Vincent v. Bank of America, N.A.
| Decision Date | 09 July 2003 |
| Docket Number | No. 05-02-00363-CV.,05-02-00363-CV. |
| Citation | 109 S.W.3d 856 |
| Parties | James and Patricia VINCENT, Appellants, v. BANK OF AMERICA, N.A. f/k/a Bank of America Texas, N.A., Appellee. |
| Court | Texas Court of Appeals |
John H. Crouch, Kilgore & Kilgore, Inc., Dallas, for appellants.
Eric Scott Lipper, Hirsch & Westheimer, P.C., Houston, for appellee.
Before Justices MOSELEY, O'NEILL, and LAGARDE.1
.
James and Patricia Vincent appeal a judgment entered after a bench trial of a dispute involving a home equity loan. In four issues, appellants: (1) contend the trial court erred in refusing to order forfeiture pursuant to the Texas constitution; (2) request this court to order forfeiture as a sanction for appellee Bank of America's contempt of the trial court's order to correct its accounting methods; (3) contend the trial court erred in refusing to certify this case for treatment as a class action; and (4) request this court to remand the case for redetermination of attorney's fees in light of the trial court's erroneous refusal to certify the class and order forfeiture. Appellee/cross appellant Bank of America asserts by way of cross points that (1) the trial court erred in determining that Bank of America failed to comply with and/or deviated from the loan agreement; (2) the trial court erred in determining that paragraph II, 6 of the loan agreement requires application of the scheduled installment earnings method of accounting; (3) there is no evidence or insufficient evidence to support the trial court's finding that Bank of America, outside of discovery, gave no explanation of its method of accounting; (4) the trial court erred in its construction of the contract and, thus, attorneys' fees should have been awarded to Bank of America and not to appellants; (5) there is no evidence or insufficient evidence that Bank of America accrued interest for statement periods in excess of the fixed payment amount; and (6) there are no pleadings to support the injunctive and declaratory relief granted. For reasons that follow, we modify the trial court's judgment by vacating that portion thereof granting injunctive relief, and we affirm the judgment as modified.
In May 1998, James and Patricia Vincent (collectively the "Vincents") borrowed $130,400 from Bank of America (the "Bank") and signed a Federal Truth in Lending Disclosure & Loan Agreement (the "Loan Agreement"). This home equity loan was secured by the Vincents' homestead and is governed by the Texas constitution. TEX. CONST. art. XVI, § 50(a)(6). After a dispute arose regarding how payments were being allocated between principal and interest, the Vincents filed suit against the Bank seeking, among other things, certification as a class action and forfeiture of all principal and interest on the loan. After a hearing, the trial court denied class certification and the case proceeded to trial before the court on December 18, 2001. Final judgment was entered in the Vincents' favor on February 14, 2002, granting them injunctive and declaratory relief, but refusing to grant a requested declaration of forfeiture of all principal and interest due under the loan documents. Requested findings of fact and conclusions of law were filed by the trial court. Both the Vincents and the Bank have appealed the trial court's judgment.
In their first issue, the Vincents contend the trial court erred in refusing to order forfeiture as required by the Texas constitution. The Vincents argue that once the trial court found the Bank failed to comply with its obligations under the home equity loan, forfeiture should have been automatic. They assert that breach of the following provision of the Loan Agreement triggered forfeiture:
6. Interest Calculation and Application of Payments. For purposes of interest calculation, we will assume that all months have thirty days, that each year has 360 days, that all payments are received on the last day of the billing cycle, and that the daily periodic rate for your account is constant. (The Daily Periodic Rate is calculated by dividing the annual percentage rate by 360.) Payments shall be applied in this order: (1) to any interest accrued to the assumed date of payment; (2) to scheduled principal reduction; (3) to any late charges accrued; and (4) to principal not yet paid.
The Vincents base this claim, in part, on section 50(a)(6)(Q)(x) of the Texas constitution. This section states:
(x) the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit if the lender or holder fails to comply with the lender's or holder's obligations under the extension of credit within a reasonable time after the lender or holder is notified by the borrower of the lender's failure to comply;
See TEX. CONST. art. XVI, § 50(a)(6)(Q)(x). This section provides the substantive rights and obligations of lenders and borrowers involved in home equity loan transactions secured by homestead property in Texas. See Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353, 356 (Tex.2000). "Section 50(a)(6), in its totality, establishes the terms and conditions a home-equity lender must satisfy to make a valid loan." Id. See TEX. CONST. art. XVI, § 50(a)(6). This section also "provides that the lender forfeits all principal and interest of the loan if it fails to comply with the obligations set out in section 50(a)(6)." Id. at 356-57. Thus, forfeiture is only available for violations of constitutionally mandated provisions of the loan documents. Violation of any other provision of the loan documents may result in traditional breach of contract causes of action only, with traditional breach of contract remedies. Therefore, the Vincents were only entitled to forfeiture if the Bank breached a provision of the Loan Agreement that was constitutionally mandated. There is nothing in the constitution that requires the language of paragraph II, 6 to be included in home equity loans secured by homestead property. Because paragraph II, 6 of the Loan Agreement is not constitutionally mandated, its breach will not support forfeiture.
The trial court found the Bank failed to comply with its obligations under the Loan Agreement in the manner of the application of the payments made by the Vincents. Paragraph II, 6 of the Loan Agreement, quoted above, provides that "[p]ayments shall be applied in this order: (1) to any interest accrued to the assumed date of payment; (2) to scheduled principal reduction; (3) to any late charges accrued; and (4) to principal not yet paid." The amount of each payment made by the Vincents from month to month that was applied to reduce the outstanding principal varied dramatically. As a result of the manner in which the Bank applied the payments made by the Vincents, found by the trial court to be in breach of paragraph II, 6, interest in excess of the $997.57 monthly payment called for in the loan documents accrued for several months. The Vincents contend this breach entitles them to automatic forfeiture under the Texas constitutional provision requiring that the loan be
scheduled to be repaid in equal successive monthly installments beginning no later than two months from the date the extension of credit is made, each of which equals or exceeds the amount of accrued interest as of the date of the scheduled installment;
TEX. CONST. art. XVI, § 50(a)(6)(L). This contention, however, ignores the actual wording of the constitution. As long as the Loan Agreement, as originally entered into by the parties, complies with the provisions of the constitution, forfeiture is not an appropriate remedy. If the loan is scheduled to be repaid in accordance with this provision, it complies with the constitution. The Loan Agreement calls for three hundred monthly payments of $997.57 beginning on June 10, 1998. As written, it complies with the terms of the constitution. Accordingly, there was no violation of section 50(a)(6)(L) of the constitution and forfeiture is not an available remedy. The trial court, therefore, did not err in denying forfeiture. We resolve the Vincents' first issue against them.
In the final judgment entered by the trial court, an injunction was issued in the Vincents' favor. In its cross issue number six, the Bank asserts, in part, the trial court erred in granting the injunction because it is not supported by the pleadings. The Vincents' third amended petition sought injunctive relief relating to the validity of the lien on their homestead in the event the trial court ordered forfeiture of all principal and interest. The trial court granted the Vincents an injunction ordering the Bank to:
use the scheduled installment earnings method, i.e., a fixed amortization schedule, to account for all future, monthly payments made by Plaintiffs under the Loan Agreement.
"Texas law requires a judgment to conform to the pleadings and the verdict." Affiliated Capital Corp. v. Musemeche, 804 S.W.2d 216, 219 (Tex.App.-Houston [14th Dist.] 1991, writ denied); TEX.R. CIV. P. 301. A party may not obtain a judgment based on a theory not pled. Wilson v. McCracken, 713 S.W.2d 394, 395 (Tex.App.-Houston [14th Dist.] 1986, no writ). A judgment not supported by pleadings must be reversed. Oil Field Haulers Assoc. v. R.R. Comm'n, 381 S.W.2d 183, 191 (Tex.1964); Affiliated Capital, 804 S.W.2d at 219. The pleadings in this case do not support the injunction. Consequently, we resolve that portion of cross issue number six relating to the injunction in the Bank's favor. We modify the trial court's judgment by vacating that portion thereof granting injunctive relief.
In their second issue, the Vincents request this court to order forfeiture as a sanction for the Bank's failure to comply with the injunction. Because vacating the trial court's...
To continue reading
Request your trial
-
Miller v. Monumental Life Ins. Co.
...400, 407 (Tex.App.2003). The court will not "ask about the subjective intent of the parties to the contract." Vincent v. Bank of Am., N.A., 109 S.W.3d 856, 867 (Tex.App.2003). "If the written instrument is so worded that it can be given a certain or definite legal meaning or interpretation,......
-
Edwards Aquifer Auth. v. Chemical Lime
...precedent."). 66. Hines v. Hash, 843 S.W.2d 464, 468 (Tex. 1992). 67. See supra note 37. 68. Compare Vincent v. Bank of Am., N.A., 109 S.W.3d 856, 868 (Tex.App.-Dallas 2003, pet. denied) (a nonprevailing party may recover attorney fees under the Declaratory Judgment Act), Brush v. Reata Oil......
-
In re Chambers
...the 1999 loan did not raise constitutional defects that the Defendant was required to cure. See Vincent v. Bank of America, N.A., 109 S.W.3d 856, 852 (Tex.App.-Dallas 2003, pet. den.). Moreover, if a lender makes an offer to modify or refinance an equity loan that complies with § 50(a)(6)(Q......
-
Baker v. Peterson, No. 10-02-00113-CV (Tex. App. 4/7/2004)
...some evidence of a substantive and probative character exists to support the trial court's decision. Vincent v. Bank of Am., N.A., 109 S.W.3d 856, 868 (Tex. App.—Dallas 2003, pet. denied) (citing Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. When using an abuse-of-discretion standard, the a......