Fiduciary Mortg. Co. v. City Nat. Bank of Irving

• Decision Date: 19 October 1988
• Docket Number: No. 05-87-01004-CV,05-87-01004-CV
• Citation: 762 S.W.2d 196
• Parties: FIDUCIARY MORTGAGE COMPANY, Appellant, v. CITY NATIONAL BANK OF IRVING, Appellee.
• Court: Texas Court of Appeals

Page 196

762 S.W.2d 196

FIDUCIARY MORTGAGE COMPANY, Appellant, v. CITY NATIONAL BANK OF IRVING, Appellee.

No. 05-87-01004-CV.

Court of Appeals of Texas Dallas.

Oct. 19, 1988.

Rehearing Denied Dec. 19, 1988.

J. Kent Davenport, Leonard A. Epstein, Dallas, for appellant.

Christopher M. Weil, Anthony A. Petrocchi, Dallas, for appellee.

Before ENOCH, C.J., and DEVANY and THOMAS, JJ.

ENOCH, Chief Justice.

Fiduciary Mortgage Company (Fiduciary) sued City National Bank of Irving (CNB) for breach of contract and for failure to pay loan servicing and participation fees. Trial was before the court without a jury and judgment was rendered for CNB. Fiduciary appeals in thirty-two points of error. Essentially, Fiduciary complains that the evidence was neither legally, nor factually sufficient to support a number of the trial court's findings of fact and conclusions of law, that certain conclusions of law were not supported by findings of fact, that costs were improperly taxed, and that the trial court erred in allowing CNB to present witnesses at the trial on the issue of damages. CNB appeals in three cross-points of error. It urges that the trial court erred in awarding sanctions against CNB and striking its pleadings. Concluding that the trial court erred in finding facts contrary to those established as a matter of law and contrary to the overwhelming weight of the evidence, we reverse the judgment of the trial court and remand for a new trial on the issues of damages and attorney's fees.

The facts of the case

Fiduciary's petition alleges that CNB, "formerly known as First National Bank of Irving," entered into a series of contracts to pay Fiduciary service fees for seven loans. The petition also alleges that CNB contracted with Colson Services Corporation to pay Colson purchase participation fees in eight other loans, which Colson would then forward to Fiduciary. According to Fiduciary's pleadings, CNB failed to pay any of these fees. Additionally, Fiduciary's petition alleged that CNB loaned $6,500 to Fiduciary for Fiduciary's participation in "Cheung's Rice Bowl" loan, with the understanding that CNB would buy the loan back if it went into default. Fiduciary pleaded that CNB assigned Fiduciary's note to the Federal Deposit Insurance Company (FDIC). The loan went into default, but CNB did not repurchase it.

CNB's answer alleges that it is not the successor of First National Bank of Irving ( FNBI ). CNB alleged that it had merely acquired certain assets of FNBI from the FDIC after FNBI had been declared insolvent and the FDIC had been appointed its receiver. CNB stated that it had no agreements with Fiduciary as to any of the loans in question and that it was not bound by any agreements made by FNBI. Further, CNB denied that it had made any agreement with Colson Services Corporation. CNB averred that after acquiring some loans from the FDIC, CNB learned that Colson served as a fiscal transfer agent with respect to participation disbursements from some loans. CNB stated that it had remitted participation amounts to Colson as the transfer agent. CNB also asserted that some of the loans remained assets of FDIC. Finally, with regard to the Cheung's Rice Bowl loan, CNB contended that any agreements were between Fiduciary and FNBI rather than between Fiduciary and CNB and that the loan remained the property of the FDIC.

Trial was set for April 16, 1987. On April 8, 1987, Fiduciary filed a motion to disqualify CNB's counsel. CNB's counsel withdrew and CNB was granted a continuance to find substitute counsel. In the interim, Fiduciary served a notice of deposition and subpoena duces tecum on CNB for April 28, 1987. Although the parties' accounts of the events following this notice vary somewhat, it is clear that CNB had not obtained permanent counsel as of April 28th. Fiduciary contends that an "interim" attorney for CNB called and requested that the deposition be postponed. Fiduciary states that it agreed, but only on the condition that the deposition be definitely scheduled for May 6, 1987. CNB contends that it did not obtain permanent counsel until May 6th, but that its new counsel was hired on that date. However, this counsel insisted that the deposition and trial be postponed. CNB further responds that, prior to May 6th, it contacted Fiduciary to postpone the deposition, that Fiduciary agreed to postpone the deposition, but that it never called CNB back to reschedule the deposition.

Fiduciary filed a motion to compel and for sanctions. The trial court granted Fiduciary's motion for sanctions and struck CNB's pleadings. The case went to trial before the court, ostensibly on the sole issue of damages. At the trial however, and over objection by Fiduciary, CNB called witnesses and introduced evidence concerning liability. At the conclusion of the trial, the trial court filed findings of fact and conclusions of law that were consistent with CNB's stricken pleadings on liability issues. The trial court also found that Fiduciary's evidence of damages did not establish with reasonable certainty that any amount was owed to Fiduciary. The trial court entered a judgment that Fiduciary take nothing in its suit against CNB.

CNB's witnesses

In its first point of error, Fiduciary contends that the trial court erred in allowing CNB to call witnesses at the trial on damages. Fiduciary contends that, at the hearing on damages, CNB had the right to be present, to object to the admission of evidence, and to cross-examine witnesses, but that it could not call its own witnesses. Fiduciary cites Illinois Employers Insurance Co. of Wausau v. Lewis, 582 S.W.2d 242 (Tex.Civ.App.--Beaumont), writ ref'd n.r.e., 590 S.W.2d 119 (Tex.1979), (per curiam), and Rainwater v. Haddox, 544 S.W.2d 729 (Tex.Civ.App.--Amarillo 1976, no writ), in support of this argument. These cases do not stand for the proposition that a defendant is completely barred from calling witnesses concerning the amount of damages owed once liability has been established. CNB was entitled to offer proof and call witnesses in mitigation of damages. See Maywald Trailer Co. v. Perry, 238 S.W.2d 826, 827 (Tex.Civ.App.--Galveston 1951, writ ref'd n.r.e.). Fiduciary's first point of error is overruled.

The trial court's findings on liability

In points of error two, three, five, six, seven, eight, nine, ten, twelve, thirteen, fifteen, sixteen, seventeen, and eighteen, Fiduciary contends that there is no evidence or insufficient evidence to support the trial court's findings of fact numbers one through seven. At the outset, we note that these points of error are multifarious as each point attacks more than one separate finding or conclusion of law. However, because Fiduciary's argument under these points of error is such that it directs this Court's attention to the asserted errors, we will address the points. See TEX.R.CIV.P. 74; Atlantic Richfield Co. v. Holbein, 672 S.W.2d 507, 517 (Tex.App.--Dallas 1984, writ ref'd n.r.e.).

Fiduciary complains of the following findings:

1. Plaintiff Fiduciary Mortgage Company ("Fiduciary") entered into a series of contracts with First National Bank of Irving involving payment of servicing fees in connection with the following loans, which are identified by borrower:

A. G & G Trucking

B. Joy Wright

C. Riggan Enterprises

D. Diversity, Inc.

E. Edwards, Inc.

F. Lens Tech

G. Holloway Office Supply

H. Hurst Video

I. Lhota Enterprises

J. Infirmacare

K. Video Works

L. Wood, Etc.

M. Soccer Center

N. Texas Law Man

O. Trifovesti

P. Cheung's Rice Bowl,

and which loans shall be collectively referred to herein as "the Loans."

2. Defendant City National Bank of Irving ("CNB Irving") is a separate and independent entity from First National Bank of Irving. In April of 1986, First National Bank of Irving was declared insolvent and the Federal Deposit Insurance Corporation ("FDIC") was appointed as receiver of that bank and acquired the assets of same. CNB Irving purchased some of the assets of First National Bank of Irving from FDIC, as receiver, but did not purchase many loans under which Fiduciary seeks recovery of servicing fees.

3. FDIC, a receiver for First National Bank of Irving, owns the loans identified as Diversity, Inc., Edwards, Inc., Lens Tech, Hurst Video, Soccer Center, Texas Law Man, and Cheung's Rice Bowl ("the FDIC loans") for which Fiduciary claims entitlement to recover loan servicing fees from CNB Irving.

4. The FDIC loans under which Fiduciary seeks to recover loan servicing fees are not assets of CNB Irving, and do not, therefore, give rise to any liability on the part of CNB Irving for payment to Fiduciary of those loan servicing fees.

5. The agreement, if any, to loan Fiduciary $6,500.00 in connection with the Cheung's Rice Bowl loan was an agreement between Fiduciary and First National Bank of Irving, to which agreement, if any, CNB Irving was not a party.

6. The agreement, if any, under which Colson Services Corporation was to receive purchase participation in connection with the Hurst Video, Lhota Enterprises, Infirmacare, Video Works, Wood, Etc., Soccer Center, Texas Law Man, and Trifovesti is an agreement between First National Bank of Irving and Colson Services Corporation, to which agreement, if any, neither Fiduciary nor CNB Irving were parties.

7. Fiduciary's right, if any, to recover loan servicing fees is contingent upon borrowers' payments to the person holding the loan. Therefore, Fiduciary may not recover any amounts for servicing fees on non-performing loans.

(Emphasis added.)

Although Fiduciary states in its points of error that there is "no evidence" to support the trial court findings, in its argument Fiduciary treats these points of error as matter of law points. ¹ In the argument under these points of error, Fiduciary contends that "a fact that is judicially admitted does not require evidence; rather, it is established conclusively as a matter of law and precludes the trial court from finding facts...