Branch Banking and Trust Company v. TCI Luna Ventures, LLC, Transcontintal Realty

Reverse and Remand; Opinion Filed April 9, 2013.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-12-00653-CV
BRANCH BANKING AND TRUST COMPANY, Appellant
V.
TCI LUNA VENTURES, LLC AND TRANSCONTINENTAL
REALTY INVESTORS, INC., Appellees
On Appeal from the 192nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. dc-12-03653
OPINION ON REHEARING
Before Justices Francis, Murphy, and Evans
Opinion by Justice Evans
We deny appellant’s motion for rehearing and, on our own motion, withdraw our opinion
dated February 21, 2013, and vacate the judgment of that date. This is now the opinion of the
Court.
Branch Banking and Trust Company appeals a temporary injunction order prohibiting it
from foreclosing on two properties owned by TCI Luna Ventures, LLC. In a single issue, BB&T
argues that the trial court abused its discretion when it granted the temporary injunction because
TCI Luna failed to present evidence to support at least one of the elements necessary for the
issuance of a temporary injunction. We conclude the trial court abused its discretion when it
found that TCI Luna had shown a probable right on final trial to the relief sought for any of its
causes of action. We reverse the trial court’s order and dissolve the temporary injunction.
BACKGROUND
In June 2005, Transcontinental Realty Investors, Inc. executed a $10,000,000 promissory
note payable to Colonial Bank that was secured by deeds of trust on twelve properties, including
the two that are the subject of the temporary injunction order (the Mansfield and Sheffield
properties). In 2010, Colonial Bank assigned the note and deeds of trust to BB&T. Also in
2010, Transcontinental Realty assigned its interest in the secured properties to TCI Luna. 1 TCI
Luna did not pay off the note when it matured on September 29, 2010, leaving an unpaid balance
of $8,386,512. Failure to pay off the balance of the note when it matured was an event of
default, one remedy for which was foreclosure.
BB&T foreclosed on three of TCI Luna’s properties and sent notices of foreclosure for
six more before TCI Luna filed for bankruptcy in September 2011. While in bankruptcy, TCI
Luna and BB&T discussed TCI Luna voluntarily requesting a dismissal of its bankruptcy with
prejudice, deeds in lieu of foreclosure for some properties in return for lien releases on other
properties, and BB&T obtaining and delivering to TCI Luna appraisals on each property as part
of BB&T’s foreclosure on any property. The parties dispute whether or not they resolved the
following issues before dismissal of TCI Luna’s bankruptcy: how to handle any disagreement
about the appraised value of a property; whether the foreclosure bid prices or the full appraised
values would be used as the credits against the debt; and for which properties BB&T would
accept deeds in lieu of foreclosure in exchange for releasing its lien on the other properties.
After TCI Luna obtained a voluntary dismissal of its bankruptcy in January 2012, BB&T
foreclosed on two properties and sent notices of foreclosure for four more properties including
the Mansfield and Sheffield properties. TCI Luna responded by filing this suit in April 2012. In
1
Other than in the factual recitations in their briefs, the parties do not distinguish between Transcontinental
Realty and TCI Luna which are related entities. We will refer to both as TCI Luna.
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its petition, TCI Luna did not dispute the existence of the loan, the note, the unpaid debt, or the
security liens on its properties, although it calculated the amount of debt it owed differently than
BB&T. TCI Luna contended instead that the parties formed an enforceable agreement that
limited BB&T’s right to foreclose on the properties in exchange for TCI Luna requesting a
dismissal of its bankruptcy proceeding. TCI Luna also alleged that BB&T’s promises made a
part of the agreement constituted misrepresentations that were actionable as fraud, statutory real
estate fraud, and deceptive trade practices. In addition, TCI Luna argued that BB&T’s previous
foreclosures were wrongful and that foreclosing on the Mansfield and Sheffield properties would
constitute tortious interference with existing contracts of sale to third parties. TCI requested, and
the trial court granted, a temporary injunction preventing BB&T from foreclosing on the
Mansfield and Sheffield properties. This interlocutory appeal followed.
ANALYSIS
I. Standard of Review
We review a trial court’s order granting a temporary injunction for abuse of discretion.
Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993). When conducting our evaluation, we do
not substitute our judgment for that of the trial court, but determine only whether the court’s
action was so arbitrary as to exceed the bounds of reasonable discretion. See Butnaru v. Ford
Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). We draw all legitimate inferences from the
evidence in the light most favorable to the trial court’s ruling. Id. When the trial court bases its
decision on conflicting evidence, there is no abuse of discretion. Id. However, the trial court
abuses its discretion when it misapplies the law to established facts or when there is no evidence
that supports the trial court’s determination of the existence of a probable injury or a probable
right of recovery. Id. at 211 (“The trial court does not abuse its discretion if some evidence
reasonably supports the trial court's decision.”). We review de novo any determinations on
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questions of law that the trial court made in support of the order. Tom James of Dallas, Inc. v.
Cobb, 109 S.W.3d 877, 883 (Tex. App.—Dallas 2003, no pet.).
A temporary injunction is an extraordinary remedy and will not issue as a matter of right.
Butnaru, 84 S.W.3d at 204. Rather, an applicant must plead and prove: (1) a cause of action
against the opposing party; (2) a probable right on final trial to the relief sought; and (3) a
probable, imminent, and irreparable injury in the interim. Id.; Walling, 863 S.W.2d at 57. We
first consider whether TCI Luna presented sufficient evidence of a probable right to recover on at
least one of its causes of action. Even though we review an applicant’s probable right of
recovery, we do not reach the merits of the underlying dispute on interlocutory appeal and will
not assume the evidence presented at the temporary injunction hearing will be the same as the
evidence developed at a full trial on the merits. See Cobb, 109 S.W.3d at 884–85.
II. Breach of Contract Claim
TCI Luna argued and pleaded that in exchange for dismissal of the bankruptcy, BB&T
promised to: (1) obtain and deliver to TCI Luna appraisals on the properties; (2) “meet with
Plaintiffs in good faith in an effort to determine and agree upon the fair market values of the
properties”; and (3) accept deeds in lieu of foreclosure on some of the properties in full
satisfaction of the debt thereby allowing TCI Luna to “keep other properties free and clear.” TCI
Luna further argued in its brief and pleaded that TCI Luna “understood that they would receive
full credit toward the Note for the fair market value of any properties foreclosed by BBT.”
BB&T contends TCI Luna’s proof at the hearing on the temporary injunction did not
support its argument and pleadings that an agreement was formed. TCI Luna’s representative
testified that, in exchange for TCI Luna moving for voluntary dismissal of its bankruptcy, BB&T
agreed only to provide appraisals on the properties. As to the other alleged terms of agreement,
under both direct and cross-examination, TCI Luna’s representative consistently stated that:
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(1) the parties agreed to meet after dismissal of the bankruptcy to try to resolve disputes that
might arise when appraised values were received; (2) the parties never discussed, or agreed to,
the relation between the appraised value of the properties and the amount of credit against the
outstanding loan balance upon foreclosure; 2 (3) the parties agreed to meet after dismissal of the
bankruptcy and attempt to agree on whether “some properties. . . would go back to the bank, and
some properties we would keep free and clear”; and (4) there was no agreement before dismissal
of the bankruptcy other than an agreement to meet in the future in an effort to agree to terms of a
contract. In addition to that testimony, the record contains an email from TCI Luna’s counsel
that the parties “agreed to sit down and discuss in good faith this deal” after the bankruptcy was
dismissed. BB&T’s attorney’s reply to this email confirmed that “BB&T will discuss the
deal . . . and BB&T when ready is willing to work through the properties.”
The elements of a valid and enforceable contract are: (1) an offer; (2) an acceptance in
strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party’s consent
to the terms; and (5) execution and delivery of the contract with the intent that it be mutual and
binding. Hubbard v. Shankle, 138 S.W.3d 474, 481 (Tex. App.—Fort Worth 2004, pet. denied).
The necessary elements of both written and oral contracts are the same and must be present for a
contract to be binding. Id. A contract’s material terms must be sufficiently definite and
reasonably certain to both parties. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d
831, 846 (Tex. 2000). Accordingly, all essential terms of the agreement must be agreed upon
before a contract may be enforced by the courts. T.O. Stanley Boot Co., Inc. v. Bank of El Paso,
847 S.W.2d 218, 221 (Tex. 1992). If the terms of an alleged contract are so indefinite that it is
impossible for the courts to determine the rights and obligations of the parties, it is not an
2
TCI Luna’s representative testified TCI Luna decided to rely on section 51.003 of the property code rather
than discuss this term with BB&T.
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enforceable agreement. Shin-Con Dev. Corp. v. I.P. Invs., Ltd., 270 S.W.3d 759, 765 (Tex.
App.—Dallas 2008, pet. denied). Parties may agree on some terms sufficient to create a
contract, leaving other provisions for later negotiation. See Scott v. Ingle Bros. Pac., Inc., 489
S.W.2d 554, 555 (Tex. 1972); Ski River Dev., Inc. v. McCalla, 167 S.W.3d 121, 133 (Tex.
App.—Waco 2005, pet. denied). When an agreement leaves material terms open for future
adjustment and agreement that never occur, it is not binding upon the parties and merely
constitutes an agreement to agree. See Fort Worth Indep. Sch. Dist., 22 S.W.3d at 846; Ski
River, 167 S.W.3d at 134.
BB&T argues the testimony of TCI Luna’s own representative and both parties’
counsel’s emails established that there was no material term of obligation on the part of BB&T to
do anything. According to TCI Luna’s representative, BB&T promised nothing other than
continued negotiations of two subjects after dismissal of the bankruptcy: (1) disagreements about
the valuations in future appraisal reports; and (2) a potential agreement to deed some properties
to BB&T in exchange for BB&T’s release of liens on other properties. As such, material terms
were omitted from the alleged agreement rendering it unenforceable. See Fiduciary Fin. Servs.
of Sw., Inc. v. Corilant Fin., L.P., 376 S.W.3d 253, 256 (Tex. App.—Dallas 2012, pet. denied).
This evidence proves an agreement to agree, not an enforceable contract. Accordingly, there was
no factual dispute for the trial court to resolve regarding formation of the alleged agreement. In
the absence of any evidentiary support of an enforceable agreement, TCI Luna’s breach of
contract claim does not support the temporary injunction order.
III. Fraud Claims
BB&T argues that TCI Luna failed to prove its claims of fraud and statutory fraud
involving real estate. BB&T contends that TCI Luna simply alleged—but failed to prove—that
BB&T’s promises made as part of the alleged oral agreement between it and BB&T constituted
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misrepresentations made by BB&T to induce TCI Luna to request a dismissal of its bankruptcy
and consent to the subsequent foreclosures. Common to both theories pleaded by TCI Luna is
the requirement that there be a material, false, misrepresentation. See Formosa Plastics Corp.
USA v. Presidio Eng’s & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998) (elements of
common law fraud include making material misrepresentation that was false); Texas Integrated
Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 366 (Tex. App.—
Dallas 2009, pet. denied) (elements of statutory fraud involving sale of real estate pursuant to
section 27.01 of the Texas Business and Commerce Code include making false representation of
a past or existing material fact or false and material promise to do an act with the intention of not
fulfilling it).
The record here shows that the parties never finalized terms of an agreement but only
agreed to continue negotiations after the bankruptcy was dismissed. TCI Luna does not accuse
BB&T of failing and refusing to continue negotiations of contractual terms after the bankruptcy
was dismissed, nor is there any evidence of such conduct in the record. Because there was no
evidence presented at the temporary injunction hearing of an actionable misrepresentation, TCI
Luna’s fraud and statutory fraud claims cannot support the temporary injunction order.
IV. DTPA
TCI Luna supported the request for temporary injunction in the trial court with a claim
under the Deceptive Trade Practices Act. See TEX. BUS. & COM. CODE ANN. §§ 17.41-.63 et seq.,
(West 2011 & Supp. 2012). BB&T argues that TCI Luna’s DTPA claims arise from a loan of
money which is not a “service” under the DTPA. See, e.g., La Sara Grain Co. v. First Nat. Bank
of Mercedes, 673 S.W.2d 558, 566 (Tex. 1984); Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169
(Tex.1980). If the loan is not a service, BB&T argues, then TCI Luna cannot be a “consumer” as
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defined under and required by the DTPA. See TEX. BUS. & COM. CODE ANN. § 17.45(4), (10).
Both arguments are correct. The DTPA claims cannot support the temporary injunction.
V. Wrongful Foreclosure Claims
BB&T contends that TCI Luna cannot prevail on its wrongful foreclosure claims. TCI
Luna argued to the trial court that BB&T (1) induced TCI Luna to consent to foreclosures with
fraudulent statements, (2) used the bid price as the credit for each foreclosure sale instead of the
appraised, fair market value, (3) foreclosed on properties after TCI Luna cured its defaults, and
(4) failed to provide notices of default and acceleration before foreclosure. Our disposition
above of TCI Luna’s claims for breach of contract, fraud, and DTPA also resolves TCI Luna’s
wrongful foreclosure claim based on fraudulent inducement because the alleged fraudulent
statements TCI Luna asserts it relied upon are the same alleged misrepresentations we have
already concluded are not actionable. We consider here BB&T’s other arguments related to TCI
Luna’s wrongful foreclosure arguments to the trial court.
A. Credit for Fair Market Value or Foreclosure Bid Prices
TCI Luna argues as a factual matter, pleaded, and sought to prove at the hearing that the
correct calculation of its debt should be done using the fair market values of the foreclosed
properties as credits to the balance owed on the note, rather than the prices actually paid at the
foreclosure sale. By recalculating the several foreclosure sales that had already occurred based
on appraised fair market values, TCI Luna argued and alleged that the amount it owed on the
note was substantially reduced by the time of the temporary injunction hearing. At the hearing,
TCI Luna’s representative testified that section 51.003 of the property code entitled it to receive
credit for the appraised, fair market value of each property, rather than the cash or credit amount
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bid at the foreclosure sale. 3 TCI Luna then argued that the greatly reduced amount of the debt
justified enjoining foreclosure of the Mansfield and Sheffield properties that were allegedly
worth far more than the debt TCI Luna stated it owed. 4
BB&T argued below and here that Section 51.003 of the Texas Property Code addresses
deficiency judgments and is not applicable to this lawsuit. Subsection (a) of 51.003 describes a
deficiency suit as an “action brought to recover the deficiency” after a foreclosure sale. TEX.
PROP. CODE ANN. § 51.003(a) (West 20007). Subsection (b) specifically provides that
requesting a court to determine fair market value is a defense for reducing liability for a
deficiency judgment, stating:
Any person against whom such a recovery is sought by motion may
request that the court in which the action is pending determine the fair market
value of the real property as of the date of the foreclosure sale.
Id. BB&T argues that the phrase, “against whom such a recovery is sought,” has no other
reference than an “action brought to recover the deficiency” in subsection (a). We agree. The
statute is clear on this matter. See Martin v. PlainsCapital Bank, __ S.W.3d __, 2013 WL
1313770 at *6 (Tex. App.—Dallas Mar. 28, 2013, no. pet. h.) (“Section 51.003 is an affirmative
defense because the borrower is seeking an offset”); Interstate 35/Chisam Rd., L.P. v. Moayedi,
377 S.W.3d 791, 797 (Tex. App.—Dallas 2012, pet. filed) (“Section 51.003 was designed to
protect borrowers and guarantors in deficiency suits brought following the non-judicial
3
TCI Luna did not specify a claim under section 51.003 in its pleadings; however its factual statement
made these allegations without specific reference to section 51.003. TCI Luna’s wrongful foreclosure count
incorporated those allegations by reference. BB&T does not complain on appeal about TCI Luna’s pleading and
after being served with the amended petition did not object to the testimony at the hearing specifically connecting
the calculation with section 51.003. Accordingly, we address the statute to the extent it is incorporated into TCI
Luna’s wrongful foreclosure theory of recovery.
4
TCI Luna extends this argument in its brief to assert that a foreclosure sale that occurred after the
temporary injunction order was signed resulted in full repayment of the debt if the debt is calculated using section
51.003. This evidence was not before the trial court and is contested by BB&T. We do not have jurisdiction to take
new evidence and make findings of facts. See Wisdom v. Smith, 209 S.W.2d 164, 166 (Tex. 1948). Accordingly we
do not consider TCI Luna’s arguments that are outside the temporary injunction hearing record.
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foreclosure on realty.”); Comiskey v. FH Partners, LLC, 373 S.W.3d 620, 643 (Tex. App.—
Houston [14th Dist.] 2012, pet. denied) (declining to apply section 51.003 to a declaratory
judgment action).
In this case, BB&T has not sued TCI Luna for a deficiency judgment. We have not
found, and TCI Luna does not cite, any opinion holding that section 51.003 provides an
affirmative cause of action against a creditor by a debtor who has not been sued for a deficiency
judgment. Even if we construe TCI Luna’s argument as asserting that there is confusion about
the amount owed, that is not a sufficient reason to enjoin foreclosure. Ginther-Davis Ctr., Ltd. v.
Houston Nat. Bank, 600 S.W.2d 856, 864 (Tex. Civ. App.—Houston [1st Dist.] 1980, writ ref’d
n.r.e.) (“appellants’ claimed confusion concerning the amount of the payment required to avoid
foreclosure is not in itself grounds for an injunction.”). As BB&T points out, merely that the sale
may not bring the best price is not a basis to enjoin a foreclosure sale. See Floore v. Morgan,
175 S.W. 737, 739 (Tex. Civ. App.—Fort Worth 1915, no writ). TCI Luna did not respond to
BB&T’s arguments that TCI Luna has not shown any facts or law justifying the use of any credit
to the balance owed on the note other than the cash or credit bid price at each foreclosure sale.
Accordingly, TCI Luna’s debt recalculation arguments under section 51.003 do not support the
temporary injunction.
B. Other Grounds for Wrongful Foreclosure
BB&T contends TCI Luna’s other bases for claiming wrongful foreclosure are each
precluded by the terms of the note and deeds of trust. TCI Luna’s argument that it cured pre-
maturity default so there was no default justifying BB&T’s foreclosures is inapplicable to the
temporary injunction order, which prohibits the foreclosure sales based on post-maturity non-
payment of the note. Although TCI Luna claims the foreclosures were wrongful due to lack of
notices of default and acceleration, it failed to put on any evidence that notice was required.
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Instead, BB&T argues and the evidence shows, TCI Luna waived all such notices. See Adams v.
First Nat'l Bank of Bells/Savoy, 154 S.W.3d 859, 867 (Tex. App.—Dallas 2005, no pet.) (waiver
of notice of default permissible). Moreover, the default BB&T sought to remedy by foreclosure
was that the note had matured and not been paid which did not require notice. See Deposit Ins.
Bridge Bank, N.A. v. McQueen, 804 S.W.2d 264, 267 (Tex. App.—Houston [1st Dist.] 1991, no
writ) (notice of acceleration not required when note matures on its own terms). Finally, there is
no evidence in the record to support TCI Luna’s contention that BB&T is obligated to obtain its
consent to foreclosure. As BB&T argues, the note and deeds of trust did not obligate BB&T to
obtain TCI Luna’s consent to foreclosure or provide notice of foreclosure. Moreover, we have
concluded above the parties did not enter into an enforceable agreement restricting BB&T’s
rights to foreclose. Because BB&T demonstrated that TCI Luna did not establish a probable
right to recover on its wrongful foreclosure claims, the temporary injunction order is not
supportable on this basis.
VI. Tortious Interference with Existing Contracts
Lastly, TCI Luna justified its temporary injunction request to the trial court as necessary
to avoid BB&T’s tortious interference with TCI Luna’s contracts to sell the Mansfield and
Sheffield properties to two separate buyers. BB&T correctly argues that bona fide exercise of
one’s own contractual rights constitutes a privilege to interfere with another’s contract. See
Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690-91 (Tex. 1989). Having concluded there was
no evidence to substantiate the conclusion that BB&T’s foreclosures were wrongful, breached
any agreement, or operated a fraud on TCI Luna, BB&T was within its rights to proceed with the
foreclosure sales. Additionally, TCI Luna failed to bring forward any evidence at the temporary
injunction hearing that the foreclosure sales would be independently tortious, further negating
the trial court’s reliance on TCI Luna’s tortious interference claim to justify the temporary
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injunction order. See Ginther-Davis, 600 S.W.2d at 861 (no “automatic right to an injunction”
even if foreclosure might interfere with a sale of the property). As argued by BB&T, the
evidence presented at the temporary injunction hearing could not support a finding that TCI Luna
had a probable right of recovery on its claim for tortious interference with an existing contract.
Accordingly, this cause of action cannot support the issuance of the temporary injunction order.
CONCLUSION
Having concluded that the record does not provide any basis for the trial court’s finding
that TCI Luna had shown a probable right of recovery on final trial on any of its claims, we do
not reach the remainder of BB&T’s arguments. We resolve BB&T’s sole issue in its favor and
conclude the trial court abused its discretion by granting the temporary injunction. We reverse
the trial court’s temporary injunction order, dissolve the temporary injunction, and remand the
case to the trial court for further proceedings.
120653HF.P05
/David W. Evans/
DAVID W. EVANS
JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
BRANCH BANKING AND TRUST On Appeal from the 192nd Judicial District
COMPANY, Appellant Court, Dallas County, Texas
Trial Court Cause No. dc-12-03653.
No. 05-12-00653-CV V. Opinion delivered by Justice Evans.
Justices Francis and Murphy participating.
TCI LUNA VENTURES, LLC and
TRANSCONTINTAL REALTY, Appellees
We WITHDRAW the opinion and VACATE the judgment of February 21, 2013. This
is now the judgment of the Court.
In accordance with this Court’s opinion of this date, we REVERSE the temporary
injunction order of the trial court, DISSOLVE the temporary injunction, and REMAND the case
to the trial court for further proceedings. It is ORDERED that appellant Branch Banking and
Trust Company recover its costs of this appeal from appellees TCI Luna Ventures, LLC and
Transcontinental Realty Investors, Inc.
Judgment entered this April 9, 2013.
/David W. Evans/
DAVID W. EVANS
JUSTICE
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