Hayes v. Wells Fargo Bank, N.A., No. 01-06-00720-CV (Tex. App. 10/18/2007)
| Decision Date | 18 October 2007 |
| Docket Number | No. 01-06-00720-CV.,01-06-00720-CV. |
| Parties | LEROY HAYES, JR., Appellant v. WELLS FARGO BANK, N.A., Appellee. |
| Court | Texas Court of Appeals |
On Appeal from the 280th District Court, Harris County, Texas, Trial Court Cause No. 2005-43586.
Panel consists of Chief Justice RADACK and Justices ALCALA and BLAND.
Appellant, Leroy Hayes, Jr., pro se, appeals a take-nothing judgment rendered in favor of appellee, Wells Fargo Bank, N.A. (the bank) after a bench trial. The judgment awarded the amount of principal and interest on a promissory note acknowledging Hayes's indebtedness to the bank and also awarded the bank attorney's fees. We construe Hayes's issues on appeal as follows: (1) Hayes challenges (a) the trial court's interpretation of the note and (b) the sufficiency of the evidence to support the trial court's implied findings, (2) Hayes contends he was entitled to a mistrial because the bank did not respond to discovery requested during the week before trial, and (3) Hayes contends that the trial court abused its discretion by (a) denying Hayes's request for a jury trial, (b) excusing a witness that Hayes had subpoenaed, and (c) applying the rule of sequestration. We affirm.
Prime Bank (later purchased by Wells Fargo) loaned $100,000 to Hayes for "working capital" for his business. On February 11, 2000, Hayes signed a "Commercial Fixed Rate Promissory Note" by which he promised to repay all principal plus interest at the rate of 9%, with total interest charges of $24,546.20. The note was payable "[o]n demand, but if no demand is made, then" in 59 payments of $1,608.91 each, with a final payment, "due and payable" on February 11, 2005 for "the unpaid balance plus accrued interest." The note recites Hayes's promise to pay "until all amounts owing under this note are paid in full." Hayes was authorized to prepay the note, in part or in full, on or before the maturity date without penalty.
Hayes's lawsuit disputes the last, or 60th payment, due on February 11, 2006. Though his live pleadings acknowledge the terms stated above, Hayes alleged (1) that his "understanding and intentions," when he executed the note, were that his loan would be paid "in full" by February 11, 2006, (2) that he did not know that the last payment due would be a "balloon payment," and (3) that he should not be required to "pay an additional . . . $14,235.52 in interest as prescribed by the written contract."1 Hayes sought attorney's fees, interest, and costs, but did not assert a claim for damages.
The bank filed a general denial and a counterclaim asserting that Hayes still owed $35,272.31 on the note, in addition to attorney's fees and costs. The bank also filed a motion for judgment on the day before trial began.
After a two-day trial, the trial court rendered judgment that Hayes take nothing on his claim, and that Wells Fargo was entitled to "recover on its modified counterclaim" and also entitled to interest, costs, and attorney's fees for trial and contingent attorney's fees for appeal. The trial court did not file findings of fact and conclusions of law, and Hayes did not request them. Hayes timely filed a letter requesting a new trial, which the trial court denied after an oral hearing.
Because we have no findings of fact and conclusions of law by the trial court, we infer all findings necessary to support the judgment. See BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002); Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990). It is axiomatic that any implied finding be consistent with the judgment. Anderson Mill Mun. Util. Dist. v. Robbins, No. 03-04-00369-CV, 2005 WL 2170355, at *6 (Tex. App.-Austin, Sept. 8, 2005, no pet.). We presume that the trial court found all questions of fact in support of the judgment, and we affirm if the judgment can be upheld on any legal basis supported by the pleadings and the evidence. See Point Lookout W., Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987); Worford, 801 S.W.2d at 109. When the record includes a reporter's record of the trial, as here, the appealing party must show that the judgment of the court below cannot be sustained by any theory raised by the evidence. See Whorton, 742 S.W.2d at 278.
Two of Hayes's issues challenge the trial court's interpretation of the loan documents and note. The well-settled rules of contract interpretation apply to promissory notes. See EMC Mortgage Corp. v. Davis, 167 S.W.3d 406, 413 (Tex. App.-Austin 2005, pet. ref'd). The court's first priority is to determine the intent of the parties as expressed in the instrument. DeWitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999); EMC Mortgage Corp., 167 S.W.3d at 413 (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003);Nat'l Union Fire Ins. Co. v. CBI Indus., 907 S.W.2d 517, 520 (Tex. 1995)). In determining the parties' intent, courts must consider the entire writing and give effect to all provisions of the contract within the context of the entire agreement so that no provision is either rendered meaningless or given dispositive effect in isolation. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); EMC Mortgage Corp., 167 S.W.3d at 413. If this analysis permits a certain or definite legal meaning or interpretation, then there is no ambiguity, and the court will construe the contract as a matter of law. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex. 2000); Coker, 650 S.W.2d at 393; EMC Mortgage Corp., 167 S.W.3d at 413. A contract is ambiguous only when it is reasonably susceptible to more than one meaning. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). Whether a contract is ambiguous is a question of law for the court. Coker, 650 S.W.2d at 393; EMC Mortgage Corp., 167 S.W.3d at 413. Extraneous evidence concerning the parties' interpretations is admissible only if the court first determines that the contract is ambiguous. National Union, 907 S.W.2d at 520; EMC Mortgage Corp., 167 S.W.3d at 413.
In this case, the trial court's judgment recites that Hayes "have and recover nothing" from the bank on his claims. This judgment implies that the trial court rejected Hayes's claims (1) that he expected and intended, in executing the note, that his loan would be paid "in full" by February 11, 2005 after paying $1,608.91 per month, (2) that he did not know that the last payment due would be "balloon payment," and (3) that he should not be required to "pay an additional . . . $14,235.52 in interest as prescribed by the written contract."
The face of the note defeats Hayes's first contention because paying $1,608.91 for 60 months would repay only $96,534.60 against an undisputed $100,000 indebtedness. By rendering judgment against Hayes, the trial court impliedly rejected this claim and Hayes's remaining claims. An agreement with a balloon-payment provision generally calls for regular, equal payments that consist mostly of interest and smaller amounts of principal, with a large, final payment of all remaining principal plus any accrued interest, which fully satisfies the borrower's financial obligations to the lender. See EMC Mortgage Corp., 167 S.W.3d at 414 . Because the note and accompanying documents in this case meet these criteria, the trial court properly concluded, as a matter of law, that the note unequivocally required a 60th, balloon payment of unpaid principal plus interest. The trial court's stating on the record that the bank did not "adequately impress" upon Hayes the nature of the balloon payment neither changes this result nor compels a different interpretation of the note.
The record here shows that Hayes realized, from his own calculations, that a balloon payment was due and complained to the bank. In response to Hayes's complaints, the bank loaned him additional funds at a lower interest rate to enable him to pay off his balance. As the trial court recognized, Hayes was "absolutely" not adversely affected even if he did not initially understand that he had signed a loan committing him to a balloon payment.
Hayes counters that the bank violated the disclosure requirements of 12 C.F.R. Part 226 (Regulation Z), adopted under the Federal Truth in Lending Act, 15 U.S.C. § 1601 et seq., because the bank did not disclose that the loan transaction required a balloon payment. As reflected in the enactment of chapter 348 of the Finance Code, which governs installment sales of motor vehicles, Regulation Z applies to "retail installment transactions." See Tex. Fin. Code Ann. § 348.009(a) (Vernon 2006) (emphasis added); see also 12 C.F.R. Part 226.1(b) () (emphasis added). Hayes's note shows on its face that it is a commercial, fixed rate promissory note. It is undisputed that Hayes borrowed the $100,000 as working capital for his business and thus for a commercial, rather than a retail, purpose. As the trial court recognized, Regulation Z does not apply to this commercial transaction. See Tex. Fin. Code Ann. § 348.009(a); 12 C.F.R. Part 226.1.
Hayes also argues that a bank officer made a "human error" in calculating amortization of Hayes's $100,000 loan because his monthly payments should have amounted to $2,076.00, instead of $1,608.91 monthly, in order to amortize the $100,000 indebtedness over 60 months. But, Hayes's proposed amortization would change the basic character of his note from a loan transaction that requires a final balloon payment "of the unpaid principal balance plus accrued interest," to a loan transaction with equal monthly...
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