Med Center Bank v. Fleetwood
| Decision Date | 19 May 1993 |
| Docket Number | No. 3-91-584-CV,3-91-584-CV |
| Citation | 854 S.W.2d 278 |
| Parties | MED CENTER BANK, Appellant, v. M.D. FLEETWOOD, Appellee. |
| Court | Texas Court of Appeals |
Shannon H. Ratliff, McGinnis, Lochridge & Kilgore, L.L.P., Austin, for appellant.
Robert M. Roller, Graves, Dougherty, Hearon & Moody, Austin, for appellee.
Before CARROLL, C.J., and ABOUSSIE * and JONES, JJ.
This is a subrogation case before this Court on its second appeal. M.D. Fleetwood sued Med Center Bank ("Med Center") seeking a declaratory judgment that Fleetwood's leasehold in certain real property was superior to Med Center's interest, obtained by purchase at foreclosure sale, in that same property. Med Center counterclaimed seeking a judgment declaring that its interest was superior. Med Center successfully moved for a summary judgment. However, on the first appeal of this cause, we reversed the summary judgment and remanded the cause for trial. See Fleetwood v. Med Ctr. Bank, 786 S.W.2d 550 (Tex.App.--Austin 1990, writ denied) (Fleetwood I ). At trial, Fleetwood prevailed and, in addition to the declaration that his leasehold was superior to Med Center's interest, was awarded trespass damages and attorney's fees. Med Center now brings this appeal on eight points of error. We will reverse the judgment of the trial court and render judgment in favor of Med Center.
In March 1984, Fleetwood and two other individuals, Messrs. Bradshaw and Looney, formed a partnership, the Center Hill Joint Venture ("Center Hill"), to develop approximately 24 acres of raw land for commercial use. Fleetwood held a 55 percent ownership interest in Center Hill, and Bradshaw and Looney each held a 22.5 percent interest. The principle project on the land was a shopping center. While the shopping center project occupied only a portion ("the shopping center tract") of the 24-acre tract, the tract could not be further subdivided because of zoning restrictions. The project was initially financed by interim construction financing, secured by a deed of trust on the entire 24-acre tract.
After the shopping center was completed, but before permanent financing had replaced the interim construction financing, Fleetwood sold his interest in Center Hill to the joint venture. This transaction closed on February 3, 1986. As consideration for his interest, Fleetwood was to receive $479,000 in cash and a promissory note for $1,391,000 ("the Fleetwood note"). The Fleetwood note was secured by a deed of trust ("the Fleetwood deed of trust") on the entire 24-acre tract, a standby letter of credit in the amount of $695,000, and the personal guarantees of the two remaining partners. The Fleetwood deed of trust provided that Fleetwood would subordinate his lien to any lien securing the permanent financing on the shopping center tract. The parties also executed a lease agreement whereby Fleetwood was granted a 55 percent undivided interest in a 99-year lease ("the lease") 1 of the two portions of the tract not occupied by the shopping center ("the leased tracts"). 2 The lease expressly Subsequently, Nationwide Life Insurance Company ("Nationwide") provided the permanent financing for the shopping center project. This loan was secured by a deed of trust on the shopping center tract and one of the two leased tracts, designated "tract A." 3 Only tract A is at issue in this cause. As provided in the Fleetwood deed of trust, Fleetwood expressly subordinated his lien to Nationwide's deed of trust.
provided that it was "subject to" the Fleetwood deed of trust. A "Memorandum of Lease Agreement" and the Fleetwood deed of trust were filed in the Travis County Real Property Records, in respective order.
The closing on the permanent financing triggered a prepayment obligation of Center Hill on the Fleetwood note. The joint venture could not make the payment. Fleetwood threatened to call the standby letter of credit and otherwise exercise his rights under the note and deed of trust if the default were not cured. To cure the default, Center Hill obtained a $1,691,000 loan from Med Center, evidenced by a promissory note. This debt was secured by a deed of trust on the shopping center tract and tract A. On May 19, 1986, Center Hill used most of the loan proceeds to pay off the Fleetwood note. At Med Center's request, Fleetwood executed a full release of his deed of trust.
Almost immediately thereafter, Center Hill fell victim to the local real estate bust, failed to meet its financial obligations, and was forced to declare bankruptcy. In December 1986 or January 1987, after Center Hill defaulted on the Med Center note, Med Center called in the letter of credit to bring the note current. In January 1988, Med Center foreclosed on tract A by nonjudicial foreclosure sale. Sometime after the sale, at Med Center's request, Bradshaw and Looney executed Acknowledgments of Extinguishment of Lease.
As stated above, Fleetwood initiated this suit seeking a declaration that his leasehold interest was superior to Med Center's interest obtained at the foreclosure sale and to recover trespass damages for Med Center's alleged wrongful possession of tract A. Med Center counterclaimed seeking a contrary result. After we reversed the summary judgment in favor of Med Center in Fleetwood I, the case proceeded to trial. The case was tried to the court, although, a jury was impanelled to provide advisory findings. The trial court declared that Fleetwood's interest was superior and that Fleetwood held 100 percent of the leasehold. The trial court also awarded Fleetwood trespass damages in the amount of the fair rental value of tract A and attorney's fees. Med Center appeals.
As stated above, only tract A, subject to both Med Center's deed-of-trust lien and the lease, is at issue in this appeal. Med Center brings eight points of error. Points one through three complain of the determination that Med Center should not be subrogated to Fleetwood's lien because subrogation would prejudice Fleetwood's interest in the lease. Point four complains of the trial court's refusal to submit instructions and questions on Med Center's fraudulent conveyance counterclaim to the jury. Points five and six complain of the determination that Fleetwood held 100 percent of the leasehold after the other joint lessors acknowledged the lease was extinguished. Points seven and eight respectively complain of the award of trespass damages and attorney's fees to Fleetwood. Before we address these points of error, we discuss three preliminary matters.
Fleetwood has moved for a dismissal of this appeal contending that it is barred by estoppel. Under the provisions of the lease, Fleetwood, as tenant, was obligated to pay the property taxes on tract A. He failed to do so during the pendency of the Fleetwood argues the Med Center has taken inconsistent positions in the two causes and has accepted benefits of the judgment in this cause by demanding payment of the taxes and terminating the lease under its terms. Fleetwood contends that these actions estop Med Center's right to appeal the judgment in this cause. Fleetwood relies on the decision in Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002 (1950). 4 See also Empire Gas & Fuel Co. v. Albright, 126 Tex. 485, 87 S.W.2d 1092 (1935); River & Beach Land Corp. v. O'Donnell, 632 S.W.2d 885 (Tex.App.--Corpus Christi 1982, no writ). In Carle the court held that "[a] litigant cannot treat a judgment as both right and wrong, and if he has voluntarily accepted the benefits of a judgment he cannot afterward prosecute an appeal therefrom." Carle, 234 S.W.2d at 1004. There are two exceptions to this rule. First, if a reversal of the judgment on appeal would not affect the party's right to the benefit received, estoppel does not apply. Id. Second, if the party's retention of benefits under the judgment was not voluntary, estoppel does not bar an appeal the judgment. Id.
subrogation suit. After the trial court rendered its judgment that the lease was valid, Med Center demanded from Fleetwood reimbursement for the property taxes on tract A that Med Center had paid. When Fleetwood failed to make payment, Med Center gave notice that it had terminated the lease because of Fleetwood's material breach and filed a separate suit seeking a judgment declaring the lease terminated.
In its second suit, Med Center seeks only a declaration that it properly terminated the lease pursuant to its provisions. If successful in its second suit, Med Center would hold tract A free and clear of the lease. Similarly, if we reverse the judgment in this cause and declare that Med Center's lien was superior to the lease and the foreclosure extinguished the lease, Med Center would hold tract A free and clear of the lease. Med Center seeks to reach the same result by alternative theories. 5 We note that Med Center could have sought these alternative remedies in a single cause. Tex.R.Civ.P. 47. Although our decision in this cause may moot the subsequent suit, Med Center's alternative grounds for relief are not fatally inconsistent. Whether by a foreclosure of a superior lien or by termination for a default, Med Center seeks the same result, avoidance of Fleetwood's lease interest. Accordingly, we conclude that Med Center's positions in these two causes are not inconsistent. A reversal of the judgment in this cause would result in the same benefit to Med Center as it seeks in its second suit. Therefore, this situation lies within the first exception set out in Carle. We overrule Fleetwood's motion to dismiss.
To continue reading
Request your trial
-
Pitman v. Lightfoot
...judgment proceeding is distinguishable from a full trial on the merits. Id. at 630-31. See also Med Center Bank v. Fleetwood, 854 S.W.2d 278, 283 (Tex.App.--Austin 1993, writ denied). The court in Pannill also recognized that an "appeal after a full and lengthy trial on the merits with a ju......
-
Kim v. Lee
...At least one court has granted subrogation in spite of actual knowledge without further explanation. See, e.g., Med Ctr. Bank v. Fleetwood, 854 S.W.2d 278, 287 (Tex.Ct.App.1993). 7. Constructive knowledge by virtue of a failure to discover a properly recorded lien is typically not considere......
-
Hallmark v. Hand
...doctrine does not apply if the issues and facts are not substantially the same in the subsequent trial. Med Center Bank v. Fleetwood, 854 S.W.2d 278 (Tex.App.--Austin 1993, writ denied). It is for that reason that trial courts enjoy limited discretion in applying the doctrine according to t......
-
Flying Diamond-West Madisonville Limited Partnership v. GW Petroleum, Inc., No. 10-07-00281-CV (Tex. App. 8/26/2009)
...the case to determinations made in prior appeals from summary judgments has also been questioned. Med Center Bank v. M.D. Fleetwood, 854 S.W.2d 278, 283 (Tex. App.-Austin 1993, writ denied). See also Allstate Ins. Co. v. Smith, 471 S.W.2d 620, 623 (Tex. Civ. App.-El Paso, 1971 no writ); Gle......