May 13, 2011

The Texas First District Court of Appeals issued a decision yesterday in Case No. 01-10-00020-CV (decision dated May 12, 2011) which affirmed a summary judgment entered by the Harris County trial court in favor of the homeowners against Wells Fargo as “trustee” of a securitized mortgage loan trust. Wells Fargo had filed an application for an expedited non-judicial foreclosure. The homeowners, pursuant to the Texas Rules of Civil Procedure, timely filed a Petition challenging Wells Fargo’s application prior to the entry of an Order on the application, which filing automatically abated and dismissed the application.

Wells Fargo counterclaimed for foreclosure in the case filed by the homeowers, in which the homeowners sought a declaratory judgment that Wells Fargo did not own the Note and thus had no standing to foreclose. The borrowers prevailed. That same day, Wells Fargo filed a separate action against the homeowners which contained the same claims as it had asserted as counterclaims in the trial on the homeowers’ action.

The trial court granted summary judgment to the homeowners on Wells Fargo’s second action, which Wells Fargo appealed. The Appeals court affirmed the summary judgment, rejecting Wells Fargo’s “void judgment” and other arguments, holding that the doctrines of res adjudicata and collateral estoppel barred Wells Fargo from attempting to re-litigate the very threshold issues that it lost in the trial of the homeowners’ lawsuit (that being that it failed to prove that it owned the promissory note).

We thank one of our dedicated readers for bringing this to our attention today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com