Variation on the arbitration theme: Amegy Bank sues customer to block arbitration

WHEN THE LITTLE GUY WANTS TO TAKE THE BIG GUY TO ARBITRATION 

Here is another rare case where an individual wanted to arbitrate a dispute with a business -- rather than the reverse -- and was thwarted in his quest: Carter v. ZB National Association d/b/a Amegy Bank, No. 14-17-00900-CV (Tex.App.- Houston [14th Dist.] May 7, 2019) (concluding that the trial court did not err in declaring as a matter of law that Carter cannot force Amegy Bank to arbitrate his dispute with the bank).

Affirmed as Modified and Opinion filed May 7, 2019.

In The

Fourteenth Court of Appeals

NO. 14-17-00900-CV

STANWYN JAY CARTER, Appellant

V.

ZB, NATIONAL ASSOCIATION D/B/A AMEGY BANK, Appellee

On Appeal from the 55th District Court

Harris County, Texas

Trial Court Cause No. 2017-56775

O P I N I O N

Opinion filed May 7, 2019.

Amy Wolfshohl, Jonna Summers, for ZB, National Association d/b/a Amegy Bank, Appellee.

Stanwyn Jay Carter, for Appellant, Pro Se.

On Appeal from the 55th District Court, Harris County, Texas, Trial Court Cause No. 2017-56775.

Affirmed as Modified.

Panel consists of Chief Justice Frost and Justices Wise and Jewell.

OPINION BY KEM THOMPSON FROST, Chief Justice.

Appellant Stanwyn Jay Carter, pro se, appeals the trial court's order granting appellee ZB, National Association d/b/a Amegy Bank ("Amegy Bank") summary judgment on its claim for declaratory relief that Carter cannot force Amegy Bank to arbitrate the dispute in an arbitration that Carter had commenced.

We modify the trial court's judgment to delete two declarations and affirm the judgment as modified.

I. FACTUAL AND PROCEDURAL BACKGROUND

Contours Community Development Corporation executed a promissory note dated September 1, 2010, in the principal amount of $544,000 (the "Note") payable to Amegy Bank. Carter signed the Note as Executive Director of Contours. Contours and Amegy Bank executed a "First Modification and Extension to Note and Deed of Trust," dated December 31, 2010 ("First Modification"). Carter signed the First Modification as Executive Director of Contours.

Paragraph 43 of the Note and paragraph 13 of the First Modification address dispute resolution and are substantially similar in all material respects. Each paragraph has a section entitled "JURY TRIAL WAIVER," and a section entitled "ARBITRATION."

In the first section, Contours and Amegy Bank waive their right to a jury trial in connection with a claim, dispute, or controversy that arises between them with respect to the Note, related agreements, or any other agreement or business relationship between them, whether or not related to the subject matter of the Note (hereinafter a "Dispute"). In the first paragraph, Contours and Amegy Bank agree that any Dispute will be resolved "BY A JUDGE SITTING WITHOUT A JURY." Contours and Amegy Bank agree that if a court determines that the jury-trial-waiver provision is not enforceable, then before trial of a Dispute but not later than thirty days after entry of the order determining the provision to be unenforceable, either party may move the court for an order compelling arbitration and staying or dismissing such litigation pending arbitration (an "Arbitration Order.").

In the second paragraph regarding arbitration, Contours and Amegy Bank agree that if a Dispute arises and only if a jury-trial waiver is not permitted by applicable law or by a court ruling, then either party may require that the Dispute be resolved by binding arbitration before a single arbitrator at the request of any party.

Carter, pro se, filed a demand for arbitration with JAMS, seeking to arbitrate claims against Amegy Bank under the arbitration provision in Paragraph 43 of the Note. When JAMS refused to dismiss the arbitration, Amegy Bank filed suit in the trial court below seeking declaratory relief, including a declaration that Carter cannot force Amegy Bank to arbitrate, and seeking to stay the arbitration proceedings. Instead of filing an answer, Carter filed a motion to compel arbitration.

Following a temporary restraining order and a temporary injunction enjoining Carter from continuing to prosecute the arbitration, Amegy Bank filed a motion for traditional summary judgment. In the motion, Amegy Bank sought various declarations as a matter of law, including a declaration that Carter cannot force Amegy Bank to arbitrate the dispute in the commenced JAMS arbitration styled Carter, Stanwyn Jay v. Amegy Bank National Association (hereinafter the "Carter Dispute"). Amegy Bank maintains that Carter improperly commenced arbitration predicated on an arbitration provision that does not authorize arbitration at this juncture. Amegy Bank attached to its motion authenticated copies of the Note and the First Modification. Carter filed a summary-judgment response, asserting various points and arguing that he raised genuine issues of material fact.

The trial court granted Amegy Bank's summary-judgment motion, making seven declarations as a matter of law. The trial court later rendered a final judgment ordering that the Carter Dispute remain stayed. In the final judgment the trial court reiterated the same seven declarations:

1. Pursuant to Paragraph 43 of the Promissory Note and Paragraph 13 of the First Modification and Extension to Note and Deed of Trust ("First Modification"), only a court may determine the validity, enforceability, meaning, and scope of the Promissory Note and First Modification's arbitration provisions.
2. Pursuant to Paragraph 43 of the Promissory Note and Paragraph 13 of the First Modification, arbitration cannot be commenced unless a court determines that the jury trial waiver is not enforceable.
3. Pursuant to Paragraph 43 of the Promissory Note and Paragraph 13 of the First Modification, arbitration cannot be commenced until there is an Arbitration Order as defined in the Promissory Note and First Modification.
4. Pursuant to Paragraph 43 of the Promissory Note and Paragraph 13 of the First Modification, an Arbitration Order cannot issue unless a court determines that the jury trial waiver is not enforceable.
5. An Arbitration Order has not issued.
6. There has been no determination that the jury trial waiver is unenforceable.
7. Defendant Stanwyn Jay Carter cannot force ZB, National Association d/b/a Amegy Bank to arbitrate the dispute in the commenced JAMS arbitration styled Carter, Stanwyn Jay vs. Amegy Bank National Association.
On appeal Carter argues that the trial court reversibly erred in granting summary judgment.

II. Analysis

Liberally construing Carter's brief, we interpret Carter to assert the following points:

(1) The agreement does not require an arbitration order to issue before an arbitration may be initiated under the arbitration clause.
(2) Under their plain texts, the agreements provide for arbitration if a jury-trial waiver is not permitted by applicable law or by court ruling, and thus there is no requirement that a court determine the jury-trial waiver to be unenforceable.
(3) The jury-trial-waiver provision applies if permitted by applicable law or by a court ruling, but no summary-judgment evidence proves either proposition.
(4) Even though Carter did not sign the Note or First Modification in his individual capacity, Carter may arbitrate the Carter Dispute because he is an obligated party to an arbitration agreement that encompasses the Carter Dispute and because Amegy Bank refuses to arbitrate.
(5) The trial court erred in declaring that Carter cannot force Amegy Bank to arbitrate the Carter Dispute because the arbitration clause provides that "Arbitration shall be commenced by filing a petition with, and in accordance with the applicable arbitration rules of, JAMS or National Arbitration Forum . . . as selected by the initiating party."
(6) The trial court's first declaration is contrary to precedent under which attacks on the validity of the contract, as opposed to attacks on the validity of the arbitration clause, are to be resolved by the arbitrator in the first instance.
(7) Under the contracts, either the jury-trial waiver is enforceable or the arbitration clause is enforceable, and because the arbitration clause is valid, irrevocable and enforceable, the jury-trial waiver necessarily is unenforceable.

A. Standard of review

We review declaratory judgments decided by summary judgment under the same standards that govern summary judgments generally. See Tex. Civ. Prac. & Rem. Code § 37.010 (West, Westlaw through 2017 1st C.S.); Wolf Hollow I, L.P. v. El Paso Mktg., L.P., 472 S.W.3d 325, 332 (Tex. App.-Houston [14th Dist.] 2015, pet. denied). We review the trial court's grant of a summary judgment de novo. See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). In a traditional motion for summary judgment, if the movant's motion and summary-judgment evidence facially establish its right to judgment as a matter of law, the burden shifts to the nonmovant to raise a genuine, material fact issue sufficient to defeat summary judgment. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000). In our de novo review of a trial court's summary judgment, we consider all the evidence in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). The evidence raises a genuine issue of fact if reasonable and fair-minded jurors could differ in their conclusions in light of all of the summary-judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).

In this case, the trial court was asked to render a declaratory judgment based on the Note and the First Modification, instruments subject to the general rules of contract construction. See Marzo Club, LLC v. Columbia Lakes Homeowners Ass'n, 325 S.W.3d 791, 798 (Tex. App.-Houston [14th Dist.] 2010, no pet.). In construing a contract, our primary concern is to ascertain and give effect to the intentions of the parties as expressed in the contract. Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998). To ascertain the parties' true intentions, we examine the entire agreement in an effort to harmonize and give effect to all provisions of the contract so that none will be rendered meaningless. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 652 (Tex. 1999). Whether a contract is ambiguous is a question of law for the court. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation. Id. But, when a written contract is worded so that it can be given a certain or definite legal meaning or interpretation, it is unambiguous, and the court construes it as a matter of law. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). We cannot rewrite the contract or add to its language under the guise of interpretation. See American Mfrs. Mut. Ins. Co., 124 S.W.3d at 162. Rather, we must enforce the contract as written. See Don's Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 (Tex. 2008).

B. Law on arbitration

A party seeking to force another party to arbitrate certain claims must establish that (1) a valid arbitration agreement exists[1] and (2) the claims at issue are within the scope of the agreement. See In re D. Wilson Const. Co., 196 S.W.3d 774, 780-81 (Tex. 2006) (orig. proceeding); In re Igloo Prods. Corp., 238 S.W.3d 574, 577 (Tex. App.-Houston [14th Dist.] 2007, orig. proceeding [mand. denied]). If the party seeking arbitration proves a valid arbitration agreement, any doubts as to whether the claims fall within the scope of the arbitration clause must be resolved in favor of arbitration. See Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995); Osornia v. AmeriMex Motor & Controls, Inc., 367 S.W.3d 707, 712 (Tex. App.-Houston [14th Dist.] 2012, no pet.). A court should not deny arbitration unless the court can say with positive assurance that an arbitration clause is not susceptible of an interpretation that would cover the claims at issue. See Prudential Sec. Inc., 909 S.W.2d at 899; Osornia, 367 S.W.3d at 712.

We presume for the purposes of our analysis that the arbitration clauses in the Note and First Modification are broad, making the presumption of arbitrability particularly applicable. See Osornia, 367 S.W.3d at 712. In such instances, absent any express provision excluding a particular grievance from arbitration, only the most forceful evidence of purpose to exclude the claim from arbitration can prevail, and Amegy Bank has the burden of showing that the claims fall outside the scope of the arbitration clauses. See id. Nonetheless, the strong policy favoring arbitration cannot serve to stretch a contractual clause beyond the scope intended by the parties or to allow the court to modify the unambiguous meaning of the arbitration clause. See id.

C. Applicable language from the Note and the First Modification

The First Modification provides in pertinent part as follows:

13. Dispute Resolution. This paragraph contains a jury waiver, arbitration clause[,] and a class action waiver. This paragraph should be carefully read.

(a) JURY TRIAL WAIVER. AS PERMITTED BY APPLICABLE LAW, EACH PARTY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BEFORE A JURY IN CONNECTION WITH ANY DISPUTE (HEREINAFTER DEFINED), AND DISPUTES SHALL BE RESOLVED BY A JUDGE SITTING WITHOUT A JURY.[2] IF A COURT DETERMINES THAT THIS PROVISION IS NOT ENFORCEABLE FOR ANY REASON, THEN AT ANY TIME PRIOR TO TRIAL OF THE DISPUTE, BUT NOT LATER THAN THIRTY (30) DAYS AFTER ENTRY OF THE ORDER DETERMINING THIS PROVISION IS UNENFORCEABLE, EITHER PARTY SHALL BE ENTITLED TO MOVE THE COURT FOR AN ORDER COMPELLING ARBITRATION AND STAYING OR DISMISSING SUCH LITIGATION PENDING ARBITRATION ("ARBITRATION ORDER").

(b) ARBITRATION. If a claim, dispute, or controversy arises between the parties hereto with respect to [the First Modification] or the Note, related agreements, or any other agreement or business relationship between the parties hereto whether or not related to the subject matter of [the First Modification] or the Note (all of the foregoing, a "Dispute"), and only if a jury trial waiver is not permitted by applicable law or ruling by a court,[3] either party may require that the Dispute be resolved by binding arbitration before a single arbitrator at the request of any party. By agreeing to arbitrate a Dispute, each party gives up any right such party may have to a jury trial, as well as other rights such party would have in court that are not available or are more limited in arbitration, such as the rights to discovery and to appeal.

Arbitration shall be commenced by filing a petition with, and in accordance with the applicable arbitration rules of, JAMS or National Arbitration Forum ("Administrator") as selected by the Initiating party. If the parties agree, arbitration may be commenced by appointment of a licensed attorney who is selected by the parties and who agrees to conduct the arbitration without an Administrator. Disputes include matters [stating several matters]. However, Disputes do not include the validity, enforceability, meaning, or scope of this arbitration provision and such matters may be determined only by a court. If a third party is a party to a Dispute, each party will consent to including the third party in the arbitration proceeding for resolving the Dispute with the third party. Venue for the arbitration proceeding shall be at a location determined by mutual agreement of the parties or, if no agreement, in the city and state where lender or bank is headquartered. 

After entry of an Arbitration Order, the non-moving party shall commence arbitration. The moving party shall, at its discretion, also be entitled to commence arbitration but is under no obligation to do so, and the moving party shall not in any way be adversely prejudiced by electing not to commence arbitration. The arbitrator . . . [listing tasks that arbitrator will perform]. Filing of a petition for arbitration shall not prevent any party from [listing various actions a party may take]. The exercise of such rights shall not constitute a waiver of the right to submit any Dispute to arbitration.
Judgment upon an arbitration award may be entered in any court having jurisdiction except that, if the arbitration award exceeds $4,000,000.00, any party shall be entitled to a de novo appeal of the award before a panel of three arbitrators. To allow for such appeal, [setting forth provisions regarding the procedure for a party to exercise its right to appeal an arbitration award in excess of $4,000,000.00 to a panel of three arbitrators].
Arbitration under this provision concerns a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. This arbitration provision shall survive any termination, amendment, or expiration of [the First Modification] and the Note. If the terms of this provision vary from the Administrator's rules, this arbitration provision shall control.

The correlative parts of the Note are substantially similar in all material respects to the above-quoted text. Both the Note and the First Modification contain a provision stating that the instrument shall be governed by and construed in accordance with Texas law.

D. Trial court's determination that no party can start an arbitration unless a court has determined that the jury-trial waiver is not enforceable

In its second declaration, the trial court ruled that under Paragraph 43 of the

Note and Paragraph 13 of the First Modification, "arbitration cannot be commenced unless a court determines that the jury trial waiver is not enforceable." On appeal, Carter asserts that under the plain text of the Note and First Modification, there is no such requirement. Amegy Bank asserts that Carter waived this argument by not presenting it in his summary-judgment response in the trial court. Even if Carter did not raise this argument in his summary-judgment response, the law does not require that he have done so because his challenge constitutes a complaint that Amegy Bank's summary-judgment evidence does not prove as a matter of law Amegy Bank's entitlement to summary judgment on a traditional ground. See M.D. Anderson Hosp. & Tumor Institute v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000). Thus, Carter still can raise this complaint. See id.

Under the unambiguous wording of each instrument, the parties agree to arbitrate any Dispute, but "only if a jury trial waiver is not permitted by applicable law or ruling by a court." Thus, the arbitration agreement is triggered only if: (1) a jury-trial waiver is not permitted by applicable law, or (2) a court rules that a jury-trial waiver is not permitted. See Morgan v. Bronze Queen Mngmt. Co., LLC, 474 S.W.3d 701, 710 (Tex. App.-Houston [14th Dist.] 2014, no pet.) (construing similar language). Though such a court order does trigger the arbitration clause, it is not the exclusive trigger. See id.

In the jury-trial-waiver paragraph, the parties agree that, if a court determines that the jury-trial waiver is not enforceable for any reason, then before trial and no later than thirty days after entry of the order, either party is entitled to ask the court for an order compelling arbitration and staying or dismissing the litigation pending arbitration. This language is consistent with the language in the arbitration provision, in which the parties agree that one of two situations in which their arbitration agreement is triggered is when a court rules that a jury-trial waiver is not permitted. Yet, neither in the jury-trial-waiver provision nor in the remainder of either instrument do the parties agree that such a court ruling is the only situation in which the parties agree to arbitrate a Dispute. See id.

Under the unambiguous language of the two instruments, the arbitration clause may be triggered without any court order if a jury-trial waiver is not permitted by applicable law. See id. Therefore, the trial court erred in declaring that under Paragraph 43 of the Note and Paragraph 13 of the First Modification, "arbitration cannot be commenced unless a court determines that the jury trial waiver is not enforceable." See id.; Marzo Club, LLC, 325 S.W.3d at 799-800.

E. Trial court's determination that no party can start an arbitration until there is an order compelling arbitration

In its second declaration, the trial court ruled that under Paragraph 43 of the Note and Paragraph 13 of the First Modification, "arbitration cannot be commenced until there is an Arbitration Order." On appeal, Carter asserts that under the plain text of the Note and First Modification, there is no such requirement. Amegy Bank asserts that Carter waived this argument by not presenting it in his summary-judgment response in the trial court. Even if Carter did not raise this argument in his summary-judgment response, the law does not require that he have done so because he is asserting that Amegy Bank's summary-judgment evidence does not prove as a matter of law Amegy Bank's entitlement to summary judgment on a traditional ground. See M.D. Anderson Hosp. & Tumor Institute, 28 S.W.3d at 23. Thus, Carter can raise this complaint for the first time on appeal. See id.

In the jury-trial-waiver provision, the parties agree that if a court determines that the jury-trial waiver is not enforceable for any reason then before trial and no later than thirty days after the order's entry, either party may ask the court for an order compelling arbitration and staying or dismissing the litigation pending arbitration. Under the clear text of each instrument, if a court determines that the jury-trial waiver is not enforceable, then within a certain time period either party may ask the court for an order compelling arbitration, but the parties do not make an Arbitration Order mandatory.

Nothing in the Federal Arbitration Act or Texas Arbitration Act requires that parties get an order compelling arbitration, and unless the parties agree that an order compelling arbitration is a necessary prerequisite to arbitration, an arbitration may be conducted and an arbitration award may be rendered and enforced without any order compelling arbitration. See Ewing v. Act-Catastrophe Texas, L.C., 375 S.W.3d 545, 550-51 (Tex. App.-Houston [14th Dist.] 2012, pet. denied).

The parties do not state in either instrument that an order compelling arbitration must be obtained before the parties may arbitrate a Dispute. On the contrary, under the permissive language of the jury-trial-waiver section, either party may ask the court for an order compelling arbitration if a court determines that the jury-trial waiver is not enforceable, as long as the party does so before trial and within thirty days of the trial court's order determining that the jury-trial waiver is not enforceable. To construe the instruments as requiring a party to obtain an order compelling arbitration would conflict with the parties' agreement that "EITHER PARTY SHALL BE ENTITLED TO MOVE THE COURT FOR AN ORDER COMPELLING ARBITRATION."[4] Though the parties agree that "[a]fter entry of an Arbitration Order, the non-moving party shall commence arbitration," the parties do not stipulate that arbitration may be commenced only after an Arbitration Order.

Amegy Bank argues that construing the instruments as not requiring an Arbitration Order before a Dispute may be arbitrated would render superfluous the requirement that a party seek an order compelling arbitration within thirty days of the trial court's order determining that the jury-trial waiver is not enforceable. According to Amegy Bank, there would be no need for a thirty-day deadline to seek an order compelling arbitration if the parties could proceed to arbitrate a Dispute after the thirty-day deadline expired. We disagree.

A deadline for seeking an Arbitration Order after a court's order that the jury-trial waiver is not enforceable still has meaning even if parties are free to arbitrate without an Arbitration Order. If a party fails to seek an Arbitration Order within this thirty-day period and then files an arbitration demand, one of the respondents may refuse to arbitrate. In addition, if a jury-trial waiver is not permitted by applicable law, then a court order that the jury-trial waiver is not enforceable is not required, and a party may want to file an arbitration demand without seeking an order compelling arbitration.

Under the unambiguous language of the two instruments, arbitration may be started without an Arbitration Order in some circumstances. Therefore, the trial court erred in declaring as a matter of law that under Paragraph 43 of the Note and Paragraph 13 of the First Modification, "arbitration cannot be commenced until there is an Arbitration Order."

F. The trial court's declaration as to who may determine arbitrability

Carter also asserts that the trial court erred in declaring that under Paragraph 43 of the Note and Paragraph 13 of the First Modification, "only a court may determine the validity, enforceability, meaning, and scope of the [arbitration provisions in the Note and First Modification]." The parties agreed that "Disputes do not include the validity, enforceability, meaning, or scope of this arbitration provision and such matters may be determined only by a court." Under the Federal Arbitration Act, courts presume that parties to an arbitration agreement intend that courts rather than arbitrators decide issues as to the validity, scope, and enforceability of the arbitration clause. See Jody James Farms, JV v. Altman Group, Inc., 547 S.W.3d 624, 631-33 (Tex. 2018). Though Carter argues otherwise, this agreement does not contradict precedent under which attacks on the validity of the contract as a whole, as opposed to attacks on the validity of the arbitration clause, are to be resolved by the arbitrator in the first instance. Under the plain text of the instruments, the parties agreed that "only a court may determine the validity, enforceability, meaning, and scope of the [arbitration provisions in the Note and First Modification]." Therefore, the trial court did not err in making the first declaration in the final judgment. See Marzo Club, LLC, 325 S.W.3d at 799-800.

G. The declaration that Carter cannot force Amegy Bank to arbitrate the Carter Dispute

Carter asserts that the trial court erred in declaring that Carter cannot force Amegy Bank to arbitrate the Carter Dispute because the arbitration clause provides that "Arbitration shall be commenced by filing a petition with, and in accordance with the applicable arbitration rules of, JAMS or National Arbitration Forum . . . as selected by the initiating party." But, this sentence does not address the circumstances under which the parties have agreed to arbitrate or the scope of the arbitration agreement. As discussed above, under the plain text of the instruments, the parties' agreement to arbitrate turns on either (1) a jury-trial waiver not being permitted by applicable law, or (2) a court ruling that a jury-trial waiver is not permitted. In its summary-judgment motion Amegy Bank asserted that the jury-trial waiver provision is enforceable under applicable law, and Amegy cited legal authorities showing that applicable law permits a jury-trial waiver. Indeed, Texas and federal law allow jury-trial waivers. See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 132-33 (Tex. 2004); Morgan, 474 S.W.3d at 710. In addition, the undisputed summary-judgment evidence shows that no court has ruled that a jury-trial waiver is not permitted.

Even indulging the presumption that the Carter Dispute should be arbitrated and resolving any doubts as to whether the arbitration clause requires arbitration of the Carter Dispute in favor of arbitration, we can say with positive assurance that the arbitration clauses are not susceptible of an interpretation that would require arbitration of the Carter Dispute at this juncture. See Osornia, 367 S.W.3d at 712.

Under the express language of the arbitration clauses, the parties' agreement to arbitrate is conditioned on either (1) a jury-trial waiver not being permitted by applicable law, or (2) a court ruling that a jury-trial waiver is not permitted. Amegy Bank's motion and summary-judgment evidence prove as a matter of law that neither condition has occurred, so there is no agreement to arbitrate the Carter Dispute at this time. The strong policy in favor of arbitration cannot push the boundaries of a contractual provision beyond the scope intended by the parties or allow a court to modify the unambiguous meaning of the arbitration clause. See id.

Carter also asserts that under the contracts, either the jury-trial waiver is enforceable or the arbitration clause is enforceable, and because the arbitration clause is valid, irrevocable, and enforceable, the jury-trial waiver necessarily is not enforceable. This argument conflicts with the plain text of the instruments, under which the parties have not agreed to arbitrate the Carter Dispute unless (1) a jury-trial waiver is not permitted by applicable law, or (2) a court rules that a jury-trial waiver is not permitted.

Carter claims that the jury-trial-waiver provision applies if permitted by applicable law or by a court ruling, but that no summary-judgment evidence proves either proposition. In this argument, Carter does not correctly state the two conditions, which are (1) a jury-trial waiver not being permitted by applicable law, or (2) a court ruling that a jury-trial waiver is not permitted.

Under the applicable standard of review, we conclude the trial court did not err in declaring as a matter of law that Carter cannot force Amegy Bank to arbitrate the Carter Dispute. See In re Prudential Ins. Co. of Am., 148 S.W.3d at 132-33; Morgan, 474 S.W.3d at 710; Osornia, 367 S.W.3d at 712.

III. Conclusion

Under the express language of the arbitration clauses, the parties conditioned their agreement to arbitrate on either (1) a jury-trial waiver not being permitted by applicable law, or (2) a court ruling that a jury-trial waiver is not permitted. Amegy Bank's motion and summary-judgment evidence prove as a matter of law that neither condition has occurred, and therefore that there is no agreement to arbitrate the Carter Dispute at this time.

We conclude the trial court did not err in declaring as a matter of law that Carter cannot force Amegy Bank to arbitrate the Carter Dispute. Because the trial court's second and third declarations conflict with the unambiguous language of the instruments, we modify the trial court's judgment to delete these two declarations, and we affirm the judgment as modified.

[1] If all relevant parties did not sign the contract containing the arbitration agreement, this first prong may include issues as to whether a non-signatory is bound by or may enforce the arbitration agreement. See In re Rubiola, 334 S.W.3d 220, 223-24 (Tex. 2011). Though Carter, in his individual capacity, is a non-signatory, we presume, without deciding, that Carter may enforce arbitration of the Carter Dispute under the arbitration provisions of the Note and First Modification.
[2] boldface added
[3] emphasis added
[4] emphasis added

STATEMENT OF THE CASE, PER APPELLANT

PRAYER FOR RELIEF REJECTED 

Gregory v. Bank of America - Homeowners win appeal in suit against BANA over shoddy home equity loan foreclosure process

Gregory v. Bank of America, NA, No. 04-16-00435-CV 

(Tex.App.- San Antonio [4th Dist.] Jun. 14, 2017) 

Texas appeals court finds evidence that Bank of America failed to credit customers' payments in home equity loan foreclosure case, failed to adhere to proper procedure in issuing acceleration and cure letter, and overstated amount needed to cure default. Reverses summary judgment granted in Bank of America's favor and sends homeowners' breach-of-contract and declaratory judgment claims against the bank back to the trial court for further proceedings. 

Everett W. GREGORY Jr. and Marcia Gregory, Appellants,
v.
BANK OF AMERICA, N.A. and Jesse R. Mendoza, Appellees.

No. 04-16-00435-CV.

Court of Appeals of Texas, Fourth District, San Antonio.

Delivered and Filed June 14, 2017.   

Appeal from the 37th Judicial District Court, Bexar County, Texas, Trial Court No. 2014 CI 05064, Honorable Cathy Stryker, Judge Presiding.

AFFIRMED IN PART, REVERSED AND REMANDED IN PART.

Sitting: Karen Angelini, Justice, Luz Elena D. Chapa, Justice, Irene Rios, Justice.

MEMORANDUM OPINION

LUZ ELENA D. CHAPA, Justice.

Everett W. Gregory Jr. and Marcia Gregory appeal the trial court's summary judgment on their claims against appellees Bank of America N.A. and Jesse R. Mendoza. The Gregorys argue they raised a fact issue regarding each element of their cause of action for breach of contract against Bank of America and their related claims for a declaratory judgment, permanent injunction, and attorney's fees. The Gregorys do not challenge the dismissal of their cause of action under the Deceptive Trade Practices Act (DTPA) or their claims against Mendoza. 

We affirm in part, reverse in part, and remand for further proceedings.

BACKGROUND

In 1999, the Gregorys refinanced a house they owned in San Antonio. The Gregorys signed a deed of trust and a promissory note to NationsBank for the amount of $85,900. The note required the Gregorys to make payments on the first day of each month for fifteen years. The deed of trust provided how the payments received by NationsBank must be applied to interest, principal, and other amounts due. If the Gregorys defaulted by failing to timely pay in full each month, the note authorized NationsBank to notify the Gregorys of the default. If the Gregorys failed to pay the overdue amount by a certain date after their receipt of the notice, NationsBank could accelerate the note and demand payment of the entire balance. Bank of America is NationsBank's successor in interest and became the holder of the note in April 1999.

The Gregorys filed for bankruptcy in 2008, but continued to make payments to Bank of America through the bankruptcy trustee. After the Gregorys filed for bankruptcy, Bank of America stopped accepting the Gregorys' automated payments. Bank of America's records show Bank of America received funds from the Gregorys in various months, but Bank of America reversed the payments instead of applying the payments to the Gregorys' account. In fall 2012, the Gregorys started making payments to Bank of America over the phone, but Bank of America also reversed some of those payments and did not apply them to the Gregorys' account. The Gregorys continued making payments in 2013 and 2014 by cashier's checks drawn on the Gregorys' account at Chase Bank. Bank of America accepted the Gregorys' cashier's checks throughout 2013 and the first several months of 2014. Bank of America credited some of the Gregorys' payments in 2013, but reversed other payments.

In July 2013, Bank of America sent the Gregorys a notice stating the Gregorys were in default. The notice lists the payments allegedly missed from March 2011 to July 2013. The notice stated the Gregorys had the right to cure the default by paying Bank of America a total of $38,555.20. The notice also stated that if the default was not cured "in the full amount" by August 20, 2013, "the mortgage payments will be accelerated with the full amount . . . becoming due and payable in full." The Gregorys attempted to tender payments, but Bank of America refused to accept the payments as curing the default because the amount paid was less than $38,555.20.

Bank of America requested that the bankruptcy court grant it relief from the automatic stay. After the request was granted, the Gregorys filed suit to enjoin Bank of America from foreclosing on the house. The trial court issued a preliminary injunction, finding there was a substantial probability that Bank of America would foreclose on the house "when there is no default sufficient to justify foreclosure." The Gregorys also sued Bank of America for breach of contract and violating the DTPA. The Gregorys sought damages, a declaratory judgment, a permanent injunction, and attorney's fees. The Gregorys named Jesse Mendoza, a Bank of America employee, as a defendant and alleged he defamed Marcia Gregory and was "verbally rough" with her, but Mendoza was never served.

Bank of America filed a traditional and no-evidence motion for summary judgment. Bank of America argued its evidence conclusively established it did not breach the deed of trust or the note. In support of its traditional ground, Bank of America relied on the loan documents, the default notice, Everett Gregory Jr.'s deposition, bankruptcy filings, and a "bankruptcy plan ledger." Although Bank of America also attached a business records affidavit to its motion, the affidavit does not explain the transaction codes contained in the bankruptcy plan ledger. Bank of America further argued the Gregorys had no evidence of any element of their cause of action for breach of contract. Bank of America's motion also challenged the Gregorys' cause of action under the DTPA, and requested summary judgment on the Gregorys' claims for a declaratory judgment, permanent injunction, and attorney's fees because the Gregorys did not have a valid, underlying cause of action to support the requested relief.

The Gregorys filed a response and produced an affidavit from Everett Gregory Jr., Bank of America's records showing the transaction history for the Gregorys' account, and copies of the fronts and backs of cashier's checks made payable to, and accepted and cashed by, Bank of America beginning in January 2013 through April 2014. The trial court granted Bank of America's motion and dismissed all of the Gregorys' claims. The Gregorys appeal.

STANDARD OF REVIEW

"We review a summary judgment de novo." City of San Antonio v. San Antonio Express-News, 47 S.W.3d 556, 561 (Tex. App.-San Antonio 2000, pet. denied). To prevail on a traditional motion for summary judgment, the movant must show "there is no genuine issue as to any material fact and the [movant] is entitled to judgment as a matter of law." TEX. R. CIV. P. 166a(c); accord Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). "When a party moves for a no-evidence summary judgment, the nonmovant must produce some evidence raising a genuine issue of material fact." Romo v. Tex. Dep't of Transp., 48 S.W.3d 265, 269 (Tex. App.-San Antonio 2001, no pet.) (citing Tex. R. Civ. P. 166a(i)). The nonmovant does not have the burden to marshal its evidence, but it must produce some evidence that raises a fact issue on the challenged element. See id. We take as true all evidence favorable to the nonmovant, resolve all conflicts in the evidence in the non-movants' favor, and "indulge every reasonable inference and resolve any doubts in the nonmovant's favor." Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); see City of San Antonio, 47 S.W.3d at 561.

DTPA & CLAIMS AGAINST MENDOZA

The Gregorys do not argue the trial court erred by rendering summary judgment on their DTPA cause of action or on their claims against Mendoza. We must refrain from deciding cases on issues not raised by the parties. See W. Steel Co. v. Altenburg, 206 S.W.3d 121, 124 (Tex. 2006) (per curiam). We therefore affirm the trial court's judgment as to the Gregorys' DTPA cause of action and their claims against Mendoza.

BREACH OF CONTRACT

Bank of America raised several grounds for summary judgment on the Gregorys' cause of action for breach of contract. Because the trial court did not specify the grounds for granting summary judgment, we must affirm if any grounds advanced in Bank of America's motion are meritorious. See FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). Bank of America argued in its summary judgment motion that its evidence conclusively established it did not breach the deed of trust or the note and the Gregorys have no evidence of any element of their cause of action for breach of contract. The elements of breach of contract are: "(1) a valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) the plaintiff was damaged as a result of the breach." Richter v. Wagner Oil Co., 90 S.W.3d 890, 898 (Tex. App.-San Antonio 2002, no pet.). The Gregorys argue they raised a fact issue as to each element of their breach of contract claim and established Bank of America is not entitled to judgment as a matter of law.

A. Valid Contract

The covenants in a deed of trust and a promissory note are contractual. See Williams v. Durst's Adm'x, 35 Tex. 421, 423 (1871); Jim Maddox Props., LLC v. WEM Equity Capital Invs., Ltd., 446 S.W.3d 126, 132 (Tex. App.-Houston [1st Dist.] 2014, no pet.). The parties agreed to the covenants contained in the deed of trust and the promissory note in 2009, and the Gregorys allege they are suing Bank of America for breaching those agreements. Bank of America does not argue on appeal why the deed of trust or the note is not a valid contract. We hold Bank of America's no-evidence ground as to the "valid contract" element of the Gregorys' cause of action does not support the trial court's summary judgment.

B. Performance or Tendered Performance

A plaintiff alleging a breach of contract must show it performed or tendered performance under the contract. Richter, 90 S.W.3d at 898. "A tender is an unconditional offer by a debtor to pay another a sum not less in amount than that due on a specified debt." Jensen v. Covington, 234 S.W.3d 198, 206 (Tex. App.-Waco 2007, pet. denied). "Prevention of performance by one party excuses performance by the other party, both of conditions precedent to performance and of promise." Dorsett v. Cross, 106 S.W.3d 213, 217 (Tex. App.-Houston [1st Dist.] 2003, pet. denied). "When the obligation of a party to a contract depends upon a certain condition's being performed, and the fulfillment of the condition is prevented by the act of the other party, the condition is considered fulfilled." Id.; see Jensen, 234 S.W.3d at 206 ("[A] formal tender is excused where the creditor has indicated he is unwilling to accept what is due in discharge of the debt.").

Bank of America did not challenge this element in its traditional motion for summary judgment or argue the evidence conclusively establishes the Gregorys failed to perform or tender performance. Instead, Bank of America asserted the Gregorys had no evidence showing they performed or tendered performance. Bank of America also argues the Gregorys did not perform because they missed several payments and failed to pay $38,555.20 to cure the default. The promissory note required the Gregorys to make monthly payments at a specified NationsBank location in San Antonio "or at a different place if required by the Note Holder." Bank of America became the note holder on April 1, 1999, when the Gregorys' first payment was due.

Everett Gregory Jr. swore in his affidavit there were arrearages on the note, but the arrearages were caused by Bank of America's breach of the deed of trust and the note. Everett further swore he made "automated payments" to Bank of America, but starting in early 2011, "Bank of America through their transactional errors or other mistake stopped taking my automated payments." He also swore he always had sufficient funds for the automated payments and "was very adamant and diligent about [his] mortgage." Everett further swore Bank of America failed to apply payments he made.

It is reasonable to infer from Bank of America's acceptance of the Gregorys' automated payments that the parties arranged for the Gregorys to make automated payments to satisfy the Gregorys' payment obligations under the note. Taking the Gregorys' evidence as true, Bank of America failed to accept and apply the Gregorys' payments that were paid in accordance with the note. We hold the Gregorys produced some evidence showing they tendered performance by offering to pay Bank of America the full amounts due, but Bank of America refused to accept the Gregorys' payments and thereby prevented the Gregorys from performing. See Jensen, 234 S.W.3d at 206; Dorsett, 106 S.W.3d at 217.

Everett further swore in his affidavit that starting in late 2012, after Bank of America stopped accepting the automated payments, he made payments to Bank of America over the phone. The Gregorys produced copies of the fronts and backs of cashier's checks made payable to—and accepted and cashed by—Bank of America beginning in January 2013 through April 2014. This evidence shows the Gregorys performed or tendered performance under the deed of trust and the note during these months. Taking the Gregorys' evidence as true, and drawing all reasonable inferences in their favor, the Gregorys produced some evidence raising a genuine issue of material fact with regard to whether the Gregorys performed, tendered performance, or were excused from performing.

C. Breach

In its motion for summary judgment, Bank of America argued the terms of the note regarding the Gregorys' monthly payments impose no obligations on Bank of America. It also argued it was not required to accept the Gregorys' attempt to cure the default because the amount the Gregorys tendered was less than the $38,555.20 amount stated in the default notice. On appeal, the Gregorys argue Bank of America breached the deed of trust and the note by failing to (1) accept and apply their payments; (2) comply with the requirements for accelerating the note; and (3) accept their attempt to cure the default. Bank of America argues the Gregorys did not raise the first two alleged breaches in their summary judgment response.

1. Sufficiency of the Gregorys' Summary Judgment Response

In the summary judgment context, we may consider only the issues expressly presented to the trial court in a written response as grounds for reversal. TEX. R. CIV. P. 166a(c); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677-78 (Tex. 1979). The "Arguments and Authorities" section of the Gregorys' written response contains the following subsection:

C. The defendant breached the contract.

28. The affidavit of Everett W. Gregory Jr. and Marcia Gregory establishes that he was not given credit for many payments he made and that amounts that were not owed were charged in the Notice to Cure that billed Gregory. This was both a breach of their duties to properly apply payments and the[ir] duty to send a correct default amount in a notice to cure. See id at 3,4,5. Also see Ex A Enclosure A and PL Ex C which show vastly different amounts necessary to cure the debt or for that matter retire the debt through a loan. [Bank of America] also refused to give him annual accountings that were contractual duties. See id at 3,4,5.

Although using other words, the Gregorys expressly argued Bank of America breached its contractual obligations by failing to accept and apply their payments and follow the requirements for accelerating the note. We may therefore consider these issues as grounds for reversal. See TEX. R. CIV. P. 166a(c); City of Houston, 589 S.W.2d at 677-78.

2. Failure to Accept and Apply the Gregorys' Payments

The Gregorys argue Bank of America breached several provisions of the deed of trust and the note by failing to accept and apply their payments. Whether a defendant's conduct constitutes a breach of contract is a question of law for the court. Schuhardt Consulting Profit Sharing Plan v. Double Knobs Mountain Ranch, Inc., 468 S.W.3d 557, 573-74 (Tex. App.-San Antonio 2014, pet. denied). We construe a contract to "give effect to the parties' intentions as expressed in the writing itself." El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 805 (Tex. 2012). We consider the entire contract to harmonize and give effect to all the provisions so that none will be rendered meaningless. Id. Absent any indication that the parties intended contractual terms to have a technical or special meaning, we give the contract's terms their plain, ordinary, and generally accepted meanings. See id. at 808.

We begin by examining the contract's express language. See id. at 805-06. Paragraph 3 of the deed of trust provides:

3. Application of Payments. Unless applicable law provides otherwise, all payments received by Lender [for payment of principal, interest, taxes, insurance, late charges, and prepayments] shall be applied: first, to any prepayment charges due under the Note; second, to amounts payable [for taxes and insurance]; third, to interest due; fourth, to principal due; and last, to any late charges due under the Note.

Paragraph 3(A) of the note provides:

3. PAYMENTS

(A) Time and Place of Payments

I will pay principal and interest by making payments every month.

I will make my monthly payments on the 1st day of each month beginning on April 1, 1999. I will make these payments every month until I have paid all of the principal and interest and any other charges described below that I may owe under this Note. My monthly payments will be applied to interest before principal. If, on March 01, 2014, I still owe amounts under this Note, I will pay those amounts in full on that date, which is called the "maturity date."

I will make my monthly payments at [the NationsBank location] or at a different place if required by the Note Holder.

Bank of America argues these provisions impose obligations only on the Gregorys and suggest it was not required to accept the Gregorys' payments. We disagree. Although the plain language of the note's payment provisions expressly require the Gregorys to make payments, the Gregorys' tendered payments cannot be applied unless Bank of America accepts the payments. Paragraph 3 of the deed of trust requires how "payments received by Lender" must be applied. Considering the entire deed of trust and the note, the parties intended that if the Gregorys made payments according to the terms of the deed of trust and the note, then Bank of America was required to accept those payments and apply them as per paragraph 3 of the deed of trust.

The Gregorys produced evidence showing Bank of America breached the deed of trust and the note by not accepting their payments and not applying those payments as per paragraph 3 of the deed of trust. See Woods MFI, LLC v. PlainsCapital Bank, No. 14-15-00655-CV, 2016 WL 6465872, at *8-10 (Tex. App.-Houston [14th Dist.] Nov. 1, 2016, pet. filed) (mem. op.) (holding lender's acceptance of auto-debit from borrower's account, followed by its unexplained failure to continue accepting auto-debits, raised a fact issue as to the lender's breach of contract).^[1] Regarding Bank of America's traditional ground as to the breach element, we hold Bank of America did not conclusively establish it complied with the provisions of the deed of trust and the note. Regarding Bank of America's no-evidence ground, we hold the Gregorys produced some evidence raising a fact issue as to whether Bank of America breached provisions of the deed of trust and the note by not accepting and properly applying the Gregorys' payments.

3. Failure to Comply with Acceleration Requirements

"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). Because acceleration is such a harsh remedy, we strictly construe acceleration provisions against acceleration. Schuhardt Consulting, 468 S.W.3d at 569; Burns v. Stanton, 286 S.W.3d 657, 661 (Tex. App.-Texarkana 2009, pet. denied). Furthermore, a notice's failure to strictly comply with the acceleration requirements in a deed of trust may support a cause of action for breach of contract. See Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 140 (Tex. App.-Corpus Christi 2008, no pet.) (reversing summary judgment when lender's notice failed to comply with all requirements of an acceleration clause nearly identical to the one in this case). Paragraph 21 of the deed of trust contains requirements for accelerating the note:

NON-UNIFORM COVENANTS: Borrower and lender further covenant and agree as follows:

21. Acceleration; Remedies. Lender shall give notice to Borrower prior

to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under paragraph 17 [relating to the transfer of the property] unless applicable law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice will result in acceleration of the sums secured by this Security Instrument and sale of the Property. . . .

Paragraph 6 of the note provides:

6. BORROWER'S FAILURE TO PAY AS REQUIRED

(A) Late Charge for Overdue Payments

If the Note Holder has not received the full amount of any monthly payment by the end of fifteen (15) calendar days after the date it is due, I will pay a late charge to the Note Holder. The amount of the charge will be 4.00% of my overdue payment of principal and interest. I will pay this late charge promptly but only once on each late payment.

(B) Default

If I do not pay the full amount of each monthly payment on the date it is due, I will be in default.

(C) Notice of Default

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of principal which has not been paid and all the interest that I owe on that amount. That date must be at least 30 days after the date on which the notice is delivered or mailed to me.

In the trial court, Bank of America argued it complied with the deed of trust's and the note's acceleration provisions because it sent the Gregorys a notice listing all of the months the Gregorys failed to make payments and specified the default was $38,555.20.

Paragraph 21 of the deed of trust requires that "prior to acceleration," Bank of America "shall give notice" to the Gregorys and the notice "shall specify: (a) the default; [and] (b) the action required to cure the default." The note provides a default occurs if the Gregorys "do not pay the full amount of each monthly payment on the date it is due." Under the plain meaning of this provision, a separate default occurs in each and every month the Gregorys do not pay the full amount of each monthly payment. Furthermore, the notice provisions use the terms "specify," "the," and "required" to refer to a particular default and a particular action that must be taken to cure the particular default. See In re W.B.B., No. 05-16-00454-CV, 2017 WL 511208, at *5 (Tex. App.-Dallas Feb. 8, 2017, no. pet.) (mem. op.) (distinguishing "a," which refers to an unspecified subject, from "the," which is used to refer to particular subject). We construe paragraph 21 as requiring the notice to correctly identify (1) the particular month or months the Gregorys did not make a payment of the full amount due; and (2) the particular amount the Gregorys owe and must pay to cure the default. If the notice specifies an inaccurate default or that the Gregorys are required to pay more than the actual amount owed, then the notice has not specified "the default" or specified "the action required to cure the default." See El Paso Field Servs., 389 S.W.3d at 805.

Bank of America's notice lists twenty nine months (from March 2011 to July 2013) for which the Gregorys supposedly did not make payments. Bank of America also relies on the bankruptcy plan ledger and the notice of default to establish the Gregorys failed to make payments for those months. The Gregorys produced evidence that Bank of America breached provisions of the deed of trust and the note by not accepting and applying the Gregorys' payments. The Gregorys also produced evidence showing they made payments over the phone in late 2012, and Bank of America accepted those payments. They further produced copies of cashier's checks showing they made payments to Bank of America—and that Bank of America accepted those checks—from January 2013 through July 2013 and thereafter.

If the Gregorys' summary judgment evidence is true, then the bankruptcy plan ledger does not correctly identify the months for which the Gregorys did not pay and the notice of default fails to correctly identify the specific default and action required to cure the default. Additionally, when viewed in a light most favorable to the Gregorys, the ledger appears to confirm Bank of America did not accept and apply the Gregorys' payments as the deed of trust requires. The ledger contains several entries appearing to show the Gregorys made numerous payments that Bank of America received, but Bank of America reversed the payments instead of applying them to the Gregorys' account. The Gregorys' payments appear to be coded on the ledger as "Funds Received," but several of those payments were reversed. The bankruptcy plan ledger's code for these reversed payments is "MISC REVERSAL," "PAYMENT REVERSAL," or "FUND REVERSAL." The reversals total over $28,000 of the payments received. Bank of America's evidence does not explain the transaction codes and entries on the bankruptcy plan ledger or explain why Bank of America reversed over $28,000 of the Gregorys' payments. Finally, the bankruptcy plan ledger states, "This ledger is for bankruptcy purposes only," and notes Bank of America keeps a separate record "that tracks payments according to the terms of the loan documents."

Taking the Gregorys' evidence as true, and drawing all reasonable inferences in their favor, Bank of America's notice does not correctly identify (1) the particular months the Gregorys failed to make payments (or failed to tender performance), and (2) the particular amount the Gregorys owe under the note and must pay to cure the default. Consequently, the Gregorys raised a fact issue with regard to whether Bank of America breached the deed of trust because the notice of default did not satisfy the requirements for accelerating the note. See Sauceda, 268 S.W.3d at 140.

4. Conclusion as to the Breach Element

We conclude the Gregorys raised a fact issue regarding Bank of America's breach of the deed of trust and the note by failing to accept and properly apply the Gregorys' payments. We further conclude the Gregorys raised a fact issue regarding Bank of America's breach the deed of trust because the default notice failed to correctly identify the default and the action required to cure the default.^[2] Thus, Bank of America's traditional and no-evidence grounds regarding the breach element do not support the trial court's summary judgment.

D. Damages

A plaintiff suing for breach of contract must show damages or a loss resulting from the defendant's breach. Richter, 90 S.W.3d at 898. A plaintiff may sue for breach of contract if the plaintiff suffers a loss of credit reputation, is denied a loan, or is charged a higher interest rate as a result of the defendant's breach. See St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co., 974 S.W.2d 51, 53 (Tex. 1998) (per curiam) (citing LAWRENCE A. CUNNINGHAM, 5 CORBIN ON CONTRACTS § 1007 (Supp. 1998)). Everett's affidavit lists numerous ways the Gregorys have suffered loss and been injured as a result of Bank of America breaching the deed of trust and the note, including their loss of credit reputation, being denied a loan from Chase Bank, and being charged at higher interest rates than they would otherwise be charged. Bank of America does not argue on appeal why the Gregorys failed to raise a fact issue regarding this element. We hold Bank of America's no-evidence ground regarding the element of damages does not support the trial court's summary judgment.

E. Conclusion as to Breach of Contract

Bank of America did not conclusively establish it complied with provisions of the deed of trust and the note regarding the application of the Gregorys' payments and acceleration. Furthermore, the Gregorys produced evidence raising a genuine issue of material fact as to all elements of their cause of action for breach of contract. We therefore hold the trial court erred by rendering summary judgment on the Gregorys' cause of action for breach of contract.

THE GREGORYS' CLAIMS FOR A DECLARATORY JUDGMENT, PERMANENT INJUNCTION & ATTORNEY'S FEES

Bank of America moved for summary judgment on the Gregorys' claims for a declaratory judgment, permanent injunction, and attorney's fees. Bank of America argued these claims fail as a matter of law because they are all based on the Gregorys' causes of action for breach of contract and violations of the DTPA, which Bank of America argued failed as a matter of law. The Gregorys contend they are entitled to a remand as to these claims because they raised a fact issue regarding all elements of their cause of action for breach of contract. Because we hold the trial court erred by rendering summary judgment on the Gregorys' cause of action for breach of contract, the Gregorys' claims for a declaratory judgment, permanent injunction, and attorney's fees do not fail as a matter of law.

Regarding the Gregorys' declaratory judgment claim, Bank of America further argued in its summary judgment motion the Gregorys had no evidence of a justiciable controversy to be resolved by the declaration sought. A declaratory judgment is appropriate only if (1) a justiciable controversy exists as to the rights and status of the parties; and (2) the controversy will be resolved by the declaration sought. See Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995). The Gregorys produced evidence showing Bank of America is asserting they owe $38,555.20. They also produced evidence showing they owe substantially less than $38,555.20. According to their live pleading, the Gregorys seek "a declaratory judgment as to a tabulation of the amount owed." The Gregorys produced some evidence of a justiciable controversy to be resolved by the declaration sought. See id. Thus, Bank of America's no-evidence grounds do not support the trial court's summary judgment as to the Gregorys' request for a declaratory judgment. We therefore hold the trial court erred by rendering summary judgment on the Gregorys' claims for a declaratory judgment, permanent injunction, and attorney's fees.

CONCLUSION

We affirm the trial court's judgment as to the Gregorys' claims against Mendoza and their DTPA cause of action. We reverse the remainder of the trial court's judgment and remand for further proceedings.

[1] The Woods MFI court held that depositing money into an account "without [the lender] having any authorization to debit the account" did not conclusively establish a tender for purposes of the plaintiffs' cross-motion for summary judgment. See 2016 WL 6465872, at *7. However, the court held the evidence raised an inference as to the existence of auto-debit arrangement, which supported the borrower-guarantor's breach of contract claim against the lender. See id. at *8-10.

[2] Because we hold there is a fact issue as to Bank of America's breach, we need not address whether Bank of America further breached the deed of trust or the note by refusing to accept the Gregorys' attempt to cure. See TEX. R. APP. P. 47.1. According to Bank of America's brief and the default notice, Bank of America refused to accept the Gregorys' attempt to cure the default because the amount the Gregorys tendered was less than $38,555.20. There is a fact issue as to whether this is the actual amount owed under the note, and it is reasonable to infer that Bank of America would not have accepted any amount less than $38,555.20, even if the amount tendered was the actual amount owed under the note.

WESTLAW CASE CITE: Gregory v. Bank of Am., N.A., No. 04-16-00435-CV, 2017 WL 2561561 (Tex. App.-San Antonio June 14, 2017, no pet.) (mem. op.).