Highway 82/Fannin Joint Venture v. Capital One Bank (In Re Highway 82/Fannin Joint Venture)

Case: 13-41146 Document: 00512762159 Page: 1 Date Filed: 09/09/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 9, 2014
No. 13-41146
Lyle W. Cayce
Clerk
In the Matter of: HIGHWAY 82/FANNIN JOINT VENTURE,
Debtor
HIGHWAY 82/FANNIN JOINT VENTURE,
Appellant
v.
CAPITAL ONE BANK,
Appellee
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 4:12-CV-707
Before STEWART, Chief Judge, OWEN, Circuit Judge, and MORGAN ∗,
District Judge.
PER CURIAM: **
Plaintiff-Appellant Highway 82/Fannin Joint Venture (the “Joint
Venture”) appeals the dismissal of its adversary bankruptcy proceeding claim
for declaratory relief against Defendant-Appellee, Capital One Bank. The
∗
District Judge for the Eastern District of Louisiana, sitting by designation.
** Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
Case: 13-41146 Document: 00512762159 Page: 2 Date Filed: 09/09/2014
No. 13-41146
Joint Venture contends it has set forth a claim for relief under a theory of
quasi-estoppel.
On July 7, 2006, Mark Ragon executed a promissory note in favor of
Capital One in the principal amount of $340,000. On that same day, Ragon
executed a deed of trust providing Capital One a lien on a 243 acre parcel of
property. The Deed of Trust contained a cross-collateralization clause
whereby the property served as additional collateral for any and all
obligations owed by Ragon to Capital One, whether then existing or
thereafter arising. On January 3, 2007, the Joint Venture executed a
promissory note in favor of Ragon in the principal amount of $340,000 for the
purchase of the property. The Joint Venture was aware of the bank’s prior
lien on the property and the cross-collateralization provision in the Deed of
Trust. Later, the bank became aware that Ragon had transferred the
property to the Joint Venture. The Joint Venture made all its payments to
Ragon but, at some point, Ragon defaulted on his obligations to the bank and
the bank initiated foreclosure proceedings on the property.
The Joint Venture filed a petition for relief under Chapter 11 of the
Bankruptcy Code on December 15, 2011 to prevent the foreclosure. The Joint
Venture initiated an adversary bankruptcy proceeding seeking a declaratory
judgment that it is entitled to a release of the bank’s lien on the property
based on quasi estoppel under Texas law. The district court affirmed the
order of the bankruptcy court dismissing Highway 82/Fannin’s adversary
proceeding for failure to state a claim under Federal Rule of Civil Procedure
12(b)(6) because there was no plausible claim for relief under a theory of
quasi estoppel.
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Case: 13-41146 Document: 00512762159 Page: 3 Date Filed: 09/09/2014
No. 13-41146
“Quasi estoppel precludes a party from asserting, to another’s
disadvantage, a right inconsistent with a position previously taken.” Lopez v.
Munoz, Hockema & Reed, LLP¸22 S.W. 3d 857, 864 (Tex. 2000). This form of
estoppel applies when it would be unconscionable to allow a party to
maintain a position inconsistent with one in which it acquiesced or accepted a
benefit. Id. To adequately plead a claim under a theory of quasi estoppel, a
party must allege (1) the defendant acquiesced to or accepted a benefit under
a transaction; (2) the defendant’s present position is inconsistent with its
earlier position wherein it acquiesced to or accepted the benefit of the
transaction; and (3) it would be unconscionable to allow the defendant to
maintain its present position, which is to the plaintiff’s disadvantage. Id.The district court dismissed the Joint Venture’s claim because the
second element had not been sufficiently pleaded. Specifically, the district
court held Capital One’s enforcement of the cross-collateralization clause and
foreclosure on the property was not inconsistent with any earlier position the
bank had taken. On appeal, the Joint Venture argues it did sufficiently plead
Capital One’s inconsistent position by alleging (1) the Joint Venture offered
to pay its debt to Ragon by paying Capital One in exchange for release of the
lien on the property, but the bank declined; (2) the Joint Venture offered to
pay off Ragon’s note to the bank in exchange for the release of the bank’s lien
on the property, but the bank declined the offer; and (3) the Joint Venture
filed a Chapter 11 bankruptcy petition to prevent foreclosure of the property
by the bank.
We affirm for the reasons articulated by the district court in affirming
the bankruptcy court’s dismissal of the Joint Venture’s complaint under Rule
12(b)(6). The allegations of the complaint, taken as true, do not state a claim
for relief that is plausible on its face. The Joint Venture has failed to allege
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Case: 13-41146 Document: 00512762159 Page: 4 Date Filed: 09/09/2014
No. 13-41146
any position taken by Capital One that was inconsistent with the bank’s
earlier position. The Joint Venture’s belief that the cross-collateralization
would not be enforced after its purchase does not demonstrate any
inconsistency on the bank’s part. Neither is the bank’s after the fact
knowledge of Ragon’s sale to the Joint Venture, and receipt of payments from
the Joint Venture for five years, inconsistent with the bank’s enforcement of
the cross-collateralization clause. Leave to amend was not necessary as the
amendment would be futile.
The judgment of the district court is AFFIRMED.
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