Christy Onabajo and Femi Onabajo v. Household Finance Corp. III

ACCEPTED 03-15-00251-CV 7990386 THIRD COURT OF APPEALS AUSTIN, TEXAS 11/25/2015 11:37:00 AM December 8, 2015 JEFFREY D. KYLE CLERK No. 03-15-00251-CV __________________________________ RECEIVED IN IN THE COURT OF APPEALS 3rd COURT OF APPEALS AUSTIN, TEXAS FOR THE THIRD DISTRICT OF TEXAS 11/25/2015 11:37:00 AM AT AUSTIN JEFFREY D. KYLE __________________________________ Clerk

FEMI S. ONABAJO AND CHRISTY ALFRED ONABAJO, Appellants

v.

HOUSEHOLD FINANCE CORP. III, Appellee _________________________________

APPEAL FROM THE COUNTY COURT AT LAW NUMBER TWO OF TRAVIS COUNTY, TEXAS Trial Court Cause No. C-1-CV-14-010888

BRIEF OF APPELLANTS

Penny Y. Haye Texas Bar No. 24030363 Law Office of Penny Haye 7703 North Lamar Blvd Suite 400 Austin, Texas 78752 Telephone: (512) 677-4293 Facsimile: (512) 777-4535 Penny haye@sbcglobal.net

ATTORNEY FOR APPELLANTS

ORAL ARGUMENT REQUESTED

No. 03-15-00251-CV IN THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS AT AUSTIN __________________________________ FEMI S. ONABAJO AND CHRISTY ALFRED ONABAJO, Appellant v.

HOUSEHOLD FINANCE CORP. III, Appellee _________________________________

APPEAL FROM THE COUNTY COURT AT LAW NUMBER TWO OF TRAVIS COUNTY, TEXAS Trial Court Cause No. C-1-CV-14-010888

BRIEF OF APPELLANTS

Penny Y. Haye Texas Bar No. 24030363 Law Office of Penny Haye 7703 North Lamar Blvd Suite 400 Austin, Texas 78752 Telephone: (512) 677-4293 Facsimile: (512) 777-4535 Penny haye@sbcglobal.net

ATTORNEY FOR APPELLANTS

ORAL ARGUMENT REQUESTED

Appellants’ Brief Pg. 2

IDENTITY OF PARTIES AND COUNSEL

The following is a complete list of all parties, as well as the names and addresses of all counsel:

PARTIES Appellants/Defendants: FEMI S. ONABAJO AND CHRISTY ALFRED ONABAJO

Counsel: PENNY Y. HAYE Texas Bar No. 24030363 Law Office of Penny Haye 7703 N. Lamar Blvd. Suite 400 Austin, TX 78752 Telephone: 512.677.4293 Fax: 512.777.4535 Penny_haye@sbcglobal.net

Appellee/Plaintiff: HOUSEHOLD FINANCE CORP. III

Counsel: SARAH ROBBINS Texas Bar No. 24074966 Hughs, Watters & Askanase, L.L.P. Three Water Center 333 Clay, 29th floor Houston, Texas 77002 Telephone: 713.328.1916 Fax: 713.759.6834 srobbins@hwa.com

ARTHUR TROILO, III Texas Bar No. 20236010 TROILO LAW FIRM, P.C. 700 East 11th Street, Suite 300 Austin, Texas 78701 Telephone: (512) 391-9117

Appellants’ Brief Pg. 3

TABLE OF CONTENTS

IDENTIES OF PARTIES AND COUNSEL .......................................................... 3 TABLE OF AUTHORITIES .................................................................................. 5 STATEMENT OF THE CASE .............................................................................. 8

STATEMENT REGARDING ORAL ARGUMENT ............................................. 8

ISSUES PRESENTED………………..................................................................... 8 STATEMENT OF FACTS ...................................................................................... 9

ARGUMENTS: ISSUE 1: The Trial Court lacked Jurisdiction………………………… 14

ISSUE 2: Appellee’s failure to comply with Texas Property Code §24.005……………………………………………………... 20

ISSUE 3: Applying Texas Civil Practice and Remedies Code Section 16.00(a) the two-year statute of limitations………………… 21

ISSUE 4: Applying Res judicata………………………………………. 28 CERTIFICATE OF COMPLIANCE .................................................................... 29 APPENDIX …………………………………………........................................... 30 Appellants’ Brief Pg. 4

TABLE OF AUTHORITIES CASES A Plus Investments, Inc. v. Rushton, 2004 WL 868866, 2004 Tex. App. Lexis 3605 (Tex. App.—Ft. Worth 2004)…………………………………14, 16 Arnold v. Nat'l County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987)…21 Arquette v.Hancock , 656 S.W.2d 627, 629 (Tex. App.--San Antonio 1983, writ ref'd n.r.e.))………………………………………………………………………...23 Buttery v. Bush, 575 S.W.2d 144, 146 (Tex. Civ. App.—Tyler 1978, writ ref'd n.r.e.). ……………………………………………………………………………….27 Creditwatch, Inc. v. Jackson, 157 S.W.3d 814, 816 n.8 (Tex. 2005)…………..23 Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 918 (Tex.2013) …………………………………………………………………………21,24,25 Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 202 (Tex.2011)…..21 Federal Home Loan Mortg. Corp. v. Pham., 449 S.W.3d 230, 235–36 (Tex.App.– Houston [14th Dist.] 2014, no pet.)………………………………………26 Gideon v. Johns-Manville Sales Corp., 76 1 F.2d 1129, 1136-37 (5th Cir. 1985)…28 Haith v. Drake, 596 S.W.2d 194, 196 (Tex.Civ.App.–Houston [1st Dist.] 1980, writ ref’d n.r.e.)…………………………………………………………………...14 Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001)…21 Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 206 (Tex. 1999)..27 Jaimes v. Federal Nat’l Mortg. Ass’n, No. 03–13–00290–CV, 2013 WL 7809741 (Tex.App.–Austin Dec. 4, 2013, no pet.)……………………………………13 Jones v. American Fed. Bank, F.S.B., No. 05–91–00634–CV, 1992 WL 32961, at *2 (Tex.App.—Dallas 1992, writ dism’d w.o.j.) ………………………………..13 Jones v. Texaco, Inc., 945 F. Supp. 1037 – Dist. Court, SD (Texas 1996)…………23 Krohn v. Marcus Cable Assocs., L.P., 201 S.W.3d 876, 881 (Tex. App. 2006)...24,25 Leavings v. Mills, 175 S.W.3d 301, 310 (Tex. App. -Houston [1" Dist.] 2004, no pet.)…………………………………………………………………………..17 McKinney v. Blakenship, 282 S.W.2d 69,698 (Tex. 1955 )……………………….27 Massaad v. Wells Fargo Bank, Nat’l Ass’n, No. 03-14-00202-CV, 2015 WL 410514, (Tex. App.-Austin Jan. 30, 2015, no pet.)………………………………….26

Appellants’ Brief Pg. 5

Millet v. JP Morgan Chase, N.A. , 20 12 WL 1029497 at *3 (W.D. Tex.2012)…17 Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858 (Tex. App. 1997)……………23 Montenegro v. Wells Fargo Bank, N.A., No. 03-13-00123-CV, 2015 WL 3543055 (Tex. App. June 3, 2015)………………………………………………...13, 26 Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990)………………..21 Okorafor v. Uncle Sam & Assocs., Inc., 295 S.W.3d 27, 38 (Tex. App.—Houston [1st Dist.] 2009, pet. denied)…………………………………………………20 Onion Creek Luxury Apartments v. Powell, No. 03-11-00008-CV, 2011 Tex. App. LEXIS 7261 (Tex. App. – Austin, Aug. 31, 2011, no pet.)………………..18 Puentes v. Fannie Mae, 350 S.W.3d 732, 739 (Tex. App. - El Paso 2011, pet. dism‘d)……………………………………………………………………26,27 Pustejovsky v. Rapid-American Corp. v. Pustejovsky, 35 S.W.3d 643, 646 (Tex.2000)……………………………………………………………………28 Roehrs v. Conesys, Inc.,2005 U.S. Dist. LEXIS 33295, 2005 WL 3454015(N.D. Tex.Dec. 14, 2005)…………………………………………………………. 24 Reese v. Reese, 672 S.W.2d 1, 2 (Tex. Civ. App.—Waco 1984, no writ)………..27 Rogers v. Ardella Veigel Inter Vivos Trust, 162 S.W.3d 281, 290 (Tex. App.- Amarillo 2005, pet. denied)………………………………………………….22 Rice v. Pinney, 51 S.W.3d 705, 709 (Tex.App.–Dallas 2001, no pet.)…………..13 Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993). ………………………………………………………………………………..15 Tex. Dep't of Parks & Wildlife v.Miranda, 133 S.W.3d 217, 226 (Tex. 2004)….14 Texas Employment Comm'n v. International Union of Elec., Radio and Mach.Workers, Local Union No. 782, (1961)…………………………….. 14 Two Pesos, Inc. v. Gulf Ins. Co., 901 S.W.2d 495, 500 (Tex. App.-- Houston [14th Dist.] 1995, no writ)………………………………………………………… 23 Twyman v. Twyman, 790 S.W.2d 819, 821 (Tex.App.-Austin 1990), rev'd on other grounds, 855 S.W.2d 619 (Tex.1993)………………………………………24 W W Laubach Trust v. The Georgetown Corp., 80 S.W.3d 149, 159 (Tex. App.- Austin 2002, pet. denied)…………………………………………………….25 Ward v. Malone, 115 S.W.3d 267, 269 (Tex. App.-Corpus Christi 2003, pet. denied)………………………………………………………………………..18 Williams v. Bank of New York Mellon, 315 S.W.3d 925, 926 (Tex.App.–Dallas 2010,

Appellants’ Brief Pg. 6

no pet.)……………………………………………………………………… 13 Williams v. Garage Paix, Inc., 562 S.W.2d 534, 535 (TexCiv.App—Houston [14 Dist.] 1978)…………………………………………………………………. 22

Texas Constitution Texas Constitution, Art. XVI §50(A)(6)(D)………………………………………..15

Texas Rules of Civil Procedure Texas Rules of Appellate Procedure 39.1……………………………………………8 Texas Rule of Civil Procedure 510.3(e)………………………………………….. 13 Texas Rule of Civil Procedure 736.1(d)…………………………………. 11, 15, 16

Texas Statutes Texas Civil Practice and Remedies Code §16.003(a)……………12,13,19,20,22,27 Texas Property Code § 24.002 ………………………………………………...10,15 Texas Property Code § 24.004…………………………………………………….15 Texas Property Code § 24.005…………………………………………………….15

Other Sources Fuchs, Fred, “Forcible Detainer Lawsuits: Issues and Traps for the Unwary,” Updated October 1, 2013, page 101. See http://tjcja.org/resources/evictions......................................................... 19

Appellants’ Brief Pg. 7

STATEMENT OF THE CASE

This is an appeal from the forcible detainer final judgment rendered by the Honorable Judge Todd T. Wong in the County Civil Court at Law Number One in Austin, Travis County, Texas. The Court ruled in favor of Appellee/Plaintiff despite a previously rendered adverse judgment from the same court 1 and even though Appellee’s current forcible detainer case had been filed more than two years after the alleged cause of action accrued.

Appellants’ central issues in this appeal are (i) an inherent issue of title existed in the justice court and the county court thereby divesting each of jurisdiction to proceed, (ii) that Appellee violated Texas Property Code §24.005 in prematurely filing its forcible detainer suit, (iii) that Appellee filed this case outside the applicable two-year statute of limitations for a forcible detainer case, and (iv) Appellee’s suit should be barred by res judicata.

STATEMENT REGARDING ORAL ARGUMENT

Pursuant to Texas Rules of Appellate Procedure 39.1, Appellants request oral argument and submit that it would materially aid the decisional process in this case.

ISSUES PRESENTED FOR REVIEW

ISSUE 1: The Trial Court lacked jurisdiction.

1 On December 20, 2012.

Appellants’ Brief Pg. 8

ISSUE 2: Appellee’s failure to comply with Texas Property Code §24.005.

ISSUE 3: Applying Texas Civil Practice and Remedies Code Section 16.00(a) the two-year statute of limitations.

ISSUE 4: Applying Res judicata. Pg 28

STATEMENT OF FACTS

1. On June 22, 2001, Appellants financed

(the “Subject Property”) which is more formally described as:

LOT 2, BLOCK “D”, OF SCOFIELD FARMS PHASE VII, SECTION I RESUBDIVISION OF THE AMENDED PLAT OF SCOFIELD FARMS PHASE 4 A SUBDIVISION IN TRAVIS COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT, OF RECORD IN VOLUME 95, PAGES 223-25, OF THE PLAT RECORDS OF TRAVIS COUNTY, TEXAS.

2. As part of the initial financing arrangement Appellants signed a Texas Home Equity Adjustable Rate Note 2 (“Note”) and a Texas Home Equity Security Instrument 3 (“Deed of Trust”). In the Deed of Trust, the “Lender” was defined as HOME CAPITAL INC, a Georgia Corporation.

3. The Deed of Trust states that “[i]f the Property is sold pursuant to this paragraph 21, Borrower or any person holding possession of the Property through Borrower shall immediately surrender possession of the Property to the purchase at

2 RR Vol. 3, Pg 43, Defendant’s Exhibit 1. 3 RR Vol. 3, Pg 5, Plaintiff’s Exhibit 1; CR Pg 58.

Appellants’ Brief Pg. 9 the sale. If possession is not surrendered, Borrower or such person shall be a tenant at sufferance and may be removed by writ of possession.”4

4. On December 10, 2010, Appellee filed an Application for Court Order for Foreclosure under Texas Rules of Civil Procedure 736 5. Their application was verified by Appellee’s counsel 6 and contained a copy of Appellants’ Note, which it claimed was a true and correct and showed that the Note had been endorsed by HOME CAPITAL INC. to THE PROVIDENT BANK.. 7 Neither the endorser nor the endorsee were included in the Application, nor were any documents attached showing any relationship with Appellee.

5. According to the Substitute Trustee’s Deed, 8 on April 03, 2012 presented by Appellee, the Property was allegedly sold to Appellee Household Finance Corp. III., for the credit bid of $238,049.90. The Substitute Trustee’s Deed alleges that, although the original mortgagee was HOME CAPITAL INC., the alleged Current Mortgagee was HOUSEHOLD FINANCE CORP. III, and the Mortgage Servicer was HSBC MORTGAGE SERVICES, INC.

5. Appellee’s attorney Hughes, Watters & Askanase, LLP sent a letter entitled Notice to Vacate Premises dated May 3, 2012 9 and filed a forcible detainer

4 RR Vol. 3, Pg. 11, Plaintiff’s Exhibit 1. 5 RR Vol. 3, Pg 50. 6 As required by Texas Rules of Civil Procedure 736.1(d)(6). 7 RR Vol. 3, Pg. 57. 8 RR Vol. 3 Pg. 18, Plaintiff’s Exhibit 2; CR Pg. 18. 9 RR Vol. 3, Pg. 48, Defendant’s Exhibit 2.

Appellants’ Brief Pg. 10 on August 20, 2012. Judgment was rendered by the Travis County Court at Law Number Two in favor of Appellants on December 20, 2012 10; Appellee appealed the decision to the Third Court of Appeals but dismissed their appeal on July 18, 2013. 11

6. Just over two months later, Appellee’s attorney Hughes, Watters & Askanase, LLP, sent another letter titled a Notice to Vacate Premises dated October 8, 2015 12; it was not delivered to Appellants until October 17, 2014.13 On the very same day, Appellee filed their current Complaint for Forcible Detainer and Original Petition14, well after the two year limitation 15 from April 3, 2014.

7. On November 6, 2014, the Honorable Justice of the Peace Judge

Glenn Bass rendered judgment of possession 16 for Appellee. Appellants appealed the judgment to County Court.

8. On March 31, 2015, the County Court awarded judgment for

Appellee17, despite the statute of limitations found in Tex. Civ. Prac. & Rem. Code

10 Cause # C-1-CV-12-009421, Household Finance Corp III v Femi Onabajo, et al, County Court at Law #2, Travis County, Texas. 11 Cause No. 03-13-00086-CV. 12 RR Vol. 3 Plaintiff’s Exhibits 3,4,and 5 Page 23, 25, and 27 of the Reporter’s Record; Page 26 through 30 of the Clerk’s record 13 RR Vol. 3, Pg. 30-31, Plaintiff’s Exhibit 5. 14 CR 55 Through 57. 15 Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a). 16 CR 10. 17 CR 98; RR Vol. 2, Pg. 47.

Appellants’ Brief Pg. 11 Ann. § 16.003 and the lack of jurisdiction because of an intertwined issue of title divesting the justice and county courts of jurisdiction.

ARGUMENT AND AUTHORITIES

ISSUE 1: The Trial Court lacked Jurisdiction.

Forcible detainer is a procedure to determine the right to immediate possession of real property when there is no unlawful entry and is intended to be a speedy, simple, and inexpensive procedure for obtaining possession without resorting to a suit on the title. Montenegro v. Wells Fargo Bank, N.A., No. 03-13-00123-CV, 2015 WL 3543055, at *1 (Tex. App. June 3, 2015) citing Williams v. Bank of New York Mellon, 315 S.W.3d 925, 926 (Tex.App.–Dallas 2010, no pet.); see also Tex.R. Civ. P. 510.3(e) (only issue before justice court in eviction cases is “right to actual possession and not title”). A forcible-detainer action will lie when a person in possession of real property refuses to surrender possession on demand if the person is a tenant at will or by sufferance. See Tex. Prop. Code § 24.002(a); Jaimes v. Federal Nat’l Mortg. Ass’n, No. 03–13–00290–CV, 2013 WL 7809741, at *1 (Tex.App.–Austin Dec. 4, 2013, no pet.); Rice v. Pinney, 51 S.W.3d 705, 709 (Tex.App.–Dallas 2001, no pet.).

The sole issue in a forcible-detainer suit is who has the right to immediate possession of the premises. Rice, 51 S.W.3d at 709. However, where the right to immediate possession necessarily requires resolution of a title dispute, the justice Appellants’ Brief Pg. 12 court has no jurisdiction to enter a judgment and may be enjoined from so doing. Haith v. Drake, 596 S.W.2d 194, 196 (Tex.Civ.App.–Houston [1st Dist.] 1980, writ ref’d n.r.e.). The justice courts and the county courts at law are only deprived of jurisdiction to adjudicate a forcible detainer action if the question of title is so intertwined with the issue of possession that possession may not be adjudicated without first determining title. A Plus Investments, Inc. v. Rushton, 2004 WL 868866, 2004 Tex. App. Lexis 3605 (Tex. App.—Ft. Worth 2004)(emphasis added). Standard of Review

The “standard of review” used by the appellate court to review a lack of jurisdiction is de novo. Tex. Dep't of Parks & Wildlife v.Miranda, 133 S.W.3d 217, 226 (Tex. 2004). The Court should construe the pleadings liberally in favor of the pleader and look to the pleader’s intent to determine whether the facts alleged affirmatively demonstrate the trial court’s jurisdiction to hear the cause. Subject matter jurisdiction is an issue that may be raised for the first time on appeal; it may not be waived by the parties. 18 Further, a party's standing or lack thereof, is a component of subject matter jurisdiction and it may be raised for the

18 Texas Employment Comm'n v. International Union of Elec., Radio and Mach.Workers, Local Union No. 782, 163 Tex. 135, 352 S.W.2d 252, 253 (1961); This court recently reiterated that axiom in Gorman v. Life Insurance Co., 811 S.W.2d 542, 547 (Tex.), cert. denied, 502 U.S. 824, 112 S.Ct. 88, 116 L.Ed.2d 60 (1991).

Appellants’ Brief Pg. 13 first time on appeal. 19

Heightened Scrutiny with Home Equity Loans

In this case, the documents giving rise to Appellee’s claim for forcible detainer a heightened scrutiny because they involve a home equity loan, more particularly Appellants’ Texas Home Equity Security Instrument.20 The Home Equity Security Instrument provides that “[i]f the Property is sold pursuant to this Paragraph ... [Appellants] shall immediately surrender possession ... to the purchaser at the sale ... [or][i]f possession is not surrendered ... shall be a tenant at sufferance ...” (emphasis added). This means a foreclosing entity must comply with the article XVI, section 50(a)(6)(D) of the Texas Constitution, which requires a court order for foreclosure. See TEX. CONST. art. XVI § 50(a)(6)(D).

The requirements of the Texas Constitution, which were also part of this home equity security instrument, were disregarded. See TEX. CONST. art. XVI § 50(a)(6)(D). In seeking a court order for foreclosure under Texas Rules of Civil Procedure 736, only the person or entity legally authorized to prosecute the foreclosure.21 Appellee’s Application for Order for Foreclosure 22, verified by Appellee’s counsel 23, contains a copy of Appellants’ Note, which it claims is true and correct, showing that the Note had been endorsed by HOME CAPITAL INC.

19 Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993). 20 RR Vol 3, Pg 58, Texas Home Equity Security Instrument. 21 Texas Rule of Civil Procedure 736.1(d)(1)(A).

Appellants’ Brief Pg. 14 to THE PROVIDENT BANK.. 24 Without more information, the only entity entitled to enforce the Note was THE PROVIDENT BANK. There are no documents that show that Appellants has any legal authority to enforce the note or seek foreclosure of the Property. Absent the right to foreclose, Appellee could not transfer ownership of the property. Without this authority, Appellee’s foreclosure and subsequent purchase of the Property through the Substitute Trustees Deed was void. The conflict regarding title, however, is apparent. A Plus Investments, Inc. v. Rushton

The analysis by the Ft. Worth court is instructive.25 In particular, the Court focused on the requirement in a security instrument granting a foreclosure right that the right to foreclose and a landlord-tenant relationship only arises if the property is sold pursuant to the terms of the agreement. Id., at 5-6.

The A Plus Investments, Inc. v. Rushton test applies, holding that only the party granted the right to foreclose may do so. In the Note and Deed of trust, the parties are parties given contingent powers, and the names on the Note and Deed of Trust and the party seeking to enforce same are not the same. The evidence introduced in the lower courts shows a failure to connect the dots and a complete disregard when the issue was raised by Appellants. This case exemplifies a

22 RR Vol. 3, Pg 50. 23 As required by Texas Rules of Civil Procedure 736.1(d)(6). 24 RR Vol. 3, Pg. 57.

Appellants’ Brief Pg. 15 situation when the issue of possession is extremely intertwined with the question of title. This fact situation deprives the lower court of jurisdiction because the documents inherently create a title dispute.

“But factual disputes may arise when the party seeking to foreclose is not the original mortgagee, as is most often the case these days. In such cases the foreclosing party must be able to trace its rights under the security instrument back to the original mortgagee. Leavings v. Mills, 175 S.W.3d 301, 310 (Tex. App. -Houston [1" Dist.] 2004, no pet.).”26 As is here the case, there is just no evidence of how Appellee acquired its rights. If the Substitute Trustees Deed is void then any interest Appellee had at the time of trial in the justice court would be void as well making Appellee lack any standing to proceed with its cause of action.

In order to enforce the note as a holder and move forward with foreclosure, a party who is not the original lender must prove "successive transfers of possession and endorsement establishing an "unbroken chain of title." Leavings, 175 S.W.3d at 310. Thus, with certain exceptions, possession of the note is typically required in order for a holder to enforce it. Millet v. JP Morgan Chase, N.A. , 20 12 WL 1029497 at *3 (W.D. Tex.2012).

25 A Plus Investments, Inc. v. Rushton, 2004 Tex. App. Lexis 3605 (Tex. App.— Ft. Worth 2004) 26 Miller v. Homecomings Financial, LLC, 881 F. Supp.2d 825 (S.D. Tex. 2012).

Appellants’ Brief Pg. 16

Assuming that the interest Appellee had at the time of the trial in the justice court was void, and therefore Appellee lacked standing to proceed in the Justice Court and thus the county court de novo hearing. Jurisdiction over forcible-detainer actions is expressly given to the justice court of the precinct where the property is located and, on appeal, to the county court for a trial de novo. See Tex. Prop.Code Ann. § 24.004; Ward v. Malone, 115 S.W.3d 267, 269 (Tex.App.-Corpus Christi 2003, pet. denied). The appellate jurisdiction of a statutory county court is confined to the jurisdictional limits of the justice court, and the county court has no jurisdiction over an appeal unless the justice court had jurisdiction. Ward, 115 S.W.3d at 269. Since the justice court clearly did not have jurisdiction and the Appellee did not have standing, the county court lacked jurisdiction to hear this matter.

ISSUE 2: Appellee’s failure to comply with Texas Property Code §24.005.

Appellee must strictly comply with Texas Property Code § 24.002 requirements that state the landlord must make a written demand for possession in compliance with § 24.005. See, e.g., Onion Creek Luxury Apartments v. Powell, No. 03-11-00008-CV, 2011 Tex. App. LEXIS 7261, **5-7 (Tex. App. – Austin, Aug. 31, 2011, no pet.) (mem. op.) (upholding trial court judgment of possession for tenant on ground that landlord failed to prove it had given the tenant the required notice to vacate prior to filing suit). If the plaintiff fails to Appellants’ Brief Pg. 17 give a three day notice to vacate prior to filing a forcible detainer case, the case must be dismissed because the law requires that the notice to vacate be given "before the landlord files a forcible detainer suit." See Tex. Prop. Code Ann. §24.005(a). If the landlord files suit before expiration of the time given to the tenant to vacate, the suit is premature and should be dismissed. Tex. Prop. Code Ann. §24.005(b) (West Supp. 2012).

If the other errors presented in this brief are disregarded and the Court presumes Appellee was entitled to seek its forcible detainer action against Appellants, then the Court must examine the filing date for Appellee’s Complaint for Forcible Detainer and Original Petition,27 Appellee’s Notice to Vacate Premises 28 and the date such notices were delivered to Appellants. 29 The date on which the notices are delivered is the date used to calculate the notice period for Texas Property Code 24.005(g). Appellee’s notices were not received by Appellants until October 17, 2014, which is the same day that Appellee filed their forcible detainer petition. Appellee violates Texas Property Code 24.005, the trial court erred in not dismissing the case.

ISSUE 3: Applying Texas Civil Practice and Remedies Code Section 16.003(a) the two-year statute of limitations.

27 CR Pg 55. 28 RR Vol. 2, Pg 12, RR Vol 3, Pg 30; CR Pg 92. 29 RR Vol 3, Pg 30.

Appellants’ Brief Pg. 18

The “standard of review” used by an appellate court to review a trial courts legal conclusions is de novo.30 Here the trial court decided issues regarding statute of limitations, therefore making a determination of law.

The statutory precedent to this question is Texas Civil Practice and Remedies Code §16.003(a):

“(a) Except as provided by Sections 16.010, 16.0031, and 16.0045, a person must bring suit for trespass for injury to the estate or to the property of another, conversion of personal property, taking or detaining the personal property of another, personal injury, forcible entry and detainer, and forcible detainer not later than two years after the day the cause of action accrues.”

Analysis of a statute is best done by using “…the basic principle that a statute should be read as a harmonious whole, with its separate parts being interpreted within their broader statutory content in a manner that further statutory purpose. 31 In this statute the statement of the Texas Legislature is a “clear statement of congressional intent…to negate a presumption which is incorrect.32 The Texas legislature limited the time in which a party-plaintiff could pursue a cause of action associated with real or personal property. This is consistent with each of the other enumerated causes in this section of the statute but the real outstanding question is the date on which the cause of action accrues.

30 However, we must apply a de novo standard of review to the trial court's legal conclusions because a trial court has no discretion in determining what the law is, which law governs, or how to apply the law. Okorafor v. Uncle Sam & Assocs., Inc., 295 S.W.3d 27, 38 (Tex. App.— Houston [1st Dist.] 2009, pet. denied). 31 CRS Report for Congress, Statutory Interpretation: General Principles and Recent Trends, August 31, 2008 Yule Kim Legislative Attorney American Law Division.

Appellants’ Brief Pg. 19 Accrual

When a cause of action accrues is a question of law, not fact. Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 202 (Tex.2011); Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001). “Causes of action accrue and statutes of limitations begin to run when facts come into existence that authorize a claimant to seek relief.” Id. Put another way, "a cause of action can generally be said to accrue when the wrongful act effects an injury." Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990); See Arnold v. Nat'l County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987) ("A cause of action for breach of the duty of good faith and fair dealing is stated when it is alleged that there is no reasonable basis for denial of a claim ...").

A purchasing party at a foreclosure sale acquires the right to possess the property. See Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 918 (Tex.2013). It would seem that Appellee’s cause of action for forcible detainer would accrue at the time they allegedly acquired their property interest from the foreclosure of the Property on April 3, 2012. In addition, Appellee’s ability to recover possession of the property through a forcible-detainer action arose, and therefore, the statute of limitations does not begin to run, when possession was first demanded and refused by Appellants. See Jones v. American

32 Id.

Appellants’ Brief Pg. 20 Fed. Bank, F.S.B., No. 05–91–00634–CV, 1992 WL 32961, at *2 (Tex.App.— Dallas 1992, writ dism’d w.o.j.) (not designated for publication). Using that date, Appellee’s cause of action arose on May 3, 2012 and the statute of limitations should have ended two years from that date.

The Justice and County courts receive training materials on this very subject by Fred Fuchs with the Texas Rio Grande Legal Aid clearly states: 33

K. Two-Year Statute of Limitations. a. A landlord must bring a suit for forcible detainer within two years of the day the cause of action accrues. Tex. Civ. Prac. & Rem. Code Ann. §16.003(a) (West Supp. 2012). Political subdivisions, (and this appears to include public housing authorities), however, are not barred by the two year limitations period. See Tex. Civ. Prac. & Rem. Code Ann. § 16.061(a) (West 2008). b. Each breach of the lease constitutes a separate and independent cause of action. See Williams v. Le Garage de La Paix, 562 S.W.2d 534, 535 (Tex. Civ. App. -- Houston [14th Dist.] 1978, writ ref'd n.r.e.) (each month’s rent under a lease constitutes a separate cause of action). Fuchs at pg 101 (emphasis added).

The distinction that, in a non-lease forcible detainer case, a new cause of action is created each new month an occupant is present was most likely created by paragraph b above, which specifically applies to lease cases only. In the case at bar, there was no breach of any lease; if there had been a lease agreement in place,

33 Fuchs, Fred, “Forcible Detainer Lawsuits: Issues and Traps for the Unwary,” Updated October 1, 2013, page 101. See http://tjcja.org/resources/evictions.

Appellants’ Brief Pg. 21 the argument that each month a new cause of action accrued each month Appellants refused to vacate would make more sense. That is not the case.

“[F]or purposes of application of a statute of limitations, a cause of action generally accrues when a wrongful act affects an injury, regardless of when the plaintiff learns of such injury...Generally, a cause of action for injury to real property accrues when the injury is committed.” 34 The general rule is that a cause of action accrues when a wrongful act effects an injury, regardless of when the plaintiff learns of such injuries. 35 “When an act invades a legally protected right or interest, the claim accrues when the act occurs.” The exceptions to this general rule 36 but those are not present in the case at bar. Continuing Tort, Inapplicable

A continuing tort involves wrongful conduct inflicted over a period of time that is repeated until desisted, and each day creates a separate cause of action. Id; Two Pesos, Inc. v. Gulf Ins. Co., 901 S.W.2d 495, 500 (Tex. App.-- Houston [14th Dist.] 1995, no writ) (citing Arquette v.Hancock , 656 S.W.2d 627, 629 (Tex. App.--San Antonio 1983, writ ref'd n.r.e.)). The Texas Supreme Court has "neither endorsed nor addressed" the continuing tort doctrine, see Creditwatch, Inc. v.

34 Jones v. Texaco, Inc., 945 F. Supp. 1037 – Dist. Court, SD (Texas 1996). 35 Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858 (Tex. App. 1997). 36 If there was fraud, fraudulent concealment, and the discovery rule cases in which the alleged wrongful act and resulting injury were inherently undiscoverable at the time they occurred. See

Appellants’ Brief Pg. 22 Jackson, 157 S.W.3d 814, 816 n.8 (Tex. 2005), Coinmach Corp. v. Aspenwood Apt. Corp., 417 S.W.3d 909 (Tex. 2013). The continuing tort doctrine is not the law in Texas, and even if it was, the doctrine would not apply to the facts of this case.

In determining whether there is a continuing tort, "care must be taken to distinguish between 1) repeated injury proximately caused by repetitive wrongful or tortuous acts and 2) continuing injury arising from one wrongful act. While the former evinces a continuing tort, the latter does not." Krohn v. Marcus Cable Assocs., L.P., 201 S.W.3d 876, 881 (Tex. App. 2006) (quoting Rogers, 162 S.W.3d at 290).

The doctrine does not apply to actions that are "complete in themselves;" rather, it applies to a continuing course of conduct, which, over time, causes injury. See Twyman v. Twyman, 790 S.W.2d 819, 821 (Tex.App.-Austin 1990) (applying the continuous tort doctrine when a husband repeatedly urged that his wife's participation in certain sexual conduct was necessary to save their marriage); Newton, 895 S.W.2d at 506. In the area of trademarks, a claim is actionable throughout the period of infringement, and is therefore a "continuous harm." See Two Pesos, Inc., 901 S.W.2d at 500; See also Roehrs v. Conesys, Inc.,2005 U.S. Dist. LEXIS 33295, 2005 WL 3454015(N.D. Tex.Dec. 14, 2005). Computer Assoc. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455-456 (Tex. 1996), Jim Arnold Appellants’ Brief Pg. 23

Even though several courts of appeals have held that a cause of action for a continuing tort does not accrue until the defendant's tortuous conduct ceases, those cases are different from this case. See Coinmach Corp. v. Aspenwood Apt. Corp., 2013 Tex. LEXIS 953 (Tex. 2013); First Gen. Rlty. Corp. v. Maryland Cas. Co., 981 S.W.2d 495, 501 (Tex.App.—Austin 1998, pet. denied) Krohn v. Marcus Cable Assocs., L.P., 201 S.W.3d 876, 880 (Tex. App.-Waco 2006, pet. denied); Rogers v. Ardella Veigel Inter Vivos Trust, 162 S.W.3d 281, 290 (Tex. App.-Amarillo 2005, pet. denied); W W Laubach Trust v. The Georgetown Corp., 80 S.W.3d 149, 159 (Tex. App.-Austin 2002, pet. denied); Tectonic Realty Inv. Co. y. CNA Lloyd's a/Texas Ins. Co. , 812 S.W.2d 647, 654 (Tex. App.--Dallas 1991, writ denied). All of these cases involve written term leases.

The holdover occupancy of a tenant under a lease contract is different. Each time a tenant under a lease fails to pay rent gives rise to an independent cause of action. Williams v. Garage Paix, Inc., 562 S.W.2d 534, 535 (TexCiv.App— Houston [14 Dist.] 1978). However, this case surrounds a tenant at will or at sufferance, including the occupant vis-à-vis the purchaser of a substitute trustee sale. There are no obligations or collaborations between the parties after the occupant has been given notice to vacate. The adversarial relationship over possession in this case stems from, arguably making Appellants a tenant at will or Corp. v. Bishop, 928 S.W.2d 761 (Tex. App. 1996). Appellants’ Brief Pg. 24 at sufferance, rather than by lease contract. The difference is dispositive. And the forcible detainer does not cease by the sending of a new notice to vacate.

Appellants’ possession did not cease and was continuous, and thus Appellants’ noncompliance allegedly inflicted injury on Appellee. Any future notices to vacate are superfluous and do not reset the clock for the statute of limitations. This illogical interpretation would result in Appellee controlling the running of the statute of limitations, which is an absurd result. Massad, Pham and Puentes Holdings

This Court used flawed reason in refusing to apply the two year statute of limitations because a forcible-detainer action accrues each time a person refuses to surrender possession of real property after a person entitled to possession delivers proper written notification to vacate.37 In Massad, this Court based its opinion on the Houston’s Court of Appeals opinion in Pham, 38 which in turn based its opinion on the El Paso Court of Appeals opinion Puentes.39 However, the Puentes case was not presented with the statute of limitations argument but discussed res judicata only and should not be applied to statutory interpretation of

37 Montenegro v. Wells Fargo Bank, N.A., No. 03-13-00123-CV, 2015 WL 3543055, at *3 (Tex. App.-Austin June 3, 2015, no pet.); citing Massaad v. Wells Fargo Bank, Nat’l Ass’n, No. 03-14-00202-CV, 2015 WL 410514, at *1 (Tex. App.-Austin Jan. 30, 2015, no pet.) (each refusal to surrender possession constitutes new forcible detainer); Pham, 449 S.W.3d at 235-36 (same) 38 Federal Home Loan Mortg. Corp. v. Pham., 449 S.W.3d 230, 235–36 (Tex.App.–Houston [14th Dist.] 2014, no pet.)

Appellants’ Brief Pg. 25 Texas Civil Practice and Remedies Code §16.003. Puentes is wrongly decided and contrary to well-established Texas law

Appellee filed their prior forcible detainer case, received an adverse judgment, and dismissed their appeal. Appellee should not be able to revive or create a new cause of action, which involves the same parties, same facts, and same legal issues, by sending a new notice to Appellant. By allowing this, the Court is completely disregarding the limitations period set out by statute and leads to absurd results. 40

ISSUE 4: Applying Res judicata.

Res judicata prevents parties and those in privity with them from relitigating a case that a competent tribunal has adjudicated to finality. Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 206 (Tex. 1999). The doctrine is intended to curb vexatious litigation and promoting judicial economy. See Ingersoll-Rand Co., 997 S.W.2d at 207. There is a long line of Texas cases that the cause of action accrues when the injury occurs, and that a decision on possession in forcible detainer context is res judicata between the parties. Reese v. Reese, 672 S.W.2d 1, 2 (Tex. Civ. App.—Waco 1984, no writ); Buttery v. Bush, 575 S.W.2d 144, 146 (Tex. Civ. App.—Tyler 1978, writ ref'd n.r.e.).

39 Puentes v. Fannie Mae, 350 S.W.3d 732, 739 (Tex. App. - El Paso 2011, pet. dism‘d) 40 See McKinney v. Blakenship, 282 S.W.2d 69,698 (Tex. 1955).

Appellants’ Brief Pg. 26 Single Action Rule

The single action rule, also known as the rule against splitting claims, provides a plaintiff one indivisible cause of action for all damages arising from a defendant's single breach of a legal duty. Pustejovsky v. Rapid-American Corp. v. Pustejovsky, 35 S.W.3d 643, 646 (Tex.2000), citing Gideon v. Johns-Manville Sales Corp., 76 1 F.2d 1129, 1136-37 (5th Cir. 1985). This equitable doctrine is a species of res judicata that prohibits splitting a cause of action and subsequently asserting claims that should have been litigated (or in the present case were litigated) in the first instance and prevents more than one suit growing out of the same subject-matter of litigation and "and our decisions from the first have steadily fostered this policy." Id. at 647.

If a suit involves the same issue (possession of the Property), the same property, same parties, and the same date of foreclosure sale, the Court cannot construe a new set of circumstances exists because a more current notice to vacate is issued. It is obvious the accrual of action began when the first notice to vacate issued Appellants refused to vacate the Property. It is at that point in time when the tenant at sufferance takes on the legal status of forcible detainer. Unless there is an agreement or some other written concession, the forcible detainer maintains that legal status until he is dispossessed, his dispossession is barred by limitations, or he reaches a state of repose. In this case, there is no new owner Appellants’ Brief Pg. 27 who issued a notice to vacate, it is the same party, Appellee, whose action accrued at the latest three days after May 3, 2012. Appellee’s prior lawsuit and the current lawsuit involve the exact same parties, the same issues, and same cause of action. The only thing that changed from each suit was the date on Appellee’s Notice to Vacate letter.

PRAYER

WHEREFORE, Appellants respectfully request:

1. That this Court reverse the trial court’s judgment and dismiss the case, or, in the alternative, 2. That this Court reverse the trial court's judgment and remand the case for further proceedings, or 3. That this Court reverse the trial court’s judgment in whole or in part and render the judgment that the trial court should have rendered, and 4. For such other and further relief as this Court deems just and proper.

Respectfully submitted,

By: /s/ Penny Y. Haye Penny Y. Haye State Bar No. 24030363 Law Office of Penny Haye 7703 North Lamar Blvd Suite 340 Austin, Texas 78752 Telephone: (512) 677-4293 Facsimile: (512) 777-4535 Penny haye@sbcglobal.net ATTORNEY FOR APPELLANTS

Appellants’ Brief Pg. 28

CERTIFICATE OF SERVICE I hereby certify that on this the 23rd day of November 2015, a true and correct copy of the foregoing was served upon counsel of record for Appellee via this Court’s online filing system to the following:

Sarah Robbins Hughs, Watters & Askanase, L.L.P. Three Water Center 333 Clay, 29th floor Houston, Texas 77002 ATTORNEY FOR APPELLEE

By: /s/ Penny Y. Haye Penny Y. Haye

CERTIFICATE OF COMPLIANCE Relying on the word count function in the word processing software used to produce this document, I certify that the number of words in this brief (excluding any caption, identity of parties and counsel, statement regarding oral argument, table of contents, index of authorities, statement of the case, statement of issues presented, statement of jurisdiction, statement of procedural history, signature, proof of service, certification, certificate of compliance, and appendix) is 5,739.

By: /s/ Penny Y. Haye Penny Y. Haye

Appellants’ Brief Pg. 29

APPENDIX

Appellants’ Brief Pg. 30