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Date: 02-08-2020

Case Style:

Wayne Myers v. Pennymac Corporation

Case Number: 01-18-00740-CV

Judge: Richard Hightower

Court: Court of Appeals For The First District of Texas

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In October 2004, Myers obtained a home equity loan. He subsequently
defaulted on the note in December 2007 and made no further payments on the loan.
On multiple occasions between 2008 and 2013, his lender accelerated the loan and
notified him of its intention to foreclose, but then later rescinded the acceleration.
The loan was also assigned to different entities over the years, with PennyMac being
the final assignee.
On April 14, 2015, PennyMac filed an application for a court order to allow
foreclosure of the lien securing the home equity loan pursuant to Rule of Civil
Procedure 736, and it obtained a default order on October 9, 2015. See TEX. R. CIV.
P. 736.1–736.13 (providing procedures for obtaining expedited order permitting
foreclosure). The trial court ordered that the sale could proceed after January 1, 2016.
Myers then filed for bankruptcy in May 2016. After the bankruptcy court dismissed
Myers’s bankruptcy petition, PennyMac moved forward with foreclosure and
purchased the property at the foreclosure sale on January 3, 2017.
On the same day as the foreclosure sale, Myers filed a petition naming
PennyMac as the defendant and asserting a claim to quiet title based on allegations
that the foreclosure was wrongful and asserting that PennyMac’s enforcement of its
lien was barred by limitations (the 2017 suit). The trial court granted summary
judgment in favor of PennyMac on these claims, dismissing Myers’s suit with
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prejudice. Myers did not appeal this judgment. Further legal proceedings ensued,
including a forcible detainer action in the county court at law, another bankruptcy
filing, and two additional suits challenging the validity of the foreclosure, one in the
county court at law and one in district court.
On April 9, 2018, Myers sued PennyMac again by filing the petition
underlying this appeal. He asserted that the foreclosure was wrongful and sought a
declaratory judgment and quiet title. In setting out the facts supporting his claims,
Myers referred to the 2017 suit, alleging that he had filed it in “response to a
judgment on [PennyMac’s] Application For Expedited Order Under Rule 736 on a
Home Equity Loan allowing [PennyMac] to foreclose on [Myers’s] real property.”
Myers asserted that, following the filing of his 2017 suit, PennyMac was “legally
stayed from foreclosing on [Myers’s] property,” but it nevertheless continued with
the foreclosure. He recognized that, “[t]hrough a series of motions, including a
motion for summary judgment against [Myers], the court ruled adversely against
[Myers]” in the 2017 suit.
In the underlying petition, Myers sought to quiet title, asserting that he was
the rightful owner of the property and that PennyMac’s interest in the property is
invalid because the foreclosure was improper. Myers also asserted a cause of action
for wrongful foreclosure and sought a declaration that the foreclosure was wrongful.
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He asserted that the automatic stay provided for by Rule 736.111 barred the
foreclosure sale from going forward.
PennyMac moved for summary judgment on May 9, 2018, arguing, “This is
at least the fourth frivolous lawsuit in addition to two meritless appeals Mr. Myers
filed to avoid the consequences of his failure to repay a loan” and, therefore, res
judicata barred his claims. Myers responded to PennyMac’s motion for summary
judgment by arguing that PennyMac was not entitled to judgment as a matter of law
because it had not addressed any of his issues regarding Rule 736.11(a)’s automatic
stay.
The trial court granted PennyMac’s motion for summary judgment and
dismissed Myers’s claims with prejudice. This appeal followed.
Analysis
In his sole issue on appeal, Myers asserts that the trial court erred in dismissing
his suit because the foreclosure was improper under Rule 736. PennyMac, however,
moved for summary judgment arguing, in part, that Myers’s claims were barred by
res judicata, and the trial court granted that summary judgment. We agree that res
judicata applies to Myers’s claims.
1 See TEX. R. CIV. P. 736.11(a) (providing for automatic stay of Rule 736 foreclosure proceedings “if a respondent files a separate, original proceeding in a court of competent jurisdiction that puts in issue any matter related to the . . . lien sought to be foreclosed prior to 5:00 p.m. on the Monday before the scheduled foreclosure sale”).
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To establish its entitlement to summary judgment on the affirmative defense
of res judicata, PennyMac was required to conclusively establish: (1) the existence
of a prior final judgment on the merits by a court of competent jurisdiction; (2) the
identity of the parties, or those in privity with them; and (3) a second action based
on the same claims as were or could have been raised in the first action. See Travelers
Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010) (setting out elements of res
judicata); see also City of Richardson v. Oncor Elec. Delivery Co., LLC, 539 S.W.3d
252, 258–59 (Tex. 2018) (providing summary judgment standard).
PennyMac presented copies of the pleadings and judgment in the 2017 suit.
The 2017 suit was decided in the same court as the current suit. By rendering
summary judgment and dismissing Myers’s claims in the 2017 suit with prejudice,
the trial court rendered a final judgment on the merits of Myers’s various claims
challenging the foreclosure. See Hickman v. Adams, 35 S.W.3d 120, 124 (Tex.
App.—Houston [14th Dist.] 2000, no pet.) (“Dismissal with prejudice constitutes an
adjudication on the merits and operates as if the case had been fully tried and
decided. Thus, orders dismissing cases with prejudice have full res judicata and
collateral estoppel effect, barring subsequent relitigation of the same causes of action
or issues between the same parties.”) (internal citations omitted). The trial court was
a court of competent jurisdiction at the time it rendered the 2017 judgment, as it is
now. Myers and PennyMac were parties both to the 2017 suit and this suit.
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Furthermore, the claims raised in this second action are based on the same
foreclosure and involve the same rights and obligations of the parties as those raised
in the 2017 suit. In the 2017 suit, Myers argued that the foreclosure was wrongful,
and he sought to quiet title and void the foreclosure on limitations grounds. In the
present suit, he continues to argue that the foreclosure was wrongful, citing the
provisions of Rule 736. This complaint is based on the same transaction as the 2017
suit, and the validity of the foreclosure was, or could have been, addressed in the
2017 suit. See Hallco Tex., Inc. v. McMullen Cty., 221 S.W.3d 50, 58 (Tex. 2006)
(applying “the transactional approach to res judicata, which requires claims arising
out of the same subject matter to be litigated in a single lawsuit”); Getty Oil Co. v.
Ins. Co. of N.A., 845 S.W.2d 794, 799 (Tex. 1992) (holding that “[a] subsequent suit
will be barred if it arises out of the same subject matter of a previous suit and which,
through the exercise of diligence, could have been litigated in a prior suit” and citing
Texas Rule of Civil Procedure 51 providing for joinder of claims and remedies); see
also Engelman Irrigation Dist. v. Shields Bros., Inc., 514 S.W.3d 746, 750 (Tex.
2017) (“Res judicata bars the relitigation of claims that have been finally adjudicated
or that could have been litigated in the prior action.”).
We conclude that PennyMac met it burden of proving each element of its res
judicata defense. See Joachim, 315 S.W.3d at 862 (reciting elements of res judicata);
see also Oncor Elec. Delivery Co., 539 S.W.3d at 258–59 (providing that we review
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summary judgment rulings de novo and that, to prevail on traditional summary
judgment motion, movant bears burden of proving that no genuine issues of material
fact exist and that it is entitled to judgment as matter of law); Lujan v. Navistar Fin.
Corp., 433 S.W.3d 699, 704 (Tex. App.—Houston [1st Dist.] 2014, no pet.) (holding
that defendant moving for traditional summary judgment on affirmative defense
must plead and conclusively establish each essential element of its affirmative
defense). Thus, the burden shifted to Myers to raise a fact issue on at least one
element of PennyMac’s affirmative defense. See Katy Venture, Ltd. v. Cremona
Bistro Corp., 469 S.W.3d 160, 163 (Tex. 2015) (per curiam) (holding that, if
summary judgment movant meets it burden, burden then sifts to nonmovant to raise
genuine issue of material fact).
Myers has not asserted any argument attacking PennyMac’s res judicata
defense. He does not disagree that the judgment in the 2017 suit was a judgment on
the merits, and he recognizes that the trial court is a court of competent jurisdiction.
Nor does he allege that the 2017 suit involved different parties from the underlying
suit or that the validity of the foreclosure was not or could not have been considered
in the 2017 suit.
He argues, instead, that the foreclosure sale was void, citing Rule 736.11(d),
which provides that, “[i]f the automatic stay under this rule is in effect, any
foreclosure sale of the property is void.” TEX. R. CIV. P. 736.11(d). As discussed
8

above, issues related to the validity of the foreclosure were addressed or could have
been addressed in the judgment on the merits in the 2017 suit. This argument does
not raise a fact issue controverting PennyMac’s res judicata defense. Myers also
makes several passing assertions that the trial court had no jurisdiction due to a lack
of standing. His brief does not identify the basis of his argument that the trial court
lacked jurisdiction, and the record demonstrates that this complaint is wholly
unfounded. As the plaintiff, Myers was personally aggrieved by the foreclosure, and
the trial court had jurisdiction to consider both Myers’s petition and PennyMac’s
summary judgment motion. See, e.g., DaimlerChrysler Corp. v. Inman, 252 S.W.3d
299, 304–05 (Tex. 2008) (to have standing, plaintiff must be personally aggrieved,
his alleged injury must be concrete and particularized, actual or imminent, and not
hypothetical); Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 75 (Tex. 2000) (Texas
district courts are courts of general jurisdiction).
We conclude that PennyMac established its right to judgment as a matter of
law, and, thus, the trial court did not err in granting summary judgment and
dismissing Myers’s suit with prejudice. See Oncor Elec. Delivery Co., 539 S.W.3d
at 258–59. We overrule Myers’s complaints on appeal.

Outcome: We affirm the judgment of the trial court.

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