First-Citizens Bank & Trust Company v. Dr. Richard Francis, Dr. Yueh Lee, and Dr. Sherman Nagler ( 2022 )

Affirmed in Part, Reversed in Part, and Remanded, and Memorandum
Opinion filed March 3, 2022.
In The
Fourteenth Court of Appeals
NO. 14-20-00179-CV
FIRST-CITIZENS BANK & TRUST COMPANY, Appellant
V.
DR. RICHARD FRANCIS, DR. YUEH LEE, AND DR. SHERMAN
NAGLER, Appellees
and
DR. RICHARD FRANCIS, Appellant
V.
FIRST-CITIZENS BANK & TRUST COMPANY, Appellee
On Appeal from the 151st District Court
Harris County, Texas
Trial Court Cause No. 2017-62467
MEMORANDUM OPINION
Appellant First-Citizens Bank & Trust Company (First-Citizens) appeals a
final judgment in its favor on its claims under a lease guaranty signed by appellees
Dr. Richard Francis, Dr. Yueh Lee, and Dr. Sherman Nagler (doctors). After a
bench trial, the trial court awarded First-Citizens $20,809.44 on its claims against
the doctors, along with attorney’s fees. In four issues, First-Citizens argues the trial
court reversibly erred by: denying its summary-judgment motion and rendering
partial summary judgment that First-Citizens take nothing on a portion of its
lease-guaranty claim (issue 1); rendering judgment following a bench trial
awarding First-Citizens an amount less than the total amount First-Citizens sought
by its lease-guaranty claim (issues 2 and 3); and rendering a take-nothing judgment
on First-Citizens’s claim to enforce a separate credit-card guaranty (issue 4).
Francis brings a separate appeal arguing the trial court reversibly erred by
awarding any recovery to appellee First-Citizens under the lease guaranty. We
reverse the trial court’s judgment as to the lease guaranty, affirm the judgment as
to the credit guaranty, and remand the case for further proceedings.
I. BACKGROUND
First-Citizens signed a master lease agreement (lease) with Excellence
Medical Group, LLC (EMG). Under the terms of the agreement, First-Citizens
agreed to lease equipment to EMG.1 The lease contemplated that other documents,
including equipment schedules, would be incorporated into the terms of the lease.
Francis, Lee, and Nagler each signed an unconditional guaranty concerning
the lease (lease guaranty), which provided in part that:
To induce [First-Citizens] to enter into the Lease, each Guarantor
unconditionally guarantees to [First-Citizens], jointly and severally,
1
The trial court’s findings of fact describe the agreement as “involving the lease of
medical equipment.”
2
the due and punctual payment of all liabilities and obligations of
[EMG] under the Lease as, when, and however the same shall become
due.
....
The provisions of the Lease including any amendments,
modifications, extensions, and renewals thereof are hereby consented
to by Guarantor without the necessity of giving Guarantor notice
thereof and incorporated into this Guaranty by reference and made a
part of this Guaranty as if fully set out herein, and Guarantors are and
shall be bound by all of the provisions thereof, including the
agreements, waivers, and obligations set forth therein.
First-Citizens and a representative of EMG later signed two documents on
the same day: (1) an equipment schedule (schedule) showing EMG owed 84
monthly rent payments of $15,793.27, of which $31,586.54 had been paid in
advance, and (2) a Texas lease addendum (addendum) that, among other things,
specified an interest rate of 3.25% “[i]f this Lease and the transactions
contemplated hereunder are intended to be a loan . . . or a court or other tribunal of
competent jurisdiction has declared that this Lease is a loan rather than a lease[.]”
Both the schedule and the addendum reference the lease by document number and
further reference the terms of the lease, with the schedule stating it incorporates the
terms of the lease and the addendum stating it is cumulative of the terms of the
lease.
First-Citizens sued Francis, Lee, and Nagler, alleging EMG had defaulted on
payments due under the lease and related documents and the doctors were liable
for the default under the lease guaranty. First-Citizens also sought to hold the
doctors liable on a credit-card guaranty they signed (credit guaranty) covering “all
obligations of [EMG] arising from the credit card account(s) with [First-Citizens].”
First-Citizens moved for summary judgment on the lease and credit
guaranties. Francis moved for partial summary judgment on the lease guaranty,
3
arguing that no liability was incurred under that guaranty. After the
summary-judgment deadline passed, Lee and Nagler filed a motion to join
Francis’s partial summary-judgment motion, in which they also argued the lease
guaranty did not cover funds distributed to third party Genex Laboratories, LLC,
which the trial court’s findings describe as a separate entity from EMG. The trial
court denied First-Citizens’s summary-judgment motion and rendered partial
summary judgment that First-Citizens take nothing as to “any amounts disbursed to
Genex or for any interest thereon.”
After a bench trial, the trial court signed a final judgment awarding
First-Citizens $20,809.44 and $165,000 in attorney’s fees, specifying additional
fees in the event of unsuccessful appeals by the doctors. According to the trial
court’s findings of fact and conclusions of law, the damages were based on
First-Citizens’s lease-guaranty claim; the trial court determined First-Citizens was
not entitled to recovery on its credit-guaranty claim.
II. ANALYSIS
A. Choice of law
We first address choice of law. In conclusion of law 2, the trial court
concluded North Carolina law applies to this dispute, as specified in the lease, the
lease guaranty, and the addendum. The parties do not contest this conclusion, and
accordingly we apply the substantive law of North Carolina to this appeal.2 As to
2
First-Citizens asserts no conflict exists between North Carolina and Texas law on the
issues raised in this appeal and resolution of the choice-of-law question is unnecessary. The trial
court, however, did resolve this issue, and concluded North Carolina law applies. Cf. Tex. R.
Evid. 202(b)(1) (court may take judicial notice of another state’s law “on its own”); Pittsburgh
Corning Corp. v. Walters, 1 S.W.3d 759, 769 (Tex. App.—Corpus Christi 1999, pet. denied)
(“The court may undertake a choice of law analysis sua sponte[.]”). Because First-Citizens does
not challenge the trial court’s conclusion that North Carolina law applies, we will not disturb that
conclusion. See Tex. R. App. P. 33.1(a).
4
procedural matters, we apply the law of Texas. See In re Mahindra, USA Inc., 549
S.W.3d 541, 547 (Tex. 2018) (orig. proceeding) (“Choice-of-law principles may
dictate that the substantive law of another jurisdiction should apply, but it does not
govern matters of procedure in the forum state.”).
B. Summary-judgment orders
In issue 1, First-Citizens argues the trial court reversibly erred by granting
partial summary judgment in the doctors’ favor and denying First-Citizens’s
summary-judgment motion.
1. Partial summary judgment in the doctors’ favor
First-Citizens argues the trial court reversibly erred by rendering partial
summary judgment that First-Citizens take nothing by its lease-guaranty claim as
to “any amounts disbursed to Genex or for any interest thereon.” We may review
this interlocutory order, which merged with the trial court’s final judgment. See
Webb v. Jorns, 488 S.W.2d 407, 408–09 (Tex. 1972) (holding interlocutory
judgment merged into final judgment, which was then appealable).
The trial court’s partial summary judgment references two motions:
(1) Francis’s summary-judgment motion and (2) Lee and Nagler’s motion to join
Francis’s motion. In his summary-judgment motion, Francis argued
First-Citizens’s lease-guaranty claim was wholly meritless because “the undisputed
evidence establishes that the agreement under which Plaintiff operated was not the
Original Equipment Lease guaranteed by Dr. Francis, but rather was a separate,
new transaction.” After the summary-judgment deadline, Lee and Nagler filed a
motion to join Francis’s summary-judgment motion which also presented a new
argument: First-Citizens “disbursed the majority of funds” to Genex, and the
doctors’ guaranty, which referenced only EMG, did not cover funds disbursed to
5
Genex.
In its partial summary judgment, the trial court “ORDERED that Dr. Richard
Francis’s Cross-Motion for Summary Judgment and Dr. Yueh Lee and Dr.
Sherman Nagler’s Joinder are GRANTED IN PART, and that Francis, Lee and
Nagler are not liable for any amounts disbursed to Genex or for any interest
thereon.” This language indicates the trial court rendered partial summary
judgment on a ground raised in Lee and Nagler’s joinder motion, which discussed
funds disbursed to Genex, and not Francis’s summary-judgment motion, which did
not raise that ground.
This is a meaningful distinction in summary-judgment practice. In
McConnell v. Southside Independent School District, the supreme court held that
grounds raised not in a summary-judgment motion but in a contemporaneously
filed brief in support of the motion may not serve as a basis for summary judgment
under the plain language of Rule 166a(c). 858 S.W.2d 337, 340–41 (Tex. 1993)
(discussing Tex. R. Civ. P. 166a(c)). The court explained the “rigorous”
requirements of the rule:
If this court intended Rule 166a(c) to permit a summary judgment
movant to place, or possibly hide, grounds for summary judgment in a
brief filed in support of the motion or in accompanying summary
judgment evidence, the Rule could have easily provided: “The motion
for summary judgment or the brief in support thereof or the summary
judgment evidence shall state the specific grounds therefor.” Rule
166a(c), however, does not so provide. “[W]e are not free to disregard
. . . [the rule’s] plain language. Nor should we revise the rule by
opinion.” Alvarado v. Farah Mfg. Co., Inc., 830 S.W.2d 911, 915
(Tex. 1992). Although Rule 166a(c) is an admittedly rigorous rule, it
must be applied as written.
Id. (footnote omitted). In short, “a motion for summary judgment must itself
expressly present the grounds upon which it is made. A motion must stand or fall
6
on the grounds expressly presented in the motion. In determining whether grounds
are expressly presented, reliance may not be placed on briefs or summary judgment
evidence.” Id. at 341.
Francis’s summary-judgment motion argued the lease guaranty did not cover
any funds disbursed by First-Citizens at all, because any such funds were disbursed
under a “new and separate transaction.” It did not draw any distinction between
funds distributed to Genex as opposed to EMG, or argue that such funds should be
categorized differently or considered separately. We hold the ground on which the
trial court rendered summary judgment—that funds disbursed to Genex, unlike
other disbursements, were not covered by language of the lease guaranty, which
mentioned only EMG—was not “expressly presented” in Francis’s
summary-judgment motion, and accordingly reverse the trial court’s partial
summary judgment. See McConnell, 858 S.W.2d at 341.
We sustain issue 1 as to the trial court’s partial summary judgment rendering
a partial take-nothing judgment on First-Citizens’s lease-guaranty claim.
2. First-Citizens’s summary-judgment motion
First-Citizens also argues the trial court reversibly erred by denying its
summary-judgment motion. According to the supreme court, however, “a party
may not, after trial and an unfavorable judgment, prevail on a complaint that the
party’s motion for summary judgment should have been granted.” Hernandez v.
Ebrom, 289 S.W.3d 316, 321 (Tex. 2009); see Ackermann v. Vordenbaum, 403
S.W.2d 362, 365 (Tex. 1966) (stating “general rule” that order denying
summary-judgment motion is “interlocutory in nature and hence not appealable”).
First-Citizens argues an exception to the general rule applies here. We
disagree. First-Citizens argues an exception that occurs when both parties move for
7
summary judgment and the trial court grants one motion but denies the other, in
which case the appellate court determines the questions presented and, if there is
reversible error, renders the judgment the trial court should have rendered. Tobin v.
Garcia, 316 S.W.2d 396, 400–01 (Tex. 1958); see Frankoff v. Norman, 448
S.W.3d 75, 87 (Tex. App.—Houston [14th Dist.] 2014, no pet.). “For this
exception to apply, both parties must have sought a final judgment in their
cross-motions for summary judgment.” Frankoff, 448 S.W.3d at 87 (emphasis
added).
Here, First-Citizens moved for summary judgment “in whole or in part,”
asserting it was entitled to summary judgment on both the lease guaranty and the
credit-card guaranty. Francis, the only doctor to move for summary judgment,
moved only for partial summary judgment on the lease guaranty; his motion does
not address the separate credit-card guaranty. Because both sides did not seek a
final judgment in their cross-motions, the Tobin exception does not apply.
First-Citizens also cites this court’s decision in Frontier Logistics, L.P. v.
National Property Holdings, L.P., in which we determined an appellate court may
review the denial of a summary-judgment motion when the moving parties seek
summary judgment on the same issue, and the trial court grants one motion as to
that issue and denies another; in such cases, the court of appeals may review a
cross-motion that does not address all claims. 417 S.W.3d 656, 664 (Tex. App.—
Houston [14th Dist.] 2013, pet. denied) (discussing and applying FDIC v. Lenk,
361 S.W.3d 602, 611–12 (Tex. 2012)). As explained above, however, in this case
the trial court rendered partial summary judgment on a ground that was not
expressly presented in Francis’s summary-judgment motion; this ground likewise
was not presented in First-Citizens’s motion.
Ultimately, we follow the supreme court’s guidance in Ackermann, in which
8
that court explained why exceptions to the rule that the denial of a
summary-judgment motion may not be reviewed after a conventional trial on the
merits must be narrow:
Motions for summary judgment do not always disclose all the
pertinent facts relating to a case and the same may be said as to
answers and defenses to such motions. Generally, the facts are more
fully developed upon a conventional trial than they are by the
affidavits and depositions relied upon to support or defeat a motion
for summary judgment. It would seem incongruous for a court, upon
finding that a judgment following a full and complete conventional
trial should be reversed because of the admission of improper
evidence, to then review the action of a trial court in overruling a
summary judgment, particularly if it appears from the evidence
adduced upon the conventional trial that there were genuine issues of
fact in the case even though the summary judgment record might not
reflect this situation because of an incomplete development of the
facts.
Ackermann, 403 S.W.2d at 365. On the facts of this case, no exception applies that
would allow us to review the trial court’s denial of First-Citizens’s
summary-judgment motion.
We overrule issue 1 as to the denial of First-Citizens’s summary-judgment
motion.
C. Liability on the lease guaranty
In issue 2, First-Citizens argues the trial court erred by rendering judgment
following the bench trial awarding only $20,809.44 on its claims that the doctors
are liable under the lease guaranty,3 challenging numerous findings of fact and
conclusions of law supporting that portion of the judgment. We begin with
conclusions of law we hold are dispositive of this issue.
3
We note nothing in the record indicates First-Citizens approved the trial court’s
judgment as to form or content, which may bar review of a judgment in certain circumstances.
9
In its conclusions of law, the trial court determined the doctors’ lease
guaranty did not result in any liability under the lease because (1) a novation, i.e., a
substitution of a new agreement extinguishing the lease, occurred, and (2) even if
there was no novation, the liability claimed by First-Citizens arose under “an
entirely different and separate agreement” outside of the scope of the doctors’
guaranty. We hold the trial court reversibly erred.4
1. Novation
Under North Carolina law, a novation is the substitution of a new contract
for an old one which is thereby extinguished. Intersal, Inc. v. Hamilton, 834 S.E.2d
404, 412 (N.C. 2019). The essential elements of a novation are (1) a previous valid
obligation, (2) the agreement of all the parties to the new contract, (3) the
extinguishment of the old contract, and (4) the validity of the new contract. Id.(citing Tomberlin v. Long, 109 S.E.2d 365, 367–68 (N.C. 1959)). “If the parties do
not say whether a new contract is being made, the courts will look to the words of
the contracts, and the surrounding circumstances, if the words do not make it clear,
to determine whether the second contract supersedes the first.” Whittaker Gen.
Med. Corp. v. Daniel, 379 S.E.2d 824, 827 (N.C. 1989). “The intention of the
parties to effectuate a novation must be clear and definite, for novation is never to
be presumed.” Kirby Bldg. Sys. v. McNiel, 393 S.E.2d 827, 832 (N.C. 1990).
In its conclusions of law, the trial court stated the addendum and schedule
met the criteria for a novation, thereby extinguishing liability under the lease
agreement. The lease addendum, however, states it does not extinguish the lease
agreement. In its first paragraph, the lease addendum states:
4
The doctors do not argue there was a novation; instead, they state it is “immaterial,” and
focus on the trial court’s conclusion that any liability arose under a different and separate
agreement.
10
Except as expressly modified herein, all terms and conditions of the
Lease remain in full force and effect. The matters set forth in this
Texas Lease Addendum (“Addendum”) are deemed to be part of the
Lease and are cumulative of the rights and obligations of parties set
forth in the Lease. In the event of a conflict between the terms and
provisions of this Addendum and the terms and provisions of the
Lease, it is the intent and agreement of Lessor and Lessee that the
conflict shall be resolved in a manner that is the most beneficial to
Lessor.
Instead of a clear and definite intention to effectuate a novation, the
language of the addendum plainly indicates the addendum does not extinguish the
lease. Accordingly, the addendum cannot serve as the basis of a novation. See
Intersal, 834 S.E.2d at 412 (listing among elements of novation “the
extinguishment of the old contract”); see also Walters v. Rogers, 151 S.E. 188, 189
(N.C. 1930) (second deed of trust was not novation when in second deed plaintiff
“expressly reserved all his rights” as to first deed).
Likewise, the plain language of the lease and the schedule indicate the
schedule is not a novation. The lease contemplates the schedule is to be
incorporated into the lease, and the terms of the lease may be modified by the
schedule:
1. Master Lease. You unconditionally and irrevocably rent and lease
from us (together with our successors and assigns) the equipment or
motor vehicle or other personal property (together with all current and
future accessories, additions, attachments, repairs, replacements, and
substitutions, the “Equipment”) described in each Equipment
Schedule (“Schedule”) or Progress Payment Agreement (“PPA”) now
or later signed by you and us referencing this Master Lease
Agreement (“Lease”). The Equipment is or will be purchased from the
supplier or vendor indicated in the Schedule or PPA. Each Schedule
and PPA, whether now or hereafter existing is incorporated into this
Lease by reference, and the terms of this Lease are incorporated into
each Schedule or PPA; however, each Schedule will be considered a
separate lease for purposes of assignment by us. In the event of any
11
conflict between this Lease and any Schedule, the terms of the
Schedule shall control.
The schedule does not contradict the language of the lease. Instead, the
schedule references the lease by document number and states, “THIS SCHEDULE
INCORPORATES THE TERMS OF THE ABOVE-REFERENCED MASTER
LEASE AGREEMENT AND THE ADDENDUM(S) ATTACHED HERETO.”
This language is incompatible with the trial court’s conclusion that the schedule
extinguished the lease. Cf. Intersal, 834 S.E.2d at 412.
Finally, the trial court states novation was “evidenced by [First-Citizens’s]
course of action” in addition to the addendum and the schedule. It appears the trial
court bases this conclusion on findings First-Citizens entered a “new and distinctly
different agreement” with a representative of EMG “pursuant to which Plaintiff
extended a line of credit to various parties” instead of purchasing and leasing
equipment to EMG as stated in the lease. Under North Carolina law, however, the
court looks to “surrounding circumstances” of a novation only if the words of the
contracts “do not make it clear” whether a novation has occurred. Whittaker, 379
S.E.2d at 827. As analyzed above, reading the addendum and the schedule in
conjunction with the lease, the unambiguous terms of these documents indicate
there was no intention the addendum and schedule extinguish the lease. Cf.
Intersal, 834 S.E.2d at 412.
We hold the trial court erred by determining there was a novation
extinguishing the lease.
2. Different and separate agreement
The trial court additionally concluded that, even if the “new agreement
evidenced by Plaintiff’s course of action and the Texas Lease Addendum and
Equipment Schedule . . . were not a novation, it is an entirely different and separate
12
agreement, and all funding provided by Plaintiff was advanced under that
agreement, not the Master Lease Agreement.” Under North Carolina law, a
guarantor who has contracted to guarantee a specific agreement is not liable under
a new agreement substituted without his consent. O’Grady v. First Union Nat’l
Bank, 250 S.E.2d 587, 598 (N.C. 1978). However, “[a]n exception to these rules
holds the guarantor responsible for any changes to which he has either expressly or
impliedly consented.” Devereux Properties, Inc. v. BBM & W, Inc., 442 S.E.2d
555, 556 (N.C. App. 1994).
Here, the relevant documents show no “new” agreement outside the scope of
the doctors’ guaranty. The unconditional guaranty signed by each doctor states:
The provisions of the Lease including any amendments,
modifications, extensions, and renewals thereof are hereby consented
to by Guarantor without the necessity of giving Guarantor notice
thereof and incorporated into this Guaranty by reference and made a
part of this Guaranty as fully set out herein, and Guarantors are and
shall be bound by all of the provisions thereof, including the
agreements, waivers, and obligations set forth therein.
The doctors guaranty covers not only the lease, but “any amendments,
modifications, extensions, and renewals thereof,” language which encompasses the
later addendum and schedule. See First Citizens Bank & Tr. Co. v. McLamb, 439
S.E.2d 166, 169 (N.C. App. 1993) (“Where the language of a contract of guaranty
. . . provides that the signatory has made him or herself liable for all renewals,
extensions and modifications and a renewal, extension or modification occurs, the
signatory is bound by the terms of the agreement and will not be discharged from
his or her liability.”). Accordingly, the doctors’ consent to modifications that may
have been made by the addendum and schedule shows such modifications do not
constitute a different or separate agreement to which they did not consent.
Further, as discussed above regarding novation, nothing in the language of
13
the lease, addendum, or schedule indicates those documents created a different or
separate agreement; rather, the documents confirm the ongoing viability of the
lease. To the extent the doctors contend inconsistencies among the documents
evidence a “different and separate agreement,” this argument is unpersuasive. Cf.
O’Grady, 250 S.E.2d at 598 (guarantor not liable for new agreement substituted
without his consent). The addendum and schedule, on which the trial court based
its conclusions, do not contain terms that are so different from the lease to
constitute a new agreement. As summarized above, the lease states First-Citizens
will lease equipment; the schedule states 84 rent payments are due and specifies
the amount; and the addendum states a certain interest rate will apply in the event
the lease is intended to be, or construed to be, a loan. By their unambiguous terms,
the addendum and schedule do not show the creation of a new agreement separate
from the lease.5
We hold the trial court erred as a matter of law in concluding the doctors had
no obligation to guarantee the lease due to the substitution of a “different and
separate” agreement for the lease.
3. Disposition
The trial court’s findings of fact are made through the lens of its conclusions
that the lease was superseded in some way, either by novation or by the
substitution of a different and separate agreement. We hold these conclusions to be
5
We further note that even were there an inconsistency in the documents, they contain
provisions for resolving inconsistencies. For example, the lease says the schedule shall govern
over the lease if their terms conflict, while the addendum states the parties intend that any
conflicts between the addendum and lease are to be construed in the manner most favorable to
First-Citizens. These terms further weigh against a conclusion that inconsistencies in the
documents created a different and separate agreement.
We also note that we do not consider the admissibility or significance, if any, of Progress
Payment Agreements or PPAs that First-Citizens offered into evidence, as the trial court did not
base its conclusions on those documents.
14
erroneous as a matter of law. We further note the trial court did not make findings
that would control under a correct theory of law, namely, that the lease had not
been superseded. When the trial court makes findings of fact and conclusions of
law under an erroneous interpretation of law and does not make findings that
would control the case under a correct legal interpretation, the proper remedy is to
reverse the judgment and remand the case for further proceedings.6 Jones v. Smith,
291 S.W.3d 549, 553–55 (Tex. App.—Houston [14th Dist.] 2009, no pet.); see
Advanced Pers. Care, LLC v. Churchill, 437 S.W.3d 41, 47–48 (Tex. App.—
Houston [14th Dist.] 2014, no pet.) (applying Jones and reversing and remanding
when trial court erred by treating agreements separately and not as one indivisible
contract).
We sustain issue 2.
D. Trial court’s award
In issue 3, First-Citizens argues the evidence is legally- and
factually-insufficient to support the trial court’s award of $20,809.44 to
First-Citizens on its claims under the lease guaranty. As we have already reversed
this portion of the judgment, we dismiss issue 3 as moot. Tex. R. App. P. 47.1.
E. Liability on the credit guaranty
In issue 4, First-Citizens challenges the trial court’s judgment that it takes
nothing on its credit-guaranty claim. This claim is based on a guaranty signed by
the doctors covering “all obligations of [EMG] arising from the credit card
6
While the doctors argue remand is waived because First-Citizens requested only
rendition, such a result would be warranted only if First-Citizens specifically requested that we
not remand, which is not the case here. See Stevens v. National Educ. Centers, Inc., 11 S.W.3d
185, 186 (Tex. 2000); Garza v. Cantu, 431 S.W.3d 96, 108–10 (Tex. App.—Houston [14th Dist.]
2013, pet. denied) (discussing Stevens and remanding for new trial even though appellant asked
only for rendition because appellant “did not adopt a ‘rendition-or-bust’ strategy”).
15
account(s) with [First-Citizens].” First-Citizens argues the guaranty, along with a
credit-card statement to EMG showing a balance of $32,718.82, entitles them to
payment of that balance from the doctors under the credit guaranty.
The credit guaranty, however, does not list the account number listed on the
statement or otherwise reference any specific account EMG had with
First-Citizens. First-Citizens argues this is immaterial under the terms of the
guaranty, which it argues is broad enough to cover an unspecified account,
provided the account was between EMG and First-Citizens. The guaranty,
however, covers “the credit card account(s)” that EMG had with First-Citizens.
This language is incompatible with First-Citizens’s argument, which essentially
asks us to hold the guaranty covers any credit-card accounts that EMG might have
had with First-Citizens, under which theory the doctors would be liable for any
amount listed on any credit-card statement issued to EMG. This is contrary to the
language of the guaranty, particularly given the rule under North Carolina law that
“the liability of a guarantor is not to be enlarged beyond the strict terms of the
contract.” O’Grady, 250 S.E.2d at 597 (citing Shoe Co. v. Peacock, 64 S.E. 437(N.C. 1909)).
First-Citizens further argues the trial court reversibly erred by excluding a
credit-card agreement relevant to EMG’s account. However, nothing in the offer of
proof on the credit-card agreement indicates the agreement between EMG and
First-Citizens would link the statement showing EMG’s balance to “the credit card
account(s)” described in the guaranty.
We overrule issue 4.
F. Francis’s appeal
In one issue, Francis argues the trial court’s award of $20,809.44 on the
16
lease-guaranty claim does not conform to the trial court’s findings of fact, and the
trial court should have rendered a take-nothing judgment on First-Citizens’s
lease-guaranty claim against Francis. Having already reversed this portion of the
judgment, we dismiss this portion of Francis’s issue as moot. Tex. R. App. P. 47.1.
Francis also challenges the trial court’s award of attorney’s fees. Here,
First-Citizens’s success on the lease-guaranty claim is the only basis on which the
trial court could have awarded attorney’s fees. Because we have reversed the trial
court’s judgment as to that claim, we likewise reverse the portion of the trial
court’s judgment awarding attorney’s fees to First-Citizens as to Francis and
remand the case for further proceedings. See O.C.T.G., L.L.P. v. Laguna Tubular
Prods. Corp., 557 S.W.3d 175, 193 (Tex. App.—Houston [14th Dist.] 2018, pet.
dism’d by agr.) (when award of attorney’s fees is based on success on claim and
judgment is reversed as to that claim and case remanded, proper disposition is to
reverse and remand award of attorney’s fees). We sustain the attorney’s-fees
portion of Francis’s issue on appeal.
III. CONCLUSION
Having sustained First-Citizens’s issue 1 in part and issue 2, and Francis’s
sole issue in part, we reverse the portions of the trial court’s judgment awarding
First-Citizens $20,809.44 in damages and awarding attorney’s fees against Francis.
We otherwise affirm the judgment, including to the extent it awards nothing as to
First-Citizens’s credit-guaranty claim. We remand the case for further proceedings.
Tex. R. App. P. 43.2(d).
/s/ Charles A. Spain
Justice
Panel consists of Justices Jewell, Spain, and Wilson.
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