Schuhardt Consulting Profit Sharing Plan v. Double Knobs Mountain Ranch, Inc.

• Decision Date: 17 December 2014
• Docket Number: No. 04–13–00529–CV,04–13–00529–CV
• Citation: 468 S.W.3d 557
• Parties: Schuhardt Consulting Profit Sharing Plan, Appellant/Cross–Appellee v. Double Knobs Mountain Ranch, Inc., Appellee/Cross–Appellant
• Court: Texas Court of Appeals

468 S.W.3d 557

Schuhardt Consulting Profit Sharing Plan, Appellant/Cross–Appellee

v.Double Knobs Mountain Ranch, Inc., Appellee/Cross–Appellant

No. 04–13–00529–CV

Court of Appeals of Texas, San Antonio.

Delivered and Filed: December 17, 2014

Elizabeth Conry Davidson, San Antonio, Leslie M. Luttrell, Luttrell Zucker Law Group, San Antonio, Charles Joseph Cain, Ryan Eric Chapple, Dawn L. Carmody, Steven Bradley Skarnulis, Austin, for Appellant.

John Claiborne Howell, Allen, Stein & Durbin, PC, San Antonio, Ray Leach, Law Office of Ray Leach, San Antonio, for Appellee.

Sitting: Karen Angelini, Justice, Patricia O. Alvarez, Justice, Luz Elena D. Chapa, Justice

OPINION

Opinion by: Patricia O. Alvarez, Justice

This case stems from competing motions for partial summary judgment on claims that a real estate note was improperly accelerated. On September 3, 2010, Susan Chacon sold approximately 823 acres of real property to Appellee/Cross–Appellant Double Knobs Mountain Ranch. The transaction was completed with a Note, Deed of Trust, and Warranty Deed with Vendor's Lien. On August 27, 2012, Appellant/Cross–Appellee Schuhardt Consulting Profit Sharing Plan purchased the $520,000 Real Estate Lien Note and Deed of Trust from Chacon and, 04–13–00529–CV after Double Knobs made a late payment in October of 2012, Schuhardt accelerated the note and posted the property for foreclosure.

Double Knobs sought a declaratory judgment that Schuhardt improperly accelerated the note. The trial court, inter alia, granted partial summary judgment in favor of Double Knobs. We reverse the trial court's declaration as to Schuhardt's inequitable conduct and affirm the remainder of the trial court's judgment.

Factual and Procedural Background

The Royal Stoner Ranch bordered Chacon's 823–acre property on the west. The ranch was encumbered with an easement providing a legal means of ingress and egress from a public road to the Chacon property. At some point in 2000, a fence was erected along the property line for the purpose of managing the Royal Stoner Ranch's deer population. The fence obstructed the easement. The record supports Chacon was unaware the deer fence had been built, much less any repudiation of the easement. In 2006, the Royal Stoner Ranch was partitioned and a substantial portion was sold to Allan Bloxsom and his related corporate entities, including the Schuhardt Consulting Profit Sharing Plan (collectively Schuhardt). The purchased property included the disputed easement.

On September 3, 2010, Chacon sold her property to Double Knobs for $520,000. Shortly after purchasing the property, Double Knobs notified one of the Royal Stoner Ranch owners of its plans to build an access road on the easement. Approximately nine months later, Double Knobs hired a surveyor to define the parameters of the easement.

A. Court Finds Easement Valid and Schuhardt Purchases Note

In August of 2011, based on contentions that the easement terminated due to abandonment, Schuhardt obtained a temporary restraining order prohibiting Double Knobs from using the easement. On June 12, 2012, after a two-day bench trial, the trial court ruled that the easement allowing access to the property was valid and enforceable.¹

On July 31, 2012, after the trial court announced its ruling, but before entry of a judgment, Bloxsom retained an attorney for the express purpose of evaluating the enforcement of Chacon's note against Double Knobs. On August 27, 2012, Schuhardt purchased the Note and Deed of Trust from Chacon for $400,000, paying $100,000 more than the Note's fair market value. Bloxsom acknowledged his motivation for purchasing the Note was his desire to gain “negotiating power” against Double Knobs in the prior easement dispute.

At the time of the sale, Double Knobs was current on all payments and the next monthly payment was due on September 1, 2012. The record substantiates that, as of September 1, 2012, (1) Schuhardt had not notified Double Knobs of the transfer of Note and Deed of Trust, (2) had not recorded the Note or Deed of Trust, and (3) Double Knobs was unaware Schuhardt had purchased the Note and Deed of Trust.

B. Double Knobs's Payments and Schuhardt's Acceleration of the Note

As with all previous payments, Double Knobs's September 2012 payment was sent to Chacon's agent, Karen Longhurst. The payment was received on September 10, 2012. Although Chacon had divested herself of any interest in the property, Bloxsom directed Longhurst to endorse the check and deposit the check into Chacon's account. Longhurst then wrote a separate check from Chacon's account to Schuhardt, thereby avoiding Schuhardt's endorsement on Double Knobs's cancelled check.

On September 21, 2012, once again at the direction of Bloxsom, Longhurst sent Double Knobs the following written notification:

As you know, Susan [Chacon] has sent you notice that she will be traveling and all her payments are to be sent to me at my office in Pipe Creek.

Although Susan has been previously accepting your note payments late, the terms of the note call for payments to be made by the first of the month. So, payment must be made by the first of the month. .... The terms of the note will be strictly enforced.

Thank you in advance for your cooperation.

Double Knobs received the letter on September 26th.

Double Knobs's October 2012 payment was not received by the first of the month. On October 2nd, Longhurst texted Carlton Thompson, one of Double Knobs's two principals, notifying him the payment was overdue. Neither Thompson nor anyone on behalf of Double Knobs responded to the text.

On October 3, 2012, Schuhardt notified Double Knobs by correspondence that it was the owner and holder of the Note. The letter stated that payment was due on the first of the month and that Double Knobs's failure to make the monthly payment on October 1st constituted default.

...Schuhardt Consulting Profit Sharing Plan, as the Payee, has elected to and does hereby accelerate the outstanding and unpaid balance due under the terms of the Promissory Note.

...

Payment of the outstanding balances and attorney's fees must be made in immediately available funds and delivered, on or before 3:00 o'clock p.m. on Friday, October 12, 2012....

The notice further provided that if the Note's balance was not timely paid, the property would be posted for foreclosure pursuant to the terms of the Deed of Trust. Although Double Knobs did not respond directly to Schuhardt's October 3, 2012 correspondence, Double Knobs tendered the October payment to Chacon at Longhurst's address on October 5, 2012.

On October 9, 2012, Schuhardt sent Double Knobs a second letter that rejected Double Knobs's October 5th “partial payment” and reiterated that the October 3rd default notice required Double Knobs to remit the full outstanding balance of the Note no later than October 12th and that failure to remit the same would result in commencement of foreclosure proceedings.

On October 10, 2012, Schuhardt filed the Transfer of Note and Lien with the Uvalde County Clerk's Office. Two days later, on October 12, 2012, Schuhardt notified Double Knobs that its property would be sold at foreclosure on November 6, 2012.

C. Double Knobs Seeks Relief from Trial Court

On October 19, 2012, Double Knobs sought relief in the original 2011 case including a temporary restraining order, temporary injunction, and declaratory judgment. Double Knobs also brought claims of inequitable conduct, breach of contract, and tort. Schuhardt moved to sever Double Knobs's motions and claims and filed a counter-claim against Double Knobs alleging affirmative defenses of legal justification, waiver and holder in due course, and breach of contract.

After a hearing on October 25, 2012, the trial court granted Schuhardt's motion to sever and Double Knobs's temporary restraining order. The posted November 2012 foreclosure sale was halted. The parties filed competing motions for summary judgment, and after a hearing on March 20, 2013, the court held as follows:

(1) Double Knobs non-suited its wrongful disclosure, malicious prosecution, and tortious interference claims;

(2) Double Knobs's partial summary judgment was granted on all grounds;(3) Schuhardt's traditional motion for partial summary judgment was denied;

(4) Schuhardt's no-evidence motion for partial summary judgment was granted in part; and

(5) Double Knobs's claims for duress, actual fraud, and constructive fraud were dismissed.

Based on a Rule 11 stipulation, both parties agreed that all claims for recovery of attorney's fees would be submitted for decision by the trial court—based on the parties' submission of affidavits and counter-affidavits—and incorporated into the final judgment. The trial court subsequently awarded attorney's fees to Double Knobs and denied Schuhardt's requested attorney's fees.

On July 8, 2013, the trial court signed the Final Judgment and Findings of Fact and Conclusions of Law and this appeal ensued.

D. Parties' Arguments on Appeal

Schuhardt argues the trial court wrongfully (1) granted Double Knobs's motion for partial summary judgment concluding Double Knobs was entitled to recover attorney's fees under the Uniform Declaratory Judgment Act, (2) granted Double Knobs's motion for partial summary judgment as to Double Knobs's requests for declarations, (3) denied Schuhardt's traditional motion for partial summary judgment on all of its affirmative defenses to Double Knobs's contractual and equity claims, and (4) awarded attorney's fees to Double Knobs and denied Schuhardt's attorney's fees. Double Knobs filed a cross-appeal alleging the trial court erred in dismissing its claims for duress, actual fraud, and constructive fraud.

We begin our analysis with the trial court's declarations in the final judgment.

Declaratory Judgment

Texas Civil Practice and Remedies Code section 37.003 authorizes a court “to declare rights, status, and other legal relations.” Tex. Civ. Prac. & Rem. Code Ann. 37.003 (West 2008). “The power to determine an issue of fact,...