Court Opinion

ID: 3107377
Source: CourtListenerOpinion
Date Created: 2015-10-16 06:12:57.445574+00
Date Added: 2024-06-11T09:15:37.908314
License: Public Domain

COURT OF APPEALS
                               SECOND DISTRICT OF TEXAS
                                    FORT WORTH

                                  NO. 02-12-00164-CV

Edwin A. White                             §   From the 141st District Court

                                           §   of Tarrant County (141-228089-08)
v.

                                           §   December 21, 2012
JPMC 2004-C3 Trails Apartments
LLC, a Delaware limited liability
company                                    §   Opinion by Justice Gabriel

                                     JUDGMENT

       This court has considered the record on appeal in this case and holds that

there was no error in the trial court’s judgment. It is ordered that the judgment of

the trial court is affirmed.

       It is further ordered that Appellant Edwin A. White shall pay all costs of this

appeal, for which let execution issue.

                                       SECOND DISTRICT COURT OF APPEALS

                                       By_________________________________
                                         Justice Lee Gabriel
                         COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                              NO. 02-12-00164-CV

EDWIN A. WHITE                                                  APPELLANT

                                        V.

JPMC 2004-C3 TRAILS                                               APPELLEE
APARTMENTS LLC, A DELAWARE
LIMITED LIABILITY COMPANY

                                     ----------

          FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY

                                     ----------

                        MEMORANDUM OPINION1

                                     ----------

      Appellant Edwin A. White appeals the trial court’s judgment in favor of

appellee JPMC 2004-C3 Trails Apartments, L.L.C. (the Trails Apartments) for

$1,507,506.59 for waste of collateral. We affirm.

      1
       See Tex. R. App. P. 47.4.

                                         2
                               Background Facts

      The borrower, MBS—The Trails, Ltd. (MBS), through its agent Michael

Smuck, executed a $3,795,000 promissory note made payable to PNC Bank and

secured by the deed of trust to the apartment complex. White and Smuck signed

a nonrecourse indemnification agreement in which they

      assume[d] liability for and agree[d] to pay, protect, indemnify, defend
      and hold harmless [PNC] (and any assignee or purchaser of all or
      any interest in the note and the security instrument) from and against
      any and all liabilities, obligations, losses, damages, costs and
      expenses (including attorneys’ fees), causes of action, suits, claims,
      demands and judgments which at any time may be imposed upon,
      incurred by or awarded against [PNC] and for which borrower at any
      time may be personally liable pursuant to the non-recourse
      exceptions (as defined in paragraph 12 of the note).

Paragraph 12 of the note provided that PNC could

      obtain personal, recourse judgments against any person or entity
      (including borrower) relating to any losses (including attorney’s fees
      and court costs) sustained by [PNC] in connection with any fraud,
      intentional misrepresentation, waste, or misappropriation of tenant
      security deposits or rents collected more than one (1) month in
      advance by [MBS].

Neither White nor Smuck signed the note or the deed of trust.

      PNC assigned the note to Wells Fargo Bank, N.A. MBS began missing

payments on the note in September 2007. Wells Fargo then delivered a demand

letter to MBS, White, and Smuck. Because the defaults continued, Wells Fargo

accelerated the maturity of the note, advised White of the acceleration, and

posted the property for foreclosure.

                                        3
      Soon after, Wells Fargo hired Jay Parmelee with Lincoln Property

Company to investigate whether a receivership was necessary.             Parmelee

observed serious damage to the property, including mold on the ceilings, rotting

boards, and broken walls. At Wells Fargo’s request, Parmelee was appointed by

the court as receiver of the property. The property was foreclosed upon on April

1, 2008, and The Trails Apartments was the successful bidder.           The Trails

Apartments sued MBS, Smuck, White, and White’s wife, Ellen, claiming that

waste had occurred and that they were responsible for it under the note, deed of

trust, and indemnity agreement. The trial court rendered judgment against MBS,

Smuck, and White for $1,507,506.59.2 White appealed.

                                      Discussion

      White argues that any waste committed on the property was the result of

the Trails Apartments’ own negligence (and that of its predecessors) and it is

thus barred from recovery by the express negligence rule.            The express

negligence requirement is a rule of contract interpretation that an agreement

purporting to indemnify the indemnitee against liability for its own negligence

must clearly state that intent within the four corners of the agreement itself. See

Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190, 192 (Tex. 2004); Ethyl

Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex. 1987) (noting that

      2
      The Trails Apartments nonsuited Ellen. The trial court entered an agreed
judgment between The Trails Apartments and Smuck and MBS. Ellen, Smuck,
and MBS are not parties to this appeal.

                                        4
―[i]ndemnitees seeking indemnity for the consequences of their own negligence

which proximately causes injury jointly and concurrently with the indemnitor’s

negligence must also meet the express negligence test‖).

      We previously addressed this same issue in White v. MLMT 2004-BPC1

Carlyle Crossing, LLC, No. 02-10-00233-CV, 2011 WL 3672022, at *6 (Tex.

App.—Fort Worth Aug. 18, 2011, pet. denied) (mem. op.), in which we held that

―the express negligence rule does not apply here to bar appellee’s recovery

pursuant to the terms of the indemnity agreement because appellee was not

seeking recovery for its own negligence.‖ Like in Carlyle Crossing, the indemnity

provision at issue here indemnified the Trails Apartments from any losses it

incurred for which MBS was liable under the note. See id. In other words,

―if MBS did not make good on any obligation for which it was liable under

recourse provisions of the note and deed of trust, [White] would make good on

them.‖ Id.; see also id. at *1 (detailing terms of indemnity agreement similar to

the terms of the agreement at bar). The Trails Apartments did not seek recovery

for its own negligence, and White failed to establish that the Trails Apartments or

its predecessors were negligent; thus, the express negligence rules does not

apply here. See Nat’l City Mortg. Co. v. Adams, 310 S.W.3d 139, 143–44 (Tex.

App.—Fort Worth 2010, no pet.); Man GHH Logistics GMBH v. Emscor, Inc., 858
S.W.2d 41, 43 (Tex. App.—Houston [14th Dist.] 1993, no writ) (―[T]he express

negligence rule does not apply in this case because appellants are not seeking to

recover for their own negligence.‖).

                                        5
      Additionally, White did not attack the trial court’s findings of fact and

conclusions of law on appeal. Findings of fact entered in a case tried to the court

have the same force and dignity as a jury’s answers to jury questions. Anderson

v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). The trial court’s

findings of fact are reviewable for legal and factual sufficiency of the evidence to

support them by the same standards that are applied in reviewing evidence

supporting a jury’s answer. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996);

McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986) (―When findings of

fact are filed and are unchallenged, [] they occupy the same position and are

entitled to the same weight as the verdict of a jury. They are binding on an

appellate court unless the contrary is established as a matter of law, or if there is

no evidence to support the finding.‖).

      The trial court found, among other things, that

      MBS intentionally damaged the property and defaulted on the loan;

      White allowed the property to be wasted and continued to accept
      dividends on his investment;

      White executed a non-recourse indemnification agreement in which
      he agreed to indemnify and hold harmless the holder of the loan
      documents; and

      White was liable for the entire amount of damages under Paragraph
      12 of the note.

White did not challenge any of the findings concerning waste and the damages

related thereto. Because the record contains evidence to support all of these

unchallenged findings, they are binding on this court. When the uncontested

                                         6
findings state that MBS caused the waste and that White was liable, White’s

argument that the Trails Apartments sought indemnification for its own

negligence must fail. We overrule White’s issue.

                                  Conclusion

      Having overruled White’s sole issue on appeal, we affirm the trial court’s

judgment.

                                                   LEE GABRIEL
                                                   JUSTICE

PANEL: WALKER, MCCOY, and GABRIEL, JJ.

DELIVERED: December 21, 2012

                                       7