Philip Emiabata and Sylvia Emiabata v. National Capital Management, LLC

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-10-00373-CV
Philip Emiabata and Sylvia Emiabata, Appellants
v.
National Capital Management, LLC, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT
NO. D-1-GN-08-003019, HONORABLE RHONDA HURLEY, JUDGE PRESIDING
MEMORANDUM OPINION
Appellants Philip Emiabata and Sylvia Emiabata appeal from a summary judgment
in favor of appellee National Capital Management, LLC (National) on its suit for a promissory-note
deficiency. The Emiabatas argue that the district court erred by (1) not granting their motion to
compel discovery responses, (2) granting summary judgment in violation of an automatic bankruptcy
stay, (3) failing to rule on their request for additional time to file an answer and granting summary
judgment despite their failure to file an answer, (4) granting summary judgment despite National’s
failure to provide summary-judgment evidence of the deficiency amount, and (5) awarding National
13.95% post-judgment interest in the summary judgment. For the reasons discussed below, we will
affirm the district court’s judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The Emiabatas entered into a loan agreement in 2001 with CitiFinancial Auto to
purchase a Lincoln Navigator from Pavilion Lincoln Mercury in Austin, Texas. The loan agreement,
which CitiFinancial Auto subsequently transferred to National, included a security interest in the
Emiabatas’ Lincoln Navigator. The Emiabatas made initial payments on the loan in accordance
with the contract, but then defaulted in 2007 by failing to make payment of the principal and interest
due. Following the Emiabatas’ default and failure to respond to demands for payment, National
repossessed the vehicle and sold it at private auction. According to National, the forced sale left
a deficiency of $20,034.91. National filed this case against the Emiabatas, seeking recovery of
the deficiency, and subsequently filed a motion for summary judgment. The case was automatically
stayed when the Emiabatas filed for bankruptcy protection in federal district court, see 11 U.S.C.A.
§ 362(c) (West Supp. 2011), but once the bankruptcy case was closed and the stay lifted, National
re-urged its motion for summary judgment, which the district court granted. This appeal followed.
DISCUSSION
Motion to compel
In their first issue, the Emiabatas complain about the district court’s failure to rule
on their motion to compel discovery responses. The Emiabatas allege that they served discovery
requests on National on March 2, 2010, and when National did not respond, filed a motion to compel
those discovery responses. On appeal, the Emiabatas assert that the district court’s failure to rule
on their motion to compel denied them their right to conduct discovery and, thus, their ability to
defend against National’s claim.
2
We note initially that, although the Emiabatas have attached a copy of their discovery
motion to their appellate brief, there is no motion to compel in the record. We may not consider
matters or information that are outside the record. See In re M.S., 115 S.W.3d 534, 546 (Tex. 2003)
(holding that “this Court—or any other appellate court—may only consider the record presented to
it and we cannot speculate on what might or might not be in the missing portions of the record”).
Further, although the Emiabatas assert in their appellate brief that their motion to compel was set
for hearing on the same date as National’s motion for summary judgment, there is nothing in the
appellate record supporting that assertion or indicating that the motion was ever presented to the
district court. A complaint that was not presented to the trial court by a timely request, objection,
or motion is not preserved for appeal. See Tex. R. App. P. 33.1(a).
Even if the record included a copy of the motion and showed that it was presented
to the district court, the Emiabatas’ motion to compel was premature. The motion attached to the
Emiabatas’ appellate brief, which is dated March 18, 2010, asserts that the Emiabatas served
discovery requests on National on March 2, 2010. Under the rules of civil procedure, discovery
responses are due, at the earliest, thirty days after service of the discovery request. See, e.g., Tex. R.
Civ. P. 194.3 (requests for disclosure); 196.2 (requests for production); 197.2 (interrogatories); 198.2
(request for admissions). Thus, National’s response to the Emiabatas’ discovery requests would
not have been due until, at the earliest, April 2, 2010. It was certainly not due when the Emiabatas
allegedly filed their motion seeking to compel the responses. Therefore, on its face, the Emiabatas’
motion to compel lacked merit. Accordingly, we overrule the Emiabatas’ first issue.
3
Automatic stay
In their second issue, the Emiabatas assert that the district court violated the
bankruptcy code’s automatic stay when it granted National’s motion for summary judgment. See
11 U.S.C.A. § 362(c). The record shows that the Emiabatas filed for chapter 13 bankruptcy
protection in November 2008.1 In most instances when a bankruptcy petition is filed, it triggers an
automatic stay of “the commencement or continuation . . . of a judicial, administrative, or other
action or proceeding against the debtor that was or could have been commenced before the
commencement of the [bankruptcy] case.” See id. § 362(a)(1). Any action taken in a proceeding
that is subject to the automatic stay is void. See In re Sensitive Care, Inc., 28 S.W.3d 35, 38-39
(Tex. App.—Fort Worth 2000, orig. proceeding) (holding that judgment rendered after bankruptcy
petition was filed was void as a matter of law).
The Emiabatas assert that their bankruptcy case was pending when the district court
granted National’s summary judgment—i.e., April 22, 2010—because they were in the process of
appealing the bankruptcy court’s dismissal of their chapter 13 claim. We disagree. Although the
record confirms that the Emiabatas were appealing the dismissal of their bankruptcy case on
April 22, 2010, the automatic bankruptcy stay does not remain effective pending an appeal of the
bankruptcy matter. See In re Sullivan Cent. Plaza, I, Ltd., 914 F.2d 731, 736 (5th Cir. 1990). Once
the bankruptcy case is closed, dismissed, or a discharge is granted or denied, the automatic stay is
lifted. See 11 U.S.C.A. § 362(c)(2). The bankruptcy court dismissed the Emiabatas’ bankruptcy
1
Generally stated, chapter 13 of the bankruptcy code establishes a method for the
reorganization of a debtor’s financial situation through the adjustment of debts that requires the
debtor to pay at least part of the debts owed. See 11 U.S.C.A. §§ 1301-1330 (West Supp. 2011).
4
case on October 26, 2009, and closed the case on January 19, 2010. Thus, the automatic stay had
been lifted when the district court granted National’s motion for summary judgment on April 22.
Accordingly, we overrule the Emiabatas’ second issue.
Answer
In their third issue, the Emiabatas complain that the district court granted
summary judgment despite the fact that they had not yet filed an answer in this case. Specifically,
the Emiabatas challenge the district court’s failure to rule on their motion, filed soon after National
filed its petition, requesting additional time to file an answer. Assuming, without holding, that the
district court erred when it did not rule on their motion or when it granted summary judgment
before their answer was on file, the Emiabatas do not explain how the district court’s failure to rule
on their motion prevented them from filing an answer during the 20 months the case remained
pending, nor do they provide any authority for their proposition that an answer must be on file prior
to a summary judgment. More importantly perhaps, the Emiabatas do not explain how either error
probably caused the rendition of an improper judgment. See Tex. R. App. P. 44.1 (“No judgment
may be reversed on appeal on the ground that the trial court made an error of law unless the court of
appeals concludes that the error complained of . . . probably caused the rendition of an improper
judgment.”). And, given that the Emiabatas filed multiple pleadings in this matter, including a
response to National’s motion for summary judgment, we cannot see how the district court’s alleged
error resulted in the rendition of an improper judgment. Accordingly, we overrule the Emiabatas’
third issue.
5
Summary-judgment evidence
In their fourth issue, the Emiabatas assert that the district court erred in granting
National’s motion for summary judgment because National failed to provide summary-judgment
evidence showing that the Emiabatas owed $20,034.91 on the note. Specifically, the Emiabatas
complain that National failed to produce evidence of the Emiabatas’ payment history on the loan and
assert that they were not given credit for all the payments that they had made on the loan.
Because the propriety of a summary judgment is a question of law, we review
the district court’s decision de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661
(Tex. 2005). The standards for reviewing a motion for summary judgment are well established:
(1) the movant for summary judgment has the burden of showing that no genuine issue of material
fact exists as to each element of its claim and that it is entitled to judgment as a matter of law; (2) in
deciding whether there is a disputed material fact issue that would preclude summary judgment,
evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference
must be indulged in favor of the nonmovant and any doubts resolved in its favor. D. Houston, Inc.
v. Love, 92 S.W.3d 450, 454 (Tex. 2002) (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
548-49 (Tex. 1985)).
In its claim for deficiency on a secured transaction, National was required to prove
that (1) the Emiabatas executed a loan contract and security agreement specifying the collateral,
(2) the Emiabatas defaulted on the loan, (3) the Emiabatas failed to repay the note despite notice
and demand from National, (4) National foreclosed its security interest in the collateral and sold
the collateral in a commercially reasonable manner, and (5) after disposition of the collateral, a
6
deficiency existed, repayment of which was required to make the secured party whole. See Tex. Bus.
& Com. Code Ann. § 9.615 (West 2011); McGee v. Deere & Co., No. 03-04-00222-CV, 2005 WL
670505, at *2 (Tex. App.—Austin Mar. 24, 2005, no pet.) (mem. op.). Because the Emiabatas
challenge only whether National met its summary-judgment burden regarding one aspect of the
fifth element, we will limit our discussion accordingly.
As part of its summary-judgment evidence, National attached to its motion an
affidavit from its agent. The agent avers in the affidavit that he is competent to testify and has
personal knowledge that, among several other facts, “[a]fter all offsets, credits and payment
have been applied, there remains owing on the Note[] the principal amount of $20,034.91.” This
testimony is sufficient to support a summary-judgment motion. See American 10–Minute Oil
Change, Inc. v. Metropolitan Nat’l Bank–Farmers Branch, 783 S.W.2d 598, 601 (Tex. App.—Dallas
1989, no writ) (summary-judgment affidavit made on bank vice-president’s personal knowledge,
which identified the note, the principal balance, and the interest owed after allowing for all offsets,
payments and credits was not conclusory when no controverting affidavit was presented to raise a
fact issue); see also Texas Commerce Bank, Nat’l Ass’n v. New, 3 S.W.3d 515, 518 (Tex. 1999)
(citing American 10-Minute Oil Change, 783 S.W.2d at 601). Accordingly, because the Emiabatas
presented no controverting evidence, National was entitled to summary judgment. See M.D.
Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000) (holding that once movant
produces competent summary-judgment evidence establishing its right to summary judgment, burden
shifts to non-movant to raise a genuine issue of fact precluding summary judgment); American,
783 S.W.2d at 601.
7
We overrule the Emiabatas’ fourth issue.
Post-judgment interest
In their final issue, the Emiabatas assert that the district court erred by awarding
National 13.95% post-judgment interest in the summary judgment. We disagree. The district court
granted summary judgment on National’s deficiency judgment, which was based on a breach
of the loan agreement. The finance code provides that a judgment on a breach of contract claim
will earn post-judgment interest at a rate equal to the lesser of the rate specified in the contract or
18% per year. See Tex. Fin. Code Ann. § 304.002 (West 2006). The loan agreement attached to
National’s motion for summary judgment stipulates that the interest rate on the Emiabatas’ loan was
13.95%. Thus, the district court was required to award post-judgment interest at 13.95%. See id.
Accordingly, we overrule the Emiabatas’ fifth issue.
CONCLUSION
Having overruled the Emiabatas’ issues on appeal, we affirm the district court’s
judgment.
__________________________________________
Jeff Rose, Justice
Before Justices Puryear, Rose, and Goodwin
Affirmed
Filed: October 13, 2011
8