431 S.W.3d 110
Tex. App.2013Background
- Wallis State Bank sued Grace Interest, Cypresswood, and the Morrows for the deficiency after foreclosure of Cypresswood’s loan.
- The Bank obtained traditional summary judgment; the Plan in Cypresswood’s bankruptcy contemplated Grace’s assumption and continuation of the loan obligations.
- Guaranty agreements and post-bankruptcy Assumption Agreement waived Texas Anti-Deficiency Statute rights; renewal and modification agreements maintained liens and obligations.
- Grace assumed the Note, with the Plan allowing for forbearance on foreclosure if payments were made; default led to foreclosure and sale of the Property.
- Foreclosure sale yielded a $370,606.26 deficiency; the Bank later added 2010 real estate taxes paid by the Bank to the balance.
- Appellants challenged the judgment on multiple grounds but the trial court granted summary judgment for the Bank and struck some evidence; Appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject matter jurisdiction | Bank asserted plan allowed suit; plan execute-focused. | Appellants claimed bankruptcy court retained exclusive jurisdiction. | Trial court had jurisdiction; plan permitted proceeding |
| Abatement/Consolidation | Bank supported not abating; separate Regions case insulated. | Appellants wanted abate and consolidate with Regions case. | Issue not preserved; no reversible error |
| Arbitration | Bank move encompassed claims outside arbitration. | Arbitration agreement existed and covered claims. | No valid arbitration agreement found; court did not compel arbitration |
| Grounds for summary judgment | Motion stated proper grounds; evidence admissible. | Grounds not adequately specified; evidence contested. | Arguments not preserved; summary judgment proper |
| Waiver of Anti-Deficiency Statute | Waivers valid post-bankruptcy agreements; enforceable. | Waivers ineffective or not conspicuous. | Waivers valid; appellants waived rights |
Key Cases Cited
- In re Craig’s Stores, Inc., 266 F.3d 388 (5th Cir. 1991) (bankruptcy plan execution can terminate bankruptcy jurisdiction except for plan execution)
- In re U. S. Brass Corp., 301 F.3d 296 (5th Cir. 2002) (bankruptcy jurisdiction after plan depends on execution requirements)
- Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267 (Tex. App.—Houston [1st Dist.] 2004) (waiver of anti-deficiency statute rights upheld)
- Haggard v. Bank of the Ozarks, Inc., 668 F.3d 196 (5th Cir. 2012) (waiver of fair market value set-off upheld; public policy considerations limited)