John R. Holley and Ailza M. Holley v. Holley and Taylor, Inc. Pamela K. Holley, Individually and as Independent of the Estate of Mary Marshall Holley, And Melinda McDaniel, 11-15-00046-CV

John and Ailza Holley (Appellants) executed a $1,215,352 promissory note (2003) for which Holley & Taylor, Inc. (HTI) granted a deed of trust on HTI real estate; John signed the deed as HTI president.
Pamela Holley sued derivatively for HTI in 2008 alleging Appellants wrongfully caused HTI to pledge its property; the suit resolved by a mediated settlement agreement on December 15, 2008.
In 2014, HTI sold its property and paid $970,648.73 to Citizens National Bank to clear the loan so title could be conveyed; HTI then sued/Appellees counterclaimed seeking equitable subrogation and foreclosure on Appellants’ other properties.
Trial court awarded HTI $970,648.73 plus interest and fees and declared HTI equitably subrogated to the bank’s liens on Appellants’ properties, ordering foreclosure by sale.
Appellants appealed, raising: (1) judge disqualification based on a former partner’s prior representation, (2) that the 2008 settlement released HTI’s subrogation claim, and (3) insufficient evidence HTI paid involuntarily and failed to prove equitable subrogation elements.

Issue	Plaintiff's Argument (Appellants)	Defendant's Argument (HTI/Respondents)	Held
Judge disqualification	Judge Ellis should be disqualified because his former law partner Bell previously represented HTI/HCC in matters related to the loan	Bell’s 1980s representation was not the same matter; relevant events occurred after Ellis left partnership	Denied — no disqualification; prior representation was not the same matter
Effect of 2008 settlement	Settlement released all claims arising from the loan transaction, barring HTI’s later subrogation claim	Settlement left the deed of trust and bank’s liens intact and did not bar HTI from later acquiring the bank’s rights by paying the debt	Overruled — settlement did not preclude HTI’s claim for equitable subrogation
Involuntariness of payment / elements of subrogation	HTI paid voluntarily (no demand/foreclosure) and failed to prove elements/balance of equities for subrogation	Bank threatened foreclosure; HTI paid to protect its interest and thus paid involuntarily; Appellants were primarily liable; equities favor subrogation	Affirmed — evidence supports involuntary payment, primary liability, and favorable balance of equities; equitable subrogation applies

Frymire Eng’g Co. ex rel. Liberty Mut. Ins. Co. v. Jomar Int’l, Ltd., 259 S.W.3d 140 (Tex. 2008) (defines equitable subrogation and its function)
Murray v. Cadle Co., 257 S.W.3d 291 (Tex. App.—Dallas 2008) (elements of equitable subrogation: primary liability and involuntary payment; balance of equities)
Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765 (Tex. 2007) (equitable subrogation applies when one not acting voluntarily pays another’s debt)
Keck, Mahin & Cate v. Nat’l Union Fire Ins. Co. of Pittsburg, PA, 20 S.W.3d 692 (Tex. 2000) (releases may cover future or unknown claims depending on contract language)
Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931 (Tex. 1991) (release must mention the claim to be released; construe releases to effect parties’ intent)
Worford v. Stamper, 801 S.W.2d 108 (Tex. 1990) (when no findings requested, appellate court implies necessary findings to support judgment)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for reviewing legal and factual sufficiency of evidence)
Gant v. Stewart, 347 S.W.2d 1 (Tex. Civ. App.—Waco 1961) (subrogation claimant enforces rights and liens of prior lienholder)