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Last Frontier Realty Corp. v. Budtime Forest Grove Homes, LLC

Court of Appeals of Texas, Fifth District, Dallas

April 11, 2019

LAST FRONTIER REALTY CORPORATION, Appellant
v.
BUDTIME FOREST GROVE HOMES, LLC, Appellee

          On Appeal from the 162nd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-16-13968

          Before Justices Brown, Schenck, and Pedersen, III

          MEMORANDUM OPINION

          ADA BROWN, JUSTICE

         Appellant Last Frontier Realty Corporation (Last Frontier) appeals a summary judgment dismissing its claims against appellee Budtime Forest Grove Homes, LLC (Budtime) in this dispute concerning responsibility for insuring property encumbered by a deed of trust. In two issues, Last Frontier contends the trial court erred in (1) denying its statutory right of appeal and (2) granting summary judgment when Budtime, and not Last Frontier, breached the deed of trust. For the following reasons, we modify the trial court's judgment and affirm the judgment as modified.

         Background

         In March 2015, Last Frontier executed a promissory note in favor of Budtime in the principal amount of $250, 000. To secure repayment of the note, Last Frontier also executed a deed of trust covering a property in Garland, Texas. Under the deed of trust, Last Frontier's failure to "comply with or to perform any . . . terms, obligations, covenant or condition" contained in the deed of trust constituted an "event of default."

Among other obligations in the deed of trust, Last Frontier agreed to:
maintain, at [Last Frontier's] expense, all insurance coverages with respect to the Property, revenues generated by the Property, and operations on the Property that [Budtime] reasonably requires ("Required Insurance Coverages"), [1] issued by insurers and written on policy forms acceptable to [Budtime], and deliver evidence of the Required Insurance Coverages in a form acceptable to [Budtime] at least ten days before the expiration of the Required Insurance Coverages.

         The deed of trust also provided for Last Frontier to make payments to an escrow fund for taxes and insurance premiums:

19. [Last Frontier] agrees to make an initial deposit in a reasonable amount to be determined by [Budtime] and then make monthly payments to a fund for taxes and insurance premiums on the Property. [Last Frontier] shall pay to [Budtime] on the date installments are payable under the Note, escrowed sums equal to one-twelfth (1/12th) of the sum estimated by [Budtime] for payment of the annual sum for funding all taxes assessed against the Property (estimated whenever necessary), and premiums for all insurance . . . . The escrowed sums may be held by [Budtime] in noninterest-bearing accounts and may be commingled with [Budtime's] other funds . . . . If no Event of Default shall have occurred and be continuing hereunder, the escrowed sums shall by repaid to [Last Frontier] in sufficient time to allow [Last Frontier] to satisfy [Last Frontier's] obligations under the Security Documents to pay the taxes or, at the option of [Budtime], shall be paid direction [sic] to the Governmental Authority or insurance agent entitled thereto. If an Event of Default shall have occurred and be continuing hereunder, however, [Budtime] may credit the full amount of the escrowed sums or any part thereof against the Indebtedness.

         The parties' settlement statement reflects that Last Frontier obtained a commercial property insurance policy, paying a one-year premium to its agent and an additional payment covering three months of premium as "Reserves Deposited with Lender." Thereafter, Last Frontier included payments of $220.31 with its monthly note payments to be held in escrow for insurance premiums.

         The insurance policy obtained by Last Frontier expired without renewal in March 2016, and a storm damaged the property in August 2016. Budtime sent Last Frontier a notice of default, contending Last Frontier had agreed, but failed to: (1) deliver evidence of the required insurance coverages at least ten days before the expiration of the coverages; (2) maintain all required insurance coverages; (3) maintain and preserve the property in good repair and condition; and (4) make payments when due under the promissory note. Budtime demanded that Last Frontier cure the default, including providing evidence of insurance and repairs to the property and paying late fees that were due.

         Last Frontier responded with proof of a new insurance policy it obtained in August 2016 and requested an accounting of the late fees owed. Last Frontier also sent a demand letter that Budtime pay for the storm repairs that would have been covered by insurance if the previous policy had been renewed. In October 2016, however, Last Frontier received a notice of foreclosure sale. It brought this suit, seeking a temporary restraining order, temporary injunction, and permanent injunction enjoining foreclosure and asserting causes of action for breach of contract, breach of fiduciary duty, negligence, and fraud arising from Budtime's failure to pay the insurance premiums when the premiums came due.[2]

         The trial court entered a temporary injunction order requiring Budtime to desist and refrain from proceeding with foreclosure, but subsequently granted a motion filed by Budtime to dissolve the injunction. Budtime also filed a motion for summary judgment on all of Last Frontier's claims, asserting, among other things, that Budtime had no duty to provide insurance or pay premiums on a renewal policy that Last Frontier never obtained. Last Frontier responded that the deed of trust and other loan documents prepared ...


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