Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg
appeal from the 138th District Court of Cameron County,
Chief Justice Contreras and Justices Rodriguez and Benavides
M. BENAVIDES, JUSTICE
Pineda REO, LLC appeals from a take-nothing judgment from its
suit to collect on commercial loan guaranties.  Appellees,
collectively referred to as Guarantors,  also
cross-appeal challenging the trial court's grant of
partial summary judgment in Pineda's favor before trial.
In addition, Guarantors also raise two conditional cross
points challenging Pineda's attorneys' fees and the
manner in which the cap on the guaranties should be applied.
issues one and two, Pineda contends it should prevail as a
matter of law on Guarantors' defense of wrongful
foreclosure and its claim for offset by the anti-deficiency
statute because Guarantors waived their rights in the 2007
Guaranties. By issues three, four, and seven, Pineda
challenges the sufficiency of the evidence on Guarantors'
defense of wrongful foreclosure. By issue five, Pineda
asserts that as a matter of law the 2007 Guaranties did not
release Drs. Guajardo and Wong from their previous
guaranties. By issue six, Pineda challenges the trial
court's failure to issue a deficiency judgment based upon
the jury verdict.
reverse and render in part, reverse and remand in part, and
affirm in part.
2004, a group of Brownsville physicians and others formed
Brownsville MD Ventures, L.L.C. (MD Ventures) to purchase the
Brownsville Surgical Hospital (BSH). The purchase was
supported by an $8, 000, 000 loan from Texas State Bank (TSB)
and guaranteed by the investors.
September 2006, MD Ventures borrowed another $6, 000, 000
from TSB which was also guaranteed by the investors. The 2004
and 2006 guaranties were nearly identical.
November 2007, TSB loaned MD Ventures additional money and
consolidated the 2004 and 2006 notes for a total loan amount
of $16, 852, 317. New guaranty documents were signed in 2007,
and the 2007 Note stated:
The note hereby secured is a master note and represents
funds to be advanced to grantor pursuant to request for
draws and to be used for the renewal and extension of two
existing loans in favor of Texas State Bank . . . with the
remaining balance to be used for the expansion of the
existing facility located on the above-described property .
. . .
Loan Agreement listed the Guarantors as: Gerardo Jesus
Sanchez, Asim Zamir, The Guajardo Family Limited Partnership,
C. Lynn Anderson, Jose Humberto Jimenez, Charles Zavala,
Bradley Nordyke, The Lomix Limited Partnership, Robert
Lekach, Michael S. Gomez, Madhaven Pisharodi, Vicki Miles
Rodriguez, Chester Gonzalez, and Miguel A. Molinas. Each of
the listed Guarantors executed new guaranty documents.
Several of the Guarantors testified that TSB's attorney
drew up all of the loan and guaranty documents in 2004, 2006,
2009, TSB merged with Compass Bank (Compass). Compass, an
Alabama corporation, also acquired several other Texas banks
at the same time. Compass was owned by BBVA, a Spanish bank.
2010, BSH discovered that it had water infiltration and mold
resulting from construction defects during renovations. The
mold eventually caused BSH to seal off the second floor which
included operating and patient rooms. In 2011, the entity
that operated BSH stopped paying rent. By the end of 2012,
the entity operating BSH owed MD Ventures $3, 000, 000 in
2012, MD Ventures decided to either renegotiate the loan or
sell BSH. MD Ventures approached Compass and negotiated
interest only payments on the note.
2012, Compass decided to liquidate some of its commercial
loan portfolio. It privately auctioned several portfolios of
commercial loans, including MD Ventures' 2007 Note, to
large corporate bidders who participated by invitation.
Compass kept the sale of the commercial loan portfolios
confidential. The information available to the bidders
included the Guarantors' confidential financial
information. The Guarantors knew nothing about the planned
sale of their loan. In June 2012, Compass commissioned an
appraisal of BSH. The appraisal estimated BSH's fair
market value at $21.9 million. Investor bidding on
Compass' loan portfolio including MD Ventures' note
began September 4, 2012.
September 2012, MD Ventures advised Compass of a $15 million
offer to buy BSH by Alamo Street Development, but Compass did
not respond. MD Ventures furnished Compass with the proposed
real estate contract on October 2, 2012 with a projected
closing date of November 15, 2012. If Compass approved the
contract, it would receive $12, 000, 000, which was less than
the amount due on the note. Compass never responded regarding
this prospective sale. MD Ventures did not know that Compass
was trying to sell the note at this time.
October 19, 2012, MD Ventures gave Compass permission for
prospective purchasers of the note to review confidential
financial information related to BSH and the Guarantors. The
bank sold one loan portfolio, including MD Ventures'
note, to Istrouma Trustee, LLC as trustee for Pineda Grantor
Trust, II on November 1, 2012. The amount Pineda
paid for the 2007 Note was excluded from evidence at trial.
However, Guarantors learned in discovery in other litigation
that Pineda's accepted bid for the 2007 Note was
approximately 54% of its value to Compass, as part of
Pineda's overall bid for the entire loan portfolio.
January 7, 2013, Pineda's attorney sent the first of a
series of letters to MD Ventures and the Guarantors advising
them that the note was in default and that Pineda would seek
to exercise all of its rights under the note and the
guaranties. In August 2013, Pineda accelerated the note and
demanded payment in full by September 3, 2013.
August 26, 2013, MD Ventures filed a voluntary petition in
bankruptcy and obtained a stay of actions related to BSH.
Pineda then initiated this action against the Guarantors to
collect the alleged deficiency.
16, 2014, the bankruptcy court lifted the automatic stay to
allow foreclosure. Pineda posted BSH for foreclosure in
August 2014 and sent the Guarantors a letter dated August 12,
2014 with a Notice of Substitute Trustee's Sale scheduled
for September 2, 2014. By that time BSH was vacant. The
Guarantors sought a temporary restraining order and temporary
injunction in this action to prevent foreclosure on the
grounds that they had a prospective buyer for BSH for $18
million. The trial court denied the motion on August 19,
2014. BSH was scheduled to be sold at foreclosure on
September 2, 2014 at 1:00 p.m.
the September 2, 2014 sale, Dennis Stratford, the senior vice
president in charge of asset management for Capital Crossing,
received several calls regarding the BSH sale. The inquiries
were from two different entities who were interested in BSH,
one of which was Optima. Optima was trying to prevent the
foreclosure sale and purchase BSH through the bankruptcy
proceedings. Another prospective buyer asked what
Pineda's position was going to be at the auction.
According to Stratford, he refused to discuss Pineda's
bidding position and invited the prospective buyer to attend
the foreclosure auction.
morning of September 2, 2014, MD Ventures attempted to
postpone the foreclosure sale in the bankruptcy court. MD
Ventures had reached a tentative agreement with Optima for an
immediate payment of $400, 000 to Pineda. The bankruptcy
court refused to stay the sale but told Pineda that if $400,
000 was delivered to it by 1:00 p.m., they could not
foreclose: "if you've got $400, 000 I'm going to
stop the sale. You get $400, 000 before 1:00 o'clock . .
. the sale is off." The bankruptcy court did not sign an
order but the clerk made the following entry on the
bankruptcy court's electronic docket sheet:
"Arguments heard. Motion approved. Debtor was ordered to
include specific aspects in the plan. The sale was cancelled.
Parties are to process payment later today. A detailed order
foreclosure auction was held shortly after 1:00 p.m. on
September 2, 2014 on the Cameron County Courthouse steps.
According to Jeffrey Livingston, the attorney hired by Pineda
to bid on the hospital at the foreclosure sale, he made a $7
million credit bid for BSH. No one else bid. The Substitute
Trustee's Deed memorializing the sale was filed with
Cameron County later that day, but the amount paid for BSH
was left blank.
September 3, 2014, MD Ventures filed a motion to dismiss the
bankruptcy proceedings. MD Ventures filed a petition in
intervention in this case in November 2014 in which it
claimed wrongful foreclosure against Pineda. Pineda opposed
filed its first no-evidence motion for summary judgment in
November 2014 as to the Guarantors' defenses of: usury,
failure to mitigate damages, fraud, unclean hands, material
alteration of the note, offset/setoff, limitations, and
negligence. Pineda also sought a ruling dismissing other
defenses as not recognized by Texas law.
filed a traditional motion for partial summary judgment
seeking recovery of a deficiency judgment against the
Guarantors and daily interest. Alternatively, Pineda sought
summary judgment declaring that it: owned the Guaranties; MD
Ventures was in default by August 14, 2014; the Guarantors
defaulted; they breached their guaranties; and Pineda was
damaged. Pineda next filed traditional and no-evidence
motions for summary judgment on the Guarantors'
counterclaims in December 2014.
full day hearing on February 11, 2015, the trial court issued
an order on February 19, 2015:
1. striking MD Venture's plea in intervention;
2. granting Pineda's motion for protective order and
precluding discovery on the value of BSH and Pineda's
purchase of BSH note and guaranties; and
3. granting Pineda's motion for summary judgment in part
and dismissing with prejudice Guarantors' alleged
a. civil conspiracy to breach the common law duty of good
faith and fair dealing,
b. breach of the duty of good faith and fair dealing, and
c. bad faith and unreasonable foreclosure.
Guarantors filed responses to Pineda's additional motions
and sought reconsideration of the protective order. The trial
court denied the motion to reconsider.
Drs. Guajardo and Wong filed motions for summary judgment
asserting that they were not liable on the 2007 Note because
they did not sign personal guaranties. The Guarantors also
sought a continuance of the hearing on the motions for
summary judgment to obtain and compel discovery against
October 7, 2015, the trial court conducted another lengthy
hearing and took the matters under advisement. On October 30,
2015, without ruling on Guarantors' pending discovery
motions, the trial court advised the parties that
Pineda's various motions for summary judgment to dismiss
Guarantors' remaining counter-claims and defenses, and
Pineda's motion for a deficiency judgment would be
granted. The Guarantors objected. The trial court held
another hearing and signed a final judgment dated February
16, 2016, disposing of all claims in Pineda's favor. The
trial court awarded Pineda a deficiency judgment against each
of the Guarantors, including Drs. Guajardo and Wong, up to
the limits of liability set forth in the individual
guaranties. Guarantors filed motions to reconsider the grants
of summary judgment against them and Drs. Guajardo and Wong
filed a motion for new trial.
March 18, 2016, the Guarantors filed a motion to recuse the
trial judge. After the motion was filed, the trial judge
voluntarily recused himself and a visiting judge was
April 20, 2016, the newly-appointed visiting judge heard the
motions for new trial and to reconsider the summary judgments
granted on February 2016. The newly-appointed judge
determined there was a fact issue regarding release of the
2006 guaranties and granted Drs. Guajardo and Wong's
motion for new trial. The trial court later determined there
was a fact issue as to the Guarantors' defense of
wrongful foreclosure and granted their motion for
reconsideration only on that issue. Those two issues
proceeded to jury trial.
jury found that Pineda wrongfully foreclosed, that the market
value of BSH at the time of foreclosure was $14 million, and
that Drs. Guajardo and Wong were not individually liable on
the 2007 Note. It assessed $225, 000 for Pineda's past
attorneys' fees and assessed conditional attorneys'
fees for appeal against the Guarantors.
a hearing on post-judgment motions, Guarantors' counsel
argued that the finding of wrongful foreclosure precluded a
deficiency judgment for Pineda. The trial court agreed and
signed a judgment on May 17, 2017, that Pineda take nothing
against the Guarantors, and dismissed Guarantors'
counterclaim for wrongful foreclosure. This appeal followed.
issues three and four, and part of issue seven, Pineda argues
that Guarantors' evidence of wrongful foreclosure is
legally and factually insufficient.
Standard of Review
reviewing a legal sufficiency challenge, we consider the
evidence "in the light favorable to the verdict,
crediting favorable evidence if reasonable jurors could, and
disregarding contrary evidence unless reasonable jurors could
not." City of Keller v. Wilson, 168 S.W.3d 802,
807 (Tex. 2005). "Our traditional legal sufficiency-or
'no evidence'-standard of review upholds a finding
supported by '[a]nything more than a scintilla of
evidence.'" State Office of Risk Mgmt. v.
Pena, 548 S.W.3d 84, 90 (Tex.App.-Corpus
Christi–Edinburg 2018, no pet.). "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).
Because it is the jury's province ...