In Re Dwight Capital, LLC v. the State of Texas

CourtCourt of Appeals of Texas
DecidedJuly 2, 2025
Docket04-25-00081-CV
StatusPublished

This text of In Re Dwight Capital, LLC v. the State of Texas (In Re Dwight Capital, LLC v. the State of Texas) 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
In Re Dwight Capital, LLC v. the State of Texas, (Tex. Ct. App. 2025).

Opinion

Fourth Court of Appeals San Antonio, Texas

MEMORANDUM OPINION No. 04-25-00081-CV

IN RE DWIGHT CAPITAL, LLC

Original Mandamus Proceeding 1 0F

Opinion by: Lori I. Valenzuela, Justice

Sitting: Rebeca C. Martinez, Chief Justice Lori I. Valenzuela, Justice H. Todd McCray, Justice

Delivered and Filed: July 2, 2025

PETITION FOR WRIT OF MANDAMUS GRANTED IN PART AND DENIED IN PART

Relator Dwight Capital, LLC filed a petition for writ of mandamus that challenged the trial

court’s January 15, 2025 order compelling it to respond to seven requests for production (“RFPs”)

propounded by real parties in interest Terravista Corporation, Terravista Partners, Ltd., Terravista

Partners—Pecan Manor, Ltd., Terravista Partners—Roselawn, Ltd., Terravista Partners—Spanish

Spur, Ltd., Terravista Partners—Westwood, Ltd., and Terravista Partners—Winston Square, Ltd.

(collectively, “Terravista”). We grant the petition in part and deny it in part.

1 This proceeding arises out of Cause No. 2021-CI-06080, styled Terravista Corporation, Terravista Partners, Ltd., Terravista Partners—Pecan Manor, Ltd., Terravista Partners—Roselawn, Ltd., Terravista Partners—Spanish Spur, Ltd., Terravista Partners—Westwood, Ltd., and Terravista Partners—Winston Square, Ltd. v. Dwight Capital, LLC, Dwight Bridge Fund, LLC, United Core Management, Inc., United Apartment Group Management, Inc., DBDK Venture I LP, DBDK SPE I LP, AMG Realty Group, LLC, and Adam Glickman, pending in the 73rd Judicial District Court, Bexar County, Texas. The Honorable Rosie Alvarado, presiding judge of the 438th Judicial District Court, signed the order at issue in this original proceeding. 04-25-00081-CV

BACKGROUND

The underlying dispute arises out of Terravista’s desire to obtain real estate financing from

the United States Department of Housing and Urban Development (“HUD”). In 2017, Terravista

owned several multi-family apartment complexes that the parties refer to as “the HUD Portfolio.”

Shortly before its then-existing loans on the HUD Portfolio matured, it decided to refinance

through HUD’s Section 223(f) program. 2 Terravista also needed bridge loans to pay off its existing 1F

financing. Terravista alleges that Dwight Capital held itself out as a specialist in securing these

types of loans and that it hired Dwight Capital in reliance on those representations.

Terravista alleges that between 2017 and 2019, Dwight Capital dragged out the Section

223(f) process, coerced Terravista into accepting bridge loans from a newly formed Dwight

Capital affiliate, and colluded with other affiliates to take over management of the HUD Portfolio

and interfere with Terravista’s attempts to sell the properties. Terravista contends that because of

Dwight Capital’s actions, it was unable to pay its debts and “was forced to file for Chapter 11

bankruptcy and sell, at ‘fire sale’ prices,” part of the HUD Portfolio.

Dwight Capital contends that the parties settled their dispute in March 2019; however,

Terravista argues that the settlement agreement is invalid. Two years after the disputed settlement,

Terravista sued Dwight Capital. When Dwight Capital filed this original proceeding, Terravista’s

live claims included breach of contract, statutory fraud, civil conspiracy to commit fraud, and

breach of fiduciary duty.

2 A HUD website cited in Dwight Capital’s petition for writ of mandamus describes the Section 223(f) program as a type of “FHA [Federal Housing Administration] mortgage insurance for HUD-approved lenders” that “insures mortgage loans to facilitate the purchase or refinancing of existing multifamily rental housing.” U.S. Dep’t of Hous. & Urban Dev., Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental Housing: Sections 207/223(f)(updated Oct. 11, 2023), available at https://www.hud.gov/program_offices/housing/mfh/progdesc/purchrefi223f (last accessed June 23, 2025).

-2- 04-25-00081-CV

On December 4, 2024, Terravista filed a motion to compel Dwight Capital to respond to

the following RFPs:

REQUEST FOR PRODUCTION NO. 46: All documents relating to prior regulatory enforcement actions brought against Dwight Capital by HUD.

REQUEST FOR PRODUCTION NO. 47: All documents relating to prior regulatory enforcement actions threatened against Dwight Capital by HUD.

REQUEST FOR PRODUCTION NO. 48: All documents relating to prior regulatory enforcement actions brought against Dwight Capital by any federal or state agency having jurisdiction over your operations.

REQUEST FOR PRODUCTION NO. 49: All documents relating to prior regulatory enforcement actions threatened against Dwight Capital by any federal or state agency having jurisdiction over your operations.

REQUEST FOR PRODUCTION NO. 50: All documents relating to the $16 million civil money penalty that Dwight Capital agreed to with HUD, which the HUD Mortgagee Review Board approved on or about September 15, 2022.

REQUEST FOR PRODUCTION NO. 51: All documents relating to the 24 life-of- loan indemnifications that Dwight Capital agreed to with HUD, which the HUD Mortgagee Review Board approved on or about September 15, 2022.

REQUEST FOR PRODUCTION NO. 52: All documents relating to the corrective action plan that Dwight Capital agreed to with HUD, which the HUD Mortgagee Review Board approved on or about September 15, 2022.

The motion to compel cited portions of the Federal Register that described the agreement

referenced in RFPs 50, 51, and 52 (“the HUD settlement”) as follows: 3 2F

Action: On September 15, 2022, the [HUD Mortgagee Review] Board voted to enter into a settlement agreement with Dwight Capital LLC (“Dwight”) that included a civil money penalty of $16,000,000, execution of 24 life-of-loan indemnifications, and a corrective action plan. The settlement did not constitute an admission of liability or fault.

Cause: The Board took this action based on the following alleged violations of FHA requirements: Dwight (a) obtained loan fees in excess of five percent for five loans that received reduced MIP rates under FHA’s Green MIP Program; (b) engaged in prohibited business practices, (c) failed to adopt a Quality Control (“QC”) Program that fully complied with HUD requirements; (d) failed to comply

3 The HUD settlement is distinct from the parties’ purported March 2019 settlement.

-3- 04-25-00081-CV

with its QC Program, (e) engaged in business practices that do not conform to generally accepted practices of prudent mortgagees; (f) failed to disclose identity of interest (“IOI”) relationships; (g) failed to properly disclose and review IOI borrowers; (h) submitted to FHA false statements and false certifications; (i) submitted false information to the Mortgagee Review Board; and (j) violated use and disclosure requirements regarding brokers.

In response to the motion to compel, Dwight Capital argued that the RFPs did not “seek any

information relating to Terravista or the allegations made in this case.” Dwight Capital contended

the RFPs were overbroad, irrelevant, and unduly burdensome to the extent that they amounted to

“an impermissible ‘fishing expedition.’” The response included an affidavit in which Dwight

Capital’s CEO, Benjamin Siegel, averred, “To my knowledge, Dwight Capital’s dealings with

Terravista are not, and have not ever been, the subject of any regulatory enforcement action that

has been brought or threatened against Dwight Capital by HUD or any other agency.” Siegel also

averred that “the HUD settlement did not concern Terravista or arise out of any of Dwight’s

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