SW Loan A, L.P. v. Duarte-Viera

487 S.W.3d 697, 2016 Tex. App. LEXIS 1534, 2016 WL 625399
CourtCourt of Appeals of Texas
DecidedFebruary 17, 2016
DocketNo. 04-15-00255-CV
StatusPublished
Cited by4 cases

This text of 487 S.W.3d 697 (SW Loan A, L.P. v. Duarte-Viera) 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
SW Loan A, L.P. v. Duarte-Viera, 487 S.W.3d 697, 2016 Tex. App. LEXIS 1534, 2016 WL 625399 (Tex. Ct. App. 2016).

Opinion

OPINION

Opinion by:

Karen Angelini, Justice

SW Loan A, L.P. appeals from a take-nothing judgment in its suit against Aníbal J. Duarte-Viera,' Antonio P. Pardo and Edward M. Reiss for breach of guaranty agreements. SW Loan presents two issues on appeal. First, it argues the evidence is legally and factually insufficient to support the jury’s finding that the borrower, 1946 Property LLC, did not fail to comply with the promissory note. Second, it argues the trial court abused its discretion in awarding attorney fees to Duarte-Viera, Pardo, and Reiss. We reverse and remand in part, and reverse and render in part.

Background

In April 2008, 1946 Property LLC borrowed ten million dollars ($10,000,000.00) from Stillwater National Bank and Trust Company. The purpose of the loan was to refinance an existing debt on an apartment project in San Antonio, Texas.' 1946 Property signed a series of documents in connection with the loan, including a loan agreement, a promissory note, and a deed of trust. Additionally, Duarte-Viera, Par-do, and Reiss each signed a limited guaranty agreement personally guaranteeing the loan’s repayment. Each guaranty was limited to two and a half million dollars ($2,600,000.00).

In May 2011, 1946 Property and Stillwa-ter National Bank agreed to amend the loan agreement. Among other things, the amendment required 1946 Property to deposit $20,000.00 per month into an escrow account beginning on June 5, 2011, and on the fifth day of each month thereafter, apparently for the purpose of paying taxes.

In December 2011, Stillwater National Bank transferred to SW Loan all “right, title and interest in and to” the loan agreement, the promissory note, the deed of trust, and the guaranty agreements.

In 2012, SW Loan’s representatives sent 1946 Property two notices of default. The first notice of default, dated June 5, 2012, stated that 1946 Property had defaulted on the terms of its loan because it had not made its monthly tax escrow payments and, because of the escrow shortage, $262,322.36 in taxes had not been paid, to the tax authority. The first notice of default gave 1946 Property thirty days to cure the escrow and tax related defaults.

The second notice of default, dated- July 3, 2012, stated that 1946 Property had defaulted on the terms of its loan because it had failed to make seven of its required $20,000.00 tax escrow payments, and it had failed to make two principal and interest payments of $60,508.72 each for -a total of $121,017.44. The principal and interest payments were due on May 17, 2012, and June 7, 2012. Additionally, the second notice informed 1946 Property that SW loan was accelerating the amount due on the promissory note and was demanding that 1946 Property pay the balance due under the note, $10,363,669.79 by July 10, 2012.

When 1946 Property failed to comply with the demand made in the second notice of default, a foreclosure sale was scheduled for August 7, 2012. However, on the day of the foreclosure sale, 1946 Property filed for bankruptcy, causing the foreclosure sale to be postponed. Two months later, on October 19, 2012,1946 Property agreed to an order modifying the automatic bank[700]*700ruptcy stay, which allowed SW Loan to sell 1946 Property’s real property at foreclosure. The foreclosure sale occurred on November 6,2012.

SW Loan sued Duarte-Viera, Pardo, and Reiss for breach of the guaranty agreements.1 In its petition, SW Loan alleged that 1946 Property had failed to perform its financial obligations under the loan agreement and promissory note. Duarte-Viera, Pardo, and Reiss answered the suit, generally denying the allegations in S.W. Loan’s petition and asserting defenses and counterclaims.

The case went to trial before a jury. SW Loan presented two witnesses to testify about the merits of its claims. The first witness was an asset manager from the company that serviced the loan for SW Loan. The second witness was one of the defendants. Additionally, numerous documents were admitted into evidence, including the loan agreement, the deed of trust, and the guaranty agreements.

The jury found that SW Loan was the holder/owner of the limited guaranty agreements executed by Duarte-Viera, Pardo, and Reiss. However,.,in response to a question asking if 1946 Property had failed to comply with the promissory note, the jury answered, “No.” The jury did not reach the remaining questions on SW Loan’s claims, including questions about whether each of the defendants had complied with the terms of the guaranty agreements and the amount of damages. The jury did answer questions about the reasonable and necessary attorney fees for the defendants’ attorneys. The jury found that $7825.00 was a reasonable fee for the necessary services of the defendants’ attorneys in the trial court; that $7500.00 was a reasonable fee for representation in an appeal to the court of appeals; and $10,000.00 was a reasonable fee for representation in the Texas Supreme Court.

SW Loan moved to disregard the jury’s findings, but the trial court denied the motion. The trial court rendered judgment that SW Loan take nothing on its claims for breach of the guaranty agreements. Additionally, the trial court rendered judgment in favor of Duarte-Viera, Pardo, and Reiss on one of its declaratory judgment counterclaims, concluding that the limited guaranty agreements in this case “guaranteed principal and interest only up to $2,500,000.00; no other amounts such as taxes, environmental and/or appraisal costs, were guaranteed by the Defendants.”

Consistent with the jury’s findings, the trial court awarded Duarte-Viera, Pardo, and Reiss attorney fees in the amount of $7,825.00 for representation at the trial court level, $7,500.00 for representation through appeal to the court of appeals; and $10,000,000 for representation in the Texas Supreme Court. SW Loan appealed.

Sufficiency of the Evidence

In its first issue, SW Loan argues the evidence was legally and factually insufficient to support the jury’s finding against it concerning 1946 Property’s failure to comply with the promissory note. SW Loan argues the trial evidence conclusively established that 1946 Property defaulted on the promissory note and failed to repay its loan from Stillwater National Bank.

Breach of the Guaranty Agreements

A guaranty is a promise to a creditor by a third party to pay a debt on [701]*701behalf of another in the event the primary obligor fails to perform. Republic Natl Bank of Dallas v. Nw. Nat’l Bank of Fort Worth, 578 S.W.2d 109, 114 (Tex.1978). To recover under a guaranty contract, a party must show (1) the existence and ownership of the guaranty contract, (2) the terms of the underlying contract by the holder, (8) the occurrence of the conditions upon which liability is based, and (4) the guarantor’s failure or refusal to perform on the promise. Lee v. Martin Marietta Materials Sw., Ltd., 141 S.W.3d 719, 720-21 (Tex.App.-San Antonio 2004, no pet.).

Here, as the plaintiff, SW Loan had the burden to establish each and every element of its claims. See id.

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Bluebook (online)
487 S.W.3d 697, 2016 Tex. App. LEXIS 1534, 2016 WL 625399, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sw-loan-a-lp-v-duarte-viera-texapp-2016.