                         COURT OF APPEALS
                          SECOND DISTRICT OF TEXAS
                               FORT WORTH

                              NO. 02-10-00404-CV


G4 TRUST, GROVER GIBSON,                                            APPELLANT
TRUSTEE

                                        V.

CONSOLIDATED GASOLINE, INC.                                         APPELLEES
AND BILLY DELP III


                                    ------------

          FROM THE 348TH DISTRICT COURT OF TARRANT COUNTY

                                    ------------

                        MEMORANDUM OPINION1
                                     ----------

                                   I. Introduction

      In two issues, Appellant G4 Trust (G4) appeals the trial court‘s ruling that

an extrajudicial foreclosure sale was valid and its judgment that G4 take nothing

against the purchasers at the sale, Appellees Consolidated Gasoline, Inc. and

Billy Delp III (collectively, CGI). We reverse and remand.


      1
       See Tex. R. App. P. 47.4.
                      II. Factual and Procedural Background

      In 2004, JRP Equipment, Inc. and James R. Phillips (collectively, JRP)

borrowed money from National Bank of Texas to purchase some property in

Tarrant County, executing a promissory note (the Note) and securing the loan

with a deed of trust (the Deed) that named the bank as beneficiary and the

bank‘s president, George Bradford, as trustee. JRP defaulted on the loan, and

on August 1, 2008, the bank gave JRP written notice of default and then

accelerated the Note‘s maturity when JRP failed to cure the default.

      On August 12, 2008, Bradford filed a written notice of trustee‘s sale to be

held on September 2, 2008, and provided written notice to JRP. The written

notice did not state Bradford‘s address, street or otherwise. Bradford‘s cover

letter contained the bank‘s post office box number in its letterhead.

      On August 28, 2008, the bank transferred the Deed, endorsed the Note to

CGI, and gave written notice of the transfer to JRP. CGI appointed Billy Delp Jr.

as substitute trustee to conduct the September 2, 2008 foreclosure sale, and

Delp Jr. did so, selling the property to CGI. Not long after the sale, JRP assigned

to G4 any causes of action it might have that related to the foreclosure, and G4

filed a notice of lis pendens, claiming an interest in the property. Notwithstanding

the assignment, however, JPR filed suit in December 2008, seeking to set aside

the foreclosure based on defective notice. G4 intervened in the suit in 2010.

      In its August 31, 2010 judgment, the trial court found that JRP had

assigned its claims to G4 and ordered that JRP take nothing against CGI and


                                     2
Delp III. It also found that the September 2, 2008 foreclosure sale should not be

set aside, removed G4‘s lis pendens, and ordered that G4 also take nothing

against CGI and Delp III. The trial court made the following conclusions of law

pertinent to this appeal:

      6. Notice of the Trustee‘s Sale dated August 12, 2008 and the letter
      of same date sent to JRP[] complied with Texas law and the
      provisions of the deed of trust.

      7. Notice of Trustee‘s Sale served with George Bradford‘s letter
      complied with the requirement of Tex. Prop. Code [Ann.] § 51.002.

      8. [CGI] was not required to provide additional 21 day written notice
      of the foreclosure sale to [JRP] after it purchased the Note on
      August 28, 2008.

G4 now appeals.

                  III. 2005 Amendment and Strict Compliance

      In two issues, G4 challenges the trial court‘s conclusion that Bradford‘s

August 12, 2008 notice to JRP was valid because (1) the 2005 amendment to

property code section 51.0075(e) applied, rendering notice defective; and (2) the

bank and CGI did not strictly comply with the property code and Deed notice

requirements.

A. Standard of Review

      We review statutory construction de novo, and in construing statutes, we

ascertain and give effect to the legislature‘s intent as expressed by the statute‘s

language. City of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008); see

also Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009) (op.



                                    3
on reh‘g) (―Where text is clear, text is determinative of [the legislature‘s] intent.‖) ;

Fleming Foods of Tex., Inc. v. Rylander, 6 S.W.3d 278, 284 (Tex. 1999) (noting

that courts should not adopt a construction that renders statutory provisions

meaningless).

B. Property Code Sections 51.002, 51.0075, and the 2005 Amendment

      Property code section 51.002 requires, for a sale of real property under

contract lien, that notice be given at least twenty-one days before the date of the

sale by ―serving written notice of the sale by certified mail on each debtor who,

according to the records of the mortgage servicer of the debt, is obligated to pay

the debt.‖ Tex. Prop. Code Ann. § 51.002(b)(3) (West Supp. 2010). Section

51.0075(e), added in 2005, requires disclosure of the ―street address‖ of a

trustee or substitute trustee in a section 51.002(b) foreclosure notice. See Act of

May 25, 2005, 79th Leg., R.S., ch. 1231, § 1, 2005 Tex. Gen. Laws 3980

(amended 2009) (current version at Tex. Prop. Code Ann. § 51.0075 (West

Supp. 2010)).

      G4 argues that the 2005 amendment‘s enabling language and the

language in the Deed required the trial court to retroactively apply the

amendment to the Deed. The 2005 amendment‘s enabling language states that

the amendment applies

      to a security instrument or other contract executed on or after the
      effective date of this Act and to a security instrument or other
      contract executed before the date of this Act that does not conflict
      with the changes in law made by this Act. A security instrument or
      other contract executed before the effective date of this Act that

                                       4
      conflicts with the changes in law made by this Act is governed by the
      law in effect at the time the security instrument or other contract was
      executed, and the former law is continued in effect for that purpose.

Id. § 2, 2005 Tex. Gen. Laws 3980–81 (emphasis added).

C. Retroactivity

      The legislature can retroactively amend a statute so long as it does not

―take away or impair vested rights acquired under existing law‖ in contravention

of the Texas constitution. McCain v. Yost, 155 Tex. 174, 284 S.W.2d 898, 900

(1955). ―Whether a right may be regarded as vested depends on considerations

of ‗fair notice,‘ ‗reasonable reliance,‘ and ‗settled expectations.‘‖ Robinson v.

Crown Cork & Seal Co., 335 S.W.3d 126, 151 (Tex. 2010) (Medina, J.,

concurring) (quoting Owens Corning v. Carter, 997 S.W.2d 560, 572–73 (Tex.

1999)); see also Mellinger v. City of Houston, 68 Tex. 37, 45, 3 S.W. 249, 253

(1887) (stating that ―until the state of facts which the law declares shall give a

right comes into existence[,] there cannot be in law a right,‖ and that because of

this, ―it has been constantly held that, until the right becomes fixed or vested, . . .

the [legislature may] declare that the given state of facts shall not fix it, and such

laws have been constantly held not to be retroactive in the sense in which that

term is used‖); Rey v. Acosta, 860 S.W.2d 654, 656–57 (Tex. App.—El Paso

1993, no writ) (holding that 1993 provisions of section 51.002(d)—requiring

written notice of intent and a twenty-day period for debtors to cure default before

a note on residential real estate could be accelerated—applied retroactively to a




                                      5
contract entered before the statute‘s effective date because the provisions were

procedural and remedial and did not affect substantive rights).2

D. Analysis

      The parties incorporated into their agreement the laws in force in 2004

when they executed the Deed. See Wessely Energy Corp. v. Jennings, 736

S.W.2d 624, 626 (Tex. 1987) (recognizing that laws existing at the time a

contract is made become a part of the contract and govern the transaction).

However, the Deed expressly acknowledges the potential for change in the law,

stating, in relevant part:

      15. REMEDIES ON DEFAULT. In some instances, federal and
      state law will require Lender to provide Grantor with notice of the
      right to cure or other notices and may establish time schedules for
      foreclosure actions. Subject to these limitations, if any, Lender may
      accelerate the Secured Debt and foreclose this Security Instrument
      in a manner provided by law if Grantor is in default.

             ....

      In the event of a default, it shall be the duty of the Trustee . . . to
      invoke power of sale as required by Section 51.002 of the Texas
      Property Code, as then amended . . . . Trustee shall give notice of
      sale including the time, terms and place of sale and a description of
      the Property to be sold as required by the applicable law in effect at
      the time of the proposed sale.[3] [Emphasis added.]

      2
        In Rey, the buyers specifically waived notice, and the statutory
amendment occurred before the note-holder‘s action to accelerate the note. 860
S.W.2d at 658. The court held that the statute was remedial and did not alter any
substantive rights when applied retroactively because the note-holder still had
the right to accelerate the note. Id. The statutory amendment ―simply required
that written notice followed by a 20-day grace period precede acceleration.‖ Id.
      3
      The Deed also provides for removal of the trustee and appointment of a
successor trustee through written designation. The 2005 amendment introduced

                                    6
See Deacon v. City of Euless, 405 S.W.2d 59, 61 (Tex. 1966) (noting that laws

may operate retroactively when it is apparent that the makers and adopters

intended retroactive application of an amendment, provided retroactive

application does not impair vested rights); Fix v. Flagstar Bank, FSB, 242 S.W.3d

147, 155 (Tex. App.—Fort Worth 2007, pet. denied) (same).

      The Deed expressly incorporates section 51.002‘s notice requirements.

Tex. Prop. Code Ann. § 51.002. Section 51.0075(e), pertaining to the authority

of a trustee or substitute trustee, requires that the name and street address for

the trustee or substitute trustee ―shall be disclosed on the notice required by

Section 51.002(b).‖ Id. § 51.0075(e). This addition does not conflict with the

Deed‘s express notice requirements; rather, it merely supplements the list of

items required for foreclosure notice that the Deed requires by incorporating

section 51.002 and does not impair the Deed holder‘s right to foreclose. See

Mellinger, 68 Tex. at 45, 3 S.W. at 253; see also Fix, 242 S.W.3d at 147;

Deacon, 405 S.W.2d at 61. Thus, because it does not conflict with the Deed or

impair vested rights—that is, the bank‘s right to foreclose did not vest until JRP

defaulted in 2008—we hold that the 2005 amendment applies to notice sent

under the Deed. Deacon, 405 S.W.2d at 61; see also Praeger v. Wilson, 721

a change in subsection (c) of section 51.0075 that mirrored this provision in the
Deed. See Act of May 25, 2005, 79th Leg., R.S., ch. 1231, § 1, 2005 Tex. Gen.
Laws 3980 (amended 2009) (current version at Tex. Prop. Code Ann. §
51.0075(c) (West 2011)) (allowing a mortgagee to appoint a substitute trustee to
succeed to all title, powers, and duties of the original trustee by written
instrument).

                                    7
S.W.2d 597, 601 (Tex. App.—Fort Worth 1986, writ ref‘d n.r.e) (refusing to read a

qualifying restriction into a contract clause‘s plain language when doing so would

alter the ordinary meaning of the contract clause). We sustain G4‘s first issue.

And because strict compliance with the notice requirements in a deed of trust is

necessary for a trustee to invoke the power of sale in a foreclosure, and as set

out above, the Notice did not strictly comply, we sustain G4‘s second issue as

well. See Univ. Sav. Ass’n v. Springwoods Shopping Ctr., 644 S.W.2d 705, 706

(Tex. 1982) (―Texas courts have consistently held that the terms set out in a deed

of trust must be strictly followed.‖); Myrad Props., Inc., v. LaSalle Bank Nat’l

Ass’n, 252 S.W.3d 605, 615 (Tex. App—Austin 2008) (―Because a trustee‘s

power to sell the property is derived from the deed of trust and statute, strict

compliance with these requirements is considered a prerequisite to the trustee‘s

right to make the sale.‖), rev’d on other grounds, 300 S.W.3d 746 (Tex. 2009);

see also Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 768 (Tex. 1983)

(―Compliance with the notice condition contained in the deed of trust and as

prescribed by law is a prerequisite to the right of the trustee to make the sale.‖);

cf. Powell v. Stacy, 117 S.W.3d 70, 75 (Tex. App.—Fort Worth 2003, no pet.)

(stating that notice was valid when defect did not affect notice requirements);

Sanders v. Shelton, 970 S.W.2d 721, 725–26 (Tex. App.—Austin 1998, pet.

denied) (reasoning that the words used in the notice need not mimic the statutory




                                     8
language to comply with the statute as long as the information required by the

statute was actually conveyed).4

                                   IV. Conclusion

      Having sustained both of G4‘s issues, we reverse the trial court‘s judgment

and remand this case to the trial court for further proceedings consistent with this

opinion.


                                                    BOB MCCOY
                                                    JUSTICE

PANEL: WALKER, MCCOY, and MEIER, JJ.

DELIVERED: August 31, 2011




      4
       CGI contends that the August 12 notice complied with Texas law, whether
section 51.0075(e) applied or not, because JRP‘s president knew Bradford‘s
address and because Bradford‘s cover letter ―contains the required information.‖
However, as discussed above, section 51.0075(e) requires disclosure of a ―street
address‖ for the trustee or substitute trustee in the notice. See Tex. Prop. Code
Ann. § 51.0075(e). Neither the notice nor the cover letter contained Bradford‘s
street address. While we are not blind to the equities of this dispute—as the
note-holder, CGI was entitled to be made whole—we are constrained to hold that
the sale is void because strict compliance is required to invoke power of sale
under a deed of trust.

                                     9
