MFG Fin., Inc. v. Hamlin

MFG Financial, Inc., Appellant v. Paul Jason Hamlin and Tara Natalie Bertalan Hamlin, Appellees

NO. 03-19-00716-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

June 3, 2021

FROM THE 26TH DISTRICT COURT OF WILLIAMSON COUNTY

NO. 18-0609-C26, THE HONORABLE DONNA GAYLE KING, JUDGE PRESIDING

MEMORANDUM OPINION

MFG Financial, Inc., appeals from the trial court's order denying MFG's motion to dismiss under the Texas Citizens Participation Act (TCPA), see Tex. Civ. Prac. & Rem. Code §§ 27.001-.011,¹ which sought the dismissal of a lawsuit filed against MFG by appellees Paul Jason Hamlin and Tara Natalie Bertalan Hamlin.² We reverse the trial court's order and remand for further proceedings consistent with the TCPA.

FACTUAL AND PROCEDURAL BACKGROUND

On May 25, 1999, MFG obtained a default judgment against Tara Hamlin in an Arizona small-claims court. On March 25, 2004, MFG filed an affidavit to renew the judgment, but in the notice of renewal, the Arizona justice of the peace erroneously wrote that the renewed expiration date was May 25, 2009, five years from the date of the original judgment instead of five years from the date MFG filed its renewal affidavit.³ On May 7, 2009, MFG filed another renewal affidavit, which the Arizona justice of the peace purported to renew until May 7, 2014.

In December 2013, MFG, through its Texas attorney, Alton Lee Rigby, Jr., filed a Notice of Filing of Foreign Judgment in Williamson County; in January 2014, the Williamson County district clerk issued a "Notice of Filing of Foreign Judgment in the State of Texas"; and in May 2014, MFG recorded an abstract of the judgment in Williamson County's public records. Although the documents indicate that notices of the various filings were sent to Tara Hamlin at her address in Williamson County, the Hamlins asserted that they did not learn of the abstract of judgment until 2016, during title work to sell their home. The Hamlins filed a Homestead Affidavit Establishing Exemption to and Release from Judgment Lien in Williamson County's public records on June 20, 2016,⁴ see Tex. Prop. Code § 41.001(a) (homestead is exempt from seizure for creditor's claims, except for encumbrance properly fixed on homestead), and soldtheir home on June 24, see Smith Robertson, L.L.P. v Hamlin, No. 03-18-00754-CV, 2019 WL 3023304, at *1 (Tex. App.—Austin July 11, 2019, pet. denied) (mem. op.).

On July 22, 2016, the Hamlins' attorney sent MFG a lengthy letter demanding that MFG execute a release of judgment within twenty-one days and pay the Hamlins a total of $125,500: $20,000 for damages under chapter 12 of the civil practice and remedies code, see Tex. Civ. Prac. & Rem. Code § 12.002(b) (allowing each injured person to recover greater of actual damages or $10,000); $60,000 in punitive or exemplary damages under chapter 12 and the Deceptive Trade Practices Act (DTPA), see id. § 12.002(b)(4) (permitting recovery of exemplary damages), Tex. Bus. & Com. Code § 17.50(b)(1) (permitting recovery under DTPA of up to three times economic and mental-anguish damages); $45,000 for attorney's fees; and $500 in costs. Although MFG did not file a release of judgment within twenty-one days of receiving the letter, it did file a release in the Williamson County district court in September 2016—the release was recorded in Williamson County's public records in March 2017.⁵ See Smith Robertson, 2019 WL 3023304, at *1.

In May 2018, the Hamlins sued MFG—along with its attorney Rigby, and his law firm, Smith Robertson (collectively, the legal defendants)—asserting that the defendants had violated and were continuing to violate: chapter 12 of the civil practice and remedies code, see Tex. Civ. Prac. & Rem. Code §§ 12.001-.007 ("Liability Related to a Fraudulent Court Record or a Fraudulent Lien or Claim Filed Against Real or Personal Property"); section 17.50 of the DTPA, see Tex. Bus. & Com. Code § 17.50(a)(3); and several provisions of the penal code, see Tex. Penal Code §§ 32.46 ("Securing Execution of Document by Deception"), 32.48("Simulating Legal Process"), 32.49 ("Refusal to Execute Release of Fraudulent Lien or Claim"), 37.09 ("Tampering With or Fabricating Physical Evidence"), 37.10 ("Tampering with Governmental Record"), 37.13 ("Record of a Fraudulent Court"). They sought a declaration that the Arizona judgment and associated Williamson County abstract of judgment were "null, void, and unenforceable, wholly improper and invalid, and fraudulent, wrongful, and illegal at all times," and asked the court to order the defendants to have the judgment and abstract of judgment vacated and removed from the Williamson County public records. They also sought attorney's fees of more than $70,000 and the greater of $10,000 or their actual damages "in the form of economic loss, mental anguish, pain, and suffering, attorney's fees, costs, and expenses" incurred in connection with their investigating the underlying facts, sending demand letters to MFG, and executing the homestead affidavit. See Tex. Civ. Prac. & Rem. Code § 12.002(b)(1) (person who violates section 12.002(a) or (a-1) is liable to each injured person for attorney's fees, court costs, and greater of $10,000 or actual damages); Tex. Bus. & Com. Code § 17.50(d) (consumer who prevails under section 17.50 shall recover court costs and attorney's fees). Finally, the Hamlins requested statutory penalties, punitive damages, and exemplary damages in the form of treble damages under chapter 12 or the DTPA. See Tex. Civ. Prac. & Rem. Code § 12.002(b)(4) (person who violates section 12.002(a) or (a-1) is liable to each injured person for exemplary damages); Tex. Bus. & Com. Code § 17.50(b)(1) (allowing for recovery of up to treble economic and mental anguish damages).

After the legal defendants were served in May 2018, they filed a motion to dismiss, which the trial court denied. In July 2019, this Court reversed the trial court, ruling that the TCPA applies to the Hamlins' claims and that the legal defendants proved the defense of attorney immunity. See Smith Robertson, 2019 WL 3023304, at *2-3. MFG was finally servedin May 2019, at which point it also sought dismissal under the TCPA. At a hearing on the motion in August 2019, the trial court stated, "The Court is of the opinion that the Citizens Participation Act is not applicable in this case and would, therefore, deny the motion to dismiss," signing an order to that effect a month later. MFG filed this appeal, arguing that it established that the TCPA applies to the Hamlins' claims, that the Hamlins did not meet their burden of showing a prima facie case of the elements of their claims, and that the Hamlins' requests for declaratory and injunctive relief should be dismissed.

STANDARD OF REVIEW AND TCPA FRAMEWORK

We construe the TCPA liberally to effectuate its intent of safeguarding and encouraging citizens' constitutional rights to free speech, petition, and association while protecting the right to file a meritorious lawsuit. ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per curiam); see Tex. Civ. Prac. & Rem. Code §§ 27.002, .011(b). Under the former version of the TCPA, the party seeking dismissal had an initial burden of showing by a preponderance of the evidence that the nonmovant's "legal action" was based on, related to, or in response to a party's exercise of the right of free speech, right to petition, or right of association. Former Tex. Civ. Prac. & Rem. Code §§ 27.003(a), .005(b).⁶ If the movant met that burden, the burden shifted to the nonmovant to establish by clear and specific evidence a prima facie case for each element of its claim. Tex. Civ. Prac. & Rem. Code § 27.005(c); see Coleman, 512 S.W.3d at 898; In re Lipsky, 460 S.W.3d 579, 586 (Tex. 2015) (orig. proceeding). Even if the claimant put forth a prima facie case, the trial court was still required to dismiss theaction if the movant "establishe[d] by a preponderance of the evidence each essential element of a valid defense to the nonmovant's claim." Former Tex. Civ. Prac. & Rem. Code § 27.005(d). The trial court must consider "the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based," allowing limited relevant discovery on a showing of good cause but otherwise suspending discovery in the legal action until the motion has been decided. Tex. Civ. Prac. & Rem. Code §§ 27.003(c), .006.

We review de novo whether the movant established by a preponderance of the evidence that the challenged legal action is subject to the TCPA and whether the nonmovant presented clear and specific evidence establishing a prima facie case for each essential element of its challenged claims. Serafine v. Blunt, 466 S.W.3d 352, 357 (Tex. App.—Austin 2015, no pet.). We have explained that prima facie evidence is "evidence that, until its effect is overcome by other evidence, will suffice as proof of a fact in issue. In other words, a prima facie case is one that will entitle a party to recover if no evidence to the contrary is offered by the opposite party." Id. at 358. "Bare, baseless opinions do not create fact questions, and neither are they a sufficient substitute for the clear and specific evidence required to establish a prima facie case under the TCPA." Lipsky, 460 S.W.3d at 592; see also Serafine, 466 S.W.3d at 358 ("Conclusory statements are not probative and accordingly will not suffice to establish a prima facie case."). "[T]he term 'clear and specific evidence' refers to the quality of evidence required to establish a prima facie case, while the term 'prima facie case' refers to the amount of evidence required to satisfy the nonmovant's minimal factual burden." Serafine, 466 S.W.3d at 358.

DISCUSSION

Initially, although the Hamlins "do not believe that the [TCPA] applies to this proceeding or any of the claims which the Hamlins have asserted against MFG in this proceeding," raising arguments similar to those they made in the legal defendants'...