Plainscapital Bank v. William Martin
459 S.W.3d 550
Tex.2015Background
- William Martin defaulted on a construction loan secured by a deed of trust; PlainsCapital foreclosed and purchased the property at the trustee sale for $539,000 while the unpaid debt exceeded that amount.
- PlainsCapital later sold the property for $599,000 (15 months after foreclosure); it had earlier estimated ‘‘as‑is’’ value at ~$770,000 and anticipated ~30% holding/disposition costs.
- Martin sued (then dismissed some claims) and asserted as an affirmative defense under Tex. Prop. Code § 51.003 that the property’s fair market value at the foreclosure date exceeded the sale price (claiming $825,000), entitling him to an offset against any deficiency.
- The trial court held § 51.003 inapplicable, found PlainsCapital entitled to damages and attorney’s fees, and—alternatively—made § 51.003 findings that yielded a § 51.003 fair market value of $477,715.65 (using the post‑foreclosure sale price less actual holding/sale costs) so Martin was not entitled to an offset.
- The court of appeals reversed, concluding § 51.003 applied, that “fair market value” meant the historical willing‑buyer/willing‑seller definition, and that the trial court erred by relying on the later sale price without linking it to value at foreclosure; it remanded for further proceedings.
- The Texas Supreme Court reversed the court of appeals: it held § 51.003 applies, that the statutory phrase “fair market value” is to be determined using the historical concept but as informed by the categories of competent evidence listed in § 51.003(b) (including a future sales price subject to adjustment), and it remanded the case to the court of appeals for further consideration of factual sufficiency and attorney‑fee issues.
Issues
| Issue | Martin's Argument | PlainsCapital's Argument | Held |
|---|---|---|---|
| Whether Tex. Prop. Code § 51.003 applies to the bank’s suit for a deficiency | § 51.003 governs all suits to recover a deficiency after a nonjudicial foreclosure; Martin entitled to statutory protections/offset | § 51.003 applies only when deficiency is calculated from the foreclosure sale price (word “the”) and therefore is inapplicable because bank used later sale price | § 51.003 applies to this suit; “the” in context does not limit statute to only deficiencies computed strictly from the foreclosure sale price |
| Proper meaning of “fair market value” in § 51.003 | Historical willing‑seller/willing‑buyer definition should govern | Statute’s enumerated evidentiary factors modify the concept; future sales price may be competent evidence | “Fair market value” = historical concept but may be informed/modified by the competent evidence categories listed in § 51.003(b) (including future sale price/discounting) |
| Use of post‑foreclosure sale price and necessity of discounting to determine § 51.003 value | Future sale price is not per se competent unless tied to value at foreclosure; discounting/other evidence needed to convert future price to foreclosure‑date value | § 51.003(b) expressly authorizes consideration of future sales price and holding/sale costs; trial court may, in its discretion, use the later sale price and actual costs | The court may consider the later sale price as competent evidence under § 51.003(b); trial court did not abuse discretion in using the $599,000 sale price and deducting actual holding/sale costs (no required discount shown here) |
| Sufficiency of evidence for holding/sale costs, damages, and attorney’s fees | Martin contends the trial court’s use of post‑foreclosure costs and resale price lacks evidentiary support and he preserved factual sufficiency challenges | Bank says Martin failed to preserve/brief sufficiency challenges; trial court’s findings were supported | Trial court’s findings on actual holding and sale costs were legally sufficient based on bank testimony and records; factual sufficiency challenges and attorney‑fee issues are remanded to the court of appeals for further review |
Key Cases Cited
- City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177 (Tex. 2001) (articulates the historic willing‑buyer/willing‑seller definition of fair market value)
- Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1 (Tex. 2014) (section 51.003 offset operates as an affirmative defense)
- Helena Chemical Co. v. Wilkins, 47 S.W.3d 486 (Tex. 2001) (statutory interpretation principles; avoid reading words into statute)
- Dow Chemical Co. v. Francis, 46 S.W.3d 237 (Tex. 2001) (appellate standard on challenging legal sufficiency)
- Alamo Lumber Co. v. Gold, 661 S.W.2d 926 (Tex. 1983) (recognizes difference between forced/foreclosure sale price and private‑sale market value)