Court Opinion

ID: 3073229
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:53:33.671443+00
Date Added: 2024-06-11T11:50:09.663707
License: Public Domain

Reverse and Remand; Opinion Filed June 24, 2014.

                                          S   In The
                                 Court of Appeals
                          Fifth District of Texas at Dallas
                                       No. 05-13-00707-CV

                          BARBARA W. MILLS, Appellant
                                     V.
                    GRAHAM MORTGAGE CORPORATION, Appellee

                         On Appeal from the 44th Judicial District Court
                                     Dallas County, Texas
                              Trial Court Cause No. DC-12-02060

                              MEMORANDUM OPINION
                             Before Justices Lang, Myers, and Brown
                                     Opinion by Justice Lang
       Appellant Barbara W. Mills contends the trial court erred in rendering summary

judgment in favor of appellee Graham Mortgage Corporation. Appellant raises two issues: (1)

whether the trial court committed error in granting judgment for appellee in an amount over $1

million greater than the contractual amount proven by appellee and (2) whether the trial court

erred in granting summary judgment for appellee since appellee failed to establish all the

elements of its claim.

       Because all dispositive issues are settled in law, we issue this memorandum opinion.

TEX. R. APP. P. 47.2(a), 47.4. For the reasons set forth below, we reverse the summary judgment

and remand this case to the trial court for further proceedings consistent with this opinion.
                             I. FACTUAL AND PROCEDURAL BACKGROUND

           On February 23, 2012, appellee filed suit against Santa Barbara Realty Services, LLC,

Ron W. Mills, and appellant, seeking recovery on a $3.6 million promissory note (the “Note”),

payable by Santa Barbara Realty, and two guaranty agreements, one signed by Ron W. Mills and

another by appellant.               The record reflects Ron W. Mills and appellant each executed and

delivered to appellee a document titled “Unconditional Joint and Several Guaranty,” wherein

each guaranteed payment of all amounts due under the Note, up to $1.8 million each, “plus fees

and costs relating to the Note.”

           On November 12, 2012, appellee filed a traditional motion for summary judgment on its

claims. Prior to the hearing on the motion, 1 appellee and defendants Santa Barbara Realty and

Ron W. Mills reached an agreement that was embodied in an “Agreed Interlocutory Judgment.” 2

The January 10, 2013 order granting appellee’s motion for summary judgment states:

           [Appellee] shall recover from [appellant] the unpaid principal balance of the Note, as

           described in the motion, plus accrued interest and charges . . . due and owing under the

           terms of the Note, as limited by the guaranty, in the amount of $2,852,778.09, with

           interest continuing to accrue at the rate of $885.25 per day . . . until the date of final

           judgment in this case.

The order further provided that appellee recover $8,682.50 as “reasonable attorneys’ fees” from

appellant.

     1
       In its brief, appellee asserts Santa Barbara Realty and Ron W. Mills did not respond to its motion for summary judgment or appear at the
hearing on the motion “based upon an agreed resolution” of the claims that was announced at the beginning of the hearing. The transcript of this
hearing is not included in the record.
     2
     The “Agreed Interlocutory Judgment” states it was signed on January 30, 2013, twenty days after the order granting appellee’s motion for
summary judgment is dated.

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                                  II. LEGAL AUTHORITIES

A. Standard of Review

       A trial court's grant of summary judgment is reviewed de novo. Woodhaven Partners,

Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 831 (Tex. App.—Dallas 2014, no pet.)

(citing Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003)). A

traditional motion for summary judgment must show there is no genuine issue as to a specified

material fact and the moving party is entitled to judgment as a matter of law. Id. (citing TEX. R.

CIV. P. 166a(c)). “When a plaintiff moves for traditional summary judgment, it has the burden to

conclusively establish all elements of its claim as a matter of law.” Affordable Motor Co., Inc. v.

LNA, LLC, 351 S.W.3d 515, 519 (Tex. App.—Dallas 2011, pet. denied) (citing TEX. R. CIV. P.

166a(c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986) (per curiam)). A matter is

considered conclusively established “if ordinary minds cannot differ as to the conclusion to be

drawn from the evidence.” Id. Once the plaintiff satisfies its burden, the burden shifts to the

defendant to present evidence raising a genuine issue of material fact to preclude summary

judgment. Id. When deciding whether a disputed issue of material fact exists, we regard all

evidence favorable to the non-movant as true, and we indulge every reasonable inference and

resolve any doubts in the non-movant’s favor. Id.

B. Breach of Guaranty Claims

       To recover on a guaranty, the lender must prove “(1) the existence and ownership of the

guaranty contract, (2) the terms of the underlying contract by the holder [sic], (3) the occurrence

of the conditions upon which liability is based, and (4) the failure or refusal to perform the

promise by the guarantor.” Gold's Gym Franchising LLC v. Brewer, 400 S.W.3d 156, 160 (Tex.

                                               –3–
App.—Dallas 2013, no pet.) (citing Wiman v. Tomasewicz, 877 S.W.2d 1, 8 (Tex. App.—Dallas

1994, no writ)). 3

                             III. APPLICATION OF THE LAW TO THE FACTS

          Appellant raises two issues. First, appellant argues the trial court erred in granting

judgment for appellee in an amount that was over $1 million greater than the maximum sum

guaranteed of $1.8 million. Second, appellant contends the trial court erred in granting summary

judgment because appellee had “failed to establish all elements of its claim.”

          Appellee contests both of appellant’s issues. First, appellee responds that a reversal is not

necessary since the trial court’s judgment can be modified in accordance with appellee’s

statement in its brief that it agrees to voluntarily remit the judgment “to the principal amount” of

$1.8 million. Next, appellee asserts that appellant’s second issue should be interpreted to mean

that appellee “failed to establish all of the conditions necessary for recover [sic] of a deficiency

judgment.” As to this second contention, appellee argues generally that, because it stated in its

petition, “All conditions precedent to [appellee’s] recovery in this action have occurred or been

performed,” and appellant failed to identify any conditions precedent that were not met as

required by Rule of Civil Procedure 54, appellee was not required to prove the elements of its

claim.

          We construe appellant’s issues to assert the evidence was legally insufficient to support

summary judgment. In its live petition at the time of summary judgment, appellee specifically

stated that all conditions precedent had occurred or been performed. Appellant filed a general

denial answer, not specifically denying that any condition precedent had not been performed. On

this record, appellee was not required to prove any conditions precedent to recover in this case.

     3
       The antecedents of Gold’s Gym show the meaning of the second element. In Barclay v. Waxahachie Bank & Trust Co., the Waco court
stated the second element of the test was “the performance of the terms of the contract by the plaintiff.” Barclay v. Waxahachie Bank & Trust
Co., 568 S.W.2d 721, 723 (Tex. Civ. App.—Waco 1978, no writ).

                                                                   –4–
See TEX. R. CIV. P. 54 (“When such performances or occurrences [of conditions precedent] have

been so plead, the party so pleading same shall be required to prove only such of them as are

specifically denied by the opposite party.”). However, “establishing that conditions precedent

have been met, does not relieve [appellee] of the burden of proving the other elements of [its]

claim.” See Shaw v. Mid-Continent Cas. Co., No. 05-10-00642-CV, 2011 WL 2120522, at *4

(Tex. App.—Dallas 2011, no pet.); see also Broesche v. Jacobson, 218 S.W.3d 267, 273 n.4

(Tex. App.—Houston [14th Dist.] 2007, pet. denied) (“Although proof of performance of any

conditions precedent is an essential element of a plaintiff’s case, such proof does not relieve the

plaintiff of the burden of proving the other elements of the claim.”).

            Appellee’s summary judgment proof in this case 4 is comprised in part of the affidavit of

Dean Castelhano, appellee’s vice president whose duties included servicing and collecting the

debt owed by appellant and her co-defendants, and who testified as to the loan agreement

between Santa Barbara Realty and appellee, the deed of trust note executed by Santa Barbara

Realty in favor of appellee, the guaranty agreement executed by Ron W. Mills in favor of

appellee, the guaranty agreement executed by appellant in favor of appellee, and correspondence

sent on behalf of appellee to appellant and her co-defendants. Also, offered as evidence was the

affidavit of David M. O’Dens, appellee’s counsel, who testified as to attorneys’ fees.

            The judgment against appellant is for $2,852,778.08 “with interest continuing to accrue at

the rate of $885.25 per day from March 23, 2012, until the date of final judgment in this case,”

plus post-judgment interest and attorneys’ fees. Appellee’s vice president, Dean Castelhano

stated in an affidavit in support of appellee’s motion for summary judgment that “the principal

balance [under the Note], plus accrued interest and charges through March 22, 2012” was

     4
         Though appellant objected to appellee’s summary judgment evidence in the trial court, she does not re-urge this issue in her brief to this
court.

                                                                       –5–
$3,374,396.11 “with interest continuing to accrue at the rate of $1,455.88 per day from an

including March 23, 2012, until the date judgment is entered.” However, the terms of the

guaranty limit appellant’s liability to the principal amount of $1.8 million. Appellee has not

shown us, nor can we find, any evidence in the record supporting a judgment against appellant

on the guaranty for the sum identified by Castelhano in his affidavit or the sum stated in the

judgment of $2,852,778.09 “with interest continuing to accrue at the rate of $885.25 per day

from March 23, 2012, until the date of final judgment in this case.” Appellee does not contest

that there is an “error in the amount awarded,” but asserts “this [c]ourt can modify the trial

court’s judgment to correct any error in the amount of the judgment and affirm the judgment as

modified” because, pursuant to Rule of Civil Procedure 46.5, appellee “voluntarily agrees to

remit the judgment against [appellant] to the principal amount” of $1.8 million. See TEX. R. CIV.

P. 46.5. We cannot agree with appellee. Rule 46.5 only allows voluntary remittitur after a court

of appeals has reversed the trial court’s judgment because of a legal error affecting only part of

the damages awarded. See id.

       In addition to the absence of evidence to support the amount of the principal awarded in

the judgment against appellant, there remain other issues of material fact to be addressed,

including the calculation of interest and attorneys’ fees. See Basic Capital Mgmt., Inc. v. Dynex

Commercial, Inc., 402 S.W.3d 257, 272 (Tex. App.—Dallas 2013, pet. filed) (“[I]n light of the

change in the amount of damages awarded, the trial court must recalculate the amount of

prejudgment interest”); Argyle Mech., Inc. v. Unigus Steel, Inc., 156 S.W.3d 685, 688 (Tex.

App.—Dallas 2005, no pet.) (reaching same conclusion as to attorneys’ fees).

       Consequently, on remand, the trial court should consider the proof necessary to render

judgment on the guaranty and as to attorneys’ fees.

                                               –6–
                                       IV. CONCLUSION

       We reverse the trial court’s order granting summary judgment and remand the case to the

trial court for further proceedings consistent with this opinion.

                                                      /Douglas S. Lang/
                                                      DOUGLAS S. LANG
                                                      JUSTICE

130707F.P05

                                                –7–
                                        S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

BARBARA W. MILLS, Appellant                           On Appeal from the 44th Judicial District
                                                      Court, Dallas County, Texas
No. 05-13-00707-CV         V.                         Trial Court Cause No. DC-12-02060.
                                                      Opinion delivered by Justice Lang. Justices
GRAHAM MORTGAGE CORPORATION,                          Myers and Brown participating.
Appellee

        In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED, and this case is REMANDED to the trial court for further proceedings consistent
with this opinion.
        It is ORDERED that appellant Barbara W. Mills recover her costs of this appeal from
appellee Graham Mortgage Corporation.

Judgment entered this 24th day of June, 2014.

                                                      /Douglas S. Lang/
                                                      DOUGLAS S. LANG
                                                      JUSTICE

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