ACCEPTED
02-17-00366-CV
SECOND COURT OF APPEALS
FORT WORTH, TEXAS
12/20/2017 9:57 AM
DEBRA SPISAK
CLERK
No. 02-17-00366-CV
_____________
FILED IN
2nd COURT OF APPEALS
IN THE FORT WORTH, TEXAS
12/20/2017 9:57:14 AM
SECOND DISTRICT COURT OF APPEALS DEBRA SPISAK
Clerk
AT FORT WORTH, TEXAS
JONATHAN AFLATOUNI,
Appellant,
vs.
ENCLAVE AT GRAPEVINE, L.P.,
Appellee.
_____________
Appealed from the 342nd Judicial District Court of Tarrant County, Texas
__________________________________________________________________
BRIEF OF APPELLANT JONATHAN AFLATOUNI
__________________________________________________________________
PALMER & MANUEL, L.L.P.
By: /s/ Jeffrey R. Sandberg
Jeffrey R. Sandberg
State Bar No. 00790051
jsandberg@pamlaw.com
8350 N. Central Expressway; Suite
1111
Dallas, Texas 75206
(214) 242-6444/Fax (214) 265-1950
COUNSEL FOR APPELLANT
JONATHAN AFLATOUNI
ORAL ARGUMENT REQUESTED
No. 02-17-00366-CV
_____________
SECOND DISTRICT COURT OF APPEALS
AT FORT WORTH, TEXAS
JONATHAN AFLATOUNI,
Appellant,
vs.
ENCLAVE AT GRAPEVINE, L.P.,
Appellee.
________________________________________________________________
Identity of Parties and Counsel
________________________________________________________________
In order that the members of this Court may determine disqualification and
recusal under Texas Rule of Appellate Procedure 38.1(a), Appellant Jonathan
Aflatouni certifies that the following is a complete list of the parties, attorneys, and
other persons with a financial interest in the outcome of this lawsuit:
i
APPELLANT JONATHAN AFLATOUNI (Plaintiff)
Represented By:
Jeffrey R. Sandberg
State Bar No. 00790051
jsandberg@pamlaw.com
PALMER & MANUEL, L.L.P.
8350 N. Central Expressway; Suite 1111
Dallas, Texas 75206
(214) 242-6444
Facsimile: (214) 265-1950
(Trial and Appellate Counsel)
APPELLEE ENCLAVE AT GRAPEVINE, L.P (Defendant)
Represented By:
Margaret “Peg” Donahue Hall
Texas Bar No. 05968450
peg.hall@dentons.com
Leanna M. Anderson
Texas Bar No. 24085833
leanna.anderson@dentons.com
Spencer D. Hamilton
Texas Bar No. 24087656
spencer.hamilton@dentons.com
DENTONS US LLP
2000 McKinney Avenue, Suite 1900
Dallas, TX 75201
Telephone: (214) 259-0900
Facsimile: (214) 259-0910
(Trial and Appellate Counsel)
ii
No. 02-17-00366-CV
_____________
SECOND DISTRICT COURT OF APPEALS
AT FORT WORTH, TEXAS
JONATHAN AFLATOUNI,
Appellant,
vs.
ENCLAVE AT GRAPEVINE, L.P.,
Appellee.
________________________________________________________________
Request for Oral Argument
________________________________________________________________
Appellant Jonathan Aflatouni hereby requests oral argument in this case. This
appeal involves numerous complex issues, and oral argument will assist Appellant in
the presentation of Appellant’s arguments and responding to questions the Court may
have.
iii
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL ..............................................................i
REQUEST FOR ORAL ARGUMENT ................................................................... iii
TABLE OF CONTENTS ..........................................................................................iv
TABLE OF AUTHORITIES ....................................................................................ix
INTRODUCTION ......................................................................................................1
STATEMENT OF THE CASE ..................................................................................2
ISSUES PRESENTED FOR REVIEW .....................................................................3
STATEMENT OF FACTS ........................................................................................4
A. In 2007, Aflatouni Sold the Property to Grapevine Diamond
and Aflatouni Reserved a Vendor’s Lien, While City Bank Received
a Deed of Trust.................................................................................................5
B. City Bank Knew That Aflatouni Reserved a Vendor’s Lien in the
2007 Deed. .......................................................................................................5
C. When Grapevine Defaulted, City Bank Conducted a Foreclosure Sale
of the Property While Aflatouni Was in Bankruptcy, Which is a Violation
of the Automatic Bankruptcy Stay. ..................................................................7
D. Aflatouni Notified the Substitute Trustee and City Bank That Aflatouni
Filed for Bankruptcy Protection Before the Foreclosure Sale
Was Conducted. ...............................................................................................8
E. After City Bank Purchased the Property at the Foreclosure Sale,
City Bank Sold the Property to SPK, Which in Turn Sold the
Property to Enclave. .........................................................................................9
iv
F. Claims Were Brought in the Collin County Case by Grapevine Diamond
and Aflatouni Against City Bank, and Aflatouni Did Not Bring Claims
Against Grapevine Diamond or the Subsequent Owners –
SPK and Enclave..............................................................................................9
G. The Opinion Relied Upon By Enclave Does Not Contain a Holding
Regarding the Voidness or Validity of the Foreclosure Sale. ........................10
H. Aflatouni Demanded Payment by Grapevine Diamond After the
Lawsuit Against City Bank Was No Longer Pending. ..................................11
SUMMARY OF ARGUMENT ...............................................................................12
BRIEF OF ARGUMENT .........................................................................................14
STANDARD OF REVIEW - SUMMARY JUDGMENT .......................................14
ISSUE ONE (Restated) ............................................................................................15
The Trial Court Erred When It Granted Summary Judgment in Favor of
Enclave and Denied Aflatouni’s Motion for Summary Judgment Because
It Is Undisputed That Aflatouni is the Owner of An Unpaid Debt Secured
by a Vendor’s Lien – Aflatouni Is Entitled to a Judicial Rescission of his
Vendor’s Lien. (CR915, 921; App.62, 64)
ARGUMENT AND AUTHORITIES FOR ISSUE ONE ........................................15
A. Aflatouni’s Summary Judgment Evidence Established, and Enclave
Did Not Dispute, That Aflatouni Holds a Vendor’s Lien on the
Grapevine Diamond Property. .......................................................................15
B. Bank’s Foreclosure Occurred After Aflatouni Filed For
Bankruptcy Protection....................................................................................18
C. Aflatouni Notified the Substitute Trustee and City Bank that Aflatouni
Filed for Bankruptcy Protection Before the Foreclosure Sale. ......................19
D. Enclave Does Not Dispute That Bank’s Foreclosure Violated the
Aflatouni Automatic Bankruptcy Stay Because Aflatouni’s Vendor’s Lien,
as Legal Title to the Property, Is Property of the Bankruptcy Estate. ............20
1. Applicable Law – the Bankruptcy Stay Generally. .............................20
v
2. Applicable Law - Because a Second Lienholder’s Lien is a
Property Right That is Protected by the Bankruptcy Stay,
a Foreclosure Sale of the Real Property that is the Subject of the
Lien Is a Violation of the Bankruptcy Stay. ........................................22
a. Three Strokes (N.D. Texas) Unequivocally Holds the
Bankruptcy Stay Applies to Second Liens. ...............................22
b. Additional Opinions that Hold a Lienholder’s Security
Interest Is a Property Right That Is Protected by the
Bankruptcy Stay. .......................................................................23
3. Aflatouni’s Vendor’s Lien Is Legal Title to the Property. ...................25
D. Because the Foreclosure Sale Violated the Bankruptcy Stay,
the Correction Foreclosure Deed is Void Either in Its Entirety, or,
in the Alternative, as to Aflatouni’s Vendor’s Lien and Aflatouni’s
Legal Title. .....................................................................................................26
E. Aflatouni Is Entitled To Rescind Aflatouni’s Vendors’ Lien. .......................27
ISSUE TWO (Restated) ...........................................................................................28
The Trial Court Erred When It Granted Summary Judgment in Favor of
Enclave on Enclave’s Collateral Estoppel Because: ((CR; App.)
ARGUMENT AND AUTHORITIES FOR ISSUE TWO .......................................28
A. Applicable Law – Trespass to Try Title.........................................................28
B. Aflatouni Has Superior Title Because the Foreclosure Sale Was Void –
City Bank Violated the Bankruptcy Stay.. .....................................................30
ISSUE THREE (Restated) .......................................................................................31
The Trial Court Erred When It Granted Summary Judgment in Favor of
Enclave on Aflatouni’s Claim to Quiet Title and Remove Cloud on Title.
(CR921; App.64)
ARGUMENT AND AUTHORITIES FOR ISSUE THREE ...................................31
A. Applicable Law – Quiet Title and Remove Cloud on Title. ..........................31
vi
B. Aflatouni’s Summary Judgment Evidence Establishes Every Element
of Aflatouni’s Title Claims. ...........................................................................33
1. Aflatouni Has Right, Title, or Ownership in the Property. ..................33
2. City Bank’s Corrected Foreclosure Deed, the Special Warranty
Deed to SPK and the Warranty Deed to Enclave Are a Cloud on
the Title. ...............................................................................................34
3. Enclave’s Claim is Invalid Because the Foreclosure Sale
Violated the Automatic Bankruptcy Stay, and Thus the
Foreclosure Sale is Void, in Whole or in Part. ....................................34
ISSUE FOUR (Restated) ..........................................................................................37
The Trial Court Erred When It Granted Summary Judgment in Favor of
Enclave on Enclave’s Collateral Estoppel Defense Because the Court of
Appeals Opinion Never Reached the Issue of Whether City Bank’s Foreclosure
Sale Was Void Because the Foreclosure Violated the Automatic
Bankruptcy Stay, and Aflatouni Demanded Payment of His Loan After the
Collin County Judgment Was Entered and the Dallas Court of Appeals
Issued Its Opinion. (CR921; App.64)
ARGUMENT AND AUTHORITIES FOR ISSUE FOUR .....................................37
A. Applicable Law – Collateral Estoppel. ..........................................................37
B. The Court of Appeals Never Held the Foreclosure Sale Was Valid. .............38
C. Res Judicata, If It Had Been Pleaded By Enclave, Is Inapplicable –
Aflatouni Demanded Payment in March of 2017 – Long After the
Previous Litigation Concluded.......................................................................39
D. SPK and Enclave - the Subsequent Owners After City Bank - Were Not
Parties to the Collin County Lawsuit. ............................................................41
PRAYER ..................................................................................................................41
CERTIFICATE OF COMPLIANCE .......................................................................42
CERTIFICATE OF SERVICE ................................................................................43
vii
APPENDIX
Pg. # Description
1 CR66: Affidavit of J. Aflatouni
6 CR71: 2007 Special Warranty Deed (Vendor's Lien)
13 CR78: City Bank Letter (Sept.11, 2007)
14 CR79: Aflatouni Bankruptcy Petition (Dec. 6, 2010)
22 CR87: City Bank Notice of Trustee (Foreclosure) Sale (Dec. 10, 2010)
26 CR91: Correction Foreclosure Sale Deed (effective Jan. 4, 2011)
28 CR93: Foreclosure Sale Deed (Jan. 4, 2011)
33 CR98: Order Dismissing Aflatouni Bankruptcy (Jan. 12, 2011
36 CR120: Aflatouni Request for Payment to Grapevine Diamond (March 14,
2017)
37 CR220 - Opinion By Dallas Court of Appeals (Dec. 7, 2015)
62 CR915: Order Granting Enclave Motion for Partial Summary Judgment (May
26, 2017)
64 CR921: Final Judgment (Sept. 27, 2017)
68 Continental Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499 (Tex. 1988).
viii
TABLE OF AUTHORITIES
CASES: PAGE
Aguero v. Ramirez,
70 S.W.3d 372 (Tex. App.—Corpus Christi 2002, pet. denied). ...................40
Alkas v. United Sav. Ass'n of Tex., Inc.,
672 S.W.2d 852 (Tex. App.—Corpus Christi 1984, writ ref'd n.r.e.)...........31
Arlington v. McClure,
No. 02-06-296-CV, 2008 WL 755072 (Tex. App.—Fort Worth
June 5, 2008, no pet.). ....................................................................................40
Bell v. Ott,
606 S.W.2d 942 (Tex. Civ. App.—Waco 1980, writ ref'd n.r.e.). .................32
Bradford v. Thompson,
470 S.W.2d 633 (Tex. 1971). .........................................................................26
Bunn v. City of Laredo,
245 S.W. 426 (Tex. Comm’n App. 1922, judgm’t adopted). ..................25, 26
Cardinal Industries, Inc. v. Buckeye Federal Sav. & Loan Ass'n (In re Cardinal
Industries, Inc.),
105 B.R. 834 (Bankr. S.D. Ohio 1989). .........................................................24
Centeq Rlty., Inc. v. Siegler,
899 S.W.2d 195, 197 (Tex. 1995) ..................................................................14
Chale Garza Invests., Inc. v. Madaria,
931 S.W.2d 597 (Tex. App.—San Antonio 1996, writ ref'd, n.r.e.). .............26
Continental Casing Corp. v. Samedan Oil Corp.,
751 S.W.2d 499 (Tex. 1988) (copy at App.68). ............................................26
Diversified, Inc. v. Walker,
702 S.W.2d 717 (Tex. App.—Houston [1st Dist.] 1985, writ ref'd n.r.e.).....27
ix
Diversified Mortg. Investors v. Lloyd D. Blaylock Gen. Contractor, Inc.,
576 S.W.2d 794 (Tex. 1978). ...................................................................30, 31
Dominey v. The Unknown Heirs and Legal Representatives of Linda Lokomski,
172 S.W.3d 67 (Tex. App.—Ft. Worth 2005, no pet.). ...........................15, 25
Ellerd v. Ellison,
165 S.W. 876 (Tex. Civ. App.—Amarillo 1914)...........................................38
Fidelity Mortgage Investors v. Camelia Builders, Inc.,
550 F.2d 47 (2nd Cir. 1976)...........................................................................24
Flag-Redfern Oil Co. v. Humble Exploration Co.,
744 S.W.2d 6 (Tex. 1987). .......................................................................16, 25
Florey v. Estate of McConnell,
212 S.W.3d 439 (Tex. App.—Austin 2006, pet. denied)...............................32
Florida Institute of Tech. v. Carpenter (In re Westec Corp.),
460 F.2d 1139 (5th Cir. 1972). ................................................................22, 23
General Mills Restaurants, Inc. v. Tex. Wings, Inc.,
12 S.W.3d 827 (Tex. App.—Dallas 2000, no pet.). .......................................29
Getty Oil Co. v. Ins. Co. of N. America,
845 S.W.2d 794 (Tex. 1992). ...................................................................38, 39
Gordon v. W. Houston Trees, Ltd.,
352 S.W.3d 32 (Tex. App.—Houston [1st Dist.] 2011, no pet.). ..................33
Hahn v. Love,
321 S.W.3d 517 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). ....32, 33
Henke v. First S. Props., Inc.,
586 S.W.2d 617 (Tex. Civ. App.—Waco 1979, writ ref'd, n.r.e.). ................27
In re Capital Mortgage & Loan, Inc.,
35 B.R. 967 (Bankr. E.D.Ca.1983). .........................................................24, 25
x
In re Chesnut,
422 F.3d 298 (5th Cir. 2005). ........................................................................22
In re Cogar,
210 B.R. 803 (B.A.P. 9th Cir. 1997)........................................................23, 25
In re McCarthy,
421 B.R. 550 (Bankr. D. Colo. 2009). ...........................................................21
In re Three Strokes Ltd. Partnership,
397 B.R. 804 (Bankr. N.D. Tex. 2008). .............................................22, 23, 24
Lubbock v. Stubbs,
160 Tex, 111, 327 S.W.2d 411 (1959). ..........................................................38
Lusk v. Mintz,
625 S.W.2d 774 (Tex. App.—Houston [14th Dist.] 1981, no writ). ............27
McCombs v. McKaughan,
195 S.W.2dd 194 (Tex. Civ. App.—Beaumont 1946, writ ref’d). ................38
Maupin v. Chaney,
139 Tex. 426, 163 S.W.2d 380 (1942). .........................................................27
MMP, Ltd. v. Jones,
710 S.W.2d 59, 60 (Tex. 1986) ......................................................................14
Monumental Life Insur. v. Bibo, Inc. (In re Bibo, Inc.),
200 B.R. 348 (B.A.P. 9th Cir. 1996), appeal dismissed and opinions
vacated as moot, 139 F.3d 659 (9th Cir. 1998). ......................................23, 25
Oles v. Curl,
65 S.W.3d 129 (Tex. App.—Amarillo 2001, no pet.)....................................27
Park Place Hosp. v. Estate of Milo,
909 S.W.2d 508, 509 (Tex. 1995) ..................................................................14
Plumb v. Stuessy,
617 S.W.2d 667 (Tex. 1981). .........................................................................29
xi
Poag v. Flories,
317 S.W.3d 820 (Tex. App.—Fort Worth 2010, pet. denied). ......................26
Rogers v. Ricane Enters., Inc.,
884 S.W.2d 763 (Tex. 1994). ...................................................................29, 31
Segal v. Rochelle,
382 U.S. 375 (1966). ......................................................................................24
Southwest Guar. Trust Co. v. Hardy Rd. 13.4 Joint Venture,
981 S.W.2d 951 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). ..........32
State v. Forest Lawn Lot Owners Ass'n,
152 Tex. 41, 254 S.W.2d 87 (1953). ........................................................15, 27
Sysco Food Servs. v. Trapnell,
890 S.W.2d 796 (Tex. 1994). .........................................................................38
Thomson v. Locke,
66 Tex. 383, 1 S.W.112 (Tex. 1886). ............................................................32
United States v. Whiting Pools, Inc.,
462 U.S. 198 (1983). ................................................................................21, 22
Walton v. First Nat'l Bank of Trenton,
956 S.W.2d 647 (Tex. App.—Texarkana 1997, pet. denied). .......................15
Whirlpool Corp. v. Camacho,
298 S.W.3d 631 (Tex. 2009). .........................................................................29
Whiteside v. Bell,
347 S.W.2d 568 (Tex. 1961). .............................................................27, 28, 39
Wilen v. Falkenstein,
191 S.W.3d 791 (Tex. App.—Fort Worth 2006, pet. denied). ......................29
Wright v. Matthews,
26 S.W.3d 575 (Tex. App.—Beaumont 2000, pet. denied). ..........................32
xii
STATUTES AND RULES PAGE
11 U.S.C. § 362 ..................................................................................................21, 23
11 U.S.C. § 541. .......................................................................................................21
TEX. PROP. CODE § 22.001. ......................................................................................29
TEX. R. CIV. P. 166a. ................................................................................................14
xiii
No. 02-17-00366-CV
_____________
SECOND DISTRICT COURT OF APPEALS
AT FORT WORTH, TEXAS
JONATHAN AFLATOUNI,
Appellant,
vs.
ENCLAVE AT GRAPEVINE, L.P.,
Appellee.
__________________________________________________________________
BRIEF OF APPELLANT JONATHAN AFLATOUNI
__________________________________________________________________
TO THE COURT OF APPEALS:
Appellant Jonathan Aflatouni (“Aflatouni” or “Appellant”) submits this
Appellant’s’ Brief. Enclave at Grapevine, L.P. will be referred to as “Enclave” or
“Appellee.”
Grapevine Diamond, L.P. will be referred to as “Grapevine Diamond.” City
Bank will be referred to as “Bank.”
1
STATEMENT OF THE CASE
On September 11, 2015, Aflatouni and Grapevine Diamond filed the Original
Petition against the record holder of the real property, Enclave. (CR51) On March 15,
2017, Aflatouni filed his Amended Petition requesting a judicial foreclosure of
Aflatouni’s vendor’s lien and for property damage on neighboring property owned by
Aflatouni. (CR24)
On April 7, 2017, Aflatouni filed his Motion for Summary Judgment and
Response to Enclave’s Motion for Summary Judgment (“Aflatouni’s MSJ”). (CR41)
On April 12, 2017, Enclave filed its Amended Motion to Dismiss, or, in the
Alternative, Motion for Summary Judgment “Enclave’s MSJ”). (CR187) On April 27,
Aflatouni filed a Response to Enclave’s MSJ (CR259) and Enclave filed a response to
Aflatouni’s MSJ. (CR267)
On May 26, 2017, the trial court entered an Interlocutory Order granting
Enclave’s MSJ, and ruling that Aflatouni take nothing on his vendor lien claims.
(CR915; App.62) Following a settlement of the property damage claim, the trial court
entered a Final Summary Judgment on September 27, 2017. (CR921; App64).
Aflatouni filed a Notice of Appeal on October 24, 2017. (CR926)
1
References to the appellate record will be made as follows:
App.- Appendix to Brief CR- Clerk’s Record
2
ISSUES PRESENTED FOR REVIEW
ISSUE ONE
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave and
Denied Aflatouni’s Motion for Summary Judgment Because It Is Undisputed That
Aflatouni is the Owner of An Unpaid Debt Secured by a Vendor’s Lien – Aflatouni Is
Entitled to a Judicial Rescission of his Vendor’s Lien. (CR915, 921; App.62, 64)
ISSUE TWO
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave on
Aflatouni’s Trespass to Try Title Claim. (CR921; App.64)
ISSUE THREE
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave on
Aflatouni’s Claim to Quiet Title and Remove Cloud on Title. (CR921; App.64)
ISSUE FOUR
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave on
Enclave’s Collateral Estoppel Defense Because the Court of Appeals Opinion Never
Reached the Issue of Whether City Bank’s Foreclosure Sale Was Void Because the
Foreclosure Violated the Automatic Bankruptcy Stay, and Aflatouni Demanded
Payment of His Loan After the Collin County Judgment Was Entered and the Dallas
Court of Appeals Issued Its Opinion. (CR921; App.64)
3
STATEMENT OF FACTS
While many Briefs represent that the facts are undisputed when they are not, the
facts are genuinely undisputed in this case. Aflatouni established that Aflatouni owns
a Vendor’s Lien on the Property as shown on the 2007 Deed to Grapevine Diamond,
and thus Aflatouni held legal title. Aflatouni also established that Aflatouni is unpaid,
and therefore Aflatouni is entitled to rescind the Vendor’s Lien and take back the
Property. Aflatouni also established that the 2011 foreclosure sale by City Bank
occurred while Aflatouni’s Chapter 13 bankruptcy was pending, and pursuant to
federal case law and multiple Texas Supreme Court opinions, the foreclosure sale
violated the bankruptcy stay and is therefore void. Enclave never disputed these facts
or the basic bankruptcy stay legal principle involved.
Thus, the disagreement between Aflatouni and Enclave, whose title is dependent
upon the validity of the 2011 foreclosure sale, is whether Aflatouni’s prior case against
City Bank (not Grapevine Diamond) and the related Dallas Court of Appeals Opinion
support Enclave’s collateral estoppel defense. Aflatouni is entitled to enforce
Aflatouni’s Vendor’s Lien unless there was a prior holding that the 2011 foreclosure
sale was not a violation of the bankruptcy stay that would support a collateral estoppel
defense (and to be clear, res judicata was not pleaded by Enclave and would be
inapplicable if it was pleaded).
4
A. In 2007, Aflatouni Sold the Property to Grapevine Diamond and Aflatouni
Reserved a Vendor’s Lien, While City Bank Received a Deed of Trust.
When Aflatouni sold approximately 10.5 acres of real property (the “Property”)
to Grapevine Diamond in 2007 for $8,500,000.00, Aflatouni retained a vendor’s lien as
shown on the deed (the “Deed”) for the balance of the sales price that Aflatouni was
not paid - $2,741,760.51. (CR66, App.1; CR71, App.6 – 2007 Deed) In addition, City
Bank financed the purchase by Grapevine Diamond in part by lending $6,375,000.00
and City Bank received a Deed of Trust from Grapevine Diamond. (CR71, 73; App.6,
8 – 2007 Deed)
A Special Warranty Deed (Vendor’s Lien) (the “Deed”) was received by
Grapevine Diamond when it purchased the Property. (CR66, App.1; CR74, App.9 -
Deed) The Deed states the Vendor, the Aflatounis, retained a Vendor’s Lien when the
Property was sold to Grapevine Diamond. (CR66, 71; App.1, 6) The Vendor’s Lien
and superior title was retained by the Vendor until the City Bank debt and the Second
Lien Note were paid by Grapevine Diamond. (CR66, 73-74; App.1, 8-9) The Vendor’s
Lien was subordinated to City Bank’s debt until the City Bank debt was paid by
Grapevine Diamond. (CR66, 74; App.1, 9)
B. City Bank Knew That Aflatouni Reserved a Vendor’s Lien in the 2007
Deed.
Aflatouni and Grapevine Diamond communicated to City Bank, before the real
property was sold to Grapevine Diamond, that Grapevine Diamond would be providing
5
additional consideration to Aflatouni of $2,740,700.51 at the time of the closing.
(CR67; App.2) In response, on or about September 11, 2007, City Bank sent a letter to
the Fidelity Title, Inc. Escrow Officer (the “City Bank Letter”). (CR 67, App.2; CR78;
App.13 – City Bank Letter) The City Bank Letter states that City Bank knew on
September 11, 2007, which was before the closing on September 12, 2007, that
Jonathan Aflatouni would be entitled to receive $2,740,700.51 at the closing, but that
he may not actually receive the cash at closing. (CR67, 78; App.2, 13)
As part of the closing on September 12, 2007, Grapevine Diamond received a
loan from Jonathan Aflatouni in the amount of $2,741,760.51 as reflected on the
Settlement Statement as part of the purchase price for the Property. (CR68; App.3)
This loan was to be paid off on demand, which was to be no earlier that when
Grapevine Diamond sold the property or developed the property itself. (CR68; App.3)
This loan accrued interest at an annual rate of 7.00% simple interest. (CR69; App.4)
On July 19, 2013, Youval Zive, in his capacity as President of Danjon, Inc., Grapevine
Diamond’s general partner, executed a Replacement Promissory Note reflecting the
terms of the original promissory note. (CR69, App.4; CR101) This loan has not been
repaid. (CR70)
City Bank did not dispute that Aflatouni loaned Grapevine Diamond the $2.7
million when Grapevine Diamond purchased the Property in 2007. (CR162) Further,
6
Wilcox admitted that Aflatouni was not a partner in Grapevine Diamond, and that City
Bank’s letter stated that Aflatouni was not a partner. (CR162).
City Bank’s designee, Wilcox, testified that his understanding was that the use
of the two words “Vendor’s Lien” on the first page of the Special Warranty Deed
immediately below the title “Special Warranty Deed” was an indication that the
vendors held a lien on the Property. (CR154-55; CR172 -Wilcox Depo, Exh. 6, 2007
Deed) The bank would typically have the deed in its file when it makes a loan to buy
property – the Special Warranty Deed would be included in the closing documents.
(CR155-56)
C. When Grapevine Defaulted, City Bank Conducted a Foreclosure Sale of the
Property While Aflatouni Was in Bankruptcy, Which is a Violation of the
Automatic Bankruptcy Stay.
On December 6, 2010, Jonathan Aflatouni filed an Original Petition (the
“Aflatouni Bankruptcy”) in the Bankruptcy Court of the Northern District of Texas
under chapter 13, in cause no. 10-38538-sgj13 (the “Aflatouni Bankruptcy Petition”).
(CR67, App.2; CR79, App.14 - Aflatouni Bankruptcy Petition)
On or about December 9, 2010, while Aflatouni’s bankruptcy case was pending
and thus in violation of the automatic bankruptcy stay, City Bank filed its Notice of
Foreclosure Sale (the “Foreclosure Notice”) for a January 4, 2011 sale of the property
owned by Grapevine Diamond and the subject of Aflatouni’s Vendor’s Lien. (CR67,
App.67; CR87, App22 - Foreclosure Notice)
7
On or about January 4, 2011, while Aflatouni’s bankruptcy case was pending
and in violation of the automatic bankruptcy stay, a substitute trustee appointed by City
Bank conducted a foreclosure sale of the property owned by Grapevine Diamond, L.P.
and the subject of Aflatouni’s second-priority vendor’s lien. (CR67, App3; CR91,
App.26 - Correction Foreclosure Sale Deed) While Aflatouni’s bankruptcy case was
pending and in violation of the automatic bankruptcy stay, City Bank recorded its
Correction Foreclosure Deed in the real property records of Tarrant County, Texas on
or about January 12, 2011. (CR91, App.26 - Correction Foreclosure Sale Deed)
On January 14, 2011, an Order Dismissing Chapter 13 Case (the “Bankruptcy
Dismissal Order”) was entered in the Aflatouni Bankruptcy. (CR68, App.3; CR98;
App.33 - Order Dismissing Chapter 13 Case and Notice of Dismissal)
D. Aflatouni Notified the Substitute Trustee and City Bank That Aflatouni
Filed for Bankruptcy Protection Before the Foreclosure Sale Was
Conducted.
City Bank’s designee, Wilcox, admitted that City Bank knew that Aflatouni filed
for bankruptcy protection on December 6, 2011 around the time the bankruptcy
petition was filed. (CR163) Jonathan Aflatouni attended the foreclosure sale on
January 4, 2011. (CR68; App.3) Before the sale began, Jonathan Aflatouni informed
the substitute trustee conducting the foreclosure sale of the Property, and also the City
Bank employee that was present at the sale, that Jonathan Aflatouni had filed for
bankruptcy protection. (CR68; App.3) The substitute trustee and the City Bank
8
employee told Jonathan Aflatouni that Jonathan Aflatouni’s filing for bankruptcy
protection was unimportant. (CR68; App.3)
E. After City Bank Purchased the Property at the Foreclosure Sale, City Bank
Sold the Property to SPK, Which in Turn Sold the Property to Enclave.
Enclave claims title based upon: (1) a Deed of Trust executed by Grapevine
Diamond, L.P. in favor of City Bank on or about September 10, 2007 and foreclosure
sale (CR91, App.26 - Correction Foreclosure Sale Deed); (2) a Special Warranty Deed
executed by City Bank to SPK Land Acquisition, LLC (“SPK”) (CR102 - Special
Warranty Deed to SPK); and (3) a Warranty Deed executed by SPK to Enclave(CR112
- Warranty Deed by SPK to Enclave).
F. Claims Were Brought in the Collin County Case by Grapevine Diamond
and Aflatouni Against City Bank, and Aflatouni Did Not Bring Claims
Against Grapevine Diamond or the Subsequent Owners - SPK and
Enclave.
On September 29, 2011, City Bank executed the Special Warranty Deed to SPK
Land Acquisition, LLC (CR102 - Special Warranty Deed to SPK). On October 5,
2012, SPK executed a Warranty Deed to Enclave (CR112 - Warranty Deed by SPK to
Enclave). SPK and Enclave are not parties to the Dallas appeal. (CR220; App.37)
Aflatouni’s Motion for Summary Judgment filed in the Collin County case, the Order
granting City Bank’s Motion for Summary Judgment and the Final Judgment (these
three documents are included as exhibits to Enclave’s MSJ Response), shows that SPK
9
and Enclave are not parties to the Collin County case. (CR288, 364, 367) There is no
mention of a claim by Aflatouni to rescind the vendor’s lien in these documents.
G. The Opinion Relied Upon By Enclave Does Not Contain a Holding
Regarding the Voidness or Validity of the Foreclosure Sale.
Enclave’s Motion for Summary Judgment relies upon three exhibits: (1) the
Interlocutory Order granting City Bank’s Motion for Summary Judgment (CR217); (2)
the Opinion of the Dallas Court of Appeals (CR220; App.37); and (3) the United States
Supreme Court’s letter stating that the petition for writ of certiori was denied. (CR246)
The Interlocutory Order and Opinion relied upon by Enclave contain no holding
regarding the voidness or validity of the foreclosure sale. (CR217; CR220, App.37 –
Opinion) Instead, the Court of Appeals held that there was “no equity in the property”
(CR230, App.47 – Opinion) and that “no summary judgment evidence that the
property’s value exceeded the amount stated on Grapevine Diamond’s bankruptcy
schedules, and the property was sold for less than the amount of City Bank’s secured
claim” (CR231, App.48 – Opinion) As a result, the Court of Appeals overruled the
“portions . . . of the issues alleging that summary judgment for City Bank was
improper because the foreclosure sale allegedly violated the stay in Aflatouni’s
bankruptcy.” (CR231, App.48 – Opinion)
10
H. Aflatouni Demanded Payment by Grapevine Diamond After the Lawsuit
Against City Bank Was No Longer Pending.
Notably, Aflatouni did not demand payment upon the debt that is secured by the
Vendors’ Lien until March of 2017 (and long after the Court of Appeals Opinion relied
upon by Enclave). (CR70, App.5; CR120, App.36 - Demand for Payment) The
purchase money has not been paid. (CR70, App.5)
11
SUMMARY OF ARGUMENT
Aflatouni indisputably is the owner of Aflatouni’s Vendor’s Lien as shown on
the 2007 Deed so that Aflatouni held legal title, and Aflatouni is unpaid. The
undisputed evidence is that City Bank’s posting of the property for foreclosure and the
foreclosure sale itself occurred while Aflatouni’s bankruptcy was pending, violating
the automatic stay in Aflatouni’s bankruptcy. Because the foreclosure sale was a
violation of the automatic bankruptcy stay, the sale is void as to Aflatouni’s Vendor’s
Lien and Aflatouni’s legal title in the Property.
Next, because a void deed does not transfer title to the grantee (City Bank) – the
foreclosure sale deed to City Bank is “without vitality or legal effect” as stated in this
Court’s Poag opinion. Because City Bank lacked title, the subsequent deed form City
Bank to SPK, and the deed from SPK to Enclave, also did not convey title.
Faced with the fact that Enclave wholly lacked title, City Bank bootstrapped a
collateral estoppel defense based upon the Collin County case. Tellingly, while
Enclave’s Motion for Summary Judgment refers to its summary judgment ground as
being a collateral estoppel defense, Enclave does not identify the “identical issue”
already decided in the Collin County litigation. (CR206 – Enclave MSJ ¶ 8) Instead,
Enclave merely asserts that the Collin County cause of action and the current cause of
action both involved City Bank’s violation of the automatic bankruptcy stay. (CR208 –
Enclave MSJ ¶ 14) Put simply, while both cases involved this issue, Enclave wholly
12
fails to point the trial court in the present case exactly where this issue was decided
against Aflatouni. The reason is simple - it wasn’t. As a result, Enclave’s collateral
estoppels defense fails.
Further, while Enclave wisely chose not to argue res judicata barred Aflatouni’s
claims, this is essentially what Enclave is really arguing here. Notably, because
Aflatouni did not demand payment from Grapevine Diamond until March 2017, which
is after the Collin County litigation and appellate process concluded, Aflatouni’s cause
of action against Grapevine Diamond did not accrue before the Final Judgment was
entered in the Collin County litigation.
13
BRIEF OF ARGUMENT
STANDARD OF REVIEW - SUMMARY JUDGMENT
The movant is entitled to summary judgment if it shows there is no genuine
issue as to a material fact and the movant is entitled to judgment as a matter of law.
TEX. R. CIV. P. 166a(c). A plaintiff-movant is entitled to summary judgment on its
cause of action if it establishes all the elements of its cause of action. MMP, Ltd. v.
Jones, 710 S.W.2d 59, 60 (Tex. 1986).
A defendant-movant is entitled to summary judgment if it establishes all the
elements of its defense or disproves one element of the plaintiff’s cause of action. See
Park Place Hosp. v. Estate of Milo, 909 S.W.2d 508, 509 (Tex. 1995). If a defendant-
movant disproves as a matter of law an element of the plaintiff’s cause of action, the
defendant is entitled to summary judgment unless the plaintiff can either identify a fact
issue in the elements the defendant negated or create a fact issue by producing
controverting evidence that raises a fact issue on one of the elements the defendant
negated. See Centeq Rlty., Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995).
14
ISSUE ONE
(Restated)
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave
and Denied Aflatouni’s Motion for Summary Judgment Because It Is Undisputed
That Aflatouni is the Owner of An Unpaid Debt Secured by a Vendor’s Lien –
Aflatouni Is Entitled to a Judicial Rescission of his Vendor’s Lien. (CR915, 921;
App.62, 64)
ARGUMENT AND AUTHORITIES FOR ISSUE ONE
A. Aflatouni’s Summary Judgment Evidence Established, and Enclave Did
Not Dispute, That Aflatouni Holds a Vendor’s Lien on the Grapevine
Diamond Property.
The undisputed facts establish that Aflatouni retained a vendor’s lien when the
Property was sold to Grapevine Diamond – the 2007 Deed expressly reserved a
vendor’s lien. (CR71; App.6) A grantor’s express reservation of title in a deed is
sufficient to create a vendor’s lien and reserve superior legal title. State v. Forest Lawn
Lot Owners Ass'n, 152 Tex. 41, 254 S.W.2d 87 (1953); Walton v. First Nat'l Bank of
Trenton, 956 S.W.2d 647, 650 (Tex. App.-Texarkana 1997, writ denied). Superior title
is held by the vendor where an express vendor's lien is retained to secure unpaid
purchase money, and the vendee has a mere equitable right to acquire title by carrying
out the agreement. State v. Forest Lawn Lot Owners Ass'n, 152 Tex. 41, 254 S.W.2d
87, 91 (1953); Dominey v. The Unknown Heirs and Legal Representatives of Linda
Lokomski, 172 S.W.3d 67, 74 (Tex. App.—Ft. Worth 2005, no pet.). “[I]f a vendor's
15
lien encumbers the land, legal title does not pass to the vendee.” Flag-Redfern Oil Co.
v. Humble Exploration Co., 744 S.W.2d 6, 8 (Tex. 1987).
A Special Warranty Deed (Vendor’s Lien) (the “Deed”) was received by
Grapevine Diamond when it purchased the Property. (CR66, App.1; CR71, App.6 -
2007 Deed) The Deed states the Vendor, the Aflatounis, retained a Vendor’s Lien
when the Property was sold to Grapevine Diamond. (CR66, App.1; CR71, App.6 -
2007 Deed) The Vendor’s Lien and superior title was retained by the Vendor until the
City Bank debt and the Second Lien Note were paid by Grapevine Diamond. (CR66,
App.1; CR73-74, App.8-9 - 2007 Deed) The Vendor’s Lien was subordinated to City
Bank’s debt until the City Bank debt was paid by Grapevine Diamond. (CR66, App.1;
CR74, App.9 - 2007 Deed)
Aflatouni and Grapevine Diamond communicated to City Bank, before the real
property was sold to Grapevine Diamond, that Grapevine Diamond would be providing
additional consideration to Aflatouni of $2,740,700.51 at the time of the closing.
(CR67) In response, on or about September 11, 2007, City Bank sent a letter to the
Fidelity Title, Inc. Escrow Officer (the “City Bank Letter”). (CR67, App.2; CR78,
App.13 - City Bank Letter) The City Bank Letter states that City Bank knew on
September 11, 2007, which was before the closing on September 12, 2007, that
Jonathan Aflatouni would be entitled to receive $2,740,700.51 at the closing, but that
16
he may not actually receive the cash at closing. (CR67, App.2; CR78, App.13 - City
Bank Letter)
As part of the closing on September 12, 2007, Grapevine Diamond received a
loan from Jonathan Aflatouni in the amount of $2,741,760.51 as reflected on the
Settlement Statement as part of the purchase price for the Property. (CR68:App.3)
This loan was to be paid off on demand, which was to be no earlier that when
Grapevine Diamond sold the property or developed the property itself. (CR68; App.3)
This loan accrued interest at an annual rate of 7.00% simple interest. (CR69; App.4)
On July 19, 2013, Youval Zive, in his capacity as President of Danjon, Inc., Grapevine
Diamond’s general partner, executed a Replacement Promissory Note reflecting the
terms of the original promissory note. (CR69, App.4; CR101) This loan has not been
repaid, and Aflatouni demanded payment on March 14, 2017. (CR70, App.5; CR120,
App.36 – Aflatouni Request for Payment)
City Bank did not dispute that Aflatouni loaned Grapevine Diamond the $2.7
million when Grapevine Diamond purchased the Property in 2007. (CR162) Further,
Wilcox admitted that Aflatouni was not a partner in Grapevine Diamond, and that City
Bank’s letter stated that Aflatouni was not a partner. (CR162)
City Bank’s designee, Wilcox, testified that his understanding was that the use
of the two words “Vendor’s Lien” on the first page of the Special Warranty Deed
immediately below the title “Special Warranty Deed” was an indication that the
17
vendors held a lien on the Property. (CR154-55; CR172 - Wilcox Depo, Exh. 6, 2007
Deed) The bank would typically have the deed in its file when it makes a loan to buy
property – the Special Warranty Deed would be included in the closing documents.
(CR154-55) Wilcox also admitted that City Bank’s title insurer understood, based upon
the title policy document, that a vendor’s lien was being retained. (CR158-59; CR177
- Wilcox Depo. Exh. 11, Title Policy)
Aflatouni’s summary judgment evidence establishes as a matter of law that
Aflatouni holds a vendor’s lien on the Property.
B. Bank’s Foreclosure Occurred After Aflatouni Filed For Bankruptcy
Protection.
In summary, the undisputed evidence establishes that after Aflatouni filed his
bankruptcy petition and that before the Aflatouni bankruptcy proceeding was
dismissed, City Bank posted the Property for foreclosure and City Bank’s substitute
trustee conducted a foreclosure sale.
On December 6, 2010, Jonathan Aflatouni filed an Original Petition (the
“Aflatouni Bankruptcy”) in the Bankruptcy Court of the Northern District of Texas
under chapter 13, in cause no. 10-38538-sgj13 (the “Aflatouni Bankruptcy Petition”).
(CR67, App.2; CR79, App.14 - Aflatouni Bankruptcy Petition)
On or about December 9, 2010, in violation of the automatic bankruptcy stay,
City Bank filed its Notice of Foreclosure Sale (the “Foreclosure Notice”) for a January
18
4, 2011 sale of the property owned by Grapevine Diamond, L.P. and the subject of
Aflatouni’s second-priority vendor’s lien. (CR67, App.2; CR87, App.22 - Foreclosure
Notice)
On or about January 4, 2011, in violation of the automatic bankruptcy stay, a
substitute trustee appointed by City Bank conducted a foreclosure sale of the property
owned by Grapevine Diamond, L.P. and the subject of Aflatouni’s second-priority
vendor’s lien. (CR68; App.3; CR91, App.26 - Correction Foreclosure Sale Deed. City
Bank recorded its Foreclosure Sale Deed on January 5, 2011 (CR.93; App.28) and City
Bank’s Correction Foreclosure Deed in the real property records of Tarrant County,
Texas on or about January 12, 2011. (CR91; App.26 - Correction Foreclosure Sale
Deed.
On January 14, 2011, an Order Dismissing Chapter 13 Case (the “Bankruptcy
Dismissal Order”) was entered in the Aflatouni Bankruptcy. (CR68; App.3; CR98,
App.33 - Order Dismissing Chapter 13 Case and Notice of Dismissal)
C. Aflatouni Notified the Substitute Trustee and City Bank that Aflatouni
Filed for Bankruptcy Protection Before the Foreclosure Sale.
City Bank knew that Aflatouni filed for bankruptcy protection on December 6,
2011 around the time the bankruptcy petition was filed. (CR163) Jonathan Aflatouni
attended the foreclosure sale on January 4, 2011. (CR68; App.3) Before the sale
began, Jonathan Aflatouni informed the substitute trustee conducting the foreclosure
19
sale of the Property, and also the City Bank employee that was present at the sale, that
Jonathan Aflatouni had filed for bankruptcy protection. (CR68; App.3) The substitute
trustee and the City Bank employee told Jonathan Aflatouni that Jonathan Aflatouni’s
filing for bankruptcy protection was unimportant. (CR68; App.3)
D. Enclave Does Not Dispute That Bank’s Foreclosure Violated the Aflatouni
Automatic Bankruptcy Stay Because Aflatouni’s Vendor’s Lien, as Legal
Title to the Property, Is Property of the Bankruptcy Estate.
Indisputably, City Bank filed its Notice of Foreclosure Sale and the substitute
trustee conducted the foreclosure sale following the date that Aflatouni filed his
Original Petition in the Bankruptcy Court, and while Aflatouni’s bankruptcy
proceeding was pending. Enclave’s Motion for Summary Judgment does not argue
otherwise. (CR187)
1. Applicable Law – the Bankruptcy Stay Generally.
Subject to limited exceptions not relevant here, upon the commencement of a
debtor's bankruptcy case, section 362(a) of the Bankruptcy Code operates as a stay,
applicable to all entities, of (in pertinent part):
(3) any act to obtain possession of property of the estate or of property from
the estate or to exercise control over property of the estate;
(4) any act to create, perfect, or enforce any lien against property of the
estate;
(5) any act to create, perfect, or enforce against property of the debtor any
lien to the extent such lien secures a claim that arose before the
commencement of the case under [the Bankruptcy Code];
20
11 U.S.C. §362(a)(3) – (5). “The scope of this paragraph [§ 541(a)(1)] is broad. It
includes all kinds of property, including tangible or intangible property, causes of
action ... and all other forms of property.” United States v. Whiting Pools, Inc., 462
U.S. 198, 205 n.9 (1983) (citing legislative history of Section 541). The scope of the
automatic stay is extremely broad, and it forecloses a range of activities aimed at
collecting a debt, including threats of immediate action by creditors. In re McCarthy,
421 B.R. 550, 565 (Bankr. D. Colo. 2009).
Bankruptcy Code section 541(a) contains an expansive definition of property of
a debtor's estate. 11 U.S.C. § 541(a); United States v. Whiting Pools, Inc., 462 U.S.
198, 205 n.9 (1983) (“The scope of this paragraph [§ 541(a)(1)] is broad. It includes all
kinds of property, including tangible or intangible property, causes of action ... and all
other forms of property ....”) (citing legislative history of Section 541). In bankruptcy
contexts, "the term 'property' has been construed most generously and an interest is not
outside its reach because it is novel or contingent or because enjoyment must be
postponed." Segal v. Rochelle, 382 U.S. 375, 379 (1966).
21
2. Applicable Law - Because a Second Lienholder’s Lien is a Property
Right That is Protected by the Bankruptcy Stay, a Foreclosure Sale
of the Real Property that is the Subject of the Lien Is a Violation of
the Bankruptcy Stay.
a. Three Strokes (N.D. Texas) Unequivocally Holds the Bankruptcy
Stay Applies to Second Liens.
A lien secured by real property and held by a debtor that has filed a bankruptcy
case “is, indeed, a property interest that triggers the protection of the automatic stay. It
is a property interest as contemplated under Section 541 of the Bankruptcy Code.” In
re Three Strokes Ltd. Partnership, 397 B.R. 804 (Bankr. N.D. Tex. 2008) (citing
Whiting Pools, Inc., 462 U.S. at 205 n.9.).
In In re Three Strokes, the Honorable Judge Jernigan addressed a situation
similar to the one at hand - a senior lienholder attempted to foreclose on property that
was subject to the debtor's junior lien. Judge Jernigan, relying on Fifth Circuit
authority,2 unequivocally held that a foreclosure by a first lienholder on property that is
2 Florida Institute of Tech. v. Carpenter (In re Westec Corp.), 460 F.2d 1139, 1142 (5th Cir. 1972)
"Certainly, this [lienholder] interest constitutes `property' within the meaning of Sections 111 and 148
of the Bankruptcy Act, as `property' can constitute something other than fee ownership"); In re Chesnut,
422 F.3d 298, 303 (5th Cir. 2005) (property that could arguably have been community property at the
time of a foreclosure sale violated the automatic stay resulting from the husband’s bankruptcy, even
though the property might ultimately be determined to be the wife’s separate property).
22
the subject of a second lien held by a bankruptcy debtor is automatically stayed – the
second lien is property of the bankruptcy estate3:
To reiterate, the Arizona Property itself is certainly not property of the
estate, but the second lien interest of the Debtor in that property is a
property interest worthy of recognition and protection. Thus, Section 362
applies to automatically stay the foreclosure proceedings. The foreclosure
proceedings could have the effect of extinguishing the Debtor's second lien
interest. The foreclosure proceedings would constitute an exercise of control
over property of the estate, pursuant to Bankruptcy Code Section 362(a)(3). The
court recognizes that . . . Conseco [the senior lienholder] is not a creditor of this
Debtor. However, Section 362(a) is worded to prevent “all entities” (not merely
creditors) from engaging in certain acts including “an act ... to exercise control
over property of the estate.” 11 U.S.C. § 362(a)(3).
Id., at 807 (emphasis added).
b. Additional Opinions that Hold a Lienholder’s Security Interest Is a
Property Right That Is Protected by the Bankruptcy Stay.
Unsurprisingly, there are a number of opinions whose holdings are consistent
with Three Strokes – a foreclosure sale that would wipe out a second lien held by a
bankrupt debtor is a violation of the automatic stay. In re Westec Corp., 460 F.2d at
1142 (holding that taxing authorities’ foreclosure proceedings as to underlying real
property violated the automatic stay in a lienholder’s bankruptcy); Monumental Life
3 Similarly, the Ninth Circuit holds a debtor’s lien interest is property of the bankruptcy estate:
[A] bankruptcy estate is comprised of all legal and equitable interest in debtor’s
property as of the filing of the bankruptcy petition. Therefore, since a lien is considered
a beneficial or equitable interest in property, and it was in existence prior to the debtor’s
filing bankruptcy, the lien interest is considered part of the bankruptcy estate.
In re Cogar, 210 B.R. 803, 809 (B.A.P. 9th Cir. 1997) (cit. omitted).
23
Insur. v. Bibo, Inc. (In re Bibo, Inc.), 200 B.R. 348 (B.A.P. 9th Cir. 1996), appeal
dismissed and opinions vacated as moot, 139 F.3d 659 (9th Cir. 1998) (debtor’s
interest as junior deed of trust holder was included in property of the estate and senior
lienholder’s proposed foreclosure was attempt to exercise control over property of
debtor in violation of the automatic stay).
Further, courts considering the scope of the automatic stay have applied it
broadly. Fidelity Mortgage Investors v. Camelia Builders, Inc., 550 F.2d 47 (2nd Cir.
1976) (citing Segal, 382 U.S. at 379-81) (security interest under a deed of trust was a
property interest for the purposes of the bankruptcy statutes and within the scope of the
bankruptcy stay).
The Three Strokes opinion cites to additional cases holding a lien is “property”
that is subject to the bankruptcy stay. Three Strokes, 397 B.R. at 807 (citing In re
Capital Mortgage & Loan, Inc., 35 B.R. 967 (Bankr. E.D.Ca.1983) (holding that a
senior lien holder's cancellation of a loan to third party trustors and taking of a
quitclaim deed from the trustors in lieu of foreclosure violated the automatic stay of the
junior lien holder, who was a debtor in bankruptcy)); Cardinal Industries, Inc. v.
Buckeye Federal Sav. & Loan Ass'n (In re Cardinal Industries, Inc.),105 B.R. 834
(Bankr. S.D. Ohio 1989) (finding that the debtor's unrecorded second mortgage interest
became property of the estate upon the debtor's bankruptcy filing and protected by the
automatic stay from the first mortgage holder's foreclosure of its lien)).
24
Similarly, the Ninth Circuit has held that a debtor’s lien interest is property of
the bankruptcy estate:
Under § 541(a), at the time a debtor files bankruptcy, all of the debtor’s property
becomes property of the bankruptcy estate. Taylor v. Freeland & Kronz, 503
U.S. 638, 642, 112 S.Ct. 1644, 1647-48, 118 L.Ed.2d 280 (1992). Property is
defined broadly and includes “charges on property, such as liens held by
the debtor on property of a third party, or beneficial rights and interest
that the debtor may have in property of another.” 124 Cong.Rec. H11,096
(daily ed. Sept. 28, 1978) (Statement of Rep. Edwards); In re Bialac, 712 F.2d
426, 431 (9th Cir.1983) .
***
[A] bankruptcy estate is comprised of all legal and equitable interest in debtor’s
property as of the filing of the bankruptcy petition. Therefore, since a lien is
considered a beneficial or equitable interest in property, and it was in existence
prior to the debtor’s filing bankruptcy, the lien interest is considered part of the
bankruptcy estate.
In re Cogar, 210 B.R. 803, 809 (B.A.P. 9th Cir. 1997) (emphasis added) (citing
Capital Mortg., 35 B.R. at 970; Bibo, 200 B.R. at 350.
3. Aflatouni’s Vendor’s Lien Is Legal Title to the Property.
Again, “if a vendor's lien encumbers the land, legal title does not pass to the
vendee.” Flag-Redfern Oil Co., 744 S.W.2d at 8; see Dominey, 172 S.W.3d at 74.
Aflatouni is the owner of the Vendor’s Lien and thus holds legal title. (CR68-69;
App.3-4; CR71, App.71 – 2007 Deed) The court in Bunn v. City of Laredo, 245 S.W.
426, 429 (Tex. Comm’n App. 1922, judgm’t adopted), said:
It has been the uniform holding of our courts from the earliest times that,
however absolute may be the terms of such conveyance, the contract of sale is
25
treated as executory between the vendor and vendee and those holding under
them until the purchase money is fully satisfied; and that, in addition to all other
remedies to enforce payment of the purchase money, the vendor has the
alternative remedy, so long as the purchase money is not paid, to rescind the
contract of sale and recover the land upon the strength of his superior title as an
unsatisfied vendor. This remedy to rescind and resort to the superior legal title
has uniformly been held to be separate and distinct from and wholly
independent of the remedy to subject the land to the payment of the purchase
money by sale under foreclosure.
Bunn, 625 S.W.2d at 776.
D. Because the Foreclosure Sale Violated the Bankruptcy Stay, the Correction
Foreclosure Deed is Void Either in Its Entirety, or, in the Alternative, as to
Aflatouni’s Vendor’s Lien and Aflatouni’s Legal Title.
“An action taken in violation of the automatic stay is void, not merely voidable.”
Continental Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499, 501 (Tex.1988)
(cit. omitted) (App.68) Because the foreclosure sale violated the bankruptcy stay, the
Correction Foreclosure Sale Deed is void either in its entirety or, in the alternative, as
to the Vendors’ Lien. See Poag v. Flories, 317 S.W.3d 820, 825 (Tex. App.—Fort
Worth 2010, pet. denied) (“A void deed is without vitality or legal effect.”); see also
Bradford v. Thompson, 470 S.W.2d 633, 635, 637 (Tex. 1971) (concluding that a
foreclosure was “null and void[ ]” and therefore declaring that a trustee's deed arising
from the foreclosure was “cancelled and held for naught [ ]”). A foreclosure sale that
occurs during the automatic stay is void and passes no title. Oles v. Curl, 65 S.W.3d
129, 132 (Tex. App.—Amarillo 2001, no pet.). When a foreclosure sale is void, title to
property does not transfer and the purchaser takes no title. Chale Garza Invests., Inc. v.
26
Madaria, 931 S.W.2d 597, 600 (Tex. App.—San Antonio 1996, writ ref'd, n.r.e.);
Diversified, Inc. v. Walker, 702 S.W.2d 717, 721 (Tex. App.—Houston [1st Dist.]
1985, writ ref'd n.r.e.); Henke v. First S. Props., Inc., 586 S.W.2d 617, 620 (Tex. Civ.
App.—Waco 1979, writ ref'd, n.r.e.).
Indisputably, as shown above, City Bank filed its Notice of Foreclosure Sale and
the substitute trustee conducted the foreclosure sale following the date that Aflatouni
filed his Original Petition in the Bankruptcy Court, and while Aflatouni’s bankruptcy
proceeding was pending. Enclave does not dispute that because the foreclosure sale
violated the bankruptcy stay and that the Correction Foreclosure Sale Deed is void
either in its entirety or, in the alternative, as to Aflatouni’s Vendors’ Lien and
Aflatouni’s legal title. Aflatouni’s summary judgment evidence establishes this as a
matter of law.
E. Aflatouni Is Entitled To Rescind Aflatouni’s Vendors’ Lien.
A holder of a vendor’s lien possesses superior title and has the right to rescind
the vendor’s lien upon a default by the vendee. Whiteside v. Bell, 347 S.W.2d 568, 570
(Tex. 1961) (citing Maupin v. Chaney, 139 Tex. 426, 163 S.W.2d 380, 384 (1942).
When an express vendor's lien is retained to secure unpaid purchase money, superior
legal title remains in the vendor until the purchase money is paid. Lusk v. Mintz, 625
S.W.2d 774, 775 (Tex. App.—Houston [14th Dist.] 1981, no writ) (citing State v.
Forest Lawn Lot Owners Ass'n, 152 Tex. 41, 254 S.W.2d 87 (1953)).
27
Aflatouni demanded payment on March 14, 20174. (CR70, App.5; CR120,
App.36 - Demand for Payment) The purchase money has not been paid. (CR70,
App.5) Aflatouni’s summary judgment evidence established as a matter that Aflatouni
is entitled to the rescission of Aflatouni’s Vendors’ Lien, and elected a rescission and
entry of summary judgment rescinding the Vendors’ Lien and placing title to the real
property in Aflatouni. (CR29, 42, 53)
Aflatouni established his right to rescind the Vendor’s Lien as a matter of law,
as argued in Aflatouni’s Motion for Summary Judgment, and contrary to Enclave’s
argument in Enclave’s Motion for Summary Judgment.
ISSUE TWO
(Restated)
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave
on Aflatouni’s Trespass to Try Title Claim. (CR921; App.64)
ARGUMENT AND AUTHORITIES FOR ISSUE TWO
A. Applicable Law – Trespass to Try Title.
When the vendee defaults in the payment of the purchase price, the holder of a
vendor’s lien “may file a suit in trespass to try title to recover the land thereby effecting
a rescission.” Whiteside, 347 S.W.2d at 570.
4 As discussed below, because the demand for payment occurred after the final judgment in the
Collin County case, Aflatouni’s cause of action seeking a rescission of Aflatouni’s Vendor’s Lien
had not yet accrued, and therefore a res judicata defense, if Enclave had pleaded res judicata, is
inapplicable.
28
A trespass to try title action is the method of determining title to lands,
tenements, or other real property. TEX. PROP. CODE §22.001(a). Trespass to real
property occurs when a person enters another’s land without consent. Wilen
v. Falkenstein, 191 S.W.3d 791, 797 (Tex. App.—Fort Worth 2006, pet. denied);
General Mills Restaurants, Inc. v. Tex. Wings, Inc., 12 S.W.3d 827, 833 (Tex. App.—
Dallas 2000, no pet.). To recover for a trespass to real property, a plaintiff must prove
that (1) the plaintiff owns or has a lawful right to possess real property, (2) the
defendant entered the plaintiff’s land and the entry was physical, intentional, and
voluntary, and (3) the defendant’s trespass caused injury to the plaintiff. Wilen, 191
S.W.3d at 798. The plaintiff in a trespass to try title action is required to prove its title
by proving (1) a regular chain of conveyances from the sovereign to the plaintiff, (2) a
superior title to that of the defendant out of a common source, (3) title by limitations,
or (4) prior possession, which prior possession has not been abandoned. Rogers v.
Ricane Enters., Inc., 884 S.W.2d 763, 768 (Tex. 1994). In a trespass-to-try-title action,
a plaintiff recovers on the strength of his or her own title. Plumb v. Stuessy,
617 S.W.2d 667 (Tex. 1981).
A valid foreclosure on a senior lien (sometimes referred to as a "superior" lien)
extinguishes a junior lien (sometimes referred to as "inferior" or "subordinate") if there
are not sufficient excess proceeds from the foreclosure sale to satisfy the
29
junior lien. Diversified Mortg. Investors v. Lloyd D. Blaylock Gen. Contractor, Inc.,
576 S.W.2d 794, 808 (Tex. 1978).
B. Aflatouni Has Superior Title Because the Foreclosure Sale Was Void – City
Bank Violated the Bankruptcy Stay.
As discussed above, a Special Warranty Deed (Vendor’s Lien) (the “Deed”) was
received by Grapevine Diamond when it purchased the Property. (CR66, App.1;
CR71, App.6 - 2007 Deed) The Deed states the Vendor retained a Vendor’s Lien when
the Property was sold to Grapevine Diamond. (CR66, App.1; CR71, 74, App.6, 9 -
2007 Deed) The Vendor’s Lien and superior title was retained by the Vendor until the
City Bank debt and the Second Lien Note were paid by Grapevine Diamond. (CR66,
App.1; CR74, App.9 - 2007 Deed) The Vendor’s Lien was subordinated to City Bank’s
debt until the City Bank debt was paid by Grapevine Diamond. (CR66, App.1; CR74,
App.9 - 2007 Deed)
Enclave claims title based upon: (1) a Deed of Trust executed by Grapevine
Diamond, L.P. in favor of City Bank on or about September 10, 2007 and foreclosure
sale (CR91, App.26 - Correction Foreclosure Sale Deed); (2) a Special Warranty Deed
executed by City Bank to SPK Land Acquisition, LLC (CR102 - Special Warranty
Deed to SPK); and (3) a Warranty Deed executed by SPK Land Acquisition, LLC to
Enclave LLC (CR112 - Warranty Deed by SPK to Enclave). Clearly Enclave’s title
claim is dependent upon the validity of the foreclosure sale, and Aflatouni’s title claim
30
is superior to Enclave’s title if the foreclosure was void, in whole or in part, as argued
above. See Rogers, 884 S.W.2d at 768. Aflatouni’s vendor’s lien and Aflatouni’s legal
title would only be extinguished by a valid foreclosure sale. See Diversified Mortg.
Investors, 576 S.W.2d at 808.
In conclusion, Aflatouni’s summary judgment evidence establishes as a matter
of law, and contrary to Enclave’s Motion for Summary Judgment, that Aflatouni is
entitled to judgment on Aflatouni’s trespass to try title claim and the rescission of
Aflatouni’s Vendor’s Lien, placing equitable and legal title in Aflatouni.
ISSUE THREE
(Restated)
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave
on Aflatouni’s Claim to Quiet Title and Remove Cloud on Title. (CR921; App.64)
ARGUMENT AND AUTHORITIES FOR ISSUE THREE
A. Applicable Law – Quiet Title and Remove Cloud on Title.
Courts have used the term "suit to quiet title" to refer to legal disputes regarding
(1) title to and possession of real property; and (2) the validity of other "clouds" on an
undisputed owner's title to real property. Alkas v. United Sav. Ass'n of Tex., Inc., 672
S.W.2d 852, 855-56 (Tex. App.—Corpus Christi 1984, writ ref'd n.r.e.) (suit to
adjudicate ownership of property to determine whether creditors of original owner
retained interest in property purportedly conveyed to new owner was action "to quiet
31
title"); Southwest Guar. Trust Co. v. Hardy Rd. 13.4 Joint Venture, 981 S.W.2d 951,
956-57 (Tex. App.—Houston [1st Dist.] 1998, pet. denied) (undisputed property
owner's action to invalidate lien and deed of trust securing lien constituted suit "to
quiet title").
A suit to quiet title is equitable in nature, and the principal issue in such suits is
"'the existence of a cloud on the title that equity will remove.'" Florey v. Estate of
McConnell, 212 S.W.3d 439, 448 (Tex. App.—Austin 2006, pet. denied) (quoting Bell
v. Ott, 606 S.W.2d 942, 952 (Tex. Civ. App.—Waco 1980, writ ref'd n.r.e.)). A
"cloud" on legal title includes any deed, contract, judgment lien or other instrument,
not void on its face, that purports to convey an interest in or makes any charge upon
the land of the true owner, the invalidity of which would require proof. Wright v.
Matthews, 26 S.W.3d 575, 578 (Tex. App.—Beaumont 2000, pet. denied). A suit to
quiet title "'enable[s] the holder of the feeblest equity to remove from his way to legal
title any unlawful hindrance having the appearance of better right.'" Florey, 212
S.W.3d at 448 (quoting Thomson v. Locke, 66 Tex. 383, 1 S.W.112, 115 (Tex. 1886)).
Any deed, contract, judgment, or other instrument not void on its face that
purports to convey an interest in or make any charge upon the land of a true owner, the
invalidity of which would require proof, is a cloud upon the legal title of the owner.
Hahn v. Love, 321 S.W.3d 517, 531 (Tex. App.—Houston [1st Dist.] 2009, pet.
denied). To prevail in a suit to quiet title, the plaintiff must prove (1) his right, title, or
32
ownership in real property, (2) that the defendant has asserted a "cloud" on his
property, meaning an outstanding claim or encumbrance valid on its face that, if it were
valid, would affect or impair the property owner's title, and (3) that the defendant's
claim or encumbrance is invalid. See Gordon v. W. Houston Trees, Ltd., 352 S.W.3d
32, 42 (Tex. App.—Houston [1st Dist.] 2011, no pet.); Hahn, 321 S.W.3d at 531.
B. Aflatouni’s Summary Judgment Evidence Establishes Every Element of
Aflatouni’s Title Claims.
1. Aflatouni Has Right, Title, or Ownership in the Property.
As discussed above, a Special Warranty Deed (Vendor’s Lien) (the “Deed”) was
received by Grapevine Diamond when it purchased the Property. (CR66, App.1;
CR71, App.6 - 2007 Deed) The Deed states the Vendor retained a Vendor’s Lien when
the Property was sold to Grapevine Diamond. (CR66, App.1; CR71, 74, App.6, 9 -
2007 Deed) The Vendor’s Lien and superior title was retained by the Vendor until the
City Bank debt and the Second Lien Note were paid by Grapevine Diamond. (CR66,
App.1; CR74, App.9 - 2007 Deed) The Vendor’s Lien was subordinated to City Bank’s
debt until the City Bank debt was paid by Grapevine Diamond. (CR66, App.1; CR74,
App.9 - 2007 Deed) In summary, Aflatouni has right, title, or ownership in the
Property.
33
2. City Bank’s Corrected Foreclosure Deed, the Special Warranty Deed
to SPK and the Warranty Deed to Enclave Are a Cloud on the Title.
City Bank filed a Corrected Foreclosure Deed claiming title in the Property in
the real estate records of Tarrant County, Texas. (CR91, App.26 - Correction
Foreclosure Sale Deed) Subsequently, a Special Warranty Deed executed by City
Bank to SPK Land Acquisition, LLC was filed in the public records (CR102 - Special
Warranty Deed to SPK) and a Warranty Deed executed by SPK Land Acquisition,
LLC to Enclave LLC was filed in the public records. (CR112 - Warranty Deed by SPK
to Enclave)
These deeds are a cloud on the title, as Enclave is claiming it has title to the
Property, and that Aflatouni’s lien is no longer enforceable following the foreclosure
sale.
3. Enclave’s Claim is Invalid Because the Foreclosure Sale Violated the
Automatic Bankruptcy Stay, and Thus the Foreclosure Sale is Void,
in Whole or in Part.
As discussed above, the foreclosure sale was invalid because it was a violation
of the automatic bankruptcy stay resulting from Aflatouni’s bankruptcy filing. The
authorities, argument and summary judgment evidence discussed above is incorporated
as if set forth in its entirety. City Bank’s Corrected Foreclosure Deed is a “false
statement” because the foreclosure sale was invalid. The undisputed evidence
establishes that after Aflatouni filed his bankruptcy petition and before the Aflatouni
34
bankruptcy proceeding was dismissed, City Bank posted the Property for foreclosure
and City Bank’s substitute trustee conducted a foreclosure sale.
On December 6, 2010, Jonathan Aflatouni filed Aflatouni Bankruptcy Petition
under chapter 13, in cause no. 10-38538-sgj13. (CR67, App.2; CR79, App.14 -
Aflatouni Bankruptcy Petition)
On or about December 9, 2010, in violation of the automatic bankruptcy stay,
City Bank filed the Foreclosure Notice for a January 4, 2011 sale of the property
owned by Grapevine Diamond, L.P. and the subject of Aflatouni’s second-priority
vendor’s lien. (CR67, App.67; CR87, App22 - Foreclosure Notice)
On or about January 4, 2011, in violation of the automatic bankruptcy stay, a
substitute trustee appointed by City Bank conducted a foreclosure sale of the property
owned by Grapevine Diamond, L.P. and the subject of Aflatouni’s second-priority
vendor’s lien. (CR67, App3; CR91, App.26 - Correction Foreclosure Sale Deed) City
Bank recorded its Correction Foreclosure Deed in the real property records of Tarrant
County, Texas on or about January 12, 2011. (CR91, App.26 - Correction Foreclosure
Sale Deed)
On January 14, 2011, the Bankruptcy Dismissal Order was entered in the
Aflatouni Bankruptcy. (CR68, App.3; CR98; App.33 - Order Dismissing Chapter 13
Case and Notice of Dismissal)
35
City Bank’s designee, Wilcox, admitted that City Bank knew that Aflatouni field
for bankruptcy protection on December 6, 2011 around the time the bankruptcy
petition was filed. (CR163) Jonathan Aflatouni attended the foreclosure sale on
January 4, 2011. (CR68; App.3) Before the sale began, Jonathan Aflatouni informed
the substitute trustee conducting the foreclosure sale of the Property, and also the City
Bank employee that was present at the sale, that Jonathan Aflatouni had filed for
bankruptcy protection. (CR68; App.3)
Clearly Enclave’s title claim is dependent upon the validity of the foreclosure
sale, and Aflatouni’s title claim, as the holder of Aflatouni’s Vendor’s Lien and legal
title, is superior to Enclave’s title if the foreclosure was void, in whole or in part, as
argued above. See Rogers, 884 S.W.2d at 768. Aflatouni’s Vendor’s Lien and legal
title would only be extinguished by a valid foreclosure sale. See Diversified Mortg.
Investors, 576 S.W.2d at 808.
In conclusion, Aflatouni established his title claims as a matter of law, and
contrary to Enclave’s argument in Enclave’s Motion for Summary Judgment.
36
ISSUE FOUR
(Restated)
The Trial Court Erred When It Granted Summary Judgment in Favor of Enclave
on Enclave’s Collateral Estoppel Defense Because the Court of Appeals Opinion
Never Reached the Issue of Whether City Bank’s Foreclosure Sale Was Void
Because the Foreclosure Violated the Automatic Bankruptcy Stay, and Aflatouni
Demanded Payment of His Loan After the Collin County Judgment Was Entered
and the Dallas Court of Appeals Issued Its Opinion. (CR921; App.64)
ARGUMENT AND AUTHORITIES FOR ISSUE FOUR
Enclave’s motion for summary judgment contains one argument – Enclave
asserts that Aflatouni has not title because the foreclosure sale was not void – and thus
Enclave asserts that collateral estoppel bars Aflatouni’s claims. (CR205-07) Notably,
Aflatouni did not demand payment upon the debt that is secured by the Vendors’ Lien
until March of 2017 (and long after the Court of Appeals Opinion relied upon by
Enclave). Further, the Opinion relied upon by Enclave does not contain a holding on
whether the foreclosure sale was void or if Aflatouni’s Vendor’s Lien was canceled by
the foreclosure – the Opinion instead merely held that Aflatouni was not entitled to
recover damages. (CR229--31; App.46-48)
A. Applicable Law – Collateral Estoppel.
To invoke collateral estoppel, a party must establish: (1) the same facts sought to
be litigated in the second suit were fully litigated in the first suit; (2) those facts were
essential to the judgment in the first suit; and (3) the parties were cast as adversaries in
37
the first suit. Sysco Food Servs. v. Trapnell, 890 S.W.2d 796, 801 (Tex. 1994). The
prior decision has preclusive effect only if the issue decided is identical to the issue in
the pending litigation and essential to the judgment in the prior action. Getty Oil Co. v.
Ins. Co. of N. America, 845 S.W.2d 794, 802 (Tex. 1992). Stated differently, a prior
judgment is not conclusive of matters “not then directly in issue, or which were only
collateral issues, or matters of inference arising in the course of the proceedings.”
Ellerd v. Ellison, 165 S.W. 876, 882 (Tex. Civ. App.—Amarillo 1914) (cit. omitted).
A judgment can be conclusive solely of matters that exist at the time the
judgment is rendered, and it cannot be conclusive of issues that have arisen after the
judgment was rendered. Lubbock v. Stubbs, 160 Tex, 111, ___, 327 S.W.2d 411, 415
(1959). “Res judicata or estoppel by judgment does not apply in suits in trespass to try
title to any title that might be acquired by either party subsequent to the rendition of the
judgment plead as res judicata or estoppel.” McCombs v. McKaughan, 195 S.W.2dd
194, 200 (Tex. Civ. App.—Beaumont 1946, writ ref’d)(cit. omitted).
B. The Court of Appeals Never Held the Foreclosure Sale Was Valid.
The Opinion relied upon by Enclave contains no holding regarding the voidness
or validity of the foreclosure sale. (CR220, App.37 – Opinion) Instead, the Court of
Appeals held that there was “no equity in the property” (CR230, App.47 – Opinion)
and that “no summary judgment evidence that the property’s value exceeded the
amount stated on Grapevine Diamond’s bankruptcy schedules, and the property was
38
sold for less than the amount of City Bank’s secured claim” (CR231, App.48 –
Opinion) As a result, the Court of Appeals overruled the “portions . . . of the issues
alleging that summary judgment for City Bank was improper because the foreclosure
sale allegedly violated the stay in Aflatouni’s bankruptcy.” (CR231, App.48 –
Opinion)
Notably, the Opinion does refer to the bankruptcy court’s consideration of
whether an intercreditor agreement sufficiently diluted or weakened the creditor’s
property rights to the point that there was no meaningful property interest. (CR230-31,
App.47-48 – Opinion) Of course, the bankruptcy court would not have made this
analysis if Aflatouni’s Vendor’s Lien and legal title - an asset - was not property of the
bankruptcy estate and thus the subject of the automatic bankruptcy stay.
As a result, Enclave’s motion for summary judgment grounds, including
Enclave’s collateral estoppel argument, fail because the “issue presented in the current
litigation is not identical to the issue in the pending litigation.” See Getty Oil Co. v.
Ins. Co. of N. America, 845 S.W.2d at 802.
C. Res Judicata, If It Had Been Pleaded By Enclave, Is Inapplicable -
Aflatouni Demanded Payment in March of 2017 – Long After the Previous
Litigation Concluded.
A holder of a vendor’s lien possesses superior title and has the right to rescind
the vendor’s lien upon a default by the vendee. Whiteside, 347 S.W.2d at 570. A
cause of action based upon a note that is payable upon demand accrues when demand
39
is made. Aguero v. Ramirez, 70 S.W.3d 372, 375 (Tex. App.—Corpus Christi 2002,
pet. denied); see also Arlington v. McClure, No. 02-06-296-CV, 2008 WL 755072, at
*6 (Tex. App.—Fort Worth June 5, 2008, no pet.) (mem. op.). Thus, until Aflatouni
demanded payment in March of 2017 (CR120, App.36 – Aflatouni Request for
Payment), Aflatouni’s right to rescind the Vendors’ Lien had not yet accrued.
As part of the closing on September 12, 2007, Grapevine Diamond received a
loan from Jonathan Aflatouni in the amount of $2,741,760.51 as reflected on the
Settlement Statement as part of the purchase price for the Property. (CR68:App.3)
City Bank did not dispute that Aflatouni loaned Grapevine Diamond the $2.7 million
when Grapevine Diamond purchased the Property in 2007. (CR162) This loan was to
be paid off on demand, which was to be no earlier that when Grapevine Diamond sold
the property or developed the property itself. (CR68; App.3) This loan accrued
interest at an annual rate of 7.00% simple interest. (CR69; App.4) On July 19, 2013,
Youval Zive, in his capacity as President of Danjon, Inc., Grapevine Diamond’s
general partner, executed a Replacement Promissory Note reflecting the terms of the
original promissory note. (CR69, App.4; CR101) This loan has not been repaid, and
Aflatouni demanded payment on March 14, 2017. (CR70, App.5; CR120, App.36 –
Aflatouni Request for Payment) Aflatouni demanded payment on March 14, 20175.
5 Again, because the demand for payment occurred after the final judgment in the Collin County
case, Aflatouni’s cause of action seeking a rescission of Aflatouni’s Vendor’s Lien had not yet
accrued, and therefore a res judicata defense, if Enclave had pleaded res judicata, is inapplicable.
40
(CR70, App.5; CR120, App.36 - Demand for Payment) The purchase money has not
been paid. (CR70, App.5)
As a result, Enclave’s collateral estoppel argument fails because the same facts
sought to be litigated in the second suit were not fully litigated in the first suit; and (2)
the same facts were not essential to the judgment in the first suit. See Sysco Food
Servs, 890 S.W.2d at 801.
D. SPK and Enclave - the Subsequent Owners After City Bank - Were Not
Parties to the Collin County Lawsuit.
On September 29, 2011, City Bank executed the Special Warranty Deed to SPK
Land Acquisition, LLC (CR102 - Special Warranty Deed to SPK). On October 5,
2012, SPK executed a Warranty Deed to Enclave (CR112 - Warranty Deed by SPK to
Enclave). SPK and Enclave are not parties to the Dallas appeal. (CR220; App.37)
Aflatouni’s Motion for Summary Judgment filed in the Collin County case, the Order
granting City Bank’s Motion for Summary Judgment and the Final Judgment (these
three documents are included as exhibits to Enclave’s MSJ Response), shows that SPK
and Enclave are not parties to the Collin County case. (CR288, 364, 367) There is no
mention of a claim by Aflatouni to rescind the vendor’s lien in these documents.
PRAYER
Appellant Jonathan Aflatouni asks that this Court reverse the judgment of the
trial court that Aflatouni take nothing by his claims, render judgment in favor of
41
Aflatouni on his claims, or, in the alternative, remand this cause for further
proceedings.
Respectfully submitted,
PALMER & MANUEL, L.L.P.
By: /s/ Jeffrey R. Sandberg
Jeffrey R. Sandberg
State Bar No. 00790051
jsandberg@pamlaw.com
8350 N. Central Expressway; Suite 1111
Dallas, Texas 75206
(214) 242-6444/ (214) 265-1950 – Fax
COUNSEL FOR APPELLANT
JONATHAN AFLATOUNI
CERTIFICATE OF COMPLIANCE
Appellants file this Tex. R. App. P. 9.4 Certificate of Compliance regarding
the Appellants’ Brief filed on this date.
I, Jeffrey R. Sandberg, Esq., counsel for Appellants, certifies that Appellant’s
Brief was generated by a computer using Microsoft Word 2007 which indicates that
after excluding the caption, identity of parties and counsel, statement regarding oral
argument, table of contents, index of authorities, statement of the case, statement of
issues presented, statement of jurisdiction, statement of procedural history,
signature, proof of service, certification, certificate of compliance, and appendix, as
permitted under Rule 9.4(i)(1) of the Texas Rules of Civil Procedure, the word
count of this document is 8,635.
/s/ Jeffrey R. Sandberg
Jeffrey R. Sandberg
42
CERTIFICATE OF SERVICE
The undersigned certifies that a true and correct copy of the foregoing
instrument was served by certified mail, return receipt requested, on this 20th day of
December, 2017, upon:
Via E-Filing and E-Mail:
Margaret “Peg” Donahue Hall
Email: peg.hall@dentons.com
Leanna M. Anderson
Email: leanna.anderson@dentons.com
Spencer D. Hamilton
Email: spencer.hamilton@dentons.com
DENTONS US LLP
2000 McKinney Avenue, Suite 1900
Dallas, TX 75201
Via E-Mail (ziv@pacificholdingsgroup.com):
Grapevine Diamond, L.P., c/o its General Partner, Danjon, Inc.
Youval Zive, President of Danjon, Inc.
/s/ Jeffrey R. Sandberg
Jeffrey R. Sandberg
43
APPENDIX
Pg. # Description
1 CR66: Affidavit of J. Aflatouni
6 CR71: 2007 Special Warranty Deed (Vendor's Lien)
13 CR78: City Bank Letter (Sept.11, 2007)
14 CR79: Aflatouni Bankruptcy Petition (Dec. 6, 2010)
22 CR87: City Bank Notice of Trustee (Foreclosure) Sale (Dec. 10, 2010)
26 CR91: Correction Foreclosure Sale Deed (effective Jan. 4, 2011)
28 CR93: Foreclosure Sale Deed (Jan. 4, 2011)
33 CR98: Order Dismissing Aflatouni Bankruptcy (Jan. 12, 2011
36 CR120: Aflatouni Request for Payment to Grapevine Diamond (March 14,
2017)
37 CR220 - Opinion By Dallas Court of Appeals (Dec. 7, 2015)
62 CR915: Order Granting Enclave Motion for Partial Summary Judgment (May
26, 2017)
64 CR921: Final Judgment (Sept. 27, 2017)
68 Continental Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499 (Tex. 1988).
CAUSE NO. 342·280952·15
GRAPEVINE DIAMOND, L.P. and § IN THE DISTRICT COURT OF
AMIR FOAD JOHN AFLATOUNI, §
aka JONATHAN AFLATOUNI, §
Plaintiffs, §
v. § TARRANT COUNTY, TEXAS
§
ENCLAVE AT GRAPEVINE, L.P., §
A TEXAS LIMITED PARTNERSHIP, §
Defendant. § 342ND JUDICIAL DISTRICT
STATE OF TEXAS §
§
COUNTYOF _ §
AFFIDAVIT OF JONATHAN AFLATOUNI
BEFORE ME, the undersigned Notary Public, on this day personally appeared Jonathan
Aflatouni who, being duly sworn on his oath, deposed and said the following:
l. "My name is lonathan Aflatouni. I am over the age of twenty-one (21) years,
have never been convicted of a felony or a crime involving moral turpitude, and am fully
competent to testify in all respects. I have personal knowledge of all facts set forth herein and
they are all true and correct.
2. When Grapevine Diamond, L.P. purchased the property in 2007, it received
a Warranty Deed with Vendor's Lien (the "2007 Deed") retlecting the retention of a
vendor's lien by the Vendors. Further, the 2007 Deed reflects the Vendors' Lien would
be in effect until City Bank and the Vendors were repaid, was retained in favor of the
Vendors and City Bank, and partially assigned to City Bank so that the Vendors would be
subordinated to City Bank until City Bank was repaid. Thus, City Bank had actual
Affidavit of Jonathan AOatouni
1:\l4223\Pleadings\Affidavit AOatouni.J70403••doc Page 1 of 5
EXHIBIT A
Appendix to Appellant's Brief - Page 1 of 69 66
knowledge of the property interest held by the Vendors in the form of the portion of
second-priority Vendors' Lien that was not assigned to City Bank. A true and correct
copy of the 2007 Deed is attached to this Affidavit as Exhibit A-I.
3. Further, I and Grapevine Diamond communicated to City Bank, before the
real property was sold to Grapevine Diamond, that Grapevine Diamond would be
providing additional consideration to me of $2,740,700.51 at the time of the closing. In
response, City Bank confirmed in writing that City Bank knew I would be entitled to
receive $2,740,700.51 of sales proceeds at the time of the closing. A true and correct
copy of City Bank's September 12, 2007 letter to the title office is attached to this
Affidavit as Exhibit A·2.
4. I never exchanged the $2,740,700.51 of sales proceeds at the time of the
closing that was owed to me for equity in Grapevine Diamond.
5. On December 6, 2010, Aflatouni filed an Original Petition in the
Bankruptcy Court of the Northern District of Texas under chapter 13, in cause no. 10-
38538-sgj13 (the "Bankruptcy Petition"). A true and correct copy of the Bankruptcy
Petition is attached to this Affidavit as Exhibit A-3.
6. On or about December 9, 2010, in violation of the"automatic bankruptcy
stay, City Bank filed its Notice of Foreclosure Sale for a January 4, 2011 sale of the
property owned by Grapevine Diamond, L.P. and the subject of Aflatouni's second-
priority vendor's lien. A true and correct copy of the City Bank Notice of Foreclosure
Sale is attached to this Affidavit as Exhibit A-4.
Affidavit of Jonathan Anatouni
I:\14223\Pleadings\Affidavit Anatouni.170403•.doc Page 2 of5
EXHIBIT A
Appendix to Appellant's Brief - Page 2 of 69 67
7. On or about January 4, 2011, in violation of the automatic bankruptcy stay,
a substitute trustee appointed by City Bank conducted a foreclosure sale of the property
owned by Grapevine Diamond, L.P. and the subject of Aflatouni's second-priority
vendor's lien. The 2011 foreclosure sale sought to eliminate Aflatouni' s property interest
as a second-priority lienholder regarding Grapevine Diamond, L.P.'s real property. A
true and correct copy of the Correction Foreclosure Sale Deed describing City Bank's January
2011 foreclosure sale of is attached to this Affidavit as Exhibit A·5.
8. I attended the foreclosure sale on January 4, 201 L Before the sale began, I
informed City Bank's trustee/substitute trustee conducting the foreclosure sale of the Property,
and also the City Bank employee that was present at the sale, that I had filed for bankruptcy
protection. The trustee/substitute trustee and the City Bank employee told me that my filing for
bankruptcy protection was unimportant.
9. Following City Bank's issuance of the Notice of Foreclosure Sale and the
January 4,2011 foreclosure sale, my bankruptcy proceeding was dismissed on January 12,201 L
A true and correct copy of the Order Dismissing Chapter 13 Case and Notice of Dismissal is
attached to this Affidavit as Exhibit A·6.
10. As part of the closing on September 12, 2007, Grapevine Diamond executed a
promissory note (the "Note") when Grapevine Diamond received a loan from Jonathan Aflatouni
in the amount of $2,741,760.51 as reflected on the Settlement Statement as part of the purchase
price for the Property. This loan was to be paid off on demand, which was to be no earlier that
when Grapevine Diamond sold the property or developed the property itself.
11. As of the date hereof, I am the sole owner of the loan evidenced by the Note. I
have not assigned, pledged, sold, endorsed or in any way transferred or hypothecated the Note or
Affidavit of Jonathan Aflatouni
I:\14223\Pleadings\Affidavit Aflatouni.170403..doc Page 3 of 5
EXIDBITA
Appendix to Appellant's Brief - Page 3 of 69 68
any interest therein. The original Note was duly executed and delivered by Grapevine Diamond
to me on or about the date of the closing on September 12, 2007, but the original Note has been
inadvertently lost or misplaced by me, and I have been unable to locate the original Note despite
diligent efforts to do so. I cannot reasonably obtain possession of the original Note because the
whereabouts of the original Note cannot be determined. I would have been entitled to enforce the
Note when loss of possession occurred . The loan from me to Grapevine Diamond was due on
demand, which was to be no earlier than when Grapevine Diamond sells the Property or
develops the Property itself. The original note stated that Grapevine Diamond promised to pay to
the order of Jonathan Aflatouni, the sum of $2,741,760.51, together with simple interest at the
rate of 7.0% percent per annum on the principal commencing on September 12, 2007, payable:
(1) in full should Grapevine Diamond, L.P. sell the Property; or (2) monthly payments in the
amount of $35 ,000.00 on the 15th day of each month, beginning no less than 30 days following
the date of demand with the balance due upon the sale of the Property, at Grapevine, Texas .
12. On July 19, 2013, Youval Zive, in his capacity as President of Danjon, Inc.,
Grapevine Diamond's general partner, executed a Replacement Promissory Note reflecting the
terms of the original promissory note. A true and correct copy of the Replacement Promissory
Note is attached to this Affidavit as Exhibit A-7.
13. On or about September 29, 2011, City Bank executed and delivered a
Special Warranty Deed regarding Grapevine Diamond's real property in favor of SPK
Land Acquisition, LLC. ("SPK"). A true and correct copy of this deed attached to this
Affidavit as Exhibit A-S.
14. On or about October 5, 2012, SPK executed a Warranty Deed regarding
Grapevine Diamond's real property that is the subject of Aflatouni's Vendors' Lien in
Affidavit of Jonathan Aflatouni
I:\14223\Pleadings\Affidavit Aflatouni.170403••doc Page 4 ofS
EXHIBIT A
Appendix to Appellant's Brief - Page 4 of 69 69
favor of Defendant Enclave. A true and correct copy of this deed is attached to this Affidavit
as Exhibit A-9.
15. The loan to Grapevine Diamond that is the subject of the Vendors Lien accrued
interest at an annual rate of 7.00% simple interest. This loan has not been repaid and no demand
for payment was made regarding this loan until I made a demand for payment on March 14,
2017. A true and correct copy of the demand for payment is attached to this Affidavit as
Exhibit A-IO. Grapevine Diamond has failed to make the required payment of this loan,
which is now due and outstanding.
FURTHER AFFIANT SA YE~
SUBSCRIBED AND SWORN to before me on thi~ day of April, 2017, witness my
hand and official seal.
~~~~ ~
NOTA@PUBLIC in and
State of Texas
Affidavit of Jonathan At1atouni
I:\14223\Pleadings\Affidavit Anatouni.170403•.doc Page 5 or5
EXmBITA
Appendix to Appellant's Brief - Page 5 of 69 70
Electronically Recorded Tarrant Co unty Texas
OffICial Publ ic Records 2007 sep 26 09:28 AM
Fee: s 40 .00 0207343375
Submitter: ACS INC 7 Pages
Suzanne Henderson
No.:ne£O~:CONFIDENTIALITYRIGHTS: IF YOUARE A NATURAL PERSON,YOU
MAY.·REMOVE OR STmU ANY OR ALL OF THE FOLLOWING INFORMATION
FR~ ,tmSINSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC
RECORDS:<",YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE
NUMBEIt / .' .'" \ . .40-
wTdt~,.·.~;gy~:s~ Recording Fee' slJr
Vendee's Addres.'b.•mi·.. ···,···\ .
Mter Recordb'ig"RetlJtn T~ , ,:·...
Grapevme DllllnOn~t 'L.P.;'a':r~~; limited partnerslnp
13733 Omel!l1 Road .....·· .....-- r :..
Dallas, Texas75244 ./ '... --:..'.'."
..•....~..:
'. "
.-. . .
\
THESTATE OFTEXAS' ! § :. .: .' '.
'-. ..§, ..: ',,' .' Special Warranty Deed
COUNTY OFTARRANT" ·r-' : ,' ->_'" (Vendor's wen)
\ ' . : " ,.. ::.~.; Definitions
ThefollOWIng terms
instrument.
shall'~·:V~.~i;~~~I~~
."..:" . .
indicated, whercverthese termsarcusedm thIS
.' .>,
DateHereof. The effective date ofthJsihstrument, which shall be September 10,2007
.." ." ) :
Vendor: Jonathon AflalOuni ~d wlfe;~a S. Aflatouni
Vendee' Grapevmc Diamond. L~~ ;-a ·T~~ ·himted pannmlup
13733 Omega Road . , _.: i
Dallas, Texas 75244 ,~_ '.
v, ",
...-..•. ';
Lender: CityBlllIk Texas . . .'.
Attenllon: Angela W. Carona \ . !........ ". ..,
7800PrestonRoad, SUite 201 ., -_ : .
~~~~4~~~~ci:;O~~(972)491-1477 '',_. ;:~ '. "' . ' < ' .'.: .,' .
..........~.....
Trustee MIke Liller .... i. .
"
.......... . . . "
" • i ~:
"
Note Date: September 10, 2007
. ... .
'
Note Amount 56,375,00000 . .. . .. . ", ~
'! "'!..) !
NoteMaker Vendee \, • ..•., \ '0 ,..'-:'
... . . . ..... ,' . ~ ..
Note. That certalQ Promissory Note 10 the onginal princlpa(s.uai::~r tJje . ~Dte
Amount, datedas of the Note Date,executedbyNotc Makl:r;'payabtc to the
orderof Lender. ...., , , :.
Ci ty bank l\188zwd2
v.r
Special W IUlnlt Deed - Pigi I
EXHIBIT .-o
Appendix to Appellant's Brief - Page 6 of 69
71
Deed ofTrust: That certain Deed ofTrust, SecurityAgreement andAssignment of Rents,
Leases, Incomes and Agreements dated as of the Note Date, securing the
Note, executed byNoteMakerto Trustee fur thebenefit of Lender, covenng
theProperty.
. '- .•... .:.::~.... :~:-.
'
EXcePtion5:'.."...... Theexceptions from thecoverage of Vendor's wamnties oftltle set forth in
,.' ~. ,., -. .this Instrument willch areas IbUows:
. . .." -\, :.
(.. , ." .:'(I y ' "-Ad valorem taxesforthe year 2007 andsubsequent years notyetdue
....."/ ·:··.··and payable.
.." ,
"....- '.
(' . ', ",
..... .. (2J Rlgbf;-of-way easement granted 10 Texas Power& LIght Company,
. . \ :'retardedin Volume 8628,Page2381,oflhe DeedRecords ofTlID'IIIIt
, . :,' \:ounty, Texas; as affected by Volume 10062, Page 2147, Deed
..: ..' ·'·RecO!;d!, Tamtlll County, Texas.
~3) ; ': E~~~~ -\Ornght-of-waygnnlCd10 TClW Power& LightCompany
... 'oIDa/hfS,'r e'ias,recorded inVolume 8628, Page2393,DeedRecords
·'ii(.Ta·mIl1t·Counly, Texas; as affected by BII1 of'Sale AsSIgnments and
Convlly~; 'dated June25, 1990, recorded In Volume 10062. Page
z'r~1, D~R~ .~fTmant County, Texas,
(4) ~:n;ro~·~~t~or.waygnnlCd toTeus Power& Light Company
ofDallil5..Texas;recorded.lJ1 Volume 8628, Page2399, Deed Records
as
ofTarrantCounty, Te1W; affected byBillofSaleAssignments and
Conveyance, date!J·]une 2S, 1990, recorded In Volume 10062, Page
2147,DeedRerord$-ofT8mhtCounty, TClt8S.
t ,_ .'
(S) Right-of·Way '~~.\' ~~l:I:uted byWilham D Dmfeldt andWife,
Peggy 10lhDfeldt;' R"oi1aid Wai't:Jclc and WIfe, Maxme S. Wamclc 10
TexesPower & Light GOmp'any, dated July 2, 1986, filed July28,
1986, recorded In Volwi-n: 8628, _~ge 2375,of the DeedRecords of
Tarrant County, Texas> - ' ;""'." '. .\
(6) Right-of-way easement, ellcchle!J'by"Wtlham D Ihnfeldt andwife,
Peggy Jo Ihnfeldt to TexasPower.. & 1,Ight Company, datedJuly2,
1986, filedJuly 28, 1986, recorded .iii,Yolo,me 8629,Page I, of the
Deed Records ofTmant Coiuity, Te'Xasj"a,'notedon survey dated
Augustlj, 2006and prepared biChatles G.,Stames, R.P.L S. No.
2468. .: '''; 'j
. . .. ' .:..-.,
..'
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clly bllt 111881twd2
Sprdll \hrnary Drrd • "llr Z
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Appendix to Appellant's Brief - Page 7 of 69 72
(7) RJgbt-of-way easement, executed by Wilham D. Dmfeldt, Peggy
Ihnfeldt and Marsha Lynne Ihnfeldt Cokerto Texas Power & Light
Company, dated July 2, 1986, filed July 28, 1986, recorded m
, .' '.
Volume 8628,Page2387, oflhe DeedRecords of Tarrant County,
,. '
Texas; as notedon survey datedAugust J5, 2006and prepared by
Charles G Starnes, R P.L.S. No. 2468.
"
.......
. .. ~ .\ (8) The followmg itcm(s) affecting the subject property, as shown on
" - • • , W> . - :. _ .
survey dated August IS, 2006 and prepared by Charles G. Starnes,
"\ . :'
. ' '.
: R.P.L.S. No.2468'
r: . . . ..
.....' :. , Tbatpornon ofsubJectpropenyIymg withinAndersen-Gibson Road.
:
1 (....
-: -,
/ ' "~
• " . / ··' ·jtjghts otclanns, ifany, ofadjomingpropcrty owner(s) In and10 thai
"-.. ./ ..... '(""portlonofmsurcdproperty Iymg between the fence andtheSouth and
...•.. .', .: ..... W'ellt property line(s).
Consideration. ":.:All'of~~~':;;IIOWing eonsidesauon, lhe lCCelpt and sufficiency of which are
. . ..' h~y.acknQwledged andconfessed:
~~{,:·: : ·~~·~uu.s. ~S I0.00)cash in handpaid by Vendee to Vendor.
(2);...., "n~':~'~~a:~~ and delivery by Vendee of the Note, secured by the
· -Decd .ofJ:R1~ wbich NoteandDeed oCTrust is addibonally secured
b-X' ttiC.V~OE~S Lien ("Vendor's Lien") herein retained.
'~. ,': _:: :·~.:~:.<.Gr~
For and IQ consideration of ~.~ Consldcntoo",".Vendor has granted, bargamed, sold and
conveyed, and does bythese presents hereby grant,bai"gaUi, sell andconveytheProperty to Vendee,
subject only to the Exceptions Vendor wammts"co1(e~ts and represents to Vendee that the
Property docs not consunne anypart of thCll'i o.r. thei.t.~ve spouses' busmess or resideanel
homestead and that the JOJnder of Vendor.~ itlspccl!Ve spouses is nol required to effect the
conveyance of the Property herem to Vendee;, ~b ..gilr.lOlt-,comprislDg Vendor haVIDg complete
au!honty to make thisconveyance. "
. 1 .."" ;'
Habendum et TeG~dgDr- ' ..
,.' '; "
To haveandto holdtheabove-descnbed premises, 1O~C!" withall and singularthe rights
andappurtenances thereto inanywise belonging, untothesaidVend~e;'~d untoVendee's successors
andassigns forever; andVendor doesherebybmdVendor'sllem(suc;cessors andassigns to wamml
and forever defendall and smgular the said premees unto the ~!d'v~ixIee, and unto Vendee's
successors andassigns, agamst everypcrsoa whomsoever lawfully'c~lriiingpr 10elaunthesameor
anypartthereof; by,lhrough or under Vendor, butnototherwise, S\!bJ~( hqwc~r, totheExceptiOns
.:." r :.: i:
Vendor'. Lien "' , !
....: :
. .-.-
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Oily back I\l8llwdl .... " I ' "' ·.
Sped.1 WarnalY Dud ·"lIe,) . . .. .../ :
" . ' \~ ..~:::~ "'\
... . .
.....:
..... .... . ... . .
.," ;:
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-, »
Appendix to Appellant's Brief - Page 8 of 69
73
But it is expressly agreed that the Vendor's Ucn, as weU as the superiortitle in and to the
abovo-described JlfllIDiaes, is retained against tho Property, prcmi8C8 and improvemcnta until the
Noteand SecondLie.n Noteand all inte.n:st thereon are fullypaidaccording to the face, teoor, effi:ct,
and reamps' thereof, whenthis Deed shallbecome absolute, saidVendor's Lien being retained in
favor .of Lender and Vendor, as if same had beenretained by Vendor and assigned by proper
assigDmcnt WJtoLcnder, withoutrecourscupon Vendor, Lender beingthusfully subrogatcdtosame.
T)ic piiItllurilf~ Vendor'a Liensecuring Vcndorsha11 besubonlinatedmall respllCts to thcPOrtlOD
of'.lheV'qgf'~ LiCl18ccuring Lender.
_-_ .' .
..... . .. ~ /. .. ::
\
"
. ".: Execution and Effettive Date
"v .: ,
ThJs"~=till effective asoltho Date Herea£. Thisinstrumentwasexecuted 011 thedate
or dates or·tfi.,..~redgment or respective aclmowledgmenta set forthbelow.
/ ., : .i.:
:
»: .
.... "
'·M ~. .:' .
Vendor:
........ : .~ ..
,.' ,"
.,'
. . .... .
THE STATEOf TF.XAS ~ <,.<.\~," ,
COUNTY OF h4"«I4I'f § ':. <:::'-'-'..': . "\..
Before mll-fl:.1t!emdi:n'#~Ob1ry pnnted name) on this day peIlIonal1y
appeared Jonathm Aflamuni. 1m~~JllilOC pro~ed to me to be the person whose name Is
subscribed to the foregoing instrumentand aeJmowl'edg~ lQme that he executed the same fur the
purposes and consideration therein expressed...." ....,; .!
'. :' . · ·..jL
Given under my hand md seal ofoffi~ '~'I '~«laY of ~~.A«..2007.
,,,,.,,-,,,.:a"~
Ron "'AlIT KEMDRtClC
N-vPl.llIIc.Sla1eolT_
MyCQl1'IllIIsoane-
June os. 2001
~F~ .
..,
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. .. . . . ....'
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Appendix to Appellant's Brief - Page 9 of 69 74
THE STA11! OF TEXAS §
§
COUNTY OF '];;ue of t
..' .a'~~~ me ~ ~ 1'J'Ju¥.."{"J,,,'.4!NotBty printed name) 011 this day personally
app'~ 'Razia S. Afla.toUlli, 1cnoMa to me or proved to IDll to be the pcrson whose name IS
suPscl'ibc«tto ~ll'roregoing malnmlcut and acknowledged 10 methatshe excc:utcd thesameforthe
ptiJposes'~~ c9~deratiOD therein expressed,
-,...-Gi:~; ~J~ my hand and sealofoffice this ~daY 00;,,/;..,..42007.
11l~~\';~~:'-' .
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Appendix to Appellant's Brief - Page 10 of 69
75
EXHIBIT "Act
Being ~.tr8~·t·Of land situated in tbe H. SuggsSurvey, Abstract Number 1415in tbe City of
GrlJpe'1ne~ 1'arz:antCounty, Texas. Said tract is also an assemblage of six individual tracts
as 5how~..Jre~J.lfalld in total described more particularly as follows:
B~~I~~i~~~} ...e U.S. Army Corps of Enlineen monumentatop a square concrete post
10cated:aUbe 'anoSt easterly soutbent corner of a 37.59acre traet of land described as Tract
No. A-3A '.~.,a;.De~i~ra,lion of Taking by tbe U.S. Army Corps of EDgineen and being a part
of tbe same I.Dd··coDv.ey~. ~ Mn. BIrdie Elizabetb Brown by Mrs. Lola Buckaloo by deed
dated 7 Decetl\ber.1934 and .recorded in Volume 1238 at Page 373 of tbe DeedRecordsof
Tarrant CountY~::re~a!ll;,~.id··6t~11 monument also being at tbe soutbwestcorner of a 0.23
acre tract acquired·by,.agr:~e.rite.iit·,"'om tbe U.S. Army Corps of Eng!neen•
.." - ~ ." ... " ,, - .. . .... ,."
THENCE North 01 ·de~r~·~:~~utes 58 seconds East along the east Jlne of the U.S. Army
Corps of Engineen tratfaiJd.Q·~ West I~~e oftbe above said 0.23 acre agreement tract a
distance of 642.56 feet to • 112.~n·cl'" ir9D .rod (ound ",itb cap stamped SCI 2466. Said point
also being the northwest COraef: .or~ 0;99 acre parcel of land described In a deed to W.D.
Ibnfeldt recorded in Volume 3:B.97;.·.P'.ag~ '1~ or tbe DeedRecords and also being tbe
southeast corner of a 108.72 acre·p.ar.~ei;of land··described in a deed to HIA GrapevineJoint
Venture recorded in Volume IJn5,-p~~505. onhe Deed Records of Tarrant County,
T e x a s . ··-<-.··· . ...
-.
'- '
..'
THENCE North 89 degrees 56 mlDutes 30 ~~o~dl ~~t along tbe north line of said Ihnfeldt
parcel a di!ltance of 378.84feet to a 1/2 in~ iI!PiI. rod set with cap stamped SCI 2466,
passing tbe northeast corner of tbe IhDfeldt·.par~J.~t 34.0.87 feet. Said comer being In tbe
west liDe of a City of Grapevine, Texas State Rlgbf~r·w8y Deed recorded In Volume 12747,
Page 496 of the DeedRetords of Tarrant CountY, Teus.. '
...." ..
" ," .
THENCE in a southerly direction along tbe west Iin~o(the.~aJd Street Rigbt of WayDeed
tbe foDowlDg: ' ..._ ~'.':~:. ..::::'.,..,..
...... .
Soutb 00 degrees OS mi.ute5 18 seconds Easta distance o!.ziii9:
.'
·re:d to a PK nao found.
' ",,::-
South 90 degrees 00 miD utes 00 seconds East a distance Ofl'i~~:.~10 ~-l/2 inch iron rod
found. .' ~ ...' ,.:: -~! ;
\" ~':'. .' ~ .
. .. ". '
Soutb 02 degrees 06 miautes 36 seconds East a distance of 437.52 reet to ~ ll; i~ch iroD rod
Jet witb a cap stamped SCI 2466. . ' . . :'
\' ::'~:~~\" .<~" " >-... ..
South 16 degrees 21 miD utes 16 seconds Westa distance of153.07 feet to ll(il2·~:DCb .h-':)I;vod
set witb a cap stamped SUR-TEX 2466. -: ·<5· ..· >
• • • •• •• • , . , o' ~. . '.
THENCE North 69 degrees30 minutes 28 seconds West a distance of 39.53 feet .t~~ mag
nail with sbiner stamped JPH Land Suneyiag at tbe most soutberly corner of a·3.15 acre
parcel of land described In a deed to William D. IbDfeldt alld Ronald Warrick recorded in
Appendix to Appellant's Brief - Page 11 of 69
76
Volume 5008,Page 257of the Deed Records of Tarrant County, Texas,
THENCE along tbe south and west lines of said Ihnfeldt I Warrick parcel and alongthe
north and east lines of a parcel of lind describedin a deed to Carter Grapevine Partnen
Document No. D204189024 recorded io the Deed Records of Tarrant County, Texas the
rollowio~; / '"
No~tli'12 'd~r~ 21 minutes 29 seconds East a distance of 112.30 feet to a 1/2 Inch iron rod
fo~net·:witlfc.ap·Stamped JPH land Surveying.
Nortb .J.l.d·~ 23 m.lnutes 12seconds West a distance of 128.2J feetto a 5/8 incb iron rod
found• ..... . '.' ... ,.:~.' ·.. ··~.i
South 86·rlegre~·~.1.. miDutes 10 seconds West a dlstaoce of 221.12 feet to a 1 Iaeh pipe
fiound. :. . .. .",.....- ., ' .',
~." :.
Nortb 00 d~.,2i ~D~teJ-.OO seconds East a distance of 373.70 feet to a 111. Inch Iron rod
found witb (3)J..sta.Ptd SlJ~~J'EX 2466 at the northwest corner of the said Ibnfeldtl
Warrick tract, sa~(fp.oiDt;:*"so. .b~ng the southwestcorner of a parcel of land describedto a
deed to James RolaiJ~. Up.Qn:,,~d·.wlfe Joyee Ann Upton recorded in Volume 6204 Page 786
of the Deed Recordi::91·Tarra.p.tCounty, Texas.
..... .." .
THENCE North 01 delr~:i;-iiJ~~ilt~. 4'} seconds West along the westIiDe of the said
UptOD tract and the east Ii~e·o(tile'..slli~.earter Grapevine Partnen tract a distaoce of
140.85 feet to a 1/2 incb Irolfr~a ··rO.UD~Lwith cap stamped SCI 2466, said point beingthe
northeast corner of the said C~rter.-GJ:apem.e Partnen tract and the southeast comer of
the above said 0.23 acre agreem~t-~~Ci..,j ' .
THENCE South 88 degrees30 m~:~,::';;:~~~'~dl
.West aloDg the Dorth IiDe of the Carter
Grapevine Partnen tract aad the loutliilne of.tJn!"ab~ye said agreementtract a distance of
31.70 feet to the POINT OF BEGINNING .• II'd c:onti,JniJlg 451.588 square feet or 10.39
acres of Jand. "\. ::.: .,' .
-. _ :..~.: . ,
NOTE: The Company is prohibited from insuri,Bg tbe:.area or quantity of the land
described hereiD. Any statement in the above legai'~riP-t~on oftbe area or quantity of
laDd is not a representation that sucb area or quailtitj:·fj ~ofr~t, but Is madeoDly for
information ;'-. !....•., \ c ! .
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Appendix to Appellant's Brief - Page 12 of 69
77
3eprint Page 1 - 9/21/2010, 11~13am City Bank Texas Archive Copy
/ ;; Is awaret111l1 JonathonAflatouniwill be the one who will be entitledto
the $2.740.700.5 1 of sale proceeds derivedfrom the sale of tho 10.39aen: tnlet of IlIIJd to
Gropevine Diamond, LP. (31lhough he may electnot to toke cash out of this closing for
the purchase of the property).Cit}' BankTexas is also aware (harMr. Afl:ltouni hns
reached linapparent understandtng with the pDrtncrs of Gl'3pcvinc Diamond. L.P.that Mr.
Ailatouni will n:invcstthosesalo proceeds with GropcvincDiamond,LoP. in cxchlUlge
for 3Il equity interestin the partnership. ot some Interdate in connection with the
subscqucat development of the property. it is our understanding Mr. Atlatouni is not
currentlY:l partner of Grapevine Diamond, L.P. If this informntion ill norcorrect, please
advise,
CitY BankTexashllll authorized you to proceed with clolling in accordance with tho
Escrow Instructions previouslyforwarded 10 you.
>
........ G300216G
EXHIBIT '( /"
----~---
Appendix to Appellant's Brief - Page 13 of 69 78
vd::;~
,~I II) fnlela I Form I )(41'10 )
I U-J~~.j~-SgJl J uoc 1 Filed 12/06/10 Entered 12/06/10 13:17:26 Desc Main
1""'\ n. .~ 0
I vrrrn ST",Tr.~ R"N"RI JPTrV ('milT '"
VOLUNTARY PETITION "
~ame ol~.,b1or (If 'l!.dlVlduaJ, eruer Last, FIIsl. Middle): . ~IJme or' Jam. Debtor (5 pou"" I II...1. First. :>1Iddle,:
F ..... 41'... '1-,"':tt.. ~) "",,"tV
,\ 11 Other Names used by the Deb,or In rhe last ~ years .\ 11 U,her Name. usod by lheJomt Debior In the Ian ~ yean
(include married, maiden, lII1d trade names): Imclude married. malden. and trade names):
r:::,.,,v .~ \~.""""' I
r...W'J, •J /Z.4-O
Last tour digits of 500. Sec. or IndIVidual- raxpayer I.D IIT[N~'Complete EIN I.~,l tour digtts or'Soc. Sec. or Indlvldual-Ta.p.yer I D. if r1N)/Comp,eteErN
(,fmore 'han one. Slate.U): (If more than one. stale alii:
~7S'7
i"- c1 \.l _l 11: ·~." III Od nur t .~ ~o . .JIll.! "", UCl:L, L ay • •,I,wi ~w,c:, . ,ueol Adoress01 JOInI Uebtor INo, and Sueet. City. and State):
.~ )0<> D.:>,f,l.,4.L. Ci ~.'V1 r
Fl .... t/~il- IV\." .,j,./t.J 0- V-IP CODF.'7 ra.uJ. 7-IP CODE I
County at' R..idence or of'rhe Principal Place of BUSiness: CuuolYof Residence or oi me PnocrpaJ PIace of Business:
Oe.,N'<:>'rJ
Malltng Add= oi DebtorIii different rrom sueel address)' \ l.uhng Addressoi 101m Debtor Ill' d,ll'renl trorn street addreSS ,:
r>, U . .]'J)f.. Cj ~1
LL~1rJ'
Ca /4- .TA'
1.IPCODE 7.AI~ :l.IP COIJE
Locauon Of Princl~al Assels of Husmess Oebtor (If drrferent trom street address above):
rllPCODE
r ;pe of Oeblar .' olun or'Rusiness Lhapler of Bnkruplcy Codo l:ndor Whicb
IForm otOrgamzanon) ICh«k one box.] rhe Perillon .. Filod /Check ono box.)
(Check ou box.)
0 Health Care BUSiness 0 Chapter 7 0 Chapter IS Petman for
r:a IndiVidual (includes Jnint Dehton) 0 Single Asset Real Estate as derined in 0 Chap\er 9 Recogmnon of a foreign
Su EJrhlbl/D onpaf?t} of/hll/orM. II U.S.C. ~ 101(51BI 0 Chapter II .\,I' ln Proceed,"g
0 0 0
0
Corperanon (includu LLC and LLP)
Parmership 0
R.. lrnad
Stockbroker @- Chapter 12
Chapter IJ
Chapter 15 Petition tbr
Recogmnen of a Foreign
0 Other (If debtor 15 not une oi the above eruuies, 0 Commoditv Broker Ncnrnam Proceeding
check thiSbox and state type of .nury below.) 0 Clearing B'ank
0 Other ".Iuro 01 Debl.
(Chcclc. one box.'
r... Ellmpl EDIiI)'
ICheck box, Ifappheable.) Cd Debts llI'C pnmanly consumer o Debts are primarily
debts. defined in II USC. busrn... debts,
0 Debtor is a tax-exempt orgamzanon ~ 101(8)"" "incurred by an
under Title 26 otrhe United States individoal enmanly tor a
Code rthe Internal Revenue Code]. personal. fa/lllly. or house-
hold cureose."
fili n ~ foe (Clu:ck une box.) Chaplor II Doblon
Cheek one bos:
if Full Filing Fee attached. 0 O.htolisasmallbusrnCS3deb,orasdetined in II U.S.C. ~ 11l1l51D1.
0 Debtor is nora small b""rnc,.. debtoras derined in II U.S.C. ~ 101(51D)
0 Filing Fee to be paid rn Ins!allmentslapphcable re rndiv;dualsonly' . Mus' omu:h
ng ned applicancn tor the court's considerauon cenliving that the debtor is Chock if!
unable 10pay lee except In '"SIalImenu. Rule IOO6lb). See OlliciaJ Form JA. 0 Debtor', a!!gregatenoneonun!!enlliquidated debts (exc:luding debts DwedlD
instders or artihates} arl: le.. Ih.ni2.l4l,J00 (amo"'" ,ublte/to odjUlun,",
0 Filing Fe. walYer requested raeplicable tDchapter 7 lOdividuDl. nnlyl. Mu,t ,m 4-III /IJ and everv /hrrr :WOJ"J /h.rtQ/i.,~
.utach SIgned upplicauon lor the coun 's conslde"'t;Dn. See Ullicial Form lB. . .................. ................................ -- .......... -......
Ch.ck .11opplie.ble bo...:
0 A plan IS being tiled wuh Ihis pennon,
0 Acceplancesof the plan were solicned orepetltlon irom one or morl:classes
"((rednor.!. lO accordance wnh II V.S.C $ Illfifb).
::,ra,lllleoIiAdminlstnrl",laform.lIDR 11IIS SPACE IS rDR
COURT GSEONLY
0 a ebtor eSllmatesthai funds WIll be available for distrtbution 10unsccurl:d creditors.
fA Debtnr esllmates Ihat. alter any e,empt prDpenry 15 .,cluded and adminlstrallve e,pense, pallliherl: Willbe nD fund. a,all.ble lbr
.! 1 ~ r n b u r lO n to unc;ecured credlrnr.c.
~malcd N'DberOfcrcoO'"
0 0 0 0 0 0 0
I·H 51] · 9 ~ 100 · 199 : CO·999 I.U()(). 5.\J01 - 10.001· 25.00 1- ;0.1)01· l)vcr
i .QUO :cJ.llOO ~5 .000 50.000 100.000 IUO.OOO
E,tlmalCO A>seIS
0 0 0 Cd 0 0 0 0 0 0
WID 550.001 to ~IOO .OOI to 5500.001 SI .OOO .OOI 510.000.001 S50.000.001 S100.000.001 5500.000.00I MDre than
550.000 SIOU.lIUO 5501l.UOO 10SI to SIO [0 SSO [0 SIOO tDS500 '0 SI billion ~Ibrilion
'lillOn mIllion Inllhun Imillon million
t:~limated Liablhtu:s
0 0 0 '3 0 0 0 0 0 CJ
SO 10 ~50.00IlD 5100.001 to 5500.001 ROOO.OOI 5 I0.000.00I !>50.000.UO I 5100.000.00I ~5UO.000 .OO 1 ~Iore ,han
55U.000 SIlIU.COO 5500.UUO [051 10510 '0 \5 0 ,,, SIOO 'n S500 tn SI billion 51 bIllion
,.,11111"" million mIlton nllllon -nrJlion
(" LI
r- '7
EXHIBIT---.......__
Appendix to Appellant's Brief - Page 14 of 69
79
Doc 1 Filed 12/06/10 Entered 12/06/10 13: 17:26 Oesc Main
:11 IDl!iclOl Form II 1 ~i1 0 1 n~~,,~~~+ O~~,.. ..., ,..1 Q . ' ..; ~ 2
Voluntary Petition .\ Jme 01 UeMoris);
(n riJ ""fiI' mUJI b. Cam ole/PrJ omi fiI.d In ,v.rv cose.J
III P.io. Rank.unrev Cu.. t'i1td Wirbin Lufa \·U" Ifmore lhOll IWO. arracnadditional sheet.)
Lucanon Case Number OJI. FIled:
Wh""e Filed:
Location Cue Number. DJIC FIled:
'-"here FIled:
"endin H.nk.unlev Cln fil ... bv anv Sno .... Pann.r, 0 r, \,"II.t. or rbi' Dehlo, rlf more ,han one. Jllach additIonalsheet.'
Name at D.bIOr. ease Number: 0al. filed:
~ Relanonshro: 1'''L'e:
bhlbllA ~lhibil 8
I ro he! completed if debtor IS an Individlial
I To be eernpteted If debtor I. required to file aenodic reports (e.g.• rorms 10Kand IOOl '.' hose debls are primanly consumer debu.)
' " Ih the Secunnes and E"hangc COmml!!IOn pursuant 10 Secrion IJ or 151dlof the
Secunnes E"hange Act oi 1934 and ISrequealln!!rehefunder chapter I I.) I, the :Illarncy lor the penlloner named in rhe toregoing pennon, declare thll! I
have Informedthe pennoner that ' he nr she] may proceed under cllllpler 7. II . 12.
ur I J uf tirle I I. Umted S~Jl" Code. and have exetamed the ",lief..ailable under
each such chacrer. I iunher cen'l)- lhal I have d'elivered 10 rhe debtor rhe nonce
IcqUIn:U by Ii u .S,C. ~ 341(b).
0 E..hlbil A ISattachedand made a pan of this pennon, x
~Il:!narure of Anornev ror Dt!hlnr1~) i nUle'
E,hihit C
Does the debtor own or have oO=lon ofanv propeny Ihat pose! Dr I!I alleged 10 pose a Ihreat of Imminent and idenutlable harm 10 publichealth or safely?
0 Yes. ond ExJllbnC i, auached and made a pan of th!! pennon,
0 No.
ElbibllD
(To be completed by every indiVidual debtor. If a Joint pennon ISriled. each spouse must completeand anach a separate E.xhlhil 0 .)
0 Exhibit D completedand Signedhy the debtor is arraehedand made a pan orlhrs pennon
If Ihis is a jOlOt pennnn:
0 Exhibil D also completed and signed by Ihe JOInt debtor IS "niched and made a pan oithlS petuioe,
Inform.llon He••rdln. the D.btor- \·enu.
(Check anr applicable 00' )
g'" Debtee ha! been dormeited Dr has had a resilience. pnnc ipal place of business, Dr prrnclpal assets in thIS Disnna tor 180 day, Immedralely
"r"" cUlOBthe dare orthia pennon Dr lbr a longer pan of such ISO days than In anv other Distnc;
0 There ia a bankruPtcy case ecneem ine debtor's arflhare, general panner. or parrnershlppendmg In thrs DIstrict
0 Dehlor .. a d.btor in a 10"'lgn plOCeedrng and has Its prinCIpal place of hoSlnesJ or prrnclpal llSSel9 onthe UnieedStates in thu District.or hos
00 principal plllCe of bUSiness Drasset. In the United Sla,•• bu, IS a defendant 10 an acnon Drproceeding jin a rederal or Stato counj m rhrs
D,SUlCI. Drthe inlerests of the paniea 101,11 be served in regard 10 the rehef sought in th.. Dislrict.
Cer,ineaUon by I D.blor Who Ruld..... T.olal of R.sld.alla. Properly
ICheck all .ppltcable boxes.I
0 Landlend hIlS a Judgment agalOstlhe dcblor lbr possessloo of dehlOr's resideoee. Ilr"boxchecked, completolhe 'bllowing.)
i.'l ame oflanulord that obtaInedJudgmenl)
I.\ddt""s or landlord}
0 Debtor claims thaI under .oohcable nonbankruptcy law, there a", circumstaocesunder whIch the debtor would be permuted 10 cure the
, nil'" monetary def.ulI lhal gave fISC 10 Ihe ludgment lor POSseSSIOn. oller the Judgment lor possess,on 10.... enteted. and
0 Deblor h"" ,ncluded "'Ilh rhi. pelJllOn Ihe deooSltWllhthe coun of llIly rcnlthal ",ould b"Comedue dunng lhe JO- I - 47'1
Telephone NumberIif nor represented by anornev)
I 2. ~ '2,0/<:> D.lle
flJle
_';illnl lu.. of Allorn.y" S/~•• 'U~ of Non.Allorney B•• kruptcy Pelidol Prep.rer
X r declare under penalty of perjury lhar. (Ill am a bankruptcy pennon preparar as
SIgnatureolAllomey ror Debtons) defined In II U.S.C. ~ 110: f211 prepared rhll document ror comeensenon Hndnave
provided the debtor wlm a copy or ,hi. doo:umcnt and Ihe notice. and InfOmlllllOfl
Printed Name of Allorney for Debtons) required under II U.S.C. ~IIIO(b). ItOlhl. and H2(bl: and. (3) If rules Dr
gUidelines have been promulgated punuanl 10 11 U S.c. ~ IIOlh) sellIng a
Form Name maximum ree ror services ch~oab!e bv bankruplcy pennon prepareD.! have given
the deblor notice of the II1IXlmum amounl belb", prepllt1ng any document ror tiling
lor a deblor or ""ecpllng any ICe from Ihe debtor, as requtred ,n thaI section.
Ollieial Fonn 19 i. all:lChed.
Address
rciephone Number PrinredName and tnle, If 3IlY. of BankruptcyPetlllon I'reparcr
Oa,e Sucrai-Seeunty numher lif the bankruptcy pennon preparer II not an
indiVidual. state the Socral-Seeurity Dumber of the ntlicer. pnnctpai,
"In a case in whreh ~ 7071bj(4 WD) applies. this SIBnalute also constitutes a responsible person or partner of the bankruptcy pennon preparer.] (Required
.mlfic:won thlUlheallOmeyhilS no kDowledge arlar an inqUIry that rbe mrormanon by II U.S.C. ~ 110.)
In Ihe schedulel II incorrect.
Si~.llu" of Ueblor ICorponrionJPINn,nhip)
r declare under penaltyor ocrJury rhlUlhe mtormencn provided In rhis pennon II true AddrcS!
.nd correct, and thai J have been aurhonzed 10 tile rhlS pennon on behalf of rho X
debtor.
The debtor requests lhe rehef 10accordance Wllh rhe chaprer of IiII. II. Uniled Stalel IJale
C,"Ide. specllied in rhls peallon.
Signoture of bankruprcy pelllion preparer or utticer. principal. r",ponSlble pel5Oo.
X or panner whose SO<:lal·Secunty number IS prOVIded above
Si~nature of Authollzed IndlvldU41
Names and Socia/-Sccunty number.! of all olher IOdlVlduals ",110 prepared or
I'nnted Name of Authonzed IndiVIdual
lISSlSled In prepannllm" documenl unl..s the bankruptcypelmon preparer ISnot an
Title of Authonzed IndiVIdual Individual.
Date !F more thm one pC150n prepared thl! documenL :lltaeh lIddillonal sh.e..
contorming 10 the appropruua oUicial timo lor each pcl5On.
A banknJprCllprnllon pr.par., 'J fatlun /0 comply 'With th. prnmlonJ of rill, I I
and th' Frd'ral Rul.. of BanlrnJprcyP1'fJCrdunmar 'esulr In ;in .. 0' /Inproonmtnt
f), horh. fll:.S.C. ' ((I1:!R IiSC .156.
Appendix to Appellant's Brief - Page 16 of 69
81
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Document Page 4 of 8
£lID (OfficIalForm I. E:dl.bilou 12109)
UNITED STATES BANKRUPTCY COURT
ln re A.(I-t,',,,,,, iJPk--. Itf/"r;. .... {l/t' Case No. _
Debtor (if known)
EXHIBIT D • INDIVIDUAL DEBTOR'S ST ATE~[ENT OF COMPLIANCE WITH
CREDIT COUNSELING REQUIREMENT
Warning: You must be able to check truthfully one ofthe five statements reqarding
credit eounseling listed below. If you cannot do so, you are not eligible to file a bankruptcy
case, and tlte court can dismiss any case you do file. If that happens, you will lose whatever
filing fee you paid, and your creditors will be able to resume collection activities against
you. lfyour case is dismissed and you file another bankruptcy case later, you may be
required to pay a second filing fee and you may have to take extra steps to stop creditors'
collection activities.
Every individual debtor must file this Exhibit D. Ifajoint petition is liled. each spouse
must complete and file a separate Exhibit D. Check one ofthe jive statements below and attach
any documents as directed.
d"1. Within the 180 days before the tilin~ of my bankruptcy case, I received a briefing
from a credit counseling agency approved by the United States trustee or bankruptcy
administrator that outlined the opportunities for available credit counseling and assisted me in
performing a related budget analysis. and I have a certificate from the agency describing the
services provided to me. Attach a copy ofthe certificate and a copy ofany debt repayment plan
developed through the agency.
o:J 2. Within the 180 days before the filing of my bankruptcy case. I received a briefing
from a credit counseling agency approved by the United States trustee or bankruptcy
administrator that outlined the opportunities for available credit counseling and assisted me in
performing a related budget analysis, but I do not have a certificate from the agency describing
{he services provided to me. You musttile a copy ofa certificate from the agency describing the
services provided to you and a copy cfany debt repayment plan developed through the agency
no later Than I.J days after your bankruptcy case is filed
Appendix to Appellant's Brief - Page 17 of 69 82
case 10-38538-sgj13 Doc 1 Filed 12/06/10 Entered 12/06/10 13:17:26 Desc Main
Document Page 5 of 8
OlD (Official form J. E.,". Dl/ 12:09)- Cent.
:J J. r certify that r requested credit counseling services from an approved agency but
was unable to obtain the services during the seven days from the time r made my request. and the
tollowjn~ exioent circurnsrnnccs merit .1 temporary '.\ .Ii vcr of the ..redit counseung rcquiremem
so I can tile my bankruptcy case now . [Summarize exigent circumstances here.]
If your certification is satisfactory to the court, you must still obtain the credit
counseimg briefing within the tint 30 days after you file your bankruptcy petition and
promptly file a certificate from the agency that provided the counseling, together with a
copy of any debt management plan developed throu~h the agency. Failure to fulfill these
requirements may result in dismissal of your case. Any extension of the 3D-day deadline
can be granted only for cause and is limited to a maximum of 15 days. Your case may also
be dismissed if the court is not satisfied with your reasons for filing your bankruptcy case
without first receiving a credit counseling briefing.
a 4. I am not required to receive a credit counseling briefing because of: [Check the
applicable statement.] [Must be accompanied hy a motion/or determination by the court.]
,: I Incapacity. (Defined in II U.S.C. § I09(h)(4) as impaired by reason of mental
illness or mental deficiency so as to be incapable of realizing and making rational
decisions with respect to financial responsibilities.);
:I Disability. (Defined in II U.S.C. § 109(h)(4) as physically impaired to the
extent of being unable, after reasonable effort, to participate in a credit counseling
briefing in person, by telephone. or through the Internet.);
J Active military duty in a military combat zone.
::J 5. The United States trustee or bankruptcy administrator has determined that the credit
counseling requirement of II U.S.c. § I09(h) does not apply in this district.
I certify under penalty of perjury that the information provided above ill true and
correct.
Signature of Debtor: ;:..;&'f---"-+-----f<'-- ---
Date: 11,- i2C-').olc
Appendix to Appellant's Brief - Page 18 of 69
83
vd~~ I u-.)oo.jlj-s9J1j UOC 1 Filed 12/06/10 Entered 12/06/10 13:17:26 Desc Main
uzu 1A IForm 20 IAI ( 12:09) Document Page 6 of 8
WARNING: Effective December 1,2009, the IS.day deadline to file schedules and certain other documents under
Bankruptcy Rule 1007(c) is shortened to I~ days. For further information, see note at bottom of page 2
UNITED STATES BANKRUPTCY COURT
NOTICE TO CONSUMER DEBTOR(S) UNDER §342(b)
OF THE BANKRUPTCY CODE
; 11 JCConlul1CI: with ~ 342(b) ottne Bankruptcy Code. this notice to individuals with primarily consumer
debts: (1) Describes briefly the services available from credit counseling services; (2) Describes brietly the
purposes. benetits and costs of the four types of bankruptcy proceedings you may commence: and (3) Informs you
about bankruptcy crimes and notifles you that the Attorney General may examine all information you supply in
connection with a bankruptcy case.
You are cautioned that bankruptcy law is complicated and not easily described. Thus. you may wish to seek
[he advice ofan attorney to learn of your rights and responsibilities should you decide to tile a petition. Court
employees cannot give you legal advice.
Notices rrom the bankruptcy court are sent to the mailing address you list on your bankruptcy petition. In
order to ensure that you receive information about events concerning your case. Bankruptcy Rule 4002 requires that
you notify the COUrt of any changes in your address. If you are tiling a joint case (a single bankruptcy case tor two
individuals married to each other). and each spouse lists the same mailing address on the bankruptcy petition. you
and your spouse will generally receive a single copy of each notice mailed from the bankruptcy court in a jointly-
addressed envelope. unless you tile a statement with the court requesting that each spouse receive a separate copy of
JII notices.
1. SeO'ices Available from Credit Counseling Agencies
With limited exceptions, § 109(h) of the Bankruptcy Code requires that all individual debtors who tile
for bankruptcy relief 00 or after October 17, :ZOOS, receive a briefing that outlines the available opportunities
for credit counseling and provides assistance in performing a budget analysis. The briefing must be given
within 180 days befOre the bankruptcy tiling. The briefing may be provided individually or in a group (including
briefings conducted by telephone or on the Internet) and must be provided by a nonprofit budget and credit
counseling agency approved by the United States trustee or bankruptcy administrator. The clerk of the bankruptcy
court has a list that you may consult of the approved budget and credit counseling agencies. Each debtor in a joint
case must complete the briefing.
In addition. after filing a bankruptcy case. an individual debtor ~eneraUy must complete a financial
management instructional course before he or she can receive a discharge. The clerk also has a list of approved
financial management instructional courses. Each debtor in a joint case must complete the course.
Z. The Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors
Chapter 7: Liquidation (S245 filin~ fee. $39 administrative fee. SIS trustee surcharges Total fee 5299)
Chapter 7 is designed tor debtors in financial difficulty who do not have the ability to pay their existing
debts, Debtors whose debts are primarily consumer debts are subject to a "means test" designed to determine
whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income
lor your state of residence and family size. in some cases. the United States trustee (or bankruptcy administrator). the
trustee. or creditors have the right to tile a motion requesting that the COUrt dismiss your case under § 707(b) of the
Code. II is up to the court to decide whether the case should be dismissed.
Under chapter 7. you may claim certain ofyour property as exempt under governing law. A trustee may
have the right to take possession of and sell the remaining property that is not exempt and use the safe proceeds 10
pay your creditors.
me purpose of tiling a chapter 7 case is to obtain a discharge of your existing debts. If. however. you are
Appendix to Appellant's Brief - Page 19 of 69
84
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Form B 201A. Notice to Consumer DJg~p1ent Page 7 of 8 Page 2
round to have committed certain kinds of improper conduct described in the Bankruptcy Code. the court may deny
your discharge and. if it does. the purpose tor which you tiled the bankruptcy petition will be defeated.
Even if you receive a general discharge. some particular debts are not discharged under the law. Therefore,
you may still be responsible for most taxes and student loans: debts incurred to pay nondischargeable taxes; domestic
support and property settlement obligations: most tines. penalties. forfeitures. and criminal restitution obligations;
certain debts which are not properly listed in your bankruptcy papers; and debts tor death or personal injury caused
by operating a motor vehicle. vessel. or aircraft while intoxicated fh'm alcohol or t11"!1'~'j. \ hl. if ,I ..rcditor can pro ve
.. ,..It.! LiCbt arose (rum rraud, breach or tiduciary duty, or theft. or from a willful and malicious injury, the bankruptcy
court may determine that the debt is not discharged.
Chanter 13: Repayment of All or Part of the Debts ofan Individual with Regular Income ($235 filing
fee, SJ9 administrative fee: Total fee S274)
Chapter 13 is designed for individuals with regular income who would like to pay all or part of
their debts in installments over a period oftime. You are only eligible for chapter 13 if your debts do not exceed
certain dollar amounts set forth in the Bankruptcy Code.
Under chapter 13. you must tile with the court a plan to repay your creditors all or part of the money that you
owe them. using your future earnings. The period allowed by the court to repay your debts may be three years or
tive years. depending upon your income and other factors. The court must approve your plan before it can take
erfect.
After completing the payments under your plan. your debts are generally discharged except for domestic
support obligations; most student loans: certain taxes: most criminal tines and restitution obligations; certain debts
which are not properly listed in your bankruptcy papers; certain debts for acts that caused death or personal injury;
and certain long term secured obligations.
Chapter II: Reorganization (S1000 filing fee, ,539 administrative fee: Total fee S1039)
Chapter II is designed tor the reorganization ofa business but is also available to consumer debtors. Its
provisions are quite complicated. and any decision by an individual to tile a chapter II petition should be reviewed
with an attorney.
Chapter 12: Family Farmer or Fisherman (S200 filing fee, $39 administrative fee: Total fee S239)
Chapter 12 is designed to pennit family tanners and fishennen to repay their debts over a period of time from
future earnings and is similar to chapter 13. The eligibility requirements are restrictive. limiting its use to those
whose income arises primarily from a family-owned farm or commercial fishing operation.
J. Bankruptcy Crimes and Availability of Bankruptcy Papers to Law Enforcement Officials
A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty
of perjury, either orally or in writing, in connection with a bankruptcy case is subject to a tine. imprisonment. or
both. All information supplied by a debtor in connection with a bankruptcy case is subject to examination by the
Attorney General acting through the Office of the United States Trustee, the Office of the United States Attorney,
and other components and employees of the Department ofJustice.
WARNING: Section 521(a)( I) of the Bankruptcy Code requires that you promptly tile detailed information regarding your
creditors. assets. liabilities. income. expenses and general financial condition. Your bankruptcy case may be dismissed if
this information is not tiled with the court within the time deadlines set by the Bankruptcy Code. the Bankruptcy Rules. and
the local rulesof the court. The documents and the deadlines for filing them are listed on Form B2DD. which is posted at
ilttp;llwww.uscouqs.goVlbkformstbankruptcyforms.html#procedure.
~f:lny tllln~ deadlines chanae on December 1.2009. Orspecial note,12 rules that set 15 days to act are amended to
require action within 14 days, includin~ Rule I007(c), filing the initial case papers; Rule JOIS(b). flJioll a chapter 13
plan; Rule 8009(a). filing appellate briefs; and Rules 1019, 1020, 2015,2015.1.2016, 4001, 4002, 6004, and 6007.
Appendix to Appellant's Brief - Page 20 of 69
85
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U::UIl3IFonn201Bl\ 11,109) Document Page 8 of 8
UNITED STATES BANKRUPTCY COURT
In re j1;t.(,",l, 11(1""- (+/i.n,,,,,~; Case No. _
Debtor
Chapter _
CERTIFICATION OF ~OTICE TO CONSUltER DEBTOR(S)
UNDER § 342(b) OF THE BANKRUPTCY CODE
Certification of [Non-Attorney/ Bankruptcy Petition Preparer
I. the [non-attorney] bankruptcy petition preparer signing Ihe debtor's petition, hereby certify that I delivered to the debtor the
attached notice. as requiredby § J42(b) ofthe BankruptcyCode.
Printed nameand title. if any. of Bankruptcy Petition Preparer Social Security number (If the bankruptcy petition
Address: preparer is not an individual. state the Social Security
numberof the officer. principal. responsible person. or
partner of the bankruptcypetition preparer.) (Required
x _ by II U.S.C. § 110.)
Signature of Bankruptcy Petition Prepareror officer.
principal. responsible person.or partner whose Social
Security number is provided above.
Certification of the Debtor
I (We). the debtorts), atflrm that I (we) have received and read the attached nolice. as required by § 342(b) of the Bankruptcy
Code.
,dm.'f!.- I)Il'.t rl A-f.-I"''/Of/_''
Printed Namets) of DebIOI1"s) Signature 7~ Date
Case No. (if known) _ X._ _---,~---",....,...--:-::-----__=_---
Signature of Joint Debtor (if any) Dale
Instructions: Attach a copy of Form B 201A. Notice to Consumer Debtons) Under § 342(b) of the Bankruptcy Code.
Use this fonn ro certify that the debtor has received the notice required by II U.S.C, § 342(b) only if the certification has
:'tOT been made on the Voluntary Petition. Official Form B I. Exhibit B on page 2 of Form BI contains a certification by the
debror's attorney that the attorney has given the notice to the debtor, The Declarations made by debtors and bankruptcy
petition preparers on page 3 of Fonn B I also include this certification.
Appendix to Appellant's Brief - Page 21 of 69
86
..
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,
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J o,
NOTICE OF TRUSTEE'S SALE
DATE: December /0.12010
PROMISSORY NOTE #1: Promissory Note described as:
Date: September 10, 2007
Maker: Grapevine Diamond, L.P.
Payee: City Bank Texas
Principal Amount: $6,375,000.00
Amended by: That certain Renewal Promissory Note dated as of March;
10, 2009 by and between Maker and Paye~ ~ ~ ~.~
i n":~ {:) ~::
PROMISSORY NOTE #2: Promissory Note described as: !
I
~d~ [IJ'
..:;: .. _
:;~
-~
-f i:: :-, - ::-:
.<::r" .,. i.::. i-:=
Date: July 29, 2009
'J~~ ~~ :~li
;]]i~;
°
Maker: Grapevine Diamond, L.P.
Payee: City Bank:
Principal Amount: $150,000 .00
DEED OF TRUST: Deed of Trust, Security Agreement and Assignment of Rents,
Leases, Incomes and Agreements described as:
Date: September 10,2007
Grantor: Grapevine Diamond, L.P.
Trustee: Mike Liner
Beneficiary: City Bank Texas
Recording Information: Recorded under County Clerk's File No. 207343376 in the
Official Public Records of Tarrant County, Texas.
Amended by. That certain Loan Modification Agreement dated as of September
10, 2008 by and between Grantor and Beneficiary, and recorded
under County Clerk's File No. D208397416 in the Official Public
Records of Tarrant County, Texas; that certain Modification of Real
~ !g lic e otTruslcc's Sale- Page J
r:"'r-
EXHiBIT r->
----- w
Appendix to Appellant's Brief - Page 22 of 69
87
1
\1 .
Estate Note and Lien dated February 10, 2009 by and between
Grantor and Beneficiary, and recorded under County Clerk's File
No. D209060794 in the Official Public Records of Tarrant County,
Texas, and; that certain Loan Modification Agreement dated as of
l'-1larch 10, 2009 by and between Grantor and Beneficiary and
recordedWIder County Clerks File No, 0209246789 in the Official
Public Records of TarrantCounty, Texas.
LENDER: City Bank Texas
PROPERTY: SeeExhibit A attached.
SUBSTITUTE TRUSTEE: M. AndrewStewartor Michael Hicks
SubstituteTrustee's Mailing Address: 1500Broadway, Suite 700
Lubbock, Texas79401
or
SUBSTITUTE TRUSTEE: Chad Farrar,Brett Stecklein, RyanMoshell
SubstituteTrustee's MailingAddress: 2911 Turtle CreekBlvd, Suite 880
Dallas,Texas 75219
DATE AND TIME OF TRUSTEE'S SALE OF PROPERTY:
January 4, 2011, being the first Tuesday of the month, to commence at 10:00 AM, or
within three hours thereafter.
PLACE OF TRUSTEE'S SALE OF PROPERTY:
The base of the courthouse steps on the east side of the building located at 100 West
WeatherfordStreet in downtown Fort Worth, Tarrant County, Texas,
Default has occurred in the payment of the Promissory Notes and in the performance of
the obligations of the Deed of Trust, which secures the Promissory Notes. Because of such
default, Lender, the holder of the Promissory Notes and the Deed of Trust, bas requested the
Substitute Trustee to sell the Property in accordance with the terms of the Deed of Trost and
applicable law.
Additionally, this posting ofthis Notice of ForeclosureSale is being done pursuantto the
terms of an Order on City Bank's Motion for Relief from Automatic Stay which was entered
November22,2010 by the BankruptcyCourt in the Maker's bankruptcy case known as CaseNo.
lO-32368-BJH; In Re: GrapevineDiamond,L.P., Debtor; In the UnitedStates Bankruptcy Court
for the Northern District of Texas, Dallas Division. A copy of said Order is attached hereto as
Exhibit"B".
Therefore, notice is given that on the Date and Time of Trustee's Sale ofProperty and at
the Place of Trustee's Sale of Property, the Substitute Trustee or such other trustee as Lender
Noliee ofTruslcc's Sale- Pags2
Appendix to Appellant's Brief - Page 23 of 69
88
c ..
,
,"
.
"
may subsequently appoint, will sell the Property by public sale to the highest bidder for cash, in
accordance with the Deed of Trust and applicable law. The sale and conveyance of the Property
will be subject to aU matters of record applicable to the Property which are superior to the Deed
of Trust. Substitute Trustee has not made and will not make any covenants. warranties, or
.cpresenratious concermng the Property other than providing the successful bidder at the sale
with a deedto the Propertycontaining any warranties of title requi d by the Deed of Trust. The
Propertyshall be sold "AS IS. WHERE IS", and W F TS.
M.AnClrew SubstituteTrustee
ACKNOWLEDGMENT
STATE OFTEXAS )
)
COUNTY OF LUBBOCK )
This instrument was acknowledged before me on December l~ 2010, by M. Andrew Stewart,
Substitute Trustee.
My Commission Expires: NotaryPublic, Stateof Texas
Notice ofTrusle<:'S Sale- Page 3
Appendix to Appellant's Brief - Page 24 of 69
89
I
'i" ,
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... 8.
'-. 0
lleillg n trHetonllul! ~il\1I1tcd 1111110 U. SugllS Survey,Abstract Nunlbcr1415111 the elly of Gl'np~villll, TarrftlltCOllllt)',
'l'exos. 5nid trnet Isalso an llsscmbfllgO of six Jlldlvidullltrllcl~ liS shown hoteln snd lit total descrlbcd moreparlitUlnrJy liS
follows:
UEGlNNINO lit tlieU.s. ArmyCorpsofElIlltnClS'# monument atop II squnroCOllcreto posllocRtcd lit the mosl clIl>1erl)'
:;OUlllclISt cornororn 37.59l101'0 tnm efland I1cserfllcd ng TrIIot No. A-3A In a Deehll'n1lon ofTllltlng by the: U.s. Army
~Ilr(ls ul'ElIGhll:er¥ 1lIIIIIJcilllr Rpan of tllo~llmo InUIi convoyed to Mrs.lllrlllc EllzllbC!th Brown by Mrs.Lolu Buokaloo
by doed dnlQd 7 December 1934Alld recordedIIIVoluma 1238Ilt1'lIgo 373 altho DeedRecords orTarrllJltCounty,
Tents. Snlllllrnss mOIlUllIent 11l5l1l1olnx lit 1110 $onUnvest cornorDr1l1).23 acro tract Ilcqulredby IIgreCtncut from tho U.s.
ArnlYCo~ ufEUlIlllecn.
TIllI:NCE North I)ldegr ..... .~ " .."
: l
..,
- 1-
Appendix to Appellant's Brief - Page 26 of 69
91
- - - - -- - _._ - ---
Page 2 of 7
EXECUTED on January EL~ 2011 to be effective as of January 4, 2011 .
.- '
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STATE-OF·TEXAS
." ~.
§
§
\ ..... . '-
COUNTY OF DAU:;i<\S §
BE;~'~i~:,~(f'ii~a~rsignedauthority, on this day personally appeared Ryan Meshell,
as Substitute TriiSte§.;:,·rm,O~·..t0 me to be the person whose name is subscribed to the foregoing
instrument, and wJiQ'-"ack1iOwl~dged to me that he executed the same for the purposes and
consideration therein ~xp~.esS~.d:·IiI\'d'in the capacity therein stated.
Given under m;··~~~;ili4..~~iil,,0f officeon thisthe J.2.. dayof 1anuary, 2011.
(,~~~..>:.:...·~·.r:·· :·
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AFTER RECORDING. RETURN TQ:
MULLIN HOARD & BROWN, LLP
Atto: MichaelD. Hicks
P.O. Box2S8!
Lubbock, Teus 79408-2585
-2-
Appendix to Appellant's Brief - Page 27 of 69
92
Page 3 of 7
ARer RrtOrdllIIRrlUI'IlIO: MIlLUN HOARD &I BROWN, LLP.AttII:Mldlld Hkb, P.O.1011585, Lubbocll, Ttl" 79401-1585
TARRANTF'IL€D
FORECLQSVRE SALE nEED C0l.JNry
Dale: ""'. January 4,2011 1811JAN ..s TeXAS
Deed of Trust.; P/I 2t21
(' <:~9at~L··~;:· September 10,2007 HA~dU~~'jISE G'4R
\,...__~.AfO!!!. Grapevine Diamond, L.P~·· r CLfR,/1A
",~~~ijal ~eDder: CityBank
Orlgja,l'BeiitCiciary: City Bank
T~i~ec"'
< ~; ). / .......
ow . a > •• ~ ~.,.
..... 'w' • •' .~.
Mike Liner
SUbstit1ttc''T.nist"~·.,
, ,,' ....... .'
Ryan Moshell
\:::.. "". .~
Reeording.ln"'~~atlo~w.::····.. Recorded under County Clerk's FileNo. 207343376 in the
('" ::.: ,.> Official Public Records ofTarrant County, Texas
Amended bY:· · · · ;· : : :.~·~~~~~ Loan Modification Agreement dated as of September
;'1 Q;'" 2OQ$/by::~ between Grantor and Beneficiary, and recorded
··upaeit. C9unjy" Clerk's File No. D208397416 in the Official Public
R"9n&.or.t~t County, Texas; that certain Modification of Real
Estate- Note-.'~···:Lien . dated February 10, 2009 by and between
Grantot aM:- a.1jcWy.. and retOrded under County Clerk's File
No. D20~~4·t~..tlic Official Public Records of Tarrant County.
Texas, and;~-tti8.~ .ccrtain LQaI) Modification Agreement dated !IS of
March 10, 2-009 by IItId' between Grantor and Beneficiary and
recorded under CO\lJ1t)r Clerlcs File No. 0209246789 in the Official
Public Records of."~teo~iy, Texas
Property: See Attae~~d~~ii~:t.;A·~
Note #1: ./ (....;..,: /!
•• • •• ~ . . . ..... " . : . . .. . . H ... . . . . . t
Date: September 10,2007 :.., ." '-'"': ";
Maker: Grapevine DiamonlL.!P.;\..:'./.....\
Original Principal Amount: $6,375.000.00 ',.. <.'.:::.':.,..~., _-,:>.. .
NoteNZ::·' P·Y~ :~::09 ><~2j':» ...-"".-
:::~~:ptiAmo.. =~iWDOn~L.P.../;:. :(~,;:;::~ .>,
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FORECLOSVRESALE DEED-PAGE 1oF3
Appendix to Appellant's Brief - Page 28 of 69
93
- - - -- - - - - - - - - - - - --- - - -
Page 4 of 7
AtlerRecordIIII Relll... la: MVWN HOARD 41 BaoWlf, LLP.ARlIt Mlcllad HIcks, P.O. Bm 258S, lAblMck, lew ',....1585
Date of Sale of Property: January 4. 2011
(fust Tuesday of month)
Ti~e·S~I~~~i.property Started: 11 :45 A.M.
1(i~e·· ·s.~Je" :'•. Property Concluded: 2:10 P.M. (sale was reconvened to allow cash bidder to
\" - ':-'-'''". produce a cash bid, which was not produced at the
....- "'~: ",:'-. reconvened sale)
". . .
Place·of·SaJe-of, Property: The base of the courthouse steps on the east side of the building
(........ ;..........
.,... ...
' located at 100 West Weatherford Street in downtown Fort Worth,
,... / / ) . ...·....TarrantCounty. Texas
".. - I"..·..• ..' ",
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Buyer: . ~;:.: '" City Bank
Buyer's Mailing:~d~~;..\.>.~·(·.> 52)9 City Bank Parkway
[include counl)i~ f · .•..:-' Lubbock, Texas 79401
.' : _ ~ ' .LubbockCounty, Texas
'"..'; ~:/'" -.; "1
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Amount 01 Sale: ~ !'_ " ' ··..·Gref{ifBid ofS3,OOO,000.OO
..... ' I l _ ... ~. , ••• • • ~
•• :~
•. , • • ••
By Deed of Trust, Grantot..«)oVeYe!i to Mike Liner, as Trustee, the Property for the
purpose of securing and enforcing 'p~ypj.mt of the,iqdebtedncss and obligations therein described
(collectively, the "Obligations"), \ inoluClipg;..b1it ..not limited to Note #1, all renewals and
extensions of Note #1, and any and 'ill.-pf.ese~t,aIid future indebtedness of Grapevine Diamond.
L.P. to Beneficiary. whichincludes Note~~~~ "'" , .
A contingency stated in the Deed precedent for theappointment of OfTruSl~:,(c~~on
a substitute trustee occurred, and Ryan Mo~ell:::WlIS "appOinted as a Substitute Trustee by an
Appointment of Substitute Trustee executed ":bY_~"Bunk, dated December 9, 2010. and
recorded in the Official PublicRecords ofTammt Cq,Unty.l'ew.
:, t~ »< ,".'
Default has occurred in the payment of theNCite.when'(iue:City Bank, the current Holder
of the Note and the current Beneficiary of the Deed of Tiii'~ fequested Ryan Moshell, as
Substitute Trustee, to enforcethe trustof the Deed ofTru~, ! ~:•. / \
\,-_ -. •..
.
On April 5.2010. the Grantor filed a Chapter 7 bankrU"~tcy·.peti~6~ in the United States
District Court for the Northern District of Texas, Dallas DiviililJn•..in):~as~.No. 10-32368-BJH
pUni~g into effect an.automatic stay pursuant to 11 U.S.C. §362.·~!3vV~.y~!;; pu~uant to an Order
on City Bank's Motion for Relief from Automatic Stay, entered bY .1he ~ptcy Court on
November 22, 2010, the Bankruptcy Court lifted the automatic staytip.·f~vOi- .9( Beneficiary to
proceed with the foreclosure sale described herein. :: . . -:: '.'. '.
~ ... ~. .... . '\
Pursuant to the requirements of the Deed of Trust and the Jaws of ~>~~.te::of.T~xas,
written notice of the time, place, date, and terms of the public foreclosure side·:of.·th'e ~perty
was posted at the courthouse of Tarrant County. Texas, the county in which··:'i·~·'~i'6P~Jtr'; is ->,
situated, and 8 copy of the notice WIlS also filed withthe county clerk of Tarrant C~t~ ·T-exas ( ··
each notice having been posted and filed for at least twenty-one days preceding the date' of-the
foreclosure sale. . .
FORECLOSURESALE DEED- PAGE 2 OF 3
Appendix to Appellant's Brief - Page 29 of 69
94
Page 5 of 7
Arler RecordllllRet.FII101 MllWIt HoAU" BROWN,LLP. AltaI MlclIatI HlelIs, P.O,8011515,Labbock, Tu.. '79401-1585
Additionally, written notice of the time, date, place, and termsof the foreclosure sale was
served on behelf of the current Beneficiary by certified mail on each debtor who, according to
the rec;.ordsj>fthe current Beneficiary, is obligated to pay any of the Obligations. The certified-
m~il'iioJices ~ere timelysent by depositing the notices in the United States mail, postage prepaid
iu' pm"jier.an1ount, and addressed to each debtorat the debtor's last known address as shown by
t~ rec6~.s-··#f. the current Beneficiary at least twenty-one days preceding the date of the
foreelostii:o{· ,L.
· '~~~:~~~.n~~ic.~ of default and of the eppormnity to cure the default after maturity of the
Notc waS. ~e~.o~ behalf of the current Beneficiary by certified mail on each debtor who,
according toittH:' J~o~ ...p f· ~ current Beneficiary, is obligated to pay any of the Obligations.
The certified~rn.!!I..n~tiCes ~t;rC timely sent by depositing the notices in the United States mail,
postage prepaid in···Jn:ope~;:·amo\1n.t, and addressed to each debtor at the debtor's last known
address as shown'by-th~rec9~Qttbe currentBeneficiary.
:' , :: : .
In consideratibo'9f..th~·P'iCmises and of the highest unconditional bid and payment of the
sum of $3,000,000.00, :bl··~aY .of-,a·-.;:redit bid against the obligations owed to the Beneficiary,
such bid made by Buyer, I;' 8$···Su~t}tuta· Trustee, by virtue of the authority conferred on me in
the Deed of Trust, have · Q~r.sD·;·.:S(jLD, and CONVEYED and by these presents do
GRANT, SELL, and CONVEY::to··~.uier;·B~yer·s heirs and assigns, all of the Property, to have
and to hold the Property, to8ett,lCr.. ·~~ tlte rights, privileges, and appurtenances thereto
belonging unto Buyer and Buyer's,.)lci:i!.1UiitassisnsJorever.
- .".~ 0"·" ' . .:: • ,.,
I, as the Substitute Trustee, .b~b1bind ~tor and Grantor's heirs and assigns to
do·.
warrant and forever defend thc Property'co'Buyer llmrBuy~r's heirs and assigns forever, against
the claimor claims of all persons claimingthe same 9r'~y P.art thereof.
.... ...,.. ..... ' "
EXECUTED on January 4. 2011. \.\,~'.'~:'.:~~:::'" :~_-,
"
STATE OF TEXAS §
§
~
\·..2~>.~: .:.: ·:~ ·~~:.:. ~~j •
COUNTY OF DALLAS § ;~. . ~
.. ~. ..,.:"....,....~:=-
BEFORE ME, the undersigned authority, on this day pe~'oi~Ji~..ap.~.d Ryan Meshell,
?S Substitute Trustee. known to me to be the person whose name is.·~ubS~.p~ 19 the foregoing
instrument, and who acknowledged to me that he executed the same.Jor Jhc__ purposes and
consideration therein expressed and in the capacity therein stated. :::.....-;:......_.:..,......,
i /": :
Givenundermy hand and sea! or office on this the 41/1 day of ]anuaryi·20ll .<~ ., / ·:.
ffu. L.:.. -P ?i1:;;'>,
Notary Public, Stat~ '. .>-~ ~ : .
. :
FORECLOSURESAlt: DEED - PAGB 3 or 3
Appendix to Appellant's Brief - Page 30 of 69
95
Page 6 of 7
. ~
o
Deing IIlrRet orJlInd situatedIn litolL Suggs SUl'VCY, Alntract Numlxlr 1415 in the elly of Grllpovine, Tal'l'llnt Counly,
TCXDS. Said lnJet Is alsoan u~'Somblago of sixIndlvldualtnctllli shownhonlillllnd ill lotll dC3cribed morepardc:ularly II»
follows:
.... .
n'EGIN.Nt\'oiG.~ tile U.S. ArmyCorpsof Enj;lnccrs monuml1nl alop Rsquaroconcreto pOSlloclltcd III the mostllUslerly
sout~AIt. ecirpCf4f n 37.59 aerG tract of'landdcscrlbcd u Tract No.A4A ID II DcclRratlon ofTaldng by thoU.s. Army
<;orp~.c,fE~cbieer.slindbeing II part of the 1I1tlliC lMd convortel to Mrs, D1n1le Ellzalxltll Brown by Mrs. Loll Buckuloo
~ d~~_JllllQd .'1··Dcccm1lcl' 1!l34 and recordedIn Volume 1238 It Pllp373 of tila DeedRecordsofTarraSlt County.
T"Ol!llS. Sn!~· b~lISli'J;UOnumout alsobelnK III thosoulbwest corner of II 0.23aerotmet ncquiNd by IIllrccDteut from tho U.s.
Arri\y-ciirp"'uf EIlglllecn.
. ... . ... ..'. ;
TnEN~~N~ QI,demrllel7.9 minutlll58seconds East along tho cut llaeor tho u.s. Army CorpsofEngineer. tract aud
Clio 'Welt Une Qr. t4e--aboVD IlIld0.23aero agreement tract a distllneo ofCi42.56 fellt to II lIZ InebIronrod found with clip
stllMJMd SCI'2466•.S1ifiJ pellat allo bcdng 'ho DorthWC3t comer of II 0.9' aeroparcelof lllnddc:suibcd Ina deedto W.D.
thnroldt recorded'ln.Vblwit...aIl"~Pllge lGS ortbe DeedRccorcll and also bema the southeRit earner ora 108.72 aere
parcelof laltd cf~riltcd lA\a t1e~~He~IIIA CtlIpeville Joint Venture rccord~ in Volumo 13125, Page505 of thc Doed
..' . .
nocords ofTltrraniC';"lint,YlI:9:ia1t' "'.\
TIlENCE Nortb 89 cili~·~·R1I,n~~·9:~eol1d. EllstaloDG tho north 1I1l~ ofllll~ Dmfoldt pllrcel n distanceof37!f.14
reel'0 •w. illch Iron~ ~~th·Cap..ltampGd SCI 24G6, plISllng dlo northeASt corner of the Ih.feld. pan:e!at 340.87
foaL Said comer beIng hhbowOs.CJl~c. or.• City of Gnpovioe,'tau StAte RJllht ofWayDeedrccorded ill Volumo IZ741,
PaRe 49G ortllo Dead Rocoi4!l .Gr';rarr!'J~t 'C9unty, Texas.
r' " .: .: .! ....-,
TlIENCE Ill" southerlydlrcctfl111 jllo~I 'thc ~I.I~ of theSllid Street RIght ofW.y Deed the ronowlng;
'\ \ r OO' t
Soudl00 degrees05 minum 18'~COJ:l;i;E:CSS(~dISla.nc:o of713.29 teetto a PK nailfound.
", r' " •..•.• •• • -'- -. ....
Soulb90 dcgr", (10 mlnulAls 00 lecollds,~ .:~lUtCO ~f·l'.99 feet to II 112 Inch lroll rod round.
to" , ~ _ . ' • •~. , • ••••• ."
South OZ dcgrcca 06mlnutell36 ICC01Uis E~ ~. ~~..of 437.52 feet to a 1/2Jneh iron rod set with a c:IlP Itampod SCI
2466. ....... ...../ ~
South16 dcgl'01ll21 mlnutt=l2ci second,WestQ dbtllllcc.Jlrf53.o'.rell~to a JI1lncbIron rod sct with II CIP ItIlDtped SUR·
TEXG6
24 • ' .' . , .
0::'" ~•. ..., .•' .,' ,.
TIIENCENorth G!) dqJ'(leS 30 mlnutcs 28 SIlcaDdI W~it." 'di~".JI~:~t39.s3 root to • nlllg JUdi with shInerstamped JPII
LandSurvcylllJlllt the mOMt soutlletl)'corner or" 3.15lc:fepIJlc!il1 oUaJid dC$Cribcd IR a deed toWillIAm D.lhnfeldt IUld
RonaldWllrriek rcconlcdIn Volumo 5008,1'11&0 251or lho DD~ . Rec:8r~
... . . orTarrunt COUJIt)'. TOXllfo
TIIENCEalong thosouth and westlinesor laid lllnreldt 'W~i'ftGk-pjj~el·.itit·~DJ1B the north and CllSIlincs of. parcelor
landdescribed In II deedto Curtor Cl'lIpovino PllrtnersDocument ~. DZlJ4)BlJPZ4 recorded Intbe DccdRecord. of
Tarnnt County, Texlll tile followlngl \. !" " \ •-,••' -,
". ~ '.
~orth 12 degrees 7.1 minutes 29 lOCondf Eut a dIstance of 112.30 rco~'t'O,:'liiJ.ltth~ihI rod round ,,,Ub ClIp stampedJPO
hIRd Surveying. .. ., ::... . '.'.
North 71 degrees23 mhlutol12 locondl West II dlstallCG or 12U1 raet to Ii' ~ 1~)r6ii i~,-d foaJld.
South 86 dClgROl3Z ntlnutClS 10 HcondsW4l.It a dIstance or2Z1.12 feet to a "iJI~b·pJp'o.r~lIu~
North 00 dellrCCl21 minutes 00 second, East a dlstllnc:e of373.10feet to 1112 JncJa··ltQIl··rod (CMlad with CliP Ramped
SUR-TEX 2466 It tbe: nortb1ftSt comer or thesaid lhDreldl / Wlrrick trllCt, Aiel poJiJ~)llriibcl~ tileSDuthwost corner of
1\ purcol (JIhind dcscrfb~ In a deed to JamesRolandUptollftnd wlfa JoyceADD U'ptO~..rt"c~i: .~.!!l Volumo 6204 PIlgCl
786 ar thoDeedRecords OrTurrallr County. TeuL ::; •.' .---: ' .
.. j ~'. \. ., }
TIII!."NCE Norlll 01 dc:grccs ~9 minutes41 secondlWC!$t alongtho west nno altha ,aid UAlo. (~iit lIJIll!ha Imlt Bne of the
:r..lll Carter Crnpavlno Partnors tract It dlslllDw of]40.85 rcct Co R 112 laeh Iron rod found-·with ea!i.stiDlp_cd SCI 2466,
snldpoint being lhonorthc:llSt corner or tllO said Cnrter Grllpovlno PartllCrs trnet lUId tbesoudi.csilt eorlJer'of tho above
snld0.23 auo IIgrcement trace. .: > / .
TIJENCESoudl88 dcgl'ftS 30 mlnulCll13 sccandsWest Rlong tho nortb Uno or thoCarter and cnp~c'~~~~n~ra ~~t
thesouth lIno DC the .boYlllnldRgrocmullt trll~l II dlstanco of 31.70teet to tboPOINTOF BEGINNING iliad cDlltalning
452.588 square reetor 10.39 Rcm orbml1. ". .,
EXHIBIT
I A
Appendix to Appellant's Brief - Page 31 of 69
96
Page 7 of 7
MARY LOUiSe GARCIA
~.~.~ •..
COUNTY CLERK
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100 West Weatherford Fort Worth, TX 76196-0401
PHONE (817) 884-1195
( <../~': : -.<.
Ml1l::l~N"\:iOAao & BROWN LLP
MICHJ\E~ rf'ftlC1ERI\l~LAW .
(..~.~: ~<:.:'.:.: ~ :;,.
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Prepared by: AKCHRISTIAN ...' .,'-"
,
"
'.
.
Appendix to Appellant's Brief - Page 32 of 69
97
UOCLO Filed 01/14/11 Entered 01/14/1110:29:11 ,Q.lij~Miiliflvrornr
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I
United States Bankruptcy Judge
Slgned January 12,2011
Office of the Standing Chapter 13 Trustee
125 E. John Carpenter Frwy, #1100
Irving, Texas 75062
(214) 855-9200/(214) 965-0754
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE: NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In Re: Case: 10-38S38-SGJ-13
.::..r·IIR JOHN AFLATOUNI
Doabtor f s) Notice Date: 01/10/2011
Order Dismissing Chapter 13 Case Pursuant to General Order 2009-03
On representation of the Standing Chapter 13 Trustee evidenced by the signature below
that the Debtor(s) failed to file the following paper$Qrk and did not file a Motion to
2xtend time for filing same or the time period designated ~n a Motion to Extend has
,=xp~red:
3tatement of Financial .~fairs
'::;chedules (A-J)
?lan and Motion for Valuation
?lan and Motion for Valuation was not served on all scheduled creditors,
~uthorization for Pre-Confirmation Disbursement
~opies of all payment adv~ces or other evidence of payment recieved within 60 days of
riling (hMIR JOHN AFLATOUNI)
~ statement of the amount of monthly net income. ~temized to show how the amount ~s
::a1cu1ated.
~ n d that 7 days wr~tten notice of such failure ~~s given to Debtor(s) and the Attorney
for Debtor(s) . ~f any, on 12/23/2010 prior to submiss~on hereof;
IT IS THEREFORE, ORDERED . that the above proceeding be. and hereby is in all things
DISMISSED without prejudice PROVIDED that ~f. ~ith~n fourteen (14) days of entry hereof . a
=reditor in this case files a mot~on to amend this order and seeks a dismssal with
~reJudice. 5anct~ons or other relief deemed appropriate by the Court . this Order may be
~mended by the Court. after a not~ce and a hear~ng, to grant the relief sought ~n sa~d
'no t i.on in who Ls or a n part.
l
C
EXH1B1TcoJJ---.... Y--J----
1,-,
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Appendix to Appellant's Brief - Page 33 of 69
98
Case 10-38538-sgj13 Doc 25 Filed 01/14/11 Entered 01/14/11 10:29:11 Desc Main
Document Page 2 of 2
IT IS FURTHER ORDERED that all debts due and owing creditors as of this date are NOT
DISCHARGED or affected in any manner by this Order .
; ~# End of Order ~#~
~i gn e d : i sl Thomas D. Powers
Ch a p t e r 13 Tl~stee
Appendix to Appellant's Brief - Page 34 of 69
99
UUI.. L.,J- r r-ueu U 1/ /£1./1 I t:nterea Ul/14f11 10:29:11 Desc
Notice of Dismissal Page 1 of 1
UNITED STATES BA.NKRUPTCY COURT
Northern District of Texas
Case N~:,;. I 0-385~8-sgj 13
,::q :t..: r : I '
In Re: Dcbtons) (narnets) used by the debtorts) in the last 8 years. including married. maiden. trade. and address):
Amir John Atlatouni
aka Johnathan John Atlatouni, aka Foad
John Atlatouni, aka Brad John Atlatouni
P.O. Box 967
Colleyville, TX 7fi034
Social Security I Individual Taxpayer 10 No.:
v...xx-xx-j757
Employer fax 10/ Other nos .:
~OTICE OF DISMISSAL
You are hereby notitied that an Order Dismissing the above case was entered on lil4/11.
Dated: 1/14/11
Tawana C. Marshall
Clerk, U.S. Bankruptcy Court
BY: B 2isk
Deputy Clerk
Appendix to Appellant's Brief - Page 35 of 69
100
March 14, 2017
Youval Ziv CERTIFIED LETIER NO. 70153430000061272995
President RETURN RECEIPT REQUESTED
Grapevine Diamond, LP
C/O
PACIFIC HOLDINGS I LOS ANGELES
6300 Wilshire Blvd #970
Los Angeles, CA 90048
REQUEST FOR PAYMENT
This letter is my request for payment of the replacement note dated July 13, 1013 in the amount of
$2,741,760.51 by Grapevine Diamond, LP.
Yours truly,
John Aflatouni
P. O. Box 967 Colleyville, Texas 76034
Cc: Regular Mail
Appendix to Appellant's Brief - Page 36 of 69 120
Affirmed and Opinion Filed December 7, 2015
In The
Qrnur! nf Appeals
lJiiftlJ mistrirt nf IDexas at mallas
No.05-14-00260-CV
GRAPEVINE DIAMOND, L.P., JONATHAN AFLATOUNI,
and YOUVAL ZIVE, Appellants
V.
CITY BANK, Appellee
On Appeal from the 429th Judicial District Court
Collin County, Texas
Trial Court Cause No. 429-01876-2010
MEMORANDUM OPINION
Before Justices Bridges, Myers, and Whitehill
Opinion by Justice Whitehill
On the Court's own motion, we withdraw our opinion dated November 10, 2015 and
vacate the judgment ofthat date. This is now the Court's opinion.
In this post-foreclosure deficiency suit, a second lienholder and guarantor challenge a
foreclosure sale by the first lien holder. The main areas of controversy include whether (1) the
first lien holder conclusively established its right to enforce the underlying notes and guaranties
despite an alleged name discrepancy between the loan documents and pleadings, (2) alleged
irregularities in the foreclosure sale defeated the first lien holder's summary judgment motion,
and (3) the sale is void because it violated the automatic stay in the second lienholder's
bankruptcy case.
Appendix to Appellant's Brief - Page 37 of 69 220
More specifically, appellee City Bank loaned appellant Grapevine Diamond L.P. money
to purchase real property in Grapevine, Texas from appellant Jonathan Aflatouni. Appellant
Youval Zive guaranteed the debt, and Aflatouni retained a second lien.
After Grapevine Diamond defaulted, City Bank foreclosed and sued Zive on his guaranty
for the deficiency. Subsequent third-party defendants Grapevine Diamond and Aflatouni
asserted cross-claims against City Bank for wrongful foreclosure. The parties filed cross-
motions for summary judgment. The trial court ultimately denied appellants ' motions, granted
City Bank's motions, and rendered judgment for City Bank.
Appellants present twenty-two issues that challenge:
(1) City Bank's capacity to sue (Grapevine Diamond/Aflatouni' Issues 1, 8, 11, 12, 13;
Zive Issue 2);
(2) the adequacy of City Bank's summary judgment motion and pleadings (Grapevine
Diamond!Aflatouni Issues 9 and 10);
(3) the foreclosure sale, alleging violation of a bankruptcy stay and other irregularities
(Grapevine Diamond/Aflatouni Issues 2,3,4,5,6; Zive Issues l.d, I.e,3.c);
(4) the guarantor's liability, alleging release and novation (Zive Issues 3.a, 3.b);
(5) the exclusion of expert and fact witness testimony on the property's value
(Grapevine Diamond!Aflatouni Issues 14, 15, 16, 17; Zive Issues La, l.b, I.c); and
(6) failure to award their damages and attorney's fees (Grapevine Diamond/Aflatouni
Issues 7, 18, 19).
For the reasons discussed below, we resolve appellants' issues against them and affirm
the judgment.
I. BACKGROUND
On September 10, 2007, appellant Grapevine Diamond borrowed $6,375,000 from
appellee City Bank, executing a promissory note and first lien deed oftrust covering the property
I GrapevineDiamond and Aflatouniare represented by the same counsel on appeal and filed ajoint brief.
-2-
Appendix to Appellant's Brief - Page 38 of 69 221
mentioned below. Appellant Youval Zive guaranteed the indebtedness, exec.uting a guaranty
agreement on the same date. Using the loan proceeds, Grapevine Diamond purchased
approximately ten acres of vacant land in Grapevine, Texas from Aflatouni and his wife.
Under a promissory note dated July 29, 2009, Grapevine Diamond borrowed an
additional $150,000 from City Bank. The parties also signed loan modification agreements in
2008 and 2009. Zive signed the 2009 modification agreement as president of Grapevine
Diamond's general partner and also as a guarantor.
Grapevine Diamond defaulted on both notes, and on April 5, 2010, it filed a bankruptcy
petition that Zive signed on Grapevine Diamond's behalf under the penalty of perjury. On its
related Schedule A (Debtor's Real Property), Grapevine Diamond listed the property at issue as
an asset valued at $2,000,000.00 with a $7,000,000.00 corresponding "Amount of Secured
Claim."
Correspondingly, Grapevine Diamond's Schedule D (Creditors Holding Secured Claims)
listed City Bank as a creditor with a deed of trust. The related collateral is described as "raw
land" worth $2,000,00.00. In the column titled "Amount of Claim Without Deducting Value of
Collateral," Grapevine Diamond stated that it owed City Bank $7,000,000.00, with an
"unsecured portion" of$5,000,000.00.
And Grapevine Diamond's Schedule F (Creditors Holding Unsecured Nonpriority
Claims) listed Aflatouni as an unsecured creditor with a $3,500,000.00 claim.
On November 22, 2010, the bankruptcy court entered an "Order on City Bank's Motion
for Relief from the Automatic Stay" in Grapevine Diamond 's bankruptcy case. In that order, the
court found that (1) the balance due to City Bank was $6,732,506.86, secured by a first lien deed
of trust; (2) "the value of the collateral alone is insufficient to provide City Bank with adequate
protection"; and (3) Grapevine Diamond "has no equity" in the collateral.
- 3-
Appendix to Appellant's Brief - Page 39 of 69 222
At a subsequent foreclosure sale, Aflatouni bid $3,000,000 for the property "on behalf of
a client" but could not obtain cash for the purchase price. City Bank then purchased the property
for $3,000,000.00.
Aflatouni filed bankruptcy petitions on December 6, 2010 (under Chapter 13 of the
United States Bankruptcy Code) and January 31, 2011 (under Chapter 11). The Chapter 13 case
was dismissed on January 14, 2011 because Aflatouni failed to file required documentation,
including schedules. The Chapter 11 case was dismissed with prejudice on May 16,2011 . The
bankruptcy automatic stay in Aflatouni 's Chapter 13 case was in effect when the foreclosure sale
occurred.
City Bank sued Zive and another guarantor, Nasser Shafipour, on their guaranties of
Grapevine Diamond's indebtedness. Shafipour asserted third-party claims against Grapevine
Diamond and Aflatouni, who in turn asserted cross-claims against City Bank for wrongful
foreclosure , breach of contract, and several other causes of action regarding title to the property.'
All parties sought summary judgment on their affirmative claims and defenses. The trial court
denied appellants' motions and granted City Bank's. This appeal followed.
II. ANALYSIS
A. Standards of review.
We review a summary judgment de novo. Mid-Century Ins. Co. ofTexas v. Ademaj, 243
S.W.3d 618, 621 (Tex. 2003). When both parties move for summary judgment and the trial
court grants one motion and denies the other, we determine all questions presented and render
the judgment the trial court should have rendered. Id
We review a trial court's evidentiary rulings for abuse of discretion. Estate of Finney ,
424 S.W.3d 608,612 (Tex. Civ. App.-Dallas 2013, no pet.). We will not reverse a judgment on
,
- Shafipour was later dismissed from this suit and is not a party to this appea l.
Appendix to Appellant's Brief - Page 40 of 69 223
an evidentiary ruling unless the appellant establishes that (1) the trial court's ruling was in error
and (2) the error was reasonably calculated to cause and probably did cause the rendition of an
improper judgment. Id. (citing McCraw v. Maris, 828 S.W.2d 756, 757 (Tex. 1992)). When
reviewing whether evidence was properly admitted or excluded, we must review the entire
record. Id. (citing State v. Central Expressway Sign Assocs. , 302 S.W.3d 866, 870 (Tex. 2009)).
B. Was City Bank the payee on the notes and a party to the deeds of trust and
guaranties?
Appellants contend that City Bank did not own or hold the promissory notes and is not a
party to the deeds of trust or the guaranties, and therefore was not authorized to foreclose on the
property or enforce the guaranties. They instead argue that the counter-party to those documents
is "City Bank, Texas," rather than "City Bank," the plaintiff and cross-defendant in this suit.
Appellants also contend that City Bank never filed documents with the Texas Secretary of State
to create an assumed name and may not now assert that it is the same entity as "City Bank,
Texas." See TEX. Bus. & COM. CODE ANN. § 71.101 (West 2015) (entity must file certificate ifit
regularly conducts business in Texas under an assumed name).
Failure to file an assumed name certificate concerns the plaintiffs capacity to sue. Sixth
RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 55-56 (Tex. 2003). As such, the defendant must
file a verified plea challenging the plaintiffs capacity. TEx. R. CIV. P. 93.1 (pleading that
plaintiff lacks legal capacity to sue must be verified). The plaintiff must then prove that it is
entitled to recover in the capacity in which it sued. JPMorgan Chase Bank, NA. v. Prof'l
Pharmacy II, No. 02-11-00373-CV, 2014 WL 7473779, at *6 (Tex. App.-Fort Worth Dec. 31,
2014, no pet.).' City Bank met this burden.
3 The appeal was later dismissed pursuant to settlement, but the court denied the motion to withdraw its opinion. JP Morgan Chase Bank.
N.A. v. Prof"! Pharm acy II, No. 02-11-00373, 2015 WL 1119894, at·1 (Tex. App.-Fort Worth Mar. 12,2015, no pet.) (mem. op.).
-5-
Appendix to Appellant's Brief - Page 41 of 69 224
Here, the record reflects that in 2009 appellants signed a loan modification agreement
affirming their obligations to "City Bank, a Texas banking association (Lender)" under the notes,
deeds of trust, and guaranties. This loan modification agreement identifies Grapevine Diamond
as "Borrower" and Zive as one of the "Guarantors." The loan modification agreement also
describes the promissory notes, deeds of trust, and guarant ies by date, amount, deed record
reference, and property description. Appellants likewise confirmed the outstanding note
balances . The agreement further provides, "Borrower and Guarantors hereby confirm and agree
such sums are due and owing to Lender without defense, counterclaim, or offset according to the
modified payment schedule, interest rate and other terms set forth herein." This loan
modification agreement was in City Bank's summary judgment evidence as Exhibit A-4 to the
Affidavit of Morris Wilcox.' Appellants did not contest this agreement, which recites that "City
Bank" is the lender and mortgagee.
In addition, the summary judgment evidence included the bankruptcy court's November
22, 2010 order granting the motion of "City Bank" to lift the automatic stay as to the collateral
under the notes and deed of trust, and authorizing "City Bank" to "exercise any and all remedies
afforded it pursuant to the terms of its loan documentation." And City Bank's summary
judgment filings also included affidavit testimony that City Bank was the owner and holder of
the notes and a party to the guaranties . The trial court could rely on all of this this evidence in
4 Relying on Mercer v. Daoran Corp., 676 S.W.2d 580, 583 (Tex. 1984), appellants challenge Wilcox's affidavit as hearsay and violating
the best evidence rule. Their argument rests on the premise that the affida vit testimony (stating that "City Bank" is the lender) conflicts with the
note itself (stating that "City Bank, Texas" is the lender). Unlike in Mercer , Wilcox's affidavit is not "limited to a legal conclusion .. . and an
alleged copy of a note." [d. The court in Mercer distinguished cases where, as here, the sworn copies of the notes "were , indeed, copies of
originals complete with signatures ." See id. Especially in light of the additional summary judgment evidence that appellants confirmed their
indebtedness to "City Bank" in the loan modification documents, we reject appellants ' hearsay and best evidence arguments .
Appellants also challenge Wilcox's testimony of the property's post-foreclosure sales price, again citing Mercer. Even if considering this
testimony was error, it did not cause the rendition of an improper judgment because the post-foreclosure price of the property was not relevant to
any issue presented in City Bank's summary j udgment motion. See TEX. R. ApP. P. 44.1(a) (no judgment may be reversed on appeal for error of
law unless court of appeals concludes error probab ly caused rendition of improper judgment).
-6-
Appendix to Appellant's Brief - Page 42 of 69 225
rejecting appellants' argument that City Bank was not the proper party to enforce appellants'
obligations under the loan documents.
Moreover, appellants provided no evidence raising a fact issue regarding whether City
Bank was doing business under an assumed name. See Sibley, III S.W.3d at 52 (whether
partnership did business under assumed name was fact question for trial court). The only support
appellants cite for their argument is that some of the operative documents in this case recite the
lender's name as "City Bank, Texas." There was, however, no evidence that City Bank
"regularly conducts business or renders professional services in this state under an assumed
name," and was therefore required to file an assumed name certificate. See TEX. Bus. & COM.
CODE ANN. § 71.101(1).
Further, Zive's own summary judgment response negates appellants' argument that City
Bank sued under an assumed name and was therefore required by business and commerce code
§ 71.101 to file an assumed name certificate. For example, Zive's response includes a request
for judicial notice of a reference from the Texas Secretary of State's website "showing that City
Bank, a Texas state bank, has not filed the documentation with the Texas Secretary of State's
office to create an assumed name." The record thus establishes that City Bank did not sue under
an assumed name.
For the above reasons, the summary judgment evidence conclusively established that City
Bank was entitled to enforce the notes and guaranties. We thus overrule Grapevine Diamond
and Aflatouni's first, eighth, eleventh, twelfth, and thirteenth issues, and Zive's second issue.
C. Was the Bank's no-evidence summary judgment motion sufficient to challenge
appellants' trespass to try title, breach of contract, and suit to quiet title claims?
Appellants complain that City Bank's summary judgment motion was insufficient to
challenge their trespass to try title, breach of contract, and suit to quiet or remove cloud on title
-7-
Appendix to Appellant's Brief - Page 43 of 69 226
claims because City Bank attacked only one element of these causes of action and not all of their
elements. We disagree.
City Bank was not required to allege that there was no evidence on every element of
appellants' causes of action to prevail on its no-evidence summary judgment motion. Defeating
one element of each claim suffices. Rule 166a(i) itself provides that a movant may seek
summary judgment "on the ground that there is no evidence of one or more essential elements of
a claim or defense on which an adverse party would have the burden of proof at trial." TEx. R.
CIv. P. 166a(i) (emphasis added). "The motion must state the elements as to which there is no
evidence." Id.
And, as we explained in Nelson v. Regions Mortgage, Inc., the rule allows the movant to
identify "whatever elements he believes are unsupported by evidence; it imposes no restrictions
on the number of challenges that may be made." 170 S.W.3d 858, 861 (Tex. App.-Dallas
2005, no pet.); see also Timpte Indus. v. Gish, 286 S.W.3d 306, 311 (Tex. 2009) (motion
specifying two elements of products liability claim was sufficient).
Here, City Bank's motion listed all of the elements for each cause of action , and then
identified one or more specific elements on which it argued that there was no evidence.
Specifically,
(1) for appellants' trespass to try title claim, City Bank challenged the element of
superior title from a common source, see Wilhoite v. Sims, 401 S.W.3d 752, 760
(Tex. App.-Dallas 2013 , no pet.) (listing "superior title out of a common source"
as one of four elements of trespass to try title claim);
(2) for appellants' breach of contract claim, City Bank challenged the elements of an
existing enforceable contract (as to Aflatouni) and breach (as to Grapevine
Diamond), see Petras v. Criswell, 248 S.W.3d 471, 477 (Tex . App.-Dallas 2008,
-8-
Appendix to Appellant's Brief - Page 44 of 69 227
no pet.) (successful breach of contract claim requires proof of four elements
including valid contract and breach); and
(3) for appellants ' claim to quiet or remove cloud on title, City Bank challenged the
element that its claim on the property is invalid or unenforceable, see Montenegro
v. Ocwen Loan Servicing, LLC, 419 S.W.3d 561, 572 (Tex. App.-Amarillo
2013, pet. denied) (to state claim to quiet title, plaintiff must establish that
challenged claim to property is invalid or unenforceable).
City Bank 's summary judgment motion was thus sufficient to support the trial court's
judgment on appellants ' claims for trespass to try title, breach of contract, and to quiet or remove
a cloud on title. Accordingly, we overrule Grapevine Diamond and Aflatouni's ninth issue.
D. Did the trial court err by overruling appellants' objection to City Bank's pleadings
because City Bank did not plead the affirmative defenses of proportionate
responsibility, failure to mitigate, and offset?
Appellants contend that City Bank may not assert any new affirmative defenses "in the
event there is a remand." They argue that the trial court erroneously overruled their objections to
City Bank's failure to plead the proportionate responsibility, failure to mitigate, and offset
defenses. But City Bank did not seek summary judgment on these defenses; the trial court's
judgment does not include any ruling on them; and no remand is required. Appellants ' issue
does not present any error for our review. See TEX. R. ApP. P. 44.1(a) (for reversal on appeal,
court of appeals must conclude error probably caused rendition of improper judgment). We thus
overrule Grapevine Diamond and Aflatouni's tenth issue.
E. Did an alleged violation of the automatic stay in Aflatouni's bankruptcy case
require a different result?
Aflatouni and Grapevine Diamond both urge that City Bank's foreclosure sale violated
the automatic stay in Aflatouni's Chapter 13 bankruptcy case. They rely on the settlement
statement executed by Grapevine Diamond reflecting the amount of $2,741,760.51 identified as
-9-
Appendix to Appellant's Brief - Page 45 of 69 228
"Seller's Purchase into Grapevine Diamond" to support their argument that Aflatouni retained a
vendor 's lien when he sold the property to Grapevine Diamond. (Grapevine Diamond, however,
listed Aflatouni as only an unsecured creditor.) They also argue that City Bank does not dispute
that Aflatouni loaned $2.7 million to Grapevine Diamond when he sold the property in 2007.
But they admit that his vendor 's lien was subordinate to City Bank' s first lien.'
Grapevine Diamond further contends that it has standing to challenge City Bank's alleged
violation of the stay in Aflatouni's bankruptcy because it was an Aflatouni creditor based on
promises Aflatouni made in the 2009 loan modification.
Next, Aflatouni and Grapevine Diamond rely on In re Three Strokes Limited Partnership,
Debtor, 397 B.R. 804, 807 (Bankr. N.D. Tex. 2008) to support their automatic stay violation
argument. In that case, the court held that the debtor 's second lien interest in property was "a
property interest that triggers the protection of the automatic stay," even though the underlying
property was not property of the debtor 's estate, because foreclosure proceedings "could have the
effect of extinguishing the Debtor 's second lien interest." Id. The court thus concluded that,
based on the facts in that case, the debtor held "a cognizable property interest . . . that the
automatic stay protects ." Id. at 808. Based on this language from Three Strokes, Aflatouni and
Grape vine Diamond posit that Aflatouni 's alleged second lien was a property interest protected
by the automatic stay in his bankruptcy case.
The Three Strokes court, however, focused on a significant nuance in that fact pattern not
present here-whether an intercreditor subordination agreement created a waiver or
relinquishment of the debtor 's property rights such that the debtor had "no meaningful property
interests left." Id. at 808-809. The court further stated that:
S Grapevine Diamond contends that it has standing to challenge City Bank's alleged violation of the stay in Aflatouni's bankruptcy
because it was an Aflatouni creditor based on promises Aflatouni made in the 2009 loan modification .
-1 0-
Appendix to Appellant's Brief - Page 46 of 69 229
[T]his does not mean that the [d]ebtor has no property right here at all
worthy of protection. The subordination agreement certainly dilutes or
weakens the [d]ebtor's bundle of rights associated with the second lien. But
it does not extinguish the property rights altogether.
Id. at 809. Thus, in Three Strokes, there was at least a possibility of value in the
property.
The summary judgment record in the present case, however, establishes that there was no
such possibility here. That is so because it was judicially established in the bankruptcy court that
there was no equity in the property. Accordingly, there was nothing for Aflatouni's alleged lien
to attach to at the time of the sale. Or, in the words of Three Strokes, the record conclusively
establishes that there was "no meaningful property interest left" for Aflatouni, who thus had "no
property right here worthy of protection."
Specifically, when Aflatouni filed his December 6, 2010 Chapter 13 petition, the
bankruptcy court had already ruled, in Grapevine Diamond's bankruptcy proceeding, that there
was insufficient value in the collateral "to provide City Bank with adequate protection" on its
first lien. The bankruptcy court also found that Grapevine Diamond had no equity in the
collateral.
These findings were consistent with the amounts stated on Grapevine Diamond's own
bankruptcy schedules for the value of its interest in the property, the amount of City Bank's
secured claim, and Aflatouni's unsecured creditor listing. Furthermore, the bankruptcy court's
order specifically permitted City Bank to "exercise any and all remedies" permitted under its
loan documents, including foreclosure sale.
Notwithstanding the above, as a Grapevine Diamond creditor, Aflatouni could have
challenged both City Bank's motion to lift the stay and the bankruptcy court's order lifting the
stay. Grapevine Diamond itself could have appealed the order. See Mitchell v. Fort Davis State
Bank, 243 S.W.3d 117, 124 (Tex. App.-EI Paso 2007, no pet.) (bankruptcy court's order
-11-
Appendix to Appellant's Brief - Page 47 of 69 230
granting relief from automatic stay is final and appealable order) (citing In re Chunn, 106 F.3d
1239, 1242 (5th Cir. 1997)). Yet neither Aflatouni nor Grapevine Diamond took any such
actions.
Moreover, as discussed below, appellants still had no summary judgment evidence that
the property's value exceeded the amount stated on Grapevine Diamond's bankruptcy schedules ,
and the property was sold for less than the amount of City Bank's secured claim.
Accordingly, based on the specific facts before us, we overrule the portions of Grapevine
Diamond and Aflatouni 's second, fourth, fifth, and sixth issues alleging that summary judgment
for City Bank was improper because the foreclosure sale allegedly violated the stay in
Aflatouni 's bankruptcy.
F. Was the foreclosure sale invalid because of irregularities?
Appellants argue that there were two irregularities in the foreclosure sale itself that
injured them by reducing the price: (I) the bidding was interrupted three times when Jim
Goldston, who represented City Bank at the sale, received telephone calls, and (2) the sale was
not readvertised after Aflatoun i was unable to obtain cash for his winning bid and the sale was
resumed later that afternoon. We reject appellants' arguments because there is no evidence that
either alleged irregularity injured any appellant.
According to Goldston and Aflatouni, who both testified about the sale in their summary
judgment affidavits , Aflatouni was the apparent highest bidder for the property at $3,000,000 or
$3,001,000,6 and the substitute trustee accepted Aflatouni 's bid. The sale was then temporarily
suspended to allow Aflatouni to obtain cash or a cashier 's check in his bid amount, as the
foreclosure sale notice required.
6 Goldston testified the bid was $3,001,000; Aflatouni test ified it was $3,000,000.
-12-
Appendix to Appellant's Brief - Page 48 of 69 231
Both witnesses also said there were other potential bidders at the sale that morning.
According to Goldston, however, no other potential bidders made an offer . Although Aflatouni
said that five or six people appeared to be "very interested in the sale," he did not say that any of
them made an offer.
Aflatouni further said that, because of the interruptions in the sale by Goldston's
telephone calls, "I felt the substitute trustee and Mr. Goldston were not trying to maximize the
sales price because the interruptions discouraged bidding." He further said that no other bidders
were present when the substitute trustee (consistent with the sale notice) told him that he must
pay by cashier's check by 2:00, and no other bidders were present at the reconvened sale. When
Aflatouni could not perform at the reconvened sale later that afternoon, City Bank credit-bid
$3,000,000 and purchased the property without readvertising the sale.
Appellants cite American Savings & Loan Ass 'n ofHouston v. Musick for the applicable
rule: "[t]here must be evidence of irregularity, though slight, which irregularity must have
caused or contributed to cause the property to be sold for a grossly inadequate price." 531
S.W.2d 581, 587 (Tex. 1975) (citing Sparkman v. McWhirter, 263 S.W.2d 832, 837 (Tex. Civ.
App.-Dallas 1953, writ refd)). "Mere inadequacy of consideration is not grounds for setting
aside a trustee 's sale if the sale was legally and fairly made." Id. And as we have explained,
"[e]vidence showing that a better price would have resulted if the sale was conducted in a
different manner is required." Hunt v. Jefferson Sav. & Loan Ass'n, 756 S.W.2d 762, 764 (Tex.
App.-Dallas 1988, writ denied).
We reject appellants ' arguments for several reasons:
One, as a matter of law Zive cannot prevail on a claim for wrongful foreclosure. As we
discuss below, Zive waived any right to offset in the agreements he signed guaranteeing the
indebtedness and may not recover damages even had he established irregularities in the sale. See
- 13-
Appendix to Appellant's Brief - Page 49 of 69 232
Moayedi v. Interstate 35/Chisam Road, L.P., 438 S.W.3d 1, 8 (Tex. 2014) (right of offset is
defense that can be waived).
Two, Grapevine Diamond and Aflatouni cannot prove any damage caused by any
irregularities in the sale because there was no evidence that the sale's outcome would have been
different but for either type of alleged irregularity. Nor was there summary judgment evidence
establishing that the property's fair market value on the date of the foreclosure sale was higher
than City Bank's $3,000,000 bid. Although appellants cite to the appraisals City Bank accepted
at the time of the loan and modification and appraisals anticipating future development on the
property, there was no evidence that these appraisals reflected the fair market value on the
foreclosure sale date. And, as we discuss below, the trial court properly excluded appellants'
other proffered opinions on value. Nor was there evidence that any other person would have
paid any more for that property that day.
Three, we reject Grapevine Diamond's and Aflatouni's argument that, without any
evidence of an adverse effect on the sale's outcome, a sale is per se invalid if it is reconvened
later in the day without readvertising the sale or notifying the potential bidders who were present
earlier in the day. They rely on Mitchell v. Texas Commerce Bank-Irving, 680 S.W.2d 681, 683
(Tex. App.-Fort Worth 1984, writ ref'd n.r.e.), and Clearman v. Graham, 4 S.W.2d 581, 582-
83 (Tex. Civ. App.-Austin 1928, writ dism'd), to support this argument. To the extent either
case purports to hold that such conduct alone warrants invalidating the sale, that rule would be
inconsistent with supreme court precedents in Musick and Sparkman. See Musick, 531 S.W.2d at
587; Sparkman, 263 S.W.2d at 837 (both holding that irregularity must have caused or
contributed to cause property to be sold for grossly inadequate price). Moreover, the part of
Mitchell on which Grapevine Diamond and Aflatouni rely is dicta because the court had already
completely disposed of the case based on that bank's failure to give proper notice. See Mitchell,
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Appendix to Appellant's Brief - Page 50 of 69 233
680 S.W.2d at 683. Similarly, Clearman was narrowly decided based on a jury finding that the
creditor engaged in fraudulent conduct that kept the debtor from personally attending the sale
with cash in hand, and evidence that the sale was reconvened without the presence of the person
who had been declared the successful bidder earlier in the day. See Clearman, 4 S.W.2d at 582.
Neither scenario exists here, and there is no evidence that the alleged irregularities "caused or
contributed to cause" a lower sales price, let alone a grossly inadequate one. See Musick, 531
S.W.2d at 587.
For the above reasons, we conclude that appellants did not offer summary judgment proof
that any irregularities in the foreclosure sale injured them. See Hunt, 756 S.W.2d at 764. We
thus overrule Grapevine Diamond and Aflatouni's third, fourth, fifth, and sixth issues and Zive's
issues l .d and 3.c.
G. Did the 2009 loan modification release Zive from his guaranty liability?
Zive argues that the 2009 loan modification agreement and a new guaranty he signed in
2009 7 release him from liability under his 2007 guaranty. We disagree because Zive (1) agreed
in 2007 to guarantee "all renewals and extensions" of the debt; (2) agreed to the loan
modification and ratified his guaranty obligations in 2009; and (3) failed to establish that his
2009 guaranty in any way altered his obligations under his 2007 guaranty or the 2009 loan
modification agreement.
Zive's 2007 guaranty specifically included "all obligations, indebtedness and liabilities of
Borrower owed to Lender, now existing or hereafter created . . . together with any and all
renewals and extensions of such indebtedness ...." And in the 2009 loan modification
agreement, Zive "join[ed] in the execution of the foregoing Loan Modification Agreement to
7 In his own summary judgment motion and in his response to City Bank's motion, Zive relies on a guaranty agreement dated March [0,
2009, that was not included in City Bank' s summary judgment evidence. In his summary judg ment response, Zive contended the 2009 guaranty
replaced the 2007 guaranty, rendering the 2007 guaranty "ineffective."
-15-
Appendix to Appellant's Brief - Page 51 of 69 234
ratify and reaffirm [his] obligations under the Guaranty Agreement[] previously executed by
Guarantor[] in favor of Lender, and to ratify and reaffirm the liens of the Deed of Trust and
other Loan Documents to secure the Notes as modified hereby."
Zive contends that "the 2007 documents no longer support any claims of the Bank"
because "there were material changes to the overall lending arrangement" under the 2009 loan
modification. He cites Futerfas Family Partners v. Griffin for the premise that a guarantor is
discharged by a material alteration of the underlying contract that lacks the guarantor's consent
and harms the guarantor. 374 S.W.3d 473, 478 (Tex. App.-Dallas 2012, no pet.). As we
explained in Futerfas, however, to receive a discharge, the guarantor must prove, among other
elements, that a material alteration to the underlying contract was made without his consent. Id.
The summary judgment evidence here, however, established that Zive fully consented to the
2009 modification .
Specifically, the 2009 loan modification agreement Zive signed contains his consent to
the 2009 loan modification agreement:
Notwithstanding anything else herein or elsewhere, the Guaranty
Agreement[] of Youval Zive ... [is] hereby ratified and confirmed by
Youval Zive and such Guaranty Agreement[] continue[s] in full force
and effect. .
JOINDER OF GUARANTORS
The Guarantors join in the execution of the foregoing Loan Modification
Agreement to ratify and reaffirm their obligations under the Guaranty
Agreements previously executed by Guarantors in favor of Lender, and to
ratify and reaffirm the liens of the Deed of Trust and other Loan Documents
to secure the Notes as modified hereby. Guarantors each hereby affirm,
confirm, ratify, renew and extend the debts, duties, obligations, liabilities,
rights, titles, security interests, liens, powers and privileges created or
arising by virtue of each of their respective Guaranty Agreements, until all
of the indebtedness has been paid and performed in full.
Guarantor hereby covenants with Bank as follows:
(a) The Loan Documents, including but not limited to those certain
Guaranty Agreements dated as of September 10, 2007 and September 10,
-16-
Appendix to Appellant's Brief - Page 52 of 69 235
2008, as modified hereby, are in full force and effect and there are no
defenses, counterclaims, or offsets to the payment and performance of an[y]
of its/their obligations in regard to the Loan, or any of the Loan Documents,
as modified hereby . . . .
Additionally, the terms of Zive's guaranties control his obligations. See Chambers v.
NCNB Tex. Nat'l Bank, 841 S.W.2d 132, 134 (Tex. App.-Houston [14th Dist.] 1992, no writ).
Zive expressly ratified and reaffirmed his obligations as guarantor by joining in the loan
modification agreement, agreeing that his guaranty was in full force and effect without defenses,
counterclaims, or offsets, and confirming and renewing his guaranty until the debt was paid in
full. We thus conclude that Zive did not present any summary judgment evidence that raised a
fact issue regarding whether any material alteration was made in his guaranty obligation without
his consent. See Futerfas, 374 S.W.3d at 478; see also Chambers, 841 S.W.2d at 134 (where
guaranty applied to all renewals and extensions of initial loan, and expressly provided that
change in debtor's status did not alter guarantor's liability, guarantor remained liable on renewal
note made after debtor, originally a partnership, was incorporated).
Furthermore, even the 2009 guaranty on which Zive relies bears the same effective date
as the loan modification agreement and references the same promissory note and deed of trust.
Instruments concerning the same transaction may be read together even if they are executed at
different times and do not reference each other. In re Laibe Corp., 307 S.W.3d 314, 317 (Tex.
2010) (mandamus granted). Accordingly, under the express terms of his guaranties and the loan
modification agreement, Zive remained liable for Grapevine Diamond's debts to City Bank.
In addition to his general argument that his obligations were discharged by the 2009 loan
modification, Zive also contends that he has not waived the right of offset under § 51.003 of the
Texas Property Code, see TEX. PROP. CODE ANN. § 51.003(c) (West 2014) , despite the express
waiver of this right in his 2007 guaranty agreement:
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Appendix to Appellant's Brief - Page 53 of 69 236
Furthermore, in the event any property securing the Guaranteed
Indebtedness is foreclosed upon in any manner, and a deficiency is created
as a result of the purchase price at such foreclosure sale, Guarantor does
hereby irrevocably waive all rights to claim any offset against the
deficiency as provided in Section 51.003, 51.004 and 51.005 of the Texas
Property Code, as amended.
The 2009 loan modification agreement live signed did not expressly reference § 51.003,
but it did contain the above-quoted joinder provisions in which he agreed that "there are no
defenses, counterclaims, or offsets to the payment and performance of an[y] of its/their
obligations in regard to the Loan, or any of the Loan Documents, as modified hereby .. .."
These provisions were sufficient to waive live's right of offset under § 51.003 as well as any
other defenses to his liability on the guaranty. See Moayedi, 438 S.W.3d at 6.
Specifically, in Moayedi the supreme court held that the § 51.003 right of offset is a
defense that can be waived. ld. at 8; see also Holmes v. Graham Mortg. Corp., 449 S.W.3d 257,
265 (Tex. App.-Dallas 2014, pet. denied) (discussing Moayedi). The Moayedi court concluded
that a "general waiver of defenses ," including words such as "any, " "each," and "every," was
sufficient to waive "all possible defenses." Moayedi , 438 S.W.3d at 8; Holmes , 449 S.W.3d at
265. Here, live agreed to "continue in full force and effect" his express waiver in the 2007
guaranty, and also agreed that "there are no defenses , counterclaims, or offsets to the payment
and performance" of his obligations under his guaranty.
For the above reasons, we conclude that live did not establish that he was entitled to
discharge of his obligations under his guaranty and that summary judgment for City Bank was
proper. We thus overrule live's issues 3.a and 3.b.
H. Did the trial court abuse its discretion by excluding appellants' property value
evidence?
1. Blaine and Jordan
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Appendix to Appellant's Brief - Page 54 of 69
237
Through their own affidavits and the appraisals of two experts, appellants sought to offer
summary judgment evidence that the property's value exceeded $8,000,000. Specifically, they
designated Robert Blaine and George Jordan as expert witnesses on May 10, 2013, the deadline
for doing so given in the trial court's scheduling order. Each witness was designated to "provide
expert opinions regarding the appraised values of the real property at issue in this case." Blaine
was designated to opine on the property's value "at the time of the foreclosure sale and also as a
completed project for each of the development phases." Jordan was designated to opine on the
property's value "prior to the time of the foreclosure sale." The designation states that a resume
and licensing information is attached for each witness. The actual substance of Blaine 's and
Jordan's opinions, however, was not provided. Appellants argue that because the scheduling
order did not require anything other than "a designation" of their experts, their designation
exceeded the scheduling order's requirements.
But the record also reflects that appellants did not disclose Blaine and Jordan in response
to two prior requests for disclosure made long before the scheduling order deadline. On
September 22, 2011, City Bank requested disclosures from Aflatouni "of the information or
material described in" Texas Rule of Civil Procedure 194.2(a)-(l). City Bank made the same
request of Aflatouni and Grapevine Diamond on September 13, 2012. Aflatouni and Grapevine
Diamond were thus required to disclose "the general substance of the expert's mental
impressions and opinions and a brief summary of the basis for them" within thirty days after
service of the request. TEX. R. ClV. P. 194.2(f)(3); 194.3. They were also required to
supplement an incomplete response "reasonably promptly." TEx. R. CIV. P. 193.5; 195.6;
VingCard A.S. v. Merrimac Hasp. Sys. , Inc., 59 S.W.3d 847, 856 (Tex. App.-Fort Worth 2001,
pet. denied) (rules place affirmative obligation on responding party to disclose expert 's mental
-19-
Appendix to Appellant's Brief - Page 55 of 69 238
impressions and opinions and provide brief summary of basis). Appellants responded to City
Bank's requests for disclosure on October 15,2012, but did not disclose either Blaine or Jordan.
After appellants' May 2013 disclosure, City Bank again requested the information
specified in rule 194 by letter on May 31, 2013. Blaine's mental impressions and opinions were
finally supplied in an affidavit dated July 18, 2013 . City Bank, however, had already prepared
and filed its summary judgment motion two weeks earlier.
Because appellants did not timely disclose their experts in response to the disclosure
requests, the trial court was required to exclude the evidence unless appellants established good
cause for the failure to respond or the lack of unfair surprise or unfair prejudice to City Bank.
TEX. R. CIV. P. 193.6; VingCard, 59 S.W.3d at 856. Appellants do not point to any showing of
good cause or lack of unfair prejudice made in response to City Bank's motion to exclude
Blaine's testimony for failure to timely disclose his mental impressions and opinions, or in
response to City Bank's objections to Blaine's and Jordan 's appraisals. Therefore, we conclude
that the trial court did not abuse its discretion by excluding their opinions. TEx. R. CIV. P. 193.6.
Because we conclude that the trial court did not abuse its discretion by excluding Blaine 's
and Jordan's opinions for the above reasons, we need not and do not reach City Bank's argument
that the trial court also properly excluded their opinions because neither witness opined
regarding the property's value on the foreclosure sale date. See generally TEX. PROP. CODE ANN.
§ 51.003; Plains Capital Bank v. Martin, 459 S.W.3d 550, 555-58 (Tex. 20 15) (discussing
determination of fair market value for purposes of statutory provision on deficiency judgments).
2. Aflatouni and Zive as potential experts
Although Blaine and Jordan were not designated until May 2013, Aflatouni and Zive
were designated as experts in October, 2012. Zive was designated to testify "as to the activities
of a real estate developer and the land development process." Similarly, Aflatouni was
-20-
Appendix to Appellant's Brief - Page 56 of 69 239
designated to testify "as to the activities of a real estate developer, the activities of a real estate
broker, the land development process and the importance and reasonableness of the subordinated
lien held by Aflatouni on this project." Neither, however, was designated to testify regarding the
property's value on the foreclosure date. Absent disclosure or timely supplementation of
Aflatouni's and Zive's mental impressions and opinions, the trial court did not err by excluding
their "expert" opinions regarding the property's value. TEX. R. Cry. P. 195.6 (amendment and
supplementation of discovery regarding experts); TEX. R. Civ. P. 193.5 (duty to amend or
supplement); TEX. R. Cry. P. 193.6 (exclusion of evidence not timely disclosed in response to
discovery request) .
3. Aflatouni and Zive as lay witnesses
Aflatouni and Zive also argue that as owners of the property they were qualified as lay
witnesses to testify to the property's value. Citing Dallas County v. Crestview Corners Car
Wash, 370 S.W.3d 25, 41 (Tex. App.-Dallas 2012, pet. denied), Zive also asserts that as
president of Grapevine Diamond's general partner, he is presumed to have knowledge of the
property's fair market value.
When a business entity owns property, a natural person may testify as to the property's
value under the property owner rule only if the person is an officer in a management position
with duties in part relating to the property or an employee in a substantially equivalent position.
Reid Road Mun. Uti!. Dist. No.2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 849 (Tex.
2011). Reid Road, however, further instructs that we should look at the substance of the
witness 's duties rather than his title or status. Id. at 849.
Moreover, while the "Property Owner Rule establishes that an owner is qualified to
testify to property value," that testimony must meet the "same requirements as any other opinion
evidence." Nat. Gas Pipeline Co. ofAm. v. Justiss, 397 S.W.3d ISO, 156 (Tex. 2012) (quoting
- 2 1-
Appendix to Appellant's Brief - Page 57 of 69 240
Porras v. Craig, 675 S.W.2d 503, 504 (Tex. 1984» (emphasis original). The Justiss court
continued,
Because property owner testimony is the functional equivalent of expert
testimony, it must be judged by the same standards. Thus, as with expert
testimony, property valuations may not be based solely on a property
owner's ipse dixit. An owner may not simply echo the phrase "market
value" and state a number to substantiate his diminished value claim; he
must provide the factual basis on which his opinion rests. This burden is not
onerous, particularly in light of the resources available today. Evidence of
price paid, nearby sales, tax valuations, appraisals, online resources, and
any other relevant factors may be offered to support the claim. But the
valuation must be substantiated; a naked assertion of "market value" is not
enough.
Id. at 159. Thus, being qualified to testify about value does not equate to providing competent
evidence of value.
As discussed below, assuming Zive and Aflatouni were qualified based on their status to
testify about the property's value on the foreclosure date, their affidavit testimony on that issue
was still legally insufficient evidence of the property's value on the foreclosure date.
Turning first to Zive, he argues that he was qualified to opine about the property's value
because he was the president of Grapevine Diamond's general partner and that he had worked on
the project. Assuming without deciding that he was qualified to testify on that issue, his
testimony was not admissible evidence of fair market value. Specifically, Zive testified that
(l) Grapevine Diamond purchased the property in 2007 for approximately $6.5 million; (2) he
reviewed Jordan's 2009 appraisal report; (3) in his opinion, the fair market value of the property
"would have increased in the time-period from the date of purchase to the date of the foreclosure
sale"; and (4) his "conservative estimate " is that at the time ofthe foreclosure sale the fair market
value of the property was $8,300,000.
Zive's opinion, however, was not supported with an underlying basis. Although he relied
on Jordan's 2009 appraisal report, Zive provided no substantiation for his opinion that the fair
-22-
Appendix to Appellant's Brief - Page 58 of 69 241
market value of the property would have increased by approximately $2 million by the 2011
foreclosure sale date. Instead, his "conservative estimate" simply offers a conclusion that is
unsupported by any specific, underlying data.
Likewise, even if Aflatouni, as a Grapevine Diamond limited partner, was qualified to
testify as an owner of the property (an issue we do not decide), he offered only unsupported
conclusions of fair market value. His summary judgment affidavit states that he became a
Grapevine Diamond limited partner on August 4, 2009. He further said that as a limited partner
and as the seller of the property to Grapevine Diamond, he is familiar with the property and its
value.
Although Aflatouni said that he has managerial responsibilities related to the property
that include development and marketing, he does not explain what the marketing and
development duties might be. He also does not state that he ever performed these functions
regarding the property, particularly in connection with forming his opinion concerning the fair
market value ofthe property.
With regard to fair market value, Aflatouni states only that he reviewed appraisal reports
for 2007 and 2009 to form his opinion about the fair market value of the property in 2011. There
is, however, no data or other information to connect the early values to the 2011 value. He does
not explain how or why the alleged value remained constant from 2007 through 2011, or what
calculations, if any, he performed to reach his conclusion concerning the 2011 value. In short,
his opinion concerning the 2011 fair market value of the property is nothing more than a bare
conclusion.
After reviewing the entire record, we conclude that the trial court did not abuse its
discretion by excluding the testimony of Blaine, Jordan, Aflatouni, and Zive as to the property's
fair market value on the foreclosure sale date. See Estate ofFinney, 424 S.W.3d at 612. We thus
-2 3-
Appendix to Appellant's Brief - Page 59 of 69 242
overrule Grapevine Diamond and Aflatouni's fourteenth, fifteenth , sixteenth, and seventeenth
issues, and Zive's issues 1.a, 1.b., and 1.c.
I. May Grapevine Diamond or Aflatouni recover damages or attorney's fees?
Because summary judgment was proper dismissing all of Grapevine Diamond and
Aflatouni's claims against City Bank, they may not recover damages, punitive damages, or
attorney's fees. See, e.g., Univ. Sav. Ass'n v. Springwoods Shopping Ctr., 644 S.W.2d 705, 706
(Tex. 1982) (to recover damages for wrongful foreclosure, alleged irregularities in sale must be
cause of injury to mortgagor). We thus overrule Grapevine Diamond and Aflatouni's seventh,
eighteenth, and nineteenth issues.
ill. CONCLUSION
Having overruled appellants' issues, we affirm the trial court's judgment.
/Bill Whitehill/
140260F.POS BILL WHITEHILL
JUSTICE
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Appendix to Appellant's Brief - Page 60 of 69 243
Administrative Powers > Automatic Stay > General Overview
Bankruptcy Law > ... > Administrative Powers > Automatic Stay > Judicial Review
Bankruptcy Law > ... > Automatic Stay > Violations of Stay > Void & Voidable Actions
Bankruptcy Law > ... > Bankruptcy > Claims > Setoffs
HN1 An action taken in violation of the bankruptcy automatic stay is void, not merely voidable. More like this Headnote
Shepardize Narrow by this Headnote (57)
Civil Procedure > Judgments > Summary Judgment > General Overview
Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General Overview
Civil Procedure > ... > Summary Judgment > Supporting Materials > General Overview
Appendix to Appellant's Brief - Page 67 of 69
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5/3/2017 Continental Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499
HN2 In a summary judgment proceeding, the nonmovant is entitled to have all reasonable inferences made and all doubts resolved in its favor. More like this
Document: Continental Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499 Actions
Headnote
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Counsel: Mr. Joe K. McGill , Seminole, Texas, Mr. Dan Patchin, Calvin, Dylewski, Gibbs, Maddox, Houston, Texas, Mr. Daniel J. Kasprzak , Calvin, Dylewski, Gibbs, Maddox,
Houston, Texas, for Petitioner.
Ms. Elizabeth M. Marsh , Lynch, Chappell, Allday & Alsup , Midland, Texas, for Respondent.
Opinion by: PER CURIAM
Opinion
[*500] This is a summary judgment case involving the claim of a lien against mineral property under Texas Property Code sections 56.001 et seq. Samedan Oil Corporation
("Samedan") placed an order with Misco Supply Company ("Misco") for Misco to supply casing to one of its wells. Misco in turn subcontracted the job, placing an order with
Continental Casing Corporation ("Continental") for it to deliver the pipe to the well. Continental delivered the pipe promptly and billed Misco.
Due to credits for returns, Misco owed Samedan thousands of dollars, which Misco had arranged for Samedan to take in "merchandise credit" against future invoices. Misco
was in financial trouble and filed for Chapter 7 Bankruptcy the day before it sent the invoice for the pipe delivery to Samedan. Continental sent Samedan two letters
demanding that [**2] Samedan pay for the pipe. The first letter was sent by first class mail on January 9, 1984, less than two months after delivery of the pipe. This first
letter did state that if payment was not received Continental would "file necessary liens on your well," but did not expressly state that Continental claimed a lien on
Samedan's mineral property. The second letter was mailed by certified mail only eleven days before Continental filed its lien affidavit on what would appear to have been the
last day of the six month period for timely filing under Texas Property Code section 56.021(a). Samedan received and signed for this certified letter six days before the filing
date. The second letter did expressly state that a lien was claimed "pursuant to Tex. Prop. Code § 56.021(b)." Under section 56.021(b), the mineral subcontractor must
"serve on the property owner written notice that the lien is claimed" not later than ten days before the subcontractor files the lien affidavit.
Continental sued to foreclose its lien and moved for summary judgment. Samedan responded and filed its own motion for summary judgment. Samedan claimed the lien was
invalid because it had offset the pipe invoice [**3] against what Misco owed it and thus owed no debt, or alternatively because "serve" in section 56.021(b) meant actually
receiving the notice was required. [*501] Continental replied that the automatic stay of the bankruptcy made the alleged offset void, and that certified mailing was
"service" by incorporation of the mechanics' and materialmen's lien statutes.
The trial court granted Continental's motion for summary judgment and denied Samedan's. The court of appeals in an unpublished opinion reversed the trial court judgment
and rendered judgment for Samedan. The court of appeals wrote that "only the bankruptcy trustee had standing to challenge the postpetition transfer," and further
sustained Samedan's claim that ten days' notice had not been given.
The court of appeals erred in holding that a setoff in violation of the bankruptcy automatic stay was voidable. HN1 An action taken in violation of the automatic stay is void,
not merely voidable. Kalb v. Feuerstein, 308 U.S. 433, 84 L. Ed. 370, 60 S. Ct. 343 (1940); In re Albany Partners, Ltd., 749 F.2d 670, 675 (11th Cir. 1984); 4 Collier on
Bankruptcy para. 553.05[2] at 55359 (15th ed. 1987). This was error. Eichelberger [**4] v. Eichelberger, 582 S.W.2d 395 (Tex. 1979). After careful review of the record,
however, we have concluded this cause presents error precluding rendition for either party in a summary judgment proceeding. The affidavit of Samedan's landman in support
of its motion for summary judgment (and in opposition to Continental's) is conclusory and does not expressly state when the alleged offset was taken before or after the
filing of the bankruptcy petition. If it were validly taken before the bankruptcy petition was filed, it would be a preference that could only be declared invalid in the bankruptcy
court. Federal Deposit Insurance Corp. v. Davis, 733 F.2d 1083 (4th Cir. 1984). Also, Samedan's affidavit is vague on the issue of notice. It recites that notice expressly
claiming a lien was not received sooner than ten days before the filing date for the lien affidavit, but it does not deny Samedan's having received the January 9, 1984 letter.
Continental's affidavit in support of its motion for summary judgment alleged the original January 9, 1984 letter is in Samedan's possession, but does not allege any date by
which Samedan received it. HN2 In a summary judgment proceeding, the [**5] nonmovant is entitled to have all reasonable inferences made and all doubts resolved in its
favor. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex. 1979). There are other ambiguities and deficiencies in the summary judgment record we need
not expressly address. The granting of summary judgment to either party was contrary to our Clear Creek opinion.
As far as the sufficiency of the first notice letter and whether notice was effectively "served" when the second letter was mailed by certified mail, we note without approval or
disapproval that several Texas intermediate appellate court decisions have applied the substantial compliance doctrines of the mechanics' and materialmen's lien laws to the
mineral property lien statutes now codified in Texas Property Code sections 56.001 et seq. See, e.g., Energy Fund of America, Inc. v. G.E.T. Service Co., 610 S.W.2d 833,
83638 (Tex. Civ. App. Eastland 1980), modified sub nom. Ayco Development Corp. v. G.E.T. Service Co., 616 S.W.2d 184 (Tex. 1981) (expressly noting the substantial
compliance holding was not presented to the court); Marathon Metallic Building Co. v. Texas National Bank of Waco [**6] , 534 S.W.2d 743, 747 (Tex. Civ. App. Waco
1976, no writ); Texcalco, Inc. v. McMillan, 524 S.W.2d 405, 407 (Tex. Civ. App. Eastland 1975, no writ). The facts are not sufficiently developed in this summary judgment
record to determine whether such a doctrine could or should apply. We decline to address the substantial compliance doctrine in the present case, since ruling on the issue
would not necessarily be dispositive of this case, given the ambiguous state of the record.
Because the court of appeals' decision conflicts with Clear Creek, we grant Continental's application, and without hearing oral argument, a majority of the court reverses the
court of appeals' judgment and remands the cause to the trial court for further proceedings. Tex. R. App. P. 133(b).
OPINION DELIVERED: June 1, 1988.
Appendix to Appellant's Brief - Page 68 of 69
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