the Cadle Company v. Mark T. Davis and Alamo Title Company

Court of Appeals of Texas·Decided December 29, 2010·No. 04-09-00763-CV·Published

Opinion

MEMORANDUM OPINION

No. 04-09-00763-CV

THE CADLE COMPANY,

Appellant

v.

Mark T. DAVIS and Alamo Title Company, Appellees

From the 408th Judicial District Court, Bexar County, Texas Trial Court No. 2006-CI-05826 Honorable Larry Noll, Judge Presiding

Opinion by: Steven C. Hilbig, Justice

Sitting: Catherine Stone, Chief Justice Sandee Bryan Marion, Justice Steven C. Hilbig, Justice

Delivered and Filed: December 29, 2010 REVERSED AND REMANDED The Cadle Company appeals the judgment awarding Mark T. Davis damages and attorney’s fees on his breach of contract claim. We reverse the judgment and remand Davis’s breach of contract and wrongful garnishment claims to the trial court.

BACKGROUND

Mark Davis borrowed money from San Antonio Savings Association and secured the loan with a first mortgage on property he owned in Comal County. Cadle obtained the

indebtedness through a series of transactions. In 1993, Cadle brought suit to convert the loan into a judgment. Cadle and Davis entered into a consent judgment in the amount of $45,167.74, and Cadle obtained a lien on the Comal County property. At some point, the Internal Revenue Service (“IRS”) also placed a lien on the Comal County property. Davis testified that over the course of four years following the entry of the consent judgment Cadle regularly contacted him to inquire about non-exempt property and ask for payments to satisfy the consent judgment. Davis testified he gave a non-stenographic deposition regarding his assets in 1994.

In 1997, Pete Barta, a representative of Cadle, began discussions with Davis about selling the Comal County property. Davis claims that Barta offered to settle and release all claims relating to the consent judgment if Davis resolved the tax lien issue, sold the property, and gave Cadle the proceeds remaining after paying the IRS. Davis testified Barta said “if you can sell it [the property], I will work out a deal with the IRS and we will get all of this behind us and be through with it.” However, Barta testified he told Davis that if he could persuade the IRS to accept a small portion of the proceeds of the sale in order to release its lien, Cadle would likewise agree to release its deed of trust in exchange for a portion of the proceeds. Barta testified he never agreed to release the consent judgment. A buyer for the property was found and Davis contacted the IRS to negotiate a release of the tax lien. The IRS agreed to release the lien for a portion of the sale proceeds. After the IRS was paid, Cadle received $7,500 from the sale.

In the present litigation, Davis asserts the 1997 sale and agreement satisfied the consent judgment. Davis contends numerous documents demonstrate that Cadle agreed to not only release the lien but also the judgment when Cadle received a portion of the proceeds on the property sale. Cadle, on the other hand, contends the payment of the $7,500 was for release of

the lien only, and it did not forgive the entire debt. Among other evidence, Cadle refers to Barta’s testimony that the agreement was only to release the lien, as demonstrated by the Release of Deed of Trust executed by Cadle.

Both parties agree that from 1997 until 2003, Cadle took no action to collect on the consent judgment. Davis testified that in September 2003, a Bexar County deputy sheriff left a card at his mother’s residence. Davis stated he called the deputy, who told him he had a document directing the sheriff to collect on the Cadle judgment. Davis testified he told the deputy he had no non-exempt property, and the deputy took no further action.

Davis testified that approximately two months later Ted Lance, another Cadle representative, contacted him regarding the judgment. Davis said he told Lance the judgment was settled in 1997, but Lance insisted it was not. Davis testified Lance warned him that if he did not pay the judgment, Cadle would seize the money in Davis’s IBC bank account. Davis sent Cadle financial information showing he had no assets. Davis testified he received harassing phone calls from Cadle and he decided to make a good faith payment and consult a lawyer. Davis hired an attorney who sent several letters to Lance in March and April of 2004. Davis claims Lance and Cadle did not respond to the letters, but stopped harassing him.

In March 2006, Cadle garnished Davis’s IBC account. Davis learned of the garnishment when he attempted to withdraw money from the account on March 29, 2006. Davis contacted his attorney that day, who then tried to contact Cadle’s counsel to discuss the matter. On April 11, 2006, Davis filed an emergency motion to dissolve the writ of garnishment, which was heard the next day. The court granted the motion, dissolved the writ, and dismissed the garnishment suit with prejudice. Cadle appealed, and the order dissolving the writ of garnishment was affirmed by

this court. Cadle Co. v. Int’l Bank of Commerce, No. 04-06-00456-CV, 2007 WL 752260 (Tex. App.—San Antonio Mar. 14, 2007, pet. denied).

On April 12, 2006, Davis filed suit against Cadle for breach of contract, wrongful garnishment, and fraud. 1 Cadle counterclaimed, asserted affirmative defenses, and filed a third party action against Alamo Title 2 based on Davis’s assertion that he was misled by the closing document prepared by Alamo. Davis’s claims are based on Cadle’s efforts to collect on the consent judgment that Davis contends was satisfied in 1997.

In his pleadings, Davis alleged the ruling in the garnishment case collaterally estopped Cadle from asserting that the judgment was not satisfied. Cadle disputed the application of collateral estoppel and asked the court to rule on the issue pretrial. After hearing argument of counsel and reviewing various exhibits, the trial court ruled Cadle was collaterally estopped from asserting that the 1993 consent judgment had not been legally satisfied. Before opening statements, the trial court instructed the jury as follows:

Therefore, as you listen to the evidence in this case and consider the evidence in this matter, you are instructed to accept as a matter of law that the 1993 judgment of The Cadle Company versus Mark Davis has been satisfied. That issue is not a question for you to have to decide.

At the conclusion of Davis’s case, Cadle moved for a directed verdict on Davis’s claims for fraud and breach of contract. The motion was denied. After Cadle rested, Davis moved for directed verdict on two elements of the breach of contract claim—the existence of a contract and breach of the contract. Davis’s argument for the directed verdict was grounded on the trial court’s ruling on collateral estoppel. The trial court granted Davis’s motion and included the following instruction in the jury charge: “You are instructed that in 1997 there was an agreement

1 Davis plead other causes of action, but these were resolved by either a dismissal or a directed verdict and these orders are not challenged on appeal. 2 Alamo received a take nothing judgment and there are no issues on appeal related to it.

between Davis and Cadle to satisfy the 1993 Consent Judgment and that Cadle has breached that agreement.”

The jury returned a verdict in favor of Davis on his claims of wrongful garnishment, fraud, and breach of contract. Davis sought as damages for all three claims the attorney’s fees he incurred in 2004 and in the garnishment action, the money paid to Cadle in 2004, and bank service charges. Davis elected to recover on his contract claim, and the trial court rendered judgment, awarding damages in the amount of $273,926, which represents the actual damages ($20,642.00 for attorney’s fees in garnishment action and $85 for out-of-pocket), and attorney’s fees for preparation of the case through trial ($253,199.00).

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