NATIONAL COLLEGIATE STUDENT LOAN TRUST (NCSLT)
CASES IN TEXAS INTERMEDIATE COURTS OF APPEAL
CASES IN TEXAS INTERMEDIATE COURTS OF APPEAL
For coverage of trial court litigation see -- > Anatomy of NCSLT Student Loan Collection Suits in Texas
For info on appealing without attorney, see -- > Appealing a Debt Judgment Pro Se in Texas
What are the NCSLT trusts and how come they sue, rather than the banks that made the loans:
The National Collegiate Student Loan Trusts: A Bit of Background |
OVERVIEW OF TRUST LITIGATION IN TEXAS COURTS OF APPEALS (as of 2018)
The total number of Texas appellate cases with National Collegiate Student Loan Trust as a party is 16. The first such appeal was filed 7/7/2014, the most recent one on 9/21/2017. Seven of the sixteen appeals went to the First Court of Appeals in Houston. None of these cases made it the Texas Supreme Court, and it is unlikely that any of the pending ones will. This is because the Texas High Court, like the U.S. Supreme Court, exercises discretionary review, and accepts only a small percentage of petitions for full briefing and an eventual decision on the merits.
For info on appealing without attorney, see -- > Appealing a Debt Judgment Pro Se in Texas
What are the NCSLT trusts and how come they sue, rather than the banks that made the loans:
The National Collegiate Student Loan Trusts: A Bit of Background |
OVERVIEW OF TRUST LITIGATION IN TEXAS COURTS OF APPEALS (as of 2018)
The total number of Texas appellate cases with National Collegiate Student Loan Trust as a party is 16. The first such appeal was filed 7/7/2014, the most recent one on 9/21/2017. Seven of the sixteen appeals went to the First Court of Appeals in Houston. None of these cases made it the Texas Supreme Court, and it is unlikely that any of the pending ones will. This is because the Texas High Court, like the U.S. Supreme Court, exercises discretionary review, and accepts only a small percentage of petitions for full briefing and an eventual decision on the merits.
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Six appeals were initiated by one or the other of the Trusts to complain of adverse judgment in the trial court. This fact demonstrates that in Texas, the Trusts' attorneys did not simply drop lawsuits at the first sign of opposition, and even pursued cases through the appellate process. They lost one of those (Ramirez) and settled others. The Trusts also lost two appeals brought by defendants who retained an attorney to challenge default judgments that were entered against them despite them having filed pro-se answers (Cox & De Los Santos).
The overall number of NCSLT appeals is low, but the assortment is diverse. It encompasses collection cases in which the Trust's attorneys sued an individual defendant and cases in which the Trust sued borrower and co-signer together. Several borrowers are parties to multiple appeals (Annis-Acebo, Johnson, Cox & De Los Santos) while others had multiple cases in the trial court of which only one reached the appellate level.
Note that in Texas courts of appeals the case style convention differs from those of federal and other states’ courts. Whoever appeals (Appellant) gets to be identified first in the case style, regardless of whether he/she/it was the plaintiff or defendant in the case below. This is why the first Case Style column in the table contains both the names of trusts and the names of parties. The party against which the appeal is taken is called the Appellee. If both parties appeal, each acquires a second capacity, namely that of Cross-Appellant and Cross-Appellee, respectively. The respective appellate briefs are denominated accordingly.
The NCSLT appeals cases in Texas also represent a mix with respect to the involved attorneys and law firms. Three firms have been involved in appeals of private student loan collection cases filed on behalf of NCSLT trust in Texas in 2016-2018: Michael J. Scott’s law firm SCOTT & ASSOCIATES, P.C. (Attorneys Michael Joseph Scott, Teri Stewart Mace, Nicole Goldie Terrill, Ricci Crites) and JAVITCH BLOCK LLC (Attorneys Mark Melamed, Karen Guenther, Joyce Nwachukwu, and Jacob Figelman). Javitch so far has only a single case pending. Its first. In that same case (Kirk v. NCSLT 2003-1), a designation of lead attorney was later filed for Charles Penot Jr., of SESSIONS FISHMAN NATHAN & ISRAEL LLC. As of July 17, 2018, appellate briefing in Kirk v. National Collegiate Student Loan Trust 2000-3 is complete, but the case has not yet been set for submission. Two other appeals of judgments granted in favor of a National Collegiate Trust (NCSLT 2005-3 and NCSLT 2007-4) have been submitted, and one of them (Savoy v. NCSLT 2005-3) is still awaiting decision and issuance of an opinion. Mock v. National Collegiate Student Loan Trust 2007-4 has been decided, with a memorandum opinion issued July 11, 2018, but is awaiting further action due to the court's suggestion of a remittitur.
Because the same law firms represent the parties in the recent and still-pending appeals, the issues raised in briefing are similar to those argued in the already-decided cases (Ramirez and Gillesepie), but they do not completely overlap.
Because the same law firms represent the parties in the recent and still-pending appeals, the issues raised in briefing are similar to those argued in the already-decided cases (Ramirez and Gillesepie), but they do not completely overlap.
On the defendants’ side, some proceeded pro se while others were represented by attorneys, mostly from law firms that specialize in consumer debt defense and advertised themselves as such. One currently pending case (Mock v. NCSLT 2007-4) was a pro se case in the trial court and a pro bono case on appeal.
All of the still-pending appellate cases remain pending in the First Court of Appeals in Houston. The notice of appeal in the last one was filed just three days after the CFPB announced the culmination of its investigation of the National Collegiate Student Loan Trusts and its debt collector, TSI, and released the proposed consent judgment with the Trusts and the Consent Order with TSI. The Harris County trial court had signed the judgment in the most recent appeal on that very same day.
OUTCOMES ON APPEAL
Six of the total number of appealed cases have resulted in substantive appellate opinions so far: Mock, Foster, Gillespie, Ramirez, and Cox & De Los Santos. Gillespie and Ramirez pivoted on chain-of-title proof issues whereas Cox & De Los Santos involved challenges to default judgment via restricted appeal, which may be brought up until 180 days after the judgment is entered, rather than just 30 for a regular appeal (or within 90 days, when a post-judgment motion is filed).
The resolution of Foster v. NCSLT 2007-4 in an opinion issued March 1, 2018 was somewhat unusual because the Houston Court of Appeals offered the Trust an opportunity to reduce its damages claim as a condition for affirming the judgment for the discounted amount. Foster v. National Collegiate Student Loan Trust 2007-4, No. 01-17-00253-CV, 2818 WL 1095760 (Tex.App. - Houston [1st Dist.] March 1, 2018, no. pet.). This was predicated on a finding that the Trust's evidence did not support the full amount of damages that the trial court had awarded in the judgment because there was no evidence of a valid acceleration of maturity of the loan balance. On May 11, 2018, the Court
withdrew the original judgment and issued a superseding "corrected judgment" reflecting the Trust's timely acceptance of the suggested remittitur, but did not issue a superseding opinion. The March 1, 2018 opinion conflicts with other appellate cases with respect to admissibility of the affidavit signed by an employee of Transworld Systems, Inc. (TSI). See post-decision brief on evidentiary issues in Foster vs NCSLT 2007-4 for details.
In Mock v. NCSLT, the First Court made the same offer to the Trust as in Foster, which has not yet been accepted or rejected, as of July 18, 2018. The deadline for doing so is July 25, 2018.
The text of four appellate opinions in Texas NCSLT cases issued in 2017 and earlier is reproduced below. Appellate case dockets may be accessed through the hotlinks in the table of appellate cases below.
The on-line docket sheets on the respective court-of-appeals websites reveal the procedural history of each appeal, and contain hotlinks to the URLs of most of the documents filed in the case on appeal, most notably, the appellate briefs, the opinion, the judgment on appeal, and the mandate. Some of the case case are not yet finally resolved and do not have all of these case document for that reason.
withdrew the original judgment and issued a superseding "corrected judgment" reflecting the Trust's timely acceptance of the suggested remittitur, but did not issue a superseding opinion. The March 1, 2018 opinion conflicts with other appellate cases with respect to admissibility of the affidavit signed by an employee of Transworld Systems, Inc. (TSI). See post-decision brief on evidentiary issues in Foster vs NCSLT 2007-4 for details.
In Mock v. NCSLT, the First Court made the same offer to the Trust as in Foster, which has not yet been accepted or rejected, as of July 18, 2018. The deadline for doing so is July 25, 2018.
The text of four appellate opinions in Texas NCSLT cases issued in 2017 and earlier is reproduced below. Appellate case dockets may be accessed through the hotlinks in the table of appellate cases below.
The on-line docket sheets on the respective court-of-appeals websites reveal the procedural history of each appeal, and contain hotlinks to the URLs of most of the documents filed in the case on appeal, most notably, the appellate briefs, the opinion, the judgment on appeal, and the mandate. Some of the case case are not yet finally resolved and do not have all of these case document for that reason.
Two of the older cases saw appellate briefing but were settled while the appeal was still pending and therefore did not result in opinions addressing the merits of the issues presented.
APPELLATE ORDERS & OPINIONS
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NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-3, NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-4, AND NATIONAL COLLEGIATE STUDENT LOAN TRUST 2007-1, Appellants,
v.
ANGELA ANNIS-ACEBO, Appellee.
Nos. 01-16-00107-CV, 01-16-00109-CV, 01-16-00110-CV.
Court of Appeals of Texas, First District, Houston.
Opinion issued January 31, 2017.
John V. Mastriani, for Angela Annis-Acebo, Appellee.
Michael Scott, Ricci Crites, Nicole Goldie Terrill, for National Collegiate Student Loan Trust 2006-4, Appellant.
On Appeal from the 155th District Court, Austin County, Texas, Trial Court Cause Nos. 2013V-0076; 2013V-0077; 2013V-0078.
Panel consists of Justices Massengale, Brown, and Huddle.
MEMORANDUM OPINION
PER CURIAM.
Appellants and appellee have filed joint motions to dismiss these appeals. See TEX. R. APP. P. 10.3(a)(2), 42.1(a)(1). No opinion has issued. See TEX. R. APP. P. 42.1(c).
Accordingly, we grant the motions and dismiss the appeals. See TEX. R. APP. P. 42.1(a)(1). We dismiss all other pending motions as moot.
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CASONDRA K. MOCK AND KARY L. MOCK,
Appellant,
v.
NATIONAL COLLEGIATE STUDENT LOAN TRUST 2007-4
A DELAWARE STATUTORY TRUST, Appellee.
Kary L. Mock, for Appellant, Pro se.
Casondra K. Mock, for Appellant, Pro se.
Michael Scott, for National Collegiate Student Loan Trust 2007-4 a Delaware Statutory Trust, Appellee.
On Appeal from Co Civil Ct at Law No 2, Harris County, Texas, Trial Court Cause No. 1070563.
MEMORANDUM ORDER
OF REFERRAL TO MEDIATION
HARVEY BROWN, Justice.
The Court determines that it is appropriate to refer this appeal for resolution by mediation. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 154.021, 154.022(a), 154.023 (Vernon 2005). Accordingly, the Court orders that this appeal be referred to mediation unless any party to the appeal files an objection with the Clerk of this Court within ten days after receiving this order. See id. § 154.022(b).
The parties shall choose a qualified mediator and agree on a reasonable fee for the mediator's services.[1] See id. §§ 154.052, 154.054(a) (Vernon 2005).
The Court sets the following deadlines:
• No later than 15 days from the date that this order is issued, the parties shall file with the Clerk of this Court a completed "Parties' Notification to Court of Mediator." This document can be downloaded from the forms page of the Court's website at http://www.txcourts.gov/1stcoa.
• No later than 45 days from the date that this order is issued, the parties shall conduct the mediation.
• No later than two days from the conclusion of the mediation, the parties and the mediator shall advise the Clerk of this Court in writing whether the parties did or did not settle the underlying dispute.
All parties, or their representative with full settlement authority, shall attend the mediation with their counsel. The mediator shall encourage and assist the parties in reaching a settlement of their dispute, but may not compel or coerce the parties to enter into a settlement agreement. See id. § 154.053(a) (Vernon 2005). All communications relating to the mediation are confidential and not subject to disclosure, except as set forth by law. See id. § 154.073 (Vernon 2005). The Clerk of this Court, however, will file this order, any objection to this order, and the completed "Parties' Notification to Court of Mediator" with the other documents filed in this appeal that are available for public inspection.
Unless expressly authorized by the disclosing party, the mediator may not disclose to either party information given in confidence by the other and shall at all times maintain confidentiality with respect to communications relating to the subject matter of the dispute. See id. § 154.053(b). Unless the parties agree otherwise, all matters, including the conduct and demeanor of the parties and their counsel during the settlement process, are confidential and may never be disclosed to anyone, including this Court. See id. § 154.053(c).
The Court will consider the agreed fee for the mediator's services to be reasonable and tax that fee as a cost of the appeal unless the parties agree to another method of payment. See id. § 154.054.
[1] The Court does not recommend mediators. Mediation information is available from the Dispute Resolution Center of Harris County ((713) 755-8274 and http://www.co.harris.tx.us/DRC), the Fort Bend Dispute Resolution Center ((281) 342-5000), the Alternate Dispute Resolution Section of the State Bar of Texas (http://www.texasadr.org/), and other groups. The parties are not required to use a mediator recommended or listed by these groups.
PADRAIC GILLESPIE AND TRACY GILLESPIE,
Appellants,
v.
NATIONAL COLLEGIATE STUDENT LOAN TRUST 2005-3,
A DELAWARE STATUTORY TRUST,
Appellee.
Court of Appeals of Texas, Second District, Fort Worth.
Appeal from County Court at Law No. 3 of Tarrant County Trial Court No. 2014-006194-3.
PANEL: WALKER, MEIER, and GABRIEL, JJ.
MEMORANDUM OPINION [1]
LEE GABRIEL, Justice.
In this appeal from a bench trial and final judgment, we are asked to determine the admissibility of a business-records affidavit and attendant documents and to determine the sufficiency of the evidence to support several of the trial court's findings of fact. We conclude that even considering the challenged evidence, the trial court's findings and resulting judgment were not supported by legally sufficient evidence. Accordingly, we reverse and render a take-nothing judgment.
I. BACKGROUND
A. THE LOAN
On May 1, 2002, Bank One, N.A. entered into a loan-purchase agreement with The First Marblehead Corporation (First Marblehead) "for loans that were originated under Bank One's . . . EDUCATION ONE Loan Program." Three years later on July 12, 2005, appellant Padraic Gillespie,[2] as the borrower, and appellant Tracy Gillespie, as a cosigner (collectively, the Gillespies), signed a note[3] with "Bank One (JP Morgan Chase Bank, N.A.)" under which Bank One agreed to lend $12,500 to the Gillespies under its Education One loan program. Under the terms of the note, the Gillespies' repayment obligations would begin on December 20, 2008, but interest on the loan amount accrued as of the date the funds were disbursed to the Gillespies. Bank One's records reflected that it disbursed the principal amount of the loan—$13,368.98[4]—to the Gillespies on July 26, 2005.
On October 12, 2005, First Marblehead, The National Collegiate Funding LLC (National Funding), and Bank One entered into "Pool Supplements" regarding "loans that were originated under Bank One's . . . EDUCATION ONE Loan Program" (the pool supplement). That same day, National Funding entered into a deposit and sale agreement (DAS) with appellee National Collegiate Student Loan Trust 2005-3 (the Trust) under which National Funding sold and assigned to the Trust "the student loans listed on Schedule 2 to each of the Pool Supplements set forth on Schedule A." The Gillespies made no payments on their loan between December 2008 and April 2010, but were granted four deferments of their repayment obligations extending from February 1, 2010, through May 31, 2011. Even so, the Gillespies did not meet their repayment obligations.[5]
B. THE TRUST'S SUIT
On November 14, 2014, the Trust filed suit against the Gillespies seeking repayment of the unpaid balance on the note—$20,824.84—and asserting that it had either originated or acquired the Gillespies' loan through a "qualified financial institution."[6] The Trust raised a claim for breach of contract against Padraic directly and against Tracy based on her personal guarantee of the note. The Gillespies answered by filing a general denial along with a verified denial raising their assertion that the Trust did not have the capacity to sue because it is not a legal entity. They also raised the affirmative defense of limitations.
A nonjury trial was held on March 29, 2016. No witnesses were called, but the Trust offered into evidence the business-records affidavit of Kayla Chandler, who was a legal case manager for the Trust's loan servicer.[7] The affidavit attempted to authenticate thirty-six pages of records ostensibly related to the Gillespies' loan. See Tex. R. Evid. 901(a), 902(10). The Gillespies objected to portions of Chandler's affidavit as inadmissible hearsay. The trial court sustained those objections and struck those statements that went beyond certifying that the attached records were true and correct—beyond the authentication requirements of rules 901 and 902. The remainder of the affidavit was admitted, authenticating the attached business records. See Tex. R. Evid. 901(a), 902(10).
The Gillespies also objected to the admissibility of portions of the attached, authenticated records: (1) the pool supplement, which supplemented the May 1, 2002 note-purchase agreement between First Marblehead and Bank One; (2) a single page following the pool supplement (the orphan page), which the Trust asserted was included as part of the pool supplement's schedule 1 and showed that the Gillespies' note was included in those pooled for sale; (3) the DAS, assigning National Funding's rights and interests under the pool supplement to the Trust; and (4) a February 2016 printout of the financial activity on the Gillespies' loan from its inception to the date the Trust declared it to be in default. The trial court overruled most of the objections but sustained the Gillespies' objection to the pool supplement.[8] The trial court concluded that the pool supplement was not a business record but indicated that it might be admissible as a public record "[i]f [the Trust] wish[es] to introduce it in a different way." The Trust did not re-offer the pool supplement.
At the conclusion of the trial, the trial court found the Gillespies jointly and severally indebted to the Trust for $20,824.84 and awarded that amount in the final judgment. The Gillepsies requested that the trial court enter findings of fact and conclusions of law, which it did. In its findings, the trial court found that the Gillespies entered into a loan agreement with Bank One,[9] that Bank One transferred and assigned the Gillespies' note to National Funding, and that National Funding simultaneously transferred it to the Trust. In its conclusions, the trial court stated that the Trust's "Business Records Affidavit, and the documents and records attached thereto, were properly admitted into the evidentiary record at trial." It also concluded that because the Trust "acquired" the Gillespies' loan through Bank One and National Funding, the Trust had standing to bring suit to recover under the loan, which was a "valid contract" that the Gillespies breached. The Gillespies now appeal and challenge several of the trial court's evidentiary rulings and the sufficiency of the evidence to support some of the trial court's findings and conclusions.
II. SUFFICIENCY OF THE EVIDENCE
In their second issue, the Gillespies assert that the evidence was legally insufficient to show that the Trust was an assignee of Bank One's interest in the Gillespies' note or that the Gillespies breached a contract with the Trust, leading to the Trust's damages. Although the Gillespies claim in passing that the evidence was factually as well as legally insufficient, their briefing regarding sufficiency argues solely that there was no—legally insufficient—evidence of portions of the Trust's case. We will address their argument as they briefed it and will look to whether the evidence was legally sufficient to support the trial court's challenged findings.[10] See Tex. R. App. P. 38.1(i); Gutierrez v. Martinez, No. 01-07-00363-CV, 2008 WL 5392023, at *2 n.4 (Tex. App.-Houston [1st Dist.] Dec. 19, 2008, no pet.) (mem. op.).
A. STANDARD OF REVIEW
A trial court's findings of fact have the same force and dignity as a jury's answers to jury questions and are reviewable for legal and factual sufficiency of the evidence to support them by the same standards. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). When, as here, the appellate record contains a reporter's record, findings of fact on disputed issues are not conclusive if there is no evidence to support the findings. Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 52 (Tex. 2003); Ramsey v. Davis, 261 S.W.3d 811, 815 (Tex. App.-Dallas 2008, pet. denied). We defer to unchallenged findings of fact that are supported by some evidence. Tenaska Energy, Inc. v. Ponderosa Pine Energy, LLC, 437 S.W.3d 518, 523 (Tex. 2014).
We may sustain a legal sufficiency challenge only when (1) the record discloses a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence establishes conclusively the opposite of a vital fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014) (op. on reh'g). In determining whether there is legally sufficient evidence to support the finding under review, we must consider evidence favorable to the finding if a reasonable factfinder could and disregard evidence contrary to the finding unless a reasonable factfinder could not. Cent. Ready Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007).
B. STANDING TO BRING CLAIM
FOR BREACH OF CONTRACT
The trial court found that the Gillespies had entered into an educational loan agreement with Bank One at the Gillespies' request, that the parties had mutually agreed to the note's material terms and conditions, and that the Gillespies failed to make payments as agreed. It further found that the Trust acquired the Gillespies' student loan by assignment though National Funding, conferring standing on the Trust to enforce the terms of the note: "[The Trust] has standing to bring the Suit because, when [the Trust] acquired the Student Loan, [National Funding], as assignor of [Bank One], transferred to [the Trust], without limitation or reservation, all rights and privileges it owned, held, or possessed in, or with regard to, the Student Loan."[11]
The Gillespies attack the lack of evidence to support the existence of a valid and enforceable contract between them and the Trust because there was no evidence that the Trust was a holder in due course of the Gillespies' note with Bank One; therefore, the Gillespies assert the Trust does not have standing to sue to recover under the note.[12]To recover on an assigned cause of action, the Trust was required to prove that a cause of action capable of assignment existed and that the cause of action was in fact assigned to the Trust. See Tex. Farmers Ins. Co. v. Gerdes ex rel. Griffin Chiropractic Clinic, 880 S.W.2d 215, 217 (Tex. App.-Fort Worth 1994, writ denied). Therefore, the Trust had to produce evidence establishing its privity to Bank One, the lender on the note and the entity in direct privity with the Gillespies. See R & R White Family Ltd. P'ship v. Jones, 182 S.W.3d 454, 459 (Tex. App.-Texarkana 2006, no pet.); Ceramic Tile Int'l, Inc. v. Balusek, 137 S.W.3d 722, 724-25 (Tex. App.-San Antonio 2004, no pet.); Skipper v. Chase Manhattan Bank USA, N.A., No. XX-XX-XXX CV, 2006 WL 668581, at *1 (Tex. App.-Beaumont Mar. 16, 2006, no pet.) (mem. op.).
The admitted evidence shows that the Gillespies entered into the note with Bank One, and the note provided that Bank One could assign the note "at any time." Three months later, National Funding, as the seller and owner "of certain student loans," sold and assigned to the Trust specified student loans in the DAS: "This [DAS] sets forth the terms under which the Seller is selling and the Purchaser is purchasing the student loans listed on Schedule 2 to each of the Pool Supplements set forth on Schedule A attached [to the DAS] (the `Transferred Student Loans')." Further, the DAS provided that National Funding assigned to the Trust its rights "under each of the Pool Supplements listed on Schedule A attached [to the DAS] and the related Student Loan Purchase Agreements listed on Schedule B attached [to the DAS]." Schedule A to the DAS states that First Marblehead, National Funding, and Bank One entered into pool supplements on October 12, 2005, for loans that were originated under Bank One's Education One program. Schedule B states that Bank One and First Marblehead entered into note-purchase agreements on May 1, 2002, for loans that were originated under Bank One's Education One program.[13]
No document admitted into evidence purports to be the "Schedule 2" referenced in the DAS as specifying which loans were sold by National Funding to the Trust, and the pool supplement was not admitted into evidence. The Trust does not challenge the exclusion of the pool supplement on appeal, but improperly argues that the evidence is sufficient to show its standing based on the DAS as well as the excluded pool supplement.[14] We conclude the Trust failed to show that it was a holder in due course of the Gillespies' note with Bank One. No evidence shows that the Gillespies' note was indeed included in the loans pooled for sale and assigned to the Trust in the DAS. The Trust asserted that the orphan page was part of schedule 1 to the pool supplement and showed that the Gillespies' loan was part of the pooled loans transferred to National Funding. But the trial court excluded the pool supplement, including its attached schedule 1. Even if the orphan page was not part of the pool supplement document and, thus, was not part of the evidence excluded by the trial court, it proves nothing by itself.[15] The only information on the orphan page is that Padraic, identified by the last four digits of his social-security number, received a $13,368.98 loan from Bank One under its Education One loan program.
Additionally, although the admitted DAS arguably proved the sale and assignment between National Funding and the Trust of certain unspecified loans, no evidence establishes Bank One's assignment to First Marblehead. First Marblehead was National Funding's alleged predecessor in interest to the Gillespies' note; thus, without the link between Bank One and First Marblehead, First Marblehead's assignment to National Funding and National Funding's to the Trust does not establish the Trust's standing to sue on the note. Indeed, the trial court's findings skip the First Marblehead link in the assignment chain: "On or about October 12, 2005, [Bank One] transferred and assigned [the Gillespies'] promissory note . . . to [National Funding]. . . . On that same date, [National Funding] transferred and deposited [the Gillespies'] promissory note . . . to [the Trust]." Although the pool supplement, if read in tandem with the DAS, arguably supplies the assignment links from Bank One to First Marblehead, from First Marblehead to National Funding, and from National Funding to the Trust, the pool supplement was not before the trial court.
In summary, no evidence supports the trial court's finding that the Trust was a holder in due course of the Gillespies' note and had received by assignment Bank One's right to recover under the note. See, e.g., Ramirez, 2017 WL 929527, at *3-4; Frontier Commc'ns Nw., Inc. v. D.R. Horton, Inc., No. 02-13-00037-CV, 2014 WL 7473764, at *8 (Tex. App.-Fort Worth Dec. 31, 2014, no pet.) (mem. op.); Jenkins v. CACH, LLC, No. 14-13-00750-CV, 2014 WL 4202518, at *6-7 (Tex. App.-Houston [14th Dist.] Aug. 26, 2014, no pet.) (mem. op.); Skipper, 2006 WL 668581, at *1. We sustain issue two.
III. ADMISSION OF EVIDENCE
In their first issue, the Gillespies argue that the trial court abused its discretion by overruling their objections to the Trust's records it admitted through a business-records affidavit to prove its claim against the Gillespies. Because their sufficiency point is dispositive of this appeal, we need not address these evidentiary issues. See Tex. R. App. P. 47.1. However, our consideration of certain portions of the Trust's admitted evidence in our legal-sufficiency review should not be equated to a conclusion that such evidence was, in fact, properly admitted.
IV. CONCLUSION
This appeal is an object lesson in the danger of relying on imprecise or incomplete records to prove a technical issue such as a party's status as a holder in due course on the basis of multiple assignments. The result in this appeal possibly could have been avoided or ameliorated by careful adherence to the rules of evidence and the burden of proof. The mere fact that the subject matter of a suit does not involve a large amount in controversy does not relieve a party of the burden to dot every "i" and cross every "t." Details are important, even where the alleged operative breach seems to be a foregone conclusion. And here, the admitted evidence certainly shows that the Gillespies failed to comply with their repayment obligations under the note. In any event, we cannot turn a blind eye to the absence of any proof that the Trust had standing to assert Bank One's breach-of-contract claim regarding the Gillespies' note even though the result would appear to be inequitable. Accordingly, we reverse the trial court's judgment in the Trust's favor and render a take-nothing judgment in favor of the Gillespies. See Tex. R. App. P. 43.2(c), 43.3.
[1] See Tex. R. App. P. 47.4.
[2] Padraic was a student at the University of North Texas.
[3] The note consisted of a one-page "NOTE DISCLOSURE STATEMENT" and a four-page "Loan Request/Credit Agreement." Our references to "the note" in this opinion will include these two documents.
[4] This amount reflected the $12,500 amount financed plus an $868.98 "Prepaid Finance Charge."
[5] In fact, their only two payments occurred on April 27, 2010 ($25.00), and December 1, 2010 ($300.00).
[6] The Trust also pleaded for prejudgment interest and attorney's fees, but it waived these amounts at trial.
[7] The Trust had served the affidavit and attached records on the Gillespies more than fourteen days before the trial. See Tex. R. Evid. 902(10)(A).
[8] The Trust does not argue on appeal that this ruling was an abuse of discretion but instead mistakenly briefs the appeal as if the pool supplement had been admitted.
[9] The trial court found that the agreement was with JP Morgan, Bank One's successor after a merger. This difference is not material to this appeal; thus, we will refer to the original lender as Bank One.
[10] The Trust addressed only legal sufficiency in its brief as well.
[11] Although the trial court referred to some of its findings as conclusions, we are not bound by the trial court's designations. See Ray v. Farmers' State Bank of Hart, 576 S.W.2d 607, 608 n.1 (Tex. 1979).
[12] Although the Gillespies did not clearly raise this particular standing argument in the trial court, standing is a component of subject-matter jurisdiction that may be raised for the first time on appeal and is reviewed de novo as a question of law. See Rolen v. LVNV Funding, LLC, No. 2-09-304-CV, 2010 WL 1633402, at *1 (Tex. App.-Fort Worth Apr. 22, 2010, no pet.) (mem. op.).
[13] It bears repeating that this agreement occurred three years before the Gillespies' loan with Bank One was originated.
[14] Although "evidence treated by the trial court and the parties as if it had been admitted is, for all practical purposes, admitted," the trial court did not treat the pool supplement as admitted, and the Gillespies do not rely on the pool supplement as if it had been admitted even though the trial court expressly excluded it. Travelers Indem. Co. of R.I. v. Starkey, 157 S.W.3d 899, 904 (Tex. App.-Dallas 2005, pet. denied). Only the Trust references the pool supplement as if it had been admitted and that appears to be a briefing error. The Gillespies argue the effect of the admission of the pool supplement only in the alternative, and the trial court did not specifically rely on the pool supplement in its findings and conclusions.
[15] We note that the form of the pool supplement excluded by the trial court here is substantially similar to a pool supplement addressed by this court and found to be insufficient, in the absence of more specified information, to establish that the purported holder of a student loan was a holder in due course though assignment from the original lender. Nat'l Collegiate Student Loan Trust 2006-2 v. Ramirez, No. 02-16-00059-CV, 2017 WL 929527, at *3-4 & n.8 (Tex. App.-Fort Worth Mar. 9, 2017, no pet.) (mem. op.).
NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-2, Appellant,
v.
PABLO RAMIREZ, Appellee.
Court of Appeals of Texas, Second District, Fort Worth.
Appeal from County Court AT Law NO. 2 of Tarrant County Trial Court NO. 2014-001130-2.
PANEL: LIVINGSTON, C.J.; WALKER and SUDDERTH, JJ.
MEMORANDUM OPINION [1]
BONNIE SUDDERTH, Justice.
I. Introduction
Appellant National Collegiate Student Loan Trust 2006-2 (National) appeals a take-nothing judgment rendered in its lawsuit against Appellee Pablo Ramirez for breach of contract and account stated related to Ramirez's alleged default on his student loan. In a single issue, National argues that the trial court abused its discretion by excluding certain portions of evidence attached to a business records affidavit, which it complains prevented it from showing its damages from Ramirez's default on his student loan. We affirm.
II. Procedural Background
National filed suit in March 2014 and moved for and obtained a default judgment in October 2014. Ramirez subsequently moved to set aside the default judgment on the basis of defective service, and the trial court vacated the default judgment in December 2014. The case went to a bench trial on January 15, 2016. After National rested at the conclusion of its presentation of evidence,[2] the trial court granted a take-nothing judgment for Ramirez. National did not request—and the trial court did not make—findings of fact and conclusions of law.
National raised its claims as an alleged assignee, pleading that "Plaintiff is the trust that currently holds these loans [sic], and is entitled to repaying of the loan and all applicable interest," and sued Ramirez for "Suit on Open & Stated Account/Debt/Breach of Contract," quantum meruit, and attorney's fees. Thus, National assumed the burden to prove not only its claims but also its assignee status.[3]
The elements of a breach of contract claim are (1) the existence of a valid contract, (2) performance or tendered performance by the plaintiff, (3) breach of the contract by the defendant, and (4) resulting damages to the plaintiff. Rice v. Metro. Life Ins. Co., 324 S.W.3d 660, 666 (Tex. App.-Fort Worth 2010, no pet.). A valid contract requires an offer, an acceptance in strict compliance with the offer's terms, a meeting of the minds, each party's consent to the terms, and execution and delivery of the contract with the intent that it be mutual and binding, along with consideration. Kang v. Song, No. 02-15-00148-CV, 2016 WL 4903271, at *8 (Tex. App.-Fort Worth Sept. 15, 2016, no pet.) (mem. op.). A party is entitled to relief under the common law cause of action of account stated when (1) transactions between the parties give rise to indebtedness of one to the other; (2) an agreement, express or implied, between the parties fixes an amount due; and (3) the one to be charged makes a promise, express or implied, to pay the indebtedness. Morrison v. Citibank (South Dakota) N.A., No. 02-07-00130-CV, 2008 WL 553284, at *1 (Tex. App.-Fort Worth Feb. 28, 2008, no pet.) (mem. op.). A plaintiff seeking to recover in quantum meruit under an implied promise to pay must show that (1) valuable services or material were furnished; (2) for the defendant; (3) the services or materials were accepted, used, and enjoyed by the defendant; and (4) the circumstances reasonably notified the defendant that the plaintiff was expecting to be paid by the defendant for the services or materials. Wilson v. Andrews, No. 02-06-00429-CV, 2007 WL 2460356, at *3 (Tex. App.-Fort Worth Aug. 31, 2007, pet. denied) (mem. op.). To recover as an assignee under any of these three causes of action, National was required to prove not only that a cause of action existed that was capable of assignment but also that the cause of action was in fact assigned to it. See Tex. Farmers Ins., 880 S.W.2d at 217; see also Rolen,2010 WL 1633402, at *2.
In a trial to the court in which no findings of fact or conclusions of law are filed, the trial court's judgment implies all findings of fact necessary to support it. Rosemond v. Al-Lahiq, 331 S.W.3d 764, 766-67 (Tex. 2011); Wood v. Tex. Dep't of Pub. Safety, 331 S.W.3d 78, 79 (Tex. App.-Fort Worth 2010, no pet.).[4] The judgment must be affirmed if it can be upheld on any legal theory that finds support in the record. Rosemond, 331 S.W.3d at 767; see also Liberty Mut. Ins. Co., 295 S.W.3d at 777 (stating that the judgment must be affirmed if it can be upheld on any legal theory that finds support in the evidence).
III. Analysis
In its sole issue, National argues that the trial court abused its discretion by excluding from evidence the loan financial activity report and the loan payment history record that were attached to its business records affidavit. National contends that such error prevented it from proving its damages from Ramirez's default on his student loan. Ramirez responds by pointing out that even assuming that the trial court abused its discretion by excluding portions of National's exhibit, the exclusion was harmless because, among other things, National's evidence was insufficient to support the other essential elements on which National had the burden of proof. See Tex. R. App. P. 44.1(a).
Approximately forty-five days prior to trial, National filed its "Notice of Filing of Plaintiff's Affidavit and/or Other Trial Related Documents," giving notice "to all parties that it intends to rely upon said documents to establish one or more elements of its claims and/or defenses." At the beginning of the bench trial, National sought to introduce the affidavit and business records as "Plaintiff's Exhibit 1," stating that
[i]t contains the affidavit and verification of account of Plaintiff's custodian of records, note disclosure statement, credit agreement signed by the Defendants[[5]] with the applicable cosignor notices, pool supplement and deposit and sale agreement illustrating the chain of title to the loan, loan financial activity reports, deferment/forbearance details and loan payment history report.[6]
The affidavit purported to sponsor an exhibit containing thirty-six documents.
Ramirez objected to the form of the business records affidavit and asked that extraneous hearsay testimony contained within paragraphs 3 and 6 be stricken prior to admission. After the trial court sustained Ramirez's objections to paragraphs 3 and 6, National's counsel responded, "Your Honor, that's fine with 3 and 6," but then asked that two sentences from paragraph 6—"Attached hereto and incorporated as Exhibit `A' are 36 pages of business records," and "Within Exhibit `A' is a true copy of the underlying Credit Agreement/Promissory Note"— be admitted. The trial court agreed to admit those two sentences but excluded the remainder of paragraph 6 and all of paragraph 3.[7] National does not complain of these rulings in its appeal.
Ramirez then objected to the loan financial activity report and the loan payment history record, and the trial court sustained his objections. National did not seek to present by other means any of the evidence that was excluded.
National's documents included a document entitled "2006-2 Pool Supplement Charter One Bank, N.A.," which referenced a note purchase agreement by and between First Marblehead Corporation and Charter One Bank, N.A., in which Charter One Bank, N.A. assigned to National Collegiate Funding LLC the student loans set forth on "the attached Schedule 2." The agreement further provided that National Collegiate Funding LLC "will sell the Transferred Loans to The National Collegiate Student Loan Trust 2006-2." Schedule 1 of that document lists a variety of note purchase agreements between First Marblehead Corporation and financial entities and programs between 2002 and 2005 but does not list "Charter One Bank, N.A." Instead, it lists "the Program Lender for the Charter One Referral Loan Program (including loans in the UPromise, Collegiate Solutions, College Board and Axiom Alternative Loan Programs)" and it lists separately "the Program Lender for Nextstudent." None of these loan program names match the name of the program on the purported loan's note disclosure statement. The last page of that set of documents includes a header for "Schedule 2" at the bottom of the page, but nothing listed for "Schedule 2" appears on the next or any subsequent page.[8]
National's documents also include a deposit and sale agreement between it and National Collegiate Funding LLC referring to the sale "of certain student loans," which were "listed on Schedule 2 to each of the Pool Supplements set forth on Schedule A attached hereto." "Schedule B attached hereto" contains a list of the related Student Loan Purchase Agreements.
The name of the purported loan at issue is "Next Student Undergraduate Loan," and the bottom of the disclosures page included the footer, "NSTCDP Next Student UGrad Loan," but Schedule A to the deposit and sale agreement, listing the "Pool Supplements," does not list either of these names. Instead, it references,
Charter One Bank, N.A., dated June 8, 2006, for loans that were originated under the following Charter One programs: AAA Southern New England Bank, AES EducationGAIN Loan Program, Axiom Alternative Loan Program, CFS Direct to Consumer Loan Program, Citibank Flexible Education Loan Program, College Board Alternative Loan Program, College Loan Corporation Loan Program, Collegiate Solutions Alternative Loan Program, Comerica Alternative Loan Program, Custom Educredit Loan Program, EdFinancial Loan Program, Extra Credit II Loan Program (North Texas Higher Education), M&I Alternative Loan Program, National Education Loan Program, NextStudent Alternative Loan Program, NextStudent Private Consolidation Loan Program, SAF Alternative Loan Program, START Education Loan Program, and UPromise Alternative Loan Program. [Emphasis added.]
Schedule B lists Charter One Bank, N.A. student loan purchase agreements, but it also lists "Charter One's NextStudent Alternative Loan Program" and "Charter One's NextStudent Private Consolidation Loan Program," and not the name of the purported loan at issue here.
National offered no other evidence at trial to support its claims.
On the record before us, the trial court reasonably could have concluded, among other things, that National had failed to demonstrate that it was the holder of the note that National's exhibit purported to show had been made between Ramirez and Charter One Bank, N.A., of Albany, New York, as a "Next Student Undergraduate Loan." Because in the absence of findings and conclusions, the trial court's judgment must be affirmed if it can be upheld on any legal theory that finds support in the record, we therefore affirm the trial court's judgment without needing to reach National's sole issue complaining of the exclusion of evidence related to damages. See Rosemond, 331 S.W.3d at 767; Liberty Mut. Ins. Co., 295 S.W.3d at 777; see also Tex. R. App. P. 44.1(a), 47.1; Rolen,2010 WL 1633402, at *6 (concluding that there was a lack of evidence to show assignee status).
IV. Conclusion
For these reasons, we affirm the trial court's judgment.
[1] See Tex. R. App. P. 47.4.
[2] National attempted to nonsuit the case before resting, but the trial judge refused to permit it. But see Tex. R. Civ. P. 162. National does not complain of this ruling on appeal.
[3] To recover on an assigned cause of action, the party claiming the assigned rights must prove a cause of action existed that was capable of assignment and the cause was in fact assigned to the party seeking recovery. Tex. Farmers Ins. Co. v. Gerdes, 880 S.W.2d 215, 217 (Tex. App.-Fort Worth 1994, writ denied). An assignee stands in the shoes of the assignor and may assert those rights that the assignor could assert, but the plaintiff must prove that the defendant was a party to an enforceable contract with either it or with a third party who assigned its cause of action to the plaintiff. Rolen v. LVNV Funding, LLC, No. 02-09-00304-CV, 2010 WL 1633402, at *2 (Tex. App.-Fort Worth Apr. 22, 2010, no pet.) (mem. op.); see Elness Swenson Graham Architects, Inc. v. RLJ II-C Austin Air, LP, No. 03-14-00738-CV, 2017 WL 279598, at *3 (Tex. App.-Austin Jan. 20, 2017, no pet. h.) (mem. op.) ("Privity is established by proof that the defendant was a party to an enforceable contract with either the plaintiff or a party who assigned its cause of action to the plaintiff.").
[4] When a reporter's record is filed, these implied findings are not conclusive, and an appellant may challenge them by raising both legal and factual sufficiency of the evidence issues. Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 52 (Tex. 2003); Liberty Mut. Ins. Co. v. Burk, 295 S.W.3d 771, 777 (Tex. App.-Fort Worth 2009, no pet.). However, National does not raise any legal or factual sufficiency challenges.
[5] National initially sued both Ramirez and another defendant, but it nonsuited the other defendant in January 2016.
[6] The affidavit itself, by Graham Hord, "Legal Case Manager," stated that he was employed by Transworld Systems Inc., National's designated custodian of records "pertaining to the Defendants' education loan(s) forming the subject matter of the above-captioned Complaint."
[7] Paragraph 3 stated that the lawsuit had arisen "out of an unpaid loan or loans owed by" Ramirez and that Ramirez had "failed, refused, and/or neglected to pay the balance or balances pursuant to the agreed repayment schedule or schedules." The portions of paragraph 6 that were excluded provided, in pertinent part, that no payment had been made on the loan since April 21, 2011, and that Ramirez owed $47,817 (principal and accrued interest) as of November 3, 2015.
[8] The header of the 2006-2 Pool Supplement states "Page 1 of 4" and lists part of a website address and a date in the footer. The header for "Schedule 2" begins at the bottom of "Page 4 of 4," and the next page lists no page number and does not include the web address of the preceding four pages. Therefore, it does not appear to be part of the "Schedule 2" referred to in the 2006-2 Pool Supplement.
TEXAS NCSLT APPELLATE CASES WITH LINKS TO APPELLATE DOCKET SHEETS
AND ORDERS & OPINIONS ON GOOGLE SCHOLAR
Trust
|
Appeal Case No
|
Date Filed
|
Style (Appellant v. Appellee) with link to opinion
|
Name of Trust in Order of Creation
| ||
2003-1
|
9/21/2017
|
Sheila C. Kirk aka Sheila Moon v NCSLT 2003-1 - Amicus Curiae Brief
[Trust's Appellee's Brief due 5/7/2018] |
National Collegiate Student Loan Trust 2003-1
| |||
2005-2
|
2/16/2016
|
National Collegiate Student Loan Trust 2005-2
| ||||
2005-2
|
1/16/2015
|
National Collegiate Student Loan Trust 2005-2
| ||||
2005-2
|
12/22/2014
|
National Collegiate Student Loan Trust 2005-2
| ||||
2005-3
|
5/12/2017
|
Rebecca V. Savoy and Theresa Savoy v NCSLT 2005-3
[Set for submission on briefs for January 30, 2018, awaiting opinion] |
National Collegiate Student Loan Trust 2005-3
| |||
2005-3
|
4/15/2016
|
National Collegiate Student Loan Trust 2005-3
| ||||
2005-3
|
2/16/2016
|
National Collegiate Student Loan Trust 2005-3
| ||||
2006-2
|
2/19/2016
|
National Collegiate Student Loan Trust 2006-2
| ||||
2006-2
|
7/7/2014
|
Teresa Cox and Terry De Los Santos v NCSTL 2006-02
|
National Collegiate Student Loan Trust 2006-2
| |||
2006-2
|
7/7/2014
|
National Collegiate Student Loan Trust 2006-2
| ||||
2006-3
|
4/25/2016
|
National Collegiate Student Loan Trust 2006-3
| ||||
2006-3
|
2/11/2016
|
National Collegiate Student Loan Trust 2006-3
| ||||
2006-4
|
2/11/2016
|
National Collegiate Student Loan Trust 2006-4 v Angela Annis-Acebo
|
National Collegiate Student Loan Trust 2006-4
| |||
2007-1
|
2/11/2016
|
National Collegiate Student Loan Trust 2007-1 v Angela Annis-Acebo
|
National Collegiate Student Loan Trust 2007-1
| |||
4/11/2017
|
Ladanta D. Foster v NCSLT 2007-4 - [First opinion issued 3/1/2018]
Pending on motion for remittiture - Also see Texas Appeals Court's ruling on TSI Affidavit in Foster v National Collegiate Student Loan Trust 2007-4 | |||||
2007-4
|
3/28/2017
|
Casondra K. Mock and Kary L. Mock v NCSLT 2007-4 (submitted on briefs, awaiting opinion) (pro bono case on appeal, pro se in trial court)
|
National Collegiate Student Loan Trust 2007-4
| |||
| Note: In cases where the only document on Google Scholar is the opinion disposing of the appeal, a direct link is provided. In cases with multiple orders captured by Google, the hotlink is to the Google Scholar results page for the case, identified by its docket number. |
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