Court Opinion

ID: 4058193
Source: CourtListenerOpinion
Date Created: 2016-09-29 08:59:10.421491+00
Date Added: 2024-06-11T14:06:36.761176
License: Public Domain

In The
                             Court of Appeals
                    Seventh District of Texas at Amarillo

                                  No. 07-13-00432-CV

              PATRICK VAN ADRICHEM, LIDWINA VAN ADRICHEM
                   AND JAKOB VAN DER WEG, APPELLANTS

                                           V.

 AGSTAR FINANCIAL SERVICES, FLCA, AS LOAN SERVICER AND ATTORNEY-IN-
           FACT FOR MCFINNEY AGRI-FINANCE, LLC, APPELLEE

                         On Appeal from the 222nd District Court
                                Deaf Smith County, Texas
               Trial Court No. CI-13A-040, Honorable Lee Waters, Presiding

                                 November 13, 2015

                           MEMORANDUM OPINION
                 Before QUINN, C .J., and CAMPBELL and PIRTLE, JJ.

      Appellants Patrick Van Adrichem, Lidwina Van Adrichem, and Jakob Van Der

Weg appeal a judgment on a promissory note, and an order of severance. We will

affirm the judgment and the severance order.
                                        Background

         Appellants are partners in a Texas general partnership, Friendship Dairies. The

partnership and appellants, jointly and severally, borrowed some $18 million from

McFinney Agri-Finance, LLC.        In August 2012, Friendship Dairies filed a voluntary

Chapter 11 bankruptcy petition. McFinney’s attorney-in-fact, appellee AgStar Financial

Services, FLCA, brought suit in January 2013 against appellants individually to recover

for breach of the promissory note. It alleged the note had been accelerated and was

due in full. AgStar filed identical motions for summary judgment against each of the

appellants. The trial court granted the motions in part and denied them in part.         It

granted summary judgment as to the amount of principal, interest, and late charges

owed under the note. It denied AgStar’s summary judgment as to attorney’s fees and

costs.

         Over appellants’ objection, the trial court, sua sponte, entered an order severing

the claims for which it denied summary judgment and entered a final judgment as to the

amount of principal, interest, and late charges owed under the note. Appellants

thereafter filed a motion for new trial, also raising objection to the severance. That

motion was overruled by operation of law. This appeal followed.

                                          Analysis

         Appellants raise three issues on appeal, asserting the trial court: (1) abused its

discretion by overruling their objections to the summary judgment evidence; (2) erred in

granting AgStar’s motion for summary judgment; and (3) abused its discretion by

severing a single cause of action.

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Summary Judgment Evidence

       In appellants’ first issue, they argue the trial court erred by overruling their

specific objections to the affidavit of Dan Godfrey concerning the unpaid principal

balance, accrued interest and late charges due under the note. In support of their

contention, appellants assert Godfrey’s affidavit is based on hearsay rather than

personal knowledge and is thus not competent summary judgment evidence.

       We review rulings on the admission and exclusion of evidence for abuse of

discretion. McCraw Materials, L.L.C. v. DivLend Equip. Leasing, L.L.C., No. 07-12-

00215-CV, 2013 Tex. App. LEXIS 779, at *11, (Tex. App.—Amarillo Jan. 28, 2013, no

pet.) (mem. op.), (citing In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005)). We must

uphold a trial court's evidentiary ruling if there is any legitimate basis for it. Owens-

Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998) (citing State Bar of

Tex. v. Evans, 774 S.W.2d 656, 658 n.5 (Tex. 1989)).           An affidavit presented in a

summary judgment proceeding must be made on personal knowledge, set forth such

facts as would be admissible in evidence, and show affirmatively that the affiant is

competent to testify to the matters stated therein. TEX. R. CIV. P. 166a(f).

        Here, Godfrey’s affidavit stated he had “personal knowledge of the matters set

forth in this affidavit or [he had] obtained such knowledge from [AgStar’s] books and

records”; that he is employed by AgStar as “Lending Service Team Leader”; is “one of

the custodians of the books, records, and files of AgStar”; and that he had “personally

worked on said books, records, and files.” The affidavit contains the requisite

information and recitations under Rule 902(10) and 806(6). See TEX. R. EVID. 902(10);

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806(6). The trial court did not abuse its discretion in overruling appellants’ objection to

the affidavit on the basis of hearsay.

       A corporate employee is generally presumed to possess personal knowledge of

facts the employee would learn in the usual course of employment without having to

otherwise prove personal knowledge. Energico Prod. v. Frost Nat'l Bank, No. 02-11-

00148-CV, 2012 Tex. App. LEXIS 724, at *15 (Tex. App.—Fort Worth January 26, 2012,

pet. denied) (mem. op.) (citations omitted). The personal knowledge requirement is

satisfied when an affiant's summary judgment affidavit contains testimony that identifies

him as a record custodian and sufficiently describes the relationship between the affiant

and the case so that it reasonably may be assumed the affiant has personal knowledge

of the facts stated in the affidavit. See Kyle v. Countrywide Home Loans, Inc., 232
S.W.3d 355, 359 (Tex. App.—Dallas 2007, pet. denied) (affiant's testimony she was a

foreclosure specialist and custodian of records for mortgagee sufficient to identify

position and responsibilities, meeting personal knowledge requirement); Stucki v. Noble,

963 S.W.2d 776, 780 (Tex. App.—San Antonio 1998, pet. denied) (personal knowledge

requirement satisfied where affidavit adequately described relationship between affiant

and the case, permitting reasonable assumption she had personal knowledge of facts

stated in her affidavit). The trial court reasonably could have concluded the facts and

events described within the affidavit established Godfrey’s personal knowledge.

       Appellants also complain of the trial court’s overruling of their objections that

several of Godfrey’s statements pertaining to amounts owed for principal, interest, and

late charges are impermissibly conclusory.

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       A conclusory statement is one that does not provide the underlying facts to

support the conclusion and, therefore, is not proper summary judgment proof. Rizkallah

v. Conner, 952 S.W.2d 580, 587 (Tex. App.—Houston [1st Dist.] 1997, no writ).

Conclusory statements are not susceptible to being readily controverted. See Eberstein

v. Hunter, 260 S.W.3d 626, 630 (Tex. App.—Dallas 2008, no pet.) (readily controvertible

statements by an affiant are not per se conclusory). However, an affidavit made on the

personal knowledge of a bank officer, in which the officer identifies the note and recites

the principal and interest due, is not conclusory and is sufficient to support summary

judgment. Rockwall Commons Assocs. v. MRC Mortg. Grantor Trust I, 331 S.W.3d 500,

512 (Tex. App.—El Paso 2010, no pet.) (citing American 10-Minute Oil Change, Inc. v.

Metropolitan Nat’l Bank - Farmer's Branch, 783 S.W.2d 598, 601 (Tex. App.—Dallas

1989, no writ)).

       Here, the affidavit contained, in chart format, a statement of the unpaid principal

in the amount of $16,361,125.64, as well as accrued interest, late charges, attorney’s

fees and costs and the per diem rate of continuing interest. The statements and figures

in the affidavit are supported by the note itself, incorporated by reference into Godfrey’s

affidavit. Because Godfrey’s statements regarding amount owed for principal, interest

and late charges are supported by facts or documentation, his conclusion regarding

those balances is not impermissibly conclusory. See Myers v. Southwest Bank, No. 02-

14-00122-CV, 2014 Tex. App. LEXIS 13288, at* 6 (Tex. App.—Fort Worth Dec. 11,

2014, no pet.) (mem. op.) (fact that Southwest did not provide documentation of how it

calculated the outstanding balance did not in and of itself make its evidence conclusory

or insufficient as to the amount of the outstanding balance); Fairbank v. First Am. Bank,

                                            5
No. 05-06-00005-CV, 2007 Tex. App. LEXIS 6228, at *4 (Tex. App.—Dallas August 7,

2007, no pet.). Godfrey was not required to provide any underlying or additional proof

of his calculations. See Energico Prod., No. 02-11-00148-CV, 2012 Tex. App. LEXIS

724, at *13 (lender need not file detailed proof of the calculations reflecting the balance

due on note; affidavit by bank employee setting forth total balance due on note is

sufficient to sustain award of summary judgment) (citations omitted). The trial court did

not abuse its discretion by overruling appellants’ objections to Godfrey’s affidavit on the

basis that statements made therein were conclusory.

       We resolve appellants’ first issue against them.

Grant of Appellee’s Motion for Summary Judgment

       In appellants’ second issue, they assert the trial court erred in granting summary

judgment because the motions for summary judgment were based on Godfrey’s

affidavit, evidence they challenged as incompetent.

       AgStar’s motion presented only traditional grounds for summary judgment. See

TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.

1985). Appellate courts review the granting of a motion for summary judgment de novo.

Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). In doing so, the

court takes as true all evidence favorable to the non-movant, and every reasonable

inference is indulged in the non-movant's favor. Provident Life & Accid. Ins. Co. v. Knott,

128 S.W.3d 211, 215 (Tex. 2003). The movant in a traditional motion for summary

judgment, filed pursuant to Rule 166a(c), has the burden of showing that no genuine

issue of material fact exists, and that it is entitled to summary judgment as a matter of

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law. TEX. R. CIV. P. 166a(c); see Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425

(Tex. 1997).

       To prevail on its motion for summary judgment to enforce a promissory note, a

plaintiff must prove: (1) the existence of the note; (2) that the defendant signed the note;

(3) that the plaintiff was the legal owner or holder of the note; and (4) that a certain

balance was due and owing on the note. Truestar Petroleum Corp. v. Eagle Oil & Gas

Co., 323 S.W.3d 316, 319 (Tex. App.—Dallas 2010, no pet.); Hudspeth v. Investor

Collection Serv. Ltd. P'ship, 985 S.W.2d 477, 479 (Tex. App.—San Antonio 1998, no

pet.). Appellants challenge only the last element.

       Through our discussion of appellants’ first issue, we have described our

conclusion Godfrey’s affidavit was not conclusory or otherwise incompetent summary

judgment evidence. It established that the principal, interest and late charges as to

which the court granted summary judgment were due and owing.              Accordingly, we

conclude the trial court did not err by granting AgStar summary judgment for those

amounts. We overrule appellants’ second issue.

Severance of Cause of Action

       As noted, the trial court denied AgStar’s motion for summary judgment insofar as

it sought judgment for AgStar’s attorney’s fees and costs. The court severed the claims

for which it denied summary judgment. By appellants’ third issue, they challenge the

trial court’s severance order.

                                             7
      Rule 41 of the Texas Rules of Civil Procedure states that “any claim against a

party may be severed and proceeded with separately.” TEX. R. CIV. P. 41. The effect of

a severance is to divide a lawsuit into two or more independent suits that will be

adjudicated by distinct and separate judgments. Van Dyke v. Boswell, O'Toole, Davis &

Pickering, 697 S.W.2d 381, 383 (Tex. 1985). Under Rule 41, severance of claims is

proper if the (1) controversy involves more than one cause of action; (2) the severed

claim is one that would be the proper subject of a lawsuit if independently asserted; and

(3) the severed claim is not so interwoven with the remaining action that they involve the

same facts and issues. In re State, 355 S.W.3d 611, 613 (Tex. 2011) (citing Guaranty

Fed’l v. Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex. 1990)).

      A trial court has broad discretion in determining whether to sever a cause of

action, and its decision will be disturbed on appeal only when there is a prejudicial

abuse of discretion. In re Koehn, 86 S.W.3d 363, 366 (Tex. App.—Texarkana 2002,

orig. proceeding). The trial court is authorized to order severance on its own initiative

without motion by either party. In re T.J.L., 97 S.W.3d 257, 265 (Tex. App.—Houston

[14th Dist.] 2002, no pet.); Rice v. Travelers Express Co., 407 S.W.2d 534, 536 (Tex.

Civ. App.—Houston 1966, no writ). “However, courts have long recognized that it is an

abuse of discretion to grant a severance that splits a single cause of action.” Duncan v.

Calhoun Cty. Nav. Dist., 28 S.W.3d 707, 710 (Tex. App.—Corpus Christi 2000, pet.

denied).

      In the trial court and again on appeal, appellants argue this case is closely

analogous to that presented by Dalisa, Inc. v. Bradford, 81 S.W.3d 876 (Tex. App.—

Austin 2002, no pet.). We find the rationale underlying the court’s decision in Dalisa

                                            8
entirely absent from this case. The court there found a trial court erred by severing the

plaintiff’s claim for attorney’s fees under Civil Practice & Remedies Code section 37.009

from its claims for declaratory relief. Id. at 879-80. Quoting the language of section

37.009, the court held the statute’s provision for the award of costs and attorney’s fees

in a proceeding under chapter 37 refers to a “single ‘proceeding’” and agreed with the

defendant that the claim for attorney’s fees was merely a phase of the single cause of

action for declaratory relief. Id. at 880 (citing Huff v. Fidelity Life Ins. Co., 158 Tex. 433,

312 S.W.2d 493, 501 (Tex. 1958).1

        Even the dissenting opinion in Dalisa acknowledged that “neither section 37.009

nor section 38.001 of the civil practice and remedies code recognizes a stand-alone

action for attorney’s fees.” Dalisa, 81 S.W.3d at 886 (Yeakel, J., dissenting). But we do

not deal here with a statutory entitlement to attorney’s fees. AgStar’s entitlement to its

costs of collection is governed by contract. See Intercontinental Group P’ship v. KB

Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009) (“[p]arties are free to contract

for a fee-recovery standard either looser or stricter than Chapter 38’s”).

        The note’s costs of collection paragraph reads as follows:

        Notwithstanding anything to the contrary contained herein, if this Note is
        not paid when due, whether at maturity or by acceleration, and/or any
        other Event of Default shall occur, then the undersigned promise to pay all
        costs of collection, including, but not limited to, reasonable attorneys’ fees

        1
           Huff likewise addressed a statutory attorney’s fees provision. 312 S.W.2d at 500-01. Rejecting
the insurance company’s argument that limitations barred Huff’s claim for attorney’s fees, the court found
that limitations would not bar the recovery of fees when it did not bar the underlying claim. Id. at 501. In
so doing, the court noted, “That a suit for the statutory attorney’s fees as a separate action could not be
maintained is evident from the wording of the statute.” Id. See also Green Int’l, Inc. v. Solis, 951 S.W.2d
384, 390 (Tex. 1997) (entitlement to fees under Civil Practice & Remedies Code section 38.001(8)
requires that party prevail on a cause of action for which attorney’s fees are recoverable and recover
damages).

                                                     9
        and all reasonable expenses incurred in connection with collection of this
        Note, or any part thereof; the protection or realization of the collateral; and
        the enforcement of any guarantee incurred by the Lender on account of
        such collection; whether or not suit is filed hereon.

        AgStar argues that the costs of collection paragraph establishes a stand-alone

entitlement to recovery of its costs, including attorney’s fees, and we agree. Under the

note’s terms, AgStar’s entitlement to recovery of its collection costs does not depend on

a particular lawsuit’s outcome, or depend even on the filing of suit.                      And AgStar’s

entitlement to its costs arises on the occurrence of any event of default. 2                          This

distinction fully separates this case from both Dalisa and Huff.

        AgStar’s original petition, its live pleading, asserted a claim for relief for breach of

the note. It alleged Friendship Dairies had filed a voluntary Chapter 11 bankruptcy

petition, and explained that because of the automatic stay under the bankruptcy laws,

Friendship was not a defendant. It alleged also that appellants had failed to make the

five monthly payments due prior to the filing of the suit, and that the note had been

accelerated.      The petition further quoted the note’s collection costs paragraph and

asserted AgStar was entitled to recover its reasonable fees and costs.

        AgStar’s motion for summary judgment sought a judgment that included its

attorney’s fees and costs incurred through January 22, 2013, in the amount of

$116,935.09. Appellants’ response to the summary judgment motion asserted it was

unlikely that AgStar had reasonably incurred attorney’s fees in that amount by January

        2
           The note lists fourteen categories of events of default. In addition to default by the borrower’s
failure to pay indebtedness under the note when due, default is defined to include such events as loss or
substantial damage to any material part of the collateral, failure of performance of any covenant or
obligation under the note or any related document, filing of bankruptcy or a similar proceeding, and
material adverse change in the borrower’s business operations or condition, financial or otherwise.

                                                    10
22 in a suit that was not filed until January 30, and asserted fees incurred in the

Friendship Dairies bankruptcy must be segregated.

       A “cause of action” has been defined as consisting of a plaintiff’s primary right to

relief and the defendant’s act or omission that violates that right. Jones v. Ray, 886
S.W.2d 817, 821 (Tex. App.—Houston [1st Dist.] 1994, orig. proceeding) (applying

definition in severance case). The trial court severed AgStar’s claim for its attorney’s

fees and costs after the court granted summary judgment on its claims for the unpaid

principal, interest and late fees. One court of appeals has noted the practice of ordering

severance after the grant of a partial summary judgment and cautioned that severance

under such circumstances “is not proper when it amounts to the splitting of a single

cause of action.” Duncan, 28 S.W.3d at 710. It further pointed out that severance of a

single cause of action “will ultimately result in two judgments that cannot stand

independently of each other.” Id. (citing Kansas Univ. Endowment Assn. v. King, 350
S.W.2d 11, 19 (Tex. 1961) (“Each of the causes into which the action is severed must

be such that the same might properly be tried and determined if it were the only claim in

controversy”)). We find no abuse of discretion in the trial court’s action.

       The note also contains a prepayment fee.           AgStar did not seek summary

judgment for that fee. The trial court included with the severed action for collection

costs the issue of AgStar’s entitlement to, and the amount of, the prepayment penalty.

Appellants also argue the calculation of the prepayment penalty is so interwoven with

the claims on which summary judgment was granted that they involve the same facts

and issues. We disagree.

                                             11
       Finding no abuse of discretion in the trial court’s action, we overrule appellants’

third issue.

                                          Conclusion

       The court’s judgment and severance order are affirmed.

                                                James T. Campbell
                                                   Justice

Quinn, C.J., joins majority in issues one and two and concurs in result regarding issue
three.

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