Court Opinion

ID: 2899007
Source: CourtListenerOpinion
Date Created: 2015-09-08 23:53:21.893309+00
Date Added: 2024-06-11T11:33:39.668021
License: Public Domain

NO. 07-07-0374-CV

                            IN THE COURT OF APPEALS

                      FOR THE SEVENTH DISTRICT OF TEXAS

                                    AT AMARILLO

                                       PANEL A

                                  JULY 21, 2009
                         ______________________________

                       TERRA XXI LTD., ET AL., APPELLANTS

                                           V.

              AG ACCEPTANCE CORPORATION, ET AL., APPELLEES
                    _________________________________

          FROM THE 222ND DISTRICT COURT OF DEAF SMITH COUNTY;

               NO. CI-04B-011; HONORABLE ROLAND SAUL, JUDGE
                       _______________________________

Before CAMPBELL and HANCOCK and PIRTLE, JJ.

                              MEMORANDUM OPINION

                                      Background

      In 1998, Ag Services of America, Inc. (Ag Services) provided a series of loans to

Veigel Farm Partners (VFP), Grain Central Station, and Terra XXI, Ltd. (Terra). In

exchange for the funds, Terra granted a deed of trust to property located in Deaf Smith

County in favor of Ag Acceptance Corporation (AAC) as collateral. In 2000, Terra and

VFP defaulted on the loan and filed for bankruptcy, which culminated in a bankruptcy plan

of reorganization for VFP’s and Terra’s debt (“reorganization plans”), including the
outstanding Ag Services’s loans.      On October 20, 2002, as part of the bankruptcy

proceedings, VFP and Terra submitted Agreed Orders on Objection of Ag Services to the

reorganization plan (“Agreed Orders”) in each of the two bankruptcy cases which were

approved by the bankruptcy court.1 Based on the Agreed Orders, the parties entered into

Agreed Settlements. The remaining appellants, Veigel Cattle Company, Bob Veigel, Inc.,

Steve Veigel, Inc., Vicki Veigel, Inc., Veigel-Kirk, Inc., Veigel Farms, Inc., Bob Veigel,

individually, Steve Veigel, individually, and Grain Central Station, Inc. delivered to Ag

Services guaranty agreements as part of the settlement agreements.2 In the Agreed

Orders, Ag Services’s claims were secured by a second lien on all real property owned by

Terra in Deaf Smith County.

       In 2003, Terra failed to make a loan payment to First Ag Credit, a superior

lienholder, which was a condition of the settlement agreement with Ag Services. Further,

Ag Services gave notice that the ad valorem taxes on the properties were also overdue.

The settlement agreements stated that a default by Terra would constitute a default by

VFP. Hence, Ag Services, believing that Terra and VFP had defaulted per the settlement

agreement, sent out notices of default on June 16, 2003. A month later, on July 17, 2003,

Ag Services sent out notices of acceleration confirming that, because of the failure of Terra

       1
        The reorganization plan and Agreed Order for each company are separate from
the other company. However, because the language contained in the documents for Terra
and VFP are virtually identical, we will collectively refer to the two companies’ documents
as the reorganization plans and Agreed Orders.
       2
        Some documents relating to the settlement agreement, such as ratification of
guaranty and clarifying orders, were signed on later dates, however, all documentation
provided October 20, 2002 as the effective date for the agreements.

                                             2
and VFP to remedy the default conditions, the indebtedness to Ag Services was due and

payable. Finally, on August 12, 2003, Ag Services sent Terra and VFP notice of a

foreclosure sale of the Deaf Smith property set for September 2, 2003.3 At the foreclosure

sale, the encumbered property was purchased by AAC for $20,000. After Robert Veigel

and Ella Veigel, who resided on the property, refused to surrender the property, AAC

initiated a forcible detainer action in justice court to which appellants responded with a suit

in district court alleging, among other acts, wrongful foreclosure on the property.

Appellants’ suit named Ag Services, AAC, and Mark Harmon (substitute trustee) as

defendants. The named defendants filed a motion for summary judgment which prompted

appellants to file a motion for partial summary judgment. Harmon requested and was

granted a severance of the cases. Harmon then filed for summary judgment which was

granted.   Appellants appealed but this court affirmed the trial court. Terra XXI, Ltd. v.

Harmon, 279 S.W.3d 781 (Tex.App.–Amarillo 2007, pet. denied). By separate orders, the

trial court granted summary judgment in favor of Ag Services and AAC while denying the

appellants’ motion for partial summary judgment.

       In the present case, appellants appeal raising seven issues. By the first three

issues, appellants contend that the trial court erred in denying their summary judgments

and granting appellees’ summary judgments because: (1) the statute of limitations had run

on the deed of trust, thereby negating the foreclosure sale; (2) the Agreed Orders required

       3
         The foreclosure notice specified that the foreclosure sale was proceeding under
the deed of trust executed by Terra with AAC as the beneficiary. AAC is an Ag Services-
related financing company represented by the same law firm as Ag Services’s counsel.
Hence, the notices of default, acceleration, and foreclosure were actually sent out on
behalf of both Ag Services and AAC.

                                              3
redocumentation of the pre-bankruptcy notes and deed of trust liens; and (3) appellees

failed to show that there were no genuine issues of material fact regarding the foreclosure

claims. Next, as issues four through seven, appellants contend that the trial court

erroneously granted appellees’ summary judgment because the trial court erred in: (4)

dismissing appellants’ claims of deceptive trade practices, predatory lending, usury,

tortious interference, and failure to perform an accounting of the financial dealings between

the parties; (5) failing to recognize appellants’ claims of fraudulent inducement and their

right to elect remedies upon appellees’ breach of the settlement agreement; (6) requiring

appellants to deposit all checks jointly payable to defendants into the court registry when

appellants had the right to go to a jury on that question; and (7) failing to recognize Robert

and Ella’s homestead interest in the encumbered property. We affirm.

Issue One:     Statute of Limitations

         When both parties move for summary judgment and the trial court grants one

motion and denies the other, the appellate court reviews the summary judgment evidence

of both parties, determines all questions presented, and renders the judgment that the trial

court should have rendered. Bradley v. State ex rel. White, 990 S.W.2d 245, 247 (Tex.

1999).

         On the first issue, appellants contend that Ag Services began foreclosure

procedures in August 2003, more than four years after the stated January 31, 1999

“maturity date” on the face of the deed of trust and, thus, the foreclosure was barred by the

statute of limitations. See TEX . CIV . PRAC . & REM . CODE ANN . § 16.035 (Vernon 2002).

                                              4
Further, appellants contend that the lien extension agreement signed on August 14, 2003,

cannot revive the lien that had already been extinguished prior to execution of the lien

extension agreement.       In contrast, appellees contend that, during the bankruptcy

proceedings, the parties agree to an extended payment schedule and thereby extended

the maturity date on the obligations.

       By the terms of the extension agreement, the agreed effective date of the lien

extension was October 21, 2002. An agreement between litigating parties is contractual.

See Wagner v. Warnasch, 156 Tex. 334, 295 S.W.2d 890, 893 (1956). In construing a

written contract, the primary concern of the court is to ascertain the true intentions of the

parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).

Considering that appellants were proceeding in bankruptcy and that the parties anticipated

the settlement agreements to be binding in accordance with the Agreed Order of October

2002, we hold that the lien maturity date was extended and, thus, the deed of trust maturity

date was also extended. Therefore, we find that the trial court did not err in denying

appellants’ Motion for Summary Judgment and granting appellees’ Motion for Summary

Judgment by determining that the Lien Extension Agreement did extend the Deed of Trust

and that the foreclosure proceeding was not barred by the statute of limitations. We

overrule appellants’ first issue.

Issues Two and Three: Redocumentation and Appellees’ First Motion for Summary
Judgment

       In reviewing a traditional summary judgment: (1) the movant has the burden of

showing that there is no genuine issue of material fact and that it is entitled to judgment as

                                              5
a matter of law; (2) in deciding whether there is a disputed material fact issue precluding

summary judgment, evidence favorable to the nonmovant will be taken as true; and (3)

every reasonable inference must be indulged in favor of the nonmovant and any doubts

must be resolved in favor of the nonmovant. Am. Tobacco Co. v. Grinnell, 951 S.W.2d
420, 425 (Tex.1997) (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49

(Tex.1985)).

       Appellants’ next two issues have previously been addressed by this court. See

Terra XXI, 279 S.W.3d at 786. In issue two, appellants contend that the reorganization

order in the bankruptcy court extinguished appellants’ debt and required a new note and

deed of trust. However, we have previously held that the reorganization plans did not

extinguish the debt. See id. We reaffirm that position.

       Likewise, on issue three, appellants contend that the trial court erred in granting

appellees’ motion for summary judgment because genuine issues were raised.

Specifically, appellants contend that (a) foreclosure was wrongful and the foreclosure

notices were inadequate; (b) ad valorem taxes were timely paid; (c) appellees failed to

inform appellants of the exact amount owing; (d) the foreclosure sales price was

inadequate, and (e) the trial court failed to recognize Robert and Ella’s homestead rights.

This issue has been extensively discussed in our previous opinion and we continue to hold

that considering the evidence in favor of the nonmovant there are no genuine issues of

material fact considering the notice given, the payment of the ad valorem taxes, the

amount owing, the adequacy of the sales price, nor on the issue of homestead rights. See

Terra XXI, 279 S.W.3d at 786-789. We overrule appellants’ second and third issues.

                                            6
Issue Four: Granting of Appellees’ Fourth Motion for Summary Judgment

       Next, appellants contend that the trial court erred in dismissing appellants’ claims

of deceptive trade practices, predatory lending, usury, tortious interference, and failure to

perform an accounting of the financial dealings between the parties by granting appellees’

fourth motion for summary judgment. Appellants’ complaints break down into four sub-

issues: (a) the timeliness of appellees’ Fourth Motion for Summary Judgment; (b)

appellees’ failure to properly raise affirmative defenses in its Second Amended Answer

instead of in a motion for summary judgment; (c) the appropriateness of requesting the

deposit of jointly payable checks into the court registry; and (d) the court’s granting of

appellees’ no-evidence summary judgment on appellants’ post-settlement usury claim.

(A) Timeliness of Appellees’ Fourth Motion for Summary Judgment

       Appellants contend that the trial court erred in granting appellees’ fourth motion for

summary judgment because “without leave of court, without a motion to alter the

scheduling order of this court, and without even an order setting hearing,

Defendant/Appellees were allowed over Plaintiffs/Appellants’ Motion to Strike, to inject new

matters . . . . Appellants should not have been required to respond to such matters absent

a motion for leave of court.” However, appellants have failed to point toward any evidence

of a hearing or ruling on Appellants’ Motion to Strike. TEX . R. APP . P. 33.1. Appellants

have made no showing of surprise or prejudice by appellees’ failure to obtain leave of court

to file a late pleading. In fact, appellants presumably benefitted by the trial court’s practice

of allowing filing without leave of court because they filed a Motion for Summary Judgment

                                               7
after the expiration of the deadline stated by appellants. In the absence of a sufficient

showing of surprise by the opposing party, the failure to obtain leave of court when filing

a late pleading may be cured by the court’s consideration of the pleading. See Patterson

v. First Nat’l Bank of Lake Jackson, 921 S.W.2d 240, 244 (Tex.App.–Houston [14th Dist.]

1996, no writ). In this case, the trial court held a hearing on January 12, 2007 and “[a]fter

considering the motions, responses, evidence, and arguments of counsel” issued an order

on Appellees’ Fourth Motion for Summary Judgment. We conclude that the trial court did

not err in considering Appellees’ Fourth Motion for Summary Judgment.

(B) Appellees’ Failure to Raise Affirmative Defenses in Amended Answer instead of
Summary Judgment Motion

       Next, appellants complain that appellees’ motion for summary judgment raises

defenses and issues that are not supported by their Second Amended Answer and that

any unpled claim or defense first presented in a motion for summary judgment should be

denied. Specifically, appellants contend that appellees raised the affirmative defenses of

(1) contractual defenses to usury, (2) execution of guarantees as an assumption of a

“contingent obligation” not as an assumption of a debt as set forth in the Alamo Lumber4

case, (3) “lack of consideration” to guarantors, (4) legality of appellees’ action in response

to appellants’ claim of tortious interference with government payments, and (5) failure to

provide an accounting because requested action was moot.5

       4
           Alamo Lumber Co. v. Gold, 661 S.W.2d 926 (Tex. 1983).
       5
       Appellants also complain of the court’s granting of appellees’ request for summary
judgment as to post-bankruptcy lien claims; however, the trial court actually denied
appellees’ request on this issue. Therefore, we will not address this point.

                                              8
       An affirmative defense is a denial of plaintiff’s right to judgment even if plaintiff

establishes every allegation in its pleadings. Highway Contractors, Inc. v. W. Tex. Equip.

Co., 617 S.W.2d 791, 794 (Tex.Civ.App.–Amarillo 1981, no writ). An affirmative defense

does not rebut the factual propositions of the plaintiff’s pleading. Gorman v. Life Ins. Co.

of N. A., 811 S.W.2d 542, 546 (Tex. 1991). However, when in context, the pleadings,

record of the trial proceeding, and briefs make it clear that, contrary to appellants’

contention, appellees’ grounds did not constitute affirmative defenses because they directly

refute appellants’ claims rather than seeking an avoidance of appellants’ right to judgment.

Therefore, appellees’ grounds contained in its fourth motion for summary judgment were

not required to be contained in appellees’ Amended Answer. See TEX . R. CIV. P. 94. Each

of the grounds raised by appellees in their Fourth Motion for Summary Judgment were

properly considered under a traditional summary judgment or, alternatively, as grounds for

no-evidence summary judgment.

(C) Deposit of jointly payable checks into the court registry

       Next, appellants’ contend that appellees’ request to require the deposit of jointly

payable checks into the court registry is not a proper summary judgment issue but, in fact,

should have been presented as a “Motion for Mandamus” or a motion to enforce a

settlement. We agree with appellants that the court’s order requiring appellant to deposit

jointly payable checks is not a summary judgment issue; however, we disagree with

appellants that the trial court treated it as a summary judgment issue.          Appellants’

contention is the subject of its sixth issue and is fully analyzed therewith. See infra Issue

Six.

                                             9
(D) Summary judgment on appellants’ post-settlement usury claim

       Appellants also contend that the trial court improperly denied appellants’ Motion to

Strike Defendants’ No-Evidence Motion for Lack of Particularity regarding its post-

settlement usury claims and, in turn, object to the appellees’ no-evidence motion for

summary judgment. However, appellees also challenged appellants’ post-settlement usury

claims under a traditional summary judgment. Under the trial court’s order on appellees’

fourth motion for summary judgment, the trial court determined that “Defendants’

[appellees’] motion for summary judgment, and/or in the alternative, motion for no-evidence

summary judgment dismissing all of Plaintiffs’ [appellants’] post-settlement usury claims

is hereby GRANTED.”

       When a trial court's order granting summary judgment does not specify the ground

or grounds relied on for the ruling, summary judgment will be affirmed on appeal if any of

the theories advanced are meritorious. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d
374, 380 (Tex. 1993). Since, appellees presented a traditional summary judgment ground

that is not challenged on appeal, we will not overturn the trial court’s judgment. Malooly

Bros., Inc. v. Napier, 461 S.W.2d 119, 120 (Tex. 1970). We conclude that the trial court

did not err in dismissing appellants’ post-settlement usury claims. Having addressed all

of appellants’ contentions under Issue Four, we overrule appellants’ fourth issue.

Issue Five: Appellees’ Second and Fifth Motions for Summary Judgment

       On their fifth issue, appellants contend that the trial court erred in granting appellees’

second and fifth motions for summary judgments. In appellees’ Second Motion for Partial

                                               10
Summary Judgment, appellees stated that appellants’ claim alleging violations of the Bank

Holding Company Act were barred by an order from the United States Bankruptcy Court

for the Northern District of Texas and by a prior settlement agreement. Appellees’ Fifth

Motion for Partial Summary Judgment moved for summary judgment and challenged the

damages element of appellants’ breach of contract claim. Specifically, appellees allege

that appellants did not demonstrate the damages suffered because appellants were

seeking to revert to pre-settlement adversary claims as a measure of damages instead of

seeking damages under the settlement agreement.6

       Appellants’ complaint of the trial court’s granting of appellees’ second and fifth

motions for summary judgment is that the trial court did not allow appellants to elect to sue

appellees under the underlying “released” causes of action or adversary claims, a remedy

appellants believe is available to them because they claim they were fraudulently induced

into the settlement agreement. Hence, appellants contend that they should be allowed to

revive their adversary claims as they existed prior to the settlement agreement. Further,

appellants contend that appellees did not meet their burden of negating all of their causes

of action with competent summary judgment evidence and reiterate previous contentions

of grossly inadequate consideration, inadequate foreclosure notices, and illegal non-judicial

foreclosure sale. But, yet again, as in appellants’ third issue, we agree with the trial court

that appellees successfully demonstrated that there were no genuine issues of material

       6
        Appellees’ Fifth Motion for Summary Judgment also sought the dismissal of
appellants’ claims for post-settlement damages, however, the trial court did not grant
appellees’ request for summary judgment as to post-settlement damages.

                                             11
fact when the evidence was viewed in the light most favorable to the nonmovant. Am.

Tobacco Co., 951 S.W.2d at 425.

       As to whether appellants should be allowed to revive adversary claims, we hold that

appellants contracted away their rights to adversary claims when the parties entered into

a settlement agreement defining the parties’ responsibilities and remedies. See Wagner,
295 S.W.2d at 893; Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 422 (Tex. 2000).

We overrule appellant’s fifth issue.

Issue Six: Order regarding joint payment checks deposited in court registry

       Next, appellants contend that appellees were granted summary judgment regarding

monies to be deposited into the court registry.7 However, the court, in ordering the monies

to be deposited into the court registry, did not make any determination as to the ownership

or rights associated with the monies. It is entirely permissible for a trial court to order

disputed funds paid into the registry of the court until its ownership is determined if there

is evidence that the funds are in danger of being lost or depleted. Structured Captial

Resources Corp. v. Arctic Cold Storage, L.L.C., 237 S.W.3d 890, 894 (Tex.App.–Tyler

2007, no pet.). Merely placing the funds into the court’s registry does not settle the

question of the ownership of the funds and, therefore, cannot be considered an order on

the merits. Id. at 894-95. As such we do not consider the trial court’s actions as an order

granting appellees summary judgment on this issue. We overrule appellants’ sixth issue.

       7
        The monies were several jointly payable checks used as collateral for appellants’
debt to appellees.

                                             12
Issue Seven: Homestead rights of Robert (Bob) and Ella Veigel

       Finally, appellants contend that the trial court erred in failing to recognize Bob and

Ella’s homestead rights in the foreclosed property. In support of their claim, appellants

direct this court to the affidavits of Bob and Ella Veigel, dated November 16, 2004, filed in

Response to Appellees’ Motion for Summary Judgment. Appellants contend that these

affidavits raise fact issues that prevent the granting of appellees’ request for summary

judgment. However, in their own response, appellants state that “upon [Bob’s father’s]

death [the 200 acres of land] were gifted to a trust of which Bob was both a trustee and a

beneficiary. . . . Although Bob conveyed his interest to Terra XXI Ltd., partnership, Ella

never joined in the conveyance.” The trial court, in its Order on Plaintiffs’ and Defendants’

Respective Motions for Summary Judgment, made findings of fact including that part of the

disputed land (Lots 60, 61, and 62) were never owned by Bob or Ella but by the Veigel

Family Trust; therefore, the court found that Bob and Ella did not have any homestead

interest in that property. Further, the trial court found that another part of the disputed

property, Lot 42, was owned by Bob and Ella, but that they conveyed the property to Terra

by special warranty deed on November 1, 1994. Hence, the trial court found that Bob and

Ella did not possess any homestead interest in Lot 42.

       Once again, when both parties move for summary judgment and the trial court

grants one motion and denies the other, the appellate court reviews the summary judgment

evidence of both parties, determines all questions presented, and renders the judgment

that the trial court should have rendered. Bradley, 990 S.W.2d at 247. In Texas, in order

to establish homestead rights, there must be proof of concurrence of usage and intent on

                                             13
the part of the owner to claim the land as a homestead. Prince v. North State Bank of

Amarillo, 484 S.W.2d 405, 409 (Tex.Civ.App. 1972, writ ref’d n.r.e.). The intent of the

owner to claim the land as a homestead is to be established by competent proof at the time

of the execution of the deed of trust. See id. at 411. If the homestead claimant contends

that the property was being used in connection with his residence, the determining factor

is whether the claimant's acts were such as to put a reasonable prudent person on notice

that the tract constituted a part of the homestead. Id. As a general rule, when a

homestead claimant occupies a house on a lot as a homestead, other lots used only

incidentally or secondarily to home purposes are not part of the homestead. See id. at 410

(citing Calvert v. Hanna, 140 S.W.2d 976 (Tex.Civ.App.–Amarillo 1940, no writ)).

       In this case, appellants did not present any evidence that, at the time of conveyance

from Veigel Family Trust to Terra, Bob and Ella to Terra, or from Terra to AAC, that the

parties intended to reserve any homestead rights. At best, appellants’ evidence of the

affidavits of Bob and Ella show an intent to claim homestead rights as of November 16,

2004. Appellants fail to cite to any other reference in the voluminous record that could

demonstrate usage or the intent to retain the property as a homestead at the time of

conveyance of the property to either Terra in 1994 or to AAC in 1998 and we are unable

to find any such supporting evidence. See TEX . R. APP. P. 38.1(i); Arredondo v. Rodriguez,

198 S.W.3d 236, 238-39 (Tex.App.–San Antonio 2006, no pet.) (this court is not required

to wade through a voluminous record to marshal appellants’ proof, but it is the duty of the

party to show that the record supports its contention). Hence, we conclude that the trial

                                            14
court did not err in finding no genuine issues of fact regarding the homestead rights to Lots

60, 61, or 62.

       Finally, although appellant, Ella Veigel, contends that she did not join her husband,

Bob, in the conveyance of the property, Lot 42, to Terra, the record demonstrates that, by

a Special Warranty Deed signed by both Bob and Ella Veigel, the property was conveyed

to Terra on November 1, 1994 without any mention of a reservation of homestead rights.

Further, the fact that the Veigels may have lived in a home on Lot 61 does not change or

give rise to any evidence that other lots, specifically Lot 42, which were used only

incidentally or secondarily to home purposes, are part of any homestead that may have

existed on Lot 61. See Prince, 484 S.W.2d at 410.

       We conclude that the trial court did not err in its findings of fact or in granting

appellees summary judgment regarding Bob and Ella Veigel’s homestead rights.             We

overrule appellants’ seventh issue.

                                        Conclusion

       Having overruled all of appellants’ issues, we affirm the trial court.

                                   Mackey K. Hancock
                                        Justice

                                             15