Susana Aguilar v. First National Bank

NUMBER 13-10-00602-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG
____________________________________________________________

BASS DRUM INVESTMENTS, INC., Appellant,

v.

FIRST NATIONAL BANK, Appellee.
____________________________________________________________

NUMBER 13-10-00603-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG
____________________________________________________________

SUSANA AGUILAR, Appellant,

v.

FIRST NATIONAL BANK, Appellee.
____________________________________________________________
 On appeal from the 206th District Court
of Hidalgo County, Texas.
____________________________________________________________

MEMORANDUM OPINION
Before Justices Rodriguez, Benavides, and Perkes
Memorandum Opinion by Justice Benavides
This is a suit to collect on a loan deficiency and overdrawn bank account.

Appellants Bass Drum Investment, Inc. (“Bass Drum”) and Susana Aguilar bring five

issues on appeal, asserting the trial court erred in granting summary judgment because

a genuine issue of material fact existed with regard to: (1) the alleged loan deficiency;

(2) appellee First National Bank’s compliance with statutory notice requirements on

post-foreclosure property; and (3) the amounts owed and Aguilar’s liability for those

amounts. Bass Drum and Aguilar further contend that the trial court erred (4) in

considering an untimely filed “letter brief” and (5) in awarding contingent attorney’s fees.

We affirm.

I. BACKGROUND

On July 24, 2007, Bass Drum took out a $235,700 loan from First National Bank.

The terms and conditions of the loan were set forth in a promissory note (the “Note”)

signed by Aguilar, Bass Drum’s president. Aguilar executed the Note in her official

capacity, but signed a written guaranty of the loan in her personal capacity (the

“Guaranty”) as well. Bass Drum also opened a business checking account at First

National Bank.

2
 Bass Drum’s loan was secured by a deed of trust for a property located in Hidalgo

County. The loan was scheduled to mature on July 22, 2008. Bass Drum eventually

defaulted on the Note, and Aguilar defaulted on the Guaranty by failing to pay the debt

on the Note. In response, First National Bank accelerated the Note pursuant to its

terms and to the terms of the deed of trust, which allowed the bank to accelerate the

unpaid principal balance and interest without notice because both Bass Drum and

Aguilar waived their rights of notice.

First National Bank executed a substitute trustee’s deed on the property and

foreclosed on the lot. At a post-foreclosure sale, the property was acquired for

$235,700, exactly the principal amount of the note. However, a deficiency totaling

$65,976.23 remained, which consisted of accrued unpaid interest, late fees, and

attorney’s fees in attempting to collect the debt. At or around this same time frame,

Bass Drum allegedly breached the terms of its business checking account by

overdrawing $4,854.13 from the account.

After the foreclosure, First National Bank made a formal demand for payment to

Bass Drum and Aguilar for the deficiency and the overdrawn bank monies. When

appellees did not respond to the demand, First National Bank filed suit against Bass

Drum and Aguilar for breaching the Note, the Guaranty, and the terms of the checking

account. First National Bank filed traditional motions for summary judgment for the

breach of the Note and the Guaranty, and attached several exhibits, including copies of

the Note, the Guaranty, the deed of trust, the substitute trustee’s deed, demand letters to

both Bass Drum and Aguilar, the checking account agreement, and affidavits from Gloria

3
Rios, a bank employee, and Jefferson Crabb and Carlos Yzaguirre, First National Bank’s

attorneys. Bass Drum and Aguilar responded to the motion. First National Bank then

filed a “letter brief” reply to Bass Drum and Aguilar’s responses, without moving for leave

to do so. The trial court granted the bank’s motion and its requested relief, including a

judgment for the deficiency of $65,976.23, the overdrawn checking account funds of

$4,854.13, $6,553.07 as interest on the principal amount to the date of judgment,

attorney’s fees of $2,200 at the trial court level, contingent attorney’s fees of $15,000 if

the case was appealed to the court of appeals and another $15,000 if the case was

appealed to the supreme court, and $368 for court costs.

This appeal ensued.

II. SUMMARY JUDGMENT

A. Standard of Review and Applicable Law

“In a summary judgment motion brought under Texas Rule of Civil Procedure

166a(c), the moving party has the burden of showing that there is no genuine issue as to

any material fact and that it is entitled to judgment as a matter of law.” Browning v.

Prostok, 165 S.W.3d 336, 344 (Tex. 2005); see TEX. R. CIV. P. 166a(c). In deciding

whether there is a disputed material fact, evidence favorable to the nonmovant is

accepted as true, and every reasonable inference or doubt must be indulged in favor of

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

Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985)).

The standard of review on a motion for summary judgment is de novo. Valence

Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). On appeal, evidence that

4
favors the movant will not be considered “unless it is uncontroverted.” Great Am.

Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1975).

Here, to establish that Bass Drum breached the Note, First National Bank had to

prove: (1) the existence of the note in question; (2) that Bass Drum signed the note; (3)

that the bank was the legal owner and holder of the note; and (4) the balance certain on

the note. See Rea v. Sunbelt Sav. F.S.B., 822 S.W.2d 370, 372 (Tex. App—Dallas

1991, no writ); see also Albright v. Regions Bank, No. 13-08-262-CV, 2009 Tex. App.

LEXIS 8308, at *6 (Tex. App.—Corpus Christi Oct. 29, 2009, no pet.) (mem. op.). To

prove that Aguilar breached the Guaranty, First National Bank had to establish the

following: (1) the existence and ownership of the guaranty contract; (2) the terms of the

underlying promissory note; (3) Bass Drum’s default on the note; and (4) the failure or

refusal to perform the promise by the guarantor. Marshall v. Ford Motor Co., 878

S.W.2d 629, 631 (Tex. App.—Dallas 1994, no writ); see also Albright, 2009 Tex. App.

LEXIS 8308, at *6.

B. Discussion

1. The Alleged Deficiency

In their first issue, Bass Drum and Aguilar allege that the trial court erred in

granting First National Bank’s motion for summary judgment because a genuine issue of

material fact existed with respect to the alleged deficiency. They argue that the

principal amount of the loan was $235,700, and because the property was sold at a

post-default foreclosure sale for the same amount—$235,700—no deficiency existed.

We are unconvinced by this argument.

5
 For a deficiency to exist, the price at which the real property is sold at a

foreclosure sale must be less than the unpaid balance of the indebtedness secured by

the real property. See TEX. PROP. CODE ANN. § 51.003(a) (West 2007). Further,

Texas Property Code section 51.003(c) provides that, “If no party requests the

determination of fair market value or is such request is made and no competent evidence

of fair market value is introduced, the sale price at the foreclosure sale shall be used to

compute the deficiency.” Id. § 51.003(c).

Bass Drum is correct to note that the principal amount and the foreclosure sale

price were the same. However, per the terms of the loan, First National Bank had the

right to “declare the unpaid principal balance, earned interest, and any other amounts

owed on the note immediately due” upon default. This amount also included attorney’s

fees, as Bass Drum agreed to “pay reasonable attorney’s fees and court and other costs

if this note is placed in the hands of an attorney to collect or enforce the note.”

It is undisputed that Bass Drum and Aguilar defaulted on the Note and Guaranty,

respectively. The affidavit of Gloria Rios, a First National Bank employee, established

the additional costs associated with collecting the defaulted loan. Rios’s affidavit sets

forth that “after the foreclosure sale, a deficiency balance remained in the amount of

$65,876.23.” Rios’s affidavit also states that “interest on the deficiency continues to

accrue . . . at 18% [per annum], or $32.93 per day” and that the bank had to “retain both

[attorney] Jefferson Crabb and [attorney] Carlos M. Yzaguirre in connection with the

collection of the debt at issue in this lawsuit.”

Neither Bass Drum nor Aguilar controverted Rios’s affidavit. Aguilar did submit

6
an affidavit in her response to the motion for summary judgment, but the affidavit did not

address any of Rios’s claims regarding the loan’s interest, associated costs with

collection, or attorney’s fees. Aguilar’s affidavit instead argued that no deficiency

should be found because: (1) the foreclosure sale was for the same amount of money

as the initial loan and (2) First National Bank eventually sold the property at issue to a

third-party buyer for a profit.1 We, however, find these facts irrelevant. The property

code states that the deficiency should be calculated at the time of the foreclosure sale if

neither party requested a determination of fair market value. Id. § 51.003(a), (c).

There is no evidence in the record that either party made such a request. Instead, the

only evidence we have to consider is Rios’s uncontroverted affidavit which established

that, at the time of the foreclosure sale, the amount of indebtedness was $65,876.23,

excluding attorney’s fees. See Great Am. Reserve Ins. Co., 391 S.W.2d at 47. The

Hidalgo County tax appraisal documents, which Bass Drum and Aguilar submitted as

evidence in their response to the summary judgment motion, are also irrelevant. As

noted, fair market value is not at issue in this case because no one requested an

appraisal.

We overrule this issue.

2. First National Bank’s Compliance with Notice Requirements

Bass Drum and Aguilar further complain that the trial court erred because it

granted summary judgment when First National Bank failed to provide evidence that it

1
First National Bank later sold the property to a third party for $250,000.

7
complied with the statutory notice requirements for post-foreclosure property. Texas

Property Code section 51.002(b)(3) provides that the bank should serve “written notice

of the sale by certified mail on each debtor who, according to the records of the

mortgage servicer of the debt, is obligated to pay the debt.” TEX. PROP. CODE ANN. §

51.002(b)(3) (West 2007).

Both Bass Drum and Aguilar, however, waived their rights to notice. The Note

executed by Bass Drum’s president, Aguilar, stipulated that:

If Borrower defaults in the payment of this note or in the performance of
any obligation in any instrument securing or collateral to this note, Lender
may declare the unpaid principal balance, earned interest, and any other
amounts owed on the note immediately due. Borrower and each surety,
endorser, and guarantor waive all demand for payment, presentation for
payment, notice of intention to accelerate maturity, notice of acceleration of
maturity, protest, and notice of protest, to the extent permitted by law.

The deed of trust for the property contained a similar waiver:

21. Grantor and each surety, endorser, and guarantor of the Note waive
all demand for payment, presentation for payment, notice of intention to
accelerate maturity, protest, and notice of protest, to the extent permitted
by law.

Finally, the Guaranty Aguilar signed in her personal capacity also included a similar

waiver clause:

Guarantor waives . . . (b) all rights of Guarantor under chapter 34 of the
Texas Business and Commerce Code and rule 31 of the Texas Rules of
Civil Procedure; (c) protest; (d) notice of extensions, increases, renewals,
or rearrangements of the Guaranteed indebtedness; and (e) notice of
acceptance of this guaranty, of creation of the Guaranteed Indebtedness,
of failure to pay the Guaranteed Indebtedness as it matures, of any other
default, of adverse change in Borrower’s financial condition, of release or
substitution of collateral, of intent to accelerate, of acceleration, of
subordination to Lender’s rights in any collateral, and every other notice of
every kind.

8
 Because Bass Drum and Aguilar waived their rights to notice, there was no

genuine issue of material fact regarding First National Bank’s compliance with the

statutory requirements for notice on post-foreclosure sales of property. “A debtor may

expressly waive his right to notice of an intent to accelerate.” See Shumway v. Horizon

Credit Corp., 801 S.W.2d 890, 892–93 (Tex. 1991).

In any event, there is evidence that Bass Drum and Aguilar received notice of the

post-foreclosure sale. The record shows that both parties received a demand letter

from attorney Carlos Yzaguirre that they had breached the Note and Guaranty,

respectively. Further, the affidavit of Jefferson Crabb provided that he “either

personally or by agent gave proper notice of the sale to every debtor required by statute,

in strict compliance with the provisions of the deed of trust and the requirements of

Section 51.002 of the Texas Property Code.” Importantly, Bass Drum and Aguilar do

not assert that they did not receive notice; they only assert that the bank failed to prove

that it gave notice. In light of the demand letters and Crabb’s affidavit, we disagree with

this statement.

We overrule Bass Drum and Aguilar’s second issue.

3. The Amounts Owed

By its next issue, Bass Drum and Aguilar assert that the trial court erred when it

granted summary judgment “as to amounts alleged to be owing for breach of a

bank-account agreement because a genuine issue of material fact existed as to the

existence of the alleged breach, as to the amount due arising from any such breach; and

as to any personal liability of . . . Aguilar on the said account.”

9
 To prove that Bass Drum overdrew on its checking account, First National Bank

submitted the checking account agreement and the affidavit of Gloria Rios testifying that

the account holder overdrew $4,854.13. These pieces of evidence were

uncontroverted by Bass Drum or Aguilar in their responses to the motion for summary

judgment. See Great Am. Reserve Ins. Co., 391 S.W.2d at 47 (holding that a reviewing

court can consider evidence favorable to the movant only when it is uncontroverted).

With regard to Aguilar’s liability, the Guaranty she signed clearly states that she

guaranteed the Note, deed of trust, and “any other document executed by Borrower

evidencing or securing the note.” “A guaranty creates a secondary obligation whereby

the guarantor promises to answer for the debt of another and may be called upon to

perform once the primary obligor has failed to perform.” Eubank v. First Nat'l Bank, 814

S.W.2d 130, 133 (Tex. App.—Corpus Christi 1991, no writ). “By definition, it is an

undertaking by a third person to another to answer for the payment of a debt, incurred by

a named person, in the event that the named person fails to pay.” Id.

The checking account with First National Bank qualified as “any other document

executed by Borrower [Bass Drum] evidencing or security the note” because the Note

stated the bank had “rights of offset as to any funds or property of [Bass Drum] from time

to time on deposit with or in possession of [First National Bank].” The funds in Bass

Drum’s checking account were in First National Bank’s possession. And, in the

Guaranty’s opening paragraph, Aguilar contracted to guaranty the payment of the Note,

the deed of trust, “and any other document executed by Borrower [Bass Drum]

evidencing or securing the note.” Based on the foregoing language, we conclude that

10
Aguilar’s Guaranty extended to the overdrawn checking account. We overrule this

issue.

III. CONSIDERATION OF THE LETTER REPLY BRIEF

As their third issue, Bass Drum and Aguilar claim that the letter brief submitted by

First National Bank prior to the summary judgment hearing should have been struck as

untimely. By way of a timeline, First National Bank submitted its motion for summary

judgment, along with evidentiary exhibits, on June 15, 2010. Bass Drum and Aguilar

filed separate responses on September 3, 2010. First National Bank then filed a letter

brief with the court on September 14, 2010. The letter brief replied to the appellees’

responses but did not include any additional evidence to support First National Bank’s

motion for summary judgment. And even though the letter brief was filed past the date

of submission, it was not accompanied by a motion for leave to file it past this date. See

Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex. 1996) (concluding that

“summary judgment evidence may be filed late, but only with leave of court”). Both

Bass Drum and Aguilar then filed motions to strike the letter brief the next day,

September 15, 2010.

Neither Bass Drum nor Aguilar received a ruling on their motion to strike the letter

brief. To preserve a complaint for appellate review, the record must show that the

complaint was made to the trial court by a timely request, objection, or motion that stated

the grounds for the ruling that the complaining party sought from the trial court, and the

trial court ruled on the request, objection, or motion. See TEX. R. APP. P. 33.1(a).

Assuming without deciding that error was preserved, though, we find no evidence in the

11
record that the trial court considered the letter reply brief when granting the summary

judgment motion. The order granting the motion simply states that the trial court

“considered the pleading[s] and official records on file in this cause, the evidence, and

the arguments of counsel.”

Even if error had been preserved, because there is no evidence in the record that

the trial court relied on an untimely-filed letter brief to grant this motion for summary

judgment, we overrule this issue.

IV. THE AWARD OF CONTINGENT ATTORNEY’S FEES

Bass Drum and Aguilar’s fifth issue contends that the trial court erred in awarding

contingent attorney’s fees to First National Bank if Bass Drum chose to appeal the case

to the court of appeals or the Supreme Court of Texas. The record shows that First

National Bank submitted the affidavit of bank attorney Carlos Yzaguirre in support of this

award. Yzaguirre’s affidavit provides that he is personally familiar with the lawsuit and

that a “significant portion of [his] practice is devoted to commercial litigation for area

creditors.” Yzaguirre avers that he is “familiar with attorney’s fees charged in South

Texas” and with “the factors which should be considered in setting attorneys’ fees

pursuant to . . . applicable law.” Yzaguirre then proceeds to list eight factors which he

considered in calculating his attorneys’ fees and the expected attorneys’ fees in the

event of an appeal, which mirror the Arthur Andersen factors set forth by the Texas

Supreme Court. See Arthur Andersen & Co. v. Perry Equipment, 945 S.W.2d 812, 818

(Tex. 1997). After establishing his expertise and knowledge of the case, Yzaguirre

stated that his customary legal fee was $250 per hour and that he worked on this case

12
for approximately nine hours, leading to a bill of $2,200. Yzaguirre finally surmises that

it would take $15,000 to appeal this case to a court of appeals and another $15,000 for

an appeal to the Texas Supreme Court.

Neither Bass Drum nor Aguilar controverted Yzaguirre’s affidavit. We note that

rule 166a(c) recognizes that a movant can establish its right to summary judgment based

solely on the uncontroverted testimony of an expert witness if: (1) the subject matter is

such that a trier of fact would be guided solely by the opinion testimony of an expert; (2)

the evidence is clear, positive and direct, otherwise credible and free from contradictions

and inconsistencies; and (3) the evidence could have been readily controverted. See

TEX. R. CIV. P. 166a(c); Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991). These

criteria are satisfied here. We overrule this issue.

V. CONCLUSION

Because we have overruled all of appellants’ issues, we affirm the judgments of

the trial court.

__________________________
GINA M. BENAVIDES,
Justice

Delivered and filed the
2nd day of August, 2012.

13