Justice Jon West

The Corpus Christi Court of Appeals has reversed a Hidalgo County court’s decision granting a party possession and ownership of commercial property and dismissed the case, holding that the lack of a landlord-tenant relationship deprived the court of subject matter jurisdiction.

Aracely Enterprises, LLC v. Sesatty Enterprises, LLC (No.13-24-00058-CV; July 31, 2025) arose from an ownership dispute over Lisseth Sesatty’s commercial plaza in McAllen, Texas. Under the “Real Estate Sale Agreement” the parties executed in October 2022, Sesatty agreed to sell the plaza to Aracely Gonzalez, an existing tenant, for a sum of $1,100,000, paid at a rate of $11,252.88 a month. Following the Agreement’s execution, Sesatty introduced Gonzalez to other tenants as the new owner of the plaza and instructed them to remit all rent payments accordingly. Gonzalez further spent $80,000 on repairs and remodeling, as well as the property’s insurance and taxes. However, Gonzalez claimed the sale could not be finalized because Sesatty lacked a clean title to the property. Sesatty confirmed the allegation but asserted that Gonzalez was equally unable to close as she failed to pay the $125,000 downpayment at closing. Sesatty then offered to refund Gonzalez’s earnest money deposit, but Gonzalez declined and instead agreed to pay Sesatty $11,800 a month in rent.

The payments varied between $11,200 to $12,000 per month until Gonzalez ceased making them because Sesatty never cleared up the title problem. In response, Sesatty sent an eviction notice and instructed tenants to remit rent back to her. Thereafter, Sesatty initiated a forcible detainer proceeding in justice court seeking possession of the property and $20,000 in back rent. The court granted possession and awarded $11,200 in damages. Gonzalez appealed to county court, which affirmed the justice court’s decision. It also denied Gonzalez’s ensuing plea to the jurisdiction, prompting this appeal.

In an opinion by Justice West, the court of appeals reversed and rendered judgment on behalf of Gonzalez. Gonzalez argued that the county court erroneously granted Sesatty possession of the property because the dispute involved issues of title that were beyond the justice court’s subject matter jurisdiction. The court agreed, finding that absent evidence of a landlord-tenant relationship between the parties, the justice court didn’t have jurisdiction over Sesatty’s forcible detainer action. That meant in turn that the county court didn’t have jurisdiction, either. The court first established that there was no lease agreement and that other agreements between the parties did not create a landlord-tenant relationship. Moreover, neither party’s actions suggested a landlord-tenant relationship. If anything, they created a seller-buyer relationship. Indeed, the existence of the Sales Agreement and Gonzalez’s payment of the the earnest money deposit, acceptance of rent payments directly from tenants, payment of insurance and property taxes, renovating the property, and paying Sesatty more than $11,000 a month—an amount close to that stipulated in the Sales Agreement—all pointed to a sale of the property.

Not only did the county court fail to establish the existence of a landlord-tenant relationship, it also improperly evaluated title matters, despite acknowledging that it had no jurisdiction to decide such matters. The county court rationalized granting possession to Sesatty because only their warranty deed was on file, but the court of appeals rejected that reasoning outright. In a previous case, the court “held … that the justice court lacked jurisdiction to grant possession based upon a warranty deed favoring plaintiff where there was evidence that defendant had an equitable title claim, specifically an oral contract for deed, because such involved deciding the issue of title” (citation omitted). The court went on to say that “a deed on its face provides no assurance that its grantee is the actual current title holder because (i) title may transfer outside written conveyances, and (ii) conveyances need not be recorded to be effective as our real property system merely serves as a vehicle for providing notice to third parties” (citations omitted). The justice court thus erred by favoring the deed over Gonzalez’s equitable title interest, thereby exceeding its jurisdiction.

Sesatty countered, arguing that Gomez v. Esquivel, another eviction suit between parties formerly engaged in a failed real estate sales contract, supported jurisdiction. The court disagreed. In that case (1) the parties switched to a renewed lease agreement after the defendant failed to meet the sales contract’s purchase price upon closing, and (2) the plaintiff only initiated the eviction proceeding when the defendant began defaulting on the rental payments owed under the renewed lease agreement. Unlike this case, the issues of immediate possession and title in Gomez were completely independent. Since no landlord-tenant relationship existed in this case to separate the issue of title from that of possession, the court concluded that the county court exceeded its jurisdiction in granting Sesatty both possession and ownership.

TCJL Research Intern Shaan Rao Singh researched and prepared this article.

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