Opinion
01-21-00333-CV
05-09-2023
COLLINS ASSET GROUP, LLC AS SUCCESSOR IN INTEREST TO CTX MORTGAGE COMPANY, LLC, Appellant v. JAMES EVANS, Appellee
On Appeal from County Civil Court at Law No. 3 Harris County, Texas Trial Court Case No. 1150533.
Panel consists of Goodman, Hightower, and Guerra, Justices.
MEMORANDUM OPINION
Richard Hightower, Justice.
Appellant, Collins Asset Group, LLC, as successor in interest to CTX Mortgage Company, LLC (CAG) sued appellee James Evans for breach of a promissory note. The trial court rendered a take-nothing judgment against CAG. CAG argues on appeal that the trial court erred in denying it relief on its breach-of- promissory note claim. Because we conclude that CAG proved its right to recovery as a matter of law, we reverse and render judgment in favor of CAG.
Background
Evans executed a promissory note in favor of CTX Mortgage Company as a second loan on his home in the amount of $26,472. The note itself stated that the amount of the loan was $26,472 at an interest rate of 12.7%. Evans was obligated to make monthly payments through October 1, 2036. The note provides:
If I do not pay the full amount of each monthly payment on time, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date I will be in default. That date must be at least 10 days after the date on which the notice is mailed to me or, if it is not mailed, 10 days after the date on which it is delivered to me.
. . . .
If I do not pay the overdue amount by the date stated in the notice described [in the above paragraph], I will be in default. If I am in default, the Note Holder may require me to pay immediately the full amount of principal which has not been paid and all the interest that I owe on that amount.
The note provided that "[a]ny notice that must be given to me under this Note will be given by delivering it or by mailing it by certified mail addressed to me[.]"
The home securing this note was eventually sold at foreclosure, but the foreclosure proceedings did not dissolve the second note. CAG purchased the note while Evans was in default under the terms of the note.
The record reflects that CTX Mortgage Company (the original lender) sold the loan to 12 Stones Capital LLC, which in turn transferred the note to CAG.
On November 22, 2016, CAG sent notice to Evans, via certified mail at his home address, that it had purchased the note. CAG requested that Evans begin making monthly payments of principal only starting February 1, 2017. The notice stated that "CAG, as the current creditor, has reduced the balance due and owing" by "electing not to collect the accrued delinquent payments past due owing as of the date of this letter." Thus, this letter informed Evans that a principal balance of $24,849.65 remained on the note. CAG provided procedures by which Evans could dispute the validity of the debt, and it stated that CAG retained its right to enforce the provisions of the note.
On February 20, 2017, twenty days after Evans's first payment was due to CAG, it sent Evans notice of intent to accelerate and of his right to cure. This letter was again sent via certified mail to his home address. It informed Evans that he was delinquent in his payments and that he had a right to cure the delinquency by sending the monthly principal payments:
If you fail to remit the current outstanding past due balance in the amount of $23.65 within thirty (30) days of this of this letter and bring
your principal payments up to date according to the term of the promissory note, Collins Asset Group will accelerate the entire principal balance of the loan that was not previously forgiven pursuant to our letter to you dated 11/22/2016 and refer your account to its legal department.
On March 27, 2017, CAG sent Evans notice of acceleration, indicating that the entire principal balance of $24,849.65 was due in full. Like the other two letters, this notice was sent certified mail to Evans's home address. This notice informed Evans that he had "an accelerated principal balance in full now due of $24,849.65."
On February 4, 2020, CAG filed this lawsuit, alleging a cause of action for breach of the promissory note. CAG sought to recover the principal amount due under the promissory note. Evans was served with notice of the suit at his home address and filed an answer.
At trial, Daniel Laux, CAG's corporate representative, testified that CAG purchased the note while it was in default. The original balance was $26,472. Laux explained that CAG forgave any accrued interest under the note and was not seeking recovery of any interest on the note. He further pointed to the three letters sent to Evans, indicating that CAG had reduced the amount due under the loan to $24,849.65, which was the amount of principal that would have been due as of February 1, 2017, if Evans had made all of his previous payments. Thus, CAG essentially forgave any past-due amounts, assuming that Evans had paid according to the terms of the note prior to CAG's purchase of the note and notice to Evans.
CAG also presented a business records affidavit stating that the principal due on the note was $24,849.65, a copy of the note itself, and the allonge showing CAG's purchase of the note. CAG also presented copies of the three letters that it sent to Evans along with proof that these letters were sent via certified mail to his home address.
Evans testified that he never did any business with CAG and that he did not receive any communication from CAG prior to the filing of the lawsuit. He also testified:
I have no documentation of the alleged debt or how they come up with the number they have come up with. I paid that debt down lower than they are giving me credit. They haven't produced any documents showing what has been paid. This debt is 15 years old. It's time-barred. It's past its statute of limitations. They have no legal right to even sue me for it.
He confirmed his current address as being the address where CAG sent its notices and where he was served with process in this suit. Evans did not provide any additional testimony or evidence.
The trial court announced on the record that it was rendering a take-nothing judgment in favor of Evans, stating that it did not believe the evidence was sufficient "to meet the burden of how the number of $24,849.65 is the actual debt owed by this plaintiff." The trial court also expressed a concern regarding whether "notice was actually received of the acceleration," observing that the evidence showed only that "notice was sent."
The trial court rendered a take-nothing judgment on CAG's claim for breach of the promissory note on May 11, 2021. CAG filed its written request for findings of fact and conclusions of law on May 18, 2021. When the trial court failed to make the requested findings and conclusions, CAG filed its written notice of past-due findings of fact and conclusions of law on June 9, 2021. This appeal followed.
Breach of Promissory Note
In both of its appellate issues, CAG contends that the trial court erred in rendering a take-nothing judgment in this case because the evidence was sufficient to support recovery on its claim for breach of the promissory note.
A. Standard of Review
When reviewing the legal sufficiency of the evidence, we consider the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005). We credit favorable evidence if a reasonable factfinder could and disregard contrary evidence unless a reasonable factfinder could not. See id. at 827. When an appellant attacks the legal sufficiency of an adverse finding on an issue for which the appellant bore the burden of proof, the appellant "must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue." Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001).
When reviewing a factual sufficiency challenge, we "must consider and weigh all of the evidence," not just the evidence that supports the trial court's finding. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998); see Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). We must review the evidence in a neutral light. Woods v. Kenner, 501 S.W.3d 185, 196 (Tex. App.-Houston [1st Dist.] 2016, no pet.). When a party attacks the factual sufficiency of an adverse finding on an issue for which it had the burden of proof, it must demonstrate on appeal "that the adverse finding is against the great weight and preponderance of the evidence." Dow Chem. Co., 46 S.W.3d at 242.
To recover on a debt due under a promissory note, the plaintiff must establish that (1) the note in question exists, (2) the debtor executed the note, (3) the lender is the holder or owner of the note, and (4) a certain balance is due and owing on the note. Martin v. New Century Mortg. Co., 377 S.W.3d 79, 84 (Tex. App.--Houston [1st Dist.] 2012, no pet.).
B. Analysis
Here, CAG presented evidence conclusively establishing each element of its claim for breach of the promissory note. CAG introduced into evidence a certified copy of the note, signed by Evans. CAG also presented the allonge showing that it purchased the note and the testimony of its corporate representative, Laux, that CAG purchased the note. This evidence conclusively established that the note exists, that Evans executed it, and that CAG is the current holder of the note. See Dow Chem. Co., 46 S.W.3d at 241-42; Martin, 377 S.W.3d at 84 (setting out elements for breach of promissory note). Evans presented no evidence contesting these facts.
Regarding the fourth element of the breach of promissory note claim-requiring that CAG prove that a certain balance is due and owing on the note- CAG likewise presented evidence establishing the amount due and owing as a matter of law. See Martin, 377 S.W.3d at 84. Both Laux and the business records affidavit indicated that a principal amount of $24,849.65 was still due and owing on the note. Laux testified that CAG purchased the note while Evans was in default. Laux testified that no portion of the proceeds from the foreclosure sale of the property was applied to the note.
The notice dated November 22, 2016, explained that CAG had reduced the balance due and owing according to the contractual obligation set out in the note "by electing not to collect the accrued delinquent payments" and establishing the amount of principle due as of February 1, 2017, as $24,849.65, and requesting that Evans make principal-only payments beginning from that date.
Laux testified that Evans did not make any payments to CAG. As required by the terms of the note, CAG sent notice to Evans that he was delinquent and stating its intent to accelerate the entire principal balance due on the note. When Evans failed to pay the delinquent amounts, CAG sent Evans notice of acceleration, indicating that the entire principal balance of $24,849.65 was due in full.
CAG forgave any amounts due prior to its purchase of the note and set monthly principal-only payments, likewise electing not to recover any interest under the terms of the note. Under the terms of the note, when Evans failed to make his February 1, 2017 payment, CAG sent him notice that he was delinquent and that it would exercise its right to accelerate if he did not make his payment. CAG gave Evans more than the 10 days required by the note to cure his delinquency, but he made no payments. Under the terms of the note, he was then in default, permitting CAG to accelerate the amount due. CAG sent the notice of acceleration in the same manner it sent all notices-via certified mail to Evan's current address-as required by the terms of the note.
We note that this is not a foreclosure proceeding governed by the Texas Property Code. Rather, it is a claim for breach of a promissory note, and CAG must establish its right to recover according to the terms of the note. The note did not require that the note holder ensure receipt of the notice-it required that notice be mailed via certified mail. Cf. Tex. Prop. Code § 51.002(e) (providing that service of notice under Property Code by certified mail is "complete when the notice is deposited in the United States mail, postage prepaid and addressed to the debtor at the debtor's last known address"); Ebrahimi v. Caliber Home Loans, Inc., No. 05-18-00456-CV, 2019 WL 1615356, at *7 (Tex. App.-Dallas Apr. 15, 2019, pet. denied) (mem. op.) (stating that Section 51.002(e) "makes it clear that service is completed upon deposit in the mail, not actual receipt; there is no requirement that a plaintiff physically receive the notice in order for service to be valid and effective"); King v. Bank of N.Y., No. 13-07-069-CV, 2008 WL 2764523, at *2 (Tex. App.-Corpus Christi-Edinburg July 17, 2008, no pet.) (mem. op.) ("Whether the debtor actually receives the notice is irrelevant for statutory purposes. To show a violation, the debtor must show that the mortgage holder did not mail the required notice by certified mail to the debtor's last known address.").
This evidence conclusively established the balance due and owing on the note as $24,849.65. Testimony of the total amount due under a written instrument can be legally sufficient to support an award of that amount. See Tex. Commerce Bank, Nat l Ass 'n v. New, 3 S.W.3d 515, 517 (Tex. 1999); see also PlainsCapital Bank v. Miranda, No. 13-16-00210-CV, 2018 WL 1325779, at *4 (Tex. App.- Corpus Christi-Edinburg Mar. 15, 2018, pet. denied) (mem. op.) (holding that trial court admitted "uncontroverted and conclusive evidence" from holder of promissory note on amount due, and record was "devoid" of any conflicting amount due, so fact-finder's determination of zero dollars owed on note was based on legally insufficient evidence); Cha v. Branch Banking & Trust Co., No. 05-14-00926-CV, 2015 WL 5013700, at *2 (Tex. App.-Dallas Aug. 25, 2015, pet. denied) (mem. op.) (holding, in summary judgment context, that "[a]n affidavit, made on personal knowledge of a bank officer, that recites the principal and interest due and which identifies the note and guaranties" is competent to support summary judgment).
Evans's brief testimony at trial-that he had not done any business with CAG and that he did not understand how it arrived at the amount due-does not undermine the conclusion that CAG established the amount due and owing as a matter of law. See Dow Chem. Co., 46 S.W.3d at 241-42. The Dallas Court of Appeals in Cha rejected a similar argument. In Cha, the debtor argued that the evidence was insufficient to prove the amount due under a note because the creditor did not include evidence of account payment activity from the inception of the loan. 2015 WL 5013700, at *3. The court concluded that evidence of amounts due and payment history from the date the creditor acquired the note was sufficient, observing that the debtor "submitted no evidence to contradict the Bank's proof of the amount of the deficiency" and that the bank "was not required to file detailed proof of the calculations reflecting the balance due on the note." Id. (citing Myers v. Sw. Bank, No. 02-14-00122-CV, 2014 CV 7009956, at *2 (Tex. App.-Fort Worth Dec. 11, 2014, pet. denied) (mem. op.)).
Accordingly, we conclude that CAG conclusively proved its right to recover $24,849.65. See Dow Chem Co., 46 S.W.3d at 241-42. We sustain CAG's issues on appeal and render judgment awarding it $24,849.65 on its claim for breach of the promissory note.
CAG also argues that the trial court erred by not making findings of fact and conclusions of law after CAG requested them. Even though CAG timely filed a request for findings of fact and conclusions of law and a request for past due findings of fact and conclusions of law, the trial court did not file them. See Tex. R. Civ. P. 296, 297. Generally, a trial court's failure to file findings in response to a timely and proper request is presumed to be harmful, unless the record affirmatively shows that the appellant suffered no harm. Ad Villarai, LLC v. Chan II Pak, 519 S.W.3d 132, 135 (Tex. 2017). However, "[w]hen only a single ground of recovery or a single defense is presented to the trial court, the record shows the appellant has suffered no harm because he is not forced to guess the reasons for the trial court's judgment." Mora v. Mora, No. 04-17-00428-CV, 2018 WL 4903079, at *4 (Tex. App.-San Antonio Oct. 10, 2018, pet. denied) (mem. op.). The record here shows CAG suffered no harm because the single issue before this Court-whether sufficient evidence supported the trial court's take-nothing judgment-did not require CAG to guess regarding the basis of the judgment.
Conclusion
We reverse the trial court's take-nothing judgment and render judgment that CAG be awarded $24,849.65 on its breach-of-promissory-note claim.