Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg
ELAYNE MATTAR, INDIVIDUALLY; J&E EUBANKS, INC.; ELAYNE MATTAR, TRUSTEE OF THE JAMES E. EUBANKS AND VIRGINIA L. EUBANKS FAMILY TRUST; MARK MAXIMILLIAN MILAM, INDEPENDENT EXECUTOR OF THE ESTATE OF JAMES E. EUBANKS, DECEASED; AND MARK MAXIMILLIAN MILAM, INDEPENDENT EXECUTOR OF THE ESTATE OF VIRGINIA L. EUBANKS, DECEASED, Appellants,
BBVA COMPASS BANK, NA, Appellee.
appeal from the 103rd District Court of Cameron County,
Justices Rodriguez, Contreras, and Hinojosa
V. RODRIGUEZ JUSTICE.
lawsuit concerns a loan issued to George and Virginia L.
Eubanks by appellee BBVA Compass Bank, NA ("the
Bank"). The loan was secured by land associated
with the Eubanks family farm in south Texas. Appellants are
Virginia's descendants and various entities formed by
members of the Eubanks family (collectively, "the
Eubanks filed suit against the Bank challenging the
family's loan obligations and alleging tortious conduct.
Pursuant to a jury verdict, the trial court rendered a
take-nothing judgment in favor of the Bank and awarded the
Bank attorney's fees. By nine issues, the Eubanks
challenge the judgment. We affirm in part and reverse and
remand in part.
loan that is the subject of this appeal initiated as a
short-term loan in December 2004, in the amount of $1, 775,
000. The loan was renewed several times over the years, and
Virginia pledged her land as collateral for the renewals. The
most recent renewal occurred in 2008, at which time Virginia
again executed a deed pledging her land as collateral
(together, "the 2008 note"). Virginia passed away
in 2008, and her daughter Elayne Mattar began making payments
to the Bank.
the Bank attempted to foreclose on the family land, the
Eubanks filed suit, challenging the validity of the
Bank's security interest in the family land. They alleged
that the Bank violated its special duty of good faith and
fair dealing to Virginia, whom they described as an elderly,
vulnerable widow, whose love for her ailing son George was
exploited by the Bank. The Eubanks also alleged that the 2008
note: (1) was unconscionable; (2) had already been released;
and (3) was executed without authority. The Eubanks' suit
was tried before a Cameron County jury in 2016.
The Bank's Witnesses
Gilles testified that he met the Eubanks in 1980, and handled
their borrowing as a vice president and later as president of
the Bank's predecessor. Gilles testified that Virginia,
her husband Jim, and their son George ran a successful
farming operation through the family's corporation
J&E Eubanks, Inc. Jim handled the decisions concerning
planting and harvesting, and Virginia handled crop sales and
financing. Virginia held a college degree and was a realtor.
According to Gilles, the operation was so profitable that Jim
was sometimes able to finance the considerable expenses of
running the farm without the Bank's assistance, and the
Eubanks-through their family corporation-acquired several
hundred acres of land in south Texas. In the event of an
occasional crop failure or financial shortfall, the Eubanks
would obtain a loan from the Bank, which would be paid off
over the course of several seasons. Gilles testified that the
Bank viewed the Eubanks as a sound investment, due to their
thirty-year record of success.
to Gilles, Jim became ill at some point in the 1990's and
retired from the farm, leaving George and Virginia in charge.
Jim passed away in 2004, at which point Virginia became
president of the family's corporation and executor of
testified that between 2003 and 2004, George suffered
personally from his father's death, as well as from a
costly divorce, a serious car accident, and the failure of
two crops. Gilles also testified that Elayne described her
brother George as having an alcohol problem.
further testified that near the end of 2004, George and
Virginia approached him about obtaining a sizeable loan to
consolidate the Eubanks' debts and to provide funds for
the next year's farming. The Bank was amenable, and it
approved the first loan for $1, 775, 000 in December
2004. Gilles testified that the majority of the
loan was dedicated to paying George's debts, both
business and personal. George and Virginia brought bills,
taxes, and debts to the Bank, which the Bank paid with draws
from the loan.
loan became due in early 2005. It was described as a
"bridge loan"-that is, a loan for a short period of
time until a longer-term loan could be arranged. George
renewed the bridge loan in February 2005 with another
short-term bridge loan, and he did so again in April
(together, "the bridge loans"). George took
personal liability for the bridge loans, and Virginia
executed a deed of trust which pledged several hundred acres
of her land as collateral for the renewals.
a long-term renewal was executed in June 2005, along with a
corresponding deed of trust encumbering the Eubanks'
collateral (together, "the 2005 note"). Gilles
testified that the 2005 note was to be repaid over the course
of fifteen years, though it was set to mature and require
renewal in 2008 to allow for the adjustment of the interest
rate. This time, Virginia pledged additional land in exchange
for the 2005 note, amounting to nearly 400 acres in total.
Gilles testified that the Bank prepared the necessary
documents for the 2005 note, including documents stating that
the directors of the family corporation approved the
transaction at a board meeting in October 2005.
testified that the apparent inconsistency in dates in the
2005 note-which was executed in July 2005, but described a
board-approval process that occurred in the future, in
October 2005-must have been a typographical error.
testified that the Eubanks made payments on the 2005 note in
2006 and 2007. During that time, Virginia sold a portion of
her land and used the profit to pay down the debt, as Gilles
testified that she had planned. As a result, the 2005 note
was on track to be paid off in eight years rather than the
fifteen years originally anticipated. Gilles attested that he
left the Bank before the 2005 note matured, but before his
departure, he recommended that the renewal be approved.
explained that when the 2005 note matured, Virginia renewed
the 2008 note on her own, taking sole personal liability for
the first time, and executed a deed reaffirming that much of
her land was encumbered by the 2008 note. The 2008 note had a
principal amount of $1, 294, 500, and it obliged Virginia to
repay that sum with interest by February 2011. George did not
sign the 2008 note, but he did sign the 2008 deed of trust.
Virginia passed away in May 2008.
Roberson testified as the Bank's representative, and he
corroborated much of Gilles's testimony. Roberson stated
that from the Bank's perspective, the 2005 loan seemed
reasonable in light of the Eubanks' history of success,
the strength of their collateral, and the seemingly temporary
nature of the farm's problems. He further stated that,
given Virginia's financial status and reputation as a
prominent realtor, the Bank viewed Virginia as creditworthy
rather than vulnerable. Under that perspective, Roberson
believed there was no need to warn Virginia against pledging
The Eubanks' Witnesses
grandsons Matthew and Mark Milam testified concerning their
experience working at the family farm. Matthew began working
at the farm in October of 2003, and Mark began in 2004. The
Milams testified that when they started, Virginia had no role
in managing the farm, but that their uncle George handled
many aspects of the family business. However, both Milams
soon realized that George had problems with substance abuse.
According to the Milams, George's behavior became erratic
and aggressive, often disappearing from the farm for days.
The Milams attested that the farm's affairs were
neglected, and its accounts with vendors went into arrears.
stated George was seriously injured in a 2004 car accident,
and with George often absent, he began to forge George's
signature on payroll checks. Matthew testified that Gilles
approved of this practice, and the Bank never returned any of
the forged checks.
testified that in the fall of 2004, he attended a meeting
where Gilles proposed to George and Virginia that they should
take out a large loan to pay off and consolidate their
outstanding debts, with Virginia committing real estate as
collateral. Matthew testified that in December of 2004, he
forged George's name on the documents for the first
bridge loan. He testified that he did so based on
Gilles's instructions and based on his fear that the farm
would soon fold without operating capital.
to Matthew, George abruptly fired him from his position as
office manager in January 2005, and Mark assumed that job.
Mark testified that toward the end of 2005, he began to
assume greater responsibility over the farm's managerial
decisions. Throughout these years, the Milams testified that
much of the planting and related labor was run by the
farm's foreman Joe Rodriguez.
explained that in 2006, during a visit to the Bank, he told
Gilles of George's worsening condition. Mark explained
that George would not show up at the farm for weeks at a
time, and Virginia was attempting to get him psychological
help for his substance abuse.
further testified that he updated Gilles on George's
condition in 2007. He explained that George was no longer
allowed to drive due to the family's fear that George,
who was heavily medicated, would get into another collision.
Mark also stated that he witnessed George behaving strangely
at the Bank's attorney's office when Virginia signed
the 2008 note renewal. Nevertheless, he agreed that no one
had ever attempted to have George declared incompetent or
removed as trustee of the family's trust.
testified that in 2004, her brother George's declining
health and deepening substance abuse impaired his ability to
oversee the farm. She testified that after George's car
wreck, he moved into Virginia's house, and Virginia took
care of him until her death in 2008, at which point Elayne
took care of him. According to Elayne, the car wreck limited
his mobility and allowed him to visit the farm only
testified that before her death, Virginia was generally
unequipped to oversee the farm herself. She explained that
throughout her youth, Virginia had virtually no role in
managing the farm; instead, she was a school librarian during
her early career and later a realtor, but never a farmer.
did not dispute that Virginia was generally healthy and had
mental capacity to sign the 2005 and 2008 notes. Instead,
Elayne testified that she questioned the wisdom of
Virginia's decisions, stating that her mother was
mistaken in believing that by helping George with his debt,
the farm would resume successful operation. However, she
agreed that Virginia had a right to pledge her finances to
assist with George's debt.
offered a similar assessment of Virginia: that she was overly
optimistic concerning the farm's prospects, but that she
certainly had mental capacity, good health, and
self-sufficiency up until her death. He assessed Gilles much
differently than the other Eubanks: he testified that he
worked with Gilles for twenty years and viewed Gilles as an
honest man. George was not aware of the Bank having done
anything wrong during the transactions at issue in this
his own situation, George agreed that personal
problems-including his injuries and substance abuse-prevented
him from managing the farm effectively, which led Virginia
and Mark to take a greater role in managing the farm's
finances. George testified that he gave Mark authority to
sign checks on his ...