United States Court of Appeals,
Fifth Circuit.
No. 94-10385.
FIRST GIBRALTAR BANK, FSB, Plaintiff-Counter Defendant-Appellee,
v.
Jimmy D. SMITH, et al., Defendants,
Thomas A. Oddo, Defendant-Counter Plaintiff-Appellant.
Aug. 30, 1995.
Appeal from the United States District Court for the Northern
District of Texas.
Before WISDOM, DUHÉ and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
Appellant Thomas A. Oddo ("Oddo") appeals both the district
court's dismissal of his counterclaims under both the Texas Debt
Collection Act, TEX.REV.CIV.STAT.ANN. art. 5069-11.01 et seq. and the
Federal Fair Debt Collection Act, 15 U.S.C. § 1692 et seq., and the
court's calculation of damages owed to Appellee First Gibraltar
Bank ("First Gibraltar") on the guaranty signed by Oddo. We
affirm.
I.
On June 12, 1985 Oddo entered into a limited partnership with
Jimmy D. Smith and others to acquire and develop property located
in Dallas County, Texas, eventually known as Meadowcreek Village
Apartments. The partnership borrowed $10,000,000.00 from First
Texas Bank. Oddo executed a guaranty providing that:
Notwithstanding anything contained herein to the
contrary, the liability of Guarantors shall be limited to an
amount equal to (i) any and all principal due and owing on the
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Note up to but not exceeding $1,000,000.00, plus (ii) all
accrued and unpaid interest on such amount plus (iii) ten
percent (10%) of any and all amounts due and payable by Debtor
in connection with the Note and any other instrument (the
"Loan Documents") executed in connection with the lending
transaction to which the Note relates, including, without
limitation, accrued interest added to principal.
The underlying debt went into default and, in 1987, First
Texas Bank filed suit in Texas state court. In 1988 First Texas
Bank was declared insolvent and the Federal Savings and Loan
Insurance Corporation was appointed as receiver. First Gibraltar
subsequently purchased the assets of First Texas Bank. The state
court entered an interlocutory summary judgment in favor of First
Gibraltar on the guaranty signed by Oddo, ordering Oddo to pay
First Gibraltar $2,189,644.40 plus attorneys' fees, costs and
post-judgment interest.
After judgment was entered, the case was removed to federal
court. The district court dismissed Oddo's state and federal
consumer debt collection counterclaims, holding that the
transaction was commercial rather than for personal or household
use and that First Gibraltar was not a debt collector as
contemplated by both the federal and state fair debt collection
acts. The state court summary judgment award was left undisturbed.
II.
Oddo contends that the language of the guaranty limits his
liability to $1,000,000.00. He argues that the state court's
judgment of $2,189,644.40 exceeds the $1,000,000.00 cap provided in
the guaranty and is not supported by summary judgment evidence.
Once a state case is removed to the federal court, we review
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any state court order as if it were a federal court order. Walker
v. F.D.I.C., 970 F.2d 114, 121 (5th Cir.1992). Thus, "[w]e review
the summary judgment award de novo, independently of the state or
federal district court, and resolving all reasonable doubts and
drawing all reasonable inferences in favor of the party opposing
summary judgment." Id. (citations omitted).
Our review of the summary judgment evidence before the state
court supports the court's award of $2,189,644.40. We find Oddo's
allegation that the guaranty limits his liability to $1,000,000.00
contrary to the plain language of the guaranty itself. The
guaranty specifically states that Oddo is liable for principal due
up to $1,000,000.00, plus interest on that amount, plus ten percent
of any and all amounts due and payable including interest.
Reviewing the affidavits and other summary judgment evidence
submitted to the state court in connection with the total amounts
due on the $10,000,000.00 loan at the time the state court
considered the motion, we conclude that the court's calculation of
$2,189,644.40 is reasonable and supported by the record. The
summary judgment evidence conclusively establishes that Oddo is
liable for at least the amount awarded by the state court.
III.
Oddo next contends that the district court erred in
dismissing his state and federal consumer debt collection claims
because First Gibraltar is a debt collector under both the state
and federal definitions. He argues that because First Gibraltar is
not the first owner of the loan and guaranty, it is engaging in the
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collection of a debt for another.
The district court, after reviewing letter briefs submitted
at its request, found both the Federal Fair Debt Collection Act and
the Texas Debt Collection Act inapplicable to the case and
dismissed Oddo's fair debt collection claims raised in his First
Amended Counterclaim and Crossclaim as unfounded, apparently
concluding that Oddo had failed to state a claim for relief.
Although First Gibraltar did not file a Rule 12(b)(6) motion to
dismiss, the court was authorized to consider the sufficiency of
Oddo's counterclaims on its own initiative. Guthrie v. Tifco
Industries, 941 F.2d 374, 379 (5th Cir.1991), cert. denied, 503
U.S. 908, 112 S.Ct. 1267, 117 L.Ed.2d 495 (1992). Our review of
the district court's dismissal for failure to state a claim for
relief is de novo. Leffall v. Dallas Independent School Dist., 28
F.3d 521, 524 (5th Cir.1994).
The Federal Fair Debt Collection Act defines a debt collector
as:
any person who uses any instrumentality of interstate commerce
or the mails in any business the principal purposes of which
is the collection of any debts, or who regularly collects or
attempts to collect, directly or indirectly, debts owed or due
or asserted to be owed or due another.
15 U.S.C. § 1692a(6) (West Supp.1995). A debt is defined as "any
obligation or alleged obligation of a consumer to pay money arising
out of a transaction in which the money, property, insurance, or
services which are the subject of the transaction are primarily for
personal, family, or household purposes, whether or not such
obligation has been reduced to judgment." 15 U.S.C. § 1692a(5)
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(1982). The Texas Debt Collection Act defines a debt as "any
obligation arising out of a consumer transaction." TEX.REV.STAT.ANN.
art. 5069-11.01(a) (Vernon 1987). A consumer is defined as "an
individual who owes or allegedly owes a debt created primarily for
personal, family or household purposes." TEX.REV.STAT.ANN. art.
5069-11.01(d) (Vernon 1987).
We find that, on its face, the language of the federal statute
does not include First Gibraltar because it is not collecting a
"debt" for itself or another, but rather, is attempting to enforce
an obligation under a guaranty agreement in connection with a
commercial transaction. The district court concluded that the
transaction, including the partnership's purchase of real estate,
was commercial, not for personal or household purposes. On appeal,
Oddo offers no evidence to suggest that the district court's
conclusion is erroneous. Because the guaranty agreement was not
personal in nature, it does not constitute a debt as defined by the
federal statute. Similarly, under the Texas statute, neither the
partnership nor Oddo himself qualifies as a consumer. Thus, we
find the obligation arising out of the commercial transaction does
not constitute a "debt" as defined under the Texas statue either.
Because the district court's conclusion is supported by the record,
we find that the district court was correct in dismissing Oddo's
claims under the Texas Debt Collection Act and the Federal Fair
Debt Collection Act.
IV.
For the reasons articulated above, the judgment of the
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district court is AFFIRMED.
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