Richard Myers v. Hall Columbus Lender, LLC
2014 Tex. App. LEXIS 7819
| Tex. App. | 2014Background
- Hall Columbus Lender (Lender) made loans to NP Platinum Hotel, LLC (Borrower); loan agreements required Borrower to defend and indemnify Lender for project-related claims.
- Richard Myers (Guarantor) signed guaranty agreements guaranteeing Borrower’s obligations; those guaranties contained limitation language in a section 4.
- A 2011 forbearance agreement amended Myers’s guaranties, replacing section 4 with language making Myers’s obligation to perform the Guaranteed Performance Obligations effective "only upon the occurrence" of specified events (including fraud or material misrepresentation by Borrower or Guarantor) on or after the relevant date.
- Third-party plaintiffs sued Myers and others in the Silverstein lawsuit asserting, among other claims, fraud; Lender was later nonsuited from that suit.
- Lender sued Myers alleging breach of the amended guaranties for failing to defend/indemnify, sought declaratory relief and attorneys’ fees; the trial court granted partial summary judgment for Lender (awarding damages), later entered a final judgment including a declaratory judgment that Myers owed a duty to defend, and awarded attorneys’ fees. Myers appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lender proved as a matter of law that Myers breached the amended guaranties (summary judgment) | Lender: Myers’s duty to defend/indemnify was triggered by the Silverstein fraud claim against Myers (allegation sufficient). | Myers: Amended section 4(c) requires an actual "occurrence" of fraud or material misrepresentation after the relevant date, not mere allegations; no such occurrence was proven. | Reversed: Court holds "occurrence" requires an actual event (not mere allegation); Lender failed to prove occurrence as a matter of law, so summary judgment on breach was improper. |
| Whether the trial court properly entered declaratory judgment that Myers has a duty to defend in the Silverstein lawsuit | Lender: Declaratory relief follows from summary-judgment grounds; Myers waived objections by not responding specifically. | Myers: Declaratory relief is unsupported because the condition precedent in the amended guaranties was not shown; Clear Creek allows appealing legal sufficiency even without response. | Reversed: Declaratory judgment erred because it relied on the same flawed contractual interpretation; Lender’s summary-judgment proof was legally insufficient. |
| Whether attorneys’ fees awarded to Lender should stand | Lender: Fees follow prevailing breach and declaratory judgments. | Myers: Underlying judgments unsupported, so fees should be reversed. | Reversed: Attorneys’ fees reversed because the underlying judgments were reversed. |
| Contract interpretation principles and choice of law | Lender: Ohio choice-of-law clause applies but outcome same; contract language supports triggering on allegations. | Myers: Texas law applies for purposes argued; plain language controls and "occurrence" means an event. | Court: Applied Texas law (parties point to no material difference); enforced plain-meaning contract rules — cannot rewrite agreement to substitute "allegation" for "occurrence." |
Key Cases Cited
- Smith v. Deneve, 285 S.W.3d 904 (Tex. App.—Dallas 2009) (standard of review for summary judgment)
- Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81 (Tex. 1997) (distinguishing duty to defend from duty to indemnify in insurance context)
- Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650 (Tex. 2009) (duty to defend depends on policy contract language)
- Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20 (Tex. 2008) (duty-to-defend analysis driven by contract language)
- Lewis v. Foxworth, 170 S.W.3d 900 (Tex. App.—Dallas 2005) (court may not rewrite or add to contract language)
- City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671 (Tex. 1979) (nonmovant may appeal legal sufficiency of summary-judgment proof without filing a response)
- Morton v. Nguyen, 412 S.W.3d 506 (Tex. 2013) (attorneys’ fees reversal follows reversal of underlying judgment)