7677 Group, L.P. v. SMS Financial JDC, L.P., as Assignee of Federal Deposit Insurance Corporation, Receiver of First National Bank ( Edinburg, Texas) and Gal Batzri
Date Filed2023-12-12
Docket01-21-00376-CV
Cited0 times
StatusPublished
Full Opinion (html_with_citations)
Opinion issued December 12, 2023
In The
Court of Appeals
For The
First District of Texas
ââââââââââââ
NO. 01-21-00376-CV
âââââââââââ
7677 GROUP, L.P., Appellant
V.
SMS FINANCIAL JDC, L.P., AS ASSIGNEE OF FEDERAL DEPOSIT
INSURANCE CORPORATION, RECEIVER OF FIRST NATIONAL BANK
(EDINBURG, TEXAS), Appellee/Cross-Appellant
V.
GAL BATZRI, Cross-Appellee
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2016-05379
MEMORANDUM OPINION
This appeal arises from a promissory note and a personal guaranty agreement.
SMS Financial JDC, L.P. (âSMSâ), as Assignee of Federal Deposit Insurance
Corporation, Receiver of First National Bank Edinburg, Texas, Appellee/Cross
Appellant, sued 7677 Group, L.P., Appellant, and Gal Batzri, Cross-Appellee, on
the promissory note and guaranty, respectively.
The trial court granted summary judgment and dismissed SMSâs claims
against Batzri based on the statute of limitations. Following a bench trial, the trial
court entered judgment in favor of SMS and against 7677 Group on the promissory
note.
In three issues on appeal, 7677 Group argues that the trial court erred in
(1) rendering judgment for SMS because SMS failed to prove that it is the owner
and holder of the note, (2) awarding damages and other relief to SMS because 7677
Group was not given credit for all payments made on the debt or for the value of
collateral pledged to First National Bank, and (3) awarding prejudgment interest to
SMS.
SMS filed a cross-appeal seeking reversal of the trial courtâs summary
judgment in favor of Batzri, on the personal guaranty agreement.
We affirm in part and reverse and remand in part.
2
Background
On February 20, 2010, 7677 Group executed a promissory note (the âNoteâ)
in the amount of $323,972.40 payable to First National Bank in Edinburg, Texas
(âFNBâ). The Note renewed a $500,000 line of credit opened by 7677 Group in
December 2008. The Note matured on February 20, 2011. Under the terms of the
Note, 7677 Group would make 12 payments; 11 monthly payments of $2,000, and a
single âballoon paymentâ of the entire remaining unpaid balance upon maturity.
7677 Group also executed a security agreement on the same date in which
7677 Group agreed to give FNB âa security interest in all of the Property described
in this Agreementâ to secure the payment and performance of the Note (the âSecurity
Agreementâ). The âPropertyâ described in the security agreement consisted of the
following: âInventory. All inventory which [7677 Group] hold[s] for ultimate sale
or lease, or which has been or will be supplied under contracts of service, or which
are raw materials, work in process, or materials used or consumed in [7677 Groupâs]
business.â
Also on February 20, 2010, Gal Batzri, the president of 7677 Groupâs general
partner Joshua Tree, LLC, executed a personal guaranty of the Note (the
âGuarantyâ).
In September 2013, FNB was closed by the Office of the Comptroller of the
Currency, and the Federal Deposit Insurance Corporation (âFDICâ) was named
3
receiver. On November 27, 2013, the FDIC sold, transferred, and assigned the Note
and Guaranty to SMS.
On January 27, 2016, SMS sued 7677 Group and Batzri1 alleging that SMS
had become the owner and holder of the Note and the Guaranty, that 7677 Group
had defaulted on the Note, and that Batzri had defaulted on the Guaranty. Batzri
moved for summary judgment asserting that SMSâs claims against him were barred
by limitations. The trial court granted Batzriâs motion for summary judgment and
ordered that SMS take nothing on its claims against Batzri.
On January 11, 2021, SMSâs claims against 7677 Group were tried to the
bench, which rendered a final judgment in favor of SMS. The following month,
7677 Group requested findings of fact and conclusions of law, moved to modify the
final judgment, and moved for a new trial.
On April 12, 2021, the trial court signed a modified final judgment and entered
a separate order denying 7677 Groupâs motion for new trial. The trial courtâs
modified final judgment awarded SMS $312,576.83 in damages; $389,354.88 in
prejudgment interest as of January 11, 2021; additional prejudgment interest at the
rate of 17.75% per annum from January 11, 2021 through the date of the judgment;
$27,440 in trial attorneyâs fees, plus a total of $14,500 in conditional appellate
1
SMS also sued Idan Segev, a limited partner in 7677 Group, who had also executed
a personal guaranty of the Note. Although named as a defendant in the underlying
lawsuit, Segev was not served and is not a party to this appeal.
4
attorneyâs fees; post judgment interest; and court costs. The modified final judgment
also ordered that SMS take nothing on its claims against Batzri.
On May 6, 2021, the trial court signed findings of fact and conclusions of law.
Thereafter, 7677 Group filed a motion to modify the modified final judgment and a
motion for new trial. 7677 Group also filed objections and a request for additional
and amended findings of fact and conclusions of law.
The trial court denied 7677 Groupâs post-judgment motions. 7677 Group
timely appealed. And SMS timely cross-appealed.
7677 GROUPâS APPEAL
Standard of Review
In an appeal from a bench trial, a trial courtâs findings of fact have the same
weight as a juryâs verdict. Thompson v. Smith, 483 S.W.3d 87, 93(Tex. App.â Houston [1st Dist.] 2015, no pet.); HTS Servs., Inc. v. Hallwood Realty Partners,190 S.W.3d 108, 111
(Tex. App.âHouston [1st Dist.] 2005, no pet.). When challenged, findings of fact are not conclusive where, as here, there is a complete reporterâs record. Thompson,483 S.W.3d at 93
; HTS Servs.,190 S.W.3d at 111
.
Under these circumstances, the trial courtâs findings of fact are binding if the
evidence supports them. Thompson, 483 S.W.3d at 93; HTS Servs.,190 S.W.3d at 111
. If the findings are challenged, we review the sufficiency of the evidence
supporting the findings by applying the same standards that we use in reviewing the
5
legal or factual sufficiency of the evidence supporting jury findings. Catalina v.
Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).
When conducting a legal sufficiency review, we credit favorable evidence if
a reasonable factfinder could do so and disregard contrary evidence unless a
reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 827(Tex. 2005); Brown v. Brown,236 S.W.3d 343, 348
(Tex. App.âHouston [1st Dist.] 2007, no pet.). We consider the evidence in the light most favorable to the finding under review, and we indulge every reasonable inference that would support the finding. City of Keller,168 S.W.3d at 822
.
In reviewing for factual sufficiency, we consider all the evidence supporting
and contradicting the finding. PlasâTex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442,
445(Tex. 1989). We set aside the verdict only if the finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain,709 S.W.2d 175, 176
(Tex. 1986). In a bench trial, the trial court, as factfinder, is the sole judge of the credibility of the witnesses. HTS Servs.,190 S.W.3d at 111
.2
2
See also Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003)
(âIt is a familiar principle that in conducting a factual sufficiency review, a court
must not merely substitute its judgment for that of the [factfinder].â); Figueroa v.
Davis, 318 S.W.3d 53, 59 (Tex. App.âHouston [1st Dist.] 2010, no pet.) (observing
that factfinder may choose to believe one witness over another).
6
Owner and Holder of the Note
In its first issue, 7677 Group argues that the trial court erred in rendering
judgment in favor of SMS because SMS failed to prove that it is the owner and
holder of the Note. As such, 7677 Group argues that there is legally and factually
insufficient evidence to support the trial courtâs findings of fact, as well as any
implied findings, as follows:
2. After the Promissory Note was signed, [FNB] was declared
insolvent by the [FDIC], whereupon the [FDIC] became receiver
of [FNB] and the owner and holder of the above-described
Promissory Note.
3. The [FDIC] assigned the Promissory Note to [SMS], the latter of
whom became and is owner and holder of the Promissory Note.
...
8. The Promissory Note sued upon in this lawsuit requires 7677
Group, L.P. to pay reasonable and necessary attorneyâs fees
incurred by [SMS] incident to any non-payment of the
Promissory Note by 7677 Group, L.P.
According to 7677 Group, because there is legally and factually insufficient
evidence to support Findings of Fact 2, 3, and 8, the trial courtâs Conclusions of Law
10, 13, and 14, that 7677 Group breached the Note and is liable to SMS for damages,
attorneyâs fees, and costs, are also erroneous.
A. Applicable Law
To recover on a promissory note, the plaintiff must prove: (1) the existence of
the note in question; (2) the defendant signed the note; (3) the plaintiff is the owner
7
or holder of the note; and (4) a certain balance is due and owing on the note. Wells
Fargo Bank, N.A. v. Ballestas, 355 S.W.3d 187, 191 (Tex. App.âHouston [1st
Dist.] 2011, no pet.).
At issue here is the third elementâthe plaintiff is the owner or holder of the
note. The Texas Uniform Commercial Code defines âperson entitled to enforceâ an
instrument as: (i) the holder of the instrument; (ii) a nonholder in possession of the
instrument who has the rights of a holder; or (iii) a person not in possession of the
instrument who is entitled to enforce the instrument pursuant to section 3.309 or
3.418(d). See TEX. BUS. & COM. CODE § 3.301; Manley v. Wachovia Small Bus.
Cap., 349 S.W.3d 233, 239 (Tex. App.âDallas 2011, pet. denied). Also, â[a] person
may be a person entitled to enforce the instrument even though the person is not the
owner of the instrument or is in wrongful possession of the instrument.â TEX. BUS.
& COM. CODE § 3.301.
A âholderâ is âthe person in possession of a negotiable instrument that is
payable either to bearer or to an identified person that is the person in possession.â
Id. § 1.201(b)(21); Leavings v. Mills, 175 S.W.3d 301, 309(Tex. App.âHouston [1st Dist.] 2004, no pet.). When an instrument is payable to an identifiable person, the âholderâ is the person in possession if he is the identified person. TEX. BUS. & COM. CODE § 1.201(b)(21); Leavings,175 S.W.3d at 309
. A holder of an instrument is a â[p]erson entitled to enforceâ an instrument. Leavings,175 S.W.3d at 309
.
8
A person can become the holder of an instrument when the instrument is
issued to that person; or he can become a holder by negotiation. See TEX. BUS. &
COM. CODE § 3.201, U.C.C. cmt. 1. Negotiation is the âtransfer of possession of an
instrument . . . by a person other than the issuer to a person who thereby becomes its
holder.â TEX. BUS. & COM. CODE § 3.201(a); Leavings, 175 S.W.3d at 309. â[I]f an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder.â TEX. BUS. & COM. CODE § 3.201(b); Leavings,175 S.W.3d at 309
; Jernigan v. Bank One, Tex., N.A.,803 S.W.2d 774, 776
(Tex. App.âHouston [14th Dist.] 1991, no writ). The indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed to it as to become part of it. Jernigan,803 S.W.2d at 776
. If an instrument not in the possession of the original holder lacks a written indorsement and proof of the chain of title, the person in possession does not have the status of a holder. Seeid.
at 776â77.
A note may be transferred, however, even if it is not indorsed by the
transferee; in that case, the transferee acquires whatever rights the transferor had in
the note, but he does not become the holder. See TEX. BUS. & COM. CODE § 3.201;
Leavings, 175 S.W.3d at 309. The transfer of title of a negotiable instrument received by the transferee without indorsement includes âsuch rights as the transferor has therein.â Leavings,175 S.W.3d at 309
.
9
Thus, even if a person is not the holder of a note, he may still be able to prove
that he is the owner and entitled to enforce the note, foreclose on collateral and obtain
a deficiency judgment under common-law principles of assignment. Id.A person not identified in a note who is seeking to enforce it as the owner or holder must prove the transfer by which he acquired the note. Id.; Jernigan,803 S.W.2d at 777
.
B. Analysis
As noted, 7677 Group argues that the trial court erred in rendering judgment
in favor of SMS because SMS failed to prove that it is the owner and holder of the
Note. Specifically, 7677 Group argues that although SMS alleged that the FDIC
assigned the Note to it after the FDIC became receiver for FNB, SMS presented no
evidence at trial of the terms of the receivership or the assets that were included in
the receivership. 7677 Group contends that SMS failed to establish that the Note
was transferred to it as opposed to PlainsCapital Bank, Dallas, TXâidentified in
SMSâs own exhibit as the âAcquiring Financial Institution.â
At trial, SMS introduced Plaintiffâs Exhibit 8, which is a printout from the
FDICâs website identifing a list of failed banks, including FNB. Exhibit 8 states
that FNB was closed by the Office of the Comptroller of Currency on September 13,
2013, and that the FDIC was appointed receiver. Although Exhibit 8 identifies
âPlainsCapital Bank, Dallas, TXâ as the âacquiring financial institution,â it states
only that âall deposit accounts, including brokered deposits, have been transferred
10
toâ PlainsCapital. It also states that the âformer [FNB] locations will reopen as
branches of PlainsCapital Bank during regular business hours.â On the following
page, there is a separate section specifically applicable to âloan customers,â which
states:
If you had a loan with [FNB], you should continue to make your
payments as usual. The terms of your loan will not change, because
they are contractually agreed to in your promissory note. Checks
should be made payable as usual and sent to the same address until
further notice. If you have further questions regarding an existing loan,
please contact your loan officer.
For all questions regarding new loans and the lending policies of
PlainsCapital Bank, please contact your branch office.
(Emphasis added).
According to 7677 Group, Exhibit 8 does not prove that SMS was the owner
or holder of the Note because it contains no information about what assets were
included in the FDICâs receivership. Rather, it demonstrates that another
institutionâPlainsCapital Bankâacquired FNBâs assets, including deposit
accounts and existing loans. We disagree.
Exhibit 8 demonstrates that only deposit accounts were transferred to
PlainsCapital, and that new loans, not existing loans, would be handled by
PlainsCapital. Existing loan customers were to continue making payments as usual.
Further, the exhibit is clear that the FDIC was appointed as receiver in September
2013 after FNB failed.
11
This court previously has held similar evidence that the FDIC was appointed
receiver, when combined with an indorsement or other evidence of a transfer from
the FDIC in its capacity as receiver for the failed bank to the acquiring bank, is
sufficient evidence to establish that the acquiring bank is the holder or owner of the
note in question. For example, in Hinsley v. Bank One, the appellant executed a note
in favor of MBank Houston, N.A. (Mbank). See Hinsley v. Bank One, Tex., N.A.,
No. 01-90-00829-CV, 1991 WL 94427, at *1 (Tex. App.âHouston [1st Dist.] June 6, 1991, writ denied) (not designated for publication). The note matured on September 1, 1988; however, Hinsley failed to make any payment on the note.Id.
In March 1989, the Comptroller of Currency declared MBank insolvent and appointed the FDIC as MBankâs receiver.Id.
Thereafter, an order, approving the sale of certain assets and liabilities from the FDIC to the Deposit Bridge Bank, N.A. (Bridge Bank), was entered by a federal district court.Id.
Subsequently, Bridge Bank legally changed its name to Bank One, Texas, N.A. (Bank One).Id.
Bank One sued Hinsley, arguing it was the owner and holder of the note.Id.
On appeal from a judgment in favor of Bank One, Hinsley argued that Bank
One was not entitled to recover on the note because it was neither the payee of the
note, nor had the note been indorsed to Bank One. Id. The court noted that Bank
One was not a holder because the note was not indorsed to it. Id. at *2. However,
because âa note may be transferred lawfully without an indorsement by the legal
12
owner or holder,â the court explained that an individual in possession of a note,
payable to the order of a different payee, can enforce payment of the note in his own
name by proving the transaction through which the note was acquired. Id.
The Hinsley court noted that Bank One provided evidence of the (1) original
note, (2) purchase and assumption agreement between FDIC and Bridge Bank, and
(3) document which changed Bridge Bankâs legal name to Bank One. Id. Thus, the
court held that Bank One established the transaction through which it acquired the
note and proved it was an owner. Id.
The Hinsley court also rejected Hinsleyâs argument that this documentation
was insufficient to prove that Bank One was the owner of the note, because no
evidence showed that MBank owned the note when the FDIC was appointed
receiver, and no evidence that the FDIC owned the note when it entered into the
purchase and assumption agreement with Bridge Bank. Id. at *3. The court
concluded that the evidence demonstrated that MBank owned the note when the
FDIC was appointed receiver, citing to the evidence that the note matured in
September 1988, that there were no indorsements on the note, and that in March
1989, the FDIC was appointed receiver. Id. Thus, in that case, no further evidence
was required to demonstrate the initial transfer between MBank and the FDIC.
In another case, Winfield v. Dosohs I, Ltd., the appellant borrowed from
Fidelity National Bank and signed a promissory note. Winfield v. Dosohs I, Ltd., No.
13
01-97-00997-CV, 1998 WL 436895, at *1 (Tex. App.âHouston [1st Dist.] July 30, 1998, no pet.) (not designated for publication). When the note matured in March 1993, appellant was in default.Id.
After Fidelity National Bank failed, the FDIC was appointed receiver.Id.
In early 1994, Dosohs bought the promissory note from the FDIC, and the FDIC transferred the note to Dosohs by indorsement.Id.
Dosohs sued to collect on the note, and the trial court rendered judgment in favor of Dosohs.Id.
On appeal, the appellant challenged the trial courtâs findings that Fidelity
National Bank failed and was taken over by the FDIC and that Dosohs was the owner
and holder of the promissory note. Id. at *3â4. Before the court was evidence of a
transfer of liens to Dosohs executed by the FDIC âin its receivership capacity
(âAssignorâ) of Fidelity National Bank,â as well as the promissory note that included
an indorsement by âFederal Deposit Insurance Corporation, Receiver for:
FIDELITY NATIONAL BANK, HOUSTON, TEXAS.â Id. at *4.
The Winfield court concluded this evidence was sufficient to support the
finding that the bank failed and was taken over by the FDIC. The court also held
that an allonge from the FDIC to Dosohs was valid and established that it was the
holder of the note. Id. at *4â5.3
3
See also Catalina v. Cramer Fin. Grp., Inc., No. 01-96-00862-CV, 1998 WL
135120, at *10 (Tex. App.âHouston [1st Dist.] Mar. 19, 1998, no pet.) (not
designated for publication) (holding evidence established that Cramer was owner of
14
Like the acquiring institutions in the above-cited cases, SMS also introduced
evidence as to how it had acquired the Note. SMS introduced a the Note, which
matured in February 2011, as Exhibit 3. Benjamin Myers, SMSâs representative and
custodian of records, testified that SMS received the Note as part of the 398 pages
of business records it received directly from the FDIC. Myers testified that SMS
was the owner and holder of the Note.
Although the Note itself did not contain any indorsements, the trial court
admitted SMSâs Exhibit 2, an âAllonge to Promissory Note,â (âAllongeâ). It
specifically identified the Note and contained the following indorsement:
Pay to the order of SMS Financial JDC, L.P., a Delaware limited
partnership, whose address is 6829 North 12th Street, Phoenix, AZ
85014.
WITHOUT RECOURSE and without representation or warranty
except as set forth in that certain Limited Partnership Agreement dated
February 27, 2012.
BY SMS Financial JDC, L.P., under Power of Attorney from the
Federal Deposit Insurance Corporation, as Receiver for First National
Bank, 100 W. Cano, Edinburg, TX 78539.
The Allonge identified the â[FDIC] as Receiver for [FNB]â as the assignor and was
signed by âJonathan Hoffer â Attorney-in-Fact.â
note because note was indorsed from FDIC, in its capacity as receiver for MBank
Houston, to Bank One; testimony was presented that Bank One was surviving entity
of MBank, Bank One purchased all assets of MBank, and Cramer purchased
interests from Bank One; and two assignments showed FDIC, as receiver for
MBank, assigned note to Bank One, and that Bank One assigned note to Cramer).
15
The trial court here also admitted SMSâs Exhibit 7, a limited power of attorney
signed by the FDIC on March 19, 2014, designating âJonathan Hoffer of SMS
Financial CBS, LLC, to act on behalf of the FDIC in any of its Receivership . . .
capacities related to multiple failed financial institutions,â and authorizing the
attorney-in-fact â[t]o execute, acknowledge, seal and deliver on behalf of the FDIC
. . . any and all instruments of transfer and conveyance, appropriately completed,
with all ordinary and necessary endorsements, acknowledgements, affidavits and
supporting documents as may be necessary or appropriate to evidence the sale and
transfer of any asset . . . .â
Finally, the trial court admitted into evidence SMSâs Exhibit 6, entitled
âAssignment of Loan Documents and Related Rightsâ (âAssignmentâ). The
Assignment states: âThe [FDIC], as Receiver for [FNB] (âAssignorâ), by and
through its attorney in fact undersigned, hereby assigns to SMS Financial JDC, LP.
(âAssigneeâ), all rights, title and interest in the loan documents identified on the
attached Exhibit A.â Exhibit A identifies the Note, the Security Agreement, and the
Guaranty as the loan documents subject to the Assignment. The Assignment is
signed by Hoffer in his capacity as attorney-in-fact for the âAssignor: [FDIC] as
Receiver for [FNB].â
The above evidence demonstrates that SMS is in possession of the Note,
which, in the Allonge, is indorsed by the FDIC in its capacity as receiver for FNB to
16
SMS. Further, in its capacity as receiver for FNB, the FDIC assigned the Note to
SMS.
Accordingly, we hold that the evidence that the FDIC was appointed receiver
of FNB, along with the Note, the Allonge, the Assignment, and Myersâs testimony
establishes that SMS is indeed the owner and holder of the Note.4 See Winfield, 1998
WL 436895, at *3â5; Catalina,1998 WL 135120
, at *10; Hinsley,1991 WL 94427
,
at *2â3.
C. Admissibility of Exhibits 2 and 6
7677 Group also argues that the trial court erred in admitting into evidence
the purported transfer documents: (1) Exhibit 2, the Allonge and (2) Exhibit 6, the
Assignment, and therefore these exhibits are insufficient to support the trial courtâs
findings. According to 7677 Group, SMS failed to establish the necessary predicate
for admission of these documents as required by Texas Rule of Evidence 803(6)
because Myers never testified that (1) the information in these exhibits were placed
4
We find Geiselman v. Cramer Financial Group, Inc., 965 S.W.2d 532, 538 (Tex.
App.âHouston [14th Dist.] 1997, no writ), cited by 7677 Group, distinguishable.
In that case, the court held that a summary judgment affidavit was insufficient to
prove that the acquiring bank was the owner of notes because although a vice
president testified that the FDIC was appointed receiver of the failed bank and
became the rightful owner of notes, he stated no facts indicating he personally knew
the notes were among the assets of the failed bank. As noted, that case was on
summary judgment, not following a bench trial and it was undisputed that the
acquiring bank did not have possession of the original notes, as it claimed they had
been lost, stolen, or destroyed.
17
there at or near the time by a person with knowledge of that information, (2) the
information in these exhibits were kept in the ordinary course of business, or (3) it
was the regular practice of that business activity to make those records. See TEX. R.
EVID. 803(6).5
At trial, 7677 Group objected to Exhibit 2 because it was âconclusory and
hearsay.â Specifically, 7677 Group argued that the exhibit referenced an assignment
to SMS and a partnership agreement, neither of which had been produced in
discovery. 7677 Group made a similar objection to Exhibit 6, arguing that the
exhibit was conclusory because it ârelies on an agreement thatâs not in evidence,â
5
Rule 803(6) provides that certain records are not excluded by the rule against
hearsay, regardless of whether the declarant is available as a witness, if:
(A) the record was made at or near the time byâ-or from
information transmitted byâsomeone with knowledge;
(B) the record was kept in the course of a regularly conducted
business activity;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the
custodian or another qualified witness, or by an affidavit or
unsworn declaration that complies with Rule 902(10); and
(E) the opponent fails to demonstrate that the source of information
or the method or circumstances of preparation indicate a lack
of trustworthiness. âBusinessâ as used in this paragraph
includes every kind of regular organized activity whether
conducted for profit or not.
TEX. R. EVID. 803(6).
18
and that it contained statements about the limited partnership which were âcertainly
hearsay.â 7677 Group did not, however, object to these two exhibits on the basis that
SMS failed to establish the necessary predicate for the admission of business records
under Rule 803(6).6
To preserve a complaint for appellate review, a party must state an objection
clearly and with sufficient specificity to make the trial court aware of the particular
grounds for the complaint. TEX. R. APP. P. 33.1(a). Further, an appellantâs complaint
on appeal must comport with her objection in the trial court. Benson v. Chalk, 536
S.W.3d 886, 895 (Tex. App.âHouston [1st Dist.] 2017, pet. denied). â[A] general
hearsay objection does not preserve for appeal a challenge to a proper predicateâs
being made to admit business records.â7 Rogers v. Depât of Family & Protective
6
We acknowledge that 7677 Group made Rule 803(6) objections, among others, in
reference to SMSâs Exhibit 1, which consisted of Myersâs business records affidavit
and the 398 pages of business records SMS received from the FDIC. Included in
those business records were the Allonge and the Assignment. The trial court granted
7677 Groupâs objections and excluded Exhibit 1. 7677 Group, however, did not
reiterate these same Rule 803(6) objections when SMS moved to admit into
evidence the Allonge (Exhibit 2) and the Assignment (Exhibit 6) as separate
standalone exhibits.
7
See also Foster v. Natâl Collegiate Student Loan Tr. 2007-4, No. 01-17-00253-CV,
2018 WL 1095760, at *6 (Tex. App.âHouston [1st Dist.] Mar. 1, 2018, no pet.)
(mem. op.) (holding general hearsay objection did not preserve for appeal challenge
to predicate being made to admit business records); In re N.C.M., 66 S.W.3d 417,
420 (Tex. App.âTyler 2001, no pet.) (holding that general hearsay objection to
business records was insufficient to inform trial court of specific grounds of
objection or to preserve error); Clark v. WalkerâKurth Lumber Co., 689 S.W.2d
275, 281 (Tex. App.âHouston [1st Dist.] 1985, writ refâd n.r.e.) (holding that
objection to personal knowledge of sponsoring witness to assert business records
19
Servs., 175 S.W.3d 370, 376 (Tex. App.âHouston [1st Dist.] 2005, pet. dismâd
w.o.j.).
Because 7677 Groupâs conclusory and hearsay objections to Exhibits 2 and 6
do not comport with the objection it makes on appeal, we hold that this argument is
not preserved for our review. See Benson, 536 S.W.3d at 895.
7677 Group also argues that these documents are internally inconsistent and
are therefore unreliable. It argues that the Allonge states the Note was âsold,
transferred and assignedâ to SMS on November 27, 2013, but the Assignment
purports to assign the Note to SMS almost two years later, on December 10, 2015.
According to 7677 Group, the Assignment also contradicts the Allonge in that it
states âimmediately prior to making this Agreement [the FDIC] was the sole owner
of the [FDIC]âs interest in the documents and rights assigned hereby, or the fully
authorized agent of all such parties,â but the Allonge states that the FDIC had not
been the owner of the Note since late 2013. Due to these purported contradictions,
7677 Group contends that the Allonge and Assignment cannot be reconciled and are
unreliable and insufficient to support a judgment in favor of SMS.
We disagree. Any alleged contradictory nature of the exhibits was explained
by Myersâs testimony describing the transfer of the Note from the FDIC to SMS.
exception to hearsay rule did not preserve error asserted on appeal that invoices
were not generated at or near time of transaction and that appellee failed to lay
proper predicate for introduction of summary of business records).
20
Myers testified that SMS acquired the Note from the FDIC on November 27, 2013,
but that the Assignment and Allonge were not executed until 2015. Myers explained
that SMS acquired over 500 assets from the FDIC and prepared the necessary
documents after the acquisition. Myers testified that due to the number of assets
acquired, SMS was not able to get to all of them on the same date.
Accordingly, we hold that legally and factually sufficient evidence supports
the trial courtâs findings that SMS was the owner and holder of the Note.
We overrule 7677 Groupâs first issue.
Damages
In its second issue, 7677 Group argues that the trial court reversibly erred in
awarding damages and other relief to SMS, because the uncontroverted evidence
demonstrates that 7677 Group was not given credit for all payments made on the
Note or for the value of the collateral pledged to FNB and subsequently taken by
FNB. Accordingly, 7677 Group argues factually insufficient evidence support the
trial courtâs findings of fact as follows:
4. 7677 GROUP, L.P. defaulted on the Promissory Note by failing
to pay all principal and accrued interest payments required by the
February 20, 2011 maturity date and continuing through the
completion of trial in this lawsuit.
...
6. As of January 11, 2021, $312,576.83 in unpaid principal and
$389,354.88 in accrued yet unpaid interest is owed on the
Promissory Note is owed, and additional daily interest of
21
$152.00 (17.75% per annum) will accrue until the date of Final
Judgment in this lawsuit.
7. 7677 GROUP, L.P. offered insufficient evidence at trial to
establish any offsets against the principal and interest amounts
found in the preceding paragraph.
Considering all of the evidence supporting and contradicting the findings, as
we must, we agree with 7677 Group that the trial courtâs findings 6 and 7 related to
the amount owed on the Note, including any applicable offsets, are so contrary to
the overwhelming weight of the evidence as to be clearly wrong and unjust. See
PlasâTex, Inc., 772 S.W.2d at 445; Cain,709 S.W.2d at 176
.
Only one piece of evidence supports the trial courtâs finding that, as of January
11, 2021, the unpaid principal balance on the Note was $312,576.83âMyersâs
testimony. When asked what SMS was asking for on the Note, Myers responded
that the âoutstanding principal balance is $312,576.83.â Myers testified that he
compared the $312,576.83 principal balance against the payment history offered by
7677 Group and observed that the principal balances were âvery close and that most
of the payments that they suggest that they made are reflected in the payment history
that we have.â Although SMS attempted to introduce evidence of its records of the
payment history on the Note, the trial court excluded that evidence.
In contrast, 7677 Group presented testimony and documentary evidence that
7677 Group made several payments to FNB before the FDICâs receivership and
assignment of the Note to SMS that were not considered by SMS in its calculation
22
of the amount due on the Note. For instance, the trial court admitted 7677 Groupâs
Exhibit 3, which consisted of vendor reports for the years 2009, 2010, and 2011
documenting the payment history for the â[FNB] LOC.â
Batzri testified that Exhibit 3 reflected part of the payment history on the Note.
He testified that the payment history and balance sheets in Exhibit 3 were prepared
by someone in 7677 Group, that the entries were prepared as they were made, and
that he had custody of those business records as President for 7677 Groupâs general
partner, Joshua Tree, LLC.
Exhibit 3 also indicates that the 2010 ending balance on the Note was
$309,551.40. It reflects that two payments were made in January 2011, before
maturity, which brought the balance due down to $305,251.41. The exhibit also
reflects four payments made in 2011 after maturity:
⢠$2,000 payment on February 25, 2011,
⢠$45,000 payment on April 15, 2011,
⢠$99,625 payment on July 27, 2011, and
⢠$110,925.85 payment on August 2, 2011.
In support of that exhibit, Batzri testified that a payment of $45,000 was made
on or about April 15, 2011, and that FNB took this payment from his personal
savings account at FNB.
23
Batzri also testified that a payment of $99,625 was made on or about July 27,
2011. He explained that the source of that payment was the sale of 27 vehicles that
were pledged to FNB as collateral for the Note. Batzri testified that FNB had
possession of the titles to those vehicles, and that FNB released the titles so the
vehicles could be sold to fund the $99,625 payment.
Additionally, the trial court admitted 7677 Groupâs Exhibit 4, which included
an email from Eddie Dan, CFO of 7677 Group, to Batzri stating:
See list below. [T]his is the final number [I] managed to negotiate with
the buyer for the bulk purchase of all the cars.
I have already spoke[n] to Chris from FNB and he would release all the
titles for this amount. [H]e will work with me on this transaction and
we will get it done.
Below the text of this email is a list of 27 vehicles, including make, model, and title
number, and a corresponding sale price. The total proceeds from the sale of all 27
vehicles was listed as $99,625. Batzri also testified that he physically saw FNB sign
off on the titles and that he, as seller, also signed off on the titles when the vehicles
were sold to a buyer. He testified that the funds received from the sale of those
vehicles were sent to FNB as payment on the Note. And that this $99,625 payment
was âsupposed to be credited to [the] 7677 line of credit, [but] they were not credited
on the account.â
Batzri further testified that a payment of $110,925.85 was made on or about
August 2, 2011, and that he received confirmation from Idan Segev, a limited partner
24
in 7677 Group and the person who made the payment, that the payment was made.
As evidence of this payment, the trial court admitted 7677 Groupâs Exhibit 6, an
email from Segev, stating: âGal, [I] made the wire to FNB. [W]ith currency
exchange rate and the fees the net wire is $110,925.85.â The subject line of this
email is âRe: Payment FNB LOC.â
Finally, Batzri testified that if 7677 Group had received credit for these six
payments made in 2011, the outstanding principal balance owed to FNB as of
December 31, 2011, was $47,700.55. Exhibit 3 likewise reflects that the 2011
ending balance was $47,700.55. Batzri stated that SMSâs calculations of the
indebtedness owed by 7677 Group on the Note failed to give 7677 Group âthe proper
creditâ for any of those six payments.
Although there is some evidence (in the form of Myersâs testimony)
supporting the trial courtâs finding of an unpaid principal balance of $312,576.83,
the evidence supporting this finding is overwhelmingly outweighed by the evidence
reflecting that at least some payments were made to the Note before and after
maturity that were not accounted for by SMS in its calculation. Accordingly, having
examined all the relevant evidence, we hold that the trial courtâs findings 6 and 7
related to the amount of unpaid principal balance and offsets are not supported by
factually sufficient evidence.
25
We hold, however, that the trial courtâs finding 4âi.e., 7677 Group defaulted
on Note by failing to pay all principal and accrued interest payments required by the
February 20, 2011 maturity date and continuing through the completion of trial in
this lawsuitâis supported by factually sufficient evidence.
As discussed above, even considering the evidence of the six payments made
by 7677 Group before and after maturity, 7677 Group admitted at trial that the
remaining balance owed on the Note at the end of 2011, after maturity, was
$47,700.55.
7677 Group, however, contends that in addition to making these six
unaccounted for payments, in 2012, FNB agreed to take possession of nearly
$2,000,000 in collateral pledged on 7677 Groupâs behalf pursuant to the Security
Agreement, thereby satisfying all its obligations under the Note. According to 7677
Group, the collateral securing the Note consisted of two CDs with an approximate
value of $150,000 and cosmetics inventory of a separate entity, Soapranos NC
Products. Inc., with an approximate retail value of $1.7 million.
Batzri testified that in the beginning of 2012, he had a conversation with
âChrisâ at FNB and Chris was âimpatient to get payment.â He testified that FNB
âhad the inventory of So[a]pranos as collateral,â and that FNB âpressed to get the
payment [on the Note]â and âwanted t[he] collateral . . . to pay off the debt
26
completely.â Batzri testified that he told Chris he was not able to sell the inventory
as fast as the bank wanted, and so he offered FNB the collateral and FNB accepted.
We agree with SMS that this evidence related to FNBâs alleged acceptance of
this collateral in satisfaction of 7677 Groupâs obligations under the Note is barred
by federal law, specifically, DâOench, Duhme & Co. v. Federal Deposit Insurance
Corp., 315 U.S. 447(1942) and12 U.S.C. § 1823
(e).
When the FDIC acts as a receiver for a failed bank, the DâOench, Duhme
doctrine bars the use of an unrecorded agreement between a borrower and the failed
bank as a basis for defenses or claims against the FDIC or its assigns. 315 U.S. at
453â62; Bluebonnet Sav. Bank v. Jones Country, Inc., 920 S.W.2d 670, 671 (Tex.
1996) (per curiam).
Section 1823(e) partially codified the DâOench, Dhume doctrine that no
agreement which tends to diminish or defeat the interest of the FDIC in any asset
acquired by it shall be valid against the FDIC unless it: (A) is in writing; (B) was
executed by the depository institution and any person claiming an adverse interest
thereunder, including the obligor, contemporaneously with the acquisition of the
asset by the depository institution; (C) was approved by the board of directors of the
depository institution or its loan committee, which approval shall be reflected in the
minutes of said board or committee, and (D) has been, continuously, from the time
of its execution, an official record of the depository institution. 12 U.S.C. § 1823(e).
27
The policies behind this doctrine are to: (1) allow federal and state bank
examiners to rely on a bankâs records in evaluating the worth of the bankâs assets,
which are necessary when a bank is examined for fiscal soundness, deciding whether
to liquidate the failed bank, or to provide financing for purchase of its assets (and
assumption of its liabilities) by another bank, and (2) ensure mature consideration of
unusual loan transactions by senior bank officials, and prevent fraudulent insertion
of new terms, with the collusion of banks employees, when a bank appears headed
for failure. See Langley v. Fed. Deposit Ins. Corp., 484 U.S. 86, 91â92 (1987).
7677 Group argues that the DâOench, Duhme doctrine and Section 1823 do
not apply here because there is no secret agreement. Rather, according to 7677
Group, FNB took possession of the collateral, including the CDs and the Soapranos
cosmetics inventory, pursuant to a written agreement referenced in and executed at
the same time as the Note, i.e., the Security Agreement.
While it is true that the Security Agreement was executed at the same time as
and specifically references the Note, the Security Agreement gave FNB âa security
interest in all of the Property described in this Agreementâ to secure the payment
and performance of the Note. The âPropertyâ described in the security agreement
consisted of the following: âInventory. All inventory which [7677 Group] hold[s]
for ultimate sale or lease, or which has been or will be supplied under contracts of
28
service, or which are raw materials, work in process, or materials used or consumed
in [7677 Groupâs] business.â
Nothing in the Security Agreement indicates that the CDs were additional
collateral or security, or that they fell within the definition of âinventory.â The same
is true for Soapranosâs cosmetics inventory. The Security Agreement was executed
by 7677 Group, not Soapranos, and there is no indication that 7677 Groupâs
âinventory,â as defined in the Security Agreement, included the inventory of a
separate entity.
Accordingly, any evidence of a side agreement or conversations that 7677
Group had with FNB whereby FNB agreed to accept the CDs or cosmetics inventory
of another entity as collateral, even though those items were not specifically
referenced in the Security Agreement, is the type of evidence DâOench, Dhume and
Section 1823 are meant to address. See Fed. Deposit Ins. Corp. v. Projects Am.
Corp., 828 S.W.2d 771, 773 (Tex. App.âTexarkana 1992, writ denied) (holding
evidence of side agreement that collateral not specifically identified in note was
intended to be security for note was barred by DâOench, Dhume doctrine and section
1832(e)).8
8
See also Cintra Antiques, Inc. v. Bank One, Tex., N.A., No. 05-91-00484-CV, 1992
WL 13974, at *4 (Tex. App.âDallas Jan. 29, 1992, no writ) (not designated for
publication) (holding evidence of letter agreement providing for liquidation of
inventory and assets of debtor as part of accord and satisfaction of debt due to Bank
One and other âunderstandingsâ that Bank One would apply proceeds to satisfy
29
Because the only evidence before the trial court that the Note had been fully
satisfied by the time of trial consisted of Batzriâs testimony related to FNBâs
acceptance of the collateral, which is barred by federal law, the overwhelming
weight of the evidence supports the conclusion that at least some amount was owed
on the Note as of maturity and the completion of trialâand, therefore, 7677 Group
was in default. As a result, is the record contains factually sufficient evidence to
support the trial courtâs finding of fact 4.
In sum, we hold that the record contains factually sufficient evidence to
support the trial courtâs finding of fact 4, that 7677 Group defaulted on the
Promissory Note by failing to pay all principal and accrued interest payments
required by the February 20, 2011 maturity date and continuing through the
completion of trial in this lawsuit. We further hold, however, that the trial courtâs
findings of fact 6 and 7 are not supported by factually sufficient evidence.
Accordingly, 7677 Group is entitled to a new trial on damages only.9
outstanding debt was type of oral agreements barred by DâOench Dhume where
letter agreement was not in bank records).
9
See In re N. Nat. Gas Co., 327 S.W.3d 181, 187 (Tex. App.âSan Antonio 2010,
orig. proceeding [mand. denied]) (holding that balance on promissory note is
liquidated damage and reversing and remanding for new trial on damages without
requiring new trial on liability); Watson v. Sheppard Fed. Credit Union, 589 S.W.2d
742, 744 (Tex. App.âFort Worth 1979, writ refâd n.r.e.) (citing Dallas Cnty. State
Bank v. Thiess, 575 S.W.2d 20, 21 (Tex. 1978) (holding, in default judgment
context, that difference between amount of indebtedness alleged to be due and face
amount of note does not create ambiguity or raise issue of fact regarding payments
credited, and therefore, allegation of indebtedness in pleadings was liquidated
30
We sustain in part and overrule in part 7677 Groupâs second issue.10
SMSâS CROSS APPEAL
Statute of Limitations Applicable to Guaranty Agreement
In its sole issue in its cross appeal, SMS argues that the trial court incorrectly
granted summary judgment in favor of Batzri on limitations grounds. Batzri moved
for traditional summary judgment, arguing that the Texas four-year statute of
limitations in Texas Civil Practices & Remedies Code section 16.004(a), applied to
SMSâs suit on the Guaranty. See TEX. CIV. PRAC. & REM. CODE § 16.003(a)(3) (âA
person must bring suit on the following actions not later than four years after the day
the cause of action accrues . . . debt.â). The trial court granted Batzriâs motion for
summary judgment and, in the modified final judgment, ordered that SMS take
nothing on its claims against Batzri.
SMS argues on appeal, and in its summary judgment response below, that the
federal six-year statute of limitations in 12 U.S.C. Section 1821(d)(14) applies to
any contract claim, including a suit on a guaranty and therefore SMS, as an assignee
of the FDIC, is entitled to avail itself of the six-year limitations period. According
demand); cf. TEX. R. APP. P. 44.1(b) (âThe court may not order a separate trial solely
on unliquidated damages if liability is contested.â).
10
Because we reverse and remand for a new trial on damages, we likewise reverse the
award of attorneyâs fees and prejudgment interest. See Clear Lake Ctr., L.P. v.
Garden Ridge, L.P., 416 S.W.3d 527, 545 (Tex. App.âHouston [14th Dist.] 2013,
no pet.). Therefore, we do not address 7677 Groupâs substantive arguments related
to those awards in its second and third issues. See TEX. R. APP. P. 47.1.
31
to SMS, its suit against Batzri, which was brought within five years of the maturity
of the Note, was timely and summary judgment was improper. We agree.
A. Standard of Review
We review a trial courtâs ruling on a traditional motion for summary judgment
de novo. Valance Operating Co. v. Dorsett, 164 S.W.3d 656, 661(Tex. 2005). A traditional motion for summary judgment is properly granted when the movant establishes there are no genuine issues of material fact and it is entitled to judgment as a matter of law on the grounds expressly set forth in the motion. Browning v. Prostok,165 S.W.3d 336, 344
(Tex. 2005). When reviewing an order granting a traditional motion for summary judgment, we must take evidence favorable to the nonmovant as true and indulge every reasonable inference from the evidence in favor of the nonmovant. Am. Tobacco Co. v. Grinnell,951 S.W.2d 420, 425
(Tex.1997).
B. Analysis
As the movant for summary judgment, Batzri had the burden of showing there
was no genuine issue of material fact and that he was entitled to judgment as a matter
of law. Id. The facts were not disputed; therefore, we must determine whether, on
the basis of those facts, limitations barred Batzriâs suit.
The parties do not dispute that SMSâs cause of action on the Guaranty accrued
upon the maturity of the Note, February 20, 2011. Thus, the four-year statute of
limitations in section 16.004 of the Civil Practice and Remedies Code, if applicable,
32
expired on February 20, 2015. Because SMS did not file suit against Batzri until
January 27, 2016, its suit is barred if it falls under section 16.004.
SMS argues that section 16.004 does not apply and that its cause of action is
governed by the six-year statute of limitations applicable to the FDIC found in
Section 1821(d)(14) of the United States Code. If Section 1821(d)(14) applies, the
statute of limitations on SMSâs cause of action against Batzri would not have expired
until February 20, 2017, and SMSâs suit filed on January 27, 2016 would have been
timely filed.
Section 1821(d)(14) provides:
(A) In general
Notwithstanding any provision of any contract, the applicable statute of
limitations with regard to any action brought by the Corporation as
conservator or receiver shall beâ
(i) in the case of any contract claim, the longer ofâ
(I) the 6âyear period beginning on the date the claim
accrues; or
(II) the period applicable under State law . . .
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of
limitation begins to run on any claim described in such subparagraph
shall be the later ofâ
(i) the date of the appointment of the Corporation as
conservator or receiver; or
(ii) the date on which the cause of action accrues.
33
12 U.S.C. § 1821(d)(14)(A), (B).
This provision was enacted as part of the Financial Institutions Reform,
Recovery, and Enforcement Act (FIRREA). The Texas Supreme Court has noted
that FIRREA does not expressly extend the benefit of this expanded limitations
period to the FDICâs successors in interest. See Jackson v. Thweatt, 883 S.W.2d 171, 173â74 (Tex. 1994). But the court concluded that the âFDICâs successors in interest are entitled to the benefits of section 1821(d)(14) pursuant to the common law maxim that an assignee stands in the shoes of his assignor.âId. at 174
(quotations omitted). The court in Jackson further explained that â[i]f the FDICâs statute of limitations did not enure to the benefit of its transferees, the market value of notes and other assets in the hands of the FDIC would be diminished,â hindering one of FIRREAâs statutory purposes to âprovide funds from public and private sources to deal expeditiously with failed depository institutions.âId.
Accordingly, the court held that âsection 1821(d)(14) applies to actions brought by purchasers of assets from the FDIC to recover on those purchased assets . . . .âId. at 178
.
Jackson involved a suit on a promissory note brought by an assignee of the
FDIC against the debtor. In an opinion issued on the same day as Jackson, the Texas
Supreme Court applied the reasoning of Jackson to a suit on a guaranty. See EKA
Liquidators v. Phillips, 883 S.W.2d 178, 178â79 (Tex. 1994). The court explained
as follows:
34
This case presents the question resolved today in Jackson v. Thweatt,
883 S.W.2d 171 (Tex. 1994). Because the decision of the court of
appeals, 883 S.W.2d 218, conflicts with our holding in Jackson, we
reverse the judgment of the court below and remand the cause to the
trial court for further proceedings.
Troy Phillips guaranteed two notes payable to the Heritage National
Bank maturing in August 1986 and June 1987, respectively. The notes
went into default on maturity, obligating Phillips on his guaranty. The
FDIC acquired the notes as receiver for Heritage National Bank in
September 1986, later assigning them to EKA Liquidators (âEKAâ).
After EKA brought suit on the notes in August 1991, Phillips moved
for summary judgment based on the Texas four year statute of
limitations. See TEX. CIV. PRAC. & REM. CODE § 16.004. The trial court
granted summary judgment for EKA, and the court of appeals affirmed,
concluding that assignees of promissory notes from the FDIC are not
entitled to the benefit of the six year limitations period applicable to the
FDIC. See 12 U.S.C. § 1821(d)(14).
We held today in Jackson that an assignee of a promissory note from
the FDIC does receive the benefit of the special limitations provision
set forth in section 1821(d)(14). Accordingly, without hearing oral
argument, a majority of the Court reverses the judgment of the court of
appeals and remands the cause to the trial court for further proceedings.
Id.11
Batzri acknowledges the opinions in Jackson and EKA Liquidators, but
argues, in essence, that these cases were wrongly decided in that they âimproperly
11
See also U.S. Loan Liquidators I, Ltd v. Pate, No. 14-96-00591-CV, 1997 WL
251346, at *4 (Tex. App.âHouston [14th Dist.] May 15, 1997, pet. denied) (not
designated for publication) (citing Jackson v. Thweatt, 883 S.W.2d 171 (Tex. 1994),
and EKA Liquidators v. Phillips, 883 S.W.2d 178 (Tex. 1994), and holding that six-
year statute of limitations in 12 U.S.C. § 1821(d)(14) applied to suit on guaranty);
cf. Barnes v. LPP Mortg., Ltd., 358 S.W.3d 301, 305 (Tex. App.âDallas 2011, pet.
denied) (citing Jackson and EKA Liquidators and holding that similar six-year
statute of limitations in 28 U.S.C. § 2415(a) applied to assignees of Small Business
Administration in suit on guaranty).
35
elevate a common-law rule over statutes,â and therefore, we should not follow them.
It is not the function of a court of appeals to abrogate or modify established
precedent. Lubbock Cnty., Tex. v. Trammelâs Lubbock Bail Bonds, 80 S.W.3d 580,
585(Tex. 2002). Rather, as an intermediate appellate court, we are bound by existing Texas Supreme Court authority. Harris Cnty. Fresh Water Supply Dist. No. 61 v. Magellan Pipeline Co.,649 S.W.3d 630
, 648 (Tex. App.âHouston [1st Dist.]
2022, pet. denied).
Being bound by the Texas Supreme Courtâs decisions in Jackson and EKA
Liquidators, we hold that the six-year statute of limitations in 12 U.S.C. Section
1821(d)(14) applies to SMSâs claims against Batzri on the Guaranty. Accordingly,
the trial court erred in granting Batzriâs motion for summary judgment on limitations
grounds and rendering a take-nothing judgment against SMS on its claims against
Batzri based on the Guaranty.
We sustain SMSâs sole issue on cross appeal.
36
Conclusion
We reverse the trial courtâs judgment against 7677 Group as to damages,
attorneyâs fees, and prejudgment interest. We remand for a new trial as to damages,
attorneyâs fees, and for a recalculation of prejudgment interest. We reverse the trial
courtâs take-nothing judgment against Batzri and reverse and remand for further
proceedings. We affirm the judgment in all other respects.
Terry Adams
Chief Justice
Panel consists of Chief Justice Adams and Justices Hightower and Countiss.
37