Nautical Landings Marina, Inc. v. First Nat. Bank in Port Lavaca

• Decision Date: 31 May 1990
• Docket Number: No. 13-88-570-CV,13-88-570-CV
• Citation: 791 S.W.2d 293
• Parties: NAUTICAL LANDINGS MARINA, INC., David I. Denham and Betty B. Denham, Appellants, v. FIRST NATIONAL BANK IN PORT LAVACA, Appellee.
• Court: Texas Court of Appeals

Page 293

791 S.W.2d 293

NAUTICAL LANDINGS MARINA, INC., David I. Denham and Betty B Denham, Appellants, v. FIRST NATIONAL BANK IN PORT LAVACA, Appellee.

No. 13-88-570-CV.

Court of Appeals of Texas Corpus Christi.

May 31, 1990.

Rehearing Overruled June 29, 1990.

Randy Little, R. Dan Fontaine, Abraham, Watkins, Nichols, Ballard, Houston, Simank, Ron, Kleberg & Head, Corpus Christi, for appellants.

James H. Robichaux, Matthews & Branscomb, Larry G. Hyden, Henkel & Hyden, Corpus Christi, W.S. Fly, Fly, Moeller & Seel, Victoria, for appellee.

Before DORSEY, UTTER and KENNEDY, JJ.

OPINION

DORSEY, Justice.

Nautical Landings Marina, Inc. and David I. and Betty B. Denham appeal a summary judgment rendered against them in favor of First National Bank in Port Lavaca on a note by Nautical and guaranty by the Denhams. We affirm the judgment of the trial court.

The Bank has moved to dismiss Nautical's appeal for want of jurisdiction. The issue presented is whether Nautical's appeal bond, filed after entering bankruptcy, served to perfect the appeal. We grant the motion to dismiss Nautical's appeal for want of jurisdiction.

JURISDICTION

On August 9, 1988, the trial court entered a final summary judgment against Nautical and the Denhams. The trial court denied their Motion for New Trial on September 8, 1988. On October 5, 1988, Nautical filed its petition in bankruptcy in a United States Bankruptcy Court. On November 4, 1988, Nautical and the Denhams filed their appeal bond to perfect appeal to this Court. On November 17, 1988, this Court noted the bankruptcy and abated the appeal in accordance with federal law. See 11 U.S.C. § 362. On February 14, 1989, United States Bankruptcy Judge Richard Schmidt signed his Order Modifying the Stay "to permit the parties to continue the appeal of (this cause) including the rights of all parties to pursue whatever rights they might otherwise have in the appellate process." The parties took no further actions to perfect appeal.

11 U.S.C. § 362(a)(1) provides that once a petition is filed in bankruptcy, an automatic stay is imposed, prohibiting the commencement or continuation of any judicial actions or proceedings against the debtor. Thus, when Nautical sought the protection of Title 11, any judicial proceedings against it were stayed. Whether a proceeding is "against the debtor" within the meaning of § 362(a)(1) is determined from an examination of the posture of the case at the initial proceeding, regardless of whether the debtor is the appellant or appellee. Marcus, Stowell & Beye Gov't Sec., Inc. v. Jefferson Inv. Corp., 797 F.2d 227, 280 n. 4 (5th Cir.1986); Association of St. Croix Condominium Owners v. St. Croix Hotel Corp., 682 F.2d 446 (3d Cir.1982); Greenberg v. Fincher & Son Real Estate, Inc., 753 S.W.2d 506 (Tex.App.--Houston [1st Dist.] 1988, no writ).

Nautical concedes in its Response to Appellee's Motion to Dismiss that the suit now before us was originally filed by the Bank against Nautical and the Denhams. Thus, this appeal is a continuation of judicial proceedings against a debtor to which 11 U.S.C. § 362 applies. When Nautical filed its petition in bankruptcy, federal law imposed a stay on the cause now before us.

Nautical argues that this Court was not required to stay the entire appeal because the Denhams perfected their appeal to this Court, and they were not in bankruptcy. We emphasize that this Court abated the appeal upon notification of the bankruptcy; we did not "stay" the proceedings as suggested by Nautical. The "stay" upon the proceedings was imposed on October 5, 1988, by federal law when Nautical filed bankruptcy. 11 U.S.C. § 362(a)(1). Our abatement was a procedural device to ensure compliance with federal law.

Now before us, however, is the question of what effect the bankruptcy stay had upon Nautical's appeal of the judgment; it appears that the answer under both Texas and federal law is the same: all actions taken prior to the lifting of the stay by Judge Schmidt, including the filing by Nautical of its appeal bond, were void. Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370 (1940); Star-Tel, Inc. v. Nacogdoches Telecommunications, Inc., 755 S.W.2d 146, 150 (Tex.App.--Houston [1st Dist.] 1988, no writ); Southern County Mut. Ins. Co. v. Powell, 736 S.W.2d 745, 748 (Tex.App.--Houston [14th Dist.] 1987, no writ); Wallen v. State, 667 S.W.2d 621, 623 (Tex.App.--Austin 1984, no writ).

Nautical, however, takes the position that the effect of putting the appeal bond in the possession of this Court is the same no matter whether the bond is "filed" before or after the initiation of bankruptcy, because the appeal bond, being in the possession of the Court was "immediately and simultaneously filed" upon the removal of the abatement by this Court and the lifting of the stay by the bankruptcy court. We disagree.

First, with the filing of Nautical's petition in bankruptcy, the federal bankruptcy code imposed a stay upon the continuation of this proceeding. The stay was imposed October 5, 1988, and Nautical filed its appeal bond during the pendency of the stay on November 4, 1988. The filing of that appeal bond vis-a-vis Nautical was void and had no legal effect. Kalb, 308 U.S. at 438, 60 S.Ct. at 345; Southern County, 736 S.W.2d at 748; Wallen, 667 S.W.2d at 623. The subsequent termination of the stay did not have the effect of automatically validating the filing of the appeal bond. ¹ Goswami v. Metropolitan Sav. & Loan, 751 S.W.2d 487, 489-90 (Tex.1988). We do not address the issue of whether the limitations period for perfecting appeal was tolled during pendency of the stay because that issue is not now before us.

Nautical did not properly perfect its appeal. This Court must dismiss the appeal of Nautical Landings Marina, Inc., for want of jurisdiction.

The Denhams' Appeal

The record establishes that the Denhams, in their capacity as officers of Nautical, executed a promissory note with the Bank for the construction and development of a marina. In conjunction with the promissory note, the Denhams also executed a personal guaranty subjecting them to liability for the funds advanced to Nautical. The Denhams also executed a "cash reserves" agreement requiring certain funds deposited with the Bank be maintained to insure the viability of Nautical's debt. Thereafter, Nautical was unable to repay its monthly obligations as required by the terms of its promissory note. The Denhams and the Bank attempted to restructure the debt but were unable to reach an agreement. Following Nautical's default, the Bank exercised its right to set-off against the Denhams' deposits with the Bank and conducted a foreclosure sale of the property securing Nautical's promissory note. The Bank filed suit on the guaranty agreement, and the trial court granted summary judgment in favor of the Bank.

By point of error two, appellants contend the trial court erred in failing to grant their motion for continuance prior to hearing on appellees' motion for summary judgment. The basis for the continuance was that the court reporter had not yet transcribed two depositions that had been recently taken. Generally, an appellate court may reverse a trial court for abuse of discretion only if the record affirmatively establishes that the trial court's decision was arbitrary and unreasonable. Simon v. York Crane & Rigging Co., 739 S.W.2d 793, 795 (Tex.1987); see also Pierce v. Gillespie, 761 S.W.2d 390, 398 (Tex.App.--Corpus Christi 1988, no writ). Absent a record showing the trial court's abuse of discretion, a reviewing court must presume that the evidence before the court was sufficient to support the trial court's ruling. See Simon, 739 S.W.2d at 795; Tex.R.App.P. 52(d).

Appellants filed a lengthy unsworn motion for continuance stating that two recently taken depositions had not been transcribed by the court reporter. The court reporter's affidavit accompanying appellants' motion for continuance states that due to time limitations and work load the completed depositions would not be transcribed in time for the summary judgment hearing. Appellants failed to submit evidence regarding the materiality of the testimony that was purportedly unavailable. Under Tex.R.Civ.P. 166a(f), materiality of the unavailable testimony must be established before a continuance is warranted. Manges v. Astra Bar, Inc., 596 S.W.2d 605, 612-13 (Tex.Civ.App.--Corpus Christi 1980, writ ref'd n.r.e.). Thus, the trial court did not abuse its discretion in denying appellants' motion for a continuance. See id.

Appellants call to our attention our opinion in Blaschke v. Citizens Medical Center, 742 S.W.2d 779, 782 (Tex.App.--Corpus Christi 1987, no writ), where a motion for summary judgment was granted while answers to interrogatories by the movant for summary judgment were pending. We adhere to our language in Blaschke that the better practice is to abstain from ruling on the motion for summary judgment until answers to interrogatories have been filed. There is a distinction between interrogatories and depositions. The responses to interrogatories are unknown to the proponent until they are answered and returned; however, a summary of the material testimony given at a deposition may be made by affidavit by one who attended the deposition. Here, there was no showing of the substance of the testimony and why it was relevant to any summary judgment issue. ² We overrule appellant's second point of error.

By points of error one, three, four, five, six, and nine, appellants argue that the trial court improperly granted appellee's motion for summary judgment. The purpose of a summary judgment is to eliminate patently unmeritorious claims or untenable defenses. Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex.1972); Barrow v. Jack's Catfish Inn, 641 S.W.2d 624, 625 (Tex.App.--Corpus Christi 1982, writ ref'd n.r.e.). A summary judgment should be granted only if evidence establishes that no genuine issue of...