Garza v. Evans

• Decision Date: 24 May 2012
• Docket Number: NO. 01-11-00666-CV,01-11-00666-CV
• Parties: J. HOMER GARZA AND ARTURO SALOMON, Appellants v. C. PAUL EVANS, Appellee
• Court: Texas Court of Appeals

J. HOMER GARZA AND ARTURO SALOMON, Appellants

v.C. PAUL EVANS, Appellee

NO. 01-11-00666-CV

Court of Appeals For The First District of Texas

Opinion issued May 24, 2012

On Appeal from the 133rd Judicial District Court

Harris County, Texas

Trial Court Case No. 2008-47756

MEMORANDUM OPINION

Appellants, J. Homer Garza and Arturo Salomon, bring this appeal challenging the trial court's judgment, entered after a bench trial, in favor ofappellee, C. Paul Evans, in Evans's suit in intervention¹ for breach of a guaranty agreement. In three issues, Garza and Salomon contend that the trial court erred in enforcing the guaranty agreement.

We affirm.

Background

In their original petition, Garza and Salomon asserted against TBA Construction, L.L.C. ("TBA Construction") and its owners Mark Adkinson, Mary Adkinson, and Thomas Dunn their claims for breach of contract, fraud, fraudulent inducement, unfair competition, and violation of a non-competition agreement. Evans filed a suit in intervention against Garza, Salomon, TBA Construction, and Mark Adkinson, alleging that TBA Construction had defaulted on a promissory note in the amount of $200,000 and Garza, Salomon, and Adkinson had defaulted on their guaranty of payment under the promissory note. Specifically, Evans alleged that TBA Construction had delivered him a promissory note; Garza, Salomon, and Adkinson individually guaranteed the note later the same year; TBA Construction defaulted on the note; and Adkinson, Garza, and Salomon had refused to pay the amount due on the note as provided in the guaranty agreement.

The trial court entered a default judgment on Evans's claim against TBA Construction in the amount of $235.195.26. At the beginning of trial, Garza and Salomon non-suited their claims against TBA Construction.

Evans testified that in March 2006, he discussed with Dunn the possibility of loaning money to TBA Construction in order to "fund the company," and he and Dunn eventually agreed that Evans would loan TBA Construction $200,000. Evans received a promissory note from TBA Construction, signed by Evans and Dunn, which provided for semi-annual repayments of interest beginning in September 15, 2006 and the total amount coming due on March 15, 2011.

In October 2006, Evans spoke with Mark Adkinson, who informed him that "the company had been purchased by another firm." Adkinson asked if Evans "could wait for 90 days" before receiving total repayment of the note, to which Evans consented. "[A]t some point" later, Evans received a document entitled, "Specific Guaranty Agreement," signed by Garza, Salomon, and Adkinson, which provided,

FOR VALUE received, the undersigned, whether one or more, hereinafter "Undersigned" or "Guarantor," jointly, severally, and unconditionally guarantee the full and punctual payment when due of the following described indebtedness of $200,000, "Borrower," whether one or more, to C. PAUL EVANS, "Lending Party":

One certain promissory note in the original principal amount of $200,000.00, dated March 15, 2006, executed by Borrower and payable to the order of Lending Party . . . together with all renewals and extensions thereof, even though represented by new instrumentsand/or occurring after the death of any Borrower or Undersigned, together with all interest, attorney fees and/or court costs for which Borrower may become liable in connection therewith. . . .

The Undersigned waive notice of acceptance of this guaranty and of any liability to which it applies or may apply, and waive presentment and demand for payment thereof, notice of dishonor or nonpayment thereof, collection or instigation of suit or any other action by Lending Party in collection thereof including any notice of default in payment thereof or other notice to, or demand of payment therefor on, any party.

Evans received a payment of interest in September 2006 and a second payment of interest on March 13, 2007, but he received no further payment installments. On February 8, 2008, Evans sent Garza, Salomon, and Adkinson a "Notice of Default and Right to Cure Default" and requested payment of the amount due "under the Specific Guaranty Agreement," but he received no response. At the time of trial, Evans calculated that $235,713 remained due on the note.

On cross-examination, Evans explained that he first knew of the guaranty when he received it "[s]ometime after the guaranty was signed." He did not exchange anything in return for the guaranty, loan any more money to the company, or change the terms of the loan.

Dunn testified that he and Adkinson started TBA Construction in 2001. Dunn contacted Evans about making a loan to TBA Construction because Evans was "a close friend . . . and he knew that [TBA Construction was] having somefinancial issues." Even after Evans's loan, however, TBA Construction was "still struggling," so Dunn approached Adkinson about "shut[ting] the companies down" and repaying their outstanding debts to Evans and TBA Construction's equipment suppliers. Dunn and Adkinson also discussed the possibility of selling the company to Garza and Salomon. Dunn explained that, when they met with Garza and Salomon, repaying the loan to Evans was "the single most important item to be dealt with," and he refused to sell the company without Evans's consent and a "guarantee of payment" to Evans. Garza, Salomon, and Adkinson then signed the "Specific Guaranty Agreement," which was incorporated into the "Agreement of Sale of Company Assets" ("Agreement of Sale"), making Garza and Salomon general partners in TBA Construction along with Adkinson. The Agreement of Sale included the following provision,

For and in consideration of the transfer of the businesses' assets of the Companies, the Buyers agree to guarantee full payment to Paul Evans in the sum of $200,000.00 . . . .

Under Article III of the Agreement of Sale, entitled "Conditions Precedent to Obligation of Parties to Close," the contract provided,

3.01 The obligations of the Sellers ("The Companies and their Owners") under this Agreement shall be subject to the receipt by Sellers of the following documents, all of which shall be fully executed:

1. An Agreement executed by Mark D. Adkinson, J. Homer Garza, and Arturo Salomon guaranteeing full payment of a note in the sum of $200,000.00 to PaulEvan[s] in Addendum "H", attached hereto and made part of this Agreement by incorporation.

Dunn explained that the existence of the guaranty agreement "was the only way [he] was going to sign" the Agreement of Sale. Dunn did not receive "anything out of the transaction" other than the guaranty for Evans.

Adkinson testified that he was a vice president and director of TBA Construction. He first discussed a potential sale of TBA Construction with Garza, his corporate attorney, in October 2006. Because Dunn would not consent to selling the company unless he was "sure [Evans] got paid," Garza "indicated for [Adkinson] . . . to tell [Evans] that he would be paid." Adkinson contacted Evans to inform him of the potential sale and to ensure repayment of the loan, and Evans replied that he would "go along with the deal."

Adkinson, Garza, and Salomon formed a new company, AGS Investments, Ltd. ("AGS Investments"), through which it acquired and then operated TBA Construction. AGS Investments continued to work on TBA Construction's ongoing projects and received payment from their customers. Adkinson eventually "departed from the company" because he did not "get along" with Garza and was not "satisfied with what [he was] getting paid."

Salomon testified that after acquiring TBA Construction, he wired large sums of money to the company. He was not involved in negotiating the Agreement of Sale, did not "read all the details" of the Agreement of Sale, and"relied" on Garza for everything "because he was taking care of the agreement." Salomon considered himself only an investor in the project, and his understanding of the acquisition was that he, Garza, and Adkinson would "buy the assets, the machines and the things, everything clear so we can work with that." However, shortly after the acquisition, "everything was foreclosed [on] and taken away" because Salomon was not aware that "there were liens on everything."

Garza testified that Adkinson first approached him about obtaining "some assistance" with TBA Construction's "financial condition." After agreeing to acquire TBA Construction's assets, Garza explained that "most" of the Agreement of Sale was drafted "at Mr. Adkinson's and Mr. Dunn's office." Garza then identified several deposits made to bank accounts set up by Adkinson, Salomon, and Garza from projects inherited from TBA Construction. Garza also identified several payments from those bank accounts to debts that were owed by TBA Construction.

On cross-examination, Garza explained that at first he would not sign a guaranty agreement for the $200,000 note to Evans. However, Dunn explained that "there was $361,000 estimated profits on five contracts that [TBA Construction] had" and the note could be paid from those profits. Garza stated that he had never spoken to Evans prior to signing the guaranty agreement and did not receive any benefit from Evans, but rather the agreement "was between [Dunn] andourselves." Garza did receive a call from Evans in March 2007, when Evans told Garza that "[h]e had received an interest payment" and "he wanted to know why [they] were not paying him the whole amount." Garza responded that he was "looking at rescinding the contract because the equipment" was not free of all liens and he and Salomon "had not gotten [their] contractors assigned." He explained that any payments he had received were due to "new business" and he received "[n]o money at all" from the alleged $361,000 in estimated profits from TBA Construction's ongoing projects.

The trial court entered a final judgment that Evans is entitled to recover from Garza, Salomon, and Adkinson, jointly and severally, in the amount of $257,261.06. In its findings of...