Tuesday, April 17, 2018

Texas Thicc Tips Series 7: Summary judgment response deadline under the 7-day notice rule: when is the response due?

(This is up on LinkedIn, kinda - link here, but might need to open in "incognito" or similar mode)

On this Facebook group for lawyers which recently kicked me out cuz my moniker is "similar" to another licensed attorney's name, people had the question come up - when is my response to a motion for summary judgment due? Is it "seven days before the day of the hearing" or "within seven days of the hearing"? Example: hearing is set March 27, 2010. Assume it's a Monday. So is the response due on March 20, 2010, or March 19, 2010 (in which case it'd fall on a Sunday, and you'd be entitled to the "weekend rule" in reverse, resulting in a true deadline of March 17, 2010).

The law seems to say it's the simpler version - where the response is due March 20, 2010.

A little summary judgment background

In the civil context, the Rules provide for a process known as summary judgment disposition, by which a party may move for a final judgment on any issue, including the underlying dispute between the parties. This summary judgment motion is appropriate where the defendant has "appeared or answered;" because otherwise, a party would move for default judgment. Tex. R. Civ. P. 166a(a).

Who can move for summary judgment? Any PARTY (i.e. plaintiff, cross-plaintiff, counter-plaintiff, declaratory movant, etc) who is also "seeking to recover upon a claim, counterclaim, cross-claim or to obtain a declaratory judgment." Id.

What can they move for? "All or any part" of the above-described vehicles for relief (claim, crossclaim, counter-claim, dec action).

When can they move? As said above, "at any time after the adverse party has appeared or answered." Id.

How do they move? "[W]ith or without supporting affidavits for summary judgment in his favor upon ALL or any part thereof." Id. In other words, if a claim has a lot of parts (like the elements of breach of contract typically is said comprise four parts - a valid contract, performance by plaintiff, breach by defendant, and damages caused to plaintiff by defendant's breach), you could "move for summary judgment" on each part. Typically, in the creditor-debtor relation, you will see a plaintiff move for summary judgment on the whole of their claim for relief, which is usually breach of contract, or account stated, or money had and received and the like.

When do they move? "[T]he motion [for summary judgment] and any supporting affidavits shall be filed and served at least twenty-one days before the time specified for hearing," [e]xcept on leave of court with notice to opposing counsel." Tex. R. Civ. P. 166a(c).

What is the defendant to do?

The person defending against a claim (defendant), counter-claim (counter-defendant), cross-claim (cross-defendant) or declaratory action (non-movant / defendant) is called the "non-movant" in a plaintiff's traditional motion for summary judgment. (Note, a defendant could move for summary judgment on his own defensive issues. Tex. R. Civ. P. 166a(b)). Okay, so what does the non-movant to a typical motion for summary judgment need to do?

One answer is nothing. You can wait and see if the movant's motion for summary judgment is supported at law under the requisites of Rule 166a. If it's not, you can show up to the summary judgment hearing and say "hey, judge, there's a defect in their motion; look, here, here and here." I see this a lot. However, it's bad practice, since the Supreme Court of Texas has said that "objections" to someone's motion for summary judgment need to be in writing: “Thus, both the reasons for the summary judgment and the objections to it must be in writing and before the trial judge at the hearing. . .  .To permit "issues" to be presented orally would encourage parties to request that a court reporter record summary judgment hearings, a practice neither necessary nor appropriate to the purposes of such a hearing. Richards v. Allen, 402 S.W.2d 158, 161(Tex. 1966); rule 166-A(c).” City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 677 (Tex. 1979) (emphasis mine).

However, a lot of judges give respondents a pass and pretend that they don't consider oral objections raised by pro se defendants who show up, but it is 100% very difficult to purge your brain of oral complaints.

A wise respondent will cogently put these defects into writing. Note: the response does not put your defensive issues forward - you are just responding to the motion. In other words, you'r parrying / rebuffing / defending, not asserting your own issues.

So when is a response due? Comparing the 7-day notice rule with the 21-day notice rule.

That's the question that started this post. Is the response due within seven days of the summary judgment hearing set by the plaintiff, or seven days before the summary judgment hearing?

The Courts will tell you that it is the latter. I don't support this reading, but it appears to be the law, so I am reporting on my reading of the law. I have not seen a "hard ruling" on this issue upon challenge, only general factual observations from lower courts. I have seen a "hard ruling" on this issue in the context of the movant's deadline, not the respondent's deadline, from the Supreme Court of Texas.



The Rule is TRCP 166a(c). This Rule says that anyone who is responding to a motion for summary judgment must "file and serve opposing affidavits or other written response" "not later than seven days prior to the day of [the summary judgment] hearing," "[e]xcept on leave of court."


In other words, unless a court grants you permission, a respondent to a motion for summary judgment must have filed with the court and served the other side its responsive materials "not later than seven days prior to the [summary judgment] hearing." What is seven days prior to a summary judgment hearing?

If you read the courts' opinions, most of them seem to think that "not later than seven days prior to" is synonymous with "within seven days of" the summary judgment hearing. Of requires that you include the day of the hearing as part of your due date calculation. Prior may not require that interpretation, however, if it means "before." Compare the language used in the movant's deadline: "at least twenty-one days before the time specified for hearing." The answer seems to turn on an interpretation of the same "21-day notice rule," a topic some others and myself have explored.  For grins, look at Rule 5, which says "on or before the day of" (ditto for Rule 99's requirement that the "on or before" language be used in a citation; same in Rule 143, which is more on point, since it uses a number of day for the reference of "on or before" - "on or before 20 days after notice") - seems like "on or before the day of" would have been used if it's what the Court meant when it promulgated its own Rules, no? 

The Supreme Court seems to have disposed of all of these issues with its opinion in Lewis v. Blake, a surprisingly clear opinion. This is a 21-day notice rule case (i.e. the period of time required before a movant for summary judgment could get their motion heard for relief), however, and not a 7-day notice case.

In Lewis, three key dates were kicked around. June 21, 1991: the date the motion for summary judgment was mailed; July 15, 1991 (the date summary judgment heard); July 16, 1991 (the date the Court ruled summary judgment could have properly been heard).

Let's flip back the calendar. Counting June 21, 1991 and July 15, 1991 is 24 days. Counting July 16, 1991 is 25 days. What happened here? Why wasn't July 15, 1991 okay?

In Lewis, the plaintiffs mailed the motion. Under the Rules, mailed motions are given a "3-day" extension under Rule 21a. So the 21-day deadline becomes a 24-day deadline. The Court carefully read the Rule and found: "The phrase 'at least' in Rule 166a(c) means that no fewer than 24 days must intervene between the day the motion is mailed and the day of hearing; in other words, the hearing cannot be held before the 25th day after the day the motion is mailed. That day in this case was July 16." Lewis, 876 S.W.2d 314, 315 (Tex. 1994). This result is dictated by Rule 4, which requires that you not count the first day of the relevant period, but DO count the last day of the relevant period. “Applying Rule 4 to Rule 166a(c), the day of service is not to be included in computing the minimum 21-day notice for hearing, and the day of hearing is. ” Id. at 316. Let's look at our dates. June 21, 1991 is the first day, so don't count it. June 22, 2001 is thus the "first day" for purposes of period calculation; 24 days thence ends July 16, 1991.

So the Court has explicitly interpreted the phrase "at least twenty-one days before the time specified for hearing" as applying to the date of the hearing, and counting the day of the hearing for purposes of the calculation. I.e., the Court reads "before" as "of" - to include the date of the hearing in its calculation.

Okay? "At least before the date of the hearing" = "at least within the day of the hearing."



This thinking appears to apply to response deadlines, unfortunately. While the language in the response 7-day notice rule is slightly different from that in the motion's 21-day notice rule, this calculation technique looks like the law:

“Because the hearing was set for March 27, 2006, AMPS's response needed to be filed by March 20, 2006, but it was not filed until March 23, 2006, only four days before the re-scheduled date of the hearing.” A.M.P.S. v. E-One New York, No. 01-06-00607-CV (Tex. App.--Houston [1st Dist.] Apr. 10, 2008). March 27, 2006 was a Monday; not counting it for purposes of Rule 4 and working backwards to determine the "seven days prior" deadline, you get the Monday previous, March 20, 2006. This type of thinking is endemic to courts considering this issue. You're probably safe in most jurisdictions if this is how you calculate your response deadline. I fight these calculations, however.

Why fight, Cottle?

Rule 166a(c)'s 21-day notice language is different from that of the 7-day notice rule; the 7-day notice rule dictates that the responsive materials be filed prior to the day of the hearing; thus, the appropriate date to calculate would obviously not include the day of the hearing, but would begin with the day immediately preceding the hearing, and work backwards from there; if by working backwards, the deadline fell on a weekend or holiday, you'd get a Rule 4 extension accordingly. This seems like the necessary result under a plain reading of the Rule. Don't get me wrong; I get the other view on this issue - "not later than" is used to modify the "seventh day . . . prior to the day of the hearing" clause, and thus is seen in comportment with the Lewis reading which includes the day of the hearing; counting the day of the hearing, and under Rule 4, you get a 7-day period before the day of the hearing; if you file a response within that timeframe, you're out of luck, and need "leave of court" to do so. If you file before that seventh day, you're timely. My reading depends on what is being modified by "prior" - if "prior to the day of the hearing" means you must count your seven-day calculation as prior to the hearing, then this is your "first day" for calculation purposes, and you work backwards from there. So in the A.M.P.S. case, the hearing being set on March 27, 2006 would mean that you work backwards from March 26, 2006, the day "prior to the day of the hearing" and count your 7-day window from there; it would end on March 19, 2006, a Sunday, and thus you'd get until the preceding Friday, March 17, 2006, to file. I admit this is an abnormal construction but it just seems like the required result. I've fought about it but never had a ruling on the subject. I feel the weight of law is against me on it. Any ideas on how to parse this peculiar phrasing? Comments welcome.

In Summary

Movant's burden: Provide notice of the motion for summary judgment "at least" 21 days "before the time specified for hearing." The Supreme Court of Texas has ruled that this must include the day of the hearing.

Respondent's burden: Provide notice of the response to the motion for summary judgment "not later than" 7 days "prior to the day of hearing." Courts (perhaps the Supreme Court, haven't found the opinion if so) have held that this must include the day of the hearing as well. I disagree with this reading but I do understand it. Have fun!

Texas Thicc Tips Series 6: Texas Homestead Lien Loan, Community Property, Garofolo, Wood and Greedy Heirs in Probate

(Up on LinkedIn here, might need "incognito" or similar mode)

This (not-as-brief as a Texas Thicc Tips post usually is) post and sixth entry into my Texas Thicc Tips posts will provide readers with a little insight into a potentially pretty common issue involving the problem of your parents dying without paying off the mortgage on the Texas homestead, and how people try to figure out ways to clear the title to the property and clean off any liens against it so they can make a nice, clean sale of the folks' old dump for a few bucks. The Texas Supreme Court passed a couple of laws in 2016 called Garofolo and Wood, which each dealt with different aspects of homestead lien laws under § 50(a) and § 50(c) of the Texas Constitution. Subsequently, the federal courts in Texas and some state courts have developed the law in the area, and there was a recent opinion by the Fifth Circuit on the subject, although the Texas Supreme Court reintroduced a huge amount of doubt into this conversation with its 2017 opinion in Kyle v. Strasburger.
I don't plan to dig into all the laws in this post but they're there for your edification to go off and read about. Luckily, the Supreme Court and the common law of property in Texas long ago dealt with some concerns of heirs to real estate which served as the parents' homestead, and for the most part, it does not vest the heirs to such property with much rights, unless the heirs themselves have a homestead interest in the property. Bear in mind while reading this that there is a huge difference between an interest and title in real property.
Edited - It should be noted that the common practice is not to lend out homestead loanswhen there are heirs because 100% of the interest in the property could not be encumbered by such a lien, making foreclosure difficult to achieve cleanly. I do not, however, think that if a lender gives out a less-than-100% homestead lien-supported loan the heirs magically get a right to seek to try to prohibit the lien or seek to invalidate the lien due to lack of their consent to such a lien. A life estate holder is free to encumber her interest in the homestead property, and unless the heirs are homestead-entitled to the property (as, for instance, by having a possessory interest in the property), they have no rights to attack the lien as being improperly extended under the Constitution. There is some law in Texas holding that a life estate holder cannot, for instance, encumber the remainder's interest with a tax lien, but they are free to encumber it during their life. Hall v. Fields, 17 S.W.82 (Tex. 1891). However, the rule of yore is that a life estate holder may not encumber more than their own interest at law. See Sargeant v. Sargeant, 1929, 118 Tex. 343, 15 S.W.2d 589, 594 (discussing life estate tenant's liability for current taxes which could not be properly charged to the heirs' interest, nor could ordinary repairs' expenses, but noting that the property was held not by the heirs as a homestead, but the life tenant). Under Texas law, in general, a spouse has a 50% interest in the property of the other spouse, and owns property descended to the spouse following the death of the other in an outright 50% interest, unless there are no heirs and/or the will provides otherwise for a greater interest.
There is no rule that an heir can never have a homestead interest. Heirs must be able to claim a homestead interest in the property under the law for such to adhere to them. See Hall (reciting the rule that a life estate tenant may encumber the homestead with a lien with minor children living in the homestead, although upon death of the life estate tenant the law would divert the homestead to the kids, and that under the laws in effect, adult children had no homestead interest). Thus, unless the heirs you're dealing with are minors (and I say this without reviewing the current statutes on the subject, so caveat there), or exercising a present possessory interest in the property, heirs may not claim the right to a homestead just by dint of being remaindermen to a will granting them a future interest in real estate. Some facts must be shown to particularize an heir's interest in the property as a homestead one. If it's just your mom living on the property after dad dies, and you're off chasing your dreams in Hollywood, you do not get to come back and claim "oh yeah that was my homestead." See Sanchez v. Telles, 960 S.W.2d 762, 777 (Tex. App.--El Paso 1997, writ denied). But guaranteed - some will sure try. After all, money's money.
Just the facts
In a hypothetical that came up the other day, the situation runs thusly:
Homeowner has two Heirs.
Homeowner gets married to Fake Mom.
Homeowner buys Home.
Fake Mom and Homeowner have a Daughter.
Homeowner makes a will out thusly: life estate to Fake Mom, remainder to my 3 Heirs, including Daughter.
Homeowner gives up the ghost.
Fake Mom decides to take out a loan, and secures the loan with Bank using the Home as collateral for the loan. In Texas, this is called a homestead loan, and the interest the Bank now holds is secured by a "homestead lien". The Bank does not even think to talk to any of the 3 kids about the loan.
Fake Mom dies. Fake Mom gives Daughter a life estate interest of her own in all of Fake Mom's estate.
Daughter is named executor of the Fake Mom's estate.
Bank sues Fake Mom's estate when the estate refuses to pony up the damn cashola for the loan.
Daughter panics and doubles down on not paying the Loan. Daughter just wants to live in the Home without paying off the Loan.
Heirs, including Daughter, decide they actually really like the Home, even though they haven't been by in 20 years. Heirs now assert to Bank that, in fact, the Bank is violating the Texas Constitution's terms on homestead lien contracts as found in § 50(a)(6)(Q)(xi) of article XVI of the Texas Constitution.
Heirs, like a bunch of other folks in the unfortunate position of defending a homestead foreclosure, have decided that they know exactly what the Supreme Court of Texas meant by its rulings in Garofolo (497 S.W.3d 474 (Tex. 2016)) and Wood (505 S.W.3d 542 (Tex. 2016)).
Heirs tell Bank that the homestead lien contract is void and unenforceable as a matter of law, and not only, in fact, can the Bank not foreclose its loan, it also has to disgorge all payments to Daughter and forfeit its expectation of receiving the principal and interest. As an afterthought, Heirs decide to sue the Law Firm the Bank assigned to collect on the Loan. Now the Law Firm has an FDCPA case breathing down its neck for abusing the poor Heirs who left Fake Mom and Homeowner to their own devices for the past 20 years, but have now discovered, in light of their recent deaths, how much they truly loved the old Home and all the memories it held for them. They love it so much they're doing a partition action to divvy up their respective interests in the Home, but damned if this pesky Bank isn't getting in the way with its claim for about a 1/3 of the value of the home based on the outstanding balance left on the Loan.
In the meantime, Bank has secured a Rule 736 order to foreclose on the Home due to nonpayment of the Loan.
Nothing like a little death and money to unite the bitterest of siblings.
Alright, so what can the Bank and Law Firm do?
The law
A mortgage lender is prohibited by the Texas Constitution from foreclosing on a homestead property securing a loan with it unless it has followed certain rules listed in the Constitution providing it with the right to do so; if it does not, the Supreme Court of Texas has stated that its lien is invalid. In 2003, the Texas Legislature made some amendments to the Constitution pursuant to the voters’ will which expressed that, in some cases, lenders like the Bank in the above hypo may “cure” defects in the homestead loan process. These cure provisions are now listed in article XVI, § 50(a)(6)(Q)(x) of the Texas Constitution. Importantly, as to § 50(a)(6)(Q)(x)(f), the Supreme Court said that for anydefect in the loan, a creditor could cure the defect by making a $1,000.00 payment and refinancing the loan on its original terms, if by doing so, it could remedy the problem posed by the defect. The Supreme Court, in essence, divided these constitutional requisites into two categories by which constitutional error could be introduced – origination errors and post-origination errors
In Garofolo, the borrower stumbled upon an amazing scheme: after borrowing money to buy a home and paying it all back, the lender did not give her a document which was required by the Constitution. Solution: sue the lender for all of the money she paid to be disgorged back to her and then go fuck themselves. In reliance, she pointed to § 50(a)(6)(Q)(vii), which apparently required a lender to “return the cancelled note and release of lien upon full payment of the note within 60 days after the borrower informs the lender or holder of the failure to comply.” The Court asked the borrower in that case if she had any proof of being damaged by this failure. She said no. The Supreme Court told her to take a hike. The reasoning behind the Court’s decision was that, despite an apparent inference by the Constitution that the forfeiture provision in § 50(a)(6)(Q)(x) was very clear, it didn’t actually mean all that – the term was just a contractual provision that had to be included in order for a lender to foreclose on a homestead (to make the loan “foreclosure-eligible,” in the Court’s word). Unless the borrower could prove she was damaged by the failure to, following a full loan history ending with repayment of all due, give her a piece of paper showing the loan was fully paid, she had no right to seek forfeiture as a contractual remedy. In other words, the Constitution did not provide homeowners with a constitutional cause of action, but did provide damages in the event of a breach of contract claim (which necessarily requires proof of damages to be successful). The Court decided that failure to attempt to “cure” by paying her $1,000 and the like would not even fix the problem in the first place (interestingly: this tells a creditor that despite including a term in its contract that provides a way out for the bank, such a term has no practical effect in event the borrower sued for breach of contract) and thus the bank had no duty to offer this cure. The paperwork error is a post-origination error (as in, it wasn’t included in the bundle of paperwork given at the time of the loan origination, because it necessarily had to follow completion of payback of the loan).
In the sister opinion to Garofolo, the Court in Wood decided that a loan which did not comply with the Constitution posed no valid lien on the homestead, and thus no limitations would run on a suit to quiet title on the property. The lien, being absolutely void, could not be enforced to avoid a quiet title action against the lienholder unless and until the lien was brought into compliance with the Constitution, as, for instance, curing the defect by making a $1,000.00 payment and offering to refinance the loan. The lender in Wood, like the lender in Garofolo, did not offer cure; however, in Wood, they definitely should have. This is because their error was an origination error (as in, the error was bundled with the paperwork on the loan from the start). They leant money which the debtor asserted included a closing fee in excess of the then-3% cap imposed by the Constitution (note, this is now a 2% cap). The lender in Wood doubled down, saying the debtor was outside the limitations period and could go bark up a tree.
The Court told the lender that, no, there was no limitations period because the lien was invalid. The loan was not bad but there was no limitations the lender could assert as a defense to the quiet title action brought by the borrower. Because the ender never “cured” the defect, the lien was never valid. The Court pointed out another case as a means of contrast – Doody – in which the lender did cure an origination error on its own accord, and the Court found that by doing so, “the lender has established the terms and conditions the lender must satisfy to make a lien valid.” The quiet-title action specifically attacks the lien validity. Because the lien was invalid, they could not defend against the quiet-title lawsuit by saying it was brought too late (years after the loan originated, when the error would have first occurred and thus provided the accrual for the cause of action on the quiet-title suit) – thus, the quiet-title action could proceed without concern for a limitations defense (and as I understand Wood, any defense).
Okay, so what about (Q)(xi)? You said (Q)(x) let you cure any defect in the loan.
The Constitution also has another “forfeiture provision” which follows (Q)(x), in (Q)(xi). The Court in Garofolo did use very broad language that a lender could cure any defect by coughing up cash and a refinancing, but the Court observed that for certain types of errors, a more pragmatic analysis is required. Hollow cures are meaningless – a problem is meant to be fixed. A lender can’t fix the problem of not giving a borrower a release of lien document following payment of a homestead loan except by giving the document over to the borrower! The Court thus declared that certain errors cannot be curd under the (Q)(x) cure provisions.
Indeed, there is plain language in (Q)(x) that facially limits the cures available to a lender to all errors except two kinds.
(Q)(x) contains the following “exception” proviso –
“[E]xcept 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 . . . if the lender or holder . . . fails to correct the failure to comply” by curing the defect. (emphasis mine)
(Q)(xi) thus seems very important to read. What’s it say?
[T]he 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[.] (emphasis mine)

So there are two types of errors in the loan-making process that are completely cut out of the ability to cure under (Q)(x) – (1) making a loan as a no-no person as better described in § 50(a)(6)(P) or (2) affixing the homestead lien without some kind of written evidence that “each owner and each owner’s spouse” approved the loan, or some evidence that you laterfix the problem by obtaining consent. (Technically, this provision has its own cure as to problem (2), but none as to problem (1) – you can never change the fact that you were a prohibited lender under § 50(a)(6)(P)).

The Supreme Court expressed basically zero concern about the problem of a non-owner forging some evidence of consent as to an owner or owner’s spouse in Kyle v. Strasburger. The lender complained that there’s no way they could ever cure the defect and thus never foreclose on their lien and while the Supreme Court did not rule on the subject, they basically said “Yeah you’re right.” 

Interestingly, it seems that since it’s an “incurable” violation and the Court held in Garofolothat a forfeiture remedy, at least under (Q)(x) is only available if a plaintiff can prove breach of contract (i.e. a violation of the constitutional terms and conditions imported into the home loan) with actual damages, then a (Q)(xi)-violative loan could get stuck in limbo: a lender can never cure it without the consent of the owner and owner’s spouse, and if an owner and owner’s spouse die, then the heirs might be able to sue on behalf of the lack of consent, but proving damages as heirs could be very difficult. But I can think of a simple problem for a lender where exposure to forfeiture would be very likely – owner’s spouse doesn’t consent to loan, but lender makes loan to owner anyway; owner dies, and lender forecloses on property, to dismay of the owner’s spouse, who sues for various causes of action resulting in money damages. Now the owner’s spouse can sue for a disgorgement since she didn’t want the damn loan in the first place. I 100% bet though that a guaranteed defense to such a lawsuit would be if the owner’s spouse benefited from use of the property – but if it’s a separated spouse who never signs the divorce papers? Well, then, buckle up big boys, it’s gonna be a rough ride.

Lenders’ lobbies, get on your Congressman’s ass!

Alright so what’s all this about the hypo involving heirs?

Oh, yeah – so remember how the Heirs are claiming their rights were violated under (Q)(xi)? Well, that’s because they mean that they were owners of the property which served as Fake Mom’s homestead, and thus, because Bank never secured their written consent, and since they’ll never consent to the loan, the Bank is fucked! Since Fake Mom took out the loan and made payments until she died, and Daughter inherited Fake Mom’s estate, including her property interests, then Daughter is now entitled to the reimbursement of everything Fake Mom paid to the Bank. The logic is: the Heirs had to sign off on the paperwork for the Loan. Everyone did – Fake Mom and Heirs (including Daughter), since Homeowner was dead and had left an “interest” in the Home to them under the terms of his will. (Let's leave aside standing concerns until later - seems that no heir without an interest in disgorgement could ask for the remedy to the only heir to such an interest, since no heir made payments on the Loan, and Daughter did not either - she just inherited Fake Mom's interest apparently subject to the lien).

However, Texas has long held that a life estate interest holder in property may “squander” the property, such that nothing could be left over for heirs at law to take when the life estate holder croaks. The interest of a life estate holder is called a possessory interest and that of the heirs a remainder or future or executory interest (i.e., an heir has no rights in the property of the estate unless and until the life estate holder dies, as in the facts established above). The Heirs in the hypo are just saying that their interests under the will made them owners of the property, such that their consent was needed for the Bank to give the Loan to Fake Mom, and Fake Mom fucked them over by taking a loan out on property they had an interest in protecting.

Too bad, suckers. Texas says otherwise. Laster v. First Huntsville Properties Co., 826 S.W.2d 125, 130 (Tex. 1992) (“one who holds a future interest in property with no present right to possession is not entitled to homestead protection in that property”). Under the law, the Heirs have bupkiss to their name. And why’s that? Because there’s no guarantee that by the time the life estate holder is dead there’s shit to your name. This is Property Law 101. See In re Townley Bypass, 252 S.W.3d 715, 718 (Tex. App.–Texarkana 2008) (observing that trust beneficiary’s interest “might or might not ripen into the right of possession of anything at all, as the corpus would have been consumed by the trust for the mother’s benefit before he had any right to actually receive under the trust terms” and also observing that “the character of a remainder as vested is not affected by an uncertainty as to the question of a quantum which will be received by the remainderman when he or she becomes entitled to possession”), (citing Bradford v. Rain, 562 S.W.2d 514, 518 (Tex.Civ.App.–Texarkana 1978, no writ)).

And just recently, the Fifth Circuit in a (Q)(xi) case very peculiarly ruled that a debtor who brought a claim for recovery under (Q)(xi) for a (Q)(ix) violation was under a 4-year statute of limitations to sue for breach of contract (and thus avail themselves of the potential claim to the forfeiture remedy). Failure to cure after a notice under the Constitution triggered a 4-year right to the forfeiture claim, as the violation provided an independent cause of action to seek such remedy. By not bringing suit within four years, the debtor lost the chance to get the forfeiture remedy. The case is Alexander v. Wells Fargo Bank, and I have a big problem with it, namely: the Court said the big issue with regard to forfeiture remedy was to be decided under (Q)(xi), yet the facts concerned no (Q)(xi) violation (which as described above, include being an unqualified homestead lender and not securing each owner and each owner’s spouse’s written consent to the homestead lien) but rather concerned a (Q)(ix) violation – requiring owner and lender to sign a written acknowledgment as to fair market value of the homestead property! The Court never discusses (Q)(xi) issues or the language of (Q)(xi) at all, and in fact discusses all law cited and the liability of the lender under (Q)(x) and the Court’s holding in Garofolo, a (Q)(x) case. What the hell happened? I even went onto the Fifth Circuit’s website and looked at the opinion. My deep hope is that the Fifth Circuit means its analysis under (Q)(x) as applying to a (Q)(xi) one, but its opinion and its reliance on Garofolo suggest the limits of this reliance: Garofolo concerned meaningful cure attempts and not empty bullshit cures, like throwing money at people and refinancing a loan that was already paid off. There is some credence for the idea that a lender could at least attempt to cure the lack of a signature upon a refinancing offer, but again, (Q)(xi) already contemplates its own cure as to this issue – the missing signature is simply provided. Could a (Q)(x) refi cure really fix this? Maybe. The language in Doody is extremely broad, but it should be noted that Doody was decided pre-2003 amendment, separating the cure provisions in (Q)(x) out away from (Q)(xi). The Doody language previously held that “all the lender’s obligations under the ‘extension of credit’” could be cured under previous “section 50(a)(6)(Q)(x).” Under the old (Q)(x), there is no “except as otherwise provided for” in (Q)(xi) language. This is, to me, a partial abrogation of the holding in Doody to the extent that Doody  was decided in reliance on the universal cure applicability under old (Q)(x). But Garofolo, too, relied on Doody, though only for a more limited purpose – to show that a lender did not need to wait on the borrower’s notification of error to cure the defect. I would put a lot of money that a (Q)(xi) suit will result in many per curiam decisions to the extent that a lender relies on (Q)(x) holdings to the contrary. The Fifth Circuit’s opinion in Alexander is, to me, a clear aberration if not a flub by the typist’s office. I will review the underlying paperwork on this, however. Here’s the opinion - http://www.ca5.uscourts.gov/opinions/pub/16/16-20500-CV0.pdf. It’s right there, “(Q)(xi)”, page 6, Section III. Aside from the one time mentioned there, (Q)(xi) is mentioned only one more time, as part of a quote excerpt from (Q)(x)! (Q)(x), meanwhile, is described and discussed throughout the opinion.


UPDATE regarding the Alexander opinion: The Alexander Appellant’s brief is mute as to (Q)(xi) and in fact expressly proposes relief sought is under (Q)(x). I am chalking Alexander up to scrivener’s error and will notify court of such. It is a very dangerous opinion otherwise.


Bank’s solutions

So now the Heirs are trying to hold the Bank’s toes to the fire. The Bank’s foreclosure on the Home is being interfered with by the Heirs’ lawsuit (since they claim that under Rule 736.11, they’re entitled to stop the foreclosure under Rule 736 by filing a lawsuit).

What to do, what to do?

Tell the Heirs that under Rule 736, they are not, a Respondent under Rule 736.11 who could file a suit to stop the foreclosure order under Rule 736. This is because Rule 736.1 defines a “Respondent” and the definition in that Rule does not include anyone who is not in the “records of the holder or servicer of the loan agreement, contract, or lien sought to be foreclosed . . . obligated to pay.”

Remember, the Bank’s concern is with the estate of Fake Mom, not the Heirs. They have only asked Daughter to make payments as a representative of the estate of Fake Mom. They do not want Daughter to pay in her own capacity as a person.

That’s the first step. The Heirs have no right to interfere with a 736 foreclosure in this way.

The obvious response by the Heirs is that the Loan imposed an invalid lien, and could never be foreclosed, and they have a property interest in the Home that should be asserted to stop the foreclosure. I’m iffy on this position, if it’s found by the court that the lien was invalid. In my opinion, the Heirs could sue for a wrongful foreclosure or conversion or some similar action to compensate them for the wrongdoing by the Bank in the loan process and the foreclosure process.

But the Heirs are not entitled to sue to block the foreclosure for a (Q)(xi) violation, much less to sue for breach as a means of seeking the forfeiture remedy under (Q)(xi) as a term of the homestead contract (remember Garofolo requires a breach of contract suit proving actual damages to bring a (Q)(x) forfeiture remedy into play). Why? The Heirs are not owners under Texas law! If they’re not owners, and never could be owners until the life estate holder (Fake Mom) died, then their consent was not needed when the Loan was taken out with Fake Mom!

There’s a minor exception in law but it concerns heirs who had a possessory interest in the property and retroactively assert a homestead interest once the intervening estate (Fake Mom in this case) has died.

In my opinion, the Bank is free to foreclose and is indeed free to counter-sue the Heirs for fucking around with the court system like this.

As to the law firm hired by the Bank to collect, since there was no wrong in the Bank’s foreclosure, there are no inherent legal violations in seeking to foreclose the Home as well. FDCPA claims can take a hike (as to the mere act of collecting on such a debt in this fashion).



Sunday, March 18, 2018

TRCP 109, 114, 244: The Law of Publication in Texas (FDCPA / creditor focus)

https://www.linkedin.com/post/edit/trcp-109-114-244-law-publication-texas-fdcpa-creditor-j-cottle


This post will discuss serving debtor-defendants via publication, and some of the common issues plaintiff-creditors will encounter, especially with tying up loose ends, securing a default judgment following publication service, and dealing with ad litem fees.

The differences between publication and other substitute service

In Texas, if you can't find a defendant, you're allowed to serve them by a method called publication. This is an alternative to both personal service (Rule 106(a)) and substitute service (Rule 106(b)).

In every brand new suit, the Rules dictate that "unless the citation or an order of the court otherwise directs, the citation shall be served by any person authorized by Rule 103" (the process server, e.g.) "by (1) delivering to the defendant, in person, a true copy of the citation" etc etc "or (2) mailing to the defendant by registered or certified mail, return receipt requested, a true copy of the citation" etc etc. Tex. R. Civ. P. 106(a)(1)-(2).

The "substitute service" method is described in 106(b): "Upon motion supported by affidavit stating the location of the defendant's usual place of business or usual place of abode or other place where the defendant can probably be found and stating specifically the facts showing that service has been attempted under either [106](a)(1) or [106](a)(2) at the location named in such affidavit but has not been successful," then the court may authorize "substitute service" in a particular way (leaving with anyone over 16 at that location) or "in any other manner that the affidavit or other evidence before the court shows will be reasonably effective" to give notice. Tex. R. Civ. P. 106(b)(1)-(2).

You'll note that the phrase "any other manner" is incredibly broad, and may swallow up other techniques explicitly contemplated by the Rules. I haven't read any case law on the subject, but don't put it beyond some judge to arrogate that to herself. You'll also note that to get substitute service, the Rule requires an "affidavit" but also contemplates "other evidence" may be introduced. My servers sometimes attach vehicle reports and pictures of the address, and I'll sometimes attach social media and the like to show that a result is likely to be a good abode or whatnot.

Note that Rule 106 is part of "Section 5" of the Rules, the first Rule of which is Rule 99, which governs the citation's form. In the context of publication, I think it is important to see how Rule 99 describes the general form of a civil citation, and how Rule 109 concerns a separate type of citation. Rule 99, for instance, says that a citation will issue "upon the filing of the petition" and that "the clerk, when requested, shall forthwith issue a citation and deliver the citation as directed by the requesting party." Tex. R. Civ. P. 99(a). Such citations must notify the defendant that they have to "file a written answer with the clerk who issued this citation by 10:00 a.m. on the Monday next following the expiration of twenty days after you were served with this citation and petition," or else a default judgment may be taken against them. Id. at R. 99(d).

Rule 109 says that if "a party to a suit, his agent or attorney, shall make oath that [a] the residence of any party defendant is unknown to" them, "or that [b] such defendant is a transient person, and that after due diligence such party and the affiant have been unable to locate the whereabouts of such defendant, or [c] that such defendant is absent from or is nonresident of the State [of Texas], and that the party applying for the citation has attempted to obtain personal service of nonresident notice as provided for in Rule 108, but has been unable to do so," then it shall be the duty of the clerk to "issue citation . . . for service by publication." After this, "before granting any judgment on such service," it is incumbent on the court "trying the case to inquire into the sufficiency of the diligence exercised in [a] attempting to ascertain the residence or [b] whereabouts of the defendant or [c] to obtain service of nonresident notice." Id. at R. 109.

So is that citation to issue the same as that defined in Rule 99? No. Scroll down to Rule 114: "Where citation by publication is authorized . . ., the citation shall contain the requisites prescribed by Rules 15 and 99, in so far as they are not inconsistent herewith, provided that no copy of the plaintiff's petition shall accompany this citation, and the citation shall be styled "The State of Texas" and shall be directed to the defendant . . . by name, if their names are known . . . . The citation shall contain the names of the parties, a brief statement of the nature of the suit . . . , [and] [i]f issued from the district or county court, the citation shall command such parties to appear and answer at or before 10 o'clock a.m. of the first Monday after the expiration of 42 days from the date of issuance thereof, specifying the day of the week, the day of the month, and the time of day the defendant is required to answer." [So like, 'no later than 10:00 a.m. of Monday, the 1st of April.'] Tex. R. Civ. P. 114. A practitioner's tip: monitor the hell out of the citations for publication. Clerks frequently make errors in computation and if you go and pay a publisher's fee on this, you are screwed. The default judgment is easy to set aside because of the errors.

A citation by publication is to be "served by the sheriff or any constable of any county . . . or by the clerk of the court in which the case is presiding, by having the same published once each week for four (4) consecutive weeks, the first publication to be at least twenty-eight (28) days before the return day of the citation." Tex. R. Civ. P. 116. The source of the publication is described in the rest of Rule 116. The terms of the return are governed by Rule 117, and require that the officer (either the cop or the clerk from Rule 116) "shall show how and when the citation was executed, specifying the dates of such publication, be signed by him officially and shall be accompanied by a printed copy of such publication." This is separate from the publisher's affidavit which commonly is filed in lieu of such a return. This is a trap for the unwary. Rule 117 return requisites supplants Rule 107 for publication (my theory), just as Rule 114 explicitly supplants Rule 99's citation requisites. Due to the technical nature of publication of citation, I am unconvinced by citations to traditional service case law as pertinent to publication arguments, but be prepared to see such: one interesting case cited against me in collection cases was Ins. Co. of State of Pa. v. Lejeune, 297 S.W.3d 254, 256 (Tex. 2009) (per curiam) (return failed to show hour of receipt of citation per Rule 105, and thus default judgment had to be set aside on challenge showing failure in record of service). Note the requisite to "endorse [on the process to be served] the day and hour on which he received it" is mimicked in Rule 107, which requires that the return reflect "the date and time the process was received for service."  Tex. R. Civ. P. 107(b)(4) - there is a distinction between process and the return (see Rule 16, reiterating the need to "endorse on all process and precepts coming to his hand the day and hour on which he received them, the manner in which he executed them, and the time and place the process was served"). Process, meanwhile, is defined as "including citation and other notices, writs, orders, and other papers issued by the court."  Id. at R. 103. As an academic note, the Rules apparently require, therefore, that in all traditional suits, not only the citation be endorsed to reflect all the data in a return, but the return be filed as a separate documentation of the citation. I rarely see this. Do you?

I have seen some attorneys in publication cases get too horny for a default judgment. They file the motion for default judgment as soon as the deadline to answer has passed (for those defending publication cases, why cite to Rule 99 and the "normal" return Rules if you don't want to also support a traditional motion for default judgment? Hmm. Beggars, choosers.). This is wrong. Rule 244 says that as soon as the answer deadline has passed without answer or appearance, "the court shall appoint an attorney to defend the suit in behalf of the defendant, and judgment shall be rendered as in other cases, but in every such case a statement of the evidence, approved and signed by the judge, shall be filed with the papers of the cause as a part of the record thereof. The court shall allow such attorney a reasonable fee for his services, to be taxed as part of the costs."  Tex. R. Civ. P. 244.  What happens is a return is on file indicating service, a motion for default judgment is filed, and the clerk just forwards for signature on the default judgment. The judge signs an ineffective judgment, and if you rely on it, then it's simply to set aside by bill of review or by direct appeal, the logic being that personal jurisdiction attains through proper service, and the propriety of the judgment alone is subject to attack.  See, e.g., Crosby v. Bonnowsky, 69 S.W. 212 (Tex. Civ. App. 1902).

What are the papers of the cause?

In short, "papers of the cause" is another term for the record of the case - something you file into the case record. The term is used in Rule 119 (the waiver of service rule) which requires that a waiver of service "by written memorandum signed by [the defendant], . . . after suit is brought, sworn to before a proper officer other than an attorney in the case, [be] . . . filed among the papers of the cause."  Tex. R. Civ. P. 119. The term is also used in Rule 255, where the parties may, by "written consent . . . filed with the papers of the cause" request an order of the court which must "entered on the minutes" to transfer the case for trial to another county court with jurisdiction. Id. at R. 255.

Thus, in a publication suit, someone must be appointed to represent the in absentia interests of a defendant served by publication. Before judgment may issue (remember, on top of the due diligence inquiry the court is required to make into the justification for service by publication), something called a "statement of the evidence" must be "approved and signed" by the judge and entered onto the public record of the case. Let's do a somewhat lengthy discussion about what to expect when an ad litem is appointed in a typical creditor-debtor suit where publication by service is established. It is interesting to me, because a) ad litems are supposed to do a hell of a lot more work than the typical one does, and b) the payment of fees to an ad litem out of a plaintiff's pocket when the identity of the defendant is known is rife with challengeable issues.

Ad litem duty to defend the suit - "money for nothing and chicks for free"

This attorney ad litem must defend the suit: "the court shall appoint an attorney to defend the suit in behalf of the defendant." Tex. R. Civ. P. 244. However, I have never seen an attorney ad litem "defend" the suit.  In fact, I have seen attorneys ad litem stridently refuse to defend the suit because of case law which says that by appearing in the case, the defendant waives his right to argue about defects in service as a means of setting aside the judgment, should he one day get wise to the existence of a lawsuit in which he was served by publication. See Phillips v. Dallas Cnty. Child Servs. Unit, 197 S.W.3d 862, 865 (Tex. App.--Dallas 2006) (citing Tex. R. Civ. P. 121) (ad litem made did not withdraw answer, held to constitute waiver of service defects). This is such a commonplace observation, that it's dismissed in a mere citation by the Texas Supreme Court in Burrow v. Arce, 997 S.W.2d 229, 246 (Tex. 1999).

Obviously, if an ad litem wanted to be zealous for his in absentia defendant, he'd argue about service defects by making a special appearance under Rule 120a. Number of ad litems who have done this? Zero. Number of ad litems I've seen just walk up to a court and ask for an easy grand or two to not fight my case? Five or so, out of five or so cases. Easy money in the ad litem world, baby. This is pretty funny in light of the observation that Rule 244 appears to entitle attorneys to a fee for their "service," and not just for being appointed: "The rule also requires that the attorney ad litem be paid a reasonable fee for her services, which is to be taxed as part of the costs of the  suit." In re Geico, No. 14-06-00423-CV (Tex. App.--Houston [14th Dist.] Dec. 7, 2006) (citing Tex. R. Civ. P. 244 and Rhodes v. Cahill, 802 S.W.2d 643, 647 (Tex. 1990)).

Yet, the current scheme in practice across Texas is more of a shakedown - you want your default judgment? Well, prepare to pay a liquidated fee to some guy for being on a list of attorneys managed by the court. Can you imagine the cost spike for a publication suit if ad litems actually defended the suits and litigated as vigilantly as someone whose credit score and payment obligations were on the line? What ad litems claim they do in such cases is "review" the materials I send them, then do a "skip trace" on their end and bill for that. Nice.

Most of these ad litems just send an invoice over based on the order awarding the fees to your client's office right after the default judgment is awarded. However, payment of "costs of court" in a publication suit must be done through execution on a defendant's assets.  See Tex. R. Civ. P. 149 (providing that if a party does not pay costs adjudged against it, "the clerk or justice of the court in which the suit was determined may issue execution, accompanied by an itemized bill of costs, against such party to be levied and collected as in other cases," provided that "no execution shall issue in any case for costs until after judgment rendered").  In short, the same way that a plaintiff creditor would seek payment out of assets is the same way an ad litem must seek payment.  However, see Rule 141, which provides for the award of costs to some other party other than the successful party to a suit, provided that "good cause" for such is "stated on the record."  Tex. R. Civ. P. 141.

So under the clear language of the Rule, the ad litem for a publication defendant is supposed to defend the suit - theoretically, this implies discovery and all that bullshit. I've yet to see it happen. Any survivors of a real ad litem fight in a typical civil suit featuring publication, feel free to chime in.

"The attorney ad litem must exhaust all remedies available to his client and, if necessary, represent his client's interest on appeal." Cahill v. Lyda, 826 S.W.2d 932, 933 (Tex. 1992) (citing Executors of the Estate of Tartt v. Harpold, 531 S.W.2d 696, 698 (Tex. Civ. App.--Houston [14th Dist.] 1975, writ ref'd n.r.e.)).  Sounds like ad litems shouldn't just roll over if they want to get paid, and if it's judgment day, a contentious plaintiff should fight the fee to be paid out. The Cahill opinion applied the Rhodes' logic of ensuring effective representation by making ad litem fees certain instead of contingent at the appellate level; in Lyda, the ad litem was fighting for an award of fees whether he won or lost on appeal - note that the logic only concerned the absolute nature of contingency, not the appropriateness of doing work when the parties' identities were known and thus could be shifted over to the ad litems' clients for execution, instead of falling square in a plaintiff's lap. Note that Lyda dealt, again, with "unknown heirs" - thus the logic of Rhodes is untouched as applying only to those cases where the identities of the clients of the ad litem are, in fact, unknown. (See discussion on Slaughter below.)

The Tartt case is interesting. In it, the court, in discussing Rule 244 in an estate dispute, observed that an ad litem must "defend the rights of his involuntary client with the same vigor and astuteness he would employ in the defense of clients who had expressly employed him for such purpose." Tartt, 531 S.W.2d at 698 (quoting Madero v. Calzado, 281 S.W. 328 (Tex.Civ.App., San Antonio 1926, writ dism'd)).  The court observed that "costs of suit may be assessed from time to time as the suit progresses" and thus an ad litem's fee may also "be assessed and paid from time to time during the litigation." Id. The payment of the ad litem's fee in the estate dispute case could not be made contingent, as, for instance, by tacking it to the recovery of his unknown clients' shares from an estate's distribution scheme. Because of that, the appeals court upheld the trial court's order requiring that the estate pay out of its corpus the expenses and fees of the ad litem. Id. at 699.  Again, this case deals with unknown heirs, and not with known defendants.

Plaintiffs can challenge ad litem fees to the extent that their payment is sought on a premature basis (i.e. before final judgment and a determination of the successful party is made), and where they assert that the evidence establishing the reasonableness of the fee is insufficient. See In re Geico, No. 14-06-00423-CV (dispute over paying ad litem fees when defendant was located and served personally following service by publication, and plaintiff sought to terminate the ad litem); see also Garza v. Slaughter, 331 S.W.3d 43, 49 (Tex. App. Houston [1st Dist.] 2011) (observing that successful plaintiffs "are not helpless financiers of the ad litem's services; they may present evidence attacking the reasonableness of the ad litem's requested services and fees.").

"Oh, but Cottle," I hear you ad litems murmuring, "the Court already said that under Rhodes we're entitled to payment in publication suits from the plaintiffs, so give us our pound of flesh."

Wait, wily ones. Rhodes dealt with service on "defendants unknown," and the Court's observations about the obstacles in recovering payment for an ad litem's services were thus limited to those scenarios; in cases of civil suits with known defendants, these objections are inappropriate (but you'll make them anyway):

"As a result of citation by publication, many persons came into court, employed by their own attorney and proved they were heirs of Elisha Rhodes. The trial court appointed an attorney ad litem to represent the remainder of the defendants cited by publication."  Rhodes, 802 S.W.2d at 644.  "An attorney ad litem cannot as a practical matter recover his fees from his unknown clients." Id. at 647. "Under the court of appeals' analysis, appointed attorneys representing unknown parties would serve without compensation unless they were successful on appeal. Forcing attorneys to accept court appointment for a contingent representation, would surely frustrate the effective representation of unknown parties. For example, a plaintiff utilizing service of citation by publication over unknown defendants cannot prosecute his or her lawsuit until the court appoints an attorney ad litem for the unknown parties. . . . Therefore, 'good cause' for assessing such costs against successful parties under Texas Rule of Civil Procedure 141 . . . is ordinarily shown in such circumstances." Id.

So, Rhodes on its face does not apply the typical creditor-debtor suit. However, Rhodes has been cited in at least one cases where the parties' identities were known but their whereabouts were not. Garza v. Slaughter, 331 S.W.3d at 43. In Slaughter, a lady inherited some property, sued to quiet title, served the appellants by publication, and tried to finagle a deal with the ad litem thereafter. The judgment determined a certain fee was appropriate for the ad litem, and each side fought about it; the final order fixing the fee "did not specify which party was responsible for paying costs."  Id. at 44. The ad litem's appeal, beyond attempting to determine who should pay him a fee and whether the fee amount was appropriate, did not entitle him to more fees because "the ad litem must represent the interests of his client on appeal - not solely his own interests." Id. at 49 (citing Harris Cnty. Children's Protective Servs. v. Olvera, 77 S.W.3d 336, 342 (Tex. App. Houston [14th Dist.] 2002, no pet.)). Because the ad litem was just bitching about how much fees he was entitled to, he was just trying "to increase the amount of attorney's fees and to persuade this [appellate] court to assess fees as costs to be paid by [plaintiff and thus did] . . . not constitute representation of appellants' interests." Id.

Slaughter is a weird case, and to me was not rightly decided or litigated; the decision notes that the plaintiff untimely noticed appeal so a lot of potential issues to clean up were not put before the appeals court. The question of execution on the real estate as a means of paying the ad litem should have been front and center, as well as putting the matter of compensating the ad litem into record. After all, a plaintiff-creditor seeking recovery against a known debtor is going to have to rely on abstracts of judgment and writs of execution, garnishment, etc to recover payment unless a private agreement for repayment is reached, and in cases where the location is unknown, setting up a repayment agreement is unlikely. Furthermore, securing a judgment against the known defendants whose whereabouts are unknown is no guarantee of compensation to the plaintiff. Assume that a bum was personally served at a shelter, although as a transient he would have been susceptible of service by publication: a default judgment will issue same as in a publication case, but now the plaintiff's attorney doesn't need to worry about the ad litem fee. What changed? A judgment is docketed and no one gets paid. The situation is analogous to serving a known party whose location is unknown, versus serving unknown parties entirely.

This is an open issue still, as far as I can tell. In practice, I've been instructed to not fight about this shit because it's not worth the headache, but I think if it can be cheaply done with a motion, it could be worth it. There's just something repulsive about walking into a room and "agreeing" to fees.

Default judgment on publication?

Yeah I said it. It is my opinion that plaintiff-creditors are entitled to a default judgment hearing and the award of default judgment in cases where an ad litem has been appointed to represent the interests of known defendant-debtors. See Guest v. Few, No. 09-96-038-CV, 1997 Tex. App. LEXIS 3887 (Tex. App.--Beaumont July 24, 1997) (ad litem answered and appeared at trial, yet default judgment was entered, though later set aside for an unrelated reason).  You will see a spate of cases with different patterns, some where trial judgment was rendered, and some where default judgment was rendered. See, e.g., Cahill v. Lyda, 826 S.W.2d at 932 (trial judgment following publication); In re A.M.M., No. 04-14-00248-CV (Tex. App.--San Antonio, Oct. 29, 2014) (trial termination of parental rights following publication); McCarthy v. Jesperson, 527 S.W.2d 825, 826 (Tex. Civ. App. 1975) (post-publication default judgment granting divesting father of interest in real estate); Wood v. Brown, 819 S.W.2d 799 (Tex. 1991) (involving a post-publication, personal injury default judgment).  Why one happens or doesn't is not clear to me, but it may be that courts are unwilling to set for default hearing those cases in publication where an ad litem has appeared or answered. The point is, if an ad litem givers you guff, just show them Wood, McCarthy and a swathe of family law cases. Default is the name of the game in most parental rights suits.



The statement of the evidence

This is an esoteric and little-described thing. It has been held that failure to include a statement of the evidence did not impact validity of a judgment rendered, but only opened it to being set aside on bill of review.  Crosby v. Bannowsky, 69 S.W. at 213. The Crosby court found that failure to follow the post-publication requirements of getting an ad litem appointed and a statement of the evidence in the record were equal errors in nature and were correctible only by appeal or bill of review. See id. The holding of the Crosby court comports with many other opinions; compare Buse v. Bartlett, et al., 1 Civ. App. 335, 21 S.W. 52; Byrne v. Simpson, 11 S.W. 1073, 74 Tex. 79. Correcting the defect of a lack of a statement of the evidence in the record by a judgment nunc pro tunc does not work. McLane v. Kirby, 116 S.W. 118, 54 Tex.Civ.App. 113. A string-cite and discussion of these various holdings, though not detailed, is listed out in Villegas v. Shane-Michael Optical Co., 443 S.W.2d 571 (Tex. Civ. App.--El Paso 1969).

The statement of the evidence, being part of the papers of the record, must appear in the face of the record; its absence is evidence of non-compliance with this Rule 244 requirement. See Jones v. Jones, No. 09-06-238-CV, 2007 Tex. App. LEXIS 6461 *2 (Tex. App.--Beaumont Aug. 16, 2007).

But what is it? "No cases clearly delineate the required elements of a statement of the evidence as contemplated by Rule 244. However . . . several cases indirectly support the conclusion that an unsigned and unapproved court reporter's record is insufficient to satisfy Rule 244's mandate." Montgomery v. REC Interests, Inc., 130 S.W.3d 444, 446 (Tex. App.--Texarkana 2004). Remember, Rule 244 requires the statement of the evidence be "approved and signed by the judge" and be filed with the "papers of the cause."  The Montgomery court observed that, at a minimum, the reporter's record must be approved and signed, but that they were not holding a reporter's record could serve as a statement of the evidence. Something else is required. The court cited to other cases regarding a document different from the reporter's record. Id. (citing Graves v. Graves, 916 S.W.2d 65, 67 (Tex. App.--Houston [1st Dist.] 1996, no writ) (clerk's record and reporter's record filed, and court noted one of the records contained a Rule 244 statement of the evidence which described the evidence introduced at hearing); Commercial Credit Corp. v. Smith, 143 Tex. 612, 187 S.W.2d 363, 366 (1945) (statement of evidence recited proof introduced as establishing all allegations in the original petition); Blackman v. Blackman, 128 S.W.2d 433, 438 (Tex. Civ. App.--Fort Worth 1939, writ dism'd judgment cor.) (brief summary of statement of the evidence adduced at trial, which included description of documentary and testimonial evidence along with recital of relevance of some items of evidence). The concurring opinion in Montgomery discussed the old case, Byrne, as making out the statement of the evidence requirement as a thing which "make[s] out and incorporate[s] with the records of the case a statement of the facts proven on which the judgment was founded." Id. at 447 (Carter, J., concurring). The concurring opinion observes that a reporter's record does this trick because "every word of the evidence presented is before" the reviewing court in such a case - the court noted it is is an absurdity to require the same be "signed and approved," and that the Rule probably pertained to some other document which did less work than the reporter's record. Id. at 448. Interesting!

In short, the courts appear to be of the opinion that in order to get a statement of the evidence approved and signed, some indicator on the face of such a document must exist. In my practice, I do this in my proposed judgments. The judgment essentially recites the main allegations of the petition on which the cause of action is proven by default, and has a fill in the blank spot for the judge's signature and date thereof. I suppose just signing a default judgment which contains a self-described "statement of the evidence" would do the trick, but I like having the separate signature block for anal retentive purposes. Other practitioners' ideas are welcome.

A word about E.R.

Lately, a lot of ad litems have been gung ho about the case, In re E.R., a Texas Supreme Court opinion that comes down on the spanking side of publication cases. A very pissed off Wallace wrote for the majority in a case at the common intersection of the Family Code and Rule 109. People think E.R. says a lot more than it really does. In reality, the Court simply articulated that where the prerequisites of publication are not met (i.e. due diligence), then due process is violated. The Court then chimed in on what it thinks due diligence means, and basically said that a plaintiff cannot put its head in the sand about relevant facts regarding the location of a defendant. It's worth a read for that alone, but all of that seems implied by the term "due diligence." You can't even get a Rule 106(b) order without doing pre-8 A.M., pre-noon, post-noon, pre-6 P.M. and post-6 P.M. service efforts in some courts, and are lucky to get any such authority in a certain Dallas court. Good luck arguing the Rules entitle you to such, you fool. In the E.R. case, the filthy pigs were so lazy to serve a mom, they simply prepared an affidavit summarizing attempts at personal service - owing to lack of a permanent address, and despite having her phone number and that the mom showed up to court each time there was a hearing, they somehow couldn't personally serve her. I'm glad the Court bench-slapped DFPS for this.

However, if you show that you did some work to establish the location of the party, you'll probably survive an E.R. challenge on the "due diligence" deployed in a publication suit. The Court observed in E.R. that they really dislike the use of publication where the parties' identities are known (as opposed to an unknown heirs suit), so due diligence proof is paramount. In the In re A.M.M. case, an E.R. challenge was mounted but the court found that due diligence was discharged. The A.M.M. family court caseworkers testified they'd called the guy on a number they had for him, but found it disconnected, talked to his mother and asked her for info but got nothing out of her, looked on some databases for leads and checked the TDCJ records and found nothing; other testimony established they'd talked to some other lady relative who hung up on them, and they'd tried to find him at other addresses but no luck. This type of info seems like the kind necessary to survive a due diligence attack on publication service. I am not impressed by ad litems who threaten me with E.R. for defendants whose identities are known (and then ask for fees under Rhodes, ha ha!).



That's my primer on publications in creditor-debtor contexts.