Alan D. Gertner, IRA v. HQZ Partners, L.P., Lang and Company, LLC, Jim Lang, Bruce Cook, and Ray Walter

Court of Appeals of Texas·Decided August 22, 2016·No. 05-15-00422-CV·Published

Opinion

Affirm in part; Reverse and Remand in part; Opinion Filed August 22, 2016.

In The

Court of Appeals

Fifth District of Texas at Dallas No. 05-15-00422-CV

ALAN GERTNER, AS LEGAL REPRESENTATIVE OF AND FOR THE ALAN D. GERTNER IRA, Appellant V.

HQZ PARTNERS, L.P., LANG AND COMPANY, LLC, JIM LANG, BRUCE COOK, AND RAY WALTER, Appellees

On Appeal from the 160th Judicial District Court Dallas County, Texas

Trial Court Cause No. DC-13-03044-H

MEMORANDUM OPINION

Before Justices Lang-Miers, Evans, and Brown Opinion by Justice Evans

In this suit for failure to pay under a note and guaranty, Alan Gertner, as legal

representative of and for the Alan D. Gertner IRA, appeals the trial court’s order both sustaining the pleas to the jurisdiction filed by HQZ Partners, L.P., Lang and Company, LLC, Jim Lang, Bruce Cook, and Ray Walter (collectively “appellees”) and granting their traditional and no evidence motions for summary judgment. In four issues, Gertner contends the trial court erred in concluding it had no subject matter jurisdiction over his claims and that no justiciable controversy existed among the parties. Gertner further contends he produced sufficient summary judgment evidence to defeat appellees’ motion for no evidence summary judgment on his claims for common law and statutory fraud. Finally, Gertner contends the trial court erred in implicitly

denying his motions for no evidence summary judgment on appellees’ defenses. We reverse the trial court’s order to the extent it grants appellees’ pleas to the jurisdiction and motion for traditional summary judgment and remand Gertner’s claims for breach of the note and guaranty and for attorney’s fees to the trial court for further proceedings. We affirm the trial court’s order granting appellees’ motion for no evidence summary judgment on Gertner’s claims for fraud. We do not address Gertner’s issues relating to his motions for no evidence summary judgment on appellees’ defenses because we conclude nothing in the trial court’s order constitutes an explicit or implicit ruling on those motions.

BACKGROUND

On April 3, 2008, Jim Lang, on behalf of Lang and Company, LLC as general partner of HQZ Partners, L.P., executed a promissory note with a principal amount of $3,700,000 (the “Note”). The Note was made payable to eleven lenders,1 each of which was listed in the Note along with the portion of the principal amount payable to each. Among the lenders was the Alan D. Gertner IRA. With respect to the Gertner IRA, the Note stated it was payable “[t]o the extent of $560,000.00 plus interest on such principal amount to the order of Equity Trust Company Custodian FBO Alan D. Gertner, IRA, 15.14% undivided interest.” The Note also contained a guaranty signed by Lang, Ray Walter, and Bruce Cook stating that they “severally, absolutely, irrevocably, and unconditionally guarantee payment of the Note according to its terms to the same extent as if [they] were borrowers.” The Note had a maturity date of April 3, 2009 and stated it was payable in full at that time. Upon default, the unpaid balance, earned interest, and any other amounts owed on the Note could be declared due immediately. The Note further

1 Although all eleven lenders are listed under the heading “Lender” and the Note frequently refers to the term “Lender” in the singular, the Note also states that “[w]hen context requires, singular nouns and pronouns include the plural.”

stated that the borrower could refinance the loan at maturity, but the lenders were under no obligation to participate in the refinancing.

Also on April 3, 2008, Lang executed a deed of trust for the property securing the Note.

The deed of trust defined the term “Note” to include “all extensions, modifications, and renewals of the Note and all amounts secured by this deed of trust.” The deed of trust further defined the term “Lender” to include any mortgage servicer for the named lenders. The deed stated that the lenders could “remedy any default without waiving it” and “waive any default without waiving any prior or subsequent default.”

Two weeks after the Note and deed were signed, Gertner signed a loan servicing agreement (“LSA”) pursuant to which Walter Servicing Corporation was appointed to serve as the Gertner IRA’s agent in servicing the loan. The other lenders on the Note signed substantively identical LSAs with Walter Servicing. In the event of a default on the Note, the LSAs provided that

[Walter Servicing] shall give notice of such to Lenders, and is authorized and instructed to take all reasonable steps necessary to collect any sums due and remedy any default . . . . Lenders who have aggregately funded a majority of the original principal amount of the Note (“Majority Lenders”) shall have the right to instruct [Walter Servicing] to exercise the remedies under the terms of the Note and/or Deed of Trust. If Borrower is in default under the terms of the Note and/or Deed of Trust, [Walter Servicing] shall immediately give or cause to be given proper notice to Borrower, accelerate the Note and foreclose on the Property in accordance with the terms of the Deed of Trust if directed by the Majority Lenders.

Shortly after the Note and LSA were executed, Gertner discharged Equity Trust Company as custodian of his IRA and engaged Sunwest Trust as custodian. Gertner signed a contract with Sunwest under which he agreed the IRA was self-directed. The contract further stated that Gertner “agree[d] to be responsible for any and all collection actions, including . . . instituting legal action, and bringing any other suits or actions which may become necessary to protect the rights of [the IRA] as a result of the operation or administration of my investments.”

Any legal filings made on behalf of the investments were to be made in the name of “Sunwest Trust, Inc. Custodian for the Self-Directed IRA of [Alan D. Gertner].” Gertner agreed that he would prosecute any legal action, but would not institute an action on behalf of his investments without Sunwest Trust’s written consent.

On April 3, 2009, the Note’s maturity date, Gertner participated in a telephone conference that included Lang, Walter, and a representative of Walter Servicing. Gertner stated during the call that, if the Note went into default, he would immediately terminate the LSA. It is undisputed that the Note was not paid on its maturity date and Gertner terminated the servicing agreement with Walter Servicing. Approximately six weeks later, appellees and a majority of the other lenders on the Note signed a modification and extension agreement extending the maturity date of the Note to October 9, 2009. Thereafter, the Note was extended on a yearly basis.

Gertner brought this suit in his own name on March 15, 2013 alleging claims for breach of the Note and guaranties and seeking judicial foreclosure of the deed of trust. Gertner asserted that any renewals and extensions of the Note were ineffective as to the IRA’s interest because the IRA was no longer a party to a contract allowing the majority of lenders to determine what remedies would be pursued in the event of a default. Gertner obtained written consent to litigate from Sunwest Trust in June 2013. The consent agreement acknowledged that Gertner could initiate the legal action but required Sunwest Trust, as custodian of the IRA, to be named as a plaintiff along with the IRA. The agreement further stated that Gertner would have sole authority to make all decisions regarding the legal action, including agreements of settlement or final resolution of any claim.

Free access — add to your briefcase to read the full text and ask questions with AI

Alan D. Gertner, IRA v. HQZ Partners, L.P., Lang and Company, LLC, Jim Lang, Bruce Cook, and Ray Walter, (Tex. Ct. App. 2016).

Alan D. Gertner, IRA v. HQZ Partners, L.P., Lang and Company, LLC, Jim Lang, Bruce Cook, and Ray Walter (Alan D. Gertner, IRA v. HQZ Partners, L.P., Lang and Company, LLC, Jim Lang, Bruce Cook, and Ray Walter) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Texas Department of Parks & Wildlife v. Miranda
133 S.W.3d 217 (Texas Supreme Court, 2004)
Western Investments, Inc. v. Urena
162 S.W.3d 547 (Texas Supreme Court, 2005)
Timpte Industries, Inc. v. Gish
286 S.W.3d 306 (Texas Supreme Court, 2009)
Bland Independent School District v. Blue
34 S.W.3d 547 (Texas Supreme Court, 2000)
Insurance Co. of North America v. Morris
981 S.W.2d 667 (Texas Supreme Court, 1998)
Ltd. v. Williamson County Appraisal District
925 S.W.2d 659 (Texas Supreme Court, 1996)
Carr v. Brasher
776 S.W.2d 567 (Texas Supreme Court, 1989)
Camarena v. Texas Employment Commission
754 S.W.2d 149 (Texas Supreme Court, 1988)
Flood v. Katz
294 S.W.3d 756 (Court of Appeals of Texas, 2009)
Southwestern Electric Power Co. v. Grant
73 S.W.3d 211 (Texas Supreme Court, 2002)
King Ranch, Inc. v. Chapman
118 S.W.3d 742 (Texas Supreme Court, 2003)
City of Port Isabel v. Pinnell
161 S.W.3d 233 (Court of Appeals of Texas, 2005)
Nauslar v. Coors Brewing Co.
170 S.W.3d 242 (Court of Appeals of Texas, 2005)
City of Helotes v. Miller
243 S.W.3d 704 (Court of Appeals of Texas, 2007)
Mayhew v. Town of Sunnyvale
964 S.W.2d 922 (Texas Supreme Court, 1998)