Falcon Int'l Bank v. Mark A. Cantu, Roxanne Pena Cantu, Individually, & Canflor, L.P.

FALCON INTERNATIONAL BANK, Appellant, v. MARK A. CANTU, ROXANNE PENA CANTU, INDIVIDUALLY,AND CANFLOR, L.P., A TEXAS LIMITED PARTNERSHIP, Appellees.

NUMBER 13-13-00577-CV

COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG

April 16, 2015

On appeal from the 370th District Court of Hidalgo County, Texas.

MEMORANDUM OPINION

Before Justice Garza, Benavides and Perkes

Memorandum Opinion by Justice Garza

Following a bench trial in this dispute over a loan agreement, the trial court rendered judgment in favor of appellees, Mark A. Cantu and Canflor, L.P.¹ The trial courtawarded: (1) $375,728, pre- and post-judgment interest, $70,000 in attorney's fees, and contingent appellate attorney's fees to appellees jointly and severally; and (2) $750,000 plus pre-and post-judgment interest to Cantu individually. The trial court also ruled that appellant Falcon International Bank ("Falcon") was entitled to foreclose on the lien property securing the loan, but was prohibited from seeking recovery from appellees for any deficiency on the loan. By six issues, Falcon contends that the trial court: (1) erred in holding that Falcon entered into and breached an oral modification agreement with Cantu²; (2) erred in holding that Falcon committed fraud or fraud in the inducement; (3) erred in holding that Falcon owed and breached a fiduciary duty to Cantu; (4) erred in awarding mental anguish damages, exemplary damages, and attorney's fees to Cantu; (5) violated the single satisfaction rule by awarding both tort damages and contract damages for a single alleged injury; and (6) erred in rendering a take-nothing judgment on Falcon's counterclaims and in ordering that Falcon may not seek recovery for any deficiency from Cantu. We reverse the trial court's judgment and render judgment in favor of Falcon.

I. BACKGROUND³

In April 2008, Cantu refinanced a mortgage on a 64-unit apartment complex in McAllen, Texas with Falcon. The note, in the amount of $2,700,000, provided for repayment over ten years in monthly payments of $20,150 at an interest rate of 6.5%, and was secured by a deed of trust on the apartment complex. Shortly after executingthe note, in May 2008, Cantu filed for bankruptcy. The bankruptcy court appointed a trustee, Michael Schmidt, to take possession of Cantu's non-exempt assets. Schmidt assumed the operation of the apartment complex and tried unsuccessfully to sell the property. In April 2010, Schmidt relinquished control of the complex to Falcon. Although Falcon was entitled to foreclose on the complex, it did not do so. Cantu met with Bobby Martinez, then a vice-president at Falcon, to discuss modification of the loan and a proposal for Cantu to resume operation of the complex.

On June 28, 2010, Cantu and Falcon signed a written modification of the mortgage note which provided that, for a ten-month period from May 2010 to February 2011, Cantu would pay no principal on the loan, but only monthly accrued interest. The modification agreement provided that Cantu's monthly principal payments of $20,150 would resume on March 20, 2011. The modification agreement contained a "no oral agreements" merger clause.

Cantu contends that prior to executing the written modification agreement, Martinez promised him that at the end of the ten-month period covered in the written modification agreement, Falcon would extend the term of the note from 10 years to 25 years (or amortize the note over 25 years) and reduce the interest rate from 6.5 percent to 5 percent. Cantu also contends that in reliance on the oral agreement, he spent $375,728 in improvements on the apartment complex.

Cantu subsequently defaulted on the loan payments and other obligations under the note.⁴ Falcon sought to foreclose on the property. In February 2012, Cantu sued Falcon, alleging various causes of action including breach of contract, fraud, fraud in theinducement, and breach of fiduciary duty. Cantu also obtained a temporary injunction restraining Falcon from foreclosing on the property. Cantu sought a jury trial; Falcon objected on the ground that the modification agreement contained a jury waiver. After the trial court denied Falcon's objection, Falcon successfully sought a petition for writ of mandamus to enforce the jury waiver provision. See In re Falcon Int'l Bank, No. 13-12-00326, 2012 WL 2052409, at *2 (Tex. App.—Corpus Christi June 5, 2012) (orig. proceeding) (mem. op.).

The case proceeded to a bench trial in August 2012 on Cantu's claims of breach of contract, fraudulent inducement, fraud, and breach of fiduciary duty and Falcon's counterclaims of breach of contract, tortious interference with contractual relationship, and unlawful appropriation of rental income. In January 2013, the trial court issued findings of fact and conclusions of law. In August 2013, the trial court rendered judgment in Cantu's favor without specifying the cause or causes of action on which the court was granting relief. The trial court also rendered judgment that Falcon take nothing by way of its counterclaims. Falcon filed a motion for new trial, which was denied by operation of law.

II. STANDARD OF REVIEW AND APPLICABLE LAW

In an appeal from a bench trial, the trial court's findings of fact have the same weight as a jury verdict. Aland v. Martin, 271 S.W.3d 424, 428-29 (Tex. App.—Dallas 2008, no pet.); HTS Servs., Inc. v. Hallwood Realty Partners, L.P., 190 S.W.3d 108, 111 (Tex. App.—Houston [1st Dist.] 2005, no pet.). When, as here, the appellate record contains a reporter's record, findings of fact on disputed issues are not conclusive and may be challenged for sufficiency of the evidence. Sharif v. Steen Auto, LLC, 370 S.W.3d 126, 147 (Tex. App.—Dallas 2012, no pet.). We review the sufficiency of the evidence supporting the findings by applying the same standards we use in reviewing the legal and factual sufficiency of the evidence supporting a jury verdict. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994); Aland, 271 S.W.3d at 429.

An appellant challenging the legal sufficiency of an adverse finding on an issue for which it did not have the burden of proof—here, Falcon—must demonstrate there is no evidence to support the adverse finding. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983). In evaluating the legal sufficiency of the evidence to support a finding, we must determine whether the evidence as a whole would enable reasonable and fair-minded people to differ in their conclusions. Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994); Aland, 271 S.W.3d at 429. We view the evidence in the light most favorable to the fact-finding, credit favorable evidence if a reasonable fact-finder could do so, and disregard contrary evidence unless a reasonable fact-finder could not. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005); Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 888 (Tex. App.—Dallas 2009, no pet.). Anything more than a scintilla of evidence is legally sufficient to support a challenged finding. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998); OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P., 234 S.W.3d 726, 736 (Tex. App.—Dallas 2007, pet. denied).

To evaluate the factual sufficiency of the evidence to support a finding, we consider all the evidence and set aside the finding only if it is so against the overwhelming weight of the evidence as to be clearly wrong and unjust. See Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989); Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); AlanReuber Chevrolet, 287 S.W.3d at 888. In a bench trial, the trial court judges the credibility of the witnesses, determines the weight to be given to their testimony, and resolves conflicts and inconsistencies in the testimony. See City of Keller, 168 S.W.3d at 819; Hinkle v. Hinkle, 223 S.W.3d 773, 778 (Tex. App.—Dallas 2007, no pet.). We may not substitute our judgment for the fact-finder's, even though, after reviewing the evidence, we would reach a different conclusion from that of the trier of fact. Essex Crane Rental Corp. v. Striland Constr. Co., Inc., 753 S.W.2d 751, 755 (Tex. App.—Dallas 1988, writ denied.); Clancy v. Zale Corp., 705 S.W.2d 820, 826 (Tex. App.—Dallas 1986, writ ref'd n.r.e.).

We review a trial court's conclusions of law de novo. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Bollner v. Plastics Solutions of Tex., Inc., 270 S.W.3d 157, 166 (Tex. App.—El Paso 2008, no pet.). When reviewing the trial court's legal conclusions, we evaluate them independently, determining whether the trial court correctly drew the legal conclusions from the facts. Dallas Morning News v. Bd. of Trs., 861 S.W.2d 532, 536 (Tex. App.—Dallas 1993, writ denied). Conclusions of law will be upheld on appeal if the judgment can be sustained on any legal theory supported by the evidence. Mack v. Landry, 22 S.W.3d 524, 528 (Tex. App.—Houston [14th Dist.] 2000, no pet.).

III. DISCUSSION

A. Findings of Fact and Conclusions of Law

The trial court issued findings of fact and conclusions of law as follows:

FINDINGS OF FACT

1. Defendant Falcon International Bank "Falcon" and Canflor, L.P. "Canflor" entered into a Commercial Real Estate Lien Note on April20, 2008, in the principal amount of $2,700,000.00 ("Note") and a Loan Agreement, along with a Deed of Trust securing the Note, pledging the real estate hereinafter referred to as "The Apartments" . . . .

2. Plaintiff Mark Cantu "Cantu" personally guaranteed the Commercial Note and executed a written guaranty agreement ("Guaranty") on April 20, 2008. The terms of the note included a term of ten (10) years, an interest rate of 6.5%, with principal and interest payments of $20,150.00 and escrow payments for ad valorem taxes and insurance of $6,850.00.

3. Prior to April 2008, these apartments had been financed with First National Bank. Robert "Bobby" Martinez, Senior Vice President of Falcon, solicited

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