Branch Banking And Trust Company v. Lexiam Enterprises Llc et al

MOTION for Summary Judgment

N.D. Tex.July 15, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION BRANCH BANKING AND § TRUST COMPANY, § § Plaintiff, § § v. § Civil Action No. 3:15-cv-02928-M § LEXIAM ENTERPRISES, LLC, § CHRISTOPHER CLAASSEN, and § TANZEEN CLAASSEN, § § Defendants. § PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND BRIEF IN SUPPORT Respectfully submitted, KANE RUSSELL COLEMAN & LOGAN PC By: s/ Steven J. Kubik Kenneth C. Johnston State Bar No. 00792608 kjohnston@krcl.com David M. Clem State Bar No. 24050428 dclem@krcl.com Steven J. Kubik State Bar No. 24086121 skubik@krcl.com 3700 Thanksgiving Tower 1601 Elm Street Dallas, Texas 75201 Telephone: (214) 777-4200 Facsimile: (214) 777-4299 Attorneys for Defendant, Branch Banking and Trust Company Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 1 of 17 PageID 86 -i- TABLE OF CONTENTS TABLE OF AUTHORITIES ......................................................................................................................... ii I. Introduction .......................................................................................................................................... 1 II. Summary Judgment Evidence ............................................................................................................ 1 III. Undisputed Facts .................................................................................................................................. 2 IV. Arguments & Authority ...................................................................................................................... 3 A. Summary Judgment Standard of Review ............................................................................ 3 B. BB&T is entitled to summary judgment on its affirmative claims. ................................. 4 1. Borrower breached the Note. ................................................................................. 4 2. Guarantors breached the Guaranties. .................................................................... 5 3. BB&T incurred damages resulting from Defendants’ breaches. ..................................................................................................................... 6 C. Defendants’ defenses fail as a matter of law and under the express terms of the Loan Documents. ............................................................................................ 6 1. Defendants’ lack of standing defense fails because BB&T is the current holder of the Loan Documents. ......................................................... 7 2. Defendants’ lack of acceleration defense fails because BB&T has no obligation to accelerate under the Loan Documents. ............................. 7 3. Defendants’ mitigation of damages defense fails because it is waived by the Loan Documents. ............................................................................ 9 D. BB&T is entitled to its attorneys’ fees under the Loan Documents and Chapter 38 of the Texas Civil Practice and Remedies Code. ................................. 10 V. Prayer ................................................................................................................................................... 12 Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 2 of 17 PageID 87 -ii- TABLE OF AUTHORITIES Cases Atkinson Gas Co. v. Albrecht, 878 S.W.2d 2360 (Tex.App.-Corpus Christi 1994, writ denied) ................................................. 9 Atlantic Richfield Co. v. Long Trusts, 860 S.W.2d 439 (Tex. App.-Texarkana 1993, writ denied) ....................................................... 11 Austin v. Countrywide Homes Loans, 261 S.W.3d 68 (Tex. App.-Houston [1st Dist.] 2008, pet. denied) ....................................... 4, 7 Byrd v. Estate of Nelms, 154 S.W.3d 149 (Tex. App.-Waco 2004, pet. denied) .................................................................. 5 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) .............................................................................................................................. 3 Commercial Serv. of Perry, Inc. v. Wooldridge, 968 S.W.2d 560 (Tex.App.-Fort Worth 1998, no pet.) ................................................................ 7 Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451 (1992) ......................................................................................................................... 3, 4 First Interstate Bank of Arizona, 924 F.2d at 595 (5th Cir.1991) ............................................................................................................ 8 Forney 921 Lot Dev. Partners I, L.P. v. Paul Taylor Homes, Ltd., 349 S.W.3d 258 (Tex. App.-Dallas 2011, pet. denied) ................................................................. 9 Garner v. Corpus Christi Nat’l Bank, 944 S.W.2d 469 (Tex. App.-Corpus Christi 1997, writ denied) .................................................. 5 Home Furnishings, Inc. v. JPMorgan Chase Bank, NA, 07-10-00012-CV, 2011 WL 2535338 (Tex. App.-Amarillo June 24, 2011, pet. denied) ......... 8 In re Heritage Org., L.L.C., 354 B.R. 407 (Bankr. N.D. Tex. 2006) .............................................................................................. 8 Little v. Liquid Air Corp., 37 F.3d 1069 (5th Cir. 1994) ............................................................................................................... 3 Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857 (Tex. 2000) .................................................................................................................. 9 Maluski v. U.S. Bank, N.A., 349 Fed. App’x 971 (5th Cir. 2009), .................................................................................................. 7 Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 3 of 17 PageID 88 -iii- McDaniel v. IntegraCare Holdings, Inc., 901 F.Supp.2d 863 (N.D. Tex. 2012) ................................................................................................ 7 Resolution Trust Corp. v. Starkey, 41 F.3d 1018 (5th Cir. 1995) ............................................................................................................... 3 Schauer v. Von Schauer, 138 S.W. 145 (Tex. App.-Austin 1911, writ ref'd) ........................................................................ 9 Simmons v. Compania Financiera Libano, S.A., 830 S.W.2d 789 (Tex. App.-Houston [1st Dist.] 1992, writ denied).......................................... 5 Steubner Realty 19, Ltd. v. Cravens Rd. 88, Ltd., 817 S.W.2d 160 (Tex. App.-Houston [14th Dist.] 1991, no writ) .............................................. 9 T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218 (Tex. 1992) ................................................................................................................ 8 Word Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662 (Tex. App.-Fort Worth 1998, pet. denied) ...................................................... 11 Statutes TEX. CIV. PRAC. & REM. CODE § 38.001(8) ................................................................................................. 11 Rules FED. R. CIV. P. 1 ................................................................................................................................................. 3 FED. R. CIV. P. 56(a) .......................................................................................................................................... 3 Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 4 of 17 PageID 89 -1- PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Pursuant to Federal Rule of Civil Procedure 56, Branch Banking and Trust Company (“BB&T”), moves for summary judgment on its claims against Lexiam Enterprises, LLC, Christopher Claassen, and Tanzeen Claassen, and in support thereof shows the following: I. INTRODUCTION This is a breach of contract case arising from a promissory note and personal guaranties. Lexiam Enterprises, LLC (“Borrower”) executed a promissory note and Christopher Claassen and Tanzeen Claassen (together, “Guarantors”) executed absolute and continuing guaranties. BB&T owns and holds both the note and the guaranties via assignment from Citibank, N.A. Borrower and Guarantors have failed to repay the indebtedness owed under the loan documents, and have admitted liability for their breach. Defendants properly pleaded only one affirmative defense, lack of standing, which fails because BB&T is the current holder of the loan documents. Defendants’ remaining defenses fail because they are waived by the express terms of the loan documents. BB&T moves for summary judgment against Borrower and Guarantors to recover the entire indebtedness due. BB&T also seeks to recover its attorneys’ fees as provided by the loan documents. II. SUMMARY JUDGMENT EVIDENCE BB&T incorporates the following exhibits by reference, filed contemporaneously herewith in an Appendix in Support of Plaintiff’s Motion for Summary Judgment: Exhibit 1 ................... The Note (November 15, 2011) [App. 0001] Exhibit 2 ................... The Guaranties (November 15, 2011) [App. 0005] Exhibit 3 ................... Allonge and Assignment of Loan Documents (March 20, 2015) [App. 0012] Exhibit 4 ................... Affidavit of Deborah Cox [App. 0016] Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 5 of 17 PageID 90 -2- Exhibit 5 ................... Affidavit of David M. Clem [App. 0020] Exhibit 5-A ............... Notice of Default (July 8, 2015) [App. 0026] Exhibit 5-B ............... Redacted Professional Fee Invoices [App. 0030] Exhibit 5-C ............... Defendants’ Responses to BB&T’s Discovery Requests [App. 0095] Exhibit 5-D ............... BB&T’s Requests for Admission to Defendants [App. 0105] Exhibit 5-E ............... BB&T’s Requests for Production to Defendants [App. 0112] Exhibit 6 ................... Interest Statement (December 2015) [App. 0119] III. UNDISPUTED FACTS Borrower executed a promissory note in favor of Citibank, N.A. dated November 15, 2011, in the original principal amount of $390,000 (the “Note”).1 In connection with the Note, Guarantors executed separate personal guaranties, which guarantee all indebtedness, obligations and liabilities owed by Borrower under the Note, including principal, interest, late fees, costs, and attorneys’ fees (the “Guaranties,” together with the Note, the “Loan Documents”).2 Effective March 20, 2015, Citibank, N.A. assigned its interest in the Note and Guaranties to BB&T by executing both an “Allonge” and “Assignment of Loan Documents” on March 19, 2015.3 Borrower defaulted on the Note by, among other things, failing to pay the indebtedness when due.4 On July 8, 2015, BB&T served a “Notice of Default and Intent to Accelerate” on Borrower and Guarantors demanding full payment of the indebtedness due under the Loan 1 Defendants’ Answer, at 1, (Doc. No. 7) (admitting the same and that Exhibit 1 is a true and correct copy of the Note); see Ex. 1, App. 0004; Ex. 4, App. 0017-18; Ex. 5-C, App. 0097 (admitting that the signatures on page 3 of the Note are authentic reproductions of the Guarantors’ signatures, and that the Guarantors signed the Note on behalf of Borrower). 2 Defendants’ Answer, at 1 (admitting the same and that Exhibit 2 is a true and correct copy of the Guaranties); see Ex. 2, App. 0008, 0011; Ex. 4, App. 0017-18; Ex. 5-C, App. 0098 (admitting that the signatures on page 3 of both Guaranties are authentic reproductions of Guarantors’ signatures). 3 Ex. 3, App. 0013, 0015; Ex. 4, App. 0018. 4 Ex. 4, App. 0018. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 6 of 17 PageID 91 -3- Documents.5 Despite written notice provided to both Borrower and Guarantors, Borrower and Guarantors failed to pay the indebtedness.6 Borrower and Guarantors have admitted their default under the Loan Documents.7 As of July 8, 2016, a balance of $322,439.18 remains due and owing under the Loan Documents, excluding attorneys’ fees.8 IV. ARGUMENTS & AUTHORITY A. Summary Judgment Standard of Review Rule 56(c) of the Federal Rules of Civil Procedure mandates summary judgment when there are no genuine issues of material fact and the movant is entitled to a judgment as a matter of law.9 Plaintiff, as the moving party, is entitled to summary judgment when there is no genuine issue of material fact regarding any issue on which Plaintiff has the burden of proof.10 Cases involving promissory notes are ideal for disposition at summary judgment.11 Once a motion for summary judgment has been made, the nonmoving party may not rest upon mere allegations or denials in the pleadings, but must present affirmative evidence, setting forth specific facts, to show the existence of a genuine issue for trial.12 Only reasonable inferences may be drawn from the nonmoving party’s evidence.13 The non-movant’s burden is not satisfied by some metaphysical doubt as to materials facts, conclusory allegations, unsubstantiated assertions, 5 Defendants’ Answer, at 2 (admitting the same); Ex. 5-A, App. 27. 6 Defendants’ Answer, at 2 (admitting the same); Ex. 4, App. 0018. 7 Defendants’ Answer, at 1-2 (admitting the same); Joint Report Regarding Contents of Scheduling Order, at 1 (Doc. No. 12) (“Defendants admit that they are in breach of the promissory note and guarantees . . . .”). 8 Ex. 4, App. 0019. 9 FED. R. CIV. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary judgment should not be viewed as a procedural shortcut, “but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy and inexpensive determination of every action.’ ” Id. at 327 (quoting FED. R. CIV. P. 1). 10 Id. at 323. 11 See Resolution Trust Corp. v. Starkey, 41 F.3d 1018, 1023 (5th Cir. 1995). 12 Id. at 322-23. 13 Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451, 469 n.14 (1992). Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 7 of 17 PageID 92 -4- speculation, the mere existence of some alleged factual dispute, or only a scintilla of evidence.14 If the nonmoving party’s theory is senseless, no reasonable jury could find in its favor, and summary judgment should be granted.15 B. BB&T is entitled to summary judgment on its affirmative claims. 1. Borrower breached the Note. To recover for a debt on a promissory note in Texas,16 a party must establish that (a) it is the legal holder of the note, (b) the debtor executed the note, and (c) an outstanding balance is due and owing.17 Sworn testimony of qualified corporate representatives sufficiently establishes the elements of the claim.18 Borrower executed the Note on November 15, 2011.19 BB&T is the legal holder and owner of the Loan Documents pursuant to the terms of the Allonge and Assignment of Loan Documents executed by Citibank, N.A.20 Borrower defaulted by failing to pay the indebtedness when due,21 and has admitted to this default.22 The total outstanding balance owing under the Note, excluding attorneys’ fees, is $322,439.18 as of July 8, 2016.23 14 Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). 15 Eastman Kodak Co., 504 U.S. at 468-69. 16 The Loan Documents provide that Texas law applies. Ex. 1, § 10, App. 0003; Ex. 2, § 10, App. 0008, 0011. 17 Austin v. Countrywide Homes Loans, 261 S.W.3d 68, 72 (Tex. App.-Houston [1st Dist.] 2008, pet. denied). 18 See id. at 72-73. 19 Defendants’ Answer, at 1, (Doc. No. 7) (admitting the same and that Exhibit 1 is a true and correct copy of the Note); see Ex. 1, App. 0004; Ex. 4, App. 0017-18; Ex. 5-C, App. 0097 (admitting that the signatures on page 3 of the Note are authentic reproductions of the Guarantors’ signatures, and that the Guarantors signed the Note on behalf of Borrower). 20 Ex. 4, App. 0018; see Ex. 3, App. 0013, 0015. 21 Ex. 4, App. 0018. The Note provides that Borrower is in default when it “[f]ails to do anything required by the Note and other Loan Documents.” See Ex. 1, App. 0003. When an event of default occurs, BB&T may “[c]ollect all amounts owing from any Borrower or Guarantor,” and “file suit and obtain judgment.” Id. 22 Defendants’ Answer, at 1-2 (admitting the same); Joint Report Regarding Contents of Scheduling Order, at 1 (Doc. No. 12) (“Defendants admit that they are in breach of the promissory note and guarantees . . . .”). 23 Ex. 4, App. 0019. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 8 of 17 PageID 93 -5- 2. Guarantors breached the Guaranties. A guaranty agreement is a person’s promise to perform the same act that another person is contractually bound to perform.24 A guaranty creates a secondary obligation under which the guarantor promises to answer for the debt of the primary obligor if the primary obligor fails to perform.25 To succeed in a breach of guaranty claim, the plaintiff must show: (a) the existence and ownership of the guaranty agreement; (b) the terms of the underlying contract by the holder, (c) the occurrence of the conditions upon which liability is based, and (d) the failure or the refusal to perform the promise by the guarantor.26 Guarantors executed the Guaranties on November 15, 2011, in connection with the Note.27 Both Guaranties provide, in relevant part: Guarantor unconditionally guarantees payment to Lender of all amounts owing under the Note. This Guarantee remains in effect until the Note is paid in full. Guarantor must pay all amounts due under the Note when Lender makes written demand upon Guarantor. Lender is not required to seek payment from any other source before demanding payment from Guarantor.28 BB&T performed its obligations and duties under the Loan Documents.29 BB&T notified Guarantors of Borrower’s default in writing on July 8, 2015, and demanded payment of the entire indebtedness.30 Guarantors failed to make the required payments under the Guaranties and breached their contractual obligations.31 Guarantors have also admitted that they are liable for the debt 24 See Simmons v. Compania Financiera Libano, S.A., 830 S.W.2d 789, 792 (Tex. App.-Houston [1st Dist.] 1992, writ denied). 25 Garner v. Corpus Christi Nat’l Bank, 944 S.W.2d 469, 475 (Tex. App.-Corpus Christi 1997, writ denied). 26 Byrd v. Estate of Nelms, 154 S.W.3d 149, 157 (Tex. App.-Waco 2004, pet. denied). 27 Defendants’ Answer, at 1 (admitting the same and that Exhibit 2 is a true and correct copy of the Guaranties); see Ex. 2, App. 0008, 0011; Ex. 4, App. 0017-18; Ex. 5-C, App. 0098 (admitting that the signatures on page 3 of both Guaranties are authentic reproductions of Guarantors’ signatures). 28 Ex. 2, App. 0006, 0009. 29 Ex. 4, App. 0018. 30 Ex. 4, App. 0018; Ex. 5, App. 0023; Ex. 5-A, App. 0027. 31 Ex. 4, App. 0018. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 9 of 17 PageID 94 -6- evidenced by the Loan Documents, and that they failed to make the payments required by the Guaranties.32 3. BB&T incurred damages resulting from Defendants’ breaches. Due to Borrower’s default on the Loan Documents and Guarantors’ failure to perform under the Guaranties, BB&T suffered damages. BB&T is entitled to recover the unpaid principal balance, as well as interest, costs, and fees.33 As of July 8, 2016, the total amount due under the Loan Documents, excluding attorneys’ fees but after all other just offsets and credits, is $322,439.18.34 This figure consists of: Note Principal: $ 295,565.14 Note Interest: 24,038.68 Recoverable Fees: 2,835.36 Total: $ 322,439.18 (Ex. 4, App. 0019) The amount due under the Note increases at the rate of $47.21 per day (the per diem).35 C. Defendants’ defenses fail as a matter of law and under the express terms of the Loan Documents. Defendants have properly pleaded only one affirmative defense, lack of standing. This defense fails because BB&T is the owner and holder of the Loan Documents. While not properly pleaded under Rule 8(c), Defendants’ have alluded to two additional defenses, alleging (i) that BB&T failed to accelerate the debt and (ii) that BB&T failed to mitigate its damages. These defenses fail because they are waived by the express terms of the loan documents. 32 Defendants’ Answer, at 1-2 (admitting the same); Joint Report Regarding Contents of Scheduling Order, at 1 (Doc. No. 12) (“Defendants admit that they are in breach of the promissory note and guarantees . . . .”). 33 Ex. 1, App. 0003; Ex. 2, App. 0006-0011; Ex. 3, App. 0013-15; Ex. 4, App. 0018-19. 34 Ex. 4, App. 0019. 35 Id. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 10 of 17 PageID 95 -7- 1. Defendants’ lack of standing defense fails because BB&T is the current holder of the Loan Documents. Defendants allege that BB&T “lacks standing to assert the claims asserted in its complaint because it was not party to the loan documents.”36 But the assignee of a party’s interest in a promissory note has standing to sue on the note.37 BB&T does not need to be an original party to enforce the Loan Documents because it is the current holder of the Loan Documents.38 2. Defendants’ lack of acceleration defense fails because BB&T has no obligation to accelerate under the Loan Documents. In their Answer, Defendants allude to a lack of acceleration or failure of conditions precedent defense.39 Specifically, Defendants deny “that the debt is actually accelerated,” stating that “Plaintiff has sent Defendants other communications stating a lesser amount due or delinquent.”40 The communication supposedly stating “a lesser amount due” is an interest statement BB&T sent to Borrower in December 2015, attached hereto as Exhibit 6 (the “Interest Statement”).41 However, the Interest Statement does not state that a lesser amount is due, and the Loan Documents do not require BB&T to accelerate the debt. First, the Interest Statement is an automatically generated document that BB&T sends to customers to assist them in preparing tax returns.42 In November 2015, BB&T charged off the book 36 Defendants’ Answer, at 3. 37 Maluski v. U.S. Bank, N.A., 349 Fed. App’x 971 (5th Cir. 2009), per curiam (The summary judgment evidence, documenting the assignment of the note from the original lender, “was sufficient to establish [plaintiff’s] standing.”). 38 To recover for a debt due and owing under a promissory note, a party must establish that it is the legal holder of an existing note, the debtor's execution of the note, and that an outstanding balance is due and owing. Commercial Serv. of Perry, Inc. v. Wooldridge, 968 S.W.2d 560, 564 (Tex.App.-Fort Worth 1998, no pet.); Austin v. Countrywide Homes Loans, 261 S.W.3d 68, 72 (Tex. App.-Houston [1st Dist.] 2008, pet. denied). 39 Notably, Defendants did not properly plead this defense under Federal Rule of Civil Procedure 8(c), which requires a party must, when responding to a pleading, “affirmatively state any avoidance or affirmative defense.” Failure to plead an affirmative defense may result in waiver. See McDaniel v. IntegraCare Holdings, Inc., 901 F.Supp.2d 863, 868 (N.D. Tex. 2012). 40 Defendants’ Answer, ¶ 12. 41 See Ex. 6, App. 0120; Ex. 5-C, App. 0102 (referencing Ex. 6 in response to BB&T’s request to produce documents supporting this contention). 42 Ex. 4, App. 0018. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 11 of 17 PageID 96 -8- balance of the Note-not the outstanding legal balance.43 As a result, the Interest Statement reflects a zero “Prin Balance,” but this does not reflect the outstanding amount owed to BB&T.44 Indeed, Defendants’ proposed interpretation of the Interest Statement is senseless in light of their repeated admissions of liability and BB&T’s demand letter sent in July 2015.45 In addition, Defendants waived46 a lack of acceleration defense as a matter of law.47 The Note provides that “[w]ithout notice or demand and without giving up any of its rights, [BB&T] may . . . [c]ollect all amounts owing from any Borrower or Guarantor [and] [f]ile suit and obtain judgment.”48 Borrower also “waive[d] all demands and notices in connection with th[e] Note.”49 Likewise, by signing the Guaranties, Guarantors “waive[d] any notice of . . . any action or inaction on the Note or Collateral, such as . . . acceleration [and] intent to accelerate.”50 Because acceleration is not a condition precedent to enforcing the Loan Documents, Defendants waived such a defense. Similarly, any lack of acceleration defense is barred by Texas’ quasi-estoppel doctrine. Quasi- estoppel is a long-standing doctrine applied to preclude contradictory positions: it precludes a 43 Id. 44 Id. 45 Ex. 5-A, App. 0027. 46 Under Texas law, “the elements of waiver are: (1) an existing right, benefit, or advantage; (2) knowledge, actual or constructive, of its existence; and (3) actual intent to relinquish the right, which can be inferred from conduct.” First Interstate Bank of Arizona, 924 F.2d at 595 (5th Cir.1991). Intent may be established by words which “manifest an unequivocal intention to no longer assert the right.” Id. 47 Courts regularly find that loan parties’ waived claims or defenses in promissory notes and guaranties governed by Texas law. See In re Heritage Org., L.L.C., 354 B.R. 407, 435-36 (Bankr. N.D. Tex. 2006) (“The language of this clause in the Note clearly establishes an unequivocal renunciation of the co-makers' right to raise any defenses. Therefore, the Court finds that the Note contains a valid waiver provision as a matter of law.”); Home Furnishings, Inc. v. JPMorgan Chase Bank, NA, 07-10-00012-CV, 2011 WL 2535338 (Tex. App.-Amarillo June 24, 2011, pet. denied) (“[A] party to a loan can contractually waive claims and defenses . . . [Defendant] did, expressly, waive the impairment or loss of collateral claim in the guaranty agreement they entered into.”); see also T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 223 (Tex. 1992) (“The Bank argues that the guarantors waived any defense of impairment of collateral in their guaranty agreements. Each guaranty expressly waived the defense. The parties to a guaranty may normally waive such a defense.”). 48 Ex. 1, § 5, App. 0003. 49 Id. § 9(G). 50 Ex. 2, § 6(B), App. 0007, 0010. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 12 of 17 PageID 97 -9- person from asserting, to another's disadvantage, a right inconsistent with a position previously taken.51 The doctrine applies when it would be unconscionable to allow a person to maintain a position inconsistent with one in which he acquiesced.52 Here, Defendants undeniably accepted a benefit when they entered into the Loan Documents and Borrower received a loan. Defendants present position-that BB&T failed to accelerate the debt-is inconsistent with their previous representations in the Loan Documents. BB&T would be disadvantaged by, at a minimum, increased litigation costs if Defendants are permitted to pursue such a defense. Accordingly, the doctrine of quasi-estoppel bars this defense. 3. Defendants’ mitigation of damages defense fails because it is waived by the Loan Documents. Although not in any pleading in violation of Rule 8(c), Defendants also allege that BB&T failed to mitigate its damages in response to a request for admission: Request 10: Admit or deny that BB&T performed its obligations under the Loan Documents. Answer: Denied. BB&T failed to take commercially reasonable steps to secure the collateral and to mitigate the damages . . . BB&T took no action to secure the collateral and mitigate damages.53 Contrary to Defendants’ allegation, BB&T had no contractual obligation to take possession of the collateral before exercising any other remedy. 51 Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000); see Schauer v. Von Schauer, 138 S.W. 145, 149- 50 (Tex. App.-Austin 1911, writ ref'd) (“Where a person has, with knowledge of the facts, acted or conducted himself in a particular manner, or asserted a particular claim, title, or right, he cannot afterwards assume a position inconsistent with such act, claim or conduct to the prejudice of another.”); Forney 921 Lot Dev. Partners I, L.P. v. Paul Taylor Homes, Ltd., 349 S.W.3d 258, 268 (Tex. App.-Dallas 2011, pet. denied) (barring an affirmative defense under the doctrine of quasi-estoppel based on representations in a contract). 52 Lopez, 22 S.W.3d at 864; Atkinson Gas Co. v. Albrecht, 878 S.W.2d 236, 240 (Tex. App.-Corpus Christi 1994, writ denied); Vessels v. Anschutz Corp., 823 S.W.2d 762, 765-66 (Tex. App.-Texarkana 1992, writ denied). Unlike equitable estoppel, quasi-estoppel does not require a showing of a false representation or detrimental reliance. Steubner Realty 19, Ltd. v. Cravens Rd. 88, Ltd., 817 S.W.2d 160, 164 (Tex. App.-Houston [14th Dist.] 1991, no writ). 53 Ex. 5-C, App. 0098. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 13 of 17 PageID 98 -10- By executing the Note, Borrower agreed that “Lender may exercise any of its rights separately or together . . . and may delay or forgo enforcing any of its rights [including taking possession of collateral] without giving up any of them [including filing suit and obtaining a judgment].”54 Borrower also “waive[d] any defenses based upon any claim that the Lender . . . impaired Collateral; or did not obtain the fair market value of Collateral at a sale.”55 Guarantors likewise agreed that “[BB&T] has no duty to preserve or dispose of any Collateral,”56 and “waive[d] defenses based upon any claim that [BB&T] impaired the Collateral . . . did not dispose of any of the Collateral . . . [or] did not obtain fair market value of the Collateral.”57 This Court should enforce the plain language of the Loan Documents, which waive such a defense.58 The doctrine of quasi-estoppel also bars such a defense under Texas law.59 Defendants’ present position-that BB&T should have taken possession of the collateral before filing suit-is inconsistent with their previous representations in the Loan Documents. BB&T would necessarily be disadvantaged by, at a minimum, increased litigation costs, should this Court permit such a defense. Accordingly, this defense fails as a matter of law. D. BB&T is entitled to its attorneys’ fees under the Loan Documents and Chapter 38 of the Texas Civil Practice and Remedies Code. The Loan Documents entitle BB&T to recover attorneys’ fees related to the prosecution of this action. In the Note, Borrower agreed that “[BB&T] may . . . [i]ncur expenses to collect amounts due under this Note [including] . . . reasonable attorneys’ fees and costs. If [BB&T] incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal 54 Ex. 1, at § 9(D), App. 0003; see also id. § 5 (defining lenders’ rights upon default). 55 Id. § 9(G). 56 Ex. 2 § 7, App. 0007, 10. 57 Id. § 6(C). 58 See supra notes 46-47. 59 See supra notes 51-52 and accompanying text (discussing Texas’ quasi-estoppel doctrine). Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 14 of 17 PageID 99 -11- balance.”60 In the Guaranties, Guarantors agreed to “pay all expenses Lender incurs to enforce [the Guaranties], including, but not limited to, attorney’s fees and costs.”61 Section 38.001 of the Texas Civil Practice & Remedies Code also provides an independent basis for an award of attorneys’ fees where, as here, the claim involves the breach of a written contract.62 An award of attorneys’ fees to the prevailing party in a breach of contract case is mandatory under section 38.001 if there is proof of the reasonableness of the fees.63 As a result of Defendants’ failure to comply with the terms of the Loan Documents, BB&T was compelled to employ the undersigned law firm to pursue this action.64 In prosecuting this matter, BB&T has incurred $32,095.72 in total attorneys’ fees and expenses through the filing of this Motion.65 The attached Affidavit of David M. Clem, and the incorporated professional fee invoices, provide more detail regarding the attorneys’ fees and costs incurred by BB&T.66 BB&T estimates it will incur an additional $2,500.00 in attorneys’ fees to reply to Borrower’s response to this motion and to participate in the hearing of this motion.67 BB&T expects to incur an additional $2,500.00 in reasonable attorneys’ fees for responding to a motion for new trial, $10,000.00 in reasonable attorneys’ fees for appeal to the Fifth Circuit Court of Appeals, an additional $5,000.00 in the event of an appeal to the Supreme Court, and an additional $10,000 would be necessary should the writ of certiorari be granted.68 60 Ex. 1, § 6, App. 0003. 61 Ex. 2, § 9(A), App. 0007, 10. 62 TEX. CIV. PRAC. & REM. CODE § 38.001(8). 63 Word Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 683 (Tex. App.-Fort Worth 1998, pet. denied), citing Atlantic Richfield Co. v. Long Trusts, 860 S.W.2d 439, 449 (Tex. App.-Texarkana 1993, writ denied). 64 Ex. 4, App. 0019. 65 Ex. 5, App. 0022. 66 Ex. 5, App. 0021-25; Ex. 5-B, App. 0031-94. 67 Ex. 5, App. 0025. 68 Id. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 15 of 17 PageID 100 -12- V. PRAYER For these reasons, Plaintiff Branch Banking and Trust Company asks that the Court grant summary judgment, jointly and severally, against Lexiam Enterprises, LLC, Christopher Claassen, and Tanzeen Claassen as follows: (1) Actual damages and prejudgment interest in the amount of $322,439.18 plus a per diem of $47.21 running from July 8, 2016, until the date of judgment; (2) Post-judgment interest thereon from the date of judgment until paid at the per- diem rate under the note at $47.21 per day; (3) Attorneys’ fees and expenses in the amount of $32,095.72 through the filing of this motion; (4) Additional attorneys’ fees and expenses in the amount of $2,500 to reply to Defendants’ response and to participate in a hearing on this motion; (5) Costs of Court; and (6) Conditional awards of attorneys’ fees as follows: a. $2,500 in reasonable attorneys’ fees for responding to a motion for new trial, b. $10,000 in reasonable attorneys’ fees for appeal to the Fifth Circuit Court of Appeals; c. $5,000 in the event of an appeal to the Supreme Court; and d. $10,000 in the event the writ of certiorari is granted. Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 16 of 17 PageID 101 -13- Respectfully submitted, KANE RUSSELL COLEMAN & LOGAN PC By: s/ Steven J. Kubik Kenneth C. Johnston State Bar No. 00792608 kjohnston@krcl.com David M. Clem State Bar No. 24050428 dclem@krcl.com Steven J. Kubik State Bar No. 24086121 skubik@krcl.com 3700 Thanksgiving Tower 1601 Elm Street Dallas, Texas 75201 Telephone: (214) 777-4200 Facsimile: (214) 777-4299 Attorneys for Defendant, Branch Banking and Trust Company Certificate of Service I hereby certify that a true and correct copy of the foregoing document has been forwarded to all known counsel of record in this cause in accordance with the Federal Rules of Civil Procedure on July 15, 2016. s/ Steven J. Kubik Steven J. Kubik Case 3:15-cv-02928-M Document 18 Filed 07/15/16 Page 17 of 17 PageID 102