Dolenz v. Continental Nat. Bank of Ft. Worth

• Decision Date: 22 July 1981
• Docket Number: No. C-283,C-283
• Citation: 620 S.W.2d 572
• Parties: Bernard J. DOLENZ, Petitioner, v. CONTINENTAL NATIONAL BANK OF FORT WORTH, Respondent.
• Court: Texas Supreme Court

Page 572

620 S.W.2d 572

Bernard J. DOLENZ, Petitioner, v. CONTINENTAL NATIONAL BANK OF FORT WORTH, Respondent.

No. C-283.

Supreme Court of Texas.

July 22, 1981.

Rehearing Denied Sept. 28, 1981.

Staples & Foster, Ross T. Foster, Hurst, for petitioner.

Shannon, Gracey, Ratliff & Miller, David E. Keltner and D. Michael Wallach, Fort Worth, for respondent.

BARROW, Justice.

This is a suit for conversion. The principal question presented concerns the trial court's refusal to grant a plea in abatement.

Bernard J. Dolenz, a Fort Worth psychiatrist, and Bee Jay Corporation (Dolenz) ¹ sued G&R Properties, Inc. (G&R), a foreign corporation, in Tarrant County for the alleged conversion of certain equipment in a motel located in Midland County. The trial court sustained G&R's plea of privilege and transferred the suit to Midland County. Dolenz then sued G&R and Continental National Bank of Fort Worth (CNB) in Midland County for the conversion of the equipment. Dolenz's suit against CNB was severed and transferred to Tarrant County when the Midland County court sustained CNB's plea of privilege.

Dolenz's suit against G&R went to trial in Midland County, and although the jury reached a verdict in that suit, no judgment has been rendered. When the cause was subsequently set for trial in Tarrant County, CNB filed a plea in abatement in Tarrant County, based on the pendency of the Midland County suit. The Tarrant County trial court denied CNB's plea in abatement. After a trial on the merits, the Tarrant County trial court rendered a judgment for Dolenz based on the jury verdict. The court of civil appeals concluded that the trial court should have granted CNB's plea in abatement. It therefore reversed the judgment of the trial court and remanded the cause to the trial court. 613 S.W.2d 73. We reverse the judgment of the court of civil appeals and affirm the judgment of the trial court.

This cause has a complex factual and procedural background. Late in the year 1969, H-K-M Properties, Inc. (H-K-M), became interested in purchasing certain properties in Midland, Texas. To enhance H-K-M's access to credit for financing the purchase of these properties, certain shareholders in H-K-M solicited Dolenz's involvement with their corporation. Dolenz became a shareholder in H-K-M in early 1970; shortly thereafter, H-K-M purchased the Sands Motel in Midland, Texas. Fort Worth National Bank provided the financing for that purchase, with security provided in part by some of Dolenz's investment portfolio. Subsequent to its purchase of the motel, H-K-M purchased equipment to operate the motel.

H-K-M soon needed additional funds for operating the motel; it also needed to refinance the debt it owed Fort Worth National Bank. In order to satisfy these needs, H-K-M, as borrower, and each of its shareholders, as guarantors, executed a loan agreement with CNB on September 8, 1970, by which CNB agreed to loan H-K-M up to $400,000. Attached to the loan agreement were a guaranty agreement, a security agreement concerning the motel equipment, a deed of trust on the motel realty, a promissory note, two financing statements and a confirmation of lien form. The guaranty agreement obligated each signing guarantor, including Dolenz, to guarantee full payment of any H-K-M indebtedness to CNB up to $400,000. The security agreement attached to the loan agreement evidenced H-K-M's grant to CNB of a security interest in all the equipment acquired by H-K-M for use in the motel. More equipment was purchased for the motel after the loan transaction.

Shortly after H-K-M arranged the loan from CNB, Dolenz demanded H-K-M repay the debt it owed him. In exchange for a release of this obligation and the assumption by Dolenz of its liability to CNB, H-K-M deeded the motel and its contents to Dolenz. Dolenz operated the motel for a few months and on September 26, 1971, he leased the motel to G&R Properties, Inc. (G&R).

A payment due on H-K-M's obligation to CNB was not made. CNB made demand for the balance due on the note, but the demand was not honored. On August 1, 1972, CNB conducted a public foreclosure sale of the motel realty under the terms of the deed of trust. Dolenz was initially the high bidder on the realty, but did not have the cash to comply with the terms under which the sale was held. When Dolenz could not comply with the cash requirement, CNB bid in the realty for $393,500. CNB continued to lease the motel to G&R.

Because the foreclosure sale left a deficiency in H-K-M's obligation under the loan agreement, CNB decided to foreclose its security interest in the motel equipment. CNB informed Dolenz of its intention to foreclose its security interest and conduct a private sale of the equipment. When Dolenz objected to the sale and claimed the equipment as his own, CNB informed him it would relinquish the equipment to him if he could prove his purported ownership. Dolenz failed to provide satisfactory proof of ownership to CNB and CNB thereafter sold the equipment to G&R Properties, without warranty of title or encumbrances. G&R began using the equipment as its own in the operation of the motel.

This disposition of the motel equipment caused Dolenz to initiate suit in Tarrant County against G&R for conversion of the equipment. The pleas of privilege heretofore mentioned were sustained. This resulted in Dolenz having one suit against G&R in Midland County and another suit against CNB in Tarrant County. Although both suits primarily involved the alleged conversion of Dolenz's equipment, Dolenz asserted several theories of recovery in each suit.

The Midland County suit was tried first. On May 25, 1978, the jury in that suit reached a verdict in which it found Dolenz had not purchased any of the equipment for his own personal account, and that he had authorized any motel equipment he then owned or thereafter acquired to be pledged to CNB by means of the Security Agreement executed by H-K-M. The jury found the fair market value of the allegedly converted equipment was $66,450, and also found CNB's bid at the foreclosure sale of the motel realty was intended by it to discharge and fully satisfy all indebtedness owed it in connection with the motel. Both Dolenz and G&R filed motions for judgment, but no judgment has yet been rendered.

After the Midland County suit was tried, Dolenz sought a setting in the Tarrant County suit. In response, CNB filed the plea in abatement involved in this cause. CNB urged the Tarrant County court to abate Dolenz's suit against it because "the issues to be decided in this case ... have been fully tried by Plaintiff ... and ... he should not now have a second opportunity to relitigate the identical issues in this court." After a hearing on June 22, 1979, the Tarrant County court denied CNB's plea in abatement. On October 29, 1979, Dolenz's suit against CNB proceeded to trial and resulted in a jury verdict favorable to Dolenz. The jury found CNB had converted motel equipment belonging to Dolenz with a fair market value of $111,500. The jury found Dolenz did not intend to subject his interest in the motel equipment to CNB's security interest, and that CNB was estopped to assert a claim under the note and deed of trust against Dolenz for a sum in excess of the $393,500 which CNB bid at the foreclosure sale. Based on the...