Nance v. Resolution Trust Corp.

803 S.W.2d 323, 1990 Tex. App. LEXIS 3193, 1990 WL 264051
CourtCourt of Appeals of Texas
DecidedApril 18, 1990
Docket04-88-00580-CV
StatusPublished
Cited by30 cases

This text of 803 S.W.2d 323 (Nance v. Resolution Trust Corp.) 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
Nance v. Resolution Trust Corp., 803 S.W.2d 323, 1990 Tex. App. LEXIS 3193, 1990 WL 264051 (Tex. Ct. App. 1990).

Opinions

OPINION

PEEPLES, Justice.

This appeal arises from a lender liability lawsuit filed by appellant Nance against Alamo Savings Association of Texas and Alsave Corporation. Appellee Resolution Trust Corporation is the receiver of Alamo Savings Association of Texas, and conservator for Alamo Federal Savings Association of Texas. Nance alleged that Alamo breached its contract with him by failing to fund a loan for the construction of improvements to real property owned by Tez-el Cluster, Ltd. Nance was the general partner of Tezel Cluster, Ltd; Alsave Corp., Alamo’s wholly owned subsidiary, was the limited partner. A jury found that Alamo breached the contract, that Nance suffered damages in the amount of $993,-000, and that Nance did not waive his right to complain of Alamo’s breach of contract. Alamo filed a motion for judgment non obstante veredicto, which the court granted. The court set aside the jury verdict and rendered judgment for Alamo on its counterclaim in the amount of $954,566.65 —the deficiency balance on the loan at issue — plus interest, attorney’s fees, and costs of court.

Nance presents nine points of error. Points one, two and three attack the granting of the judgment n.o.v. on the ground that there is legally sufficient evidence to support the jury’s findings of breach of contract and damages. In point four, Nance urges that it was error to grant Alamo judgment on the note because the jury’s answer to question one (breach of contract) established a defense to the counterclaim. Point five asserts that the trial court erred in failing to allow Nance to file a trial amendment in support of the jury verdict. Points six and seven assign as error the court’s refusal to submit jury questions on breach of the covenant of good faith and fair dealing and economic coercion. In points eight and nine, Nance urges that his liability on the note was limited to 50% of the deficiency balance as a matter of law or, alternatively, that the trial court erred in failing to submit a jury question inquiring whether his individual guaranty was limited to 50% of the deficiency balance. We affirm in part and reverse and render in part.

I. FACTUAL BACKGROUND.

Tezel Cluster, Ltd. was formed in the fall of 1983 for the purpose of building a 67-unit townhouse development in northwest Bexar County. Nance was the general contractor on the project as well as the general partner of the limited partnership. Alamo agreed to loan Tezel $3.65 million to acquire the land and build the improvements. Alamo’s wholly owned subsidiary, Alsave Corp. was given a 50% profit interest in the project. The loan was evidenced by a construction loan agreement and a promissory note, both signed by Nance as general partner of Tezel. Nance also signed an individual guaranty of payment [327]*327and performance, which limited his liability under the guaranty to 50% of the indebtedness.

Section 4.02 of the construction loan agreement required Alamo to retain 10% of each advance to Nance:

Except as may otherwise be provided in the Disbursement Schedule, for each advance made to Borrower [Nance] hereunder Lender [Alamo] shall retain a sum equal to ten percent (10%) thereof (or a greater percentage, if required by any Legal Requirement) so that, until a period of thirty (30) days after completion of the Improvements (or such longer period if required by any Legal Requirement or if, during such longer period, a lien or claim could lawfully be filed against the Mortgage Property by anyone performing work or services, or furnishing materials, equipment or goods, during the construction of the Improvements). Lender shall have in its possession a fund equal to ten percent (10%) of the total cost of the Improvements.

The agreement defined “Improvements” as encompassing the entire 67-unit cluster housing complex. The disbursement schedule, attached to and made a part of the construction loan agreement, provided as follows:

II. Upon satisfaction of the foregoing requirements, Loan Proceeds in the amount shown in the final construction budget for “hard costs” shall be disbursed as follows:
(a) Upon request of Borrower [Nance] and not more frequently than monthly, Lender [Alamo] shall make disbursements to Borrower for the cost of work completed on the Improvements as itemized in the Request for Advance (in the form required by Lender) and in the amount by which the invoices, vouchers, statements, affidavits, payroll records and/or other documents approved by Lender, submitted therewith, together with the invoices, vouchers, statements, affidavits, payroll records and/or other documents, previously submitted to and approved by Lender, substantiate total costs on the Improvements to justify such an advance, when such documents are delivered to Lender, together with (a) a written request for disbursement on such form as shall be provided by or approved by Lender which form may require certification of work completed on the Improvements by the Architect, and (b) if required by Lender, an Affidavit of Borrower or the Contractor either (i) stating that any affidavit delivered under Section 4 of the Loan Agreement above is still true and correct as of the date of the new request or (ii) giving all of the information required under Section 4 of the Loan Agreement, but as of the date of the new request. All costs, fees and expenses shall be based upon the Exhibit “B-2” Schedule of Values submitted to and approved by Lender to which there shall be no amendment or modification without Lender’s written consent.
(b) If any of the costs insured as shown in the disbursement request documents submitted above are subject to retention and therefore not disbursed to Borrower under Paragraph 11(a) above, such sums shall be disbursed to Borrower when the conditions of Paragraph 4.02 of the Loan Agreement have been fully complied with.

Before construction began, a portion of the land was sold to a third party and the scope of the project was decreased from 67 to 45 units. A new budget was drawn reflecting the change, but the loan documents were not modified. Construction began early in 1985 and the project proceeded smoothly for the first few months. Beginning in June 1985, disputes arose concerning the 10% retainage and cutting of certain line item draw requests. As a result of these disputes some subcontractors were not paid and eventually quit the project. Construction stopped in September 1985 and, despite subsequent negotiations, was not resumed. Alamo foreclosed on the property and sold it, leaving a deficiency balance on the note of $954,566.65 at the time of trial.

[328]*328II. BREACH OF CONTRACT.

In points one and two, Nance contends that judgment n.o.v. was improper because there was sufficient evidence to support the jury’s answer to question number one that Alamo breached the contract. Concerning breach of contract, Nance pleaded in his sixth amended petition as follows:

Alternatively, plaintiff would show that ALAMO contractually agreed to loan him the full amount of money necessary to acquire, build, and construct the project; and, that he would only be required to invest his own personal funds to complete construction only if he were to exceed the approved construction budget.

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Bluebook (online)
803 S.W.2d 323, 1990 Tex. App. LEXIS 3193, 1990 WL 264051, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nance-v-resolution-trust-corp-texapp-1990.