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Martin v. PlainsCapital Bank

Court of Appeals of Texas, Fifth District, Dallas

April 26, 2017

WILLIAM MARTIN, Appellant
v.
PLAINSCAPITAL BANK, Appellee

         On Appeal from the 429th Judicial District Court Collin County, Texas Trial Court Cause No. 429-01773-2008

          Before Chief Justice Wright and Justices Bridges and Brown

          MEMORANDUM OPINION

          DAVID L. BRIDGES JUSTICE.

         PlainsCapital Bank's October 28, 2016 motion for rehearing is granted. We withdraw our opinion issued October 13, 2016, and vacate our judgment of that date. The following is now the opinion of the Court.

         William Martin appeals the trial court's judgment awarding PlainsCapital Bank $332, 927.27 in damages and $127, 558.24 in attorney's fees on PlainsCapital's counterclaim for damages resulting from Martin's default under residential construction loan documents.

         On original submission, this Court reversed the trial court's judgment and remanded to the trial court for further proceedings, holding: (1) the trial court erred in determining section 51.003 of the Texas Property Code did not apply to PlainsCapital's deficiency suit against Martin; (2) "fair market value, " for purposes of determining a deficiency under section 51.003, was the historic measure of fair market value: the price a property would bring when offered for sale by one who desired to sell, but was not obliged to sell, and was bought by one who desired to buy, but was under no necessity of buying; (3) neither evidence of the price a property sold for at foreclosure nor the actual future sale price constituted competent evidence of fair market value under section 51.003; (4) the evidence was therefore legally insufficient to support the trial court's damages award; and (5) remand to the trial court was necessary for a determination of fair market value, holding costs and sales expenses incurred by PlainsCapital, and attorney's fees.

         The Texas Supreme Court agreed that PlainsCapital's claim against Martin falls within the provisions of section 51.003. However, as to "fair market value" as used in section 51.003, the court reasoned as follows:

The Legislature used the phrase "fair market value" in § 51.003 without defining it, so we would ordinarily presume the common meaning of the term applies, as did the court of appeals. However, the statute enumerates categories of evidence and clearly specifies that they may be considered by trial courts in determining fair market value. Tex. Prop. Code § 51.003(b). For example, § 51.003(b)(5) specifies that a trial court, when calculating the fair market value as of the date of the foreclosure sale, may consider evidence of "the necessity and amount of any discount to be applied to the future sales price." This factor is forward looking, allowing the trial court to consider the price for which the lender eventually sells the property and to apply a discount, if appropriate, to determine a value as of the foreclosure sale date. It may seem odd to make the price for which the property sold after foreclosure an integral component of competent evidence of the property's fair market value on the foreclosure sale date, but that is clearly what the Legislature intended. If it were not, then the relevant part of § 51.003(b)(5) would be nonsensical because an unknown fair market value, which is the value being sought, cannot mathematically be determined by applying a discount to an unknown future sales price, nor could either a prospective buyer or the seller know what the future sales price will be in order to factor it into their decision to buy or sell, regardless of whether a discount factor is applied. And we do not attribute to the Legislature an intent to enact nonsensical statutes. See Tex. Gov't Code § 311.021(3) ("In enacting a statute, it is presumed that . . . a just and reasonable result is intended . . . ."); Hernandez v. Ebrom, 289 S.W.3d 316, 321 (Tex. 2009). Further, if we were to rule the future sales price competent evidence, but only upon a showing of comparable market conditions between the foreclosure sale and the future sale, we would be adding words to § 51.003. We refuse to do that in the absence of clear legislative intent to reach a different result from that reached by applying the plain language of the statute, or to prevent the statute from yielding an absurd or nonsensical result. See Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001). Therefore, the enumerated factors in § 51.003(b) will support a fair market value finding under the statute even though that type of evidence might not otherwise be competent in the common or historical fair market value construct. That being so, the term "fair market value" in § 51.003 does not equate precisely to the common, or historical, definition. Rather, it means the historical definition as modified by evidence § 51.003(b) authorizes the trial court to consider in its discretion, to the extent such evidence is not subsumed in the historical definition.

PlainsCapital Bank v. Martin, 459 S.W.3d 550, 556-57 (Tex. 2015).

         On the record in this case, the Texas Supreme Court concluded "the trial court did not abuse its discretion by calculating the property's fair market value using the $599, 000 future sales price, not applying a discount to reduce the price further, and deducting PlainsCapital's actual holding costs of $75, 376.41 and actual sales costs of $45, 907.04." Id. at 558. The court further concluded the evidence was legally sufficient to support the trial court's finding that the fair market value of the property on the date of the foreclosure sale for section 51.003 purposes was $477, 715.65. Id.

         On remand, we must determine (1) whether, if the issue was preserved for our review, the evidence was factually sufficient to support the trial court's fair market value determination; (2) whether the evidence was legally and factually sufficient to support the trial court's determination of PlainsCapital's holding and sales costs; and (3) whether, in light of our resolution of these issues, we should affirm the trial court's award of attorney's fees to PlainsCapital.

         As an initial matter, we note that Martin argued in his original brief, among other things, that the evidence was factually insufficient to support the trial court's finding that the fair market value of the property was $477, 715.65. Martin challenged the factual sufficiency of the evidence to support the trial court's use of $599, 000, the sale price fifteen months after foreclosure, to calculate fair market value. In its original brief and on remand, PlainsCapital does not argue that Martin has waived his challenge to the factual sufficiency of the evidence, and PlainsCapital addresses the merits of Martin's factual sufficiency challenge. Accordingly, we conclude Martin's factual sufficiency challenge is preserved for our review.

         In an appeal from a bench trial, the trial court's findings of fact have the same weight as a jury verdict. Fulgham v. Fischer, 349 S.W.3d 153, 157 (Tex. App.-Dallas 2011, no pet.). When, as here, the appellate record contains a reporter's record, findings of fact are not conclusive and are binding only if supported by the evidence. Id. We review a trial court's findings of fact under the same legal and factual sufficiency of the evidence standards used when determining if sufficient evidence exists to support an answer to a jury question. Id. (citing Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994)). When an appellant challenges the factual sufficiency of the evidence on an issue, we consider all the evidence supporting and contradicting the finding. Id. (citing Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989)). We set aside the finding for factual insufficiency only if the finding is so contrary to the evidence as to be clearly wrong and manifestly unjust. Id. (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam)). In a bench trial, the trial court, as factfinder, is the sole judge of the credibility of the witnesses. Id. As long as the evidence falls "within the zone of reasonable disagreement, " we will not substitute our judgment for that of the factfinder. Id. (quoting City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005)).

         When an appellant challenges the legal sufficiency of an adverse finding on which he did not have the burden of proof at trial, he must demonstrate there is no evidence to support the adverse finding. Id. When reviewing the record, we determine whether any evidence supports the challenged finding. Id. If more than a scintilla of evidence exists to support the finding, the legal sufficiency challenge fails. Id.; see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (more than scintilla of ...


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