                     NUMBER 13-14-00091-CV

                       COURT OF APPEALS

                THIRTEENTH DISTRICT OF TEXAS

                  CORPUS CHRISTI - EDINBURG


THE ESTATE OF SANDRA BROUGHTON,
DECEASED; GARY T. WEIMER, INDIVIDUALLY
AND AS INDEPENDENT CO-EXECUTOR OF THE
ESTATE OF SANDRA BROUGHTON, DECEASED;
GREG WEIMER, INDIVIDUALLY AND AS
INDEPENDENT CO-EXECUTOR OF THE
ESTATE OF SANDRA BROUGHTON; ET AL.,                      Appellants,

                                v.

FINANCIAL FREEDOM SENIOR FUNDING
CORPORATION; FINANCIAL FREEDOM
ACQUISITION, LLC; AND FEDERAL NATIONAL
MORTGAGE ASSOCIATION A/K/A FANNIE MAE,                   Appellees.


              On appeal from the 368th District Court
                  of Williamson County, Texas.


                     MEMORANDUM OPINION

   Before Chief Justice Valdez and Justices Rodriguez and Wittig
                      Memorandum Opinion by Justice Wittig1
         This is an appeal of a summary judgment on a claim of wrongful foreclosure of a

reverse mortgage.2 Appellants include the Estate of Sandra Broughton, Deceased; Gary

T. Weimer, Individually and as Independent Co-Executor of the Estate of Sandra

Broughton, Deceased; Greg Weimer, Individually and as Independent Co-Executor of the

Estate of Sandra Broughton, Deceased; Jere Bob Bowden; and Bonnie Zamora,

(collectively “Broughtons”).           Appellees are Financial Freedom Senior Funding

Corporation (“FFSFC”), Financial Freedom Acquisition, LLC, (“FFA”), and Federal

National Mortgage Association (“Fannie Mae”).

         The Broughtons argue that irregularities caused a wrongful foreclosure with

resulting inadequate consideration and that the entity that foreclosed the property did not

have legal authority to do so. By memorandum opinion issued on March 3, 2016, we

affirmed the summary judgment in part and reversed and remanded in part. See Estate

of Broughton v. Fin. Freedom Senior Funding Corp., No. 13-14-00091-CV, 2016 WL

836834, at *1 (Tex. App.—Corpus Christi Mar. 3, 2016, no. pet. h.) (mem. op.). Appellees

have subsequently filed a motion for rehearing in this cause. Without changing our

previous disposition, we deny the motion for rehearing, withdraw our earlier opinion and

associated judgment, and issue this memorandum opinion and related judgment in their

stead.



        1 Retired Fourteenth Court of Appeals Justice Don Wittig was assigned to this Court by the Chief

Justice of the Supreme Court of Texas pursuant to the government code. See TEX. GOV'T CODE ANN. §
74.003 (West, Westlaw through 2015 R.S.).

         2This case is before the Court on transfer from the Third Court of Appeals in Austin pursuant to an
order issued by the Supreme Court of Texas. See TEX. GOV'T CODE ANN. § 73.001 (West, Westlaw through
2015 R.S.).


                                                     2
       We affirm in part and reverse and remand in part.3

                                          I. BACKGROUND

       In 2006, Sandra and her husband Donald Broughton entered into a reverse

mortgage loan on their homestead located at 190 Oakwood Trail, Leander, Williamson

County, Texas with FFSFC. The original note was for $300,240.00. FFSFC, a subsidiary

of Indymac Bank, was placed into FDIC receivership in July 2009. Certain assets of

FFSFC presumably including the property in question were sold to FFA, including the

mortgage servicing rights. However, conflicting summary judgment proof showed a prior

sale of the same mortgage assets from FFA to Fannie Mae on July 23, 2007. The original

Broughton note and deed of trust contained an acceleration clause requiring payment on

the death of all borrowers. Sandra Broughton survived her husband, but died December

24, 2009. There was a delay in executing letters testamentary due to the loss of the

original will. The letters were finally granted August 23, 2010, with Greg and Gary Weimer

as co-executors of the estate.

       Summary judgment proof showed that neither executor received FFA’s notice

letter dated January 26, 2010 because the letter was not sent to the debtor’s address.

Instead it was sent to the deceased Broughtons’ former Oakwood Trail address. Nor had

letters testamentary been issued at that time. On November 22, 2010, FFA sent a notice

of foreclosure intended for Gary Weimer; the notice was again to the Oakwood Trail

address, not to his mailing address. On February 15, 2011, FFA sent a notice of lien and

election of preferred lien status stating that the estimated payoff for the loan was

$162,095.18. On April 4, 2011, FFA (but not the lender) sent the executors a notice of


       3  Appellees recently filed a motion to set this cause for hearing by submission “on the soonest
available date.” We grant appellees’ motion and issue this opinion accordingly.

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substitute trustee sale. Although additional extensions were requested, they were denied.

The property was listed for sale by the Weimers for the estimated value of $610,000.00.

The property was foreclosed on May 3, 2011, and the underlying lawsuit for wrongful

foreclosure was filed in August of 2011.

                                  II. STANDARD OF REVIEW

       Summary judgments are reviewed de novo. Valence Operating Co. v. Dorsett,

164 S.W.3d 656, 661 (Tex. 2005). We apply the following standards in reviewing a

traditional summary judgment: (1) the movant has the burden of showing that there is no

genuine issue of material fact and that it is entitled to judgment as a matter of law; (2) in

deciding whether there is a disputed material fact issue precluding summary judgment,

evidence favorable to the nonmovant will be taken as true; and (3) every reasonable

inference must be indulged in favor of the nonmovant and any doubts must be resolved

in favor of the nonmovant. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997)

(citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985)).

       A no-evidence motion for summary judgment is similar to a motion for a pretrial

directed verdict. See Merrell Dow Pharms, Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.

1997). In a no-evidence summary judgment motion, the movant contends there is no

evidence of one or more essential elements of the claims for which the non-movant would

bear the burden of proof at trial. TEX. R. CIV. P. 166a(i); Hamilton v. Wilson, 249 S.W.3d

425, 426 (Tex. 2008). Once the motion is filed, the burden shifts to the non-movant to

present evidence raising an issue of material fact as to the elements specified in the

motion. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). The trial

court must grant the motion unless the non-movant produces more than a scintilla of



                                             4
evidence raising a genuine issue of material fact on the challenged elements. See

Wilson, 249 S.W.3d at 426. However, the non-moving party is not required to marshal its

proof; its response need only point out evidence that raises a fact issue on the challenged

elements. TEX.R. CIV. P. 166a(i), Notes and Comments (1997); Wilson, 249 S.W.3d at

426. We review a no-evidence summary judgment for evidence that would enable

reasonable and fair-minded jurors to differ in their conclusions. See City of Keller v.

Wilson, 168 S.W.3d 802, 827 (Tex. 2005). A no-evidence motion that only generally

challenges the sufficiency of the non-movant's case and fails to state the specific

elements that the movant contends lack supporting evidence is fundamentally defective

and cannot support summary judgment as a matter of law. Jose Fuentes Co. v. Alfaro,

418 S.W.3d 280, 283 (Tex. App—Dallas 2013, pet. denied).

                                           III. UNFAIR PRICE

        The elements of a wrongful foreclosure claim are: (1) a defect in the foreclosure

sale proceedings; (2) an inadequate selling price; and (3) a causal connection between

the defect and the inadequate selling price. See Charter Nat'l Bank–Houston v. Stevens,

781 S.W.2d 368, 371 (Tex. App.—Houston [14th Dist.] 1989, writ denied).4 We first

examine the adequacy of the sales price.

        The Broughtons contend irregularities in the foreclosure sale caused or contributed

to cause the property to be sold for an inadequate or grossly inadequate price, citing as

authority American Sav. & Loan Ass'n of Houston v. Musick, 531 S.W.2d 581, 587 (Tex.



         4 As we discuss below, various courts have used different language to reflect the price inadequacy

necessary depending on the circumstances. The Stevens Court uses the term “grossly” inadequate sales
price while at the same time holding that the jury question about the fairness of the price was correct. See
Charter Nat'l Bank–Houston v. Stevens, 781 S.W.2d 368, 371 (Tex. App—Houston [14th Dist.] 1989, writ
denied).


                                                     5
1975). The property sold at foreclosure for $173,365.40, while the estimated value of the

property was $610,000.00. FFA’s own appraisal shortly before foreclosure placed the

value at $340,000.00,5 and the property had been listed by appellants in 2010 for

$585,000.00.      The Broughtons also argue that, depending on the degree of price

inadequacy, there may be a presumption that an irregularity in the sale caused the low

price. See Apex Fin. Corp. v. Brown, 7 S.W.3d 820, 828–29 (Tex. App.—Texarkana

1999, no pet.). “The particular facts of each case will determine whether the sale price

was so grossly inadequate as to warrant the setting aside of the sheriff's sale.” Id. (citing

House v. Robertson, 36 S.W. 251 (Tex. 1896); Rio Delta Land Co. v. Johnson, 566

S.W.2d 710, 712 (Tex. Civ. App.—Corpus Christi 1978, writ ref'd n.r.e.)).

        Appellees counter, citing Richardson v. Kent, which held that a sales price must

fall so far short of the real value as to shock a correct mind (thereby raising a presumption

that fraud attended the purchase). See 47 S.W.2d 420, 425 (Tex. Civ. App—Dallas 1932,

no writ). Appellees also argue that a price of more than fifty percent of property value is

not grossly inadequate as a matter of law. See Terra XXI, Ltd. v. Harmon, 279 S.W.3d

781, 788 (Tex. App.—Dallas 2007, pet denied). The Terra court relied upon Kent as sole

support for this proposition—and in Kent the court more accurately stated that they could

find no case that held a sales price of more than fifty percent was grossly inadequate as

a matter of law. Compare id. with Kent, 47 S.W.2d at 425 (“Therefore it appears that the

consideration paid and to be paid by Richardson was approximately 50 per cent of the

then value of the land, as found by the jury. We know of no case holding that, when

property at a forced sale brings fifty per cent of its value, the consideration paid by the


        5 Appellees argue that appellants “judicially admit” a market value of $340,000 but context shows
both in the underlying pleadings and their brief, appellants are referencing FAA’s own estimate of value.

                                                   6
purchaser is decreed as a matter of law, to be grossly inadequate; hence no presumption

of fraud can be indulged in respect to this sale. . . .” (emphasis added)).

       We reject appellees’ argument that a sale price of approximately fifty percent of

the value is adequate as a matter of law. See id. In any event, and more to the point,

the significant disparity between the sales price of $173,365.40 and the opinion of market

value of $610,000.00, greatly exceeds fifty percent and in fact is over three hundred and

fifty percent. Cf. Stevens, 781 S.W.2d at 370–75 (finding approximately eighty-four

percent of $430,000.00 fair market value to be inadequate and a proper cohort of

damages).

       Some courts have rejected the language that a foreclosure selling price be “grossly

inadequate.” See id. at 371. In Stevens, the relevant jury question was whether the

“fairness” of the foreclosure price was affected by the failure of the mortgagee to notify,

as promised, a person interested in purchasing the property. Id. In Stevens, it should

also be noted that the fair market value of the property was $430,000.00 and the sale

price was $355,000.00, a difference of $54,315.00. Id. 370–71. The trial court and

appellate court rejected a proposed jury question that asked whether $355,000.00 was a

“grossly inadequate bid price.” Id. at 371. Rather than the sometimes-used test of

“grossly inadequate bid price”, the correct inquiry is the inadequacy of consideration. See

id. at 373–74. Furthermore, whether or not irregularities of a sale had any influence upon

the consideration paid in the sale is a question of fact. Id. at 374 (citing Allen v. Pierson,

60 Tex. 604, 605–06 (1884) (stating that where the price is grossly inadequate, slight

additional facts showing fraud, irregularity, or other circumstances calculated to prevent




                                              7
the property from bringing something like its reasonable value, might be sufficient to avoid

the sale.)

       Given the significant disparity between the sale price of $173,365.40, appellees’

own appraisal of $340,000.00, and an appraised value of $610,000.00, we conclude

appellants raised a fact issue thus preventing a summary judgment on this element. Id.;

Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007); Apex Fin.

Corp., 7 S.W.3d at 829.

                                        IV. NOTICE

       On January 26, 2010, FFA sent correspondence addressed to the Estate of

Broughton at 190 Oakwood Tr., Leander, Texas, 78641, stating a future threat to

foreclose if any deficiencies were not cured within thirty days. Gary Weimer filed a

summary judgment affidavit stating he did not receive the letter and the stated address

was not his address. In his affidavit, Gary Weimer unequivocally stated he did not receive

this correspondence and had not and did not reside at that address. We previously held

a similar affidavit by the homeowner regarding lack of service constitutes some evidence

of a defect in the foreclosure sale proceedings. Sauceda v. GMAC Mortg. Corp., 268

S.W.3d 135, 139–40 (Tex. App.—Corpus Christ 2008, no pet.). Thus, a fact issue

remained as to whether the Saucedas were served with the notice that section

51.002(b)(3) of the property code required. See TEX. PROP. CODE ANN. § 51.002(b)(3),

(West, Westlaw through 2015 R.S.); Sauceda, 268 S.W.3d at 140.                Furthermore,




                                             8
appellees fail to show that the 190 Oakwood Trail address is the last known address of

the “debtor,” given the demise of Mrs. Broughton, the last survivor of the couple.6

        Appellants contend impliedly that the deed of trust notice requirements trump the

property code requirements. The deed of trust apparently allows notice to be sent to the

property address, presumably vacant after the death of Mrs. Broughton. This contrasts

with section 51.002(b)(3) & (e) requiring written notice to each debtor at the debtor’s last

known address.7 Furthermore, section 51.002(d) provides:

        Notwithstanding any agreement to the contrary, the mortgage servicer of
        the debt shall serve a debtor in default under a deed of trust or other contract
        lien on real property used as the debtor's residence with written notice by
        certified mail stating that the debtor is in default under the deed of trust or
        other contract lien and giving the debtor at least 20 days to cure the default
        before notice of sale can be given under Subsection (b). The entire
        calendar day on which the notice . . . is given, regardless of the time of day
        at which the notice is given, is included in computing the 20–day notice
        period . . ., and the entire calendar day on which notice of sale is given
        under Subsection (b) is excluded in computing the 20–day notice period.

TEX. PROP. CODE ANN. § 51.002(d) (emphasis added).

        Appellants contend that there is no proper summary judgment proof as to the

holder of the note and the mortgagee on the deed of trust. The deposition testimony of

Gail Funkhauser, who claimed to be the person most knowledgeable of the details of the

transaction, testified that Fannie Mae had purchased the note and owned it throughout

the transaction. Fannie Mae was the holder of the note, and perhaps the mortgagee, but

did not foreclose the note. Fannie Mae was also the purchaser and sole bidder at the


        6Section 51.002(b)(3) of the property code also required notice of sale to each debtor. See TEX.
PROP. CODE ANN. § 51.002(b)(3). While there is some evidence that Mrs. Broughton lived at the address
during her lifetime, there is no proof anyone lived there after her death.

         7 Section (e) provides that notice by certified mail is complete when deposited in the US mail,

postage prepaid and addressed to the debtor at the debtor’s last known address. In any event, even if an
affidavit was submitted to the effect that service was completed, such evidence is only prima facie and
could be controverted as was done here.

                                                   9
foreclosure “sale.”8 Nor is the record clear that FFA had specific authority from Fannie

Mae to foreclose. It appears that at one time the deed of trust was assigned from FFSFC

to Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for FFA. Other

proof suggests that Fannie Mae was the mortgage holder and owner of the note.

Nevertheless, we agree with appellees that FFA as servicer of the deed of trust had

authority to act on behalf of the lender, subject to statutory, contract, and constitutional

restrictions. See Aguero v. Ramirez, 70 S.W.3d 372, 374 (Tex. App.—Corpus Christi

2002, pet. denied) (explaining that a deed of trust may be enforced by the mortgagee,

regardless of whether the mortgagee also holds the note).

        Appellants contend that section 51.0025 allows a mortgage servicer to foreclose

on behalf of a mortgagee if the servicer and mortgagee have entered into an agreement

to foreclose and the required notices under section 51.002(b) disclose that the servicer is

representing the mortgagee under the servicing agreement and the name of the

mortgagee. See TEX. PROP. CODE ANN. §§ 51.0025, 51.002(b)(3). Appellees argue that

where there is a debt secured by a note, which is, in turn, secured by a lien, the note and

lien constitute separate obligations. See Aguero, 70 S.W.3d at 374. We agree. However,

appellants are correct that the FFA did not disclose that it acted under an agreement with

Fannie Mae to service the note. These too are separate obligations. Appellants counter

that they were the mortgagee, not the noteholder, and accordingly did not need to disclose

their principals and were empowered to foreclose.




        8 According to the testimony of Funkhauser, Fannie Mae did not actually bid at a “sale.” “It’s a

paper transaction. If there is no third party sale, it reverts back to the note holder for the amount of the
debt.” Thus, another irregularity is at issue because it appears there was some evidence that there was no
public sale as required under section 51.002(a). See TEX. PROP. CODE ANN. § 51.002(a) (West Westlaw
through 2015 R.S.).

                                                    10
       In their brief, appellees admit and argue that their notice of substitute trustee sale

shows the address of FFA and stated that FFA was acting as both the mortgagee and

mortgage servicer. Indeed, this notice shows FFSFC, a subsidiary of Indy Mac Bank, as

the original mortgagee, and FFA as “current” mortgagee and mortgage servicer.9 Yet the

summary judgment proof is in conflict as to the mortgagee note holder. Indeed FFA

conveyed multiple mortgages to Fannie Mae, presumably including the Broughton

mortgage/deed of trust in question.

       FFA did not disclose it was acting on behalf of Fannie Mae. No copy of the note

was produced. There is no showing of a complete chain of title between FFSFC and

Fannie Mae. Further, there was no showing appellees had an agreement between FFA

and Fannie Mae giving FFA authority to service the note and foreclose on behalf of Fannie

Mae. The notice stated FFA was acting as the mortgage servicer for FFA, not that it was

the lender.

       Even assuming that FFA notices were properly originated, appellants failed to give

the proper notice when the loan became due.10 Under the deed of trust, the “Lender shall

notify the secretary and borrower whenever the loan becomes due and payable under

Paragraph 9.”        While FFA (or FFSFC) was the original lender, according to some

summary judgment proof, the note and mortgage were apparently sold to Fannie Mae.

The Texas Constitution also required notice from the lender. Subsection 10 “does not

permit the lender to commence foreclosure until the lender gives notice to the borrower.




        9 Appellees go on to argue at page 5 of their response, FFA as mortgagee was not required to

disclose it had any servicing agreement with FNMA or anyone else.
       10   Appellants note the lender to be the beneficiary under the deed of trust.


                                                      11
. . .” TEX. CONST. art. XLI § 50(k)(10). The lender’s notice must provide that a ground for

foreclosure exists, giving the borrower at least thirty11 days to remedy the condition, pay

the debt, or convey the homestead property. Id. The failure of the lender to notify is

cumulative of the fact that the executors were not initially notified and did not live at the

Oakwood Trail address. Furthermore, Fannie Mae did not actually bid at the “sale” which,

according to Funkhauser, amounted to a paper transaction with the note and property

reverting back to Fannie Mae for the amount of the debt with no other bidders.

         In our de novo review of a trial court's summary judgment, we consider all the

evidence in the light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could, and disregarding contrary evidence unless

reasonable jurors could not. Tamez, 206 S.W.3d at 582. Every reasonable inference

must be indulged in favor of the nonmovant and any doubts must be resolved in favor of

the nonmovant.           Am. Tobacco Co., 951 S.W.2d at 425.                  Here, the proof does not

unequivocally establish that FFA was the authorized mortgage servicer of Fannie Mae.

Issues of fact foreclose the availability of summary judgment under these circumstances.

We hold that there is some evidence of irregularity of the sale pertaining to required

notices under the constitution, applicable statutes, and the deed of trust. There is more

than ample evidence on the lack of sufficient consideration paid and some evidence of

the likelihood of this causal connection between the defects and the inadequate selling

price.    See Sauceda, 268 S.W.3d at 139; Apex Fin. Corp., 7 S.W.3d at 828–29.

Furthermore, under our system, it is a question of fact to be determined from the evidence

whether or not the irregularity had any influence upon the consideration for which the



         11   Or at least twenty days under certain conditions not applicable here.

                                                       12
property sold. Prudential Corp. v. Bazaman, 512 S.W.2d 85, 90 (Tex. Civ. App.—Corpus

Christi, 1974, no writ) (citing Allen v. Pierson, 60 Tex. 604 (1884) (“It is not a matter of

law to be assumed by the court.”)).

                               V. BREACH OF CONTRACT CLAIMS

       Appellees point out that the Broughtons did not respond to the no-evidence motion

for summary judgment on the breach of contract claims. The trial court must grant the

motion unless the non-movant produces more than a scintilla of evidence raising a

genuine issue of material fact on the challenged elements. See Wilson, 249 S.W.3d at

426. We accordingly affirm in part the trial court’s summary judgment dealing with the

breach of contract claims.

                                      VI. CONCLUSION

       The portion of the summary judgment dealing with the breach of contract claims is

affirmed. The remainder of the summary judgment is reversed and remanded.



                                                        /s/ Don Wittig
                                                        DON WITTIG
                                                        Assigned Judge

Delivered and filed this the
19th day of May, 2016.




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