Texas Commercial Law Firm

When it later became apparent that the deed was void because the loan had been paid off, the third party purchaser sued the substitute trustee, the law firm employing the substitute trustee and the client notwithstanding that the third party purchaser's funds were attempted to be returned to them immediately following the sale. The court found that the purchaser at the sale had a valid cause of action under the DTPA, even though the sale was void as a result of administrative error and there was no evidence of intent to deceive, because the purchaser qualified as a consumer and asserted violations under the DTPA which did not require notice of intent to deceive or defraud. Id. It is perhaps a sad commentary both on the penchant of some to take advantage of others through civil process and on the frivolity tolerated by our courts to see that this otherwise insignificant event occasioned by human error could drag on for years and expand liability under the (already expansive) DTPA beyond the bounds of reason. While the sale was originally conducted on May 8, 1985, it was not until after several years of litigation that the Court of Appeals in Houston (on September 22, 1988) found the third party purchaser to have a valid cause of action and affirmed the lower court's decision in part, reversed in part and remanded in part back to the trial court for further proceedings. Needless to say, there was disproportionate litigation, cost and expense associated with a debt which at the time it was paid-off was $2,732 and where one may question whether the third party purchaser suffered significant damages.

5. Constitutionality of Texas foreclosure law. Several cases have questioned whether Texas non-judicial foreclosure procedures are constitutional. The primary question, is whether nonjudicial foreclosure involves a taking of property in violation of the Fourteenth Amendment? See Fuentes v. Shevin, 407 U.S. 67, 91 S.Ct. 1983, 32 L. Ed. 2d 556 (1972); Snidagh v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L. Ed. 2d 349 (1969). Texas law has been held to be constitutional on the basis that no significant state action is involved in foreclosure procedure and that the foreclosure statute merely establishes minimum requirements for the exercise of the power of sale granted in private contracts. Armetta v. Nusbaum, 519 S.W. 2d 673 (Tex. Civ. App.--Corpus Christi 1975, writ ref'd n.r.e.); Barrera v. Security Building and Investment Corp., 519 F.2d 1166 (5th Cir. 1975); Leisure Estates of America v. Carmel Development Company, 371 F. Supp. 556 (S.D. Tex. 1974).

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