American Title Co. v. Bomac Mortg. Holdings

• Decision Date: 20 July 2006
• Docket Number: No. 05-05-00874-CV.,05-05-00874-CV.
• Citation: 196 S.W.3d 903
• Parties: AMERICAN TITLE COMPANY OF HOUSTON, Appellant v. BOMAC MORTGAGE HOLDINGS, L.P., Appellee.
• Court: Texas Court of Appeals

196 S.W.3d 903

AMERICAN TITLE COMPANY OF HOUSTON, Appellant v. BOMAC MORTGAGE HOLDINGS, L.P., Appellee.

No. 05-05-00874-CV.

Court of Appeals of Texas, Dallas.

July 20, 2006.

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Matt E. Rubin, Williams, Birnberg & Andersen, L.L.P., Houston, for Appellant.

Tom Thomas, Winstead Sechrest & Minick, P.C., Dallas, for Appellee.

Before Justices WHITTINGTON, O'NEILL, and MAZZANT.

OPINION

Opinion by Justice WHITTINGTON.

Bomac Mortgage Holdings, L.P., sued American Title of Houston for breach of contract, fraud, violations of the Texas Deceptive Trade Practices Act, see TEX. BUS. & COM.CODE ANN. §§ 17.41-.63 (Vernon 2002 and Supp.2005) (DTPA), and other claims relating to the financing of a mortgage. The trial judge entered judgment on the jury's verdict in favor of Bomac. American Title appeals, challenging the sufficiency of the evidence and alleging error in the trial judge's rulings regarding pleading of special damages, designation of responsible third parties, the jury charge, and amendment of pleadings. We affirm the trial court's judgment.

BACKGROUND

In July 2000, Bomac loaned $288,000 to Anthony Norris to purchase property in Galveston County. American Title provided escrow and other services relating to the closing of the sale. Norris defaulted on the loan after Bomac sold it to a third party, Impac Funding Corporation. Bomac paid $197,343.82 to Impac and sued American Title alleging fraud in the transaction.

Although the parties offered contradictory testimony and the case was vigorously contested at trial, some basic facts about the transaction are well established. Lawrence Caldwell, a principal of First Interstate Financial Network and a mortgage broker, contacted American Title through Paulette Lee about providing services in connection with a sale of the property to Norris. At the time American Title opened its file on the transaction, the property was owned by SDGA Investments. The transaction financed by Bomac, however, was a sale of the property from First Interstate to Norris. The parties do not appear to dispute a "flip" took place in which the property was transferred from SDGA to First Interstate for $195,000, then from First Interstate to Norris for $320,000, on the same day. The parties also do not appear to dispute the title commitment was altered to omit ownership information about the property or that $400 of the closing costs originally designated as a "review fee" to an attorney were used for Lee's personal rent payment.

Other facts relating to the transactions are disputed. The jury heard evidence regarding the use of proceeds from the Bomac loan to finance both sales, the source of Norris's downpayment, Bomac's instructions relating to the loan and whether the flip was a "simultaneous transaction" of which American Title was required to notify Bomac, whether Bomac relied on the altered closing documents, and other facts. In an eleven to one verdict, the jury found American Title defrauded Bomac, committed theft, and acted unconscionably. In the second phase of the trial, the jury awarded Bomac $250,000 in additional damages under the DTPA for American Title's knowing conduct. The trial judge entered judgment on the jury's verdicts.

STANDARDS OF REVIEW

In reviewing the legal sufficiency of the evidence, we consider all the evidence in the light most favorable to the prevailing party, indulging every reasonable inference in that party's favor. See Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 286 (Tex.1998). We must credit the favorable evidence if reasonable jurors could and disregard the contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168 S.W.3d 802, 807, 827 (Tex.2005). When reviewing a finding for factual sufficiency, we consider all of the evidence and will set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) (per curiam).

We review the trial judge's submission of instructions and jury questions under an abuse of discretion standard. Barnett v. Coppell N. Tex. Court, Ltd., 123 S.W.3d 804, 824 (Tex.App.-Dallas 2003, pet. denied). To determine whether an alleged error in the jury charge is reversible, we must consider the pleadings of the parties, the evidence presented at trial, and the charge in its entirety. Barnett, 123 S.W.3d at 824. When the complaint on appeal is that the trial judge improperly submitted an instruction, definition, or question, reversal is warranted when, in spite of a timely objection, the trial judge submits an invalid theory of liability or an unsupported element of damage, and the error prevents appellant from demonstrating the consequences of the error on appeal. See Barnett, 123 S.W.3d at 825.

The trial judge's enforcement of a scheduling order is reviewed for abuse of discretion. G.R.A.V.I.T.Y. Enters., Inc. v. Reece Supply Co., 177 S.W.3d 537, 542 (Tex.App.-Dallas 2005, no pet.). A trial judge abuses his discretion when he acts arbitrarily or unreasonably without reference to any guiding rules or principles. Reece Supply Co., 177 S.W.3d at 542.

RESPONSIBLE THIRD PARTIES

American Title complains the trial judge erred in not permitting it to designate responsible third parties in accordance with the Texas Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.004 (Vernon Supp.2005). Bomac counters that American Title's designation was not timely. We agree with Bomac. Under section 33.004, a defendant may seek to designate a person as a responsible third party by filing a motion for leave "on or before the 60th day before the trial date unless the court finds good cause to allow the motion to be filed at a later date." TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(a).

American Title filed its motion for leave to designate responsible third parties on July 21, 2004. Trial was set for August 2, 2004. American Title's motion was not timely under section 33.004(a), and Bomac filed an objection on July 26, 2004. In response to another motion by American Title, the trial date was continued until December 6, 2004. By agreed order, the parties extended the discovery cutoff and the dates for exchanging exhibits, making stipulations, filing witness lists, and making trial announcements. The agreed order did not extend the deadlines for designating responsible third parties or amending pleadings. American Title moved for a continuance of the December 6 date, and trial finally proceeded in January 2005.

American Title argues its motion to designate responsible third parties became timely because the trial dates were extended. The trial court's scheduling order setting the August 2, 2004 trial date, however, expressly provided "[r]eset or continuance of the Initial Trial Setting will not alter any deadlines established in this Order or established by the Texas Rules of Civil Procedure, unless otherwise provided by order." A scheduling order in Reece Supply Co. had similar language. Reece Supply Co., 177 S.W.3d at 543, n. 2. In that case, we upheld the trial judge's order striking an amended petition as untimely even though it was filed more than seven days prior to the date the case actually went to trial and even though the trial date had been reset several times from the initial trial date given in the scheduling order. Reece Supply Co., 177 S.W.3d at 543 and n. 2 (resettings did not affect discovery period or deadline for amending pleadings because scheduling order provided continuance of trial date would not alter any deadlines unless otherwise provided by order, and record did not reveal any such order ever entered). As the trial judge noted when he overruled the motion, "the case was reset on a very limited basis to allow some additional discovery." American Title did not establish good cause for its untimely motion as required by section 33.004. The trial judge did not abuse his discretion by overruling the motion to designate responsible third parties.

AMENDMENT OF PLEADINGS

American Title argues the trial judge erred in not permitting it to amend its pleadings to allege the affirmative defense of limitations. American Title's motion to add the affirmative defense of limitations is dated December 7, 2004; the trial court's scheduling order required amendments to pleadings to be made, at the latest, by seven days after the discovery period, which ended on November 12, 2004. American Title's proposed amendment on December 7 was not timely under the order. See ForScan Corp. v. Dresser Indus., Inc., 789 S.W.2d 389, 393 (Tex. App.-Houston [14th Dist.] 1990, writ denied) (deadlines set by trial judge in pretrial order under rule 166 prevail over deadlines in rules of civil procedure). Bomac filed its response to the motion to amend on December 13, alleging prejudice if the late filing was permitted. Bomac argued it would be required to amend its own pleading in response to assert the discovery rule and to take additional discovery relating to limitations. Bomac alleged the facts underlying the limitations defense were known by American Title before the date for amending pleadings in the pretrial order. American Title replied, contesting the arguments made in Bomac's response, and the trial judge denied leave to amend. American Title argues the trial judge should have permitted the amendment under rules 63 and 66 of the Texas Rules of Civil Procedure.

Rule 66 governs trial amendments; rule 63 governs pleading amendments made before trial. See TEX. RS. CIV. P. 63, 66. Under rules 63 and 66, a trial judge has no discretion to refuse an amendment unless the opposing party presents evidence of surprise or prejudice or the amendment asserts a new cause of action or defense, and thus is prejudicial on its face, and the opposing party objects to the amendment. Greenhalgh v. Service Lloyds Ins. Co., 787 S.W.2d 938, 939 (Te...