Branch Banking & Trust Co. v. Lexiam Enters., LLC
| Decision Date | 24 October 2016 |
| Docket Number | Case No. 3:15-CV-2928-M |
| Parties | BRANCH BANKING AND TRUST COMPANY, Plaintiff, v. LEXIAM ENTERPRISES, LLC, CHRISTOPHER CLAASSEN, and TANZEEN CLAASSEN, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court is a Motion for Summary Judgment [ECF # 18], filed by Plaintiff Branch Banking and Trust Company ("BB&T"). Because BB&T has produced sufficient summary judgment evidence to establish that it is entitled to judgment as a matter of law on all its claims and causes of action, and because Defendants have not shown there is a genuine dispute regarding any affirmative defense, BB&T's Motion is GRANTED.
The material facts in this case are not in dispute. On or about November 15, 2011, Defendant Lexiam Enterprises, LLC obtained a business loan (the "Loan") from Citibank, N.A., to fund Lexiam's acquisition and operation of the Zen Austin Ranch, a restaurant and bar located in The Colony, Texas. See Pl. MSJ App. [ECF # 19], Ex. 1; see also Def. MSJ App. [ECF # 20] at 1-10. In connection with the Loan, Lexiam executed a promissory note (the "Note") in the amount of $390,000.00, payable to Citibank. Pl. MSJ App., Ex. 1; id., Ex. 4 at 2. See also Def. Ans. [ECF # 7] at 1, ¶ 8. Lexiam also executed a Commercial Security Agreement ("Security Agreement"), granting Citibank a security interest in certain collateral located at the restaurant premises, including restaurant fixtures, equipment, and other personal property ("FFE"). Def. MSJ App. at 11-14. Defendants Christopher Claassen and Tanzeen Claassen (the "Guarantors") executed separate personal guarantees (the "Guarantees"), unconditionally guaranteeing payment of all amounts owing under the Note. Pl. MSJ App., Ex. 2; see also Def. Ans. at 1, ¶ 9. Approximately three and a half years later, on March 14, 2015, Citibank executed an Allonge to the Note, and an Assignment of Loan Documents, transferring its interest in the Note and the Guarantees to BB&T. See Pl. MSJ App., Ex. 3.
Lexiam defaulted on the Loan by failing to make required payments when due under the Note. See Def. Ans. at 1, ¶ 11 & 2, ¶¶ 14, 22. On July 8, 2015, BB&T provided written notice of the default to Defendants. Id. at 2, ¶ 12; see also Pl. MSJ App., Ex. 5-A. When none of the Defendants cured the default, BB&T filed this lawsuit asserting (1) a claim against Lexiam for breach of the Note and (2) a claim against the Guarantors for breach of guaranty. BB&T also sought an award of attorneys' fees under the terms of the Note and the Guarantees, as well as under Chapter 38 of the Texas Civil Practice & Remedies Code. Defendants filed an answer, in which they admitted Lexiam's default under the Note and the Guarantors' breach of the Guarantees. Def. Ans. at 2, ¶¶ 12, 14, 15, 17. Defendants asserted as a defense, however, that BB&T lacks standing to bring this lawsuit. Id. at 3, ¶ 32.
BB&T moves for summary judgment against Lexiam and the Guarantors to recover the entire indebtedness due under the Note and the Guarantees, including attorneys' fees. Defendants filed a joint response and a request for leave to take further discovery and deferruling on BB&T's Motion, which the Court denied. The issues have been fully briefed, and the Motion is now ripe for determination.
Summary judgment is warranted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute as to a material fact is genuine, if the evidence is sufficient to permit a reasonable factfinder to return a verdict for the nonmoving party. Johnson v. World Alliance Fin. Corp., 830 F.3d 192, 195 (5th Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A fact is material if its resolution could affect the outcome of the action. Weeks Marine, Inc. v. Fireman's Fund Ins. Co., 340 F.3d 233, 235 (5th Cir. 2003). The substantive law determines which facts are material. See Anderson, 477 U.S. at 247.
A party seeking summary judgment who does not have the burden of proof at trial need only point to the absence of admissible evidence to support the nonmovant's claim. See Duffy v. Leading Edge Prods., Inc., 44 F.3d 308, 312 (5th Cir. 1995). Once the movant meets its initial burden, the burden shifts to the nonmoving party to produce evidence or designate specific facts in the record showing the existence of a genuine issue for trial. See Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). By contrast, a movant who bears the burden of proof at trial must establish "beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original). Once the movant meets its initial burden, the nonmovant must show that summary judgment is not proper. See Duckett v. City of Cedar Park, 950 F.2d 272, 276 (5th Cir.1992). The parties may satisfy their respectiveburdens by tendering depositions, affidavits, and other competent evidence. See Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992).
To recover on its claim for breach of the Note, BB&T must prove: (1) the existence of the Note; (2) that the party sued signed the Note; (3) that BB&T is the legal owner and holder of the Note; and (4) what amount constitutes the outstanding balance due and owing on the Note. See Truestar Petroleum Corp. v. Eagle Oil & Gas Co., 323 S.W.3d 316, 319 (Tex. App.—Dallas 2010, no pet.). Here, BB&T has produced a copy of the original Note in favor of Citibank, dated November 15, 2011, in the original principal amount of $390,000.00. Pl. Compl., Ex. 1; Pl. MSJ App., Ex. 1. Defendants admit that this Note is a valid and enforceable agreement, and that Guarantors signed the Note, on behalf of Lexiam. See Pl. MSJ App., Ex. 5-C, RFA #3; Def. Ans. at 2, ¶ 19.
The uncontroverted summary judgment evidence further establishes that BB&T is the legal owner and holder of the Note pursuant to the terms of the Allonge and the Assignment of Loan Documents, executed by Citibank in favor of BB&T, on March 20, 2015. Pl. MSJ App., Ex. 3. Although Defendants initially pled that BB&T lacks standing to bring this lawsuit because "it was not party to the loan documents," they appear to have abandoned this defense by failing to address the standing issue—or any of BB&T's evidence establishing standing—in their summary judgment response. See Black v. N. Panola Sch. Dist., 461 F.3d 584, 588 n. 1 (5th Cir. 2006) (). Even if Defendants had not abandoned their lack of standing defense, they would not prevail on the merits. The summary judgment evidence establishes that Citibank,the original lender, assigned the Note and the Guarantees to BB&T, and there are no gaps in the chain of title. This evidence is sufficient to establish BB&T's standing to bring the claims asserted in this lawsuit. See Dade v. Hoover, 191 S.W.3d 886, 888 (Tex. App.—Dallas 2006, pet. denied) ().
Defendants further admit that Lexiam defaulted on the Note by failing to pay the indebtedness when due. Def. Ans. at 1, ¶ 11 & 2, ¶¶ 14, 22. BB&T's uncontroverted summary judgment evidence further establishes that, as of July 8, 2016, the outstanding balance owing on the Loan, exclusive of attorneys' fees, was $322,439.18, comprised of $295,565.14 in unpaid principal, $24,038.68 in unpaid interest at the Note rate of $47.21 per day, through July 8, 2016, and $2,835.36 in miscellaneous recoverable fees. Pl. MSJ App., Ex. 4 at 3. Therefore, the Court finds that BB&T has satisfied the elements required to recover on its claim for breach of the Note.
To recover on its claim for breach of the Guarantees, BB&T must prove: (1) the existence and ownership of each Guarantee; (2) performance of the terms of the underlying contract by BB&T (3) the occurrence of the conditions on which liability is based; and (4) each Guarantor's failure or refusal to perform the promise. See Gold's Gym Franchising LLC v. Brewer, 400 S.W.3d 156, 160 (Tex. App.—Dallas 2013, no pet.). As with the Note, BB&T has produced a copy of the original Guarantees executed by Christopher Claassen and Tanzeen Claassen. Pl. Compl., Ex. 2; Pl. MSJ App., Ex. 3; Def. Ans. at 1, ¶ 9. BB&T has also produced uncontroverted summary judgment evidence establishing its ownership of theGuarantees, pursuant to the terms of the Assignment of Loan Documents, executed by Citibank in favor of BB&T, on March 20, 2015. Pl. MSJ App., Ex. 3.
Each Guarantee provides, in relevant part:
Guarantor unconditionally guarantees payment to Lender of all amounts owing under the Note. This Guarantee remains in effect until the Note is paid in full. Guarantor must pay all amounts due under the Note when Lender makes written demand upon Guarantor. Lender is not required to seek payment from any other source before demanding payment from Guarantor.
Id. Defendants admit that BB&T performed all of its obligations under the Note. Def. Ans. at 2, ¶ 21. Defendants further admit that Lexiam defaulted under the Note, that such default triggered Guarantors' obligations under the Guarantees, and that Guarantors failed to remedy Lexiam's default after BB&T made a written demand on them for payment. Id. at 2, ¶¶ 15, 17, 25, 26. The Court therefore finds that BB&T has satisfied the elements required to recover on its claim against Guarantors for breach of the Guarantees.
In their response to BB&T's summary judgment motion, Defendants argue that BB&T ignored the availability of the FFE at the restaurant premises valued at $150,000.00, and thus failed to...
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