Opinion
No. 04-17-00467-CV
04-18-2018
Erasmo CANTU and Eugenia Cantu, Appellants v. FALCON INTERNATIONAL BANK, Appellee
MEMORANDUM OPINION
From the 365th Judicial District Court, Maverick County, Texas
Trial Court No. 11-08-26743-MCVAJA
Honorable Amado J. Abascal, III, Judge Presiding Opinion by: Sandee Bryan Marion, Chief Justice Sitting: Sandee Bryan Marion, Chief Justice Rebeca C. Martinez, Justice Luz Elena D. Chapa, Justice AFFIRMED
The underlying lawsuit arises from two loan transactions in which Erasmo Cantu and Eugenia Cantu borrowed money from Falcon International Bank but later defaulted on the loans. The trial court granted the Bank's no-evidence and traditional motions for summary judgment as to all of the Cantus' claims after verbally sustaining the Bank's objections to some of the summary judgment evidence produced by the Cantus. On appeal, the Cantus challenge the trial court's exclusion of a portion of Erasmo's affidavit and of a 122-page transcript from a prior hearing. The Cantus also challenge the trial court's granting of summary judgment on each of the following claims: (1) common law fraud; (2) fraudulent inducement; (3) tortious interference with prospective contract; (4) wrongful foreclosure; and (5) commercially unreasonable sale. We affirm the trial court's judgment.
BACKGROUND
On October 20, 2008, the Cantus borrowed $201,015.00 from the Bank to purchase a 17.44 acre tract of land which they planned to develop into a subdivision. After purchasing a separate residential lot, on December 16, 2008, the Cantus obtained an interim construction loan from the Bank for $252,486.00 in order to build a home on the lot. The interim construction loan had a maturity date of December 16, 2009. When the Cantus were unable to secure permanent financing to pay the interim construction loan, the maturity date for the interim construction loan was extended through a series of modification and extension agreements to June 16, 2011.
On July 5, 2011, the Bank notified the Cantus they were in default under the interim construction loan. On September 6, 2011, the Bank foreclosed on the property securing the loan and purchased the property at foreclosure.
On September 8, 2011, the Bank notified the Cantus they were in default under the loan for the 17.44 acres. On November 1, 2011, the Bank foreclosed on the 17.44 acres. The Bank had agreed to postpone the foreclosure if the Cantus made certain payments before the scheduled foreclosure. The foreclosure was scheduled to occur between 1:00 p.m. and 4:00 p.m., and the Cantus did not tender the payments necessary to postpone the foreclosure until 4:30 p.m., after the foreclosure sale had occurred.
In 2011, the Cantus filed the underlying lawsuit against the Bank asserting numerous causes of action based on alleged promises by the Bank to extend permanent financing on the interim construction loan, alleged promises by the Bank to remove negative credit reports, and alleged irregularities in the foreclosure sales. The Bank subsequently filed a no-evidence and traditional motion for summary judgment. On April 26, 2017, the trial court signed an order granting the Bank's motion and entered a final take-nothing judgment on May 22, 2017. The Cantus appeal.
STANDARD OF REVIEW
We review a trial court's order granting summary judgment de novo. Cmty. Health Sys. Prof'l Servs. Corp. v. Hansen, 525 S.W.3d 671, 680 (Tex. 2017). To prevail on a traditional motion for summary judgment, the movant must show "there is no genuine issue as to any material fact and the [movant] is entitled to judgment as a matter of law." TEX. R. CIV. P. 166a(c); see also Hansen, 525 S.W.3d at 681. "A [no evidence] motion for summary judgment must be granted if: (1) the moving party asserts that there is no evidence of one or more specified elements of a claim or defense on which the adverse party would have the burden of proof at trial; and (2) the respondent [fails to produce more than a scintilla of] summary judgment evidence raising a genuine issue of material fact on those elements." Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006); see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) ("More than a scintilla of evidence exists when the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.") (internal quotation omitted). Whether reviewing a traditional or no evidence summary judgment, we consider all the evidence in the light most favorable to the nonmovant and resolve any doubts in the nonmovant's favor. See Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).
"Where, as here, a trial court does not specify the grounds on which it granted the motion for summary judgment, we must affirm if any of the grounds asserted in the motion are meritorious." Hansen, 525 S.W.3d at 680. "Further, when the motion asserts both no-evidence and traditional grounds, we first review the no-evidence grounds." Id.
COMMON-LAW FRAUD
In their brief, the Cantus assert the trial court erred in granting summary judgment in favor of the Bank on their claim that the Bank committed common-law fraud by: (1) misrepresenting that it would provide permanent financing for the interim construction loan; and (2) failing to disclose a letter from Curtis Mortgage to the Bank in which Curtis Mortgage promised to consider providing permanent financing to the Cantus. The Bank moved for both traditional and no-evidence summary judgment on the Cantus' fraud claim asserting: (1) the Cantus cannot satisfy the justifiable reliance element of their fraud claim based on the Bank's alleged misrepresentation regarding the permanent financing; (2) the Cantus' fraud claim is barred by the statute of frauds; and (3) the Cantus could not produce evidence of any injury based on the Bank's alleged failure to disclose the Curtis Mortgage letter.
One of the elements a party must prove to establish a common-law fraud claim is that the party acted in justifiable reliance on the alleged material misrepresentation. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001); BP Am. Prod. Co. v. Zaffirini, 419 S.W.3d 485, 503 (Tex. App.—San Antonio 2013, pet. denied). It is well-established that a party cannot justifiably rely upon an oral representation that is directly contradicted by the express, unambiguous terms of a written agreement between the parties. See, e.g., Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 181-82 (Tex. 1997); Gregory v. Conn. Shotgun Mfg. Co., No. 12-15-00304-CV, 2017 WL 511222, at *3 (Tex. App.—Tyler Feb. 8, 2017, no pet. h.) (mem. op.); Miller Glob. Props., LLC v. Marriott Int'l, Inc., 418 S.W.3d 342, 348 (Tex. App.—Dallas 2013, pet. denied); DRC Parts & Accessories, L.L.C. v. VM Motori, S.P.A., 112 S.W.3d 854, 858 (Tex. App.—Houston [14th Dist.] 2003, pet. denied).
In this case, the real estate lien note signed by the Cantus to obtain the interim construction loan expressly stated as follows:
THIS NOTE IS PAYABLE IN FULL AT MATURITY, AT MATURITY MAKER MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND UNPAID INTEREST THEN DUE, PAYEE IS UNDER NO OBLIGATION TO REFINANCE THIS NOTE AT THAT TIME.Any alleged representation to provide permanent financing is, therefore, directly contradicted by the express, unambiguous terms of the real estate lien note. As a result, any reliance on any such oral representation is not justified as a matter of law. See, e.g., Schlumberger Tech. Corp., 959 S.W.2d at 181-82; Gregory, 2017 WL 511222, at *3; Miller Glob. Props., LLC, 418 S.W.3d at 348; DRC Parts & Accessories, L.L.C., 112 S.W.3d at 858.
***
THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL ARGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
As previously noted, with regard to the Cantus' allegation that the Bank committed fraud by failing to disclose the Curtis Mortgage letter, the Bank moved for a no-evidence summary judgment, asserting the Cantus could not produce any evidence of an injury. One of the elements a plaintiff must prove to establish a claim of fraud by nondisclosure is that the plaintiff was injured as a result of the undisclosed facts. See Bazan v. Munoz, 444 S.W.3d 110, 119 (Tex. App.—San Antonio 2014, no pet.); Wise v. SR Dallas, LLC, 436 S.W.3d 402, 409 (Tex. App.—Dallas 2014, no pet.). In their brief, the Cantus provide no record citations to evidence showing they were injured by the Bank's nondisclosure of the Curtis Mortgage letter. Instead, the Cantus conclusively state in their brief that the non-disclosure prevented them from dealing with Curtis Mortgage to secure permanent financing. Because the Cantus have provided no citation to any evidence in the record responsive to the Bank's no-evidence motion on this element of their claim, they failed to carry their burden on appeal to show the trial court erred in granting the Bank's motion on their fraud claim. Amboree v. Bonton, No. 01-14-00846-CV, 2015 WL 4967046, at *6-7 (Tex. App.—Houston [1st Dist.] Aug. 20, 2015, no pet.) (mem. op.); Blake v. Intco Invs. of Tex., Inc., 123 S.W.3d 521, 525 (Tex. App.—San Antonio 2003, no pet.).
We note the Cantus' response to the no-evidence summary judgment states they "would have refused" any financing from Curtis Mortgage because the Cantus wanted "to start a banking relationship with Falcon Bank."
FRAUDULENT INDUCEMENT
In their brief, the Cantus assert the trial court erred in granting summary judgment on their claim that the Bank fraudulently induced them into executing the modification and extension agreements relating to the interim construction loan by misrepresenting that the Bank would remove any adverse credit report of a delinquency. The Bank moved for both traditional and no-evidence summary judgment on the Cantus' fraudulent inducement claim asserting: (1) the Cantus could produce no evidence to support their claim; (2) the statute of frauds barred the claim; and (3) the Cantus could not recover the damages they sought to recover on the claim. Specifically, in its no-evidence motion, the Bank asserted the Cantus were required to prove each of the following elements to recover on their fraudulent inducement claim: "(1) that Falcon made a false representation to Plaintiffs; (2) that the representation was material; (3) that Falcon made the representation either with the knowledge that it was false or recklessly without knowledge of its truth; (4) that Falcon made the representation with the intent that Plaintiffs would act on it; (5) that Plaintiffs justifiably relied on the representation; and (6) that the representation caused injury to Plaintiffs." The Bank then asserted, "Plaintiffs have no evidence to prove Elements (1), (2), (4), (5), or (6)."
Once again, in their brief, the Cantus provide no citations to evidence they produced that would defeat the Bank's no-evidence motion. Instead, the Cantus conclusively assert, "Plaintiffs produced evidence of a misrepresentation (Defendant would remove negative credit report), materiality of the misrepresentation (no point in paying fees for extension when alternate financing would still be denied due to adverse credit report from Defendant), misrepresentation made with intent Plaintiffs would rely on it (Plaintiffs requested extension for the purpose of obtaining alternate financing), reliance (Plaintiffs entered agreement because of representation)." Because the Cantus have provided no citation to any evidence in the record responsive to the Bank's no-evidence motion on any of the challenged elements of their claim, they failed to carry their burden on appeal to show the trial court erred in granting the Bank's no-evidence motion on their fraudulent inducement claim. Amboree, 2015 WL 4967046, at *6-7; Blake, 123 S.W.3d at 525.
TORTIOUS INTERFERENCE WITH PROSPECTIVE CONTRACT
In their brief, the Cantus assert the trial court erred in granting summary judgment on their tortious interference claim because the Bank's reporting of the delinquent status of the interim construction loan prevented them from closing on permanent financing with Marquee Mortgage. The Bank moved for both traditional and no-evidence summary judgment on the Cantus' tortious interference claim asserting: (1) the Cantus could not produce any evidence that the Bank's conduct was unlawful or independently tortious; (2) the Cantus could not produce any evidence of damages recoverable on a tortious interference claim; and (3) the Cantus could not produce any evidence that any act by the Bank caused any damages.
"To prevail on a claim for tortious interference with prospective business relations, the plaintiff must establish that (1) there was a reasonable probability that the plaintiff would have entered into a business relationship with a third party; (2) the defendant either acted with a conscious desire to prevent the relationship from occurring or knew the interference was certain or substantially certain to occur as a result of the conduct; (3) the defendant's conduct was independently tortious or unlawful; (4) the interference proximately caused the plaintiff injury; and (5) the plaintiff suffered actual damage or loss as a result." Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013); see also Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 713 (Tex. 2001) ("[T]o establish liability for interference with a prospective contractual or business relation the plaintiff must prove that it was harmed by the defendant's conduct that was either independently tortious or unlawful."). The Texas Supreme Court has explained that "independently tortious" means "conduct that would violate some other recognized tort duty." Sturges, 52 S.W.3d at 713.
In their brief, the Cantus rely on evidence that the Bank reported the Cantus as being delinquent on the interim construction loan and the Bank then chose to "turn off" their future credit reporting instead of sending an update to the credit agencies to remove the delinquency. In their brief, however, the Cantus cite no authority to support their contention that these actions were unlawful or independently tortious. The summary judgment evidence established that the maturity date for the interim construction loan was December 16, 2009. In their brief, the Cantus cite the affidavit of John Ulzheimer as evidence to support their claim. In his affidavit, however, Ulzheimer states the credit report showed the date of the Cantus' first delinquency as January 15, 2010, and that the delinquency was reported on January 31, 2010, and on February 28, 2010. Because the Cantus did not enter into the first modification and extension agreement with the Bank until March 6, 2010, the Bank's reports contained accurate information. Although Ulzheimer was critical of the manner in which the Bank subsequently "turned off" the reporting, the evidence established that the Bank did not report the Cantus as being delinquent after March 6, 2010. Because the Cantus failed to produce any evidence that the Bank's actions were unlawful or independently tortious, the trial court properly granted summary judgment in favor of the Bank on the Cantus' tortious interference claim.
In their brief, the Cantus assert the Bank reported the loan as delinquent on January 12, 2010, which was in violation of the Bank's internal policy not to report late payments until the expiration of a thirty-day grace period. The Cantus provide no record citation to support their assertion that the loan was reported delinquent on January 12, 2010. The only citation provided by the Cantus is the citation to Ulzheimer's affidavit in which he states January 15, 2010, was the date of first delinquency, and we note January 15, 2010 is thirty days after December 16, 2009.
The evidence also established the Bank sent Marquee Mortgage a letter dated March 30, 2010, stating the interim construction loan was extended and modified and the past due status had been deleted in the credit reporting.
WRONGFUL FORECLOSURE AND COMMERCIALLY UNREASONABLE SALE
Finally, the Cantus challenge the trial court's granting of summary judgment on their wrongful foreclosure claim. In their brief, the Cantus acknowledge that to prevail on a wrongful foreclosure claim, they were required to establish an irregularity calculated to affect the sale coupled with a grossly inadequate price. Apex Fin. Corp. v. Brown, 7 S.W.3d 820, 828 (Tex. App.—Texarkana 1999, no pet.). The Bank moved for both traditional and no-evidence summary judgment on the Cantus' wrongful foreclosure claim asserting: (1) the Cantus could not produce any evidence of any irregularity in the foreclosure sales; and (2) a creditor conducting a foreclosure sale "has no duty, beyond the requirements of its contract with the debtor and the Texas Property Code, to ensure either that the sale is 'fair' or that it produces 'as good a price as possible.'"
In their brief, the Cantus assert they produced evidence to support their claim and cite to evidence that: (1) the Bank itself purchased the properties at the foreclosure sales; and (2) the Bank failed to delay the foreclosure on the 17.44 acres contrary to a representation made by the Bank's legal representative. With regard to the Bank's purchase of the properties, "[t]he rule is well settled in this state that a mortgagee with power to sell may purchase at his own sale made at public auction" and such a purchase "does not constitute an impropriety." Tarrant Sav. Ass'n v. Lucky Homes, Inc., 390 S.W.2d 473, 476 (Tex. 1965); see also Edmundson Inv. Co. v. Fla. Treco, Inc., 633 S.W.2d 599, 602 (Tex. App.—Houston [14th Dist.] 1982), writ ref'd n.r.e., 640 S.W.2d 859 (Tex. 1982) ("The law is clear a creditor holding a deed of trust may, upon a debtor's default on a note, buy the property itself at a foreclosure sale."). With regard to the Bank's foreclosure on the 17.44 acres, the summary judgment evidence established that the Bank agreed to delay the foreclosure if the Cantus paid a certain sum prior to the scheduled foreclosure. The evidence also establishes, however, that the foreclosure was scheduled to occur on November 1, 2011 between 1:00 p.m. and 4:00 p.m., and the Cantus did not tender the amount necessary to delay the foreclosure until 4:30 p.m., which was after the property had been sold at foreclosure. Therefore, the Cantus produced no evidence of any irregularity in the foreclosure sales.
With regard to the Cantus' assertion that the Bank did not move for summary judgment on their commercially unreasonable sale claim, as previously noted, the Bank asserted in its motion that a creditor conducting a foreclosure sale "has no duty, beyond the requirements of its contract with the debtor and the Texas Property Code, to ensure either that the sale is 'fair' or that it produces 'as good a price as possible.'" In support of this assertion, the Bank cited Pentad Joint Venture v. First Nat'l Bank of La Grange, 797 S.W.2d 92, 96-97 (Tex. App.—Austin 1990, writ denied). In that case, the Austin court asserted, "The Texas Supreme court has never recognized an implied affirmative duty that the mortgagee produce 'as good a price as possible' at the foreclosure sale," and the Austin court "decline[d] to recognize such a duty." Id. at 97. In addition, the Austin court held "foreclosure of real property under a deed of trust need not be at a 'commercially reasonable sale,' and the failure to conduct a commercially reasonable foreclosure sale of real property is not actionable." Id. (emphasis in original).
In their brief, the Cantus cite two opinions dealing with the disposition of collateral governed by chapter 9 of the Texas Business and Commerce Code as support for their assertion that the Bank was required to dispose of the properties in a commercially reasonable manner. See Gordon & Assocs., Inc. v. Cullen Bank/Citywest, N.A., 880 S.W.2d 93, 96 (Tex. App.—Corpus Christi 1994, no writ); Daniell v. Citizens Bank, 754 S.W.2d 407, 410 (Tex. App.—Corpus Christi 1988, no writ). Section 9.109(d)(11) of the Code, however, expressly provides that chapter 9 does not apply to the creation or transfer of a lien on real property. TEX. BUS. & COM. CODE ANN. § 9.109(d)(11) (West Supp. 2017); see also Huddleston v. Tex. Commerce Bank-Dallas, N.A., 756 S.W.2d 343, 347 (Tex. App.—Dallas 1988, writ denied) (overruling assertion that sale of real property must be commercially reasonable under chapter 9). Because the law does not impose a duty on the Bank to dispose of the real property securing its liens in a commercially reasonable manner, the trial court properly granted summary judgment in favor of the Bank on this claim.
Section 9.610 of the Code requires a secured party to dispose of collateral after a default in a commercially reasonable manner. See TEX. BUS. & COM. CODE ANN. § 9.610 (West 2011).
EXCLUSION OF EVIDENCE
The Cantus also complain about the trial court's exclusion of portions of Erasmo's affidavit and a 122-page transcript from a prior hearing. Because the exclusion of the evidence about which the Cantus complain does not affect our analysis of whether the trial court properly granted summary judgment on each of the Cantus' claims, we need not decide whether the trial court erred in excluding the evidence. We note, however, that the Cantus' brief does not address the hearsay objection the Bank made as a basis for excluding the portions of Erasmo's affidavit. We also note the only reference by the Cantus to the 122-page transcript in their response to the Bank's motion for summary judgment was the following:
On December 19, 2013, this Court heard Defendants Motion to remove this case from the Jury Docket based on Plaintiffs signing the 4th Modification and Extension Agreement. The court after hearing evidence the court ruled that Plaintiffs would be denied their Constitutional Right to a Jury Trial (a copy of the transcript for the December 19, 2013 hearing is attached as exhibit 21).See Brookshire Katy Drainage Dist. v. Lily Gardens, LLC, 333 S.W.3d 301, 308 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) ("A general reference to a voluminous record that does not direct the trial court and parties to the evidence relied upon is insufficient."); Arredondo v. Rodriguez, 198 S.W.3d 236, 238-39 (Tex. App.—San Antonio 2006, no pet.) ("[W]hen presenting summary-judgment proof, a party must specifically identify the supporting proof on file that it seeks to have considered by the trial court. Attaching entire documents and depositions to a motion for summary judgment or to a response and referencing them only generally does not relieve the party of pointing out to the trial court where in the documents the issues set forth in the motion or response are raised.").
CONCLUSION
The trial court's judgment is affirmed.
Sandee Bryan Marion, Chief Justice