JOHN McBRYDE, District Judge.
The plaintiff in this action is HSBC Bank USA, N.A., as Trustee for the Registered Holders of Ace Securities Corp. Home Equity Loan Trust, Series 2005-HE3, Asset-Backed Pass-Through Certificates, which is hereinafter referred to as lithe Trustee. II The defendants in this action are SFTF Holdings, LLC ("SFTF"), DTRE, LLC ("DTRE"), Michael Murphy, and Sandra A. Murphy. Sometimes Michael Murphy and Sandra A. Murphy are collectively referred to herein as lithe Murphys."
Consistent with the discussions had and rulings made during the course of a pretrial conference/hearing conducted in the above-captioned action on the date of the signing of this memorandum opinion and order, the court is granting the motion of the Trustee to reconsider this court's order signed June 13, 2012, denying the Trustee's first amended motion for final summary judgment; and, the court has concluded that such first amended motion for final summary judgment (hereinafter "motion for summary judgment") should be granted in its entirety. For the most part, the reasons why the court has reached that conclusion were stated on the record at such pretrial conference/hearing.
The impediment to the granting of the motion for summary judgment at an earlier date was a concern the court had that there could be a fact issue as to whether there was privity in a res judicata sense between the Trustee and the defendant in the action that SFTF brought against "HSBC Bank USA, National Association"
The court has now concluded that the default judgment in the state court action did not have any adverse effect on the Trustee because privity of the kind that would be essential to causing res judicata to be applicable to the Trustee did not exist as to the state court action between the Trustee and the Bank.
On the other hand, there is summary judgment evidence that would point to lack of privity. The declaration of Nicole Domster ("Domster") established that the Bank did not own the loan through which the Trustee claims ownership of the property, and that the Bank acted only in its capacity as trustee in reference to the property. First Am. Mot., App. at 73, ¶ 5. Domster's declaration also established that the failure of the Bank to timely file an answer in the state court action resulted from the inability of the Bank to identify from the papers served on it the trust that was actually involved as the lender referenced in the state court pleading.
There might well be yet another reason why the res judicata contention of the defendants in this action cannot possibly provide any comfort to defendants in their attempt to defeat the Trustee's title and ownership to the property in question. The legal description of the property in question is as follows:
First Am. Mot., App. at 22, 34, 37 (emphasis added). In contrast, the property description used twice in the state court default judgment was as follows:
Cross-Mot. for Summ. J. of SFTF and DTRE, App. at 7-8 (emphasis added). While the "of Denton County" in the default judgment probably was the result of sloppy lawyering, the fact is that the legal description of the property affected by the state court judgment does not match up to the legal description of the property at issue in the instant litigation.
Of course, in addition to the foregoing, the summary judgment record and the stipulations of the parties in the joint pretrial order establish without dispute that the Trustee acquired ownership of the property through a foreclosure sale in August 2010, that the foreclosure sale Deed showed that the foreclosure occurred and that the Trustee acquired ownership as a result of the foreclosure, and that the deed by which the Trustee acquired the property was put of record in the Real Property Records of Tarrant County, Texas, on August 9, 2010. Joint Pretrial Order at 10, ¶¶ 19, 20, and 21. Whatever interest SFTF, DTRE, or the Murphys acquired, or tried to acquire, in the property was subject and inferior to the Trustee's ownership and interest.
At the time the Murphys thought they acquired ownership of the property, the public records of Tarrant County, Texas, clearly disclosed the Trustee's ownership of the property. The deed of trust by which the mortgage lien through which the Trustee acquired ownership of the property was created, the transfer of that lien from the original mortgage company to the Trustee, the declaration that stated that the mortgage lien took priority over a homeowner's assessment lien, and the foreclosure sale deed by which the Trustee acquired ownership of and title to the property all were of public record in the Real Property Records of Tarrant County, Texas, when plaintiff received their deed to the property.
Under Texas law, "[a]n instrument that is properly recorded in the proper county is: (1) notice to all persons of the existence of the instrument; and (2) subject to inspection by the public." Tex. Prop. Code § 13.002. The following explanation given in Texas Jurisprudence is helpful:
63 Tex. Jur. 3d Real Estate Sales § 283, at 333-34 (2002) (footnotes omitted).
Not only did the Murphys have constructive notice of the Trustee's ownership of the property, as the Murphys confirmed at the pretrial conference/hearing they also had actual knowledge of the instant action and discussed that knowledge with the attorney for SFTF and DTRE before they consummated what they thought was thought was their purchase of the property. While the Murphys might have been, and apparently were, "scammed," there is no legal basis for any argument by the Murphys that they acquired any ownership interest in the property through the special warranty deed they took from DTRE on April 29, 2011 (which is mentioned in paragraph 33 on page 11 of the joint pretrial order). Whoever took advantage of the Murphys already had tried to ensnare the Trustee in their questionable conduct.
For the reasons given at the pretrial conference/hearing and those stated above,
The court ORDERS that the Trustee's motion to reconsider order denying its first amended motion for final summary judgment be, and is hereby, granted.
The court further ORDERS that the Trustee's first amended motion for final summary judgment be, and is hereby, granted.
The court further ORDERS and DECLARES that SFTF, DTRE, and the Murphys have no right, title, or interest in the property in question, and that the Trustee has ownership of and title to such property, and is entitled to the possession of such property, as against SFTF, DTRE, and the Murphys.
845 S.W.2d 794, 800-01 (Tex. 1992).