Opinion
No. 05-19-00773-CV
08-10-2020
CHARLES J. PATERNOSTRO, Appellant v. REVERSE MORTGAGE SOLUTIONS, Appellee
On Appeal from the 59th Judicial District Court Grayson County, Texas
Trial Court Cause No. CV-18-1113
MEMORANDUM OPINION
Before Justices Myers, Partida-Kipness, and Reichek
Opinion by Justice Reichek
This case involves the foreclosure of a lien on the homestead property of Charles J. Paternostro. After Reverse Mortgage Solutions ("RMS") moved for summary judgment on Paternostro's claims as well as its own counterclaim for attorney's fees, Paternostro nonsuited his claims against RMS. Thereafter, the trial court dismissed Paternostro's claim and awarded RMS its attorney's fees in the case. Paternostro appeals, contending the (1) nonsuit mooted the issue of attorney's fees and (2) the affidavit supporting the attorney's fee award contained improper hearsay. For reasons set out below, we overrule both issues and affirm the trial court's order.
FACTUAL BACKGROUND
In July 2009, Paternostro obtained a reverse mortgage secured by his homestead property. Under the terms of the note and security interest agreement, Paternostro was obligated to maintain hazard insurance and to pay the taxes on the property. By 2012, Paternostro had stopped paying for insurance and the required property taxes, and RMS had begun paying them. RMS attempted to work with Paternostro to cure the deficiency, but when Paternostro failed to pay, RMS accelerated the debt. In March 2018, RMS obtained an order allowing foreclosure under Texas Rule of Civil Procedure 736, and the sale was scheduled for July 3.
Four days before the scheduled sale, Paternostro filed an "original proceeding" to the order of foreclosure, which automatically stayed the sale. See TEX. R. CIV. P. 736.11. In this pleading, Paternostro, an attorney representing himself, acknowledged that RMS had paid $33,680 in hazard insurance premiums and property taxes owed by him but said he had health issues beginning in September 2016 that prevented him from working. Among other things, he asserted that RMS should add the balance owing for property taxes and hazard insurance to the entire balance of the loan. He also asserted that the monthly statements failed to disclose the accumulated charges.
RMS filed an answer raising a general denial and several affirmative defenses. It also brought a counterclaim against Paternostro for attorney's fees based on (1) the filing of a frivolous suit under chapters 9 and 10 of the Texas Civil Practice and Remedies Code and (2) the terms of the note and deed of trust. RMS also propounded discovery, including requests for admission. When Paternostro failed to respond within the time permitted, RMS sent a letter in January 2019 requesting responses to the discovery. Paternostro, again, did not respond.
Two months later, in March 2019, RMS moved for traditional and no-evidence summary judgment, essentially arguing Paternostro had (1) no viable cause of action against RMS entitling him to relief, (2) admitted in his petition that he had not paid for the required hazard insurance and property taxes, and (3) failed to provide a reason for such failure dating back to 2012. RMS attached various documents as evidence, including the note, deed of trust, assignment, delinquency letter, and notices of default. In addition, RMS relied on Paternostro's admissions which were deemed as a result of his failure to respond. See TEX. R. CIV. P. 198.2.
RMS also moved for summary judgment on its counterclaim for attorney's fees. First, RMS argued that specific provisions of the deed of trust, as well as case law interpreting similar language, allowed it to recover its reasonable attorney's fees and costs incurred in defending this lawsuit. Second, RMS asserted it was entitled to attorney's fees under chapters 9 and 10 of the civil practice and remedies code because Paternostro's claims lacked merit, were frivolous, and were brought only for the purpose of delay and harassment. As evidence of reasonable and necessary fees and costs, RMS attached the affidavit of its counsel and his billing records.
Paternostro did not respond to the summary judgment motion, nor did he file a motion to withdraw the deemed admissions. Instead, Paternostro filed a motion for nonsuit in which he argued that RMS had committed fraud by claiming Paternostro failed to answer discovery that Paternostro said was never sent. Paternostro stated that the nonsuit was without prejudice so that he could file another suit against RMS.
A hearing was held sixteen days later, on April 17. At the hearing, the parties argued about Paternostro's right to nonsuit and RMS's pending claim for attorney's fees and costs. The trial court requested additional briefing on the issue of the counterclaim in light of the nonsuit.
Paternostro did not request the court reporter to transcribe this hearing, but he has not disputed that this was the focus of the hearing. See TEX. R. APP. P. 38.1(g).
Following the hearing, RMS filed a memorandum of law in which it argued Paternostro's motion for nonsuit did not bar RMS from pursuing its counterclaim. Relying on Epps v. Fowler, 351 S.W.3d 862, 870 (Tex. 2011), RMS argued that Paternostro filed his motion for nonsuit to avoid an unfavorable ruling on the merits, and RMS was therefore entitled to the attorney's fees sought in its counterclaim and motion for summary judgment.
After receiving and reviewing the memorandum, the trial court notified the parties it would grant the nonsuit without prejudice and award RMS its requested attorney's fees. The court directed RMS's counsel to prepare an order. Paternostro filed a motion to reconsider in which it appears to assert that RMS's claim for attorney's fees was not a claim for affirmative relief. Paternostro also filed an "answer" to RMS's request for attorney's fees making the same argument.
Subsequently, the trial court, after considering the evidence before it, the memorandum of law, and counsel's argument at the April 17 hearing, determined that Paternostro was liable to RMS for attorney's fees. The court ordered Paternostro's claims dismissed without prejudice and awarded RMS attorney's fees and costs against Paternostro in the amount $12,785.47. By separate order, the trial court denied Paternostro's motion to reconsider. This appeal ensued.
The trial court notified the parties by letter of its ruling prior to signing its order. Appellant filed a motion to reconsider but did not address the issue of taking the nonsuit to avoid an unfavorable ruling. On the same day the dispositive order was signed, the trial court also denied the motion to reconsider.
ANALYSIS
We begin with Paternostro's complaint that trial court erred by awarding attorney's fees to RMS because his nonsuit mooted any such claim.
In Texas, a plaintiff may nonsuit without a court order at any time before introducing all of their evidence other than rebuttal evidence. Epps, 351 S.W.3d at 868; Roach v. Turkia, No. 05-18-001420-CV, 2019 WL 516742, at *3 (Tex. App.—Dallas Feb. 11, 2019, no pet) (mem. op.). The nonsuit does not affect a defendant's pending claim for affirmative relief, such as a claim for attorney's fees. Epps, 351 S.W.3d at 868; Roach, 2019 WL 516742, at *3. When a plaintiff nonsuits his claims without prejudice, the defendant may still be a prevailing party entitled to attorney's fees if the trial court determines, on defendant's motion, that the nonsuit was taken to avoid an unfavorable ruling on the merits. Epps, 351 S.W.3d at 870; Roach, 2019 WL 516742, at *3. This determination is largely based on inferences drawn from the course of events in the lawsuit and courts place great weight upon whether plaintiff's nonsuit closely follows a defendant's potentially dispositive motion. Id.
Here, relying on Polansky v. Berenji, 393 S.W.3d 362 (Tex. App.—Austin 2012, no pet.), Paternostro appears to argue that RMS did not have a claim for affirmative relief that survived his nonsuit. He does not explain why RMS's counterclaim for attorney's fees is not a claim for affirmative relief; rather, he simply quotes extensively from the Polansky opinion without attempting to apply it to the particular facts of this case. But the facts in Polansky are materially different.
In Polansky, the plaintiffs sued the defendants for breach of a contract and sought attorney's fees under chapter 38 of the Texas Civil Practice and Remedies Code. 393 S.W.3d at 365. The defendant builders filed an answer that included a request for attorney's fees but, unlike here, stated no basis for such relief. Id. The court determined that this "non-specific request" for attorney's fees was not a claim for affirmative relief independent of the plaintiff's claim and thus did not survive plaintiffs' nonsuit. As the court explained, chapter 38 does not provide for attorney's fees by defendants who defend against a contract claim and do not present one of their own. Id. Thus, the court reasoned, even if it had been asserted, chapter 38 provided no basis for an award of attorney's fees, and the defendants did not have a claim for affirmative relief under chapter 38. Id.
Unlike the defendants in Polansky, RMS filed a counterclaim for attorney's fees based on (1) the filing of a frivolous suit under chapters 9 and 10 of the Texas Civil Practice and Remedies Code and (2) the terms of the note and deed of trust. They later filed a motion for summary judgment requesting attorney's fees, relying on both of these bases. Thus, at the time Paternostro filed his motion for nonsuit, RMS had a claim for affirmative relief that survived the nonsuit. See Polansky, 393 S.W.3d at 367 ("A claim for affirmative relief must allege a cause of action-independent of the plaintiff's claim-upon which the claimant could recover compensation or relief even if the plaintiff abandons or is unable to establish his cause of action.").
Moreover, we agree with RMS that it could proceed with its claim because Paternostro took a nonsuit to avoid an unfavorable ruling on the merits. The record shows that, after RMS filed its no-evidence and traditional motion for summary judgment, Paternostro did not file a response; rather, three weeks later, he elected to nonsuit his claims. In his motion for nonsuit, Paternostro acknowledged that RMS was relying, in part, on deemed admissions in its motion for summary judgment. Even though Paternostro alleged that the admissions were fraudulently obtained, he did not seek to withdraw them and instead opted to avoid their effect by nonsuiting this case so that he could refile another lawsuit. Paternostro has not argued on appeal that he had any other intent. In fact, RMS asserts that, at the hearing, Paternostro "spent considerable time . . . arguing his nonsuit was necessary due to the lack of responses" to the requests for admission. Given these circumstances, we conclude there was sufficient evidence for the trial court to impliedly find that Paternostro nonsuited his suit to avoid an unfavorable ruling.
Next, Paternostro argues that the affidavit supporting RMS's attorney's fees was void because it contained hearsay. A complaint that an affidavit contains hearsay is a defect in form that is waived by a failure to object and obtain a ruling. Bastida v. Aznaran, 444 S.W.3d 98, 104 (Tex. App.—Dallas 2014, no pet.). The record does not show that Paternostro made any objections to the affidavit. Because he failed to object on the basis of alleged hearsay and obtain a ruling from the trial court, Paternostro cannot raise this complaint on appeal. Bastida, 444 S.W.3d at 104. We overrule Paternostro's issues.
We affirm the trial court's order.
/Amanda L. Reichek/
AMANDA L. REICHEK
JUSTICE 190773F.P05
JUDGMENT
On Appeal from the 59th Judicial District Court, Grayson County, Texas
Trial Court Cause No. CV-18-1113.
Opinion delivered by Justice Reichek; Justices Myers and Partida-Kipness participating.
In accordance with this Court's opinion of this date, the trial court's May 28, 2019 Order Granting Plaintiff's Motion for Nonsuit and Reverse Mortgage Solutions, Inc.'s Request for Attorney's Fees and Costs is AFFIRMED.
It is ORDERED that appellee REVERSE MORTGAGE SOLUTIONS recover its costs of this appeal from appellant CHARLES J. PATERNOSTRO. Judgment entered August 10, 2020.