Martin, William v. PlainsCapital Bank
05-10-00235-CV
| Tex. App. | Mar 27, 2015Background
- PlainsCapital Bank conducted a non-judicial foreclosure sale under Tex. Prop. Code § 51.002 and purchased the property at the trustee sale for $539,000, leaving a deficiency relative to the secured debt.
- PlainsCapital later sold the property 15 months after the foreclosure for $599,000 and sued to recover the remaining debt, effectively using the later sale price to reduce the deficiency it sought.
- Martin (borrower) invoked Tex. Prop. Code § 51.003, seeking an offset based on the property’s fair market value (FMV) as of the foreclosure date; § 51.003(b)(5) permits consideration of a future sales price only as evidence with any necessary discounting to arrive at FMV on the foreclosure date.
- The trial court relied on the $599,000 post-foreclosure sale price (less holding and sales costs) without applying a discount to equate that price to FMV on the foreclosure date and awarded a limited offset.
- The dissent argues § 51.003 applies to any post-foreclosure deficiency action and that the statute requires the fact-finder to determine FMV as of the foreclosure date (willing buyer/willing seller standard), using future sale evidence only if discounted/adjusted to reflect that prior date.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 51.003 apply when a lender sues after a § 51.002 foreclosure but uses a later private sale price to compute the deficiency? | PlainsCapital: § 51.003 doesn’t apply because it sued for a deficiency measured using the later sale price rather than the trustee-sale price. | Martin: § 51.003 governs any deficiency action following a § 51.002 sale; later sale price is relevant only as evidence for FMV on foreclosure date. | Dissent: § 51.003 applies to any post-foreclosure deficiency suit; lender may not bypass statutory offsets by relying on a later sale price. |
| What is the meaning of “fair market value” in § 51.003? | PlainsCapital: (implicit) statute allows reliance on subsequent sale price to compute deficiency. | Martin: FMV means the historical willing-buyer/willing-seller value as of the foreclosure date; future-sale evidence is admissible only to establish that historic FMV. | Dissent: FMV retains its traditional meaning; § 51.003 permits forward-looking evidence only to help determine FMV as of the foreclosure date. |
| May a trial court use a future sales price without discounting to determine FMV as of the foreclosure date? | PlainsCapital: trial court may consider future sale price and need not apply a discount if it reasonably finds that price reflects prior FMV. | Martin: the statute requires the court to show necessity and amount of any discount when relying on future-sale evidence to arrive at FMV on the foreclosure date. | Dissent: Future-sale price is competent evidence only if adjusted/discounted as necessary to reflect FMV at foreclosure; relying on it without such adjustment lacks evidentiary support. |
| Was the trial court’s finding of FMV supported by competent evidence when it used $599,000 without discounting? | PlainsCapital: exclusion of its discount evidence did not change the outcome; trial court’s calculation was within discretion. | Martin: no competent evidence ties the $599,000 to FMV at foreclosure; expert testimony showed substantially higher FMV at foreclosure date. | Dissent: No, absent evidence converting the future sale price to the foreclosure-date FMV, the trial court’s finding is unsupported and remand is required. |
Key Cases Cited
- Moayedi v. Interstate 35/Chisam Road, L.P., 438 S.W.3d 1 (Tex. 2014) (deficiency-judgment measurement principles)
- Tarrant Sav. Ass’n v. Lucky Homes, Inc., 390 S.W.2d 473 (Tex. 1965) (definition of deficiency judgment components)
- Sheshunoff & Co. v. Scholl, 564 S.W.2d 697 (Tex. 1978) (discounting future payments to present value in damages)
- Republic Bankers Life Ins. Co. v. Jaeger, 551 S.W.2d 30 (Tex. 1976) (present value discounting principle for future payments)
- Alamo Lumber Co. v. Gold, 661 S.W.2d 926 (Tex. 1983) (courts may judicially notice forced-sale vs. private-sale value differences)
- City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177 (Tex. 2001) (historic fair market value definition and appraisal methods)
- Pollack v. Pollack, 39 S.W.2d 853 (Tex. Comm’n App. 1931) (discounting future payments to present worth)