Court Opinion

ID: 9910757
Source: CourtListenerOpinion
Date Created: 2023-12-18 15:09:42.6793+00
Date Added: 2024-06-11T12:54:08.605762
License: Public Domain

Opinion issued December 12, 2023

                                   In The

                          Court of Appeals
                                   For The

                       First District of Texas
                         ————————————
                          NO. 01-21-00376-CV
                        ———————————

                      7677 GROUP, L.P., Appellant

                                     V.
  SMS FINANCIAL JDC, L.P., AS ASSIGNEE OF FEDERAL DEPOSIT
INSURANCE CORPORATION, RECEIVER OF FIRST NATIONAL BANK
          (EDINBURG, TEXAS), Appellee/Cross-Appellant

                                     V.

                     GAL BATZRI, Cross-Appellee

                 On Appeal from the 215th District Court
                          Harris County, Texas
                    Trial Court Case No. 2016-05379
                           MEMORANDUM OPINION

        This appeal arises from a promissory note and a personal guaranty agreement.

SMS Financial JDC, L.P. (“SMS”), as Assignee of Federal Deposit Insurance

Corporation, Receiver of First National Bank Edinburg, Texas, Appellee/Cross

Appellant, sued 7677 Group, L.P., Appellant, and Gal Batzri, Cross-Appellee, on

the promissory note and guaranty, respectively.

        The trial court granted summary judgment and dismissed SMS’s claims

against Batzri based on the statute of limitations. Following a bench trial, the trial

court entered judgment in favor of SMS and against 7677 Group on the promissory

note.

        In three issues on appeal, 7677 Group argues that the trial court erred in

(1) rendering judgment for SMS because SMS failed to prove that it is the owner

and holder of the note, (2) awarding damages and other relief to SMS because 7677

Group was not given credit for all payments made on the debt or for the value of

collateral pledged to First National Bank, and (3) awarding prejudgment interest to

SMS.

        SMS filed a cross-appeal seeking reversal of the trial court’s summary

judgment in favor of Batzri, on the personal guaranty agreement.

        We affirm in part and reverse and remand in part.

                                          2
                                   Background

      On February 20, 2010, 7677 Group executed a promissory note (the “Note”)

in the amount of $323,972.40 payable to First National Bank in Edinburg, Texas

(“FNB”). The Note renewed a $500,000 line of credit opened by 7677 Group in

December 2008. The Note matured on February 20, 2011. Under the terms of the

Note, 7677 Group would make 12 payments; 11 monthly payments of $2,000, and a

single “balloon payment” of the entire remaining unpaid balance upon maturity.

      7677 Group also executed a security agreement on the same date in which

7677 Group agreed to give FNB “a security interest in all of the Property described

in this Agreement” to secure the payment and performance of the Note (the “Security

Agreement”). The “Property” described in the security agreement consisted of the

following: “Inventory. All inventory which [7677 Group] hold[s] for ultimate sale

or lease, or which has been or will be supplied under contracts of service, or which

are raw materials, work in process, or materials used or consumed in [7677 Group’s]

business.”

      Also on February 20, 2010, Gal Batzri, the president of 7677 Group’s general

partner Joshua Tree, LLC, executed a personal guaranty of the Note (the

“Guaranty”).

      In September 2013, FNB was closed by the Office of the Comptroller of the

Currency, and the Federal Deposit Insurance Corporation (“FDIC”) was named

                                         3
receiver. On November 27, 2013, the FDIC sold, transferred, and assigned the Note

and Guaranty to SMS.

      On January 27, 2016, SMS sued 7677 Group and Batzri1 alleging that SMS

had become the owner and holder of the Note and the Guaranty, that 7677 Group

had defaulted on the Note, and that Batzri had defaulted on the Guaranty. Batzri

moved for summary judgment asserting that SMS’s claims against him were barred

by limitations. The trial court granted Batzri’s motion for summary judgment and

ordered that SMS take nothing on its claims against Batzri.

      On January 11, 2021, SMS’s claims against 7677 Group were tried to the

bench, which rendered a final judgment in favor of SMS. The following month,

7677 Group requested findings of fact and conclusions of law, moved to modify the

final judgment, and moved for a new trial.

      On April 12, 2021, the trial court signed a modified final judgment and entered

a separate order denying 7677 Group’s motion for new trial. The trial court’s

modified final judgment awarded SMS $312,576.83 in damages; $389,354.88 in

prejudgment interest as of January 11, 2021; additional prejudgment interest at the

rate of 17.75% per annum from January 11, 2021 through the date of the judgment;

$27,440 in trial attorney’s fees, plus a total of $14,500 in conditional appellate

1
      SMS also sued Idan Segev, a limited partner in 7677 Group, who had also executed
      a personal guaranty of the Note. Although named as a defendant in the underlying
      lawsuit, Segev was not served and is not a party to this appeal.

                                          4
attorney’s fees; post judgment interest; and court costs. The modified final judgment

also ordered that SMS take nothing on its claims against Batzri.

      On May 6, 2021, the trial court signed findings of fact and conclusions of law.

Thereafter, 7677 Group filed a motion to modify the modified final judgment and a

motion for new trial. 7677 Group also filed objections and a request for additional

and amended findings of fact and conclusions of law.

      The trial court denied 7677 Group’s post-judgment motions. 7677 Group

timely appealed. And SMS timely cross-appealed.

                            7677 GROUP’S APPEAL

                               Standard of Review

      In an appeal from a bench trial, a trial court’s findings of fact have the same

weight as a jury’s verdict. Thompson v. Smith, 483 S.W.3d 87, 93 (Tex. App.—

Houston [1st Dist.] 2015, no pet.); HTS Servs., Inc. v. Hallwood Realty Partners,

190 S.W.3d 108, 111 (Tex. App.—Houston [1st Dist.] 2005, no pet.). When

challenged, findings of fact are not conclusive where, as here, there is a complete

reporter’s record. Thompson, 483 S.W.3d at 93; HTS Servs., 190 S.W.3d at 111.

      Under these circumstances, the trial court’s findings of fact are binding if the

evidence supports them. Thompson, 483 S.W.3d at 93; HTS Servs., 190 S.W.3d at

111. If the findings are challenged, we review the sufficiency of the evidence

supporting the findings by applying the same standards that we use in reviewing the

                                          5
legal or factual sufficiency of the evidence supporting jury findings. Catalina v.

Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).

      When conducting a legal sufficiency review, we credit favorable evidence if

a reasonable factfinder could do so and disregard contrary evidence unless a

reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.

2005); Brown v. Brown, 236 S.W.3d 343, 348 (Tex. App.—Houston [1st Dist.] 2007,

no pet.). We consider the evidence in the light most favorable to the finding under

review, and we indulge every reasonable inference that would support the finding.

City of Keller, 168 S.W.3d at 822.

      In reviewing for factual sufficiency, we consider all the evidence supporting

and contradicting the finding. Plas–Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442,

445 (Tex. 1989). We set aside the verdict only if the finding is so contrary to the

overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v.

Bain, 709 S.W.2d 175, 176 (Tex. 1986). In a bench trial, the trial court, as factfinder,

is the sole judge of the credibility of the witnesses. HTS Servs., 190 S.W.3d at 111.2

2
      See also Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003)
      (“It is a familiar principle that in conducting a factual sufficiency review, a court
      must not merely substitute its judgment for that of the [factfinder].”); Figueroa v.
      Davis, 318 S.W.3d 53, 59 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (observing
      that factfinder may choose to believe one witness over another).
                                            6
                          Owner and Holder of the Note

      In its first issue, 7677 Group argues that the trial court erred in rendering

judgment in favor of SMS because SMS failed to prove that it is the owner and

holder of the Note. As such, 7677 Group argues that there is legally and factually

insufficient evidence to support the trial court’s findings of fact, as well as any

implied findings, as follows:

      2.     After the Promissory Note was signed, [FNB] was declared
             insolvent by the [FDIC], whereupon the [FDIC] became receiver
             of [FNB] and the owner and holder of the above-described
             Promissory Note.
      3.     The [FDIC] assigned the Promissory Note to [SMS], the latter of
             whom became and is owner and holder of the Promissory Note.

      ...
      8.     The Promissory Note sued upon in this lawsuit requires 7677
             Group, L.P. to pay reasonable and necessary attorney’s fees
             incurred by [SMS] incident to any non-payment of the
             Promissory Note by 7677 Group, L.P.
      According to 7677 Group, because there is legally and factually insufficient

evidence to support Findings of Fact 2, 3, and 8, the trial court’s Conclusions of Law

10, 13, and 14, that 7677 Group breached the Note and is liable to SMS for damages,

attorney’s fees, and costs, are also erroneous.

A.    Applicable Law

      To recover on a promissory note, the plaintiff must prove: (1) the existence of

the note in question; (2) the defendant signed the note; (3) the plaintiff is the owner

                                          7
or holder of the note; and (4) a certain balance is due and owing on the note. Wells

Fargo Bank, N.A. v. Ballestas, 355 S.W.3d 187, 191 (Tex. App.—Houston [1st

Dist.] 2011, no pet.).

      At issue here is the third element—the plaintiff is the owner or holder of the

note. The Texas Uniform Commercial Code defines “person entitled to enforce” an

instrument as: (i) the holder of the instrument; (ii) a nonholder in possession of the

instrument who has the rights of a holder; or (iii) a person not in possession of the

instrument who is entitled to enforce the instrument pursuant to section 3.309 or

3.418(d). See TEX. BUS. & COM. CODE § 3.301; Manley v. Wachovia Small Bus.

Cap., 349 S.W.3d 233, 239 (Tex. App.—Dallas 2011, pet. denied). Also, “[a] person

may be a person entitled to enforce the instrument even though the person is not the

owner of the instrument or is in wrongful possession of the instrument.” TEX. BUS.

& COM. CODE § 3.301.

      A “holder” is “the person in possession of a negotiable instrument that is

payable either to bearer or to an identified person that is the person in possession.”

Id. § 1.201(b)(21); Leavings v. Mills, 175 S.W.3d 301, 309 (Tex. App.—Houston

[1st Dist.] 2004, no pet.). When an instrument is payable to an identifiable person,

the “holder” is the person in possession if he is the identified person. TEX. BUS. &

COM. CODE § 1.201(b)(21); Leavings, 175 S.W.3d at 309. A holder of an instrument

is a “[p]erson entitled to enforce” an instrument. Leavings, 175 S.W.3d at 309.

                                          8
      A person can become the holder of an instrument when the instrument is

issued to that person; or he can become a holder by negotiation. See TEX. BUS. &

COM. CODE § 3.201, U.C.C. cmt. 1. Negotiation is the “transfer of possession of an

instrument . . . by a person other than the issuer to a person who thereby becomes its

holder.” TEX. BUS. & COM. CODE § 3.201(a); Leavings, 175 S.W.3d at 309. “[I]f an

instrument is payable to an identified person, negotiation requires transfer of

possession of the instrument and its indorsement by the holder.” TEX. BUS. & COM.

CODE § 3.201(b); Leavings, 175 S.W.3d at 309; Jernigan v. Bank One, Tex., N.A.,

803 S.W.2d 774, 776 (Tex. App.—Houston [14th Dist.] 1991, no writ). The

indorsement must be written by or on behalf of the holder and on the instrument or

on a paper so firmly affixed to it as to become part of it. Jernigan, 803 S.W.2d at

776. If an instrument not in the possession of the original holder lacks a written

indorsement and proof of the chain of title, the person in possession does not have

the status of a holder. See id. at 776–77.

      A note may be transferred, however, even if it is not indorsed by the

transferee; in that case, the transferee acquires whatever rights the transferor had in

the note, but he does not become the holder. See TEX. BUS. & COM. CODE § 3.201;

Leavings, 175 S.W.3d at 309. The transfer of title of a negotiable instrument

received by the transferee without indorsement includes “such rights as the

transferor has therein.” Leavings, 175 S.W.3d at 309.

                                             9
      Thus, even if a person is not the holder of a note, he may still be able to prove

that he is the owner and entitled to enforce the note, foreclose on collateral and obtain

a deficiency judgment under common-law principles of assignment. Id. A person

not identified in a note who is seeking to enforce it as the owner or holder must prove

the transfer by which he acquired the note. Id.; Jernigan, 803 S.W.2d at 777.

B.    Analysis

      As noted, 7677 Group argues that the trial court erred in rendering judgment

in favor of SMS because SMS failed to prove that it is the owner and holder of the

Note. Specifically, 7677 Group argues that although SMS alleged that the FDIC

assigned the Note to it after the FDIC became receiver for FNB, SMS presented no

evidence at trial of the terms of the receivership or the assets that were included in

the receivership. 7677 Group contends that SMS failed to establish that the Note

was transferred to it as opposed to PlainsCapital Bank, Dallas, TX—identified in

SMS’s own exhibit as the “Acquiring Financial Institution.”

      At trial, SMS introduced Plaintiff’s Exhibit 8, which is a printout from the

FDIC’s website identifing a list of failed banks, including FNB. Exhibit 8 states

that FNB was closed by the Office of the Comptroller of Currency on September 13,

2013, and that the FDIC was appointed receiver. Although Exhibit 8 identifies

“PlainsCapital Bank, Dallas, TX” as the “acquiring financial institution,” it states

only that “all deposit accounts, including brokered deposits, have been transferred

                                           10
to” PlainsCapital.      It also states that the “former [FNB] locations will reopen as

branches of PlainsCapital Bank during regular business hours.” On the following

page, there is a separate section specifically applicable to “loan customers,” which

states:

                 If you had a loan with [FNB], you should continue to make your
          payments as usual. The terms of your loan will not change, because
          they are contractually agreed to in your promissory note. Checks
          should be made payable as usual and sent to the same address until
          further notice. If you have further questions regarding an existing loan,
          please contact your loan officer.
                For all questions regarding new loans and the lending policies of
          PlainsCapital Bank, please contact your branch office.
(Emphasis added).

          According to 7677 Group, Exhibit 8 does not prove that SMS was the owner

or holder of the Note because it contains no information about what assets were

included in the FDIC’s receivership.              Rather, it demonstrates that another

institution—PlainsCapital Bank—acquired FNB’s assets, including deposit

accounts and existing loans. We disagree.

          Exhibit 8 demonstrates that only deposit accounts were transferred to

PlainsCapital, and that new loans, not existing loans, would be handled by

PlainsCapital. Existing loan customers were to continue making payments as usual.

Further, the exhibit is clear that the FDIC was appointed as receiver in September

2013 after FNB failed.

                                             11
      This court previously has held similar evidence that the FDIC was appointed

receiver, when combined with an indorsement or other evidence of a transfer from

the FDIC in its capacity as receiver for the failed bank to the acquiring bank, is

sufficient evidence to establish that the acquiring bank is the holder or owner of the

note in question. For example, in Hinsley v. Bank One, the appellant executed a note

in favor of MBank Houston, N.A. (Mbank). See Hinsley v. Bank One, Tex., N.A.,

No. 01-90-00829-CV, 1991 WL 94427, at *1 (Tex. App.—Houston [1st Dist.] June

6, 1991, writ denied) (not designated for publication).       The note matured on

September 1, 1988; however, Hinsley failed to make any payment on the note. Id.

In March 1989, the Comptroller of Currency declared MBank insolvent and

appointed the FDIC as MBank’s receiver. Id. Thereafter, an order, approving the

sale of certain assets and liabilities from the FDIC to the Deposit Bridge Bank, N.A.

(Bridge Bank), was entered by a federal district court. Id. Subsequently, Bridge

Bank legally changed its name to Bank One, Texas, N.A. (Bank One). Id. Bank One

sued Hinsley, arguing it was the owner and holder of the note. Id.

      On appeal from a judgment in favor of Bank One, Hinsley argued that Bank

One was not entitled to recover on the note because it was neither the payee of the

note, nor had the note been indorsed to Bank One. Id. The court noted that Bank

One was not a holder because the note was not indorsed to it. Id. at *2. However,

because “a note may be transferred lawfully without an indorsement by the legal

                                         12
owner or holder,” the court explained that an individual in possession of a note,

payable to the order of a different payee, can enforce payment of the note in his own

name by proving the transaction through which the note was acquired. Id.

      The Hinsley court noted that Bank One provided evidence of the (1) original

note, (2) purchase and assumption agreement between FDIC and Bridge Bank, and

(3) document which changed Bridge Bank’s legal name to Bank One. Id. Thus, the

court held that Bank One established the transaction through which it acquired the

note and proved it was an owner. Id.

      The Hinsley court also rejected Hinsley’s argument that this documentation

was insufficient to prove that Bank One was the owner of the note, because no

evidence showed that MBank owned the note when the FDIC was appointed

receiver, and no evidence that the FDIC owned the note when it entered into the

purchase and assumption agreement with Bridge Bank. Id. at *3.            The court

concluded that the evidence demonstrated that MBank owned the note when the

FDIC was appointed receiver, citing to the evidence that the note matured in

September 1988, that there were no indorsements on the note, and that in March

1989, the FDIC was appointed receiver. Id. Thus, in that case, no further evidence

was required to demonstrate the initial transfer between MBank and the FDIC.

      In another case, Winfield v. Dosohs I, Ltd., the appellant borrowed from

Fidelity National Bank and signed a promissory note. Winfield v. Dosohs I, Ltd., No.

                                         13
01-97-00997-CV, 1998 WL 436895, at *1 (Tex. App.—Houston [1st Dist.] July 30,

1998, no pet.) (not designated for publication). When the note matured in March

1993, appellant was in default. Id. After Fidelity National Bank failed, the FDIC

was appointed receiver. Id. In early 1994, Dosohs bought the promissory note from

the FDIC, and the FDIC transferred the note to Dosohs by indorsement. Id. Dosohs

sued to collect on the note, and the trial court rendered judgment in favor of Dosohs.

Id.

      On appeal, the appellant challenged the trial court’s findings that Fidelity

National Bank failed and was taken over by the FDIC and that Dosohs was the owner

and holder of the promissory note. Id. at *3–4. Before the court was evidence of a

transfer of liens to Dosohs executed by the FDIC “in its receivership capacity

(‘Assignor’) of Fidelity National Bank,” as well as the promissory note that included

an indorsement by “Federal Deposit Insurance Corporation, Receiver for:

FIDELITY NATIONAL BANK, HOUSTON, TEXAS.” Id. at *4.

      The Winfield court concluded this evidence was sufficient to support the

finding that the bank failed and was taken over by the FDIC. The court also held

that an allonge from the FDIC to Dosohs was valid and established that it was the

holder of the note. Id. at *4–5.3

3
      See also Catalina v. Cramer Fin. Grp., Inc., No. 01-96-00862-CV, 1998 WL
      135120, at *10 (Tex. App.—Houston [1st Dist.] Mar. 19, 1998, no pet.) (not
      designated for publication) (holding evidence established that Cramer was owner of
                                          14
      Like the acquiring institutions in the above-cited cases, SMS also introduced

evidence as to how it had acquired the Note. SMS introduced a the Note, which

matured in February 2011, as Exhibit 3. Benjamin Myers, SMS’s representative and

custodian of records, testified that SMS received the Note as part of the 398 pages

of business records it received directly from the FDIC. Myers testified that SMS

was the owner and holder of the Note.

      Although the Note itself did not contain any indorsements, the trial court

admitted SMS’s Exhibit 2, an “Allonge to Promissory Note,” (“Allonge”). It

specifically identified the Note and contained the following indorsement:

            Pay to the order of SMS Financial JDC, L.P., a Delaware limited
      partnership, whose address is 6829 North 12th Street, Phoenix, AZ
      85014.

            WITHOUT RECOURSE and without representation or warranty
      except as set forth in that certain Limited Partnership Agreement dated
      February 27, 2012.
            BY SMS Financial JDC, L.P., under Power of Attorney from the
      Federal Deposit Insurance Corporation, as Receiver for First National
      Bank, 100 W. Cano, Edinburg, TX 78539.
The Allonge identified the “[FDIC] as Receiver for [FNB]” as the assignor and was

signed by “Jonathan Hoffer – Attorney-in-Fact.”

      note because note was indorsed from FDIC, in its capacity as receiver for MBank
      Houston, to Bank One; testimony was presented that Bank One was surviving entity
      of MBank, Bank One purchased all assets of MBank, and Cramer purchased
      interests from Bank One; and two assignments showed FDIC, as receiver for
      MBank, assigned note to Bank One, and that Bank One assigned note to Cramer).
                                         15
       The trial court here also admitted SMS’s Exhibit 7, a limited power of attorney

signed by the FDIC on March 19, 2014, designating “Jonathan Hoffer of SMS

Financial CBS, LLC, to act on behalf of the FDIC in any of its Receivership . . .

capacities related to multiple failed financial institutions,” and authorizing the

attorney-in-fact “[t]o execute, acknowledge, seal and deliver on behalf of the FDIC

. . . any and all instruments of transfer and conveyance, appropriately completed,

with all ordinary and necessary endorsements, acknowledgements, affidavits and

supporting documents as may be necessary or appropriate to evidence the sale and

transfer of any asset . . . .”

       Finally, the trial court admitted into evidence SMS’s Exhibit 6, entitled

“Assignment of Loan Documents and Related Rights” (“Assignment”).                 The

Assignment states: “The [FDIC], as Receiver for [FNB] (‘Assignor’), by and

through its attorney in fact undersigned, hereby assigns to SMS Financial JDC, LP.

(‘Assignee’), all rights, title and interest in the loan documents identified on the

attached Exhibit A.” Exhibit A identifies the Note, the Security Agreement, and the

Guaranty as the loan documents subject to the Assignment.         The Assignment is

signed by Hoffer in his capacity as attorney-in-fact for the “Assignor: [FDIC] as

Receiver for [FNB].”

       The above evidence demonstrates that SMS is in possession of the Note,

which, in the Allonge, is indorsed by the FDIC in its capacity as receiver for FNB to

                                          16
SMS. Further, in its capacity as receiver for FNB, the FDIC assigned the Note to

SMS.

       Accordingly, we hold that the evidence that the FDIC was appointed receiver

of FNB, along with the Note, the Allonge, the Assignment, and Myers’s testimony

establishes that SMS is indeed the owner and holder of the Note.4 See Winfield, 1998

WL 436895, at *3–5; Catalina, 1998 WL 135120, at *10; Hinsley, 1991 WL 94427,

at *2–3.

C.     Admissibility of Exhibits 2 and 6

       7677 Group also argues that the trial court erred in admitting into evidence

the purported transfer documents: (1) Exhibit 2, the Allonge and (2) Exhibit 6, the

Assignment, and therefore these exhibits are insufficient to support the trial court’s

findings. According to 7677 Group, SMS failed to establish the necessary predicate

for admission of these documents as required by Texas Rule of Evidence 803(6)

because Myers never testified that (1) the information in these exhibits were placed

4
       We find Geiselman v. Cramer Financial Group, Inc., 965 S.W.2d 532, 538 (Tex.
       App.—Houston [14th Dist.] 1997, no writ), cited by 7677 Group, distinguishable.
       In that case, the court held that a summary judgment affidavit was insufficient to
       prove that the acquiring bank was the owner of notes because although a vice
       president testified that the FDIC was appointed receiver of the failed bank and
       became the rightful owner of notes, he stated no facts indicating he personally knew
       the notes were among the assets of the failed bank. As noted, that case was on
       summary judgment, not following a bench trial and it was undisputed that the
       acquiring bank did not have possession of the original notes, as it claimed they had
       been lost, stolen, or destroyed.

                                            17
there at or near the time by a person with knowledge of that information, (2) the

information in these exhibits were kept in the ordinary course of business, or (3) it

was the regular practice of that business activity to make those records. See TEX. R.

EVID. 803(6).5

      At trial, 7677 Group objected to Exhibit 2 because it was “conclusory and

hearsay.” Specifically, 7677 Group argued that the exhibit referenced an assignment

to SMS and a partnership agreement, neither of which had been produced in

discovery. 7677 Group made a similar objection to Exhibit 6, arguing that the

exhibit was conclusory because it “relies on an agreement that’s not in evidence,”

5
      Rule 803(6) provides that certain records are not excluded by the rule against
      hearsay, regardless of whether the declarant is available as a witness, if:

             (A)   the record was made at or near the time by—-or from
                   information transmitted by—someone with knowledge;

             (B)   the record was kept in the course of a regularly conducted
                   business activity;

             (C)   making the record was a regular practice of that activity;

             (D)   all these conditions are shown by the testimony of the
                   custodian or another qualified witness, or by an affidavit or
                   unsworn declaration that complies with Rule 902(10); and

             (E)   the opponent fails to demonstrate that the source of information
                   or the method or circumstances of preparation indicate a lack
                   of trustworthiness. “Business” as used in this paragraph
                   includes every kind of regular organized activity whether
                   conducted for profit or not.

      TEX. R. EVID. 803(6).

                                          18
and that it contained statements about the limited partnership which were “certainly

hearsay.” 7677 Group did not, however, object to these two exhibits on the basis that

SMS failed to establish the necessary predicate for the admission of business records

under Rule 803(6).6

      To preserve a complaint for appellate review, a party must state an objection

clearly and with sufficient specificity to make the trial court aware of the particular

grounds for the complaint. TEX. R. APP. P. 33.1(a). Further, an appellant’s complaint

on appeal must comport with her objection in the trial court. Benson v. Chalk, 536

S.W.3d 886, 895 (Tex. App.—Houston [1st Dist.] 2017, pet. denied). “[A] general

hearsay objection does not preserve for appeal a challenge to a proper predicate’s

being made to admit business records.”7 Rogers v. Dep’t of Family & Protective

6
      We acknowledge that 7677 Group made Rule 803(6) objections, among others, in
      reference to SMS’s Exhibit 1, which consisted of Myers’s business records affidavit
      and the 398 pages of business records SMS received from the FDIC. Included in
      those business records were the Allonge and the Assignment. The trial court granted
      7677 Group’s objections and excluded Exhibit 1. 7677 Group, however, did not
      reiterate these same Rule 803(6) objections when SMS moved to admit into
      evidence the Allonge (Exhibit 2) and the Assignment (Exhibit 6) as separate
      standalone exhibits.
7
      See also Foster v. Nat’l Collegiate Student Loan Tr. 2007-4, No. 01-17-00253-CV,
      2018 WL 1095760, at *6 (Tex. App.—Houston [1st Dist.] Mar. 1, 2018, no pet.)
      (mem. op.) (holding general hearsay objection did not preserve for appeal challenge
      to predicate being made to admit business records); In re N.C.M., 66 S.W.3d 417,
      420 (Tex. App.—Tyler 2001, no pet.) (holding that general hearsay objection to
      business records was insufficient to inform trial court of specific grounds of
      objection or to preserve error); Clark v. Walker–Kurth Lumber Co., 689 S.W.2d
      275, 281 (Tex. App.—Houston [1st Dist.] 1985, writ ref’d n.r.e.) (holding that
      objection to personal knowledge of sponsoring witness to assert business records
                                          19
Servs., 175 S.W.3d 370, 376 (Tex. App.—Houston [1st Dist.] 2005, pet. dism’d

w.o.j.).

       Because 7677 Group’s conclusory and hearsay objections to Exhibits 2 and 6

do not comport with the objection it makes on appeal, we hold that this argument is

not preserved for our review. See Benson, 536 S.W.3d at 895.

       7677 Group also argues that these documents are internally inconsistent and

are therefore unreliable. It argues that the Allonge states the Note was “sold,

transferred and assigned” to SMS on November 27, 2013, but the Assignment

purports to assign the Note to SMS almost two years later, on December 10, 2015.

According to 7677 Group, the Assignment also contradicts the Allonge in that it

states “immediately prior to making this Agreement [the FDIC] was the sole owner

of the [FDIC]’s interest in the documents and rights assigned hereby, or the fully

authorized agent of all such parties,” but the Allonge states that the FDIC had not

been the owner of the Note since late 2013. Due to these purported contradictions,

7677 Group contends that the Allonge and Assignment cannot be reconciled and are

unreliable and insufficient to support a judgment in favor of SMS.

       We disagree. Any alleged contradictory nature of the exhibits was explained

by Myers’s testimony describing the transfer of the Note from the FDIC to SMS.

       exception to hearsay rule did not preserve error asserted on appeal that invoices
       were not generated at or near time of transaction and that appellee failed to lay
       proper predicate for introduction of summary of business records).

                                           20
Myers testified that SMS acquired the Note from the FDIC on November 27, 2013,

but that the Assignment and Allonge were not executed until 2015. Myers explained

that SMS acquired over 500 assets from the FDIC and prepared the necessary

documents after the acquisition. Myers testified that due to the number of assets

acquired, SMS was not able to get to all of them on the same date.

      Accordingly, we hold that legally and factually sufficient evidence supports

the trial court’s findings that SMS was the owner and holder of the Note.

      We overrule 7677 Group’s first issue.

                                       Damages

      In its second issue, 7677 Group argues that the trial court reversibly erred in

awarding damages and other relief to SMS, because the uncontroverted evidence

demonstrates that 7677 Group was not given credit for all payments made on the

Note or for the value of the collateral pledged to FNB and subsequently taken by

FNB. Accordingly, 7677 Group argues factually insufficient evidence support the

trial court’s findings of fact as follows:

      4.     7677 GROUP, L.P. defaulted on the Promissory Note by failing
             to pay all principal and accrued interest payments required by the
             February 20, 2011 maturity date and continuing through the
             completion of trial in this lawsuit.

             ...
      6.     As of January 11, 2021, $312,576.83 in unpaid principal and
             $389,354.88 in accrued yet unpaid interest is owed on the
             Promissory Note is owed, and additional daily interest of

                                             21
             $152.00 (17.75% per annum) will accrue until the date of Final
             Judgment in this lawsuit.
      7.     7677 GROUP, L.P. offered insufficient evidence at trial to
             establish any offsets against the principal and interest amounts
             found in the preceding paragraph.
      Considering all of the evidence supporting and contradicting the findings, as

we must, we agree with 7677 Group that the trial court’s findings 6 and 7 related to

the amount owed on the Note, including any applicable offsets, are so contrary to

the overwhelming weight of the evidence as to be clearly wrong and unjust. See

Plas–Tex, Inc., 772 S.W.2d at 445; Cain, 709 S.W.2d at 176.

      Only one piece of evidence supports the trial court’s finding that, as of January

11, 2021, the unpaid principal balance on the Note was $312,576.83—Myers’s

testimony. When asked what SMS was asking for on the Note, Myers responded

that the “outstanding principal balance is $312,576.83.” Myers testified that he

compared the $312,576.83 principal balance against the payment history offered by

7677 Group and observed that the principal balances were “very close and that most

of the payments that they suggest that they made are reflected in the payment history

that we have.” Although SMS attempted to introduce evidence of its records of the

payment history on the Note, the trial court excluded that evidence.

      In contrast, 7677 Group presented testimony and documentary evidence that

7677 Group made several payments to FNB before the FDIC’s receivership and

assignment of the Note to SMS that were not considered by SMS in its calculation

                                          22
of the amount due on the Note. For instance, the trial court admitted 7677 Group’s

Exhibit 3, which consisted of vendor reports for the years 2009, 2010, and 2011

documenting the payment history for the “[FNB] LOC.”

      Batzri testified that Exhibit 3 reflected part of the payment history on the Note.

He testified that the payment history and balance sheets in Exhibit 3 were prepared

by someone in 7677 Group, that the entries were prepared as they were made, and

that he had custody of those business records as President for 7677 Group’s general

partner, Joshua Tree, LLC.

      Exhibit 3 also indicates that the 2010 ending balance on the Note was

$309,551.40. It reflects that two payments were made in January 2011, before

maturity, which brought the balance due down to $305,251.41. The exhibit also

reflects four payments made in 2011 after maturity:

         • $2,000 payment on February 25, 2011,

         • $45,000 payment on April 15, 2011,

         • $99,625 payment on July 27, 2011, and

         • $110,925.85 payment on August 2, 2011.

      In support of that exhibit, Batzri testified that a payment of $45,000 was made

on or about April 15, 2011, and that FNB took this payment from his personal

savings account at FNB.

                                          23
      Batzri also testified that a payment of $99,625 was made on or about July 27,

2011. He explained that the source of that payment was the sale of 27 vehicles that

were pledged to FNB as collateral for the Note. Batzri testified that FNB had

possession of the titles to those vehicles, and that FNB released the titles so the

vehicles could be sold to fund the $99,625 payment.

      Additionally, the trial court admitted 7677 Group’s Exhibit 4, which included

an email from Eddie Dan, CFO of 7677 Group, to Batzri stating:

      See list below. [T]his is the final number [I] managed to negotiate with
      the buyer for the bulk purchase of all the cars.

      I have already spoke[n] to Chris from FNB and he would release all the
      titles for this amount. [H]e will work with me on this transaction and
      we will get it done.

Below the text of this email is a list of 27 vehicles, including make, model, and title

number, and a corresponding sale price. The total proceeds from the sale of all 27

vehicles was listed as $99,625. Batzri also testified that he physically saw FNB sign

off on the titles and that he, as seller, also signed off on the titles when the vehicles

were sold to a buyer. He testified that the funds received from the sale of those

vehicles were sent to FNB as payment on the Note. And that this $99,625 payment

was “supposed to be credited to [the] 7677 line of credit, [but] they were not credited

on the account.”

      Batzri further testified that a payment of $110,925.85 was made on or about

August 2, 2011, and that he received confirmation from Idan Segev, a limited partner
                                           24
in 7677 Group and the person who made the payment, that the payment was made.

As evidence of this payment, the trial court admitted 7677 Group’s Exhibit 6, an

email from Segev, stating: “Gal, [I] made the wire to FNB. [W]ith currency

exchange rate and the fees the net wire is $110,925.85.” The subject line of this

email is “Re: Payment FNB LOC.”

      Finally, Batzri testified that if 7677 Group had received credit for these six

payments made in 2011, the outstanding principal balance owed to FNB as of

December 31, 2011, was $47,700.55. Exhibit 3 likewise reflects that the 2011

ending balance was $47,700.55. Batzri stated that SMS’s calculations of the

indebtedness owed by 7677 Group on the Note failed to give 7677 Group “the proper

credit” for any of those six payments.

      Although there is some evidence (in the form of Myers’s testimony)

supporting the trial court’s finding of an unpaid principal balance of $312,576.83,

the evidence supporting this finding is overwhelmingly outweighed by the evidence

reflecting that at least some payments were made to the Note before and after

maturity that were not accounted for by SMS in its calculation. Accordingly, having

examined all the relevant evidence, we hold that the trial court’s findings 6 and 7

related to the amount of unpaid principal balance and offsets are not supported by

factually sufficient evidence.

                                         25
      We hold, however, that the trial court’s finding 4—i.e., 7677 Group defaulted

on Note by failing to pay all principal and accrued interest payments required by the

February 20, 2011 maturity date and continuing through the completion of trial in

this lawsuit—is supported by factually sufficient evidence.

      As discussed above, even considering the evidence of the six payments made

by 7677 Group before and after maturity, 7677 Group admitted at trial that the

remaining balance owed on the Note at the end of 2011, after maturity, was

$47,700.55.

      7677 Group, however, contends that in addition to making these six

unaccounted for payments, in 2012, FNB agreed to take possession of nearly

$2,000,000 in collateral pledged on 7677 Group’s behalf pursuant to the Security

Agreement, thereby satisfying all its obligations under the Note. According to 7677

Group, the collateral securing the Note consisted of two CDs with an approximate

value of $150,000 and cosmetics inventory of a separate entity, Soapranos NC

Products. Inc., with an approximate retail value of $1.7 million.

      Batzri testified that in the beginning of 2012, he had a conversation with

“Chris” at FNB and Chris was “impatient to get payment.” He testified that FNB

“had the inventory of So[a]pranos as collateral,” and that FNB “pressed to get the

payment [on the Note]” and “wanted t[he] collateral . . . to pay off the debt

                                         26
completely.” Batzri testified that he told Chris he was not able to sell the inventory

as fast as the bank wanted, and so he offered FNB the collateral and FNB accepted.

      We agree with SMS that this evidence related to FNB’s alleged acceptance of

this collateral in satisfaction of 7677 Group’s obligations under the Note is barred

by federal law, specifically, D’Oench, Duhme & Co. v. Federal Deposit Insurance

Corp., 315 U.S. 447 (1942) and 12 U.S.C. § 1823(e).

      When the FDIC acts as a receiver for a failed bank, the D’Oench, Duhme

doctrine bars the use of an unrecorded agreement between a borrower and the failed

bank as a basis for defenses or claims against the FDIC or its assigns. 315 U.S. at

453–62; Bluebonnet Sav. Bank v. Jones Country, Inc., 920 S.W.2d 670, 671 (Tex.

1996) (per curiam).

      Section 1823(e) partially codified the D’Oench, Dhume doctrine that no

agreement which tends to diminish or defeat the interest of the FDIC in any asset

acquired by it shall be valid against the FDIC unless it: (A) is in writing; (B) was

executed by the depository institution and any person claiming an adverse interest

thereunder, including the obligor, contemporaneously with the acquisition of the

asset by the depository institution; (C) was approved by the board of directors of the

depository institution or its loan committee, which approval shall be reflected in the

minutes of said board or committee, and (D) has been, continuously, from the time

of its execution, an official record of the depository institution. 12 U.S.C. § 1823(e).

                                          27
      The policies behind this doctrine are to: (1) allow federal and state bank

examiners to rely on a bank’s records in evaluating the worth of the bank’s assets,

which are necessary when a bank is examined for fiscal soundness, deciding whether

to liquidate the failed bank, or to provide financing for purchase of its assets (and

assumption of its liabilities) by another bank, and (2) ensure mature consideration of

unusual loan transactions by senior bank officials, and prevent fraudulent insertion

of new terms, with the collusion of banks employees, when a bank appears headed

for failure. See Langley v. Fed. Deposit Ins. Corp., 484 U.S. 86, 91–92 (1987).

      7677 Group argues that the D’Oench, Duhme doctrine and Section 1823 do

not apply here because there is no secret agreement. Rather, according to 7677

Group, FNB took possession of the collateral, including the CDs and the Soapranos

cosmetics inventory, pursuant to a written agreement referenced in and executed at

the same time as the Note, i.e., the Security Agreement.

      While it is true that the Security Agreement was executed at the same time as

and specifically references the Note, the Security Agreement gave FNB “a security

interest in all of the Property described in this Agreement” to secure the payment

and performance of the Note. The “Property” described in the security agreement

consisted of the following: “Inventory. All inventory which [7677 Group] hold[s]

for ultimate sale or lease, or which has been or will be supplied under contracts of

                                         28
service, or which are raw materials, work in process, or materials used or consumed

in [7677 Group’s] business.”

      Nothing in the Security Agreement indicates that the CDs were additional

collateral or security, or that they fell within the definition of “inventory.” The same

is true for Soapranos’s cosmetics inventory. The Security Agreement was executed

by 7677 Group, not Soapranos, and there is no indication that 7677 Group’s

“inventory,” as defined in the Security Agreement, included the inventory of a

separate entity.

      Accordingly, any evidence of a side agreement or conversations that 7677

Group had with FNB whereby FNB agreed to accept the CDs or cosmetics inventory

of another entity as collateral, even though those items were not specifically

referenced in the Security Agreement, is the type of evidence D’Oench, Dhume and

Section 1823 are meant to address. See Fed. Deposit Ins. Corp. v. Projects Am.

Corp., 828 S.W.2d 771, 773 (Tex. App.—Texarkana 1992, writ denied) (holding

evidence of side agreement that collateral not specifically identified in note was

intended to be security for note was barred by D’Oench, Dhume doctrine and section

1832(e)).8

8
      See also Cintra Antiques, Inc. v. Bank One, Tex., N.A., No. 05-91-00484-CV, 1992
      WL 13974, at *4 (Tex. App.—Dallas Jan. 29, 1992, no writ) (not designated for
      publication) (holding evidence of letter agreement providing for liquidation of
      inventory and assets of debtor as part of accord and satisfaction of debt due to Bank
      One and other “understandings” that Bank One would apply proceeds to satisfy
                                           29
      Because the only evidence before the trial court that the Note had been fully

satisfied by the time of trial consisted of Batzri’s testimony related to FNB’s

acceptance of the collateral, which is barred by federal law, the overwhelming

weight of the evidence supports the conclusion that at least some amount was owed

on the Note as of maturity and the completion of trial―and, therefore, 7677 Group

was in default. As a result, is the record contains factually sufficient evidence to

support the trial court’s finding of fact 4.

      In sum, we hold that the record contains factually sufficient evidence to

support the trial court’s finding of fact 4, that 7677 Group defaulted on the

Promissory Note by failing to pay all principal and accrued interest payments

required by the February 20, 2011 maturity date and continuing through the

completion of trial in this lawsuit. We further hold, however, that the trial court’s

findings of fact 6 and 7 are not supported by factually sufficient evidence.

Accordingly, 7677 Group is entitled to a new trial on damages only.9

      outstanding debt was type of oral agreements barred by D’Oench Dhume where
      letter agreement was not in bank records).
9
      See In re N. Nat. Gas Co., 327 S.W.3d 181, 187 (Tex. App.—San Antonio 2010,
      orig. proceeding [mand. denied]) (holding that balance on promissory note is
      liquidated damage and reversing and remanding for new trial on damages without
      requiring new trial on liability); Watson v. Sheppard Fed. Credit Union, 589 S.W.2d
      742, 744 (Tex. App.—Fort Worth 1979, writ ref’d n.r.e.) (citing Dallas Cnty. State
      Bank v. Thiess, 575 S.W.2d 20, 21 (Tex. 1978) (holding, in default judgment
      context, that difference between amount of indebtedness alleged to be due and face
      amount of note does not create ambiguity or raise issue of fact regarding payments
      credited, and therefore, allegation of indebtedness in pleadings was liquidated
                                           30
      We sustain in part and overrule in part 7677 Group’s second issue.10

                              SMS’S CROSS APPEAL
           Statute of Limitations Applicable to Guaranty Agreement

      In its sole issue in its cross appeal, SMS argues that the trial court incorrectly

granted summary judgment in favor of Batzri on limitations grounds. Batzri moved

for traditional summary judgment, arguing that the Texas four-year statute of

limitations in Texas Civil Practices & Remedies Code section 16.004(a), applied to

SMS’s suit on the Guaranty. See TEX. CIV. PRAC. & REM. CODE § 16.003(a)(3) (“A

person must bring suit on the following actions not later than four years after the day

the cause of action accrues . . . debt.”). The trial court granted Batzri’s motion for

summary judgment and, in the modified final judgment, ordered that SMS take

nothing on its claims against Batzri.

      SMS argues on appeal, and in its summary judgment response below, that the

federal six-year statute of limitations in 12 U.S.C. Section 1821(d)(14) applies to

any contract claim, including a suit on a guaranty and therefore SMS, as an assignee

of the FDIC, is entitled to avail itself of the six-year limitations period. According

      demand); cf. TEX. R. APP. P. 44.1(b) (“The court may not order a separate trial solely
      on unliquidated damages if liability is contested.”).
10
      Because we reverse and remand for a new trial on damages, we likewise reverse the
      award of attorney’s fees and prejudgment interest. See Clear Lake Ctr., L.P. v.
      Garden Ridge, L.P., 416 S.W.3d 527, 545 (Tex. App.—Houston [14th Dist.] 2013,
      no pet.). Therefore, we do not address 7677 Group’s substantive arguments related
      to those awards in its second and third issues. See TEX. R. APP. P. 47.1.

                                            31
to SMS, its suit against Batzri, which was brought within five years of the maturity

of the Note, was timely and summary judgment was improper. We agree.

A.    Standard of Review

      We review a trial court’s ruling on a traditional motion for summary judgment

de novo. Valance Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A

traditional motion for summary judgment is properly granted when the movant

establishes there are no genuine issues of material fact and it is entitled to judgment

as a matter of law on the grounds expressly set forth in the motion. Browning v.

Prostok, 165 S.W.3d 336, 344 (Tex. 2005). When reviewing an order granting a

traditional motion for summary judgment, we must take evidence favorable to the

nonmovant as true and indulge every reasonable inference from the evidence in favor

of the nonmovant. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex.1997).

B.    Analysis

      As the movant for summary judgment, Batzri had the burden of showing there

was no genuine issue of material fact and that he was entitled to judgment as a matter

of law. Id. The facts were not disputed; therefore, we must determine whether, on

the basis of those facts, limitations barred Batzri’s suit.

      The parties do not dispute that SMS’s cause of action on the Guaranty accrued

upon the maturity of the Note, February 20, 2011. Thus, the four-year statute of

limitations in section 16.004 of the Civil Practice and Remedies Code, if applicable,

                                           32
expired on February 20, 2015. Because SMS did not file suit against Batzri until

January 27, 2016, its suit is barred if it falls under section 16.004.

      SMS argues that section 16.004 does not apply and that its cause of action is

governed by the six-year statute of limitations applicable to the FDIC found in

Section 1821(d)(14) of the United States Code. If Section 1821(d)(14) applies, the

statute of limitations on SMS’s cause of action against Batzri would not have expired

until February 20, 2017, and SMS’s suit filed on January 27, 2016 would have been

timely filed.

      Section 1821(d)(14) provides:

      (A) In general

      Notwithstanding any provision of any contract, the applicable statute of
      limitations with regard to any action brought by the Corporation as
      conservator or receiver shall be—

                (i)    in the case of any contract claim, the longer of—

                       (I)    the 6–year period beginning on the date the claim
                              accrues; or
                       (II)   the period applicable under State law . . .

      (B) Determination of the date on which a claim accrues
      For purposes of subparagraph (A), the date on which the statute of
      limitation begins to run on any claim described in such subparagraph
      shall be the later of—
                (i)   the date of the appointment of the Corporation as
                conservator or receiver; or
                (ii)   the date on which the cause of action accrues.

                                             33
12 U.S.C. § 1821(d)(14)(A), (B).

      This provision was enacted as part of the Financial Institutions Reform,

Recovery, and Enforcement Act (FIRREA). The Texas Supreme Court has noted

that FIRREA does not expressly extend the benefit of this expanded limitations

period to the FDIC’s successors in interest. See Jackson v. Thweatt, 883 S.W.2d 171,

173–74 (Tex. 1994). But the court concluded that the “FDIC’s successors in interest

are entitled to the benefits of section 1821(d)(14) pursuant to the common law

maxim that an assignee stands in the shoes of his assignor.” Id. at 174 (quotations

omitted). The court in Jackson further explained that “[i]f the FDIC’s statute of

limitations did not enure to the benefit of its transferees, the market value of notes

and other assets in the hands of the FDIC would be diminished,” hindering one of

FIRREA’s statutory purposes to “provide funds from public and private sources to

deal expeditiously with failed depository institutions.” Id. Accordingly, the court

held that “section 1821(d)(14) applies to actions brought by purchasers of assets

from the FDIC to recover on those purchased assets . . . .” Id. at 178.

      Jackson involved a suit on a promissory note brought by an assignee of the

FDIC against the debtor. In an opinion issued on the same day as Jackson, the Texas

Supreme Court applied the reasoning of Jackson to a suit on a guaranty. See EKA

Liquidators v. Phillips, 883 S.W.2d 178, 178–79 (Tex. 1994). The court explained

as follows:

                                          34
        This case presents the question resolved today in Jackson v. Thweatt,
        883 S.W.2d 171 (Tex. 1994). Because the decision of the court of
        appeals, 883 S.W.2d 218, conflicts with our holding in Jackson, we
        reverse the judgment of the court below and remand the cause to the
        trial court for further proceedings.
        Troy Phillips guaranteed two notes payable to the Heritage National
        Bank maturing in August 1986 and June 1987, respectively. The notes
        went into default on maturity, obligating Phillips on his guaranty. The
        FDIC acquired the notes as receiver for Heritage National Bank in
        September 1986, later assigning them to EKA Liquidators (“EKA”).
        After EKA brought suit on the notes in August 1991, Phillips moved
        for summary judgment based on the Texas four year statute of
        limitations. See TEX. CIV. PRAC. & REM. CODE § 16.004. The trial court
        granted summary judgment for EKA, and the court of appeals affirmed,
        concluding that assignees of promissory notes from the FDIC are not
        entitled to the benefit of the six year limitations period applicable to the
        FDIC. See 12 U.S.C. § 1821(d)(14).

        We held today in Jackson that an assignee of a promissory note from
        the FDIC does receive the benefit of the special limitations provision
        set forth in section 1821(d)(14). Accordingly, without hearing oral
        argument, a majority of the Court reverses the judgment of the court of
        appeals and remands the cause to the trial court for further proceedings.

Id.11

        Batzri acknowledges the opinions in Jackson and EKA Liquidators, but

argues, in essence, that these cases were wrongly decided in that they “improperly

11
        See also U.S. Loan Liquidators I, Ltd v. Pate, No. 14-96-00591-CV, 1997 WL
        251346, at *4 (Tex. App.—Houston [14th Dist.] May 15, 1997, pet. denied) (not
        designated for publication) (citing Jackson v. Thweatt, 883 S.W.2d 171 (Tex. 1994),
        and EKA Liquidators v. Phillips, 883 S.W.2d 178 (Tex. 1994), and holding that six-
        year statute of limitations in 12 U.S.C. § 1821(d)(14) applied to suit on guaranty);
        cf. Barnes v. LPP Mortg., Ltd., 358 S.W.3d 301, 305 (Tex. App.—Dallas 2011, pet.
        denied) (citing Jackson and EKA Liquidators and holding that similar six-year
        statute of limitations in 28 U.S.C. § 2415(a) applied to assignees of Small Business
        Administration in suit on guaranty).
                                             35
elevate a common-law rule over statutes,” and therefore, we should not follow them.

It is not the function of a court of appeals to abrogate or modify established

precedent. Lubbock Cnty., Tex. v. Trammel’s Lubbock Bail Bonds, 80 S.W.3d 580,

585 (Tex. 2002). Rather, as an intermediate appellate court, we are bound by

existing Texas Supreme Court authority. Harris Cnty. Fresh Water Supply Dist. No.

61 v. Magellan Pipeline Co., 649 S.W.3d 630, 648 (Tex. App.—Houston [1st Dist.]

2022, pet. denied).

      Being bound by the Texas Supreme Court’s decisions in Jackson and EKA

Liquidators, we hold that the six-year statute of limitations in 12 U.S.C. Section

1821(d)(14) applies to SMS’s claims against Batzri on the Guaranty. Accordingly,

the trial court erred in granting Batzri’s motion for summary judgment on limitations

grounds and rendering a take-nothing judgment against SMS on its claims against

Batzri based on the Guaranty.

      We sustain SMS’s sole issue on cross appeal.

                                         36
                                    Conclusion

      We reverse the trial court’s judgment against 7677 Group as to damages,

attorney’s fees, and prejudgment interest. We remand for a new trial as to damages,

attorney’s fees, and for a recalculation of prejudgment interest. We reverse the trial

court’s take-nothing judgment against Batzri and reverse and remand for further

proceedings. We affirm the judgment in all other respects.

                                                    Terry Adams
                                                    Chief Justice

Panel consists of Chief Justice Adams and Justices Hightower and Countiss.

                                         37