Rebecca v. Savoy and Theresa Savoy v. National Collegiate Student Loan Trust 2005-3

Opinion issued August 9, 2018

In The

Court of Appeals

For The

First District of Texas

————————————

NO. 01-17-00345-CV

———————————

REBECCA V. SAVOY AND THERESA SAVOY, Appellants

V.

NATIONAL COLLEGIATE STUDENT LOAN TRUST 2005-3, Appellee

On Appeal from the County Civil Court at Law No. 2

Harris County, Texas

Trial Court Case No. 1076548

OPINION

This is an appeal from a final judgment in favor of National Collegiate

Student Loan Trust 2005-3 in its suit against Rebecca and Theresa Savoy for

breach of a student loan agreement and personal guaranty.1 In three issues, the

Savoys contend that (1) the trial court abused its discretion in admitting the Trust’s

exhibits under the business-records exception to the hearsay rule, (2) there is

legally and factually insufficient evidence to support the trial court’s judgment, and

(3) the Trust did not have standing to sue because the loan’s other guarantor, The

Education Resources Institute, Inc., assumed and paid off the debt after the Savoys

defaulted. We suggest a remittitur of damages. Conditioned on that suggestion, we

affirm the trial court’s judgment.

Background

In August 2005, Rebecca Savoy, as borrower, and Theresa Savoy, as

cosignor, took out a student loan from JPMorgan Chase Bank, N.A. to finance

Rebecca’s education at the University of Houston. Over ten years later, in April

1

This appeal is one of several recent appeals involving Delaware statutory trusts

that have acquired student loan debt and subsequently asserted claims against

defaulting borrowers and guarantors. See, e.g., Mock v. Nat’l Collegiate Student

Loan Tr. 2007-4, No. 01-17-00216-CV, 2018 WL 3352913 (Tex. App.—Houston

[1st Dist.] July 10, 2018, no pet. h.) (mem. op.); Foster v. Nat’l Collegiate Student

Loan Tr. 2007-4, No. 01-17-00253-CV, 2018 WL 1095760 (Tex. App.—Houston

[1st Dist.] Mar. 1, 2018, no pet.) (mem. op.). Although the cases involve different

borrowers and different trusts, the lawyers are the same and the issues are similar.

2

2016, the Savoys were sued by a Delaware statutory trust,2 National Collegiate

Student Loan Trust 2005-3, for defaulting on the loan.3

The Trust alleged that it acquired the note from JPMorgan Chase before the

Savoys’ first payment date, when the loan was still in good standing. The Trust

further alleged that, after the loan’s deferral period, the Savoys failed to make

payments as agreed, causing a default. The Trust then sent the Savoys a letter

demanding payment in full, but the Savoys failed to pay the note. The Trust

asserted claims for breach of contract and breach of personal guaranty, seeking

damages of $20,492.05 for the unpaid balance and $2,004.15 for accrued and

unpaid interest.

The case was tried to the bench. The Trust did not call any live witnesses.

Instead, it offered into evidence the affidavit of Alicia L. Holiday, a legal case

manager for the Trust’s loan subservicer, Transworld Systems, Inc., and seven

attached exhibits.

The first exhibit was a Subservicer Confirmation letter, which showed that

TSI is a subservicer for the Trust and the custodian of records for all student loan

2

See DEL. CODE tit. 12, §§ 3801–26.

3

Unlike common law trusts, statutory trusts may sue and be sued. See TEX. BUS. &

COM. CODE § 9.102 cmt. 11 (statutory trust is juridical entity that may sue and be

sued); cf. Ray Malooly Tr. v. Juhl, 186 S.W.3d 568, 570 (Tex. 2006) (stating

general rule that suit against common law trust must be brought against trustee).

3

accounts owned by the Trust. The second exhibit consisted of two documents

relating to the origination of the loan: (1) a “Loan Request/Credit Agreement” and

(2) a “Note Disclosure Statement.” The third exhibit consisted of three documents

relating to JPMorgan Chase’s assignment of the loan through an intermediary to

the Trust: (1) a “Pool Supplement,” dated October 12, 2005, (2) a redacted copy of

Schedule 1 to the Pool Supplement, and (3) a “Deposit and Sale Agreement,” also

dated October 12, 2005. The fourth, fifth, sixth, and seventh exhibits consisted of

four documents relating to the loan’s repayment history: (1) a “Loan Financial

Activity” Report, (2) a “Deferment/Forbearance” Summary, (3) a “Repayment

Schedule,” and (4) a “Loan Payment History Report.”

The Savoys made numerous written and oral objections to Holiday’s

affidavit and the attached exhibits. The trial court overruled the Savoys’ objections

and admitted the seven exhibits into evidence under the business-records exception

to the hearsay rule. The trial court rendered judgment for the Trust on both its

claims, awarding it damages in the amount of $20,492.05, plus costs and interest.

The Savoys appeal.

Admissibility of Evidence

In their first issue, the Savoys contend that the trial court abused its

discretion in admitting the Pool Supplement, Pool Supplement Schedule, Deposit

and Sale Agreement, Loan Financial Activity Report, Deferment/Forbearance

4

Summary, and Repayment Schedule into evidence under the business-records

exception to the hearsay rule. The Savoys contend that none of the documents

satisfy the requirements of the business-records exception. And they further

contend that three of the documents—the Pool Supplement, Pool Supplement

Schedule, and Deposit and Sale Agreement—were not properly authenticated.

A. Standard of review

We review a trial court’s decision to admit or exclude evidence for an abuse

of discretion. Simien v. Unifund CCR Partners, 321 S.W.3d 235, 239 (Tex. App.—

Houston [1st Dist.] 2010, no pet.). A trial court abuses its discretion when it acts

without reference to any guiding rules and principles. Id. We must uphold the trial

court’s evidentiary ruling if there is any legitimate basis for the ruling. Id.

B. Whether documents meet requirements of Rule 803(6) to qualify as

business records

Hearsay is an out-of-court statement offered into evidence to prove the truth

of the matter asserted. TEX. R. EVID. 801(d). Hearsay is inadmissible unless a

statute or rule provides otherwise. TEX. R. EVID. 802. The proponent of hearsay has

the burden to show that the testimony fits within an exception to the general rule

prohibiting the admission of hearsay evidence. Simien, 321 S.W.3d at 240.

Rule 803 establishes various exceptions to the hearsay rule, including an

exception for certain business records. Under the business-records exception, a

record of an act, event, condition, or opinion is not excluded by the hearsay rule if:

5

(A) the record was made at or near the time by—or from

information transmitted by—someone with knowledge;

(B) the record was kept in the course of a regularly conducted

business activity;

(C) making the record was a regular practice of that activity;

(D) all these conditions are shown by the testimony of the custodian

or another qualified witness, or by an affidavit or unsworn declaration

that complies with Rule 902(10); and

(E) the opponent fails to demonstrate that the source of information

or the method or circumstances of preparation indicate a lack of

trustworthiness.

TEX. R. EVID. 803(6).

“A document authored or created by a third party may be admissible as

business records of a different business if: (a) the document is incorporated and

kept in the course of the testifying witness’s business; (b) that business typically

relies upon the accuracy of the contents of the document; and (c) the circumstances

otherwise indicate the trustworthiness of the document.” Simien, 321 S.W.3d at

240–41.

In her affidavit, Holiday testified that TSI is the Trust’s loan subservicer and

the designated custodian of records for the Savoys’ educational loan; that she is

employed by TSI and authorized by the Trust to make the representations in her

affidavit and to testify about the Savoys’ educational loan; and that she has

personal knowledge of the business records maintained by TSI as custodian of

6

records and the business records attached to her affidavit. See TEX. R. EVID.

903(6)(D). She stated that the records are created, compiled, and recorded as part

of regularly conducted business activity at or near the time of the event and from

information transmitted by a person with personal knowledge of the event and a

business duty to report it, or from information transmitted by a person with

personal knowledge of the accounts or events described within the business

records. See TEX. R. EVID. 803(6)(A), (C). She further stated that the records are

created, kept, maintained, and relied upon in the course of ordinary and regularly

conducted business activity. See TEX. R. EVID. 803(6)(B). And she stated that it is

TSI’s regularly conducted business practice to incorporate prior loan records and

documentation into TSI’s business records and that she is familiar with the process

by which TSI receives prior account records, including origination records from

the time the loans are requested and the funds disbursed. See Simien, 321 S.W.3d

at 240–41 (stating circumstances under which document authored or created by

third party may be admissible as business record of different business).

Thus, Holiday’s affidavit provided the testimony necessary to show that the

attached business records comply with the general requirements of Rule 803(6).

Nevertheless, the Savoys argue that the Pool Supplement, Deposit and Sale

Agreement, Pool Supplement Schedule, Loan Financial Activity Report,

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Deferment/Forbearance Summary, and Repayment Schedule did not qualify as

business records because they were not trustworthy for various reasons.

1. Pool Supplement and Deposit and Sale Agreement

First, the Savoys argue that the Pool Supplement and Deposit and Sale

Agreement did not qualify as the Trust’s business records because they were

retrieved from the SEC’s online database, EDGAR. Assuming the Pool

Supplement and Deposit and Sale Agreement were retrieved from EDGAR, these

documents were nevertheless admissible as business records of the Trust because

the Trust showed (a) the documents are incorporated and kept in the course of the

Trust’s business, (b) it typically relies upon the accuracy of the contents of these

documents, and (c) the circumstances otherwise indicate that the documents are

trustworthy. Id. Holiday averred that it is TSI’s regularly conducted business

practice to incorporate prior loan records and documentation into TSI’s business

records and that she is familiar with the process by which TSI receives prior

account records. And if the Pool Supplement and Deposit and Sale Agreement

came from EDGAR, then the circumstances indicate they are trustworthy. See

Williams Farms Produce Sales, Inc. v. R&G Produce Co., 443 S.W.3d 250, 259

(Tex. App.—Corpus Christi 2014, no pet.) (documents printed from government

websites are self-authenticating).

8

The Savoys further argue that the Pool Supplement was inadmissible

because the copy proffered by the Trust is missing its final, fifth page. But the

Savoys themselves admit that the fifth page is simply a reference to the Pool

Supplement Schedule—which the Trust did proffer in redacted form. We hold that

the trial court did not abuse its discretion in admitting Pool Supplement and

Deposit and Sale Agreement.

2. Pool Supplement Schedule

Next, the Savoys argue that the Pool Supplement Schedule did not qualify as

the Trust’s business record because it was not made contemporaneously, it is not a

record of the Trust but rather the Trust’s indenture trustee, and it is not the

schedule referenced by the Pool Supplement attached to Holiday’s affidavit, as it

contains information relating to only one loan rather than all the loans pooled for

sale. As already discussed, in her affidavit, Holiday averred that the Pool

Supplement Schedule, like the other records, was made at or near the time of the

event it records. Just because the Pool Supplement Schedule is on file with the

Trust’s indenture trustee does not mean that it is not also on file with the Trust

itself. Holiday averred in her affidavit that the Pool Supplement Schedule was on

file with the Trust, and it was within the trial court’s discretion to rely on that

testimony. And it is unsurprising that the Pool Supplement Schedule only contains

information for one loan, as Holiday’s affidavit makes clear that it is a “redacted

9

copy.” That the information relating to the other loans is missing is not evidence

that the Trust proffered the wrong schedule. We hold that the trial court did not

abuse its discretion in admitting the Pool Supplement Schedule.

3. Loan Financial Activity Report, Deferment/Forbearance

Summary, and Repayment Schedule

Finally, the Savoys argue that the Loan Financial Activity Report,

Deferment/Forbearance Summary, and Repayment Schedule did not qualify as the

Trust’s business records because the print date on these documents (May 18, 2016)

shows that they were not made contemporaneously, were not kept in the course of

a regularly conducted business activity, and are untrustworthy. See TEX. R. EVID.

803(6)(A), (B), (E). The print date on these documents does not suggest that the

documents were prepared on the date they were printed. Each document includes

the date for each event recorded. The Loan Financial Activity Report records

events from August 25, 2005 to January 8, 2014; the Deferment/Forbearance

Summary records events from December 1, 2007 to February 28, 2009; and the

Repayment Schedule records events from December 17, 2007 to July 2, 2013.

These dates, considered together with Holiday’s affidavit testimony, show that the

records were kept contemporaneously and created before this litigation began to

track the repayment of the loan. Rule 803(6) only requires that the information be

recorded at or near the time of the event. It does not also require that the copy of

the record proffered into evidence be printed near the time of the event. It is

10

therefore irrelevant that new copies of the Loan Financial Activity Report,

Deferment/Forbearance Summary, and Repayment Schedule were printed after the

Trust filed its petition. We hold that the trial court did not abuse its discretion in

admitting the Loan Financial Activity Report, Deferment/Forbearance Summary,

and Repayment Schedule.

C. Whether documents were authenticated under Rule 902(10) or

otherwise

The Savoys further contend that the Trust failed to properly authenticate the

three documents relating to the assignment of the loan—the Pool Supplement, Pool

Supplement Schedule, and Deposit and Sale Agreement. The Trust responds that it

authenticated these documents through Holiday’s business-records affidavit.

Under Rule 902(10), business records are self-authenticating and require no

extrinsic evidence of authenticity if they meet the requirements of Rule 803(6) and

are accompanied by an affidavit that complies with subparagraph (B) of the rule

and any other requirements of law. TEX. R. EVID. 902(10). Subparagraph (B)

provides a template for a sufficient affidavit, which enumerates the elements of

Rule 803(6), discussed above. TEX. R. EVID. 902(10)(B).

Rule 902(10)(B) “does not require the affiant to identify the particular

person who originally created the business record in order to satisfy the

authentication predicate.” H2O Sols., Ltd. v. PM Realty Grp., LP, 438 S.W.3d 606,

622 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). “Testimony by a witness

11

or affiant identifying the exhibits as the business records of the proponent of the

evidence ‘is sufficient evidence to satisfy the authentication requirement of Rule

901(a), regardless of whether the witness had personal knowledge of the contents

of this evidence.’” Id. (quoting Concept Gen. Contracting, Inc. v. Asbestos Maint.

Servs., Inc., 346 S.W.3d 172, 181 (Tex. App.—Amarillo 2011, pet. denied)

(brackets omitted).

The Savoys argue that the Pool Supplement and Deposit and Sale

Agreement should have been authenticated either by a live witness or as certified

copies of public records under Rule 902(4)(B). We disagree. As discussed, a

proponent can authenticate a business record with an affidavit that complies with

Rule 902(10), which is what the Trust did here.

The Savoys further argue that the Pool Supplement Schedule was not

properly authenticated because the schedule was never identified by Holiday.

Again, we disagree. In her affidavit, Holiday stated that the Pool Supplement

Schedule was “a redacted copy of the Schedule of transferred loans referenced

within the Pool Supplement.” Thus, the Pool Supplement Schedule was

sufficiently identified.

We conclude that Holiday’s affidavit complies with Rule 902(10)(B). See

TEX. R. EVID. 803(6), 902(10)(B). Thus, the Trust’s business records—including

the Pool Supplement, Pool Supplement Schedule, and Deposit and Sale

12

Agreement—are self-authenticating and require no extrinsic evidence of

authenticity to be admitted. See TEX. R. EVID. 902; Foster v. Nat’l Collegiate

Student Loan Tr. 2007-4, No. 01-17-00253-CV, 2018 WL 1095760, at *6 (Tex.

App.—Houston [1st Dist.] Mar. 1, 2018, no pet.) (mem. op.) (in similar case,

holding that affidavit of employee of loan’s subservicer complied with Rule

902(10)(B) and that attached business records were self-authenticating).

We overrule the Savoys’ first issue.

Sufficiency of Evidence

In their second issue, the Savoys contend that there is legally and factually

insufficient evidence to support the trial court’s judgment.

A. Standard of review

In an appeal from a bench trial, the trial court’s findings of fact have the

same weight as a jury verdict. Choice! Power, L.P. v. Feeley, 501 S.W.3d 199, 208

(Tex. App.—Houston [1st Dist.] 2016, no pet.). When challenged, a trial court’s

findings of fact are not conclusive if there is a complete reporter’s record on

appeal. Id.

We review a trial court’s findings of fact under the same legal-sufficiency-

of-the-evidence standard used when determining whether sufficient evidence exists

to support an answer to a jury question. Id. When considering whether legally

sufficient evidence supports a challenged finding, we must consider the evidence

13

that favors the finding if a reasonable factfinder could, and disregard contrary

evidence unless a reasonable factfinder could not. Id. We view the evidence in the

light most favorable to a finding and indulge every reasonable inference to support

it. Id.

When, as here, a party attacks the legal sufficiency of an adverse finding on

an issue on which she did not have the burden of proof, she must demonstrate on

appeal that no evidence supports the adverse finding. Graham Cent. Station, Inc. v.

Pena, 442 S.W.3d 261, 263 (Tex. 2014) (per curiam). We may sustain a legal-

sufficiency challenge to a trial court’s finding only when (1) the record discloses a

complete absence of evidence of a vital fact, (2) the court is barred by rules of law

or of evidence from giving weight to the only evidence offered to prove a vital

fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla,

or (4) the evidence establishes conclusively the opposite of a vital fact. Feeley, 501

S.W.3d at 208.

The Savoys contend that there is insufficient evidence that (1) they entered

into a valid student loan contract with JPMorgan Chase, (2) the loan was assigned

to the Trust, (3) interest accrued at the rate alleged by the Trust, and (4) the Trust

accelerated repayment of the loan. We consider each contention in turn.

14

B. Sufficient evidence of formation of student loan contract

First, the Savoys contend that there is insufficient evidence that they entered

into a valid loan contract with the loan’s originator, JPMorgan Chase. The Trust

responds that the Credit Agreement and Disclosure Statement are sufficient

evidence that the Savoys entered into a loan contract with JPMorgan Chase.

“To prevail on a breach of contract claim, a party must establish the

following elements: (1) a valid contract existed between the plaintiff and the

defendant; (2) the plaintiff tendered performance or was excused from doing so;

(3) the defendant breached the terms of the contract; and (4) the plaintiff sustained

damages as a result of the defendant’s breach.” West v. Triple B Servs., LLP, 264

S.W.3d 440, 446 (Tex. App.—Houston [14th Dist.] 2008, no pet.). The elements of

a valid contract are (1) an offer, (2) an acceptance, (3) a meeting of the

minds, (4) each party’s consent to the terms, and (5) execution and delivery of the

contract with the intent that it be mutual and binding. Beverick v. Koch Power,

Inc., 186 S.W.3d 145, 150 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).

When an offer prescribes the manner of acceptance, compliance with those terms is

required to create a contract. Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex.

1995). If one party signs a contract, the other party may accept by his acts,

conduct, or acquiescence to the terms, making it binding on both parties. Jones v.

Citibank (S.D.), N.A., 235 S.W.3d 333, 338 (Tex. App.—Fort Worth 2007, no

15

pet.). To be enforceable, a contract must be sufficiently certain to enable a court to

determine the rights and responsibilities of the parties. Williams v. Unifund CCR

Partners Assignee of Citibank, 264 S.W.3d 231, 236 (Tex. App.—Houston [1st

Dist.] 2008, no pet.).

The Credit Agreement is signed by Rebecca Savoy, as borrower, and

Theresa Savoy, as cosignor, and is dated August 18, 2005. It shows that the Savoys

applied for a student loan in the amount of $15,000 from JPMorgan Chase under

its Education One Undergraduate Loan program to finance Rebecca’s education at

the University of Houston for the academic period of August 2005 to May 2006.

Under the Credit Agreement, the Savoys promised to pay any loan made to

them by JPMorgan Chase:

I promise to pay to your order, upon the terms and conditions of this

Credit Agreement, the principal sum of the Loan Amount Requested

shown on the first page of this Credit Agreement, to the extent it is

advanced to me or paid on my behalf, and any Loan Origination Fee

added to my loan (see Paragraph F) (“Principal Sum”), interest on

such Principal Sum, interest on any unpaid interest added to the

Principal Sum, and other charges set forth herein.

The Credit Agreement set forth the method by which the Savoys would

agree to the terms of any loan offered by JPMorgan Chase:

By signing this Credit Agreement, and submitting it to you, I am

requesting that you make this loan to me in an amount equal to the

Loan Amount Requested plus any Loan Origination Fee . . . . I agree

to accept an amount less than the Loan Amount Requested and to

repay that portion of the Loan Amount Requested that you actually

lend to me. . . .

16

If you agree to make a loan to me, you will mail me the disbursement

check (the “Disbursement Check”) and a statement disclosing certain

information about the loan in accordance with the federal Truth-in-

Lending Act (the “Disclosure Statement”). . . . In addition to other

information, the Disclosure Statement will tell me the amount of my

disbursement and the amount of the Loan Origination Fee. The

Disclosure Statement is part of this Credit Agreement. Upon receipt of

the Disclosure Statement, I will review the Disclosure Statement and

notify you in writing if I have any questions. My endorsement of the

Disbursement Check or allowing the loan proceeds to be used by or

on behalf of the Student without objection will acknowledge receipt of

the Disclosure Statement and my agreement to be legally bound by

this Credit Agreement.

And the Credit Agreement set forth the method by which the Savoys could

cancel the loan:

If I am not satisfied with the terms of my loan as disclosed in the

Disclosure Statement, I may cancel my loan. To cancel my loan, I will

give you a written cancellation notice, together with my unused

Disbursement Check or, if I have already endorsed and delivered the

Disbursement Check to the School, a good check, payable to you, in

the full amount of the Disbursement Check.

The Credit Agreement also addressed deferment periods, terms of

repayment, interest, default, and acceleration.

The Disclosure Statement shows that, on August 25, 2005, JPMorgan Chase

approved the Savoys’ loan request and disbursed to Rebecca loan proceeds in the

amount of $15,000 for Loan No. 03206792. The terms included an origination fee

of $1,042.78; interest at 8.407 percent; and 240 payments of $149.95, due on the

first day of each month, starting July 1, 2007.

17

Thus, the evidence shows that the Savoys applied for a loan from JPMorgan

Chase, JPMorgan Chase offered the Savoys a loan on the terms set forth in the

Credit Agreement and Disclosure Statement, and the Savoys accepted the offer by

allowing the loan proceeds to be used by or on behalf of Rebecca without

objection.

The Savoys nevertheless argue that the evidence is insufficient to show a

valid contract because, although the Credit Agreement contains a promise, the

promise was qualified as follows: “I promise to pay to your order, upon the terms

and conditions of this Credit Agreement, the principal sum of the Loan Amount

Requested shown on the first page of this Credit Agreement, to the extent it is

advanced to me or paid on my behalf . . . .” (Emphasis added.) The Savoys contend

that their promise to pay was “contingent” on the loan being approved and,

because JPMorgan Chase had not yet approved the application when the Savoys

signed it, there could not yet have been a meeting of the minds on the essential

terms of the contract, including the amount of the loan and the cost-of-credit terms.

The Savoys recognize that the terms do appear on the Disclosure Statement, but

they contend that the Disclosure Statement cannot be part of the agreement

because it is dated August 25, 2005, which is seven days after the date the Credit

Agreement was signed. The Savoys contend that, although they signed the Credit

Agreement, it does not, without more, constitute a binding contract. We disagree.

18

The Credit Agreement and Disclosure Statement, taken together, evince the

essential terms of the loan, including the amount of the loan. The Disclosure

Statement evinces the Savoys’ assent to those terms. See Mock v. Nat’l Collegiate

Student Loan Tr. 2007-4, No. 01-17-00216-CV, 2018 WL 3352913, at *6–7 (Tex.

App.—Houston [1st Dist.] July 10, 2018, no pet. h.) (mem. op.) (in similar case,

holding that credit agreement and disclosure statement constituted sufficient

evidence of essential loan terms); Foster, 2018 WL 1095760, at *10.

The Savoys’ argument overlooks “well-established law that instruments

pertaining to the same transaction may be read together to ascertain the parties’

intent, even if the parties executed the instruments at different times and the

instruments do not expressly refer to each other.” Fort Worth Indep. Sch. Dist. v.

City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000). Courts may construe all the

documents as if they were part of a single, unified instrument. Id.

The Savoys further argue that there is insufficient evidence that JPMorgan

Chase disbursed the loan proceeds because the Trust failed to present a signed

disbursement check. However, a signed disbursement check was unnecessary to

prove that the proceeds were disbursed because the Trust presented the Disclosure

Statement, which states that the proceeds were disbursed on August 25, 2005. The

Savoys do not argue that the Disclosure Statement is inaccurate. Nor do they point

19

us to evidence that they cancelled or attempted to cancel the loan after JPMorgan

Chase deposited the loan proceeds.

We hold that there is legally and factually sufficient evidence that the

Savoys entered into a student loan contract with JPMorgan Chase.

C. Sufficient evidence of assignment

Next, the Savoys contend that there is insufficient evidence that the loan was

assigned to the Trust. The Trust responds that the Pool Supplement, redacted Pool

Supplement Schedule, and Deposit and Sale Agreement show that the loan was

assigned by JPMorgan Chase to The National Collegiate Funding LLC and then by

National Collegiate to the Trust.

Under the Pool Supplement,4 JPMorgan Chase sold and assigned to National

Collegiate each student loan listed on an attached Pool Supplement Schedule. And

National Collegiate, in turn, agreed to sell the loans to the Trust.

The redacted Pool Supplement Schedule contains the information for one of

the loans that was sold and assigned under the Pool Supplement. 5 This information,

when cross-referenced with the Credit Agreement, Disclosure Statement, and Loan

4

The Pool Supplement is a supplement to two earlier Amended and Restated Note

Purchase Agreements—one dated May 1, 2002 and the other dated July 26,

2002—by and between The First Marblehead Corporation and Bank One, N.A.

(Columbus Ohio) by its successor by merger, JPMorgan Chase Bank, N.A.

5

In her affidavit, Holiday describes the document as “a redacted copy of the

Schedule of transferred loans referenced within the Pool Supplement.”

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Payment History Report, discussed below, shows that the referenced loan is the

loan that JPMorgan Chase made to the Savoys. Among other information, the Pool

Supplement Schedule identifies the loan by the lender (Bank One),6 the loan

program (Education One Undergraduate), the borrower’s social security number

(matching the number provided by Rebecca Savoy in the Credit Agreement), and

the principal balance (matching the balance of the Savoys’ loan as of the date of

the Pool Supplement).

Under the Deposit and Sale Agreement, National Collegiate sold and

assigned to the Trust the student loans pooled under various pool supplements

listed on an attached Schedule A. Schedule A to the Deposit and Sale Agreement

lists the Pool Supplement under which JPMorgan Chase sold and assigned the

Savoys’ loan to National Collegiate—i.e., the Pool Supplement “entered into by

and among The First Marblehead Corporation, The National Collegiate Funding

LLC and . . . Bank One, N.A., dated October 12, 2005, for loans that were

originated under Bank One’s . . . Education One Loan Program . . . .”

In sum, the Pool Supplement shows that JPMorgan Chase transferred, sold,

and assigned to National Collegiate the student loans listed on the attached Pool

Supplement Schedule and that National Collegiate agreed to sell those loans to the

6

In July 2004, Bank One merged with JPMorgan Chase. In some parts of the

record, the loan’s originator is identified as Bank One, while in others, it is

identified as JPMorgan Chase.

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Trust. The redacted Pool Supplement Schedule shows that the loan JPMorgan

Chase made to the Savoys was among those sold to National Collegiate. And the

Deposit and Sale Agreement shows that National Collegiate sold and assigned to

the Trust the student loans listed on each pool supplement listed on an attached

Schedule A, which lists the Pool Supplement under which JPMorgan Chase

assigned the Savoys’ loan to National Collegiate. Thus, these three documents

show that JPMorgan Chase assigned the Savoys’ loan to National Collegiate,

which, in turn, assigned the loan to the Trust. We hold that there is sufficient

evidence that the Savoys’ loan was assigned to the Trust. See Mock, 2018 WL

3352913, at *7 (holding that pool supplement, redacted loan transfer schedule, and

deposit and sale agreement constituted sufficient evidence that loan was assigned

to trust by originator through intermediary); Foster, 2018 WL 1095760, at *7–8

(same).

D. Sufficient evidence of interest rate

Next, the Savoys contend that there is insufficient evidence of the loan’s

interest rate during the term of the loan.

The Credit Agreement in paragraph D discusses in detail how interest on the

Savoys’ loan was to be calculated throughout its term and provides for

capitalization of interest during deferment. Paragraph I also provides for

capitalization of interest and fees upon default. The Disclosure Statement states an

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annual percentage rate of 8.407 percent, with a variable rate based on the average

of the one-month LIBOR index published in the “Money Rates” section of The

Wall Street Journal on the first business day of each of the three calendar months

immediately preceding the first day of each calendar quarter. The Loan Financial

Activity Report lists the amount of “Interest Accrued” each month on the Savoys’

loan through January 8, 2014.

The Savoys provide no evidence and do not contend that the interest rate

reflected in these documents is in any way incorrect. Nor do they provide any

authority for their argument that the Trust was required to support its claim with

calculations supporting each month’s interest computation over the life of the loan.

We hold that there is sufficient evidence of the loan’s interest rate. See

Mock, 2018 WL 3352913, at *7 (holding that credit agreement, disclosure

statement, and loan financial activity report constituted sufficient evidence of

loan’s interest rate); Foster, 2018 WL 1095760, at *11 (same).

E. Insufficient evidence of acceleration

The Savoys contend that there is insufficient evidence that the maturity of

the loan was accelerated.

The Disclosure Statement reflects that the Savoys agreed to pay the loan

over a period of 20 years, with payments beginning in July 2007. The Credit

Agreement states that, to the extent permitted by law, in the event of a default on

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the loan, the Trust “will have the right to give [the Savoys] notice that the whole

outstanding principal balance, accrued interest, and all other amounts payable to

[the Trust] under the terms of this Credit Agreement are due and payable at once.”

“Where the holder of a promissory note has the option to accelerate maturity

of the note upon the maker’s default, equity demands notice be given of the intent

to exercise the option.” Ogden v. Gibraltar Sav. Ass’n, 640 S.W.2d 232, 233 (Tex.

1982). “The accelerated maturity of a note, which is initially contemplated to

extend over a period of months or years, is an extremely harsh remedy.” Allen

Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863, 866 (Tex. 1975). A creditor

“must give the debtor an opportunity to pay the past due installments before

acceleration of the entire indebtedness; therefore, demand for payment of past due

installments must be made before exercising the option to accelerate.” Williamson

v. Dunlap, 693 S.W.2d 373, 374 (Tex. 1985) (emphasis omitted). The note holder

must also notify the maker both of its intent to accelerate and of the acceleration.

Ogden, 640 S.W.2d at 233–34.

There is no evidence in the record before us that the Trust provided the

Savoys with either of the required notices. The Trust alleged in its petition that, as

a prerequisite to acceleration, it served the Savoys with a letter demanding

payment in full. However, the demand letter is not part of the record, and pleadings

are not evidence.

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We hold that the evidence is legally and factually insufficient to support the

full amount of actual damages awarded. See Mock, 2018 WL 3352913, at *8

(holding that evidence was insufficient to show acceleration when trust presented

no evidence that it provided debtor with notice of acceleration); Foster, 2018 WL

1095760, at *11–12 (same).

When acceleration is invalid, the plaintiff is entitled to judgment against the

defendant only “for past due installments plus accumulated interest as provided in

the note.” Williamson, 693 S.W.2d at 374.

The Savoys request that we “reform the judgment to an amount

commensurate with the sum of missed installment payments through the date the

petition was filed” or, alternatively, “suggest a remittiture to accomplish a proper

adjustment of the amount of contract damages proven by the admissible evidence

as having been caused by breach of contractual duties.” The evidence shows that,

the sum of all monthly payments due, beginning on July 1, 2007, as stated in the

Disclosure Statement, through the date of the filing of suit, April 15, 2016, is

$15,894.70.7

A court of appeals may suggest a remittitur when there is insufficient

evidence to support the full amount of damages awarded but sufficient evidence to

support a lesser award. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. &

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Calculated as $149.95 in monthly payments over 106 months.

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Research Corp., 299 S.W.3d 106, 124 (Tex. 2009); see TEX. R. APP. P. 46.3. If part

of a damage verdict lacks sufficient evidentiary support, the proper course is to

suggest a remittitur of that part of the verdict, giving the party prevailing in the

trial court the option of accepting the remittitur or having the case remanded for a

new trial. Akin, Gump, 299 S.W.3d at 124.

As set out above, the record contains some evidence that breach-of-contract

damages exist, but, without evidence of notice of acceleration, the evidence does

not support the full amount awarded by the trial court. The evidence does,

however, allow us to determine a lesser award. See ERI Consulting Eng’rs, Inc. v.

Swinnea, 318 S.W.3d 867, 877–78, 880 (Tex. 2010) (holding there was “legally

sufficient evidence to prove a lesser, ascertainable amount of lost profits with

reasonable certainty,” and remanding case to court of appeals to consider

suggestion of remittitur).

Based on the record, the evidence is legally and factually sufficient to

support a lesser damages finding of $15,894.70, which represents the sum of all

monthly payments due, beginning on July 1, 2007, as stated in the Disclosure

Statement, through the filing of suit on April 15, 2016. See Mock, 2018 WL

3352913, at *9 (suggesting remittitur when plaintiff-trust failed to prove

acceleration of loan’s maturity); Foster, 2018 WL 1095760, at *12 (same); see

also PNS Stores, Inc. v. Munguia, 484 S.W.3d 503, 513 (Tex. App.—Houston

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[14th Dist.] 2016, no pet.) (suggesting remittitur to “the highest amount of actual

damages supported by the evidence”).

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

Standing

In their third issue, the Savoys argue that the Trust lacked standing to sue

because the loan was paid in full by the loan’s second guarantor, The Education

Resources Institute, Inc. TERI is a nonprofit organization that provides guaranties

for private education loans. The Credit Agreement states that JPMorgan Chase

“purchased a guaranty” from TERI. According to the Savoys, the last entry in the

Loan Financial Activity Report reflects a principal balance of zero dollars, which

shows that TERI assumed and paid the debt after the Savoys defaulted. We

disagree.

The Loan Financial Activity Report reflects that the principal balance

decreased to zero when a $20,492.05 “transaction” occurred in January 2014. The

Loan Payment History Report reflects that the “transaction” did not refer to TERI

paying the debt; rather, it referred to the Trust charging off the debt. The Savoys

have failed to proffer any evidence that, contrary to these reports, the principal

balance decreased to zero because the debt was paid by TERI. See Mock, 2018 WL

3352913, at *9 (holding that borrowers failed to show debt was paid by TERI

when they failed to proffer evidence of such payment).

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We overrule the Savoys’ third issue.

Conclusion

We conclude that the evidence is insufficient to support the trial court’s

award of actual damages in the amount of $20,492.05 but is sufficient to support

an award of actual damages in the amount of $15,894.70. Thus, we suggest a

remittitur of the actual damages award to $15,894.70. In accordance with Rule

46.3 of the Texas Rules of Appellate Procedure, if the Trust files with this Court,

within fifteen days of the date of this opinion, a remittitur to that amount, the trial

court’s judgment on damages will be modified and affirmed. See TEX. R. APP. P.

46.3. If the suggested remittitur is not timely filed, the trial court’s judgment will

be reversed and the cause will be remanded for a new trial on liability and

damages. See Rancho La Valencia, Inc. v. Aquaplex, Inc., 383 S.W.3d 150, 152

(Tex. 2012) (holding that if party rejects remittitur, court of appeals must remand

for new trial on liability and damages).

Harvey Brown

Justice

Panel consists of Justices Keyes, Brown, and Lloyd.

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