AMK 2000-A, L.L.C. v. Maliek
411 F. App'x 703
5th Cir.2011Background
- Guarantors signed a guaranty for AMK Enterprises that secured a $1,250,000 loan to U.S. Bank at 9.5% interest.
- AMK defaulted, triggering Appellants’ liability on the guaranty.
- U.S. Bank sought damages totaling $2,215,870.07, including a Defeasance Amount of $754,656.59.
- District court granted partial summary judgment on liability (March 18, 2010) and on damages (April 7, 2010).
- Appellants challenged only the Defeasance Amount as an unenforceable penalty and sought leave to amend their answer.
- The district court denied the motion to amend as futile; the district court awarded the Defeasance Amount incorporated in the damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Defeasance Amount is an unenforceable penalty under Texas law. | Appellants (as borrowers) argue it is an excessive penalty. | U.S. Bank argues the Defeasance Amount is a permitted prepayment premium under Texas law. | No; Defeasance Amount is not an unenforceable penalty under Texas law. |
| Whether the district court properly denied Appellants’ motion to amend. | Amendment should have been allowed to plead the penalty issue. | amendment would be futile; issue lacking support. | Properly denied; amendment would have been futile. |
| Whether the damages calculation including the Defeasance Amount was correct. | Defeasance Amount should be excluded as improper. | Defeasance Amount proper under the note’s terms. | Damages including the Defeasance Amount were properly calculated. |
| Whether Texas usury arguments were waived on appeal. | Usury was raised though not briefed. | Waived for lack of argument supporting usury claim. | Usury arguments waived on appeal. |
Key Cases Cited
- Parker Plaza W. Partners v. UNUM Pension & Ins. Co., 941 F.2d 349 (5th Cir. 1991) (prepayment penalties permitted; acceleration not forbidden)
- Groseclose v. Rum, 860 S.W.2d 554 (Tex. App. 1993) (prepayment penalties valid under Texas law)
- Bearden v. Tarrant Sav. Ass’n, 643 S.W.2d 247 (Tex. App. 1982) (no requirement for prepayment penalty to be reasonable)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (summary judgment burden-shifting standard; evidence needed)
- Avatar Exploration, Inc. v. Chevron, U.S.A., Inc., 933 F.2d 314 (5th Cir. 1991) (amendment futility standard; futility may bar amendment)