Griffith v. Lone Star, FLCA (In re Griffith)
| Decision Date | 10 June 2021 |
| Docket Number | ADVERSARY NO. 20-4038-MXM,CASE NO. 19-44562-MXM-13 |
| Parties | IN RE: RAY DOUGLAS GRIFFITH, DEBTOR. RAY DOUGLAS GRIFFITH, PLAINTIFF, v. LONE STAR, FLCA AND CRYSTAL MATULICH, DEFENDANTS. |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Northern District of Texas |
The following constitutes the ruling of the court and has the force and effect therein described.
[Relates to Adv. ECF Nos. 1, 15, 29]
The Court held a trial to liquidate all claims between Plaintiff Ray Douglas Griffith ("Mr. Griffith") and Defendants Lone Star, FLCA ("Lone Star") and Crystal Matulich ("Ms. Matulich").
Mr. Griffith defaulted on his mortgage loan to Lone Star and filed Chapter 13 bankruptcy to stave-off foreclosure of the real property securing the loan. The Court dismissed Mr. Griffith's Chapter 13 bankruptcy because he failed to file required documents. Mr. Griffith filed a motion to reinstate his bankruptcy case. But before Mr. Griffith's bankruptcy case was reinstated, Lone Star foreclosed and sold the property to Ms. Matulich, a third-party buyer with the highest bid at the foreclosure auction.
Through the Complaint,1 Mr. Griffith seeks to either void the foreclosure sale or recover damages through various legal claims under the Bankruptcy Code and Texas law, alleging (among other things) that Lone Star did not provide proper notice of the foreclosure sale. After a round of summary-judgment motions, Mr. Griffith's two surviving claims are breach of contract and wrongful foreclosure.
The Court has considered the pleadings and other papers filed in this adversary proceeding and in the bankruptcy case, the testimony of witnesses, the exhibits admitted into evidence, and the arguments of counsel. This Memorandum Opinion constitutes the Court's findings of fact and conclusions of law2 as required by Federal Rule of Civil Procedure 52, made applicable in this adversary proceeding by Federal Rule of Bankruptcy Procedure 7052.
For the reasons explained below, the Court finds and concludes that Mr. Griffith failed to establish an essential element of each surviving cause of action, so his claims for breach of contract and wrongful foreclosure against Lone Star and Ms. Matulich fail and are hereby dismissed.
The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This proceeding is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (E), (F), (H), and (O). Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409(a). The Court has constitutional and statutory authority to enter a final judgment in this matter.
In 2001, Mr. Griffith purchased approximately 97 acres of land in Cisco, Texas located on County Road 228.4 On December 8, 2005, Mr. Griffith purchased an additional approximately 99 acres of contiguous land on Farm Road 569.5 To finance the 2005 purchase of the Farm Road 569 property, Mr. Griffith obtained a loan from Lone Star Land Bank, FLCA, predecessor-in-interest to Lone Star, and executed a Promissory Note in the principal amount of $137,500.00 (the "Note").6 To secure repayment of the Note, Mr. Griffith also executed a Deed of Trust (the "Deed of Trust")7 granting a lien on both the County Road 228 property and the Farm Road 569 property (together, the "Property").
Because the central issue in this dispute is whether Lone Star provided Mr. Griffith proper notice of a foreclosure sale that took place in January 2020—fifteen years after the Note and Deed of Trust were executed—the relevant notice provisions in the loan documents are extremely relevant.
The Note provides on page one that "BORROWER'S NAME AND ADDRESS" is "Ray Griffith, 5112 Geddes Avenue, Ft. Worth, TX 76107"8 (the "Geddes Address").
Page two of the Note includes a "NOTICE" provision that provides:
Unless otherwise required by law, any notice to me shall be given by delivering it or by mailing it by first class mail addressed to me at my last known address within 30 days of the change. I agree to inform you in writing of any change in my address. I will give any notice to you by mailing it first class to your address stated on page 1 of this agreement, or to any other address that you have designated.9
Like the Note, page one of the Deed of Trust provides: "GRANTOR: Ray Griffith . . . a single person whose address is 5112 Geddes Avenue, Ft. Worth, Texas 76107."10
Page six, paragraph 27 of the Deed of Trust includes a "NOTICE" provision that provides:
Unless otherwise required by law, any notice shall be given by delivering it or by mailing it by first class mail to the appropriate party's address on page 1 of this Security Instrument, or to any other address designated in writing. Notice to one grantor will be deemed to be notice to all grantors.11
From 2005 until sometime in 2007, Mr. Griffith was single and lived at the Geddes Address.12 In 2007, Mr. Griffith began living at 2916 Sanguinet, Fort Worth, Texas 76107 (the "Sanguinet Address"), where he then lived with his spouse.13
Lone Star contends that on March 26, 2014, Mr. Griffith telephoned Lone Star to change his notice address from the Geddes Address to the Sanguinet Address.14 In support of Lone Star's contention, Mr. Gerrit Schouten ("Mr. Schouten"), Lone Star's credit office president, testified that Lone Star's business records contain a Loan System Management Change15 dated March 26, 2014, which is an internal document created in the ordinary course of Lone Star's business to effect changes in its loan maintenance system resulting from oral changes requested by customers that were made either in person at a branch location or by telephone.16 Based on the Loan System Management Change, Lone Star changed Mr. Griffith's notice address in its loan maintenance system from the Geddes Address to the Sanguinet Address and began sending all correspondence, monthly statements, and any other notices to the Sanguinet Address beginning on March 26, 2014.17
Mr. Griffith denies that he made any such oral request in 2014 for Lone Star to change his address from the Geddes Address to the Sanguinet Address.18 However, Mr. Griffith admitted in his testimony that at some point prior to 2016, he began receiving correspondence, monthly statements, and other notices from Lone Star at his Sanguinet Address.19 At no time in 2014 or thereafter, however, did Mr. Griffith ever raise any concerns to Lone Star that he was receiving mail from Lone Star at his Sanguinet Address rather than at his Geddes Address.20
The Court finds the testimony of Mr. Schouten and the corroborating Loan System Management Change business record that was created at that time more persuasive than Mr. Griffith's testimony that he did not make the oral change of address in 2014.
Sometime prior to April 6, 2016, Mr. Griffith fell behind on his Note obligation to Lone Star.21 On or about April 6, 2016, Mr. Griffith decided to cure his Note delinquency and to sign up for online banking in Lone Star's Cardinal loan accounting system, which would allow him to make his Note payments online.22 Therefore, Mr. Griffith sent a hand-written cover letter to Lone Star enclosing (i) check #4114 to bring his Note obligation current, and (ii) a voided check and an executed Electronic Fund Transfer Authorization and Agreement to enable Mr. Griffith to establish his online banking account.23 Although Mr. Griffith was setting up online banking for his account, he confirmed in his cover letter that that he still wanted to receive his monthly invoices by mail.24 Mr. Griffith signed his hand-written note and included his cell phone number and his Sanguinet Address.25
Mr. Griffith testified that his hand-written note was intended, in part, to be his "written instruction . . . that instructs Lone Star to send mail to 2916 Sanguinet,"26 as required by the Note and Deed of Trust, but Mr. Griffith's testimony was not persuasive or credible on this point. Rather, the credible evidence suggests that Mr. Griffith's hand-written note was intended to serveas a cover letter for the enclosed check #4114 to bring his Note obligation current. That hand-written note, together with the voided check and executed Electronic Fund Transfer Authorization and Agreement, were simply the documents required by Lone Star to enable Mr. Griffith to establish his online banking account. And Mr. Griffith's cover-letter statement, "I would still like to receive the Invoice monthly by mail,"27 supports the finding that Mr. Griffith had previously orally requested that his invoices be sent to the Sanguinet Address and that he still wanted his invoices mailed each month to the Sanguinet Address even though he was establishing an online banking account.
Beginning in 2017 and continuing through December 2018, Mr. Griffith made sporadic and untimely payments on his Note to Lone Star.28 In fact, the last payment Mr. Griffith has made on the Note was in December 2018.29 As a result of Mr. Griffith's payment defaults, Lone Star sent at least four Notice of Default and Notice of Acceleration letters to Mr. Griffith at the Sanguinet Address between May 17, 2018 through March 1, 2019.30
On April 3, 2019—in connection with the March 1, 2019 Notice of Default and Notice of Acceleration—Lone Star sent to Mr. Griffith a Notice of Acceleration and Intent to Foreclose.31 This notice was also sent to the Sanguinet Address.32
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