Amina Maliek, Amirali Mavani, Dollar Value, Inc., and M & V Company, Inc. (“Appellants”), executed a guaranty in favor of U.S. Bank National Association (“U.S. Bank”)
I.
Appellants executed a loan guaranty under which they personally guaranteed the full payment of all obligations arising under a commercial loan agreement between AMK Enterprises, LLC (“AMK”), the borrower, and U.S. Bank. The original loan amount guaranteed by Appellants was $1,250,000, with interest at 9.5% per annum. After AMK defaulted on the loan, U.S. Bank sought payment from Appellants and eventually initiated this diversity action for breach of contract when Appellants failed to make any payment to U.S. Bank.
On March 18, 2010, the district court granted U.S. Bank’s motion for partial summary judgment on liability, finding Appellants liable for breach of the guaranty. On April 7, 2010, U.S. Bank then filed a motion for partial summary judgment on damages. U.S. Bank sought $2,215,870.07, which included all amounts provided for under the loan agreement. Of this sum, Appellants disputed only the “Defeasance Amount,” which totaled $754,656.59 and which Appellants argued was an unenforceable penalty. They first raised this affirmative defense, however, in their response to U.S. Bank’s motion for summary judgment on damages. Apparently recog
On May 12, 2010, the district court denied Appellants’ motion for leave to amend and granted U.S. Bank’s damages motion, concluding that Appellants’ defense was not supported by the relevant authority and thus that amendment would be futile. The district court then entered a judgment against Appellants for $2,215,870.07, plus post-judgment interest.
On appeal, Appellants argue that the Defeasance Amount is an unenforceable penalty, and that the district court erred in denying their motion for leave to amend. Because we conclude that the Defeasance Amount is not an unenforceable penalty, we affirm the judgment of the district court.
II.
According to the promissory note, the borrower could not prepay the loan unless the borrower also paid a “Defeasance Amount,” which would be determined according to a pre-arranged formula.
Importantly, Texas law does not state that agreed-upon prepayment penalties are subject to a “reasonableness” test. See, e.g., Tex. Fin.Code Ann. § 306.005 (“A creditor and an obligor may agree to a prepayment premium, make-whole premium, or similar fee or charge.”); Bearden v. Tarrant Sav. Ass’n,
The district court thus properly denied Appellants’ motion to amend because amendment would have been futile. See Avatar Exploration, Inc. v. Chevron, U.S.A., Inc.,
AFFIRMED.
Notes
Pursuant to 5th Cut. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
. U.S. Bank National Association was the trustee for the Registered Holders of FMAC Loan Receivables Trust 2000-A, a special purpose business trust organized and existing under Delaware law, the lender in this case. On October 8, 2010, U.S. Bank National Association transferred its interest in the judgment and the guaranty to AMK 2000-A LLC, making it the real party in interest. For ease of reference, however, we will continue to refer to “U.S. Bank” in this appeal.
. Section 2.5.2 of the promissory note stated, "The Defeasance Amount shall be the amount which, when added to the [outstanding] Principal Amount of the Note ... is sufficient to purchase direct, non-callable obligations of the United States of America (the "U.S. Obligations”) that provide for payments prior ... to the due date for each Regular Monthly Payment Amount or principal payment through and including the Maturity Date, with each such payment being equal to or greater than (1) the Regular Monthly Payment Amount and (2) with respect to the payment due on the Maturity Date, the entire outstanding Principal Amount of this Note together with any interest accrued as of such date and all other amounts payable pursuant to the Loan Documents. The Defeasance Amount shall include an amount sufficient to pay all costs, charges and expenses incurred or to be incurred in connection with the purchase of the U.S. Obligations.”
. Section 2.5.3 provides, "The Defeasance Amount shall apply not only in the case of voluntary prepayment, but also in the event that this Note becomes due and payable in full in the event of acceleration by reason of the occurrence of a Default Event or otherwise.”
. The Appellants object to the affidavit upon which this figure is based. They claim that the affidavit is "conclusionary [sic]” and provides “no explanation as to the reasoning or methodology explaining how the purported [Defeasance Amount] was calculated.” While we agree the affidavit provides no explanation as to how it arrived at the Defeasance Amount, the Appellants never submitted proof-or even claim-that the total is incorrect. In fact, Section 2.5.4 of the Note provides that the Lender's determination of the Defeasance Amount is "binding and conclusive" on the parties "[a]bsent material and manifest error.” Consequently, once U.S. Bank submitted the affidavit in question, the burden shifted to the Appellants to provide competent summary judgment evidence establishing the existence of a genuine fact issue. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
. The parties agree Texas substantive law governs this diversity suit. See Erie R.R. Co. v. Tompkins,
. Appellants briefly mention in their brief that the Defeasance Amount "far exceed[s] a legal interest rate." While this suggests that Appellants challenge the Defeasance Amount also on grounds of usury, the brief does not mention usury in either its statement of issues or its summary of argument, nor does the brief cite authority on the subject. In fact, the summary of argument adverts only to the argument that the Defeasance Amount "constitutefs] an unenforceable penalty.” Consequently, any usury arguments have been waived on appeal, and thus do not consider them. Sanders v. Unum Life Ins. Co. of Am.,