Samuel Murphy and Leela Murphy v. Fairfield Financial Group, Inc. and J. Richard ("Rick") Renshaw

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN NO. 03-98-00583-CV Samuel Murphy and Leela Murphy, Appellants v. Fairfield Financial Group, Inc. and J. Richard ("Rick") Renshaw, Appellees FROM THE DISTRICT COURT OF LLANO COUNTY, 33RD JUDICIAL DISTRICT NO. 11,805, HONORABLE DONALD V. HAMMOND, JUDGE PRESIDING Samuel Murphy and Leela Murphy appeal the order denying their motion for a temporary injunction to prevent Fairfield Financial Group, Inc. and J. Richard "Rick" Renshaw from foreclosing on and selling their house. We will reverse the order and remand the cause for further proceedings and orders consistent with this opinion. In 1986, the Murphys assumed a $45,000 note on real estate in Llano County. The note was originally due in 1991. Fairfield extended the due date until May 4, 1994. The Murphys did not make the balloon payment on the due date. More than four years later, in a letter dated September 2, 1998, the Murphys wrote the following, apparently in response to steps to collect or foreclose: We would like to request a "holiday" from the interest on the house, as we will have to be paying on the taxes also, and can't afford both on our income. If the house payment could be cut in ½ and all of it go on principal, we might be able, with our children's help, to hang on. I know this seems like a lot to ask but I don't see any other way we can do it. I hope we can work something out, as we really hate to lose the house. Thank you so much for your consideration the past few years--it has been a big blessing for us. * * * P.S. We are both disabled, on disability, Mr. Murphy is legally blind, on dialysis 3X weekly and cannot work at all. I cannot work because of my Rheumatoid Arthritis--I am having to use a walker or wheelchair to get around and also have fibromyalgia, which is painful and tender over most of my body. Fairfield set the house for foreclosure on October 6, 1998. The Murphys filed this suit seeking a permanent injunction stopping the sale and a declaration that the deed of trust on their property is unenforceable because a four-year statute of limitations bars appellees from foreclosing on their property. See Tex. Civ. Prac. & Rem. Code Ann. § 16.035(b) (West Supp. 1999). Pending trial on those claims, the Murphys sought a temporary injunction preventing a foreclosure sale, arguing that the foreclosure sale would harm them irreparably by disposing of the property. Following a hearing, the trial court denied the Murphys' request for temporary injunction. In the order denying a temporary injunction, the court expressly found that "the letter dated September 2, 1998, signed by [the Murphys] and admitted as Defendants' Exhibit #5 in the hearing for temporary injunction, is an acknowledgement of debt." The court nevertheless enjoined appellees from posting the property for foreclosure for thirty days after November 5, 1998. This Court issued a temporary order preventing appellees from posting the property for foreclosure during the pendency of this interlocutory appeal. We may reverse the denial of a motion for temporary injunction only if we find that the trial court clearly abused its discretion. Davis v. Huey, 571 S.W.2d 859, 861-62 (Tex. 1978). We do not consider the merits of the movant's case on appeal and cannot substitute our judgment for that of the trial court. Id. at 861-62. We must draw all legitimate inferences from the evidence in a manner most favorable to the trial court's ruling. Miller v. K & M Partnership, 770 S.W.2d 84, 87 (Tex. App.--Houston [1st Dist.] 1989, no writ). At a hearing on a request for temporary injunction, the only question before the trial court is whether the applicant is entitled to the preservation of the status quo of the subject matter of the suit pending trial on the merits. Davis, 571 S.W.2d at 862. To be entitled to a temporary injunction, the movant must show (1) a probable right to recovery; (2) that imminent, irreparable harm will occur in the interim if the request is not granted; and (3) that no adequate remedy at law exists "when all defenses made by the pleadings are considered." Sun Oil Co. v. Whitaker, 424 S.W.2d 216, 218-19 (Tex. 1968); Transport Co. of Texas v. Robertson Transps., Inc., 261 S.W.2d 549, 152 Tex. 551 (Tex. 1953); see also Tex. Civ. Prac. & Rem. Code Ann. § 65.011 (West 1997). The record does not include any findings of fact or conclusions of law apart from the trial court's express finding that the Murphys' letter constituted an acknowledgment of their debt. We therefore assume the court determined adversely to the Murphys all prerequisites to the issuance of a temporary injunction. With respect to their need to show a probable and irreparable injury, we find no basis upon which the trial court could have decided that matter against them. It is undisputed that the Murphys presently have title and possession of the property, and further that the foreclosure sale would deprive them of both. In these circumstances, any legal remedy would be inadequate as a matter of law. See Anderson Oaks (Phase I) Ltd. Partnership v. Anderson Mill Oaks, Ltd., 734 S.W.2d 42, 43 (Tex. App.--Austin 1987, no writ). Thus, we must decide whether the trial court abused its discretion in deciding that the Murphys did not demonstrate a probable right to recover. Based upon the trial court's finding with regard to their letter, it is clear that the trial court determined that the Murphys could not prevail on the merits. The facts are undisputed that the Murphys' debt became due more than four years before Fairfield attempted foreclosure. It is equally clear that the debt is secured by a real property lien. The Murphys interposed a limitations defense that would bar Fairfield's right to recovery under a four year statute of limitations. Tex. Civ. Prac. & Rem. Code Ann. § 16.035 (West Supp. 1999) (sale pursuant to lien must be made not more than four years after cause accrues). Thus, to the extent the statute applies, the Murphys demonstrated a probable right to prevail on the merits. Fairfield's response relies upon the Murphys' September 2 letter, claiming that the debt can be renewed by written acknowledgment. Tex. Civ. Prac. & Rem. Code Ann. § 16.065; see Eldridge v. Collard, 834 S.W.2d 87, 89 (Tex. App.--Fort Worth 1992, no writ). Whether their letter is an acknowledgment that revives their debt is a question for the trier of fact on the merits of the trial, not a question of fact or law for the trial judge at the hearing on the temporary injunction. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). We conclude that under the facts presented the trial court abused its discretion by not granting the temporary injunction. The fact that the parties dispute the effect of the September 2 letter merely supports the need to maintain the status quo pending resolution of their dispute about the facts, taking into account the principles of equity, the nature of the parties' interests, and the necessity for protecting those interests during the pendency of the cause. See Anderson Oaks, 734 S.W.2d at 43. We therefore reverse the order of the trial court denying the temporary injunction. We remand the cause to the trial court with instructions to issue the temporary injunction and fix the amount of security required. Tex. R. Civ. P. 684. Our previous injunction shall continue in effect until the expiration of this Court's power over its judgment herein. Marilyn Aboussie, Chief Justice Before Chief Justice Aboussie, Justices Kidd and Powers* Reversed and Remanded Filed: June 10, 1999 Do Not Publish * Before John E. Powers, Senior Justice (retired), Third Court of Appeals, sitting by assignment. See Tex. Gov't Code Ann. § 74.003(b) (West 1998). most favorable to the trial court's ruling. Miller v. K & M Partnership, 770 S.W.2d 84, 87 (Tex. App.--Houston [1st Dist.] 1989, no writ).