Opinion
NUMBER 13-14-00079-CV
03-17-2016
H.T. STRASBURGER, INDIVIDUALLY AND IN HIS CAPACITY AS (I) CHAIR OF THE BOARD OF DIRECTORS OF FIDELITY BANK OF TEXAS, AND (II) AS A MEMBER OF TUITION LLC; SHIRLEY STRASBURGER, INDIVIDUALLY AND IN HER CAPACITY, ET AL., Appellants, v. WENDY LEE KYLE, Appellee.
On appeal from the 250th District Court of Travis County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Rodriguez and Wittig
Memorandum Opinion by Justice Wittig
Retired Fourteenth Court of Appeals Justice Don Wittig assigned to this Court by the Chief Justice of the Supreme Court of Texas pursuant to the government code. See TEX. GOV'T CODE ANN. § 74.003 (West, Westlaw through 2015 R.S.).
Appellants, (collectively "Fidelity"), challenge the trial court's denial of their motion for sanctions belatedly filed after the court granted appellants' summary judgment. Shortly after appellee Wendy Kyle ("Kyle") filed her notice of appeal, Fidelity asked the trial court to modify its judgment in its favor to include attorney's fees and costs based upon Kyle's alleged filing of a frivolous lawsuit. In three issues, Fidelity argues: (1) the trial court erred in denying its attorney's fees and costs under Chapter 10 of the Texas Civil Practice and Remedies Code; (2) the trial court erred in denying attorney's fees and costs under Rule 13 of the Texas Rules of Civil Procedure; and (3) appellants' requested fees and costs were necessary and reasonable. We will affirm.
Appellants are Fidelity Bank of Texas, Tuition LLC, H.T. Strasburger, Shirley Strasburger, and Terry Whitley
This case is before the Court on transfer from the Third Court of Appeals in Austin pursuant to an order issued by the Supreme Court of Texas. See TEX. GOV'T CODE ANN. § 73.001 (West, Westlaw through 2015 R.S.).
I. BACKGROUND
The underlying summary judgment appeal that was recently decided by this Court can be found at Kyle v. Strasburger, No. 13-13-00609-CV, 2015 WL 7567523 (Tex. App.—Corpus Christi, Nov. 24, 2015, no pet. h.) (mem. op.). There, we affirmed the trial court's summary judgment on behalf of Fidelity. Id.
The inception of this controversy was a 2004 $1,100,000.00 loan by Fidelity to Kyle's former husband, Mark Kyle, without her consent or signature on the note and deed of trust. The homestead was thus mortgaged. Later evidence indicated Kyle's signature was forged. Fidelity began sending demands for past-due payments and property taxes in 2007. In 2009, the Kyles filed for divorce. In 2010, Fidelity negotiated with the parties for a forbearance agreement to slow foreclosure proceedings. The negotiations failed when Kyle would not sign Fidelity's requested statement in the abatement documents that she previously signed or consented to the loan. We discuss below whether the absence of Kyle's signature on the loan formation documents made the loan void or voidable.
On March 24, 2011, Fidelity commenced foreclosure proceedings against Mark Kyle, Wendy Kyle and the Kyles' homestead. In his deposition, the bank president testified he did not know at that time of commencement of the foreclosure whether the bank knew Kyle did not sign the loan documents. Kyle's affidavit stated that the bank's petition included false allegations that she had executed the loan documents. Signature comparisons indicated the purported signature of Kyle did not match her known signature. Kyle's verified denial indicated she did not sign the loan documents, the signature was forged, and that she gave no one authority to sign the documents. Fidelity continued its collection efforts and represented not only in court but to others, including the parties and the Internal Revenue Service, that both Mark and Wendy Kyle had executed the loan papers. In June of 2011, pursuant to a Rule 11 divorce settlement agreement, Kyle conveyed her interest in the homestead to Mark by special warranty deed because she did not want to be part of the foreclosure proceeding, though she thought she could be still liable on the note according to Fidelity's various representations, and advice of counsel. See TEX. R. CIV. P. 11. Kyle also claimed that Tuition L.L.C. ("Tuition") attempted to collect from her and instituted foreclosure proceedings naming her as a party. The couple was divorced in August 2011.
Kyle filed suit on October 3, 2012 against Fidelity claiming fraudulent filing of a financing statement, statutory fraud in a real estate transaction, common law fraud, negligent misrepresentation, aiding and abetting, damage to credit, et cetera. She also sought a declaration that the loan agreement was void and asked the trial court to set aside her partial transfer of the property to Mark Kyle.
October 13, 2011 Fidelity Bank sold the note and deed of trust to Tuition, an entity owned and formed by the Strasburgers (H.T. and Shirley) to hold the note and lien. The Strasburgers were also majority shareholders of Fidelity Bank.
II. STANDARD OF REVIEW
We review the imposition of sanctions under Chapter 10 of the Texas Civil Practice and Remedies Code under the same standard we review sanctions under Rule 13—abuse of discretion. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007) (citing Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006); Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004)). An appellate court may reverse the trial court's ruling only if the trial court acted without reference to any guiding rules and principles, such that its ruling was arbitrary or unreasonable. Cire, 134 S.W.3d at 838-39. Generally, courts presume that pleadings and other papers are filed in good faith. Low 221 S.W.3d at 614 (citing GTE Commc'ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 730 (Tex. 1993)). The party seeking sanctions bears the burden of overcoming this presumption of good faith. Id. at 731. In deciding whether the denial of sanctions constitutes an abuse of discretion, we examine the entire record, including the findings of fact and conclusions of law, reviewing the conflicting evidence in the light most favorable to the trial court's ruling and drawing all reasonable inferences in favor of the court's judgment. See Lake Travis Indep. Sch. Dist. v. Lovelace, 243 S.W.3d 244, 249-50 (Tex. App.—Austin 2007, no pet.) (citing In re C.Z.B., 151 S.W.3d 627, 636 (Tex. App.—San Antonio 2004, no pet.)).
"'Groundless' for purposes of this rule means no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law." TEX. R. CIV. P. 13; see Hartman v. Urban, 946 S.W.2d 546, 551 (Tex. App.—Corpus Christi 1997, no writ). To determine if a pleading was groundless, that is, filed for an improper purpose, the trial court must objectively ask whether the party and counsel made a reasonable inquiry into the legal and factual basis of the claim at the time the suit was filed. See Loeffler v. Lytle Indep. Sch. Dist., 211 S.W.3d 331, 348 (Tex. App.—San Antonio 2006, pet. denied). A trial court may not base Rule 13 sanctions on the legal merit of a pleading or motion. Emmons v. Purser, 973 S.W.2d 696, 700 (Tex. App.—Austin 1998, no pet.). Merely filing a motion or pleading that the trial court denies does not entitle the opposing party to rule 13 sanctions. Id.
In this case, no findings of fact or conclusions of law were requested or filed. It is therefore implied that the trial court made all the findings necessary to support its judgment. See Lemons v. EMW Mfg. Co., 747 S.W.2d 372, 373 (Tex. 1988); In re W.E.R., 669 S.W.2d 716, 717 (Tex.1984). In determining whether some evidence supports the judgment and the implied findings of fact, "it is proper to consider only that evidence most favorable to the issue and to disregard entirely that which is opposed to it or contradictory in its nature." See Renfro Drug Co. v. Lewis, 235 S.W.2d 609, 613 (Tex. 1950).
III. ABSOLUTE PRIVILEGE
Appellants first argue that all of Kyle's claims were barred because they were based upon statements in judicial proceedings, citing Reagan v. Guardian Life Ins. Co., 166 S.W.2d 909, 912 (Tex. 1942). Absolute privilege typically applies to claims of libel and slander arising out of judicial proceedings, for example, the Reagan court itself held that " no remedy exists in a civil action for libel or slander." Id.
We first observe that Kyle's claims are not based solely on Fidelity's legal filings for foreclosure. There were communications between at least the bank president and Kyle's agents regarding the threatened foreclosure by Fidelity as well as alleged verbal threats to foreclose even after Fidelity knew Kyle claimed both lack of consent to the underlying loan and forgery. Fidelity sent a notice to the Internal Revenue Service. Further, Fidelity was directly involved in negotiations surrounding the Rule 11 agreement and special warranty deed wherein Kyle signed away her interest. In its reply brief, Fidelity cites Perdue, Brackett, Flores, Utt & Burns v. Linebarger, Goggan, Blair, Sampson & Meeks, L.L.P., 291 S.W.3d 448, 451 (Tex. App.—Fort Worth 2009, no writ). However, once again, the case deals with libel or slander in a governmental context: "the affirmative defense that the alleged defamatory statements were absolutely privileged under the doctrine of quasi-judicial immunity." Id.; see also Bird v. W.C.W., 868 S.W.2d 767, 771-72 (Tex. 1994) (stating that a communication was privileged where the father's damages were basically defamation).
Moreover, as Kyle argues, the Lee case observes: "We know of no Texas case where absolute privilege was asserted as anything other than an affirmative defense to a defamation claim." In re Lee, 995 S.W.2d 774, 776 (Tex. App.—San Antonio 1999, orig. proceeding).
We acknowledge other cases sometimes extend the absolute privilege rule into a broader context but here other proof takes the claim outside the rule.
With due consideration for the above arguments and authorities, we hold that absolute privilege did not apply, or there was a sound argument against its application under these facts.
IV. KNOWLEDGE OF FORGERY
Fidelity next argues that it informed Kyle's counsel that it was not aware that the loan had been forged prior to filing of the foreclosure. Fidelity quotes selected portions of Kyle's deposition that she had no indication that Fidelity knew the loan was forged prior to filing of the foreclosure action on March 24, 2011. Kyle counters that as early as 2007, Fidelity and its counsel began sending demands for past due payments. Kyle maintained she knew nothing of the details about the loan. Again in 2010, Kyle and her husband tried to negotiate a forbearance agreement to abate any foreclosure. Kyle refused to sign the foreclosure abatement because it required her to acknowledge she had previously signed the loan documents. Kyle maintained that the proposed acknowledgement was not true. Furthermore, Fidelity's own president testified in his deposition that he did not know whether or not Fidelity was on notice that Kyle had not signed the loan. Kyle's constitutional forfeiture claims were facially viable, assuming the homestead loan was made without her consent.
We hold that the evidence was controverted and could not be the basis for requiring the trial court to award sanctions. Reviewing the conflicting evidence in the light most favorable to the trial court's ruling and drawing all reasonable inferences in favor of the court's judgment we cannot say the trial court abused its discretion. Lovelace, 243 S.W.3d at 249-50.
V. CAUSATION AND RELIANCE
Because Kyle admitted in her deposition she knew by 2004 or 2005 her signature had been forged, she could not have relied on the statements in the application for order of foreclosure claiming she executed the loan documents. And furthermore, according to selected deposition passages, she relied on the advice of counsel to enter into the agreement to give away her half of the house. Fidelity argues that such reliance negated any causal connection between its actions and Kyle's harm.
We acknowledge conflicting deposition testimony and other proof presented by both sides. Counsel for Fidelity asked Kyle what deception his clients visited upon her that persuaded her to execute the Rule 11 agreement (signing away her one-half interest by special warranty deed). Kyle replied: "They said that they were going to foreclose, and I believed that I was liable for the debt." Counsel then reiterated that at least the representation of alleged liability was made in the application for foreclosure. Other proof suggested Fidelity insisted that its home equity loan and lien were valid against Kyle and her interest in her homestead. For example, consider the following deposition testimony: "Okay. In here you allege that the Defendants committed common law fraud when they misrepresented to you that your home would be foreclosed upon. Correct?" Kyle: "Yes." Even if Kyle knew by 2004 or 2005 that she had not signed the loan papers, that fact is not relevant to the claim that Fidelity sought to make her responsible for the $1,100,000.00 home equity loan in letters to her, collection efforts, and its application for foreclosure.
In any event, it is not necessary, in order to avoid a contract for fraud, that such fraud should have been the sole cause of making such a contract. "It is sufficient that the fraudulent representation is relied on to the extent that it was a material factor in inducing the making of the contract and without which the same would not have been made." First State Bank of Bellaire v. Olde Colony House, Inc., 414 S.W.2d 221, 223 (Tex. App.—Waco 1967, writ ref'd n.r.e.). In the context of common law fraud, courts have uniformly treated the issue of justifiable reliance as a question for the factfinder. 1001 McKinney Ltd. v. Credit Suisse First Boston Mortgage Capital, 192 S.W.3d 20, 30 (Tex. App.—Houston [14th Dist.] 2005, pet. denied). The question of justifiable reliance depends heavily on the relationship between the parties and their relative sophistication. Id.
Once again, the proof is controverted and conflicting. Accordingly, such evidence, without more, is not sufficient for this Court to conclude that the trial court must assess sanctions. See Emmons, 973 S.W.2d at 700.
VI. COMMUNICATIONS WITH STRASBURGERS
Appellants next contend that Kyle's claims based on misrepresentations by the Strasburgers were sanctionable because she never met or communicated with the Strasburgers. Kyle responds with the assertion that the Strasburgers did not specially except or file a verified denial that they were not liable in the capacity in which they were sued. Further, Kyle's allegations included joint liability theories including "aiding and abetting" or concert of action. Under these theories of liability, Kyle was not required to prove that the Strasburgers actively participated in the tort but opens up joint liability, where one party gives substantial assistance to another in accomplishing a tortious result and that party's own conduct, separately considered, constitutes a breach of duty to the third person. See Shinn v. Allen, 984 S.W.2d 308, 311 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (citing Restatement (Second) of Torts § 876 (1977)). Fidelity Bank and Tuition were closely held entities. The Strasburgers substantially owned the bank and entirely owned one hundred percent of Tuition. Tuition was created solely to hold Kyle's home equity loan. Consequently, there is circumstantial evidence supporting Kyle's contention that as officers, directors, or principals of both Tuition and Fidelity Bank, the Strasburgers had the requisite knowledge, consent, or participation in Fidelity's foreclosure efforts. To the extent Kyle was able to make her claims for return of principal and interest under her constitutional or fraud claims, the holders of the note would forfeit both principal and interest if the lien was not created with the written consent of Kyle as alleged. And the Strasburgers in their individual capacities could be liable where the corporate structure is abused to perpetuate a fraud including inadequate capitalization. Castleberry v. Branscum, 721 S.W.2d 270, 272-73 & n.3 (Tex. 1986) (stating that "[n]either fraud nor an intent to defraud need be shown as a prerequisite to disregarding the corporate entity; it is sufficient if recognizing the separate corporate existence would bring about an inequitable result").
Kyle also insists she had the right to additional discovery on these issues and, ergo, that additional evidence could be constructively credited to her claim in judging whether or not it was frivolous. We agree. See Jampole v. Touchy, 673 S.W.2d 569, 573 (Tex. 1984) (holding that the ultimate purpose of discovery is to seek the truth, so that disputes may be decided by what the facts reveal, not by what facts are concealed). We find there is some evidence supporting some of these claims and additional evidence could reasonably be adduced to bolster support of individual claims. See id.; see also D Design Holdings, L.P. v. MMP Corp., 339 S.W.3d 195, 203 (Tex. App.—Dallas 2011, no pet.) (stating that the test for an abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court's action, but whether the court acted without reference to any guiding rules and principles).
VII. COLLATERAL ATTACK
After Fidelity filed its initial motion for summary judgment, Kyle filed additional claims that Fidelity likewise argued to be groundless in both law and fact. These claims included: (1) a claim for forfeiture of principal and interest paid; (2) a declaratory judgment that the loan is void; (3) the special warranty deed is void; and (4) alleged violations of the Texas Finance Code and Texas Deceptive Trade Practices Act.
Fidelity argues that the first three claims of categories listed above were impermissible collateral attacks on the divorce court judgment. First, we note Kyle's pleadings do not support that such a claim was made. While it is true that the decree may have confirmed Kyle's divestiture of her interest (if any) in the property, it did not seem to hamper Fidelity's ongoing claims and attempted foreclosure against Kyle. Appellants' reliance upon Kyle's lay testimony that she was seeking a fair community property settlement is misplaced and substantially contradicted by other direct or differing testimony and the pleadings. In any event, under both federal and Texas law, a party seeking to assert the bar of collateral estoppel must establish that: (1) the facts sought to be litigated in the second action were fully and fairly litigated in the first action; (2) those facts were essential to the judgment in the first action; and (3) the parties were cast as adversaries in the first action. John G. & Marie Stella Kenedy Mem'l Found. v. Dewhurst, 90 S.W.3d 268, 288 (Tex. 2002). We hold collateral estoppel is not available to Fidelity as a basis for sanctions under these facts and pleadings. See id.
Fidelity initially contradicted its later position on appeal because it sought to hold Kyle liable on a note she did not sign and to foreclose her "interest" in the homestead.
VIII. LIMITATIONS
Appellants next argue Kyle's claims were barred because she did not file them until more than eight years after the loan documents were executed without her signature or forged. Relying heavily on In re Estate of Hardesty, 449 S. W.3d 895, 911 (Tex. App.—Texarkana 2014, no pet.), we recently held in the companion case, that if the lien was created without the written consent of each owner and spouse, the forfeiture is curable under section 50(a)(6)(Q)(xi) of the Texas Constitution and thus not void. See also Kyle, 2015 WL 7567523, at *4. However, at the time Kyle first initiated her claims in 2012, no Texas state court had made that determination under the specific constitutional section. This was an open question of law. At least one federal court opinion supported Kyle. See Smith v. JPMorgan Chase Bank, Nat. Ass'n., 825 F. Supp. 2d 859, 861 (S.D. Tex. 2011) (stating that a noncompliant mortgage lien against a homestead is void ab initio) (citing Moore v. Chamberlain, 195 S.W. 1135 (Tex. 1917)); Florey v. Estate of McConnell, 212 S.W.3d 439, 447 (Tex. App.—Austin 2006, pet. denied)).
The Texas Supreme Court has yet to rule whether such a violation of the constitution is void or voidable with the subsequent application of various limitation periods. Historically the high court has jealously guarded the homestead protections of Texas citizens. See, e.g., Moore v. Chamberlain, 195 S.W. 1135, 1136-37 (Tex. 1917). --------
Kyle concedes that in 2013, the Fifth Circuit found Section 50(a)(6)(Q)(x) allows a lender to cure certain violations making a lien voidable, rather than void ab initio and concluding that the legal injury rule applies to the creation of unconstitutional liens. Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667, 675 (5th Cir. 2013). However, she also argues that her claim is under subsection (xi) of the constitution rather than subsection (x) as found by the Fifth Circuit. Compare TEX. CONST. art. XVI § 50(a)(6)(Q)(xi) with (x). Kyle also cites Garcia v. Garza, 311 S.W.3d 28, 44 (Tex. App.—San Antonio 2010, pet. denied) for the proposition that forged deeds are void ab initio. We conclude that when these claims were filed, appellee had a basis in law or fact for her claims or her claims were warranted by a good faith argument for the extension, modification, or reversal of existing law. TEX. R. CIV. P. 13; see also Hartman, 946 S.W.2d at 551.
IX. FINANCE CODE AND DECEPTIVE TRADE PRACTICES ACT
Fidelity reiterates its argument that Kyle's claims were groundless due to lack of causation and reliance because Kyle relied "solely" on her lawyers in deeding away her house. As we discussed in section V above, Kyle testified that Fidelity asserted it was going to foreclose, and she believed that she was liable for the debt. Kyle suggests there is no good faith reason or explanation for Fidelity and Tuition to pursue an action for foreclosure and seeking payment from Kyle on the $1,100,000.00 loan. Fidelity places itself in the untenable position of saying she had no interest in the property while simultaneously seeking foreclosure and other remedies against her. As long as Fidelity pursued a deficiency claim against Kyle, she had a justiciable interest in the subject matter of the loan. We find no merit to Fidelity's argument and reiterate our holding in section V above.
X. BAD FAITH
Fidelity argues that bad faith justifies the award of attorneys' fees and expenses. Appellants quote Loeffler, that in order to determine if a pleading, motion, or paper was groundless (or brought in bad faith) the court objectively inquires as to whether the party and counsel made a reasonable inquiry into the legal and factual basis of the claim at the time the suit was filed. 211 S.W.3d at 348. We agree in principle. To prevail under Chapter 10, there must be little or no basis for the claims, no grounds for legal arguments, misrepresentation of law or facts, or legal action that is sought in bad faith. Id. Fidelity argues that there is no evidence of pre-suit investigation to establish whether Kyle had a basis for a claim. Fidelity claims Kyle neither testified nor filed an affidavit nor did her attorney.
Fidelity also argues that when Kyle "admitted" her lawsuit was an effort to achieve a fair and equitable property settlement, her conduct shows bad faith, citing Thottumkal v. McDougal, 251 S.W.3d 715, 718 (Tex. App.—Houston [14th Dist.] 2008, pet. denied). There, Thottumkal filed a lawsuit based upon his personal feelings about the inequities of a prior lawsuit rather than the validity of the claims and any potential bars. See id. "Had the Thottumkals made a reasonable inquiry before filing suit, they would have discovered that their claims were barred by statute of limitations, res judicata, and/or collateral estoppel from the 2000 lawsuit." Id. McDougal also sent a letter to the Thottumkals after being served with the lawsuit detailing legal bars to their claims. Id. The court held that McDougal produced adequate evidence rebutting the presumption that the Thottumkals' petition was filed in good faith and that McDougal produced sufficient evidence that the Thottumkals failed to conduct a reasonable inquiry into the validity of their claims prior to filing suit. Id.
Kyle argues that Thottumkal is not applicable because the facts were vastly different. See id. In January 2000, McDougal, an attorney, sued his client Thottumkal in county court and obtained a judgment for non-payment for services rendered and stopping payment on his check. Id. at 716. In May 2005, the Thottumkals sued McDougal in district court essentially claiming new defenses to the prior judgment. Id. As soon as he was sued, McDougal immediately wrote a detailed letter illustrating that Thottumkals' claims were time barred, without merit, frivolous, and warning the Thottumkals that he would seek sanctions. Id.
We agree that the facts of Thottumkal presented a far stronger and more appropriate case for the award of sanctions than those we are presented. Here, we first note that Fidelity implicitly seeks to shift the burden of proof from itself to Kyle regarding bad faith. Courts must presume that pleadings are filed in good faith. Low 221 S.W.3d at 614; see also Tanner, 856 S.W.2d at 730; Save Our Springs All., Inc. v. Lazy Nine Mun. Util. Dist. ex rel. Bd. of Directors, 198 S.W.3d 300, 321 (Tex. App.—Texarkana, 2006 pet. denied). The party seeking sanctions bears the burden of overcoming the presumption of good faith in the filing of pleadings. Low, 221 S.W.3d at 614. To the extent that evidence was lacking concerning the circumstances surrounding the filing of the pleading and the signer's credibility and motives, the trial court had no evidence to determine that Kyle or her attorneys filed the pleading in bad faith or to harass. See McCain v. NME Hosps., Inc., 856 S.W.2d 751, 757-58 (Tex. App.—Dallas, 1993 no writ). Moreover, the record reflects over three hundred hours spent by her attorney researching case law, gathering information and documents prior to filing the original petition. Additionally, Kyle's counsel spent over thirty hours addressing Fidelity's letter claiming defenses under the Reagan case cited and discussed above.
Faced with a situation where Fidelity was seeking to enforce what Kyle believed to be a void lien and hold her responsible for an unsigned, unauthorized loan of $1,100,000.00 on her former homestead, and where she received no money or other consideration, it is little wonder she sought to achieve a fair and equitable settlement in the chaotic aftermath of the attempted collection efforts against her. Clearly, Rule 13 is a tool that must be available to trial courts in those egregious situations where the worst of the bar uses our system for ill motive without regard to reason and the guiding principles of the law. Laub v. Pesikoff, 979 S.W.2d 686, 693 (Tex. App.—Houston [1st Dist.] 1998, pet. denied) (citing Dyson Descendant Corp. v. Sonat Exploration Co., 861 S.W.2d 942, 951 (Tex. App.—Houston [1st Dist.] 1993, no writ)). However, this rule cannot become a weapon used to punish those with whose intellectual or philosophical viewpoints the trial court finds fault. Id.
Under Rule 13, Fidelity must establish "not only the frivolity of its opponent's claim but also the improper motives underlying the decision to file the suit, motion, or document." Karagounis v. Prop. Co. of Am., 970 S.W.2d 761, 765 (Tex. App.—Amarillo, 1998 pet. denied). "Bad faith" requires the conscious doing of a wrong for a dishonest, discriminatory, or malicious purpose. Stites v. Gillum, 872 S.W.2d 786, 794-96 (Tex. App.—Fort Worth 1994, writ denied); see Lovelace, 243 S.W.3d 256-57 (comparing Chapter 10 requirements). Fidelity has neither overcome the presumption of good faith nor has it met its burden to establish bad faith. Stites, 872 S.W.2d at 794-96; Save Our Springs, 198 S.W.3d at 321; Tanner, 856 S.W.2d at 731.
XI. CONCLUSION
Viewing the conflicting evidence in the light most favorable to the trial court's ruling and drawing all reasonable inferences in favor of the court's judgment, we cannot say the trial court abused its discretion. Lovelace, 243 S.W.3d at 249-50; Low 221 S.W.3d at 614. The judgment of the trial court denying sanctions is affirmed.
/S/ Don Wittig
DON WITTIG
Assigned Judge Delivered and filed this the 17th day of March, 2016.