Alexander House, Ltd. v. Arbor Commercial Mortgage, LLC ( 2019 )

Opinion issued December 5, 2019
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00470-CV
———————————
ALEXANDER HOUSE, LTD., Appellant
V.
ARBOR COMMERCIAL MORTGAGE, LLC and
ARBOR COMMERCIAL FUNDING, LLC, Appellees
On Appeal from the 113th District Court
Harris County, Texas
Trial Court Case No. 2015-68985
MEMORANDUM OPINION
Appellant Alexander House, Ltd. sued Appellees Arbor Commercial
Funding, LLC (Arbor Funding) and Arbor Commercial Mortgage, LLC (Arbor
Mortgage) for breaches of contract and fiduciary duty and other claims after their
loan commitment to refinance the debt on Alexander House’s apartment complex
fell through. Alexander House decided not to go forward with the loan just before
closing when the final loan documents included what Alexander House considered
to be cost-prohibitive, recourse requirements to the otherwise non-recourse loan.
After a bench trial, the trial court entered a take-nothing judgment against
Alexander House on its claims against Arbor Funding and Arbor Mortgage.
Alexander House appeals, asserting in three issues that the trial court erred in
(1) enforcing a jury waiver and (2) concluding there was no fiduciary duty and
(3) that the evidence is legally and factually insufficient to support the trial court’s
adverse fact findings. We affirm.
Background
Alexander House is the owner and operator of a large Houston apartment
complex. It had owned the apartment complex since 1993, and in November 2005,
it mortgaged the complex with a ten-year conduit loan. That loan’s terms gave
Alexander House a two-month window before the loan matured—between
September 11, 2015 and November 1, 2015—to refinance its mortgage without
having to pay a penalty. With the knowledge that the loan process can take several
months, Alexander House began searching for refinancing in early 2015 with the
assistance of its mortgage broker, Jim Adams of Berkadia Commercial Mortgage,
LLC.
2
By late March 2015, Alexander House had received quotes from several
lenders, including MC-Five Mile Commercial Mortgage Finance, LLC. Alexander
House ultimately decided to pursue a refinance loan from the Federal Home Loan
Mortgage Corporation (known as “Freddie Mac”), which prompted Adams to
contact Arbor Funding in May 2015 because it was an approved seller and servicer
of Freddie Mac loans. Alexander House and Arbor Funding then began discussions
regarding refinancing with a Freddie Mac Small Balance Loan (SBL) in the
principal amount of $4 million.
Alexander House executed a Small Balance Loan Letter of Interest with
Arbor Funding (the letter of interest agreement) dated May 22, 2015 and paid
Arbor Funding a $12,500 application fee. On August 31, 2015, Alexander House
executed a loan commitment agreement (the loan commitment agreement) with
Arbor Mortgage. The loan commitment agreement provided that Arbor Mortgage
would, subject to certain conditions, fund a loan to Alexander House on specified
terms and then sell that loan to Freddie Mac. It was expressly understood that
Freddie Mac’s loan documents were non-negotiable. Alexander House paid Arbor
Mortgage a $40,000 good-faith deposit and an application fee of $4,000. The loan
was scheduled to close on September 11, 2015.
Freddie Mac’s final loan documents included repair riders that Alexander
House considered to be cost-prohibitive, recourse obligations to an otherwise non-
3
recourse loan. After Arbor Mortgage was either unable or unwilling to get Freddie
Mac to revise the repair riders, Alexander House notified Arbor Mortgage that it
would not close on the loan. It then sought and obtained refinancing with MC-Five
Mile and incurred additional expenses and interest.
The crux of Alexander House’s claims against Arbor Funding and Arbor
Mortgage are that they agreed but failed to timely furnish all the Freddie Mac loan
documents—specifically the repair riders—to Alexander House and that, if they
had timely done so, Alexander House would not have pursued the Freddie Mac
SBL loan.
Alexander House originally sued Arbor Mortgage on November 18, 2015,
asserting claims for breach of contract and for fraud arising out of the letter of
interest agreement and the loan commitment agreement. Arbor Mortgage asserted a
counterclaim for indemnity based on Alexander House’s failure to perform under
the loan commitment. In its first amended petition, Alexander House added a claim
against Arbor Mortgage for negligent misrepresentation. Alexander House also
filed a jury demand. In its second amended petition, Alexander House added
claims for negligence and breach of fiduciary duty against Arbor Mortgage and
deleted its fraud claim.
Arbor Mortgage filed a motion to strike Alexander House’s jury demand,
asserting that the loan commitment contained a valid jury waiver. After Alexander
4
House responded in opposition and a hearing was held, the trial court granted the
motion. Alexander House then filed a third amended petition that added Arbor
Funding as a defendant and asserted claims arising out of its letter of interest
agreement with Arbor Funding.
After a bench trial, the trial court entered a take-nothing judgment against
Alexander House and a take-nothing judgment against Arbor Mortgage on its
counterclaim. The trial court also made and filed findings of fact and conclusions
of law. Specific to this appeal, the trial court found that Alexander House did not
prove its breach of contract claim and concluded that Arbor Funding did not owe
Alexander House a fiduciary duty.
Jury Waiver
In its first issue, Alexander House asserts that the trial court erred in striking
its jury demand because the jury waiver is limited to claims arising from the loan
commitment with Arbor Mortgage and that it should have had a jury trial on its
claims arising from its earlier letter of interest agreement with Arbor Funding. It
also argues that it was entitled to a jury trial on its claims against Arbor Funding.
The loan commitment agreement between Alexander House and Arbor
Mortgage contains a New York choice-of-law provision and the following jury-
waiver provision:
5
42. WAIVER OF TRIAL BY JURY. BORROWER AGREES
NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS CONDITIONAL
COMMITMENT OR THE RELATIONSHIP BETWEEN THE
PARTIES AS LENDER AND BORROWER THAT IS TRIABLE
OF RIGHT BY A JURY AND WAIVES ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO SUCH ISSUE TO THE
EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE
FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN BY BORROWER KNOWINGLY AND VOLUNTARILY
WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.1
The loan commitment defines “Lender” as “Arbor Commercial Mortgage,
LLC, a New York limited liability company (together with its successors and
assigns)” and “Borrower” as “Alexander House, Ltd.” Alexander House’s letter of
interest agreement with Arbor Funding does not have a jury-waiver provision.
The trial court struck Alexander House’s jury demand on the motion of
Arbor Mortgage before Alexander House added Arbor Funding as a defendant.
After adding Arbor Funding as a defendant, Alexander House did not request a
jury trial on its claims against Arbor Funding. By failing to request a jury trial on
its claims against Arbor Funding, Alexander House has not preserved its complaint
for appellate review as to Arbor Funding. See TEX. R. APP. P. 33.1(a); see also
TEX. R. CIV. P. 216(a) (providing that “[n]o jury trial shall be had in any civil suit,
unless a written request for a jury trial is filed”).
1
Alexander House does not contest the validity of the jury waiver under either New
York or Texas law.
6
Regarding the scope of the contractual jury waiver in the loan commitment
with Arbor Mortgage, Alexander House argues that its claims against Arbor
Mortgage arising out of the letter of interest agreement with Arbor Funding are
outside the waiver’s scope, which it contends is limited to claims arising from the
loan commitment with Arbor Mortgage. We disagree.
The scope of the waiver is “ANY ISSUE ARISING OUT OF THIS
CONDITIONAL COMMITMENT OR THE RELATIONSHIP BETWEEN THE
PARTIES AS LENDER AND BORROWER.” [Emphasis added.]. At the time of
Arbor Mortgage’s motion to strike Alexander House’s jury demand, Alexander
House’s live petition was its Second Amended Petition, which alleged four claims
against Arbor Mortgage: negligence, breach of fiduciary duty, negligent
misrepresentation, and breach of contract.
For its negligence claim, Alexander House asserted that “Arbor breached its
duty [of care] by failing to obtain and provide the Repair Riders until after
execution of the Arbor Commitment and by failing to understand and advise
Alexander House regarding the substance of the unusual requirements stated in
those riders.” For its claim for breach of fiduciary duty, Alexander House alleged
the same duty and breach.
Alexander House’s negligent misrepresentation claim was that “Arbor
misrepresented the loan documents” “by omitting the Repair Riders from the set of
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required loan documents and by submitting a list of required repairs that did not
include any repairs to the circuit breakers, piping or wiring on the property—much
less the potential cost-prohibitive repairs that could be required under the Repair
Riders.”
The breach-of-contract claim alleged that “Arbor breached [the letter of
interest agreement] by failing to provide all of the material loan documents until
after the execution of the loan commitment” with Arbor Mortgage.
All of these claims arise from either the loan commitment or the lender-
borrower relationship, even if the inception of that relationship was the letter of
interest agreement with Arbor Funding. See, e.g., In re Credit Suisse First Boston
Mortg. Capital, L.L.C., 257 S.W.3d 486, 490–91 (Tex. App.—Houston [14th Dist.]
2008, orig. proceeding). Accordingly, the trial court did not err in enforcing the
contractual jury waiver on Alexander House’s claims against Arbor Mortgage.
We overrule issue one.
Fiduciary Duty
We turn to Alexander House’s third issue. Alexander House alleged that
Arbor Funding breached its fiduciary duty of full disclosure by failing to disclose
the repair riders for nearly three months and only until just before the closing. In its
conclusions of law, the trial court determined that “Arbor did not owe a fiduciary
duty to Alexander House” and that the “ ‘no-shopping’ provision in the parties’
8
agreement did not establish a fiduciary relationship.” Alexander House contends
that the trial court erred in concluding that Arbor Funding was not Alexander
House’s fiduciary and thus did not owe it a fiduciary duty.
Whether a fiduciary duty exists is a question of law. Dernick Res., Inc. v.
Wilstein, 312 S.W.3d 864, 877 (Tex. App.—Houston [1st Dist.] 2009, no pet.). On
appeal from a bench trial, a trial court’s conclusions of law are reviewed de novo,
giving no deference to the trial court’s resolution of a legal question. Harris Cty.
Appraisal Dist. v. Wilkinson, 317 S.W.3d 763, 766 (Tex. App.—Houston [1st Dist.]
2010, pet. denied).
Alexander House asserts that Arbor Funding was its fiduciary because its
letter of interest agreement with Arbor Funding created an agency relationship,
with Arbor Funding becoming Alexander House’s exclusive agent to procure a
loan from Freddie Mac for Alexander House. The agreement’s exclusivity
provision provides in pertinent part:
EXCLUSIVITY: Borrower [Alexander House] hereby acknowledges
that from the date hereof the Lender [Arbor Funding] is the only
Freddie Mac Lender authorized to represent the Borrower and act on
behalf of the Borrower with Freddie Mac in connection with the
proposed financing of the Property as set forth herein (the “Proposed
Financing”). Borrower hereby represents, warrants and covenants that
for a period of ninety (90) days from (i) the date the borrower notifies
the Lender in writing of Borrower’s termination of this Application or
(ii) the date the Lender notifies the Borrower in writing of Lender’s
termination of the Application, the Borrower shall be prohibited from
seeking Freddie Mac financing from any other Freddie Mac Lender.
9
In Northern Shipping Funds I, LLC v. Icon Capital Corp., the federal court
summarized New York law on fiduciary relationships as follows:
Under New York law, “[a] fiduciary relationship exists between two
persons when one of them is under a duty to act for or to give advice
for the benefit of another upon matters within the scope of the
relation.” Krys v. Butt, 486 Fed. Appx. 153, 154 (2d Cir. 2012)
(alteration in original) (quoting EBC I, Inc. v. Goldman Sachs and
Co., 5 N.Y.3d 11, 19, 799 N.Y.S.2d 170, 175, 832 N.E.2d 26 (2005)).
Moreover,
[s]uch a relationship, necessarily fact-specific, is grounded in a
higher level of trust than normally present in the marketplace
between those involved in arm’s length business transactions.
Generally, where parties have entered into a contract, courts
look to that agreement to discover the nexus of the parties’
relationship and the particular contractual expression
establishing the parties’ interdependency. If the parties do not
create their own relationship of higher trust, courts should not
ordinarily transport them to the higher realm of relationship and
fashion the stricter duty for them.
Id. (quoting EBC I, Inc., 5 N.Y.3d at 19–20, 799 N.Y.S.2d at 175, 832
N.E.2d 26). “ ‘At the heart of the fiduciary relationship lies reliance,
and de facto control and dominance.’ ” Id. (quoting United States v.
Chestman, 947 F.2d 551, 568 (2d Cir. 1991)). “[W]hen parties deal at
arm[’]s length in a commercial transaction, no relation of confidence
or trust sufficient to find the existence of a fiduciary relationship will
arise absent extraordinary circumstances.” Boccardi Capital Systems,
Inc. v. D.E. Shaw Laminar Portfolios, LLC, 355 Fed. Appx. 516, 519
(2d Cir. 2009) (second alteration in original) (internal quotation marks
omitted); see also Intellivision v. Microsoft Corp., 784 F. Supp. 2d 356,
372 (S.D.N.Y. 2011) (“Generally, commercial transactions do not
create fiduciary obligations, absent express language in the contract or
prolonged prior course of dealings between the parties establishing the
fiduciary relationship.” (internal quotation marks omitted)).
10
921 F. Supp. 2d 94, 101–02 (S.D.N.Y. 2013); see also Wiener v. Lazard Freres &
Co., 241 A.D.2d 114, 122, 672 N.Y.S.2d 8, 14 (1998) (“As a general matter, an
arms-length lender-borrower or creditor-debtor contractual relationship may not
give rise to a fiduciary obligation on the part of the lender or creditor.”).
New York law provides that an agency relationship can give rise to fiduciary
duties between the parties. See Maurillo v. Park Slope U-Haul, 194 A.D.2d 142,
146 (N.Y. App. Div. 1993) (recognizing that agency is fiduciary relationship
between principal and agent); Vill. On Canon v. Bankers Tr. Co., 920 F. Supp. 520,
532 (S.D.NY. 1996) (“It is true that an exclusive agency gives rise to a fiduciary duty
between principal and agent under New York law.”). Under New York law, “[a]n
agency is a fiduciary relationship which results from a manifestation of consent by
one person to another that the other shall act on his behalf and subject to his
control, and the consent by the other to act. It is a relationship whereby one retains
a degree of direction and control over another.” Meese v. Miller, 79 A.D.2d 237,
241, 436 N.Y.S.2d 496, 499 (1981) (internal citations and quotations omitted). But,
“[w]hen an agency relationship is purported to be established by contract, ‘a court
will look to the language of the agreement to ascertain the relationship created
between the parties.’ ” Northern Shipping Funds, 921 F. Supp. 2d at 103 (quoting
Steinbeck v. Steinbeck Heritage Found., 400 Fed. Appx. 572, 575 (2d Cir. 2010)).
11
Additionally,
labels are not dispositive, rather the facts and circumstances of the
parties’ relationship determines whether an agent-principal
relationship existed. Onebeacon Insurance Co. v. Forman
International, Ltd., No. 04 Civ. 2271, 2005 WL 100849, at *3
(S.D.N.Y. Jan. 19, 2005) (collecting cases). “[O]ne does not become
an agent through the mere utterance of that term. Rather, a party
claiming an agency relationship—to which a fiduciary duty might
apply—must demonstrate that the alleged fiduciary ‘occup[ied] a
position of trust or special confidence with regard to [the plaintiff]
that imposed obligations beyond the express agreements.’ ” TD
Waterhouse Investor Services, Inc. v. Integrated Fund Services, Inc.,
No. 01 Civ. 8986, 2003 WL 42013, at *14 (S.D.N.Y. Jan. 6, 2003)
(alterations in original) (quoting Bridgestone/Firestone, Inc. v.
Recovery Credit Services, Inc., 98 F.3d 13, 20 (2d Cir. 1996)).
Id.
The parties do not dispute that at least one purpose for the exclusivity
provision was to serve as a “no-shopping” provision to prevent Alexander House
from contacting one of Arbor Funding’s competitors and seeking a similar Freddie
Mac loan while Arbor Funding was working on Alexander House’s loan
application. See Qantum Commc’ns Corp. v. Star Broad., Inc., 473 F. Supp. 2d
1249, 1258 (S.D. Fla. 2007) (stating that no-shopping provision is contractual
provision that “precludes [the seller] from soliciting, entertaining, or negotiating
with entities other than [the buyer] regarding the [purchase assets] while the
Agreement is in effect.”). Adams, who was Alexander House’s broker, agreed that
the exclusivity provision was “a protection to the lender [Arbor].” Furthermore,
nothing in the letter of interest agreement suggests that Alexander House had
12
control over Arbor Funding. See Northern Shipping Funds, 921 F. Supp. 2d at 104
(citing In re Parmalat Sec. Litig., 594 F. Supp. 2d 444, 451 (S.D.N.Y. 2009)
(“When the existence of an agency relationship is uncertain, the courts often look
to control as a critical indicator.”)).
Before the letter of interest agreement with Arbor Funding, Alexander
House already had a loan broker—Jim Adams of Berkadia Commercial Mortgage,
LLC. Joseph Pryzant, Alexander House’s principal, described Adams as “my
representative” and his “loan broker” and confirmed that only Adams had direct
communications with Arbor Funding. Pryzant never spoke with or dealt directly
with Jay Porterfield, Arbor Funding’s loan originator, or anyone else at Arbor.
Pryzant testified that Adams provided the following services to Alexander
House as its loan broker: find a new loan; assist with loan negotiations; and assist
in reviewing documents for Alexander House. It was Adams who approached
Arbor Funding about obtaining a Freddie Mac SBL loan and acting on Alexander
House’s behalf in seeking the Freddie Mac SBL Program loan from Arbor.
Additionally, Alexander House and Arbor each had their own legal counsel for the
transaction. Finally, Alexander House presented no evidence that it had control
over Arbor Funding as an alleged agent. See id.
We therefore conclude that, under New York law, the relationship in the
letter of interest agreement between Alexander House and Arbor Funding was not
13
an agency relationship that created a fiduciary relationship.2 The trial court did not
err in concluding that the exclusivity provision did not create a fiduciary
relationship between Alexander House and Arbor Funding
We overrule issue three.
Sufficiency of the Evidence
In issue two, Alexander House asserts that the trial court’s findings on its
breach of contract claim are erroneous under legal and factual sufficiency grounds.
Alexander House argues that the evidence conclusively shows that it and Arbor
Funding entered into a binding agreement that Alexander House performed but that
Arbor Funding did not perform because it failed to timely provide Alexander
House with all material loan documents, resulting in damages to Alexander House.
Specifically, it contends that Arbor Funding failed to timely provide—only after
the loan commitment agreement was made and only until just before closing—
three repair riders that were material to the refinance loan because they added cost-
2
Alexander House alleged the same duty, breach, and damages for its breach-of-
contract claim and for its breach-of-fiduciary duty claim. Even if there were a
fiduciary relationship with Arbor Funding, it would be unavailing to Alexander
House under New York law because “a cause of action for breach of fiduciary
duty which is merely duplicative of a breach of contract claim cannot stand.”
Northern Shipping Funds, 921 F. Supp. 2d at 105 (quoting Ellington Credit Fund,
Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162, 196 (S.D.N.Y. 2011)).
“Breach of fiduciary duty and breach of contract claims are duplicative where they
‘are premised upon the same facts and seek the same damages for the alleged
conduct.’ ” Kriss v. Bayrock Grp. LLC, No. 10cv3959, 2017 WL 1901966, at *4
(S.D.N.Y. May 8, 2017) (quoting William Kaufman Org., Ltd. v. Graham & James
LLP, 703 N.Y.S.2d 439, 442 (1st Dep’t 2000)).
14
prohibitive, recourse requirements to an otherwise non-recourse loan. This alleged
breach resulted in Alexander House’s damages in the form of deposits, fees, and
expenses associated with pursuing the Freddie Mac loan, as well as added interest
and other costs associated with its existing loan and with obtaining a different
refinance loan. Alternatively, Alexander House argues that the trial court’s
findings on its breach-of-contract claim are against the great weight of the
evidence.
The trial court made the following finding relevant to Alexander House’s
claim for breach of contract: “Losses or damages suffered by Alexander House, if
any, were not proximately caused by any breach on the part of Arbor.”
When a trial court makes express findings on at least one element of a
claim, but omits other elements, implied findings on the omitted elements are
deemed to have been made in support of the trial court’s judgment. See TEX. R.
CIV. 299; In re Marriage of Elabd, — S.W.3d —, —, 2019 WL 4200422, at *2
(Tex. App.—Waco Sept. 4, 2019, no pet. h.); Howe v. Howe, 551 S.W.3d 236,
245 (Tex. App.—El Paso 2018, no pet.). On appeal, the trial court’s findings are
subject to the same legal and factual sufficiency review that would be applied in
reviewing a jury’s answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.
1994).
15
In a legal-sufficiency review, the appellate court should credit favorable
evidence if a reasonable factfinder could and disregard contrary evidence unless a
reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.
2005). When a party raises a legal-sufficiency challenge to an adverse finding on
which it had the burden of proof at trial, it must demonstrate “that the evidence
establishes, as a matter of law, all vital facts in support of the issue.” Dow Chem.
Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001).
When that same finding is challenged for factual insufficiency, the party
raising the challenge must demonstrate that the adverse finding is “against the
great weight and preponderance of the evidence.” Id. at 242. In assessing the
factual sufficiency challenge, the appellate court must consider and weigh all the
evidence and should set aside the challenged finding if the evidence is so weak, or
if the finding is so against the great weight and preponderance of the evidence, that
the finding is clearly wrong and unjust. Id.
Alexander House summarizes its breach-of-contract claim in its reply brief
as follows:
[T]he basis of Appellant’s breach of contract claim is that Arbor
Funding agreed to provide advance copies of all material Freddie Mac
form documents—i.e., sample documents with blanks—that could
potentially be included as part of the final loan agreement. In other
words, because Freddie Mac’s form documents are non-negotiable,
Appellant wanted to know what terms the loan could contain before
proceeding with the transaction, so Arbor Funding agreed to provide
Appellant with advance copies of all material Freddie Mac form
16
documents that might be used for the contemplated loan. [Emphases
in original.].
Or as Alexander House stated succinctly in its opening brief, “Because
Freddie Mac loan documents are non-negotiable, the parties agreed that Arbor
Funding would provide Appellant with all of the loan documents before Appellant
committed to a Freddie Mac loan.” The threshold matter, therefore, is whether
there was an agreement that Arbor Funding would provide Alexander House with
all sample Freddie Mac loan documents, including all potential riders.
A plaintiff must prove four elements to recover for breach of contract:
(1) the existence of a valid contract; (2) plaintiff performed or tendered
performance; (3) defendant breached the contract; and (4) plaintiff sustained
damages as a result of defendant’s breach. Davis v. Tex. Farm Bureau Ins., 470
S.W.3d 97, 104 (Tex. App.—Houston [1st Dist.] 2015, no pet.). To form a binding
contract, there must be mutual assent—a “meeting of the minds”—on the essential
terms of the contract. David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex.
2008); Davis, 470 S.W.3d at 104. The material terms of a contract must be agreed
upon by the parties before a court can enforce the contract. Williams v. Unifund
CCR Partners, 264 S.W.3d 231, 236 (Tex. App.—Houston [1st Dist.] 2008, no
pet.). Whether the parties had a meeting of the minds is based on the objective
standard of what the parties said and did, not on their subjective state of mind.
17
DeClaire v. G & B Mcintosh Fam. Ltd. P’ship, 260 S.W.3d 34, 44 (Tex. App.—
Houston [1st Dist.] 2008, no pet.).
We begin our analysis by noting Alexander House’s concession in its
opening brief that the alleged agreement to provide all material Freddie Mac loan
document samples is not part of the letter of interest agreement; it candidly states
that “this promise was not specifically included in the written document.” But as
Arbor Funding points out, the letter of interest agreement contains the following
provision that disclaims the existence of the alleged agreement to provide all
material Freddie Mac loan document samples:
The foregoing terms shall not be construed as an agreement to make
the Borrower a loan pursuant to the above referenced terms. Further,
no oral agreements or promises have been entered into or provided
with respect to the Letter of Interest. This Letter of Interest shall not
be modified except by an instrument in writing counter-signed by
Lender and Borrower.
Accordingly, to the extent the trial court made an implied adverse finding that
there was no alleged agreement to provide all material Freddie Mac loan document
samples, Alexander House did not establish the alleged agreement’s existence as a
matter of law.
Alexander House points to the following evidence to support the existence
of the alleged agreement: (1) a June 2, 2015, email with attachments from
Porterfield to Adams with the subject “Freddie SBL loan docs,” but with no email
text; (2) on that same date, Adams forwarded that email with the attachments to
18
Pryzant and Alexander House’s transactional attorney, with email text stating,
“Sample loan docs”; (3) a June 23, 2015, email from Arbor’s transactional attorney
to Alexander House’s transactional attorney, with email text stating, “[W]e are
transmitting for your review correspondence and Freddie Mac form loan
documents, including but not limited to certain form riders that may or may not be
incorporated into the final loan documents.”; (4) the correspondence (dated June
19, 2015) referenced in the June 23 email from Arbor’s transactional attorney to
Alexander House’s transactional attorney, similarly stating, “We are transmitting
to you a sample set of loan documents, including but not limited to certain form
riders that may be incorporated into the final loan documents.”; and (5) Pryzant’s
trial testimony that Porterfield had told Adams that, while the loan documents
could not be changed, Arbor would provide them to Alexander House.
In addition to the above disclaimer language in the letter of interest, Arbor
points to the following contradictory evidence: (1) the following sentence from
Arbor’s transactional attorney’s June 23, 2015 email to Alexander House’s
transactional attorney: “All required riders will be provided for in the
Commitment,” and (2) the following full paragraphs from the June 19, 2015,
correspondence from Arbor’s transactional attorney to Alexander House’s
transactional attorney pertaining to the loan documents:
19
We are transmitting to you a sample set of loan documents, including
but not limited to certain form riders that may be incorporated into the
final loan documents. The sample set of loan documents are standard
Freddie Mac forms for the SBL program, and may be updated and/or
modified from time to time, including at any time by Freddie Mac
prior to the closing of the Loan. Further, modifications to the loan
documents may be required by virtue of Arbor’s review of matters in
connection with underwriting the Loan, including but not limited to
third party reports.
A copy of the final loan documents will be provided to you at
least one (1) business day prior to the closing of the Loan, although
Arbor will endeavor to provide them a few days before the closing.3
The final loan documents will be sent directly to the title/escrow
company responsible for closing the Loan, where Borrower will need
to sign all loan documents unless alternative arrangements have been
made. The final loan documents will incorporate all deal specific
points set forth in Arbor’s loan commitment, and may also incorporate
additional terms of the Loan based upon Lender’s review or Lender’s
counsel’s review of the third party reports and any other matters
which are a condition of the Loan.
Upon considering all the evidence, we conclude that the trial court’s implied
adverse finding that there was not an alleged agreement to provide all material
Freddie Mac loan document samples, including all potential riders, is not against
the great weight and preponderance of the evidence.
We overrule issue two.
3
The one-day period was changed by agreement to five days.
20
Conclusion
Having overruled Alexander House’s three issues, we affirm the judgment of
the trial court.
Richard Hightower
Justice
Panel consists of Justices Kelly, Hightower, and Countiss.
21