Pirate's Lake, Ltd. v. Vestin Realty Mortgage I, Inc., Vestin Realty Martgage II, Inc., Vestin Fund III, L.L.C., and Vestin Mortgage, Inc.

Dismissed as Moot and Memorandum Opinion filed August 12, 2008 Dismissed as Moot and Memorandum Opinion filed August 12, 2008. In The Fourteenth Court of Appeals ____________ NO. 14-08-00085-CV ____________ PIRATE=S LAKE, LTD., Appellant V. VESTIN REALTY MORTGAGE I, INC., VESTIN REALTY MORTGAGE II, INC., VESTIN FUND III, L.L.C., AND VESTIN MORTGAGE, INC., Appellees On Appeal from the 56th District Court Galveston County, Texas Trial Court Cause No. 08-CV-0006 M E M O R A N D U M   O P I N I O N Appellant Pirate=s Lake, Ltd., appeals from the trial court=s order granting the application of appellees Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., Vestin Fund III, L.L.C., and Vestin Mortgage, Inc. (collectively AVestin@) to appoint a receiver. Pirate=s Lake contends that the trial court erred in appointing a receiver because (1) the receiver was appointed ex parte and without sufficient notice; and (2) there were no contractual, statutory, or equitable bases for the appointment of a receiver. Because the real property that was the sole subject of the receivership was sold by foreclosure sale after Pirate=s Lake perfected its appeal, we dismiss this appeal as moot. Factual and Procedural Background On June 23, 2006, Pirate=s Lake executed a $10,000,000 promissory note payable to Vestin (Athe Note@). The Note was secured by a deed of trust (Athe Deed@) covering a parcel of real property located in Galveston County, Texas (Athe Property@). The Note required Pirate=s Lake to make monthly payments of interest and stated that if interest payments were not timely made, Vestin could accelerate the Note, collect the unpaid principal with all accrued interest, and charge default interest until the default is cured. The Note and the Deed further specified that placing a second lien on the Property without Vestin=s consent constituted an event of default, for which Vestin could accelerate the Note and Apursue any rights or remedies it may have hereunder or at law, or in equity . . . .@ The Deed further granted Vestin a power of sale over the Property in the event of default. The Deed also empowered Vestin to seek the appointment of a receiver: 22. Other Available Remedies. If any of the indebtedness hereby secured shall become due and payable, [Vestin] shall have the right and power, in addition to and without limiting any other rights or remedies contained herein, to proceed by a suit or suits in equity or at law, whether for the specific performance or any covenant or agreement herein contained, in aid of the execution of any power herein granted, for any foreclosure hereunder or for the sale of [the Property] under the order of a court or courts of competent jurisdiction, under executory or other legal process, or for the enforcement of any other appropriate legal or equitable remedy. According to Vestin, Pirate=s Lake never made a payment on the loan, and never made any attempt to satisfy the Note. In addition, Vestin alleged that Pirate=s Lake placed a second lien on the Property. Consequently, Vestin accelerated the Note and sought appointment of a receiver to take possession of and sell the Property. On January 4, 2008, the trial court granted Vestin=s AEx Parte Application For Appointment of a Receiver.@ In its order, the trial court empowered the receiver to (1) take possession of the Property; (2) market the Property for sale, and retain a real estate broker for such purpose; (3) retain surveyors and title companies, and conduct environmental assessments and/or other engineering and studies, in connection with the marketing and sale of the Property; (4) employ and pay property managers, accountants, and other professionals as the receiver deems appropriate; (5) pay the operating expenses of the Property; and (6) make an accounting of all rents and revenues collected and all expenses paid, and pay to Vestin all remaining receipts. Pirate=s Lake then filed its notice of accelerated appeal. On February 5, 2008, the Property was sold by foreclosure sale at the Galveston County Courthouse. Vestin then filed a motion to terminate the receivership and discharge the receiver. The trial court never acted on Vestin=s motion. Issues on Appeal In two issues, Pirate=s Lake contends that the trial court erred in appointing a receiver to take possession of and sell the Property. In its first issue, Pirate=s Lake argues that it was not given the minimum three-day notice of the hearing on Vestin=s application for appointment of a receiver, as required by Rule 695 of the Texas Rules of Civil Procedure. In its second issue, Pirate=s Lake asserts that there were no contractual, statutory, or equitable bases for the appointment of a receiver. We conclude that, because the Property was sold at a foreclosure sale after Pirate=s Lake perfected its appeal, Pirate=s Lake=s appeal is moot. Analysis I. The Mootness Doctrine Neither the Texas Constitution nor the Texas Legislature has vested this Court with the authority to render advisory opinions. See Tex. Const. art. II, _ I; see also Camarena v. Tex. Employment Comm=n, 754 S.W.2d 149, 151 (Tex. 1988). The mootness doctrine limits courts to deciding cases in which an actual controversy exists between the parties. Fed. Deposit Ins. Corp. v. Nueces County, 886 S.W.2d 766, 767 (Tex. 1994). When there ceases to be a controversy between the litigating parties due to events occurring after the trial court has rendered judgment, the decision of an appellate court would be a mere academic exercise, and the court may not decide the appeal. See Olson v. Comm=n for Lawyer Discipline, 901 S.W.2d 520, 522 (Tex. App.CEl Paso 1995, no writ). Stated differently, if a judgment cannot have a practical effect on an existing controversy, the case is moot. Id. In that situation, the appellate court is required to vacate the judgment of the trial court and dismiss the underlying cause of action. See Speer v. Presbyterian Children=s Home & Serv. Agency, 847 S.W.2d 227, 228 (Tex. 1993); see also Gen. Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 570 (Tex. 1990) (if no controversy continues to exist between the parties, the appeal is moot and the court of appeals must dismiss the cause); Guajardo v. Alamo Lumber Co., 159 Tex. 225, 317 S.W.2d 725, 726 (1958) (when a case becomes moot on appeal, all previous orders are set aside by the appellate court, and the case is dismissed).[1] When a trial court appoints a receiver to sell real property, and the real property is sold after the appellant has perfected its appeal, the appeal of the appointment of the receiver becomes moot. See Beard v. Beard, 49 S.W.3d 40, 71B72 (Tex. App.CWaco 2001, pet. denied) (concluding that appeal of appointment of receiver was moot when real property that was sole subject of receivership had been foreclosed upon after appellant perfected her appeal). Therefore, we will examine the record to determine whether the PropertyCthe sole subject of the receivershipCwas sold after Pirate=s Lake perfected its appeal, thereby rendering its appeal moot. II. The Sale of the Property Renders This Appeal Moot The record is clear that the Property was sold by foreclosure sale after Pirate=s Lake perfected its appeal. The receiver was appointed only to take possession of, manage, and sell the Property. When the Property was later sold by foreclosure sale conducted under terms of the Deed, Pirate=s Lake=s appeal of the trial court=s appointment of the receiver became moot. See id. Pirate=s Lake argues that its appeal is not moot because (1) an actual controversy remains between the parties that requires a determination by this Court; and (2) no order has been signed by the trial court terminating the receivership. These arguments are without merit. With respect to the first ground, Pirate=s Lake asserts that, without a determination by this Court regarding the appointment of the receiver, it may be unable to prove the second element of a tortious interference claim that it asserted in the trial court.[2] However, even if we were to conclude that the trial court abused its discretion in appointing a receiver, this conclusion does nothing to support Pirate=s Lake=s claim that Vestin committed a tortious or unlawful act in seeking the receivership.[3] As Vestin correctly notes, this Court=s ruling on any alleged error committed by the trial court in appointing the receiver would have no bearing on whether Vestin=s act in seeking the receivership satisfies the second element of a tortious interference claim. Thus, even if we were to reach the merits of Pirate=s Lake=s appeal, our ruling would have no practical effect on an existing controversy between the parties.[4] See Olson, 901 S.W.2d at 522. With respect to the second ground, an order terminating a receivership is not expressly required to render the appeal of the appointment of a receiver moot. See Beard, 49 S.W.3d at 71B72 (appeal of appointment of receiver was moot without order terminating receivership). Rather, all that is required is that a judgment A[not] have a practical effect on an existing controversy@ between the parties. See Olson, 901 S.W.2d at 522. Pirate=s Lake cites us to no authority to the contrary.[5] Conclusion Therefore, because the Property was sold by foreclosure sale after Pirate=s Lake perfected its appeal, Pirate=s Lake=s appeal is moot. Accordingly, without reference to the merits, we vacate the trial court=s order appointing a receiver to take possession of and sell the Property, and dismiss the underlying cause of action and this appeal. /s/ Adele Hedges Chief Justice Judgment rendered and Memorandum Opinion filed August 12, 2008. Panel consists of Chief Justice Hedges, Justice Boyce, and Senior Justice Price.** [1] The Texas Supreme Court has recognized two exceptions to the mootness doctrine, neither of which apply here: (1) the Acapable of repetition yet evading review exception@; and (2) the Acollateral consequences exception.@ See Gen. Land Office, 789 S.W.2d at 571. The former applies where the challenged act is of such short duration that the appellant cannot obtain review before the issue becomes moot. Id. This exception has been used only to challenge unconstitutional acts performed by the government. Id. The latter is invoked only under narrow circumstances, when vacating the underlying judgment will not cure the adverse consequences suffered by the party seeking to appeal that judgment. Marshall v. Hous. Auth. of San Antonio, 198 S.W.3d 782, 789 (Tex. 2006). In order to invoke the collateral consequences exception, Pirate=s Lake must show (1) a concrete disadvantage resulted from the judgment; and (2) the disadvantage will persist even if the judgment is vacated and the case dismissed as moot. Id. Pirate=s Lake does not contend that either exception applies to the present appeal. [2] According to Pirate=s Lake, it asserted a counterclaim in the trial court for Atortious interference with a prospective contract.@ This counterclaim is not part of the record on appeal. [3] The elements of a claim for tortious interference with a prospective business relationship are (1) a reasonable probability that the plaintiff would have entered into a business relationship; (2) an independently tortious or unlawful act by the defendant that prevented the relationship from occurring; (3) the defendant did such act with a conscious desire to prevent the relationship from occurring or the defendant knew the interference was certain or substantially certain to occur as a result of the conduct; and (4) the plaintiff suffered actual harm or damages as a result of the defendant=s interference. Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.CHouston [14th Dist.] 2001, pet. denied). [4] Furthermore, to the extent that this argument can be construed as an attempt to invoke the collateral consequences exception to the mootness doctrine, we have already explained that Pirate=s Lake has failed to demonstrate that (1) a concrete disadvantage resulted from the trial court=s judgment; or (2) it will continue to suffer any adverse consequences if the judgment below is vacated and the cause dismissed as moot. See Marshall, 198 S.W.3d at 789. In fact, our vacating the order appointing the receiver and dismissing the underlying cause of action as moot would have no effect on Pirate=s Lake=s ability to pursue and succeed on its tortious interference claim in the trial court. [5] In its brief, Pirate=s Lake cites Grant v. Am. Nat=l Ins. Co., 808 S.W.2d 181, 184 (Tex. App.CHouston [14th Dist.] 1991, no writ), to support its assertion that, A[a]bsent a signed order, the trial court retains jurisdiction over a disputed issue, and dismissal of the appeal is premature.@ However, Grant addresses whether the court of appeals may exercise appellate jurisdiction in the first instance in the absence of a signed, appealable order from the trial court. See id. at 183 (AThus, we must determine whether the docket entry is sufficient to constitute a signed order for purposes of Tex. R. Civ. P. 306a and Tex. R. App. P. 5(b).@). Grant does not address the question of whether an appeal can be dismissed on mootness grounds in the absence of an order on a motion filed after the appellant has perfected its appeal. Therefore, Grant is inapposite. * Senior Justice Frank C. Price sitting by assignment.