Court Opinion

ID: 3114977
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:30:23.931029+00
Date Added: 2024-06-11T12:27:01.313613
License: Public Domain

COURT OF APPEALS
                          SECOND DISTRICT OF TEXAS
                               FORT WORTH

                              NO. 02-11-00148-CV

ENERGICO PRODUCTION, INC.,                                          APPELLANTS
GREEN MEADOW OIL & GAS
CORP., AND STEPHEN W. KNIGHT

                                        V.

THE FROST NATIONAL BANK                                                APPELLEE

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          FROM THE 352ND DISTRICT COURT OF TARRANT COUNTY

                                     ----------

                         MEMORANDUM OPINION1
                                     ----------

      This is an appeal from the trial court’s summary judgment for The Frost

National Bank in a suit to recover amounts due on three promissory notes. In

three issues, appellants contend that summary judgment was improper as to

Energico Production, Inc. and Green Meadow Oil & Gas Corp. because a

genuine issue of material fact exists as to the amount of liability they owe on the

      1
       See Tex. R. App. P. 47.4.
notes sued upon, that summary judgment was improper as to guarantor Stephen

W. Knight for the same reason, and that the trial court’s attorney’s fees award for

appellee was improper because appellee failed to segregate fees among the

three appellants. We affirm in part and reverse and remand in part.

                                   Background

      Appellee sued appellants, seeking to recover amounts past due on two

notes by Energico as maker and one note by Green Meadow as maker. They

alleged that Knight, as guarantor of the three notes, was jointly and severally

liable for the past due amounts. Appellee filed a motion for summary judgment

as to all three appellants, in which it claimed that it was entitled to judgment as a

matter of law on its claims against appellants as follows:

      ●     $279,187.05, plus prejudgment and postjudgment interest,
      from Energico and Knight, jointly and severally;

      ●    $47,307.53, plus prejudgment and postjudgment interest, from
      Energico and Knight, jointly and severally;

      ●      Foreclosure of Energico’s collateral;

      ●    $45,907.90, plus prejudgment and postjudgment interest, from
      Green Meadow and Knight, jointly and severally;

      ●      Foreclosure of Green Meadow’s collateral;

      ●     Attorney’s fees of $17,597, plus postjudgment interest, along
      with $5,000 for an unsuccessful appeal to the court of appeals and
      $10,000 for an unsuccessful appeal to the supreme court; and

      ●      Court costs, plus postjudgment interest.

                                         2
Appellants filed a response and objected to some of appellee’s summary

judgment evidence. The trial court overruled appellants’ objections to appellee’s

summary judgment evidence and granted appellee a final summary judgment on

all of its claims in the amounts set forth above.

                               Standard of Review

      We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,

315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the

light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could and disregarding evidence contrary to the

nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every

reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,

Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008).        A plaintiff is entitled to

summary judgment on a cause of action if it conclusively proves all essential

elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986).

                         Summary Judgment - Damages

      In their first and second issues, appellants contend that appellee failed to

meet its summary judgment burden to show how it calculated accrued and

unpaid interest on the notes because appellants’ responsive evidence shows that

appellee’s summary judgment affidavit from a vice president is conclusory.

                                          3
Appellee’s Evidence

       Appellees attached to their motion for summary judgment an affidavit from

David Spadafora, a vice president who averred that he had personal knowledge

of the facts in the affidavit and that he was a custodian of records for appellee.

According to Spadafora, Energico executed and delivered a promissory note as

maker to appellee as lender on May 11, 2007 in the principal amount of $559,000

with interest of 9.25% and postmaturity interest of 18%. Spadafora averred that

the note provides that Energico promised to pay reasonable attorney’s fees and

costs for the collection of amounts due under the note. The note is attached to

Spadafora’s affidavit.

       According to Spadafora, to secure the first note, Energico provided

appellee with a security interest in its “inventory, accounts, furniture and

equipment and one (1) 1962 Oilwell Drawworks Serial No. SK592” and that

appellee perfected its security interest in this collateral by proper filing. The

security agreement is attached to Spadafora’s affidavit. Spadafora also averred

that Knight signed a Commercial Guaranty personally guaranteeing the amounts

due under the first note to Energico.       That guaranty is also attached to the

affidavit.

       Spadafora next averred that Energico executed and delivered a second

promissory note as maker to appellee as lender on January 31, 2008 in the

principal amount of $50,000 with interest of 9% and postmaturity interest of 18%.

Spadafora averred that this second note provides that Energico promised to pay

                                        4
reasonable attorney’s fees and costs for the collection of amounts due under the

note. The note is attached to Spadafora’s affidavit.

      Spadafora further averred that to secure the second note, Energico

provided appellee with a security interest in its “inventory, accounts, furniture and

equipment” and that appellee perfected its security interest in this collateral by

proper filing.   The security agreement is attached to Spadafora’s affidavit.

Spadafora also averred that the Commercial Guaranty Knight signed in

connection with the first note also guaranteed the amounts due under the second

note to Energico.     That guaranty states that it is a continuing guaranty of

amounts “now existing or hereafter arising or acquired, on an open and

continuing basis.”

      Spadafora averred that Energico defaulted on both notes and that Knight

defaulted on the guaranty.      According to Spadafora, appellee made proper

demand on Energico and Knight for the amounts due under the notes, and both

failed or refused to pay and likewise failed or refused to surrender the collateral.

Spadafora averred that after applying “all just and lawful offsets, credits and

payments, as of May 26, 2009,” the total amount of principal and interest due on

the first note was $279,187.05 and the total amount of principal and interest due

on the second note was $47,307.53. Spadafora also averred that postmaturity

interest was accruing on both notes at a rate of 18% per annum.

      As to the third note, Spadafora averred that on January 28, 2008, Green

Meadow executed a note as maker in the principal amount of $50,000 at an

                                         5
interest rate of 8.5%, that Green Meadow executed a security agreement giving

appellee a security interest in its “inventory, accounts, furniture and equipment,”

and that Knight guaranteed the repayment of the loan. According to Spadafora,

Green Meadow failed to pay $45,907.90 due on the note despite demand, and

postmaturity interest was accruing on the note at the rate of 18% per annum.

Copies of the note, security agreement, and guaranty are also attached to the

affidavit as summary judgment evidence.

      Finally, appellee attached as evidence excerpts from Knight’s deposition.

Knight could not remember when Energico had made the last payment on the

first note, but he agreed Energico was in default. When asked, “And I’ll represent

to you that it’s my understanding that the last payment made by Energico on [the

first note] was in the amount of $5,172.80 and that occurred on October 16th of

2008. Do you have any recollection one way or the other as to last payment date

. . . .,” Knight said, “That sounds correct.”     Knight wrote Energico’s check

payments to appellee himself.

      As for the second note, when asked, “I will represent to you that it’s my

understanding the last payment made on [the second note] was on October 16th

of 2008 and that payment was in the amount of $1,041.89. Do you have any

recollection of that payment being made to the Frost National Bank?,” Knight

answered, “That sounds correct.” Knight admitted that Energico had made some

but not all of the payments under the second note. He also admitted that he had

not made any payments in his individual capacity on either note.         However,

                                        6
Knight testified that he had a $250,000 certificate of deposit (CD) with appellee

that was eventually applied to the principal of the $559,000 note.

      Knight agreed that as of May 11, 2007, Energico did not have any

inventory and that as of January 2008, it did not have any collateral that it

pledged under the security agreement.          It also did not own any machinery,

equipment, or tools other than the drawworks and some tubing that it had sold to

a rancher at the time of the deposition.

      Knight identified the notes, security agreements, and guaranties.

      Knight also admitted that Green Meadow had not made payments each

month as scheduled on its note with appellee and that Green Meadow had no

collateral when that note was signed.           He had not made any payments

individually on the Green Meadow note.

      Knight further testified that he could not give any facts supporting his pled

affirmative defenses of failure of consideration, laches, waiver, and failure to

mitigate damages.

Appellant’s Evidence

      In their response, appellants argued that appellee “failed to show how it

calculated the accrued and unpaid interest, including the per diem interest.”

Appellants produced the deposition testimony of Teresa Woods, which they

contend shows that appellee did not produce any evidence of how the note

balance was calculated; thus, Spadafora’s affidavit testimony regarding the note

balance is conclusory. Finally, they contend that they raised a fact issue as to

                                           7
how interest should be calculated because of appellee’s failure to timely apply

the amount of the CD to the balance due on the first note.

           Attached is a letter from appellants’ attorney to appellee’s attorney with an

attached deposition notice for the person “most knowledgeable about” the loans,

“requests by the debtor to apply the [CD] held as collateral to the loan, and

payment history on the loans . . . [as well as] interest calculations for the loans.”

Also attached is deposition testimony from Woods, in which she testifies that the

CD had already been applied to the loan before she received the file in mid to

late January 2009. She did not know how appellee decided to apply the CD to

the loan; she reviewed no notes in the file regarding that matter, just the fact that

it had been applied. She determined that the loans were unlikely to be repaid,

and the bank decided to write them off in February or March 2009. Before then,

she had tried to locate the drawworks, but it was in Oklahoma and she could not

find it.

           Once the loan was charged off, Woods did not work on it any longer. It

was assigned to Spadafora, who worked in appellee’s loan recovery department.

Regarding how the loan balance was calculated, Woods testified,

                  We have a department that handles the loan payoff balances
           at any time. I don’t quote them personally. I don’t calculate them
           personally. It’s typically something that is run through an accounts
           department, and they will run those numbers and I will confirm that
           they appear to be correct based on what I see in the documents as
           far as the interest rate and the principal amount of the note, but the
           exact calculation is determined by that department.

                                             8
Woods testified that she did not have any documents showing the interest

calculation on the loan other than what had been produced to appellants.

      Woods elaborated that the responsible department calculates the amounts

via a computer program and that she was “sure it’s their duty to verify that when

they put it in the system, that the interest rate is correct and that there are other

fees attached that are different from what the note requires.” She did not know

how the interest rate was calculated before or after the application of any CD

proceeds. She agreed, however, that she was the person at the bank with the

most knowledge of “the loans that are the subject of the lawsuit” although she did

not have any input regarding Knight’s request to apply the CD to the first note.

She knew when the last payments were made from review of the file, but with

regard to interest calculations, she said, “I would have to go back to - - the

interest calculations are based on the note and I think anybody in the bank would

be in the same position that I am in regards to answering questions on this

interest calculation.”   She agreed she had not personally done any interest

calculations or seen a detailed interest calculation.

      Woods also went through the list of various documents provided to

appellants’ counsel; loan committee notes, if any, and notes to the file were not

included among them. She did not know whether Knight had been given notice

of the application of the CD proceeds to the balance due under the first note.

      Finally, Knight’s affidavit is attached, in which he avers that he

                                          9
      repeatedly requested and demanded . . . that the [CD] be applied to
      the loan to reduce the accrued interest on the loan, which [appellee]
      refused to do for over a year, charging me the note rate of interest
      on the obligations, accruing the note rate of interest on the
      obligations, but paying Energico a much lower rate on the [CD].

According to Knight, appellee did not provide notice of its application of the CD to

the first note or any accounting of how the proceeds were applied, and appellee

“has evidently kept that sum in satisfaction of all debt owed by” appellants.

Knight stated,

      [d]espite repeated requests, individually and through my counsel, for
      a computation of all payments and interest, no such accounting or
      computation has been received. In addition, from the attached
      deposition excerpts of the person most knowledgeable in the bank
      about the interest calculations, it appears there is no one that has
      any personal knowledge, but they merely look to a computer
      program to come up with a number. [Appellee] has yet to provide
      any detail on the calculations, when and what credits were made,
      and how [appellee] arrived at the final figure.

      Knight also averred that he had informed appellee for over a year of the

location of the drawworks, and appellee “took no action to take possession of the

drawworks and/or foreclose upon it.” Finally, Knight stated that he had never met

or talked to Spadafora.

Applicable Law

      To prevail on its motion for summary judgment to enforce the promissory

notes, appellee was required to prove that (1) the notes exist, (2) appellee is the

legal owner and holder of the notes, (3) Energico and Green Meadow are the

makers of the notes, and (4) a certain balance is due and owing on each note.

Rockwall Commons Assocs., Ltd. v. MRC Mortg. Grantor Trust I, 331 S.W.3d
10
500, 505 (Tex. App.––El Paso 2010, no pet.); Levitin v. Michael Group, L.L.C.,

277 S.W.3d 121, 123 (Tex. App.––Dallas 2009, no pet.). A lender need not file

detailed proof the calculations reflecting the balance due on a note; an affidavit

by a bank employee which sets forth the total balance due on a note is sufficient

to sustain an award of summary judgment.          Hudspeth v. Investor Collection

Servs. Ltd. P’ship, 985 S.W.2d 477, 479 (Tex. App.––San Antonio 1998, no pet.);

Martin v. First Republic Bank Fort Worth, 799 S.W.2d 482, 485 (Tex. App.––Fort

Worth 1990, writ denied); see also Thompson v. Chrysler First Bus. Credit Corp.,

840 S.W.2d 25, 28–29 (Tex. App.––Dallas 1992, no writ); Gen. Specialties, Inc.

v. Charter Nat’l Bank-Houston, 687 S.W.2d 772, 774 (Tex. App.––Houston [14th

Dist.] 1985, no writ).

      When a plaintiff alleges that “all conditions precedent have been performed

or have occurred,” as appellee did here, a defendant must specifically deny any

conditions that were not performed or have not occurred. Tex. R. Civ. P. 54;

Greathouse v. Charter Nat’l Bank-Sw., 851 S.W.2d 173, 174 (Tex. 1992);

Rockwall Commons Assocs., 331 S.W.3d at 508. When a defendant does not

specifically deny a plaintiff’s performance-of-conditions-precedent pleading, a

plaintiff is not encumbered with proof of such performance. Rockwall Commons

Assocs., 331 S.W.3d at 508; Hill v. Thompson & Knight, 756 S.W.2d 824, 826

(Tex. App.––Dallas 1988, no writ).      Appellants did not specifically deny that

appellee performed all necessary conditions precedent to enforcing the notes.

      All three notes contain the following provision:

                                        11
      RIGHT OF SETOFF. To the extent permitted by applicable law,
      Lender reserves a right of setoff in all Borrower’s accounts with
      Lender (whether checking, savings, or some other account). . . .
      Borrower authorizes Lender, to the extent permitted by applicable
      law, to charge or setoff all sums owing on the indebtedness against
      any and all such accounts.

Before a bank can exercise its right of setoff, the debt owed to the bank by the

customer must be mature, that is, it must have come due. Bandy v. First State

Bank, Overton, Tex., 835 S.W.2d 609, 619 (Tex. 1992) (op. on reh’g) (citing

Stockyards Nat’l Bank v. Presnall, 194 S.W. 384, 385 (Tex. 1917)).              The

exception to this rule is when the customer is insolvent. Id.

Analysis

      Appellants contend that they raised a fact issue to defeat summary

judgment because they showed that Spadafora’s affidavit testimony regarding

the amount owed on the notes is deemed conclusory by Woods’s assertion that

she is the person with the most knowledge about the loans and she does not

know how the CD was applied or how the interest rate was calculated.

      A corporate employee is generally presumed to possess personal

knowledge of facts that he or she would learn in the usual course of employment

without having to otherwise prove personal knowledge.           See, e.g., Fernea v.

Merrill Lynch Pierce Fenner & Smith, Inc., No. 03-09-00566-CV, 2011 WL
2769838, at *11 (Tex. App.––Austin July 12, 2011) (op. on reh’g), abated for

settlement, 2011 WL 4424491 (Tex. App.––Austin Sept. 23, 2011, order);

Equisource Realty Corp. v. Crown Life Ins. Co., 854 S.W.2d 691, 695 (Tex.

                                        12
App.––Dallas 1993, no writ). Spadafora averred that he is a vice president of

appellee and is a custodian of records for appellee. This statement sufficiently

identifies his position and responsibilities. See Kyle v. Countrywide Home Loans,

Inc., 232 S.W.3d 355, 359 (Tex. App.––Dallas 2007, pet. denied); Stucki v.

Noble, 963 S.W.2d 776, 780 (Tex. App.––San Antonio 1998, pet. denied); Waite

v. BancTexas-Houston, N.A., 792 S.W.2d 538, 540 (Tex. App.––Houston [1st

Dist.] 1990, no writ).

      Although Woods identified herself as the person having the most

knowledge of the notes, that does not preclude Spadafora’s having superior

knowledge than Woods of the limited issue of how the amounts due on the notes

were calculated, including how and when the CD was applied to the first

Energico note’s balance. Additionally, that note did not require appellee to apply

the CD proceeds; it gave appellee discretion to do so.2 Accordingly, we conclude

and hold that appellants did not show that Spadafora’s affidavit testimony was

conclusory and thus failed to raise a fact issue regarding the amounts due under

the notes.

      For these reasons, we conclude and hold that the trial court did not err by

granting appellee’s motion for summary judgment as to the amounts due under

the three notes and guaranty. We overrule appellants’ first and second issues.

      2
      Additionally, although appellants do not specifically acknowledge that this
argument applies solely to the first Energico note, it logically must in that the CD
was applied only to that note and not the others.

                                        13
            Summary Judgment - Segregation of Attorney’s Fees

      Appellants also contend that the trial court erred by awarding appellee

lump sum attorney’s fees of $17,597, for which each appellant is jointly and

severally liable, because appellee failed to segregate the part of the lump sum

attributable to each appellant. A party who seeks to recover attorney’s fees must

segregate nonrecoverable fees from recoverable fees and must also segregate

the fees attributable to different parties. DMC Valley Ranch, L.L.C. v. HPSC,

Inc., 315 S.W.3d 898, 906 (Tex. App.––Dallas 2010, no pet.); see also Stewart

Title Guar. Co. v. Sterling, 822 S.W.2d 1, 11 (Tex. 1991) (providing that fees

must be segregated amongst settling and nonsettling defendants). Energico and

Green Meadow are separate entities.      Although Knight signed one guaranty

applicable to both Energico notes, he signed a separate guaranty for the Green

Meadow note. Energico had a CD with appellee, which was applied to one of its

notes, but there is no evidence of any similar setoff applicable to Green

Meadow’s note. Appellee had to prove different facts to recover on each of the

notes and on Knight’s two guaranties; thus, appellee was required to segregate

its attorney’s fees among the appellants, and the trial court should not have

awarded a lump sum for which appellants were jointly and severally liable. See

DMC Valley Ranch, L.L.C., 315 S.W.3d at 906. Because it did not do so, we

sustain appellants’ third issue.

                                       14
                                   Conclusion

      Having sustained appellants’ third issue, we remand the part of the trial

court’s judgment awarding attorney’s fees for further proceedings in accordance

with this opinion. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 314

(Tex. 2006).    Having overruled appellants’ first two issues, we affirm the

remainder of the trial court’s judgment.

                                                TERRIE LIVINGSTON
                                                CHIEF JUSTICE

PANEL: LIVINGSTON, C.J.; DAUPHINOT and WALKER, JJ.

DELIVERED: January 26, 2012

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