Martin, William v. PlainsCapital Bank
402 S.W.3d 805
Tex. App.2013Background
- Foreclosure on a residential construction loan; PlainsCapital Bank held the note and security interests.
- Foreclosure occurred nonjudicially under Texas Property Code §51.002; sale price $539,000.
- Martin defaulted; property later sold at auction; PlainsCapital purchased for $539,000 and sought damages.
- Martin and PlainsCapital litigated counterclaims; trial focused on fair market value of the property.
- Trial court concluded §51.003 did not apply and awarded PlainsCapital damages based on the post-foreclosure sale price ($599,000) with offsets; court did not tie FMV to foreclosure date.
- This court reverses and remands to determine proper applicability of §51.003 and the fair market value as of the foreclosure date, along with damages and fees on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §51.003 applies when damages are based on resale price | Martin: §51.003 applies; deficiency based on FMV less debt. | PlainsCapital: §51.003 does not apply when damages are based on resale price. | §51.003 applies; court erred in denying the defense. |
| Whether evidence supports damages of $332,927.27 | Martin: FMV on foreclosure date was $825,000; no deficiency. | PlainsCapital: FMV based on factors under §51.003; $599,000 sale relevant. | Evidence insufficient to support damages; remand for FMV determination. |
| Whether attorney's fees were proper given the counterclaim outcome | Fees based on favorable ruling for PlainsCapital on counterclaim. | Fees depend on ultimate success on the merits. | Not reached; remand for determination of damages first. |
Key Cases Cited
- Preston Reserve, L.L.C. v. Compass Bank, 373 S.W.3d 652 (Tex. App. C Houston [14th Dist.] 2012) (FMV and section 51.003 considerations for deficiency claims)
- Cabot Capital Corp. v. USDR, Inc., 346 S.W.3d 634 (Tex. App. C El Paso 2009) (Affirmative defense under §51.003; logical framework for FMV considerations)
- Moore v. Bank Midwest N.A., 39 S.W.3d 395 (Tex. App. C Houston [1st Dist.] 2001) (FMV determination under §51.003; use of competent evidence)
- City of Pearland v. Alexander, 483 S.W.2d 244 (Tex. 1972) (Definition of fair market value for real property)
- Long v. NCNB-Tex. Nat'l Bank, 882 S.W.2d 861 (Tex. App. C Corpus Christi 1994) (Legislative intent behind chapter 51 provisions)
- Trunkhill Capital, Inc. v. Jansma, 905 S.W.2d 464 (Tex. App. C Waco 1995) ( Legislative history of deficiency liens)
- Langever v. Miller, 76 S.W.2d 1025 (Tex. 1934) (Early deficiency regulation considerations)
- Exxon Corp. v. Middleton, 613 S.W.2d 240 (Tex. 1981) (Economic concepts in FMV determinations)