Does Sub-Prime Student Loan Debt Deserve Sub-Prime Jurisprudence? Sheila Kirk v. National Collegiate Student Loan Trust 2003-1

GIVING CREDIT WHERE CREDIT IS DUE 

Democrat Richard Hightower botches his first National Collegiate Student Loan Trust case after taking office as a member of Houston Court of Appeals 

Sheila Kirk v. National Collegiate Student Loan Trust 2003-1, 

No. 01-17-00722-CV (Tex.App. - Houston [1st Dist.] Feb. 28, 2019, no pet.). 

Following affirmance of a take-nothing judgment against one of the National Collegiate Student Loan Trusts by the Fort Worth Court of Appeals and reversal of a judgment in favor of another Trust -- both decided in 2017 based on insufficient proof of assignment* -- another Texas appellate court in 2018 took a different approach to such private student loan cases. In three appeals decided that year, the First Court of Appeals pared down the amount of the damages awarded by the trial courts, and affirmed the judgments for the reduced amount after the Trust accepted the court's suggestion of remittitur, thereby avoiding reversal and remand. The Houston-based appellate court did what it did based on absence of evidence of a valid acceleration of maturity of the loans--each with a 20-year amortization period.

* Nat'l Collegiate Student Loan Trust 2006-2 v. Ramirez, No. 02-16-00059-CV, 2017 WL 929527,  (Tex. App.-Fort Worth Mar. 9, 2017, no pet.) (mem. op.); Gillespie v. National Collegiate Student Loan Trust 2005-3, No. 02-16-00124-CV, 2017 WL 2806780 (Tex. App.-Fort Worth June 29, 2017, no pet.) (mem. op.)

In the latest chapter of the ongoing saga involving the use of the court system to improve yields on these troubled private student loans originated and securitized before the financial crisis under the National Collegiate moniker, a panel of the same court in February 2019 ignored its own prior holdings and affirmed a judgment for the Trust. It did so based on mistaken facts and extemporized legal grounds that do not hold up upon closer scrutiny.

Here is a litany of what went wrong in the case culminating in a memorandum opinion by Richard Hightower in Sheila Kirk v. National Collegiate Student Loan Trust 2003-1, No. 01-17-00722-CV (Tex.App. - Houston [1st Dist.] Feb. 28, 2019, no pet.). 

FACTS SHOULD NOT BE CUT & PASTED FROM ONE CASE TO THE NEXT 

As an initial matter, and leaving aside the numerous errors in spelling and grammar, which betray serious copy-editing failures prior to release, the opinion got the facts wrong as they appear in the record for this case. Apparently because the facts were taken from the first student loan trust case, rather than the case-specific appellate record for the most recent one that made it to the appellate level. The first one was Foster v. Nat'l Collegiate Student Loan Tr. 2007-4, No. 01-17-00253-CV, 2018 WL 1095760 (Tex. App.-Houston [1st Dist.] Mar. 1, 2018, no pet.) (mem. op.). 

But the opinion in Kirk does not follow Foster in the analysis and resolution of the acceleration-of-the-outstanding-balance issues; nor does it even acknowledge the existence of two opinions in other NCSLT cases that the same court had handed down in the interim: Mock v. Nat'l Collegiate Student Loan Tr. 2007-4, No. 01-17-00216-CV, 2018 WL 3352913 (Tex. App. — Houston [1st Dist.] July 10, 2018, no pet. h.) (mem. op.), and Savoy v. National Coll. Student Loan Trust 2005-3, 557 S.W.3d 825 (Tex.App. - Houston [1st Dist.] 2018).

All four cases involved a core set of proof and legal sufficiency issues. The fourth one has now become an aberration in light of the three opinions that preceded it. Kirk stands in stark contrast to the three cases decided consistently last year, with the final one in the trilogy having precedental value as a published case.

APPELLATE COURT MUST BE FAMILIAR WITH ITS OWN PRECEDENTS BECAUSE THEY ARE BINDING ON SUBSEQUENT CASES INVOLVING THE SAME LEGAL ISSUE 

As for the reference to the first case, Kirk cites Foster for a non-doctrinal point; a supposed briefing deficiency by the same lawfirm that also handled all of the other cases for the respective appellants. The Panel opinion faults the appellant for failing to cite sufficient caselaw on the matter of the creditor's burden to substantiate the interest component of its claim with competent evidence. 

Kirk contends that the evidence is insufficient because the Trust did not provide evidence of what the LIBOR rate was for each month. In Foster v. National Collegiate Student Loan Trust 2007-4, No. 01-17-00253-CV, 2018 WL 1095760 at *11 (Tex. App.-Houston [1st Dist.] 2018, no pet.), we rejected an argument identical to Kirk's. We noted that that the appellant "provide[d] no authority for her assertion that the Trust was required to support its claim with calculations supporting each month's interest computation over the life of the loan." Id. at *11. The same is true here. Accordingly, we overrule Kirk's argument that the Trust failed to provide legally and factually sufficient evidence indicating how her loan was calculated.

Note that the opinion does not say that the court couldn’t find any authority for the proposition, based on its own research, as appellate courts sometimes do when presented with novel issues or unusual factual scenarios. There is good reason for the coyness here: There actually happens to be such caselaw, including caselaw from the Houston courts of appeal, but the Panel chose to ignore it, apparently because it would have helped the Appellant, rather than the Trust.  

In Hay v. Citibank, the Fourteenth Court of Appeals, which also sits in Houston and lords over the same trial courts in ten surrounding counties, did not merely hold that use of credit card and payments to account demonstrated existence of contract (thus ruling against the Defendant on that issue), but also reversed the judgment in part because the bank had not adduced any evidence of what the variable interest rate was at the relevant time (thereby sustaining one of the Defendant’s complaints of error raised on appeal). See Hay v. Citibank (South Dakota) N.A., No. 14-04-01131-CV, 2006 WL 2620089, at *3 (Tex.App.-Houston [14th Dist.] Sept. 14, 2006, no pet.).

In addition to purchases, the Citibank statements contain charges for late fees and over credit limit fees, the amounts of which are flat fees plainly specified in the terms and conditions in exhibit C.  However, the statements also impose finance charges, which are generally described in the terms and conditions, but neither the statements nor Citibank’s other summary judgment evidence provides an explanation showing how these amounts were calculated.  In addition, although the card agreement states that Citibank may increase the annual percentage rates on all balances to a default rate of up to 19.99% plus the applicable prime rate, nothing in the evidence establishes what the applicable prime rate was for the relevant time periods on the statements.  Citibank argues that the default rate of 24.24% reflected on some of the statements minus the 19.99% factor provided in the card agreement indicates that the applicable prime rate was 4.25%.  Although this reflects what prime rate was used, it provides no evidence of what the applicable prime rate for any date or time period actually was, such as by reference to a source of that information.  Because Citibank’s summary judgment materials are therefore insufficient to prove that Hay owed the amounts claimed for finance charges, we sustain her fifth issue as to those amounts, and we need not address her other challenges to those amounts.

Accordingly, the summary judgment is: (1) reversed as to the finance charges and remanded to the trial court for further proceedings thereon; and (2) affirmed as to the remainder of the judgment.

The First Court of Appeals itself cited Hay v. Citibank in one of the most-often cited opinions involving collection of credit card debt: Winchek v. Am. Exp. Travel Related Servs. Co., 232 S.W.3d 197, 204 (Tex. App.-Houston [1st Dist.] 2007, no pet.), but left unmentioned the partial reversal of the summary judgment in Hay for insufficient proof of the interest rate. There are several other cases from the Houston courts of appeals and elsewhere, that resulted in reversal for insufficient proof of the interest rate likewise. 

It appears that the Panel in Kirk was so committed to thwarting the appeal of the student loan debtor that it ignored its own existing jurisprudence in consumer debt cases to the extent it would favor the student loan defendant's arguments in the case before it. 

But that was not all. The Panel additionally rephrased—without offering any reason or justification--the quoted portions from the Trust’s business records affidavit. The affidavit was signed by a self-described employee of Transworld Systems, Inc., whom the Panel elevated to the status of a custodian of records for the occasion. The Panel then modified the quoted portions of the affidavit to make them refer to only one defendant--the appellant--even though there were two defendants in the trial court, and even though the affidavit referred to both of them. 

APPELLATE COURT SHOULD NOT REWRITE THE RECORD, WHICH IS WHAT HAPPENED HERE WHEN TWO DEFENDANTS WERE REDUCED TO ONE  

Does it matter? Or is it merely another instance of sloppy treatment of a consumer debt case that is considered a low priority given the small amount in controversy, compared to tort and business-vs-business cases?

There is good reason to conclude that the alteration does matter here. For it changed the nature of the case and its procedural posture on appeal. There was a second defendant (Merle Kirk), whose signature appears on the loan application as a co-signer. He was sued along with the student-borrower (Sheila Kirk), but he did not file an answer in the court below, and he did not appear for trial. After judgment was entered following a truncated trial in which the judge cut off the Sheila Kirk's attorney, who attempted to press evidentiary issues, only the student-borrower (as primary obligor) pursued an appeal.

The problem is with the wording of the judgment that is the subject of Sheila Kirk’s appeal: it grants judgment for the Trust as Plaintiff, but only against one defendant, and it does not identify that single defendant by name as required by the rules. What happened to Merle Kirk? The co-defendant against who a judgment by default would normally have been entered?

THE TRIAL COURT'S JUDGMENT WAS AND REMAINS DEFECTIVE ON ITS FACE 

When a purportedly final judgment is not clear, the court of appeals would normally request clarification from the trial court or advise the parties of a possible defect affecting the court’s jurisdiction, and ask for briefing, and supplementation of the record, if appropriate. Sometimes the defect involving non-finality is cured with a nonsuit, or with an order of severance.

This did not happen here. While the Panel went out of its way to affirm the judgment for the Trust, and even endeavored to extemporize a novel construction of rule 93(12)--a pleading rule--for that purpose, it is questionable whether the Houston appellate court, and therefore the three-member panel to which the case was assigned, ever even acquired jurisdiction to reach the merits to begin with. 

GOTCHA JURISPRUDENCE

When litigants appeal without a lawyer, they are routinely rebuffed for a variety of procedural failures and blamed for not producing a brief as would be expected of appellate attorneys. They are told that they failed to preserve error in the trial court, and that they cannot raise objections and new arguments for the first time on appeal. If they did raise objection in the trial court, they are blamed for not obtaining a ruling, or for not obtaining a ruling in writing, or for not making an objection specifically enough, or for not obtaining a specific-enough written order disposing of it.

The pro-se-and-doomed-to-lose scenario did not apply to Sheila Kirk, however, who had attorney representation both at trial and on appeal. But she did not fare much better.

In the trial court, her attorney was cut off by the judge when she objected to the Trust’s business records affidavit and started to argue that the Trust had failed to establish its status as assignee with proper evidence of assignment.

On appeal, the Panel overruled her argument regarding the proffered assignment proof by distinguishing the case the Second Court of Appeals had cited when it revered a judgment in the trust’s favor.* It then refused to address Kirk’s objections to other pieces of documentary evidence on the basis that she had not first presented them to the trial court. 

* See Gillespie v. National Collegiate Student Loan Trust 2005-3, No. 02-16-00124-CV, 2017 WL 2806780 (Tex. App.-Fort Worth June 29, 2017, no pet.) (mem. op.), citing 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.)

How could Kirk be at fault for not asserting objections in the trial court when the judge of that court prevented her from making them, cut the trial short, and granted judgment for the Trust instanter?

Worse, the Panel made short shrift of the Trust’s failure to plead that it was suing as an assignee (as opposed to original creditor), but manufactured a pleading defect for the defendant instead. It did so by re-purposing rule 93(12), which addresses notice of loss/claim in the insurance and indemnity context, and applying it for the first time to a consumer debt collection case. Unsurprisingly, the Panel cited no existing caselaw to support this deus-ex-machina stratagem to save the Trust from suffering reversal or reduction of damages as in the previous cases.   

Rejecting Kirk’s contention that the Trust had failed to meet the requirements for acceleration of loan maturity under Texas law--the same contention that had resulted in the downward adjustment of damages in the other three NCSLT cases decided in 2018—the Panel transmuted the same deficiency in the Trust’s proof into a supposed pleading deficiency on the part of the Defendant instead.

Lastly, Kirk contends that because the Trust did not produce any documents establishing that it notified Kirk that it was accelerating her loan following her failure to maintain the monthly payments, the Trust was entitled to recover past-due payments only and not the full amount. Again, Kirk waived this issue by not filing a verified denial that raised it. See TEX. R. CIV. P. 93(12) (stating that party's failure to file verified denial "[t]hat notice and proof of loss or claim for damage has not been given as alleged" results in "notice and proof . . . be[ing] presumed"); see also Brown, 414 S.W.3d at 285-86. We therefore reject Kirk's notice-of-acceleration argument.

What the Panel stooped to here is to fault Kirk for failing to follow a pleading rule that did not exist until the Panel made it up for the purpose of denying Kirk the relief that the other student loan debtors had obtained in three similar cases decided by the very same court less than a year earlier.

In all three opinions handed down in 2018, the First Court had treated proper acceleration of loan maturity under Texas law as an issue on which the Trust had the burden of proof as plaintiff suing for the full amount alleged outstanding on loans which had not yet matured by their own terms. See Savoy v. Nat. Coll. Student Loan Tr., 557 SW 3d 825 (Tex.App. – Houston [1st Dist.] 2018) (excerpt below).  

E. Insufficient evidence of acceleration

The Savoys contend that there is insufficient evidence that the maturity of the loan was accelerated.

The Disclosure Statement reflects that the Savoys agreed to pay the loan over a period of 20 years, with payments beginning in July 2007. The Credit Agreement states that, to the extent permitted by law, in the event of a default on the loan, the Trust "will have the right to give [the Savoys] notice that the whole outstanding principal balance, accrued interest, and all other amounts payable to [the Trust] under the terms of this Credit Agreement are due and payable at once."

"Where the holder of a promissory note has the option to accelerate maturity of the note upon the maker's default, equity demands notice be given of the intent to exercise the option." Ogden v. Gibraltar Sav. Ass'n, 640 S.W.2d 232, 233 (Tex. 1982). "The accelerated maturity of a note, which is initially contemplated to extend over a period of months or years, is an extremely harsh remedy." Allen Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863, 866 (Tex. 1975). A creditor "must give the debtor an opportunity to pay the past due installments before acceleration of the entire indebtedness; therefore, demand for payment of past due installments must be made before exercising the option to accelerate." Williamson v. Dunlap, 693 S.W.2d 373, 374 (Tex. 1985) (emphasis omitted). The note holder must also notify the maker both of its intent to accelerate and of the acceleration. Ogden, 640 S.W.2d at 233-34.

There is no evidence in the record before us that the Trust provided the Savoys with either of the required notices. The Trust alleged in its petition that, as a prerequisite to acceleration, it served the Savoys with a letter demanding payment in full. However, the demand letter is not part of the record, and pleadings are not evidence.

We hold that the evidence is legally and factually insufficient to support the full amount of actual damages awarded. See Mock, 2018 WL 3352913, at *8 (holding that evidence was insufficient to show acceleration when trust presented no evidence that it provided debtor with notice 840*840 of acceleration); Foster, 2018 WL 1095760, at *11-12 (same).

When acceleration is invalid, the plaintiff is entitled to judgment against the defendant only "for past due installments plus accumulated interest as provided in the note." Williamson, 693 S.W.2d at 374.

The Savoys request that we "reform the judgment to an amount commensurate with the sum of missed installment payments through the date the petition was filed" or, alternatively, "suggest a remittitur to accomplish a proper adjustment of the amount of contract damages proven by the admissible evidence as having been caused by breach of contractual duties." The evidence shows that, the sum of all monthly payments due, beginning on July 1, 2007, as stated in the Disclosure Statement, through the date of the filing of suit, April 15, 2016, is $15,894.70.

A court of appeals may suggest a remittitur when there is insufficient evidence to support the full amount of damages awarded but sufficient evidence to support a lesser award. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp., 299 S.W.3d 106, 124 (Tex. 2009); see TEX. R. APP. P. 46.3. If part of a damage verdict lacks sufficient evidentiary support, the proper course is to suggest a remittitur of that part of the verdict, giving the party prevailing in the trial court the option of accepting the remittitur or having the case remanded for a new trial. Akin, Gump, 299 S.W.3d at 124.

As set out above, the record contains some evidence that breach-of-contract damages exist, but, without evidence of notice of acceleration, the evidence does not support the full amount awarded by the trial court. The evidence does, however, allow us to determine a lesser award. See ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 877-78, 880 (Tex. 2010) (holding there was "legally sufficient evidence to prove a lesser, ascertainable amount of lost profits with reasonable certainty," and remanding case to court of appeals to consider suggestion of remittitur).

Based on the record, the evidence is legally and factually sufficient to support a lesser damages finding of $15,894.70, which represents the sum of all monthly payments due, beginning on July 1, 2007, as stated in the Disclosure Statement, through the filing of suit on April 15, 2016. See Mock, 2018 WL 3352913, at *9 (suggesting remittitur when plaintiff-trust failed to prove acceleration of loan's maturity); Foster, 2018 WL 1095760, at *12 (same); see also PNS Stores, Inc. v. Munguia, 484 S.W.3d 503, 513 (Tex. App. — Houston [14th Dist.] 2016, no pet.)(suggesting remittitur to "the highest amount of actual damages supported by the evidence").

We sustain in part and overrule in part the Savoys' second issue.

[…]

 Conclusion

We conclude that the evidence is insufficient to support the trial court's award of actual damages in the amount of $20,492.05 but is sufficient to support an award of actual damages in the amount of $15,894.70. Thus, we suggest a remittitur of the actual damages award to $15,894.70. In accordance with Rule 46.3 of the Texas Rules of Appellate Procedure, if the Trust files with this Court, within fifteen days of the date of this opinion, a remittitur to that amount, the trial court's judgment on damages will be modified and affirmed. See TEX. R. APP. P. 46.3. If the suggested remittitur is not timely filed, the trial court's judgment will be reversed and the cause will be remanded for a new trial on liability and damages. See Rancho La Valencia, Inc. v. Aquaplex, Inc., 383 S.W.3d 150, 152 (Tex. 2012)(holding that if party rejects remittitur, court of appeals must remand for new trial on liability and damages

SHEILA C. KIRK AKA SHEILA MOON AKA CHRISTINE S. ALLEN, Appellant,
v.
NATIONAL COLLEGIATE STUDENT LOAN TRUST 2003-1, Appellee.

No. 01-17-00722-CV 

Court of Appeals of Texas, First District, Houston.

Opinion issued February 28, 2019.

On Appeal from the County Civil Court at Law No. 4, Harris County, Texas, Trial Court Case No. 1087683.

Panel consists of Justices Lloyd, Kelly, and Hightower.

MEMORANDUM OPINION

RICHARD HIGHTOWER, Justice.

Appellee National Collegiate Student Loan Trust 2003-1 sued appellant Shelia Kirk for breach of contract following her failure to make payments on the student loan that the Trust claimed it was assigned.^[1] After a short bench trial, the trial court entered judgment in favor of the Trust. On appeal, Kirk contends that the Trust lacked standing to sue because it failed to prove that it was in fact assigned her loan, that the trial court improperly admitted the Trust's business-records affidavit and the exhibits that accompanied it, that the breach-of-contract evidence was legally and factually insufficient to support the judgment, and that the Trust's pleadings did not support the judgment.

We conclude that the Trust did submit evidence of the loan's assignment to it; that the trial court reasonably could have concluded that the business-records affidavit and its exhibits satisfied Rule of Evidence 803(6)'s requirements; that the breach-of-contract evidence was legally and factually sufficient; and that Kirk failed to adequately brief her argument that the Trust's pleadings did not support the judgment.

Accordingly, we affirm.

Background

Germany v. Wells Fargo Bank, N.A. (Tex.App.- Houston [14th Dist.] 2019, pet. filed)

Standards again lowered to facilitate robo-litigation with sloppy affidavits and minimal documentation in consumer debt collection cases. Judicial awareness of fitting facts tapped to fill voids in creditor's summary judgment evidence.    

A February 2019 panel opinion of the Fourteenth Court of Appeals in Houston marks a new nadir in the evolving jurisprudence governing credit card collection cases in Texas. See Charles J. Germany, Jr. v. Wells Fargo Bank, N.A., 14-17-00916-CV (Tex.App. – Houston [14^th Dist.] Feb. 7, 2019, pet. filed in Texas Supreme Court 4/9/2019) (memorandum opinion by Justice Tracy Christopher).

Different account type, non-matching account numbers, false representation of account status in affidavit 

Appealing a summary judgment in the creditor’s favor, counsel for the defendant raised three issues regarding the Bank’s sparse summary judgment evidence, consisting of an affidavit (by Loan Adjuster Lance Becker), a generic Consumer Credit Card Customer Agreement (Exhibit A) and two account statements (Exhibits B and C).

(1) The Bank’s affiant identified the account as a “CORE PLATNIUM” account, which did not match the attached boilerplate cardmember agreement; (2) the affiant asserted that the account balance had been accelerated, referring to the last statement, which reflected that it had not been accelerated; and (3) the two account statements attached to the Bank’s affidavit had different account number ending digits printed on them.  

From three discrepancies to none - by fiat 

The panel opinion, authored by Justice Tracy Christopher, addresses each of the three discrepancies and then declares them to be nonexistent. Rather than finding them not material or “trivial”, as the Bank had urged in its appellee’s brief, the Court concludes without qualification that “Wells Fargo produced uncontroverted evidence, free from any contradictions or inconsistencies” and accordingly affirms the summary judgment granted by the Fort Bend County trial court. 

How did the Court make the discrepancies disappear? – In a highly unorthodox fashion: It extemporized its own theory of the case to resolve the observed lack of congruity in the evidence, and endeavored to cite caselaw to adduce facts missing from the Bank’s summary judgment record, rather than citing cases for legal propositions, as is the normal practice to justify appellate case resolution under applicable law. 

No judicial perception of conflict 

As for the discrepancy in the identification of the type of credit card account, the panel opinion states that “we perceive no conflict between the generally worded agreement and the loan adjustor's more specifically worded affidavit.” 

The boilerplate agreement did not contain the designation “CORE PLATINUM”, so the Court reasoned that the affiant merely supplied more specific information about the account (without a documentary basis) and inferred that a CORE PLATINUM account could be one governed by the boilerplate agreement that was attached to the affidavit as Exhibit A. 

In concluding that Germany was bound by the agreement because he had used the credit card, the Court relieved the Bank from its obligation to prove that the specific version of a standard-term agreement had been provided to him (offer) before he used the card (acceptance). The opinion does not reveal whether either one of the two billings statements actually evidences any card use to support the theory of contract-formation by account utilization. Other credit card issuers typically attach at least half a year worth of statements. American Express often produces hundreds of pages of account activity records and also attaches cardmember agreements that are dated, identify the type of card, have the cardholder's name printed on it, as well as the account number ending digits. No such details in Wells Fargo cases.  

  

Additionally, the general boilerplate agreement ("core") would not and does not contain the account-specific cost-of-credit terms, which would appear on a separate document because they vary among customers even within the same category of credit card account. See Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212 (Tex.App.-Texarkana 2005) (reversing summary judgment for creditor on breach of contract cause of action because Citibank failed to prove that cardholder agreed to the interest rates Citibank charged as shown on its account statements).
   

Aff-Testimony in lieu of Proof of Offer & Acceptance: Attached-is-the-Applicable-Contract 

The Houston court of appeal’s relaxation of the requirements to prove offer and acceptance with respect to an unsigned form contract bearing no identifying data that links it to the account or the account holder is not entirely unprecedented.

In a prior summary judgment appeal in which the consumer proceeded pro se both in the trial court and on appeal, the Fourteenth Court of Appeals held that Wells Fargo had proven liability on the contract because the boilerplate agreement in that case said that it applied to cardholder and the defendant was a cardholder. 

According to Wells Fargo's summary-judgment evidence, the account agreement states that by using the Wells Fargo Visa card, a cardholder accepts the terms of the account agreement. On about July 10, 2002, Wakefield used the Wells Fargo Visa card, accepting the terms.

*** 

Wakefield asserts Wells Fargo failed to prove existence of a valid contract for several reasons. First, Wakefield argues Wells Fargo did not prove the contract it provided to support its summary-judgment motion specifically applied to her. Although Wakefield's name is not specifically identified on the account agreement, the agreement states: "This Customer Agreement and Disclosure Statement . . . constitutes your Agreement with us that covers your credit card account." The agreement also defines "you" and "your" as referring "to each cardholder." Rogers's affidavit and supporting monthly credit-card statements establish that Wakefield is a cardholder. Therefore, without controverting evidence from Wakefield, we reject this argument.

The appellant pointed out that she could not have accepted the attached agreement by using the card on the date attested to by the affiant because that was years before the year printed on the agreement proffered as a summary judgment exhibit. The Court however, made short shrift of that argument by stating that the bank was allowed to modify the terms. See Wakefield v. Wells Fargo Bank, NA, No. 14-12-00686-CV, 2013 WL 6047031, at *2-*3 (Tex.App.-Houston [14th Dist.] Nov. 14, 2013, no pet.) (mem.op. by Christoper, J.) (“While it is true the account agreement Wells Fargo produced is not the same one used in 2002, Wakefield is still bound to the new terms because the agreement states, "[w]e can change or add to any terms of your account at any time.")

From judicial notice to judicial “awareness” of fitting facts gleaned from other court opinions

As for the discrepancy in the account numbers on the face of the two billing statements in Germany v. Wells Fargo Bank, the Court invoked other court cases to support the proposition that a bank may change account numbers for a variety of reasons, and was satisfied that this possibility was sufficient to reconcile the inconsistent account numbers found in the summary judgment record before it.

There was no mention that Wells Fargo has recently achieved notoriety with its massive creation of accounts without customer consent. See wiki article on  Wells Fargo Account Fraud Scandal and references therein. 

In Germany v. Wells Fargo the Houston court of appeals saw fit to sua sponte find facts on appeal that were not contained in the case-specific summary judgment record. Cf. American Express Bank FSB v Damme, No. 1 CA-CV 16-0024 (Ariz. Court of Appeal [1st Div.] Feb. 16, 2017) (summary judgment for bank on credit card debt affirmed where assistant custodian of record testified that the account sued-upon had two different numbers over its life).

¶7 Here, American Express's motion for summary judgment was supported by the affidavit of Anthony D. Mendez (Mendez), assistant custodian of records for American Express. The Mendez affidavit stated that in his position with American Express, Mendez was familiar with American Express's card member account records. The affidavit further stated that Mendez personally reviewed American Express's card member records concerning the Dammes, and that the records "reflect that [the Dammes] opened an American Express credit card account, the current account number ending in 52008, previously 51000 . . . in November 2011." The Mendez affidavit stated that the Dammes defaulted on the account, American Express closed it, and as of August 12, 2015 the Dammes owed $28,217.11 on the account, exclusive of attorneys' fees and costs. The affidavit referenced two exhibits attached to the affidavit in support of Mendez's assertions: exhibit A, a card member agreement dated November 30, 2011, and exhibit B, a credit card statement dated July 27, 2014 showing a past due amount of $28, 217.11. 

This approach is wholly inconsistent with traditional notion of judicial notice. See Tafel v. State, 536 S.W.3d 517, 523 (Tex. 2017) ("An appellate court is limited to the record that is before it on appeal and generally may take judicial notice only of (1) facts that could have been properly judicially noticed by the trial judge or (2) facts that are necessary to determine whether the appellate court has jurisdiction of the appeal.").  "[A]ppellate courts are reluctant to take judicial notice of matters which go to the merits of a dispute," because they are not triers of fact. SEI Bus. Sys., Inc. v. Bank One Texas, N.A., 803 S.W.2d 838, 840 (Tex. App.-Dallas 1991, no writ).

Amount Outstanding vs. Amount Actually Due / Past-Due 

Finally, with respect to the affiant’s testimony that the account balance had been accelerated, the Court concluded that this could be true because the affidavit post-dated the final account statement, and that acceleration could have happened in the interim. Ergo, no conflict.

Testimony by affidavit in the summary judgment context, however, must be supported by copies or originals of the documents or records on which the testimony is based. Tex. R. Civ. P. 166a(f) ("Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith."). The documentary substantiation requirement is obviously nontrivial in the summary judgment context because testimony by affidavit would otherwise be hearsay at trial since the affiant is not subject to cross-examination. 

The affiant in Germany v. Wells Fargo based his claim of “personal knowledge” on review of the attached records, rather than on some other source. The last account statement reveals that the outstanding balance on the account had not been accelerated, and that payment of a much smaller amount was due. Therefore, the testimony about acceleration having occurred, and the entire balance balance being due in a lump sum, was unsupported and conclusory. See Camarillo v. Cabinets by Michael, Inc., No. 02-17-00154-CV (Tex.App.- Fort Worth, Jun. 28, 2018)(reversing summary judgment granted based on an affidavit about number of overtime hours worked that was conclusory because it was not supported by the referenced time-records, and was therefore no evidence.), citing, inter alia, Brown v. Mesa Distribs, Inc., 414 S.W.3d 279, 287 (Tex. App.-Houston [1st Dist.] 2013, no pet.) (noting that an affidavit that states only legal or factual conclusions without providing factual support is not proper summary judgment evidence).

And since Wells Fargo's affiant purported to recite factual information gleaned from attached exhibits that affirmatively reflected something else, it did not meet the criteria governing the acceptability of affidavits by interested witnesses under the summary judgment rule: 

"A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, or of an expert witness as to subject matter concerning which the trier of fact must be guided solely by the opinion testimony of experts, if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted." TRCP 166a(c). 

Nor could a conclusory assertion that acceleration had occurred be easily controverted by the defendant as nonmovant. How could the consumer prove the opposite, which is a negative: the Bank's non-exercise of the option to accelerate the revolving balance on the account? 

Texas law requires notice of intent to accelerate and notice of acceleration

Appellate counsel for Germany additionally pointed out that there was no evidence that Wells Fargo had complied with Texas law regarding acceleration, which requires two notices: (1) Notice of intent of accelerate and (2) notice of acceleration. The Court disposed of this argument by mis-citing a prior precedent of its own for the proposition that the debtor must specifically raise the lack-of-notice issue in his pleadings to preserve a complaint about it for appeal.

The Court cited Miller v. Univ. Sav. Ass'n, 858 S.W.2d 33, 36 (Tex. App.-Houston [14th Dist.] 1993, writ denied) for “holding that a summary-judgment movant was not required to prove the requisites for accelerating a note because there was no specific denial of conditions precedent in the nonmovant's answer.”

What the Panel Opinion fails to say, however, is that the nonmovant in the Miller case was a guarantor rather than a principal obligor; that the case was a second appeal after a limited remand on the issue of damages only; and that the nonmovant’s defenses had not been raised in the prior proceeding (“We reversed the judgment and remanded the case only for a determination of damages.”). Once the mandate has issued, the trial court has no authority to take any action inconsistent with or beyond the scope of the mandate. See Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986) ("When this court remands a case and limits a subsequent trial to a particular issue, the trial court is restricted to a determination of that particular issue."). 
   

Miller actually supports Germany’s argument about being entitled to notice of acceleration, which is not surprising because those notice requirements rest on Texas Supreme Court precedent that the intermediate court of appeals in Houston was bound to follow. In Miller, the Fourteenth Court expressly distinguished guarantors from makers of promissory notes: 

In support of his argument that appellees' did not prove their entitlement to judgment as a matter of law, appellant directs us to the case law regarding promissory notes and the requirements of acceleration. Generally, the holder of a note must perform three requirements before he can properly accelerate the maturity of a note, namely: 1) make presentment, or demand for payment upon the maker; 2) give notice of intent to accelerate, and; 3) notify maker of actual acceleration. Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 892 (Tex.1991); Ogden v. Gibraltar Sav Ass'n, 640 S.W.2d 232, 233; Allen Sales & Servicenter v. Ryan, 525 S.W.2d 863, 865 (Tex.1975). However, this case does not involve a holder's obligation to a maker. Instead, it involves the liability of a guarantor when the maker defaults on the loan. While we agree with appellant that Texas law requires a holder to notify a maker of his intent to accelerate a note, it does not require that notice of intent to accelerate be given to a guarantor. United States v. Little Joe Trawlers, Inc., 776 F.2d 1249, 1252 (5th Cir.1985). While a guaranty clause may incorporate certain terms and provisions of the underlying promissory note, it is a separate contract with separate ramifications and obligations imposed on those parties.

Also see -- > Beyond Judicial Notice: A Critique of Sua Sponte Speculation and Factfinding on Appeal  (in-depth critique of Charles J. Germany v. Wells Fargo Bank) 

Germany v. Wells Fargo Bank 

CHARLES J. GERMANY JR., Appellant,v.
WELLS FARGO BANK, NA, Appellee.

No. 14-17-00916-CV 

Court of Appeals of Texas, Fourteenth District, Houston.

Memorandum Opinion filed February 7, 2019.     

Roger G. Jain, Thomas Henry Smith, III, for Charles J. Germany, Junior, Appellant.

Edgar Quijada Mendez, Scott E. Hayes, Thomas M. Sellers, for Wells Fargo Bank, N.A., Appellee.

On Appeal from the 458th District Court, Fort Bend County, Texas, Trial Court Cause No. 17-DCV-239533.

Affirmed.

Panel consists of Justices Christopher, Jewell, and Hassan.

MEMORANDUM OPINION

TRACY CHRISTOPHER, Justice.

Wells Fargo sued Charles Germany, alleging a single cause of action for breach of contract. After Germany filed a pro se answer, Wells Fargo moved for a traditional summary judgment. Germany did not respond to Wells Fargo's motion, and the trial court granted summary judgment in Wells Fargo's favor. Because Germany did not file a response, the only question we consider on appeal is whether Wells Fargo satisfied its burden of showing that it was entitled to judgment as a matter of law. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993) ("If a non-movant fails to present any issues in its response or answer, the movant's right is not established and the movant must still establish its entitlement to summary judgment. The effect of such a failure is that the non-movant is limited on appeal to arguing the legal sufficiency of the grounds presented by the movant.").

STANDARD OF REVIEW

Our review of the summary judgment is de novo. See Katy Venture, Ltd. v. Cremona Bistro. Corp., 469 S.W.3d 160, 163 (Tex. 2015) (per curiam). To prevail on its traditional motion for summary judgment, Wells Fargo had to establish that there was no genuine issue of material fact as to each element of its claim such that it was entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000) (per curiam). In deciding whether there is a genuine issue of material fact, we consider all of the evidence in the light most favorable to Germany, indulging every reasonable inference and resolving any doubts in his favor. See City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005).

MOTION FOR SUMMARY JUDGMENT

Wells Fargo argued in its motion that it was entitled to judgment on its contract claim because Germany entered into a consumer credit card agreement with Wells Fargo, and Germany breached that agreement by defaulting on his payments.

Wells Fargo supported that claim with the affidavit of a loan adjustor, who testified that he worked for Wells Fargo and that he had acquired personal knowledge of the business records involved in this case. The loan adjustor attached a consumer credit card agreement to his affidavit, and he testified that it was a true and correct copy of the agreement that Germany had entered.

The loan adjustor also attached two credit card statements associated with Germany's account, one dated from 2016, and the other dated from 2017. The loan adjustor testified that Germany's last payment to his account was reflected in the 2016 statement. Because Germany had not remitted any additional payments since that time, the loan adjustor testified that the entire balance on Germany's account had been accelerated according to the terms of the agreement. The loan adjustor cited the account balance on the 2017 statement as proof of the amount that was due and owing.

Now represented by appellate counsel, Germany argues that Wells Fargo's motion is insufficient because the summary-judgment evidence is not "free from contradictions and inconsistencies." See Tex. R. Civ. P. 166a(c). Germany focuses on three evidentiary issues in particular.

CREDIT CARD AGREEMENT

The first issue relates to the loan adjustor's affidavit testimony that Germany "entered into an agreement for a CORE PLATINUM Account." Germany contends that this testimony is inconsistent with the agreement itself because the agreement does not reflect that Germany obtained a CORE PLATINUM Account.

The agreement is silent about many things, and appears to have been drafted with standardization in mind. For example, it does not bear Germany's name or even require his signature as a condition to contract formation. By its own terms, Germany is deemed to have accepted the terms of the agreement "by using or activating [his] Account." See Mid-Continent Cas. Co. v. Global Enercom Mgmt., Inc., 323 S.W.3d 151, 157 (Tex. 2010)("Texas law recognizes that a contract need not be signed to be `executed' unless the parties explicitly require signatures as a condition of mutual assent.").

In keeping with its boilerplate character, the agreement has a generally worded heading: "Consumer Credit Card Customer Agreement & Disclosure Statement." Beneath that heading, there is a short subheading—"Visa® or MasterCard®"— followed by terms that are applicable to both types of credit cards, unless otherwise stated.

The agreement does not indicate which type of credit card was issued to Germany. In fact, the agreement defines the word "Card" as "any credit card we issue to use your Account." The word "Account" is also defined in the barest of terms as "your credit card account."

Germany correctly observes that the agreement does not contain the words "CORE PLATINUM," but he fails to explain how that omission creates an inconsistency. The agreement does not affirmatively state that Germany obtained an account with Wells Fargo that bore a different title. Absent that sort of discrepancy, we perceive no conflict between the generally worded agreement and the loan adjustor's more specifically worded affidavit. See Hernandez v. Lukefahr, 879 S.W.2d 137, 143 (Tex. App.-Houston [14th Dist.] 1994, no writ) (explaining that the types of inconsistencies prohibited by Rule 166a(c) are those that create "equivocating positions which do not serve to clarify the pertinent issues in the case").

CREDIT CARD STATEMENTS

The next issue relates to differing descriptions of Germany's account in the loan adjustor's affidavit and the two credit card statements. The loan adjustor testified that Germany had a CORE PLATINUM Account ending with the numbers 5236. Those account numbers are accurately reflected in the 2017 statement, but not in the 2016 statement, which represented that Germany's account ended with the numbers 5921.

We agree with Germany that this evidence gives rise to a discrepancy, but the discrepancy is immaterial. The loan adjustor did not testify that Germany's account ended with the numbers 5236 at the time his account was opened, or that his account has always ended with those numbers. Rather, the loan adjustor testified that Germany's account "ends"—in the present tense—with the numbers 5236. That testimony comports with the account number appearing on the 2017 statement, which the loan adjustor described as the "last statement" that was sent to Germany.

The loan adjustor did not explain the discrepancy between the two credit card statements, but we are aware that financial institutions can change account numbers when the need arises. See, e.g., Wells Fargo Bank, N.A. v. Blackburn, No. 02-10-00166-CV, 2011 WL 346951, at *1 (Tex. App.-Fort Worth Feb. 3, 2011, no pet.) (mem. op.) (numbers were changed after the account holder closed and then reactivated the account); United States v. Parson, 599 F. Supp. 2d 592, 605 (W.D. Pa. 2009) (numbers were changed after the account holder expressed a concern about identity theft). The mere fact that a change may have occurred here does not raise a genuine issue of material fact because there was uncontroverted evidence that Germany owned the account ending in 5236 and Wells Fargo's claim for damages was limited to the balance due under that account. Cf. Reagan Nat'l Advert. of Austin, Inc. v. Hazen, No. 03-05-00699-CV, 2008 WL 2938823, at *11 (Tex. App.-Austin July 29, 2008, no pet.) (mem. op.) (factual discrepancies regarding the number of times that an attorney communicated with a third party, who initiated those disputed communications, and how a written agreement was delivered to the third party did not preclude a summary judgment on the attorney's defense that he was entitled to attorney immunity).

Germany also contends that there is an inconsistency because both credit card statements indicate that he has a Wells Fargo Visa Account, as opposed to a CORE PLATINUM Account. However, neither statement actually identifies the title of Germany's account. The statements merely contain logos for Wells Fargo and Visa. The Visa logo permits a reasonable inference that Germany was issued a Visa credit card, but nothing in the statements identifies which type of Visa credit card. Because the statements are silent regarding the title of Germany's account, we do not perceive any inconsistency with the loan adjustor's affidavit testimony that Germany obtained a CORE PLATINUM Account. See Blackburn, 2011 WL 346951, at *3 (indicating that Visa has a "Platinum" line of credit cards).

ACCELERATED BALANCE

Germany's final issue relates to the loan adjustor's affidavit testimony that Wells Fargo is owed an accelerated balance of $24,809.38. That figure matches the total balance of Germany's account as reflected in the 2017 statement, but Germany argues that there is a conflict because the same statement shows a minimum balance due of only $3,579.38. In a related complaint, Germany argues that the loan adjustor's testimony is conclusory because, even if he owned the account, there is insufficient proof that the total balance actually became due and owing. We address these points in reverse order.

There is uncontroverted evidence that Wells Fargo had a right to accelerate the balance of Germany's account. The credit card agreement provided that if Germany defaulted by "fail[ing] to pay a Minimum Payment by the Payment Due Date," then Wells Fargo's rights included, but were not limited to, "requiring the immediate payment of the Outstanding Balance."

The 2017 statement proved that Germany had defaulted. A notice included in that statement said the following:

Our records indicate that your account is in default for failure to make payments due. Unless the past due amount shown on this month's billing statement is received by the end of the present calendar month, immediate payment in full of your account may be required (this is also called "acceleration").

There is no evidence, however, that Wells Fargo gave notice to Germany that his account balance had actually been accelerated. Without such evidence, Germany argues that Wells Fargo did not satisfy its burden of showing that the balance was accelerated.

Assuming for the sake of argument that Wells Fargo was required to give notice of acceleration, we conclude that proof of this notice was unnecessary because Wells Fargo pleaded that all conditions precedent had been performed and Germany failed to specifically deny that notice had been given. See Tex. R. Civ. P. 54 ("In pleading the performance or occurrence of conditions precedent, it shall be sufficient to aver generally that all conditions precedent have been performed or have occurred. When such performances or occurrences have been so plead, the party so pleading same shall be required to prove only such of them as are specifically denied by the opposite party."); Miller v. Univ. Sav. Ass'n, 858 S.W.2d 33, 36 (Tex. App.-Houston [14th Dist.] 1993, writ denied) (holding that a summary-judgment movant was not required to prove the requisites for accelerating a note because there was no specific denial of conditions precedent in the nonmovant's answer). Accordingly, the loan adjustor's testimony was not conclusory, and Wells Fargo's motion was not insufficient for lacking more proof of acceleration.

The only remaining complaint is Germany's argument that the evidence was inconsistent. Germany contends that his account balance could not have been accelerated as the loan adjustor had testified because the 2017 statement did not reflect that the entire account balance was due and owing, and because the notice attached to that statement merely warned that immediate payment in full "may be required." But the 2017 statement predated the loan adjustor's affidavit by more than three months. That statement does not contradict the loan adjustor's subsequent testimony that Germany's balance "has been accelerated" as a result of his failure to remit payments. Cf. Hammer v. Powers, 819 S.W.2d 669, 672 (Tex. App.-Fort Worth 1991, no writ) (affiant's testimony that testatrix had testamentary capacity two days before the will was executed was not contradicted by testimony that the testatrix had been hospitalized for alcoholism seven days before the will was executed).

CONCLUSION

Wells Fargo produced uncontroverted evidence, free from any contradictions or inconsistencies, that Germany entered into a credit card agreement; that Germany defaulted under that agreement; and that $24,809.38 is due and owing as a result of Germany's breach. Based on this uncontroverted evidence, we conclude that Wells Fargo established that it was entitled to judgment as a matter of law on its claim for breach of contract.

We therefore affirm the trial court's judgment.

858 S.W.2d 33 (1993)

Vance C. MILLER, Appellant,
v.
UNIVERSITY SAVINGS ASSOC., and Landmark Savings Assoc., Appellees.

No. B14-92-00746 CV.

Court of Appeals of Texas, Houston (14th Dist.).

July 1, 1993.  Rehearing Denied August 19, 1993.  
34

Before MURPHY, SEARS and DRAUGHN, JJ.

OPINION

DRAUGHN, Justice.

This is an appeal from a judgment in favor of appellees, and the denial of appellant's summary judgment motion. In four points of error, appellant contends the trial court erred in granting appellees' summary judgment motion based on their claim and appellant's counter-claim of usury. Appellant also asserts the trial court committed reversible error in denying and failing to grant his motion for summary judgment. We affirm the judgment of the trial court.

This is the second time this case has been before us on appeal. See University Sav. Ass'n v. Miller, 786 S.W.2d 461 (Tex. App.-Houston [14th Dist.] 1990, writ denied). As the facts have not changed, and we are presented with some variations of the same issues decided in the first appeal, a brief recitation of the facts and procedural posture of this case is necessary.

On August 26, 1977, appellant entered into a guaranty agreement with appellee, University Savings Association ("University"), in conjunction with a loan by University Savings to Miller Warehouse of Houston. This loan was documented by a promissory note, and further secured by a deed of trust covering an apartment complex in Houston. The loan was for $2,740,000.00.

Miller Warehouse defaulted on the loan, beginning with the failure to pay the September 1, 1985 installment payment. On January 9, 1986, University Savings accelerated 35*35the maturity of the note and made demand upon appellant, as guarantor, to make the payment required under the guaranty agreement. As of the date of acceleration, the amounts owed to University were as follows: 1) Unpaid principal balance $2,573,620.02; 2) unpaid accrued interest $130,718.51; 3) unpaid negative escrow balance owed for advances made by University for unpaid taxes due on the secured real property in the sum of $23,807.15; and 4) $4,322.32 for unpaid accrued late charges, for a total of $2,732,468.00. The addition of ten percent attorney's fees and foreclosure costs immediately preceding the foreclosure sale of the apartment complex made the total indebtedness owing to University $3,027,019.43. The apartment complex was bought by University at the foreclosure sale for $2,400,000.00, and the proceeds applied to the unguaranteed portion of the indebtedness.

In the original trial of this case, the trial court was faced with cross-motions for summary judgment. At that time, the trial court granted appellant's motion for summary judgment and denied appellees' motion for summary judgment, based upon that court's interpretation of the guaranty agreement. Basically, the trial court found that the guaranty agreement, by its terms, terminated after the foreclosure sale. University appealed, both on the ground that Miller's motion for summary judgment was improvidently granted, but also on the ground that the trial court improperly denied its motion for summary judgment. The appeal was limited to the summary judgment evidence based upon the construction of the guaranty agreement.

Upon the first appeal to this court, we held that not only was Miller's motion for summary judgment improperly granted, but also that University had proven its entitlement to summary judgment relief as a matter of law. We reversed the judgment and remanded the case only for a determination of damages.

On remand, appellees, University, and Landmark Savings, the assignee of the note, filed a Motion for Entry of Judgment and provided the trial court with proof of the liquidated damages owed. Appellant, though not directly responding to appellees' motion for entry of judgment/second motion for summary judgment, filed his own Motion for Summary Judgment, alleging, for the first time, that the interest charged against him was usurious. The trial court, in accordance with our previous opinion, entered judgment for appellees and awarded the appropriate, liquidated damages.

In this second appeal, appellant contends the trial court erred by entering the judgment in appellees' favor and in granting their motion for summary judgment on appellant's counterclaim of usury. Appellant further asserts that the trial court improperly denied his motion for summary judgment. And, for the first time, appellant raises the issue that appellees' failed to prove their entitlement to summary judgment relief, as a matter of law, in the original proceeding, based upon their alleged failure to send him notice of intent to accelerate the note. Appellant asserts this issue even though no defense to appellees' first or second motions for summary judgment on the grounds of failure to send notice of intent was ever made.
   

In his first point of error, appellant claims the trial court erred in granting the appellees' motion for summary judgment, even in light of our prior opinion remanding the case for entry of judgment in appellees' favor and a determination of damages. Specifically, appellant contends our first decision on this case, rendering summary judgment relief for appellees, was in error, as appellees did not sustain their burden proving a right to such relief as a matter of law because they failed to prove the necessary requisites for accelerating the underlying note. In the alternative, appellant contends that the "law of the case" doctrine does not apply because substantially different facts now exist, namely, those giving rise to a claim of usury which arose on remand.

In support of his argument that appellees' did not prove their entitlement to judgment as a matter of law, appellant directs us to the case law regarding promissory 36*36 notes and the requirements of acceleration. Generally, the holder of a note must perform three requirements before he can properly accelerate the maturity of a note, namely: 1) make presentment, or demand for payment upon the maker; 2) give notice of intent to accelerate, and; 3) notify maker of actual acceleration. Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 892 (Tex.1991); Ogden v. Gibraltar Sav Ass'n, 640 S.W.2d 232, 233; Allen Sales & Servicenter v. Ryan, 525 S.W.2d 863, 865 (Tex.1975). However, this case does not involve a holder's obligation to a maker. Instead, it involves the liability of a guarantor when the maker defaults on the loan.

While we agree with appellant that Texas law requires a holder to notify a maker of his intent to accelerate a note, it does not require that notice of intent to accelerate be given to a guarantor. United States v. Little Joe Trawlers, Inc., 776 F.2d 1249, 1252 (5th Cir.1985). While a guaranty clause may incorporate certain terms and provisions of the underlying promissory note, it is a separate contract with separate ramifications and obligations imposed on those parties.

Even if we assume arguendo appellant's interpretation, he has waived this point of error and argument by failing to raise it either at the prior trial or on appeal therefrom. In their original petition, appellees plead that "all conditions precedent have been performed or have occurred," and appellant failed to specially except to this pleading. Nor did he object to it, or bring it to the trial court's attention by controverting it at the prior summary judgment stage.

We are well aware that a non-movant is not required to respond to a motion for summary judgment when the movant's summary judgment proof is legally insufficient. See Cove Inv. Inc. v. Manges, 602 S.W.2d 512, 514 (Tex.1980). However, Tex. R.Civ.P. 54 provides:

In pleading the performance or occurrence of conditions precedent, it shall be sufficient to aver generally that all conditions precedent have been performed or have occurred. When such performances or occurrences have been so plead, the party so pleading same shall be required to prove only such of them as are specifically denied by the opposite party.(Emphasis added).

We find it hard to sympathize with appellant on this second appeal when he failed to raise the issue either at the trial level or at the first appeal, either by cross-point or in his motion for rehearing. He limited his arguments to the construction of the guaranty agreement and wholly failed to address the sufficiency of appellees' summary judgment proof on this issue. Having plead that all necessary requirements had been met, and obtaining a judgment based on those summary judgment pleadings, appellees are not now subject to an insufficiency claim by appellant, who failed to specifically deny the existence of those conditions as required by Rule 54, or to raise it on the original appeal. Accordingly, point of error one is overruled.

In point of error two, appellant complains of the trial court's granting of appellees' motion for summary judgment on his counter-claim of usury. Appellant contends appellees' Motion for Entry of Judgment charges him with interest at the rate of 18%, when he is only liable for interest at the legal rate of 6% from the date of maturity upon whatever damages may be assessed against him. He further asserts that this claim of usury is not precluded by the "law of the case" doctrine or res judicata, because the interest was not charged or demanded until the remand of this case for entry of the judgment and determination of the amounts owed. Appellant also argues that he is not liable for any "post-maturity" sums owing on the note, although we included the time period of the foreclosure sale in our order.

The guaranty agreement incorporated the terms of the promissory note in its provisions by stating: "... reference being made to the aforesaid note for all of the terms and conditions thereof and same by reference is made a part hereof for all purposes." The note itself provided for interest at the maximum lawful rate permitted upon default, until such time the 37*37 payment of indebtedness had been made in full.

The highest rate allowed on such a note is 18% per annum. TEX.REV.CIV.STAT. ANN. art. 1302-2.09 (Vernon 1989). Furthermore, appellant is not liable for this entire amount. The guaranty agreement states:

guarantors jointly and severally, for themselves, their heirs, executors, administrators, and successors, absolutely and unconditionally guarantee to the Association, its successors and assigns, the prompt, complete and full payment at maturity, howsoever such maturity may be brought about, of the first or top ten percent (10%) of all sums owing and to be owing upon the note, including interest and attorneys' fees as provided for therein (emphasis added).

Thus, by the explicit wording of the agreement, appellant is liable for the interest throught he foreclosure sale. Furthermore, the interest owed by a guarantor cannot be usurious when it is allowed under law.
 
Also, appellant is obligated only to pay the top 10% of the principal and interest charged on the note and 10% of the attorneys' fees. It follows that the amount of interest is clearly not usurious.

Moreover, the amount of the loan and the rate of interest are liquidated damages which were ascertainable at the time of the original proceeding. As such, this claim, since not plead in the initial motion, is waived. These issues have already been determined by this court, as we held that judgment for appellees should include interest from the date of foreclosure. See University Sav. Ass'n. v. Miller, 786 S.W.2d at 464. If appellant believed that the interest rates were usurious, he should have so plead, as those amounts have not changed and were known at all times by merely reading the provisions of the promissory note and the guaranty agreement.

Nonetheless, appellant argues that principles of res judicata do not apply because the facts have changed which alter the legal rights or relations of the parties. See City of Lubbock v. Stubbs, 160 Tex. 111, 327 S.W.2d 411, 414 (Tex.1959). On the contrary, the facts have not changed at all. As mentioned above, only simple mathematics was required to calculate the exact sums owing. The interest rates have been fixed throughout these proceedings, and were known at the time appellant brought his first motion for summary judgment. Having failed to bring this claim before the trial court in the initial proceeding, appellant is now barred from asserting this cause of action. Point of error two is overruled.

In his third and fourth points of error, appellant claims the trial court erred in both denying and failing to grant his motion for summary judgment on the usury claim. As discussed above, appellant is precluded from bringing this claim, because no facts have changed the rights or relationship of the parties. Lubbock v. Stubbs, 327 S.W.2d at 414. Furthermore, the doctrine of "law of the case" applies, as this court has already determined the issues involved, and the only duty the trial court had was to enter judgment for appellees on the guaranty and apply the mathematical computations. See University Sav. Ass'n. v. Miller, 786 S.W.2d 461; Pan American Petro. Corp. v. Southland Royalty Co., 396 S.W.2d 519 (Tex.Civ.App.-El Paso 1965, writ dism'd). Therefore, since appellant was barred from bringing this claim, and, as we have already discussed, appellant did not prove usury as a matter of law, the trial court could not have abused its discretion in denying or failing to grant appellant's summary judgment motion. Points of error three and four are overruled.

Accordingly, the judgment of the trial court is, hereby,

AFFIRMED.