Counsel Fin. Servs., L.L.C. v. Leibowitz
| Decision Date | 25 July 2013 |
| Docket Number | NUMBER 13-12-00103-CV |
| Parties | COUNSEL FINANCIAL SERVICES, L.L.C., Appellant, v. DAVID McQUADE LEIBOWITZ AND DAVID McQUADE LEIBOWITZ, P.C., Appellees. |
| Court | Texas Court of Appeals |
On appeal from the 370th District Court
of Hidalgo County, Texas.
MEMORANDUM OPINIONBefore Chief Justice Valdez and Justices Benavides and Perkes
Appellant, Counsel Financial Services, L.L.C. ("Counsel Financial"), appeals two orders granting summary judgment in favor of appellees David McQuade Leibowitz, P.C. and David McQuade Leibowitz, individually, and further appeals the denial of itsmotion to dismiss on the basis of forum selection clauses in contracts between the parties. The summary judgments granted relief in favor of appellees on their usury claims against Counsel Financial and also declared a security agreement unenforceable. We reverse and remand, in part, and dismiss, in part.
The parties to this case have engaged in extensive litigation and the factual underpinnings of their relationship have been explained in several different opinions by this Court and others.1 In short, Counsel Financial loaned the law firm of David McQuade Leibowitz, P.C. more than five million dollars. The loan was secured byDavid McQuade Leibowitz, P.C. and David McQuade Leibowitz individually (collectively "Leibowitz"). The promissory note evidencing the loan was secured by an agreement and guaranty executed by Leibowitz in his individual capacity. The note and security agreement were modified several times by the agreement of the parties over the course of several years. These documents provided Counsel Financial with a security interest in Leibowitz's legal fees, accounts, and intangibles in the event of a default under the loan.
Leibowitz failed to make payments due under the loan, and Counsel Financial obtained a default summary judgment against Leibowitz on the note and security agreement in the New York state court system. Leibowitz unsuccessfully appealed that judgment through the New York appellate courts.
Counsel Financial domesticated the New York judgment in Texas under the Uniform Enforcement of Foreign Judgments Act. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 35.001-.008 (West 2008 & Supp. 2011). On appeal, the San Antonio Court of Appeals held that the New York judgment is entitled to full faith and credit and is fully enforceable in Texas.
In separate trial court proceedings, which underlie this appeal, Leibowitz represented Maria Alma Anzaldua in a personal injury lawsuit against Kmart Corporation ("Kmart") in the 370th District Court of Hidalgo County. Upon learning that the parties had reached a settlement in the personal injury lawsuit, Counsel Financial filed a plea in intervention in that suit on grounds that Leibowitz had refused to pay the New York debt and judgment. In this intervention, Counsel Financial sought "an order from the Court directing all Parties to pay directly to [Counsel Financial] all funds (up tothe amount of CFS's lien) to which Leibowitz and the Law Firm may be entitled to as a result of this case and the settlement." Counsel Financial expressly stated that it "[did] not seek to disturb the proposed settlement agreement in the Lawsuit" and likewise "[did] not seek to disturb the rights of Plaintiff to receive the portion of the settlement that is rightfully hers, or the release of Defendant from the Lawsuit."
On October 9, 2009, in response to Counsel Financial's intervention, Leibowitz also intervened in the Hidalgo County suit and asserted claims for affirmative relief against Counsel Financial, including claims for declaratory and temporary injunctive relief and damage claims for tortious interference and business disparagement. By his first amended pleading, Leibowitz sought an anti-suit injunction and an anti-execution injunction attempting to restrain Counsel Financial from enforcing either the security agreement or the domesticated judgment. According to Leibowitz's pleadings, Counsel Financial claimed that it was entitled to his portion of the settlement funds based either on "a foreign default judgment which is not now enforceable under Texas law, or a Security Agreement which [Counsel Financial] has itself breached."
Counsel Financial filed, inter alia, motions to transfer venue, a plea to the jurisdiction, and a motion to dismiss based on forum selection clauses in the loan documents. Leibowitz filed two partial motions for summary judgment on usury claims. On January 20, 2012, the trial court granted both motions and severed them into a separate cause number. That same day, the trial court denied Counsel Financial's motion to dismiss based on the forum selection clauses in its documents. Counsel Financial thus brought this appeal and subsequently filed a separate petition for writ ofmandamus on the forum selection clause. We first address the motions for summary judgment.
We review a grant of summary judgment de novo. Exxon Corp. v. Emerald Oil & Gas Co., L.C., 331 S.W.3d 419, 422 (Tex. 2010). When the trial court does not specify the grounds for its ruling, a summary judgment will be affirmed if any of the grounds advanced by the motion are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 87273 (Tex. 2000). A party moving for traditional summary judgment has the burden to prove that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). The non-movant has no burden to respond to or present evidence regarding the motion until the movant has carried its burden to conclusively establish the cause of action or defense on which its motion is based. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000) (per curiam).
Counsel Financial's first issue on appeal attacks the trial court's order granting summary judgment on the usury claims against it. Leibowitz filed a motion for partial summary judgment seeking judgment against Counsel Financial on Leibowitz's claims under the Texas Finance Code. According to the motion, the default judgment against Leibowitz was subject to the New York post-judgment interest statute at a rate of 9%. The motion alleged that, under both Texas and New York Law, pursuant to thedoctrines of merger and bar, the note was merged into the default judgment. From the date of the default judgment through August 2010, Counsel Financial sent invoices to Leibowitz which included amounts for interest. According to Leibowitz, if the 9% post-judgment rate is applied, the amount of interest payable on $5,506,800.96 from November 25, 2008 through March 31, 2010 is $670,321.00. However, according to an affidavit provided by Leibowitz, the amount of interest, fees and charges for the use of money from the date of the default judgment through March 31, 2010, which is stated in the invoices, is $2,139,133.00. The motion for summary judgment also further contended that Counsel Financial was attempting to collect money which was not set out in the default judgment. As grounds for summary judgment, Leibowitz alleged violations of sections 305.0032 and 305.0043 of the Texas Finance Code. In short, thebasis of the motion is that, applying the New York statutory rate of interest on judgments (9%) to invoices sent by Counsel Financial to Leibowitz, the interest charged in the invoices is usurious under the Texas statutes. Leibowitz contends that Counsel Financial breached the finance code by sending invoices which included interest "at a time that no interest was accruing on the Note." Leibowitz calculated that the amount of interest that Counsel Financial charged was $2,139,133.00; however, the amount of interest allowed by law was $670,321.00, thus he was entitled three times the amount computed by subtracting the interest allowed by law from the total interest received, which is $4,406,436.00. Leibowitz sought judgment in the amount of $5,519,992.72, or, in the alternative, $4,406,436.00, or alternatively, a declaration of the amount of interest and fees Counsel Financial is entitled to collect under the domesticated New York judgment.
Counsel Financial filed a response to the motion including various objections to the motion, including a specific objection that the motion to dismiss on forum selection grounds should be addressed prior to any decision on the merits. The response also contended, inter alia, that: (1) the usury claims fail under New York law; (2) the usury claims fail under Texas law; and (3) the declaratory judgment claims fail on factual and legal grounds.
On January 20, 2012, the trial court granted Leibowitz's motion and rendered an "Order Granting Motion for Partial Summary Judgment and Order of Severance" which reads in part as follows:
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