Texas Capital Bank N.A. v. Dallas Roadster, Ltd. (In Re Dallas Roadster, Ltd.)
2017 U.S. App. LEXIS 802
| 5th Cir. | 2017Background
- Dallas Roadster borrowed under a $4M revolving "Floor Plan" note and a ~$2M real-estate note from Texas Capital Bank (TCB); guarantors included principals Hafezamini and Khobahy and IEDA.
- DEA investigated Roadster and Hafezamini for money‑laundering; DEA executed a seizure and arrested Hafezamini on Nov. 16, 2011. TCB had early notice and conducted audits and monitoring before the raid.
- On Nov. 16, 2011 (during the DEA action), TCB sent notices of default/acceleration and obtained an ex parte state‑court receivership based on asserted loan defaults (including lender deeming itself "insecure" and material adverse change clauses).
- Roadster filed Chapter 11; the confirmed plan satisfied loan balances and carved out TCB’s claim for post‑petition attorneys’ fees incurred defending against Roadster’s and guarantors’ counterclaims. Litigation over breach and fees followed in federal court.
- After summary judgment limited the issues, a four‑day bench trial resulted in take‑nothing judgments: district court found TCB acted in bad faith re: the receivership and held contractual fee/indemnity provisions unenforceable under an Erie analysis of Zachry or, alternatively, disallowed fees via inherent‑power sanctions; but it held Roadster had committed prior material breaches (false financials/certificates and an undisclosed change in ownership).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hafezamini’s tort and malicious‑prosecution claims survive summary judgment | His claims arise from TCB’s role in obtaining the receivership and alleged interference/procurement of prosecution | TCB argued the claims were released and, on the merits, lacked elements (no independent tort, no procurement of criminal prosecution, conclusory evidence) | Affirmed summary judgment for TCB; Hafezamini’s claims fail on the merits (no proof of procurement; conclusory affidavits) |
| Whether Roadster materially breached the loan agreements before TCB’s actions | Roadster argued any prior breaches were immaterial and TCB waived rights by continuing the relationship | TCB argued false financial statements and undisclosed ownership change deprived it of the contract’s benefit and were material under Mustang factors | Affirmed: district court’s factual findings not clearly erroneous; false certificates and undisclosed ownership were material breaches relieving Roadster’s recovery |
| Whether TCB may recover post‑petition attorneys’ fees under contract given district court’s application of Zachry | Roadster argued Zachry makes broad indemnity/fees unenforceable when lender engaged in deliberate wrongful conduct | TCB argued Zachry applies to a party seeking to insulate itself from liability, but here TCB seeks fees for successful defense; contract permits fee recovery | Reversed as to Zachry issue: appellate court holds Zachry does not bar fee recovery here because TCB is not using the clause to shield itself from liability; contractual fee provisions remain enforceable (remanded to determine fees) |
| Whether district court properly used inherent power to deny TCB fees without further process | Roadster relied on district court’s bad‑faith findings to justify sanctioning TCB and denying fees | TCB argued it had no adequate opportunity to respond to sua sponte inherent‑power sanction and that fees were contractually recoverable | Vacated on this ground and remanded: court erred procedurally by invoking inherent‑power sanctions without adequate due‑process show‑cause; remand for further proceedings if sanctions still sought |
Key Cases Cited
- Zachry Constr. Corp. v. Port of Houston Auth., 449 S.W.3d 98 (Tex. 2014) (contract clause unenforceable where used to shield party from liability for its deliberate wrongful interference)
- Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (five‑factor test for materiality of contract breach)
- Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (federal courts’ inherent power to sanction for bad‑faith litigation conduct)
- Browning‑Ferris Indus., Inc. v. Lieck, 881 S.W.2d 288 (Tex. 1994) (claim that knowingly furnishing false information to procure prosecution requires proof that prosecutor acted on it)
- Prudential Ins. Co. of Am. v. Financial Review Servs., Inc., 29 S.W.3d 74 (Tex. 2000) (elements of tortious interference with contract)