Florida Law Governing Landlord-Tenant Evictions, Ejectments Not Applicable Where Title Is An Issue In Connection With Sale Leaseback Foreclosure Rescues, Similar Scams; Evidentiary Hearing To Determine True Owner Required Before Compelling Payment Of Past Due Rent Into Court Registry & Awarding Possession; Foreclosure Proceeding Required To Oust Occupant

(This post has been adapted from earlier posts published in April, 2007.)

A Florida appellate court ruled that a Miami-area foreclosure rescue operator cannot evict a homeowner who signed away title to her home in a "sale-leaseback-buyback option" arrangement until a determination is made as to who the true owner of the property is and effectively ruling that the Florida Residential Landlord Tenant Act is not applicable to such a transaction unless and until such a determination favorable to the operator is made.

The case involved a situation where, at some point after a financially strapped homeowner signed away the title to her home to a foreclosure rescue operator, the operator attempted to evict her. The homeowner asserted the defense that she was the true owner. The lower court ruled that, pursuant to the applicable provisions of the Florida Residential Landlord Tenant Act, she had to pay into the court registry the rent that was called for in the leaseback of her home while the court proceedings were pending.(1)

According to the appellate court's opinion:

• "[The homeowner] alleges she was tricked into conveying her home to Equinamics in a transaction which is impressed with characteristics of a sale, but in reality is a disguised loan secured by her home. If this is accurate, then Equinamics is not an owner of [the homeowner's] residence but rather a lender who must proceed to oust [her] via a foreclosure action."

The court then made this observation:

• "Based upon the facts of this case, it is apparent that the transaction by which Equinamics received title to the Minalla residence was not an ordinary real estate transaction. Likewise, the circumstances under which Minalla continued to remain on the property after she executed the special warranty deed to Equimanics was not possessed of the trappings of a usual landlord tenant relationship."

Ultimately, in reversing the lower court ruling to the contrary, the appellate court stated:

• While not seriously disputing the proposition that the substance of a transaction controls over form when considering the legal effect of a real estate transaction or any other business transaction, see § 697.01(1), Fla. Stat. (2005)("[a]ll conveyances, obligations, conditioned or defeasible, bills of sale or other instruments of writing conveying or selling property . . . for the purpose or with the intention of securing the payment of money . . . shall be deemed and held mortgages . . ."); Rothschild Reserve Int'l, Inc. v. Silver, 830 So.2d 224, 225 (Fla. 4th DCA 2002)("Section 697.01(1), Florida Statutes (2000) provides that all instruments of writing, conveying property for the purpose of securing the payment of money, are deemed mortgages subject to foreclosure."); Valk v. J.E.M. Distribs. of Tampa Bay, Inc., 700 So.2d 416, 419 (Fla. 2d DCA 1997)("whether a conveyance should be declared a mortgage under the statute depends on the particular facts, and, as the statute provides, is a question of the parties' intent"), Equinamics nevertheless insists that as holder of record title to the property, it is entitled to require Minalla to pay rent into the court registry so long as she continues to live on the property. Like the trial court, Equinamics says this is necessary to "maintain the status quo," until the issue of title finally is resolved. In this argument, Equinamics is in error.
  
  Although a landlord generally is entitled to require a tenant in possession to deposit rents into the court registry during the course of any landlord tenant dispute where the tenant interposes any defense other than payment, the rule yields where title is in issue.
  
  This exception is well illustrated by the recent Fourth District Court of Appeal case, Frey v. Livecchi, 852 So.2d 896 (Fla. 4th DCA 2003). In Frey, Pamela Livecchi, the owner of a Broward County home, entered into a one-year residential lease agreement with the Freys. Id. at 897. The Freys alleged that at the end of the lease agreement they had entered into an option to purchase the property. Id. Livecchi, on the other hand, denied the existence of any such option and asserted that at the end of the lease, the Freys became month-to-month tenants. Id. At the end of the period, Livecchi sent the Freys a notice to vacate the premises. Id. The Freys responded with a complaint for specific performance based upon the purported option. Id. Without conducting an evidentiary hearing on this dispute, the trial court ordered the Freys to put the disputed past due "rent" in the registry of the court or face an order of eviction. Id. The court of appeal reversed stating:
  
  
  Section 83.60(2), Florida Statutes, requires payment of rent into the registry of the court in residential landlord tenant disputes under Part II of Chapter 83. 83.60, Fla. Stat. (1999). However, section 83.60 does not apply when the occupancy is under a contract for sale of a dwelling unit or the property of which it is a part. 83.42(2), Fla. Stat. (1999). The Freys claim that this provision is inapplicable because they were not tenants under the statute. Rather, their claim is based on their rights under a contract for sale. The resolution of this factual dispute would determine whether section 83.60 is applicable. Because such a determination would be dispositive, we hold that the trial court was required to conduct an evidentiary hearing before determining whether the Freys were required to pay money into the court registry. Because the trial court failed to conduct such a hearing, we find that the trial court erred in imposing such a requirement, erred in entering the default judgment, and reverse the entry of the final default judgment. 
  
  

  Id. at 897-98; see also Grimm v. Huckabee, 891 So.2d 608 (Fla. 1st DCA 2005). Cf. Blanco v. Novoa, 854 So.2d 672, 673 (Fla. 3d DCA 2003)(reversing a motion to pay accrued "rent" into the registry of the court where the trial court "construed the agreement between Blanco and Novoa to be a [true] lease" rather than a mortgage); First Hanover v. Vazquez, 848 So.2d 1188 (Fla. 3d DCA 2003)(affirming the grant of a motion for default and non-payment of rent where tenant ratified the conveyance of property by bringing action for damages for fraudulent inducement apparently without placing title in issue).
  
  As in Frey, there is a factual dispute in this case concerning who is the true owner of the property. Because the trial court's order requiring payments by Minalla of monies into the registry was made without conducting an evidentiary hearing concerning the nature of the transaction and who is the true owner of the residence, the court erred in imposing the payment requirement upon her.

For the court ruling, see Minalla v. Equinamics Corp., 954 So. 2d 645 (Fla. App. 3rd DCA, 2007).

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See also:

Blanco v. Novoa, 854 So. 2d 672; (Fla. App. 3rd DCA 2003). This case dealt with an eviction action in a sale-leaseback, foreclosure rescue ripoff. The trial court granted a motion that, in effect, erroneously treated the subject transaction as a standard landlord-tenant relationship. In reversing, the Florida appellate court stated:

• The substance and not the form is what is critical. Here, the trial court erred by determining that the words "lease" and "rent" controlled when the parties clearly acted not as landlord and tenant, but rather as mortgagor and mortgagee.
  
  Thus, the remedy available to Novoa in this case is that of a foreclosure proceeding.

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By the way, Florida cases like these where a party in possession of property has fought off an eviction/ejectment in situations where it had earlier signed over title to property, asserting it was done so as collateral in a financing transaction have been addressed by the Florida Supreme Court and go as far back as 130+ years. See:

Walls v. Endel, 20 Fla. 86; (Fla. 1883) . This case involved an action for ejectment by a title holder of property. The person in possession alleged that it was the owner of the property who had conveyed absolute title to the current title holder as security for the payment of money and that, therefore, the deed should be treated as a mortgage. The lower court erroneously refused to allow evidence that the arrangement between the parties should be treated as a mortgage. In reversing the lower court, the Florida Supreme Court stated:

• [T]he result of these facts is that the deed was given to secure the payment of money, and is therefore, by the rules of equity, only a mortgage, and the statute we have cited declares it to be a specific lien, and that the holder cannot have possession without due foreclosure, decree and sale; while the judgment at law would give possession without foreclosure and sale.
  
  A plainer case for equitable relief can scarcely be imagined. If the plaintiff has only a specific lien on the property, though it is in form a deed in fee, it is not only inequitable but contrary to the plain words of the statute that he should obtain possession otherwise than by due foreclosure of the mortgage interest.

The court also quotes from a Wisconsin Supreme Court case, Kent vs. Agard, 24 Wis. 378 (Wis. 1869), another eviction case, in support of its decision, in which it was said:

• [T]he plaintiff should have been allowed to show by parol that the absolute deed was intended as a mere security and was consequently only a mortgage. That this may be done in some form of action is not contested. And I see no reason why it may not be done in an action to recover the possession of real estate. When the facts are proved such deed is a mortgage only, both in law and in equity. The rights of the mortgagor and mortgagee are precisely the same as though the defeasance were contained in the deed itself. The only difference is in the manner of proving the defeasance.

It also cites Saunders vs. Stewart, 7 Nev. 200, a Nevada high court case, where, when referring to parol evidence, it was observed:

• The doctrine is that such evidence is not received to contradict an instrument of writing, but to prove an equity superior thereto.

-------------------------------------------

Folks v. Chesser, 106 Fla. 837; 145 So. 602; (Fla. 1932) The Florida high court made the following observations in connection with an equitable mortgagee's right of possession to be obtained only after a mortgage foreclosure is had:

• Our statute enacts a recognized rule of equity, that all deeds of conveyance conveying or selling property for the purpose, or with the intention, of securing the payment of money, shall be deemed and held as mortgages, and shall be subject to the same rules of foreclosure and the same regulations and restrictions as are prescribed by law in relation to mortgages. See Sections 5724-5725 C.G.L. 3836-3837 R.G.S.
  
  Under these statutes, in no case will the right of possession to property by a mortgagee be recognized in a court of justice in this State, until due foreclosure is had according to the forms of the law providing for foreclosure of mortgages.

Hewitt v. State, 101 Fla. 807; 135 So. 130 (Fla. 1931): Another case involving a property owner alleging that he gave a deed to another as security for a loan; after reviewing the statute governing unlawful detention proceedings, the court added this qualification:

• The above statutory provision as to procedure in cases of landlord and tenant does not preclude the defendant in possession from pleading to the jurisdiction of the court on the ground that he claims title to the real estate, of which subject the county judge has no jurisdiction to try or determine.
  
  When, in proceedings in the county judge's court to recover possession of land as from a tenant, a pleading is filed which puts in issue the title or boundaries of the land in controversy, it becomes the duty of the county judge to dismiss the cause for want of jurisdiction. Barrs v. State, 91 Fla. 30, 107 So. 249; Welch v. State, 85 Fla. 264, 95 So. 751; State v. Philips, 64 Fla. 105, 59 So. 241; South Florida Amusement & Dev. Co. v. Blanton, 95 Fla. 885, 116 So. 869.
  
  Prohibition is the defendant's remedy where the county judge does not dismiss an action for unlawful possession of lands when a plea tenders an issue as to the title of the land. State ex rel. v. Hutchins, 135 So. 298, decided at this term.

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(1) The court in Minalla v. Equinamics Corp. reveals the following in footnote 2 of its ruling:

• that the homeowner has brought claims against the foreclosure rescue operator under the Federal Truth in Lending Act giving her a right to rescind under 15 U.S.C. § 1635 and Reg. Z 226.23, and damages under 15 U.S.C. § 1640 (a);
• that the arrangement is alleged to be a Home Ownership and Equity Protection Act Amendments (HOEPA) loan under 15 U.S.C. § 1602 (aa) and Reg. Z 226.31, giving right to an additional basis to rescind under § 1635 and enhanced actual damages under § 1640 (a)(4);
• that the arrangement is alleged to violate Florida's usury statute, § 687.02(1), Florida Statutes (2005);
• that the homeowner has brought a quiet title claim; and
• that the homeowner seeks declaratory relief on the basis that enforcing the arrangement as a true "sale lease option" would enforce an illegal equity skimming contract in violation of section 697.08, a third degree felony, which it claims allows Minalla civil damages as being "against public policy." abcd

Forcible Detainer, Equitable Mortgage, Lack Of Jurisdiction, Mandamus: Fighting Off An Ongoing Eviction While Trying To Recharacterize A Sale Leaseback Transaction As A Secured Loan

A 2013 ruling from a Texas Court of Appeals (In re: Gallegos, No. 13-13-00504-CV (Tex. App. 13th Dist., Corpus Christi, Edinburg, 2013)) may be helpful to those who, in the process of attempting to undo a foreclosure rescue transaction involving a sale/leaseback w/ repurchase option and before a resolution is reached, find themselves having to fight off an ongoing eviction action ordered by a court in a separate proceeding brought by the buyer/lessor in an effort to boot the seller/lessee.

An oversimplified summary of the background facts follows. While the transaction in this case involved a sale/leaseback, the context did not specifically involve a foreclosure rescue. The legal principles set forth by the Texas appeals court are nevertheless applicable. The reader is referred to the entire ruling for the specific details of the background facts.

1. The relationship between the opposite sides in this case evolved out of a sale and contemporaneous leaseback of real estate, coupled with an option to repurchase the premises, that was consummated over ten years before the legal dispute arose.
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2. The case itself involves the use of a forcible detainer action filed by the buyer/lessor ("Vela") to boot the successor-in-interest ("Gallegos") of the original owner/seller/lessee of the subject premises ("Pyle").
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3. The initial ruling in the eviction action, which Vela had filed and lost in a justice court, was subsequently appealed in a county court ("a justice court is expressly deprived of jurisdiction to determine or adjudicate title to land. ... The appellate jurisdiction of the county court is confined to the jurisdictional limits of the justice court.").
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4. While the forcible detainer appellate proceeding was pending in county court, Gallegos filed a separate suit to quiet title in a court of general jurisdiction (ie. district court) alleging that the warranty deed and note agreement used to effect the sale leaseback of the premises (for the reasons which Gallegos alleged, and which are set forth in more detail in the court's opinion) were void and illegal.
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5. Gallegos then filed a motion to dismiss the county court appellate proceeding on grounds that the county court lacked jurisdiction, alleging that the title dispute in the district court had to be resolved before the issue of possession in the county court could be addressed.
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6. The county court denied the motion to dismiss and granted Vela a writ of possession.
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7. Gallegos filed a petition for writ of mandamus and motion for emergency stay with the Texas appeals court. The motion for emergency stay was granted, thereby temporarily slamming the brakes on the eviction until the court considered the merits of Gallegos claims that the county court lacked jurisdiction to issue a writ of possession and allow the eviction to go forward.

After an examination and analysis of the applicable law in Texas on mandamus, forcible detainer ("[T]he county court is deprived of jurisdiction if resolution of a title dispute is a prerequisite to the determination of the right to immediate possession"), equitable mortgage (see Johnson v. Cherry, 726 SW2d 4 (Tex. 1987) ), the state appeals court ruled in favor of Gallegos, concluding that, under this set of facts, the forcible detainer suit and the title suit could not proceed concomitantly. The issuance of the writ of possession went beyond the county court's jurisdiction, and consequently, the appeals court granted Gallegos' petition for writ of mandamus.

On the availability of mandamus relief, generally, the court stated:

• Gallegos contends that the county court's order is void because it lacks jurisdiction over the case. Mandamus is proper if a trial court issues an order beyond its jurisdiction. See In re Dickason, 987 S.W.2d 570, 571 (Tex. 1998) (orig. proceeding); Bd. of Disciplinary App. v. McFall, 888 S.W.2d 471, 472 (Tex. 1994) (orig. proceeding).
  
  Mandamus is available to correct a void order even if the order was appealable and the party requesting relief failed to pursue an appeal. Dikeman v. Snell, 490 S.W.2d 183, 186 (Tex. 1973) (orig. proceeding). Where an order is void, the relator need not show it did not have an adequate appellate remedy and mandamus relief is appropriate. See In re Sw. Bell Tel. Co., 35 S.W.3d 602, 605 (Tex. 2000) (orig. proceeding); In re Union Pac. Res., Co., 969 S.W.2d 427, 428 (Tex. 1998) (orig. proceeding).

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On the use of a forcible detainer action to boot an occupant from the premises when there was an ongoing title dispute regarding the premises, the appeals court set forth the applicable law:

• The forcible detainer action is the procedural vehicle by which the right to immediate possession of real property is determined. Ward v. Malone, 115 S.W.3d 267, 270 (Tex. App.-Corpus Christi 2003, pet. denied). Such an action is intended to be a speedy and inexpensive means for resolving the question of who is entitled to immediate possession of property without resorting to an action upon title. Harrell v. Citizens Bank & Trust Co., 296 S.W.3d 321, 325 (Tex. App.-Texarkana 2009, pet. dism'd); Falcon v. Ensignia, 976 S.W.2d 336, 338 (Tex. App.-Corpus Christi 1998, no pet.). The only issue in a forcible detainer action is the right to actual possession of the premises. Marshall v. Hous. Auth., 198 S.W.3d 782, 785-86 (Tex. 2006); see TEX. R. CIV. P. 746.
  
  In cases of forcible entry or forcible detainer, the "merits of the title shall not be adjudicated." TEX. R. CIV. P. 746; Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 434 (Tex. App.-Houston [1st Dist.] 2007, no pet.). In keeping with the foregoing prohibition against the adjudication of title in a forcible detainer action, a justice court is expressly deprived of jurisdiction to determine or adjudicate title to land. See TEX. GOV'T CODE ANN. § 27.031(b)(4) (West Supp. 2013).
  
  By statute, a justice court has jurisdiction over a forcible detainer action. See TEX. PROP. CODE ANN. § 24.004 (West Supp. 2013). From the justice court, a forcible detainer suit may be appealed to the county court for a de novo review. See TEX. R. CIV. P. 749; Hong Kong Dev., Inc., 229 S.W.3d at 433-34. The appellate jurisdiction of the county court is confined to the jurisdictional limits of the justice court. Salaymeh v. Plaza Centro, LLC, 264 S.W.3d 431, 435 (Tex. App.-Houston [14th Dist.] 2008, no pet.); Hong Kong Dev., Inc., 229 S.W.3d at 434. Therefore, neither the justice court nor a county court on appeal can resolve questions of title beyond the immediate right to possession. See Bacon v. Jordan, 763 S.W.2d 395, 396 (Tex. 1988).
  
  A forcible detainer action is cumulative, not exclusive, of other remedies a party may have in the courts of this State, including a suit to try title. Salaymeh, 264 S.W.3d at 435-36; Rice v. Pinney, 51 S.W.3d 705, 709 (Tex. App.-Dallas 2001, no pet.); see Scott v. Hewitt, 90 S.W.2d 816, 818-19 (Tex. 1936). The displaced party is entitled to bring a separate suit in the district court to determine questions of title. Salaymeh, 264 S.W.3d at 435-36. Accordingly, forcible detainer suits in justice court may run concurrently with an action in another court even if the other action involves adjudication of matters that could result in a different determination of possession from the decision rendered in the forcible detainer suit. Id.; Hong Kong Dev. Inc., 229 S.W.3d at 437. However, where the right to immediate possession necessarily requires resolution of a title dispute, a justice court has no jurisdiction to enter a judgment. Rice, 51 S.W.3d at 709. In other words, a justice court is not deprived of jurisdiction because there is a title dispute; it is deprived of jurisdiction only if resolution of a title dispute is a prerequisite to determination of the right to immediate possession. See id.
  
  Whether an existing title dispute deprives the justice and county courts of jurisdiction to adjudicate possession in forcible detainer actions generally turns on whether there is a basis, independent of the claimed right to title, for the plaintiff's claim of superior possession rights in the property. See Villalon v. Bank One, 176 S.W.3d 66, 71 (Tex. App.-Houston [1st Dist.] 2004, no pet.); see also Chinyere v. Wells Fargo Bank, N.A., No. 01-11-00304-CV, 2012 WL 2923189, at *3 (Tex. App.-Houston [1st Dist.] July 12, 2012, no pet.) (op.).
  
  Courts have concluded that several different factual scenarios generally require the resolution of title as a prerequisite to determination of possession.
  
  Familial disputes over property rights generally require the initial resolution of title. See, e.g., Pina v. Pina, 371 S.W.3d 361, 365-66 (Tex. App.-Houston [1st Dist]. 2012, no pet.) (explaining that the district court had jurisdiction over the determination of the right to immediate possession of property between four siblings, where their mother had deeded the property to two of the four children, because the issue necessarily required a resolution of the title dispute between the children); Geldard v. Watson, 214 S.W.3d 202, 208-09 (Tex. App.-Texarkana 2007, no pet.) (holding that the justice court lacked jurisdiction over a forcible detainer suit because the disagreement over the right of possession, which arose from a familial dispute over homestead rights in property, "necessarily required an adjudication of the merits of title").
  
  Similarly, claims regarding adverse possession typically involve the preliminary determination of title disputes. See, e.g., Gibson v. Dynegy Midstream Servs., L.P., 138 S.W.3d 518, 524 (Tex. App.-Fort Worth 2004, no pet.) (concluding that the issue of title raised by a party's claims of adverse possession was "integrally linked" to the issue of possession); Gentry v. Marburger, 596 S.W.2d 201, 203 (Tex. Civ. App.-Houston [1st Dist.] 1980, writ ref'd n.r.e.) (holding that the justice court lacked subject-matter jurisdiction over a forcible detainer suit where the pleadings raised the issue of title by adverse possession and thus "title to premises was directly involved").
  
  The resolution of the issue regarding whether a forcible detainer case can proceed concurrently with a title dispute or whether title has to be resolved as a preliminary matter is more complicated in situations regarding the purchase and sale or lease of a property.
  
  In general, cases have held that where the relationship between the parties in a forcible detainer suit is that of buyer and seller only, the determination of the right to immediate possession of the property necessarily requires resolution of the title dispute. See, e.g., Dass, Inc. v. Smith, 206 S.W.3d 197, 200-01 (Tex. App.-Dallas 2006, no pet.) (concluding that the determination of the right to immediate possession of property necessarily required a resolution of a title dispute, and jurisdiction properly belonged in the district court, where there was evidence that a landlord-tenant relationship had ended and a buyer-seller relationship had begun); see also Chinyere, 2012 WL 2923189, at *5 (holding that the justice and county court lacked subject matter jurisdiction where the claim for possession of property rested solely on the claim to title based on the sale of the property).
  
  In contrast, where the relationship between the purchaser and seller of real property encompasses the landlord and tenant relationship, even where such a relationship occurs in the context of a sale of property, the issue of immediate possession can typically be determined without first necessarily determining the issue of title. See, e.g., Morris v. Am. Home Mortg. Serv., 360 S.W.3d 32, 35 (Tex. App.-Houston [1st Dist.] 2011, no pet.) (holding that a deed of trust containing language establishing a landlord-tenant relationship between the borrower and the purchaser provided a basis to resolve competing claims to possession without resolving the title dispute between the parties); Bruce v. Fed. Nat. Mortg. Ass'n, 352 S.W.3d 891, 893 (Tex. App.-Dallas 2011, pet. denied) ("Here, the Deed of Trust contains a provision that creates a landlord-tenant relationship, and this relationship `provides an independent basis on which the trial court could determine the issue of immediate possession without resolving the issue of title to the property.'"); see also Black v. Washington Mut. Bank, 318 S.W.3d 414, 418 (Tex. App.-Houston [1st Dist.] 2010, pet. dism'd w.o.j.); Yarto & DTRJ Invs., L.P. v. Gilliland, 287 S.W.3d 83, 89 (Tex. App.-Corpus Christi 2009, no pet.); Elwell v. Countywide Home Loans, Inc., 267 S.W.3d 566, 569 (Tex. App.-Dallas 2008, pet. dism'd w.o.j.); Villalon, 176 S.W.3d at 71; Rice, 51 S.W.3d at 712-13; see also Weatherbee v. GMAC Mortgage, LLC, No. 01-11-00546-CV, 2012 WL 1454494, at *3 (Tex. App.-Houston [1st Dist.] Apr. 26, 2012, pet. dism'd w.o.j.) (mem. op.).

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The analysis and application of Texas law as above stated by the court to the facts at bar, and its ruling, follow:

• IV. ANALYSIS
  
  Gallegos contends that the county court did not have jurisdiction over Vela's forcible detainer cause of action because of the pending title dispute in district court. As stated previously, the county court is deprived of jurisdiction if resolution of a title dispute is a prerequisite to the determination of the right to immediate possession. See Rice, 51 S.W.3d at 709.
  
  In contrast, Vela asserts that the leasehold relationship between the parties provided an independent basis for the trial court to determine the right to immediate possession without resolution of the title issues.
  
  While we agree with Vela that a leasehold relationship typically establishes an independent basis for the county court to determine possession without the prerequisite resolution of a title dispute, we disagree with Vela's assertion that the resolution of this case is controlled by that doctrine. The facts and argument presented here render this proceeding distinguishable from those cases concluding that a landlord-tenant relationship provides an independent basis to determine possession. Specifically, the alleged landlord-tenant relationship between Vela and Pyle does not provide an independent basis for determination of possession because Gallegos contends that the transaction itself was void. According to Gallegos, Pyle's transfer of the property in exchange for a loan to Vela, with a right to buy back the real property on repayment, is prohibited by the Texas Constitution and the pretended sale of the homestead was void. See TEX. CONST. art. XVI, § 50(c); Johnson v. Cherry, 726 S.W.2d 4, 6 (Tex. 1987).
  
  Agreements executed at the same time, for the same purpose, and in the course of the same transaction are to be construed together. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004) (orig. proceeding); Jim Walter Homes, Inc. v. Schuenemann, 668 S.W.2d 324, 327 (Tex.1984) (citing Jones v. Kelley, 614 S.W.2d 95 (Tex. 1981)); Nevels v. Harris, 102 S.W.2d 1046, 1048 (Tex. 1937) (stating that a deed of trust and notes for principal and interest should be treated as one contract because the borrowers executed the documents at the same time and for the same purpose of obtaining a loan secured by the real property); Nat'l City Bank of Indiana v. Ortiz, 401 S.W.3d 867, 884 (Tex. App.-Houston [14th Dist.] 2013, no pet.).
  
  In this case, the real estate note agreement, the warranty deed, and the lease were all allegedly executed on August 19, 1999. The real estate note agreement, which underlies the transfer of title and Vela's right to "foreclose" on the property, included provisions allegedly establishing the lease between Vela and Pyle. The lease at issue in this case contains provisions that clearly implicate the transfer of title. Under the lease, Pyle retained the option to "buy back the house," Vela had the right to declare the lease forfeited and to repossess the premises if Pyle defaulted in his obligations, Vela would have "clear title" to the property, the "sole purpose for [Vela] to hold the deed of said property is to borrow the said monies," and "upon final payment on bank note the house will be return[ed] to the lessee."
  
  In short, there is no leasehold that is independent of the claimed right to title that would buttress Vela's claim of superior possession rights in the property. As part of the same transaction, the lease would also be necessarily void under Gallegos's claims. Vela's claims for possession cannot be separated into claims based on his alleged disparate positions as both lessor and owner of the property.
  
  Thus, we agree with Gallegos that the right to immediate possession of the property necessarily required a resolution of the title dispute. Accordingly, the forcible detainer suit and the title suit could not proceed concomitantly. See, e.g., Dass, Inc., 206 S.W.3d at 200-01; Rice, 51 S.W.3d at 709; see also Chinyere, 2012 WL 2923189, at **4-6. Because the right to immediate possession of the property necessarily required resolution of the title dispute, the county court had no jurisdiction to enter a judgment regarding the right to possession. See Rice, 51 S.W.3d at 709. The trial court's order of September 19, 2013, denying Gallegos's plea and granting a writ of possession in favor of Vela, was void. See id. We sustain Gallegos's first issue. Having sustained her first issue, we need not address her second issue regarding the deficiency of the notice of the hearing on possession. See TEX. R. APP. P. 47.4.
  
  V. CONCLUSION
  
  The Court, having examined and fully considered the petition for writ of mandamus, the response, the reply, and the applicable law, is of the opinion that Gallegos has met her burden to obtain mandamus relief. Accordingly, the stay previously imposed by this Court is lifted. See TEX. R. APP. P. 52.10(b) ("Unless vacated or modified, an order granting temporary relief is effective until the case is finally decided."). We conditionally grant Gallegos's petition for writ of mandamus. We are confident that the trial court will withdraw its order. The writ will issue only if the trial court fails to comply with this opinion.

For the ruling, see In re: Gallegos, No. 13-13-00504-CV (Tex. App. 13th Dist., Corpus Christi, Edinburg, 2013). abcd

Procedural Issues Involved In Undoing Sale Leasebacks When Homeowner Files Bankruptcy After State Court Orders Eviction: Comply Or Seek To Waive Section 362(l) Tenant Certification Requirement, Res Judicata, Rooker-Feldman Doctrine

A 2007 court case decided by a U.S. Bankruptcy Court in Florida (In re Weinraub, 361 B.R. 586 (Bankr. S.D. Fla. 2007) illustrates some of the procedural hurdles that may face an attorney representing a homeowner in attempting to unwind/undo a predatory sale leaseback transaction.

In this case, the homeowner's bankruptcy attorney was retained very late in the game - the foreclosure rescue operator had already sued in state court and obtained a default final judgment of possession and a writ of eviction against the homeowner. The actual eviction, however, had yet to take place.

A summary of what next ensued to successfully prevent the eviction of the homeowners (the "Weinraubs") before it could litigate the merits of undoing the allegedly predatory actions taken by the foreclosure rescue operator ("Winston") follows:

1. A Chapter 13 bankruptcy petition was filed on behalf of the Weinraubs, which immediately slammed the brakes on the eviction proceeding.
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2. Also filed with the Chapter 13 petition was an adversary complaint (go here for the Adversary Complaint (in re Weinraub)), in which the Weinraubs challenged the validity of the ownership interest asserted by Winston in their home. According to the court:
   
   
   The basis for this claim is that Winston disguised a consumer credit transaction within a plethora of documents, which has been termed by Winston a "sale and lease back" agreement. The Weinraubs assert in their adversary complaint that the transaction really was a consumer credit transaction involving a loan of money and a security interest in their home. They further claim that such a transaction falls within the scope of the Truth In Lending Act, 15 U.S.C. § 1601 et seq. (hereafter "TILA"). The Weinraubs claim the transaction between them and Winston was part of a predatory lending scheme, to which they fell' victim. They further assert that this scheme would provide an unreasonably large and possibly usurious return to Winston. As such, the Weinraubs seek to exercise a right of rescission under TILA, among other remedies, arising under Title 15 of the United States Code and applicable Florida usury laws.
   .
3. However, when filing their Ch. 13 petition, the Weinraubs failed to file a certification required (under Section 362(l) of the Federal Bankruptcy Code) of a debtor who is a tenant in a residential property. In lieu thereof, they requested emergency relief by filing a Motion to Waive Requirement of Section 362(l) and to Confirm the Automatic Stay is In Effect in an effort to immediately halt the eviction and allow them to litigate the merits of their claims (ie. recharacterization of the sale leaseback as a secured loan/equitable mortgage subject to the Federal Truth in Lending Act, and any associated usury claim).(1)
   .
4. Failing to file the required certification resulted (by operation of §362(b)(22)) in the immediate removal of the protection of the automatic stay, which consequently allowed for the continuation of the eviction action where the landlord has obtained a judgment for possession before filing of the bankruptcy petition.
   .
5. In response to the Weinraubs' motion, Winston asserted that, even if the court had the power to waive the tenant certification filing requirements, it should not do so, invoking both the doctrine of res judicata, and the Rooker-Feldman doctrine, essentially asserting that any Truth in Lending and usury claims should have been litigated in the earlier state court proceeding. His position was that, once the state court entered the default final judgment of possession and a writ of eviction against the homeowner, any claims the homeowners could have made were extinguished.

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Issues

1) Waiver of the tenant certification filing requirement under Section 362(l):

The court found that, in fact, it did have the power to waive this requirement and reimpose the automatic stay, It articulated two independent bases for doing so, the explanations for which are a little too long and esoteric to reproduce here, Accordingly, the reader is referred to the text of the court's ruling for the court's reasoning in waiving the tenant certification filing requirements.

2) Application of res judicata to bar Truth in Lending Act ("TILA") claims:

The court found that res judicata was inapplicable because the TILA claims were not compulsory during the state court proceedings. In that regard, the court stated:

• The law is well settled that compulsory counterclaims, which are not raised in a prior proceeding are waived. See Montgomery Ward Dev. Corp. v. Juster, 932 F.2d 1378, 1380-81 (11th Cir.1991); See Yost v. American National Bank, 570 So. 2d 350, 352 (Fla.App.1990)(holding that under Florida law a failure to raise a compulsory counterclaim in the first lawsuit results in a waiver of that claim). Furthermore, in the Eleventh Circuit, when a federal court is determining the preclusive effect of a state court judgment it must look to the law of the state that issued the judgment for any preclusive effect. See Montgomery Ward Dev. Corp. v. Juster, 932 F.2d at 1380; Daniels v. Funding USA, Inc. (In re Daniels), 350 B.R. 619, 623 (Bankr.S.D.Fla., 2006). The Court notes that the Florida Rule of Civil Procedure 1.170(a) incorporates Rule 13(a) of the Federal Rules of Civil Procedure. See Montgomery Ward Dev. Corp. v. Juster, 932 F.2d at 1380.
  
  The crux of the issue thus becomes whether the TILA claims that the Debtors now seek to assert were compulsory counterclaims to the eviction proceedings that have been reduced to final judgment in state court. The Court holds that they were not.
  
  Most recently, this exact issue, under very similar circumstances, was decided by Judge Isicoff, in Daniels v. Funding USA, Inc. See Daniels v. Funding USA, Inc. (In re Daniels), 350 B.R. 619, 623 (Bankr. S.D.Fla., 2006). Judge Isicoff determined that just because TILA authorizes a borrower to raise TILA claims in state court, it is not required that the borrower do so. See id. at 625-26. The court in Daniels followed the determination in In re Tomasevic that TILA rescission claims go "to the making of the loan, rather than a dispute as to the obligations under the loan as was the issue in the state court foreclosure action. Because the claims are not the same, res judicata does not bar this Truth in Lending claim." In re Tomasevic 275 B.R. 86, 101 (Bankr.M.D.Fla.2001). This conclusion has been reached in courts all around the country.
  
  Notably in Brady v. C.F. Schwartz Motor Co. Inc, the district court concluded that the sole connection between the TILA claim and the debt claim is the execution of the sale contract. Resolution of the debt claim, however, does not bear a logical relationship to the resolution of the Plaintiff's TILA claims because the validity or enforceability of the underlying sales contract does not affect Defendant's compliance or non-compliance with the TILA disclosure requirements. Brady v. C.F. S[c]hwartz Motor Co. Inc., 723 F.Supp. 1045, 1050 (D.Del. 1989); accord Walker v. Contimortgage (In re Walker), 232 B.R. 725, 734 (Bankr.N.D.Ill.1999).
  
  The above findings are also supported by Florida state court decisions. Although it does not appear that any state court has addressed this precise issue. One case that has come close is Whigum v. Heilig-Meyers Furniture Inc. In that case the court deemed actions on a debt to be permissive counterclaims to an action under Florida Consumer Collection Practices Act. See Whigum v. Helig-Meyers Furniture Inc. 682 Sold 643, 646 (Fla.Dist.Ct. App.1996). The court in reaching its conclusion noted that: (i) the Florida rule of Civil Procedure 1.170(a) was identical to Fed.R.Civ.P. 13(a); (ii) the policies in the federal consumer statutes are generally the same as those in the Florida statutes; (iii) the characteristics that determine whether a counterclaim is permissive or compulsory "dictate [the] conclusion that the proposed counterclaim is permissive." See id. at 646-47 (citing as support cases that held "that an action on a debt was not a compulsory counterclaim to an action under the Federal. Truth in Lending Act."). Even though Whigum was not the identical procedural issue, it would stand that the similar result would be reached under Florida law for the issue of the nature of a TILA counterclaim with respect to a state court debt claim.
  
  Based on the above, the Court adopts the determination in Daniels and finds that Weinraubs TILA claims, were not compulsory counterclaims. Therefore, they are not barred by res judicata.

3) Application of the Rooker-Feldman doctrine to bar TILA claims:

The court found that Rooker-Feldman was also inapplicable to the Weinraubs' TILA claims, articulating three separate reasons for doing so. Again, the court's basis for arriving at its conclusion is a bit too long and esoteric to be set forth below (and again, the reader is referred to the text of the court's ruling for the court's full rationale), but in a nutshell:

1. The court cited persuasive precedent from the 9th Circuit Court of Appeals for the proposition that Rooker-Feldman does not apply where "the federal plaintiff does not complain of a legal injury caused by a state court judgment, but rather of a legal injury caused by an adverse party ..." [citations omitted].
   .
2. The Weinrebs' TILA claims were not inextricably intertwined with with the default state court eviction proceeding, thereby failing to meet Rooker-Feldman's "inextricably intertwined" test.
   .
3. The court found that Rooker-Feldman was inapplicable to bankruptcy courts, again citing 9th Circuit precedent, stating:
   
   
   The Ninth Circuit has found "two particularly notable statutory exceptions" to Rooker-Feldman, "First a federal district court has original jurisdiction to entertain petitions for habeus corpus . . . Second, a federal bankruptcy court has original jurisdiction under which it is empowered to avoid state judgments, to modify them, and to discharge them." Noel v. Hall, 341 F.3d 1148, 1155 (9th Cir.2002)(internal citations and quotation omitted); accord Gruntz v. County of Los Angeles (In re Gruntz), 202 P.3d 1074, 1079 (9th Cir.2000)(conducting an extensive analysis of the reasons why bankruptcy proceedings are exempt from Rooker-Feldman).

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.
For the court ruling, see In re Weinraub, 361 B.R. 586 (Bankr. S.D. Fla. 2007).

Go here for the Adversary Complaint (in re Weinraub) and here for the Motion to Waive Requirement of Section 362(l) and to Confirm the Automatic Stay is In Effect.

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Miscellaneous Side Notes

• This case should serve as a reminder of the importance of seeking out competent counsel long before the foreclosure rescue operator goes to court and gets an eviction judgment. It's tough enough to undo these predatory transactions without also having to neutralize the effect of such a judgment.
  .
• Ultimately, the court never addressed the merits of this case; the parties appear to have reached a mediated settlement, according to the docket report in the adversary proceeding. A review of the documents included with the Motion to Waive Section 362(l) reveals that the sale leaseback transaction was consummated in July, 2005, when the real estate market was at its peak. Presumably, there was quite a bit of equity in the property at that time. This bankruptcy case commenced in September, 2006, and the litigation went into 2007, at which point the real estate market had already stalled and had begun to tank. Presumably, by this time, the equity in the home existing at the time the transaction had been consummated had pretty much evaporated, thereby making a mediated settlement the easiest and most expedient way for the parties to settle their differences.
  .
• The court ruling is silent as to whether the Florida state court proceeding was conducted in a court of general jurisdiction (ie. circuit court), or a court of limited jurisdiction (ie. county court), where residential tenant evictions are commonly litigated. If the eviction proceeding was brought in a court of limited jurisdiction, said court would not have had jurisdiction to hear cases where title to property is an issue (ie. recharacterizing a sale leaseback as an equitable mortgage and thereby establishing the homeowner victimized by the predatory deal as the true owner of the property (and the foreclosure rescue operator as a mere mortgagee), as well as TILA and usury claims. See, for example, Hewitt v. State, 101 Fla. 807; 135 So. 130 (Fla. 1931):.
  
  .
  When, in proceedings in the county judge's court to recover possession of land as from a tenant, a pleading is filed which puts in issue the title or boundaries of the land in controversy, it becomes the duty of the county judge to dismiss the cause for want of jurisdiction. Barrs v. State, 91 Fla. 30, 107 So. 249; Welch v. State, 85 Fla. 264, 95 So. 751; State v. Philips, 64 Fla. 105, 59 So. 241; South Florida Amusement & Dev. Co. v. Blanton, 95 Fla. 885, 116 So. 869. Prohibition is the defendant's remedy where the county judge does not dismiss an action for unlawful possession of lands when a plea tenders an issue as to the title of the land. State ex rel. v. Hutchins, 135 So. 298, decided at this term.
  .
• A review of the sale leaseback transaction documents filed with the Motion to Waive Section 362(l) reveals that the eviction proceeding was, in fact, brought in a court of limited jurisdiction (ie. a Florida county court), which does not have jurisdiction to hear or decide cases when title to property is placed in issue. (In this case, the homeowner default in the case and, consequently, the county court judge presiding over the eviction action was unaware of the true nature of the foreclosure rescue transaction involved). Had had the Weinraubs asserted this fact in the bankruptcy proceeding, addressing the foreclosure rescue operator's res judicata and/or Rooker-Feldman claims would probably have been obviated.
  .
• Florida law is clear that when a sale leaseback is deemed to be an equitable mortgage, traditional landlord tenant rules don't apply. That doesn't mean, however, that a foreclosure rescue operator won't go into court seeking an eviction, anyway (vs. foreclosing), counting on the financially distressed homeowner to fail to respond to the eviction complaint (as was done in this case). It's up to the homeowner to show up in court and assert the appropriate defenses, claiming the deal was an equitable mortgage, usurious loan, and/or allege TILA violations. Since the homeowners didn't show up in court to defend against the eviction, the foreclosure rescue operator initially got away with obtaining an eviction judgment in state court.  See Florida Law Governing Landlord-Tenant Evictions, Ejectments Not Applicable Where Title Is An Issue In Connection With Sale Leaseback Foreclosure Rescues, Similar Scams; Evidentiary Hearing To Determine True Owner Required Before Compelling Payment Of Past Due Rent Into Court Registry & Awarding Possession; Foreclosure Proceeding Required To Oust Occupant.
  .
• Note that paragraph 6 of Florida Statute Sec. 501.1377 now creates a rebuttable presumption that any foreclosure rescue transaction (a term of art that is specifically defined in the statute) involving a lease option or other repurchase agreement is an equitable mortgage under section 697.01, Florida Statutes. This law (passed subsequent to the ruling in this case) is part of the The Foreclosure Rescue Fraud Prevention Act of 2008, passed by the Florida legislature in response to the need to protect homeowners at risk of losing their homes to foreclosure or for non-payment of taxes, and who may be vulnerable to fraud, deception, and unfair dealings with foreclosure-rescue consultants or equity purchasers. See also, Florida Foreclosure Rescue Conveyances With Buyback Right To Be Treated As Equitable Mortgages Unless Established Otherwise.

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Footnote

(1) Section 11 U.S.C. § 362(l) requires a debtor who is a tenant in a residential property to file a certification with the bankruptcy petition that:

• (A) under nonbankruptcy law applicable in the jurisdiction, there are circumstances under which the debtor would be permitted to cure the entire monetary default that gave rise to the judgment for possession, after that judgment for possession was entered; and
  
  (B) the debtor has deposited with the clerk of the court, any rent that would become due during the 30-day period after the filing of the bankruptcy petition.

In footnote (4) of the court's ruling, the court offered this observation that the homeowner could have filed the required residential tenant certification, asserting in the certification that the sale leaseback transaction was a disguised consumer credit transaction:

• A possible alternative, other debtors may pursue when they may have a valid TILA claim, is to certify under § 362(l). Their certification would state that "the nonbankruptcy law applicable" in the jurisdiction would be TILA and the cure of the default would be rescission. If the transaction was rescinded, the entire default that gave rise to the judgment for possession would be cured.

Along these same lines, and in cases where the TILA does not apply to a sale leaseback transaction (ie. a non-homeowner occupied or other commercial real estate transaction), I suppose other alternatives would be to state that "the nonbankruptcy law applicable" is the state law on equitable mortgage (Sec. 697.01, Florida Statutes, and the case law thereunder), or the state law on criminally usurious loans (Sec. 687.071, Florida Statutes). Note that the homeowners in this case, in their Adversary Complaint and their Motion to Waive Section 362(l), make reference to both equitable mortgage/F.S. 697.01 and usury in the context of the Truth in Lending Act.

If the transaction is deemed to be an equitable mortgage, the cure would arguably be the recharacterization of "rent" as a loan payment assocciated with the equitable mortgage, and that the sole remedy for obtaining possession upon default would be for the foreclosure rescue operator, as a recharacterized equitable mortgagee, to initiate a foreclosure action, in the same way any other mortgagee would be required to.

If the transaction is found to be a criminally usurious loan, the cure would be that the entire principal and all payments due thereunder on the now-recharacterized criminally usurious loan would be rendered unenforceable pursuant to Sec. 687.071(7), Florida Statutes. abcd