N0.14-14-00174-CV

IN THE FOURTEENTH COURT OF APPEALS

TRACEY LYNN FREEZIA, APPELLANT,

v. IS STORAGE VENTURES, LLC, JLE INVESTORS, INC.

D/B/A ASSOCIATED MORTGAGE INVESTORS, POST OAK BANK, N.A. A~D JAMES L. EMERSON,

APPELLEES,

From Cause No. 2012-20372; Tracey Lynn Freezia v. IS Storage Ventures, LLC Investors, LLC, JLE Investors, Inc. d/b/a Associated Mortgage

Investors, Post Oak Bank, N.A. and James L. Emerson; In the 28lst Judicial District Court of Harris County, Texas

BRIEF OF APPELLANT, TRACEY LYNN FREEZIA

Elizabeth M. Bruman Law Office of Elizabeth Bruman, P.C. State Bar No. 13882700 4560 Cypress Creek Parkway, Ste. 104 Houston, Texas 77069 281/583-0089 (telephone) 281/587-9342 (facsimile)

ATTORNEY FOR APPELLANT, TRACEY LYNN FREEZIA

ORAL ARGUMENT REQUESTED

IDENTITY OF PARTIES AND COUNSEL

In order that members ofthis Court may determine disqualification and recusal under Rule 38.1 (a) of the Texas Rules of Appellate Procedure, Appellant certifies that the following is a complete list of parties, attorneys and other parties who may have an interest in the outcome of this proceeding:

Appellant/Plaintiff:

Appellant's Appellate Attorney:

Appellant's Trial Attorneys:

Appellees/Defendants:

Appellees' Trial and Appellate Attorney:

Appellees/Defendants:

Appellees' Trial and Appellate Attorney:

Presiding Judge:

Tracey Lynn Freezia

Elizabeth M. Bruman Law Office of Elizabeth Bruman, P.C. 4560 Cypress Creek Parkway West, Suite 104 Houston, Texas 77069

Charles Wist/Siri Khalsa Wist Holland & Kehlhof 720 North Post Oak Road, Suite 610 Houston, Texas 77024

IS Storage Ventures, LLC, and Post Oak Bank, N.A.

Elizabeth R. Flora Fidelity National Law Group 5151 Beltline Road, Suite 410 Dallas, Texas 75254

JLE Investors, Inc. dba Associated Mortgage Investors and James L. Emerson

Britton L. Larison McGlinchey Stafford, PPLC 2711 N. Haskell Avenue, Suite 2750 Dallas, Texas 75204

Hon. Sylvia A. Matthews 281 st Judicial District Court of Harris County 20 I Caroline, 14th Floor Houston, Texas 77002

/s/ Elizabeth M. Bruman Elizabeth M. Bnunan

-IL-

TABLE OF CONTENTS

Identity of Parties and Counsel ..................................... - 11 -

Table of Contents ............................................ - ii-viii -

Index of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - ix-xiii -

Abbreviations and Record References .............................. - xvi -

I. Statement of the Case ....................................... - 1 -

II. Statement Regarding Oral Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -

III. Issues Presented . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -

ISSUE NO. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -

The Trial Court Erred in Granting JLE and Emerson's Motion for Summary Judgment Because Appellant Raised Genuine Issues of Material Fact on their Affirmative Defenses ofEstoppel, Ratification, Wavier/Release, Bona Fide Mortgagee Status, Wrongful Foreclosure, and After Acquired Title and on Her Claims for Trespass to Try Title, Money Had and Received, and Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -

ISSUE NO. 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -

IS Storage and Post Oak Bank's No-Evidence Motion for Summary Judgment Was Erroneously Granted Because the Smmnary Judgment in Favor of JLE and Emerson was Erroneously Granted and Appellant Presented Genuine Issues of Material Fact ...................................... - 2 -

IV. Statement of Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -

A. Undisputed Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -

B. Procedural Posture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -

V. Summary of the Argument ................................... - 9 -

VI. Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -

-111-

Standard of Review for This Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -

A. Traditional Motion for Summary Judgment Standard of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -

B. No Evidence Motion for Summary Judgment Standard ofReview ..................................... - 13 -

ISSUE NO. 1 ............................................. - 14 -

A. The Court Erred in Granting JLE Investors and Emerson's Joint Motion for Summary Judgment ..................... - 14 -

B. JLE and Emerson Failed to Conclusively Prove Each Element of Their Affirmative Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -

1. Estoppel Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -

a. Equitable Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . - 15 -

(1) Elements ............................ - 15 -

(2) Fact Issues on Equitable Estoppel . . . . . . . . - 15 -

b. Judicial Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -

(1) Elements ............................ -18-

(2) Fact Issues on Judicial Estoppel . . . . . . . . . - 18 -

(a) The Bankruptcy Filings . . . . . . . . . . . - 18 -

(b) The Articles of Incorporation of the New Corporation . . . . . . . . . . . . . . . . - 18 -

( c) The Deed of Trust and The Loan Documents . . . . . . . . . . . . . . . . . . . . . - 20 -

c. Estoppel by Deed . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -

(1) Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -

(2) Fact Issues on Estoppel by Deed . . . . . . . . . - 20 -

-IV-

d. Promissory Estoppel . . . . . . . . . . . . . . . . . . . . . . . . - 21 -

(1) Elements ............................ - 21 -

(2) Fact Issues on Estoppel by Deed . . . . . . . . . - 21 -

e. Quasi-Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -

(1) Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -

(2) Fact Issues on Quasi-Estoppel . . . . . . . . . . . - 22 -

2. Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -

a. Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -

b. Fact Issues on Ratification . . . . . . . . . . . . . . . . . . . - 23 -

3. Waiver/Release ................................. - 24 -

a. Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -

b. Fact Issues on Waiver/Release . . . . . . . . . . . . . . . . - 24 -

c. Contract Context . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -

d. Contract Construction Rules . . . . . . . . . . . . . . . . . - 25 -

e. Contract Provision . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -

(1) Section 2.5 of the Guaranty ............. - 26 -

(2) Section 2.10( c) of the Guaranty .......... - 27 -

(3) Section 2 .10( d) of the Guaranty ......... - 27 -

(4) Section 2.1 O(i) of the Guaranty .......... - 28 -

(5) Section 2.lO(k) of the Guaranty ......... - 29 -

(6) Deed of Trust, Paragraph 13(g) .......... - 29 -

(7) Modification Agreement, Paragraph 6 .... - 31 -

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(8) Modification Agreement, Paragraph 16 . . . - 31 -

4. Bona Fide Mortgagee/Lender . . . . . . . . . . . . . . . . . . . . . . - 32 -

a. Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -

b. Fact Issues on Bona Fide Mortgagee/Lender . . . . - 33 -

5. After Acquired Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -

a. Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -

b. Fact Issues on After Acquired Title . . . . . . . . . . . . - 33 -

c. Cases relied on by JLE and Emerson are not on point . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -

d. Texas Law Does Not Apply After-Acquired Title to Officers of Corporations When the Transfer is Not Absolute . . . . . . . . . . . . . . . . . . . . - 35 -

6. There are Fact Issues on Unclean Hands or Mutual Mistake Which Bar Equitable Defenses and Prevent Summary Judgment .......... ·.· ................. - 36 -

C. JLE and Emerson Failed to Negate One or More Elements of Appellant's Claims ................................. - 37 -

1. Trespass to Try Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 7 -

a. Alleged Negated Elements of Trespass to Try Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -

b. Fact Issues on Trespass to Try Title . . . . . . . . . . . - 39 -

c. Cases Cited by JLE and Emerson are Not Conclusive on Title Issue . . . . . . . . . . . . . . . . . . . . - 3 9 -

2. Wrongful Foreclosure ............................ - 41 -

a. Alleged Negated Elements of Wrongful Foreclosure ............................... - 41 -

b. Fact Issues on Wrongful Foreclosure - 41 -

-VI-

3. Money Had and Received ........................ - 41 -

a. Alleged Negated Elements of Money Had and Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -

b. Fact Issues on Money Had and Received . . . . . . . - 42 -

4. Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 42 -

a. Alleged Negated Elements of Conversion . . . . . . . - 42 -

b. Fact Issues on Conversion . . . . . . . . . . . . . . . . . . . - 42 -

5. Negligence Per Se . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -

a. Summary Judgment on this Claim was Denied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -

ISSUE NO. 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -

IS Storage and Post Oak Bank's No-Evidence Motion for Summary Judgment Was Erroneously Granted Because the Summary Judgment in Favor of JLE and Emerson was Erroneously Granted and Appellant Presented Genuine Issues of Material Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -

1. IS Storage and Post Oak Bank's No-Evidence Motion for Summary Judgment Was Erroneously Granted .......... - 43 -

a. The Sole Basis of the IS Storage and Post Oak Bank Motion: Because Summary Judgment was Rendered for JLE and Emerson and Appellants Claims Against IS Storage and Post Oak Bank are Derivative to Claims Against JLE and Emerson, then Appellant's Claim Against Them Fail . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -

2. Trespass to Try Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 44 -

a. IS Storage and Post Oak Bank's Contentions . . . . . . . . . - 44 -

b. Appellant's Response Raised Fact Issues . . . . . . . . . . . . - 45 -

1. If Order Granting JLE and Emerson's

-vn-

Summary Judgment is reversed, then the Order Granting IS Storage and Post Oak Bank's Summary Judgment Should Likewise be Reviewed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -

2. Fact Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -

3. Money Had and Received .............................. - 47 -

a. The Contentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 7 -

b. Appellant's Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 47 -

4. Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -

a. The Contentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -

b. Appellant's Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -

VIL Prayer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 49 -

Certificate of Compliance ........................................ - 50 -

Certificate of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 50 -

Appendix .................................................. - 51, 52 -

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INDEX OF AUTHORITIES

Rules:

TEX. R. Crv. P. 166a(a),(b) ....................................... - 14 -

TEX. R. Crv. P. 166a(i) ..................................... - 13, 14, 45 -

TEX. R. Crv. P. 805 ................ ' . . . . . . . . . . . . . . . . . . . . . . . . . - 42, 43 -

Codes:

TEX. PROP. CODE §22.001 ........................................ - 37 -

Cases:

American Tobacco Co. v. Grinnell,951S.W.2d420, 436 (Tex. 1997) - 22 -

Angell v. Bailey, 225 S.W.3d 834, 842 (Tex. App. -El Paso 2007, no pet.) . - 20 -

Aransas Pass Harbor Co. v. Manning, 63 S.W. 627 (Tex. 1901) ...... - 39, 40 -

Baldwin v. Johnson, 65 S.W.171, 172 (Tex. 1901) .................... - 40 -

Burns v. Rochon, 190 S.W.3d 263, 267-68 (Tex. App. - Houston [Pt Dist.] 2006, no pet.) . . . . . . . . . . . . . . . . . . . . . . . . - 42 -

Cadle Co. v. Ortiz, 227 S.W.3d 831 (Tex. App. - Corpus Christi 2007, no pet.) .......................... - 41 -

Carothers v. Alexander, 12 S.W. 4, 12 (Tex. 1889) ........... - 20, 21, 35, 40 -

Casstevens v. Smith, 269 S.W.3d 222, 235 (Tex. App. -Texarkana 2008, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -

Crump v. Frank, 2013 WL 2420381 (Tex. App. -Texarkana 2011, no pet.) - 36 -

Denman v. Atlas Leasing, L.L.C., 288 S.W.3d 591 (Tex. App. -Dallas 2009, not pet.) ................................ -41-

Duhig v. Peavy Moore Limber Co., 144 S.W.2d 875 (Tex. 1940) ...... - 33, 34 -

Eagle Pass Realty Co. v. Esparza, 474 S.W.2d 624 (Tex. Civ. App. - San Antonio 1971, writ ref. n.r.e.) .. - 19, 38 -

-lX-

Earwoodv. Smart, 107 S.W.3d 1, 3-4 (Tex. App. - San Antonio 2002, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -

Fein v. R.P.JI, Inc., 68 S.W.3d 260, 266 (Tex. App. - Houston [14th Dist.] 2002, pet. denied) ................... - 26 -

Ferrellv. Delano, 144 S.W. 1039, 1041 (Tex. Civ. App. - San Antonio 1912) .............................. - 37 -

Fin. Freedom Fin. Funding Corp. v. Horrocks, 294 S.W.3d 749, 755-56 (Tex. App. -Houston [14th Dist.] 2009, no pet.) - 35 -

Ford Motor Co. v. Ridgeway, 135 S.W.3d 598, 600 (Tex. 2004) . . . . . . . . . - 46 -

Forrest v. Guardian Loan & Trustee Co., 230 S.W.2d 273, 276 (Tex. Civ. App. -El Paso 1950, r'hg den'd) ........ - 40 -

Frost Nat'! Bankv. L & F Distrbs., Ltd., 165S.W.3d310,312(Tex.2005) .................................. -26-

Galley v. Apollo Associated Servs., 177 S.W.3d 523, 528-29 (Tex. App - Houston [l't Dist.] 2005, no pet.) .... - 18 -

Geosearch Inv. v. Howell Petroleum Corp., 819 F.2d 521, 526-7 (5th Cir. 1987) ................................. - 22 -

Gilcrease Oil Co. v. Cosby, 132 F.2d 790, 792 (5th Cir. 1943, reh'g denied) ................................... - 21, 40 -

Green Int'! v. Solis, 951 S.W.2d 384, 391(Tex.1997) ................. - 42 -

Grahn v. Marquardt, 657 S.W.2d 851, 855 (Tex. App. - San Antonio 1983, writ refd n.r.e.) ................. - 36 -

Heritage Res., Inc. v. Nations Bank, 939 S.W.2d 118, 121 (Tex. 1996) .... - 26 -

Humble Oil & Refining Co. v. Blankenburg, 235 S.W.2d 891, 894 (Tex. 1951) .................................. - 40 -

Hunt v. Baldwin, 68 S.W.3d 117, 132 (Tex. App. - Houston [ 141h Dist.] 2001, no pet.) . . . . . . . . . . . . . . . . . . . . . . - 41 -

Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 515-6 (Tex. 1998) ................................ - 15 -

-x-

Kennedy Con., Inc. v. Forman, 316S.W.3d129, 135 (Tex. App. -Houston [14tl1 Dist.] 2010,no pet.) ..................... - 37-

Kuykendahl v. Spiller, 299 S.W.2d 522 (Tex. App. - Fort Worth 1927, writ ref'd) . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -

Ligon v. E. F. Hutton & Co., 428 S.W.2d 434, 437 (Tex. Civ. App. - Dallas 1968, writ ref'd n.r.e.) ...................... - 36 -

Lucky Homes, Inc. 11. Tarrant Sav. Ass 'n, 379 S.W.2d 386, 388 (Tex. Civ. App. -Fort Worth 1964), rev 'don other grounds, 390 S.W.2d 473 (Tex. 1965) . . . . . . . . . . . . . . . . . . - 35 -

McMahon v. Greenwood, 108 S.W.3d 467, 486-491 (Tex. App. -Houston [14th Dist.] 2003, no pet.) ..................... - 30 -

Martin v. Amerman, 133 S.W.3d 265 (Tex. 2004) . . . . . . . . . . . . . . . . . . . . . - 37 -

Matagorda County Hosp. Dist. v. Burwell, 189 S.W.3d 738, 740 (Tex. 2006)(per curiam) . . . . . . . . . . . . . . . . . . . . . . . . - 26 -

Motel Enterprises, Inc. v. Hoban, 784 S.W.2d 545, 547 (Tex. App. - Houston [l't Dist.] 1990, no writ) . . . . . - 23 -

Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex. 1982) . . . . . . . . . . . . . . . . . . . . . - 21 -

Nguyen &. Southwestern Nat 'l Bank v. Chapa, 305 S.W.3d 316, 323 (Tex. App. -Houston [14th Dist.] 2009, pet, denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -

Noble Mortg. & Inv., LLC v. D&M Vision Inv., LLC, 340 S.W.3d 65, 76 (Tex. App. - Houston [l't Dist.] 2011, no pet.) ....... - 33 -

Perry Nat'! Bankv. Eidson, 340 S.W.2d 483, 486 (Tex. 1960) ........... - 20 -

Powers v. Wallis, 258 S.W.2d 360, 362 (Tex. Civ. App. -Eastland 1953, writ ref'd n.r.e.) .................... - 20 -

Robinson v. Saxon Mortgage Servs., Inc., 240 S.W.3d 311, 313 (Tex. App. -Austin 2007, no pet.) . . . . . . . . . . . . . . . - 30 -

Rogers v. Ricane Enters., 884 S.W.2d 763, 768 (Tex. 1994) ............. - 37 -

-XI-

Shamburger Lumber Co. v. Bredthauer, 62 S.W.2d 603 (Tex. Civ. App. - Fort Worth 1933, writ dism'd) - 34 -

Slaughter v. Qualls, 162 S.W.2d 671, 674-5 (Tex. 1942) ............... - 37 -

Smith v. McKnight, 240 S.W.2d 368, 371 (Tex. Civ. App. -Amarillo 1951, no writ) .......................... - 24 -

Staats v. Miller, 243 S.W.2d 686, 687-88 (Tex. 1951) .................. - 41 -

Texas Parks & Wildlife Dept. v. Sawyer Trust, · 354 S.W.3d 384, 389 (Tex. 2011) .................................. - 37 -

Trenholm v. Ratcliff, 646 S.W.2d 927, 932 (Tex. 1983) .............. - 17, 22 -

United Mobile Networks, L.P. v. Deaton, 939 S.W.2d 146, 147 (Tex. 1997) .................................. - 42 -

Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005) .................................. - 26 -

Vessels v. Anschutz Corp., 823 S.W.2d 762, 765-6 (Tex. App. -Texarkana 1992, writ denied) ......................... - 22 -

Waco Bridge Co. v. City of Waco, 20 S.W. 137, 140 (Tex. 1892) ......... - 20 -

Walden v. Affiliated Computer Servs., 97 S.W.3d 303, 326 (Tex. App. - Houston [141

h Dist.] 2003, pet. denied) ................... - 36 -

Wicker v. Tex. Bank of Garland, NA., No. 05-94-01109-CV, 1995 WL 141152, at *3 (Tex. App. -Dallas Mar. 31, 1995, writ den'd) (not designated for publication) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -

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ABBREVIATIONS AND RECORD REFERENCES

"C.R._" followed by a number refers to that certain page of the Clerk's Record filed in Case No. 2012-20372 in this case.

"Appellant" refers to Appellant, Tracey Lynn Freezia.

"IS Storage" refers to Appellee, IS Storage Ventures, LLC.

"JLE" refers to Appellee, JLE Investors, Inc. d/b/a Associates Mortgage Investors.

"Post Oak Bank" refers to Appellee, Post Oak Bank, N.A.

"Emerson" refers to Appellee, James L. Emerson.

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NO. 14-14-00174-CV

IN THE FOURTEENTH COURT OF APPEALS

TRACEY LYNN FREEZIA, APPELLANT,

v. IS STORAGE VENTURES, LLC, JLE INVESTORS, INC.

D/B/A ASSOCIATED MORTGAGE INVESTORS, POST OAK BANK, N.A. AND JAMES L. EMERSON,

APPELLEES,

From Cause No. 2012-20372; Tracey Lynn Freezia v. IS Storage Ventures, LLC Investors, LLC, JLE Investors, Inc. d/b/a Associated Mortgage

Investors, Post Oak Bank, N.A. and James L. Emerson; In the 28lst Judicial District Court of Harris County, Texas

BRIEF OF APPELLANT, TRACEY LYNN FREEZIA

TO THE HONORABLE FOURTEENTH COURT OF APPEALS:

COMES NOW Tracey Lynn Freezia (referred to as "Ms. Freezia" or

"Appellant"), Appellant, and files this appeal.

I. STATEMENT OF THE CASE

This is a trespass to try title, wrongful foreclosure, conversion and money had

and received case against a lender and a trustee under a Deed of Trust after a

foreclosure and against a subsequent purchaser and its lender. (C.R. 127-33). The

trial court granted summary judgment on affirmative defenses and/or the claims of the

Appellant against the foreclosing lender and its trustee. (C.R. 499). Based on that

summary judgment, and because the claims against the subsequent purchaser and its

lender were derivative claims, these parties moved for summary judgment, which was

granted. (C.R. 604). From these orders granting summary judgment, Appellant

appeals. (C.R. 1027).

II. STATEMENT REGARDING ORAL ARGUMENT

Appellant believes oral argument will aid the Court as this is a case requiring

explanation over and above the Briefs filed herein. If oral argument is granted,

Appellant requests permission to attend and participate in oral argument.

III. ISSUES PRESENTED

ISSUE NO. l

The Trial Court Erred in Granting JLE and Emerson's Motion for Summary Judgment Because Appellant Raised Genuine Issues of

Material Fact on their Affirmative Defenses of Estoppel, Ratification, Wavier/Release, Bona Fide Mortgagee Status, Wrongful Foreclosure, and After Acquired Title and on Her Claims for Trespass to Try Title

Money Had and Received, and Conversion

ISSUE NO. 2

IS Storage and Post Oak Bank's No-Evidence Motion for Summary Judgment Was Erroneously Granted Because the Summary Judgment in Favor of JLE and Emerson was Erroneously Granted and Appellant

Presented Genuine Issues of Material Fact

-2-

IV. STATEMENT OF FACTS

A. UNDISPUTED FACTS.

Appellant sued Appellees claiming a superior title to property located at 215

Wynne St., Houston, Texas (the "Property") which is a storage rental property. (C.R.

8-13). Appellees' claims of title to the Property derive from a Note andDeed of Trust

executed by Original Designer Homes, Inc. (C.R. 630-636). Yet, the title to the

Property had never vested with Original Designer Homes, Inc. (C.R. 467).

On March 29, 1958, Designer Homes, Inc. 1 was formed in Houston, Texas,

under charter number 145662-00. (C.R. 487). The Articles of Incorporation of

Designer Homes, Inc. designated a twenty five year term of existence beginning in

1958. (C.R. 487). On March 28, 1983, Designer Homes, Inc.'s 25 year term

expired.2 (C.R. 487).

Under the Texas Business Corporation Act, which was the governing law of

business organizations at the time, Designer Homes, Inc. had a three year grace period

within which it could amend its articles of incorporation to extend the life of the

corporation. See TEX. Bus. CORP. ACT, ART. 7.12(E). (C.R. 487).

Designer Homes, Inc., however, did not do so and the time to extend the

corporation's existence expired on March 28, 1983. (C.R. 487)

In 1983, Charles Freezia was the sole shareholder of Designer Homes, Inc.

2

Designer Homes, Inc., not Original Designer Homes, Inc.

The Texas Business Corporations Act provides that when a corporation expires, any corporate assets are automatically distributed to its shareholders in proportion to their rights and interests. See TEX. Bus. CORP. ACT, ART. 6.04(3).

-3-

(C.R. 42-3). Mr. Freezia acquired all shares in Designer Homes, Inc. prior to 1967.

(C.R. 42).

Therefore, in 1983, when Designer Homes, Inc. expired, all of its property

became the property of Charles Freezia, individually, who was the sole shareholder

when the corporation expired. (C.R. 42-3). However, Charles Freezia was unaware

of the expiration of the charter of Designer Homes, Inc. and continued to do business.

as if Designer Homes, Inc. was still in existence. (C.R. 35).

Charles Freezia died in 2004, and his will was probated under Cause No.

347,117 in Harris County Probate Court 1. (C.R. 45). Mr. Freezia left all of his

property equally to his four daughters, including Appellant and her three sisters.

(C.R. 47). Appellant later received all of Designer Homes, Inc. 's property interest in

the Property by quitclaim from her sisters. (C.R. 36).

Appellant's ex-husband, Thomas W. Luedemann, was appointed independent

executor of the Estate of Charles Freezia. (C.R. 47). Thomas W. Luedemann,

Independent Executor, continued to act as if Designer Homes, Inc. was in still good

standing. Appellant was named the president of Designer Homes, Inc. and became

responsible for its day-to-day operations. (C.R. 35).

In 2005, the Secretary of State purged all corporations that were not in good

standing, including Designer Homes, Inc. (C.R. 455; 487). Appellant became aware

of this when she sought to obtain a letter of good standing from the Secretary of State

at the request of a lender, Appellee, JLE Investors. Inc/ d/b/a Associated Mortgage

Investors ("JLE"). (C.R. 35).

-4-

Appellant sought the advice of counsel as to whether Designer Homes, Inc.

could be revived. (C.R. 455-6). She learned that the name "Designer Homes" had

been taken, but at the suggestion of JLE and her own counsel, Appellant formed a

new corporation, "Original Designer Homes, Inc." on May 18, 2005. (C.R. 327-330).

Due to similarity between corporate names and to avoid possible confusion, Original

Designer Homes, Inc. shall be referred to henceforth in this Brief as "New

Corporation."

It is undisputed that the Property was never conveyed to the New Corporation

by Designer Homes, Inc. before its corporate existence ceased in 1983. (C.R. 340;

345). It is also undisputed that the Property was never conveyed to the New

Corporation by Charles Freezia, his estate, or his heirs. (C.R. 340; 345).

Prior to lending money to the New Corporation, JLE knew that title was in the

name of Designer Homes, Inc. and not the New Corporation, due to a title report and

due to Appellant notifying JLE. (C.R. 455-457; 466-469).

On June 29, 2005, the New Corporation borrowed $360,000.00 from JLE and

executed a Promissory Note ("Note"). (C.R. 230-5). On the same date, the New

Corporation executed a Deed of Trust and Security Instrument (The Deed of Trust")

on the Property to secure the Note. (C.R. 236-42). The Note and Deed of Trust were

signed the New Corporation by Appellant as President. (C.R. 235-41). Appellant

individually signed a Guaranty of the Note. (C.R. 388-394).

The New Corporation used the loan from JLE to pay off a mortgage of

$65,184.36, an IRS lien of$24, 187.47, and to discharge various unpaid taxes. (C.R.

-5-

243-5).

JLE purportedly received a lien on the Property as beneficiary of the Deed of

Trust lien dated June 29, 2005. (C.R. 236-242). The grantor of the lien was "Original

Designer Homes, Inc., a Texas corporation f/k/a Designer Homes, Inc." which is the

New Corporation. (C.R. 23 6). In fact, the New Corporation was not formerly known

as Designer Homes, Inc. but instead was a completely new and separate corporation

and JLE knew this. (C.R. 462-465; 487). The New Corporation did not have title to

the Property and JLE knew this. (C.R. 466-469). Thus, JLE's purported lien was

invalid.

Claiming under this "purported lien," JLE foreclosed on the Property on April

5, 2011. (C.R. 331; 709). The foreclosure was conducted by James L. Emerson

("Emerson"), trustee. The buyer at the foreclosure sale was JLE. (C.R. 504).

Subsequent to the foreclosure of the Property, JLE sold the Property to IS

Storage Ventures, LLC ("IS Storage"), who partially financed the purchase with a

loan from Post Oak Bank, N.A. ("Post Oak Bank"). (C.R. 504). Post Oak Bank

claims a lien on the Property through the same lien upon which JLE had foreclosed.

B. PROCEDURAL POSTURE.

Appellant sued IS Storage, JLE, Post Oak Bank and Emerson in trespass to

try title, for wrongful foreclosure, for money had and received, conversion, and

negligence per se. (C.R. 8-13; 127-133). Appellant alleged that JLE's lien was

invalid and that JLE's foreclosure conducted by Emerson, as trustee, was wrongful.

(C.R. 8-13; 127-33). Appellant alleged she had superior title to the Property over all

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parties. (C.R. 8-13; 127-133). Appellant claimed a fee simple interest in the Property

and to be entitled to possession of the Property. (C.R. 8-13; 127-133). Appellant

alleged that JLE unlawfully entered upon and dispossessed her of the Property on

July 5, 2011 and IS Storage Ventures, LLC unlawfully dispossessed Appellant of the

Property beginning on November 2, 2011. Appellant requested the court to quiet title

against Appellants. (C.R. 8-13; 127-133). Because the Property is storage rental

property, Appellant, also sought the rents produced by the Property during the period

of dispossession. (C.R. 9; 11; 130).

All Appellees answered and asserted various affirmative defenses and that

Appellant's own conduct caused her damages. (C.R. 14-24; 122-5; 568-572).

JLE filed a counterclaim which was conditioned on Appellant being successful

in her suit. (C.R. 373).

Appellant moved for summary judgment on her claims. (C.R. 29-56). The trial

court denied her Motion for Summary Judgment. (C.R. 126).

JLE and Emerson filed motions for summary judgment asserting that their

affinnative defenses of estoppel, ratification, waiver, release, bona fide mortgagee

status, and/or after acquired title barred Appellant's claims. (C.R. 192-368). In

addition, JLE and Emerson moved for a no-evidence motion summary judgment

based on trespass to title, wrongful foreclosure, money had and received, conversion,

and negligence per se alleging that Appellant could not prove her claim of title. (C.R.

199-222).

Appellant responded to JLE and Emerson's Motion for Summary Judgment.

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(C.R. 441-498). The trial court granted JLE's Motion for Summary Judgment in its

entirety and granted Emerson's Motion for Summary Judgment except as to

negligence per se. (C.R. 499).

Appellant requested the trial court to reconsider its grant of summary judgment

or in the alternative to grant a Motion for New Trial. (C.R. 513-530). This motion

was denied. (C.R. 603).

IS Storage and Post Oak Bank filed a "no evidence" motion on Appellant's

claims for trespass to try to title, money had and received, and conversion based on

the trial court's granting of summary judgment in favor of JLE because IS Storage

took title from JLE. (C.R. 502-512). Appellant responded. (C.R. 540-567). The

trial court granted IS Storage and Post Oak Bank's Motion for Summary Judgment

leaving only the claim of negligence per se by Appellant against Emerson.

Emerson filed a Motion for Summary Judgment on the claims against him for

negligence per se. (C.R. 627 and 654). Appellant responded to Emerson's Motion

for Summary Judgment. (C.R. 665-1019). Emerson replied to the response. (C.R.

656-662). The court granted Emerson's Motion for Summary Judgment. (C.R.

1020).3

From the orders on summary judgment granted in favor of the Appellees,

Appellant appeals.

Subsequent to the appeal, the parties filed a Rule 11 Agreement acknowledging their collective belief and agreement that the orders in this case construed together make a final judgment as there are no remaining claims, issues or parties to be adjudicated. (S.C.R.).

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v. SUMMARY OF THE ARGUMENT

JLE's Deed of Trust lien is not from Appellant; it is from the New

Corporation. Appellant is not the New Corporation. The New Corporation never had

title to the Property which is the subject of this dispute. The loan documents do not

create a lien or conveyance on the Property.

In this appeal, this court will decide whether as a matter of law a lien on real

estate can be created by estoppel, ratification, bona fide lender status, waiver, release,

or other affirmative defenses. The court will also decide whether a guarantor's

disclosed mistake of facts in title can convey a lien to a lender. Because a lien cannot

be created under these theories, because an individual guarantor is a separate legal

person from a corporation, and because Appellant raised fact issues on each and every

defense asserted by the Defendants and presented sufiicient evidence to defeat the

motions filed, the orders granting summary judgment should be reversed. The

Appellant has superior title to the Property over all Defendants.

JLE and Emerson based their summary judgment on various defenses and on

Appellant's claims. Because JLE and Emerson did not conclusively prove all

elements of their defenses and because Appellant negated or raised fact issues on the

defenses and the claims, the trial court erred in granting the summary judgment.

To be barred under equitable estoppel, JLE and Emerson had to conclusively

prove Appellant made a false statement of fact to a party without the knowledge or

means to obtain the knowledge. Appellant disclosed all facts concerning title and

corporate status to JLE and Emerson who had actual knowledge. To prevail on

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judicial estoppel, JLE and Emerson had to conclusively prove the statements they

identified made were not because by mistake. Appellant explained the circumstances

of each statement and raised an issue of fact on mistake. To prevail on estoppel by

deed, there had to be a valid deed and Appellant had to be a party to that deed.

Neither scenario is applicable. To prevail on a promissory estoppel, the Defendant

had to prove reasonable and substantial reliance. Appellant proved her accurate

disclosures to JLE and Emerson and raised a fact issue as to whether JLE and

Emerson reasonably or substantially relied on any promises. To prevail on quasi­

estoppel, JLE and Emerson had to prove an unconscionable result. Appellant raised

a fact issue because JLE and Emerson set up the transaction and participated in all

steps devised to ensure title was held by the New Corporation.

To prevail on ratification, JLE and Emerson had to conclusively prove

Appellant had full knowledge of an earlier act and intended to give validity to it.

Appellant raised fact issues as to whether she had full knowledge that the New

Corporation did not have title to the Property and whether she intended to give

validity to the earlier act. To conclusively prove waiver and release, JLE and

Emerson had to prove an existing right, with full knowledge of its existence, and an

intention to give up such right. Appellant raised fact issues on whether she had

knowledge of her right in the Property and the intention to relinquish that right. Any

provisions in the documents were signed prior to her knowledge in 2012 that the New

Corporation did not have title to the Property.

To prevail on a bona fide mortgagee status, JLE and Emerson had to

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conclusively prove they lacked actual or constructive knowledge of any claims.

Appellant raised fact issues on whether JLE and Emerson's knowledge of the state

of the title was actual or constructive knowledge of claims. To prevail on the after

acquired title doctrine, JLE and Emerson had to prove Appellant was a grantor or

mortgagor on a deed. She was neither. Moreover, the after acquired title doctrine

does not apply to president of a corporation absent an absolute conveyance.

JLE and Emerson failed to conclusively prove the above referenced defenses.

Appellant also raised fact issues on unclean hands and mutual mistake which may bar

equitable defenses. JLE and Emerson devised the transaction and all parties were

mistaken that the New Corporation held title.

JLE and Emerson failed to conclusively negate Appellant's claim of title to the

Property. Appellant presented evidence of title from a common source, Section 2.4

of the Guaranty applies to personal property, and the after acquired title doctrine does

not bar Appellant's claims. JLE and Emerson failed to conclusively negate

Appellant's claim for wrongful foreclosure. If there was no lien on the Property, the

foreclosure was wrongful. JLE and Emerson failed to conclusively negate

Appellant's claim for money had and received and conversion. If Appellant had title

to the Property, then she should not have been dispossessed of the Property and

would be owed rents collected after the wrongful foreclosure.

The sole basis for IS Storage and Post Oak Bank's Motion for Summary

Judgment was that the trial court had granted judgment for JLE and Emerson.

Because Appellant's claims against them are derivative, IS Storage and Post Oak

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Bank sought summary judgment as well on trespass to try title, conversion, and

money had and received. Yet, Appellant presented evidence and fact issues on each

claim.

VI. ARGUMENT

Standard of Review for This Appeal

A. Traditional Motion for Summary Judgment Standard of Review.

This appeal involves two of the four separate summary judgment orders

granting the Appellees' Motions for Summary Judgment.4 The court of appeals

reviews the trial court's granting of a traditional motion for summary judgment de

novo. Farmers Ins. Exch. v. Rodriguez, 366 S.W.3d 216, 221 (Tex. App. -Houston

[14u1 Dist.] 2012, pet. denied). The court of appeals must take as true evidence

favorable to the non-movant. Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d

280, 282 (Tex. 1996).

For a Defendant to prevail on a motion for summary judgment, a defendant

must either conclusively negate at least one element of each of the plaintiff's causes

of action or conclusively establish each element of any affirmative defense that was

before the trial court. Id. A matter is conclusively established if reasonable people

could not differ as to the conclusion to be drawn from the evidence. Rodriguez, 366

S. W.3d at 221. If a trial court's order granting summary judgment does not specify

the ground or grounds relied on for its ruling, the summary judgment will be affirmed

4 In this appeal, Appellant does not appeal the order denying her Motion for Swnmary Judgment (C.R. 126) or the order denying Emerson negligence per se Motion for Summary Judgment. (C.R. 1020).

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on appeal if any of the theories advanced are meritorious. Dow Chem. Co. v. Francis

46 S.W.3d 237, 242 (Tex. 2001).

B. No Evidence Motion for Summary Judgment Standard of Review.

TEX. R. Crv. P. 166a(i) requires the trial court to grant the motion for no­

evidence summary judgment ifthe nonmovant does not produce summary judgment

evidence that raises a genuine issue of material fact. Dolcefino v. Randolph, 19

S.W.3d 907, 917 (Tex. App. - Houston [14111 Dist.] 2000, pet. denied); Saenz v.

Southern Un. Gas Co., 999 S.W.2d 490, 493 (Tex. App. - El Paso 1999, pet.

denied).

In reviewing a no-evidence summary judgment, the appellate court must

consider all the evidence in the light most favorable to the party against whom the

summary judgment was rendered, crediting evidence favorable to that party if

reasonable jurors could and disregarding contrary evidence unless reasonable jurors

could not. Timpte Indus. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009); City of Keller

v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). The appellate court will affirm a no­

evidence summary judgment ifthe record shows one of the following: (1) there is no

evidence on the challenged elements, (2) the evidence offered to prove the challenged

element is no more than a scintilla, (3) the evidence establishes the opposite of the

challenged element, or ( 4) the court is barred by law or the rules of evidence from

considering the only evidence offered to prove the challenged element. Merriman v.

XI'O Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013); City of Keller, 168 S.W.3d at

810; Taylor-Made Hose, Inc. v. Wilkerson, 21 S.W.3d 484, 488 (Tex. App. - San

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Antonio 2000, pet. denied). Generally, the review of judgments granted under TEX.

R. Crv. P. 166a(i) is the same as under TEX. R. Crv. P. 166a(a), (b).

ISSUE N0.1

The Trial Court Erred in Granting JLE and Emerson's Motion for Summary Judgment Because Appellant Raised Genuine Issues of

Material Fact on their Affirmative Defenses of Estoppel, Ratification, Wavier/Release, Bona Fide Mortgagee Status. Wrongful Foreclosure, and After Acquired Title and on Her Claims for Trespass to Try Title,

Money Had and Received, and Conversion

A. The Trial Court Erred in Granting JLE Investors and Emerson's Joint Motion for Summary Judgment.

JLE and Emerson filed a traditional Motion for Summary Judgment seeking a

judgment against Appellant's claims based on their affirmative defenses of estoppel,

ratification, waiver/release, and bona fide mortgagee/lender status. (C.R. 192-367).

JLE and Emerson also sought a summary judgment against Appellant contending that

they could negate one or more of the essential elements of Appellant's causes of

action for her claims of trespass to try title, wrongful foreclosure, money had and

received, conversion, and negligence per se. (C.R. 192-367). After filing this

Motion, JLE and Emerson filed a Supplement to Their Motion for Summary

Judgment asserting that Appellant's claims were barred by after acquired title. (C.R.

384-94). Appellant filed a Response to Motion for Summary Judgment. (C.R. 441-

93).

B. JLE and Emerson Failed to Conclusively Prove Each Element of Their Affirmative Defenses.

1. Estoppel Issues.

JLE and Emerson claim that they established, as a matter oflaw, the affirmative

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defenses of equitable and legal or judicial estoppel, estoppel by deed, promissory

estoppel, and quasi estoppel. (C.R. 199-207).

a. Equitable Estoppel.

(1) Elements. Equitable estoppel is an affirmative defense which seeks to

bar a party from claiming a fact when she has, with knowledge, misled the other party

to believe a different set of facts. Johnson & Higgins of Texas, Inc. v. Kenneco

Energy, Inc., 962 S.W.2d 507, 515-6 (Tex. 1998). The elements of equitable estoppel

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

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; (5) who detrimentally relied on the representations. Id.

(2) Fact Issues on Equitable Estoppel. Appellant responded that JLE and

Emerson could not prove the first, second, and fourth elements of this affirmative

defense because Appellant made no false representations nor did she conceal material

facts, and because JLE and Emerson also had knowledge of the facts and the means

to discover the facts on their own. (C.R. 455). Appellant notified JLE and its counsel

that she had just been informed that Designer Homes, Inc. was not in good standing

and its charter had expired. (C.R. 442; 456). Charles Freezia's estate attorney and

JLE's attorney crafted a "solution" which JLE's counsel represented to Appellant

would allow the New Corporation to step into the shoes of Designer Homes, Inc.

(C.R. 455-6).

In her affidavit, Appellant averred:

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3. I did not knowingly make any false representations to JLE Investors, Inc. or James Emerson, and I did not attempt to conceal any material facts from them regarding [the Property]. Both I and [Appellees] discovered, at the same time during the process of loan underwriting, that the Secretary of State had voided out all companies whose charter had a stated term that had expired and which was not deemed perpetual pursuant to Section 2.02A(l) of the Texas Business act and that Designer Homes was one of the corporations purged. The Secretary gave no notice to the registered agent or officers of the corporation. Since this corporation had been active and viable in 2004, [Appellees]' attorney and my estate attorney at the time tried to fix the problem of Designer Homes, Inc., and its nillne no longer existing by forming a new corporation, and together those attorneys represented to me that the formation of [the New Corporation] would succeed to the interests of the old Designer Homes, Inc. I was assured by these legal representations that [the New Corporation] had the power to pledge all of the assets owned by Designer Homes, Inc., including [the Property] as collateral.

4. [ Appellees] knew before the loan to [the New Corporation] was closed that Designer Homes, Inc. had gone out of existence as they were participants in the establishment of the new corporation. I was told at closing that [the New Corporation] was now a successor corporation to Designer Homes, Inc. and owned all of Designer Homes, Inc.'s property.

5. When I signed the petition and filed [the New Corporation] for Chapter 11 bankruptcy in June of 2011, I was still under the impression that [the New Corporation] had succeeded to Designer Homes, Inc., and that Designer Homes, Inc.'s property became that of [the New Corporation]. I thought that the 100% shareholder of [the New Corporation] was the Estate of Charles Freezia. I understand now that was a mistake.

6. As soon as I discovered that [the New Corporation] did not own any of Designer Homes, Inc. 's property, I acted to dismiss [the New Corporation J's bankruptcy and to notify all creditors that had collateralized loans with [the New Corporation] of this new information.

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7. To the best of my knowledge, the idea of fonning a new corporation to succeed Designer Homes, Inc. was originated by [JLE] or their attorneys and the title company. I was told by [JLE], their attorneys, the title company, and my estate attorney that they all thought that this would be the easiest way to clear the title conditions which blocked the loan, since time was of the essence as to obtaining the loan.

8. I did not realize that [the New Corporation] did not own Designer Homes, Inc.' s property until February of 2012, after I met with _my new attorneys. Until that time, I believed that [the New Corporation] had succeeded to Designer Homes, Inc. At the time I signed modification agreements as an officer of [the New Corporation], I was under the impression that [the New Corporation] owned [the Property].

9. I later discovered, in 2012, that [the New Corporation], never had title to [the Property], and therefore had no power to convey or encumber it.

10. At the time the loan to [the New Corporation] closed in 2005, I signed a guarantee of the debt.

(C.R. 455-7).

Thus, JLE had knowledge of the facts and the means to discover the facts on

its own. Rather than concealing or misrepresenting facts, Appellant advised JLE of

the problem with title and corporate standing, and all parties participated in a

solution, albeit not an effective one. (C.R. 455-7). No party realized title did not vest

in the New Corporation. Thus, Appellant refuted the claim of equitable estoppel or

at the very least raised a fact issue because JLE and Emerson had knowledge and the

means to obtain knowledge of the facts and did not rely on Appellant. (C.R. 455-7).

Generally, estoppel and reasonable reliance are fact questions. Trenholm v. Ratcliff,

646 S.W.2d 927, 932 (Tex. 1983).

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b. Judicial Estoppel.

(1) Elements. The elements of judicial estoppel are 1) a sworn, inconsistent

prior statement made in a prior judicial proceeding; 2) the party making the statement

gained some advantage by it; 3) the statement was not made inadvertently or because

of mistake, fraud or duress; and 4) the statement was deliberate, clear and

unequivocal. Galleyv. Apollo AssociatedServs., 177 S.W.3d 523, 528-29 (Tex. App

- Houston [1st Dist.] 2005, no pet.).

(2) Fact Issues on Judicial Estoppel. JLE and Emerson asserted that

Appellant should be estopped due to statements in a bankruptcy, recitations in the

Articles of Incorporation of the New Corporation, a Deed of Trust, and loan

documents. (C.R. 199). Appellant disputed the third element of the defense of!egal

estoppel and averred that any misstatement was due to mistake. (C.R. 455-7).

Appellant specifically noted that she made a mistake based on erroneous guidance

from JLE's attorneys. (C.R. 455-7). Appellant thus raised fact questions on this

theory of estoppel.

(a) The Bankruptcy Filings. Appellant averred that when she filed

the bankruptcy of the New Corporation, she was mistaken that the New Corporation

owned the Property and qualified to be called a formerly known corporation to

Designer Homes, Inc. (C.R. 455-7, ~5, 6, 8, 9).

(b) The Articles of Incorporation of the New Corporation. Article

II of the Articles of Incorporation stated:

"The corporation Designer Homes, Inc. was initially incorporated on March 28, 1958 and its articles of

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incorporation stated it shall have a twenty-five year term of existence. On March 16, 1981 the existence of the corporation was forfeited for failure to file franchise tax reports and it was reinstated by the Secretary of State on July 30, 1992. From July 30, 1992 until October of2004,. Designer Homes, Inc. remained an active corporation and was recognized by the Secretary of State as an existing corporation under file no 145662. In October of 2004, through no fault of Designer Homes, Inc., and with no notification to the registered agents or directors of the Corporation, the Secretary of State's computer system voided out all companies whose charter had a stated term that had expired and which was not deemed perpetual pursuant to Section 2.02A(l) of the Texas Business Corporations Act. During this period of time and from the date in October of2004 to the present, the corporation has continued to operate as a defacto corporation. Because the name "Designer Homes, Inc." is no longer available, the corporation, which previously operated as Designer Homes, Inc., now files these Articles of Incorporation under the name [the New Corporation]."

(C.R. 327). Yet, Designer Homes, Inc. did not merge with or acquire shares of the

New Corporation. It did not own assets or otherwise exist to become a "successor

corporation." (C.R. 487). There is no such thing as "de facto" corporation in Texas.

Eagle Pass Realty Co. v. Esparza, 474 S.W.2d 624 (Tex. Civ. App. - San Antonio

1971, writ ref. n.r.e. ). Appellant explained and thereby raised a fact issue on mistake:

"Since this corporation had been active and viable in 2004, Defendants' attorney and my estate attorney at the time tried to fix the problem of Designer Homes, Inc., and its naine no longer existing by forming a new corporation, and together those attorneys represented to me that the formation of [the New Corporation] would succeed to the interests of the old Designer Homes, Inc. I was assured by these legal representations that [the New Corporation] had the power to pledge all of the assets owned by Designer Homes, Inc., including [the Property] as collateral."

(C.R. 455-7; 487). However, absent a conveyance by Charles Freezia's heirs to the

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New Corporation, the New Corporation had no asset to pledge. Carothers v.

Alexander, 12 S.W. 4, 12 (Tex. 1889).

(c) The Deed of Trust and The Loan Documents.

Appellant had explained that any misstatements regarding the ownership of the

Property by the New Corporation and regarding a "formerly known" status were made

by mistake. (C.R. 455-7). This negated or raised a fact issue on judicial estoppel.

c. Estoppel by Deed.

(1) Elements. Estoppel by deed prevents a party from denying the truth of

matters set forth in a deed the party has offered as grantor or has accepted as grantee.

Greenev. White, 153 S.W.2d 575, 583 (Tex. 1941); Waco Bridge Co. v. Cityo/Waco,

20 S.W. 137, 140 (Tex. 1892); Angell v. Bailey, 225 S.W.3d 834, 842 (Tex. App. -

El Paso 2007, no pet.); Earwood v. Smart, 107 S.W.3d 1, 3-4 (Tex. App. - San

Antonio 2002, pet. denied). Estoppel by deed may be invoked only in a suit on the

deed or concerning a right arising from the deed. Perry Nat'l Bank v. Eidson, 340

S.W.2d 483, 486 (Tex. 1960).

(2) Fact Issues on Estoppel by Deed. JLE and Emerson sought a summary

judgment that Appellant must be estopped by deed from asserting that Appellant

owns the Property. (C.R. 201-2). Yet, in order to invoke estoppel by deed, there

must be a good and valid deed and the Appellant must have been a grantor or grantee.

Powers v. Wallis, 258 S.W.2d 360, 362 (Tex. Civ. App. -Eastland 1953, writrefd

n.r.e.). The Deed of Trust from the New Corporation to JLE was not a valid lien

because the New Corporation owned no property to convey. In addition, Appellant

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was neither grantor nor grantee under the Deed of Trust. (C.R. 236-242). Texas

courts have held that the president of a corporation is not estopped individually from

claiming title if, as president of a corporation and on behalf of a corporation, he or she

had granted a non absolute conveyance such as a Deed of Trust. Carothers v.

Alexander, 12 S.W. 4, 12 (Tex. 1889). Further, "title to real property cannot be

acquired by 'estoppel,' particularly where estoppel allegedly flows from deeds and

transactions to which party pleading estoppel was not a party." Gilcrease Oil Co. v.

Cosby, 132 F.2d 790, 792 (5th Cir. 1943, reh'g denied); Kuykendahl v. Spiller, 299

S.W.2d 522 (Tex. App. - Fort Worth 1927, writ refd).

d. Promissory Estoppel.

(1) Elements. JLE and Emerson sought a summary judgment on their

affirmative defense of promissory estoppel. (C.R. 202-205). The elements of

promissory estoppel are 1) a promise, 2) upon which the defendant reasonably and

substantially relied, 3) which the plaintiff knew or should have known would lead the

defendant to some definite and substantial injury, and 4) where injustice can only by

avoided by enforcing the plaintiffs promise. Nagle v. Nagle, 633 S.W.2d 796, 800

(Tex. 1982).

(2) Fact Issues on Promissory Estoppel. Appellant negated or raised a fact

question on the third and fourth elements of defense of promissory estoppel. First,

Appellant asserted that the borrower was the New Corporation, not Appellant

individually, and thus there was a difference in parties and who made the promises

to which JLE and Emerson refer. (C.R. 445). Appellant had made no promises or

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representations as to the validity of the title to the Property. (C.R. 445). All parties

to the transaction - Appellant, JLE, and their attorneys - believed that the New

Corporation was the owner of the Property. (C.R. 455-7). Yet, all parties also !mew

every fact concerning the state of the title. (C.R. 340). Thus, whether there was a

promise on which JLE or Emerson reasonably and substantially relied or whether

Appellant knew or should have known JLE or Emerson would be lead to a definite

and substantial injury is a fact question. American Tobacco Co. v. Grinnell, 95 l

S.W.2d 420, 436 (Tex. 1997). Reasonable and justifiable reliance is an issue of fact.

Geosearch Inv. v. Howell Petroleum Corp., 819 F.2d 521, 526-7 (5th Cir. 1987);

Trenholm v. Ratcliff, 646 S.W.2d 927, 932 (Tex. 1983).

e. Quasi-Estoppel.

(1) Elements. JLE and Emerson also sought a summary judgment on their

affirmative defense of quasi-estoppel. (C.R. 202). JLE and Emerson cannot prove

quasi-estoppel as a matter oflaw. Quasi-estoppel prevents a party who has benefitted

from a transaction from asserting, to another's disadvantage, a right inconsistent with

a position taken by the party, where the result would be unconscionable. Vessels v.

Anschutz Corp., 823 S.W.2d 762, 765-6 (Tex. App. -Texarkana 1992, writ denied).

(2) Fact Issues on Quasi-Estoppel. Appellant raised a fact question or

conclusively negated the affirmative defense of quasi-estoppel. Appellant disputed

that the result of trying title to the Property would be unconscionable because it was

JLE which prepared the paperwork and devised the legal scheme to pass title to the

New Corporation. (C.R. 445; 455-6). Because Appellant raised fact issues as to this

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element of the affirmative defense of quasi-estoppel, the trial court should have

denied JLE and Emerson's Motion.

2. Ratification.

a. Elements. JLE and Emerson sought summary judgment on their

affirmative defense of ratification. The elements of ratification are 1) approval by act,

word or conduct, 2) with full knowledge of the facts of the earlier act, and 3) with the

intention of giving validity to an earlier act. Motel Enterprises, Inc. v. Hoban, 784

S.W.2d 545, 547 (Tex. App. -Houston [1st Dist.] 1990, no writ).

b. Fact Issues on Ratification. Appellant raised fact issues as to the

second and third elements of the affirmative defense of ratification. When Appellant

signed the Modification Agreements on behalf of the New Corporation in 2006 and

2008, she did not have full knowledge of the facts of the earlier act and she did not

intend to give validity to an earlier act. (C.R. 246-259; 456-7). Appellant did not

discover until 2012 that the New Corporation did not have title to the Property. (C.R.

457). Being unaware, she did not and could not have full knowledge of the facts of

an earlier act nor could she intend to give validity to it. Id. Thus, Appellant raised

fact questions as to the second and third elements of ratification.

Appellant did not challenge the validity of the Guaranty she signed personally.

Instead, she challenged title issues. (C.R. 12 7 -13 3). Because JLE and Emerson cannot

conclusively establish every element of the affirmative defense of ratification, the

court should have denied the Motion.

-23-

3. Waiver/Release.

a. Elements. JLE and Emerson moved for summary judgment on their

affirmative defense of waiver and release. The elements of waiver are 1) an existing

right, benefit, or advantage made, 2) with full knowledge of its existence, 3) with

intention to relinquish such right, 4) for valuable consideration. Smith v. McKnight,

240 S.W.2d 368, 371 (Tex. Civ. App. -Amarillo 1951, no writ).

b. Fact Issues on Waiver/Release. Like ratification, Appellant did not

know until 2012 that the New Corporation did not have title to the Property. She did

not have "full knowledge of her rights" or any "intention to relinquish" her rights.

Appellant signed a Guaranty, but at the time she had no knowledge she had any

interest in the Property. (C.R. 447; 457). There is a fact question as to whether

Appellant had full knowledge of any existing right and intended to relinquish that

right. Therefore, because Appellant raised a fact issue as to waiver and release, the

court should have denied the Motion.

c. Contract Context.

JLE and Emerson argues that certain provisions of the contract bar Appellant's

claim. The provisions cited by JLE and Emerson must be read in context of the

purpose of the Guaranty, which is payment. Appellant guaranteed only the

Indebtedness, not the validity of any lien. (C.R. 388-394). Section 1.1 of the Guaranty

states:

"Indebtedness As used in this Guaranty Agreement, the "Indebtedness" means all indebtedness now or hereafter owing by Borrower to Lender, including without limitation, the Note, all principal advanced under the Note

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and all interest and default rate interest on the Note, together with any modifications, extensions, renewals, and/or rearrangements of the Note, together with all amounts that Borrower may from time to time become obligated to pay or reimburse to Lender under the Security Documents, including without limitation amounts paid by Lender for ad valorem taxes or insurance premiums or repair costs that are obligations arising under or in connection with the Security Documents, and including all reasonable attorney's fees and costs of court incurred by Lender in enforcing Lender's rights under the Security Documents. Without limiting the generality of the foregoing, the Indebtedness guaranteed under this Guaranty Agreement includes all post-petition interest, expenses and other liabilities of Borrower that would be owed by Borrower to Lender but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization, or similar proceeding involving Borrower.

(C.R. 388). This section refers only to payment issues, not lien issues.

Likewise, Section 2.1 states:

Indebtedness Guaranteed. Guarantor unconditionally and irrevocably guarantees the prompt payment when due, whether at maturity or otherwise, of all of the Indebtedness. If Guarantor fails to make any payment of any part of the Indebtedness when due, or if the Note or Security Document under which such payment is due provides any cure period, before the expiration of said cure period, then said failure will constitute a default under this Guaranty Agreement."

(C.R. 389). Nonetheless, JLE and Emerson cited the following contract provisions

for their theories of estoppel, ratification, waiver, and release which will be addressed

here.

d. Contract Construction Rules.

In construing a written contract, the primary concern of the court is to ascertain

-25-

the true intentions of the parties, as expressed in the instrument. Valence Operating

Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). Ordinarily, the writing alone is

sufficient to express the parties' intentions, for it is the objective, not subjective,

intent that controls. Matagorda County Hosp. Dist. v. Burwell, 189 S.W.3d 738, 740

(Tex. 2006)(per curiam). To achieve this, a court examines and considers the entire

writing in an effort to harmonize and give effect to all provisions so that none will be

rendered meaningless. Valence Operating Co., 164 S.W.3d at 662.

Contract terms are given their plain, ordinary, and generally accepted

meanings, unless the contract itself shows them to be used in a technical or different

sense. Id. Contracts are construed from a utilitarian standpoint bearing in mind the

particular business activity sought to be served and will avoid when possible and

proper a construction which is unreasonable, inequitable, and oppressive. Frost Nat 'l

Bankv. L & F Distrbs, Ltd., 165 S.W.3d310, 312 (Tex. 2005). The contract must

be read as a whole, rather than by isolating a certain phrase, sentence, or section of

the agreement. Fein v. R.P.H, Inc., 68 S.W.3d260, 266 (Tex. App. -Houston [14tl1

Dist.] 2002, pet. denied). The court presumes that the parties to the contract intended

every clause to have some effect. Id; Heritage Res., Inc. v. Nations Bank, 939 S.W.2d

118, 121(Tex.1996).

e. Contract Provisions.

(1) Section 2.5 of the Guaranty.

Section 2.5 of the Guaranty states that Appellant waived:

"any defense or right arising by reason of any disability, lack of corporate authority or power ... or other defense of

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Borrower or any other guarantor of any of the Indebtedness II

(C.R. 390). Appellant did not assert the borrower lacked authority or power or had

a defense to the Note. Appellant's trespass to try title case is based on the premise

that the New Corporation did not have title to the Property, not a lack of power to act.

(2) Section 2.lO(c) of the Guaranty.

JLE and Emerson next cited to Section 2.10( c) of the Guaranty asserting that

Appellant waived any rights she might have in connection with:

" ... lack of power of Borrower, Guarantor or any other party at any time liable for payment of all or part of the Indebtedness ... any sale, lease or transfer of any or all of the assets ofBorrower, Guarantor or any other party, or any changes in the shareholders or members of Borrower, Guarantor, or any other party; or any change of name, identity, structure, reorganization or any change in the business or operations ofBorrower, Guarantor or any other party."

(C.R. 391 ). There is no defense oflack of power nor is there a sale, lease, or transfer

of assets issue. Section 2.10 of the Guaranty describes events and circumstances that

would reduce or discharge Appellant's monetary obligations. (C.R. 388-394).

Section 1.1, 2.1, and 2.10 of the Guaranty must be read together. Appellant's

obligations are only of payment and do not address or waive the right to title to the

Property. (C.R. 388-394). Because the Guaranty is not an issue in this case, and

because the only issues are title to the Property, this section of the Guaranty is

inapplicable.

(3) Section 2.lO(d) of the Guaranty.

JLE and Emerson claimed that Appellant had expressly and individually

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waived any right she may have or had to assert her claims in Section 2.1 O( d) of the

Guaranty, which states:

"The invalidity, deficiency, illegality orunenforceability of all or any part of the Indebtedness, or any document or agreement executed in connection with the Indebtedness, for any reason whatsoever, including without limitation ... creating the Indebtedness or any part thereof is ultra vires, the officers or representatives executing the documents or otherwise creating the Indebtedness acted in excess of their authority .... the creation, performance, or repayment of the Indebtedness (or the execution, delivery, and performance of any document or instrument representing part of the Indebtedness, or executed in connection with the Indebtedness) is illegal, uncollectible, legally impossible, or unenforceable, or the Note, the Security Documents or other documents or instruments pertaining to the Indebtedness have been forged or otherwise are irregular or not genuine or authentic."

(C.R. 391-2). This is a trespass to the try title action. There is no issue of ultra vires,

forgery, genuineness and the like nor is there any dispute as to Indebtedness. Again,

the Guaranty of Indebtedness is a monetary default issue, not a validity of!ien issue.

( 4) Section 2.1 O(i) of the Guaranty.

JLE and Emerson further contended that in paragraph 2.1 O(i) of the Guaranty,

Appellant waived any right to assert:

"The fact that any collateral, security interests, or lien contemplated or intended to be given, created, or granted as security for the repayment of the Indebtedness is or is not properly perfected or created, and proves to be unenforceable or subordinate to any other security interest

1. II or 1en ...

(C.R. 392). Yet, Section 2.lO(i) of the Guaranty it is limited in application to events

that reduce Appellant's obligation of payment; there is no contractual obligation

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represented in the loan documents to guarantee the purported lien granted by the New

Corporation. (C.R. 388-394). Like ratification, Appellant did not know until 2012

that the New Corporation did not have title to the Property. She did not have "full

knowledge of her rights" or any "intention to relinquish" her rights. Appellant signed

a Guaranty, but at the time she had no knowledge she had any interest in the Property.

(C.R. 44 7; 457). There is a fact question as to whether Appellant had full knowledge

of any existing right and intended to relinquish that right.

(5) Section 2.lO(k) of the Guaranty.

Emerson further contended that in the Guaranty, Section 2.1 O(k), Appellant

waived:

"any other action taken or omitted to be taken with respect to the Note, the Security Documents, the Indebtedness, or the security and collateral therefore, that would or might constitute or afford any legal or equitable discharge, release of, or defense to a guarantor or surety ... whether or not such action or omission prejudices Guarantor or increases the likelihood that Guarantor will be required to pay the Indebtedness pursuant to the terms thereof."

(C.R. 393). This section deals with increasing Appellant's liability of the Guaranty

which is not an issue in this case. Again, Appellant asserts that a reading of the

Guaranty as a whole, including Sections 1.1 and 2.1, reflects guaranty of

Indebtedness, not lien validity. (C.R. 388-394).

(6) Deed of Trust, Paragraph 13(g).

JLE and Emerson further contended that Appellant waived any complaints after

the sale was conducted under the Deed of Trust in paragraph l 3(g), which states:

"any sale under the powers granted by this Deed of Trust shall be a perpetual bar

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against Gran tors, their heirs, successors, assigns and legal representatives." (C.R.

236-242). The interpretation of a deed of trust is governed by the same rules

applied to contracts. Robinson v. Saxon Mortgage Servs., Inc., 240 S.W.3d 311, 313

(Tex. App. -Austin 2007, no pet.). A deed of trust is construed along with the note

it is intended to secure. Id.

Paragraph 13(g) bars grantors, their heirs, successors, assigns, and legal

representatives. Yet, Appellant is not individually a party to the Deed of Trust and

there was no evidence that Appellant is an "heir" of the New Corporation, an "assign"

of the New Corporation, or a "legal representative" of the New Corporation. A legal

representative is not an officer, but rather someone who stands in place of another.

McMahon v. Greenwood, 108 S.W.3d 467, 486-491 (Tex. App. - Houston [141h

Dist.], 2003 no pet.). Black's Law Dictionary provides:

"The term in its broadest sense, means one who stands in place of, and represents the interests of, another. A person who oversees the legal affairs of another. Examples include the executor or administrator of an estate and a court appointed guardian of a minor or incompetent person. Term "legal representative," which is almost always held to be synonymous with term "personal representative," means, in accident cases, member of family entitled to benefits under wrongful death statute. Unsatisfied Claim and Judgment Fund v. Hamilton, 256 Md. 56, 259 A.2d 303, 306."

Black's Law Dictionary, 5th ed. (1979). Nothing in the loan documents indicates any

intention to change the ordinary meaning of this definition so as to make Appellant

the New Corporation.

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(7) Modification Agreement, Paragraph 6.

JLE and Emerson contended that the terms and provisions of the Modification

Agreements barred Appellant's claims in Paragraph 6, which states:

"Release ofLender. Borrower releases, acquits and forever discharges Lender, Lender's agents, servants and employees and all persons, natural or corporate, in privity with them or any of them, from any and all claims or causes of action of any kind whatsoever, at common law, statutory or otherwise, which Borrower has now or might have in the future, known or unknown, now existing or that might arise hereafter, directly or indirectly attributable to the Property, the Loan Documents, or from any transaction or matter in connection withe Loan Documents, or the Property, it being intended to release all claims of any kind or nature that Borrower might have against those hereby released whether asserted or not.

(C.R. 255). Yet, in Paragraph 6, it is the Borrower, not the Appellant, which is

providing a release.

(8) Modification Agreement, Paragraph 16.

JLE and Emerson urged that Appellant's conduct operated as a bar to any

complaints she may have had as to the origination of the loans. (C.R. 208). Emerson

contended that Appellant's actions were inconsistent with individual ownership

because Appellant signed Modification Agreements which expressly waived and

released any claims which challenged the validity of the loan transaction in Paragraph

16, which states:

"Each Guarantor, whether one or more, (a) consents and agrees to the terms and provisions of the foregoing Agreement; (b) agrees that Guarantors' guaranty of the Loan, as evidenced by Guarantors' Guaranty Agreement remains in full force and effect securing payment of the Loan, as renewed, rearranged, extended, amended and

-31-

modified by the foregoing Agreement; ( c) agrees that Guarantors' Guaranty Agreement is Guarantors' valid, binding and enforceable obligation, and ( d) reaffirms each representation, warranty, convenant, agreement and obligation contained in or arising under Guarantors' Guaranty Agreement and the other Loan Documents as if each were separately stated herein and made as of the date hereof."

(C.R. 256-7). JLE and Emerson contended the foregoing provisions are binding on

Appellant, through Paragraph 12, which states:

"Parties Bound. This Agreement is binding on and inures to the benefit of Lender, Borrower, and their respective heirs, executors, administrators, legal representatives, successors and assigns."

(C.R. 256). JLE and Emerson contend Appellant individually acknowledged,

consented, and agreed to the foregoing terms. (C.R. 208). Yet, a corporation is a

separate legal entity from its officers, its shareholder, or its guarantors. Neither ILE

nor Emerson presented any evidence that Appellant is an "heir", "executor",

"administrator", "legal representative", "successor" or "assign" of the New

Corporation. See page 30, infra. Moreover, waiver principles are based on

relinquishments of known rights. Appellant accordingly had raised fact issues on

whether she had "full lmowledge" and an "intention to relinquish" her rights.

4. Bona Fide Mortgagee/Lender.

a. Elements. JLE and Emerson sought summary judgment on their

affirmative defense of bona fide mortgagee/lender. To show bona fide mortgagee, a

defendant must show that it I) took a lien in good faith, 2) for valuable consideration,

and 3) without actual or constructive notice of outstanding claims. Nguyen &.

-32-

Southwestern Nat'! Bankv. Chapa, 305 S.W.3d316, 323 (Tex. App. -Houston [14th

Dist.] 2009, pet, denied); Noble Mortg. & Inv., LLC v. D&M Vision Inv., LLC, 340

S.W.3d 65, 76 (Tex. App. - Houston [1st Dist.] 2011, no pet.).

b. Fact Issues on Bona Fide Mortgagee/Lender. Appellant raised a fact

question as to the third element of the affirmative defense of bona fide mortgagee

status because JLE and Emerson had actual and constructive knowledge that title was

in Designer Homes, Inc., instead of the New Corporation, even first offering loan

terms to Designer Homes, Inc. to be signed by Charles Freezia. (C.R. 339-40).

Further, JLE's own title search performed by Chicago Title showed ownership of the

Property vested in Designer Homes, Inc. by deed. (C.R. 340). Therefore, there is a

fact question as to whether JLE and Emerson had actual or constructive notice of

outstanding claims precluding the affirmative defense of bona fide mortgagee status.

5. After Acquired Title.

a. Elements. JLE and Emerson sought summary judgment that the doctrine

of after acquired title barred Appellant from recovering the Property in her action to

try title. (C.R. 384-387). The doctrine of after acquired titles bars a grantor who

makes a deed purporting to convey an interest in land from later asserting an after

acquired title where the grantor has warranted the deed. Duhig v. Peavy Moore

Limber Co., 144 S.W.2d 875 (Tex. 1940).

b. Fact Issues on After Acquired Title. JLE and Emerson's assertion of

after acquired title again is based on a confusion of the parties. Since Appellant was

not the grantor of the Deed of Trust, the after acquired title doctrine will not bar her

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from asserting title. Id. (C.R. 236-42; 252-3).

c. Cases relied on by JLE and Emerson are not on point.

JLE and Emerson relied upon two cases: Duhig v. Peavy-Moore Lumber Co.,

144 S.W.2d 878 (Tex. 1940) and Shamburger Lumber Co. v. Bredthauer, 62 S.W.2d

603 (Tex. Civ. App. -Fort Worth 1933, writ dism'd).

In Duhig, the court stated the rule of after acquired title:

"It is a general rule, supported by many authorities, that a deed purporting to convey a fee simple or a lesser definite estate in land and containing covenants of general warranty of title or ownership will operate to estop the grantor from asserting an after-acquired title or interest in the land, or the estate which the deed purports to convey, as against the grantee and those claiming under him."

Duhig, 144 S.W.2d at 880. (Emphasis added). Appellant was not the grantor of the

Deed of Trust; the New Corporation was. (C.R. 236-42). Thus, Duhig does not bar

Appellant individually from asserting title.

JLE and Emerson also cited Shamburger to support their contention that

Appellant's claim is barred by the doctrine of after acquired title. Shamburger,

however, does not apply the after acquired title doctrine to Appellant because she is

neither a mortgagor or mortgagee.

Quoting from the Corpus Juris, Shamburger recites:

"a mortgagor is estopped to assert anything in derogation of the rights which the instrument purports to convey ... or that the instrument, although running to the mortgagee, was in fact the property of a firm to which the mortgagee belonged".

Id at 605. (Emphasis added). In the instant case, the mortgagor was the New

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Corporation and the mortgagee was JLE. Appellant is neither.

d. Texas Law Does Not Apply After-Acquired Title To Officers of Corporations When the Transfer is Not Absolute.

In Texas, a deed which is signed and executed by the president of a corporation

which purports to convey a corporate interest in land, when in fact the interest is

owned by the president individually, is not sufficient to pass the president's title by

estoppel, unless by the terms of the deed the conveyance is absolute. Carothers, 12

S.W. 4, 12.

A deed of trust is not an absolute conveyance. It is a conveyance in trust for

the purpose of securing a debt, subject to the condition of defeasance. Lucky Homes,

Inc. v. Tarrant Sav. Ass'n, 379 S.W.2d 386, 388 (Tex. Civ. App. - Fort Worth

1964), rev'd on other grounds, 390 S.W.2d 473 (Tex. 1965). "[A] deed of trust

creates only a lien on property and does not constitute a conveyance of the property".

Fin. Freedom Fin. Funding Corp. v. Horrocks, 294 S.W.3d 749, 755-56 (Tex. App.

-Houston [14th Dist.] 2009, no pet.). "[A] deed of trust or mortgage in Texas does

not convey title to the property; it does, however, convey an interest in the property."

Wickerv. Tex. Banko/Garland, N.A., No. 05-94-01109-CV, 1995 WL 141152, at *3

(Tex. App. -Dallas Mar. 31, 1995, writ den'd) (not designated for publication).

Therefore, since the Deed of Trust given by the New Corporation to ILE was

not an absolute conveyance, Appellant was not estopped from asserting title under the

after acquired title doctrine. (C.R. 236-242); Carothers, 12 S.W. 4, 12.

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6. There are Fact Issues on Unclean Hands or Mutual Mistake Which Bar Equitable Defenses and Prevent Summary Judgment.

JLE and Emerson's Motion was based in part upon the defenses of estoppel,

bona fide mortgagee and after acquired title doctrine. These three defenses are

equitable defenses.

The unclean hands doctrine requires that one who comes to the court pleading

equity must do so with clean hands. Grahn v. Marquardt, 657 S.W.2d 851, 855 (Tex.

App. - San Antonio 1983, writrefdn.r.e.). "This maxim means that a court acting

in equity will refuse to grant relief to a plaintiff who has been guilty of unlawful or

inequitable conduct with regard to the issue in dispute." Id. Courts apply the

doctrine of unclean hands to those whose own conduct in connection with the matter

at issue has been unconscientious, unjust, or marked by a want of good faith, or one

who has violated the principles of equity and righteous dealing. Ligon v. E. F. Hutton

& Co., 428 S.W.2d 434, 437 (Tex. Civ. App. -Dallas 1968, writ refd n.r.e.). To

show mutual mistake, the evidence must show that both parties were acting under the

same misunderstanding of the same material fact. Walden v. Affiliated Computer

Servs., 97 S.W.3d 303, 326 (Tex. App. - Houston [14'h Dist.] 2003, pet. denied).

Mutual mistake is an equitable ground for rescission. Crump v. Frank, 2013 WL

2420381 (Tex. App. -Texarkana 2011, no pet.).

Appellant raised material fact issues that JLE and Emerson acted with unclean

hands and under a mutual mistake. (C.R. 455-57). JLE prepared all documents and

guided the entire transaction with the New Corporation, even to the point of

instructing Appellant to form the New Corporation as a "successor corporation."

-36-

(C.R. 456). Both parties executed documents under a mutual mistake of law. Both

parties mistakenly believed the New Corporation was a successor corporation to

Designer Homes, Inc. and somehow had title to the Property. (C.R. 455-7).

Therefore, summary judgment was improper as there were fact issues which may bar

ILE and Emerson from claiming equitable defenses.

The Deed of Trust and the Trustee's Deed conveyed no title. Slaughter v.

Qualls, 162 S.W.2d 671, 674-5 (Tex. 1942). Mutual mistake is grounds for

cancellation of a deed. A trespass to try title case, which Appellant filed, is the means

to achieve cancellation. Ferrell v. Delano, 144 S.W. 1039, 1041 (Tex. Civ. App. -

San Antonio 1912).

C. JLE and Emerson Failed to Negate One or More Elements of Appellant's Claims.

1. Trespass to Try Title.

a. Alleged Negated Elements of Trespass to Try Title. A trespass to try

title suit may be brought to determine which party has superior title to a piece of

property. TEX. PROP. CODE §22.001; Texas Parks & Wildlife Dept. v. Sawyer Trust,

354 S.W.3d 384, 389 (Tex. 2011). To prove a trespass to try title action in this case,

Appellant sought to establish a superior title from a common source. Martin v.

Amerman, 133 S.W.3d 265 (Tex. 2004); Rogers v. Ricane Enters., 884 S.W.2d 763,

768 (Tex. 1994); Kennedy Con., Inc. v. Forman, 316 S.W.3d at 129, 135 (Tex. App.

- Houston [14th Dist.] 2010, no pet.); Casstevens v. Smith, 269 S.W.3d 222, 235

(Tex. App. -Texarkana 2008, pet. denied).

JLE and Emerson claimed they could negate one or more elements of

-37-

Appellant's causes of action to try title to the Property. (C.R. 218-221). ILE and

Emerson claimed that Appellant could not show title from a common source because

Designer Homes, Inc. was still operating as a de facto corporation prior to the death

of Charles Freezia, and therefore, was able to somehow pass title to the New

Corporation. (C.R. 218-221). This claim must fail because there are no de facto

corporations in Texas and neither Designer Homes, Inc. nor its shareholders passed

title to ILE. Eagle Pass Realty Co. v. Esparza, 474 S.W.2d 624 (Tex. Civ. App. -

San Antonio 1971, writ ref. n.r.e.).

ILE and Emerson also contend that Section 2.4 of the Guaranty granted a lien

on the Property. (C.R. 219). Section 2.4 of the Guaranty states:

"As security for its obligations under this Guaranty Agreement, Guarantor grants to Lender a security interest in, a general lien upon and/or right of set-off of the following (herein referred to as the "Security"): (i) the balance of every deposit account now or hereafter existing of Guarantor, any other claim of Guarantor against Lender now or hereafter existing, and all monies, instruments, securities, documents, chattel paper, credits, claims, demands and any other property, rights and interests of Guarantor, which at any time come into the possession or custody or under the control of Lender or any of its agents or affiliates, for any purpose; (ii) any claim of Guarantor against Borrower now or hereafter existing and all monies, instruments, securities, documents, chattel paper, credits, claims, demand and any other property, rights and interests of Borrower, which at any time come into possession or custody or under the control of Guarantor for any purpose; and (iii) the proceeds, products and accessions of and to any of the foregoing. Lender, at its option, may at any time, without notice and without any liability, retain all or any part of the Security against the Indebtedness, whether the Indebtedness is matured or unmatured, in any manner and in any order of preference that Lender, in its sole discretion, chooses. The grant of the above security interest and lien will not in anywise limit or be construed as limiting Lender to collect payment of any liability of Guarantor under this Guaranty Agreement only out of the Security, but it is expressly understood and provided that all such liability constitutes the absolute, unconditional and continuing

-38-

obligation of Guarantor".

(C.R. 389-90). Yet, the items in Paragraph 2.4 concerning lien rights are all items of

personal property which come under the control of the lender, not real property. No

reasonable reading of Section 2.4 of the Guaranty creates a lien on the Property.

b. Fact Issues on Trespass to Try Title.

Once Designer Homes, Inc. went out of existence in 1983, it was dissolved and

its property passed directly to its sole shareholder, Charles Freezia. (C.R. 487-8).

TEX. Bus. CORP. AcT ART. 6.04(3). The New Corporation could not have placed JLE

in the chain of title, as it did not receive title to the Property. (C.R. 466-7). JLE and

Emerson state that the loan documents place JLE in the chain of title (C.R. 219). Yet,

Appellant is neither grantor or grantee in the Deed of Trust and no reasonable reading

the Guaranty signed by Appellant could be construed to convey title to JLE. (C.R.

236-242; 388-394).

c. Cases Cited by JLE and Emerson are Not Conclusive on Title Issue.

JLE andEmersonre!iedonAransas Pass Harbor Co. v. Manning, 63 S.W. 627

(Tex. 1901 ). JLE and Emerson claimed that Aransas Pass stands for the proposition

that a president of a corporation binds himself to make a conveyance of his property

ifhe owns it and not the corporation. That is not the holding of the case.

The issue in Aransas Pass was whether the president of a corporation had been

authorized by his board of directors to give away property for the corporation.

Aransas, 63 S.W. 629. The court held that ifthe president conveyed property without

authority to do so, he should be estopped from denying that he lacked the corporate

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authority to do so to invalidate the deed, because he was a shareholder as well. If the

president's corporate authority did not exist, the effect of his deed was "merely [to]

have been to convey his interest in the specific parcel of land which was attempted

to be conveyed." Id. at 630.

However, that case is distinguishable from this appeal. In Aransas Pass, the

president was also a shareholder, who, along with the other shareholders, consented

to a sale of land. Id. at 629. The question before the court was whether the

shareholders, as beneficial owners of the corporate property, could convey the

corporate property absent the formality of a directors meeting. Id. The court found

that the president could not then deny that he conveyed the corporate interest, since

as a shareholder, beneficial ownership belonged to the president to begin with. Id.

at 630.

Aransas Pass is not applicable to the instant case. Aransas Pass is a case about

corporate authority and the power of shareholders, and the cases citing it reflect that.

Forrest v. Guardian Loan & Trustee Co., 230 S.W.2d 273, 276 (Tex. Civ. App. - El

Paso 1950, r'hg den' d); Baldwin v. Johnson, 65 S.W.171, 172 (Tex. 1901); Humble

Oil & Refining Co. v. Blankenburg, 235 S.W.2d 891, 894 (Tex. 1951). Appellant's

case is one about title and ownership, not a question of corporate shareholders acting

for the corporation. Title does not pass by estoppel. Gilcrease, 132 F .2d at 792. The

proper rule is found in Carothers v. Alexander, 12 S.W. 4, 12 (Tex. 1889).

Therefore, since JLE and Emerson did not negate any essential element of

Appellant's cause of action in trespass to try title and Appellant raised fact issues, the

-40-

trial court should have denied JLE and Emerson's Motion.

2. Wrongful Foreclosure.

a. Alleged Negated Elements of Wrongful Foreclosure. JLE and

Emerson claimed that they could negate one or more elements of Appellant's cause

of action for wrongful foreclosure because her personal interest in the Property was

conveyed and pledged by the Deed of Trust and Guaranty. (C.R. 221 ). Yet, Appellant

raised a fact question on this issue. Again, Appellant was neither grantor not grantee

in the Deed of Trust. (C.R. 236-242). If a lien on property is invalid, any foreclosure

is improper, wrongful, and void. Cadle Co. v. Ortiz, 227 S.W.3d 831 (Tex. App. -

Corpus Christi 2007, no pet.); Denman v. Atlas Leasing, L.L.C., 288 S.W.3d 591

(Tex. App. - Dallas 2009, no pet.).

b. Fact Issues on Wrongful Foreclosure. Appellant raised fact issues on

her cause of action for wrongful foreclosure. If a lender and its trustee have no valid

lien, any foreclosure is wrongful. Id.

3. Money Had and Received.

a. Alleged Negated Elements of Money Had and Received. The

elements of money had and received are:

1. The defendant holds money.

2. The money belongs to the plaintiff in equity and good conscience.

Staats v. Miller, 243 S.W.2d 686, 687-88 (Tex. 1951); Hunt v. Baldwin, 68 S.W.3d

117, 132 (Tex. App. -Houston [14th Dist.] 2001, no pet.).

b. Fact Issues on Money Had and Received. JLE and Emerson claimed

-41-

they could negate one or more elements of Appellant's causes of action for money

had and received due to an Assignment of Rents. (C.R. 221). Yet, the New

Corporation signed the Assignment ofRents, not Appellant in her individual capacity.

(C.R. 353-358; 449-50). Further, if Appellant does recover the Property through her

action to try title, she would be entitled to receive damages from the money in rents

generated from the Property. TEX. R. Crv. P. 805.

4. Conversion.

are:

a. Alleged Negated Elements of Conversion. The elements of conversion

1. The plaintiff owned, possessed, or had the right to immediate possession of property.

2. The property was personal property.

3. The defendant wrongfully exercised dominion or control over the property.

4. The plaintiff suffered injury.

Green Int'! v. Solis, 951 S.W.2d 384, 391 (Tex. 1997); United Mobile Networks, L.P.

v. Deaton, 939S.W.2d146, 147 (Tex. 1997);Burnsv. Rochon, 190 S.W.3d263, 267-

68 (Tex. App. - Houston [ 1 '' Dist.] 2006, no pet.).

b. Fact Issues on Conversion. JLE and Emerson claimed that they could

negate the second and third elements of Appellant's cause of action for conversion

because JLE and Emerson claim that Appellant had no right to possession of the

Property, and that its seizing of rents was not wrongful because of the Assignment of

Rents signed by the New Corporation. (C.R. 222). Appellant responded by asserting

-42-

that JLE and Emerson's Motion is again relying on a confusion of parties. (C.R. 451 ).

Neither Appellant nor her sisters pledged personal rents. (C.R. 451 ). Like the claim

for money had and received, if Appellant prevails on her trespass to try title case, she

is entitled to rents. (TEX. R. Crv. P. 805). Appellant presented evidence and created

a fact question on conversion.

5. Negligence Per Se.

a. Summary Judgment on this Claim was Denied.

JLE and Emerson claimed they could negate one or more elements of

Appellant's causes of action for negligence per se. (C.R. 222). The trial court denied

this ground in this motion.5 (C.R. 499).

ISSUE NO. 2

IS Storage and Post Oak Bank's No-Evidence Motion for Summary Judgment Was Erroneously Granted Because the Summary Judgment in Favor of JLE and Emerson was Erroneously Granted and Appellant

Presented Genuine Issues of Material Fact

1. IS Storage and Post Oak Bank's No-Evidence Motion for Summary Judgment Was Erroneously Granted.

a. The Sole Basis of the IS Storage and Post Oak Bank Motion: Because Summary Judgment was Rendered for JLE and Emerson and Appellants Claims Against IS Storage and Post Oak Bank are Derivative to Claims Against JLE and Emerson, then Appellant's Claim Against Them Fail.

IS Storage and Post Oak Bank, filed a No-Evidence Motion for Summary

Judgment seeking a judgment on Appellant's claims for trespass to try title, money

5 Later, the trial court granted a motion for summary judgment on this issue. (C.R. 1020).

-43-

had and received, and conversion. (C.R. 502-9). The sole basis for their motion was

that IS Storage and Post Oak Bank's claims to the Property arise from any rights

owned by JLE. Appellant's claims against IS Storage and Post Oak Bank are

derivative of claims against JLE and Emerson. (C.R. 506). Having granted summary

judgment against these claims against JLE and Emerson, IS Storage and Post Oak

Bank sought a summary judgment as well. (C.R. 504, 506).

Appellant filed a Response addressing the legal arguments and presenting

conflicting facts. (C.R. 513-530; 540-67). Appellant also had filed a Motion to

Reconsider Grant ofSwnmary Judgment or, In the Alternative, Motion for New Trial

requesting the Court to vacate the August 9, 2013 Order granting JLE and Emerson's

Motion for Summary Judgment again pointing to the numerous material issues of fact

that should be left to a jury. (C.R. 513-530). Appellant argued that the Order

granting summary judgment in favor of JLE and Emerson should be reconsidered and

vacated and IS Storage and Post Oak Bank's No-Evidence Motion automatically

denied on this basis. 6 (C.R. 540-41). In addition, Appellant offered evidence to

defeat the No-Evidence Motion for Summary Judgment.

2. Trespass to Try Title.

a. IS Storage and Post Oak Bank's Contentions.

IS Storage and Post Oak Bank sought to defeat Appellant's claims of trespass

to try title and wrongful foreclosure based on the court's August 9, 2013 summary

judgment order eliminating those claims against JLE. (C.R. 506). IS Storage and

6This Motion was denied. (C.R. 603).

-44-

Post Oak Bank contended that because "IS Storage took title from JLE under a valid

claim of title," Appellant could not establish any elements of trespass to try title

against them since the court granted judgment against the trespass to try title and

wrongful foreclosure claims against JLE. (C.R. 506). IS Storage and Post Oak Bank

contended that Appellant could not show a regular chain of conveyances from the

sovereign and could not establish a superior title of a common source and thus they

should be entitled to summary judgment. (C.R. 506).

b. Appellant's Response Raised Fact Issues.

1. If JLE and Emerson's Order Granting Summary Judgment is reversed, then the Order Granting IS Storage and Post Oak Bank's Summary Judgment should likewise be reversed.

Appellant urged that the Trial Court's August 9, 2013 Summary Judgment

Order was decided in error. This point is the basis for Issue No. 1 in this appeal. If

reversed as urged in this appeal, the October 14, 2014 Order granting IS Storage and

Post Oak Bank Motion for Summary Judgment should be reversed as well. (C.R.

604).

2. Fact Issues.

The No-Evidence Motion by IS Storage Ventures and Post Oak Bank should

only be affirmed if there is not even a scintilla of evidence disputing that title is

vested in IS Storage Ventures. TEX. R. Crv. P. 166a(i). Appellant presented more

than a scintilla of evidence establishing a genuine issue of material fact exists on title.

(C.R. 541-43). Ford Motor Co. v. Ridgeway, 135 S.W.3d 598, 600 (Tex. 2004).

JLE's Motion was based in part on the affidavit of Mr. Gonzolo Arjona who

-45-

admitted that JLE was aware before lending any money to the New Corporation that

the title was not in the New Corporation. (C.R. 542; 226-229). Attached to the Arjona

Affidavit as Exhibit A-13 is a Title Commitment from Chicago Title which reflects

the title was vested in Designer Homes, Inc., not the New Corporation. (C.R. 340;

555).

Appellant demonstrated her title from a common source: Appellant presented

evidence that the charter of the Designer Homes, Inc. had lapsed, that Charles Freezia

was the sole shareholder, that his estate left his assets to his four daughters, that

Appellant was one of the daughters, and that the other three daughters had

quitclaimed their interest to Appellant. (C.R. 556-60).

This evidence raised a genuine issue of material fact as to who is the record

title owner of the Property. Accordingly, because there was conflicting evidence

regarding which person or corporation had title to the Property, there is a genuine

issue of material fact on the trespass to try title cause of action. (C.R. 542-3). Due

to conflicting evidence on title, the trial court should have denied the summary

judgment on the trespass to try title theory. Appellant presented evidence of her title

through a common source. She is not also required to show title from the sovereign.

Neither IS Storage nor any Appellee showed title from a regular chain of

conveyances from the sovereign or a common source of vested title. (C.R. 541 ). Each

of Appellee's claims of title comes from the New Corporation which itself never had

title. (C.R. 541). Contrary to IS Storage and Post Oak Bank's assertion that "IS

Storage took title from JLE under a valid chain of title," there is no evidence, or

-46-

conflicting evidence at best, of any chain of title to JLE. (C.R. 506). Nothing in the

interlocutory partial summary judgment Order had determined who had title to the

Property. (C.R. 449). (See pages 37 - 41, infra and the case law and the record

references cited).

3. Money Had and Received.

a. The Contentions.

IS Storage and Post Oak Bank next contended that they were entitled to a no­

evidence summary judgment on Appellant's money had and received claim because

of the court's August 9, 2013 order granting summary judgment for JLE on this cause

of action. (C.R. 506). IS Storage and Post Oak Bank claimed that since Appellant

did not prevail against JLE on her trespass to try title issue, she could not show that

IS Storage holds money that in equity and good conscience belonged to Appellant.

(C.R. 506-7). Moreover, without presenting any evidence, IS Storage alleged that it

had valid title to the Property. (C.R. 507).

b. Appellant's Response.

Like the trespass to try title claim, if Appellant's Issue No. 1 reversing the

order granting summary judgment in favor of JLE and Emerson is sustained by this

court, then the sole basis for granting IS Storage and Post Oak Bank's Motion for

Summary Judgment is likewise absent. Moreover, Appellant raised material issues

of fact on the question of whether she or JLE or IS Storage had title to the Property

and consequently the right to the rents. (C.R. 556-560). Appellant averred, in

pertinent part:

-47-

"14. It is my opinion that the value of the Property exceeds all the offsets claimed by the Defendants and this value, plus the lost rents since the wrongful foreclosure, are being kept from my sisters and I wrongfully.

(C.R. 5 56-60). Appellant had incorporated her prior affidavits previously filed, which

stated, in pertinent part,

"9. I later discovered, in 2012, that [the New Corporation] never had title to [the Property], and therefore had no power to convey or encumber it."

(C.R. 457). Appellant also presented title commitment showing title in Designer

Homes, Inc. 's name, not the New Corporation. (C.R. 554-5). Thus, Appellant raised

genuine issues of material fact as to who owns the Property. Whoever owns the

Property is entitled in equity and good conscience entitled to its rent.

4. Conversion.

a. The Contentions.

Appellant sued IS Storage for conversion of rents and income due to Appellant

from the Property. (C.R. 13 0). Because the court granted summary judgment for JLE

on this cause of action, because her trespass to try title claim was denied, IS Storage

claimed Appellant could not show IS Storage had Appellant's property. (C.R. 507).

b. Appellant's Response.

For the same reasons identified in the Money Had and Received Section above

which are incorporated herein, Appellant raised fact issues as to title and ownership

of the Property and the resulting rent. Moreover, in this No Evidence Motion, neither

IS Storage nor Post Oak Bank presented evidence, such as the Assignment of Rents

to support their claims. Although the New Corporation had signed an Assignment of

-48-

Rents and Leases, neither Appellant in an individual capacity nor her sisters had in

any capacity signed this document. (C.R. 353-358). Neither Appellant nor her sisters

had assigned their personal rights to rental proceeds to JLE or any successor.

VII. PRAYER

WHEREFORE, PREMISES CONSIDERED, Tracey Lynn Freezia prays that

this Court reverse each order of the trial court granting summary judgment against her

claims, remand this case to the trial court for further proceedings, grant such other

and further relief to which she is entitled.

Respectfully submitted,

LAW OFFICE OF ELIZABETHBRUMAN, P.C.

Isl Elizabeth M. Bruman Elizabeth M. Bruman State Bar No. 13882700 4560 Cypress Creek Parkway, Suite 104 Houston, Texas 77069 281/583-0089 (telephone) 2811587-9342 (facsimile) Attorney for Tracey Freezia, Appellant

-49-

CERTIFICATE OF COMPLIANCE

I do hereby certify that this brief is in compliance with Rule 9.4 of the Texas Rules of Appellate Procedure requiring that all computer generated documents filed with the Court must be in a typeface no smaller than 14-point font. In accordance with Texas Rules of Appellate Procedure 9(i)(3), this brief contains 13,255 words according to my computer generated word count.

Isl Elizabeth M. Bruman Elizabeth M. Bruman

CERTIFICATE OF SERVICE

I do hereby certify that on the 28rn day of August 2014, a true and correct copy of the foregoing Tracey Lynn Freezia's Brief was sent as follows:

Elizabeth Flora 5151 BeltineRoad, Suite410 Dallas, Texas 75254 Via Facsimile No.: 972-812-9408

Britton L. Larison McGlinchey Stafford, PLLC 2711 N. Haskell Ave., Suite 2750 Dallas, Texas 75204 Via Facsimile No.: 214-445-2450

Isl Elizabeth M. Bruman Elizabeth M. Bruman

-50-

NO. 14-14-00174-CV

IN THE FOURTEENTH COURT OF APPEALS

TRACEY LYNN FREEZIA, APPELLANT,

v. IS STORAGE VENTURES, LLC, JLE INVESTORS, INC.

D/B/A ASSOCIATED MORTGAGE INVESTORS, POST OAK BANK, N.A. AND JAMES L. EMERSON,

APPELLEES,

From Cause No. 2012-20372; Tracey Lynn Freezia v. IS Storage Ventures, LLC Investors, LLC, JLE Investors, Inc. d/b/a Associated Mortgage

Investors, Post Oak Bank, N.A. and James L. Emerson; In the 28lst Judicial District Court of Harris County, Texas

APPENDIX

DOCUMENT TAB

Affidavit of Appellant (without attachments)(C.R. 455-8). 1

Order on JLE Investors, Inc., d/b/a Associated Mortgage Investors, and James L. Emerson's Motion for Summary Judgment (C.R. 499). 2

Affidavit of Tracey Freezia (without attachments)(C.R. 556-560). 3

Order on Defendants IS Storage Ventures, LLC and Post Oak Bank, N.A. 's No-Evidence Motion for Summary Judgment (C.R. 604). 4

-51-

Supplemental Affivait of Tracey Freezia (C.R. 522-530)

Affidavit of Tracey Freezia (C.R. 728-733).

Order on James L. Emerson's Motion for Summary Judgment (C.R. 1020).

Title Commitment (C.R. 466-469)

Memorandum by Secretary of State (C.R. 487-8)

-52-

5

6

7

8

9

TABl

'l1lACEYLYNN FREEZIA IN Tm~ DISTRICT COURT

v. 281" JUDICIAL DISTRICT

IS STORAGE VENTURES, LLC, JLE INVESTORS, lNC. D/B/ A ASSOCIATED MORTGAGE lNVESTORS, POST OAK BANK, N.A. Ai\iO JAMitS L Hlv!ERSON

§ § § § § § § §

OF BARRIS COUNTY, TEXAS

STA.TE OF Tf.'~XAS

COUNTY OF HARRIS

§ § §

AFFIDAVIT OF TRACY FREEZ1A

Before me,tlm \lndersigned ai.1Jhotity, on this day pei'$onal!y appeared Tracey Freezia,

known to me, w:bo, after first being placed upon !Jet oath, deposed and .said.

1. "My name is Tracey Fteezia. 1 rim over the age of l 8 a11d competent to make this

affidavit. The follO,Ning hiformation is true and correct and ·within my personal knowlQdge,

2, I am the Plaintiff in this l1>wsuit

3. I did not knowingly make any fals~ .teptesentatkitis to JLE Investors, Inc' or

James Emernon(''Defondants"), .and I did not attempt to conceal any nmteriaJ facts from them,

regarding 215 Wynne Street. Both l and Defendants d\scovcred, at th<:1 siime time during the

process of loan tlllderwrithlg, that the Se<;retary of $ta1e had voi<lc4 out aH companies whose

charter had a stated tem1 that had a)(pired and which was not dee.med perpetual pursuant to

Section2.02A(l) of the Texas Business act and that Designer Hoines was oi1e of the oorpomtions

purged. The Secretaxy gave no notice to the registered agent or officers of the (lorporntion. Since

this corporation had been active and viable in 2004, Defendants' attorney and my <\state <ittorney

at the time tried to fix the problem ofDesigner Hornes, Inc., and ifs name no long~r existing by

1

455

forming anew corpt)rat.ion, and together those attotneys reptesei1tod tome tlmt the formation of

Origlnal.Desigrier Homes, lnc. would succeed to the interests <:Jftlrn old Designer Home~, Ino. J

was asswe.d. by these legal representations that Original Designer Homes, Inc. had the power to

ple<lge all of the assets owned byDe~igner I;fomes, foo, including 215 Wynne Street as collateral,

4, Defendants. knew before the loa.n to Origin.al Designer Homes, Inc, was closed

that Deslgtlet Homes, Inc. had gone out of existence as they were participants in the

establishment of the new c0 rpomtion. I was told at ckJ$ing that Original Designer Homes, Inc,

was now a successor corporation to Designer H0111es, Inc. and owned all of Designer Homes,

Inc,' s. property.

5. When I signed the petition and filed Original IJesigner Homes, Irie. for Chapter

1.1 bal)kruptcy in Jtme of 2011, I was still µnder the impression thiit Orlginiil Designer Homes,

Inc. had succeeded to Designer Homes, Inc,, and that Designer Homes, Inc,' s property became

that of Otiginal Designer Homes, !tic. l thought that the 100% sharehi.ildet of Original Designet

Homes, Inc. was the Estate of Charles Freezi.a,. J understand now that was a mis-tske.

6, As soon as [discovered that ()rigiJ1al Designer Homes, Inc, did not own any of

Designet Homes, Inc.' s propeity, l a.cted to dismiss Original Designer Hornes, foe.' s bankmpfoy

and to i1otify all creditors that had collateralized loa11s tvith Original Designer Homes of this new

information.

7. To the best of my biowledge, the idt,aof forrning a 1ww <:orporation to suc.ceet'.i

Designer Hornes, Inc. was origfoated by Defo11da11ts or their attorneys and the title .Company. I I

Jn1 . . . . ... . . . . . . . was told4$t Defendants, their attorneys, the title company, and my estate attorney that they all

thought that this would be fae easiest way to clear the title conditions which blocked th<; loan,

2 456

since t.ln1e was of the essence as to obtaining the :loan.

8. 1 did uotreaJize that Orlgi\1!\l be.signer Bomes, Inq. did not. own Diosigner Homes,

fo~,.'s property until February t1f 2012, lifter I met with my new attoroeys, Unl11 that time, I

beli<;wed that Original Designer Hornes, tmi, had succeed.ed tQ Designer Hornes, ):n,,, At the time

I signed modific&tion ag:reern.~nts as an oi'ficer of Original Designer Home1>, Inc., 1 was under the

impression that Original Deslg1J<~t Homes, Inc. owned 215 Wynne Sttest.

9. I later discovered, in 2012, that Original Designer Bome~, Inc. n<Nllr had title to

215 Wyrnie Street, and thel:l)fore hap no pow~r to convey or encumber it.

W. Atthe thne the loati to Otiginal Desif,'1ier Homes, Inc, dosed in.2005, I signed a

t,'1.larantee ofthe de1:Jt, At the time t signed that g1wnmtee, I !lad no ki1owledge that I was vested

with a25% interestin 215 V\iynne Stre~t. Obviously, a.25% interest would not have been enough

to satisfy Defendants.

11. Exhibits B thrtntgh I, whid1 are attached, ·were kept or maintained by me as an

qfffoer of Origl.nal Dt;signer lfrunes, Inc, in th() regular course of business, with knowledge ot'the

events, at or near the time when tl1e event occurred .. Exhlbits B thro11gh l are true .and co1Tect

copies of the original documents.

Further affiant sayeth not

·:>F'\ SWORN TO AND SUBSCRIBED TO before me by TRACEY FRHEZIA on fhls the _;;:>''i..J'-· ...

z:,.,,{,./ day o:f M<1y, 2013,

3

457

4

458

TAB2

Filed 13 May 10 P4:37 Chris Daniel· District Clerk

CAUSE NO. 2012-20372

Harris County ~ ED101J017480970 By: adiiianl soils O /

~

TRACYLYNNFREEZIA, § §

Plaintiff, § §

IN THE DISTRICT COU~+s j ~ "· §

§ IS STORAGE VENTURES, LLC, JLE § INVESTORS, INC. d/b/a ASSOCIATED § MORTGAGE INVESTORS, POST OAK § BANK, N.A., and JAMES L. EMERSON, §

·1 ft 281

8T JUDICIALDISTRICT 1.o·-( I

§ Defendants. § HARRIS COUNTY, TEXAS

ORDER ON JLE INVESTORS, INC., D/B/A ASSOCIATED MORTGAGE INVESTORS, AND

JAMES L. EMERSON'S MOTION FOR SUMMARY JUDGMENT

ON THIS DAY the Court heard Defendants JLE Investors, Inc,, d!bla Associated

Mortgage Investors, and James L. Emerson's Motion for Summary Judgment (the "Motion"),

-\ k_ 6'--'-l'f{, '"-'-+ -{ kt t' V'l d. l ')'l L '-After considering the Motion1 ~nd ~responses/herets 1 if ally, and' hearing the arguments of

counsel, the Court is of the opinion that the Motion should be GRANTEDJ ,,_ pi:cd,.

IT IS THEREFORE ORDERED, ADnJDGED and DECREED, that Defendants' Motion

ts GRANTED and that Plaintiff take nothing from Defendants JLE Investors, Inc., d/b/a

Associaied Mortgage Investors, arnl !ames L. EmerseH. llt}T\ kd C'~.) -{-;_, .j J><'--'-" L.

_\,'._1~/_(_j ___ , 2013. f PV. \ IC>~, SIGNED this ___ day of

PAGElOF1

499

/1-1

TAB3

Cau$e No. 2012-20372

TRACEY L \'NN FREEZIA IN THE DISTRICT COURT

v. 28l't JUDIC14L DISTRlCT

IS STORAGE VENTURES, LLC, JLE INVESTORS, INC. D/B/AASSOC!ATED MORTGAGE INVESTORS, .POST OAK BANK, N.A. AND J&\1ES .L, Bl\IIERSON

§ § § § § § § §

OF HAR,RIS COUNTY, TEXAS

STATE OF TEXAS

COUNTY OP fL4.RR1S

§ § §

ArEilJAYIL0Y.IRAGY..fllil.'B..ZLtiJbLR!~.Si'QNSE TO NO-EVIDENCE MOTION FO\~ . SUMMARY JUDGMEJ'1fJ:

Before me, the undersigned authority, on this dayperso11ally appeared Tracey Freezia,

known to me, who, after first being placed upcm her oath, deposed and said.

1. "My name is Tracey Fteezia. l rnn oYcl' the age of J. 8 a.ml comp,~tent to make this

affidavit The following siateme;nts me tnte and con·ect and vl'i.thin my pets,.>na! knowledge.

2. This a11i.d~.vit is in response to theNo-Evidenc.e Motion for Summary Jqdgment

filed by IS Storage. V entu.res, LLC mid Po.st Oak Bank, NA I hereby incorporate in this affidavit

my affidavits dated pnwimrnly filed in this case.

3. I ant the Plaintiff in this lawrnit, Thqiroperty at issne in this case is 215 Wynne

Street, Houston, Texas (the "Prn1)erty"}. Putsnant to a written agreement, l lm!d this Property in

trust for my three sisters, who own 75% nf the Property. My sisters quitclab:ned thekinti:irestln

the Property to me in trust in August 2012 so that I crnxld pursue this litigatkm on thefr [Jehalf:

None of 1ny sisters have executed any document infovor of JLE fovestors, !110.

4. I have read the afj]davit. signed by Mr. Gonzalo Arjona on May HJ, 2013 ;i:nd filed

556

In support of the Motion for Surnmary.Jm:!gment filed by. JLE Investors, Inc. !the "Arjona ' '

Affid<tvit"). The Arjona Afl'ldavit contains nl.ll:i:JetotlS it1acc.uratc. statetnents that I qi~agree with.

5. Paragraph l l ofthe Arjona Affidavh states that "At the time of the loan

transaction, a .commitment for title insurance obtained from a title in$m:er, attrtched as µµ Exl!lbit

here.to showed record title to the property to be vested in Design~r Homes, Jnc." The effoctive

date of the title contm.itment attached to the Arjona Affidavit isMay L2, 2005. Even before. that

date JLE Investors, Itui, knew n.icord title was in Designei· Homes, Inc. Attached as Exhibit l is

a ttue mtd correct c'ipy of an AptH 21, 2005 mell'iorartdtiti1 :from Mr. A1jona that shows dearly

that JLE Investors, Inc. knew ret;ord title to the Property was. in Designer Homes, Inc. The foiin

Was not miide until. Juile 29, ;!005. ln foct aU documents related to the loail transaotfon showing

Original D\Jsigner Homes, Inc. aa the bottowt-or ai1d grai1tor ofa lie11 interest were prepared by

JLE Investors, Inc. aftet the corporation's rcptc.scntatives, focludlng Mr. At:jona, lm"w record

title was in Design~r Homes, foe. and not Original Designer H01nes, foe.

6. Paragraph 3 ofthe Ar.jona Affidavit cont~fos factual inaccnr1.tcfo.s,

Representcifrves of Original Designer Homes, Iti(\. did no! contact JLE Investors, Inc: in regards

to rnaking a loan to Original Designw Hrn:nes, Inc. Original Designer .Homes, foe:. waa not

formed \:inti! May 18, 2005. I approached JLEinvcstors, Inc. on behalf of Designer Homes, lnc.

in March or early April 2005 for a loan. A CQPY of mY father's will was shown to them at th cit

time. During itS lmdeiWdting forthe loan JLE Investors, Inc, discovered Designer Jfomes, lnc.

wiis not in good standing with th{) State of TexaG and could not be reinstated. JLE lnvestors,

Inc .. detennfaed thiLt forming a new c01·poratio11 lhat. it called a "S11ceessor Corporation" was the

best way to satisfy itself that a loan with a fiyst Hen on the. Property couJd be m;id~. JLE

Investors, foe. never tequested that tny sisters Qr I execute a deed. of the :Property to th~ new

557

eortJoration. ·'

7. I infonned .JLE Jnvesiors, h1c. representatives that my father, Chad es Freezla was

deceased and. hi:s Estate was in probate in out earliest conversations !n March or April 2005.

BecaUBe the will of my father was shown to \hem, JLE Investors, foe. knew my three sisters and

I were his beneficiaries as my moilier had already passed away in 1997. T11ere was an. open

probate that l made JLE fovestors, Inc. aware of,

8. Shmtly after JLE Investors, Jue. discovered that Designer Homes, Inc. was not a

corporation in good standing and coµl<l not be reinstattid it coniacted my .father's estate attorney.

JLE Investors, lne. and proposed that a new corporation be fom1ed hy myself and my ex-

hushMd to be a stwcossor corporation. JLE Investors, Inc. informed me that a loan would not be

made except to the new corporation. The new corporation was fonned lmder the name Original

DesignerHottxes, Inc. ondet the direction (}f" JLE Investots, Inc. The Property was not

transferred to the new corporation by myself ot my sisters. Despite this, JLE Iiwestors, Inc. and

the estate attorney lnfom'led .tne \hat Origii1al Designer Homes, foe. owi1ed the property bectmse

it was a ''Successor Corporation". l relied on th<) statements made to l11e by .JLE hlvestors, In.c ..

when f signed the document$ J!.$ Investors, Inc, prepared forthe loan trausactions.. JLE

Investors, Inc. J.mew I telfod 01i their staterrmnts which were either reckless ot misleading

designed to induce me u2 .signing the 1.oa.o doc:ui.nents sG that a high int~rest r!lte loan could be

made.

9. AU pl.J.pet work related to the new coi11oratio:o. was sho\vnto JLE Investors, lnc,

for its approval including the language in.the Arlide oflncorpmation that Original Desigper

Homes, Inc. was the successor to Designer Homes, Inc. JLB lnvestots, foe. pt'epared all

3

558

agreements related to making tho loan Mr, Emerson wanted to make. JLE Investors, Inc. opet1ed

their loan file in the name ofDesigtu::r Homes, lnc. butm(lde 0\1t the loan agreements hi the name

of Original Designer Ho.mes, Inc, JLE Inwstors, Inc. advertises that it does its own

underwriting. JLB Investors, 1nc. uses it own attol11eys to prepare the doc.uments fot its loans.

10, Patagraph () ofthe Arjona Affidavit states that th\l loan in question wiJ.S made on

rep.resentations that Orighial D~signer Homes, lnc. '"owned the P.mpe.iiy". This cannot possibly

be true. Original DesigiterHomes, Inc. was fonnoo at the direction of JLE InvestO!'s, Inc. 1LE

InvestoJ'S, Inc. was directed formation of the new corporation .and folly satisfax1 itself th1J.t .a new

corporation was th<: proper borrower an\) would he able to gra.nt a lien to JLE Investm·s .. lnc, It is

not reasonable to daim that JLE Investors, Inc. relied on any reptesentation ofmyselfor Original

Designer Homes, Inc. JLE Investors, Inc . .and the estate attorney told me I could make the

representations in tlw doctm1(1nts referr?<l tp in the Arjona affidavit <rnd whi;;h W<t;re prepar"d by

JLE Investors, I11c. lrelied on these statements in slg11ing the loan doclJrlients. prepared by JLE

luvestoi:s, Inc.

11. JLE fovestots, ItK\, claims iil Paragraph 7 of the Arjoml. Affidavit that it was "no<

aware of a'.ny information wfool) would have mad£ the loan to Original Dosigner Homes, In\:.

suspicious iJ.S to the ow11iership of the !'rope.tty". This sfriterr:wr1t is JJ.Cit true, and is contradicted

by Paragraph 1l inMr. Arjona'$ Affidavit.

12.. The statementinPm·agraph 9ofthe A1jonaAffidavit ·rhatJLE Investors, In.c. was

"not aware of anything hr th1~ chain of title t-0 the Property disclosing onefotencir1g adverse

claims of Fre.ezi:i" ls also not trLie. Thi" company and its representatives Wlire folly aware th\lt the

assets of Designer Homes, Inc. were pa.rt of my father's estate and that my sisters and I were the

4

559

bonefldruies. JLE llw<;stors, Inc. chose to make the Joan on its own .accord and knowing all the

13. With the exception of my personal guarantee ofthe loan, atno time did my sisters

or I execute any documents individually or on behalf of Designer Homes, foe. reqnesting. a loan,

requesting that a pdor Joan or Hen ~e paid off, granting a lfon or assigning any rents ih fuvor of

JLE Investors, Inc.

14, It is .my opinion tlmt the value of the Properly exceeds all the offsets claimed by

1he Defendants and tbls value, plus the lost rents.since thio wrongfµl foredosure, are being kept

from iny sisters and I wrongfully.

Furthet afTIMt sayeth not.

TRACEY FREEZIA

5

560

TAB4

Filed 13 August 23 P4:30 Chris Daniel· District Clerk Harris County ED101J017673492 By: Wanda Chambers

CAUSE NO. 2012 20372

TRACY LYNN FREEZIA

v.

IS STORAGE VENTURES, LLC, JLE INVESTORS, INC. D/B/A ASSOCIATED MORTGAGE INVESTORS, POST OAK BANK, N.A. AND JAMES L. EMERSON

§ § § § § § § §

IN THE DISTRICT COURT

2818T JUDICIAL DISTRICT

OF HARRlS COUNTY, TEXAS

ORDER ON DEFENDANTS JS STORAGE VENTURES, LLC AND POST OAK BANK. N.A.'S NO-EVIDENCE MOTION FOR SUMMARY JUDGl.VIENT

On this day, the Court considered Defendants JS Storage Ventures, LLC and Post Oak

Bank, NA. 's No-Evidence Motion for Summary Judgment (the "Motion"). After considering the

Motion and responses thereto, if any, the Court is of the opinion that the Motion should be

GRANTED.

IT IS THEREFORE ORDERED, ADJUDGED and DECREED, that Defendants' Motion

is GRANTED and that Plaintiff take nothing from Defendants JS Storage Ventures, LLC and

Post Oak Bank, N .A. '-tht-s l 5

SIGNED ON: lo l u

-~-~\ ___ , 2013.

OCl 0 ~ 2013

RECORDER'S MEMORANDUM Thi~ 1nstrumen\ 1s of poor qualit'f

a1 the time of imaging

604

-

TAB5

35. Plaintiff has raised material fact issue that the Defendants acted in this matter with

unclean hands. See Exhibit A. Therefore, summary judgment was improper as fact issue exists

which may bar Defendants from claiming equitable defenses.

IV. Mutual Mistake

36. Defendant prepared all documents and guided the entire transaction with 01i.ginal

Designer Homes, Inc., even to the point of instrncting Plaintiff to form Original Designer

Homes, Inc. as a "successor corporation". See Exhibit A.

37. Both parties executed documents under a mutual mistake of law. Both pmties

mistakenly believed Original Designer Homes, Inc. was a successor corporation to Designer

Homes, Inc, See Exhibit A.

38. To show mutual mistake, the evidence must show that both parties were acting

under the same misunderstanding of the same material fact. Walden v. Affiliated Computer

Servs., Inc., 97 S.W.3d 303, 326 (Tex.App.-Houston [14th Dist.] 2003, pet. denied). Mutual

mistake is an equitable ground for rescission. Crump v. Frank, 2013 WL 2420381 (Tex. App.­

Texm·kana 2011, no pet.).

39. Since Plaintiff has raised issues of matelial fact as to the mutual mistake of the

parties, summary judgment was improper.

D. Prayer

Plaintiff prays that the court grant this Motion and vacate its order granting Defendants

Summary Judgment in Part to Defendants; or, in the alternative, grant Plaintiff a new hearing on

Defendants' Motion for Sumrnmy Judgment, after which, the Order Granting Summary

Judgment in Part be vacated; and granting Plaintiff all other relief, whether legal or equitable,

whether general or special, to which she may show herself entitled.

-10 522

Respectfully submitted,

Isl Siri Khalsa Charles Wist SBT 21820700 Siri Khalsa SBT 24070052 WIST HOLLAND & KEHLHOF 720 North Post Oak Road, Suite 610 Houston, Texas 77024 (713) 686-5444 (713) 686-0703 Fax cwist@whkllp.co1I\ E-mail ATTORNEYS FOR PLAINTIFF

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the above Plaintiff's Motion to Reconsider Grant of Summary Judgment or In the Alternative, Motion for New Trial was sent to Defendant IS Storage Ventmes and Defendant Post Oak Bank, LLC by serving its counsel of record;

Elizabeth Flora, Esq. 600 E. John Carpenter F1wy., Suite 125 Irving, Texas 75062-3902 Fax; 972-812-9408

By Prodoc Electronic Service on this 261h day of August, 2013.

And JLE Mo1tgage Investors and James L. Emerson by serving their counsel of record:

Britton L. Larison, Esq. McGlinchy Stafford, PLLC 2711 N. Haskell Ave, Suite 2750 Dallas, Texas 75204 Fax: 214 445 2450

By Prodoc Electronic Service and Certified Mail, Return Receipt Requested on this 28th day of August, 2013.

Isl Siri Khalsa Siri Khalsa

523

APPENDIX OF CASES

1. American Tobacco Co. v. Grinnell, 951 S.W.2d 420 (Tex. 1997).

2. Aransas Pass Harbor Co. v. Manning, 63 S.W. 627 (Tex. 1901).

3. Baldwin v. Johnson, 65 S.W.171 (Tex. 1901 ).

4. Carothers v. Alexander, 12 S.W. 4 (Tex. 1889).

5. Duhig v. Peavy-Moore Lumber Co., 144 S.W.2d 878 (Tex. 1940).

6. Fin. Freedom Financial Funding Corp. v. Horrocks, 294 S.W.3d 749 (Tex. App. -Houston [14th Dist.] 2009, no pet.).

7. Forrest v. Guardian Loan & Trustee Co., 230 S.W.2d 273 (Tex. Civ. App. -El Paso 1950, rehearing denied).

8. Geosearch, Inc. v. Howell Petroleum Corp, 819 F.2d 521 (5th Cir. 1987).

9. Gilcrease Oil Co. v. Cosby, 132 F.2d 790 (5th Cir. 1943, rehearing denied).

10. Humble Oil & Refining Co. v. Blankenburg, 235 S.W.2d 891 (Tex. 1951).

11. Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998).

12. Lucky Homes, Inc. v. Tarrant Sav. Ass'n, 379 S.W.2d 386 (Tex.Civ.App.-Fort Worth 1964).

13. Sanger Bros. v. Ely & Walker Dry Goods Co., 207 S.W. 348 (Tex. App.- Fort Worth 1918, rehearing den'd).

14. Shamburger Lumber Co. v. Bredthauer, 62 S.W.2d 603 (Tex. Civ. App.- Fort Worth 1933, writ dismissed).

15. Wicker v. Tex. Bank of Garland, N.A., No. 05-94-01109-CV, 1995 WL 141152, at *3 (Tex.App.-Dallas 1995, writ denied) (not designated for publication).

16. World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662 (Tex. App. Fort Worth 1998, r'hg overruled).

524

DATE: 4/21/2005 TO: Mr. Robert R. Wisner, Attorney (Crain, Caton & James)

Telephone: 713.752.8607 & fax 713.655. 7287 E-mail: rwisner@ccj"law.com

FROM: Gonzalo Arjona Telephone: 713.682.4400 & fax 713.682.8810 e"mail: gonzalol@houston-mortgage.com

Please prepare the following loan documents, to-wit:

LENDER; JLE Investors, Inc., a Texas Corporation d/b/a Associated Mortgage Investors 710 North Post Oak Road, Suite 208 Houston, Texas 77024

BORROWER: Designer Homes, Inc. a Texas Corporation 12335 Kingsride Ln. Suite 145 Houston, TX 77024-4116 NOTE: The documents will be executed by Charles A. Freezia, Designer Homes President.

GUARANTOR: Dana Trousdale 12335 kingside Lu. suite 145 Houston, TX 77024

GUARANTOR: Thomas w Luedeman 12335 kingsideLn. suite 145 Houston, TX 77024

GUARANTOR: Tracey Freezia 12335 kingside Lu. suite 145 ttousto11, TX 77044 .. ' . ' .

AMOUNT: $365,000.00

INTEREST: 14.00% plus I point at closing

TERMS: (I) 11 Principal and interest payments of$ 4,476.67,

525

Cause No. 2012-20372

TRACEY LYNN FREEZIA IN THE DISTRICT COURT

v. 281 st JUDICIAL DISTRICT

rs STORAGE VENTURES, LLC, JLE INVESTORS, INC. DIBIA ASSOCIATED MORTGAGE INVESTORS, POST OAK BANK, N.A. AND JAMES L. EMERSON

§ § § § § § § §

OFHARRISCOUNTY,TEXAS

STATE OF TEXAS

COUNTY OF HARRIS

§ § §

SUPPLEMENTAL AFFIDAVIT OF TRACEY FREEZIA

Before me, the undersigned authority, on this day personally appeared Tracey Freezia,

known to me, who, after first being placed upon her oath, deposed and said.

I. "My name is Tracey Freezia. I am over the age of 18 and competent to make this

affidavit. The following statements are true and correct and within my personal knowledge.

2. This affidavit is in response to the Motion for Summary Judgment and its

supplement filed in this case by JLE Investors, Inc. and James L. Emerson. I hereby incorporate

in this affidavit my affidavit dated May 20, 2013 previously filed in this case.

3. I am the Plaintiff in this lawsuit. The property at issue in this case is 215 Wynne

Street, Houston, Texas (the "Property"). Pursuant to a written agreement, I hold this Property in

trust for my three sisters, who own 75% of the Property. My sisters quitclaimed their interest in

the Property to me in trust in March 2012 so that I could pursue this litigation on their behalf

None of my sisters have executed any document in fuvor of JLE Investors, Inc.

4. I have read the affidavit signed by Mr. Gonzalo Arjona on May 10, 2013 and filed

I

526

in support of the Motion for Summary Judgment filed by JLE Investors, Inc. (the "Arjona

Affidavit"). The Arjona Affidavit contains numerous inaccurate statements.

5. Paragraph 11 of the Arjona Affidavit states that "At the tirne of the loan

transaction, a commitment for title insurance obtalned from a title insurer, attached as an Exhibit

hereto showed record title to the property to be vested in Designer Homes, Inc." The effective

date of the title commitment attached to the Arjona Affidavit is May 12, 2005. Even before that

date JLE Investors, Inc. knew record title was in Designer Homes, Inc. Attached as Exhibit S-1

is a true and correct copy of an April 21, 2005 memorandum from Mr. Arjona that shows clearly

that JLE Investors, Inc. knew record title to the Property was in Designer Homes, Inc. The loan

was not made until June 29, 2005. In fact all documents related to the loan transaction showing

Original Designer Homes, Inc. as the borrower and grantor of a lien interest were prepared by

JLE Investors, Inc. after the corporation's representatives, including Mr. Arjona, knew record

title was in Designer Homes, Inc. and not Original Designer Homes, Inc.

6. Paragraph 3 of the Arjona Affidavit contains factual inaccuracies.

Representatives of Original Designer Homes, Inc. did not contact JLE Investors, Inc. in regards

to making a loan to Original Designer Homes, Inc. Original Designer Homes, Inc. was not

formed until May 18, 2005. I approached JLE Investors, Inc. on behalf of Designer Homes, Inc.

in March or early April 2005 for a loan. A copy of my father's will was shown to them at that

time. During its underwriting for the loan JLE Investors, Inc. discovered Designer Homes, Inc.

was not in good standing with the State of Texas and could not be reinstated. JLE Investors,

Inc. determined that forming a new corporation that it called a "Successor Corporation" was the

best way to satisfy itself that a loan with a first lien on the Property could be made. JLE

2

527

Investors, Inc. never requested that my sisters or I execute a deed of the Property to the new

corporation.

7. I informed JLE Investors, Inc. representatives that my father, Charles Freezia was

deceased and his Estate was in pro bate in our earliest conversations in March or April 2005,

Because the will of my father was shown to them, JLE Investors, Inc, knew my three sisters and

I were his beneficiaries as my mother had already passed away in 1997. JLE Investors, Inc. had

knowledge of the open probate case from me, my estate attorney and the title commitment

report, referred to in Paragraph 11, that required action from JLE Investors, Inc in order to

proceed with the loan.

8. Shortly after JLE Investors, Inc. discovered that Designer Homes, Inc. was not a

corporation in good standing and could not be reinstated it contacted my father's estate attorney.

JLE Investors, Inc. and proposed that a new corporation be formed by myself and my ex­

husband to be a successor corporation. JLE Investors, Inc. informed me that a loan would not be

made except to the new corporation. The new corporation was formed under the name Original

Designer Homes, Inc. under the direction of JLE Investors, Inc. The Property was not

transferred to the new corporation by myself or my sisters. Despite this, JLE Investors, Inc. and

the estate attorney informed me that Original Designer Homes, Inc. owned the property because

it was a "Successor Corporation''. I relied on the statements made to me by JLE Investors, Inc.

when I signed the documents JLE Investors, Inc. prepared for the loan transactions. JLE

Investors, Inc. knew I relied on their statements which were either reckless or misleading

designed to induce me to signing the loan documents so that a high interest rate loan could be

made.

9. All paper work related to the new corporation was shown to JLE Investors, Inc.

3

528

· for its approval including the language in the Article oflncorporation that Original Designer

Homes, Inc. was the successor to Designer Homes, Inc. JLE Investors, Inc. prepared all

agreements related to making the loan Mr. Emerson wanted to make. JLE Investors, Inc. opened

their loan file in the name of Designer Homes, Inc. but made out the loan agreements in the name

of Original Designer Homes, Inc. JLE Investors, Inc. advertises that it does its own

underwriting. JLE Investors, Inc. uses it own attorneys to prepare the documents for its loans.

10. Paragraph 6 of the Arjona Affidavit states that the loan in question was made on

representations that Original Designer Homes, Inc. "owned the Property". This cannot possibly

be true. Original Designer Homes, Inc. was formed at the direction of JLE Investors, Inc. JLE

Investors, Inc. was directed fonnation of the new corporation and fully satisfied itself that a new

corporation was the proper borrower and would he able to grant a lien to JLE Investors. Inc. It is

not reasonable to claim that JLE Investors, Inc. relied on any representation of myself or Original

Designer Homes, Inc. JLE Investors, Inc. and the estate attorney told me I could make the

representations in the documents referred to in the Arjona affidavit and which were prepared by

JLE Investors, Inc. I relied on these statements in signing the loan documents prepared by JLE

Investors, Inc.

11. JLE Investors, Inc. claims in Paragraph 7 of the Arjona Affidavit that it was "not

aware of any infonnation which would have made the loan to Original Designer Homes, Inc.

suspicious as to the ownership of the Property". This statement is not true, and is contradicted

by Paragraph 11 in Mr. Arjona's Affidavit.

12. The statement in Paragraph 9 of the Arjona Affidavit that JLE Investors, Inc. was

"not aware of anything in the chain of title to the Property disclosing or referencing adverse

4

529

claims ofFreezia" is also not true. The company and its representatives were fully aware that the

assets of Designer Homes, Inc. were part of my father's estate and that my sisters and I were the

beneficiaries. JLE Investors, Inc. chose to make the loan on its own accord and knowing all the

facts.

13. With the exception of my personal guarantee of the loan, at no time did my sisters

or I execute any documents individually or on behalf of Designer Homes, Inc. requesting a loan,

requesting that a prior loan or lien be paid off, granting a lien or assigning any rents in favor of

JLE Investors, Inc.

14. It is my opinion that the value of the Property exceeds all the offsets claimed by

the Defendants and this value, plus the lost rents since the wrongful foreclosure, are being kept

from my sisters and i wrongfully.

Further affiant sayeth not.

TRACEY FREEZIA

:!:> r? SWORN TO AND SUBSCRIBED TO before me TRACEY FREEZIA on this the

c:/'l._J_dayofAugus1,2013. ~a,

P blic, State of Texas

5

530

TAB6

Cause No. 2012-20372

TRACEYLYNNFREEZfA

v.

IS STORAGE VENTURES, LLC, JLE INVESTORS, INC. D!BIA ASSOCIATED MORTGAGE INVESTORS, POST OAK BANK, N.A. AND JAMES L. EMERSON

§ § § § § § § §

IN THE DISTRICT COURT

281" JUDICIAL DISTRICT

OF HARRIS COUNTY, TEXAS

EXHIBIT A -AF.FIDA VIT OF TRACEY FREEZIA IN RESPONSE TO

JAMES L. J;;MERSON'S MOTION FOR SUMMARY JUDGMENT

STATE OF TEXAS

COUNTY OF HARRlS

§ § §

Befure me, the undersigned authority, personally appeared Tracey Freezia, who_, being by

me duly sworn, deposed as follows:

1. "My name is Tracey Freezia, I am of sound mind, capable of making this

affidavit, and personally acquainted with the facts herein stated.

2. Mr. Emerson conducted a "foreclosure" in April 2011 and a second "foreclosure"

of the same property in July 2011. In both instances he knew Odginal Designer Homes, Inc.

never had record title and that the purported lien he was basing both foreclosures on was invalid.

3. At the time immediately pd or to the April foreclosure I was operating under a

moratorium on payments that had been arranged by Mr. Arjona of JLE Investors, Inc. ("JLE")

that lvfr. Emerson was aware of. The purpose of the moratorium was to modify the existing loan,

increasing the collateral and list the business (made up of both properties) for sale. The

additional collateral triggered updated appraisals of the existing property, an appraisal, survey

and title search to be nm on the new collateral located at 1600 Cordell. The title search done by

Alliant Title brought forth the infonnation that Original Designer Homes never S\lcceeded to the

interests of Designer Homes imd that there was never a deed from Designer Homes, Inc. to

Original Designer Homes, Inc. The title company informed JLE/AMI of this information. Since

all properties owned by Designer Homes would be affected by not having proper deeds to

Original Designer Homes, JLE became aware that the loan they had made in 2005 was not

collateralized. Despite this Mr. Emerson conducted the foreclosure of the invalid lien. Attached

as Exhibit 1 are pages I and 6 of that title report, the email from the title company to Gonzalo

stating that I would have to file a Trespass Try Title to suit to clear up the title issues, emails to

me from the attorney I went to for the title problems and page I of the appraisal report for the

property connected to the existing loan.

4. In bringing this lawsuit I am not seeking to avoid paying the loan JLE made back

in 2005. That should be paid back but they should not be allowed to benefit for more than they

were owed or inflict damage onto me. The value of the property foreclosed on by Mr. Emerson

far exceeds the amount owed on the JLE Investors, Inc. note. I and my sisters were irreparably

damaged by Mr. Emerson foreclosure by our loss of significant equity and rental payments

collected but not credited to me. The appraised value of the property at the time of Mr.

Emerson's foreclosure was $630,000 yet the amount owed JLE was only $372,293.65.

5. I have read the Gonzalo Arjona affidavit dated October 31, 2013 and attached to

James L. Emerson's Motion for Summary Judgment. The affidavit contains the following

inaccuracies:

2

729

-Paragraph 3 inaccurate in that a representative of Original Designer Homes, Inc. could

not have contacted JLE as Original Designer Homes was not fanned until after JLE discovered

Designer Homes, hie. had lost its chaiter. Interesti11gly, Mr. Aijona does not state any dates in

his affidavit because it would show the statement to be untrue. Attached as Exhibit 2 to this

Affidavit is a JLE Investors, Inc internal memo dated April 21, 2005 prepared by Mr. Arjona

showing that the original borrower was to be Designer Homes, Inc. The new corporation that

JLE Investors, Inc. loaned the money to, Original Designer Homes, Inc. was not formed until

May 18, 2005.

-Paragraph 6 is inaccurate in that any representations that were made were on documents

related to the loan that were prepared by JLE attomeys that Emerson knew were false and

therefore JLE did not rely on those representation. The loan documents were prepared by the

same JLE attorney that was involved with the formation of Original Designer Homes, Inc.

Attached as Exhibit 3 to this Affidavit is a copy of the Invoice from the attomey who prepared

the loan documents and the subsequent Modification documents.

-Paragraph 7 is inaccurate in that JLE knew Original Designer Homes, Inc. was not the

record title holder and knew Original Designer Homes, Inc. could not grant a lien.

-Paragraph 8 is inaccurate in that I was not a party to the Modification Agreements and

only signed at JLE's request to show I as guarai1tor had knowledge of the modification,

6. In 2011 I placed Original Desigi1er Homes, Inc. in Chapter 11 Bankruptcy in

hopes of setting Mr. Emerson's wrongful foreclosure aside. The Bankruptcy Judge ruled that

Original Designer Homes, Inc. did not have ownership of the real property which is subject to

3

730

this lawsuit and dismissed the case. A true and correct copy of the first page of the docket sheet,

' . Order and entry Number 58 showing the Judge's ruling is attached as Exhibit 4.

7. Designer Homes, Inc. owned other real property on Cordell Street that JLE

Investors, Inc. considered for a loan in 2005. A title report from Arneripoint Title for both the

Cordell Street property and the property which is the subject of this lawsuit was received stating

vested title appears to be vested in Designer Homes, Inc. A true and correct copy is attached as

Exhibit 5. This determination was confirmed in the original title commitment from Chicago

Insurance Company for JLE to make a loan. A true and correct copy is attached as Exhibit 6.

This infonnation is what led to JLE to detennine that a new corporation, Original Designer

Homes, fnc., was necessary. Title to the real property which is the subject to this lawsuit was

never transferred to the new corporation; Mr. Emerson knew this when he foreclosed on the

property.

8. In April 2011 Designer Homes, Inc was subject to an IRS tnx lien. Mr. Emerson

was aware of this but foreclosed any way. After the foreclosure by Mr. Emerson, JLE had to pay

the IRS a sum of money to clear the lien for a pending sale. If Original Designer Homes, Inc.

had title to the property this payment would not have been necessary. Attached as Exhibit 7 is a

portion of a post foreclosure title report that shows the IRS liens on Designer Homes, Inc.

attached to the property foreclosed on by Mr. Emerson. Also attached as Exbibit 7 are true and

correct copies of correspondence received by JLE/ AMI that notified them of the IRS liens and

documents that show where JLE/AMI had to pay for the release of those liens.

4

731

9. Filed for record in this case is an Abstract attached as Exhib.it 8. The abstract

shows an unbroken chain of title in Designer Homes, Inc. To this day I receive solicitation mail

as the owner of tl1e real property foreclosed by Mr. Emerson.

lQ. Attached to tl1e Response to Mr. Emerson's Motion for Summary Judgment is a

trne and correct copy of my deposition in this case with Exhibits, which I incmporate in this

affidavit. I also incorporate in this Affidavit all of my prior Affidavits in tllis case with Exhibits.

11. Attached as Exhibit 9 are true and correct copies ofrecords and emails I received

from Marilyn Syms, estate attorney for my father's estate, showing numerous communications

between her and JLE Investments, Inc./James L. Emerson showing conclusively that Mr.

Emerson and JLE knew Original Designer Hornes, Inc. never had title to tl1e property he

foreclosed on. Exhibit 10 are emails tlmt are true and correct copies of emails and other

correspondence showing Mi-. Emerson's knowledge before the foreclosures.

Further affiant sayeth not.

A+fiant

5

732

SWORN TO AND SUBSCRIBED before me by Tracey Freezia on the ll day /Uir. 2013. 1

6

733

TAB7

Filed 13 November 01 P12:26 Chris Daniel· District Clerk Harris County

CAUSE NO. 2012-20372

TRACY LYNN FREE ZIA, § §

Plaintiff, § §

ft. § §

IS STORAGE VENTURES, LLC, JLE § L'lVESTORS, INC. d/b/a ASSOCIATED § MORTGAGE INVESTORS, POST OAK § BANK, N.A., and JAMES L. EMERSON, §

§ Defendants. §

ED101J017800928 By: adiliani solis

IN THE DISTRICT COURT

281 5T JUDICIAL DISTRICT

HARRIS COUNTY, TEXAS

ORDER ON JAMES L. EMERSON'S MOTION FOR SUM!'1ARY JUDGMENT

ON THJS DAY the Court heard Defendant James L Emerson's Motion for Summary

Judgment (the "Motion"). After considering the Motion,a.itl~sponse~ ~~ a~!J Court is of the op1mon that the Motion should be GRANTED.

lT IS IHEREFORE ORDERED, ADJUDGED and DECREED, that Defendant's Motion

is GRANTED and that Plaintiff take nothing from Defendant Jam es L. Emerson.

SIGNEDthis 1-~i\ dayof Kb ,-2013 2..-0ilf-

JUDGE SID G

PAGElOFl

1020

4-1/ ( /-1

TABS

Effectiv¢ .Da.te: M~Y l 2, 2005, 8:00 mn

COMMITM"ENT FOR TITLE INSVRi\NCE

$CllltDtJLE A

Cornmil:!nent Issued.: May 20, 2()05, !l:OO ~rn

(il) OWNER POLICY OF TlTLE lN$URANCE (Fo•mT"l) (Not applicable for lmprn\'ed ono.to.fo4r family tosldentfol teal estate)

POiicy Amount PROPOSED INSURED:

(&) TEXAf> RES!D.fi.NT1At OWNER POUCY OF TITLE INSURANCE· ONE·TO•FOURFAMJLY ltESlDENCEB{form T·IR)

~o)ity Amol!nt: PROPOSED lNSlillE.D:

(r.) MORTGAGEE· POLJCY OF TITLE INSURANCE (Form 1'2)

Polloy.Aii1ount: PROPOSED INSURED: Pr~posed EMpWer:

$370,()00.00 JLlt fovo•tors, hie. d!bfa Associated Mortgage Chari.,. A Frooxia

G F. No. or Ffle No, 0Si558ZMX

(d) TEXAS SHORT FORJi1 !tE.SJOENTlAL, MOR tOAGE,E J'()UcY OF TITLE rusURANCl'. (Fo1111 T·?.R)

Pqljcy fo,motmt: PROPQ~ED INSU!<JH): Pl'Oposed BotrOvler:

(e) MOR TO AGEE TITLE POLICY BINDER ON INrnRJM C6NSTJWCTION l.QAN (foii!l f •13)

l:iinder Anioui<t: PROPOSE!) lNSllRJZD: Pr<ipo$¢d l'>o!ro\</er:

(f) OTHER

P1>licy Amo•mt: PROPOSED !NSliRET>:

2 .. The internst in the land covered by this CoiJllnitment is: F'•• S!rnJ)le

(/? .. ;~

466

Continu~ikm of S~heduk A

3. Reeold title t-0 the land oJJthe f:iffoctive bate, appears to be vos.locl Im D<!ll!guerHNins, Inc.,~· '.fe%!ls Ci>rpotM!im, by virrnc &fl>oed dated Ocwbcr (!, 1971, llN<l for recqnl .ulld~rl'farris Cou RlJ' Clerk's Fi!• No. :IJS4M46.

4. Legal descriptii>n<•fUie land: A tr~et uf!uod ooutal!!lllg 7it,SZ6,94 square 16ot{l.626Q •<ros); morn ur foss,.bein~•it"•tcd inoo,.dbefoga iiod <>f J'ohn Austin :t.eagu~, Ab~it'~etNo. l, of Harris Co1mty, To~••· S~!d tra¢t nf fand being m<We partktifar!y dcs¢l'l~ed by m•lli1'and ll<>µl!<!s in Exbililt "A'' »ltndied h¢reto.

467

COMMl'j'MllNT FOR TITLE INSURANCE

SCHEDULE C

You( Policy wHl 11Dtoover loss, costs, attorneys' fees, and exl'enses resulting from the folfowil1g.requkoroonts th~t wm app•«!'., Exc~.pricns in Schedule B of'lne Polky, unless you dispose of these mallets to. oursatJsfaotkm, l!efore 1Jie date th" P91ky is issued;

L Doowmmts creatl11g your tit!~ or interest lnust b~ apprnved l!y tls and must be signed, l><>iat•!zed and t1led fOrrecorcl.

z. Satisfilctoty evidence must be provided tliat:

a. no p.ernon occupying the land claims any Interest In 1!lnt land againsl: the persons name4 in paragraph J of SohediJle A, .

b. flll standby foes, I axe~, oss"1mments and charges against the properl')I have, been paid,

c. all improvements otrnpilirs to the propert:Y are c-0mplet¢d i!nd accepted by the.owner, and thahll contractors, subc.onnn.ctors,. labor:ers .a~d. supplierK have beeri ft.illy pa.id. and that n.o mechanic.~s,_ laborer's or ttHlterlnbnen1s li¢ns· hav'' attached to the property,

d there ls legal light <1f atoess w 011ct. th:>m the land,

e.. (on a Mortgagee Policy only) restrl~tions have not be~n oM wtll nN i;>e violated that afl'eet the valldil;Y ilnd prfotity ofthe fosur~<11ll<>r1gage.. •

3.. You nn1st pay the ~efler or hon·o\ver tln~ ~_greed.amount for yous property· or iOterest..

4. Any defect, JIM or other matter that may affect titlo to the land odnt•Jesl insured, that ar!Bes Qr io filed aft•rthe effective date a:fthfa Corrirnitmeni

5, The title io~uren~e policy being h<i•M to yo• c~nrnlns ·~ orMtratkn 11mvi•ion. II r1ll-0ws}<'" or theConopony !<> require ar1ll!.rntfo11 lithe •ni~mit afin•iiranoe ls $1,ooo,ooo,ao o" !es$. If you wu•i ta ret~i• ,YoHr rig))( i~ sue the Comp1rny In eose of a dispute over a tl~lm, you !!IU$! requeM deletion of.lite ar!J!trnl!on pt-Ovfalon .before th• policy is IMuod. lfyau are the purnlrns•r fo tho tro!lsoeti<l11 •rtd ol~ct <l•ldl~ll ofthf. .~rblfration provisfon, pl•~s•i11fQrnl us through y-01ir l<•w d"shig fas!rut0011s.

6. l"rocedmwl Rule p,z7 i1s provided (\lrh! Article ~,~9 of !he fe~•s Ins"'·"""" Code >«quires that "Goads Fun(!<" b• r•C!>lved ••d <l•p.qslfod !Je(~re a Till• A~eo! m~y dl~lml'ile from its trust fond account.

ll. lt¢m i, $c~o~Jule B wm !>um.ended to i·1l!1<l "A•1phorl•gos hi ore•" ii! the ()w11er's Title Pnl!cy ;r we ore furaishcd • current sm-vey plat prepared hy ~rt npprovod liCM .. 1d Wr>'•Y(•r wlw te1•fiiles funlthere oi·e no diserepandoo, <•iltlio!s in boui>dory liues, or an)' ¢ncn:iaehmeot(s), or auy overt~ppfog ol imprnvcme11!s, nnd !he n•)'ment tlf Ul• ~;:t~i!l<>rtnl rn•i~iM(l prellll11m: 5% of ih• bns!~ r.~t~ far this nmen!lment on r.Sldtntial polides ~!id !B% o~ other ownoq,ollcjes.

lt "Rlgbt• ofparil•• io pos••••fon" slmwooin Schod~le l> ofthlS commitmerat will be deleted from tile Owner:'$ 'fftle Policy ONLY If on hrnp~ctk~n is m•d• n11~ pi1\dfor wlik~ shows no pnrties hr possession ~tiler tllan die own•i' or fn:~irtl~~~~f($)'. lf.S't~_'~l'r ;an fn$l_l_)'e_ct§on t~ n~t riegidr~d, tb~ ~JUr~h~·$f1r~s)_ 1n:us.t ~ig·n B W~ive~ ofI.n:spett:io-n_and aol;.iiow!edg~ that they und~rstnnd .tb"! fo• OW•~r', Till~ l'olioy wm w i!IBMd sul>Jeot(a th• !'lgh!s of P"rt!os In possessloo.

l O. Camp4HlY tl':q:uiri::::u-~ _i~\§~bl~ .c~r:y·(Jf >..:iuirQ;nt tlrll1et'$ fiet:i:B;e ~r other pois.iUve prtlo:f l>f .ident.ifica_tion of tire partle$ t-0 the. closing. ·

l l.. EFF!;;c'l'lVll JANUARY l, 2004 " NOTICE OF CONFit\llNT1A),,i1'Y 11.JG!ffS; IF YOtl ARll A NATURAi,, PERSON. Y-Oll MA y REMOV~: ON snnKll: ANY OF rmi 1101.t.lhWING !NFORMA 1'10N J<'IUH\1 THIS

468

Continuation ofSchedule.C

u. Doe~ anrusl tfatetl July 26, 2001, 1Jieuforroeord co Jul)• :Mi, lOQ2, under Hards C1'un1y C!ed1's Filol'fo. '\197174'}, ·~·e•i!e<!I by !)~signer HQmes, r~c., a T~~·s ••tpOr•tlo .. , tlba f;·OK W1mh~os¢, to G~ido l'.l~gott, rr~sie¢(s), !Q !~~Ure tl\~ payment ol on~ 1w!.e 111 th• ptfodµal rnm of$l5tl,OOO.OQ, f}ayablo to the order M Cont.-~! ll•11k, and sullJoet to all oflh• torms, eondltlon• •ml $tipul•tlon• oonl2l"cd th•reln, inchaillag buJ not Hmlt•d to any other imd !<•lure lndob!edocss also secured ~Y thls lien,

i\ddi!IO\l~lly secur'ed l>y Asslg•rn1cut (1f .Lenses •tHI Ro11ts, l11eil for record undct' Hanis co.unty Clerk's File No. V97!744.

13. We 111ost be fnrnlshod • cur,.ent .>ooopl•bl< survoy and field nol• description thereof an<l lhe !lie 1·eti1rnod for' review •ml possible mldltil>n•l •~ceplfons.

14. Secure evidence ofoxisfono• -0f tM record ow~er corpornUon and evidence thnt it ls In good silmdlng with the Texas Secretary ofStl\fo,

JS, Any <:<>n'l~)'illicil out oftii• l'c<io!'d <1WMr corp11rat!on Wu$! be ~~pporled by pt<>1><1r !'M<>fu!l<>!• ln ''~~otd•b!• form.

16. Tho loon •pplic•mt• mu•t ·~•c~fonn •Hldoyit desigo~ting otb•r prqporty as tr1elr i•li"1ost¢ad, doS<.ribing th•'""'° by b<>lh str••t oMr•s:; a~ct by regal <!•~•rlption, Thoy •tr• to further di•cluionmy int•r•sf \nth• subject J>roperty ~oder tM ToX•• H<>mo$tead L•w•; •nd to ack110wledgo that thesomc ls not ""'om pt from fOritlld ••le. G11ar•nty i• sebi••t to prier Jns11•et!o11 by a memh•r ofi:~!~ Compolly, ont! Ibo jlndings or •ncll inspection rn<1st )>e ilp)>r-Oved l>Y ·~ of!lcot o.f this Comr•11y,

n The iolfow,ug iterns appear of rc®rd against persons with u•m•• me •••~• •s or simifar rothili M tMRec{frd Ow~•r(<). Vil• mm;t be ror'oish•d wUb ,.., •• ,.,, '" r.•ordal>I• rorm, ofs•ld .items'" ijD afJldavlt cxeeu!ed by t~e R1•cQt'4 Owner(•) sla!log l>of~helth•y is/are no! the same perMl(s) mm1!im1etl in said !toms:

Alntrnd of Judgment fil•il fo,, rec<>t'd ,/~ly 19, 1995, Moder Barris Cou11ty Ch>ri<'s Filo l'fo. lM887(jt, lo fllvlii' of U1>ltod S~vlngs Assod~!ll:i'1 ofTox!l$, Ji'Sl.l, ~g~instl:leslgncr Homes by Gem•ga&, !no., for t.lte amount 01'$10'/,436.38, phis c<1'1•, i•torcst Mtj atN<l>ey's fo!IS.

Noiie~ M Federd .Lien, lil<id for record "" May :l, 2005, undo•· Harris County Cfork'• l'lfo No. Y443807, against Deilg~<ir fionws0 hie., In fa~. ~moirni o!$l4,731i.;lA, plu> lJ"nalty and interest

JS. '!'he fo!lnwl•g Jlcms .!lpp;i,i.r of O'<loord against persolit with nii!11"1i th• same as or slmll~r lo tbt ~f Ch~i'le• A, llr••z!a, form¢•· preslde>1t0Hleslgiaer Home•, 111~., n<•w deceased (l'rnllato of Will .filed fN' tecoro Af!rH Z7, J004 under OoekM No. J471l 7). We must be furnished wllll roleas"'" ln recordable (orm, of sold l!oms. or an •ffl!lovit ·~ec~ted by Cli•orlos Freezla stating holsMlthoJ' L;/l!r·e ~ot the $U!il• person\•) milntion•d In ••lid l!Om$;

Notiee o!Tetler•l.Lien, filed for .roeord on April B, 2002, under H•rrls Coonty Ckrk's '!til• No. V7i1446, •§>inst Cli•rle• J\,. l'r<Jezfo, in tho 1mw~11! of ll>Hl,842 .• 9l., pins p¢nalcy ~nd interest

19. Orllhi•neeNo, 8S•)S1S li,11 t!i¢ City ol'IJ11"ston, dafod Oct<>bcr 23, 1985, a eertme<l eopy <>fWl!klrn'8s llied Aug•st I, 19.91., nnd••" H•rtfa} Comity Clerk'• FJ!e No. N2S3S86, relnti•g to rn!os, rog4lMlu"s, prQoedure• ond d~i~1 s!o~d~rds for devdopmen! .•nd pl~:tiiag n<ld p.tevfding for the eS!nbli~hfag of bsilltl!ng seduwk lines. (FORJNFORMATION PUl'!i'OSES ONLY)

20. Ordb1'lReeNo. 9147Qt hy tiw C!ty of Ho@Wn, regllt'din~ the plllniing, pxeserv~tion and mah;tena•<• oftroes.•nd ~$oor;>(!•• lnod•t•pillg," <ertifJod cppy of which i. filed for t'o"ord under l't!!rt!~ Counn• ClorWs Flt~ No. NZ56$$~. (FOR !NFORJ\11)1.TJON PlJRPOSES ONLY)

469

TAB9

Feb 0513 04:38p Tracey Freezia

Entity Name:

7134650006

STATE OF TEXAS OFFICE OF THE SECRETARY OF STA TE

CORPORATIONS SECTION

Memoraudum to Entity Record

DESIGNER HOMES INC. Enti1y File Number: 14566200

Entity Srarns;

N arne Status:

Expired

Inactive Entity Status and Applicatton fur Reinstatement Filed July 30, 1992

p,1

Regarding;

Provided By: ~~~~~~~~~~~~~~~~~~~~

Carmen Flores, Deputy Director, Business & Public Filings

Basis: This memo ls provided to clarify tbe filing history and status of the above named entity as evidenced by the electronic database of the secretary of state.

Background: On March 28, 1958, articles of incorporation were filed for a Texas business corporation by the name of DESIGNER HOMES INC. As evldenced by section IT of the charter instrument, the corporation was to exist for a period oftwemy-five (25) years. The Texas Business Corporation Act (TBCA), which became effective on September 6, 1955, was the law in effect at the time of formation <Jf DESIGNER HOMES INC. Pursuant to Article 2.02 of1he TBCA, a Texas corporation had the power "to have a perpetual succession by its corporate name unless a limited period of duration is stated in its articles of incorporarion." (emphasis added)

In accordance with the articles of incorporation, the duration of the co1poration was set to expire 25 years from its formation; namely, March 28, 1983. However, before the expiration of its stated term, the Secretary of State forfeited the entity's charter on March 16, 1981 pursuant to the forfeiture.provisions of Chapter 171 of the Texas Tax Code. There is no evidence of record to indicate that the entity filed articles of amendment before March I 6, I 981 to extend its stated term or change is period of duration to perpetual.

The filing history indicates that on or about July 30, 1992, the Corporations Section received an application for reinstatement and request to set aside the tax forfeiture. Although an employee of the Office of the Secretary of State accepted the application for relnstatemen1, the entity's si:at~d ptriod of duration 1111d existence expired effective Maroh 28, 1983. A cmporation that dissolves by the expiration of the time set forth in tis articles of incorporation has no underlying corporate existence to be reinstated. By July 30, 1992, the timeframe within which the entity could have reactivated its corporate

487

Feb 0513 04:38p Tracey Freezia 7134650006

Memornndum to the File Page 2

existence and amended its charter to perpetlrnte its existence h.ad expired. Consequently, the filing of th.e application for reinstatement in 1992 and the filing of tlie statement of change of registered agent i111d registered office on May 15, 1998, did not have the force or effect of amending the mticles of incolj)Oration or extending the duration or existence of the corporation. See e.g., Op. Tex. Att'y Gen. No. WW-44 (1957) and Op. Tex. Att'y Gen. No. 0-5707 (1943).

Tlte status of the entity will remain expired; no statutory filing can be accepted to reactivate the existence of the entity.

Action Requested: A copy of this memorandum is' to be indexed as a Miscellaneous document in the filing history of the entity for the purpose of clarifying the filing history and e.~pired status of DESIGNER HOMES INC.

Entity Status: Nmne Status

p,2

488