Opinion issued on August 29, 2002

In The

Court of Appeals

For The

First District of Texas

NO. 01-00-00211-CV

EMIGDIO BENITEZ, Appellant

V.

SYLVIA ANN PERALES AND BOB CAVENDER, Appellees

On Appeal from the 113th District Court of

Harris County, Texas

Trial Court Cause No. 98-36588

O P I N I O N

Appellant, Emigdio Benitez (Benitez), is appealing a summary judgment in favor of appellees, Sylvia Ann Perales (Perales) and Bob Cavender (Cavender). In one issue, Benitez claims the trial court erred by granting summary judgment on his wrongful foreclosure claim. We affirm.

Factual Background

On or about December 7, 1993, Benitez and Perales were divorced. Benitez was awarded, among other things, "two houses located at 28 and 30 Avenue N, Houston, Texas." In exchange for receiving the houses, Benitez agreed to name Perales primary beneficiary of two deeds of trust that would encumber the houses. The first deed of trust secured payment of the original mortgage, which Benitez agreed to assume, and the second deed of trust secured payment of a $2,500 promissory note. ⁽¹⁾

On January 19, 1996, Charles C. Wright, the original trustee of both deeds of trust, sent Benitez a "notice of default." The notice informed Benitez that he was in default because (1) he failed to pay the 1994 and 1995 school taxes totaling $668.17, (2) he failed to pay the Harris County taxes totaling $268.32, and (3) he never provided Perales with proof that the properties were insured. Wright demanded that Benitez cure all defects on or before February 9, 1996. Otherwise, Perales would accelerate the notes and foreclose on the properties.

On February 17, 1996, eight days after the cure period ended, Benitez received a notice of acceleration from Cavender, the new substitute trustee. ⁽²⁾ Cavender advised Benitez that, because he failed to cure his default, the underlying notes were accelerated and immediately due and payable in full. The notice further advised Benitez that the property would be posted for foreclosure, and that a notice would be sent to him not less than 21 days prior to the sale. Ten days later, and more than 21 days before the proposed date of sale, Benitez received notice from Cavender that the foreclosure sale would take place on April 2, 1996, between the hours of 10:00 a.m. and 4:00 p.m.

On April 2, 1996, Benitez filed proceedings in bankruptcy court, and the automatic stay provisions of the bankruptcy code precluded the foreclosure sale from proceeding. However, on June 21, 1996, Benitez's bankruptcy case was dismissed and the automatic stay was lifted. ⁽³⁾

Cavender then sent Benitez another notice by certified letter, to his current mailing address. The notice informed Benitez that he was in default, that the notes had been accelerated, and that a foreclosure sale would take place on August 6, 1996. The next day, Cavender posted a notice of sale at the Harris County courthouse and filed a copy of the notice with the Harris County clerk's office. The foreclosure sale was held at the advertised time and place, and the properties were sold to Perales for $1,113.32. ⁽⁴⁾ Cavender then executed a substitute trustee's deed conveying the property to Perales, and Benitez was evicted.

Benitez sued Perales and Cavender for wrongful foreclosure and sought rescission of the sale, as well as damages. In his petition, Benitez claimed the notes were improperly accelerated because he was not in default; he further alleged he never received a notice of intent to accelerate or an opportunity to cure. All parties filed summary judgment motions, ⁽⁵⁾ and, on December 1, 1999, the trial court signed an order that granted Perales's and Cavender's motion for summary judgment and denied Benitez's motion for partial summary judgment. This appeal followed.

Motion to Dismiss

In a motion to dismiss this appeal, Perales and Cavender claim this court lacks jurisdiction because Benitez failed to timely file his notice of appeal.

As a general rule, the periods within which parties may file various post-judgment motions, and trial courts may exercise their plenary jurisdiction, all run from the date the judgment is signed. See John v. Marshall Health Serv., Inc., 58 S.W.3d 738, 740-41 (Tex. 2001); see also Tex. R. Civ. P. 306a(1), 329b. Once the judgment is signed, the trial court's clerk must notify the parties or their attorneys about the trial court's ruling. Id. at 306a(3); Marshall Health Serv., 58 S.W.3d at 740-41.

However, if the party adversely affected by the court's ruling does not receive notice from the clerk or acquire actual knowledge of the signing of the judgment within 20 days, then the appellate timetable begins to run from the date the adverse party receives such notice or acquires actual knowledge of the judgment. ⁽⁶⁾ Tex. R. Civ. P. 306a(4); Marshall Health Serv., Inc., 58 S.W.3d at 741. In order to invoke this exception, the movant must prove to the trial court, on sworn motion and notice, the date on which the party or his attorney first either received a notice of the judgment or acquired actual knowledge of the signing of the judgment, and that this date was more than 20 days after the judgment was signed. Tex. R. Civ. P. 306a(5); Marshall Health Serv., 58 S.W.3d at 741.

In this case, the undisputed evidence shows that, on December 1, 1999, the trial court entered summary judgment for Perales and Cavender, and denied Benitez's motion for partial summary judgment. During the next three days, Benitez received two separate notices ⁽⁷⁾ from the trial court. The first notice stated that the case had been reset for trial on February 28, 2000, and the second notice informed Benitez that the trial court was "denying [his] partial summary judgment." Benitez did not receive notice of the court's entry of a take-nothing summary judgment against Benitez until several months after the judgment had been signed.

Finally, on January 24, 2000, almost two months after the trial court entered summary judgment in favor of Perales and Cavender, Benitez received a third post card notice which stated,

Be advised on 12/01/1999 the following activity occurred. Final summary judgment signed.

Within 30 days of receiving this notice, Benitez filed a motion for new trial. In a sworn affidavit, attached to his motion, Benitez's counsel expressly stated that he had no actual knowledge or notice that the judgment was signed until January 24, 2000, the date he received the third postcard notice from the trial court.

We hold that the undisputed evidence shows that Benitez complied with rule 306a(5), extended the appellate timetable, and timely filed his notice of appeal on February 28, 2000. Accordingly, we overrule the motion to dismiss.

Summary Judgment

Benitez claims the trial court erred by granting summary judgment because a genuine issue of material fact existed regarding (1) whether he received sufficient notice of acceleration, (2) whether he was in default on the notes, (3) whether Perales and Cavender waived their right to accelerate by accepting a late payment, and (4) whether the sale price of the houses was "grossly inadequate."

Standard of Review

Both Perales and Cavender filed traditional motions for summary judgement under rule 166a(c) of the Texas Rules of Civil Procedure. Tex. R. Civ. P. 166a(c). We follow the usual standard of review. Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997); Marchal v. Webb, 859 S.W.2d 408, 412 (Tex. App.--Houston [1st Dist.] 1993, writ denied).

Failure to give Notice

In Texas, when a secured promissory note gives the holder the option, upon notice, to accelerate the maturity of the note upon the maker's default, as in this case, notice of several events is necessary. See Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566-67 (Tex. 2001) (citing Ogden v. Gibraltar Sav. Ass'n, 640 S.W.2d 232, 233 (Tex. 1982)); see also Tex. Prop. Code Ann. § 51.002 (Vernon Supp. 2002). First, the holder of the note must present the note before accelerating it, provide a time to cure, and advise the maker that the note will be accelerated and the entire balance will become due and payable if the delinquency is not satisfied. Ogden, 640 S.W.2d at 233; Tex. Prop. Code Ann. § 51.002. Second, after the time to cure has passed, the holder must give notice that the debt has been accelerated. Ogden, 640 S.W.2d at 233. Both notices must be "clear and unequivocal." Id.

In this case, the undisputed summary judgment evidence shows that Perales and Cavender provided Benitez with both a notice of intent to accelerate as well as a notice of acceleration. Benitez received a "notice of default" letter dated January 19, 1996 which notified him that Perales intended to accelerate the notes unless he cured his default. Specifically, the letter stated,

You [Benitez] have violated the terms of both of the above described Deeds of Trust in that you have failed to pay the 1994 and 1995 taxes, which total approximately $668.17, and the 1995 Harris County tax for approximately $268.32, on the property covered by the deeds of trust. In addition, in spite of my client's demands, you have not provided proof that the property is insured as required by both Deeds.

Demand is hereby made that on or before February 9, 1996, you must (1) pay all past due taxes on the property and (2) provide my client proof that the property is insured.

If all of the above is not performed by February 9, 1996, my client shall accelerate the maturity of said promissory note, declare the entire balance due and payable immediately, without further demand, and will proceed to foreclose and sell the above referenced property at public auction in accordance with the terms of the above referenced Deeds of Trust.

More than a week after the cure period ended, Benitez received a second notice, dated February 17, 1996, which stated,

You [Benitez] were notified of your default on January 19, 1996 by Charles Curry Wright, the original trustee, and given the opportunity to cure the default by February 9, 1996. You have failed to cure the default and the maturity of the unpaid balance of the principal on the $2,500.00 note has been accelerated and the entire unpaid principal balance plus all accrued and earned interest is immediately due and payable.

. . . .

As substitute Trustee on the Deeds of Trust described above I intend to post the property for foreclosure. . . .

On July 15, 1996, Cavender sent Benitez a third and final notice which stated,

You have been delinquent in the payment of your installments on the above described notes. Therefore, I have been instructed to commence foreclosure proceedings under said Deeds of Trust. This is to notify you that the balance of said $2,500.00 note has been accelerated and that, as of this date, the entire remaining balance on said note, together with all accrued interest and 10% attorney's fees, is due and payable.

THIS IS THE ONLY NOTICE YOU WILL RECEIVE. Unless payment in full is received, the property will be sold at Trustee's Sale to the highest bidder for cash. Enclosed herewith is a Notice of Trustee's Sale to sell the property therein described on Tuesday, August 6, 1996, between the hours of 10:00 a.m. and 4:00 p.m.

We hold that the Perales and Cavender, as a matter of law, provided Benitez with both notice of intent to accelerate and notice of acceleration. Id.

Insufficient Notice

Benitez also argues that he received "insufficient notice" because he was in Mexico and never received the July 15, 1996 notice. ⁽⁸⁾

Service of notice is considered complete when the notice is deposited in the United States mail, postage prepaid, and addressed to the debtor's last known address as shown by the records of the holder of the debt. Tex. Prop. Code Ann. § 51.002(e) (Vernon Supp. 2002). The purpose of the statute is to provide a minimum level of protection for the debtor, and it provides for only constructive notice of the foreclosure. Onwuteaka v. Cohen, 846 S.W.2d 889, 892 (Tex. App.--Houston [1st Dist.] 1993, writ denied); Hausmann v. Texas Sav. & Loan Ass'n, 585 S.W.2d 796, 799 (Tex. App.--El Paso 1979, writ ref'd n.r.e.). There is no requirement that Benitez actually receive the notice. See Martinez v. Beasley, 616 S.W.2d 689, 690 (Tex. App.--Corpus Christi 1981, no writ).

Whether Benitez was in Default

Benitez also claims summary judgment was improper because he was not in default at the time of the foreclosure sale. However, in Texas, once the defaulting party receives an acceleration notice, it "cuts off the debtor's right to cure the default and gives notice that the entire debt is due and payable." Ogden, 640 S.W.2d at 233; see also Cruce v. Eureka Life Ins. Co. of Am., 696 S.W.2d 656, 659 (Tex. App.--Dallas 1985, writ ref'd n.r.e) (citing Faulk v. Futch, 214 S.W.2d 614 (Tex. 1948)); Bodiford v. Parker, 651 S.W.2d 338, 339 (Tex. App.--Fort Worth 1983, no writ); Tamplen v. Bryeans, 640 S.W.2d 421, 422 (Tex. App.--Waco 1982, writ ref'd n.r.e).

In this case, Cavender sent Benitez's notice of acceleration on February 17, 1996. As of this date, Benitez's right to cure was "cut off" and the note was immediately due and payable. See Ogden, 640 S.W.2d at 233. Any attempt by Benitez to pay his back due taxes or provide Perales with proof of insurance after this date would not prevent the foreclosure. In order to prevent the sale, Benitez had to pay the full balance on the note. According to the summary judgment evidence, this he failed to do.

Waiver by Acceptance of Late Payment

Benitez also claims that a genuine issue of material fact exists as to whether Perales and Cavender waived their right to accelerate the notes by accepting a late payment. In support of his argument, Benitez directs the court's attention to two cases, both of which are factually distinguishable from the present case. McGowan v. Pasol, 605 S.W.2d 728, 732 (Tex. App.--Corpus Christi 1980, no writ) and Matter of Marriage of Rutherford, 573 S.W.2d 299, 301 (Tex. App.--Amarillo 1978, no writ). In both Pasol and Rutherford, the court held that, when the holder of the note has accepted late payments on numerous occasions in the past, he is generally precluded from accelerating the maturity of an installment note because of a single late payment unless he has, prior to the late payment for which default is claimed, notified the maker that in the future he will not accept late payments. Pasol, 605 S.W.2d at 732; Rutherford, 573 S.W.2d at 301.

However, in this case, there is no evidence in the record that Perales or Cavender ever accepted late payments prior to the notes being accelerated on February 17, 1996. Moreover, the record indicates that Benitez defaulted on the notes because he also (1) failed to pay taxes and (2) failed to furnish proof of insurance. We hold that neither Perales nor Cavender waived their right to accelerate the notes by accepting payments after acceleration had already occurred.

Grossly Inadequate Consideration

Finally, Benitez claims the foreclosure sale was invalid because the sales price was "grossly inadequate" to its market value. However, inadequacy of consideration alone does not render a foreclosure sale void if the sale was "legally and fairly made." See American Sav. & Loan Ass'n v. Musick, 531 S.W.2d 581, 587 (Tex. 1975); see also Tarrant Sav. Ass'n v. Lucky Homes, Inc., 390 S.W.2d 473, 475 (Tex. 1965); Maupin v. Chaney, 163 S.W.2d 380 (1942); Onwuteaka, 846 S.W.2d at 892; Pentad Joint Venture v. First Nat'l Bank, 797 S.W.2d 92, 96 (Tex. App.--Austin 1990, writ denied); Donaldson v. Mansel, 615 S.W.2d 799, 802 (Tex. App.--Houston [1st Dist.] 1981, writ ref'd n.r.e.). There must also be evidence of some irregularity, such as fraud, conspiracy, or price chilling, that caused or contributed to a sale for a grossly inadequate price. See Musick, 531 S.W.2d at 587; Mansel, 615 S.W.2d at 802.

In this case, no irregularities in the foreclosure sale are raised by the summary judgment evidence. Therefore, Benitez failed to raise a fact issue regarding whether the properties were sold for a grossly inadequate price. See Tarrant Sav. Ass'n, 390 S.W.2d at 475 (holding that party claiming inadequate sales price must raise fact issue with respect to propriety of sale).

Moreover, there is no evidence in the record regarding the fair market value of the property at the time of the sale. Therefore, there is no evidence to raise a fact issue tending to prove the consideration received for the property was grossly inadequate. Gainesville Oil & Gas Co., Inc. v. Farm Credit Bank of Texas, 847 S.W.2d 655, 661-63 (Tex. App.--Texarkana 1993, no writ) (holding fact issue did not exist regarding inadequate sale price where there was no evidence of land's market value at time of foreclosure sale).

Accordingly, we overrule Benitez's sole point of error.

Conclusion

We affirm the trial court's judgment.

Margaret Garner Mirabal

Justice

Panel consists of Justices Mirabal, Hedges, and Jennings.

Do not publish. Tex. R. App. P. 47.4.

1. The $2,500 note was repayment for the purchase price of the home.

2. Perales hired Cavender to oversee the foreclosure sale.

3. Both the bankruptcy trustee and Benitez filed motions to dismiss the bankruptcy proceedings.

4. Perales purchased the properties subject to the underlying mortgage.

5. Benitez filed a motion for partial summary judgment, while Perales and Cavender filed a motion for a final, take-nothing summary judgment.

6. This time period cannot begin more than 90 days after the original judgment or other appealable order was signed. Tex. R. Civ. P. 306a(4).

7. Benitez does not dispute receiving either of these notices.

8. Benitez's reliance on Mitchell v. Texas Commerce Bank-Irving is misplaced. In Mitchell, the court held that notice of acceleration was insufficient because the bank sent it to the debtor's old mailing address instead of his current mailing address. 680 S.W.2d 681, 682-83 (Tex. App.--Fort Worth 1984, writ ref'd n.r.e). In this case, the undisputed evidence shows that Cavender sent all three notices to Benitez's current mailing address. The summary judgment record shows that Benitez left for Mexico after July 31, 1996. The July 15, 1996 notice of sale was sent certified mail return receipt requested, and the postal service gave notice on July 20, July 25 and August 4, 1996 to Benitez that he had a certified letter to pick up. The July 20, 1996 postal notation indicates the letter was refused on July 20.