Court Opinion

ID: 2990068
Source: CourtListenerOpinion
Date Created: 2015-09-23 02:54:42.120022+00
Date Added: 2024-06-11T11:45:01.925095
License: Public Domain

Affirmed in Part and Reversed and Remanded in Part and Majority and
Concurring and Dissenting Opinions filed April 12, 2012.

                                          In The

                      Fourteenth Court of Appeals

                                  NO. 14-10-01001-CV

GUS H. COMISKEY, III, A/K/A TREY COMISKEY, AND TC3, INC., Appellants

                                            V.

                            FH PARTNERS, LLC, Appellee

                       On Appeal from the 113th District Court
                               Harris County, Texas
                         Trial Court Cause No. 2008-60397

                       MAJORITY                  OPINION

       This appeal follows the trial court’s directed verdict and entry of a declaratory
judgment that FH Partners did not breach its contract with Gus H. Comiskey, III a/k/a
Trey Comiskey. The crux of the dispute between the parties is FH Partners’ enforcement
of the cross-collateralization clause in a loan agreement. Although Comiskey was not
originally a party to the agreement, he signed an Extension and Modification of the
agreement along with the original debtor. After the original debtor defaulted on other
loans, FH Partners used the cross-collateralization clause to foreclose on property that the
debtor had deeded to Comiskey’s company, TC3, Inc.              In six issues, appellants,
Comiskey and TC3, contend (1) they presented more than a scintilla of evidence
supporting various theories of waiver, estoppel, and mutual mistake that bar FH Partners
from enforcing the cross-collateralization clause, (2) the trial court erred in excluding
testimony regarding the purpose of the agreement Comiskey signed, (3) they presented
more than a scintilla of evidence that FH Partners committed fraud, (4) the court erred in
determining that the loan documents unambiguously permit enforcement of the cross-
collaterization clause, (5) the court erred in refusing to take into consideration the fair
market value of foreclosed property in determining the merit of certain counterclaims,
and (6) the court erred in its award of attorney’s fees because FH Partners failed to
segregate recoverable from unrecoverable fees.

       We reverse the trial court’s grant of a directed verdict on appellants’ waiver claim
and, consequently, the award of attorney’s fees to FH Partners. We affirm the remainder
of the judgment.

                                             I. Background

       The connection between Comiskey and FH Partners runs through Paul Gomberg,
who was a debtor to FH Partners and a business associate of Comiskey. By May 2008,
Gomberg had several loans with 1st Choice Bank, a predecessor in interest to FH
Partners. One of the transactions involved a purchase money loan for $1.365 million to
purchase real property on Drury Street in Houston, Texas, and the other was a purchase
money loan of $900,000 for property in an area known as “Burkhart Forest.”                                  In
association with both of these notes, Gomberg executed deeds of trust to pledge the
respective properties as collateral.              These deeds of trust also contained cross-
collateralization or “dragnet” clauses that made each property security for all of
Gomberg’s indebtedness to the beneficiary of the deeds of trust (at the time, 1st Choice).1

       1
           For example, the deed of trust for the Burkhart property includes language stating as follows:

       This conveyance is made in trust . . . for the purpose of securing and enforcing the
       payment of a certain promissory note . . . executed by Grantor [Gomberg] and payable to
       the order of 1ST CHOICE BANK, (hereinafter, together with any subsequent holder of
       the Note, called “Beneficiary”[)] . . . all renewals, rearrangements, extensions and/or
       modifications of the Note; and all other sums of money which may be hereafter paid or
                                                      2
       Gomberg used the Burkhart loan to buy the Burkhart property from GHC3
Development, a corporation owned by Comiskey. The purchase price was $1.2 million;
Gomberg paid $900,000 from proceeds of the 1st Choice loan and gave GHC3 a
promissory note for the remainder. The promissory note also was secured by a second
lien on the Burkhart property.          Apparently, Gomberg intended to sell the Burkhart
property to a local developer, but when that sale fell through and it appeared that
Gomberg would be unable to make payment on the promissory note, Gomberg executed a
deed in lieu of foreclosure, conveying the Burkhart property to TC3, a separate
corporation wholly owned by Comiskey. That transaction, however, did not extinguish
the debt owed to 1st Choice or 1st Choice’s first lien on the Burkhart property.

       On February 19, 2008, Gomberg and Comiskey went to 1st Choice’s offices where
both signed an “Extension and Modification” of the Burkhart note. This Extension and
Modification, and the circumstances surrounding its execution, are the focus of the
present litigation.

       The Burkhart note was originally scheduled to mature on January 18, 2008. Under
the terms of the Extension and Modification, Gomberg and Comiskey promised to pay
the principal amount of the note ($900,000) plus 8% interest. The interest was due in six
monthly payments beginning February 18, 2008, and the principal balance was due at
maturity on July 18, 2008. FH Partners contends that it incorporated and maintained in
full force the Burkhart deed of trust with its cross-collateralization, or “dragnet,” clause,
and appellants contend that it extinguished the clause. A key dispute between the parties

       advanced by or on behalf of Beneficiary under the terms and provisions of this Deed of
       Trust; any additional loans made by Beneficiary to Grantors; and any and all other
       indebtedness, obligations and liabilities of any kind of Grantors to Beneficiary, now or
       hereafter existing, absolute or contingent, joint and/or several, secured or unsecured, due
       or not due, arising by operation of law, including indebtedness, obligations and liabilities
       to Beneficiary of Grantors as a member of any partnership, syndicate, association or other
       group, and whether incurred by Grantors as principal, surety, endorser, guarantor,
       accommodation party or otherwise, and whether originally contracted with Beneficiary or
       acquired by Beneficiary pursuant to a loan participation agreement or otherwise (all of
       which are hereinafter referred to as the “Indebtedness”). (Emphasis added.)
                                                    3
revolves around interpretation of the following paragraph in the Extension and
Modification:

       And the Undersigned [Gomberg and Comiskey] hereby extends said liens
       on said property until said indebtedness and note as so renewed, modified
       and extended has been fully paid, and agreed that such extension or
       rearrangement shall in no manner affect or impair said note or the liens
       securing the same and that said liens shall not in any manner be waived, the
       purpose of this instrument being simply to extend or rearrange the time or
       manner of payment of said notes and indebtedness and to carry forward all
       liens securing the same, which are acknowledged by the Undersigned to be
       valid and subsisting, and the Undersigned further agree that all terms and
       provisions of said original note and of the instrument or instruments
       creating or fixing the liens securing the same shall be and remain in full
       force and effect as therein written, except as otherwise expressly provided
       herein.
The parties’ arguments regarding this paragraph will be discussed in detail below.

       Bill Sellers, a senior vice president of 1st Choice, signed the Extension and
Modification on behalf of 1st Choice. There is no dispute that Comiskey signed the
Extension and Modification; however, at trial, there was conflicting testimony regarding
the circumstances under which Comiskey signed the agreement. Comiskey testified that
he asked 1st Choice’s representative, Sellers, about the Burkhart note itself but it was not
produced at the meeting. According to Comiskey, Sellers represented that “the key terms
of what would be our relationship going forward were in that three-page document [the
Extension and Modification].” Comiskey said that the terms he was interested in were
the interest rate and term of the loan. Comiskey had previously requested a copy of the
Burkhart note from Gomberg, but Gomberg had failed to comply with Burkhart’s request.
Later in his testimony, Comiskey stated it was his understanding that if he paid off the
note, title to the Burkhart property would be released to him. He said that he came to this
conclusion in part because of discussions he had with Sellers. When asked what Sellers

                                             4
said to make him think this, defense counsel objected on hearsay grounds and the trial
court sustained the objection.2

        In the offer of proof, Comiskey’s attorney indicated that, had he been permitted to
answer the question, Comiskey would have explained that Sellers told him the Extension
and Modification was the only document he needed to review and full payment of the
note would result in a full release of 1st Choice’s lien on the property. Further according
to the attorney, Comiskey would have testified that Sellers made these statements both
before and after the Extension and Modification was signed. However, Comiskey also
acknowledged in his trial testimony that he did not read all of the Extension and
Modification or any of the Burkhart note or deed of trust, which were referenced in the
Extension and Modification.

        Sellers and Gomberg both testified that contact between Sellers and Comiskey was
limited and no representations were made about any other documents.                             Gomberg,
however, acknowledged that he was not in Comiskey’s presence the entire time on the
day in question when they were at 1st Choice.3

        Comiskey subdivided the Burkhart property into several lots and began selling
individual lots. When the first two lots sold, 1st Choice granted partial releases of its lien
on those particular parcels and the majority of sale proceeds was allocated to reduce the
balance on the Burkhart note.4 On May 23, 2008, all of Gomberg’s 1st Choice debt,
including the Burkhart and Drury notes, was purchased by FH Partners. As the date of
the debt sale approached, Comiskey contacted AllegianceBank about the possibility of
obtaining another loan to pay off the Burkhart note. Allegiance requested the current
balance from 1st Choice, and 1st Choice responded with a payoff quote addressed to

        2
             In their second issue, appellants specifically complain about the court’s sustaining of this
objection.
        3
          Gomberg stated that he stepped away from Comiskey for a brief period of time to transact other
business at the bank. There is no indication in the record that Gomberg left Comiskey with Sellers or that
Sellers and Comiskey had any contact outside of Gomberg’s presence on the day in question.
        4
          The Burkhart deed of trust specifically authorized the granting of partial releases “without
affecting the lien hereof against the remainder.”
                                                     5
Gomberg, which included the following language: “PLEASE FURNISH RELEASE OF
LIEN.” Sellers testified that such language typically indicated a bank was expecting to
release a lien once the indicated amount was paid. Comiskey never obtained the loan
from Allegiance.

       After FH Partners purchased the notes, Jeff Coupe, a senior vice president for First
City Servicing Corp., which managed Gomberg’s notes for FH Partners, communicated
with Comiskey about paying off the Burkhart note.          When Comiskey sold another
subdivided lot in the Burkhart property, FH Partners issued a partial release of its lien to
facilitate the sale. At some point, an apparent discrepancy arose regarding the balance on
the Burkhart note when Comiskey gave Gomberg a check to pay on the note, but the
funds were misapplied.      In the midst of this complication, Comiskey requested a
statement and Coupe responded that the balance was $87,174.53.

       In late April 2008, Gomberg went into default on his purchase money loan for the
Drury property. Evidence reflects that he was cooperative through that summer in trying
to pay the loan, but in August 2008, negotiations between Gomberg and First City (as FH
Partners’ representative) broke down, and FH Partners decided to foreclose on the Drury
property.   In that same month, Comiskey again requested a payoff amount on the
Burkhart property, and First City informed him that the Burkhart property was subject to
cross-collateralization obligations for debt on which Gomberg was then in default and
that these other obligations would have to be satisfied before the lien on the Burkhart
property could be released. Comiskey apparently attempted to pay the remaining balance
on the Burkhart note but FH Partners rejected the payment. FH Partners then foreclosed
on the last remaining subdivided lot from the Burkhart property.

       Thereafter, FH Partners brought a declaratory judgment action to establish that it
had not breached the contract between the parties. Comiskey then raised numerous
defenses and counterclaims, including variations of waiver, estoppel, fraud, breach of

                                             6
contract, mutual mistake, and unjust enrichment.5 After presentation of the evidence but
before the jury was charged, the trial court granted a directed verdict in favor of FH
Partners. The court then entered a declaratory judgment that FH Partners did not breach
the contract between the parties. Appellants now bring this appeal.

        We begin our analysis by addressing appellants’ evidentiary complaints under
issue two. We will then consider the breach-of-an-unambiguous-contract contention
raised in issue four, the mutual mistake, estoppel, and waiver claims raised in issue one,
and the fraud claim raised in issue three. Lastly, we will consider the fair market value
contention raised in issue five and the attorney’s fees complaint raised in issue six.

                                     II. Standard of Review

        Appellants primarily seek reversal of the trial court’s granting of a directed verdict
favoring FH Partners. We review the grant of a directed verdict under the usual standards
for assessing the legal sufficiency of the evidence. See City of Keller v. Wilson, 168
S.W.3d 802, 821–28 (Tex. 2005). We examine the evidence in the light most favorable
to the party against whom the verdict was directed, and we determine whether there is
any evidence of probative value to raise a material fact issue on the question presented.
See Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, 684 (Tex. 2004). We
credit favorable evidence if reasonable jurors could and disregard contrary evidence
unless reasonable jurors could not. See City of Keller, 168 S.W.3d at 827.

                                  III. Evidentiary Complaints

        We first address appellants’ challenges to evidentiary rulings made by the trial
court to determine whether we can appropriately consider certain evidence in analyzing
appellants’ substantive contentions. Under issue two, appellants specifically complain
about exclusion of (1) Comiskey’s testimony that Sellers told him that full payment of the
Burkhart note would result in full release of the Burkhart lien, and (2) Sellers’s testimony

        5
         Appellants initially raised claims against Gomberg and other entities as third-party defendants,
but those claims were nonsuited or otherwise disposed of prior to trial. Appellants also raised other
counterclaims against FH Partners that are not raised as grounds for reversal in this appeal.
                                                   7
that “the deal” was that if the note were paid in full, the lien would be released. To
preserve error in the exclusion of evidence, a party must (1) attempt during the
evidentiary portion of the trial to introduce the evidence; (2) if an objection is lodged,
specify the purpose for which the evidence is offered and give the trial court reasons why
the evidence is admissible; (3) obtain a ruling from the court; and (4) if the court rules the
evidence inadmissible, make a record of the evidence the party desires admitted. E.g.,
Tex. Prop. and Cas. Guar. Ass’n v. Nat’l Am. Ins. Co., 208 S.W.3d 523, 546 (Tex. App.–
Austin 2006, pet. denied).

       We review a trial court’s evidentiary rulings under an abuse of discretion standard.
In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005). A trial court abuses its discretion when it
acts without regard to any guiding rules or principles. Downer v. Aquamarine Operators,
Inc., 701 S.W.2d 238, 241–42 (Tex. 1985); Mitchell v. Bank of Am., N.A., 156 S.W.3d
622, 626 (Tex. App.—Dallas 2004, pet. denied). Unless an erroneous evidentiary ruling
probably caused rendition of an improper judgment, this court will not overturn the trial
court’s ruling. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 906 (Tex. 2000).

                          A. Sellers’s Alleged Representations

       We turn first to the excluded testimony from Comiskey regarding alleged
representations by Sellers. During direct examination, Comiskey’s counsel asked him
why he thought that if he paid off the Burkhart note the lien would be released.
Comiskey answered, in part, that his belief was based on “[d]iscussions . . . with Mr.
Sellers.” Counsel next asked, “What did Mr. Sellers say that made you think this was the
deal?” Opposing counsel then raised a hearsay objection, which the trial court sustained.
In response, appellant’s counsel pointed out that the question and expected answer went
to Comiskey’s state of mind when he acted in reliance on the statement. Counsel also
explained that the statement was relevant to the intent of the parties in making the
agreement and was not offered for the truth of the matter asserted. Later, counsel
submitted an offer of proof, indicating Comiskey would have testified that Sellers stated,

                                              8
both before and after the signing of the Extension and Modification, that full payment of
the note would result in full release of the lien.

        On appeal, appellants argue that the proffered testimony concerned “operative
facts” and therefore was not offered for the truth of the matter asserted in Sellers’s
alleged statements; in other words, the testimony was admissible as evidence that Sellers
made the statements, regardless of whether the statements were true. See 2 Steven Goode
et al., Texas Practice Series: Guide to the Texas Rules of Evidence § 801.2 (3d ed. 2002)
(discussing nonhearsay utterances including “operative facts”). For example, in proving
elements of estoppel, testimony that a promise was made would not be hearsay because
relevance of the testimony is not dependent on the truth of the statement but on the fact
that it was made. See Allen v. Allen, 280 S.W.3d 366 (Tex. App.—Amarillo 2008, pet.
denied); cf. Thomas C. Cook, Inc. v. Rowhanian, 774 S.W.2d 679, 685 (Tex. App.—El
Paso 1989, writ denied) (explaining that statements constituting offer, acceptance, or
terms of a contract concern operative facts and are therefore not barred by the hearsay
rule); Cherokee Water Co. v. Forderhause, 727 S.W.2d 605, 614 (Tex. App.—
Texarkana) (finding statements of operative facts admissible in context of mutual mistake
claim), rev’d on other grounds, 741 S.W.2d 377 (Tex. 1987). Because Comiskey’s
testimony was offered as proof that Sellers made certain statements, and not to establish
the truth of the matter asserted in the statements themselves, we agree that the proffered
testimony was not hearsay. We hold the trial court abused its discretion by excluding it.
Accordingly, we will consider the excluded testimony where appropriate in our
substantive analysis but reverse only if the evidentiary error was harmful. See Caffe Ribs,
Inc. v. State, 328 S.W.3d 919, 927, 931 (Tex. App.—Houston [14th Dist.] 2010, no pet.).6

        6
          As will be explained in detail below, the excluded testimony was an integral part of the evidence
establishing a fact question regarding appellants’ waiver claims. Consequently, we reverse the trial
court’s directed verdict against those claims.

                                                    9
                                        B. Sellers’s Testimony

        Next, we consider the proffered testimony regarding Sellers’s purported belief that
“the deal” required release of the lien upon full payment of the note.                           On appeal,
appellants complain about two rulings made by the court below, specifically the
sustaining of both a “legal conclusion” objection and a “speculation” objection during
cross-examination of Sellers concerning Sellers’s understanding of the Extension and
Modification agreement.7 Appellants’ counsel asked Sellers, based on specific language
in the agreement, “until when” were the liens to be extended? Opposing counsel objected
on the ground that the question called for a legal conclusion (i.e., interpretation of the
particular language in the agreement), and the trial court sustained the objection.
Because the question objected to was tied to the interpretation of a specific phrase in the
contract, the trial court did not abuse its discretion in excluding the testimony.8
Appellants’ counsel then abandoned that line of questioning.

        Later, appellants’ counsel asked Sellers “if Mr. Comiskey had tendered full
payment of that note at that time, would the bank have released this lien?” Opposing
counsel objected that the question called for “speculation,” and the trial court sustained
the objection. Because this particular question asked what 1st Choice would have done
in a particular situation, rather than what Sellers would have done or recommended, the
trial court did not abuse its discretion in sustaining the objection. Furthermore, appellant
did not offer any specific argument to the trial court, nor does so in its appellate brief, as
to the propriety of the question at issue and whether it improperly called for speculation.
See Tex R. App. P. 38.1(i) (“The brief must contain a clear and concise argument for the
contentions made . . . .”).9 Because appellant has not demonstrated that the trial court

        7
         The trial court actually permitted much of this line of questioning over various objections by
opposing counsel.
        Appellants submitted an excerpt from Sellers’s deposition as an offer of proof of what Sellers
        8

would have said had the trial court not excluded the evidence.
        9
           Although not mentioned by appellants in their briefing, counsel did ask one additional time
regarding Sellers’s understanding of the agreement between the parties. Appellants’ counsel asked, “In
this time frame, sir, you understood that full payment of this note, the first lien note, would result in a full
                                                      10
committed any error in excluding Sellers’s testimony, we will not consider the proffered
testimony in our substantive analysis below.

                            IV. Breach of Unambiguous Contract

       In their fourth issue, appellants challenge the trial court’s finding that as a matter
of law, FH Partners did not breach the parties’ unambiguous agreement. Appellants
contend the loan documents are ambiguous and that the interpretation of them, therefore,
should have been a matter for the jury. See Coker v. Coker, 650 S.W.2d 391, 394 (Tex.
1983) (explaining that when a contract contains an ambiguity, its interpretation becomes
a fact issue). According to appellants, the jury could have reasonably interpreted the
ambiguous agreement in their favor—as requiring FH Partners to release the Burkhart
lien upon full payment of the $900,000 plus interest due on the Burkhart note. Because
FH Partners clearly rejected Comiskey’s tendered final payment and refused to release
the lien, if the jury adopted appellant’s suggested interpretation, FH Partners would have
breached the contract. In granting the directed verdict, the trial court found that the
agreement between the parties unambiguously included a cross-collateralization clause
under which the Burkhart property also secured other debts owed by Gomberg to FH
Partners.

       To prevail on a breach of contract claim, a plaintiff must prove (1) the existence of
a valid contract; (2) the plaintiff’s performance or tender of performance; (3) the
defendant’s breach; and (4) the plaintiff’s damages resulting from the breach. Roof Sys.
Inc. v. Johns Manville Corp., 130 S.W.3d 430 (Tex. App.—Houston [14th Dist.] 2004,
no pet.). The interpretation or construction of an unambiguous contract is a matter of law
to be determined by the court. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157
(Tex. 2003). Whether a contract is ambiguous is also a question of law for the court.

release of this lien; is that accurate?” Opposing counsel objected, “He’s already said the documents
control. And this is just going over the same—.” The trial court then cut off opposing counsel by
sustaining his objection. Appellants’ counsel offered no response to the objection or defense of the
question and moved on to questions concerning a document. The issue of whether the trial court erred in
sustaining this objection is not preserved or presented for our review.
                                                  11
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). If a contract can be
given a certain or definite legal meaning or interpretation, it is not ambiguous. Coker,
650 S.W.2d at 391. Ambiguity does not arise simply because parties advance conflicting
interpretations of a contract. Wal–Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 728 (Tex.
2001).

         When interpreting a contract, our primary concern is to ascertain and give effect
to the intent of the parties as expressed in the agreement. Seagull Energy E & P, Inc. v.
Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006).           To discern this intent, we
examine and consider the entire writing in an effort to harmonize and give effect to all of
its provisions so that none will be rendered meaningless. Id. No single provision taken
alone will be given controlling effect; rather, all the provisions must be considered with
reference to the whole instrument. Id.

         Appellants focus exclusively on language in the Extension and Modification. FH
Partners contends that it incorporated and maintained in full force the Burkhart deed of
trust with its cross-collateralization, or “dragnet,” clause, and appellants contend that it
extinguished the clause.     Appellants first note that the only indebtedness expressly
mentioned in the Extension and Modification is the $900,000 owed on the loan for the
Burkhart property. They then point to the following operative statement: “Undersigned
hereby extends said liens on said property until said indebtedness and note as so renewed,
modified and extended has been fully paid.” Appellants contend that the provision for
only a $900,000 debt in the Extension and Modification in fact modified the amount
required to be paid for a release of the lien, thus nullifying the cross-collateralization
clause contained in the deed of trust.        According to appellants, since the only
indebtedness mentioned in the Extension and Modification itself was on the Burkhart
property, the reference to “indebtedness and note” in the operative statement must refer to
that and only that debt.

         We agree with FH Partners’ and the trial court’s interpretation of the contract,
however, and disagree with appellants that there was any ambiguity requiring

                                            12
interpretation by the jury. The Extension and Modification explains that “the purpose of
this instrument [is] simply to extend or rearrange the time or manner of payment of said
notes and indebtedness and to carry forward all liens securing the same . . . .” It further
specifically references the Burkhart note and deed of trust and states that their terms
“remain in full force and effect . . . except as otherwise provided” in the Extension and
Modification.

        The Extension and Modification does not expressly reference, much less
extinguish, the cross-collateralization clause in the deed of trust.10 Appellants’ recitation
of somewhat imprecise language in the Extension and Modification regarding
“indebtedness” and “liens” does not convince us that there is any indication that the
parties intended to nullify the cross-collateralization clause, particularly in light of the
language that the terms of the deed of trust were to remain in effect and the sole purpose
of the Extension and Modification was to extend the time of payment and carry forward
the liens. Accordingly, the trial court did not err in ruling that the agreement between the
parties unambiguously permitted enforcement of the cross-collateralization clause. We
overrule appellants’ fourth issue.

                               V. Mutual Mistake & Reformation

        In their first issue, appellants contend, among other things discussed below, that
the evidence presented questions for the jury regarding whether there was a mutual
mistake between the parties necessitating reformation of the contract and whether FH
Partners breached the reformed contract. The underlying objective of reformation is to
correct a mutual mistake made in preparing a written instrument, so that the instrument
truly reflects the original agreement of the parties. Cherokee Water, 741 S.W.2d at 379.
Thus, a party seeking reformation of a contract based on mutual mistake must prove: (1)
an original agreement and (2) a mutual mistake, occurring after the original agreement, in
reducing the original agreement to writing. See id. The mistake in reducing the original

        10
            Interestingly, in his trial testimony, Comiskey acknowledged that through the cross-
collateralization clause in the deed of trust, Gomberg’s other debts were secured by the Burkhart property.
                                                    13
agreement to writing must be by both parties. Valero Energy Corp. v. Teco Pipeline Co.,
2 S.W.3d 576, 589 (Tex. App.—Houston [14th Dist.] 1999, no pet.); United Interests,
Inc. v. Brewington, Inc., 729 S.W.2d 897, 903 (Tex. App.-Houston [14th Dist.] 1987, writ
ref’d n.r.e.); see also Estes v. Republic Nat’l Bank of Dallas, 462 S.W.2d 273, 275 (Tex.
1970) (stating that it is not enough that an agreement existed that was at variance with the
writing; the proponent must go further and “establish the fact that the terms or provisions
of the writing which differ from the true agreement made were placed in the instrument
by mutual mistake”). “A court is without power to make a contract that the parties did
not make; an actual agreement reached prior to the drafting of the instrument involved is
a prerequisite to an action for reformation.” Cherokee Water, 741 S.W.2d at 379. It is
also important to note that “[t]he doctrine of mutual mistake must not routinely be
available to avoid the result of an unhappy bargain.” Williams v. Glash, 789 S.W.2d 261,
265 (Tex. 1990).

       As evidence of mutual mistake, appellants point primarily to Comiskey’s proposed
testimony that Sellers told him that paying off the Burkhart note would result in release
of the Burkhart lien. Based on this evidence, appellants suggest that Comiskey and 1st
Choice both understood that this was the agreement. However, under the circumstances
of this case, these alleged statements by Sellers do not establish that an agreement was
reached between Comiskey and 1st Choice prior to the reduction of the agreement into
writing. Comiskey testified that he arrived at 1st Choice on the day the agreement was
signed expecting to receive a new and separate note of his own, replacing the one
Gomberg already had with 1st Choice.             He was then given the Extension and
Modification to sign, which had already been drafted before Comiskey and Gomberg
arrived at 1st Choice. Comiskey testified that Sellers told him that the Extension and
Modification was the only document he needed to review, and in his excluded testimony,
Comiskey would have stated that Sellers told him what “the deal” was between the
parties.   Sellers denied making these representations to Comiskey.        However, even
assuming, as we must, that Sellers made those representations, they were representations

                                            14
about a document that already had been drafted but not yet signed; the statements did not
constitute contract negotiations or a meeting of the minds.11 Therefore, they are no
evidence of mutual mistake. See Cherokee Water, 741 S.W.2d at 379 (explaining that
mutual mistake concerns an actual agreement reached prior to the drafting of the written
instrument).12

        Furthermore, the circumstances in this case are substantially similar to those the
Texas Supreme Court addressed in Estes, 462 S.W.2d 273. In that case, the court held
that in the absence of a showing of “fraud or imposition,” mutual mistake cannot occur
where one party did not even read the agreement before signing. Id. at 276. In other
words, the court reasoned that when one party does not read the contract, there cannot be
a mutual mistake in drafting the agreement absent fraud or duress. See id. Appellants do
not allege any form of duress or imposition.

        The fraud exception referenced by the Estes court is often called “unilateral
mistake.” See, e.g., Orix Capital Mkts., LLC v. La Villita Motor Inns, J.V., 329 S.W.3d
30, 46 (Tex. App.—San Antonio 2010, pet. denied); see also Cambridge Cos. v.
Williams, 602 S.W.2d 306, 308 (Tex. App.—Texarkana 1980) (explaining unilateral
mistake) (cited in Davis v. Grammer, 750 S.W.2d 766, 769 (Tex. 1988)), aff’d, 615
S.W.2d 172 (Tex. 1981). In their briefing, appellants allege that the evidence presents a
fact question as to whether there was a unilateral mistake on Comiskey’s part caused by
fraud on the part of 1st Choice and FH Partners. Appellants do not cite, however, where
they raised this counterclaim or defense below, and our review has not revealed any

        11
           Sellers’s alleged representations also encompassed the deed of trust and note which preexisted, and were
incorporated into, the Extension and Modification.
        12
           In Cherokee Water, the court explained that there could be no mutual mistake where the
document in question was drafted before any alleged agreement occurred because the mistake must be in
the drafting of the agreement. 741 S.W.2d at 381. The court further clarified that the time of drafting is
the key and not the time of execution. Id. at 380.
        Appellants additionally point to conduct by 1st Choice, and later FH Partners, which occurred
well after the Extension and Modification was signed, as evidence that both sides had a different
understanding of what their agreement was than that contained in the written contract. This is also no
evidence that an agreement was reached prior to the drafting and signing of the Extension and
Modification.
                                                        15
preservation of this issue in the trial court. Accordingly, they cannot rely on this claim on
appeal. See Orix Capital, 329 S.W.3d at 46; Loera v. Interstate Inv. Corp., 93 S.W.3d
224, 228 (Tex. App.—Houston [14th Dist.] 2002, pet. denied). We overrule appellants’
first issue to the extent it contends the trial court erred in not submitting the issue of
reformation to the jury.

                                       VI. Estoppel

       Also in their first issue, appellants assert that the trial court erred in refusing to
submit their promissory estoppel, equitable estoppel, and quasi-estoppel counterclaims
and defenses to the jury. Specifically, appellants contend they presented a fact question
regarding whether FH Partners was precluded, under these doctrines, from enforcing the
cross-collateralization clause in the Burkhart deed of trust. We will address each of these
doctrines separately because their respective elements differ significantly.

                                 A. Promissory Estoppel

       Promissory estoppel is an equitable doctrine that ordinarily is used defensively to
prevent “a party from insisting upon [its] strict legal rights when it would be unjust to
allow [it] to enforce them.” Wheeler v. White, 398 S.W.2d 93, 96 (Tex. 1985). It
requires evidence of (1) a promise, (2) foreseeability of reliance, (3) actual, substantial,
and reasonable reliance by the promisee to his or her detriment, and (4) that failure to
enforce the promise would result in an injustice. In re Weekley Homes, L.P., 180 S.W.3d
127, 133 (Tex. 2005); Collins v. Walker, 341 S.W.3d 570, 573–74 (Tex. App.—Houston
[14th Dist.] 2011, no pet.). To support a finding of promissory estoppel, the asserted
“promise” must be sufficiently specific and definite that it would be reasonable and
justified for the promisee to rely upon it as a commitment to future action. See Alpha
Vista, Inc. v. Holt, 987 S.W.2d 138, 141–42 (Tex. App.—Houston [14th Dist.] 1999, pet.
denied). The “promise” also must be more than mere speculation concerning future
events, a statement of hope, or an expression of opinion, expectation, or assumption.
Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 305 (Tex. App.—Dallas 2009, no pet.).

                                             16
       Appellants support their promissory estoppel claim by pointing to (1) Sellers’s
alleged statements that “the deal” between the parties was that full payment of the
Burkhart note would result in release of the Burkhart lien; (2) the payoff quote provided
by 1st Choice to Gomberg, which included the statement “please furnish release of lien”;
and (3) FH Partners’ providing of an account balance without stating that Gomberg had
other outstanding debts.13 Assuming without deciding that the evidence cited is proof of
promises directly contradicting the terms of the agreement between the parties, there is no
evidence that Comiskey reasonably relied on these promises. See Collins, 341 S.W.3d at
573–74.

       A party to an arm’s length transaction must exercise reasonable diligence in
protecting his own interests, and a failure to do so is not excused by mere confidence in
the honesty and integrity of the other party. Ortiz v. Collins, 203 S.W.3d 414, 422 (Tex.
App.—Houston [14th Dist.] 2006, no pet.); see also Thigpen v. Locke, 363 S.W.2d 247,
251 (Tex. 1962) (fraud case). Appellants provide few arguments regarding Comiskey’s
reliance or the reasonableness thereof. Instead, they essentially rely on the inference that
because promises allegedly were made and Comiskey sold lots and paid the proceeds to
the successive owners of the Burkhart note, he must therefore have relied on the promises
in doing so.14

       The record reflects that Comiskey is a sophisticated businessman with significant
experience negotiating commercial contracts as well as real estate transactions and bank
loans. See 1001 McKinney Ltd. v. Credit Suisse First Boston Mortg. Capital, 192 S.W.3d
20, 30 (Tex. App.—Houston [14th Dist.] 2005, pet. denied) (explaining that the question

       13
          The balance in question was provided in email form and in response to an email request from
Comiskey asking specifically for “the outstanding balance on this note.” As discussed above, the email
exchange was apparently in relation to a possible discrepancy in the loan balance. No specific payoff
figure was requested or given.
       14
           At no point in his testimony was Comiskey specifically asked about his alleged reliance on
promises outside the written contract. At one point, he testified that he relied upon the Extension and
Modification agreement to protect his second lien in preference to the cross-collateralization of the
property for Gomberg’s other debts. This interpretation of the written agreement, however, has not been
mentioned in the appellate briefing.

                                                  17
of justifiable reliance often depends heavily on the relative sophistication of the parties);
see also BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 68–69 (Tex. 2011) (considering
sophistication of party in holding alleged reliance was not reasonable as a matter of
law).15 He admitted that he did not fully read the Extension and Modification. Had he
read it, he would have learned that, as discussed above, it referenced the note and deed of
trust and indicated that terms in those documents still governed the loan. Had he then
read the deed of trust before signing the Extension and Modification, he would have seen
the cross-collateralization clause.16 Comiskey complained at trial that 1st Choice did not
provide him with copies of the deed of trust or the note; however, it is also clear from the
evidence that (1) Comiskey was under no duress to sign the Extension and Modification
without having read the deed of trust; (2) Comiskey did not refuse to sign without first
seeing the deed of trust; (3) Comiskey also failed to obtain a copy of the document from
Gomberg, the other signatory; and (4) the deed of trust was filed in the public property
records and thus available to Comiskey to view on his own.17

        In summary, Comiskey was a relatively sophisticated person who by his own
admission signed on to an existing loan without fully reading the Extension and
Modification he was signing or even seeing the underlying and still largely controlling
loan documents. In doing so, Comiskey did not act with reasonable diligence to protect
his own interests. See Swank v. Sverdlin, 121 S.W.3d 785, 802 (Tex. App.—Houston [1st
Dist.] 2003, pet. denied) (holding that party, who failed to read contracts, could not

        15
          Comiskey testified that he has a degree in finance, has negotiated commercial contracts as a
professional energy consultant, and has been involved in several prior real estate investments, each of
which involved lenders.
        16
           Comiskey averred that had he read the cross-collateralization clause, he would not have
understood it. But see R. Conrad Moore & Assocs., Inc. v. Lerma, 946 S.W.2d 90, 94 (Tex. App.—El
Paso 1997, writ denied) (“A person who signs a contract is presumed to know and understand its
contents; absent a finding of fraud, failure to apprehend the rights and obligations under the contract will
not excuse performance.”). He further acknowledged that he should have consulted an attorney regarding
the transaction but did not.
        17
          Furthermore, Comiskey acknowledged in his own testimony at trial that he sold the third lot
and paid the proceeds to FH Partners because he was “obligated to do so” under the Extension and
Modification agreement. He did not specifically say that he paid on the note based on any promises made
outside and contradictory to the signed agreement.

                                                    18
justifiably rely on alleged misrepresentations contrary to the terms of the contracts).
Consequently, appellants have not raised a fact question on the element of reasonable
reliance. Accordingly, the trial court did not err in directing a verdict against appellants’
promissory estoppel claims.

                                  B. Equitable Estoppel

       Under the doctrine of equitable estoppel, a party is precluded, due to its voluntary
conduct, from asserting rights it might otherwise possess against another person who has
relied on the party’s conduct to change his position for the worse. Royalco Oil & Gas
Corp. v. Stockhome Trading Corp., No. 02-10-00455-CV, 2012 WL 254037, at *5 (Tex.
App.—Fort Worth 2012, no pet. h.). It requires evidence of (1) a false representation or
concealment of material facts, (2) made with actual or constructive knowledge of those
facts, (3) with the intention that it should be acted on, (4) to a party without knowledge,
or the means of knowledge, of those facts, (5) who detrimentally relied upon the
misrepresentation. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d
507, 515–16 (Tex. 1998).

       In support of their equitable estoppel claim, appellants contend that 1st Choice and
FH Partners knew the facts concerning the cross-collateralization clause and Gomberg’s
other debts but concealed them from Comiskey and instead represented that payment of
the Burkhart debt would result in release of the Burkhart lien. They further state that
having made representations about “the transaction and his debt,” 1st Choice and FH
Partners had a duty to “tell him the full story and disclose the dragnet clause.” As for
reliance, appellants again appear to rely on the inference that because Comiskey paid on
the Burkhart note, he must have done so in reliance on the representations by 1st Choice
and FH Partners.

       Appellants arguments, however, principally ignore the requirement that the party
urging application of the equitable estoppel doctrine have been without the means of
obtaining knowledge of the true facts. See Johnson & Higgins, 962 S.W.2d at 515–16.
Although Comiskey testified that neither Gomberg nor 1st Choice provided him with a

                                             19
copy of the deed of trust where the cross-collateralization clause could be found, he
acknowledged that he did not insist on seeing a copy before signing the Extension and
Modification, and the record also reflects that the deed of trust was on file in the public
property records prior to the Extension and Modification being signed.                        Appellants
suggest that Sellers kept appellant from obtaining knowledge of the “true facts” by
suggesting Comiskey did not need to review any other documents. Although this alleged
statement may have discouraged Comiskey from viewing the deed of trust before signing,
it did not prevent him from doing so.18 Because Comiskey clearly had the means of
knowledge regarding the existence of the cross-collateralization clause, the trial court did
not err in directing a verdict against appellants’ equitable estoppel claim. Simpson v.
MBank Dallas, N.A., 724 S.W.2d 102, 108 (Tex. App.—Dallas 1987, writ ref’d n.r.e.)
(affirming summary judgment where party claiming estoppel presented no evidence that
he was without means of knowledge concerning either the financial status of parties
whose loan he guaranteed or the effect of his guaranty).19

        18
          It is unclear to what extent appellants are contending that 1st Choice or FH Partners should
have informed Comiskey regarding Gomberg’s financial status. However, at the time Comiskey signed
the Extension and Modification, he knew that Gomberg had defaulted on payment of the promissory note
to Comiskey himself. Furthermore, as FH Partners points out, Comiskey entered the bank with Gomberg
to sign onto one of Gomberg’s loans. Appellants provide no argument as to why under those
circumstances, 1st Choice had a duty to inform Comiskey of Gomberg’s financial status.
        19
           In Simpson, similar to here, the party claiming estoppel admitted that he did not attempt to
ascertain the financial status of the parties whose loan he guaranteed but instead relied on the advice of
another. 724 S.W.2d at 108. Also in Simpson, the court explained that the claimant possessed the means
to know the effect of his guarantee, in part, because he had signed prior similar guarantees with the same
lender. Id.
        In support of their arguments, appellants cite Alamo Bank of Texas v. Palacios, 804 S.W.2d 291
(Tex. App.—Corpus Christi 1991, no writ), and Monumental Life Insurance Co. v. Hayes-Jenkins, 403
F.3d 304 (5th Cir. 2005). Both are distinguishable from the present case. In Alamo Bank, the Corpus
Christi Court of Appeals upheld a trial court’s estoppel finding where there was evidence that a bank
representative promised that the bank would not press criminal charges for forgery against a third party if
Palacios signed a promissory note in favor of the bank. 804 S.W.2d at 295. However, at the time the
promise was made, the bank already had reported the alleged forgery to the FBI. Id. There is no
discussion in the opinion of whether Palacios had means of knowledge regarding the charges. Id.
        In Monumental Life, the Fifth Circuit held that an issue of material fact was raised precluding
summary judgment where evidence suggested that insurance application instructions contained potentially
misleading statements on which a couple may have reasonably relied. 403 F.3d at 311–13. Again, there
                                                    20
                                        C. Quasi-Estoppel

        Quasi-estoppel precludes a party from asserting, to another party’s disadvantage, a
right inconsistent with a position previously taken; it applies only when it would be
unconscionable to allow the party to maintain the inconsistent position. Lopez v. Munoz,
Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000). Unlike equitable estoppel,
quasi-estoppel requires no showing of misrepresentation or detrimental reliance. Eckland
Consultants, Inc. v. Ryder, Stilwell Inc., 176 S.W.3d 80, 87 (Tex. App.—Houston [1st
Dist.] 2004, no pet.).

        Appellants’ argument is essentially that, with 1st Choice and FH Partners having
made representations, committed acts, and remained silent for months while Comiskey
gradually paid off the Burkhart note under the belief that doing so would result in a full
release of the Burkhart lien, FH Partners could not then assert the cross-collateralization
clause and refuse to accept Comiskey’s final Burkhart payment and release the lien. As
stated, in order to constitute quasi-estoppel, 1st Choice and FH Partners’ conduct had to
have been unconscionable. See, e.g., Doe v. Tex. Ass’n of Sch. Bds., Inc., 283 S.W.3d
451, 464 (Tex. App.—Fort Worth 2009, pet. denied) (holding party who obtained money
under a settlement agreement was estopped from contending that she did not have
authority to provide the required consideration); Eckland Consultants, 176 S.W.3d at 81–
83, 87–88 (holding that property inspector was estopped from claiming that a plaintiff did
not have standing to sue for a breach of the inspection contract when the company
accepted the benefits of the contract and stated in a report that noncontracting entities
could rely on the report). The actions appellants complain of, even if true, were not
unconscionable under the circumstances of this case.

        As discussed above, none of 1st Choice’s or FH Partners’ statements or conduct
directly contradicted the cross-collateralization clause or promised that it would not be
enforced in the event of a default and subsequent lack of cooperation from Gomberg.

is no discussion in the opinion regarding whether the couple had the means of knowledge regarding the
true contents of the insurance policy, which they only received after their application was accepted. Id.
                                                   21
Thus, it was not unconscionable for FH Partners to enforce the cross-collateralization
clause. See Fasken Land & Minerals, Ltd. v. Occidental Permian Ltd., 225 S.W.3d 577,
594 (Tex. App.—El Paso 2005, pet. denied) (holding it was not unconscionable for party
to exercise its right under a contract). Ultimately, it was Comiskey’s own failure to read
the loan documents that caused any alleged disadvantage he suffered in the transaction.
Cf. Douglas v. Moody Gardens, Inc., No. 14-07-00016-CV, 2007 WL 4442617 at *4
(Tex. App.—Houston Dec. 20, 2007, no pet.) (mem. op.) (rejecting quasi-estoppel claim
and holding that workers’ compensation claimant’s failure to timely pursue claim, not
employer’s taking of inconsistent positions, was cause of denial of recovery). Comiskey
made payments on the Burkhart note as he was required to do under the Extension and
Modification agreement. FH Partners collected the benefits to which it was entitled
under the agreement (payment of principal and interest) and enforced the cross-
collateralization clause as it was entitled under the contract.20 It was not unconscionable
for FH Partners to accept benefits under the unambiguous contract. Consequently, the
trial court did not err in directing a verdict against appellants’ quasi-estoppel claim.

                                                VII. Waiver

        Appellants additionally assert in their first issue that the trial court erred in
granting a directed verdict because they presented more than a scintilla of evidence that
FH Partners and its predecessor in interest, 1st Choice, waived the right to enforce the

        20
             In Hartford Fire Insurance Co. v. City of Mont Belvieu, Texas, the Fifth Circuit explained that
        “Rights expressly secured by contract” ordinarily cannot be “dissolve[d]” by quasi-
        estoppel because a party may, pursuant to a contract and for legitimate reasons, have the
        right to assert superficially inconsistent positions at different times. Neiman-Marcus
        Group, Inc. v. Dworkin, 919 F.2d 368, 371 (5th Cir. 1990); Fasken Land & Minerals,
        Ltd. v. Occidental Permian Ltd., 225 S.W.3d 577, 594 (Tex. App.—El Paso 2005,
        petition denied) . . . . That party cannot “be equitably charged with choosing to accept
        benefits in a manner genuinely inconsistent with his subsequent claim.” Neiman-Marcus,
919 F.2d at 371 (emphasis added). In such a case, the party has not acted to “avoid
        corresponding obligations” but merely to assert its legal rights. Fasken, 225 S.W.3d at
        593.
611 F.3d 289, 298–99 (5th Cir. 2010) (first bracket omitted).

                                                      22
cross-collateralization clause.21 Waiver is the intentional relinquishment of a known,
existing right or intentional conduct inconsistent with claiming it. Jernigan v. Langley,
111 S.W.3d 153, 156 (Tex. 2003). The affirmative defense of waiver can be established
by a party’s express renunciation of a known right, by its conduct, or by silence or
inaction for so long a period as to show an intention to yield the known right. See Aguiar
v. Segal, 167 S.W.3d 443, 451 (Tex. App.—Houston [14th Dist.] 2005, no pet.). A
person who does nothing inconsistent with an intent to rely upon a right does not waive
that right. Jernigan, 111 S.W.3d at 156. Waiver is ordinarily a question of fact, but
when the surrounding facts and circumstances are undisputed, the question becomes one
of law. WTG Gas Processing, L.P. v. ConocoPhillips Co., 309 S.W.3d 635, 648 (Tex.
App.—Houston [14th Dist.] 2010, pet. denied).                 We find that a fact issue existed
regarding waiver, and thus, the trial court erred in directing a verdict against this claim.

        As evidence of waiver, appellants point to (1) Comiskey’s proffered testimony that
Sellers told him both “before and after” they signed the Extension and Modification that
full payment of the Burkhart note would result in full release of the Burkhart lien; (2)
Sellers’s allegedly discouraging Comiskey from viewing the Burkhart note and deed of
trust by telling him that the Extension and Modification contained all of the key terms;
(3) the issuance of partial releases by 1st Choice and FH Partners; (4) the pay-off
statement from 1st Choice which included the phrase “please furnish release of lien”; (5)
alleged conversations involving Jeff Coupe, as representative of FH Partners, with
Comiskey and a representative of AllegianceBank, Dan Tralmer, who was attempting to
set up a refinancing or buyout of the Burkhart note; and (6) 1st Choice and FH Partner’s
failure to inform Comiskey either that he would have to pay off Gomberg’s other debts in
order to get clear title to the Burkhart property or exactly what other debts Gomberg had.
We will begin by addressing the evidence which will not support waiver; we will then
examine the evidence that created a fact issue on waiver.

        21
          Appellants explain in their briefing that their waiver claim was a defense to the declaratory
judgment action and also supported their affirmative claims for unjust enrichment and breach of contract.

                                                   23
                                    A. Not Evidence of Waiver

        Statements made and conduct occurring before signing the agreement could not
constitute waiver of terms in the agreement. See, e.g., Tri-Steel Structures, Inc. v. Baptist
Found. of Tex., 166 S.W.3d 443, 451 (Tex. App.—Fort Worth 2005, pet. denied).
Likewise, statements made contemporaneously with signing the agreement, and which
purported to simply explain “the deal” that was being signed, would not constitute an
express renunciation of a right contained in the document.                     Thus, Sellers’s alleged
statements at the time of signing the Extension and Modification, and his allegedly
discouraging Comiskey from viewing the other loan documents, amount to no evidence
of waiver.

        Additionally, that 1st Choice and FH Partners had a practice of issuing partial
releases when parcels of the Burkhart property were sold, taken in isolation, was no
evidence of waiver. The deed of trust itself provided for the granting of partial releases
“without affecting the lien hereof against the remainder.”                   Furthermore, the partial
releases did no more than facilitate sale of the parcels in order to pay down the debt22;
thus, by themselves, the partial releases neither demonstrated a clear intent to waive the
cross-collateralization clause nor were inconsistent with assertion of the clause when
Comiskey attempted to pay the balance due on the Burkhart note and keep the final lot
for himself.

        Lastly, appellants do not explain on what basis they claim 1st Choice or FH
Partners had a duty to inform Comiskey regarding the nature of Gomberg’s other debts.
See generally Tex. R. App. P. 38.1(i) (requiring briefs to contain argument for the
contentions raised); Brown v. Green, 302 S.W.3d 1, 14 (Tex. App.—Houston [14th Dist.]
2009, no pet.) (declining to expand on party’s conclusory arguments). Comiskey entered
the bank with Gomberg and signed the Extension and Modification as a co-maker on
Gomberg’s preexisting note. Appellants cite no authority for the proposition that 1st

        22
           Evidence demonstrated that the vast majority of the proceeds from sale of the lots went to retire
the debt and very little, if any, was retained by Comiskey.

                                                    24
Choice or FH Partners had a duty to inform Comiskey about Gomberg’s other debts.23
Without such a duty, the failure to disclose is no evidence that 1st Choice or FH Partners
waived enforcement of the cross-collateralization clause.

                                     B. More than a Scintilla

        In the offer of proof responsive to the court’s exclusion of portions of Comiskey’s
testimony, appellants’ counsel represented that Comiskey would have testified that at
some point after the agreement was signed, Sellers told him full payment of the Burkhart
note would result in full release of the Burkhart lien.               Additionally, as mentioned,
evidence was admitted regarding conversations between Coupe and Comiskey, and
Coupe and Dan Tralmer, regarding a refinancing or buyout of the Burkhart note. These
alleged statements and conversations, when taken together in light of the pay-off
statement and the assertion that neither 1st Choice nor FH Partners ever mentioned the
cross-collateralization clause to Comiskey or Tralmer as a roadblock to full release of the
lien, presented a fact question on the waiver claim.24 Of particular note, the pay-off
statement in question included the phrase “please furnish release of lien.”                      Sellers
acknowledged that inclusion of such language on a pay-off statement typically indicated
that a bank was expecting to release a lien once the specified amount was paid. This
language, taken together with the alleged statements, conversations, and silence regarding
the clause itself, presents at least some evidence of an intention to yield a known right.
        23
           FH Partners suggests that informing Comiskey about Gomberg’s debt would have run contrary
to certain banking laws, citing Tex. Fin. Code § 59.006. We need take no position on whether this is
correct under the circumstances of this case.
        24
           Again, taken in isolation, the conversations between Coupe and Comiskey and Coupe and
Tralmer are were not enough to raise a fact issue; it is only when considered together that the evidence
creates a fact issue on waiver. Specifically concerning these conversations, the record shows that Coupe
spoke to Comiskey about Comiskey’s plans to sell off several lots, pay off the note, and then build a
house on the final Burkhart lot. However, at no point in the testimony are any specific promises or
waivers by Coupe mentioned. Coupe himself testified that he talked with Comiskey to try to figure out
why Comiskey was involved with the loan because “[i]t just didn’t seem to make much sense.” Coupe
said that he did not realize Comiskey expected a release if the note was fully paid. Similarly, the
testimony regarding Coupe’s discussions with Tralmer reveals, at most, negotiations regarding a possible
refinancing or buyout of the Burkhart note, but the conversations never resulted in any such buyout, much
less any express renunciation of the cross-collateralization clause.

                                                   25
See Aguiar, 167 S.W.3d at 451. It also is some evidence of conduct inconsistent with an
intent to rely upon the right of cross-collateralization. See Jernigan, 111 S.W.3d at 156.

        We sustain appellants’ first issue to the extent appellants contend the trial court
erred in directing a verdict against their waiver claims.25 However, we overrule the first
issue to the extent appellants allege the trial court erred by directing a verdict against
their mutual mistake or estoppel contentions.

                                             VIII. Fraud

        In their third issue, appellants contend there was evidence to support submission to
the jury of their fraud, fraudulent concealment, and fraudulent inducement counterclaims
against FH Partners. Under these counterclaims, appellants sought actual and exemplary
damages against FH Partners. Fraud requires a showing of a material misrepresentation,
which (1) was false, (2) was either known to be false when made or was asserted without
knowledge of the truth, (3) was intended to be acted upon, (4) was relied upon, and (5)
caused injury. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990). Silence
when there is a duty to speak may equate to a misrepresentation of material facts. Ho v.
UT Arlington, 984 S.W.2d 672, 691 (Tex. App.—Amarillo 1998, pet. denied) (explaining
that a duty to speak may exist when the parties are in a fiduciary relationship or when a
party later discovers that a material representation it made was untrue). To support a
claim of fraud, reliance on a misrepresentation must be justifiable and reasonable. See

        25
           In the trial court, FH Partners pleaded application of the statute of frauds in response to
appellants’ counterclaims; however, at no point in the trial court or on appeal has FH Partners contended
that the application of the statute defeats appellants’ waiver claim. Moreover, it does not appear that FH
Partners established such a defense as a matter of law. For the statute in question, Texas Business and
Commerce Code section 26.02, to apply, the financial institution must have given conspicuous notice to
the debtor or obligor in a writing signed by the debtor or obligor. Tex. Bus. & Comm. Code § 26.02(e).
The Extension and Modification signed by Comiskey did not include this required notice. Appellants
also claimed that the subsequent waiver was evidenced by writings (the partial releases and payoff quote)
and thus was not an oral modification barred by the statute of frauds, and that Comiskey partially
performed based on the alleged waiver, which is an exception to the statute of frauds. See Bank of Tex.,
N.A. v. Gaubert, 286 S.W.3d 546, 553-54 (Tex. App.—Dallas 2009, pet. dism’d w.o.j.) (discussing partial
performance exception to statute of frauds).

                                                   26
Atl. Lloyds Ins. Co. v. Butler, 137 S.W.3d 199, 226 (Tex. App.—Houston [1st Dist.]
2004, pet. denied) (citing Restatement (Second) of Torts § 531 (1977)).

        As evidence of fraud, Comiskey cites (1) Coupe’s email stating the Burkhart note
balance, (2) the partial release issued by FH Partners for the sale of a portion of the
Burkhart property, and (3) FH Partners’ failure to disclose Gomberg’s other debts and the
fact they were tied to release of the lien on the Burkhart property.                     According to
Comiskey’s version, FH Partners led him along, taking his payments on the Burkhart
note, and then refused to accept final payment and release the lien.

        In their briefing, appellants state that Coupe told Comiskey in an email that “the
Burkhart note could be paid off for $87,174.53.” The email in question, however, only
responded to an email request from Comiskey for a balance amount on the Burkhart note;
nothing was said by either party to the emails about a payoff of the note.26 The record
further reflects that the correspondence concerned an alleged discrepancy in the balance,
apparently owing to the fact that Comiskey had given a check to Gomberg to take to the
bank to pay on the note and some of the funds got misapplied. Corrections were made.
The email contained no representation that if the amount was paid, a release of lien would
issue; it merely provided the information Comiskey requested: the balance on the
Burkhart note.

        As for the partial release issued by FH Partners for one of the lots sold from the
Burkhart property, there is no evidence that the statements therein are untrue. Standing
alone, this document makes no material misrepresentations which could be a basis for a
finding of fraud. It merely provided a partial release of lien, which was authorized under
the deed of trust and was a prerequisite for sale of the lot. Appellants suggest, though,

        26
           In an email dated June 6, 2008, Comiskey asked Coupe “What is the outstanding balance on
this note per your records?” Coupe responded the same day with an email stating a principal balance,
accrued interest, and total for the note. Coupe further said that he needed to confirm the accuracy of the
figures because the “asset” had just been uploaded on the system. On June 13, after sale of one of the
Burkhart lots, Comiskey again emailed Coupe: “Have you had a chance to review the balance on this
yet? It was my belief we had a difference.” Coupe responded three days later, providing an attachment
showing payment and balance history for the note. He further stated “I am showing a current balance of
$87,174.53.”
                                                   27
that it “could [have] further[ed] Comiskey’s preexisting belief that payment of the last
sum remaining on the note would discharge the lien.” However, assuming this allegation
could be a basis for a fraud claim, appellants cite no evidence that FH Partners was aware
that Comiskey had such a preexisting belief; appellants further cite no evidence that FH
Partners intended for Comiskey to rely on the partial release in continuing to pay on the
debt.

        Lastly, appellants complain that FH Partners never disclosed that Gomberg’s other
loans were secured by the Burkhart property. But, as discussed above, appellants offer
no basis for imposing a duty on FH Partners to supply that information. See generally
Tex. R. App. P. 38.1(i); Brown, 302 S.W.3d at 14. Because the evidence cited by
appellants does not raise a material issue of fact supporting their fraud counterclaim, we
overrule their third issue.

                                 IX. Fair Market Value

        In issue five, appellants contend that the trial court erred in entering a directed
verdict against their breach of contract, fraud, and unjust enrichment counterclaims
because there was evidence that FH Partners wrongfully refused to credit appellants with
the fair market value of the Drury property. Gomberg owned the Drury property and
defaulted on a balance of over $1.4 million owed to FH Partners for purchase of the
property. FH Partners thereafter foreclosed on the Drury property and then credited the
$850,000 sales price it paid for the property at foreclosure against the debts owed by
Gomberg and secured by the cross-collateralization clause in the Burkhart deed of trust.
Appellants contend, however, that there was evidence that the fair market value of the
Drury property was closer to $1.5 million, which sum should have been credited against
Gomberg’s debts. According to appellants, if the fair market value had been credited
against Gomberg’s debts, there would have been no need to foreclose on the Burkhart
property because there would not have been an outstanding balance on the Drury loan.

        In support of their contention, appellants cite sections 51.003, 51.004, and 51.005
of the Texas Property Code. Tex. Prop. Code §§ 51.003–.005. These sections permit a

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person obligated for indebtedness, and against whom a post-foreclosure deficiency is
sought, to offset the fair market value of the property foreclosed upon against the amount
owed if the fair market value is greater than the actual foreclosure proceeds.                  Id.
Appellants acknowledge, however, that they were not makers or guarantors of the note on
the Drury property and FH Partners did not seek to recover a foreclosure deficiency
against them; thus, they cannot make a claim directly under those code sections.27 Other
than suggesting that this court apply the “spirit” of the Property Code to the facts of this
case, appellants do not cite any authority or make any particular argument suggesting
these code provisions can be used in this manner. We decline to apply the provisions
beyond the boundaries set by the legislature. See generally St. Luke’s Episcopal Hosp. v.
Agbor, 952 S.W.2d 503, 505 (Tex. 1997) (explaining that courts must interpret statutes as
written and are not themselves law-making bodies); Consol. Reinforcement, L.P. v.
Carothers Exec. Homes, Ltd., 271 S.W.3d 887, 892 (Tex. App.—Austin 2008, no pet.)
(“It is not the function of this Court to expand the scope of [a statute] beyond the
legislature’s intent as expressed in the statute’s plain language.”). Accordingly, we
overrule appellants’ fifth issue.

                                         X. Conclusion

         We reverse the trial court’s grant of a directed verdict on appellants’ waiver claim.
Because we reverse on this substantive issue, we also reverse the award of attorney’s fees
favoring FH Partners and need not reach appellants’ sixth issue complaining about FH
Partners’ failure to properly segregate its fees. See Hamrick v. Ward, No 14-10-00560-
CV, 2011 WL 6975990, at *14 (Tex. App.—Houston [14th Dist.] December 29, 2011, no
pet. h.). We further sever and remand those issues for further proceedings in the trial
court.

         27
          Gomberg and his wife were the only signatories on the Drury loan; Comiskey was a signatory
on the Extension and Modification regarding the Burkhart property only.
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      The remainder of the judgment is affirmed.

                                       /s/    Martha Hill Jamison
                                              Justice

Panel consists of Justices Seymore, Brown, and Jamison. (Brown, J., Concurring and
Dissenting Opinion.)

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