Credit Suisse AG, Cayman Islands Branch v. Claymore Holdings, LLC, 05-15-01463-CV

Citation584 S.W.3d 18
Decision Date20 February 2018
Docket NumberNo. 05-15-01463-CV,05-15-01463-CV
Parties CREDIT SUISSE AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC, Appellants v. CLAYMORE HOLDINGS, LLC, Appellee
CourtCourt of Appeals of Texas

Anjali Dalal, Kevin Arlyck, E. Joshua Rosenkranz, Matthew Shahabian, Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, David Lender, Gregory Silbert Weil, Gotshal & Manges, LLP, 767 Fifth Avenue, Luna Barrington, Weil, Gotshal & Manges, LLP, 767 Fifth Avenue, New York, NY, Claudia Wilson Frost, Orrick, Herrington & Sutcliffe LLP, 1300 McKinney, Suite 4100, Houston, TX, Edmund G. LaCour Jr., Kirkland & Ellis LLP, 655 Fifteenth Street, NW, Robert M. Loeb, Orrick, Herrington & Sutcliffe LLP, 1152 15th Street, N.W., Washington, DC, Jeffrey M. Tillotson, Tillotson Law, 750 N. St. Paul Street Suite 610, John O'Connor, T. Ray Guy, Weil, Gotshal & Manges LLP, 200 Crescent Ct. Ste. 300, Dallas, TX, for Appellant.

Nathaniel Palmer, William T. Reid IV, Lisa Sheaufeng Tsai, Scott Saldana, Keith Cohan, Reid Collins & Tsai LLP, 1301 S. Capital of Texas Hwy., Building C, Suite 300, Austin, TX, James Michael Stanton, Stanton Law Firm, LLP, 9400 North Central Expy., Ste. 1304, Jeffrey S. Levinger, Levinger PC, 1445 Ross Avenue, St. 2500, Dallas, TX, H. Christopher Bartolomucci, Kirkland & Ellis LLP, C. Harker Rhodes IV, Edmund G. LaCour Jr., 655 Fifteenth Street, NW, Washington, DC, for Appellee.

Before Justices Lang -Miers, Brown, and Boatright

MEMORANDUM OPINION

Opinion by Justice Lang -Miers In this appeal, we determine whether, under New York law, disclaimers in a contract between appellants/cross-appellees Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC ("Credit Suisse") and appellee/cross-appellant Claymore Holdings, LLC ("Claymore") relieved Credit Suisse of liability for an allegedly fraudulent real property appraisal. We also consider whether the trial court erred in its award of damages to Claymore in the final judgment. In Claymore's cross-appeal, we consider whether the trial court erred in its award of prejudgment interest or by failing to award damages for unjust enrichment. For the reasons we explain below, we conclude that the trial court did not err in its rulings on these issues. We affirm the trial court's judgment.

BACKGROUND1

In 2007, Claymore2 invested $250 million in a refinancing of real property in Las Vegas. Credit Suisse acted as "administrative agent" for the refinancing deal. In that capacity, Credit Suisse procured an appraisal of the property. After a series of tolling agreements between the parties expired, Claymore sued Credit Suisse alleging it manipulated the appraisal to inflate the value of the property, and that Claymore's entire $250 million investment was lost because of Credit Suisse's fraud and breaches of contract. Claymore's fraud claims were submitted to a jury. The jury awarded Claymore $40 million on one of its fraud claims. Claymore's breach of contract claims were tried to the court. The trial court's final judgment awarded Claymore $211,863,998.56 in damages, prejudgment interest of $75,644,154.22, court costs, and post-judgment interest.

The contract at issue is an amended and restated credit agreement dated June 22, 2007 ("Credit Agreement"). In the Credit Agreement, the parties refer to Credit Suisse as "Administrative Agent." Claymore is a "Lender." Section 2.3 of the Credit Agreement required Credit Suisse to make the loan proceeds available to the borrowers "[u]pon satisfaction or waiver" of specified "conditions precedent." In its operative petition, Claymore alleged that Credit Suisse breached this provision by failing to satisfy one of the specified conditions precedent, to receive a "Qualified Appraisal" of the property "in a form reasonably acceptable" to Credit Suisse, as required in section 3.1(H)(vi) of the Credit Agreement. "Qualified Appraisal" was defined in section 1.1 of the Credit Agreement:

"Qualified Appraisal" means any real estate appraisal conducted in accordance with the Financial Institutions Reform Recovery and Enforcement Act ("FIRREA"), the Uniform Standards of Professional Appraisal Practice ["USPAP"] (as promulgated by the Appraisal Standards Board of the Appraisal Foundation) and all requirements of Applicable Law applicable to Administrative Agent undertaken by an Appraiser, and providing an assessment of the Appraised Value (Land Only) and the Appraised Value (All Collateral), the form and substance of such appraisal to be reviewed and approved by the Administrative Agent in its reasonable judgment .

(Emphasis added).

At trial, Claymore offered evidence that

• Claymore agreed to participate in the refinancing only if Credit Suisse obtained an as-is market value appraisal of the property that complied with FIRREA;
• The appraisal Credit Suisse received did not include an as-is market value appraisal of the property that complied with FIRREA, and therefore was not a "Qualified Appraisal";
• Credit Suisse knew the appraisal was not a "Qualified Appraisal," because Credit Suisse and the appraiser CBRE, Inc. manipulated the valuation of the property before the appraisal was finalized and provided to Claymore;
• Prior to the execution of the Credit Agreement, Credit Suisse represented to Claymore that the appraised "FIRREA value" of the property, based on CBRE's appraisal, was $891 million; and
• An appraisal that complied with FIRREA would have revealed the as-is market value of the property to be less than $540 million, the total amount of the loan.

Credit Suisse, in turn, relied on the Credit Agreement's extensive disclaimers and exculpatory provisions. Section 8.3 provided:

The Agents shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. ... The Agents shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements, or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 3 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agents.

Section 8.8 provided:

Each Lender acknowledges that it has, independently and without reliance upon any Agent ... and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the [sic] any Agent ... and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

Additionally, section 8.4 of the Credit Agreement provided that Credit Suisse would not incur liability for relying on any "certificate ... believed by it in good faith to be genuine."

Relevant to Claymore's fraud claims, Claymore agreed in a separate "Assignment and Assumption Agreement" ("A&A"), under which the actual loans were made, that it had "received a copy of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest on the basis of which it has made such analysis and decision...." Claymore also agreed that "it will, independently and without reliance on Administrative Agent ... and based on such documents and information as it shall deem appropriate at that time, continue to make its own credit decisions in taking or not taking action under the Credit Documents...."

The trial court concluded that neither section 8.3 nor section 8.8 of the Credit Agreement relieved Credit Suisse of liability for breach of contract or fraud. In its detailed findings and conclusions, the trial court explained that the Credit Agreement's express requirement that Credit Suisse review and approve a Qualified Appraisal was an exception to the exculpatory provisions in section 8.3. Conclusion of Law ("C.L.") 24 (Credit Suisse had express duties regarding Qualified Appraisal in sections 2.3, 3.1, and 8.3 of Credit Agreement that fell within section 8.3's exception for duties or obligations "expressly set forth herein"). The trial court also concluded that section 8.8 "does not expressly disclaim the conduct that Credit Suisse has been proved to have engaged in here." C.L. 25. Although the trial court did not make an express conclusion regarding section 8.4, its findings of fact that Credit Suisse knew of the errors in the appraisal would support a conclusion that Credit Suisse did not "believe ... in good faith" that the appraisal was "genuine."

Each party now appeals the trial court's judgment.

DISCUSSION
I. Standards of review

The Credit Agreement provides, and the parties agree, that New York law applies to their substantive claims. Procedural issues, however, are governed by Texas law. McAfee, Inc. v. Agilysys, Inc. , 316 S.W.3d 820, 824 (Tex. App.—Dallas 2010, no pet.) ("In applying a contractual choice-of-law provision, Texas courts apply the substantive law of the choice-of-law provision but apply Texas law to matters of remedy and procedure."). Procedure includes standards of review. Id. We review the trial court's findings of fact and the jury's verdict under...

To continue reading

Request your trial
2 cases
  • Credit Suisse AG v. Claymore Holdings, LLC
    • United States
    • Texas Supreme Court
    • April 24, 2020
    ...court costs, and post-judgment interest.The court of appeals affirmed. Credit Suisse AG, Cayman Islands Branch v. Claymore Holdings, LLC , 584 S.W.3d 18 (Tex. App.—Dallas 2018, pet. granted). The court rejected Credit Suisse's arguments that it did not breach the Credit Agreement, that the ......
  • Credit Suisse AG v. Claymore Holdings, LLC
    • United States
    • Texas Court of Appeals
    • February 14, 2023
    ...808 (Tex. 2020). The Texas Supreme Court reversed and remanded to the trial court for reconsideration of damages in light of its opinion. Id. On remand, the trial court awarded $40 in fraudulent inducement damages determined by the jury, plus pre- and post-verdict interest, less allocable s......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT