De La Pena v. Elzinga

980 S.W.2d 920, 1998 WL 770257
CourtCourt of Appeals of Texas
DecidedDecember 17, 1998
Docket13-97-372-CV
StatusPublished
Cited by13 cases

This text of 980 S.W.2d 920 (De La Pena v. Elzinga) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
De La Pena v. Elzinga, 980 S.W.2d 920, 1998 WL 770257 (Tex. Ct. App. 1998).

Opinion

OPINION

RODRIGUEZ, Justice.

Appellants Rudy De la Pena, Dalia De la Pena, and Diana De la Pena appeal from the granting of two motions for partial summary judgment in favor of appellees Theo Elzinga and James C. Hopkins as Trustee of the Comanche Investment Trusts. The question *921 presented by the De la Penas in this appeal is whether Texas courts will assist a grantor in recovering property or damages arising from the refusal of the grantee to reconvey the property conveyed by the grantor if such conveyance was made in an attempt to hinder, delay or defraud the grantors’ creditors. Following a long line of precedent, we answer the question in the negative.

Due to the many bank failures in the late 1980’s, Rudy and Dalia De la Pena experienced severe financial difficulties. The FDIC had declared insolvent several of the banks with whom the De la Penas did business, and it was calling in the notes owed by the De la Penas on several pieces of real property. Other lienholders were also threatening foreclosure of their liens.

The De la Penas contend Elzinga gained the confidence of Diana De la Pena and advised her to convince her parents to transfer all of the De la Penas’ real property 1 to him or the Comanche Investment Trust and then file for bankruptcy. Elzinga allegedly assured the De la Penas that upon the completion of the bankruptcy proceedings, he would reeonvey the property to them. The De la Penas further contend that based on Elzinga’s representations, they conveyed their property to him and filed for bankruptcy. In January 1993, the De la Penas made demand upon Elzinga for the return of the properties. When Elzinga refused, the De la Penas filed suit, alleging common law fraud, statutory fraud, conversion, and requesting the imposition of a constructive trust. Both defendants answered and Elzinga also filed a counterclaim.

Elzinga and Hopkins filed a motion for partial summary judgment asserting the De la Penas are not entitled to a reconveyance of six of the properties (the Six Properties), because the alleged secret agreement between Elzinga and the De la Penas to recon-vey the Six Properties to the De la Penas was an illegal attempt to delay, hinder or defraud the De la Penas’ creditors. Three weeks later, Elzinga and Hopkins filed a second motion for partial summary judgment asserting the same argument with respect to the other six properties (the Rudlumnk Lots). The trial court granted both motions and severed the De la Penas’ suit from Elzin-ga’s counterclaim, resulting in a final, appeal-able judgment.

*922 The crux of the De la Penas’ first issue is that Elzinga and Hopkins were not entitled to summary judgment on their affirmative defense of illegality of contract because they failed to prove the De la Penas intended to defraud their creditors. When a defendant establishes as a matter of law that an essential element of a plaintiffs cause of action does not exist or establishes as a matter of law all of the elements of its affirmative defense, the defendant is entitled to summary judgment. Rosas v. Buddie’s Food Store, 518 S.W.2d 534, 537 (Tex.1975); Castillo v. Tropical Tex. Ctr. for Mental Health & Mental Retardation, 962 S.W.2d 622, 624 (Tex.App. — Corpus Christi 1997, no writ). And, while a summary judgment may not normally be granted on the basis of the plaintiffs pleadings alone, Texas Dep’t of Corrections v. Herring, 513 S.W.2d 6, 9 (Tex. 1974), pleadings may be considered in determining whether a legally enforceable claim has been asserted. Reyna v. City of Weslaco, 944 S.W.2d 657, 660 (Tex.App. — Corpus Christi 1997, no writ).

For purposes of this opinion, we accept as true all of the De la Penas’ allegations set out in their original petition. Poe v. Hamlin Nat’l Bank, 921 S.W.2d 515, 517 (Tex.App.— Eastland 1996, writ denied). After doing so, however, we are compelled to find that the representations made by the De la Penas in their pleading constitute judicial admissions that as a matter of law preclude their recovery.

A judicial admission is a formal waiver of proof usually found in pleadings or the stipulations of the parties which reheves the opposing party’s burden of proving the admitted fact, and bars the admitting party from disputing it. Mendoza v. Fidelity & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex.1980). The public policy underlying this rule is that it would be unjust to permit a party to recover after he has sworn himself out of court by clear, unequivocal testimony. United States Fidelity & Guar. Co. v. Carr, 242 S.W.2d 224, 229 (Tex.Civ.App. — San Antonio 1951, writ ref d).

The De la Penas’ position, as asserted in their original petition, is clear. They are seeking imposition of a constructive trust and damages because Elzinga and Hopkins refused to reconvey to the De la Penas property that the De la Penas had transferred to Elzinga in order to protect them from imminent foreclosure by their lienholders. In other words, the conveyance to Elzinga was made to hinder, delay, or defraud the De la Penas’ creditors. See generally Tex. Bus. & Com.Code Ann. § 24.005(a)(1) (Vernon Supp. 1998) (transfer by a debtor is fraudulent as to a creditor if the debtor made the transfer with the actual intent to hinder, delay, or defraud the creditor).

The Eastland Court of Appeals was presented with the same situation in Poe. In that case, George Poe sued the Hamlin National Bank and Bank President W.T. Johnson, alleging fraudulent breach of contract, loss of business opportunity, and intentional infliction of emotional distress. Poe, 921 S.W.2d at 516. 2 Based on his execution of a guaranty agreement, Poe had received demand for the payment of $1,000,000 to Citicorp Industrial Credit, Inc. Fearing that Citicorp would sue him and take his oil and gas properties, Poe took a copy of the demand to Johnson, his long-time friend and banker. Poe owed the Bank a substantial amount of money, none of which was secured by deeds of trust or other security agreements. Poe alleged that Johnson told him, “Let me protect [the property] for you.” The Bank prepared and Poe signed deeds of trust and other security agreements in favor of the Bank covering Poe’s oil and gas properties.

In 1984, Citicorp obtained a judgment against Poe for $1,000,000, plus costs and attorney’s fees. Poe testified that Johnson believed the Bank should foreclose on Poe’s properties to prevent Citicorp from pursuing the Bank’s liens on the assets.

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980 S.W.2d 920, 1998 WL 770257, Counsel Stack Legal Research, https://law.counselstack.com/opinion/de-la-pena-v-elzinga-texapp-1998.