Preview
Filed 13 October 4 A11:39
Chris Daniel - District Clerk
Harris Coun!
ED101) 017752450
By: angellia Dozier
CAUSE NO. 2010 63264
CADENCE BANK IN THE DISTRICT COURT
f/kla ENCORE BANK
Plaintiff,
OF HARRIS COUNTY, TEXAS
ALLEN L. BERRY;
JOSEPH D. MCCORD;
and ROBERT G. TAYLOR, II,
Defendants. ™ JUDICIAL DISTRICT
PLAINTIFF’S SECOND TRADITIONAL
TION FOR SUMMARY JUDGMENT
EVIDENCE MOTION FOR SUMMARY JUDGMENT
aulJ. Dobrowski
SBN 05927100
pid@doblaw.com
Cody W. Stafford
SBN 24068238
cstafford@doblaw.com
OBROWSKI, LARKIN & JOHNSON L.L.P
4601 Washington Avenue, Suite 300
Houston, Texas 77007
Telephone:(713) 659
Facsimile: (713) 659
ATTORNEYS FOR PLAINTIFF
CADENCE BANK f/k/a ENCORE BANK
TABLE OF CONTENTS
TABLE OF CONTENTS
TABLE OF AUTHORITIES
OVERVIEW
IL. TRADITIONAL SUMMARY JUDGMENT EVIDENCE
Defendants’ “Mutual Mistake” Defense Fails as a Matterof Law
The Guaranty Agreement is Unambiguous and Must be Enforced as
Written
A Mistake of Law is Not a “Mutual Mistake”
The Parties Never Reached a Different Agreement Other Than the
Guaranty
The Guarantyis Presumed
to Accurately Reflect
the Parties’ Agreement
Defendants Assumed the Risk of Mistake
Defendants Are Not Parties to the Mortgage A greeme
Defendants Are Not Entitled to the Remedy They Seek
Defendants’ New Counterclaims Fail as a Matter
of Law
Negligence
Declaratory Judgment on Statute of Limitations
Remaining Declaratory Judgment Actions
Ii. NO EVIDENCE MOTION FOR SUMMARY JUDGMENT
Negligence
Intentional Infliction of Emotional Distress
Public Disclosure of Private Facts
Business Disparagement
THE COURT SHOULD GRANT SUMMARY JUDGMENT ON DEFENDANTS’
AFFIRMATIVE DEFENSES
No Evidence Exists to Support the Defenses Asserted
PRAYER
TABLE OF AUTHORITIES
CASES
1st Coppell Bank v. Smith,
7A2 S.W.2d 454 (Tex. App.Dallas 1987, no writ)
Abalos v. Oil Develop. Co.
544 S.W.2d 627 (Tex. 1976)
Adolph Coors Co. v. Rodri:
780 S.W.2d 477 (Tex. App.Corpus Christi 1989, writ denied)
Amouri v. Southwest Toyota, Inc.,
20 S.W.3d 165 (Tex. App.Texarkana 2000, pet. denied);
Arnold v. Nat'l County Mut.Fire Ins. Co.,
725 S.W.2d 165 (Tex. 1987)
Ayre
v. J.D. Bucky Allshouse, P.C.,
942 S.W.2d 24 (Tex. App.Houston [14th Dist.] 1996, writ denied)
Barr v. Resolution Trust Corp. ex rel. Sunbelt Fed. Sav.
837 S.W.2d 627 (Tex. 1992)
Baskin v. Mortgage & Trust Co.
837 S.W.2d 743 (Tex. App.Houston [14th Dist.] 1992, writ denied)
Baty v. ProTech Ins. Agency,
63 S.W.3d 841 (Tex. App.Houston [14th Dist.] 2001, pet. filed)
BHP PetroleumCo., Inc. v. Millard,
800 S.W.2d 838 (Tex.1990)
Bonnivell v. Beech Aircraft Corp.,
663 S.W.2d 816 (Tex.1984)
Brown v. Cain Chem, Inc.,
837 S.W.2d 239 (Tex. App.Houston [1st Dist.] 1992, writ denied)
Capitol Rod & Gun Club v. Lower Colorado River Authority,
622 S.W.2d 887 (Tex. Civ. App.Austin 1981, writ ref ‘dnre)
Cent. Sav. & Loan Ass'n v. Stemmons N.W. Bank, NA.,
848 S.W.2d 232 (Tex. App.Dallas 1992, no writ)
Chambersv. Huggins
709 S.W.2d 219 (Tex. App.Houston 14th Dist. 1986, no writ)
Chapman Children's Trust v. Porter & Hedges, L-L.P.,
S.W.3d 429 (Tex. App.Houston [14th Dist.] 2000, pet. denied)
Cherryv. McCall
138 S.W.3d 35 (Tex. App.San Antonio 2004, pet. denied)
City Nat Bankv. Pope
260 S.W. 903 (Tex. Civ. App.San Antonio 1924, no writ)
City of The Colony v. N. Tex. Mun. Water Dist.,
272 S.W.3d 699 (Tex. App.Fort Worth 2008, pet. filed)
Cole v. Hall,
864 S.W.2d 563 (Tex. App.Dallas 1993, writ dism'd w.oj.)
Davis v. Estridge
85 S.W.3d 308 (Tex. App.Tyler 2001, pet denied)
Deer Creek Lid. v. North Am Mortgage Co.,
792 S.W.2d 198 (Tex. App.Dallas 1990, no writ)
Denbina v. City of Hurst
516 S.W.2d 460 (Tex. Civ. App.Tyler 1974, no writ)
Doncaster v. Hernaiz.
161 S.W.3d 54 (Tex. App.San Antonio 2005, no pet.)
Eagle Properties, Ltd.v. Scharbauer,
807 S.W.2d 714 (Tex. 1990)
English
v. Fischer,
660 S.W.2d 521 (Tex.1983)
Estes v. Republic Nat'l Bank of Dallas,
462 S.W.2d 273 (Tex.1970)
FDIC v. Coleman
795 S.W.2d 706 (Tex. 1990)
Ferguson v. DRG/Colony N,, Ltd.
764 S.W.2d 874(Tex. App.Austin 1989, writ denied)
First City Mortg. Co. v. Gillis,
694 S.W.2d 144 (Tex. App.Houston [14th Dist] 1985, writ refd n.re.)
Forbes, Inc. v. Granada Biosciences, Inc.
124 S.W.3d 167 (Tex. 2003)
Getty Oil v. Insurance Co. of N. America,
845 S.W.2d 794 (Tex. 1992)
Gracia v. RC ColaUp Bottling Co.,
667 S.W.2d 517 (Tex.1984)
Greater Houston Transp. Co. v. Phillips
801 S.W.2d 523 (Tex. 1990)
Green v. Morris
43 S.W3d 604 (Tex. App.Waco 2001, no pet.)
Heritage Life v. Heritage Group Holding,
751 S.W.2d 229 (Tex. App.Dallas 1988, writ denied)
Hoffman LaRoche, Inc. v. Zeltwanger
144 S.W.3d 438 (Tex. 2004)
Hollander v. Capon
853 S.W.2d 723 (Tex. App.Houston [1st Dist.] 1993, writ denied)
HRN Inc. v. Shell OilCo.,
102 S.W.3d 205 (Tex. App.Houston [14th Dist.] 2003, pet. granted)
Humphrey v. Camelot Ret. City.
893 S.W.2d 55 (Tex. App.Corpus Christi 1994, no writ)
Inre Media Arts Group, Inc.
116 S.W.3d 900 (Tex. App.Houston [14th Dist.] 2003, no pet.)
Intermedics, Inc. v. Grady
683 S.W.2d 842 (Tex. App.Houston [1st Dist.] 1984, writ ref'd n.re.)
Jacobsonv. DP Partners Ltd. P'ship
245 S.W.3d 102 (Tex. App.Dallas 2008, no pet.)
James T. Taylor and Son, Inc. v. Arlington Ind. School Dist.,
160 Tex. 617, 335 S.W.2d 371 (1960)
Johnson v. Conner,
260 S.W.3d 575 (Tex. App.Tyler 2008, no pet.)
Juliette Fowler Homes v. Welch Associates,
793 S.W.2d 660 (Tex.1990)
Kenneth Leventhal & Co. v. Reeves,
978 S.W.2d 253 (Tex. App.Houston [14th Di _ st.] 1998, no pet.)
Kroger Tex. L.P. v. Suberu
216 S.W.3d 788 (Tex. 2006)
Longv. NCNBTex. Nat! Bank,
882 S.W.2d 861 (Tex. App.Corpus Christi 1994, no writ)
Lovellv. Western Nat] Life Ins.,
754 S.W.2d 298 (Tex. App.Amarillo 1988, writ denie
Marsh v. Marsh
949 S.W.2d 734 (Tex. App.Houston [14th Dist.] 1997, no writ)
Matthews v. Matthews,
725 S.W.2d 275 (Tex. App.Houston [1st Dist.] 1986, writ ref'd n.re.)
N. Natural Gas v. ChisosJ oint Venture I
142 S.W.3d 447 (Tex. App.El Paso 2004, no pet.)
Newnan
Oil Co. v. Alkek
614 S.W.2d 653 (Tex. Civ. App.Corpus Christi 1981)
Patterson v. Neel
610 S.W.2d 154 (Tex. Civ. AppHouston [1st Dist.] 1980, writ ref’d ne)
Roland v. McCullot
561 S.W.2d 207 (Tex. Civ. App.SanAn_ tonio 1978, writ refdnre.)
San Antonio Real Estate, Bldg. & Loan Ass'n v. Stewart
94 Tex. 441, 61 S.W. 386 (1901)
Simpsonv. MBank Dallas, NA.
724 S.W.2d 102 (Tex. App.Dallas 1987, writ refd n.re.)
Smith Gilbardv. Perry
332 S.W.3d 709 (Tex. App.Dallas 2011, no pet.)
Spin Doctor Golf, Inc. v. Paymentech, L.P.
296 S.W.3d 354 (Tex. App.Dallas 2009, pet. struck)
Star Telegram, Inc. v. Doe
915 S.W.2d 471 (Tex. 1995)
Sylvester v. Watkins,
538 S.W.2d 827 (Tex. Civ. AppAmarillo19 76, witrefdnre)
Sysco Food Servs., Inc. v. Trapnell,
890 S.W.2d 796 (Tex. 1994)
Thi v. Locke,
363 S.W.2d 247 (Tex.1962)
Tucker v. Graham,
878 S.W.2d 681 (Tex. App.Eastland 1994, no writ)
US Bank, NA. v. Prestige Ford Garland Ltd. P'ship
170 S.W.3d 272 (Tex. App.Dallas 2005, no pet.)
Ussery v. Hollebeke,
391 S.W.2d 497 (Tex. Civ. App.El Paso 1965, wit ref'd ne.)
Victoria
Bank & Trust Co. v. Brady,
779 S.W.2d 893 (Tex. App.Corpus Christi 1989)
Walden v. Affiliated Computer Servs., Inc.,
97 S.W.3d 303 (Tex. App.Houston [14th Dist.] 2003, pet. denied)
‘Weynand
v. Weynand,
990 S.W.2d 843 (Tex. App.Dallas 1999, pet. denied)
White v. Mellon Mortgage Co.,
995 S.W.2d 795 (Tex. App.Tyler 1999, no pet.)
Williams v. Glash,
789 S.W.2d 261 (Tex. 1990)
Williamson v. Da
114.S.W. 195 (Tex. App.Galveston 1908, writ ref’ d)
Windhamv. Alexander, Weston & Poehner, P.C.,
887 S.W.2d 182 (Tex. App.Texarkana 1994, writ denied)
STATUTES
RAC ODES 32.001(a)
RAC ODE33.002(a)(1)
RAC opeE§ 33.011(7)
RAC ODE § 33.002(a)
RAC ODE
IV 166a(i)
OTHER AUTHORITIES
Restatement (Second) of Contracts § 152
Restatement (Second) of Contracts§ 154
CAUSE NO. 2010 63264
CADENCE BANK IN THE DISTRICT COURT
f/kla ENCORE BANK
Plaintiff,
OF HARRIS COUNTY, TEXAS
ALLEN L. BERRY;
JOSEPH D. MCCORD;
and ROBERT G. TAYLOR, II,
Defendants. ™ JUDICIAL DISTRICT
AINTIFF’S SECOND TRADITIONAL MOTION FOR SUMMARY JUDGMENT
EVIDENCE MOTION FOR SUMMARY JUDGMENT.
TO THE HONORABLE JUDGE OF SAID COURT:
laintiff Cadence Bank f/k/a Encore Bank (“Plaintiff’ or “Encore”) files this Second
Traditional Motion for Summary Judgment and No Evidence Motion for Summary Judgment
and shows the Court as follows
OVERVIEW
Seven days before the hearing on Encore’s First Amended Traditional Motion for
Summary Judgment and No Evidence Motion for Summary Judgment, Defendantsapparently
recognizing the deficiencies
in their original argume amended their pleadings
and asserted
several new affirmative defenses and counterclaims. Because those affirmative defenses and
counterclaims
fail as a matter of lawor have no evidence to support them Encore files this
motion for summary judgment.
Despite Defendants’ last minute attempt to avoid summary judgment by raising
legally baseless and unsupported allegations, the Court should grant summary judgment in
Encore hereby incorporates its First Amended Traditional Motion for Summary Judgment and No Evidence
Motion for Summary Judgment, and the evidence attached thereto, as if fully set forth herein.
Encore’s favor.
TRADITIONAL SUMMARY JUDGMENT EVIDENCE
Defendants’ “Mutual Mistake” Defense Fails as a Matter of Law
Defendants attempt to raise “mutual mistake” as a defense to avoid repaying
millions of dollars they guaranteed. Defendants
argue that all parties believed
Encore had a first
lien on the Betty Lyn Ilbut for different reasons. Defendants claim Encore was mistaken.
regarding lien priority under maritime law and that they were misled by Encore’s alleged
representations that the Mortgage Agreement would provide a first lien. Thus, they claim, there
‘wes
a mutual mistake and they should not be bound by the Guaranty. However, mutual mistake
is inapplicable as a defense to the Guaranty for numerous reasons.
The Guaranty Agreement is Unambiguous and Must be Enforced as Written
When construing
a contract, the parties' intent must be taken from the agreement
itself and the agreement must be enforced as written. Jacobsonv. DP Partners Ltd. P'ship, 245
S.W.3d 102, 106 (Tex. App.Dallas 2008, no pet.) o avoid their unambiguous obligations as
written in the Guaranty, Defendants claim there was a “mutual mistake” that voids the Guaranty
and allows them to abscond with more than $3.6 million.
A mutual mistake of fact occurs when the parties to an agreement have a common.
intention, but the written contract does not reflect the intention of the parties due to a mutual
mistake. N. Natural Gas v. Chisos Joint Venture I, 142 S.W.3d 447, 456 (Tex. App.El Paso
2004, no pet.)To sustain
the affirmative defense of mutual mistake on summary judgment,
efendants
must raise fact issues showing that the contracting parties were acting under the
samemisunde rstanding of the samematerial fact.
istake of Law is Not a “Mutual Mistake”
While mutual mistake of fact may destroy the necessary meeting of the minds
for formation of a contract, a mutual mistake of law is not a ground for rescission of a contract.
Marsh v. Marsh, 949 S.W.2d 734, 745 (Tex. App.Houston [14th Dist.] 1997, no writ) Ussery
v. Hollebeke, 391 S.W.2d 497, 502 (Tex. Civ. App.El Paso 1965, writ ref'd nre.) see also 1st
Coppell Bank v. Smith, 742 S.W.2d 454, 462 (Tex. App.Dallas 1987, no writ) The parties’
failure to understand the legal effect of their agreement is a mistake of law See Marsh, 949
S.W.2d at 745. Moreover, mutual mistake only involves mistakes conceming past or present
facts. Green v. Morris, 43 S.W3d 604, 607 (Tex. App.Waco 2001, no pet.) A mistake
in
predicting a future event known to be uncertain cannot be raised as a defense . Defendants
claim the parties were mistaken as to the future legal effect of the Mortgage Agreement:
Defendants and [Encore] both believed [Encore] had a first, priority lien and that
the First Preferred Ship Mortgage was the means by which the first, priority lien
was perfected . . . [t]he First Preferred Ship Mortgage was insufficient
to provide
[Encore] with a first, priority lien.
Defendants’ Second Amended Answer at p. 31, (46.
Thus, Defendants’ own pleading negates their mutual mistake argument. Indeed,
earlier
in their Answer Defendants allege Encore was negligent for failing to seek legal advice
with respect to maritime law and lien priority. .atp. 11, 922. Defendants admit, as they must,
that establishing lien priority under maritime law is a legal determination. Consequently, even if
there was a mistake as to the priority of liens, that mistake was legal in nature and there was no
mutual mistake of fact.
The Parties Never Reached a Different Agreement Other Than the Guaranty
To prove
a mutual mistake, the evidence must show that both parties were acting
under the same misunderstanding
of the same material fact. Walden v. Affiliated Computer
Servs., Inc., 97 S.W.3d 303, 326 (Tex. App.Houston [14th Dist.] 2003, pet. denied) see also
City of The Colonyv. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 735 (Tex. App.Fort Worth
2008, pet. filed). When seeking relief from an alleged mutual mistake, the party seeking relief
must prove the true agreement’s terms. Johnson v. Conner, 260 S.W.3d 575, 581 (Tex. App.
Tyler 2008, no pet). However, Defendants must prove more than an agreement which is at
variance with the written contract. . at 581; Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d
273, 275 (Tex.1970) Defendants are required to go further and establish that the tems or
provisions of the writing that differ from the true agreement made were placed in the instrument
by mutual mistake Johnson, S.W.3d at 581. The Texas Supreme Court has repeatedly
cautioned that “[t]he doctrine of mutual mistake must not routinely be available to avoid the
result of an unhappy bargain.” Williams v. Glash, 789 S.W.2d 261, 265 (Tex. 1990). “Parties
should be able to rely on the finality of freely bargained agreements.” City of The Colony,
S.W.3d at 735 (citing Glash, 789 S.W.2d at 265). Here, Defendants simply want the Court to
rescind a freely bargained agreement because their business venture tumed out poorly.
Defendants have no evidence of an agreement different than the written Guaranty. Nor do
Defendants cite any evidence that the wrong terms were placed in the Guaranty by mistake.
Thus, mutual mistake isno defense to Encore’s Motions for Summary Judgment.
The Guaranty is Presumed to Accurately Reflect the Parties’ Agreement
Mutual mistake requires a showing that the mistake was mutual and that it was a
material inducement
to the transaction. It is not enough that one party signed the agreement
believing it did not contain what was plainly expressed in the agreementChambers v. Huggins
709 S.W.2d 219 (Tex. App.Houston 14th Dist. 1986, no writ). Thus, neither the subjective
intent of the parties nor their oral discussions are controlling on a transaction that is subsequently
reduced to an unambiguous writing such as a contract or deed, which is what occurred
in this
case. See Capitol Rod & Gun Club v. Lower Colorado River Authority, 622 S.W.2d 887, 894
(Tex. Civ. App.Austin 1981, writ ref'd nre.) see also Smith Gilbard v. Perry, 332 S.W.3d.
709, 715 (Tex. App.Dallas 2011, no pet.) Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d
273, 275 (Tex.1970) (“The law presumes that a written agreement correctly embodies the parties'
intentions, and is an accurate expression of the agreement the parties reached in prior oral
negotiations.”). Here, the Guaranty to which Defendants are parties contains no language with
respect to priority liens, much less any language requiring Encore to obtain a first lien on the
Vessel. Further, the Mortgage Agreement expressly requires BLyn, as owner of the Vessel, to
maintain Encore’s lien as a priority. Ex. A 10, ENBK002150, art. 1.7. The language is express
and unambiguous.
Moreover, under Texas law a person is obligated to protect himself by reading
what he signs and may not excuse himself from the consequences of failing to meet that
obligation. See First City Mortg. Co. v. Gillis, 694 S.W.2d 144, 147 (Tex. App.Houston [14th
Dist.] 1985, writ refd n.re.). One who signs an agreement, without knowledge of its contents, is
presumed
to have consented
to its terms. See id. Consequently, a party to a contract
may not
successfully claim that he believed the provisions of the contract were different from those
plainly set out in the contract or that he did not understand the meaning of the language used.
See Amouri v. Southwest Toyota, Inc., 20 S.W.3d 165, 169 (Tex. App.Texarkana 2000, pet.
denied); In re Media Arts Group, Inc., 116 S.W.3d 900, 908 (Tex. App.Houston [14th Dist.]
2003, no pet.)
Thus, a party who fails to read a contract is not entitled to relief based on mutual
mistake of fact. Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d 273, 276 (Tex. 1970). At
least one Defendant,
Mr. Taylor, II, admits he did not read any of the documents he signed.See,
eg., Ex. H, 49:5 Therefore, even if the parties operated under a mistake of both fact and law,
Defendant Taylor, II and any other Defendant that failed to read the agreementsis not
entitled
to relief.
Defendants Assumed the Risk of Mistake
A party cannot void a contract based on mutual mistake if the risk of mistake has
been allocated to that party. See Cherryv. McCall, 138 S.W.3d 35, 40 (Tex. App.San Antonio
2004, pet. denied)see also Restatement
(Second _) of Contracts§ 152cmt e. A party
can assume
this risk when it (1) specifically agrees to assume the risk or (2) is consciously ignorant of the
facts surrounding the mistake (i.e., it proceeds even though it knows it has limited knowledge of
the facts).
In this case, Defendants assumed the risk of mistake in two ways. First,
Defendants expressly assumed the risk by the very terms of the Guaranty:
Guarantor absolutely and unconditionally covenants and agrees that: (ii) if all
or any part of the Obligations (or any instrument or agreement made or executed
in connection therewith) is for any reason found to be invalid, illegal,
unenforceable, uncollectible or legally impossible, for any reason whatsoever
(including, without limiting the generality of the foregoing, upon the grounds that
the payment and/or performance of the Obligations is ultra vires or otherwise
without authority, may violate applicable usury laws, is subject to valid defenses,
claims or offsets of Borrower, or any instrument evidencing any of the
ligations is forged or otherwise irregular), then in any such case Guarantor
shall pay and perform the Obligations as herein provided and that no such
occurrence shall in any way diminish or otherwise affect Guarantor’s obligations
hereunder.
Ex.A 915, 7. In other words, Defendants expressly agreed that even if any of the other Loan.
Documents were invalid, they would still be liable to Encore for the amounts borrowed by BLyn.
Hence, even if there was a mistake in drafting the documents, the agreement of Defendants to
Likewise, Defendant Berry admits that he did not “review the bank documents regarding the mortgage [Encore]
took [on the Betty Lyn II].” Ex. F, 22:21
Pay remains valid and enforceable.To the extent the Mortgage Agreement here was “invalid”
because it did not secure a first, priority
lien on the Vessel, Defendants expressly assumed that
risk and are not entitled to the defense of mutual mistake.
Second, Defendants were consciously ignorant of the facts surrounding the
mistake and yet proceeded to sign the Guaranty anyway. Defendants
are sophisticated
businessmen and knew they were ignorant of maritime law and maritime liens.See —_ efendants’
Response to Plaintiff's First Amended Motion for Summary Judgment, p. 7. Nevertheless,
Defendants chose to forego the option to consult with legal counsel and signed the Guaranty
anyway. Defendants knowingly assumed the risk that the Mortgage Agreement would not
provide Encore with a first, priority lien on the Vessel. As a result, the defense of mutual
mistake is not available to Defendants.
Defendants Are Not Parties to the Mortgage Agreement
Further, any alleged mutual mistake regarding the Mortgage Agreement does not
invalidate the Guaranty. Defendants argue that a defect in the underlying loan documentation
should give them relief from their guarantees. However, Defendants lack standing to assert
defects in the Mortgage Agreement. Encore entered into the Mortgage Agreement with BLyn,
not Defendants. As a result, it is impossible for Defendants to have had a different agreement
from the one contained in the Mortgage Agreement. Consequently, even if there was a mutual
mistake as to the terms of the Mortgage Agreementwhich there was Defendants are not
entitled to assert that claim See, eg. Patterson v. Neel, 610 S.W.2d 154 (Tex. Civ. App
Houston [1st Dist.] 1980, writ ref’d nre). Defendants are parties to the Guaranty, which
ntains no provisions requiring Encore to obtain a priority lien on the Vessel. Indeed, the
Guaranty specifically notes that Encore has no duty with respect to the collateral and does not
have to foreclose
on the collateral before seeking payment from Defendants. Ex. A 8, 115.
Defendants Are Not Entitled to the Remedy They Seek
Defendants have vigorously argued to the Court that the Guaranty should be
rescinded
due to the alleged mutual mistake. Then, they claim, the Court should
use its equitable
powers to permit Defendants to walk away from the Guaranty without owing Encore anything.
However, Texas law supports no such remedy and Defendants are not entitled to an equitable
remedy
in any event.
To be entitled to the equitable remedy of rescission, Defendants
must first show
they have no adequate remedy at law for damages. Ferguson v. DRG/Colony N, Ltd.
S.W.2d 874, 886 (Tex. App.Austin 1989, writ denied) To the contrary, Defendants seek
monetary damages from Encore and have repeatedly argued to the Court that they intend to
recover money damages. Defendants’ assertions are inconsistent with their request for equitable
relief.
More importantly, a party seeking rescission must show it is not in breach of the
contract. See, eg. Williamson
v. Davey, 114 S.W. 195, 195 96 (Tex. App.Galveston 1908,
wit ref’d). Here, it is undisputed that Defendants signed the Guaranty of BLyn’s Promissory
Note, that the Note matured on March 15, 2012, that BLyn did not pay, and that Defendants have
not repaid the Note. Thus, Defendants are in breach of their Guaranty. Consequently,
Defendants are not entitled to rescission.
Even if Defendants were entitled to rescission, they are not permitted
to keep the
money loaned
by Encore. He who seeks equity must do equity. Davis v. Estridge, 85 S.W.3d
308, 311 (Tex. App.Tyler 2001, pet denied) In Davis, the court held that one who seeks to
undo a transaction
by the equitable remedy of rescission must first retum the benefit he received
in the transaction. Upon rescission, the rights and liabilities of the parties are extinguished, any
consideration
paid is retumed, and the parties are restored to their respective positions as if no
contract had ever existed. Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 855 (Tex. App.
Houston [14th Dist] 2001, pet. filed) Humphrey
v. Camelot Ret. Cmty. 893 S.W.2d 55, 59
(Tex. App.Corpus Christi 1994, no writ) Here, even if the Court rescinded the agreement,
Encore would be entitled to receive back the money it loaned in order to restore
the parties to
their pre contractual positions.
In sum, Defendants’ assertion of mutual mistake is not a viable defense to
Encore’s claims. For the reasons discussed above, Defendants’ claim of mutual mistake fails as
amatter
of law.
Defendants’ New C ounterclaims Fail as a Matter of Law
Defendants’ newly pled counterclaims are legally baseless. Thus, the Court
should grant summary judgment in Encore’s favor on Defendants’ counterclaims.
Negligence
Defendants assert several new “ne igence” counterclaims. Defendants assert
Encore had a duty to obtain UCC liens against appurtenances to the Vessel, a duty to obtain a
title insurance policy, and
a duty to seek advice
from legal counsel regarding
the loan and lien.
However, no such duties exist.
Texas law uniformly holds that a lender generally owes no duty of care to a
bomower with respect to the underlying investment for which loans are borrowed. See, eg.
Baskinv. Mortgage & Trust Co., 837 S.W.2d 743 (Tex. App.Houston [14th Dist.] 1992, writ
As more fully set forth in Encore’s First Amended Motion for Summary Judgment, the “negligence” claims pled
by Defendants actually sound in contract, not tort. The duties Defendants allege Encore owed could only arise by
virtue of the agreements between the parties. However, Encore addresses the negligence claims as pled for purposes
of this motion.
denied). Further, an unconditional, continuing guaranty, like the one Defendants executed here,
is binding upon them regardless of any impairment of collateral. Simpson v. MBank Dallas,
NA., 724 S.W.2d 102, 106 (Tex. App.Dallas 1987, writ ref'd nre) Consequently, any
alleged failure by Encore to protect the Betty Lyn II is completely irrelevant. See id.
Moreover, the Texas Supreme Court has declined to impose an implied duty of
good faith and fair dealing in every contract, though it has recognized that such a duty may arise
as a result of “a special relationship between the parties govemed or created by a contract.”
Arnold v. Nat'l] County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987) English v. Fischer,
660 S.W.2d 521, 522 (Tex. . However, absent a “special relationship,” any duty to act in
good faith is contractual in nature and its breach does not amount to an independent tort. Cole v.
Hall, 864 S.W.2d 563, 568 (Tex. App.Dallas 1993, writ dism'd w.oj.) (citing Cent. Sav. &
Loan Ass'n v. Stemmons NW. Bank, NA., 848 S.W.2d 232, 239 (Tex. App.Dallas 1992, no
wiit)); Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477, 481 (Tex. App.Corpus Christi 1989,
wit denied)
Texas courts have found no “special relationship” between a mortgagor and
a mortgagee, or between a creditor and a guarantor, that would impose an independent
common law duty of good faith and fair dealingSee FDIC v. Coleman, 795 S.W.2d 706, 709
(Tex. 1990) (“The relationship of mortgagor and mortgagee ordinarily does not involve a duty of
good faith. Similarly, the relationship between a creditor and a guarantor does not ordinarily
import a duty of good faith.”); White v. Mellon Mortgage Co., 995 S.W.2d 795, 800 (Tex.
App.Tyler 1999, no pet.) (“T]he relationship between a mortgagor and a mortgagee does not
give rise to a duty of good faith.”); Long v. NCNBTex. Nat'l Bank, 882 S.W.2d 861, 869 (Tex.
App.Corpus Christi 1994, no writ) (“secured parties do not owe guarantors a duty of good
faith’); Victoria Bank & Trust Co. v. Brady, 779 S.W.2d 893, 902 (Tex. App.Corpus Christi
rev'd on other grounds, 811 S.W.2d 931 (Tex. 1991) (citing Thigpen v. Locke, 363
S.W.2d 247, 253 (Tex. 1962)) (“We know of no cases in this state which impose
a duty of good
faith and fair dealing on lenders in general to their borrowers: a debtor creditor relationship does
not give rise to such a duty....”); Lovell v. Western Nat'l Life Ins., 754 S.W.2d 298, 303 (Tex.
App.Amarillo 1988, writ denied) (“[T]Jhere exists no special relationship between the
[borrowers and note holder] and, therefore, no duty of good faith and fair dealing is implied.”).
In sum, Encore owed Defendants none of the duties alleged. As Texas law makes
Clear, the only duty owed
by Encore to Defendants was to perform the contractwhich
it did. It
is undisputed that Encore fully funded the $6 million loan. As a result, Defendants’ negligence
Claims fail asa matter of law.
Declaratory J udgment on Statute of Limitations
Defendants’ claim for declaratory judgment on statute of limitations fails as a
matter of law. In sum, Encore’s claim against Defendants for breach of the Guaranty is not
barred.
On June 2, 2010, Encore provided notice to the primary obligor, BLyn, and
requested
that BLyn cure the non monetary default under the Promissory Note due to Crimson’s
maritime lien on the Betty Lyn ITEx. A BLyn failed to discharge Crimson’s lien. BLyn
then filed bankruptcy in August 2010, which constituted
yet another non monetary default. As a
result, Encore exercised its right under the Loan Agreement and demanded that BLyn pay the
full outstanding balance on the Note. Encore also demanded, on August 23, 2010, that
Defendants, as Guarantors, honor the Guaranty and pay the outstanding balance on the Note
As discussed below, Defendants’ declaratory judgment claims also fail as a matter of law under the Declaratory
Judgments Act.
since BLyn had not. BLyn’s failure to pay the outstanding balance on the Note constituted an
event of default
for which Defendants can be held liable under the express terms of the Guaranty.
Ex. A Encore then filed a lawsuit against Defendants for “a breach of the terms and
conditions of the Guaranty Agreements.” Orig. Pet. at 15. Contrary to Defendants’ claims,
Encore
did not sue Defendants for breach of the Mortgage Agreement. The breach
of the
Mortgage Agreement by BLyn was simply
the non monefary default that, when
left uncured, led
to the default
upon which Defendants
were sued under the Guaranty.
Tn any event, subsequent to making demand in full on Defendants and filing the
original lawsuit, the parties continued performing in compliance with the terms of the loan
agreements. For example, BLyn and/or Defendants continued making interest only payments
and principal reduction payments as required by the Promissory Note and related amendments.
See, eg., Exs. A 3, A5, and A 6. Thus, even assuming Encore accelerated
the debt in
2010, that acceleration was abandoned when Encore continued to accept payments from
Defendants. Consequently, the maturity date on the Promissory Note was unaffected. City Nat'l
Bank v. Pope, 260 S.W. 903, 905 (Tex. Civ. App.San Antonio 1924, no wiit) see also San
Antonio Real Estate, Bldg. & Loan Ass'n v. Stewart, 94 Tex. 441, 61 S.W. 386, 388 (1901)
(explaining that the parties' agreement or actions can “have the effect of obviating the default and
restoring the contract to its original condition as if it had not been broken”); Denbina v. City of
Hurst, 516 S.W.2d 460, 463 (Tex. Civ. App.Tyler 1974, no writ) (explaining that an option to
accelerate may be withdrawn or revoked after it is exercised by the noteholder, effectively
restoring the note's original maturity date). As a result, the earliest time Defendants could have
breached the Guaranty is when they failed and refused to pay the outstanding balance on the
Note after August 2010.
Moreover, when recovery is sought on an obligation payable in installments, the
statute of limitations runs against each installment from the time it becomes due. Intermedics,
Inc. v. Grady, 683 S.W.2d 842, 845 (Tex. App.Houston [1st Dist.] 1984, writ refd nre.)
Thus, a suit for the breach of a contract requiring payment in periodic installmentsas the Note
in this casemay include all payments due within the four year statute of limitations period,
even if the initial breach was beyond the limitations period. Hollander v. Capon, 853 S.W.2d
27 (Tex. App.Houston [1st Dist.] 1993, writ denied) see also Spin Doctor Golf, Inc.
v. Paymentech, L.P., 296 S.W.3d 354, 362 (Tex. App.Dallas 2009, pet. struck) . Thus, evenif
the initial breach of the agreement was more than four years ago, Encore is still entitled
to
recover any and all outstanding amounts due and owing within the last four years. Here, Encore
seeks to recover the defaulted principal installment due on March 15, 2012little over a year
agoplus interest and attomeys’ fees. Consequently, Encore’s claim for breach of the Guaranty
is timely and the Court should grant Encore’s Motions for Summary Judgment.
Remaining Declaratory J udgment Actions
The vast majority of Defendants’ “new” counterclaims simply ask the Court to
entera declaratory judgment in their favor on their affirmative defenses or on their own causes of
action. Defendants’ creative pleading is a misuse of the Declaratory Judgments Act
consequently, their counterclaims fail as a matter of law
The Declaratory Judgment Act provides a means by which a party “may have
determined any question of construction or validity arising under [a] statute ... [or] contract ...
and obtain a declaration of rights, status, or other legal relations thereunder.” IV RAC
ODE (Vemon 1997). It is “not available to settle disputes already
In order to avoid repetition, t he extent Encore addressed those affirmative defenses and counterclaims in its First
Amended Motion for Summary Judgment, they are not addressed again in this motion.
pending before a court.” BHP Petroleum Co., Inc. v. Millard, 800 S.W.2d 838, 841 (Tex.
(citing Heritage Life v. Heritage Group Holding, 751 S.W.2d 229, 235 (Tex. App.
Dallas 1988, writ denied)). Ordinarily declaratory relief will not be granted where the cause of
action has fully matured and invokes a present remedy at law. See Tuckerv. Graham,
S.W.2d 681, 683 (Tex. App.Eastland 1994, no writ) Sylvester v. Watkins, 538 S.W.2d 827,
831 (Tex. Civ. App. Amarillo 1976, writ ref'd mre). Moreover, a declaratory judgment is
improper if the relief requested is raised for the first time in an amended petition and merely
dresses the same issues as were raised in the original petition. See Kenneth Leventhal & Co. v.
Reeves, 978 S.W.2d 253, 25859 (Tex. App.Houston [14th Dist.] 1998, no pet.) US Bank,
NA. v. Prestige Ford Garland Ltd. P ship, 170 S.W.3d 272, 278 (Tex. App.Dallas 2005, no
pet)
Here, Defendants request a declaratory judgment on their affirmative defenses
and, oddly, even their own counterclaimswhich they initially raised in their First Amended.
Answer months ago. However, the allegations pled in Defendants’ counterclaim are not any
avements of fact upon which affirmative relief could be granted. Defendants’ declaratory
judgment “counterclaims” are merely denials of Encore cause of action.Consequently,
Defendants’ “counterclaims” for declaratory judgment are not viable causes of action and fail as
a matter of law.See, e.g. Newman Oil Co. v. Alkek 614 S.W.2d 653 (Tex. Civ. App.Corpus
Christi 1981) BHP Petroleum Co. Inc. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990)
Accordingly, the Court should grant summary judgment in Encore’s favor on Defendants’ claims
seeking a declaratory judgment.
NO EVIDENCE MOTION FOR SUMMARY JUDGMENT
Pursuant to 166a(i), Plaintiff hereby brings this No Evidence
Motion for Summary Judgment, and asserts that Defendants have no evidence to support
essential elements of their counterclaims.
Negligence
The common law doctrine of negligence consists of three elements: (1) a legal
duty owed by one person
to another; (2) a breach
of that duty; and (3) damages proximately
resulting from the breach.” Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523 (Tex.
. As outlined above, Defendants cannot establish that Encore owed them a duty. Nor do
they have probative evidence of any breach by Plaintiff of any duty. They have no evidence
of
damages and no evidence of causation.
Intentional Infliction of Emotional Distress
A cause of action for intentional infliction of emotional distress requires the
Plaintiff to prove the following: (1) the plaintiff is a person; (2) the defendant
acted intentionally
or recklessly; (3) the emotional distress suffered by the plaintiff was severe; (4) the defendant’s
conduct was extreme and outrageous; (5) the defendant’s conduct proximately caused the
Plaintiff's emotional distress; and (6) no altemative cause of action would provide a remedy of
the severe emotional distress caused by the defendant’s
conduct. See Kroger Tex. L.P. v. Suberu
216 S.W.3d 788, 796 (Tex. 2006) Hoffman LaRoche, Inc. v. Zeltwanger, 144 S.W.3d 438, 447
(Tex. 2004)
Defendants have no evidence that Encore acted intentionally or recklessly to
cause any Defendant any emotional distress. Defendants have no evidence that any Encore
employee, acting within the course and scope of their employment, intentionally or recklessly
caused any Defendant any emotional distress. Defendants have no evidence that Encore engaged.
in any conduct that was extreme and outrageous. Defendants have no evidence that any of them
suffered emotional distress that was proximately caused by Encore’s conduct. Nor do
Defendants have evidence that no altemative cause of action would provide a remedy for the
alleged emotional distress.
Public Disclosure of Private Facts
A cause of action for public disclosure of private facts requires the plaintiff to
prove the following: (1) the defendant publicized information about the plaintiff’s private life;
(2) the publicity would be highly offensive to a reasonable person; (3) the matter publicized is
not a legitimate
public concem; and (4) the plaintiff suffered an injury as a result of the
defendant's disclosure. See Star Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 74 (Tex. 1995)
Here, Defendants have no evidence that Encore publicized information about any
of their private lives. Defendants have no evidence that any alleged publicity would be highly
offensive to a reasonable person or that any Defendant suffered an injury as a result of any
alleged disclosure.
Business Disparagement
To recover on a cause of action for business disparagement, a plaintiff must
prove: (1) the defendant published disparaging words about the plaintiff's economic interests;
(2) the words were false; (3) the defendant published the words with malice; (4) the defendant
published the words without privilege; and (5) the publication caused special damages. See
Forbes, Inc.v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003)
In this case, Defendants have no evidence that Encore published disparaging
words about any of their economic interests or that any allegedly published words were false.
Defendants have no evidence that Encore published any false words with malice. Defendants
have no evidence that Encore published false words in the absence of a privilege. Finally,
Defendants have no evidence of any special damages.
Iv. THE COURT SHOULD GRANT SUMMARY JUDGMENT ON DEFENDANTS’
AFFIRMATIVE DEFENSES
No Evidence Exists to Supportthe Defenses A sserted
efendants have no evidence to support their newly minted defenses. The Court
should therefore
grant ano evidence summary judgment as to all these defenses. IV
166a(i). To the extent further specificity is required:
Coercion and Duress Generally, when one coerves another to execute a
contact by taking undue or unjust advantage of the person's economic
necessity or distress, the contract may be invalid or unenforceable. Brown
v. Cain Chem, Inc.,837 S.W.2d 239, 244 (Tex.App.Houston [1st Dist.]
1992, writ denied) It requires both the acts or conduct of the opposing
party and the necessities of the alleged victim or his fear of what a third
person might do. Id. The victim's plight alone will not suffice; it must be
coupled with the bad acts of the transgressor. Id. What constitutes duress
is a question of law for the court. Windham v. Alexander, Weston &
Poehner, P.C., 887 S.W.2d 182, 185 (Tex. App.Texarkana 1994, writ
denied) Matthews v. Matthews, 725 S.W.2d 275, 278 (Tex. App.
Houston [1st Dist.] 1986, writ ref'd n.re.)There can be no dur_ ess without
the following: 1) a threat or action taken without legal justification; (2)
the action or threat was of such a character as to destroy the other party's
free agency; (3) the threat or action overcame the opposing party's free
will and caused it to do that which it would not otherwise have done and
that which it was not legally bound to do; (4) the restraint
was imminent;
and (5) the opposingparty had no means of protection. HRN, Inc.
v. Shell Oil Co., 102 S.W.3d 205, 215 16 (Tex. App.Houston [14th
Dist.] 2003, pet. granted) apman Children's Trust v. Porter & Hedges,
LLP., 32 S.W.3d 429, 443 (Tex. App.Houston [14th Dist] 2000, pet.
denied). Furthermore, economic duress may be claimed only when the
party against whom it is claimed was responsible for the claimant's
financial distress. HRN, Inc., 102 S.W.3d at 216 Deer Creek Ltd. v.
North Am Mortgage Co., 792 S.W.2d 198, 203 (Tex. App.Dallas 1990,
no writ) Here, Defendants have no evidence that Encore coerced them to
enter into any of the agreements. There is no evidence of a threat or any
action taken without legal justification. There is no evidence the
Defendants’ free agency was destroyed or that their free will was
overcome. Nor is there any evidence that Defendants had no means of
protection in the transaction. Indeed, the Defendants are sophisticated
businessmen with the means to protect themselves in an ams length
financial transaction.
Collateral Estoppel: The doctrine of collateral estoppel prohibit
relitigation of particular issues already resolved in a prior suit. See Ayre v.
J.D. Bucky Allshouse, P.C., 942 S.W.2d 24, 27 (Tex. App.Houston
[14th Dist] 1996, writ denied). In order to invoke collater
Preview
Filed 13 October 4 A11:39 Chris Daniel - District Clerk Harris Coun! ED101) 017752450 By: angellia Dozier CAUSE NO. 2010 63264 CADENCE BANK IN THE DISTRICT COURT f/kla ENCORE BANK Plaintiff, OF HARRIS COUNTY, TEXAS ALLEN L. BERRY; JOSEPH D. MCCORD; and ROBERT G. TAYLOR, II, Defendants. ™ JUDICIAL DISTRICT PLAINTIFF’S SECOND TRADITIONAL TION FOR SUMMARY JUDGMENT EVIDENCE MOTION FOR SUMMARY JUDGMENT aulJ. Dobrowski SBN 05927100 pid@doblaw.com Cody W. Stafford SBN 24068238 cstafford@doblaw.com OBROWSKI, LARKIN & JOHNSON L.L.P 4601 Washington Avenue, Suite 300 Houston, Texas 77007 Telephone:(713) 659 Facsimile: (713) 659 ATTORNEYS FOR PLAINTIFF CADENCE BANK f/k/a ENCORE BANK TABLE OF CONTENTS TABLE OF CONTENTS TABLE OF AUTHORITIES OVERVIEW IL. TRADITIONAL SUMMARY JUDGMENT EVIDENCE Defendants’ “Mutual Mistake” Defense Fails as a Matterof Law The Guaranty Agreement is Unambiguous and Must be Enforced as Written A Mistake of Law is Not a “Mutual Mistake” The Parties Never Reached a Different Agreement Other Than the Guaranty The Guarantyis Presumed to Accurately Reflect the Parties’ Agreement Defendants Assumed the Risk of Mistake Defendants Are Not Parties to the Mortgage A greeme Defendants Are Not Entitled to the Remedy They Seek Defendants’ New Counterclaims Fail as a Matter of Law Negligence Declaratory Judgment on Statute of Limitations Remaining Declaratory Judgment Actions Ii. NO EVIDENCE MOTION FOR SUMMARY JUDGMENT Negligence Intentional Infliction of Emotional Distress Public Disclosure of Private Facts Business Disparagement THE COURT SHOULD GRANT SUMMARY JUDGMENT ON DEFENDANTS’ AFFIRMATIVE DEFENSES No Evidence Exists to Support the Defenses Asserted PRAYER TABLE OF AUTHORITIES CASES 1st Coppell Bank v. Smith, 7A2 S.W.2d 454 (Tex. App.Dallas 1987, no writ) Abalos v. Oil Develop. Co. 544 S.W.2d 627 (Tex. 1976) Adolph Coors Co. v. Rodri: 780 S.W.2d 477 (Tex. App.Corpus Christi 1989, writ denied) Amouri v. Southwest Toyota, Inc., 20 S.W.3d 165 (Tex. App.Texarkana 2000, pet. denied); Arnold v. Nat'l County Mut.Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987) Ayre v. J.D. Bucky Allshouse, P.C., 942 S.W.2d 24 (Tex. App.Houston [14th Dist.] 1996, writ denied) Barr v. Resolution Trust Corp. ex rel. Sunbelt Fed. Sav. 837 S.W.2d 627 (Tex. 1992) Baskin v. Mortgage & Trust Co. 837 S.W.2d 743 (Tex. App.Houston [14th Dist.] 1992, writ denied) Baty v. ProTech Ins. Agency, 63 S.W.3d 841 (Tex. App.Houston [14th Dist.] 2001, pet. filed) BHP PetroleumCo., Inc. v. Millard, 800 S.W.2d 838 (Tex.1990) Bonnivell v. Beech Aircraft Corp., 663 S.W.2d 816 (Tex.1984) Brown v. Cain Chem, Inc., 837 S.W.2d 239 (Tex. App.Houston [1st Dist.] 1992, writ denied) Capitol Rod & Gun Club v. Lower Colorado River Authority, 622 S.W.2d 887 (Tex. Civ. App.Austin 1981, writ ref ‘dnre) Cent. Sav. & Loan Ass'n v. Stemmons N.W. Bank, NA., 848 S.W.2d 232 (Tex. App.Dallas 1992, no writ) Chambersv. Huggins 709 S.W.2d 219 (Tex. App.Houston 14th Dist. 1986, no writ) Chapman Children's Trust v. Porter & Hedges, L-L.P., S.W.3d 429 (Tex. App.Houston [14th Dist.] 2000, pet. denied) Cherryv. McCall 138 S.W.3d 35 (Tex. App.San Antonio 2004, pet. denied) City Nat Bankv. Pope 260 S.W. 903 (Tex. Civ. App.San Antonio 1924, no writ) City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699 (Tex. App.Fort Worth 2008, pet. filed) Cole v. Hall, 864 S.W.2d 563 (Tex. App.Dallas 1993, writ dism'd w.oj.) Davis v. Estridge 85 S.W.3d 308 (Tex. App.Tyler 2001, pet denied) Deer Creek Lid. v. North Am Mortgage Co., 792 S.W.2d 198 (Tex. App.Dallas 1990, no writ) Denbina v. City of Hurst 516 S.W.2d 460 (Tex. Civ. App.Tyler 1974, no writ) Doncaster v. Hernaiz. 161 S.W.3d 54 (Tex. App.San Antonio 2005, no pet.) Eagle Properties, Ltd.v. Scharbauer, 807 S.W.2d 714 (Tex. 1990) English v. Fischer, 660 S.W.2d 521 (Tex.1983) Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d 273 (Tex.1970) FDIC v. Coleman 795 S.W.2d 706 (Tex. 1990) Ferguson v. DRG/Colony N,, Ltd. 764 S.W.2d 874(Tex. App.Austin 1989, writ denied) First City Mortg. Co. v. Gillis, 694 S.W.2d 144 (Tex. App.Houston [14th Dist] 1985, writ refd n.re.) Forbes, Inc. v. Granada Biosciences, Inc. 124 S.W.3d 167 (Tex. 2003) Getty Oil v. Insurance Co. of N. America, 845 S.W.2d 794 (Tex. 1992) Gracia v. RC ColaUp Bottling Co., 667 S.W.2d 517 (Tex.1984) Greater Houston Transp. Co. v. Phillips 801 S.W.2d 523 (Tex. 1990) Green v. Morris 43 S.W3d 604 (Tex. App.Waco 2001, no pet.) Heritage Life v. Heritage Group Holding, 751 S.W.2d 229 (Tex. App.Dallas 1988, writ denied) Hoffman LaRoche, Inc. v. Zeltwanger 144 S.W.3d 438 (Tex. 2004) Hollander v. Capon 853 S.W.2d 723 (Tex. App.Houston [1st Dist.] 1993, writ denied) HRN Inc. v. Shell OilCo., 102 S.W.3d 205 (Tex. App.Houston [14th Dist.] 2003, pet. granted) Humphrey v. Camelot Ret. City. 893 S.W.2d 55 (Tex. App.Corpus Christi 1994, no writ) Inre Media Arts Group, Inc. 116 S.W.3d 900 (Tex. App.Houston [14th Dist.] 2003, no pet.) Intermedics, Inc. v. Grady 683 S.W.2d 842 (Tex. App.Houston [1st Dist.] 1984, writ ref'd n.re.) Jacobsonv. DP Partners Ltd. P'ship 245 S.W.3d 102 (Tex. App.Dallas 2008, no pet.) James T. Taylor and Son, Inc. v. Arlington Ind. School Dist., 160 Tex. 617, 335 S.W.2d 371 (1960) Johnson v. Conner, 260 S.W.3d 575 (Tex. App.Tyler 2008, no pet.) Juliette Fowler Homes v. Welch Associates, 793 S.W.2d 660 (Tex.1990) Kenneth Leventhal & Co. v. Reeves, 978 S.W.2d 253 (Tex. App.Houston [14th Di _ st.] 1998, no pet.) Kroger Tex. L.P. v. Suberu 216 S.W.3d 788 (Tex. 2006) Longv. NCNBTex. Nat! Bank, 882 S.W.2d 861 (Tex. App.Corpus Christi 1994, no writ) Lovellv. Western Nat] Life Ins., 754 S.W.2d 298 (Tex. App.Amarillo 1988, writ denie Marsh v. Marsh 949 S.W.2d 734 (Tex. App.Houston [14th Dist.] 1997, no writ) Matthews v. Matthews, 725 S.W.2d 275 (Tex. App.Houston [1st Dist.] 1986, writ ref'd n.re.) N. Natural Gas v. ChisosJ oint Venture I 142 S.W.3d 447 (Tex. App.El Paso 2004, no pet.) Newnan Oil Co. v. Alkek 614 S.W.2d 653 (Tex. Civ. App.Corpus Christi 1981) Patterson v. Neel 610 S.W.2d 154 (Tex. Civ. AppHouston [1st Dist.] 1980, writ ref’d ne) Roland v. McCullot 561 S.W.2d 207 (Tex. Civ. App.SanAn_ tonio 1978, writ refdnre.) San Antonio Real Estate, Bldg. & Loan Ass'n v. Stewart 94 Tex. 441, 61 S.W. 386 (1901) Simpsonv. MBank Dallas, NA. 724 S.W.2d 102 (Tex. App.Dallas 1987, writ refd n.re.) Smith Gilbardv. Perry 332 S.W.3d 709 (Tex. App.Dallas 2011, no pet.) Spin Doctor Golf, Inc. v. Paymentech, L.P. 296 S.W.3d 354 (Tex. App.Dallas 2009, pet. struck) Star Telegram, Inc. v. Doe 915 S.W.2d 471 (Tex. 1995) Sylvester v. Watkins, 538 S.W.2d 827 (Tex. Civ. AppAmarillo19 76, witrefdnre) Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796 (Tex. 1994) Thi v. Locke, 363 S.W.2d 247 (Tex.1962) Tucker v. Graham, 878 S.W.2d 681 (Tex. App.Eastland 1994, no writ) US Bank, NA. v. Prestige Ford Garland Ltd. P'ship 170 S.W.3d 272 (Tex. App.Dallas 2005, no pet.) Ussery v. Hollebeke, 391 S.W.2d 497 (Tex. Civ. App.El Paso 1965, wit ref'd ne.) Victoria Bank & Trust Co. v. Brady, 779 S.W.2d 893 (Tex. App.Corpus Christi 1989) Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303 (Tex. App.Houston [14th Dist.] 2003, pet. denied) ‘Weynand v. Weynand, 990 S.W.2d 843 (Tex. App.Dallas 1999, pet. denied) White v. Mellon Mortgage Co., 995 S.W.2d 795 (Tex. App.Tyler 1999, no pet.) Williams v. Glash, 789 S.W.2d 261 (Tex. 1990) Williamson v. Da 114.S.W. 195 (Tex. App.Galveston 1908, writ ref’ d) Windhamv. Alexander, Weston & Poehner, P.C., 887 S.W.2d 182 (Tex. App.Texarkana 1994, writ denied) STATUTES RAC ODES 32.001(a) RAC ODE33.002(a)(1) RAC opeE§ 33.011(7) RAC ODE § 33.002(a) RAC ODE IV 166a(i) OTHER AUTHORITIES Restatement (Second) of Contracts § 152 Restatement (Second) of Contracts§ 154 CAUSE NO. 2010 63264 CADENCE BANK IN THE DISTRICT COURT f/kla ENCORE BANK Plaintiff, OF HARRIS COUNTY, TEXAS ALLEN L. BERRY; JOSEPH D. MCCORD; and ROBERT G. TAYLOR, II, Defendants. ™ JUDICIAL DISTRICT AINTIFF’S SECOND TRADITIONAL MOTION FOR SUMMARY JUDGMENT EVIDENCE MOTION FOR SUMMARY JUDGMENT. TO THE HONORABLE JUDGE OF SAID COURT: laintiff Cadence Bank f/k/a Encore Bank (“Plaintiff’ or “Encore”) files this Second Traditional Motion for Summary Judgment and No Evidence Motion for Summary Judgment and shows the Court as follows OVERVIEW Seven days before the hearing on Encore’s First Amended Traditional Motion for Summary Judgment and No Evidence Motion for Summary Judgment, Defendantsapparently recognizing the deficiencies in their original argume amended their pleadings and asserted several new affirmative defenses and counterclaims. Because those affirmative defenses and counterclaims fail as a matter of lawor have no evidence to support them Encore files this motion for summary judgment. Despite Defendants’ last minute attempt to avoid summary judgment by raising legally baseless and unsupported allegations, the Court should grant summary judgment in Encore hereby incorporates its First Amended Traditional Motion for Summary Judgment and No Evidence Motion for Summary Judgment, and the evidence attached thereto, as if fully set forth herein. Encore’s favor. TRADITIONAL SUMMARY JUDGMENT EVIDENCE Defendants’ “Mutual Mistake” Defense Fails as a Matter of Law Defendants attempt to raise “mutual mistake” as a defense to avoid repaying millions of dollars they guaranteed. Defendants argue that all parties believed Encore had a first lien on the Betty Lyn Ilbut for different reasons. Defendants claim Encore was mistaken. regarding lien priority under maritime law and that they were misled by Encore’s alleged representations that the Mortgage Agreement would provide a first lien. Thus, they claim, there ‘wes a mutual mistake and they should not be bound by the Guaranty. However, mutual mistake is inapplicable as a defense to the Guaranty for numerous reasons. The Guaranty Agreement is Unambiguous and Must be Enforced as Written When construing a contract, the parties' intent must be taken from the agreement itself and the agreement must be enforced as written. Jacobsonv. DP Partners Ltd. P'ship, 245 S.W.3d 102, 106 (Tex. App.Dallas 2008, no pet.) o avoid their unambiguous obligations as written in the Guaranty, Defendants claim there was a “mutual mistake” that voids the Guaranty and allows them to abscond with more than $3.6 million. A mutual mistake of fact occurs when the parties to an agreement have a common. intention, but the written contract does not reflect the intention of the parties due to a mutual mistake. N. Natural Gas v. Chisos Joint Venture I, 142 S.W.3d 447, 456 (Tex. App.El Paso 2004, no pet.)To sustain the affirmative defense of mutual mistake on summary judgment, efendants must raise fact issues showing that the contracting parties were acting under the samemisunde rstanding of the samematerial fact. istake of Law is Not a “Mutual Mistake” While mutual mistake of fact may destroy the necessary meeting of the minds for formation of a contract, a mutual mistake of law is not a ground for rescission of a contract. Marsh v. Marsh, 949 S.W.2d 734, 745 (Tex. App.Houston [14th Dist.] 1997, no writ) Ussery v. Hollebeke, 391 S.W.2d 497, 502 (Tex. Civ. App.El Paso 1965, writ ref'd nre.) see also 1st Coppell Bank v. Smith, 742 S.W.2d 454, 462 (Tex. App.Dallas 1987, no writ) The parties’ failure to understand the legal effect of their agreement is a mistake of law See Marsh, 949 S.W.2d at 745. Moreover, mutual mistake only involves mistakes conceming past or present facts. Green v. Morris, 43 S.W3d 604, 607 (Tex. App.Waco 2001, no pet.) A mistake in predicting a future event known to be uncertain cannot be raised as a defense . Defendants claim the parties were mistaken as to the future legal effect of the Mortgage Agreement: Defendants and [Encore] both believed [Encore] had a first, priority lien and that the First Preferred Ship Mortgage was the means by which the first, priority lien was perfected . . . [t]he First Preferred Ship Mortgage was insufficient to provide [Encore] with a first, priority lien. Defendants’ Second Amended Answer at p. 31, (46. Thus, Defendants’ own pleading negates their mutual mistake argument. Indeed, earlier in their Answer Defendants allege Encore was negligent for failing to seek legal advice with respect to maritime law and lien priority. .atp. 11, 922. Defendants admit, as they must, that establishing lien priority under maritime law is a legal determination. Consequently, even if there was a mistake as to the priority of liens, that mistake was legal in nature and there was no mutual mistake of fact. The Parties Never Reached a Different Agreement Other Than the Guaranty To prove a mutual mistake, the evidence must show that both parties were acting under the same misunderstanding of the same material fact. Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 326 (Tex. App.Houston [14th Dist.] 2003, pet. denied) see also City of The Colonyv. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 735 (Tex. App.Fort Worth 2008, pet. filed). When seeking relief from an alleged mutual mistake, the party seeking relief must prove the true agreement’s terms. Johnson v. Conner, 260 S.W.3d 575, 581 (Tex. App. Tyler 2008, no pet). However, Defendants must prove more than an agreement which is at variance with the written contract. . at 581; Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d 273, 275 (Tex.1970) Defendants are required to go further and establish that the tems or provisions of the writing that differ from the true agreement made were placed in the instrument by mutual mistake Johnson, S.W.3d at 581. The Texas Supreme Court has repeatedly cautioned that “[t]he doctrine of mutual mistake must not routinely be available to avoid the result of an unhappy bargain.” Williams v. Glash, 789 S.W.2d 261, 265 (Tex. 1990). “Parties should be able to rely on the finality of freely bargained agreements.” City of The Colony, S.W.3d at 735 (citing Glash, 789 S.W.2d at 265). Here, Defendants simply want the Court to rescind a freely bargained agreement because their business venture tumed out poorly. Defendants have no evidence of an agreement different than the written Guaranty. Nor do Defendants cite any evidence that the wrong terms were placed in the Guaranty by mistake. Thus, mutual mistake isno defense to Encore’s Motions for Summary Judgment. The Guaranty is Presumed to Accurately Reflect the Parties’ Agreement Mutual mistake requires a showing that the mistake was mutual and that it was a material inducement to the transaction. It is not enough that one party signed the agreement believing it did not contain what was plainly expressed in the agreementChambers v. Huggins 709 S.W.2d 219 (Tex. App.Houston 14th Dist. 1986, no writ). Thus, neither the subjective intent of the parties nor their oral discussions are controlling on a transaction that is subsequently reduced to an unambiguous writing such as a contract or deed, which is what occurred in this case. See Capitol Rod & Gun Club v. Lower Colorado River Authority, 622 S.W.2d 887, 894 (Tex. Civ. App.Austin 1981, writ ref'd nre.) see also Smith Gilbard v. Perry, 332 S.W.3d. 709, 715 (Tex. App.Dallas 2011, no pet.) Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d 273, 275 (Tex.1970) (“The law presumes that a written agreement correctly embodies the parties' intentions, and is an accurate expression of the agreement the parties reached in prior oral negotiations.”). Here, the Guaranty to which Defendants are parties contains no language with respect to priority liens, much less any language requiring Encore to obtain a first lien on the Vessel. Further, the Mortgage Agreement expressly requires BLyn, as owner of the Vessel, to maintain Encore’s lien as a priority. Ex. A 10, ENBK002150, art. 1.7. The language is express and unambiguous. Moreover, under Texas law a person is obligated to protect himself by reading what he signs and may not excuse himself from the consequences of failing to meet that obligation. See First City Mortg. Co. v. Gillis, 694 S.W.2d 144, 147 (Tex. App.Houston [14th Dist.] 1985, writ refd n.re.). One who signs an agreement, without knowledge of its contents, is presumed to have consented to its terms. See id. Consequently, a party to a contract may not successfully claim that he believed the provisions of the contract were different from those plainly set out in the contract or that he did not understand the meaning of the language used. See Amouri v. Southwest Toyota, Inc., 20 S.W.3d 165, 169 (Tex. App.Texarkana 2000, pet. denied); In re Media Arts Group, Inc., 116 S.W.3d 900, 908 (Tex. App.Houston [14th Dist.] 2003, no pet.) Thus, a party who fails to read a contract is not entitled to relief based on mutual mistake of fact. Estes v. Republic Nat'l Bank of Dallas, 462 S.W.2d 273, 276 (Tex. 1970). At least one Defendant, Mr. Taylor, II, admits he did not read any of the documents he signed.See, eg., Ex. H, 49:5 Therefore, even if the parties operated under a mistake of both fact and law, Defendant Taylor, II and any other Defendant that failed to read the agreementsis not entitled to relief. Defendants Assumed the Risk of Mistake A party cannot void a contract based on mutual mistake if the risk of mistake has been allocated to that party. See Cherryv. McCall, 138 S.W.3d 35, 40 (Tex. App.San Antonio 2004, pet. denied)see also Restatement (Second _) of Contracts§ 152cmt e. A party can assume this risk when it (1) specifically agrees to assume the risk or (2) is consciously ignorant of the facts surrounding the mistake (i.e., it proceeds even though it knows it has limited knowledge of the facts). In this case, Defendants assumed the risk of mistake in two ways. First, Defendants expressly assumed the risk by the very terms of the Guaranty: Guarantor absolutely and unconditionally covenants and agrees that: (ii) if all or any part of the Obligations (or any instrument or agreement made or executed in connection therewith) is for any reason found to be invalid, illegal, unenforceable, uncollectible or legally impossible, for any reason whatsoever (including, without limiting the generality of the foregoing, upon the grounds that the payment and/or performance of the Obligations is ultra vires or otherwise without authority, may violate applicable usury laws, is subject to valid defenses, claims or offsets of Borrower, or any instrument evidencing any of the ligations is forged or otherwise irregular), then in any such case Guarantor shall pay and perform the Obligations as herein provided and that no such occurrence shall in any way diminish or otherwise affect Guarantor’s obligations hereunder. Ex.A 915, 7. In other words, Defendants expressly agreed that even if any of the other Loan. Documents were invalid, they would still be liable to Encore for the amounts borrowed by BLyn. Hence, even if there was a mistake in drafting the documents, the agreement of Defendants to Likewise, Defendant Berry admits that he did not “review the bank documents regarding the mortgage [Encore] took [on the Betty Lyn II].” Ex. F, 22:21 Pay remains valid and enforceable.To the extent the Mortgage Agreement here was “invalid” because it did not secure a first, priority lien on the Vessel, Defendants expressly assumed that risk and are not entitled to the defense of mutual mistake. Second, Defendants were consciously ignorant of the facts surrounding the mistake and yet proceeded to sign the Guaranty anyway. Defendants are sophisticated businessmen and knew they were ignorant of maritime law and maritime liens.See —_ efendants’ Response to Plaintiff's First Amended Motion for Summary Judgment, p. 7. Nevertheless, Defendants chose to forego the option to consult with legal counsel and signed the Guaranty anyway. Defendants knowingly assumed the risk that the Mortgage Agreement would not provide Encore with a first, priority lien on the Vessel. As a result, the defense of mutual mistake is not available to Defendants. Defendants Are Not Parties to the Mortgage Agreement Further, any alleged mutual mistake regarding the Mortgage Agreement does not invalidate the Guaranty. Defendants argue that a defect in the underlying loan documentation should give them relief from their guarantees. However, Defendants lack standing to assert defects in the Mortgage Agreement. Encore entered into the Mortgage Agreement with BLyn, not Defendants. As a result, it is impossible for Defendants to have had a different agreement from the one contained in the Mortgage Agreement. Consequently, even if there was a mutual mistake as to the terms of the Mortgage Agreementwhich there was Defendants are not entitled to assert that claim See, eg. Patterson v. Neel, 610 S.W.2d 154 (Tex. Civ. App Houston [1st Dist.] 1980, writ ref’d nre). Defendants are parties to the Guaranty, which ntains no provisions requiring Encore to obtain a priority lien on the Vessel. Indeed, the Guaranty specifically notes that Encore has no duty with respect to the collateral and does not have to foreclose on the collateral before seeking payment from Defendants. Ex. A 8, 115. Defendants Are Not Entitled to the Remedy They Seek Defendants have vigorously argued to the Court that the Guaranty should be rescinded due to the alleged mutual mistake. Then, they claim, the Court should use its equitable powers to permit Defendants to walk away from the Guaranty without owing Encore anything. However, Texas law supports no such remedy and Defendants are not entitled to an equitable remedy in any event. To be entitled to the equitable remedy of rescission, Defendants must first show they have no adequate remedy at law for damages. Ferguson v. DRG/Colony N, Ltd. S.W.2d 874, 886 (Tex. App.Austin 1989, writ denied) To the contrary, Defendants seek monetary damages from Encore and have repeatedly argued to the Court that they intend to recover money damages. Defendants’ assertions are inconsistent with their request for equitable relief. More importantly, a party seeking rescission must show it is not in breach of the contract. See, eg. Williamson v. Davey, 114 S.W. 195, 195 96 (Tex. App.Galveston 1908, wit ref’d). Here, it is undisputed that Defendants signed the Guaranty of BLyn’s Promissory Note, that the Note matured on March 15, 2012, that BLyn did not pay, and that Defendants have not repaid the Note. Thus, Defendants are in breach of their Guaranty. Consequently, Defendants are not entitled to rescission. Even if Defendants were entitled to rescission, they are not permitted to keep the money loaned by Encore. He who seeks equity must do equity. Davis v. Estridge, 85 S.W.3d 308, 311 (Tex. App.Tyler 2001, pet denied) In Davis, the court held that one who seeks to undo a transaction by the equitable remedy of rescission must first retum the benefit he received in the transaction. Upon rescission, the rights and liabilities of the parties are extinguished, any consideration paid is retumed, and the parties are restored to their respective positions as if no contract had ever existed. Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 855 (Tex. App. Houston [14th Dist] 2001, pet. filed) Humphrey v. Camelot Ret. Cmty. 893 S.W.2d 55, 59 (Tex. App.Corpus Christi 1994, no writ) Here, even if the Court rescinded the agreement, Encore would be entitled to receive back the money it loaned in order to restore the parties to their pre contractual positions. In sum, Defendants’ assertion of mutual mistake is not a viable defense to Encore’s claims. For the reasons discussed above, Defendants’ claim of mutual mistake fails as amatter of law. Defendants’ New C ounterclaims Fail as a Matter of Law Defendants’ newly pled counterclaims are legally baseless. Thus, the Court should grant summary judgment in Encore’s favor on Defendants’ counterclaims. Negligence Defendants assert several new “ne igence” counterclaims. Defendants assert Encore had a duty to obtain UCC liens against appurtenances to the Vessel, a duty to obtain a title insurance policy, and a duty to seek advice from legal counsel regarding the loan and lien. However, no such duties exist. Texas law uniformly holds that a lender generally owes no duty of care to a bomower with respect to the underlying investment for which loans are borrowed. See, eg. Baskinv. Mortgage & Trust Co., 837 S.W.2d 743 (Tex. App.Houston [14th Dist.] 1992, writ As more fully set forth in Encore’s First Amended Motion for Summary Judgment, the “negligence” claims pled by Defendants actually sound in contract, not tort. The duties Defendants allege Encore owed could only arise by virtue of the agreements between the parties. However, Encore addresses the negligence claims as pled for purposes of this motion. denied). Further, an unconditional, continuing guaranty, like the one Defendants executed here, is binding upon them regardless of any impairment of collateral. Simpson v. MBank Dallas, NA., 724 S.W.2d 102, 106 (Tex. App.Dallas 1987, writ ref'd nre) Consequently, any alleged failure by Encore to protect the Betty Lyn II is completely irrelevant. See id. Moreover, the Texas Supreme Court has declined to impose an implied duty of good faith and fair dealing in every contract, though it has recognized that such a duty may arise as a result of “a special relationship between the parties govemed or created by a contract.” Arnold v. Nat'l] County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987) English v. Fischer, 660 S.W.2d 521, 522 (Tex. . However, absent a “special relationship,” any duty to act in good faith is contractual in nature and its breach does not amount to an independent tort. Cole v. Hall, 864 S.W.2d 563, 568 (Tex. App.Dallas 1993, writ dism'd w.oj.) (citing Cent. Sav. & Loan Ass'n v. Stemmons NW. Bank, NA., 848 S.W.2d 232, 239 (Tex. App.Dallas 1992, no wiit)); Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477, 481 (Tex. App.Corpus Christi 1989, wit denied) Texas courts have found no “special relationship” between a mortgagor and a mortgagee, or between a creditor and a guarantor, that would impose an independent common law duty of good faith and fair dealingSee FDIC v. Coleman, 795 S.W.2d 706, 709 (Tex. 1990) (“The relationship of mortgagor and mortgagee ordinarily does not involve a duty of good faith. Similarly, the relationship between a creditor and a guarantor does not ordinarily import a duty of good faith.”); White v. Mellon Mortgage Co., 995 S.W.2d 795, 800 (Tex. App.Tyler 1999, no pet.) (“T]he relationship between a mortgagor and a mortgagee does not give rise to a duty of good faith.”); Long v. NCNBTex. Nat'l Bank, 882 S.W.2d 861, 869 (Tex. App.Corpus Christi 1994, no writ) (“secured parties do not owe guarantors a duty of good faith’); Victoria Bank & Trust Co. v. Brady, 779 S.W.2d 893, 902 (Tex. App.Corpus Christi rev'd on other grounds, 811 S.W.2d 931 (Tex. 1991) (citing Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962)) (“We know of no cases in this state which impose a duty of good faith and fair dealing on lenders in general to their borrowers: a debtor creditor relationship does not give rise to such a duty....”); Lovell v. Western Nat'l Life Ins., 754 S.W.2d 298, 303 (Tex. App.Amarillo 1988, writ denied) (“[T]Jhere exists no special relationship between the [borrowers and note holder] and, therefore, no duty of good faith and fair dealing is implied.”). In sum, Encore owed Defendants none of the duties alleged. As Texas law makes Clear, the only duty owed by Encore to Defendants was to perform the contractwhich it did. It is undisputed that Encore fully funded the $6 million loan. As a result, Defendants’ negligence Claims fail asa matter of law. Declaratory J udgment on Statute of Limitations Defendants’ claim for declaratory judgment on statute of limitations fails as a matter of law. In sum, Encore’s claim against Defendants for breach of the Guaranty is not barred. On June 2, 2010, Encore provided notice to the primary obligor, BLyn, and requested that BLyn cure the non monetary default under the Promissory Note due to Crimson’s maritime lien on the Betty Lyn ITEx. A BLyn failed to discharge Crimson’s lien. BLyn then filed bankruptcy in August 2010, which constituted yet another non monetary default. As a result, Encore exercised its right under the Loan Agreement and demanded that BLyn pay the full outstanding balance on the Note. Encore also demanded, on August 23, 2010, that Defendants, as Guarantors, honor the Guaranty and pay the outstanding balance on the Note As discussed below, Defendants’ declaratory judgment claims also fail as a matter of law under the Declaratory Judgments Act. since BLyn had not. BLyn’s failure to pay the outstanding balance on the Note constituted an event of default for which Defendants can be held liable under the express terms of the Guaranty. Ex. A Encore then filed a lawsuit against Defendants for “a breach of the terms and conditions of the Guaranty Agreements.” Orig. Pet. at 15. Contrary to Defendants’ claims, Encore did not sue Defendants for breach of the Mortgage Agreement. The breach of the Mortgage Agreement by BLyn was simply the non monefary default that, when left uncured, led to the default upon which Defendants were sued under the Guaranty. Tn any event, subsequent to making demand in full on Defendants and filing the original lawsuit, the parties continued performing in compliance with the terms of the loan agreements. For example, BLyn and/or Defendants continued making interest only payments and principal reduction payments as required by the Promissory Note and related amendments. See, eg., Exs. A 3, A5, and A 6. Thus, even assuming Encore accelerated the debt in 2010, that acceleration was abandoned when Encore continued to accept payments from Defendants. Consequently, the maturity date on the Promissory Note was unaffected. City Nat'l Bank v. Pope, 260 S.W. 903, 905 (Tex. Civ. App.San Antonio 1924, no wiit) see also San Antonio Real Estate, Bldg. & Loan Ass'n v. Stewart, 94 Tex. 441, 61 S.W. 386, 388 (1901) (explaining that the parties' agreement or actions can “have the effect of obviating the default and restoring the contract to its original condition as if it had not been broken”); Denbina v. City of Hurst, 516 S.W.2d 460, 463 (Tex. Civ. App.Tyler 1974, no writ) (explaining that an option to accelerate may be withdrawn or revoked after it is exercised by the noteholder, effectively restoring the note's original maturity date). As a result, the earliest time Defendants could have breached the Guaranty is when they failed and refused to pay the outstanding balance on the Note after August 2010. Moreover, when recovery is sought on an obligation payable in installments, the statute of limitations runs against each installment from the time it becomes due. Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex. App.Houston [1st Dist.] 1984, writ refd nre.) Thus, a suit for the breach of a contract requiring payment in periodic installmentsas the Note in this casemay include all payments due within the four year statute of limitations period, even if the initial breach was beyond the limitations period. Hollander v. Capon, 853 S.W.2d 27 (Tex. App.Houston [1st Dist.] 1993, writ denied) see also Spin Doctor Golf, Inc. v. Paymentech, L.P., 296 S.W.3d 354, 362 (Tex. App.Dallas 2009, pet. struck) . Thus, evenif the initial breach of the agreement was more than four years ago, Encore is still entitled to recover any and all outstanding amounts due and owing within the last four years. Here, Encore seeks to recover the defaulted principal installment due on March 15, 2012little over a year agoplus interest and attomeys’ fees. Consequently, Encore’s claim for breach of the Guaranty is timely and the Court should grant Encore’s Motions for Summary Judgment. Remaining Declaratory J udgment Actions The vast majority of Defendants’ “new” counterclaims simply ask the Court to entera declaratory judgment in their favor on their affirmative defenses or on their own causes of action. Defendants’ creative pleading is a misuse of the Declaratory Judgments Act consequently, their counterclaims fail as a matter of law The Declaratory Judgment Act provides a means by which a party “may have determined any question of construction or validity arising under [a] statute ... [or] contract ... and obtain a declaration of rights, status, or other legal relations thereunder.” IV RAC ODE (Vemon 1997). It is “not available to settle disputes already In order to avoid repetition, t he extent Encore addressed those affirmative defenses and counterclaims in its First Amended Motion for Summary Judgment, they are not addressed again in this motion. pending before a court.” BHP Petroleum Co., Inc. v. Millard, 800 S.W.2d 838, 841 (Tex. (citing Heritage Life v. Heritage Group Holding, 751 S.W.2d 229, 235 (Tex. App. Dallas 1988, writ denied)). Ordinarily declaratory relief will not be granted where the cause of action has fully matured and invokes a present remedy at law. See Tuckerv. Graham, S.W.2d 681, 683 (Tex. App.Eastland 1994, no writ) Sylvester v. Watkins, 538 S.W.2d 827, 831 (Tex. Civ. App. Amarillo 1976, writ ref'd mre). Moreover, a declaratory judgment is improper if the relief requested is raised for the first time in an amended petition and merely dresses the same issues as were raised in the original petition. See Kenneth Leventhal & Co. v. Reeves, 978 S.W.2d 253, 25859 (Tex. App.Houston [14th Dist.] 1998, no pet.) US Bank, NA. v. Prestige Ford Garland Ltd. P ship, 170 S.W.3d 272, 278 (Tex. App.Dallas 2005, no pet) Here, Defendants request a declaratory judgment on their affirmative defenses and, oddly, even their own counterclaimswhich they initially raised in their First Amended. Answer months ago. However, the allegations pled in Defendants’ counterclaim are not any avements of fact upon which affirmative relief could be granted. Defendants’ declaratory judgment “counterclaims” are merely denials of Encore cause of action.Consequently, Defendants’ “counterclaims” for declaratory judgment are not viable causes of action and fail as a matter of law.See, e.g. Newman Oil Co. v. Alkek 614 S.W.2d 653 (Tex. Civ. App.Corpus Christi 1981) BHP Petroleum Co. Inc. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990) Accordingly, the Court should grant summary judgment in Encore’s favor on Defendants’ claims seeking a declaratory judgment. NO EVIDENCE MOTION FOR SUMMARY JUDGMENT Pursuant to 166a(i), Plaintiff hereby brings this No Evidence Motion for Summary Judgment, and asserts that Defendants have no evidence to support essential elements of their counterclaims. Negligence The common law doctrine of negligence consists of three elements: (1) a legal duty owed by one person to another; (2) a breach of that duty; and (3) damages proximately resulting from the breach.” Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523 (Tex. . As outlined above, Defendants cannot establish that Encore owed them a duty. Nor do they have probative evidence of any breach by Plaintiff of any duty. They have no evidence of damages and no evidence of causation. Intentional Infliction of Emotional Distress A cause of action for intentional infliction of emotional distress requires the Plaintiff to prove the following: (1) the plaintiff is a person; (2) the defendant acted intentionally or recklessly; (3) the emotional distress suffered by the plaintiff was severe; (4) the defendant’s conduct was extreme and outrageous; (5) the defendant’s conduct proximately caused the Plaintiff's emotional distress; and (6) no altemative cause of action would provide a remedy of the severe emotional distress caused by the defendant’s conduct. See Kroger Tex. L.P. v. Suberu 216 S.W.3d 788, 796 (Tex. 2006) Hoffman LaRoche, Inc. v. Zeltwanger, 144 S.W.3d 438, 447 (Tex. 2004) Defendants have no evidence that Encore acted intentionally or recklessly to cause any Defendant any emotional distress. Defendants have no evidence that any Encore employee, acting within the course and scope of their employment, intentionally or recklessly caused any Defendant any emotional distress. Defendants have no evidence that Encore engaged. in any conduct that was extreme and outrageous. Defendants have no evidence that any of them suffered emotional distress that was proximately caused by Encore’s conduct. Nor do Defendants have evidence that no altemative cause of action would provide a remedy for the alleged emotional distress. Public Disclosure of Private Facts A cause of action for public disclosure of private facts requires the plaintiff to prove the following: (1) the defendant publicized information about the plaintiff’s private life; (2) the publicity would be highly offensive to a reasonable person; (3) the matter publicized is not a legitimate public concem; and (4) the plaintiff suffered an injury as a result of the defendant's disclosure. See Star Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 74 (Tex. 1995) Here, Defendants have no evidence that Encore publicized information about any of their private lives. Defendants have no evidence that any alleged publicity would be highly offensive to a reasonable person or that any Defendant suffered an injury as a result of any alleged disclosure. Business Disparagement To recover on a cause of action for business disparagement, a plaintiff must prove: (1) the defendant published disparaging words about the plaintiff's economic interests; (2) the words were false; (3) the defendant published the words with malice; (4) the defendant published the words without privilege; and (5) the publication caused special damages. See Forbes, Inc.v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003) In this case, Defendants have no evidence that Encore published disparaging words about any of their economic interests or that any allegedly published words were false. Defendants have no evidence that Encore published any false words with malice. Defendants have no evidence that Encore published false words in the absence of a privilege. Finally, Defendants have no evidence of any special damages. Iv. THE COURT SHOULD GRANT SUMMARY JUDGMENT ON DEFENDANTS’ AFFIRMATIVE DEFENSES No Evidence Exists to Supportthe Defenses A sserted efendants have no evidence to support their newly minted defenses. The Court should therefore grant ano evidence summary judgment as to all these defenses. IV 166a(i). To the extent further specificity is required: Coercion and Duress Generally, when one coerves another to execute a contact by taking undue or unjust advantage of the person's economic necessity or distress, the contract may be invalid or unenforceable. Brown v. Cain Chem, Inc.,837 S.W.2d 239, 244 (Tex.App.Houston [1st Dist.] 1992, writ denied) It requires both the acts or conduct of the opposing party and the necessities of the alleged victim or his fear of what a third person might do. Id. The victim's plight alone will not suffice; it must be coupled with the bad acts of the transgressor. Id. What constitutes duress is a question of law for the court. Windham v. Alexander, Weston & Poehner, P.C., 887 S.W.2d 182, 185 (Tex. App.Texarkana 1994, writ denied) Matthews v. Matthews, 725 S.W.2d 275, 278 (Tex. App. Houston [1st Dist.] 1986, writ ref'd n.re.)There can be no dur_ ess without the following: 1) a threat or action taken without legal justification; (2) the action or threat was of such a character as to destroy the other party's free agency; (3) the threat or action overcame the opposing party's free will and caused it to do that which it would not otherwise have done and that which it was not legally bound to do; (4) the restraint was imminent; and (5) the opposingparty had no means of protection. HRN, Inc. v. Shell Oil Co., 102 S.W.3d 205, 215 16 (Tex. App.Houston [14th Dist.] 2003, pet. granted) apman Children's Trust v. Porter & Hedges, LLP., 32 S.W.3d 429, 443 (Tex. App.Houston [14th Dist] 2000, pet. denied). Furthermore, economic duress may be claimed only when the party against whom it is claimed was responsible for the claimant's financial distress. HRN, Inc., 102 S.W.3d at 216 Deer Creek Ltd. v. North Am Mortgage Co., 792 S.W.2d 198, 203 (Tex. App.Dallas 1990, no writ) Here, Defendants have no evidence that Encore coerced them to enter into any of the agreements. There is no evidence of a threat or any action taken without legal justification. There is no evidence the Defendants’ free agency was destroyed or that their free will was overcome. Nor is there any evidence that Defendants had no means of protection in the transaction. Indeed, the Defendants are sophisticated businessmen with the means to protect themselves in an ams length financial transaction. Collateral Estoppel: The doctrine of collateral estoppel prohibit relitigation of particular issues already resolved in a prior suit. See Ayre v. J.D. Bucky Allshouse, P.C., 942 S.W.2d 24, 27 (Tex. App.Houston [14th Dist] 1996, writ denied). In order to invoke collater