Speedy Car Wash, Inc. v. Sher

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SPEEDY CAR WASH, INC. AND CARLOS A. GUERRA, GUARANTOR, Appellants, v. GERALD SHER, SUSAN SHER, SPECIALTY CUISINE, INC. D/B/A ISLE WASH, AND ANDREW SHER, TRUSTEE, Appellees.

Nos. 13-20-00492-CV, 13-21-00085-CV, 13-21-00425-CV

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

May 11, 2023

On appeal from the 103rd District Court of Cameron County Texas.

Before Chief Justice Contreras and Justices Silva and Peña

MEMORANDUM OPINION

L ARON PEÑA JUSTICE

Appellees Gerald Sher, Susan Sher, Specialty Cuisine, Inc. d/b/a Isle Wash, and Andrew Sher, trustee (the Sellers) sold three tracts of real property, one containing a car wash business (the property), to appellants Speedy Car Wash, Inc. and Carlos A. Guerra, Guarantor (the Purchasers). The Sellers who financed the transaction, later sued the Purchasers, seeking declaratory relief and alleging breach of contract and fraud claims. During the pendency of the litigation, the Sellers conducted a non-judicial foreclosure on the property pursuant to a Rule 11 agreement, and they later pleaded a claim for deficiency. The trial court granted partial summary judgment in favor of the Sellers on their deficiency claim and severed the judgment into a separate cause of action. Later, the trial court granted summary judgment in favor of the Sellers on their claims concerning the Purchasers' post-foreclosure failure to vacate the property. The Purchasers appeal the two summary judgments, as well as a post-judgment order authorizing a court-appointed receiver to sell real property in satisfaction of the judgment.^[1] We affirm the trial court's judgments in appellate cause numbers 13-20-00492-CV and 13-21-00085-CV. We dismiss as moot appellate cause number 13-21-00425-CV.

I. Background

A. The Sale

The subject property is located in South Padre Island, Cameron County, Texas. The Purchasers bought the property for $977,000, making a down payment of $100,000, with the remainder being seller-financed. The Purchasers held a special warranty deed with a vendor's lien subject to a deed of trust and a real estate lien note. The note, in the amount of $877,000, required monthly payments of $5,785.90 to the Sellers. The note provided that in the event of default, the Sellers could opt to accelerate the note, causing the unpaid principal balance and accrued interest to become immediately due and payable. The Sellers disclaimed making "any warranties or representations . . . of any kind or character, . . . including operating history or projections [and] valuation[.]" Relatedly, the Purchasers disclaimed relying on any such representations, asserting that they conducted their own independent investigation.

Approximately five months later, the Purchasers informed the Sellers that they were unable to meet their payment obligations due to less-than-expected revenue from the car wash business and that they wished to sell two of the three tracts. The Purchasers requested a partial release of the Sellers' deed of trust and lien covering those tracts to facilitate the sale. The Sellers declined, and the Purchasers threatened litigation.

B. Partial Summary Judgment Proceedings

The Sellers preempted the Purchasers' threat by filing suit seeking declaratory relief that the note and deed of trust did not require them to grant a partial release of the secured collateral. The Sellers also sought a declaration that the Purchasers waived any claim that they relied on representations by the Sellers pursuant to the disclaimers contained in the parties' agreement. The Sellers alleged breach of contract and anticipatory breach of contract claims based on the Purchasers' threat of litigation and their intention not to continue making timely monthly payments. Finally, the Sellers alleged that the Purchasers committed fraud and fraudulent inducement.

Fifteen days after filing suit, the Sellers notified the Purchasers that they were accelerating the unpaid principal balance and accrued interest on the note due to the Purchasers' default. The Sellers subsequently notified the Purchasers of a scheduled non-judicial foreclosure sale.

Before the scheduled foreclosure, the Purchasers filed a "Counterclaim, Verified Petition and Affirmative Defenses," asserting various claims and defenses.^[2] The Sellers filed a Rule 91a motion to dismiss the Purchasers' counterclaims, alleging that the claims had no basis in law. See Tex. R. Civ. P. 91a. Subsequently, the trial court granted the Sellers' Rule 91a motion to dismiss in its entirety.^[3]

The parties then filed a Rule 11 agreement, see Tex. R. Civ. P. 11, containing the following pertinent terms:

2. [The Sellers] shall agree to postpone the foreclosure sale currently set for February 4, 2020[,] provided the [Purchasers] strictly comply with all of the following:

a. [The Purchasers] shall make all loan payments current and due, that is, December 2019 and January 2020, in the amount of $5,785.30 for each month totaling $11,570.60 on or before 5:00 PM CST Monday, February 3, 2020.

b. The loan payments under 2(a) hereinabove shall be made by wire transfer or direct deposit, certified check, bank draft, or other verifiable manner and shall be made payable directly to the [Sellers].

c. [The Purchasers'] failure to timely make the loan payments as required by 2(a) and 2(b) hereinabove shall authorize [the Sellers] to proceed with the foreclosure sale scheduled for Tuesday, February 4, 2020 at 10:00 AM CST . . . without delay or interference by or on behalf of [the Purchasers]. d. [The Purchasers] shall refinance and pay [the Sellers] the accelerated debt in its entirety pursuant to all conditions and terms as set out in the Loan Documents including but not limited to all principal, interest, penalties, fees, costs and expenses, including reasonable attorney fees on or before March 1, 2020 at 5:00 PM CST. . . .

e. [The Purchasers'] failure to refinance and timely pay as required by 2(d) hereinabove shall authorize [the Sellers] to proceed with foreclosure on Tuesday, March 3, 2020 at 10:00 AM CST on the steps of the Cameron County Courthouse in Brownsville, Cameron County, Texas without any further required notice, other than notice of the foreclosure sale for March 3, 2020, required under the Texas Property Code, or judicial review and without delay or interference by or on behalf of [the Purchasers].

The Purchasers were unable to refinance the loan by the agreed deadline, and the March 3, 2020 non-judicial foreclosure proceeded. At the sale, the Sellers reacquired the property for $800,000. They then filed a supplemental petition seeking a deficiency judgment. The Sellers also sought attorney's fees associated with conducting the foreclosure. The Sellers brought an additional claim for breach of the Rule 11 agreement, alleging the Purchasers refused to peaceably vacate the property. Finally, the Sellers brought a claim for abuse of process and malicious civil prosecution based on the Purchasers having filed a Rule 202 proceeding seeking pre-suit discovery in El Paso County, Texas. See Tex. R. Civ. P. 202 ("Deposition Before Suit or to Investigate Claims").

The Sellers filed a motion for partial summary judgment on their deficiency claim. They sought a judgment in the amount of $95,588.47 pursuant to the terms of the real estate lien note, deed of trust, and commercial loan security agreement. That figure represented the difference between the foreclosure sale price and the debt owed on the date of foreclosure. The Sellers also maintained they were entitled to $94,044.78 in attorney's fees and expenses associated with the foreclosure. The Sellers further argued that the foreclosure sale was properly conducted pursuant to the parties' Rule 11 agreement. The Sellers' motion was supported by the transaction agreements, the real estate lien note, a special warranty deed with vendor's lien, a deed of trust, the Rule 11 agreement, foreclosure notices, and the affidavits of the Sellers' counsel. The Sellers also filed a motion for equitable relief, requesting "that the gross revenues generated by [the Purchasers] from [the property] be paid into the registry of the Court until such time as possession is restored to [the Sellers]."

The Purchasers filed a response to the motions, contending that they entered into the Rule 11 agreement only "given the proviso that the financial information would be forthcoming" and that the Rule 11 agreement is void because the Sellers did not provide such information. The Purchasers supported the motion with the affidavit of Carlos Guerra.

The Sellers replied, noting that the Rule 11 agreement contained no provision requiring the Sellers to provide financial information.^[4]

The trial court held a hearing on the Sellers' motions for partial summary judgment and for equitable relief. After hearing arguments, the trial court orally pronounced it was granting the partial summary judgment in part-awarding attorney's fees and expenses associated with the foreclosure. However, the trial court found "there is no deficiency" because the Sellers "do have the property back." The trial court also orally pronounced that it was granting the Sellers equitable relief and ordered the Purchasers to vacate the property. The trial court then signed an order that: granted the motion for partial summary judgment "in part"; awarded the Sellers a $95,588.47 "judgment for deficiency, reasonable and necessary attorney fees, and expenses incurred as of March 3, 2020,"^[5] along with post-judgment interest, and costs; and ordered the Purchasers to vacate the property. The trial court severed the partial summary judgment into a separate cause, leaving the Sellers' post-foreclosure claims remaining.

C. Final Summary Judgment

After the...