Griffith et al v. Lone Star FLCA et al
Filing
20
MEMORANDUM OPINION & ORDER: Having OVERRULED Mr. Griffith's issues on appeal, the Court AFFIRMS the bankruptcy court. (Ordered by Judge Mark Pittman on 4/28/2022) (bdb)
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UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
RAY DOUGLAS GRIFFITH,
Appellant,
v.
No. 4:21-cv-0825-P
LONE STAR FLCA ET AL.,
Appellees.
MEMORANDUM OPINION & ORDER
Ray Douglas Griffith appeals the bankruptcy court’s finding that his
P.O. Box constituted his “last known address” and the finding that he
waived the Deed of Trust’s contractual provision requiring that any
change of address be designated in writing. Because the bankruptcy
court did not clearly err, the Court affirms.
BACKGROUND
A. The Family Ranch
Approximately 20 years ago, Mr. Griffith purchased two tracts of
land in Cisco, Texas: a 97-acre tract in 2003, and an adjacent 100-acre
tract in 2005. Together, these two properties functioned as Mr. Griffith’s
family ranch until January 2020, when they were sold in the foreclosure
proceedings that prompted this litigation.
B. The Promissory Note and Deed of Trust
Mr. Griffith financed the purchase of each tract of land with a loan. 1
For the 100-acre tract of land, Mr. Griffith obtained a loan from Lone
Star and executed a Promissory Note—agreeing to repay the loan, plus
applicable interest. He also executed a Deed of Trust granting Lone Star
a lien on both tracts.
Under the terms of the Promissory Note and the Deed of Trust, Mr.
Griffith “[would] be in default” if he “fail[ed] to make payment when
1The
loan used to finance the purchase of the 97-acre tract of land is not at issue.
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due.” In the event of a default, the Deed of Trust empowered Lone Star
to accelerate the debt and foreclose on both tracts, in accordance with
the procedures articulated in the Deed of Trust.
Two provisions in the Deed of Trust are relevant to this appeal. First,
Paragraph 16 of the Deed of Trust requires Lone Star to “give notice of
sale . . . as required by the applicable law in effect at the time of the
proposed sale.” Second, Paragraph 27 of the Deed of Trust requires Lone
Star to send “any notice” to either 5112 Geddes Avenue, Fort Worth,
Texas 76107 (“Geddes Address”) or to “any other address designated in
writing,” unless “otherwise required by law.”
C. Mr. Griffith’s Notice Address and Note Delinquencies
At the time he signed the Promissory Note and Deed of Trust, Mr.
Griffith was living at the Geddes Address. In 2007, however, he moved
from the Geddes Address to 2916 Sanguinet, Fort Worth, Texas 76107
(“Sanguinet Address”). Following this move, Mr. Griffith changed his
notice address with Lone Star from the Geddes Address to the Sanguinet
Address. Lone Star then began mailing correspondence, monthly
statements, and other notices to the Sanguinet Address.
Sometime prior to April 6, 2016, Mr. Griffith began to fall behind on
his Promissory Note obligations. To help cure this delinquency, he
signed up for online banking in Lone Star’s loan accounting system.
Despite creating an online account, Mr. Griffith specifically stipulated
that he wanted to continue to receive his monthly invoices by mail.
Over the next years, Mr. Griffith made sporadic and untimely
payments on his Promissory Note, with his last payment being made in
December 2018. As a result, Lone Star began sending “Notice of Default
and Notice of Acceleration” letters to the Sanguinet Address. Lone Star
also mailed a “Notice of Acceleration and Intent to Foreclose” to the
Sanguinet Address and left several voicemails on Mr. Griffith’s phone.
Mr. Griffith then sent a series of text messages, confirming that he
had received the voicemails. Mr. Griffith also wrote, “I am not getting
mail [at the Sanguinet Address] I am at [the Geddes Address].” Because
the text messages were confusing, Lone Star scheduled a phone call.
During the phone call, Mr. Griffith requested that his notice address be
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changed from the Sanguinet Address to P.O. Box 101509, Fort Worth,
Texas, 76185 (“P.O. Box”). At no point after this verbal change of address
did Mr. Griffith ever attempt to change his address again. Thus, in
accordance with the last change of address request, Lone Star began
sending all mail (e.g., monthly statements and multiple “Notice of
Substitute Trustee’s Sale”) to the P.O. Box.
D. Foreclosure Sale and Procedural Background
On November 4, 2019, Mr. Griffith filed a bankruptcy petition.
However, he failed to file several required documents with his petition.
The bankruptcy court accordingly dismissed his case on December 4,
2019. With the bankruptcy case dismissed and not yet reinstated, Lone
Star sent a “Notice of Substitute Trustee’s Sale” to the P.O. Box.
Per the “Notice of Substitute Trustee’s Sale,” Lone Star conducted a
foreclosure sale on January 7, 2020 and sold Mr. Griffith’s family ranch.
The next day, Mr. Griffith filed the required documents missing from
his original bankruptcy petition. The bankruptcy court then reinstated
the original bankruptcy case. On January 29, 2020, however, Lone Star
sent a letter to Mr. Griffith’s P.O. Box, enclosing a release of lien and
confirming that the Promissory Note had been paid in full.
On May 18, 2020, Mr. Griffith filed a complaint, commencing the
underlying adversary proceeding. And on January 13, 2021, the
bankruptcy court dismissed all of Mr. Griffith’s claims except for a
breach of contract claim. On March 17, 2021, however, the bankruptcy
court reconsidered and amended its previous dismissal order to
reinstate Mr. Griffith’s wrongful-foreclosure claim. The bankruptcy
court then held a trial on Mr. Griffith’s claims for breach of contract and
wrongful foreclosure. Following the trial, the bankruptcy court
dismissed both claims. This appeal followed.
JURISDICTION
In an appeal of a bankruptcy court’s resolution of bankruptcy-related
claims, this Court exercises jurisdiction pursuant to 28 U.S.C. § 158(a).
STANDARD OF REVIEW
When a district court reviews a bankruptcy court’s decision, it
functions as an appellate court and utilizes the same standard of review
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generally applied by a federal court of appeals. In re Webb, 954 F.2d
1102, 1104 (5th Cir. 1992). Conclusions of law are reviewed de novo. In
re Young, 995 F.2d 547, 548 (5th Cir. 1993). And findings of fact are
reviewed for clear error. In re Allison, 960 F.2d 481, 483 (5th Cir. 1992).
These findings are reversed only if, based on the entire body of evidence,
the court is left “with the definite and firm conviction that a mistake has
been made.” Beaulieu v. Ragos, 700 F.3d 220, 222 (5th Cir. 2012).
ANALYSIS
Mr. Griffith raises two issues on appeal. He challenges the
bankruptcy court’s finding that his P.O. Box constituted his “last known
address” and the finding that he waived the contractual provision in the
Deed of Trust requiring both parties to designate, in writing, any change
of address. As explained, the Court affirms the bankruptcy court.
A. The bankruptcy court did not clearly err in finding that Mr.
Griffith’s P.O. Box constituted his “last known address.”
Under the Deed of Trust, Lone Star was required to “give notice of
sale . . . as required by the applicable law in effect at the time of the
proposed sale.” The “applicable law” is Chapter 51 of the Texas Property
Code—which, in relevant part, requires the lender to send the notice of
the foreclosure sale “to the debtor at the debtor’s last known address.”
TEX. PROP. CODE § 51.002(e). To that end, a “[d]ebtor’s last known
address” is the “debtor’s last known address as shown by the records of
the mortgage servicer.” Id. § 51.0001(2)(B). To change the last known
address, however, a “debtor shall inform the mortgage servicer of the
debt in a reasonable manner of any change of address of the debtor for
purposes of providing notice to the debtor under Section 51.002.” Id.
§ 51.0021 (emphasis added).
Here, following a two-day bench trial, the bankruptcy court found
that Mr. Griffith “verbally and expressly” directed Lone Star to change
his notice address to the P.O. Box. This directive was likewise found to
be a valid change of address; thus, Mr. Griffith’s P.O. Box constituted
his “last known address.” The bankruptcy court therefore found that
Lone Star complied with “applicable law” by mailing the foreclosure
notice to the P.O. Box. Based on the Court’s review of the record and
applicable law, this finding is entirely plausible.
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Mr. Griffith counters with two responses; neither have merit. He first
contends that under Bauder v. Alegria, 480 S.W.3d 92 (Tex. App.—
Houston [14th Dist.] 2015, no pet.), whenever a debtor provides a
written instruction, that written instruction overrides any competing
information in the servicer’s records at the time a foreclosure notice is
sent. In the alternative, he contends that a certified Notice of
Bankruptcy (“Bankruptcy Note”) related to his bankruptcy petition
established his “last known address.”
Under Mr. Griffith’s first theory, the text messages sent on April 23,
2019, 2 which allegedly gave Lone Star clear written instruction that all
notices should be mailed to the Geddes Address, override the subsequent
phone call where he “verbally and expressly” directed Lone Star to
change his notice address to his P.O. Box. Thus, Mr. Griffith argues, the
text messages establish the Geddes Address as his “last known address.”
Mr. Griffith’s reliance on Bauder—more specifically, on a footnote in
Bauder—is misplaced. Instead of supporting Mr. Griffith’s theory,
Bauder merely states:
Under [§ 51.0001(2)(B),] if [the debtor] had provided [the
lender] a written change of address before the notices were
sent, then the notices should have been sent to the address
provided in writing, even if it differed from [the debtor’s]
last known address as shown by [the lender’s] records. . . .
But, [the debtor] did not provide [the lender] with a written
change of address before the notices were sent.
Bauder, 480 S.W.3d at 97 n.7. This footnote supports the proposition
that a debtor’s written instruction overrides any competing information
in the mortgage service’s record at the time the written instruction was
made. It does not, however, support the proposition that a written
instruction also overrides a subsequent change of address.
2Underlying
Mr. Griffith’s argument is the assumption that the text messages
were found to be a valid change-of-address request. The bankruptcy court’s findings,
however, offer no such support. And were this Court to exercise its “discretion to affirm
on any ground supported by the record,” Rutila v. Dep’t of Transp., 12 F.4th 509, 511
n.3 (5th Cir. 2021), the Court would conclude that the text messages were not a
qualifying change-of-address request because the messages did not provide reasonable
notice that he wished to change his notice address. However, because the bankruptcy
court did not clearly err, the Court need not pursue such an avenue.
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Here, the bankruptcy court found that Mr. Griffith “verbally and
expressly” directed Lone Star to change his notice address to the P.O.
Box. Importantly, this change of address occurred after the text
messages. Thus, even if the text messages had reasonably instructed
Lone Star to mail foreclosure notices to the Geddes Address, that
designation would have controlled only until Mr. Griffith’s verbal and
express directive changed his notice address to the P.O. Box. And
because Mr. Griffith did not provide Lone Star with a change of address
after the phone call, the P.O. Box remained his “last known address.”
Despite Mr. Griffith’s argument, nothing in Bauder requires this Court
to ignore the fact that he “verbally and expressly” directed Lone Star to
change his notice address to his P.O. Box because of a prior written
change of address.
Mr. Griffith next contends that, even without the text messages, the
Bankruptcy Notice related to his bankruptcy petition established the
Geddes Address as his “last known address.” After hearing all the
testimony and carefully considering the evidence, the bankruptcy court
rejected this argument. Specifically, the bankruptcy court found that the
Bankruptcy Notice could not reasonably be construed to be a notice of
address change as contemplated by the Texas Property Code and the
Deed of Trust. And, even if it could somehow be construed as a technical
change-of-address form, the bankruptcy court found that Mr. Griffith
did not inform Lone Star of this change “in a reasonable manner.” There
is no clear error on this point.
While Mr. Griffith may disagree with the bankruptcy court’s
conclusion, he cannot dispute that the bankruptcy court’s findings
pertaining to his “last known address” are “reasonable and supported by
the evidence.” The Court therefore concludes that the bankruptcy court
did not clearly err in finding that Mr. Griffith’s P.O. Box constituted his
“last known address.”
B. The bankruptcy court did not clearly err in finding that Mr.
Griffith waived the contractual requirement that both
parties designate, in writing, any change of address.
Pursuant to Paragraph 27 of the Deed of Trust, Lone Star was
required to send “notice” to either the Geddes Address or to “any other
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address designated in writing,” unless “otherwise required by law.” The
bankruptcy court found, however, that Mr. Griffith waived this
contractual provision.
Under Texas law, waiver is the “intentional relinquishment of a
known right or intentional conduct inconsistent with claiming that
right.” Tenneco Inv. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex.
1996). As such, waiver requires intent. Specific to implied waiver,
“intent must be clearly demonstrated by the surrounding facts and
circumstances.” Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003).
“Silence or inaction, for so long a period as to show an intention to yield
the known right, is . . . enough to prove waiver.” Tenneco, 925 S.W.2d at
643.
After hearing all the testimony and carefully considering the
evidence, the bankruptcy court found that Mr. Griffith—expressly and
impliedly—waived his right to have Lone Star send notice to either the
Geddes Address “or to any other address designated in writing.” Based
on the Court’s review of the record and applicable law, this
determination is entirely plausible.
Mr. Griffith counters with one response. He contends that because
there is insufficient evidence in the record, the bankruptcy court clearly
erred in finding that he expressly and impliedly waived his contractual
right. This contention is without merit.
Here, the bankruptcy court found that Mr. Griffith: (1) “twice made
an express change-of-address request to Lone Star verbally over the
phone”; (2) “verbally and expressly asked [Lone Star] to send notices to
Mr. Griffith’s [P.O. Box] rather than to the Geddes Address”;
(3) “received the June 2019 Foreclosure Sale Notice at the [P.O. Box]
and never raised any concerns to Lone Star that such notices should be
sent to the Geddes Address instead”; (4) “received the November 2019
Foreclosure Sale Notice at the [P.O. Box] and never raised any concerns
to Lone Star that such notices should be sent to the Geddes Address
instead”; and (5) “never raised any concerns to Lone Star that [his
monthly bank statements] should be sent to the Geddes Address instead
[of his P.O. Box].” Because the record supports these factual findings,
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the bankruptcy court did not clearly err in finding that Mr. Griffith
impliedly waived his contractual right. 3
To undercut the bankruptcy court’s findings, Mr. Griffith specifically
argues that there is no evidence in the record that he had “actual
knowledge” that Lone Star was posting, sending, and addressing various
mailings to his P.O. Box. On this point, however, Mr. Griffith fails to
establish that this finding is unsupported by the record. Instead, the
record demonstrates that Mr. Griffith was fully aware that Lone Star
was sending mail to his P.O. Box.
Mr. Griffith testified that he received various mailings, such as
monthly statements, from Lone Star at his P.O. Box both before and
after the disputed foreclosure sale. And while he denies receiving any of
the foreclosure notices sent to his P.O. Box, Mr. Griffith testified that he
avoided the June and November foreclosure sales, which had notices
sent to his P.O. Box. He did so by appointing a receiver in his divorce
proceeding and by filing a Chapter 13 petition under the Bankruptcy
Code. And despite receiving mail at the P.O. Box, Mr. Griffith testified
that he never informed Lone Star that mail should be sent elsewhere.
Based on the exhibits and credibility of the witnesses, the
bankruptcy court found that Mr. Griffith had knowledge that Lone Star
was sending mail to the P.O. Box. And based the Court’s review of the
record, the Court concludes that the bankruptcy court’s finding that Mr.
Griffith had knowledge that Lone Star was mailing items to the P.O.
Box is not clearly erroneous. See In re Renaissance, 713 F.3d 285, 293
(5th Cir. 2013) (“Factual findings ‘based on determinations regarding
the credibility of witnesses’ demand ‘even greater deference’ because
‘only the trial judge can be aware of the variations in demeanor and tone
of voice that bear so heavily on the listener’s understanding of and belief
in what is said.’” (quoting Anderson v. Bessemer City, N.C., 470 U.S. 564,
575 (1985))).
3Because
the bankruptcy court did not clearly err in finding that Mr. Griffith
impliedly waived the contractual provision, which is an independent ground to affirm,
the Court need not analyze the bankruptcy court’s finding that he expressly waived
the same.
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Essentially, Mr. Griffith argues that his view of the evidence is
correct and that the bankruptcy court’s view is incorrect. The clearly
erroneous standard, however, does not allow this Court to substitute the
bankruptcy court’s credibility findings for its own. And because the
bankruptcy court’s finding that Mr. Griffith waived his contractual right
is “reasonable and supported by the evidence,” the Court will not
overturn the bankruptcy court.
ORDER
Having OVERRULED Mr. Griffith’s issues on appeal, the Court
AFFIRMS the bankruptcy court.
SO ORDERED on this 28th day of April, 2022.
Mark T. Pittman
UNITED STATES DISTRICT JUDGE
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