Case Name: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Appellant, v. Michael P. GEARY, Dependent Administrator of the Estate of Steven J. Corey, Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1997-01-28
Citations: 938 S.W.2d 205
Docket Number: No. 05-94-01210-CV
Parties: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Appellant, v. Michael P. GEARY, Dependent Administrator of the Estate of Steven J. Corey, Appellee.
Judges: Before KINKEADE, OYARD and MALONEY, JJ.
Reporter: South Western Reporter Second Series
Volume: 938
Pages: 205–219

Head Matter:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Appellant, v. Michael P. GEARY, Dependent Administrator of the Estate of Steven J. Corey, Appellee.
No. 05-94-01210-CV.
Court of Appeals of Texas, Dallas.
Jan. 28, 1997.
Rehearing Overruled Jan. 28, 1997.
Michael F. Pezzulli, Carol E. Farquhar, Pezzulli & Associates, Dallas, for appellant.
Larry M. Wolfish, Evaleen M. Davis, Geary, Porter & West, P.C., Dallas, for ap-pellee.
Before KINKEADE, OYARD and MALONEY, JJ.

Opinion:
KINKEADE, Justice.
Texas Commerce Bank National Association (TCB) appeals from a summary judgment granted in favor of Michael P. Geary and the denial of TCB's motion for summary judgment on a claim against a decedent's estate. In seven points of error, TCB generally argues: (1) Texas probate code section 306 does not apply to independent administrations (see TexProb.Code Ann. § 306 (Vernon 1980)) (unless otherwise indicated, all statutory references in this opinion are to the probate code as it read in 1991 when the decedent died and the probate court granted letters testamentary); (2) TCB did not elect preferred debt and lien status under section 306; (3) TCB's claim was not a secured claim; (4) Geary's motion for summary judgment became moot when the trial court granted a motion to strike Geary's declaratory judgment causes of action; and (5) bankruptcy proceedings did not affect the estate's liability for TCB's claim. For the reasons set forth below, we affirm the trial court's denial of TCB's motion for summary judgment, reverse the summary judgment granted in favor of Geary, and remand this case for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
In 1986, Steven J. Corey, in his capacity as president of Incorsel International Entertainment Consultants, Inc., executed an $800,000 note, secured by a deed of trust on certain residential real estate. In 1989 Corey and Incorsel executed a loan modification agreement as co-makers. Texas Commerce Bank National Association (TCB) became the holder of this note. Corey died on September 17, 1991. The probate court granted letters testamentary on October 15,1991 and appointed Michael P. Geary as independent executor of Corey's estate.
In September 1992, Incorsel filed for protection under chapter 11 of the United States Bankruptcy Code. TCB foreclosed on the property securing the note in June 1993, after the bankruptcy court had confirmed a reorganization plan for Ineorsel and lifted the stay on the property. TCB sold the property for $402,000 and also received a $39,720.38 distribution from Ineorsel's bankruptcy estate.
On October 6, 1993, upon Geary's motion, the probate court converted Corey's estate to a dependent administration and appointed Geary as dependent administrator. The next month, TCB claimed a deficiency from Corey's estate for the balance remaining on the note. Geary denied the claim, and TCB brought this action to enforce its claim.
Although the record does not contain Geary's original answer and counterclaims, we presume the answer and counterclaims contained declaratory judgment causes of action, because Geary moved for summary judgment asking the court to make several declaratory judgments. TCB filed an answer to Geary's motion for summary judgment along with its own motion for summary judgment. TCB also filed a motion to strike Geary's declaratory judgment causes of action.
Before the court ruled on any of the motions, Geary filed an amended answer and counterclaims. He asserted several declaratory judgment counterclaims against TCB, as well as counterclaims for conversion and constructive trust. He also asserted the affirmative defenses of accord and satisfaction, res judicata, estoppel, and payment.
The court later conducted a hearing on the motions. The court granted TCB's motion to strike Geary's declaratory judgment causes of action but denied TCB's motion for summary judgment. The same day, the court granted Geary's motion for summary judgment, denying TCB's claim. A month after the trial court's judgment, TCB filed an amended petition and motion for rehearing, which the trial court denied.
APPLICABILITY OF SECTION 306 TO INDEPENDENT ADMINISTRATIONS
The ultimate outcome of this action turns largely on whether section 306 applies to independent administrations through its interaction with section 146 of the probate code. Section 146 states, in part, that an independent executor must pay claims against an estate "in the same order of priority, classification, and proration prescribed" in other code sections. Tex.PROB.Code § 146. Section 306 of the code provides that personal representatives of estates shall pay secured claims in different ways, depending on how a creditor elects to treat his claim. Under section 306, there are two kinds of secured claims that are classified and prioritized differently under sections 320 and 322. A secured creditor may elect to have his claim treated as either: (1) a matured secured claim; or (2) a preferred debt and lien. Tex.Prob.Code § 306(a). If a secured creditor makes no claim or does not affirmatively elect otherwise within six months after the original grant of letters testamentary, his claim will be treated as a preferred debt and lien. Tex.Prob.Code § 298(a), 306(b) (time period amended by Act of May 27,1995, 74th Leg., R.S., ch. 1054, § 9,1995 Tex.Gen. Laws 5207, 5210); Cessna Fin. Corp. v. Morrison, 667 S.W.2d 580, 583-84 (Tex.App.—Houston [1st Dist.] 1984, no writ). So, within six months a personal representative will be able to fit a secured claim into one of the two categories set forth in section 306.
If the claim is a matured secured claim, the representative will treat it as third class and pay it, to the extent of the value of the collateral, after first- and second-class claims, but before other lower-class claims. Tex. Prob.Code § 306, 320, 322. If there is not enough money in the estate to pay the first- and second-class claims, however, the representative will invade the collateral for the matured secured claim to pay the higher-priority claims. Tex.Prob.Code § 322; see Wyatt v. Morse, 129 Tex. 199, 204-05, 102 S.W.2d 396, 398-99 (1937). If the entire claim is not satisfied through the collateral, the representative can pay the deficiency as a lower-class claim out of other assets of the estate. Tex.Prob.Code § 322; see Wyatt, 129 Tex. at 204-05, 102 S.W.2d at 398-99.
If a claim is a preferred debt and lien, the representative may either pay the debt off or continue making payments as per the terms of the contract that secured the debt. Tex. Prob.Code § 306(a)(2) and (c). Regardless of which method the representative chooses, the creditor will have priority over all other debts, even first- and second-class claims, to the extent of the value of its collateral. Tex PROB.Code ANN. § 306(a)(2) and (c); see Wyatt, 129 Tex. at 204-05, 102 S.W.2d at 398-99; Dallas Joint-Stock Land Bank in Dallas v. Maxey, 112 S.W.2d 305, 307-09 (Tex.Civ.App.—Dallas 1937, no writ). But see San Antonio Sav. Ass'n v. Beaudry, 769 S.W.2d 277, 280 (Tex.App.—Dallas 1989, writ denied) (expenses directly related to preserving, maintaining, and selling collateral may be paid out of the sales proceeds of the property). However, if the entire claim is not satisfied through the collateral, the representative cannot pay any deficiency out of other assets of the estate as he could if the claim were a matured secured one. Tex Prob.Code § 306(c); see Wyatt, 129 Tex. at 204-05, 102 S.W.2d at 398-99.
The applicability of section 306 is paramount to this action. If TCB had a secured claim against Corey's estate and section 306 applies to independent administrations, TCB cannot succeed on its claim for a deficiency if it elected preferred debt and lien status. TCB argues section 306 does not apply to independent administrations, and Geary argues that it does. We conclude section 306 applies to independent administrations.
The Bunting Decision
In 1935, before the adoption of the probate code, the supreme court held that the predecessor to section 306 did not apply to independent administrations. Fischer v. Britton, 125 Tex. 505, 508-09, 83 S.W.2d 305, 306-07 (1935). The dissent relies on Bunting v. Pearson, 430 S.W.2d 470 (Tex.1968), in concluding that section 146 of the probate code did not overrule Fischer's holding. We disagree.
In its Bunting decision, the supreme court did not address whether section 146 of the probate code overruled Fischer. The court did, however, establish a framework for determining when sections of the probate code are applicable to independent administrations.
Bunting Did Not Revisit Fischer
Bunting does not stand for the proposition, as the dissent concludes, that section 146 of the probate code left the holding of Fischer intact and that, therefore, section 306 is also inapplicable to independent administrations. The Bunting court did not revisit Fischer in the sense the dissent implies. In fact, the only reference to Fischer in the entire Bunting opinion is at the end of a string citation supporting the first sentence of the opinion, which stated what the law was regarding claims against an estate "[p]rior to the adoption of the Texas Probate Code." Bunting, 430 S.W.2d at 471.
The Bunting Analysis
In Bunting, the court used a two-part analysis to determine whether three probate code sections (sections 309, 310, and 313 regarding a ninety-day limitation on suits to collect rejected authenticated claims) would apply to independent administrations. Under the court's analysis, other probate code sections apply to independent administrations in either one of two ways. Even if a section did not meet the requirements of the first circumstance, it would apply to independent administrations if it met the requirements of the second circumstance. See id. at 473.
The first circumstance in which other code sections apply is when the context of the sections does not preclude applying them to independent executors. Id. at 472-73. The context of a section would preclude application to independent executors, for example, if the section required supervision by the probate court. See id.
The second circumstance in which other code sections apply to independent administrations is if another provision of the code "explicitly and specifically" makes the sections applicable. Id. at 473. The independent executor in Bunting argued that section 146 did this very thing. Id. The court, however, rejected this argument and held that section 146 did not make the three sections at issue in that case applicable to independent administrations, because those sections did not relate to section 146's requirement that independent executors pay claims in the same order of "priority, classification, and proration" prescribed in the code. Id.
In dicta, the court said that section 146 did make sections 320, 321, and 322 applicable to independent administrations because each dealt with issues of priority, classification, or proration. Id. The court went further in dicta, saying that the only other part of the code that section 146 could refer to was "the section dealing with exempt property and allowances." Id. The court did not consider or address the applicability of section 306 to independent administrations. Its failure to mention this section in its dicta does not require us to hold that section 306 is inapplicable to independent administrations. To the contrary, the analysis in Bunting would require us to conclude section 306 is applicable to independent administrations if it relates to the priority, classification, or pro-ration of claims as referred to in section 146.
Applying the Bunting Analysis to Section 306
Section 306 is applicable to independent administrations because it satisfies the second circumstance of the Bunting analysis; i.e., another section of the code, section 146, explicitly and specifically makes section 306 applicable to independent administrations. As recognized in Bunting, section 146 explicitly and specifically makes other sections dealing with either priority, classification, or proration of claims applicable to independent administrations. Because section 306 relates to both priority and classification of claims, it applies to independent administrations.
Fischer Recognized that Predecessor to Section 306 Related to Classification
In 1935, the supreme court recognized that the predecessor to section 306 dealt with classifying claims when it held that article did not apply to independent administrations. Fischer, 125 Tex. at 508-09, 83 S.W.2d at 306-07. The court reasoned the article did not apply solely because the legislature did not place the article in the statutory chapter pertaining to independent administrations, "under which presentation and classification of claims are not required," but instead placed it in the statutory chapter governing dependent administrations, under which "presentation and classification are- required." Id. Section 146 of the probate code, however, expressly requires classification of claims in an independent administration. Tex.Prob.Code Ann. § 146. Because section 146 clearly provides that classification is required in independent administrations, the reasoning of Fischer no longer applies.
Plain Language of Section 306 Shows it Affects Priority and Classification
As detailed above, the plain language of section 306 shows that it affects both the priority and classification of secured claims. Because section 306 treats secured claims differently in terms of classification and priority of payment depending on the claim status the creditor elects, section 306 relates to classification and priority. Therefore, according to the analysis in Bunting, section 306 applies to independent administrations because section 146 explicitly and specifically makes sections dealing with either priority, classification, or proration of claims applicable to independent administrations.
Courts of Appeals Are Split on Applicability of Section 306
We have found no authority applying the Bunting analysis to section 306, though several courts of appeals have addressed the applicability of section 306 to independent administrations. At least two courts have applied section 306 in the context of independent administrations. See Gross Nat'l Bank of San Antonio v. Merchant, 459 S.W.2d 483, 486 (Tex.Civ.App.—San Antonio 1970, no writ) (under section 306, creditor who, in effect, elected preferred debt and lien status waived right to any deficiency); Montague v. Brassell, 443 S.W.2d 703, 705 (Tex.Civ.App.—Beaumont 1969, writ ref'd n.r.e.) (by electing preferred debt and lien status, creditor is subject to restrictions of section 306(c)).
Other courts have expressly said section 306 does not apply to independent administrations. The Waco Court of Appeals, in Gibraltar Mortgage & Loan Corp. v. Lerman, 346 S.W.2d 487 (Tex.Civ.App.—Waco 1961, no writ), said that section 306 does not apply to independent administrations, yet nevertheless reached a result consistent with applying section 306. In Gibraltar, a secured creditor requested that its claim be given matured secured status in an independent administration and argued that its entire claim, not just the value of the collateral, should be classified as third class. Id. at 487. The court held (as section 306 would require) that the creditor was entitled to third-class priority only to the extent of the value of the collateral and that the deficiency would be treated as a lower-class claim. Id. at 488. However, relying on Fischer and Higginbotham v. Alexander Trust Estate, 129 S.W.2d 352 (Tex.Civ.App.—Eastland 1939, writ ref'd), the court then said that the procedure outlined in section 306 does not apply to independent administrations. Gibraltar, 346 S.W.2d at 488. The Texarkana Court of Appeals, in Joffrion v. Texas Bank of Tatum, 780 S.W.2d 451, 453 (Tex.App.—Texarkana 1989), vacated per settlement, 792 S.W.2d 456 (Tex.1990), relying on Fischer and Gibraltar, held that section 306 does not apply to independent administrations and allowed a secured creditor to proceed against an estate for a deficiency after it had foreclosed on the property securing its claim. The Waco and Texarkana courts' reliance on Fischer and Higginbotham is misplaced, however, since both Fischer and Higginbotham were decided well before the adoption of the probate code and the enactment of section 146.
The Austin Court of Appeals, in Texas Commerce Bank—Austin, N.A. v. Estate of Cox, 783 S.W.2d 16 (Tex.App.—Austin 1989, writ denied) (per curiam), was self-contradictory on the application of section 306. In the same sentence, the court said section 306 does not apply to independent administrations, but that "a claimant who chooses to bring its claim within the statute's purpose and intent is entitled to the benefits — and bound by the restrictions — of § 306(c)." Id. at 19. Thus, according to the court in Cox, section 306 does not apply to independent administrations, but does apply if a creditor so elects. Nevertheless, the court concluded a creditor did not elect preferred debt and lien status by foreclosing on secured property. This result is incongruous.
We note the legislature recently amended sections 146 and 322 to make it clear that section 306 applies to independent administrations. See Act of May 27, 1995, 74th Leg., R.S., ch. 1054, § 1, 24, 1995 Tex.Gen. Laws 5207, 5207-08, 5214, 5214-15 (codified at Tex.PROB.Code Ann. § 146, 322 (Vernon Supp.1996)). These amendments, however, apply only to estates of persons who died on or after January 1, 1996. See Act of May 27, 1995, 74th Leg., R.S., ch. 1054, § 30, 1995 Tex.Gen. Laws 5207, 5216. We are aware of the line of cases saying a legislative amendment is presumed to change the law and that courts should adopt a construction that does not render an amendment useless. See Ex parte Trahan, 591 S.W.2d 837, 842 (Tex.Crim.App.1979); American Sur. Co. of New York v. Axtell Co., 120 Tex. 166, 177-78, 36 S.W.2d 715, 719 (1931); Friedrich Air Conditioning & Refrigeration Co. v. Bexar Appraisal Dist., 762 S.W.2d 763, 767 (Tex.App.-San Antonio 1988, no writ); Buckner Glass & Mirror, Inc. v. T. A Pritchard Co., 697 S.W.2d 712, 714 (Tex.App.—Corpus Christi 1985, no writ). Because various courts of appeals have interpreted the probate code in different ways and the supreme court has not addressed the issue, we conclude the legislature amended it to clarify, rather than change, the law regarding the application of section 306 to independent administrations.
None of the eases from the courts of appeals addresses the analysis set forth in Bunting or otherwise offers any reason why it should not be followed. Neither does a construction of the recent amendments to the probate code preclude us from applying the Bunting analysis to interpret the code as it read before the amendments. Following this analysis, section 306 applies to independent administrations because it satisfies the requirements of at least one of the circumstances the supreme court discussed; i.e., another code section, section 146, explicitly and specifically makes section 306 applicable to independent administrations. We hold that section 306 applied to independent ad ministrations even before the recent clarifying amendments to the probate code.
TCB'S MOTION FOR SUMMARY JUDGMENT
In its fourth point of error, TCB claims the trial court erred in denying its motion for summary judgment. A motion for summary judgment "must stand or fall on the grounds expressly presented in the motion." McConnell v. Southside Ind. Sch. Dist., 858 S.W.2d 337, 341 (Tex.1993). TCB's motion for summary judgment was based solely on the applicability of section 306 to this action. TCB argued that section 306 of the probate code did not apply to independent administrations and was not relevant in this case because the estate was under independent administration when TCB foreclosed on its security interest. TCB further argued that when the estate became a dependent administration, section 306 was irrelevant because TCB's claim at that point had become an unsecured one and section 306 applies to only secured claims. We note that in its motion for summary judgment, TCB did not argue in the alternative that, even before the foreclosure, its claim against the estate was unsecured or that it had elected matured secured status and not preferred debt and lien status. Because TCB did not elect otherwise within six months after the original grant of letters testamentary, we conclude TCB effectively elected preferred debt and lien status. See Tex.Prob.Code § 298(a), 306(b); Cessna Fin. Corp., 667 S.W.2d at 583-84. Because section 306 applied when the estate was under independent administration, and TCB elected preferred debt and lien status, we conclude the trial court did not err in denying TCB's motion for summary judgment. We overrule TCB's fourth point of error.
GEARY'S MOTION FOR SUMMARY JUDGMENT
TCB asserts the trial court erred in granting Geary's motion for summary judgment. In its first point of error, it urges generally that the trial court erred in granting the motion. In the five remaining points of error, TCB argues the trial court improperly granted Geary's motion for summary judgment because: (1) section 306 of the probate code does not apply to independent administrations; (2) TCB did not elect preferred debt and lien status; (3) TCB's claim against the estate was not a secured one; (4) Geary's motion became moot when the trial court granted the order striking Geary's declaratory judgment causes of action; and (5) the bankruptcy reorganization plan did not affect the estate's liability for the claim either by accord and satisfaction or res judicata. Based on our previous discussion, we overrule TCB's fifth point of error regarding the applicability of section 306 and sixth point of error regarding its preferred debt and lien election. We address the remaining points of error.
Secured or Unsecured Claim
In its third point of error, TCB argues the trial court erred in granting Geary's motion for summary judgment because its claim against the Corey estate was never a secured one, even when the estate was under independent administration. It argues that because Incorsel, not Corey, owned the property securing the note, Corey's obligation was unsecured and TCB's claim against Corey's estate was likewise unsecured. TCB argues that even though TCB was a secured creditor, it had an unsecured claim against Corey's estate because Corey did not own the collateral securing the note. Because section 306 deals with only secured claims, it would be relevant only if TCB's claim was a secured one.
The contention that TCB's original claim against the estate was unsecured was not before the trial court when it ruled on the motions for summary judgment. In its response to Geary's motion, TCB said the resolution of the case depended on two issues: (1) whether section 306 applies to independent administrations; and (2) whether the bankruptcy reorganization plan affected the estate's liability for TCB's claim. (We address the reorganization plan below.) In its own motion for summary judgment, filed after Geary's motion, TCB argued as though its original claim against the estate was a secured one, saying it was entitled to judg ment because section 806 did not apply to independent administrations and, when it finally presented its claim under the dependent administration, the claim had become an unsecured one for the deficiency remaining on the debt after the foreclosure. TCB did not alternatively raise the issue that the claim had never been secured in its response to Geary's motion, in its own motion for summary judgment, or in any other response. TCB first contended its claim against the estate was never a secured one in its motion for rehearing. TCB does not complain on appeal that the trial court erred in denying its motion for rehearing. Therefore, in accordance with TCB's point of error and argument in its brief, we consider the issue of whether TCB's claim was ever secured only in relation to the trial court's grant of Geary's motion for summary judgment.
We do not consider on appeal grounds not raised in the trial court in opposition to a summary judgment motion. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 676 (Tex.1979). By written answer or response to the motion, the nonmov-ant must fairly apprise the movant and the trial court of the issues the nonmovant contends should defeat the motion for summary judgment, though the nonmovant needs no answer or response to contend on appeal that the grounds expressly presented in the mov-ant's motion are insufficient as a matter of law to support the summary judgment. Id. at 678. A nonmovant may not urge on appeal any and every new ground he can think of, nor can he resurrect grounds that he abandoned at the hearing. Id.
When the trial court ruled on the motions for summary judgment, TCB argued that it, and not Geary, was entitled to judgment as a matter of law because section 306 does not apply to independent administrations. This assertion would entitle TCB to judgment only if its claim was a secured one covered by section 306. We conclude TCB abandoned this ground for defeating Geary's motion, because the argument on which it relied in its response and in its own motion necessarily presupposed the claim was a secured one before the foreclosure. Accordingly, TCB cannot now raise this issue on appeal. See id. Without deciding whether TCB's claim against the estate was secured or unsecured before the foreclosure, we conclude the trial court did not err on this issue when it granted Geary's motion for summary judgment, because TCB had abandoned this argument when the court rendered judgment. We overrule TCB's third point of error.
Mootness
In its second point of error, TCB argues the trial court erred in granting Geary's motion for summary judgment because the motion became moot upon the striking of Geary's declaratory judgment causes of action. A motion for summary judgment must be supported by pleadings, and the final judgment must conform to the pleadings. Krull v. Somoza, 879 S.W.2d 320, 322 (Tex.App.-Houston [14th Dist.] 1994, writ denied). A motion for summaiy judgment must expressly present the grounds, or reasons, entitling the movant to judgment as a matter of law. See Tex.R.Civ.P. 166a(e); McConnell, 858 S.W.2d at 339 n. 2, 341. When an order granting summary judgment explicitly states the grounds therefor, we can affirm the summary judgment looking only to those grounds and no others. State Farm Fire & Casualty Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993).
Geaiy requested summaiy judgment as a counterclaimant only and not as a defendant. Geary's motion for summary judgment asked the court to make several declaratory judgments or, alternatively, impose a constructive trust on TCB's foreclosure sale proceeds or award relief for conversion of property. He requested the court to declare that: (1) section 306 of the probate code applies to independent administrations; (2) TCB elected preferred debt and lien status; (3) TCB waived matured secured status; (4) alternatively, TCB must return its foreclosure proceeds; (5) the bankruptcy reorganization resulted in an accord and satisfaction and served as res judicata; and (6) Geary is entitled to attorney's fees. The trial court granted Geary's motion for summary judgment, denying TCB's claim and declaring: (1) section 306 of the probate code applies to independent administrations; (2) TCB elected preferred debt and lien status; and (3) the bankruptcy reorganization plan constituted an accord and satisfaction of TCB's claim as well as res judicata to further litigation. The same day the court granted Geary summary judgment, it struck all of his declaratory judgment causes of action. TCB argues this action rendered Geary's motion for summary judgment moot because there were no longer causes of action underlying the motion.
Although Geary originally pleaded the theories of accord and satisfaction and res judicata as declaratory judgment causes of action, in an amended pleading (filed before the court granted summary judgment) he framed those theories as affirmative defenses. The trial court did not strike Geary's affirmative defenses. We conclude Geary's summary judgment motion was not rendered moot to the extent it relied on the reasons of accord and satisfaction and res judicata because the motion sufficiently expressed these grounds. See McConnell, 858 S.W.2d at 339 n. 2, 341. We address those grounds below.
Geary relies on Roark v. Stallworth Oil and Gas, Inc., 813 S.W.2d 492, 494-95 (Tex.1991), for the contention that the parties "tried" the declaratory judgment claims by consent even though they were "impleaded" upon the granting of summary judgment. We conclude Roark does not support this theory on the facts at issue in this case. In Roark, the trial court granted summary judgment on the affirmative defense of no consideration, which was included in the grounds of the motion for summary judgment, but was not alleged in the petition. Id. at 493-94. The Texas Supreme Court held a trial court can grant summary judgment on an unpleaded affirmative defense if: (1) the motion for summary judgment requested judgment on that ground; and (2) the opposing party does not object to the absence of a pleading, implying the parties tried the issue by consent. Id. at 494r-95. Because TCB moved to strike Geary's declaratory judgment causes of action, however, we conclude the parties did not try those claims by consent. Moreover, only some of the unpleaded causes of action could be characterized as affirmative defenses.
Because the trial court struck Geary's declaratory judgment causes of action regarding the applicability of section 306 and TCB's preferred debt and hen status, these grounds were unpleaded when the trial court ruled on the summary judgment. Furthermore, the parties did not try these grounds by consent. See id. We conclude the motion for summary judgment became moot regarding the grounds of section 306 applicability and TCB's preferred debt and lien status. The trial court erred in granting summary judgment on these grounds because they were no longer supported by the pleadings. See Krull, 879 S.W.2d at 322. We sustain TCB's second point of error to the extent the trial court granted summary judgment on Geary's section 306 and preferred debt and lien status claims.
Accord and Satisfaction and Res Judicata
In its seventh point of error, TCB argues the trial court erred in granting Geary's motion for summary judgment because the In-corsel bankruptcy reorganization plan did not constitute an accord and satisfaction of, and was not res judicata to, TCB's deficiency claim against Corey's estate.
An accord is an agreement in which one party agrees to perform and another party agrees to accept, in satisfaction of a claim, something other than what the party believes himself to be entitled. A satisfaction is the performance of that agreement. Fortner v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 687 S.W.2d 8, 13 (Tex.App.-Dallas 1984, writ ref'd n.r.e.). Reorganization proceedings are judicial, not contractual. See NCNB Texas Nat'l Bank v. Johnson, 11 F.3d 1260, 1266 (5th Cir.1994). Corey's estate was not a party to the bankruptcy proceedings or the reorganization plan. Moreover, because the bankruptcy proceedings were judicial, the reorganization plan was not contractual. Without a contract to which Corey's estate was a party, there can be no accord and satisfaction of TCB's claim against the estate.
Res judicata bars subsequent collateral attacks on a final judgment and requires identity of parties, issues, and subject matter. Matthews Constr. Co. v. Rosen, 796 S.W.2d 692, 694 (Tex.1990); Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 818 (Tex.1984). Because Corey's estate was not a party to the bankruptcy proceedings, there is no identity of parties as required for res judicata of this action.
We- conclude the bankruptcy reorganization plan did not constitute an accord and satisfaction or res judicata. Therefore, the trial court erred in granting Geary's summary judgment motion on these grounds. We sustain TCB's seventh point of error. Because of our disposition of TCB's second and seventh points of error, we sustain TCB's first point of error.
CONCLUSION
TCB filed both a motion for summary judgment and a response to Geary's motion for summary judgment taking the position that its original claim against the Corey estate was a secured one. Because this position resulted in abandoning any argument that its claim was ever unsecured, TCB cannot now raise this issue on appeal. For the purposes of this appeal, we therefore assume, without deciding, that TCB had a secured claim against the estate. The issue of whether TCB ever had an unsecured claim against the estate is one that is reserved for argument at the trial court should TCB raise it on remand.
Based on the assumption that TCB had a secured claim against the estate, TCB could have elected matured secured status under section 306 within six months of the original grant of letters testamentary. If it had done so, Geary would have been required to pay TCB the remaining value of the secured real estate after he had paid higher-priority claims. If there was still a balance remaining on the note, TCB could then have claimed a deficiency against the estate. Because TCB did not elect matured secured status within six months of the grant of the original letters testamentary, by default it effectively elected preferred debt and lien status and gave up the right to claim any deficiency on the note.
Because section 306 applies to independent administrations and TCB gave up the right to claim a deficiency, assuming it had a secured claim, we affirm the trial court's denial of TCB's motion for summary judgment. Because the grounds on which the trial court granted summary judgment either were not supported by the pleadings (declaratory judgments on Geary's section 306 and preferred debt and lien counterclaims that had been struck) or were without merit (the estate was not a party to a contract as required for an accord and satisfaction and the estate was not a party to the bankruptcy proceedings as required for res judicata), we reverse the summary judgment granted in favor of Geary. We remand this case for further proceedings consistent with this opinion.