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Leteff v. Roberts

Court of Appeals of Texas, First District

May 22, 2018

JOE LETEFF, Appellant
v.
JIMMY ROBERTS, INDIVIDUALLY AND D/B/A CITY AUTO SALES, Appellee

          On Appeal from the 212th District Court Galveston County, Texas Trial Court Case No. 16-CV-0645

          OPINION

          Russell Lloyd Justice

         A creditor made numerous cash loans to an obligor for the obligor's business. The obligor failed to repay many of the loans, and the creditor sued. After a bench trial, the trial court found the obligor liable in contract and the creditor liable for usury. The court awarded the obligor an offset equal to the usury damages he was owed on the four loans that he repaid but refused to award any usury damages on the 10 loans that he failed to repay. In part because of this, the obligor's contract liability exceeded the creditor's usury liability. The parties agreed to a reduced judgment of $1, 094, 047.04 in the creditor's favor, but the court noted that the obligor did not waive his right to appeal.

         The obligor appeals the trial court's refusal to award him usury damages on the 10 loans that he failed to repay. He also appeals the court's refusal to award him attorneys' fees under the usury statutes. We reverse and remand.

         Background

         Joe Leteff met Jimmy Roberts through a mutual acquaintance. Leteff told the acquaintance that he was looking for financing for his business-providing manpower and equipment rentals to the oil-and-gas industry. The acquaintance called Roberts, who provided financing for the acquaintance's used-car dealership.

         Leteff and Roberts, with Roberts's attorney present, met at the dealership to discuss a deal. Leteff proposed, and the parties reduced to writing, a transaction that specified that Roberts would "loan" Leteff $40, 000 and that Leteff would repay in 45 days both the $40, 000 and $20, 000 as an "interest amount." Leteff and Roberts signed the agreement. The acquaintance looked on as Leteff and Roberts "did the transaction" at the dealership's table.

          Leteff and Roberts entered into more similarly structured loans, some reduced to writing and others not. In all, Leteff and Roberts entered into 17 loans, each with a stated principal amount and an obligation that Leteff repay the principal. Fourteen of the loans called for a stated interest amount; the other three did not call for any interest. On at least one occasion, Leteff met Roberts and the acquaintance at Roberts's house for a loan of over half a million dollars. That amount was counted out in cash, and Leteff took the cash away in grocery bags.

         Of the 14 loans that called for interest, Leteff repaid Roberts on only four. Leteff never repaid Roberts on the remaining 10 loans.

         Roberts sued Leteff for breach of contract. Leteff counterclaimed for usury, under Texas Finance Code § 305.001, on the 14 loans that called for interest. The parties tried the case without a jury, and the trial court entered a judgment in Roberts's favor for $1, 094, 047.04.

         The trial court, on request, entered findings of fact and conclusions of law. For each of the 17 loans, the trial court listed the date; principal amount; interest amount, if any; and period for repayment, if any was specified. The court also noted which loans were memorialized in a written agreement. For loans in which the parties failed to specify a period for repayment, the court applied a default period of one year.

          The trial court entered a conclusion of law that it "will not award any interest in transactions to Leteff where Leteff fully defaulted on the repayment of" principal and interest. The court then applied Finance Code § 305.001(a-1), found that Roberts was liable for usury, and awarded Leteff an offset against the money he had not repaid for the usury damages on the four loans that he had repaid. The trial court did not award any usury damages or offset for the 10 loans not repaid.

         The trial court's findings of fact establish the following about the 10 loans:

         1. The March 13, 2014 loan, by written agreement, provided for $100, 000 in principal, $40, 000 in interest, and repayment in 60 days.

         2. The April 9, 2014 loan provided for $60, 000 in principal and $40, 000 in interest.

         3. The May 9, 2014 loan, by written agreement, provided for $52, 750 in principal, $10, 000 in interest, and repayment in seven days.

         4. The July 10, 2014 loan, by written agreement, provided for $60, 000 in principal, $10, 000 in interest, and repayment in seven days.

         5. The July 18, 2014 loan, by written agreement, provided for $553, 720 in principal and $425, 000 in interest.

         6. The July 23, 2014 loan, by written agreement, provided for $285, 000 in principal, $90, 000 in ...


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