Edwin A. White v. JPMC 2004-C3 Trails Apartments LLC, a Delaware Limited Liability Company ( 2012 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00164-CV
Edwin A. White § From the 141st District Court
§ of Tarrant County (141-228089-08)
v.
§ December 21, 2012
JPMC 2004-C3 Trails Apartments
LLC, a Delaware limited liability
company § Opinion by Justice Gabriel
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was no error in the trial court’s judgment. It is ordered that the judgment of
the trial court is affirmed.
It is further ordered that Appellant Edwin A. White shall pay all costs of this
appeal, for which let execution issue.
SECOND DISTRICT COURT OF APPEALS
By_________________________________
Justice Lee Gabriel
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00164-CV
EDWIN A. WHITE APPELLANT
V.
JPMC 2004-C3 TRAILS APPELLEE
APARTMENTS LLC, A DELAWARE
LIMITED LIABILITY COMPANY
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FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION1
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Appellant Edwin A. White appeals the trial court’s judgment in favor of
appellee JPMC 2004-C3 Trails Apartments, L.L.C. (the Trails Apartments) for
$1,507,506.59 for waste of collateral. We affirm.
1
See Tex. R. App. P. 47.4.
2
Background Facts
The borrower, MBS—The Trails, Ltd. (MBS), through its agent Michael
Smuck, executed a $3,795,000 promissory note made payable to PNC Bank and
secured by the deed of trust to the apartment complex. White and Smuck signed
a nonrecourse indemnification agreement in which they
assume[d] liability for and agree[d] to pay, protect, indemnify, defend
and hold harmless [PNC] (and any assignee or purchaser of all or
any interest in the note and the security instrument) from and against
any and all liabilities, obligations, losses, damages, costs and
expenses (including attorneys’ fees), causes of action, suits, claims,
demands and judgments which at any time may be imposed upon,
incurred by or awarded against [PNC] and for which borrower at any
time may be personally liable pursuant to the non-recourse
exceptions (as defined in paragraph 12 of the note).
Paragraph 12 of the note provided that PNC could
obtain personal, recourse judgments against any person or entity
(including borrower) relating to any losses (including attorney’s fees
and court costs) sustained by [PNC] in connection with any fraud,
intentional misrepresentation, waste, or misappropriation of tenant
security deposits or rents collected more than one (1) month in
advance by [MBS].
Neither White nor Smuck signed the note or the deed of trust.
PNC assigned the note to Wells Fargo Bank, N.A. MBS began missing
payments on the note in September 2007. Wells Fargo then delivered a demand
letter to MBS, White, and Smuck. Because the defaults continued, Wells Fargo
accelerated the maturity of the note, advised White of the acceleration, and
posted the property for foreclosure.
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Soon after, Wells Fargo hired Jay Parmelee with Lincoln Property
Company to investigate whether a receivership was necessary. Parmelee
observed serious damage to the property, including mold on the ceilings, rotting
boards, and broken walls. At Wells Fargo’s request, Parmelee was appointed by
the court as receiver of the property. The property was foreclosed upon on April
1, 2008, and The Trails Apartments was the successful bidder. The Trails
Apartments sued MBS, Smuck, White, and White’s wife, Ellen, claiming that
waste had occurred and that they were responsible for it under the note, deed of
trust, and indemnity agreement. The trial court rendered judgment against MBS,
Smuck, and White for $1,507,506.59.2 White appealed.
Discussion
White argues that any waste committed on the property was the result of
the Trails Apartments’ own negligence (and that of its predecessors) and it is
thus barred from recovery by the express negligence rule. The express
negligence requirement is a rule of contract interpretation that an agreement
purporting to indemnify the indemnitee against liability for its own negligence
must clearly state that intent within the four corners of the agreement itself. See
Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190, 192 (Tex. 2004); Ethyl
Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex. 1987) (noting that
2
The Trails Apartments nonsuited Ellen. The trial court entered an agreed
judgment between The Trails Apartments and Smuck and MBS. Ellen, Smuck,
and MBS are not parties to this appeal.
4
―[i]ndemnitees seeking indemnity for the consequences of their own negligence
which proximately causes injury jointly and concurrently with the indemnitor’s
negligence must also meet the express negligence test‖).
We previously addressed this same issue in White v. MLMT 2004-BPC1
Carlyle Crossing, LLC, No. 02-10-00233-CV, 2011 WL 3672022, at *6 (Tex.
App.—Fort Worth Aug. 18, 2011, pet. denied) (mem. op.), in which we held that
―the express negligence rule does not apply here to bar appellee’s recovery
pursuant to the terms of the indemnity agreement because appellee was not
seeking recovery for its own negligence.‖ Like in Carlyle Crossing, the indemnity
provision at issue here indemnified the Trails Apartments from any losses it
incurred for which MBS was liable under the note. See id. In other words,
―if MBS did not make good on any obligation for which it was liable under
recourse provisions of the note and deed of trust, [White] would make good on
them.‖ Id.; see also id. at *1 (detailing terms of indemnity agreement similar to
the terms of the agreement at bar). The Trails Apartments did not seek recovery
for its own negligence, and White failed to establish that the Trails Apartments or
its predecessors were negligent; thus, the express negligence rules does not
apply here. See Nat’l City Mortg. Co. v. Adams, 310 S.W.3d 139, 143–44 (Tex.
App.—Fort Worth 2010, no pet.); Man GHH Logistics GMBH v. Emscor, Inc., 858
S.W.2d 41, 43 (Tex. App.—Houston [14th Dist.] 1993, no writ) (―[T]he express
negligence rule does not apply in this case because appellants are not seeking to
recover for their own negligence.‖).
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Additionally, White did not attack the trial court’s findings of fact and
conclusions of law on appeal. Findings of fact entered in a case tried to the court
have the same force and dignity as a jury’s answers to jury questions. Anderson
v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). The trial court’s
findings of fact are reviewable for legal and factual sufficiency of the evidence to
support them by the same standards that are applied in reviewing evidence
supporting a jury’s answer. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996);
McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986) (―When findings of
fact are filed and are unchallenged, [] they occupy the same position and are
entitled to the same weight as the verdict of a jury. They are binding on an
appellate court unless the contrary is established as a matter of law, or if there is
no evidence to support the finding.‖).
The trial court found, among other things, that
MBS intentionally damaged the property and defaulted on the loan;
White allowed the property to be wasted and continued to accept
dividends on his investment;
White executed a non-recourse indemnification agreement in which
he agreed to indemnify and hold harmless the holder of the loan
documents; and
White was liable for the entire amount of damages under Paragraph
12 of the note.
White did not challenge any of the findings concerning waste and the damages
related thereto. Because the record contains evidence to support all of these
unchallenged findings, they are binding on this court. When the uncontested
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findings state that MBS caused the waste and that White was liable, White’s
argument that the Trails Apartments sought indemnification for its own
negligence must fail. We overrule White’s issue.
Conclusion
Having overruled White’s sole issue on appeal, we affirm the trial court’s
judgment.
LEE GABRIEL
JUSTICE
PANEL: WALKER, MCCOY, and GABRIEL, JJ.
DELIVERED: December 21, 2012
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