      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                      NO. 03-06-00326-CV



                    Oscar Omar Sosa and Margarita N. Sosa, Appellants

                                                v.

        Long Beach Mortgage Company; Long Beach Mortgage Loan Trust 2001-2;
          Deutsche Bank National Trust Company f/k/a Bankers Trust Company
            of California, N.A.; and Washington Mutual Bank F.A., Appellees


     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
      NO. D-1-GN-05-000428, HONORABLE GISELA D. TRIANA, JUDGE PRESIDING



                            MEMORANDUM OPINION


               Appellants Oscar and Margarita Sosa challenge a summary judgment rendered in

favor of appellees Long Beach Mortgage Co., Deutsche Bank National Trust Co., and Washington

Mutual Bank (collectively “Long Beach” or “the bank”). On appeal, the Sosas contend that the trial

court improperly granted summary judgment in favor of the bank because their home equity loan

violated the Texas Constitution and was otherwise invalid. Because we conclude that the trial court

properly granted summary judgment, we affirm the judgment.


                                        BACKGROUND

               After purchasing in 1995 a lot that contained two housing structures on it, the Sosas

claimed a homestead exemption on the entire lot for the tax years 1995 through 2002. The Sosas

executed a homestead designation in 1995, which they filed with the Travis Central Appraisal
District. Both structures located on the property were specifically identified in the records of the

Travis Central Appraisal District as being homestead property for the years 2001 and 2002.1 In

February 2001, the Sosas obtained a home equity loan in the amount of $52,000 and entered into a

home equity loan agreement with Long Beach Mortgage, which was evidenced by a security

instrument giving Long Beach a lien on the entire property. When the Sosas defaulted on the note,

Long Beach foreclosed on the property. Two years later, the Sosas sued Long Beach for fraud and

wrongful foreclosure, claiming that only a portion of the property was their homestead and that the

loan violated the Texas Constitution, which prohibits a loan secured by additional property other

than the homestead. The Sosas urged that the loan was unconstitutional, that Long Beach had no

right to foreclose, and that the Sosas should be awarded the value of the property, exemplary

damages, and attorney’s fees.

               Long Beach filed a motion for summary judgment, urging that the bank had

established all of the elements of its affirmative defense and, in addition, that there was no evidence

of the elements of the Sosas’ claims. See Tex. R. Civ. P. 166a. The trial court granted the bank’s

motion for summary judgment on its affirmative defense of estoppel and otherwise denied the

motion. In its order, the trial court also found that the Sosas had withdrawn their fraud claim. This

appeal followed.


                                           DISCUSSION

               We review the trial court’s grant of summary judgment de novo. See Provident Life


       1
         In 2003, the records of the Travis Central Appraisal District reflect that the owner divided
the property to claim a homestead exemption only for a portion of the property.

                                                  2
& Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We must determine whether the

movant carried its burden to establish that there existed no genuine issue of material fact and that

it was entitled to judgment as a matter of law. Joe v. Two Thirty Nine J. V., 145 S.W.3d 150, 157

(Tex. 2004). A defendant moving for summary judgment must disprove at least one element of a

plaintiff’s cause of action or establish all elements of an affirmative defense. American Tobacco Co.

v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). Estoppel is an affirmative defense. Tex. R. Civ. P.

94. A defendant moving for summary judgment on the affirmative defense of estoppel has the

burden to conclusively establish that defense. Knott, 128 S.W.3d at 220. We assume all evidence

favorable to the nonmovants is true, indulge every reasonable inference in favor of the nonmovants,

and resolve any doubts in their favor. Id. at 215. Once the movant has established a right to

summary judgment, the nonmovant must expressly present any reasons seeking to avoid the

movant’s entitlement and must support the reasons with summary judgment proof to establish a

fact issue. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). In

reviewing a summary judgment, we consider all grounds presented to the trial court and preserved

on appeal. Knott, 128 S.W.3d at 216; Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626

(Tex. 1996). In this case, the trial court’s order specifies the ground relied upon for its summary

judgment ruling; thus, the summary judgment will be affirmed if the theory relied upon by the trial

court is meritorious. Cates, 927 S.W.2d at 625; State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374,

380 (Tex. 1993).

               Homesteads are protected from forced sale for the payment of debts, except for those

debts specifically enumerated in the constitution such as the home equity loan here to the extent the



                                                 3
loan is on the homestead. Tex. Const. art. XVI, § 50(a); see Tex. Prop. Code Ann. § 41.001(b)

(West Supp. 2005). Constitutional homestead rights protect citizens from losing their homes and

have historically enjoyed great protection in our jurisprudence. Kendall Builders, Inc. v. Chesson,

149 S.W.3d 796, 807 (Tex. App.—Austin 2004, pet. denied). Property designated as a homestead

only loses that character through abandonment, death, or alienation. Majeski v. Estate of Majeski,

163 S.W.3d 102, 107 (Tex. App.—Austin 2005, no pet.). Evidence establishing the abandonment

of a homestead “‘must be undeniably clear’” and must show “‘beyond almost the shadow, at least

[of] all reasonable ground of dispute, that there has been a total abandonment with an intention not

to return and claim the exemption.’” Burkhardt v. Lieberman, 159 S.W.2d 847, 852 (Tex. 1942)

(quoting Gouhenant v. Cockrell, 20 Tex. 96, 98 (1857)). If a lien that is not constitutionally

permitted is placed on property that has not lost its homestead character, the lien on the property is

void. Laster v. First Huntsville Props. Co., 826 S.W.2d 125, 129-30 (Tex. 1991).

               Among the grounds urged in its motion for summary judgment, Long Beach urged

as an affirmative defense that estoppel bars the Sosas’ claims as a matter of law. Specifically, Long

Beach contends that because the Sosas claimed the property as their homestead with the tax authority

as well as in the documents executed in connection with the home equity loan, the Sosas are

estopped from taking a position contrary to those representations in this litigation. Attaching to their

motion the documents evidencing the debt and the homestead exemption claimed to the tax

authorities, Long Beach contends that, in the absence of fraud, accident, or mutual mistake, estoppel

precludes the Sosas from accepting the benefits of the loan while denying the terms of the security

instrument. At the hearing on the motion, the Sosas did not contend that the contract was entered



                                                   4
into by accident or mutual mistake, and they withdrew their claim of fraud.

                  To establish the affirmative defense of estoppel, Long Beach must conclusively prove

the following elements: (1) a false representation or concealment of material facts; (2) made with

the knowledge, actual or constructive, of those facts; (3) with the intention that it should be acted

on; (4) to a party without knowledge or means of obtaining knowledge of the facts; and (5) who

detrimentally relies on the representations. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc.,

962 S.W.2d 507, 515-16 (Tex. 1998). Estoppel arises where, by the fault of one, another is induced

to change his position to his detriment. Vessels v. Anschutz Corp., 823 S.W.2d 762, 765

(Tex. App.—Texarkana 1992, writ denied). The Sosas do not contend that Long Beach failed to

establish the elements of its affirmative defense. In the court below, the Sosas urged only that their

use of the property was open and obvious and that estoppel by declaration is inapplicable.

                  It is well settled that the parties to a contract have an obligation to protect themselves

by reading what they sign. G-W-L, Inc. v. Robichaux, 643 S.W.2d 392, 393 (Tex. 1982), overruled

on other grounds by Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987). Unless there

is some basis for finding fraud, the parties may not excuse themselves from the consequences of

failing to meet that obligation. Id. If no fraud is involved, one who signs an agreement without

knowledge of its contents is presumed to have consented to its terms and is charged with knowledge

of the agreement’s legal effect; in those circumstances, a party’s failure to read an instrument before

signing it is not a ground for avoiding it. Id.; see also Estes v. Republic Nat’l Bank, 462 S.W.2d 273,

276 (Tex. 1970); Hampshire v. Hampshire, 485 S.W.2d 314, 316 (Tex. Civ. App.—Fort Worth

1972, no writ).



                                                      5
               The Sosas urge that at all times relevant to this action there have been two houses on

the property at issue and that they did not intend to encumber the portion of the property that was not

their homestead. They do not deny their homestead designation but claim that at some point they

abandoned it or, at least, abandoned it as to a portion of their property. The only evidence submitted

in response to the motion for summary judgment were the affidavits of Oscar and Margarita Sosa.2

In his affidavit, Oscar Sosa averred that he and his wife lived in the “back” house and leased the

front unit (Unit A) to tenants and that the Sosas were involved in a legal action in small claims court

in December 2001 that declared their property not to be a homestead.3 He further averred that “[i]n

connection with obtaining the home equity loan, we were advised that we would have to divide our

property into two lots because the home equity loan could only be secured by our Homestead

Property, that [w]e did not realize when we closed on our Home Equity Loan in February 2001, but

we later discovered after September 2003 that Long Beach Mortgage took both our Homestead

Property and our Rental Property to secure our Home Equity Loan,” and that when the Sosas

executed the loan documents, they “believed that the Home Equity Loan was secured only by the

home we occupied, our Homestead Property.”



       2
           In her affidavit, Mrs. Sosa testified regarding the Sosas’ efforts to obtain legal
representation. Mr. Sosa’s affidavit is included in the appendix to the Sosas’ brief, but it does not
appear in the record.
       3
          An order in a small claims case does appear in the appendix to the bank’s brief, but does
not appear in the record. The order appears to reflect a dispute between the Sosas and a tenant who
filed a “Motion for Garnishment and Motion to Declare Property Not a Homestead.” The order
reflects that the court found that Margarita Sosa and “third-party defendant, Omar O. Sosa
(‘landlord’) ha[d] abandoned Unit A . . . and that Unit A is not a homestead.” Because this
document and related proceedings do not appear in the record, we may not consider it. In any event,
this case appears to have occurred after the Sosas’ home equity loan was issued.

                                                  6
               The evidence is uncontroverted that the Sosas claimed a homestead exemption for

the entirety of the property from the date of the purchase of the property through tax year 2002. The

record shows that the Sosas never disputed the fact that they claimed a homestead exemption for the

entirety of the property on the lot from the date of purchases through tax year 2002 and affirmatively

represented to Long Beach that they had done so. The only documentary evidence in the record

shows that it was not until 2003, more than two years after the home equity loan, that the Travis

Central Appraisal District records reflect that the property was divided to claim a homestead

exemption for only a portion of the property. The Sosas signed the home equity loan documents and

affidavits affirming that the property was their homestead and that the homestead was being used

to secure the home equity loan that the Sosas sought. The document entitled “Texas Home Equity

Affidavit and Agreement” described the entire property as did the other documents evidencing the

loan. The home equity loan documents reflect that the entire property was designated as their

homestead and that this property was being used to secure the home equity loan at issue. In the

absence of fraud on the part of Long Beach, the Sosas cannot avoid the terms of the agreement.

Thus, Long Beach demonstrated its entitlement to summary judgment on its affirmative defense of

estoppel, and the Sosas failed to present competent evidence to defeat Long Beach’s defense or to

raise a fact question. Because the Sosas (i) represented to Long Beach that the entire property was

their homestead, and (ii) claimed a homestead exemption on the entire property in loan instruments

and to tax authorities, and (iii) because Long Beach relied on the Sosas’ representations and sworn

affidavits to loan them $52,000 secured by their purported homestead, we conclude the trial court

properly found that the Sosas are estopped from claiming that the loan violated the constitution



                                                  7
and did not err in rendering summary judgment in favor of Long Beach. We overrule the Sosas’

issues on appeal.


                                        CONCLUSION

               Having overruled the Sosas’ issues, we conclude that the trial court did not err in

granting Long Beach’s motion for summary judgment. Accordingly, we affirm the judgment of the

trial court.




                                             __________________________________________

                                             Jan P. Patterson, Justice

Before Justices Patterson, Pemberton and Waldrop

Affirmed

Filed: June 12, 2007




                                                8
