Wells Fargo Bank, N.A. v. Murphy

Respondents obtained a home-equity loan from Wells Fargo Bank. After Respondents stopped making loan payments, Wells Fargo filed an application in the district court for an expedited court order authorizing foreclosure. Respondents filed a separate and original declaratory judgment action that invoked the automatic stay and dismissal provisions of Tex. R. Civ. P. 736.11. Wells Fargo filed an amended answer asserting a counterclaim for declaratory judgment and requesting attorney’s fees pursuant to the Uniform Declaratory Judgments Act. The trial court granted Wells Fargo’s motion for summary judgment and awarded attorney’s fees, concluding that Respondents had defaulted on their home-equity loan. The court of appeals affirmed the trial court’s summary judgment but reversed the attorney’s fee award, concluding that neither party had pleaded a cognizable claim for declaratory relief, and the non-recourse status of the home-equity loan prohibited a personal judgment for attorney’s fees against Respondents. The Supreme Court reversed in part, holding (1) because Respondents 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; and (2) neither the parties’ loan agreement nor the Texas Constitution prohibited a personal judgment against Respondents for attorney’s fees. View "Wells Fargo Bank, N.A. v. Murphy" on Justia Law