Towncreek Indus., LLC v. Wells Fargo Bank
| Decision Date | 27 October 2016 |
| Docket Number | NO. 02-15-00393-CV,02-15-00393-CV |
| Parties | TOWNCREEK INDUSTRIAL, LLC; H&H STEEL FABRICATORS, INC.; ALLTEX STEEL, INC.; AND JAMES TOBEY APPELLANTS v. WELLS FARGO BANK, NATIONAL ASSOCIATION APPELLEE |
| Court | Texas Court of Appeals |
FROM THE 43RD DISTRICT COURT OF PARKER COUNTY
Appellants Towncreek Industrial, LLC; H&H Steel Fabricators, Inc.; Alltex Steel, Inc.; and James Tobey appeal from the trial court's summary judgmententered in favor of appellee Wells Fargo Bank, National Association. Because the trial court neither erred nor abused its discretion by granting Wells Fargo summary judgment, we affirm the trial court's final summary judgment.
On May 24, 2013, Towncreek executed a promissory note in favor of Wells Fargo, showing that Wells Fargo had loaned Towncreek $1,150,000 at 5% annual interest (Note 1). Towncreek's first payment on Note 1 was due June 30, 2013, followed by fifty-nine monthly payments of $7,636.16 with a May 31, 2018 balloon payment of $970,002.07. To secure Note 1, Towncreek contemporaneously signed a deed of trust with power of sale in favor of Wells Fargo on a 6.67-acre tract of real property located in Springtown, Texas. Wells Fargo recorded the deed of trust in the Parker County real property records on May 28, 2013. The deed of trust secured all obligations between Towncreek and Wells Fargo "whether now existing or hereafter arising." Two affiliates of Towncreek—H&H and Alltex—and Tobey—the principal of Towncreek, H&H, and Alltex—each signed commercial, continuing guaranties under which they agreed to be jointly and severally liable for Towncreek's payment and performance obligations under Note 1 and as to "all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired" owed by Towncreek to Wells Fargo. Appellants do not dispute the "validity or enforceability" of the contractual documents related to Note 1.
On June 7, 2013, Wells Fargo issued Towncreek a credit-card account. The credit card had a limit of $25,000 and was personally guaranteed by Tobey. Appellants do not challenge the validity or enforceability of the credit-card agreement.
On November 18, 2013, H&H executed a promissory note in favor of Wells Fargo, showing that Wells Fargo had loaned H&H $1,650,000 (Note 2). Under the terms of Note 2, H&H was required to repay all principal and interest in one lump-sum payment on November 20, 2014, with a variable interest rate. The maturity date was later extended to February 18, 2015. To secure Note 2, H&H signed a security agreement, granting Wells Fargo a security interest in H&H's personal property, which included H&H's "Inventory, Chattel Paper, Accounts, Equipment and General Intangibles." Additionally, Towncreek and Tobey executed commercial, continuing guaranties under which they agreed to be jointly and severally liable for H&H's payment and performance obligations under Note 2 and as to "all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired" owed by H&H to Wells Fargo. On the same day H&H's promissory note was executed, Towncreek executed an additional deed of trust with a power of sale regarding the Springtown real property to secure all payment obligations owed to Wells Fargo by Towncreek or H&H. As with Note 1 and the credit-card agreement, Appellants do not argue that the contractual documents related to Note 2 are invalid or unenforceable.
Towncreek failed to make the payments on Note 1 that were due January 31 and February 28, 2015, triggering a default of Note 1. H&H also did not make the February 18, 2015 payment on Note 2. On March 4, 2015, Towncreek missed making its credit-card payment. On March 24, 2015, Wells Fargo sent a default notice to Towncreek, H&H, Alltex, and Tobey, notifying them that Note 1 was in default, that ad valorem property taxes had not been paid on the Springtown property, that they had seven days to cure the default, and that the maturity of Note 1 would be accelerated if the default was not cured. That same day, Wells Fargo sent a default notice to H&H, Towncreek, and Tobey regarding their default of their payment obligation under Note 2 and gave them seven days to cure the default.
Appellants failed to cure the payment default under Note 1 or pay the matured Note 2 balance during the cure period. Wells Fargo, therefore, sent a formal notice to Towncreek, H&H, Alltex, and Tobey on April 1, 2015, reflecting that Wells Fargo was accelerating the balance owed on Note 1 and demanding full payment of the accelerated balance. Wells Fargo warned that if the accelerated balance was not paid, it would "proceed with the exercise of its contractual and legal default remedies, including . . . foreclosure of the Collateral pursuant to the Loan Agreements." Appellants made no further payments under Note 1 or Note 2. As of June 12, 2015, the credit-card account had an unpaid balance of $24,878.24.
On April 21, 2015, Wells Fargo filed suit against Appellants. Wells Fargo alleged breach-of-contract claims against Towncreek based on its nonpayment of Note 1 and the credit-card account and against H&H based on its nonpayment of Note 2. Wells Fargo also raised claims for breach of the guaranties against H&H, Alltex, and Tobey based on their continuing guaranties of Note 1, which also assumed liability for Towncreek's previous payment obligations under the credit-card account. Finally, Wells Fargo alleged that Towncreek and Tobey breached their continuing guaranties of Note 2. Appellants answered Wells Fargo's petition through a general denial.
Shortly after filing its petition, Wells Fargo initiated foreclosure proceedings on the Springtown property based on Note 2 and the additional deed of trust. At the June 2, 2015 foreclosure sale, Wells Fargo bought the property for $987,254.99. Wells Fargo applied the sale proceeds against the accelerated debt of Note 1—owed by Towncreek and guaranteed by H&H, Alltex, and Tobey—leaving a deficiency as of June 12, 2015 of $129,442.98 plus daily interest. As of June 12, 2015, the balance of Note 2—owed by H&H and guaranteed by Towncreek and Tobey—was $1,679,569.91 plus daily interest, and the balance of the credit-card account—owed by Towncreek and guaranteed by Tobey—was $24,878.24 plus daily interest.
On June 19, 2015, Wells Fargo moved for a traditional motion for summary judgment on its claims for breach of contract and breach of the guaranties,arguing that it had established its right to recover under Note 1, Note 2, the credit-card account, and the attendant guaranties as a matter of law. Wells Fargo attached the affidavit of an assistant vice president, Justin McKinney, proving up the contractual documents, Appellants' payment history, and the facts leading to Appellants' defaults on Note 1, Note 2, and the credit-card account. A hearing on the motion was set for July 20, 2015.
On June 26, 2015, Appellants amended their answer to allege the affirmative defenses of failure to mitigate damages, offset, and payment. That same day, H&H, Towncreek, and Tobey filed a verified motion to continue the summary-judgment hearing "to allow Defendants adequate time to present a defense."2 The trial court heard the motion to continue on July 7, 2015, and signed a docket entry noting that counsel were present and that "Rule 11 Agreement forthcoming." On August 13, 2015, the summary-judgment hearing was rescheduled for September 17, 2015.
On August 24, 2015, Wells Fargo filed a no-evidence motion for summary judgment directed to Appellants' affirmative defenses. On September 9, 2015, Appellants responded to the traditional motion and asserted that Wells Fargo failed to establish its claims as a matter of law because (1) Wells Fargo failed tomitigate its damages "as it relates to the foreclosure of the equipment and personal property collateral" on the Springtown property and (2) the summary-judgment evidence, i.e., Wells Fargo's "H&H Transaction History,"3 supported "only $1,437,894.77, which is $395,996.36 less than the total amount sought" by Wells Fargo. In short, Appellants did not contest liability, only damages. They also objected to McKinney's affidavit, arguing that it was conclusory and impermissibly relied on hearsay documents. The next day, Appellants responded to Wells Fargo's no-evidence motion, arguing that the fact issue regarding the amount of Wells Fargo's damages, raised by the "H&H Transaction History," precluded summary judgment on their affirmative defenses.
On September 17, 2015, the day of the summary-judgment hearing, H&H, Towncreek, and Tobey filed a motion to compel production of an "appraisal of the [Springtown real property] or personal property located on [the Springtown real property] from 2012 or 2013." Appellants could not locate the appraisal in their own records, but Tobey recalled that "the fair market value of the [Springtown property] was determined to be significantly higher than the purchase price of the [Springtown property] by [Wells Fargo] at the foreclosure sale." H&H, Towncreek, and Tobey also filed a second verified motion to continue thesummary-judgment hearing "to allow [H&H, Towncreek, and Tobey] adequate time to compel production of the relevant documents associated with the appraisals of the [Springtown property] conducted in 2012 and/or 2013, which is critical to [their] mitigation . . . defense."
The trial court held the summary-judgment hearing on September 17, 2015, as previously scheduled, and considered "the Motion for Summary Judgment" filed by Wells Fargo, "any timely response filed by [Appellants]," the pleadings, and "the argument and authority of counsel" for Appellants and Wells Fargo. No record was made of this hearing, but the trial court signed a docket notation that it took the motion "[u]nder...
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