Background
Lajita Homes purchased six unimproved lots from La Mancha, which retained a vendor’s lien. Lajita executed a promissory note secured by a deed of trust, built houses on four lots, and sold them, but La Mancha retained its lien. After Lajita defaulted, La Mancha’s general partner appointed Jerry Gardner as substitute trustee, and Gardner sold all six properties together at foreclosure to American Pointe Realty.
Lajita sued for wrongful foreclosure, seeking rescission and damages. It alleged that the required foreclosure notice was not properly mailed and that selling all six lots as a group was an irregularity that produced a grossly inadequate price. The trial court granted the defendants’ traditional and no-evidence summary-judgment motions without specifying its grounds and awarded attorney’s fees to La Mancha and Thurman Investment Properties.
The Court’s Holding
The First Court of Appeals held that Lajita produced sufficient evidence to create a genuine fact issue over whether the foreclosure notice was mailed by certified mail with prepaid postage as Texas Property Code section 51.002 requires. Although the foreclosure deed and the substitute trustee’s affidavits constituted prima facie evidence of proper service, that evidence was rebuttable rather than conclusive.
Lajita presented an unstamped certified-mail receipt that did not show postage had been paid or the notice mailed, unavailable Postal Service tracking information, and affidavits denying receipt. Viewed in Lajita’s favor, this evidence controverted the trustee’s statement that he properly mailed the notice and defeated both forms of summary judgment. The court reversed the wrongful-foreclosure judgment and related attorney’s-fee award and remanded for further proceedings; it did not decide whether selling the lots together was a foreclosure irregularity.
Key Takeaways
- Recitals in a foreclosure deed and a knowledgeable person’s affidavit are prima facie evidence of proper notice, but a debtor may rebut them.
- An unstamped certified-mail receipt, unavailable tracking records, and nonreceipt affidavits together can create a fact issue about whether notice was properly mailed.
- The appellate court resolved only the notice issue and expressed no holding on whether the group sale of the six lots was improper.
Why It Matters
The decision underscores that Texas foreclosure notice turns on proper mailing, not actual receipt, but also confirms that a trustee’s sworn assertion of mailing does not conclusively establish compliance. Objective irregularities in mailing documentation may be enough to require a trial.
Because the unresolved notice issue could establish the required defect in the foreclosure proceedings, the defendants were not entitled to summary judgment or the attorney’s-fee award incorporated into the final judgment.