Lory K. Wilson, Gregory S. Venable, and James B. Johnson v. Capital Partners Financial Group USA, Inc. and BTH Bank, National Association
05-20-00704-CV
| Tex. App. | Jul 5, 2022Background
- In August 2016 Capital Partners leased medical equipment to Fast Lane Emergency Room; appellants (Wilson, Venable, Johnson) signed personal guarantees.
- Capital Partners borrowed from BTH, granted BTH a security interest in the lease and assigned the lease to BTH.
- Fast Lane defaulted in October 2017; Capital Partners sent demand letters and on June 20, 2018 Michael Austin emailed guarantors saying Capital Partners would inventory, remove (July 9–10) and sell “permissible equipment,” noting bids for CT and radiology equipment.
- Advantage Healthcare removed and sold equipment; Capital Partners and BTH sued the guarantors for the resulting deficiencies; Capital Partners moved for summary judgment on contract claim and BTH sought summary judgment on loan defaults.
- The trial court granted summary judgment for appellees and entered large deficiency awards; appellants appealed, arguing the disposition notice violated UCC §9.613.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of the UCC (lease vs. security interest) | Lease functioned as a security interest; UCC governs | Lease is a disguised security interest; UCC applies | Court: Lease creates a security interest under §1.203(b)(4); UCC ch. 9 applies |
| Adequacy of disposition notice under UCC §9.613 | June 20 email (and demand letters) failed to provide required information (collateral description, method of sale, accounting right, time/place) | Email (plus demand letters) gave reasonable notice and identified collateral and sale plans | Court: Email failed to include multiple required elements; whether the notice was nevertheless sufficient is a fact issue; summary judgment inappropriate |
| Remedy for defective notice | Defective notice should bar any deficiency recovery (take-nothing) | §9.626 allows a commercial creditor to recover a deficiency despite defects, subject to limits | Court: §9.626 displaces the absolute-bar rule; defective notice does not automatically preclude a deficiency judgment |
| Appropriateness of summary judgment | Appellants sought summary judgment dismissal based on defective notice | Appellees sought summary judgment awarding deficiencies | Court: Fact issues about reasonable notice preclude summary judgment for either side; trial court's summary judgment reversed and case remanded |
Key Cases Cited
- Tex. Workforce Comm’n v. Wichita Cnty., 548 S.W.3d 489 (Tex. 2018) (standard of review for summary judgment)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (credit and inference principles in summary-judgment review)
- Regal Fin. Co., Ltd. v. Tex Star Motors, Inc., 355 S.W.3d 595 (Tex. 2010) (UCC reasonableness requirement for disposition notice)
- SMS Fin., LLC v. ABCO Homes, Inc., 167 F.3d 235 (5th Cir. 1999) (purpose of UCC disposition notice: opportunity to discharge debt or arrange purchaser)
- In re ProvideRx of Grapevine, LLC, 507 B.R. 132 (Bankr. N.D. Tex. 2014) (consideration of multiple documents together for notice)
- Crow–Southland Joint Venture No. 1 v. N. Fort Worth Bank, 838 S.W.2d 720 (Tex. App.—Dallas 1992) (sufficiency of collateral description)
- Lister v. Lee–Swofford Invs., L.L.P., 195 S.W.3d 746 (Tex. App.—Amarillo 2006) (definition and significance of public disposition under UCC)
- Beardmore v. Am. Summit Fin. Holdings, LLC, 351 F.3d 352 (8th Cir. 2003) (effect of §9.626 in displacing absolute-bar rule)