Legal Document: LBC WESTOVER HILLS PROPERTIES LLC vs MITCHELL W. WARREN, ET AL

On October 30, 2019 a PTLTF' 1ST AMD PET (NO+) was filed involving a dispute between and for CONTRACT, OTHER DEBT/CONTRACT in the District Court of Tarrant County.

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236-312952-19 FILED
TARRANT COUNTY
2/11/2020 5:40 PM
Cause No. 236-312952-19 THOMAS A. WILDER
DISTRICT CLERK

LBC WESTOVER HILLS § IN THE DISTRICT COURT
PROPERTIES LLC, §
§
Plaintiff, §
§
v. § TARRANT COUNTY, TEXAS
§
MITCHELL W. WARREN, §
MELVIN W. WARREN, JR., and §
TLG FAMILY MANAGEMENT, LLC, §
§
Defendants. § 236th JUDICIAL DISTRICT

PLAINTIFF’S FIRST AMENDED PETITION

LBC Westover Hills Properties LLC files this suit to recover outstanding debts. Westover Hills

Memory Care, LLC borrowed more than $10,000,000 to construct a memory care facility in Bexar

County, Texas. Melvin W. Warren, Jr. and his son, Mitchell W. Warren, guaranteed that loan. Westover

Hills Memory Care later defaulted on its loan after borrowing an additional $289,000 to pay for past

due property taxes. Melvin W. Warren, Jr., Mitchell W. Warren, and TLG Family Management, LLC

(together, “Guarantors”) guaranteed that loan.

LBC Westover Hills Properties now seeks to recover the amounts due under the loans because

Guarantors refuse to honor their respective guaranties.

DISCOVERY CONTROL PLAN

1. Pursuant to Texas Rule of Civil Procedure 190.3, LBC Westover Hills Properties

intends that discovery be conducted under Level 2.

STATEMENT OF MONETARY RELIEF

2. Pursuant to Texas Rule of Civil Procedure 47(c)(4), LBC Westover Hills Properties

seeks monetary relief of over $200,000 but not more than $1,000,000, including damages of any kind,

penalties, costs, expenses, pre-judgment interest, and attorneys’ fees.

LBC’S FIRST AMENDED PETITION PAGE 1
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PARTIES & SERVICE

3. LBC Westover Hills Properties LLC (“LBC”) is a Delaware limited liability company

organized and existing under the laws of the State of Delaware with its principal place of business in

Stillwater, Minnesota.

4. Mitchell W. Warren is an individual residing in Dallas County, Texas. Mitchell W.

Warren has appeared in this suit.

5. Melvin W. Warren, Jr. is an individual residing in Florida. Melvin W. Warren, Jr. has

appeared in this suit.

6. TLG Family Management, LLC (“TLG”) is a Texas limited liability company with its

principal place of business at 545 East John Carpenter Freeway, Suite 500, Irving, Texas 75062, in

Dallas County, Texas. TLG has appeared in this suit.

JURISDICTION & VENUE

7. The damages that LBC seeks are within the jurisdictional limits of the Court.

8. This Court has subject matter jurisdiction over this matter pursuant to Texas

Government Code Section 24.007.

9. Venue isproper in this County pursuant to Texas Civil Practice & Remedies Code

Section 15.020(a) and (b) because Guarantors agreed to venue in Tarrant County, Texas.

FACTUAL ALLEGATIONS

Borrower and Guarantors Execute the Notes & Guaranties

10. On July 16, 2014, LBC’s predecessor in interest, Southside Bank, successor in interest

to OmniAmerican Bank, made a construction loan to Westover Hills Memory Care, LLC

(“Borrower”) evidenced by a Promissory Note in the original principal amount of $10,261,217 (“First

Note”). The First Note constitutes a valid and legally enforceable contract between LBC and

Borrower. A true and correct copy of the First Note is attached as Exhibit 1.

LBC’S FIRST AMENDED PETITION PAGE 2
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11. On the same day, Borrower and OmniAmerican entered into a Construction Loan

Agreement that established the terms and conditions of Borrower’s loan (together with any

amendments, “Loan Agreement”). A true and correct copy of the Loan Agreement is attached as

Exhibit 2.

12. The First Note was secured by a Deed of Trust, Security Agreement, Financing

Statement, and Assignment of Rents (“First Lien Deed of Trust”) dated July 18, 2014. A true and

correct copy of the First Lien Deed of Trust is attached as Exhibit 3. The First Lien Deed of Trust

created a lien on, among other things, real property in Bexar County, Texas, as described in Exhibit

A to the First Lien Deed of Trust (“Property”).

13. On April 19, 2016, Borrower and Southside Bank entered into the First Amendment

to Construction Loan Agreement (“First Amendment”) that amended the Loan Agreement to limit

Borrower’s ability to “redeem, retire or otherwise acquire, directly or indirectly, any of itsmember

interest or other equity interest, (b) declare or pay any dividend, or (c) make any other distribution or

contribution of any assets, properties, cash, rights, obligations or securities.” A true and correct copy

of the First Amendment is attached as Exhibit 4.

14. In October 2017, Borrower was in default under the Loan Agreement and First Note

for failing to perform certain financial covenants.

15. On October 19, 2017, Borrower and Southside Bank entered into a Forbearance

Agreement and Second Amendment to Construction Loan Agreement (“Forbearance Agreement”)

in which Southside Bank agreed to forbear from exercising certain rights and remedies and to loan

Borrower an additional $289,906.39 to pay past due 2016 property taxes owing on the Property. A

true and correct copy of the Forbearance Agreement is attached as Exhibit 5.

16. The new loan was evidenced by a second Promissory Note in the original principal

amount of $289,906.39 (“Second Note”) dated October 19, 2017. The Second Note constitutes a valid

LBC’S FIRST AMENDED PETITION PAGE 3
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and legally enforceable contract between LBC and Borrower. A true and correct copy of the Second

Note is attached hereto as Exhibit 6.

17. The Second Note was secured by a Second Lien Deed of Trust, Security Agreement,

Financing Statement, and Assignment of Rents (“Second Lien Deed of Trust”) dated October 19,

2017. A true and correct copy of the Second Lien Deed of Trust is attached as Exhibit 7.

18. To induce Southside Bank to agree to the Forbearance Agreement, Melvin W. Warren,

Jr. and Mitchell W. Warren (together, “Warrens”) each executed a Limited Guaranty (“First Loan

Guaranties”) securing a portion of the indebtedness owed under the First Note. A true and correct

copy of the First Loan Guaranties are attached as Exhibits 8 and 9.

19. The First Loan Guaranties expressly made the Warrens liable for a limited amount of

Borrower’s obligations under the First Note. The First Loan Guaranties specifically state:

2. Payment. Guarantor is a beneficial owner and/or an Affiliate
of Borrower and the extension of credit to Borrower is a substantial
and direct benefit to Guarantor. As an inducement to Bank to extend
or continue to extend credit and other financial accommodations to
Borrower, Guarantor, for value received, subject to the terms and
conditions contained herein, does hereby unconditionally and
absolutely guarantee the prompt and full payment and
performance of the Guaranteed Indebtedness when due or
declared to be due and at all times thereafter; provided, however,
notwithstanding any provisions to the contrary contained this
Guaranty, Guarantor’s obligation hereunder for the principal and
accrued interest portion of the Guaranteed Indebtedness shall be
limited to $500,000.00.

20. The First Loan Guaranties also state:

Notwithstanding the foregoing provisions of this paragraph,
Guarantor shall be fully liable to Bank to the same extent that
Guarantor would be liable absent the foregoing provisions of this
paragraph .. . (d) for failure to pay taxes, assessments or other
charges which can create liens on any portion of the Mortgaged
Property . . . that are payable or applicable prior to any
foreclosure under the Deed of Trust . . . (to the full extent of any
such taxes, assessments or other charges) (g) for the reasonable
attorneys’ fees, collection costs and court costs incurred by Bank as a
result of any Event of Default by Borrower or Guarantor hereunder

LBC’S FIRST AMENDED PETITION PAGE 4
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or under any of the other Loan Documents. Guarantor shall promptly
pay the amount due hereon to Bank without notice or demand, of any
kind or nature . . .

21. While the First Loan Guaranties may be limited in terms of the obligations they secure,

they are otherwise “an absolute, continuing and unconditional guaranty of payment and not of

collection.”

22. To further induce Southside Bank to agree to the Forbearance Agreement and provide

additional credit to Borrower under the Second Note, each Guarantor also executed an Unlimited

Guaranty (“Second Loan Guaranties,” together with First Loan Guaranties, “Guaranties”) that

“unconditionally and absolutely guarantee[d] the prompt and full payment and performance of the

Guaranteed Indebtedness when due or declared to be due and at all times thereafter.” True and correct

copies of the Second Loan Guaranties are attached as Exhibits 10, 11, and 12.

23. Among other things, the Second Loan Guaranties expressly make each Guarantor

liable for the full amount of Borrower’s obligations under the Second Note. Specifically, each of the

Second Loan Guaranties state:

2. Payment. Guarantor is a beneficial owner of Borrower and the
extension of credit to Borrower is a substantial and direct benefit to
Guarantor. As an inducement to Bank to extend or continue to extend
credit and other financial accommodations to Borrower, Guarantor,
for value received, subject to the terms and conditions contained
herein, does hereby unconditionally and absolutely guarantee
the prompt and full payment and performance of the Guaranteed
Indebtedness when due or declared to be due and at all times
thereafter. Guarantor shall promptly pay the amount due hereon to
Bank without notice or demand, of any kind or nature . . . .

24. Importantly, the First Loan Guaranties and the Second Loan Guaranties allow LBC,

as Southside Bank’s assignee and successor in interest, to bring an action against Guarantors without

first pursuing its rights or remedies against Borrower:

12. Actions against Guarantor. In the event of a default in the
payment or performance of all or any part of the Guaranteed
Indebtedness, or if an Event of Default occurs under any Loan

LBC’S FIRST AMENDED PETITION PAGE 5
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Document, when all or any portion of the Guaranteed Indebtedness
become due, whether by its terms, by acceleration or otherwise,
Guarantor shall, upon demand, promptly pay the amount due by
Guarantor hereunder to Bank . . . One or more successive or
concurrent actions may be brought against Guarantor, either in
the same action in which Borrower is sued or in separate actions,
as often as Bank deems advisable. The exercise by Bank of any
right or remedy under this Guaranty or under any other
agreement or instrument, at law, in equity or otherwise, shall not
preclude concurrent or subsequent exercise of any other right or
remedy. . . .

25. The First Loan Guaranties and the Second Loan Guaranties also contain waiver

provisions, including specific waivers of the Texas’s anti-deficiency statute. For instance, each guaranty

states:

6. Consent and Waiver.

(a) Except as otherwise provided herein or in another
Loan Document, Guarantor waives (i) promptness, diligence and
notice of acceptance of this Guaranty and notice of the incurring of
any obligation, indebtedness or liability to which this Guaranty applies
or may apply, and, except as expressly required by this Guaranty or the
other Loan Documents, waives presentment for payment, notice of
nonpayment, protest, demand, notice of protest, notice of intent
to accelerate, notice of acceleration, notice of dishonor, diligence
in enforcement and indulgences of every kind, and (ii) the taking
of any other action by Bank, including without limitation, giving
any notice of default or any other notice to, or making any
demand on, Borrower, or any other guarantor of all or any part of
the Guaranteed Indebtedness or any other party.

(b) Guarantor waives any rights Guarantor has under, or
any requirements imposed by, (i) Chapter 43 of the Texas Civil Practice
and Remedies Code, as amended, (ii) Section 17.001 of the Texas Civil
Practice and Remedies Code, as amended, (iii)Rule 31 of the Texas
Rules of Civil Procedure, as amended, and (iv) any and all rights
under Section 51.005 of the Texas Property Code.

***

(d) Should Bank seek to enforce the obligations of
Guarantor hereunder by action in any court or otherwise,
Guarantor waives any requirement, substantive or procedural,
that (i) Bank first enforce any rights or remedies against
Borrower or any other person or entity liable to Bank for all or

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any part of the Guaranteed Indebtedness, including without
limitation that a judgment first be rendered against Borrower or any
other person or entity, or that Borrower or any other person or entity
should be joined in such cause, or (ii) Bank shall first enforce its rights
against any collateral which shall ever have been given to secure all or
any part of the Guaranteed Indebtedness or this Guaranty. Such waiver
shall be without prejudice to Bank’s right, at its option, to proceed
against Borrower or any other person or entity, whether by separate
action or by joinder.

(e) In addition to any other waivers, agreement and
covenants of Guarantor set forth herein, Guarantor hereby
further waives and releases all claims, causes of action, defenses
and offsets for any act or omission of Bank, its directors, officers,
employees, representatives or agents in connection with Bank’s
administration of the Guaranteed Indebtedness . . .

26. Effective September 20, 2018, LBC’s predecessor in interest—Southside Bank—and

Borrower and Guarantors entered into the Third Amendment to Construction Loan Agreement

(“Third Amendment”) relating to the planned sale or refinancing of certain properties owned, directly

or indirectly, by The LaSalle Group, Inc. (“LaSalle”) for capital contributions to Borrower. A true and

correct copy of the Third Amendment is attached as Exhibit 13. The following Section 4.29 was

added to the Loan Agreement:

4.29 2018 Property Taxes. If the October 2018 Liquidity Event
occurs, then by no later than November 8, 2018, Borrower shall
deposit into the Escrow Account funds in an amount which the Bank
determines in its reasonable discretion to be sufficient to satisfy fifty
percent (50%) of the estimated 2018 Taxes.

27. The Third Amendment also amended the Loan Agreement to add Section 6.20 that

provided:

6.20 2018 Property Taxes. Any failure to timely and fully fulfill the
obligations set forth in Section 4.29 of this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement
or the Loan Documents, any failure by Borrower to strictly comply
with Section 4.29 of this Agreement shall constitute an
immediate Event of Default under this Agreement and under all
of the Loan Documents, without any requirement that Bank
provide Borrower or Guarantors with notice of such failure or any
opportunity cure such failure.

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28. Borrower subsequently defaulted under the Loan Agreement by, among other things,

failing to pay property taxes when due and payable.

Borrower and Guarantors Default on their Obligations

29. On or about February 12, 2019, Borrower stopped paying on the First Note and

Second Note—defaulting under each Note.

30. Borrower’s failure to make the required payments for both the First Note and Second

Note triggered each Guarantors’ obligations under the Guaranties.

31. Despite their obligations under the loan documents, Borrower and Guarantors have

failed and refused to make the required payments.

LBC Acquires the First Note and Second Note

32. On March 27, 2019, Southside Bank assigned to LBC1 Trust, a Delaware statutory

trust, the First Lien Deed of Trust and Second Lien Deed of Trust securing the First Note and Second

Note (collectively, “Assignments to Trust”). True and correct copies of Assignments to Trust are

attached as Exhibit 14.

33. LBC1 Trust subsequently assigned the First Lien Deed of Trust and Second Lien Deed

of Trust on August 28, 2019 to LBC (“Assignments to LBC”). True and correct copies of the

Assignments to LBC are attached as Exhibit 15.

34. As a result, LBC is the owner and holder of the loan documents.

Borrower Secures a Tax Loan and LBC Pays the Outstanding Tax Lien

35. In April 2019, Borrower obtained a tax loan from successor in interest Caz Creek TX,

LLC (“Caz Creek”) for the 2017 and 2018 property taxes owed on the Property (“Tax Loan”).

36. In connection with the Tax Loan, Borrower executed a Tax Lien Contract in the

original principal amount of $184,062.17 that was secured by a tax lien against the Property.

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37. On or about August 23, 2019, after receiving a payoff statement, LBC’s loan servicer,

Willow River, LLC (“Willow River”), satisfied the Tax Loan to Caz Creek on LBC’s behalf by paying

the principal balance of $184,062.17, plus accrued interest and late fees, for a total of $188,042.15. A

true and correct copy of the Tax Loan payoff and payment receipts are attached as Exhibit 16.

38. Shortly thereafter, Willow River received a refund in the amount of $2,080.48 due to

its over payment of the Tax Loan.

39. As a result, LBC incurred additional damages of $185,961.67.

LBC Demands Payment and Post the Property for Foreclosure

40. On September 9, 2019, LBC served a Notice of Default and Acceleration on Borrower

and Guarantors (“Demand”). The Demand advised Borrower that LBC had accelerated to maturity

the indebtedness owed under the First Note and Second Note and demanded payment of the

accelerated debt due and owing. A true and correct copy of the Demand is attached as Exhibit 17.

41. Despite their obligations under the loan documents and demand for payment,

Borrower and Guarantors failed to cure the default.

42. In accordance with Section 51.002 of the Texas Property Code, on September 9, 2019,

LBC properly filed and posted a Notice of Substitute Trustee’s Sale providing at least a 21-days’ notice

to Borrower of LBC’s intention to foreclose the First Lien Deed of Trust on the Property on October

1, 2019 (“Notice of Sale”). A true and correct copy of the Notice of Sale is attached as Exhibit 18.

The Notice of Sale was served on Borrower by United States certified mail, return receipt.

43. In the Notice of Sale, LBC appointed a substitute trustee to conduct the sale.

LBC Forecloses the Property and Credits the Foreclosure Sale Amount

44. On October 1, 2019, in accordance with the terms of the First Lien Deed of Trust,

the substitute trustee, at LBC’s direction, conducted a non-judicial sale of the Property to the highest

bidder for cash (“Sale”). Pursuant to the terms of the First Lien Deed of Trust and in compliance with

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the applicable Texas laws, LBC conducted the Sale at the date, time, and place stated in the Notice of

Sale.

45. At the Sale, LBC entered a credit bid of $3,500,000 for the Property, which was the

highest and best bid.

46. Title to the Property was subsequently transferred to LBC pursuant to a Trustee’s

Deed with Bill of Sale (“Trustee’s Deed”) as recorded in the Official Public Records of Bexar County,

Texas as Instrument No. 20190197057 on October 1, 2019. A true and correct copy of the Trustee’s

Deed is attached as Exhibit 19.

47. After recording the Trustee’s Deed, LBC applied full credit of the Sale amount to the

outstanding loan balance. After the application of the appropriate credit, a deficiency of $7,056,287.37

remains due and owing on the First Note as of February 6, 2020.

48. This amount includes $6,495,438.06 in unpaid principal and $560,849.31 in accrued

but unpaid interest. Interest continues to accrue on the unpaid principal balance of First Note at the

per diem rate of $888.99 per day as specified in the terms of the First Note. A true and correct copy

of the payoff statement for the First Note is attached as Exhibit 20.

49. A deficiency balance of $302,181.45 remains due and owing on Second Note as of

February 6, 2020.

50. This amount includes $282,971.89 in unpaid principal, $18,026.95 in accrued but

unpaid interest, and late fees of $1,182.61. Interest continues to accrue at the per diem rate of $43.23

per day as specified in the terms of the Second Note. A true and correct copy of the payoff statement

for the Second Note is attached as Exhibit 21.

51. All conditions precedent to LBC’s recovery under the loan documents have occurred.

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CLAIMS

Count 1: Breach of the First Loan Guaranties

52. The First Loan Guaranties constitute valid and legally enforceable contracts between

the Warrens and LBC.

53. LBC is the owner and holder of the First Loan Guaranties.

54. The First Note contains the obligations underlying the First Loan Guaranties.

55. Borrower’s failure to remedy its breach of the First Note triggered the Warrens’

respective obligations under the First Loan Guaranties.

56. Despite demand for payment, the Warrens breached their obligations under the First

Loan Guaranties by, among other things, failing or refusing to make the required payments.

57. As an actual and proximate result of the Warrens’ breach of the First Loan Guaranties,

the Warrens are indebted to LBC for the principal and interest that remains due and owing on the

First Note, as may be limited according to the terms of the First Loan Guaranties.

58. After all just and lawful offsets, credits, and payments, $7,056,287.37 remains due and

owing on the First Note as of February 6, 2020. This amount continues to increase by the contractual

rate (per diem) of 18% per day or $888.99 per day as specified in the terms of the First Note.

59. This amount excludes certain reasonable and necessary attorneys’ fees, costs of court,

and pre- and post-judgment interest recoverable under the First Loan Guaranties.

60. All conditions precedent to LBC’s recovery under the First Loan Guaranties have

occurred.

Count 2: Breach of the Second Loan Guaranties

61. The Second Loan Guaranties constitute valid and legally enforceable contracts

between Guarantors and LBC.

62. LBC is the owner and holder of the Second Loan Guaranties.

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63. The Second Note contains the obligations underlying the Second Loan Guaranties.

64. Borrower’s failure to remedy its breach of the Second Note triggered Guarantors’

obligations under the Second Loan Guaranties.

65. Despite demand for payment, Guarantors breached their obligations under the Second

Loan Guaranties by, among other things, failing or refusing to make the required payments.

66. As an actual and proximate result of Guarantors’ breaches, Guarantors are indebted

to LBC for the amounts remaining due and owing on the Second Note.

67. After all just and lawful offsets, credits, and payments, $302,181.45 remains due and

owing on the Second Note as of February 6, 2020. This amount continues to increase by the

contractual rate (per diem) of $43.23 per day and excludes certain reasonable and necessary attorneys’

fees, costs of court, and pre- and post-judgment interest recoverable under the Second Loan

Guaranties.

68. All conditions precedent to LBC’s recovery under the Second Loan Guaranties have

occurred.

Count 3: Attorneys’ Fees

69. The Guaranties contain provisions requiring each Guarantor to pay court costs and

LBC’s reasonable attorneys’ fees in LBC’s pursuit of collecting on the debt. Accordingly, LBC is

contractually entitled to recover its court costs and reasonable attorneys’ fees in pursuing this action.

70. Alternatively, and without waiving the foregoing, Guarantors’ failure to comply with

the terms of their Guaranties compelled LBC to employ the undersigned law firm to pursue this action.

Pursuant to Chapter 38 of the Texas Civil Practice & Remedies Code, LBC is entitled to recover its

reasonable and necessary attorneys’ fees and costs of court in prosecuting this action. LBC presented

written demand on Guarantors in this action more than 30 days ago.

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PRAYER

For these reasons, LBC asks the Court to grant judgment against Guarantors for actual

damages, pre- and post-judgment interest, attorneys’ fees and costs of court, and such other and

further relief to which LBC may be justly entitled.

Respectfully submitted,

JOHNSTON PRATT PLLC

By: s/ Sean M. Affleck
Kenneth C. Johnston
State Bar No. 00792608
kjohnston@johnstonpratt.com
Sean M. Affleck
State Bar No. 24105491
saffleck@johnstonpratt.com
Ekaterina G. Long
State Bar No. 24102700
klong@johnstonpratt.com
1717 Main Street, Suite 3000
Dallas, Texas 75201
(214) 974-8000 Main
(972) 474-1725 S. Affleck Direct
(972) 474-1750 Fax

Attorneys for LBC Westover Hills Properties LLC

Certificate of Service
The undersigned certifies that a true and correct copy of this Amended Petition has been
served on all counsel of record on February 11, 2020, via the Court’s electronic filing system.

By: Sean M. Affleck
Sean M. Affleck

LBC’S FIRST AMENDED PETITION PAGE 13
146109 V1
OMNIAMERICAN BANK

PROMISSORY NOTE

$10,261,217.00 July 16, 2014
Effective Date

July 16, 2019
Loan Number Maturity Date

1. Definitions. As used inthis Promissory Note, the following terms have the meanings
indicated below (all capitalized terms not otherwise defined herein shall have the meaning assigned to them in
the Loan Agreement).

"Amortization Dale" means January 16, 2017.

"Bank" means OmniAmerican Bank and its successors and assigns.

"Borrower" means, whether one or more, WESTOVER HILLS MEMORY CARE, LLC, a Delaware
limited liability company.

"Deed of Trust" means the Deed of Trust, Security Agreement, Financing Statement and Assignment
of Rents of even date with this Note, executed by Borrower for the benefit of Bank covering certain real and
personal property located in Bexar County, Texas, as it may be amended, restated, renewed and extended
from time to time.

"Effective Date" means July 16, 2014.

"LIBOR" means the London Interbank Offered Rate for the applicable Reference Period stated on the
WSJ.com website two (2) days before the Loan Rate calculation date (or in the event no such rate is stated on
that date, the rate stated on the day most immediately preceding the date of determination on which such a
quotation was stated), as adjusted from time to time in Bank's sole discretion for then-applicable reserve
requirements, deposit insurance assessment rates, and other regulatory costs. If WSJ.com becomes
unavailable, Bank may use another source to determine LIBOR. If WSJ.com states more than one rate for the
applicable Reference Period, the applicable rate shallbe the arithmetic mean of allstatedrates for that
Reference Period. The "Reference Period" shall be thirty (30) days. The index defined in this paragraph is
referred to as "LIBOR."

"LIBOR Margin" means three and one-fourth percent (3.25%).

"Loan Agreement" means the Construction Loan Agreement of even date herewith among Bank,
Borrower and the guarantor specified therein as such may be amended, renewed, extended and replaced from
time to time.

"Loan Documents" means this Note, the Deed of Trust, the Loan Agreement and any and all other
agreements, documents, and instruments executed and delivered in connection with this Note, and any future
amendments thereto, or restatements thereof, together with any and all renewals, extensions, amendments
and modifications to any such agreements, documents, and instruments.

"Loan Rate" means (a) from the Effective Date until the day before the Amortization Date, the higher
of (i) LIBOR as it may vary from Reference Period to Reference Period~ the LIBOR Margin, or (ii) 4.00%
per annum and (b) from the Amortization Date until the maturity of this Note, a fixed rate of interest equal to
the higher of (i) LIBOR as of the Amortization Date~ the LIBOR Margin or. (ii) 4.00% per annum.

-1 - 00698904.DOCX.2

Ex. 1
"Maturity Date" means July 16, 2019.

"Maximum Rate" means at the particular time in question the maximum rate of interest which, under
applicable law, may then be charged on this Note. If such maximum rate of interest changes after the date
hereof and this Note provides for afluctuatingrate of interest,
the Maximum Rate shall be automatically
increased or decreased, as the case may be, without notice to Borrower from time to time as of the effective
date of each change in such maximum rate. If applicable law ceases to provide for such
maximum rate of
interest, the Maximum Rate means eighteen percent (18%) per annum.

"Note" means this Promissory Note and all modifications,increases,replacements, renewals, and
extensions of this Promissory Note.

2. Promise to Pay. For value received, Borrower (jointly andseverally if more than one),
unconditionally hereby promises to pay to the order of Bank, at 1320 S. University Drive,Suite 402, Fort
Worth, Texas 76107, or at such other place as the holder of this Note may hereafter designate, the principal
sum of Ten MillionTwo Hundred Sixty-One Thousand Two Hundred Seventeen and no/100 Dollars
($10,261,217.00) orso much thereof as may be advanced, in lawful money of the United States of America for
the payment of private debts, together with interest on the unpaid principal balance from time to time owing
hereon computed from the date hereof until maturity at a per annum rate which shall be, except as otherwise
provided in this Note, the lesser of (a) the Loan Rate in effect from day to day, or (b) the Maximum Rate.
Interest on this Note is computed on a 365/360 simple interest basis; that is by applying the ratio of the annual
interest over a year of 360 days times the outstanding principal balance, times the actual number of days the
principal balance is outstanding, unless such calculation would result in a usurious rate, in which case interest
shall be calculated on a per diem basis of a year of 365 or 366 days as the case may be. Borrower
acknowledges that this calculation will result in a higher effective interest than the numeric Loan Rate stated in
this Note. If Bank has not received the full amount of any scheduled installment payment by the end of ten
(10) calendar days after the date it is due,Borrower willpay to Bank a late charge in the amount of five
percent (5.00%) of the delinquent payment amount. Borrower is liable for this late charge only once for each
delinquent payment, provided that such late charge shall not be applicable with respect to the principal amount
due at maturity of this Note.
All past due principal and matured interest, at Bank's option, shall bear interest at
the Maximum Rate. This Note is subject to multiple advances until the Amortization Date but does not have a
revolving credit feature.

3. Loan Rate. The Loan Rate as of the Effective Date is 4.00% percent per annum but is
subject to change as set forth in the definition of "Loan Rate."

4. Payments. This Note is payable as follows: accrued, unpaid interestshall be due and
payable on August 16, 2014, and on the same day of every month thereafter through the Amortization Date.
Thereafter, principal and accrued, unpaid interest shall be payable in equal monthly installments of $54,498.31
(subject to an adjustment in the installment amount caused by a change in the Loan Rate or an increase in the
principalbalance of this Note) with the first of suchinstallments due on February 16, 2017, and a like
installment shall be due on the same day of each succeeding calendar month

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February 11, 2020

Case Filing Date

October 30, 2019

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Document for LBC WESTOVER HILLS PROPERTIES LLC vs MITCHELL W. WARREN, ET AL

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