A dispute between two home-equity borrowers and Wells Fargo ended with the Texas Supreme Court reinstating an award of more than $116,000 in attorney’s fees to the lender.
On Friday the high court found that Well’s Fargo was entitled to attorney fees under the Uniform Declaratory Judgments Act.
Court records show Patrick and Beverly Murphy refinanced their existing home loan by obtaining a $252,000 home-equity loan from Wells Fargo Bank in January 2006. They soon fell behind in their payments and stopped making payments all together in February 2008.
Wells Fargo responded by filling an application foreclosure. The Murphys countered by filing a lawsuit of their own in Harris County District Court, alleging common law fraud and seeking declaratory judgment, plus an award of attorney’s fees.
In its amended answer to the Murphys’ suit, Wells Fargo also requested attorney’s fees under the UDJA.
Eventually, both parties moved for summary judgment, court records show.
The trial court presiding over the litigation granted Wells Fargo’s motion, finding the couple defaulted on their loan and ordering them to pay the lender $116,505.75 in attorney’s fees.
The ruling prompted the couple to appeal.
Justices on the 14th Court of Appeals affirmed the trial court’s judgment but reversed the award of attorney’s fees, finding that neither party had pleaded for declaratory relief, court records show.
In its appeal to the Texas Supreme Court, Wells Fargo argued that both parties pleaded for declaratory relief, and the parties’ home-equity loan agreement and the Texas Constitution do not prohibit a personal judgment for attorney’s fees against the Murphys.
“Wells Fargo pleaded to recover its attorney’s fees for either defending or prosecuting a claim for declaratory relief,” states the high court’s opinion, authored by Justice Paul Green.
“Because the Murphys failed to preserve any challenge to the characterization of their own claim for declaratory relief, the trial court was authorized to enter a judgment awarding Wells Fargo its attorney’s fees under the UDJA. Neither the parties’ loan agreement nor the Texas Constitution prohibits a personal judgment against the Murphys for attorney’s fees.
“Therefore, we reverse the court of appeals’ judgment in part and reinstate the trial court’s judgment in favor of Wells Fargo.”
Houston attorney Bertrand Moser represents the Murphys.
Wells Fargo is represented by attorneys Derrick Bryan Carson, Christopher Benjamin Dove, Robert T. Mowrey, W. Scott Hastings and Daniel John Pettit.
Case No. 13-0236