DECO DENCE AND JUSTIN BURGESS v. JAMES ROBERTSON III AND JAMES ROBERTSON III (2011)

MEMORANDUM OPINION

Opinion By Justice Moseley

Deco–Dence, L.L.C. and Justin Burgess filed suit against James S. Robertson, III and James S. Robertson, III, P.C. seeking a declaratory judgment that an abstract of a judgment held by Robertson PC against Burgess did not encumber a tract of real property owned by Deco–Dence under an unrecorded deed from Burgess.   The trial court denied appellants' motion for summary judgment and later granted Robertson PC's motion for partial summary judgment.   After a bench trial on attorney's fees, the trial court rendered a final judgment that declared the abstract of judgment had not been released, canceled, or discharged and awarded Robertson PC its attorney's fees.   The background of the case and the evidence adduced at trial are well known to the parties;  thus, we do not recite them here in detail.   Because all dispositive issues are settled in law, we issue this memorandum opinion.  Tex.R.App. P. 47.2(a), 47.4.   We affirm the trial court's judgment.

Appellants raise the same argument under each of their issues and we discuss those issues together.   Their first issue argues the trial court erred by denying their motion for summary judgment.¹  In their second and third ² issues, appellants argue the trial court erred by granting Robertson PC's motion for partial summary judgment and by declaring in the final judgment that the abstract of judgment had not been released.

A partial summary judgment becomes appealable after a final judgment disposing of all parties and issues is rendered.   See Newco Drilling Co. v. Weyand, 960 S.W.2d 654, 656 (Tex.1998);  Webb v. Jorns, 488 S.W.2d 407, 409 (Tex.1972).   We apply the well-settled standards for reviewing summary judgments.   See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985).

The summary judgment evidence indicates Burgess was doing business under the assumed name of Deco–Dence.   In 1999, he purchased real property located at 3020 Canton Street, Dallas, Texas, for use in the business.   Robertson became Burgess's attorney in February 2001.   Burgess later consulted Robertson about incorporating the business.   The business name was registered with the State of Texas in October 2001.   The limited liability company was organized on April 23, 2002.   Burgess conveyed the property to Deco–Dence, L.L.C. by a warranty deed dated the same day, but the deed was not recorded at that time.

Robertson PC's predecessor obtained a judgment against Burgess on June 30, 2003 and filed an abstract of the judgment in Dallas County on August 4, 2003.   Burgess filed for Chapter 7 bankruptcy protection four days later.   Burgess did not list the Canton Street property on his schedule of assets.

Burgess acknowledged the deed in September 2003, and filed the deed of record on October 13, 2003.   Burgess received a discharge in bankruptcy on November 1, 2004.

Appellants contend the abstract and judgment were released by law under property code section 52.042.   See Tex. Prop.Code Ann. § 52.042 (West 2007).  Section 52.042 provides that a judgment is discharged and an abstract of the judgment and judgment lien are canceled and released if:

(1) the lien is against real property owned by the debtor before a petition for debtor relief was filed under federal bankruptcy law;  and

(2) the debt or obligation evidenced by the judgment is discharged in the bankruptcy.

Tex. Prop.Code Ann. § 52.042(a).

Robertson PC contends, among other things, that section 52.042 does not apply because, based on Burgess's previously executed but unrecorded deed to Deco–Dence, the property was not owned by Burgess when he filed for bankruptcy.

A conveyance of real property is void as to a creditor without notice of the conveyance unless the instrument has been acknowledged, sworn to, or proved and filed for record as required by law.   See Tex. Prop.Code Ann. § 13.001(a) (West 2004).   However, the “unrecorded instrument is binding on a party to the instrument․”  Id. § 13.001(b).  Thus the deed to Deco–Dence, although unrecorded, was effective to transfer title from Burgess to Deco–Dence.   As a result, Burgess did not own the property when he filed for bankruptcy and the property never became a part of the bankruptcy estate.   See id.   Because the property was not owned by Burgess when he filed for bankruptcy, section 52.042 does not apply.   Id. § 52.042(a)(1).

In their brief, appellants admit the deed transferred title from Burgess to Deco–Dence before Burgess filed for bankruptcy.   However, they contend section 52.042 still applies.   They argue the section's reference to real property “owned by the debtor before a petition for debtor relief was filed under federal bankruptcy law” includes real property owned at any time before the debtor files for bankruptcy protection, not just property owned by the debtor at the time of bankruptcy.   As a result, and even though the property was not owned by Burgess when he filed for bankruptcy, appellants argue section 52.042 cancels and releases Robertson PC's judgment lien and abstract of judgment.

We disagree.   Subchapter C of Chapter 52, also contains section 52.043.³  That section provides that

A judgment lien is not affected by this subchapter and may be enforced if the lien is against real property owned by the debtor before a petition for debtor relief was filed under federal bankruptcy law and:

(1) the debt or obligation evidenced by the judgment is not discharged in bankruptcy;  or

(2) the property is not exempted in the bankruptcy and is abandoned during the bankruptcy.

Tex. Prop.Code Ann. § 52.043. We conclude the legislative purpose of the subchapter is to address the automatic cancellation and release of judgment liens and abstracts of judgment when the subject property was part of the bankruptcy estate, and thus subject to the actions of the trustee and the bankruptcy court.   Appellants point to no legislative purpose—and we can think of none—in providing for the statutory cancellation and release of judgment liens on property that was not part of the bankruptcy estate.

A creditor's lien takes priority over an unrecorded deed, unless the creditor has notice of the deed at or before the time the lien attaches to the property.  Apex Fin. Corp. v. Garza, 155 S.W.3d 230, 234 (Tex.App.—Dallas 2004, pet. denied);  Gensheimer v. Kneisley, 778 S.W.2d 138, 140–41 (Tex.App.—Texarkana 1989, no writ).   Appellants argue a material issue of fact was raised as to whether Robertson had notice of the deed at or before the time the judgment lien attached to the property.   Burgess's affidavit states that in 2001, Robinson “had personal knowledge that I was in the process of incorporating my business and that the property located at 3020 Canton Street was the business place of operation and major asset.”   Viewing this evidence and reasonable inferences from it in appellants' favor, we cannot conclude it raises a genuine issue of fact that Robertson had notice of the unrecorded deed purportedly signed in April 2002.

Robertson PC argued in its motion for partial summary judgment that even if section 52.042 applies, the property was abandoned by the bankruptcy trustee and section 52.043 excepts such property from the effects of section 52.042.   See Tex. Prop.Code Ann. § 52.043(2).   Appellants' argue there were fact issues regarding whether the bankruptcy trustee abandoned the property.   However, because we have concluded the property never came into the bankruptcy estate, the bankruptcy trustee never had the opportunity to abandon it.⁴  Although the parties disagree about the meaning and substance of the trustee's deposition testimony, the issue of whether the bankruptcy trustee abandoned the property is immaterial.

We conclude the trial court did not err by granting Robertson PC's motion for partial summary judgment.   We overrule appellants' issues.

We affirm the trial court's judgment.

081090F.P05

FOOTNOTES

FN1. Generally, parties may not appeal the denial of a motion for summary judgment.   See Anderton v. Schindler, 154 S.W.3d 928, 931 (Tex.App.—Dallas 2005, no pet.).   Appellants do not come within the exception where opposing parties file cross-motions for summary judgment.   See Holmes v. Morales, 924 S.W.2d 920, 922 (Tex.1996).   Appellant's filed a motion for summary judgment, which the trial court denied.   Robertson PC then filed its own motion for partial summary judgment, which was granted by the trial court.   The remaining issues were tried to the court and a final judgment rendered..  FN1. Generally, parties may not appeal the denial of a motion for summary judgment.   See Anderton v. Schindler, 154 S.W.3d 928, 931 (Tex.App.—Dallas 2005, no pet.).   Appellants do not come within the exception where opposing parties file cross-motions for summary judgment.   See Holmes v. Morales, 924 S.W.2d 920, 922 (Tex.1996).   Appellant's filed a motion for summary judgment, which the trial court denied.   Robertson PC then filed its own motion for partial summary judgment, which was granted by the trial court.   The remaining issues were tried to the court and a final judgment rendered.

FN2. Appellants' third issue is directed at the final judgment, but adds no new arguments.   We have no record of the bench trial and no findings of fact and conclusions of law were requested or filed.   Thus, the third issue presents nothing for review..  FN2. Appellants' third issue is directed at the final judgment, but adds no new arguments.   We have no record of the bench trial and no findings of fact and conclusions of law were requested or filed.   Thus, the third issue presents nothing for review.

FN3. We apply the well-recognized rules of statutory construction.   See Tex. Gov't Code Ann. §§ 311.001–.034 (West 2005);  McIntyre v. Ramirez, 109 S.W.3d 741, 745 (Tex.2003).   We presume the legislature intended the entire statute to be effective and a just and reasonable result.   See Tex. Gov't Code Ann. § 311.021. “[W]e will not give an undefined statutory term a meaning that is out of harmony or inconsistent with other provisions of the statute.”  McIntyre, 109 S.W.3d at 745..  FN3. We apply the well-recognized rules of statutory construction.   See Tex. Gov't Code Ann. §§ 311.001–.034 (West 2005);  McIntyre v. Ramirez, 109 S.W.3d 741, 745 (Tex.2003).   We presume the legislature intended the entire statute to be effective and a just and reasonable result.   See Tex. Gov't Code Ann. § 311.021. “[W]e will not give an undefined statutory term a meaning that is out of harmony or inconsistent with other provisions of the statute.”  McIntyre, 109 S.W.3d at 745.

FN4. The record indicates the trustee waived any claim to set aside the unrecorded deed from Burgess to Deco–Dence.   The bankruptcy court's order approving the trustee's compromise with Burgess recites that the trustee “waives any and all claims that the bankruptcy estate may have concerning any alleged fraudulent conveyance relating to the formation of Deco–Dence and the transfer of the Burgess' individual assets into the company.”.  FN4. The record indicates the trustee waived any claim to set aside the unrecorded deed from Burgess to Deco–Dence.   The bankruptcy court's order approving the trustee's compromise with Burgess recites that the trustee “waives any and all claims that the bankruptcy estate may have concerning any alleged fraudulent conveyance relating to the formation of Deco–Dence and the transfer of the Burgess' individual assets into the company.”

JIM MOSELEY JUSTICE