Barbara W. Mills v. Graham Mortgage Corporation ( 2014 )

Reverse and Remand; Opinion Filed June 24, 2014.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-13-00707-CV
BARBARA W. MILLS, Appellant
V.
GRAHAM MORTGAGE CORPORATION, Appellee
On Appeal from the 44th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-12-02060
MEMORANDUM OPINION
Before Justices Lang, Myers, and Brown
Opinion by Justice Lang
Appellant Barbara W. Mills contends the trial court erred in rendering summary
judgment in favor of appellee Graham Mortgage Corporation. Appellant raises two issues: (1)
whether the trial court committed error in granting judgment for appellee in an amount over $1
million greater than the contractual amount proven by appellee and (2) whether the trial court
erred in granting summary judgment for appellee since appellee failed to establish all the
elements of its claim.
Because all dispositive issues are settled in law, we issue this memorandum opinion.
TEX. R. APP. P. 47.2(a), 47.4. For the reasons set forth below, we reverse the summary judgment
and remand this case to the trial court for further proceedings consistent with this opinion.
I. FACTUAL AND PROCEDURAL BACKGROUND
On February 23, 2012, appellee filed suit against Santa Barbara Realty Services, LLC,
Ron W. Mills, and appellant, seeking recovery on a $3.6 million promissory note (the “Note”),
payable by Santa Barbara Realty, and two guaranty agreements, one signed by Ron W. Mills and
another by appellant. The record reflects Ron W. Mills and appellant each executed and
delivered to appellee a document titled “Unconditional Joint and Several Guaranty,” wherein
each guaranteed payment of all amounts due under the Note, up to $1.8 million each, “plus fees
and costs relating to the Note.”
On November 12, 2012, appellee filed a traditional motion for summary judgment on its
claims. Prior to the hearing on the motion, 1 appellee and defendants Santa Barbara Realty and
Ron W. Mills reached an agreement that was embodied in an “Agreed Interlocutory Judgment.” 2
The January 10, 2013 order granting appellee’s motion for summary judgment states:
[Appellee] shall recover from [appellant] the unpaid principal balance of the Note, as
described in the motion, plus accrued interest and charges . . . due and owing under the
terms of the Note, as limited by the guaranty, in the amount of $2,852,778.09, with
interest continuing to accrue at the rate of $885.25 per day . . . until the date of final
judgment in this case.
The order further provided that appellee recover $8,682.50 as “reasonable attorneys’ fees” from
appellant.
1
In its brief, appellee asserts Santa Barbara Realty and Ron W. Mills did not respond to its motion for summary judgment or appear at the
hearing on the motion “based upon an agreed resolution” of the claims that was announced at the beginning of the hearing. The transcript of this
hearing is not included in the record.
2
The “Agreed Interlocutory Judgment” states it was signed on January 30, 2013, twenty days after the order granting appellee’s motion for
summary judgment is dated.
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II. LEGAL AUTHORITIES
A. Standard of Review
A trial court's grant of summary judgment is reviewed de novo. Woodhaven Partners,
Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 831 (Tex. App.—Dallas 2014, no pet.)
(citing Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003)). A
traditional motion for summary judgment must show there is no genuine issue as to a specified
material fact and the moving party is entitled to judgment as a matter of law. Id. (citing TEX. R.
CIV. P. 166a(c)). “When a plaintiff moves for traditional summary judgment, it has the burden to
conclusively establish all elements of its claim as a matter of law.” Affordable Motor Co., Inc. v.
LNA, LLC, 351 S.W.3d 515, 519 (Tex. App.—Dallas 2011, pet. denied) (citing TEX. R. CIV. P.
166a(c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986) (per curiam)). A matter is
considered conclusively established “if ordinary minds cannot differ as to the conclusion to be
drawn from the evidence.” Id. Once the plaintiff satisfies its burden, the burden shifts to the
defendant to present evidence raising a genuine issue of material fact to preclude summary
judgment. Id. When deciding whether a disputed issue of material fact exists, we regard all
evidence favorable to the non-movant as true, and we indulge every reasonable inference and
resolve any doubts in the non-movant’s favor. Id.
B. Breach of Guaranty Claims
To recover on a guaranty, the lender must prove “(1) the existence and ownership of the
guaranty contract, (2) the terms of the underlying contract by the holder [sic], (3) the occurrence
of the conditions upon which liability is based, and (4) the failure or refusal to perform the
promise by the guarantor.” Gold's Gym Franchising LLC v. Brewer, 400 S.W.3d 156, 160 (Tex.
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App.—Dallas 2013, no pet.) (citing Wiman v. Tomasewicz, 877 S.W.2d 1, 8 (Tex. App.—Dallas
1994, no writ)). 3
III. APPLICATION OF THE LAW TO THE FACTS
Appellant raises two issues. First, appellant argues the trial court erred in granting
judgment for appellee in an amount that was over $1 million greater than the maximum sum
guaranteed of $1.8 million. Second, appellant contends the trial court erred in granting summary
judgment because appellee had “failed to establish all elements of its claim.”
Appellee contests both of appellant’s issues. First, appellee responds that a reversal is not
necessary since the trial court’s judgment can be modified in accordance with appellee’s
statement in its brief that it agrees to voluntarily remit the judgment “to the principal amount” of
$1.8 million. Next, appellee asserts that appellant’s second issue should be interpreted to mean
that appellee “failed to establish all of the conditions necessary for recover [sic] of a deficiency
judgment.” As to this second contention, appellee argues generally that, because it stated in its
petition, “All conditions precedent to [appellee’s] recovery in this action have occurred or been
performed,” and appellant failed to identify any conditions precedent that were not met as
required by Rule of Civil Procedure 54, appellee was not required to prove the elements of its
claim.
We construe appellant’s issues to assert the evidence was legally insufficient to support
summary judgment. In its live petition at the time of summary judgment, appellee specifically
stated that all conditions precedent had occurred or been performed. Appellant filed a general
denial answer, not specifically denying that any condition precedent had not been performed. On
this record, appellee was not required to prove any conditions precedent to recover in this case.
3
The antecedents of Gold’s Gym show the meaning of the second element. In Barclay v. Waxahachie Bank & Trust Co., the Waco court
stated the second element of the test was “the performance of the terms of the contract by the plaintiff.” Barclay v. Waxahachie Bank & Trust
Co., 568 S.W.2d 721, 723 (Tex. Civ. App.—Waco 1978, no writ).
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See TEX. R. CIV. P. 54 (“When such performances or occurrences [of conditions precedent] have
been so plead, the party so pleading same shall be required to prove only such of them as are
specifically denied by the opposite party.”). However, “establishing that conditions precedent
have been met, does not relieve [appellee] of the burden of proving the other elements of [its]
claim.” See Shaw v. Mid-Continent Cas. Co., No. 05-10-00642-CV, 2011 WL 2120522, at *4
(Tex. App.—Dallas 2011, no pet.); see also Broesche v. Jacobson, 218 S.W.3d 267, 273 n.4
(Tex. App.—Houston [14th Dist.] 2007, pet. denied) (“Although proof of performance of any
conditions precedent is an essential element of a plaintiff’s case, such proof does not relieve the
plaintiff of the burden of proving the other elements of the claim.”).
Appellee’s summary judgment proof in this case 4 is comprised in part of the affidavit of
Dean Castelhano, appellee’s vice president whose duties included servicing and collecting the
debt owed by appellant and her co-defendants, and who testified as to the loan agreement
between Santa Barbara Realty and appellee, the deed of trust note executed by Santa Barbara
Realty in favor of appellee, the guaranty agreement executed by Ron W. Mills in favor of
appellee, the guaranty agreement executed by appellant in favor of appellee, and correspondence
sent on behalf of appellee to appellant and her co-defendants. Also, offered as evidence was the
affidavit of David M. O’Dens, appellee’s counsel, who testified as to attorneys’ fees.
The judgment against appellant is for $2,852,778.08 “with interest continuing to accrue at
the rate of $885.25 per day from March 23, 2012, until the date of final judgment in this case,”
plus post-judgment interest and attorneys’ fees. Appellee’s vice president, Dean Castelhano
stated in an affidavit in support of appellee’s motion for summary judgment that “the principal
balance [under the Note], plus accrued interest and charges through March 22, 2012” was
4
Though appellant objected to appellee’s summary judgment evidence in the trial court, she does not re-urge this issue in her brief to this
court.
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$3,374,396.11 “with interest continuing to accrue at the rate of $1,455.88 per day from an
including March 23, 2012, until the date judgment is entered.” However, the terms of the
guaranty limit appellant’s liability to the principal amount of $1.8 million. Appellee has not
shown us, nor can we find, any evidence in the record supporting a judgment against appellant
on the guaranty for the sum identified by Castelhano in his affidavit or the sum stated in the
judgment of $2,852,778.09 “with interest continuing to accrue at the rate of $885.25 per day
from March 23, 2012, until the date of final judgment in this case.” Appellee does not contest
that there is an “error in the amount awarded,” but asserts “this [c]ourt can modify the trial
court’s judgment to correct any error in the amount of the judgment and affirm the judgment as
modified” because, pursuant to Rule of Civil Procedure 46.5, appellee “voluntarily agrees to
remit the judgment against [appellant] to the principal amount” of $1.8 million. See TEX. R. CIV.
P. 46.5. We cannot agree with appellee. Rule 46.5 only allows voluntary remittitur after a court
of appeals has reversed the trial court’s judgment because of a legal error affecting only part of
the damages awarded. See id.
In addition to the absence of evidence to support the amount of the principal awarded in
the judgment against appellant, there remain other issues of material fact to be addressed,
including the calculation of interest and attorneys’ fees. See Basic Capital Mgmt., Inc. v. Dynex
Commercial, Inc., 402 S.W.3d 257, 272 (Tex. App.—Dallas 2013, pet. filed) (“[I]n light of the
change in the amount of damages awarded, the trial court must recalculate the amount of
prejudgment interest”); Argyle Mech., Inc. v. Unigus Steel, Inc., 156 S.W.3d 685, 688 (Tex.
App.—Dallas 2005, no pet.) (reaching same conclusion as to attorneys’ fees).
Consequently, on remand, the trial court should consider the proof necessary to render
judgment on the guaranty and as to attorneys’ fees.
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IV. CONCLUSION
We reverse the trial court’s order granting summary judgment and remand the case to the
trial court for further proceedings consistent with this opinion.
/Douglas S. Lang/
DOUGLAS S. LANG
JUSTICE
130707F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
BARBARA W. MILLS, Appellant On Appeal from the 44th Judicial District
Court, Dallas County, Texas
No. 05-13-00707-CV V. Trial Court Cause No. DC-12-02060.
Opinion delivered by Justice Lang. Justices
GRAHAM MORTGAGE CORPORATION, Myers and Brown participating.
Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED, and this case is REMANDED to the trial court for further proceedings consistent
with this opinion.
It is ORDERED that appellant Barbara W. Mills recover her costs of this appeal from
appellee Graham Mortgage Corporation.
Judgment entered this 24th day of June, 2014.
/Douglas S. Lang/
DOUGLAS S. LANG
JUSTICE
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