### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03- 07 -00 105 -CV

Tr ian LLC , A ppe lla nt

v. NovaStar M ortgage , Inc. , Appellee

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 201S T JUDICIAL DISTRICT NO. D-1- GN-04- 0040 07 , HO NORAB LE STEP HEN Y ELENOSK Y , JUDGE PRESIDI NG

M E M O R

A N D U M O P I N I O N Appellee NovaStar Mortg ag e, I nc. is a company that purcha ses mortg ag e loans a nd
re la te d mor

tg a g e se rv ic ing ri g hts fr om co mpa nie s tha t or ig inate and

pr oc e ss m or

tg a g e loa ns . In late 20 02 , it e nte re d in to a

c on tr a c t wit h app ell ant Tr ian, L L C, w hic h is a c omp any that or ig inate s,
un de rw ri te s, and

pr oc e sse s a

pp l i c a t i o n s f o r r e sid e nti a l mo rt g a g e loa ns , und e r w hic h N ov a Star w ou ld buy and ser vice mortg ag e loans originate d by Trian. I n late 2004, Nova Star sued Tria n, alleg ing that Trian br eac hed the pa

rties’ c ontrac t wh en i t d id not repurc hase thre e loans a s require d by the contra ct. The tria l court g rante d summary judgme nt in NovaStar’s fa vor, aw ardingNovaStar $1 68 ,6 67 .8 0 in

dama g e s and

$4 1, 78 5 in tr ia l court a tto rn e y ’s fe e s, plu s c os ts, pr e jud g me nt i nte re st,
and c on dit ion a l a

pp e llate a tto rn e y ’s fe e s. On a pp e a l, T ri an c on te nd s th a t the tr ia l c ourt e rr e d in g ranting summary judgme nt be cause NovaStar did not prove there was no issue of material fa ct as2

to its breach of

contra ct claim and beca

use Trian raised a fa ct issue as to its affir mative def

ense of
e sto pp e l. We a ff

ir m th e tr ia l c ourt ’s jud g me nt.

Stand ard of Review To b e en t i t led to summary judgme nt on a claim for brea ch of c ontrac t, a plaintiff
mus t pr ov e that no qu e sti on of ma te ri a l f

a c t re ma ins a s to the fo llo wi ng fo ur e le me nts of the c la im: (1) a valid contra ct exist ed betwe en the pa rties; (2) the plaintiff perf

ormed or tendere d perf

ormanc e; (3) the de fenda

nt brea ched a duty it owe d under the contra ct; and (4) the plaintiff wa s damag ed as
a re sult. Roundville Partners, L.L.C. v. Jones , 118 S.W .3d 73, 8 2 (Tex. App.—Austin 2003, pe t. d e nie d) ; se e Ke nd

zio rsk i v . S au nd e rs , 191 S.W .3d 395, 402 (Tex. App.—Austin 2006, no pet.) (in revie wing summary

judgme nt, w e resolve doubts and take a s true evide nce in f avor of nonmovant; movant is e ntitled to summary judgme nt if it de monstrates there are no g enuine issues of mater ial fac t and establishes a ll elements of cla im a s matter of law). NovaStar e stablished that the pa rt ie s h a d a

va lid c on tr a c t, w hic h c on ta ine d a pr ov isi on

that, u nd e r certai n c ir c ums tanc e s, require d Trian to buy

back loa ns sold to NovaStar; NovaStar pe rfor med i t s o b ligations under the contra ct, purc hasing a n u m b er o f loans from Tr ian, including the three loans at issue her e; the fi rs t th re e pa

y me nts we re mis se d o n a ll thr e e loa ns , tr ig g eri ng Tria

n’ s c on tr a c tua l ob lig a tio n to repur chase the loans fr om NovaStar; NovaStar demande d that Trian buy back the loans as provide d in the contra ct; and Tria n re fused. Thus, unless Tr ian pre sented summary judgme nt evidence sufficie nt to raise a f

act issue on one of the e lements of Nova Star’s cla im or on eac h el ement of
o n e o f T r i a n ’ s a f

f i r m a t i v e d e f

e n s e s , t h e t r i a l c o u rt p r o p e r l y g r an t e d s u m m ar y j u d g m e nt i n NovaStar’ s favor
. See Hope’s Fin. Mgmt. v. Chase Manhattan Mortgage Corp. , 172 S.W .3d 105, 108 (Tex. App.—Dallas 2005, pe t. denied).The c ontrac t also includes a c lause t h at p ro v i d es that, upon discovery of a material 1 misrepre sentation, NovaStar c ould require Trian, within six ty day s of notice, to re purcha se “a ny loan containing such mater ial misrepre sentation,” a nd an indemnification clause un d er w hich Trian ag ree d to indemnify

NovaStar f

rom any loss it incurre d arising out of “the ina ccur acy or bre ach of any war ranty or represe ntation made by [Trian] in this Ag ree ment, or t he breac h by [Trian] of any obli g a ti o no r

c o v e n an t t o b e p e r f

o r me d b y it u n d e r th is A g r e e me n t. ” T r ia

nar g u e s th a t N o vaStar c ann ot re ly on the ind e mni fi c a tio n or misr e pr e se ntatio n pro vis ion s, bu t Nov a Star re sp on ds that it is not suing unde r those cla

uses and is re ly ing sole ly

on the buy -bac k provision. Acc o rd i ng to NovaStar’s motion for summar y judgme nt, NovaStar for eclose d on the 2 Nguy e n a nd Ma xwe ll pr op e rt ie s and so ld the m to t hir d- pa rt ie s, re du c ingthe a mou

nt o f d a ma g e s it soug ht from Trian acc ording ly . The loan pr incipals on the Nguy en loans totaled $272,719.77, NovaStar inc urre d $52,521.31 in lost i ntere st and maintenanc e costs, and the proper ty was sold for $236,000, of which N ovaStar ne tted $204,9 8 4
. 7 5 ; NovaStar’ s net loss on the Ng uy en loans wa s th er ef o re $120,256.33. The principa l on the Maxwell loan was $231,814.47, NovaStar incurre d $24,803.90 in lost interest and maintenanc e costs, and the proper ty was sold for $175,500, of which NovaStar ne tted $158,206.90; NovaStar’s ne t loss on the Maxwell loan was $98,411.47. Nova Star offse t its damag es by a $50,000 cre dit it owed Trian on other loans. Thus, Nova Star asser ted that Trian owe d NovaStar a

total of $168,667.80 ($120,256.33 plus $98,411.47, less $50,000). 3 F ac tu al B ac kgr ound Th e pa rt ie s’ c on tr a c t pro vid e s th a t T ri an “ wi ll b e ob lig a te d to re purc ha se any loa n in wh ic h th e bo rr ow e r d oe s n ot m a ke on e of the fi rs t th re e sc he du le d Pr in cipal and I nte re st p ayments due to [NovaStar] under the Mortg ag e Note” (the “ buy -bac k provision”). O n or about 1 November 3, 2003, Trian closed two loans to a per son who claimed to be named B rittany Ng uy en. The loans we re f

or $218,222.74 and $54,497.03. It was later discovere d that t h e per son who took out th e loan ha d stolen Ng uy en’s identity ; the thief has not bee n identified. On or a bout J anuar y 4, 2004, Trian or iginated a $232,000 loan to Jason Maxwell. NovaStar boug ht the Ng uy en and Maxwell loans, but on Nove mber 18, 2004, a fter N g uy en and Max well fa iled to make any of the first three schedu l ed pay

ments, NovaStar se nt a demand le tter askingTrian to buy back the loans purs ua nt t o th e c on tr a c t pr ov isi on s. Trian r efuse d, and Nova Star filed suit. 24 NovaStar move d for summary judgme nt, poin t i n g t o the contra ct’s provisions and pr ov idi ngdo c ume ntatio n s ho wi ngthe su ms N ov a Star pa id f or the loa ns , th e su ms p a id i n maintaining a

nd servicingthe prope rt i es, and that the first three pay ments on all three loa

ns were
never paid. NovaStar also provided proof that it demanded Tr ian’s ac tion under the c ontrac t and that Trian r efuse d to comply
. I n response to NovaStar’ s motion for summary judgme nt, Trian asse rted that the bo rr ow e r on the Nguy e n loa ns ha d c omm itt e d ide nti ty the ft in o bta ini ngthe loa

ns and , th us , the re wa s no act ual b or

ro we r w ho se de fa

ult wo uld tr ig g e r t he buy -b a c k p ro vis ion . T ri an a lso contende d that beca

use Tria n relied on a

n inacc urate cre dit report provide d by NovaStar in making the loans, NovaStar was contributorily or compa ratively neg lige nt in causing the loss on the Ng uy en loa ns . A s f or the Ma xwe ll l oa

n, Tr ian a

rgue d th a t be c a

us e a No va Star u

nderwri ter decid e d to overlook “ cer

tain neg ative aspects of borrowe r Max well’s credit history ,” NovaStar was e stopped fr om s e e kin g re c ov e ry

fr om T ri an. Tr ian a sse rt e d th a t No va Sta r “ ind uc e d Tr ian to se ll the loa

n to NovaStar by

. . . independe ntly

approvingthe Maxwell L oan.” NovaStar r eplied to T rian’s response , asser ting that Tr ian had not re futed that it had
a c o n t ra ct u al d

u t y t o b u y b ac k t h e N gu y en an d

M ax we l l l o an s an d

ar gu i n g t h at t h e p l ai nl an gu age of the c ontrac t neg ated the burdens that Trian was attempting to place on N ovaStar for the writing of the loans. Nova Star argued that “T rian c ontrac tually shifted to it s el f t h e ri s k of loss under the circ umstances he re. A s a matter of law, ther efor e, Nova Star owed no underw riting or other duties to Trian.” N ovaStar c ontended that Tr ian had not ra ised a fa ct issue as to whether NovaStar ow ed any duties to Trian bey ond those set out in the contract; that the Ng uy en cr edit repor t was pre pare d using infor

mation supplied by

cre dit r eporting ag encie s and that Tria n thus would have g ather ed the5

same infor

mation had i t u s ed a report from a n ag ency other than N ovaStar; that Nova Star did not “appr ove” the Maxwell loan; and that even if there was e vidence of Nova Star’s appr oval of the loa n, Tr ian s til l ha d a

n a bs olute du ty

to b uy ba c k th e loa

n, re g ard le ss o f t

he re a so n f

or the de fa ult
. The Ng uye n Loa ns On NovaStar ’s claims re lated to the Nguy en loans, Tr ian asser ts that the buy -b ack provision arises only if “the borrower does not make one of the fir st three sc heduled Principa l and I ntere st pay

ments,” but bec ause the person who took out the loans c om m i t t ed i d entity theft, there
w a s n o “ b o r

r o w e r ” o r “ m o rt g a g e n o t e ” u n d e r t h e N o v a S t ar

/ T r i anc o n t r a c t , an d

i t s c o n t r a c tu a l b u yback duties w ere not trigg ere d by the def ault on the Nguy en loans. Trian also argues t hat NovaStar is estopped from se eking the buy back of the Ng uy en loans because Trian decided to make the loans afte r re viewing a cr edit repor t prepa red by NovaStar. Tr ian fi rs t c on te nd s th a t be c a us e the loa

ns we re ma de in N g uy e n’ s n a me a s a re su lt of identity

theft, the buy -bac k provision was not trig g ere d. Trian’ s argument boils down to this: the Ng uy en loans we re ma de throug h fra ud. There is no leg itimate bor rowe r on the loans, and N g uy en is not obli g ated on the l o an s b ec au s e she w as the victim of identity theft and did not sig n the
mor tg a g e pa pe rs. B e c a

us e the re is n o le g iti ma te bo rr ow e r, Tr ian in sis ts, the mor tg a g e no te is a sham, and the buy -bac k provision cannot be tr igg ere d by a sham note and borrowe r. We disag ree . T h e p art i e s ’ c o n tr a c t d o e s n o t i n c l u d e p r o v i s i o n s r e l a t e d t o f r a u d o r i d e n t i t y t h e f t
. It does not provide pr otections for Tr ian in the eve nt of a fr audulently obtained loan or include pr ov isi on s a llo c a tin g ri sk s and los se s d ue to f ra ud . T he buy -b a c k p ro vis ion is s tr a ig ht- fo rw a rd : if a borr ower

misses one of the f

irst three pay

ments on a mortg ag e, Tria n is “obligated to repur chase ”6

the loan. The contra ct does not shift the burde n of loss to NovaStar in ca se of f raud, the ref

ore the loss must rema in on T rian, as provided by the plain lang uag e of the contra ct. Trian ha s not provided
an y a u t h o r i t y t o s u

p p o rti t s ar g u m e n tt h a tb e c a u s e t h e l o an s w e r e o b t a i n e d t h r o u g h f r a u d , l e g a l l y, there is no borrowe r or mortg ag e note. We c annot imply or rea d into the contra ct lang uag e re lated t o h o w t h e p ar t i es al l o ca t ed l o s s d u e to fr au d
. W e c an o n l y re l y o nt h e p l ai nco n t ra ct u al l an gu age and the f acts a s established by

the par ties’ summary judgme nt evidenc e. The real Brittney Ng uy en did not take out the loans, but someone else, ref err ed to as J ane Doe or “ Br ittney Ng uy en” in va

rious fi lin g s, did
. Jane Do e or “ B ri ttn e y Nguy e n” is t

he bo rr ow e r, and

sh e did no t make any

of the fi rs t three pay ments on the loan. Althoug h the loans we re obta ined throug h fra ud, the loans we re ma de to a bo rr ow e r, wh o d e fa

ult e d imme diate ly

on the loa ns . Ind e e d, Tr ian s ou g ht a nd ob ta ine d a

de fa ult judgme nt ag ainst J ane Doe that found that Doe wa s the owner of the prope rty , that the promissary notes and de eds of trust constituted valid lien s , an d t h at Trian ha d the rig ht to forec lose on the proper ty . NovaStar e stablished that the loans we re ma de by Tri an , b o u g ht by

NovaStar, a

nd de fa ult e d o n by the sh a m bor

ro we r. Tr ian is thus ob lig a te d to re purc ha se the loa ns un le ss i t c an r a ise a fa ct issue as to ea ch ele ment of its estoppel defe nse.

Trian state s that it “order ed [the October 2003] cre dit report fr om NovaStar” and that No va Star i s e sto pp e d f

ro m a sse rt ing its c la im ag a ins t Tri an be c a us e the re po rt

c on ta ine d in a c c ur a te informa t ion. Trian say s, “In sum, NovaStar is now asse rting that Trian should not have made the Ng uy en loans, c ontrary

to its posi tion that Nguy en applica nt was cr edit worthy .” A par ty asser ting e stoppel must show: “(1) a false repr esentation or conce alment of materia l fac ts; (2) made wit h actua l or constructive knowledg e of those fac ts; (3) to a par ty without knowledg e or the means of knowledg e, of those fac ts; (4) with the intention that it s hould be ac ted7

on; and (5) the party

to whom it was made mus t h av e re l i ed o r ac ted on it to his prejudice.” Gh as him v . S

tat e , 104 S.W .3d 184, 188 (Tex. App.—Austin 2003, no pet.). T ri an s t at es that it relied on a c redit re port provided by NovaStar in wr iting the Ng uy en loans. The summary judgme nt evidenc e includes the report, dated Oc tober 2, 2003, whic h i s b as ed on information obtained f rom three cre dit reporting ag encie s, does not ref lect any irregularities or fraud alerts related t o Ng uy en’s c redit history , and does not list two other mortg ag es that wer e take n out in Nguy en’s name in September 20 0 3 . Although the October repor t does not inc lud e a fr a ud a le rt or the Se pte mbe r 2 00 3 lo ans , it do e s r e fl e c t a

bout twe nty

inq uir ie s in to Ng uy en’s c redit w i t h in just over one month’s time, betwee n Aug ust 22 and Octobe r 2, 2003, in c lu d in g in qu ir ie s b y

a t l e a s t s ix o th e r

mo rtg a g e c o mp an ie s . A late r c r e d it r e p o rt, d a ted Marc h 1 1, 20 04 , s ho ws the tw o a dd iti on a l lo ans tha t w e re op e ne d in

Nguy e n’ s n a me in Se pte mbe r 20 03 and ha s a fr a ud a le rt that state s that Nguy e n is the po ssi ble vic timof ide nti ty the ft
. The re cord a lso includes a letter from Nguy en st at i ng that she lea rned in e arly

Fe bruar y 2004 that she wa s the victim of identity theft. Both Nguy en cr edit repor ts w er e printed fr om a NovaStar website, www.Nova starI S.com. Although the O ctober 2003 repor t was printed from the NovaStar w ebsite, it states that it wa s p re p ar ed by CSC Mortg ag e Servic es for Trian, ba sed on information obtained from the Trans Union, Ex peria n, and Equifa x Information Servic es cr edit repor ting a g encie s. The repor t state s t h at C SC prepare d the re port but had not verif ied the information. Si milarly , the Marc h 2004 repor

t was pre pare d for NovaStar by Chase Credit Resear ch using infor mation from the
same thr e e re po rt inga g e nc ie s, and Cha se state d it

ha d n ot v e ri fi e d th e info rm ati on . B oth re po rt sTrian’ s evidenc e does not e x plicitly establish this fact, but it can be impl i ed from the 3 e vid e nc e and

a rgume nts . In h is a ff

ida vit , M art in C antu , T ri an’ s p re sid e nt, stat es that T ri an p a id 8 state, “While this report is being used for some rea l estate lendingpurposes, it is not a Residential Mortg ag e Credit Report a s defined by FNMA , FHL MC and FHA/VA g uidelines.” Trian’ s argu m ent i s that beca use Nova Star provided Tr ian with the Octobe r 2003
re po rt , wh ic h did no t inc lud e a fr a ud a le rt or sh ow tw o Se pte mbe r mor tg a g e loa ns take n out in Ng uy en’s name, NovaStar essentially acquie sced to Trian’ s making of t he Nguy en loans and may not now asser

t its claims related to the loans. We disag ree . First, Tria n has pre sented no e vidence to show that NovaStar ha d actua l or constructive know ledg e of the true fa cts or that it provided the O ctobe r 2 0 0 3 re p o rt to Trian, intending that Trian would wr ite the loans despite the the ft of Nguy en’s identity
. T h e re p ort may have be en g iven to Trian by NovaStar b u t i t wa s p repa red by CSC Mortg ag e Servic es base d on information provided by

three cre dit reporting ag encie s. NovaStar did not collec t the information
and the re is n o ind ic a tio n in the re c or d that No va Star ha d a ny du ty to v e t th e inf

or ma tio n, e ith e r i n reg ards to its relationship with Trian or in g ener al as a company that boug ht c redit report s from
re po rt pr ov ide rs , o r t

hat N ov a Star i n a

ny wa y wa rr a nte d th e inf

or ma tio n c on ta ined i n the re po rt
. F ina lly , th e e vid e nc e do e s n ot rai se a fac t is su e a s to wh e the r t he Oc tob e r 2 00 3 r e po rt

c on ta ins a materia l misreprese ntation. At the time of the repor t, the identity

theft had not be en discove red a nd, thus, there c ould not have bee n a fr aud ale rt noted. F urther, the repor t was run on Oc tober 2, 2003, the re cord doe s not establish when in September the other mortgag e loans wer e written, and there is n o e vid e nc e a s to ho w l on g it tak e s for c re dit inf or ma tio n to be re po rt e d. Tr ian d id n ot e sta bli sh that the September

loans, knowledg e of w hich it argu es wo u l d have stoppe d it from writing the loa ns , should have be en re flec ted on the re port run on October 2, 2003. Tr ian did not raise a fac t 3No va Star f or the re po rt , th a t th e re po rt “ wa s n ot a

n a c c urat e repre se ntatio n” of Nguy e n’ s c re dit beca use it did not disclose the identity theft or the September loa ns, and that “Tr ian would not have made the N g y

uen [sic] loans but for the NovaStar credit re port.” Cantu does not spec ifically aver that T ri an w ou ld n ot h a ve wr itt e n th e loa ns if it h a d k no wn a bo ut t he Se pte mbe r l oa

ns . Cantu ’s a ff

ida vit , atta c he d to Tr ian’ s mo tio n f or su mma ry judgm e nt, a lso state s th a t a 4 “Nova Star L oan Approval Summary for the Max well loan” w as attac hed as e x hibit A-3. Howeve r, the cler k’s re cord doe s not contain this ex hibit, and communications with the trial court c lerk’s of fice confirme d that they

do not have the e x hibit in t heir possession. 9 issue as t o eac h element of estoppel, se e Gh as him , 104 S.W .3d at 188, and there fore the trial cour t did not err in g ranting summary judgme nt relate d to the Ng uy en loans in Nova Star’s favor.
The Maxwell L oan Wit h reg ard to the Ma x well loan , T ri an ar g ues that Nova Star is estopped fr om seeki ng to reco ve r f

or that lo an b e c a

us e it “ ind e pe nd e ntl y

a pp ro v[e d] th e Ma xwe ll l oa n w hil e overlooking neg ative aspe cts of Maxwell’s cre dit hist ory .” We disag ree .

As su mma

ry jud g me nt ev ide nc e , Tr ian pro du c e d e ma ils and no te s b y Sha ro n D a vis , a Tria n underw riter. Davis wrote an emai l to Stephanie Ver dug o, a Nova Star underw riter, 4 explaining that Trian had rec eived an application from Maxwell for “an 80% Cash-out R efina nce on a home that is one y ear old,” but that Ma x well had “bee n making ‘intere st only pay ments since 2/02 and is la

beled ‘Construction L oan.’” Davis said she had explained that Trian “c annot do a c ashout on a ‘c onstruction loan’ and the Broker ’s response is that they have been living there for 1 y ear with a history

of making pay

ments.” Ver dug o responde d, “[W ]e should be fine on this as long a s
we c an e vid e nc e tha

t th e ho us e ha s b e e n c omp le te and the bo rr ow e r ha s b e e n r e sid ingin t he ho us e for the la st y ear

and we can e vidence who all is on title.” A wee k later, Davis made notes that she spoke with Ver dug o about the late pa y ments. Ver dug o said Trian should g et a letter from the ba

nk10

that wrote the construction loan “stating that the pay ments were not require d and we re ma de above
an d b e y o n d r e qu ir e me n ts o f

lo anan d w e s h o u ld

b e O K
. ” D a v is wheth e r T r ia ns h o u ld p e n a li ze Maxwell, and Verdug o told her, “‘ No. As long as y ou document they wer e not re q u i red.’ Then added, ‘ But a lso, verify

previous housing history to complete the 24 months history .’” Davis next spoke to the vice-pr esident of the A marillo Ba nk, who explained that Maxwell’s wife died of canc er just befor e the construction loan matured and that the bank allowed the family

to remain in the home w hile they dealt with their g rief. Max well told the bank that he would make pa

y ments if possible and re financ e whe n he wa s able, a nd the bank told Davis that “[t] he pay ments were not r equire d and wer e made above and bey ond the require ments of the note.” Th e vic e -p re sid e nt a lso e xpla ine d that a t le a st on e pa y me nt wa s pr oc e sse d by the ba nk on e mon th afte r it was re ceive d from Maxwell and that the de lay was not Maxwell’s fault. The vic e-pr esident sent Davis a le tter explaining in writing t h at s hortly afte r the Maxwells beg an construc tion, Mrs. Maxwell was diag nosed with terminal lung ca n ce r; she died shortly afte r the house w as
co m p l et ed. The bank is more than 100 y ear s old and requir es its employ ees to be “attuned to our
c us tom e rs and

the ir ne e ds ,” and the vic e -p re sid e nt sa id, “ [d]ur ing thi s pe ri od of g ri e f, Mr . M a xwe ll did no t ne e d a w e ll s e c ur e d b ank makin g de mand s. ” F ur

the r, Ma xwe ll a

nd his bu ild e r h a d a

dis pu te
a bo ut o ve rc ha

rg e s, wh ic h M a xwe ll u lti ma te ly wo n in a laws uit . T he le tte r s ta te d, “ I n th e int e ri m period , th e n o te d id

n o t h a v e anin te r e s t r e p ay me n t s c h e d

u le ; h o w e v e r , M r . M a xw e ll d id make
mon thl y int e re st p ay

me nts .” Fin all y , the v ic e -p re sid e nt e xpla ine d th a t Maxwe ll m a de an in te re st pay ment in September 2003, but that it did not ge t posted to Max well’s ac count until October, w hen Ma xwe ll p oin te d o ut t

he omi ssi on

a t th e tim e he ma de the Oc tob e r p ay me nt.11 Trian a rg ues that NovaStar “induce d Trian to sell the loan to Nova Star by NovaStar independe ntly

approvingthe Maxwell L oan while overlooking neg ative aspec ts of the borrow er’ s
cre dit hist ory ” an d that, beca use Nova Star “ove rlook[ed] its own credit-w orthiness g uidelines,”
a c c e pti ngthe ri sk

that Maxwe ll m ig ht de fa

ult , Nov a Star sho uld

no t be pe rm itt e d to sh if

t th a t r isk to Trian a nd demand Tr ian’s complianc e with the buy -bac k provision. Ac c or din g to t

he e vid e nc e , N ov a Sta

r’ s und e rw ri tin g guid elin e s r e qu ir e d “ that a bo rr ow e r’ s p ay

me nt s ta tus be ‘0 x30’ or

no t late in t

he la st 3 0 d ay s. ” Th e e vid e nc e e sta bli sh e s th a t, when a question arose about Maxwell’s late pay ments, Trian c ontacted the bank that made the construction loan in que stion a nd was informed that Maxwell had made pa y ments when not re quired to do s o an d

t h a th i s p ay

m e n t s w e r e “ a

b o v e an d b e y o n d ” t h e l o an ’ s r e qu i r e m e n t s . T h e b an k a lso informed Trian t hat M axwell had made pay ments in both September a nd October

2003 but that the Se pte mbe r p ay

me nt w a s post e d lat e du e to t he ba nk ’s ha nd lin g of the pa y me nt, no t be c a

us e Ma xwe ll ha d p a id l a te . T hu s, no t on ly did the ba nk e xpla in t hat Maxwe ll ha d not be e n lat e in t he la st thir

ty day s, it e x plained that Maxwell had made intere st pay ments when not re quired to do so. NovaStar did not provide to T rian any information about Maxwell’s c redit history ; it mere ly informed Tr ian of what information was nece ssary to le arn about Maxwell’s c onstruction loan. Trian obta ined that information fr o m t h e bank, a nd from the e vidence provided, the ba nk’s information showe d that Ma xwe ll w a s n ot i n v iol a tio n o f N ov a Sta r’ s “ ‘0 x30’ or

no t late in t

he la st 3 0 d ay s” re qu ir e me nts
. Fur ther, Tr ian did not present e vidence to raise a fac t issue as to whether

NovaStar provided false inf

ormation, knew a

bout the misrepre sentation, or intended T rian to re ly on the misrepre sentation. Tria n d i d not show that NovaStar pr ovided any information about12

Maxwell’s credit history
. NovaStar’ s underwr iter discussed Ma x well with Trian’ s underwr iter, but No va Star mad e no re pr e se ntatio ns a bo ut w he the r M a xwe ll q

ua lif ie d f or the loa n. No va Star o nly explained what it would require to consider him qualified. N or is there any evidenc e to show that No va Star kn e w that Ma xwe ll wa s no t c re dit -w or thy or that it ha d a

ny inf or ma tio n a bo ut M a xwe ll to contradic t what Trian le arne d from the bank. Bec ause Tr ian did not present e vidence raising a fa ct issue about ea ch ele ment of estoppel, se e Gh as him , 1 04 S.W. 3d a t 18 8, the tr ia l c ourt

did no t e rr in g ranting NovaStar summar y judgme nt on its claims related to the Maxwell loan.

Conclusion Havingconsidere d Trian’ s complaints relate d to the Ng uy en and Ma x well loans and having deter

mined that Trian f

ailed to ra ise a fa ct issue to neg ate NovaStar’ s entitlement to judgment
a s a ma tte r o f l aw und e r t

he buy -b a c k p ro vis ion , w e a ff ir m th e tr ia l c ourt ’s jud g me nt.

__________________________________________ David Pury ear , J ustice Be fore J ustices Patterson, Pury ear and Pember

ton Affir med Filed: August 31, 2009