Paul P. Black v. First Community Bank

ACCEPTED
13-15-00289-CV
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
10/16/2015 6:57:57 PM
Dorian E. Ramirez
CLERK
IN THE COURT OF APPEALS
FOR THE THIRTEENTH JUDICIAL DISTRICT OF TEXAS
AT CORPUS CHRISTI FILED IN
13th COURT OF APPEALS
______________________________________________________
CORPUS CHRISTI/EDINBURG, TEXAS
10/16/2015 6:57:57 PM
No. 13-15-00289-CV DORIAN E. RAMIREZ
Clerk
_______________________________________________________
PAUL P. BLACK
Appellant,
v.
FIRST COMMUNITY BANK
Appellee.
__________________________________________________________________
On Appeal from Nueces County Court at Law #1
Trial Court Cause No. 2011-CCV-62433-1
__________________________________________________________________
APPELLANT’S BRIEF
__________________________________________________________________
ANDY TAYLOR
State Bar No. 19727600
Andy Taylor & Associates, P.C.
2668 Highway 36S, #288
Brenham, Texas 77833
Telephone: (713) 222-1817
Facsimile: (713) 222-1855
ataylor@andytaylorlaw.com
COUNSEL FOR APPELLANT
APPELLANT REQUESTS ORAL ARGUMENT
1
IDENTITY OF PARTIES AND COUNSEL
1. Appellant:
Paul P. Black
Counsel for Appellant:
ANDY TAYLOR & ASSOCIATES, P.C.
Andy Taylor
State Bar No. 19727600
2668 Highway 36S, #288
Brenham, Texas 77833
Telephone: (713) 222-1817
Facsimile: (713) 222-1855
ataylor@andytaylorlaw.com
2. Appellees:
First Community Bank
Counsel for Appellee:
ANDERSON, LERHMAN, BARRE, MARAINST, LLP
Denny Barre
State Bar No. 01805280
Gaslight Square
1001 Third Street, Ste 1
Corpus Christi, TX 78404
Telephone: (361) 884-4981
Facsimile: (361) 883-4079
dbarre@albmlaw.com
2
TABLE OF CONTENTS
Identity of Parties and Counsel............................................................................. 2
Table of Contents ....................................................................................................3
Index of Authorities ................................................................................................4
Statement of the Case .............................................................................................4
Issues Presented ......................................................................................................4
Statement of Facts ...................................................................................................5
Summary of the Argument ....................................................................................8
Argument and Authorities ....................................................................................9
Prayer ......................................................................................................................15
Certificate of Service .............................................................................................15
Certificate of Compliance ....................................................................................16
Appendix ................................................................................................... Attached
3
INDEX OF AUTHORITIES
Authority Page
Custom Transit, L.P. v. Flatrolled Steel, Inc.,
375 S.W.3d 337 (Tex. App. Houston 14th Dist. 2012) ............................11
Lucas v. Clark,
347 S.W.3d 800, 803-04 (Tex.App.--Austin 2011, pet. denied)……..14
Marhaba Partners Ltd. P'ship v. Kindron Holdings, LLC,
2015 Tex. App. LEXIS 805, 8-9
(Tex. App. Houston 14th Dist. Jan. 29, 2015) ..........................................10
Moayedi v. Interstate 35/Chisam Rd., L.P.,
438 S.W.3d 1, 4-5 (Tex. 2014) ....................................................................... 9
Taiwan Shrimp Farm Village Ass 'n v. U.S.A. Shrimp Farm Dev.,
915 S.W.2d 61, 71 (Tex. App. Corpus Christi 1996)……………………….12
STATEMENT OF THE CASE
Nature of underlying Suit for money allegedly due on a Promissory
proceeding: Note.
Action from which relief Judge Vargas of the Nueces County Court at
requested: Law No. 1 granted Appellee’s No Evidence
and Traditional Motion for Summary
Judgment on April 1, 2015. (App. Tab 1).
ISSUE PRESENTED
Did the Trial Court err in granting summary judgment in favor of the
Appellee Bank where the Appellant Debtor/Owner of the collateral plead
4
and raised a genuine issue of material fact as to the fair market value of the
collateral?
STATEMENT OF FACTS
Appellant Paul Black executed a promissory note ("Note #6272" or
the “Note”), deed of trust and modification agreement. CR 42-CR 57.
Appellee First Community Bank is the owner and holder of Note #6272.
To secure the debt created by this note, Appellant Black granted Appellee
a security interest in Lot One B (lB), Block One (1), MARSDEN PLACE, a
Subdivision of the City of Corpus Christi, Nueces County, Texas, as further
described in the deed of trust.
Appellant Black thereafter defaulted in the payment of Note #6272.
Appellee Bank made demand for payment and gave notice of its intent to
sell the collateral at a foreclosure sale. CR 87-CR 90. Appellee Bank then
disposed of the collateral and applied the sales proceeds to the note. CR
40. At the foreclosure sale, Appellee Bank made a credit bid of $405,000.00,
which left a substantial deficiency remaining under the Note. Appellee
Bank then pursued Appellant Black for the alleged deficiency by filing the
lawsuit which is now the subject of this appeal.
5
In response to the deficiency suit, Appellant Black asserted a right to
an offset or credit on the basis that the fair market value of his property, at
the time of foreclosure, was in excess of the claimed deficiency. CR 254.
Appellant Black also filed a motion seeking a fair market value
determination. CR 158.
Appellee Bank eventually filed a motion for summary judgment. CR
62. Appellant Black thereafter filed his response to Appellee’s motion for
summary judgment asserting a right to a credit or offset to Appellee Bank’s
alleged deficiency claim under Texas Property Code 51.003 (c). CR 158,
366. Appellant Black also submitted a sworn affidavit, as the owner of the
real property, that the fair market value was $1,155,000.00. More
specifically, the affidavit contained the following statements:
“In 2008 until the foreclosure in early 2012, I owned two
neighboring lots (the subject lot was unimproved and the other
was contained my homestead) on Ocean Drive in Corpus
Christi, Texas. These lots were Marsden Place Block 1 Lot 1-B
(the "1-B" lot) and Marsden Place Block 1 Lot 2-A. I purchased
these lots for $850,000.00 and $2,030,000.00 respectively.
The 1-B lot is an unimproved, vacant, residential lot on the bay
side of Ocean Drive. At the time of the purchase of the 1-B lot, I
learned that it was appraised by the bank for $850,000.00.
During the time I lived on the property, I kept up with property
values in the area and based upon such knowledge I believe the
6
fair market value of the 1-B lot was $1,155,000.00 as of the time
of foreclosure.
In 2011 (which became effective in 2012), I combined the 1-B lot
with the 2-A lot which contained my homestead.
Around the time of the foreclosure, the appraisal district
removed the homestead exemption and separated the lots.
After this split, lot 1-B was the same lot, with the same
dimensions, and same location as before the split. The value
was the same as before the split.
At the time of the foreclosure lot 1-B was worth $1,155,000.
However, the bank foreclosed on the Note and Deed of Trust
and purchased it for a mere $405,000.00.”
CR 375 (“Affidavit of Paul Black”).
Appellee Bank attempted to avoid Appellant Black’s response by
arguing two things. First, Appellee Bank argued that Appellant Black’s
prior attorney’s failure to respond and deny a request for admission on
how much was owed as a deficiency constituted a deemed admission.
Second, Appellee Bank argued that Appellant Black’s affidavit should be
ignored because his attorney had not designated Appellant Black as an
expert witness in response to propounded discovery requesting the
identification of experts. In response, Appellant Black provided good
cause for why the request for admission should not be deemed against
7
him, filed a denial to that particular request for admission, and asked that
any such deemed admission be stricken for the reasons explained therein.
The Trial Court never entered any written orders on any of these
issues, but simply signed a final summary judgment without further
explanation.
SUMMARY OF ARGUMENT
The Trial Court erred in granting summary judgment in favor of the
Appellee Bank where Appellant, who was the owner of the real property
that was the collateral for the Note, plead and raised a genuine issue of
material fact as to the fair market value of the collateral. The Trial Court
never entered a written order that Appellant Black’s affidavit should be
stricken, and never ordered that his attorney’s alleged failure to timely
respond and deny a request for admission was indeed an admission to be
deemed against him. Although Rule 198.2(c) provides that no court order
is required to deem a request for admission against a non-responder, there
must first be a court finding that there was indeed a failure to timely serve
a response. Where, as here, the evidence clearly demonstrated a fact issue
of when the discovery request was sent, and when it was due, coupled
with a denial of same and sworn evidence explaining the confusion
8
surrounding the situation, the predicate finding of “not timely served”
within the meaning of Rule 198.2(c) was not proven as a matter of law. As
a result, a written order would have been required, but the Trial Court did
not enter one. Accordingly, Appellant’s affidavit raised a genuine issue of
material fact, and it was error for the Trial Court to grant summary
judgment in favor of Appellee Bank. This case should therefore be
reversed remanded to the Trial Court for further proceedings.
ARGUMENT
I.
Appellee Bank Had No Incentive to Pay Market Value
Texas courts widely view a bank's bid at a foreclosure sale with
suspicion. The Supreme Court in Moayedi v. Interstate 35/Chisam Rd., L.P.,
438 S.W.3d 1, 4-5 (Tex. 2014) made this clear:
"When lenders are the sole bidders at a foreclosure sale, they
can control the foreclosure sale price and by implication the
deficiency judgment. There is little incentive for them to bid
high when a low bid preserves the amount they might get in
a judgment against the borrower. Thus, the nonjudicial
foreclosure sale often does not directly represent what a buyer
might pay in the market." (emphasis added)
9
Earlier this year the 14th Court of Appeals cited this same case in
Marhaba Partners Ltd. P'ship v. Kindron Holdings, LLC, 2015 Tex. App. LEXIS
805, 8-9 (Tex. App. Houston 14th Dist. Jan. 29, 2015), when it said:
"The legislature created this mechanism in recognition that
post-foreclosure deficiencies artificially can be inflated
because ‘the nonjudicial foreclosure sale often does not
directly represent what a buyer might pay in the market."’
Moayedi, 438 S.W.3d at 5. When the lender is the sole bidder, it
has little incentive to bid high." (emphasis added).
II.
Appellee Bank's Acts Demonstrate Intent to Create Deficiency
Appellant Black asked the Trial Court—and now asks this Honorable
Court--to take notice that this suit was filed before the non-judicial
foreclosure took place. CR 6, CR 96-CR 98. The only way the bank could
have known, prior to conducting the foreclosure sale, that it could file a
lawsuit and pursue a deficiency claim is if it intended to create one. Thus,
the Court must look at the amount bid at the foreclosure sale with the
upmost suspicion. Indeed, it is obvious that the Appellee Bank, as the sole
bidder, had no reason to make a credit bid that was even close to fair
market value. That being the case, the Appellee Bank's $405,000.00 bid
reflects the Bank's attempt to preserve what it might get in a judgment
against Appellant Black. As the Appellee Bank knew its intention to
10
underbid even before it sold the property, its credit bid at the foreclosure
sale in no way reflects the market value of the property.
III.
Appellant Black Is Qualified As An Expert On His Own Property
Although the Trial Court never ruled on the issue, Appellee Bank
argued that only an expert is allowed to value the property. CR 175-CR
178. However, Texas courts recognize what is known as the “Property
Owner's Rule”. In Custom Transit, L.P. v. Flatrolled Steel, Inc., 375 S.W.3d
337, 352 (Tex. App. Houston 14th Dist. 2012), the court examined the
Property Owner's Rule, holding as follows:
"Custom Transit's speculation challenge to Bollman's testimony
focuses on the Property Owner Rule, under which "a property
owner is qualified to testify to the value of her property even
if she is not an expert and would not be qualified to testify to
the value of other property." Reid Road Mun. Util. Dist. No. 2 v.
Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 852-53 (Tex. 2011)
(citing Porras v. Craig, 675 S.W.2d 503, 504 (Tex. 1984)). "The
rule is based on the presumption that an owner will be
familiar with her own property and know its value." Speedy
Stop, 337 S.W.3d at 853. The Texas Supreme Court has applied
this principle to valuation of real property, see id ; the supreme
court also has applied it to valuation of personal property. See
Redman Homes, Inc. v. Ivy, 920 S.W.2d 664, 668-69 (Tex. 1996); see
also Taiwan Shrimp Farm Village Ass 'n, Inc. v. U.S.A. Shrimp
Farm Dev., Inc., 915 S.W.2d 61, 71 (Tex. App.-Corpus Christi
1996, writ denied), cited with approval in Speedy Stop, 337
S.W.3d at 853." (emphasis added).
11
In addition, the Corpus Christi Court of Appeals encountered this
issue in the case of Taiwan Shrimp Farm Village Ass 'n v. U.S.A. Shrimp Farm
Dev., 915 S.W.2d 61, 71 (Tex. App. Corpus Christi 1996). The Court held
that "[A] property owner can testify to market value as long as testimony
shows it refers to market value and not intrinsic value." Id.
In the Trial Court, Appellant Black filed an affidavit providing the
sworn basis for his non-expert owner’s opinion as to the value of the
collateral at the time the Appellee Bank foreclosed. CR 375. In his
affidavit, Appellant Black states that the value of the property is
$1,155,000.00. As the property owner, he is qualified to testify about the
value of the property, and disclosure of his identity or opinions in response
to an expert witness discovery request was not required. In any event, the
Trial Court did not enter a written order on this subject, so, for purposes of
this appeal, Appellant Black asserts that his affidavit was properly before
the Trial Court and necessarily created a genuine issue of material fact.
His testimony is consistent with the Supreme Court's reasoning in Moayedi,
cited above. Namely, that the bank made a low bid, not because it was
consistent with the value of the property, but to bring a cause of action
against Appellant Black for an artificially-created deficiency.
12
IV.
No Deemed Admission Occurred Under The Circumstances
Although Rule 198.2(c) provides that no court order is required to
deem a request for admission against a non-responder, there must first be a
court finding that there was indeed a failure to timely serve a response.
Where, as here, the evidence clearly demonstrated a fact issue of when the
discovery request was sent, and when it was due, coupled with a denial of
same and sworn evidence explaining the confusion surrounding the
situation, the predicate finding of “not timely served” within the meaning
of Rule 198.2(c) was not proven as a matter of law. As a result, a written
order would have been required, but the Trial Court did not enter one.
Accordingly, Appellant’s affidavit raised a genuine issue of material fact,
and it was error for the Trial Court to grant summary judgment in favor of
Appellee Bank.
Even if the evidence mandates a finding that no timely response was
made to Appellee Bank’s request for admission, which Appellant Black
denies, it would still be error to deem an admission on an outcome-
determinative issue, particularly where, as here, the issue had been plead,
sworn proof submitted by way of affidavit, a motion requesting a fair
13
market determination had been filed, and a reasonable sworn explanation
had been provided over the confusion about what had been served and
when a response was due. As explained in the case of Lucas v. Clark, 347
S.W.3d 800, 803-04 (Tex.App.--Austin 2011, pet. denied):
The primary purpose of requests for admissions is to
"simplify trials by eliminating matters about which there is no
real controversy." (citation omitted). They were never intended
to be used as a demand upon a plaintiff or defendant to admit
that he had no cause of action or ground of defense. Id. Courts
have cautioned that litigants should not be allowed to use
requests for admissions as a tool to trap their opposition.
(citation omitted). The rule regarding requests for admissions
"was designed, not as a trap to prevent the presentation of the
truth in a full hearing but as a tool for the fair disposition of
litigation with a minimum of delay." (citation omitted). When a
party uses deemed admissions to try to preclude presentation
of the merits of a case, however, due process concerns may
arise. Therefore, overly broad, merits-preclusive requests for
admissions are improper and may not result in deemed
admissions. (citations omitted).
For the above stated reasons, the Trial Court erred in granting the
Appellee Bank’s Motion for Summary Judgment as there was a genuine
fact issue and Appellee is not entitled to judgment as a matter of law.
Specifically, Appellee Bank’s lack of incentive, low bid, and Appellant
Black’s affidavit created a material issue of fact.
14
PRAYER
Appellant Paul Black seeks a reversal and remand for a new trial
against Appellee Bank. Appellant Black seeks all further and other relief to
which they may show themselves to be justly entitled.
Respectfully Submitted,
Andy Taylor & Associates, P.C.
BY: /s/Andy Taylor
Andy Taylor
State Bar No. 19727600
2668 Highway 36 S, #288
Brenham, Texas 77833
713-222-1817 (telephone)
713-222-1855 (facsimile)
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the
above and foregoing document has been served via the electronic filing
system on the following on this the 16th day of October, 2015.
Denny Barre
Anderson, Lerhman, Barre, Marainst, LLP
Gaslight Square
1001 Third Street, Ste 1
Corpus Christi, TX 78404
/s/ Andy Taylor
15
CERTIFICATE OF COMPLIANCE
I, Andy Taylor, Counsel for Appellant certify that this document was
generated by a computer using Microsoft Word which indicates that the
word count of this document is 2,807using Book Antiqua, 14 pt for text and
12 pt for footnotes.
/s/ Andy Taylor
16
Appendix
Tab Description
1 Order of Trial Court granting Motion for Summary Judgment
TAB 1