Court of Appeals of Texas, Twelfth District, Tyler
GRACE CREEK DEVELOPMENT, LP AND THE CHALLENGE GOLF GROUP LIMITED, APPELLANTS
REM-K BUILDERS, LTD., APPELLEE
FROM THE 7TH JUDICIAL DISTRICT COURT SMITH COUNTY, TEXAS
consisted of Worthen, C.J., Hoyle, J., and Neeley, J
Creek Development, LP and The Challenge Golf Group Limited
appeal from a summary judgment in favor of REM-K Builders,
Ltd. in the latter's suit on a note. In six issues,
Appellants contend there are fact issues on their affirmative
defenses and counterclaims. We affirm in part and reverse and
remand in part.
Creek Development, LP is a Texas limited partnership, and The
Challenge Golf Group is its general partner. David Carlile is
The Challenge Golf Group's president. Appellants agreed
to purchase a real estate development known as Eagle's
Bluff from Ralph E. Martin and several entities he owned,
including REM-K. Eagle's Bluff includes a section of
single family homes and a section of townhomes known as The
Villas. The sales contract was signed on November 25, 2009
and amended in December and again in January 2010. The real
estate lien note in the amount of $400, 000.00 was signed
December 31, 2009. Appellants were to make quarterly interest
only payments through December 31, 2011, at which time the
entire unpaid balance was to be paid in full. Appellants made
one $20, 000.00 interest payment in November 2010. They made
no additional payments on the note. REM-K filed its suit to
collect the debt on April 25, 2014. In their answer,
Appellants asked that the court render judgment that REM-K
take nothing on its claims and, instead, award damages to
Appellants due to alleged fraud in the inducement and
Deceptive Trade Practices Act violations by REM-K. Appellants
also asserted numerous affirmative defenses.
filed a combined traditional and no evidence motion for
summary judgment supported by numerous exhibits. REM-K asked
for "damages in the sum of $998, 584.39 through April
30, 2016 with an additional $499.29 for each day thereafter
until final judgment is rendered." Appellants responded,
also presenting evidence, and requesting the court deny all
relief requested by REM-K. The trial court granted
REM-K's motion for summary judgment and ordered
Appellants to pay $998, 584.39, which reflects the note
balance and interest as of April 30, 2016, plus daily
interest after that at $499.29 per day, attorney's fees
of $60, 000.00 through trial, and additional amounts in
attorney's fees in case of appeal.
review the trial court's decision to grant summary
judgment de novo. Tex. Mun. Power Agency v. Pub. Util.
Comm'n, 253 S.W.3d 184, 192 (Tex. 2007). A party
moving for traditional summary judgment bears the burden of
showing that no genuine issue of material fact exists and
that it is entitled to judgment as a matter of law.
Tex.R.Civ.P. 166a(c). A plaintiff moving for summary judgment
must conclusively establish all essential elements of its
cause of action as a matter of law. MMP, Ltd. v.
Jones, 710 S.W.2d 59, 60 (Tex. 1986) (per curiam). Once
the movant establishes its right to summary judgment as a
matter of law, the burden shifts to the non-movant to present
evidence raising a genuine issue of material fact.
Amedisys, Inc. v. Kingwood Home Health Care, LLC,
437 S.W.3d 507, 511 (Tex. 2014). To determine if there is a
fact issue, we review the evidence in the light most
favorable to the non-movant, crediting evidence favorable to
the non-movant if reasonable jurors could do so, and
disregarding contrary evidence unless reasonable jurors could
not. Mann Frankfort Stein & Lipp Advisors, Inc. v.
Fielding, 289 S.W.3d 844, 848 (Tex. 2009). The evidence
raises a genuine issue of fact if reasonable and fair minded
jurors could differ in their conclusions in light of all the
summary judgment evidence. Goodyear Tire & Rubber Co.
v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007) (per curiam).
party moving for summary judgment in opposition to a
counterclaim is in the position of a defendant opposing a
plaintiff's motion for summary judgment. Adams v.
Tri-Continental Leasing Corp., 713 S.W.2d 152, 153 (Tex.
App.-Dallas 1986, no writ). In order to defeat such a
counterclaim by a summary judgment, the counter-defendant
must show that no issue of material fact exists as to at
least one element of the counter-plaintiff's cause of
action, or establish each element of an affirmative defense,
and that the counter-defendant is entitled to judgment as a
matter of law. Ryland Group, Inc. v. Hood, 924
S.W.2d 120, 121 (Tex. 1996) (per curiam); Adams, 713
S.W.2d at 153.
their first issue, Appellants assert that REM-K erroneously
determined the amount due on the real estate lien note, which
specifies an 18% rate per annum. Specifically, they contend
that through its calculations, REM-K erroneously compounded
interest at 18% per quarter, resulting in the usurious rate
of 19.25%. They argue they are entitled to a proper
calculation of the amount they owe on the note.
to the real estate lien note, Appellants were to pay interest
only, in quarterly payments, for two years. The entire unpaid
balance of both principal and accrued interest was to be paid
in full on December 31, 2011. The note also provided that
"[a]ll past due principal and interest shall bear
interest from date of maturity until paid at the lesser of
(a) eighteen percent (18%) per annum, or (b) at the highest
interest rate allowed under applicable law."
case involving a note containing language very similar to
this provision, the Austin Court of Appeals determined that,
by use of this language, the parties expressly agreed to
compound interest. Bair Chase Prop. Co., LLC v. S & K
Dev. Co., 260 S.W.3d 133, 142 (Tex. App.-Austin 2008,
pet. denied) (held that language in note stating that
"past due principal and/or interest shall bear interest
from and after maturity" constitutes an express
agreement to compound interest). Likewise, the note at issue
here calls for compound interest, "per annum." The
parties agree that 18% is the highest interest rate allowed
assert that the problem arose because REM-K, when it
calculated amounts currently owed under the note, compounded
interest on a quarterly basis, rather than annually,
resulting in a usurious rate. However, Appellants admit that
the contract does not call for payment of usurious interest.
interest" means interest that exceeds the applicable
maximum amount allowed by law. Tex. Fin. Code Ann. §
301.002(a)(17) (West 2016). The purpose of the usury statute
is to punish those who intentionally charge usurious
interest. C & K Invs. v. Fiesta Group, Inc., 248
S.W.3d 234, 241 (Tex. App.-Houston [1st Dist.] 2007, no
pet.). Thus, a creditor who contracts for or receives
interest that is greater than the amount authorized by
statute in connection with a commercial transaction is
subject to penalties. Tex. Fin. Code Ann. § 305.001(a-1)
conclude that Appellants' asserted complaint, although
referred to as usury, is not usury and arose during
litigation at the time REM-K calculated the amount urged as
owed. Therefore, under these circumstances, REM-K is not
subject to a penalty under the finance code See George A
Fuller Co of Tex, Inc v Carpet Servs, Inc, 823 S.W.2d
603, 606 (Tex 1992) (Mauzy, J, concurring) (explaining that
the usury statute does not apply to claims made solely in the
context of judicial proceedings).
crux of Appellants' complaint is that REM-K erroneously
calculated the amount of damages it is entitled to under the
terms of the note. As movant, REM-K was required to establish
the amount due on the note. See Tex. R. Civ. P.
166a(c); Bailey, Vaught, Robertson & Co. v. Remington
Invs., Inc., 888 S.W.2d 860, 866 (Tex. App.-Dallas 1994,
motion for summary judgment, REM-K asserted that Appellants
owe principal and interest in the amount of $998, 584.39 as
of April 30, 2016, and an additional $499.29 for each day
thereafter until final judgment is rendered. REM-K relied on
the unsworn declaration of Ty Beard, the trustee of a trust
that owns REM-K. Beard specified the exact amount owed, but
provided no explanation or calculation showing how he reached
that amount. In REM-K's response to interrogatories, it
asserted the specific amount that Appellants allegedly owed
on each January first from 2011 through 2016, as follows: