptions to the exemption.”)(emphasis added); [CR Vol. 1, 176-77]. Thus, the court erred in interpreting the law by failing to analyze whether Mosser pleaded an exception to the professional services exemption, such that the trial court abused its discretion in finding that there was no basis in law or fact to assert a DTPA claim against Appellee. Reversal on this point is warranted. MELTON’S BREACH OF CONTRACT CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT 102. As a threshold matter, neither James C. Mosser nor Mosser Law, PLLC, signed a pleading that contained this cause of action and therefore may not be sanctioned under either Chapter 10 or Rule 13, as only the attorney that signed the offensive pleading may be sanctioned. Yuen v. Gerson, 342 S.W.3d 824, 828 (Tex.App.–Houston [14th Dist.], pet. denied.). If this court declines to follow Yuen v. Gerson, then Mosser argues alternatively that the sanctions awarded in response to Melton’s breach of contract claim fail as a matter of law. 103. Breach of contract may be established by showing the existence of a valid contract, performance or tendered performance by the plaintiff, 46 breach of the contract by the defendant, and damages sustained by the plaintiff as a result of the breach. Valero Marketing & Supply Co. v. Kalama Intern. 51 S.W.3d 345, 351 (Tex.App.–Houston [1st Dist.] 2001, rehearing overruled). Additionally, the plaintiff must establish that it is the proper party to commence the suit. Mandell v. Hamman Oil & Ref. Co., 822 S.W.2d 153, 161 (Tex.App.–Houston [1st Dist.] 1991, writ denied). 104. In its second motion for summary judgment, which formed the basis for the trial court’s award of sanctions, the Appellee conceded that there was a valid contract, and that Colonial had tendered performance on the contract through Ben Melton’s payment of $350.00 to the Appellee. Compare [CR Vol. 1, 312] with [Id., 425 at ¶42]. The trial court ultimately ruled that the claim was “groundless” when brought because Ben Melton never could have been the third party beneficiary of the contract between Colonial and Appellee, based on an erroneous interpretation of the evidence. [CR Vol.1, 425 at ¶ 42]. The record evidence establishes that Colonial transmitted an appraisal order form that specifically identified Ben Melton as the borrower in a loan transaction dependent on the 47 results of the appraisal that properly reflected the fair market value of Melton’s property. [RR Vol. 3, 35]. The evidence also establishes that the price paid for the appraisal was $350.00, and that Appellee performed the appraisal knowing that the appraisal would directly benefit Melton as the borrower in the transaction. [CR Vol. 1, 105], [RR Vol. 3, 51]. Thus, the evidence demonstrates that Mosser has a good faith basis for arguing that Melton was a third party beneficiary to this contract, as both the Appellee and Colonial intended that the appraisal benefit Ben Melton, as it would form the basis of his loan, and that both parties entered the contract directly for the benefit of Melton. See Basic Capital Management, Inc. v. Dynex Commercial, Inc., 348 S.W.3d 894, 900 (Tex. 2001). 105. Thus, the court abused its discretion in ruling that the claim was groundless and lacked evidentiary support when brought, such that reversal is warranted on this issue. 106. Furthermore, the court appears to have accepted that there was no breach as the Appellee fully performed his obligations under the contract. The record evidence demonstrates that there was a genuine issue of material fact on this point, as the contract was for 48 Appellee’s opinion of the fair market value of Melton’s property, not a value that grossly exceeded the values determined by the Tom Green County Central Appraisal District’s determination of fair market value on the same property. Thus, the court abused its discretion in determining that there was no basis in law or in fact to assert a breach of contract on this issue, such that reversal is warranted. 107. Finally, the court also erred in determining that Melton suffered no damages or injury as a result of a breach of contract. The record evidence establishes that Ben Melton tendered $350.00 for the appraisal, which was to properly reflect fair market value of the property. [RR Vol. 3: 51; 75 at ¶ 6,7]. This is the adequate measure of damages under breach of contract known to Steinberg at the time she filed this pleading. Thus, the court clearly erroneously assessed the evidence on this issue, such that reversal is warranted under an abuse of discretion standard. MELTON’S NEGLIGENCE CLAIM WAS NOT GROUNDLESS AND HAD EVIDENTIARY SUPPORT 108. As a threshold matter to this claim, neither James C. Mosser nor Mosser Law, PLLC, signed a pleading that contained this cause of action and therefore may not be sanctioned under either Chapter 10 49 or Rule 13, as only the attorney that signed the offensive pleading may be sanctioned. Yuen v. Gerson, 342 S.W.3d 824, 828 (Tex.App.–Houston [14th Dist.], pet. denied.). If this court declines to follow Yuen v. Gerson, then Mosser argues alternatively that sanctions awarded pursuant to Melton’s negligence claim fail because the claim was not groundless when made. 109. The trial court ruled that because Appellee owed no legal duty to Melton, the claim was groundless when brought as there was no basis in law or fact for bringing the claim and there was no good faith argument for the extension, modification, or reversal of existing law. The trial court failed to analyze the law properly for it to have arrived at this conclusion. The Supreme Court of Texas has held that with every contract, there is a common law duty to perform it with care, skill, reasonable expedience, and faithfulness. Southwestern Bell Tel. Co. V. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991). Furthermore, a contract for professional services creates a duty that the professional exercise the degree of care, skill, and competence that reasonably competent members of the profession would exercise under similar circumstances. Dukes v. Philip Johnson/Alan Ritchie Architects, 50 P.C., 252 S.W.3d 586, 594 (Tex.App.–Fort Worth 2008, pet. denied). The trial court’s logic thus fails in concluding simultaneously that Appellee could qualify for the professional services exemption under the DTPA and that Appellee owed no duty under a contract for professional services to Melton. Compare [CR Vol. 1, 425 at ¶ 40] with [CR Vol. 1, 426 at ¶ 43]. 110. Steinberg had a good faith basis in pleading negligence, as it is clear that Appellee could have and did owe a duty to both Melton and Colonial to perform appraisals with the degree of care, skill, and competence that reasonably competent appraiser would exercise under reasonable circumstances. Dukes, 252 S.W.3d at 594. The facts known to Steinberg at the time tend to indicate that the Appellee breached this duty, as the appraisers for the Tom Green County Central Appraisal District are bound to perform appraisals in the same manner as Appellee, yet their valuations of Melton’s property were significantly less than that proposed by the Appellee. [CR Vol. 1, 104]; [RR Vol. 2, 49: 9-11]; [App.37-38]. Furthermore, Appellee’s appraisal was the proximate cause of Melton’s damages, as it permitted the funding of an unconstitutional extension of credit 51 secured by Melton’s homestead, such that Melton suffered damages in the form of both a lien enabling alienation of his homestead and principal and interest paid under that loan to Colonial, which was aided by the Appellee’s tortious acts. See City of Fort Worth v. Pippen, 439 S.W.2d 660, 668 (Tex. 1969) (affirming joint and several liability for aiding and abetting). 111. Thus, the trial court abused its discretion in failing to properly apply or analyze the law as it pertains to duties arising from a contract for professional services, such that reversal on this issue is also warranted. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992); Bennett v. Grant, 460 S.W.3d 220, 255 (Tex.App.–Austin 2015, pet. filed). THE TRIAL COURT ABUSED ITS DISCRETION IN SANCTIONING MOSSER FOR BRINGING ALLEGEDLY TIME-BARRED CLAIMS AGAINST APPELLEE 112. Finally, the court erred in sanctioning Mosser under both Rule 13 and Chapter 10 for arguing for the delayed accrual of all of Melton’s claims. 113. The trial court’s sanctions order states, “All of the claims and causes of action asserted against Bob Mims in the petitions filed in this cause are barred by the applicable statute of limitations.” [CR Vol. 1, 52 425]. This is based in large part on its orders granting summary judgment in favor of Appellee on all causes, in which Appellee argued that limitations barred recovery on all of Melton’s claims. [CR Vol. 2, 19]; [CR Vol. 1, 428-29]. Because it is questionable whether Summary Judgment should have been granted at all on this issue, sanctions are inappropriate against Mosser or Mosser Law PLLC as a matter of law. 114. When filing a motion for summary judgment, the movant bears the burden of proof and all doubts about the existence of a genuine issue are resolved against the movant. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985)(emphasis added). 115. Furthermore, all evidence and any reasonable inferences must be viewed in the light most favorable to the nonmovant. Id. at 548-49. 116. Most importantly, all conflicts in the evidence are disregarded, and the evidence which tends to support the position of the party opposing the motion is accepted as true. Evidence favoring the movant’s position will not be considered unless it is uncontradicted. Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1965)(emphasis added). 53 117. A defendant moving for summary judgment on limitations must conclusively prove when the cause of action accrued and negate the discovery rule, if it applies and has been pleaded or otherwise raised, by proving as a matter of law that there is no genuine issue of material fact about when the plaintiff discovered, or in the exercise of reasonable diligence, should have discovered the nature of its injury. KPMG Peat Marwick v. Harrison County Housing Finance Corp., 988 S.W.2d 746, 748 (Tex. 1999). 118. Likewise, a party moving for sanctions based on limitations bears the burden of proving that the nonmovant’s pleading of the discovery rule was groundless and filed in bad faith and for purpose of harassment. Dolenz v. Boundy, 197 S.W.3d 416, 421 (Tex.App.–Dallas 2006, pet. denied). 119. Mosser plead fraud as an element of every pleading filed in this case on which his signatures appears in the signature block. [CR Vol. 1, 10 at ¶21; 24 at ¶ 6(b), (f); 36 at ¶ 6(I)]. 120. In its response to Colonial and Appellee’s first motions for summary judgment, Steinberg amended Melton’s petition, pleaded the discovery rule, and Mosser filed the affidavit of Ben Melton with the 54 response to both Colonial’s and Appellee’s Motions for Summary Judgment. [CR Vol. 1, 246-250; 279-283]. 121. Colonial responded, “Plaintiff does not understand that limitations began to run when he suffered his alleged injury, not when he knew about it...Here, Plaintiff when he closed his loan had all of the information he needed to determine whether or not he suffered a legal injury.” [CR Vol. 3, 9]. Appellee, for his part, simply adopted and incorporated this argument, in addition to making several conclusory statements that the discovery rule did not apply here. [CR Vol. 2, 6- 7]. 122. Neither Colonial nor Appellee offered any documentary evidence or statements establishing that Ben Melton knew or should have known of any legal injury accruing on the date the loan closed. Both parties simply asserted that case law establishes that the accrual date of all injuries was the date that the loan closed, March 13, 2009. [CR Vol. 3, 9] (citing Schanzle v. JPMC Specialty Mortg. LLC, No. 03-09- 00639-CV, 2011, 2011 Tex. App. LEXIS 1748 *10 (Tex.App.–Austin Mar. 11, 2011, no pet.); Hannaway v. Deutsche Bank Nat’l Trust Co., A-10-CV-714-LY, 2011 U.S. Dist. Lexis 24775 *8 (W.D. Tex, Mar. 11, 55 2011)). The only document that even indicates that Ben Melton might have been aware of the value of the homestead is the Fair Market Value Acknowledgment, and that document reinforces the notion that Melton had “no knowledge or reason to believe that the fair market value of the Homestead Property stated in this acknowledgment is incorrect” at the time the loan closed. See [CR Vol. 1, 94]. Nothing in the summary judgment evidence offered by either Appellee or Colonial indicates that Melton received a copy of the appraisal at closing, which would have provided him with the proper means to discover an injury. See [CR Vol. 1, 55-168; 180-215]. 123. Additionally, neither of the cases cited by Appellee and Colonial is binding authority on the issue of fraudulently prepared appraisals. Schanzle does not address the discovery rule, instead generally concluding that a four-year statute of limitations applies to claims made under Article 16 Section 50 of the Texas Constitution as the appellant in that case failed to plead the discovery rule or fraud. Schanzle v. JPMC Specialty Mortg. LLC, No. 03-09-00639-CV, 2011, 2011 WL 832170 at *4 (Tex.App.–Austin Mar. 11, 2011, no pet.) Hannaway is a ruling from a United States District Court which was 56 not binding authority on the trial court, and which improperly conflated claims sounding in fraud with the discovery rule. Compare Hannaway v. Deutsche Bank Nat’l Trust Co., A-10-CV-714-LY, 2011 WL 891669 at *5 (W.D. Tex, Mar. 11, 2011) (citing S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996) with S.V. v. R.V. 933 S.W.2d 1, 6 (Tex. 1996) (“Restated, the general principle is this: accrual of a cause of action is deferred in cases of fraud or in which the wrongdoing is fraudulently concealed, and in discovery rule cases in which the alleged wrongful act and resulting injury were inherently undiscoverable at the time they occurred but may be objectively verified.”)(emphasis added). 124. In direct contrast and in response to the two motions for summary judgment, Mosser filed Melton’s affidavit which states that Melton received documents at the loan’s 2009 closing that were incomplete, that he ultimately lost employment in 2012 which led to him seeking modification options of his extension of credit and to him investigating the whole loan closing in July of that year, and that he sought the final executed copies of the documents from Mortgage Electronic Registration Systems in both July 2012, and February 2013. [CR Vol. 57 1, 330-332 at ¶ 16-23]. No evidence presented by either Appellee or Colonial rebutted this. See generally [CR Vol. 1, 55-168; 180-215]. 125. Thus, the evidence before the court certainly raised a fact question on when Melton knew or should have known there was a serious problem with the appraisal, such that summary judgment as a matter of law on Melton’s Constitutional, statutory fraud, and DTPA claims was inappropriate. See Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1965); See also TEX. BUS. & COM. CODE § 17.565 (“All actions brought under this subchapter must be commenced...within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice.”). More importantly, this fact question demonstrates that Mosser had some basis in fact for pleading deferral of accrual of Melton’s claims, such that the trial court clearly abused its discretion in finding that the pleadings Mosser signed were “groundless.” The dearth of substantive case law on this issue also demonstrates that Mosser’s pleading of fraud and Steinberg’s pleading of the discovery rule were warranted by good faith argument 58 for the extension of existing law, such that the trial court abused its discretion in finding otherwise. 126. The trial court’s finding that Melton’s common law fraud, breach of contract, and negligence claims were time-barred and warranted sanctions is also wrong. Appellee’s arguments in his Second Motion for Summary Judgment improperly conflate the discovery rule with claims sounding in fraud. Compare [CR Vol. 1, 309-310] with S.V. v. R.V. 933 S.W.2d 1, 6 (Tex. 1996) (“Fraud, we have said, in and of itself prevents running of the statute of limitations.”). Appellee offered no evidence to show when Melton knew or should have known of the accrual of his cause, such that he did not conclusively negate the deferral of the fraud claims or the discovery rule. Compare [CR Vol. 1, 309-310] with KPMG Peat Marwick v. Harrison County Housing Finance Corp., 988 S.W.2d 746, 748 (Tex. 1999). 127. Although the court refused to consider Melton’s properly mailed response to Appellee’s Second Motion for Summary Judgment, the Appellee himself introduced Melton’s affidavit in support of the response to Appellee’s Second Motion for Summary Judgment into evidence at the sanctions hearing. [RR Vol. 2, 51:10-20]; [RR Vol. 3, 59 74-78]. Like the affidavit offered in response to Appellee’s first Motion for Summary Judgment, this affidavit also states that Melton did not discover the issues with the appraisal undergirding his extension of credit until July 2012. [RR Vol. 3, 76-77 at ¶ 16-23]. 128. Rather than rebutting these statements, the testimony adduced at the hearing reinforces the notion that Melton never received a copy of the appraisal from which he could have discovered a legal injury. See [RR Vol. 2, 61:11-18]. No other evidence adduced at the hearing, or presented by Appellee rebuts Melton’s pleading of fraud or the discovery rule. See generally [RR Vol. 2, 1-113]. Thus, the only evidence offered in support of sanctions against Mosser for pleading fraud and the discovery rule as grounds to defer accrual of Melton’s claims actually militates against sanctions, as the evidence shows that Mosser and Steinberg had a basis in fact for filing such pleadings. [RR Vol. 2, 51:8-20, 61:11-18], [RR Vol. 3, 74-78]. The evidence was legally insufficient to provide a basis for the court to award sanctions against Mosser for bringing claims that were allegedly time-barred such that the trial court abused its discretion in awarding the sanctions. See City of Keller v. Wilson, 168 S.W.3d 60 802, 810 (Tex.2005); See also Bennett v. Grant, 460 S.W.3d 220, 255 (Tex.App.–Austin 2015, pet. filed). THE TRIAL COURT ABUSED ITS DISCRETION IN FINDING THAT THE PLEADINGS WERE BROUGHT FOR AN IMPROPER PURPOSE 129. In addition to demonstrating that the claims filed by Mosser on behalf of Melton were “groundless,” the Appellee also has the burden of proving that the claims were brought in bad faith or for the purpose of harassment to prevail on a motion for sanctions. TEX. R. CIV. P. 13. Sanctions under Rule 13 require a showing of bad faith, or the conscious doing of a wrong for a dishonest, discriminatory, or malicious purpose. Lake Travis Indep. Sch. Dist. v. Lovelace, 243 S.W.3d at 256 (citing Stites v. Gillum, 872 S.W.2d 786, 794-96 (Tex.App.–Fort Worth 1994, writ denied). Improper motive is an essential element of bad faith. Robson v. Gilbreath, 267 S.W.3d 401, 407 (Tex.App.–Austin 2008, pet.denied). Harassment in the context of Rule 13 means that the pleading was intended to annoy, alarm, and abuse another person. State v. PR Investments and Specialty Retailers, Inc., 180 S.W.3d 654, 670 (Tex.App.–Houston [14th Dist.] 2005, pet. granted). When reviewing a sanctions order under Chapter 10.001 of the Texas Civil Practices and Remedies Code, 61 courts construe the phrase “improper purpose” as the equivalent of “bad faith” under rule 13. Dike v. Peltier Chevrolet, Inc., 343 S.W.3d 179, 196 (Tex.App.–Texarkana 2011, no pet.). The evidence is legally insufficient to support the trial court’s conclusion that these proceedings were filed in bad faith or for the purpose of harassment such that the trial court abused its discretion in making such a finding. 130. The court erred in awarding sanctions pursuant to Texas Civil Practice and Remedies Code Chapter 10 or Rule 13, as the Appellee wholly failed to plead an improper purpose in its motion for sanctions. The motion itself contains a recitation of facts and the bald assertion, “The petitions and pleadings in this cause filed against Bob Mims have been intended to harass or cause unnecessary delay or needless increase in the cost of litigation.” [CR Vol. 1, 407]. Appellee wholly failed to demonstrate how the facts contained in the motion prove an improper purpose for filing suit against Appellee. Compare [CR Vol. 1, 407] with TEX. CIV. PRAC. & REM. CODE § 10.001. 131. Despite the deficient motion, the trial court concluded “that the primary purpose for naming Bob Mims as a defendant in this cause 62 was to defeat diversity jurisdiction and the removal of this cause to federal court,” such that all pleadings filed in this case against Appellee “were brought in bad faith or were “brought for the purpose of harassment.” [CR Vol. 1, 425-426 at ¶ 37, 45]. 132. During the sanctions hearing and over Mosser’s relevance objection, the court received into evidence all of the pleadings filed in Priester v. Long Beach Mortgage Company and J.P. Morgan Chase, 708 F.3d 667 (5th Cir. 2013), for the limited purpose of establishing a common scheme allegedly utilized by Mosser. [RR Vol. 2, 82: 24-25; 85:15- 22]. Despite the court’s insistence that it would “disregard any testimony about diversity jurisdiction or that purpose,” the court ultimately and wrongly concluded that Mosser added Appellee to the suit to defeat diversity jurisdiction. Compare [RR Vol. 2, 85:18-20] with [CR Vol. 1, 425 at ¶ 37]. The evidence and the record simply do not support this assertion. 133. Because the Appellee bore the burden of overcoming the presumption that papers and pleadings are filed in good faith, the Appellee was bound to put on some evidence that diversity jurisdiction could have and would have been established in the 63 absence of the Appellee. See Dike v. Peltier Chevrolet, Inc., 343 S.W.3d 179, 191 (Tex.App.–Texarkana 2011, no pet.)(citing GTE Commc’ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993). Appellee failed entirely to do this at the hearing, as the testimony taken at the hearing establishes that Appellee and Melton were Texas residents but does not address Colonial or First Western Title. RR 2: 28, lines 1-4. 134. The record itself demonstrates that all parties to this litigation were Texas residents such that diversity jurisdiction could not have been established, even in Appellee’s absence. The Federal District Courts have diversity jurisdiction where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs and is between citizens of different states. 28 U.S.C. § 1332(a)(1). There is no question that the amount in controversy requirement is met, but the diverse residency requirement cannot be met by either of the other parties to this case. As stated, Ben Melton is a Texas resident currently located in Tom Green County, Texas. [CR Vol. 1, 7 at ¶2]. By its own admission and evidence filed in support of its Motion for Summary Judgment which the court reviewed prior to granting the 64 Motion in its favor, Defendant Colonial was a Texas resident with its principal office located at 2600 West Freeway, Fort Worth, Texas 76102. [CR Vol. 1, 7 at ¶3; 59 at ¶ 10]. Finally, by its own admission, First Western Title is a Texas Corporation with principal office located at 2626 West Freeway, Fort Worth, Texas 76102. [CR Vol. 1, 164- 68]. Disregarding for the moment Appellee and his direct connection to the case, the plaintiff and the other defendants were all Texas residents, such that the conditions to establish diversity jurisdiction could never have been met. See 28 U.S.C § 1332(a)(1). 135. Secondly, neither of the other defendants filed a motion to remove to this case to Federal Court. In fact, Colonial admitted that jurisdiction was proper in Texas and that the trial court had subject matter jurisdiction over this case in its original counterclaim filed in this case. [CR Vol. 1, 29-30 at ¶ 1-4]. As no diversity of residents could be established and at least one other defendant admitted both residency and subject matter jurisdiction before the Trial Court in Tom Green County, inclusion of Mims in the suit would have had no bearing on the forum of the case, such that the evidence is legally insufficient to establish that Mosser added Mims to the suit to defeat diversity 65 jurisdiction. 136. Additionally, although Priester and this case share a violation of Texas Constitution Article 16 Section 50, the similarities stop there. As stated above, the central claim in this case involves an extension of credit that exceeded eighty percent of the fair market value of the home, as enabled by a fraudulent appraisal. [CR Vol. 1, 8 at ¶11(b), (f); 24 at ¶ 6(b), (f); 34-36 at ¶6(b)-(e), (i); 258 at ¶6(b)-(e), (I)]. No similar claim was ever made in Priester. [RR Vol. 3, 90-99; 156-74; 181-207; 249-59. Secondly, Appellee was a named party to the lawsuit from the filing of the original petition as his actions would have been directly responsible for the unconstitutional extension of credit, whereas the title company and the attorney named as parties in Priester were named once the case was in Federal Court. Compare [RR. Vol. 3, 90-99] with [Id. at 156-74]. 137. Finally, the trial court adduced no evidence as to the motives and credibility of James C. Mosser, the person who signed the first three petitions filed in this cause. Rule 13 generally requires that the trial court hold an evidentiary hearing to make a determination about the motives and credibility of the person signing the petition. Dike v. 66 Peltier Chevrolet, Inc., 343 S.W.3d 179, 191 (Tex.App.–Texarkana 2011, no pet.). As Appellee wholly failed to call Mosser to testify regarding his reasons for filing the petition, there is no evidence in the record regarding any improper motive he may have had in filing any of the petitions that he signed. See Dike at 194. (“As the party having the burden of proof at the sanctions hearing, Peltier could have easily called counsel to testify regarding what inquiry, if any, was made with respect to application of the discovery rule before filing the petition.”). 138. Thus, it is clear that Appellee was a necessary party to the suit as his appraisal formed the basis for the entire claim, and was not added for the supposed improper purpose of defeating diversity jurisdiction or to annoy, alarm or surprise him. The evidence shows a complete absence of any facts that would permit diversity jurisdiction to be established, such that this court should sustain a challenge to the legal sufficiency of the evidence on which the trial court based its finding that Mosser brought this suit for an improper purpose, such that sanctions under Rule 13 and Chapter 10 are inappropriate. See City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005); Bennett v. 67 Grant, 460 S.W.3d 220, 255 (Tex.App.–Austin 2015, pet. filed). PRAYER The trial court’s order awarding sanctions against James C. Mosser and Mosser Law PLLC weaponizes Rule 13 and Chapter 10 so as to punish those with whom the trial court disagrees intellectually or philosophically. See Tarrant County v. Chancey, 942 S.W.2d 151, 154-55 (Tex.App.–Fort Worth 1997, no writ.). The record evidence is insufficient to establish that Mosser Law PLLC signed any pleadings in this case, and is insufficient to establish that James C. Mosser signed two of the four pleadings filed in this case. All pleadings and the claims contained therein had some legal and factual basis for their filing, or were warranted by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law, such that the court could not have concluded otherwise. Furthermore, on the basis of the record before it, the court could not have ever concluded that any of the parties to this suit were diverse, let alone the driving force behind the addition of Appellee to this lawsuit. These findings constitute abuses of discretion, for which the only adequate remedy is reversal and rendition of judgment against Appellee on his motion of sanctions by this court, and an award of 68 attorney’s fees and costs on appeal to Mosser. Respectfully Submitted, MOSSERLAW PLLC /s/ James C. Mosser James C. Mosser Texas Bar No. 00789784 Nicholas D. Mosser Texas Bar No. 24075405 Paul J. Downey Texas Bar No. 24080659 2805 Dallas Parkway, Suite 220 Plano, Texas 75093 Tel. (972) 733-3223 Fax. (469) 626-1073 courtdocuments@mosserlaw.com 69 CERTIFICATE OF COMPLIANCE I certify that there are 13520 words in this document, and that I relied on the word count function of WordPerfect X6, which was used to prepare this document /s/ Paul J. Downey Paul J. Downey CERTIFICATE OF SERVICE I certify that on November 23, 2015, this document was served on the following parties or counsels of record in accordance with the Texas Rules of Appellate Procedure 9.5 /s/ Paul J. Downey Paul J. Downey Appellee Bob Mims, represented by Hay, Wittenburg, Davis, Caldwell & Bale, LLP Larry W. Bale Texas Bar No. 01629830 P.O. Box 271 San Angelo, Texas 76092 Tel. (325) 658-2728 lwb@hwdcb.com 70 NO. 03-15-00365-CV JAMES C. MOSSER and MOSSER LAW PLLC, Appellant, v. BOB MIMS, Appellee. APPENDIX TO APPELLANT’S BRIEF LIST OF DOCUMENTS Exhibit 1: Order Granting Bob Mims’ First Amended Motion for Sanctions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App.1 Exhibit 2: Order Granting Bob Mims’ First Motion for Summary Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App.8 Exhibit 3: Order Granting Bob Mims’ Second Motion for Summary Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App.10 Exhibit 4: TEX. CONST. ART. XVI § 50. . . . . . . . . . . . . . . . . . . . . . App.11 Exhibit 5: TEX. BUS. & COM. CODE § 27.01. . . . . . . . . . . . . . . . . . App.29 Exhibit 6: TEX. CIV. PRAC. & REM. CODE § 10.001. . . . . . . . . . . . App.31 Exhibit 7: TEX. CIV. PRAC. & REM. CODE § 10.004. . . . . . . . . . . . App.32 Exhibit 8: TEX. TAX CODE § 23.01. . . . . . . . . . . . . . . . . . . . . . . . . App.34 Exhibit 9: TEX. R. CIV. P. 13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App.36 71 Exhibit 10: Tom Green County Central Appraisal District Tax Assessments of 1969 Beaty Road, San Angelo, Texas 76904 for 2008, 2009, and 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App.37 Exhibit 11: Act of May 28, 1983, 68th Leg. R.S., ch. 949, 1983 Gen. Laws. 5208. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App. 41 72 EXHIBIT 1 APP. 1 EXHIBIT 1 APP. 2 EXHIBIT 1 APP. 3 EXHIBIT 1 APP. 4 EXHIBIT 1 APP. 5 EXHIBIT 1 APP. 6 EXHIBIT 1 APP. 7 EXHIBIT 2 APP. 8 EXHIBIT 2 APP. 9 CAUSE NO. C130102C BEN MELTON § IN THE DISTRICT COURT § V. § § CU MEMBER'S MORTGAGE § 340TH JUDICIAL DISTRICT A DIVISION OF COLONIAL SAVINGS, F.A§ FIRST WESTERN TITLE CO. AND § BOB MIMS § TOM GREEN COUNTY, TEXAS ORDER GRANTING BOB MIMS' MOTION FOR SUMMARY JUDGMENT On January 10, 2014, the Court heard oral argument on Bob Mims' Motion for Summary Judgment. After considering the pleadings on file, the summary judgment evidence admitted for consideration, and the argument of counsel, the Court finds that Bob Mims' Motion for Summary Judgment should be in all things granted. Prior to entering its ruling on Bob Mims' Motion for Summary Judgment, the Court heard and considered Bob Mims' Objections to Plaintiff's Summary Judgment Evidence, which was filed prior to the hearing on Bob Mims' Motion for Summary Judgment. The Court has determined that the three objections in Bob Mims' Objections to Plaintiffs Summary Judgment Evidence are sustained and that the objectionable summary judgment evidence in Plaintiffs Response to Bob Mims' Motion for Summary Judgment should be stricken from the record and not considered for any purpose. It is, accordingly, ORDERED that the three objections in Bob Mims' Objections to Plaintiffs Summary Judgment Evidence are sustained and the objectionable summary judgment evidence in Plaintiffs Response to Bob Mims' Motion for Summary Judgment is stricken from the record and shall not be considered for any purpose. It is further ORDERED that Bob Mims' Motion for Summary Judgment is in all things granted. Signed this 21rJ day of May 2014. QL~ DiSTRIJliDGE PRESiDG EXHIBIT 3 19 APP. 10 § 50. Homestead; protection from forced sale; mortgages,..., TX CONST Art. 16, § 50 KeyCite Yellow Flag - Negative Treatment Proposed Legislation Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annos) Article XVI. General Provisions Vernon's Ann.Texas Const. Art. 16, § 50 § 50. Homestead; protection from forced sale; mortgages, trust deeds and liens Effective: November 22, 2013 Currentness (a) The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for: (1) the purchase money thereof, or a part of such purchase money; (2) the taxes due thereon; (3) an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding; (4) the refinance of a lien against a homestead, including a federal tax lien resulting from the tax debt of both spouses, if the homestead is a family homestead, or from the tax debt of the owner; (5) work and material used in constructing new improvements thereon, if contracted for in writing, or work and material used to repair or renovate existing improvements thereon if: (A) the work and material are contracted for in writing, with the consent of both spouses, in the case of a family homestead, given in the same manner as is required in making a sale and conveyance of the homestead; (B) the contract for the work and material is not executed by the owner or the owner's spouse before the fifth day after the owner makes written application for any extension of credit for the work and material, unless the work and material are necessary to complete immediate repairs to conditions on the homestead property that materially affect the health or safety of the owner or person residing in the homestead and the owner of the homestead acknowledges such in writing; (C) the contract for the work and material expressly provides that the owner may rescind the contract without penalty or charge within three days after the execution of the contract by all parties, unless the work and material are necessary to complete EXHIBIT 4 Thomson Reuters. No claim to original U.S. Government Works. © 2015 APP. 11 1 § 50. Homestead; protection from forced sale; mortgages,..., TX CONST Art. 16, § 50 immediate repairs to conditions on the homestead property that materially affect the health or safety of the owner or person residing in the homestead and the owner of the homestead acknowledges such in writing; and (D) the contract for the work and material is executed by the owner and the owner's spouse only at the office of a third-party lender making an extension of credit for the work and material, an attorney at law, or a title company; (6) an extension of credit that: (A) is secured by a voluntary lien on the homestead created under a written agreement with the consent of each owner and each owner's spouse; (B) is of a principal amount that when added to the aggregate total of the outstanding principal balances of all other indebtedness secured by valid encumbrances of record against the homestead does not exceed 80 percent of the fair market value of the homestead on the date the extension of credit is made; (C) is without recourse for personal liability against each owner and the spouse of each owner, unless the owner or spouse obtained the extension of credit by actual fraud; (D) is secured by a lien that may be foreclosed upon only by a court order; (E) does not require the owner or the owner's spouse to pay, in addition to any interest, fees to any person that are necessary to originate, evaluate, maintain, record, insure, or service the extension of credit that exceed, in the aggregate, three percent of the original principal amount of the extension of credit; (F) is not a form of open-end account that may be debited from time to time or under which credit may be extended from time to time unless the open-end account is a home equity line of credit; (G) is payable in advance without penalty or other charge; (H) is not secured by any additional real or personal property other than the homestead; (I) is not secured by homestead property that on the date of closing is designated for agricultural use as provided by statutes governing property tax, unless such homestead property is used primarily for the production of milk; (J) may not be accelerated because of a decrease in the market value of the homestead or because of the owner's default under other indebtedness not secured by a prior valid encumbrance against the homestead; (K) is the only debt secured by the homestead at the time the extension of credit is made unless the other debt was made for a purpose described by Subsections (a)(1)-(a)(5) or Subsection (a)(8) of this section; EXHIBIT 4 Thomson Reuters. No claim to original U.S. Government Works. © 2015 APP. 12 2 § 50. Homestead; protection from forced sale; mortgages,..., TX CONST Art. 16, § 50 (L) is scheduled to be repaid: (i) in substantially equal successive periodic installments, not more often than every 14 days and not less often than monthly, beginning no later than two months from the date the extension of credit is made, each of which equals or exceeds the amount of accrued interest as of the date of the scheduled installment; or (ii) if the extension of credit is a home equity line of credit, in periodic payments described under Subsection (t)(8) of this section; (M) is closed not before: (i) the 12th day after the later of the date that the owner of the homestead submits a loan application to the lender for the extension of credit or the date that the lender provides the owner a copy of the notice prescribed by Subsection (g) of this section; (ii) one business day after the date that the owner of the homestead receives a copy of the loan application if not previously provided and a final itemized disclosure of the actual fees, points, interest, costs, and charges that will be charged at closing. If a bona fide emergency or another good cause exists and the lender obtains the written consent of the owner, the lender may provide the documentation to the owner or the lender may modify previously provided documentation on the date of closing; and (iii) the first anniversary of the closing date of any other extension of credit described by Subsection (a)(6) of this section secured by the same homestead property, except a refinance described by Paragraph (Q)(x)(f) of this subdivision, unless the owner on oath requests an earlier closing due to a state of emergency that: (a) has been declared by the president of the United States or the governor as provided by law; and (b) applies to the area where the homestead is located; (N) is closed only at the office of the lender, an attorney at law, or a title company; (O) permits a lender to contract for and receive any fixed or variable rate of interest authorized under statute; (P) is made by one of the following that has not been found by a federal regulatory agency to have engaged in the practice of refusing to make loans because the applicants for the loans reside or the property proposed to secure the loans is located in a certain area: (i) a bank, savings and loan association, savings bank, or credit union doing business under the laws of this state or the United States; (ii) a federally chartered lending instrumentality or a person approved as a mortgagee by the United States government to make federally insured loans; EXHIBIT 4 Thomson Reuters. No claim to original U.S. Government Works. © 2015 APP. 13 3 § 50. Homestead; protection from forced sale; mortgages,..., TX CONST Art. 16, § 50 (iii) a person licensed to make regulated loans, as provided by statute of this state; (iv) a person who sold the homestead property to the current owner and who provided all or part of the financing for the purchase; (v) a person who is related to the homestead property owner within the second degree of affinity or consanguinity; or (vi) a person regulated by this state as a mortgage broker; and (Q) is made on the condition that: (i) the owner of the homestead is not required to apply the proceeds of the extension of credit to repay another debt except debt secured by the homestead or debt to another lender; (ii) the owner of the homestead not assign wages as security for the extension of credit; (iii) the owner of the homestead not sign any instrument in which blanks relating to substantive terms of agreement are left to be filled in; (iv) the owner of the homestead not sign a confession of judgment or power of attorney to the lender or to a third person to confess judgment or to appear for the owner in a judicial proceeding; (v) at the time the extension of credit is made, the owner of the homestead shall receive a copy of the final loan application and all executed documents signed by the owner at closing related to the extension of credit; (vi) the security instruments securing the extension of credit contain a disclosure that the extension of credit is the type of credit defined by Section 50(a)(6), Article XVI, Texas Constitution; (vii) within a reasonable time after termination and full payment of the extension of credit, the lender cancel and return the promissory note to the owner of the homestead and give the owner, in recordable form, a release of the lien securing the extension of credit or a copy of an endorsement and assignment of the lien to a lender that is refinancing the extension of credit; (viii) the owner of the homestead and any spouse of the owner may, within three days after the extension of credit is made, rescind the extension of credit without penalty or charge; (ix) the owner of the homestead and the lender sign a written acknowledgment as to the fair market value of the homestead property on the date the extension of credit is made; EXHIBIT 4 Thomson Reuters. No claim to original U.S. Government Works. © 2015 APP. 14 4 § 50. Homestead; protection from forced sale; mortgages,..., TX CONST Art. 16, § 50 (x) except as provided by Subparagraph (xi) of this paragraph, the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit if the lender or holder fails to comply with the lender's or holder's obligations under the extension of credit and fails to correct the failure to comply not later than the 60th day after the date the lender or holder is notified by the borrower of the lender's failure to comply by: (a) paying to the owner an amount equal to any overcharge paid by the owner under or related to the extension of credit if the owner has paid an amount that exceeds an amount stated in the applicable Paragraph (E), (G), or (O) of this subdivision; (b) sending the owner a written acknowledgement that the lien is valid only in the amount that the extension of credit does not exceed the percentage described by Paragraph (B) of this subdivision, if applicable, or is not secured by property described under Paragraph (H) or (I) of this subdivision, if applicable; (c) sending the owner a written notice modifying any other amount, percentage, term, or other provision prohibited by this section to a permitted amount, percentage, term, or other provision and adjusting the account of the borrower to ensure that the borrower is not required to pay more than an amount permitted by this section and is not subject to any other term or provision prohibited by this section; (d) delivering the required documents to the borrower if the lender fails to comply with Subparagraph (v) of this paragraph or obtaining the appropriate signatures if the lender fails to comply with Subparagraph (ix) of this paragraph; (e) sending the owner a written acknowledgement, if the failure to comply is prohibited by Paragraph (K) of this subdivision, that the accrual of interest and all of the owner's obligations under the extension of credit are abated while any prior lien prohibited under Paragraph (K) remains secured by the homestead; or (f) if the failure to comply cannot be cured under Subparagraphs (x)(a) -(e) of this paragraph, curing the failure to comply by a refund or credit to the owner of $1,000 and offering the owner the right to refinance the extension of credit with the lender or holder for the remaining term of the loan at no cost to the owner on the same terms, including interest, as the original extension of credit with any modifications necessary to comply with this section or on terms on which the owner and the lender or holder otherwise agree that comply with this section; and (xi) the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit if the extension of credit is made by a person other than a person described under Paragraph (P) of this subdivision or if the lien was not created under a written agreement with the consent of each owner and each owner's spouse, unless each owner and each owner's spouse who did not initially consent subsequently consents; (7) a reverse mortgage; or (8) the conversion and refinance of a personal property lien secured by a manufactured home to a lien on real property, including the refinance of the purchase price of the manufactured home, the cost of installing the manufactured home on the real property, and the refinance of the purchase price of the real property. EXHIBIT 4 Thomson Reuters. No claim to original U.S. Government Works. © 2015 APP. 15 5 § 50. Homestead; protection from forced sale; mortgages,..., TX CONST Art. 16, § 50 (b) An owner or claimant of the property claimed as homestead may not sell or abandon the homestead without the consent of each owner and the spouse of each owner, given in such manner as may be prescribed by law. (c) No mortgage, trust deed, or other lien on the homestead shall ever be valid unless it secures a debt described by this section, whether such mortgage, trust deed, or other lien, shall have been created by the owner alone, or together with his or her spouse, in case the owner is married. All pretended sales of the homestead involving any condition of defeasance shall be void. (d) A purchaser or lender for value without actual knowledge may conclusively rely on an affidavit that designates other property as the homestead of the affiant and that states that the property to be conveyed or encumbered is not the homestead of the affiant. (e) A refinance of debt secured by a homestead and described by any subsection under Subsections (a)(1)-(a)(5) that includes the advance of additional funds may not be secured by a valid lien against the homestead unless: (1) the refinance of the debt is an extension of credit described by Subsection (a)(6) of this section; or (2) the advance of all the additional funds is for reasonable costs necessary to refinance such debt or for a purpose described by Subsection (a)(2), (a)(3), or (a)(5) of this section. (f) A refinance of debt secured by the homestead, any portion of which is an extension of credit described by Subsection (a) (6) of this section, may not be secured by a valid lien against the homestead unless the refinance of the debt is an extension of credit described by Subsection (a)(6) or (a)(7) of this section. (g) An extension of credit described by Subsection (a)(6) of this section may be secured by a valid lien against homestead property if the extension of credit is not closed before the 12th day after the lender provides the owner with the following written notice on a separate instrument: “NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION 50(a)(6), ARTICLE XVI, TEXAS CONSTITUTION: “SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION ALLOWS CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN YOUR HOME. SUCH LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU DO NOT REPAY THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, THE LENDER MAY FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES THAT: “(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT OF EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE; “(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE MUST NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES OF ALL OTHER LIENS AGAINST YOUR HOME, IS MORE THAN 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME; “(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL FRAUD; EXHIBIT 4 Thomson Reuters. No claim to original U.S. Government Works. © 2015 APP. 16 6 § 50. Homestead; protection from forced sale; mortgages,..., TX CONST Art. 16, § 50 “(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY WITH A COURT ORDER; “(E) FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 3 PERCENT OF THE LOAN AMOUNT; “(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE DEBITED FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED FROM TIME TO TIME UNLESS IT IS A HOME EQUITY LINE OF CREDIT; “(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE; “(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN; “(I) THE LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT IS DESIGNATED FOR AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS THE AGRICULTURAL HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE PRODUCTION OF MILK; “(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN AGREED SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME DECREASES OR BECAUSE YOU DEFAULT ON ANOTHER LOAN THAT IS NOT SECURED BY YOUR HOME; “(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR HOME AT ANY GIVEN TIME; “(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS THAT EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT PERIOD; “(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT WITHOUT YOUR CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE A COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY PROVIDED AND A FINAL ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS, INTEREST, COSTS, AND CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF YOUR HOME WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR HAS PASSED FRO [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4075664. Public record. Not legal advice.