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Wyrick v. Business Bank of Texas, N.A.

Court of Appeals of Texas, Fourteenth District

April 30, 2019


          On Appeal from the 200th District Court Travis County, Texas Trial Court Cause No. D-1-GN-16-002323

          Panel consists of Chief Justice Frost and Justices Christopher and Jewell.



         Two individual guarantors of a $3 million promissory note appeal the trial court's summary judgment enforcing the guaranty in favor of a bank and dismissing the guarantors' tort claims. In their first two issues, the note guarantors, appellants Michael Lee Wyrick and Gregory Michael Ruhnke, contend the trial court erred in granting summary judgment to the bank, appellee Business Bank of Texas, N.A., (the "Bank"), because legally sufficient evidence supports their contract defenses (fraudulent inducement, negligent misrepresentation, mutual mistake, and equitable estoppel) and affirmative counterclaims (fraud, tortious interference, negligence, and gross negligence). We conclude that appellants lack standing to assert some of their counterclaims and that the summary judgment evidence does not raise a fact issue as to the remainder of their counterclaims and their contract defenses.

         In their third and fourth issues, appellants challenge the trial court's permanent anti-suit injunction, which bars appellants and others, including a company they own, Barquero Energy Services, LLC ("Barquero"), from initiating or proceeding with any related claims they may have against the Bank in any other forum. After careful review of the record, we conclude the trial court erred in granting the anti-suit injunction, and we modify the judgment to dissolve the injunction. We otherwise affirm the trial court's judgment as modified.


         Read in the light most favorable to appellants, [1] the record reveals the following pertinent background facts. The Bank loaned $3, 000, 000 to Barquero for investment in a salt water disposal well (the "Barquero SWD"), and Barquero signed a promissory note to the Bank in that amount. The note promising the loan's repayment specifies as "security for payment" (1) "an Assignment of Leases" covering the leasehold interest in the Barquero SWD and (2) an assignment of interest in Barquero stock and three life insurance policies. Wyrick signed the note as managing member of Barquero. The Bank did not sign the note, though appellants contend the Bank drafted the note's terms. The Bank's representatives, Ed Lette and Ray Bearden, assured Wyrick and Ruhnke, another Barquero member, that the loan would be secured by a valid security interest in the Barquero SWD lease. By a separate document signed the same day as the note, the Bank and Barquero agreed to arbitrate all claims, disputes, and controversies between and among them arising out of or relating to the loan.

         Each of the appellants signed an agreement titled "Unlimited, Unconditional Guaranty," which provides in relevant part:

1. Guarantor unconditionally, irrevocably, and absolutely . . . guarantees to Lender . . . that (a) the principal of and interest on, and attorneys' fees provided in, the Note . . . will be promptly paid when due in accordance with the provisions thereof . . .; (b) all covenants and agreements of Borrower contained in the Note, the Assignment, the Debt, and any other instrument, . . . will be duly and promptly observed and performed and (c) all additional amounts owing or which hereafter become owing by Borrower under the terms of the Note, the Assignment, the Debt, and any other instrument . . . will be promptly paid when due.
2. The obligations of Guarantor shall be performable without demand of Lender and shall be unconditional irrespective of the genuineness, validity, regularity or enforceability of the Note, the Assignment, or any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or a guarantor, and Guarantor hereby waives the benefit of all principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Unconditional Guaranty, and agrees that the obligations of Guarantor shall not be affected by any circumstances, whether or not referred to in this Unconditional Guaranty, which might otherwise constitute a legal or equitable discharge of a surety or guarantor. Specifically, to the extent this Unconditional Guaranty is governed by the laws of the State of Texas, the Guarantor waives all rights and remedies accorded by law to guarantors and sureties and further waives the benefits of any right of discharge under Article 34 of the Texas Business and Commerce Code[2] and any other rights of sureties and guarantors thereunder, together with all rights and remedies under Texas Property Code Sections 51.003 to 51.005, as amended. Without limiting the generality of the foregoing, the Guarantor hereby waives diligence, presentment, demand of payment, protest, all notices (whether of nonpayment, intention to accelerate, acceleration, dishonor, protest or otherwise) with respect to the note, notice of acceptance of this Unconditional Guaranty and of the incurring by borrower of any of the obligations hereinbefore mentioned, all demands whatsoever, and all rights to require Lender to (a) proceed against the borrower; (b) proceed against or exhaust any collateral held by Lender to secure the payment of the indebtedness or (c) pursue any other remedy it may now or hereafter have against the borrower.
3. Guarantor hereby agrees that, at any time or from time to time, without notice to Guarantor and without affecting the liability of Guarantor, . . . any security for the Debt may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Debt.

         (Emphases added).

         Appellants acknowledge signing the guaranties but contend the Bank assured them that it would execute on the collateral, rather than pursue the guaranties, in the event of Barquero's default on the note.

         Barquero defaulted on the note. However, contrary to what appellants allegedly were led to believe through the Bank's assurances, the Bank did not foreclose on the Barquero SWD but rather sought to enforce the personal guaranties. Appellants refused to honor their guaranties. According to appellants, the Bank was unable to foreclose on the collateral due to a problem of its own making: the Bank failed to secure all necessary leasehold assignments and landowner consent to the assignments, as contemplated by the note. Further, appellants contend, the Bank began operating as if it were the owner of the Barquero SWD, which interfered with appellants' ability to sell the well for its true value or to attract investors. Appellants claim that the Bank's actions caused them to lose potential investors and buyers, and negatively impacted their credibility with vendors.

         The Bank sued appellants in Travis County for breach of their personal guaranties.[3] Appellants answered with a general denial and asserted affirmative defenses of fraudulent inducement and negligent misrepresentation. They later amended their answers to also plead mutual mistake and equitable estoppel. Appellants filed counterclaims against the Bank, Lette, and Bearden, alleging fraud, tortious interference with prospective contracts, negligence, and gross negligence. Barquero asserted similar cross-claims against the Bank, but Barquero and the Bank agreed to arbitrate Barquero's claims pursuant to the arbitration agreement between them. The trial court signed an agreed order compelling all of Barquero's claims against the Bank to arbitration, and severing and abating those claims. Barquero nonsuited its cross-claims that were subject to the arbitration order.

         After the parties agreed to arbitrate Barquero's claims in Travis County, Barquero Fund I, LLC ("Barquero Fund")-an entity owned by Barquero and ostensibly controlled by appellants-filed suit against the Bank in Dimmit County, asserting claims similar if not identical to those Barquero had asserted against the Bank in Travis County. The Bank filed a motion for sanctions and for an anti-suit injunction in Travis County when it discovered Barquero Fund's lawsuit in Dimmit County.

         Meanwhile, in the Travis County lawsuit, the Bank, Lette, and Bearden sought summary judgment against appellants in two similar motions on both traditional and no-evidence grounds.[4] In the traditional portion of the motions, the movants asserted that: (1) appellants are liable for breach of their guaranties; (2) appellants' affirmative defenses of fraudulent inducement and negligent misrepresentation fail for lack of justifiable reliance; (3) the defense of mutual mistake does not void the guaranties because appellants assumed the risk of any failure of collateral;[5](4) appellants lack standing to bring counterclaims because those claims belong to Barquero; and (5) appellants' counterclaims fail because the damages are speculative. In the no-evidence portion of the motions, the movants argued that appellants had no evidence of any required elements of their fraud, tortious interference, negligence, or gross negligence counterclaims.

         Appellants filed responses to each summary judgment motion, asserting that they were not liable on the guaranties due to the Bank's purported misrepresentations concerning the loan collateral-i.e., that the Bank had or would obtain a valid security interest in the Barquero SWD leasehold. Appellants also asserted that they had standing to assert their counterclaims, that their damages were based on reasonable certainty, and that they had substantial evidence supporting their fraud, tortious interference, and negligence-based claims.

         The trial court granted partial summary judgment in favor of the Bank on Ruhnke's guaranty and denied Ruhnke's motion to reconsider. The court later granted summary judgment in the Bank's favor on Wyrick's guaranty and signed a final judgment, which incorporated the partial summary judgment against Ruhnke. The trial court awarded the Bank damages of $3 million plus interest, as well as attorney's fees and costs (including conditional appellate fees). The trial court also dismissed with prejudice appellants' counterclaims against the Bank and granted summary judgment in favor of Lette and Bearden.[6]

         The day before it signed the judgment, the trial court granted the Bank's motion for a permanent anti-suit injunction, the terms of which the court expressly incorporated into the judgment. The anti-suit injunction barred appellants, Barquero, Barquero Fund, and all those acting in concert with them from initiating or proceeding with any related claims against the Bank in Dimmit County or any other county except Travis County. We discuss the injunction's terms in more detail below in connection with appellants' third and fourth issues.

         This appeal timely followed.

         The Guaranties

         In their first two issues, appellants challenge the trial court's summary judgments in the Bank's favor.

         A. Standard of Review

         We review de novo a trial court's decision to grant summary judgment. Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009) (per curiam). We consider the evidence in the light most favorable to the non-movant, indulging reasonable inferences and resolving doubts in the non-movant's favor. Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). We credit evidence favorable to the non-movant if reasonable fact finders could, and we disregard contrary evidence unless reasonable fact finders could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

         In a no-evidence motion for summary judgment, the movant asserts that no evidence exists of one or more essential elements of the claims for which the non-movant bears the burden of proof at trial. See Tex. R. Civ. P. 166a(i); Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). The non-movant then must present more than a scintilla of probative evidence that raises a genuine issue of material fact supporting each element contested in the motion. See Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003); Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 & n.4 (Tex. 2002). More than a scintilla exists when the evidence would enable reasonable and fair-minded people to reach different conclusions. Burbage v. Burbage, 447 S.W.3d 249, 259 (Tex. 2014); see also Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007). The non-movant "is 'not required to marshal its proof; its response need only point out evidence that raises a fact issue on the challenged elements.'" Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008) (per curiam) (quoting Tex.R.Civ.P. 166a(i) cmt.-1997). Unless the non-movant raises a genuine issue of material fact, the trial court must grant summary judgment. Tex.R.Civ.P. 166a(i). But if the non-movant satisfies its burden of production on the no-evidence motion, then the court cannot properly grant summary judgment. See Smith v. O'Donnell, 288 S.W.3d 417, 424 (Tex. 2009).

         A traditional summary judgment movant must show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); Fielding, 289 S.W.3d at 848. When a plaintiff moves for summary judgment on its cause of action, it must conclusively prove all essential elements of its claim as a matter of law. Leonard v. Knight, 551 S.W.3d 905, 909 (Tex. App.- Houston [14th Dist.] 2015, no pet.); Cullins v. Foster, 171 S.W.3d 521, 530 (Tex. App.-Houston [14th Dist.] 2005, pet. denied). Evidence is conclusive only if reasonable people could not differ in their conclusions. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); see also Appleton v. Appleton, 76 S.W.3d 78, 83 (Tex. App.-Houston [14th Dist.] 2002, no pet.). The non-movant has no burden to respond to a motion for summary judgment unless the movant conclusively establishes each element of its cause of action as a matter of law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222-23 (Tex. 1999).

         If the movant produces evidence conclusively establishing its right to summary judgment, then the burden of proof shifts to the non-movant to present grounds for avoiding summary judgment, Home Loan Corp. v. JPMorgan Chase Bank, N.A., 312 S.W.3d 199, 205 (Tex. App.-Houston [14th Dist.] 2010, no pet.), including evidence sufficient to raise a genuine issue of material fact, if the non-movant so contends. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). If the non-movant relies on affirmative defenses to defeat summary judgment on the movant's cause of action, the non-movant must do more than merely plead the affirmative defense. Lujan v. Navistar Fin. Corp., 433 S.W.3d 699, 704 (Tex. App.-Houston [1st Dist.] 2014, no pet.). The non-movant must produce sufficient evidence to conclusively prove or at least raise a material issue of fact as to each element of the affirmative defense. Leonard, 551 S.W.3d at 909-10; see Wiggins v. Overstreet, 962 S.W.2d 198, 200 (Tex. App.-Houston [14th Dist.] 1998, pet. denied).

         In granting summary judgment to the Bank, the trial court necessarily construed the guaranties. Courts construe unambiguous guaranty agreements as any other contract, i.e., by determining the true intentions of the parties as expressed in the contract. See Moayedi v. Interstate 35/Chisam Road, L.P., 438 S.W.3d 1, 6 (Tex. 2014). We examine and consider the entire writing to determine the parties' intent. See id. We review de novo a trial court's construction of an unambiguous contract. Id. No party contends the guaranties are ambiguous.

         B. Appellants' Affirmative Defenses

         In their first issue, appellants contend the trial court erred in granting summary judgment in the Bank's favor because they raised a fact issue on their affirmative defenses of fraudulent inducement, negligent misrepresentation, mutual mistake, and equitable estoppel. Appellants do not argue that the Bank failed to establish conclusively all elements of its breach of contract claim, and they do not otherwise contest their liability under the guaranties in the event their affirmative defenses fail as a matter of law. We agree that the Bank met its initial summary judgment burden. Accordingly, appellants bore the burden to bring forward sufficient summary judgment evidence to raise a fact issue on each element of their affirmative defenses. Leonard, 551 S.W.3d at 909-10. As we explain, appellants either could not or did not meet this burden as to each affirmative defense.

         1. Fraudulent Inducement and Negligent Misrepresentation Defenses

         In their live pleading, appellants alleged that the Bank represented to them that it would obtain a valid security interest in the Barquero SWD as collateral for Barquero's note, but that the Bank failed to do so. In support of this defense, appellants alleged that the Bank's misrepresentation about the collateral was negligent or fraudulent and induced them into signing their guaranties. We begin with the fraudulent inducement defense.

         To prevent the guaranties' enforcement based on the Bank's alleged fraudulent inducement, [7] appellants had to show among other things that they justifiably relied on the Bank's representations.[8] JPMorgan Chase Bank, N.A. v. Orca Assets, G.P., LLC, 546 S.W.3d 648, 653-54 (Tex. 2018); Simulis, L.L.C. v. Gen. Elec. Cap. Corp., 439 S.W.3d 571, 577 (Tex. App.-Houston [14th Dist.] 2014, no pet.); see also Tex. Black Iron, Inc. v. Arawak Energy Int'l Ltd., 566 S.W.3d 801, 819-20 (Tex. App.-Houston [14th Dist.] 2018, no pet. h.) (identifying reliance as element of fraudulent inducement affirmative defense). Although justifiable reliance usually presents a fact question, it may be negated as a matter of law when circumstances show that the reliance cannot be justified. See JPMorgan Chase, 546 S.W.3d at 654; Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 424-25 (Tex. 2015) (per curiam) ("[A]s Texas courts have repeatedly held, a party to a written contract cannot justifiably rely on oral misrepresentations regarding the contract's unambiguous terms.") (citing Thigpen v. Locke, 363 S.W.2d 247, 251 (Tex. 1962)); DRC Parts & Accessories, L.L.C. v. VM Motori, S.P.A., 112 S.W.3d 854, 858-59 (Tex. App.-Houston [14th Dist.] 2003, pet. denied) (reliance on oral representation that is directly contradicted by express terms of written agreement not justified as a matter of law).

         Though as a traditional summary judgment movant on its breach-of-guaranty claim the Bank had no burden to negate appellants' affirmative defenses, [9] the Bank's motion challenged the element of justifiable reliance. The Bank argued preemptively that the guaranties' written terms contradict appellants' purported reliance on the Bank's alleged oral misrepresentation that it had perfected, or would perfect, its security interest in the Barquero SWD. Thus, the Bank contends, appellants' fraudulent inducement defense fails as a matter of law on the justifiable reliance element. We agree.

         Appellants' guaranties state explicitly that appellants' obligations would be "unconditional irrespective of the genuineness, validity, regularity[, ] or enforceability" of the loan or assignment of the Barquero SWD. By signing the guaranties, appellants waived "the benefit of all principles or provisions of law, statutory or otherwise" that contradict the terms of the guaranties and agreed that their obligations would not be subject to any legal or equitable discharges. Appellants further agreed that "any security for the Debt may be modified, exchanged, surrendered[, ] or otherwise dealt with," and that in any event the Bank was not required to proceed first against the borrower or exhaust any collateral before enforcing the guaranties. Because the guaranties' express terms make clear that the Bank could have abandoned or "surrendered" the collateral altogether, whether the Bank actually secured the collateral or whether the collateral is actually available is immaterial. If, for example, the Bank secured the assignments of leases and then released the collateral, appellants concede they would be liable on their guaranties. The guaranties' language places the risk for any failure of collateral squarely on appellants, not the Bank. Assuming the Bank's representatives made the statements appellants attribute to them, appellants could not have relied justifiably on those statements as a matter of law because they contradict the unambiguous text of the guaranties that they admittedly read and signed. See, e.g., JPMorgan Chase Bank, 546 S.W.3d at 659-60; Nat'l Prop. Holdings, 453 S.W.3d at 424-26; DRC Parts & Accessories, 112 S.W.3d at 858-59.

         Wyrick's argument on reliance fails for an additional reason. A party may not rely justifiably on a fraudulent misrepresentation when "he knows that it is false or its falsity is obvious to him." Triesch v. Triesch, No. 03-15-00102-CV, 2016 WL 1039035, at *2 (Tex. App.-Austin Mar. 8, 2016, no pet.) (mem. op.). This rule applies to Wyrick because at the time he signed his guaranty, he knew that the Bank did not have a valid assignment of the lease: "I know that for a fact because the [Bank representatives] told me they were going to have to go to Mr. B[]aty to get that. And I arranged for that to happen." ...

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