Thom W. Farrell v. First State Bank of Bremond

Farrell v. FSB Bremond IN THE TENTH COURT OF APPEALS No. 10-91-127-CV THOM W. FARRELL, Appellant v. FIRST STATE BANK OF BREMOND, Appellee From the 82nd District Court Robertson County, Texas Trial Court # 88-08-13,498-CV O P I N I O N First State Bank of Bremond sued Thom W. Farrell for a deficiency judgment on a note executed by the Baird, Farrell, Irvin Joint Venture and guaranteed by Farrell. On July 11, 1986, the Joint Venture renewed the note in the amount of $60,941.79, and Farrell executed a guaranty of the Modification and Extension of Real Estate Note and Lien. On July 11, 1987, the Joint Venture defaulted on the note, with a balance due of $56,665.81. On January 5, 1988, the Bank sold the property secured by the note for $44,000, leaving a deficiency of $12,665.81 on the note, plus $3,552.10 in interest from the date of default to the date of foreclosure, attorney's fees of $1000 incurred in the foreclosure, abstract costs of $247, and delinquent property tax of $707.76. The Bank sued Farrell for the total deficiency of $18,172.67, plus attorney's fees, prejudgment interest from the date of foreclosure, post-judgment interest, and costs. The trial court granted a summary judgment in favor of the Bank. In point one, Farrell contends that an issue of material fact exists regarding the amount owed to the Bank. In his argument under point one, Farrell has identified only one source indicating an amount that differs from the figures supporting the summary judgment. In Farrell's response to the Bank's motion for summary judgment, he states that he "received from John C. Paschall, attorney for [the Bank], a letter dated June 17, 1988, listing a principal sum of $60,941.79 and a deficiency of $14,554.08, a copy of which is attached hereto as Exhibit "2" and incorporated herein by reference for all purposes." By an affidavit attached to his response, Farrell claimed that he received conflicting claims for payment by the Bank, including the letter dated June 17, 1988, demanding payment of a $14,554.08 deficiency. However, the letter does not indicate which of the collection costs authorized by the promissory note were included in the deficiency amount demanded on that date. The Bank's summary judgment proof was properly sworn and presented facts that Farrell owed a deficiency of $12,665.81 on the note, plus post-default interest, attorney's fees, costs, and delinquent property taxes. Farrell's proof merely showed that, at a certain time before the suit was filed, the Bank demanded $14,554.08, a figure that was more than the $12,665.81 due on the note but less than the total deficiency of $18,172.67, including collection costs. Under these circumstances we find that there was no genuine issue of material fact about the amount owed to the Bank. See Trans-Continental Finance Corp. v. Summit National Bank, 761 S.W.2d 575, 577 (Tex. App.—Fort Worth 1988, no writ). Point of error one is overruled. In point two, Farrell contends that the trial court erred in granting summary judgment because he did not personally execute the note sued upon. However, issues not expressly presented to the trial court may not be considered on appeal as grounds for reversal of a summary judgment. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex. 1979). Farrell failed to complain, in his response to the Bank's motion for summary judgment, that he was being sued on the Promissory Note rather than the Guaranty Agreement. Therefore, we overrule point of error two. In point three, Farrell contends that an issue of material fact exists about whether the interest rate charged by the Bank constituted a breach of contract. The Promissory Note, executed by the Joint Venture on July 11, 1986, provided for an interest rate of eleven percent per annum, until July 11, 1987. Because the Joint Venture defaulted on the note on July 11, 1987, the note's provisions for the rate of interest after that date are not relevant. The exhibits attached to the Bank's motion for summary judgment indicate that the Joint Venture was charged interest at the rate of eleven percent per annum from July 11, 1986 to July 11, 1987. The notations of higher interest rates, to which Farrell refers in his argument under point three, all relate to interest charges prior to the note's renewal on July 11, 1986. The original promissory note and its interest-rate provisions are not in the summary judgment evidence. Furthermore, Farrell admitted that the Joint Venture executed, and he guaranteed, the renewal of the promissory note in the amount of $60,941.79 on July 11, 1986. Because we find that there was no genuine issue of material fact on the rate of interest charged on the note sued upon, we overrule point of error three. In point four, Farrell contends that an issue of material fact exists about whether the Bank committed usurious conduct. Specifically, Farrell argues that the Bank's demand for $14,554.08, in the letter dated June 17, 1988, constitutes a usurious charge. Because the total deficiency after foreclosure was $18,172.67, we find no genuine issue of material fact regarding whether the demand letter contained a usurious charge. Farrell also argues that a letter dated January 9, 1989, constitutes a usurious charge. The letter to Farrell merely said: "Please sign the enclosed and return." Attached was a three-year promissory note for an installment loan, offered in satisfaction of the deficiency judgment sought by the Bank. Farrell has failed to point out how the Bank's offer to refinance the debt constitutes usury. Finally, Farrell argues that the Bank's abandoned pleadings, certified copies of which were attached to his affidavit and response to the Bank's motion for summary judgment, contained usurious charges. Specifically, the Plaintiff's Original Petition alleged that, on the date of foreclosure, the amount due, including collection costs, was $62,424.49, and that, after foreclosure, the total deficiency was $18,424.69. However, one who uses the defense of usury in a suit on a note that does not call for usurious interest on its face has the obligation to establish that there was a usurious charge. Moss v. Metropolitan National Bank of Houston, 533 S.W.2d 397, 399 (Tex. Civ. App.—Houston [1st Dist.] 1976, no writ). Farrell has neither alleged nor submitted competent summary judgment proof that the pleading contains a usurious charge. Indeed, although the renewed promissory note provided for a "default rate" of sixteen percent interest, it appears that the Bank ultimately charged only eleven percent interest between the date of default and the date of foreclosure. Because we find that there is no issue of material fact regarding whether the Bank committed usurious conduct, we overrule point of error four. In point five, Farrell contends that an issue of material fact exists regarding the reasonableness of attorney's fees awarded to the Bank. The reasonableness of attorney's fees is a question of fact and must be supported by competent evidence. Great American Reserve Insurance Co. v. Britton, 406 S.W.2d 901, 907 (Tex. 1966). In John Paschall's affidavit in support of the Bank's motion for summary judgment, the Bank's attorney stated that $5000 was a reasonable fee for "the above described services," which included the demand for payment and the foreclosure sale. We note that $1000 for attorney's fee incurred in the foreclosure was already included by the Bank in its claim for a deficiency judgment of $18,172.67. Farrell argues that he raised a fact issue through the affidavit of Dolores G. Hunkler, the attorney representing him during the early stages of this case. After stating her legal qualifications and her familiarity with the reasonable and necessary attorney's fees normally charged in commercial-collection litigation, Hunkler's affidavit challenged the attorney's fees incurred by the Bank on the basis that $5000 was "unreasonable and unnecessary." This statement raised the issue of reasonableness of the attorney's fees incurred by the Bank. See Nguyen Ngoc Giao v. Smith & Lamm, P.C., 714 S.W.2d 144, 149 (Tex. App.—Houston [1st Dist.] 1986, no writ). Therefore, we sustain point of error five. We modify the summary judgment to delete the award of attorney's fees, sever that portion from the remainder of the cause, and remand it to the trial court for a determination of reasonable attorney's fees. In all other respects, the partial summary judgment, as modified, is affirmed. See Tex. R. App. P. 81(b)(1); Tex. R. Civ. P. 166a(e). BOBBY L. CUMMINGS Justice Before Chief Justice Thomas, Justice Cummings, and Justice Vance Affirmed in part and reversed and remanded in part Opinion delivered and filed July 8, 1992 Do not publish1