UMLIC VP LLC v. T&M Sales and Environmental Systems9/15/2005
Before Justices Hinojosa, Rodriguez, and Garza
Appellant, UMLIC VP LLC ("UMLIC"), sued appellees, T&M Sales and Environmental Systems, Inc. ("T&M"), Tomas and Perla Lozano, and Walter M. Ezell, to recover the overdue balance on a note and guaranty agreement. Appellees asserted the affirmative defense of wrongful foreclosure and counter-claimed for breach of contract and negligence. After a jury found in favor of appellees, the trial court signed a judgment against UMLIC. UMLIC challenges the trial court's judgment by twenty-eight issues. We reverse and render in part. The remaining part of the trial court's judgment is reformed and, as reformed, is affirmed.
A. FACTUAL BACKGROUND
On July 19, 1989, T&M obtained a business loan from the Small Business Administration ("SBA") in the amount of $150,000. Under the terms of the promissory note, T&M agreed to pay $1,992 per month for ten years, with a balloon payment for the unpaid principal being due and payable at the end of the ten-year period. The note was secured by a deed of trust on the land on which T&M was located, a security agreement, and a guaranty executed by the Lozanos and Ezell in their personal capacities. The note matured by its own terms on July 19, 1999. The last payment T&M made on the note was on November 19, 1998. The parties stipulated that as of that date, the remaining principal balance was $49,602.24.
On October 15, 1999, UMLIC purchased the note, deed of trust, security agreement, and guaranty from the SBA. In January 2000, Tomas Lozano contacted UMLIC and offered to continue making payments on the note in the amount of $1,000 per month. UMLIC rejected the offer and decided to pursue foreclosure. UMLIC never informed appellees of its intention to foreclose.
In preparation of the contemplated foreclosure, UMLIC conducted a title search on the property secured by the deed of trust. During the search, UMLIC discovered that local taxing authorities had foreclosed on the property because appellees had failed to pay property taxes. On February 1, 2000, the sheriff sold the property at a public auction to Pablo Gonzalez for $10,000. On June 6, 2000, UMLIC redeemed the property from Gonzalez for $12,500, the amount Gonzalez had paid for the property plus the statutory twenty-five percent penalty. Gonzalez then executed a special warranty deed in favor of UMLIC.
On July 24, 2000, UMLIC sent T&M a notice to vacate the property.
On August 25, 2000, UMLIC offered to let T&M redeem the property, on the condition that T&M also pay the balance due on the note. On October 9, 2000, UMLIC filed a petition for forcible detainer in justice court, seeking possession of the property. By letter dated October 20, 2000, T&M tendered a cashier's check in the amount of $12,500 to UMLIC in an attempt to redeem the property, but T&M made no attempt to pay the note. UMLIC rejected the offer and returned the check. On November 3, 2000, the justice court granted UMLIC possession of the property.
On February 16, 2001, UMLIC made demand for payment on the note and guaranty, but it received no response. On March 6, 2002, UMLIC sold the property to LSS Investments, Inc. for $66,000. UMLIC did not credit the amount received at the sale to the balance due on the note. On June 11, 2001, UMLIC filed the underlying suit to collect the unpaid principal balance and interest. T&M filed a counterclaim, alleging both tort and contract violations.
The jury found against UMLIC on both the note and the guaranty. The jury further found in favor of T&M and the Lozanos on their counterclaims of wrongful foreclosure,
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