Houle v. Jose Luis Casillas, Casco Invs. Inc.

Citation594 S.W.3d 524
Decision Date24 September 2019
Docket NumberNo. 08-17-00189-CV,08-17-00189-CV
Parties Robert G. HOULE, Appellant, v. Jose Luis CASILLAS, Casco Investments Inc. and JLC Ventures, Inc., Appellees.
CourtCourt of Appeals of Texas

ATTORNEY FOR APPELLANT, Robert E. Hedicke, P. O. Box 640175, El Paso, TX 79904-0175.

ATTORNEY FOR APPELLEES, David James Ellis, 4115 Trowbridge Dr, El Paso, TX 79903-1825.

Before Rodriguez, J., Palafox, J., and Larsen, J. (Senior Judge), Larsen, J. (Senior Judge), sitting by assignment

OPINION

GINA M. PALAFOX, Justice

Appellant Robert G. Houle appeals from several different orders by the trial court which were not subject to review until after the court finally disposed of all claims. After Appellee Casco Investments, Inc. (Casco), filed suit against Appellant Houle, he returned fire by filing a variety of causes of action against Casco, and asserted those same claims by cross-claim against Casco's sole owner, Jose Luis Casillas (Casillas), and against JLC Ventures, Inc. (JLC Ventures), a second entity Casillas had also established. Ultimately, the trial court granted judgment in favor of Casillas, individually, and as a corporate representative of Casco and JLC Ventures (collectively, "Appellees"). The parties' suit against each other stemmed from difficulties that arose from a real estate investment and renovation project that failed to pan out as planned. For the reasons set forth below, we affirm in part, and reverse and remand in part.

FACTUAL AND PROCEDURAL BACKGROUND
The Parties' Agreement

Most of the facts regarding when and how the parties first entered into their business venture in the summer of 2009 are undisputed. At that time, Houle, an El Paso resident, and Casillas, a resident of Mexico, had known each other for approximately 25 years. Houle was then married to Casillas' sister, Ana Casillas, although they were in the process of divorcing after 18 years of marriage. The venture began when Houle—who worked for a bank in El Paso and harbored an interest in owning real estate—learned of a large, older home for sale in El Paso that had already been divided into apartment units. The property was located at 3901 Pershing (the "Pershing Property"). Eventually, Houle met with Casillas and the two orally agreed to purchase the property. The parties initially intended to renovate the building for resale, but soon they decided they would keep it instead and lease out the apartment units after they were renovated. Before purchasing, the parties inspected the building during which Houle informed Casillas that he believed renovations could be accomplished in three to four months, at a cost amounting somewhere between $40,000 and $50,000.

In general, the parties agreed that Casillas would provide financing for purchasing and renovating the property while Houle would apply his expertise in overseeing renovations; thereafter, once Casillas had been reimbursed for his initial investment, the parties would split profits equally regardless of whether profits arose from selling the property, or from rental income generated from leasing units. Houle further claims that the parties agreed he would be entitled to manage the property after renovations were completed.

In furtherance of their agreement, Houle suggested that they form a limited liability corporation (LLC) to purchase the Pershing Property with the entity to be known as the Pershing 3901 LLC ("the Pershing LLC").1 At Houle's suggestion, Casillas formed a separate corporation to shield himself from personal liability, which he named Casco Investments, Inc.2 Thereafter, Houle and Casco were named as the two sole members of the Pershing LLC. The parties orally agreed that Casillas, in his individual capacity, would fund the project by loaning $100,000 to the Pershing LLC to purchase the property, and he would loan additional monies thereafter to fund renovations as planned.

On July 27, 2009, the Pershing LLC purchased the property for $100,000, and with Houle's agreement, Casillas took back a promissory note from the Pershing LLC, secured by a deed of trust on the property in the principal amount of $100,000 (the "original deed of trust"). The promissory note, which was dated July 27, 2009, named Casillas as lender and the Pershing LLC as borrower with the entire principal balance and all accrued unpaid interest being due and payable, in a lump sum, on or before July 31, 2010. The note indicated that the annual interest rate "shall be the daily Prime Interest Rate during the term of the Note, with interest calculated based on the Prime Interest Rate in effect for each day during the term of the loan." Prime Interest Rate is further defined as "the annual rate of interest identified as the ‘prime rate’ in the ‘Money Rates’ column published in the Wall Street Journal." After the note became due and payable, the interest rate would rise to 18 percent on matured, unpaid amounts.

The Year-Long Renovation Project

The renovations began shortly after the purchase and continued for a year, until July of 2010, with Houle overseeing the project. From time to time, Houle made purchases himself and paid renovation workers using a credit card in the LLC's name, but he sought reimbursement for his expenses from Casillas. According to Houle, he submitted approximately 16 reimbursements totaling $45,030.25 in the first year of the renovations. Although Houle admitted that the project was not completed within the contemplated timeframe, he claimed that delays occurred because he ran into unexpected plumbing, draining, and electrical issues which caused renovations to require significantly longer time than he had initially estimated.

The July 6, 2010 Memo

On July 6, 2010, Casillas sent a detailed email to Houle outlining the parties' original agreement, i.e., to complete renovations in three to four months at cost expected to total $40,000. Casillas complained that Houle had not fulfilled his commitment given that a year had already passed, and the renovations remained incomplete despite Casillas having already spent around $40,000, or the total amount originally expected. Casillas accused Houle of making unilateral decisions, such as not hiring a general contractor, trying to do much of the work himself, and taking unauthorized "draws" in return for his work, despite the fact that there was no agreement that Houle would be reimbursed for his services. He further complained that none of the apartments had been leased and that he had not yet received any return on his investment.3

Expressing concern over the security of his investment, Casillas requested an accounting, an updated projected budget and repair schedule, and an addendum to the promissory note to increase the interest rate. Casillas expressed that if he felt more secure in his investment he would not mind if Houle kept "delaying the project in a reasonable manner." In addition, Casillas further expressed his opinion that the property belonged to him, repeatedly referring to the property as being "mine," unless and until he received a reimbursement for his investment.4

The parties disagree over what occurred after the memo was sent. Houle claimed that he provided some of the requested information, including a partial proposed budget, but that Casillas refused to continue funding the renovations in July of 2010, and instead suggested that they have a meeting in September of that year. Houle recalled that the parties met, but apparently did not resolve the matter; he claims that he nevertheless did additional work on the project for which he was never compensated.

According to Casillas, however, Houle did not provide him with the requested information, and at their September 2010 meeting, Houle advised him that he no longer intended to work on the project, and thereafter refused to communicate with him; he therefore faulted Houle for breaching the agreement. Casillas recalled that he suggested they try to sell the building at that time and split any profits they might receive after Casillas was reimbursed for his investment. Casillas claimed that Houle refused to cooperate as he did not believe Casillas would get his money back if the property was sold at that time.

The Second Promissory Note and Deed of Trust

Casillas thereafter contacted a law firm in El Paso (the "Gordon Law Firm"), to determine how best to protect his investment. At that point, the parties agree that Casillas had the right to foreclose on his original promissory note of $100,000. However, in order to protect his additional investment for sums he had advanced for renovations, the law firm drafted a promissory note that Casillas signed on November 15, 2010, to "memorialize" the advances that he had previously made to the Pershing LLC.5 In addition, the law firm drafted a second deed of trust in which it identified the Pershing, LLC, as the "borrower," and Casillas as the "lender," stating that the amount owed to Casillas was $45,030.25. Marcelo Rivera, a member of the law firm, was designated as the trustee on the deed of trust. The deed stated that in order to secure payment of the obligation, the Pershing LLC, as grantor, conveyed the Pershing Property to the trustee (Rivera) in trust. The note further stated that if the Pershing LLC failed to perform any of its obligations, the lender had the right to declare any unpaid principal balance due and payable immediately, and to direct the trustee to foreclose the lien through a duly noticed foreclosure sale. The deed was dated November 15, 2010, and the maturity date was on that same date—in essence allowing Casillas to immediately start foreclosure proceedings on the deed. Casillas signed the document on December 6, 2010, in the capacity indicated as follows:

PERSHING 3901, L.L.C.
By: Casco Investments, Inc.
Its: Manager
BY: ____________________
Jose Luis Casillas, President

According to Houle, Casillas signed this second deed of trust, as well as the promissory note, without his knowledge or consent.

Shortly thereafter, on ...

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