Opinion
NO. 01-16-00736-CV
07-13-2017
COMERICA BANK, Appellant v. JOHN MINCHEW, Appellee
On Appeal from the County Court at Law No. 1 Fort Bend County, Texas
Trial Court Case No. 15-CCV-054517
MEMORANDUM OPINION
In this dispute over damages, appellant, Comerica Bank, argues that the trial court erred in awarding damages to appellee, John Minchew. In four issues on appeal, Comerica argues that (1) the damages are legally and factually insufficient; (2) Minchew does not qualify as a consumer under the Deceptive Trade Practices Act; (3) the trial court erred in awarding attorney's fees; and (4) it was entitled to a setoff.
We reverse and render.
Background
In 2011, Minchew received a loan from Comerica for $30,000 secured by a certificate of deposit (C.D.) in the same amount to help pay his business expenses for two of his companies. At the end of 2013, Minchew was making payments on the loan and had an outstanding balance of approximately $12,000. After Minchew inquired about obtaining another $30,000 loan from Comerica, Kaytona Ford, a banker for Comerica, told him that he would have to pay off the first loan and then he could enter into a new loan. Minchew stated that to pay off the new loan, he and his wife would transfer money from her IRA into Comerica. Minchew testified that Ford informed him that he did not need to complete any new paperwork for the new loan.
Unbeknownst to Minchew, Comerica had cashed out his C.D. around the end of January 2014 without his authorization, paid off the balance on the loan, and deposited the remaining funds into Minchew's account. Minchew's wife also withdrew the funds from her IRA and transferred those funds into Minchew's account. Minchew later learned that Comerica had denied his request for a new loan. After his wife noticed that no loan payments were being deducted from their account, Minchew met with a manager at Comerica who informed him that Minchew did not have a loan with Comerica.
Minchew testified that he sustained damages because he did not have a loan anymore, he did not have a C.D., and he lost $18,000 "by [his wife] taking her savings and our savings of $30,000 to purchase the C.D." Minchew's counsel agreed with the trial court that that his companies had no damages. Minchew stated that the $30,000 from the cashing in of the C.D. was used on their businesses.
Minchew agreed on cross-examination that approximately $13,000 was deposited into his account in January 2014. He also agreed that his $30,000 loan with Comerica had been fully paid off, that an $18,000 deposit had been made into his account from another third-party account, that he had use of the funds in his account, and that the funds were still in his account or he had spent some of the funds. Minchew stated that he "already knew I had a new loan because the manager Ford said there w[ere] no applications."
Minchew's wife testified that she did not authorize Comerica to cash in the C.D. She also testified that she cashed in her IRA for about $18,000 to pay off the loan.
Ford testified that at the time of Minchew's loan, she served as the Banking Center Manager for Comerica Bank. She testified that when Minchew asked her about getting a new loan, she told him that the existing loan needed to be paid off and then he could apply for a new loan. She further testified that Minchew had to apply for a new loan and that they completed an application for a new loan "via phone." She disagreed with Minchew's earlier testimony that he had been approved for the loan. Ford did not recall Minchew's wife cashing out her IRA to pay off the loan or her paying off the loan in any manner. She testified that she later called and left a voicemail for Minchew stating that they were not approved for the loan. She stated that the balance on the loan in January 2014 was $16,939.49 and that a payment for the same amount came from the C.D. Ford testified that she had a discussion with Minchew about using the C.D. to pay the balance of the note and she disagreed with Minchew's testimony that he did not authorize cashing in the C.D. She also testified that it was common to start the process of cashing in a C.D. without the customer signing documentation. When asked how they were going to get collateral for the new loan, Ford said they had $16,000 left over from the C.D. and they were adding to the checking account to bring it back to $30,000 to obtain a new C.D. Ford insisted that she did not know how they were going to get their account back to $30,000 for a new loan.
The trial court rendered judgment for Minchew finding that Comerica owed $16,922 in damages and $7,000 in attorney's fees. Comerica filed a motion to vacate or reform the judgment along with a brief in support, arguing that Minchew presented no evidence of damages. Both parties filed requests for findings of fact and conclusions of law. After issuing findings of fact and conclusions of law, the trial court denied Comerica's motion. Comerica then filed this appeal.
Damages
In its first issue, Comerica argues that the evidence is legally and factually insufficient to support the award of damages. Specifically, Comerica argues that the evidence does not support any measure of damages.
A. Standard of review
In an appeal of a judgment rendered after a nonjury trial, a trial court's findings of fact have the same weight as a jury's verdict, and we review the legal sufficiency of the evidence used to support them just as we would review a jury's findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). In conducting a legal-sufficiency review of the evidence, we must consider all of the evidence in the light most favorable to the verdict and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). In determining whether legally-sufficient evidence supports the finding under review, we must consider evidence favorable to the finding, if a reasonable fact finder could consider it, and disregard evidence contrary to the finding, unless a reasonable fact finder could not disregard it. Id. at 827. When a party attacks the legal sufficiency of an adverse finding on which it did not have the burden of proof, it must demonstrate that there is no evidence to support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Bellino v. Comm'n for Lawyer Discipline, 124 S.W.3d 380, 385 (Tex. App.—Dallas 2003, pet. denied). We will sustain a legal-sufficiency or "no evidence" challenge if the record shows one of the following: (1) a complete absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. City of Keller, 168 S.W.3d at 810.
We review a trial court's conclusions of law de novo, and we will uphold the conclusions if the judgment can be sustained on any legal theory supported by the evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Although a trial court's conclusions of law may not be challenged for factual sufficiency, we may review the legal conclusions drawn from the facts to determine whether the conclusions are correct. Id. If we determine that a conclusion of law is erroneous, but the trial court nevertheless rendered the proper judgment, the error does not require reversal. Id. Finally, we note that the trial court acts as fact finder in a bench trial and is the sole judge of the credibility of witnesses. HTS Servs., Inc. v. Hallwood Realty Partners, L.P., 190 S.W.3d 108, 111 (Tex. App.—Houston [1st Dist.] 2005, no pet.). "We may not pass upon the credibility of the witnesses or substitute our judgment for that of the trier of fact, even if a different answer could be reached upon review of the evidence." Rich v. Olah, 274 S.W.3d 878, 884 (Tex. App.—Dallas 2008, no pet.).
B. Claims and trial court's findings and conclusions
In his original petition, Minchew brought claims for DTPA violations and common law fraud. Minchew alleged that he suffered economic and actual damages from "the loss of those funds from the line of credit [he] was in a position of having to manage bills from other sources of funds and thus their business suffered adversely" and "the penalties and taxes attributed to the early withdrawal of the IRA resulted in damages to Plaintiff for which Defendant is responsible."
The trial court made the following relevant findings of fact and conclusions of law:
23. Plaintiff suffered the loss of his CD, IRA, Assumed Loan, and tax penalties as a result of Defendant's actions.The trial court made the following relevant conclusions of law:
24. Plaintiff's business suffered as a result of Defendant's actions.
7. Plaintiff demonstrated it sustained economic and actual damages as a result of the action and/or omissions of Defendant, more specifically described as:
a. The loss of funds from the Loan or Assumed Loan, Plaintiff utilized to manage bills, thus adversely affecting the business.
b. The penalties and taxes sustained from the early withdrawal of the IRA, resulting in damages to Plaintiff.
10. Plaintiff demonstrated it is entitled to recover multiple damages under Tex. Bus. & Comm. Code, Section 17.50(b)(1).
Both parties agree that under either of Minchew's theories of recovery, he had to prove damages. We now analyze whether Minchew presented legally sufficient evidence of damages.
C. Loss of funds that adversely affected Minchew's business
Minchew testified that his loan with Comerica was a personal loan, but it was used for his companies. He also testified that the C.D. consisted of their personal funds. When he originally received the loan, Comerica deposited $30,000 into his personal account and Minchew made payments on the loan. After Minchew discussed getting a second $30,000 loan, Comerica liquidated his C.D. and used the funds to pay off the balance on the original loan ($16,000) leaving approximately $14,000 in his account. Not knowing that Comerica had paid off the original loan with the C.D., Minchew's wife transferred the funds from her IRA ($18,000) into Minchew's account.
In explaining how he suffered a loss, Minchew testified:
I suffered three items. One, I didn't have a loan anymore; and I would have—I wouldn't—if I—if I knew this was going to be like this, then why would I take out $18,000 out of an IRA? Why
would my wife take out her savings to pay off a loan that we were perfectly happy with? We were making the payments.
So, we lost $18,000 by her taking her savings and our savings of $30,000 to purchase the C.D. So, now we don't have a loan. We don't have a C.D., and we don't have an IRA anymore. So, now we lost $30,000 plus $18,000 of our personal savings on something that they actually took upon their self to cash in."
Although Minchew testified that he lost the loan, the C.D., and the IRA, the evidence shows otherwise. Before the dispute, Minchew had a loan that owed approximately $16,000 to Comerica. He also had a C.D. securing the loan for $30,000. Minchew's wife also had an IRA valued at approximately $18,000. The net value of these three amounts equals $32,000.
When Comerica used the C.D. to pay off the balance of the loan (approximately $16,000), the remaining funds (approximately $14,000) were deposited into Minchew's account. Minchew did not dispute that he had access to these funds. Likewise, when Minchew's wife wired the proceeds from her IRA into Minchew's account, Minchew also testified that he had access to those funds. After the dispute, Minchew's account contained the difference between the C.D. ($30,000) and the outstanding loan balance ($16,000) which left approximately $14,000 in Minchew's account. When Michew's wife wired the IRA ($18,000) into Michew's account, Minchew's account contained a total of approximately $32,000. Although the funds belonging to Minchew and his wife were no longer in the same financial instruments, the funds themselves were still available for Minchew's use. Because the funds on hand before the dispute equal the same funds on hand after the dispute, Minchew did not present any evidence that he suffered any damages. Accordingly, the trial court's conclusion of law number 7a is legally insufficient.
During trial, Minchew's counsel agreed with the trial court that Minchew's companies suffered no damages. It is also undisputed that Minchew's companies were not parties to the lawsuit and therefore could not recover damages. See Business Staffing, Inc. v. Jackson Hot Oil Serv., 401 S.W.3d 224 (Tex. App.—El Paso 2012, pet. denied). Accordingly, no evidence supports the trial court's conclusion of law that the actions of the bank adversely affected the business.
D. Penalties and taxes from early withdrawal of IRA
Comerica next argues that Minchew presented no evidence of penalties and taxes incurred from an early withdrawal of the IRA. Minchew responds without any citation to authority or the record that "there are early withdrawal penalties for premature withdrawal of an IRA." During the trial, no one testified that damages resulted from the withdrawing of funds from Minchew's wife's IRA. The only portion of the record that mentions a penalty to early withdrawal is an e-mail exhibit in which Minchew states, "We cashed in our 401K to pay off the loan costing us a penalty doing so." Damages must be based on competent evidence, not mere conjecture. Moore v. Canadian Commercial Bank, 672 S.W.2d 324, 326 (Tex. App.—Houston [14th Dist.] 1984, writ ref'd n.r.e.). Thus, this evidence is no more than a scintilla of evidence of damages. Accordingly, no evidence supports the trial court's finding of fact number 23 and conclusion of law 7b is legally insufficient.
We sustain Comerica's first issue on appeal.
Attorney's fees
In its third issue, Comerica argues that because Minchew did not prove damages, he is not a prevailing party and therefore is not entitled to attorney's fees. Minchew responds that the trial court correctly awarded attorney's fees and that they are justly awarded when damages are proven by the prevailing party. Because we have sustained Comerica's first issue on appeal and determined that Minchew did not prove damages, we likewise sustain Comerica's second issue. See TEX. BUS. & COM. CODE ANN. § 17.50(d) (West 2011) ("Each consumer who prevails shall be awarded court costs and reasonable and necessary attorney's fees."); Gulf States Utilities Co. v. Low, 79 S.W.3d 561, 567 (Tex. 2002) (plaintiff who receives nominal or zero damages is not entitled to attorney's fees).
We sustain Comerica's third issue on appeal.
In its second issue, Comerica argues that Minchew was not a consumer under the DTPA. Comerica raises this issue for the first time on appeal and therefore the issue is waived. See TEX. R. APP. P. 33.1. In its fourth issue, Comerica argues that it had the right of setoff. Because we have sustained Comerica's first and third issues, it is unnecessary to address its fourth issue. See TEX. R. APP. P. 47.1.
Conclusion
We reverse the judgment of the trial court and render judgment that Minchew take nothing from Comerica.
Sherry Radack
Chief Justice Panel consists of Chief Justice Radack and Justices Brown and Lloyd.