Rampart Capital Corp. v. Egmont Corp.

18 S.W.3d 318, 2000 Tex. App. LEXIS 3487, 2000 WL 679144
CourtCourt of Appeals of Texas
DecidedMay 25, 2000
DocketNo. 09-99-146 CV
StatusPublished
Cited by6 cases

This text of 18 S.W.3d 318 (Rampart Capital Corp. v. Egmont 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
Rampart Capital Corp. v. Egmont Corp., 18 S.W.3d 318, 2000 Tex. App. LEXIS 3487, 2000 WL 679144 (Tex. Ct. App. 2000).

Opinion

OPINION

RONALD L. WALKER, Chief Justice.

On May 28, 1982, Westland Oil Development Corporation executed a $4,000,000 promissory note payable to Killeen Savings & Loan Association. The note was secured by a deed of trust securing an interest in an undivided 40% interest in certain real property located in Montgomery County, Texas, and required monthly payments through May 28,1987. On April 1,1983, Fort Hood National Bank acquired an 8.182% participation interest in the Kil-leen Note. On May 28,1987, without knowing that Fort Hood owned a participation interest, Westland executed a renewal of the Killeen Note for another 5 year term, through May 28,1992. On that same date, Killeen and Fort Hood extended their participation agreement to apply to the Kil-leen Renewal Note.

On October 7, 1987, Westland filed for reorganization in the bankruptcy court. The proof of claim filed Killeen did not mention Fort Hood’s participation interest. Fort Hood did not file a proof of claim

On March 30, 1988, Killeen and Fort Hood converted the participation agreement into an assignment of an 8.182% interest in the Killeen Renewal Note. The assignment was filed in the real estate records of Montgomery County, Texas, on April 7, 1988. Killeen and Fort Hood executed another agreement, defining their respective rights and obligations, on June 28,1988.

The bankruptcy court approved West-land’s plan of reorganization on November 3, 1988. As part of the plan, Westland agreed to sell the collateral for the Killeen Renewal Note by April 30, 1989, or abandon the collateral to Killeen and give Kil-leen an additional unsecured claim for $1,500,000.

On December 28, 1988, the Federal Deposit Insurance Corporation declared Kil-leen insolvent and took over as receiver. On November 16, 1990, the FDIC sold Killeen’s interest in the Killeen Renewal Note to Egmont Corporation, the parent company of Westland. The FDIC, West-land and Egmont signed a Settlement Agreement and Release. The FDIC received an unsecured claim for $1,500,000.

On September 3, 1997, Rampart Capital Corporation obtained Fort Hood’s interest in the Killeen Renewal Note. On February 18,1998, Rampart sued Egmont for breach of contract for failing to honor the participation agreement and assignment of the Killeen Renewal Note, and for breach of fiduciary duty for failing to collect Ram[320]*320part’s share of the Killeen Renewal Note. Although Rampart’s pleadings included a claim for $155,458 for its share of the unpaid balance of the Killeen Note, Rampart expressly abandoned that claim in this appeal. Thus, in the Killeen transaction, Rampart seeks relief only against Egmont.

On December 5, 1988, in an unrelated transaction, Westland signed a promissory note payable to NCNB Texas National Bank. On May 14,1992, Westland executed a non-recourse renewal note in favor of the FDIC as receiver for RepublicBank Dallas, N.A. The renewal deed of trust executed the same day purported to convey a secured interest in certain real property. The deed of trust included a clause that the conveyance was of “Mortgaged Property (as defined in the Prior Deed of Trust),” and that “Grantor expressly acknowledges that the hen created by this Deed of Trust and the Prior Deed of Trust result in Beneficiary receiving a lien in one hundred percent (100%) of the Land.” In its petition, Rampart alleged Westland did not in fact own ah of the secured property. The FDIC sold the FDIC Renewal Note and the FDIC Renewal Deed of Trust to Rampart on December 16,1994. Rampart foreclosed the deed of trust on November 4,1997.

When litigation commenced on February 18, 1998, Rampart sued Westland for breach of the covenant of seisen and breach of warranty for failure to convey good title to the FDIC Renewal Deed of Trust. Egmont was not involved in the transaction. In the FDIC transaction, Rampart seeks relief only against West-land.

Westland and Egmont filed a joint motion for summary judgment, on the following grounds: 1) that Rampart is not entitled to enforce payment of the Killeen Renewal Note; 2) that Egmont is a holder in due course of the Killeen Renewal Note; 3) that the statute of limitations on the Killeen Renewal note had expired; 4) that there had been accord and satisfaction on the Killeen Renewal Note; 5) that the Killeen Renewal Note had been discharged in Westland’s bankruptcy; 6) that Egmont owed no duties to Rampart because it was not aware of Fort Hood’s interest in the Killeen Renewal Note; 7) that enforcement of any duties of Egmont is barred by the Statute of Frauds; 8) that the non-recourse provision of the FDIC Deed of Trust barred Rampart’s actions against Westland for breach of warranty of title; 9) for breach of covenant of seisin; and 10) that there was no evidence to support Rampart’s causes of action. The trial court granted the motion for summary judgment.

Rampart raises seven issues on appeal. Issues one through six concern Rampart’s claims against Egmont on the Killeen Renewal Note:

Issue one: “Is Rampart precluded from enforcing its interest in the Killeen Renewal Note because it is not a holder of the note, but rather, a part owner?”
Issue two: “Does Egmont qualify as a holder in due course of the Killeen Renewal Note so as to preclude Rampart’s claims against it?”
Issue three: “Does the statute of limitations bar Rampart’s claims on the Kil-leen Renewal Note?”
Issue four: “Have Rampart’s claims against the Killeen Renewal Note been discharged by an accord and satisfaction?”
Issue five: “Does Egmont owe Rampart a duty to enforce the Killeen Renewal Note?”
Issue six: “Does the Statute of frauds bar Rampart’s claims on the Killeen Renewal Note?”
Issue seven concerns Rampart’s claims against Westland on the FDIC Deed of Trust:
Issue seven: “Do the non-recourse provisions bar Rampart’s claims with respect to the FDIC Renewal Deed of Trust?”

[321]*321Rampart argues a six-year statute of limitations applies to its claims regarding the Killeen Renewal Note. The maturity date on the Killeen Renewal Note was May 28, 1992. Four years had not expired when the legislature created a six year statute of limitations in place of the previously applicable four year statute of limitation. See Tex. Bus. & Com.Code Ann. § 3.118(a) (Vernon Supp.2000); Tex. Civ. PRAC. & Rem.Code Ann. § 16.004 (Vernon Supp.2000). An action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date stated in the note. Id. While we agree with Rampart that the amended version of Section 8.118 applied to its suit to enforce the Killeen Renewal Note, Rampart abandoned its suit against Westmont on the Killeen note. The participation and assignment were made without recourse to Killeen. The only claims now being asserted concerning this transaction are Rampart’s claims against Egmont for breach of contract and breach of fiduciary duty. These claims arise out of the assignment and underlying participation agreement, neither of which are negotiable instruments. The statute applicable to these claims is Section 16.004 of the Civil Practice and Remedies Code, not Section 3.118 of the Business and Commerce Code.

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Cite This Page — Counsel Stack

Bluebook (online)
18 S.W.3d 318, 2000 Tex. App. LEXIS 3487, 2000 WL 679144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rampart-capital-corp-v-egmont-corp-texapp-2000.