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Badalich v. First National Bank of Winnsboro

Court of Appeals of Texas, Twelfth District, Tyler

November 15, 2017

SHERRY LYNN BADALICH, INDIVIDUALLY AND AS INDEPENDENT EXECUTRIX OF THE W. SCOTT BURKE, JR. ESTATE, AND AS TRUSTEE OF THE BADALICH FAMILY TRUST, AND CARL BADALICH, INDIVIDUALLY AND AS TRUSTEE OF THE BADALICH FAMILY TRUST, APPELLANTS
v.
FIRST NATIONAL BANK OF WINNSBORO, APPELLEE

         APPEAL FROM THE 402ND JUDICIAL DISTRICT COURT WOOD COUNTY, TEXAS

          Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

          OPINION

          James T. Worthen Chief Justice

         Sherry Lynn Badalich, individually and as independent executrix of the W. Scott Burke, Jr. Estate, and as trustee of the Badalich Family Trust (the Trust), and Carl Badalich, individually and as trustee of the Badalich Family Trust, appeal a summary judgment in favor of the First National Bank of Winnsboro (the Bank) in the amount of $2, 277, 826.54, postjudgment interest of five percent per annum, and judicial foreclosure of real property owned by the Trust. In two issues, the Badaliches contend that the trial court erred in granting summary judgment and that they raised material issues of fact as to whether the Bank had failed to comply with a bankruptcy refinance agreement. We affirm.

         Background

         Between December 30, 2005 and March 30, 2010, the Badaliches signed numerous promissory notes, deeds of trust, extensions of real estate notes and liens, and personal guaranties on real property owned by the Trust to the Bank.[1] The highest interest rate on any of these notes was 9.25% per annum, and interest at 10% percent per annum for matured unpaid principal on each of the notes.

         Beginning in March 2010, the Badaliches were late in making each monthly payment. From December 2010 through July 2012, they made only partial or no payments. Finally, after August 2012, the Badaliches ceased making any payments to the Bank.

         The Bank subsequently filed suit against the Badaliches to enforce the agreements and foreclose on the property. On December 2, 2013, Carl filed a Chapter 13 petition with the United States Bankruptcy Court in the Southern District of Texas, Corpus Christi Division. On May 19, 2014, he converted his bankruptcy proceeding to a Chapter 11. The Bank subsequently sought relief from the automatic stay.[2] The parties entered into an agreement, as part of an agreed bankruptcy court order, to lift the automatic stay and allow the Badaliches to refinance their notes at 4% interest. The Badaliches paid $50, 000.00 as required by the agreement, which the Bank applied to back taxes and past due interest.

         After eighteen months in bankruptcy, and without confirming a plan of reorganization, Carl filed a motion to dismiss his Chapter 11 bankruptcy, stating in the motion that he "has learned that his lender of funds to pay his secured creditors will only provide financing to the debtor not in bankruptcy."[3] His motion further states that he "believes that he will be able to make suitable arrangements with his bankruptcy creditors through the financing contemplated through his lender." Based on this motion, the bankruptcy court dismissed Carl's Chapter 11 bankruptcy proceeding on June 29, 2015.

          Thereafter, the Bank filed suit in state court to collect on the Badaliches' indebtedness based on the original promissory notes, deeds of trust, extensions, and personal guaranties signed from December 2005 through March 2010. It also sought to foreclose on the real property securing the Badaliches' indebtedness. The Bank eventually filed a motion for summary judgment. As part of the summary judgment evidence, the Bank attached the original promissory notes, deeds of trust, extensions, and guaranties. It also attached evidence establishing the amounts owed and unpaid. The Badaliches opposed the Bank's summary judgment motion with evidence of their own, consisting primarily of Carl's affidavits based on the bankruptcy refinance agreement. The trial court entered a final judgment based on the Bank's motion for summary judgment in the amount of $2, 277, 826.54 against the Badaliches in their individual and other above-described capacities, and decreed judicial foreclosure against the real property owned by the Trust securing the indebtedness. This appeal followed.

         Summary Judgment

         In their first issue, the Badaliches contend the trial court erred in granting summary judgment. Specifically, they contend they raised fact issues relating to their defensive legal theories of accord and satisfaction, estoppel, and novation related to the refinance agreement entered during Carl's bankruptcy proceeding. In their second issue, they contend that they raised material issues of fact with regard to their breach of contract claim against the Bank, also based on the bankruptcy refinance agreement. We will consider these two issues together.

         Standard of Review

         We review the trial court's grant of a traditional summary judgment de novo. Shell Oil Co. v. Writt, 464 S.W.3d 650, 654 (Tex. 2015). The standards for ...


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