Receivership Law | Foreclosure Sale of Property Moots Complaint about Appointment of Receiver

Pirate's Lake Ltd. v. Vestin Realty Mortgage I, Inc.,
No. 14-08-00085-CV (Tex.App.- Houston [14th Dist.] Aug. 12, 2008) (appointment of receiver challenged, but foreclosure of property at issue moots case)

FROM THE OPINION BY CHIEF JUSTICE ADELE HEDGES:

Issues on Appeal

In two issues, Pirate's Lake contends that the trial court erred in appointing a receiver to take possession of and sell the Property. In its first issue, Pirate's Lake argues that it was not given the minimum three-day notice of the hearing on Vestin's application for appointment of a receiver, as required by Rule 695 of the Texas Rules of Civil Procedure. In its second issue, Pirate's Lake asserts that there were no contractual, statutory, or equitable bases for the appointment of a receiver.

We conclude that, because the Property was sold at a foreclosure sale after Pirate's Lake perfected its appeal, Pirate's Lake's appeal is moot.

The Mootness Doctrine

Neither the Texas Constitution nor the Texas Legislature has vested this Court with the authority to render advisory opinions. See Tex. Const. art. II, _ I; see also Camarena v. Tex. Employment Comm'n, 754 S.W.2d 149, 151 (Tex. 1988). The mootness doctrine limits courts to deciding cases in which an actual controversy exists between the parties. Fed. Deposit Ins. Corp. v. Nueces County, 886 S.W.2d 766, 767 (Tex. 1994).

When there ceases to be a controversy between the litigating parties due to events occurring after the trial court has rendered judgment, the decision of an appellate court would be a mere academic exercise, and the court may not decide the appeal. See Olson v. Comm'n for Lawyer Discipline, 901 S.W.2d 520, 522 (Tex. App.- El Paso 1995, no writ).

Stated differently, if a judgment cannot have a practical effect on an existing controversy, the case is moot. Id. In that situation, the appellate court is required to vacate the judgment of the trial court and dismiss the underlying cause of action. See Speer v. Presbyterian Children's Home & Serv. Agency, 847 S.W.2d 227, 228 (Tex. 1993); see also Gen. Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 570 (Tex. 1990) (if no controversy continues to exist between the parties, the appeal is moot and the court of appeals must dismiss the cause); Guajardo v. Alamo Lumber Co., 159 Tex. 225, 317 S.W.2d 725, 726 (1958) (when a case becomes moot on appeal, all previous orders are set aside by the appellate court, and the case is dismissed).[1]

When a trial court appoints a receiver to sell real property, and the real property is sold after the appellant has perfected its appeal, the appeal of the appointment of the receiver becomes moot. See Beard v. Beard, 49 S.W.3d 40, 71- 72 (Tex. App.- Waco 2001, pet. denied) (concluding that appeal of appointment of receiver was moot when real property that was sole subject of receivership had been foreclosed upon after appellant perfected her appeal).

Therefore, we will examine the record to determine whether the Property - the sole subject of the receivership - was sold after Pirate's Lake perfected its appeal, thereby rendering its appeal moot.

The Sale of the Property Renders This Appeal Moot

The record is clear that the Property was sold by foreclosure sale after Pirate's Lake perfected its appeal. The receiver was appointed only to take possession of, manage, and sell the Property. When the Property was later sold by foreclosure sale conducted under terms of the Deed, Pirate's Lake's appeal of the trial court's appointment of the receiver became moot. See id.Pirate's Lake argues that its appeal is not moot because (1) an actual controversy remains between the parties that requires a determination by this Court; and (2) no order has been signed by the trial court terminating the receivership. These arguments are without merit.With respect to the first ground, Pirate's Lake asserts that, without a determination by this Court regarding the appointment of the receiver, it may be unable to prove the second element of a tortious interference claim that it asserted in the trial court.[2]

However, even if we were to conclude that the trial court abused its discretion in appointing a receiver, this conclusion does nothing to support Pirate's Lake's claim that Vestin committed a tortious or unlawful act in seeking the receivership.[3]

As Vestin correctly notes, this Court's ruling on any alleged error committed by the trial court in appointing the receiver would have no bearing on whether Vestin's act in seeking the receivership satisfies the second element of a tortious interference claim. Thus, even if we were to reach the merits of Pirate's Lake's appeal, our ruling would have no practical effect on an existing controversy between the parties.[4] See Olson, 901 S.W.2d at 522.

With respect to the second ground, an order terminating a receivership is not expressly required to render the appeal of the appointment of a receiver moot. See Beard, 49 S.W.3d at 71-72 (appeal of appointment of receiver was moot without order terminating receivership). Rather, all that is required is that a judgment "[not] have a practical effect on an existing controversy" between the parties. See Olson, 901 S.W.2d at 522. Pirate's Lake cites us to no authority to the contrary.[5]

Conclusion

Therefore, because the Property was sold by foreclosure sale after Pirate's Lake perfected its appeal, Pirate's Lake's appeal is moot. Accordingly, without reference to the merits, we vacate the trial court's order appointing a receiver to take possession of and sell the Property, and dismiss the underlying cause of action and this appeal.

DISMISSED AS MOOT:
Panel: Chief Justice Hedges, Justice Bill Boyce, and Senior Justice Frank C. Price (sitting by assignment)
Appellate cause no.: (link to docket sheet)
Full case style: Pirate's Lake, Ltd. v. Vestin Realty Mortgage I, Inc., Vestin Realty Martgage II, Inc., Vestin Fund III, L.L.C., and Vestin Mortgage, Inc.--Appeal from 56th District Court of Galveston County
Trial court judge: Hon. Lonnie Cox
Attorneys: Jeffrey R. Singer, Martin W. Brett Keith M Aurzada

Find terms: Houston foreclosure caselaw mootness doctrine in Texas
DWOJ = Dismissal for want of jurisdiction jurisdictional dismissal