FirstBank v. TZK Invs., LLC
| Decision Date | 27 May 2022 |
| Docket Number | Civil Action No. 4:21-cv-449 |
| Citation | 604 F.Supp.3d 451 |
| Parties | FIRSTBANK, Plaintiff, v. TZK INVESTMENTS, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of Texas |
Christopher Charles Townsend, Robert Martin Dungan, Michael John McKleroy, Jr., Akerman LLP, Dallas, TX, for Plaintiff.
Leland C. de la Garza, Hallett & Perrin PC, Dallas, TX, for Defendant.
Pending before the Court are Defendant TZK Investments, LLC's Motion for Summary Judgment (Dkt. #23) and Plaintiff FirstBank's Summary Judgment Motion (Dkt. #24). Having considered the motions and the relevant pleadings, the Court finds Plaintiff's Summary Judgment Motion should be GRANTED in part and DENIED in part , and Defendant's Motion for Summary Judgment should be DENIED .
On May 12, 2011, Defendant TZK Investments, LLC ("TZK") entered into a brokerage agreement (the "Brokerage Agreement") with an entity named Franklin Synergy Bank ("Franklin") (Dkt. #1, Exhibit 1). Franklin eventually merged into Plaintiff FirstBank ("FirstBank").
The Brokerage Agreement states that Franklin sought to sell mortgage loans on a bulk and/or flow basis, and that Franklin desired to obtain TZK's brokerage services, specifically in introducing Franklin to potential buyers of mortgage loans. The Brokerage Agreement also states:
If seller, or any of its affiliates, sells any of the mortgage loans to any broker contact whereby broker introduced such broker contact to seller, then, subject to section 1(b), broker shall be entitled to a fixed fee equal to 25 basis points (0.25%) of the outstanding principal balance of the mortgage loans as of the closing date of any and all such sales to broker contact (the "commission"). "Broker contact" shall mean any individual or a legal entity who buys mortgage loans from seller whereby broker introduced buyer to seller.
(Dkt. #1, Exhibit 1 § 1(a)). The Brokerage Agreement does not state a termination date. Nor does the Brokerage Agreement specify a procedure for either party to terminate the agreement.
After entering into the Brokerage Agreement, TZK connected Franklin with Capitol Federal, a potential buyer of Franklin's loans. Franklin began selling loans to Capitol Federal in late 2011, and Franklin paid commissions to TZK for each loan sold.
Franklin merged into FirstBank on August 15, 2020 (Dkt. #17 ¶ 10). FirstBank continued selling loans to Capitol Federal and paying TZK commissions after the merger. As of December 31, 2020, TZK had received a total of $613,174.53 under the terms of the Brokerage Agreement (Dkt. #24 ¶ 30).
On March 16, 2021, FirstBank, through its general counsel, sent a letter to TZK providing FirstBank's "notice of non-renew and terminate the [Brokerage Agreement] in its entirety, without penalty" (the "Letter") (Dkt. #24, Exhibit A-6). TZK disputed FirstBank's right to terminate the Brokerage Agreement (Dkt. #24, Exhibit A-7). "Out of an abundance of caution," on June 14, 2021, FirstBank tendered TZK a check in the amount of $93,918, which FirstBank calculated to be the commissions owed to TZK for all loans sold by FirstBank to Franklin Synergy through March 16, 2021 (Dkt. #17 ¶ 17). FirstBank now asserts its calculation was incorrect because any commissions owed from January 1, 2021, to March 16, 2021, would total $43,939.78. In total, TZK has received $707,092.53 in commissions for loans sold to Capitol Federal.
FirstBank filed suit on June 14, 2021, seeking declaratory relief (Dkt. #1). Specifically, FirstBank requests a declaration that it terminated the Brokerage Agreement on March 16, 2021, a reasonable duration for the Brokerage Agreement has passed, and FirstBank owes no obligation to pay TZK commissions (Dkt. #1 ¶ 29). In its answer, TZK denied FirstBank's allegations and asserted counterclaims for declaratory relief and breach of contract (Dkt. #6). TZK seeks a declaration from the Court that: (1) the Brokerage Agreement was not terminable at will; (2) the Brokerage Agreement was not validly terminated; (3) the Brokerage Agreement cannot be terminated so long as FirstBank sells loans to Capitol Federal; and (4) even if the Brokerage Agreement was validly terminated, FirstBank is still obligated to pay TZK commissions for loans sold to Capitol Federal (Dkt. #6 ¶ 27).
On September 14, 2021, FirstBank made formal demand on TZK to return the $43,939.78 in alleged overpayment of commissions within thirty (30) days (Dkt. #24, Exhibit A-10). TZK did not pay FirstBank any amount of money. Accordingly, on October 22, 2021, FirstBank amended its complaint, adding claims for unjust enrichment, money had and received, and conversion based on its alleged overpayment of commissions (Dkt. #17).
TZK moved for summary judgment on January 7, 2022 (Dkt. #23). FirstBank responded on February 11, 2022 (Dkt. #27). TZK replied on February 25, 2022 (Dkt. #34). FirstBank also moved for summary judgment on January 7, 2022 (Dkt. #24). TZK responded on February 11, 2022 (Dkt. #29). FirstBank replied on February 25, 2022 (Dkt. #35).
The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett , 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits "[show] that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The trial court must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment. Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co. , 655 F.2d 598, 602 (5th Cir. 1981) (citations omitted). The substantive law identifies which facts are material. Anderson , 477 U.S. at 248, 106 S.Ct. 2505.
The party moving for summary judgment has the burden to show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247, 106 S.Ct. 2505. If the movant bears the burden of proof on a claim or defense on which it is moving for summary judgment, it must come forward with evidence that establishes "beyond peradventure all of the essential elements of the claim or defense." Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge its burden by showing that there is an absence of evidence to support the nonmovant's case. Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ; Byers v. Dallas Morning News, Inc. , 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the nonmovant must "respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial." Byers , 209 F.3d at 424 (citing Anderson , 477 U.S. at 248–49, 106 S.Ct. 2505 ). The nonmovant must adduce affirmative evidence. Anderson , 477 U.S. at 257, 106 S.Ct. 2505. No "mere denial of material facts nor ... unsworn allegations [nor] arguments and assertions in briefs or legal memoranda" will suffice to carry this burden.
Moayedi v. Compaq Comput. Corp. , 98 F. App'x 335, 338 (5th Cir. 2004). Rather, the Court requires "significant probative evidence" from the nonmovant in order to dismiss a request for summary judgment supported appropriately by the movant. United States v. Lawrence , 276 F.3d 193, 197 (5th Cir. 2001). The Court must consider all of the evidence but must refrain from making any credibility determinations or weighing the evidence. See Turner v. Baylor Richardson Med. Ctr. , 476 F.3d 337, 343 (5th Cir. 2007).
FirstBank and TZK have filed competing summary judgment motions. TZK argues it is entitled to judgment on its requests for declaratory judgment and its breach of contract claim (Dkt. #23). FirstBank asserts it too is entitled to judgment on its requests for declaratory judgment (Dkt. #24). FirstBank also argues it is entitled to judgment for $43,939.78 under its claim for either unjust enrichment or money had and received.1 Finally, FirstBank contends TZK's breach of contract counterclaim fails as a matter of law.
FirstBank requests a declaration it terminated the Brokerage Agreement on March 16, 2021, a reasonable duration for the Brokerage Agreement has passed, and FirstBank owes no further obligation to pay TZK commissions (Dkt. #1 ¶ 29). TZK seeks a declaration from the Court that: (1) the Brokerage Agreement was not terminable at will; (2) the Brokerage Agreement was not validly terminated; (3) the Brokerage Agreement cannot be terminated so long as FirstBank sells loans to Capitol Federal; and (4) even if the Brokerage Agreement was validly terminated, FirstBank is still obligated to pay commissions for loans sold to Capitol Federal (Dkt. #6 ¶ 27). Because each side's request for declaratory judgment principally revolves around this Court's determination of whether the Brokerage Agreement was terminable at will, the Court will begin its analysis there.2
Trient Partners I, Ltd. v. Blockbuster Entm't Corp. , 83 F.3d 704, 708 (5th Cir. 1996) (citations omitted); see also Clear Lake City Water Auth. v. Clear Lake Utils. Co. , 549 S.W.2d 385, 390 (Tex. 1977) (...
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