Appendix — Lundquist v. Premier Financial Services-Texas, L. P.

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961456 MAR 51997

OFFICE OF THE CLaNK

DOCKET No.

IN THE

SUPREME COURT OF THE UNITED STATES

1996 TERM

WAYNE A. LUNDQUIST, JR., PETITIONER

-VS-

PREMIER FINANCIAL SERVICES - TEXAS, L.P.,

RESPONDENT

APPENDIX

TO

PETITION FOR A WRIT OF CERTIORARI

Shelby A. Jordan

JORDAN, HYDEN, WOMBLE AND

CULBRETH, P.C.

900 NationsBank Center North

Corpus Christi, Texas 78471

Telephone No. (512) 884-5678

Telecopier No. (512) 888-5555

ATTORNEY IN CHARGE _ FOR

PETITIONER

OUI OS Ee ig .

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 96-40079

Summary Calendar

PREMIER FINANCIAL SERVICES - TEXAS L. P.,

Plaintiff-Counter Defendant-Appellee,

VERSUS

WAYNE A. LUNDQUIST, JR., ET AL.,

Defendants,

WAYNE A. LUNDQUIST, JR.,

Defendant-Counter ClaimantAppellant.

Appeal from the United States District Court

For the Southern District of Texas

(C-94-CV-545)

Before JONES, DeMOSS, and PARKER, Circuit Judges.

PER CURIAM*

On July 26, 1996, this Court stayed further

* Pursuant to Local Rule 47.5, the Court has

determined that this opinion should not be published

and is not precedent except under the limited

circumstances set forth in Local Rule 47.5.4.

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consideration of this appeal pending an order of the

United States Bankruptcy Court for the Southern District

of Texas lifting the automatic stay of that court in the

Chapter 11 bankruptcy proceeding No. 96-22457-C11

filed by appellant Wayne A. Lundquist, Jr. Such

automatic stay has now been lifted by the bankruptcy

court and we proceed with consideration of this appeal.

Premier Financial Services - Texas L.P. ("Premier")

sued Wayne A. Lundquist, Jr. ("Lundquist") and others

on a written guaranty agreement executed by Lundquist,

guaranteeing the payment of a promissory note dated

October 24, 1983, executed by Nueces Development

Company payable to Victoria Savings Association in the

original principal sum of $793,000 one year after date.

The maturity date of this note was ultimately extended

by various renewal and extension agreements until

September 19, 1987. The Resolution Trust Corporation

("RTC") was appointed conservator of Victoria Savings

Association on June 29, 1989. In December 1990, after

making demand on the maker and Lundquist for

payment of this note, the RTC proceeded to foreclose

upon the secured property and sold the secured

property at public auction for the sum of $161,028,

which was credited against the note. In January 1994, the

RTC as receiver for Victoria Savings Association FSA.

transferred the note and guaranty, along with all right,

title and interest therein, to Premier. On December 16,

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1994, Premier brought this suit upon his guaranty

against Lundquist seeking to

the remaining amounts due and owing on the note. In

September 1995, Premier moved for a summary

judgment on its claims against defendant Lundquist and

on Lundquist's counterclaim against Premier. On

December 6, 1995, the district court granted Premier's

motion for a summary judgment and by a corrected final

judgment entered under date of December 29, 1995,

granted recovery in the amount of $606,345.08 against

Lundquist.

We have carefully reviewed the briefs, the record

excerpts and relevant portions of the record itself; and

for the reasons stated by the district court in its order

granting motion for summary judgment entered under

date of December 6, 1995, we affirm the final judgment

entered under date of December 29, 1995.

AFFIRMED.

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UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 96-40079

PREMIER FINANCIAL SERVICES - TEXAS L. P.,

Plaintiff-Counter Defendant-Appellee,

V.

WAYNE A. LUNDQUIST, JR., ET AL.,

Defendants,

WAYNE A. LUNDQUIST, JR.,

Defendant-CounterClaimant-Appellant.

Appeal! from the United States District Court

For the Southern District of Texas, Corpus Christi

Before JONES, DeMOSS, and PARKER, Circuit Judges.

IT IS ORDERED that the petition for rehearing filed

in the above case is denied.

ENTERED FOR THE COURT: (Filed December 5, 1996)

[S/ Harold R. DeMoss

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

PREMIER FINANCIAL §

SERVICES - §

TEXAS, L-P., §

Plaintiff §

§ C.A. No. C-94-545

VS. §

§

WAYNE A. LUNDQUIST, §

JR. §

and JAMES E. GUNN, §

Defendants. §

ORDER GRANTING MOTION FOR SUMMARY

JUDGMENT

On this date came on to be considered a Motion for

Summary Judgment by Plaintiff Premier Financial

Services - Texas, L.P. ("Premier") against Defendant

Wayne A. Lundquist ("Lundquist").

lL JURISDICTION

This Court has jurisdiction on the basis of diversity

of citizenship of the parties pursuant to 28 U.S.C. § 1332.

Ii, FACTS AND PROCEEDINGS

On October 24, 1983, Nueces Development

Company ("Debtor") executed and delivered to Victoria

Savings Association a Promissory Note ("Note")

whereby Debtor promised to pay unto the order of

Victoria Savings Association the principal sum of

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$793,000.00, together with interest thereon on or before

the expiration of 365 days from the date of the execution

of the Note. The Note was subsequently extended and

renewed by various extension and renewal agreements

dated November 21, 1984, July 24, 1984, July 22, 1986, |

and March 30, 1987. Pursuant to the terms of the last |

extension and renewal agreement, the Note matured on

September 19, 1987.

Also on October 24, 1983, Nueces Development

Company executed and delivered a Deed of Trust

Security Agreement Financing Statement-("Deed of

Trust"), conveying to the Trustee for the benefit of

Victoria Savings Association, and its successors and

assigns, certain property as security for the debt owed

on the Note. Further, on that same date, Defendant

Lundquist, along with others, by and through a Guaranty

Agreement ("Guaranty"), individually guaranteed in

writing the payment of the indebtedness evidenced by

the Note.

The Resolution Trust Corporation ("RTC") was

appointed conservator of Victoria Savings Association on

June 29, 1989. On December 11, 1990, in its capacity as

conservator of Victoria Savings Association, the RTC

made demand upon Nueces Development Company and

Defendant Lundquist for payment of the Note. Both

Nueces Development Company and Lundquist failed to

meet such demand. As a result, the RTC proceeded with

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the foreclosure sale of the secured property pursuant to

the terms of the Deed of Trust. The property sold at

public auction for the sum of $161,028. After the

application of the sale price to the unpaid balance on the

Note, a balance of $606,345.08 remained due and owing

on the Note, including principle, interest, and attorney's

fees.

On January 14, 1994, the RTC as receiver for

Victoria Savings Association, F.S.A., transferred the

subject Note and Guaranty, along with all right, title and

interest therein to Plaintiff Premier. On December 16,

1994, Premier brought this cause of action to recover the

~ amount owed and due plus interest against Defendant

Lundquist based upon his guarantee of the note.

On June 14, 1995, this Court granted Defendant's

motion for leave to file a first amended answer,

affirmative defenses, and counterclaim ("first amended

answer’) Defendant's first amended answer is the only

proper pleading before this Court at this time In the first

amended answer, Defendant raises the following

affirmative defenses to Plaintiff's cause of action: (1)

Texas's four-year statute or in the alternative, the

coctrine of laches bars Plaintiffs suit; (2) wrongful

foreclosure; and (3) usury As a counterclaim, Defendant

asserts that the Guaranty Agreement is usurious on its

face.

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On September 20, 1995, Premier moved for

Summary Judgment on its entire claim against

Defendant Lundquist, and on Defendant Lundquist's

counterclaim against Plaintiff for usury. On October 13,

1995, Plaintiff supplemented its Motion for Summary

Judgment with a Reply to Defendant's Response to

Premier's Motion for Summary Judgment.

Il, DISCUSSION

A. Standard for Summary Judgment

Summary judgment is proper, pursuant to

FED.R.CIV.P. 56(c), when "the pleadings, depositions,

answers to interrogatories, and admissions file, together

with the affidavits, if any, show that there is no genuine

issue of material fact and that the moving party is

entitled to judgment as a matter of law." A party seeking

summary judgment bears the initial burden of informing

the Court of the basis for its motion and of identifying

those portions of the record and affidavits which

evidence an absence of material fact. Celotex Corp. v

Catrett, 477 U.S. 317, 324 (1986). Once the movant has

met its burden, it is then incumbent upon the non-

movant to show that disputed issues of fact remain State

Farm Life Ins. Co. v. Gutterman, 896 F 2d 116, 118 (Sth

Cir 1990). The Court, in turn, must view all inferences

from the evidence in the light most favorable to the non-

movant. Anderson v. Liberty Lobby Inc., 477 U.S. 242,

255 (1986).

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The movant's summary judgment evidence must

sufficiently indicate the failure of an essential element of

the non-movant's claim. Celotex Corp., 477 U.S. at 322.

A complete failure of proof on an essential element

renders all other facts immaterial because there is no

longer a genuine issue of material fact. Id. at 323. Rule

56(c) requires the Court to enter summary judgment if

the evidence favoring the non-moving party is not

sufficient for the jury to enter a verdict in his favor.

Anderson, 477 U.S. at 249.

In proceedings under Rule 56(c), documents and

exhibits identified by affidavit may be submitted to

support a motion for summary judgment. First Nat

Bank Co. of Clinton III. v Insurance Co of North Am _, 606

F.2d 760, 766 (Sth Cir. 1979). Along with its Motion for

Summary Judgment, Premier provided an affidavit of

Lisa A. Bullock, an asset manager of Premier, which

identified copies of the Note, Guaranty, loan agreement,

Deed of Trust, and the renewal and extension

agreements. In Defendant's First Amended Response to

Premier's Motion for Summary Judgment, Lundquist

provided an Affidavit by Robert Thorpe and himself.

B. Defendant's Usury Counterclaim and

Affirmative Defense

As an affirmative defense and counterclaim,

Defendant maintains that the Guaranty constitutes a

contract for, or a charge of, interest in a greater amount

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than permitted by law. Under Texas law, usury is defined

as “interest in excess of the amount allowed by law."

TEX.REV.CIV.STAT.ANN art 5069-1.01(d). The essential

elements of a usurious transaction are (1) a loan of

money; (2) an absolute obligation that the principal be

repaid; and (3) the extraction from the borrower of a

greater compensation than the amount allowed by law

for the use of money by the borrower. Holley v. Watts,

629 S.W.2d 694, 696 (Tex. 1982).

Where a transaction appears lawful on its face, the

party claiming usury has the burden of proof. Americaa

Century Mortgage Investors v Regional Center. Ltd., 529

S.W.2d 578, 583 (Tex.Civ.App.--Dallas 1975, writ ref'd

n.r.e.). Conversely, where the loan instruments show on

their face that the loan is usurious, the lender has the

burden to prove that the terms of the loan resulted from

accidental and bona fide error. Miller v. First State Bank,

551 S.W.2d 89, 99 (Tex.Civ.App.--Fort Worth 1977),

modified on other grounds, 563 S.W.2d 572 (Tex. 1978).

Here, the Court finds that the Guaranty appears lawful on

its face, and therefore, Lundquist has the burden of proof

on the claim of usury See, American Century Mortgage

Investors, 529 S.W.2d at 583.

The Court finds that Lundquist has not met his

burden of proof He offers no credible evidence

establishing that the Guaranty is usurious or that the any

of the elements for a claim of usury have been satisfied.

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EEO

Lundquist contends that the Guaranty is usurious

since, as written, it provides for his liability even if the

Debtor has satisfied its obligations under the Note. To

support this allegation, Lundquist directs the Court's

attention to language in the Guaranty providing that if

the

Borrowers are not liable, for any reason, for

any reason, for the amounts due or which may

become due under the said promissory note . .

such facts shall in no manner affect the liability

of the Guarantors hereunder, but the

Guarantors shall be and remain liable herein

notwithstanding said Borrowers be not liable

for such indebtedness, and to the same extent

as the Guarantors would have been liable if the

indebtedness of said Borrower has been

enforceable against them.

(Pl.'s Mot Summ. J Ex. A-2, Guaranty Agreement at 2).

This Court disagrees with Defendant's construction of

the Guaranty since it previously found that such

interpretation of the Guaranty Agreement was

unconvincing at best when the Court denied Defendant's

motion for summary judgment on his counterclaim for

usury on July 24, 1995.

Further, even assuming Defendant presented some

evidence that the Guaranty is usurious, this claim would

fail as a matter of law since the Guaranty refers to the

Note which contains a usury savings clause. Texas

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courts have repeatedly acknowledged the validity of

usury savings clauses and enforce such clauses to defeat

violations of the usury laws. Woodcrest v.

Commonwealth Mortgage, 775 S W 2d 434, 437 (Tex.

App --Dallas 1989). The Court examines the usury

savings clause in the Note because “[t]he question of

usury must be determined by a construction of all the

documents constituting the transaction, interpreted as a

whole, and in light of the attending circumstances.”

Tygrett v University Gardens Homeowners’ Ass'n, 687 S

W 2d 481, 485 (Tex.App.--Dallas 1985, writ refd n.r.e.).

The usury savings clause reads as follows:

All agreements between Maker and Payee are

expressly limited so that no contingency or

event whatsoever shall the amount paid, or

agreed to be paid, to Payee for the use,

forbearance, or detention of the money to be

lent hereunder exceed the maximum amount

permissible under applicable law. If, from any

circumstances whatsoever, fulfillment of any

provision hereof at the time such performance

is due would involve transcending the limit of

validity prescribed by law, then ipso facto the

obligation to be fulfilled shall be reduced to

the limit of such the obligation to be fulfilled

shall be reduced to the limit of such validity,

and if from any circumstances Payee shall

receive as interest an amount that would

exceed the highest lawful rate, such amount

that would be excessive interest shall be

applied to the reduction of the principal

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amount owing hereunder, or shall be refunded,

but shall not be applied to payment of interest.

(Pl.’s Mot. Summ. J. Ex. A-l, Promissory Note at 1).

The Court finds that the preceding provision in the

Note constitutes a valid usury savings clause. As such,

even if Lundquist could show some evidence that the

Guaranty Agreement is usurious, this claim would fail

since the Court would enforce the usury savings clause

to defeat a violation of the usury laws.

Accordingly, the Court GRANTS Plaintiff's Motion

for Summary Judgment on Defendant's usury

counterclaim, and affirmative defense.

B.__ Plaintiff's Claim Under G y )

Premier moves for summary judgment on its claim

against Defendant Lundquist under the Guaranty

Agreement To prevail in its motion for summary

judgment, Premier must establish that (1) Defendant

executed the guaranty; (2) that the underlying note is in

default; (3) that Plaintiff is the present holder of the

guaranty; and (4) that a certain balance is due and owing.

Sunbelt Sav. FSB. Dallas Tex. v Birch, 796 F.Supp. 991,

995 (N.D. Tex. 1992); Universal Metals and Machinery.

Inc v Bohart, 539 S.W.2d 874, 877-78 (Tex. 1976).

In the present case, the uncontroverted facts

establish all four elements for a cause of action under a

guaranty agreement. First, on October 24, 1983,

Defendant, along with others, executed the Guaranty

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Agreement by individually promising in writing the

payment of the indebtedness evidenced by the Note.

Second, the underlying note is in default since Debtor

and Defendant refused to pay the RTC the indebtedness

under the Note when the RTC demanded payment.

Third, Premier established that it is a holder of the

Guaranty through the affidavit by Lisa E. Bullock. (PI.'s

Mot. Summ J. Ex. A). A party can show its status as an

owner or the holder of a guaranty by offering an affidavit

sworn copy of the Guaranty. Zarges v. Bevan, 652 S W

2d 368, 369 (Tex 1983); Life Ins. Co. v. Gar-Dal. Inc., 570

S.W 2d 378, 380 (Tex. 1979); State Sav. & Loan Ass'n v.

Liberty Trust Co., 863 F 2d 423, 426 (Sth Cir 1989)

Fourth, the affidavit of Lisa E. Bullock establishes that a

certain amount is due and owing under the Note--i.e.,

$606,345.08 together with interest from and after

January 1, 1991, at the rate allowed by the laws as

provided in the Note, together with costs (Pl ‘s Mot.

Summ. J. Ex. A).

In addition, a district court may properly grant

summary judgment when a contract is unambiguous,

but may not grant summary judgment when a contract

is ambiguous and the parties’ intent presents a genuine

issue of material fact. Southern Natural Gas Co. v. Pursue

Energy, 781 F.2d 1079, 1081 (Sth Cir. 1986); Union

Planters National Leasing. Inc. v. Woods, 687 F.2d 117,

120 (Sth Cir. 1982); Freeman v. Continental Gin Co, 381

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ea

F.2d 459, 465 (Sth Cir. 1967). Pursuant to this principle,

the Fifth Circuit has held that summary judgment is

particularly appropriate for suits on promissory notes!

and in cases where the language of a guaranty contract

is clear.2 This suit particularly invites summary

judgment since it requires little more than this Court's

interpretation of an unambiguous written guaranty

agreement.

The Texas rules for interpreting guaranty

agreements are well-established. In construing a

guaranty contract, the primary concern for this Court is

to ascertain the intent of the parties Coker v. Coker, 650-

S.W.2d 391, 333 (Tex 1983). In order for a guaranty to

be enforceable it must, with reasonable clearness,

evidence an intent on the part of the party to become

liable on an obligation in the event of default by the

primary obligor. Block v. Aude, 718 S.W.2d 914, 915

(Tex.App --Beaumont 1986, no writ).

1 FDIC v, Cardinal Oil Well Servicing Co. Inc., 837 F.2d

1369, 1371 (Sth Cir. 1988) ("Typically suits on promissory

notes provide fit grist for the summary judgment mill").

2 Resolution Trust Corp. v. Marshall, 939 F.2d 274, 276

(Sth Cir. 1991).

If a guaranty 1s ambiguous, this Court must apply

the “construction which is the most favorable to the

guarantor.” Coker, 650 S$.W.2d at 394 n. i. However, if the

guaranty “can be given a certain or definite meaning or

legal interpretation, then it is not ambiguous and the

court will construe the contract as a matter of law."

Coker, 650 S.W.2d at 393. When a guaranty's terms are

plain and unambiguous, a federal court will enforce the

guaranty according to those terms. NCNB Texas Nat.

Bank v. Johnson, 11 F.3d 1260, 1266 (Sth Cir.), reh'g

denied, 19 F.3d 17 (Sth Cir. 1994). |

Under Texas law, the rule of strictissimi juris applies

after the terms of the guaranty agreement have been

ascertained McKnight v. Virginia Mirror Co., 463 S.W.2d

428, 430 (Tex. 1971). This rule prohibits the extension of

the guarantors obligations by implication beyond the

written terms of the agreement. Clark _v. Walker-Keith

Lumber Co., 689 S.W.2d 275, 278 (Tex.App.-- Houston

{ist Dist.] 1985, writ ref'd n.r.e.). However, this rule does

not abrogate the principle applicable to all contracts that,

in their interpretation, the Court must ascertain the true

intent of the parties who executed them Preston Ridge

Financial Services Corp. v Tyler, 796 S W 2d 772, 780

(Tex App --Dallas 1990, reh'g denied).

Applying these settled rules of contract

construction to the Guaranty Agreement, the Court finds

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that the parties’ intent is clear that Defendant Lundquist

is to be held liable as a guarantor for indebtedness

evidenced by the Note. The plain language of the

guaranty states:

In the event that any one or more of the

Borrowers are not liable, for any reason, for

the amounts due or which may become due

under said promissory note, or in the event the

said promissory note cannot be enforced

against any one or more of the Borrowers,

then, in any such event, such facts shall in no

manner affect the liability of the Guarantors

hereunder, but the Guarantors shall be and

remain liable for such indebtedness, and to the

same extent as the Guarantors would have

been liable if the indebtedness of said

Borrowers has been enforceable against them.

(P.'s Mot. Summ. J. Ex. A-2, Guaranty Agreement at 2-3).

Thus, the unambiguous language of this provision

provides that the Defendant Guarantor is liable for the

“indebtedness” under the Note if the borrowers are not

liable “for any reason" for "the amounts due or which

may become due” under the Note. This provision also

shows no expression of intent to hold the Defendant

Guarantor liable if the Note has been paid. Specifically,

the Guaranty Agreement provides that “the Guarantors

shall be and remain liable for such indebtedness ... to the

same extent as the Guarantors would have been liable if

the indebtedness of said Borrowers has been enforceable

against them.”

The undisputed facts establish the elements for a

cause of action under the Guaranty Agreement, and the

Court finds that the Guaranty Agreement is clear and |

unambiguous. Therefore, unless Defendant Lundquist

establishes a valid affirmative defense, the Court shall

issue Summary judgn.ent in favor of Premier.

C. Defendant's Affirmative Defenses |

(a) Statue of Limitations Defense |

Defendant asserts as an affirmative defense that

Plaintiff's action is barred by Texas's four-year statute of

limitations. See, Tex.Civ.Prac. & Rem Code. § 16.004(a)(3)

(Vernon's 1986). Lundquist contends that this four-year

limitations period ran on October 24, 1988--

approximately four years after the Note’s maturity date

on October 23, 1984. Plaintiff argues that the four-year

period does not bar this suit on the ground that this

action is governed by the six-year statute of limitations

period under the Financial Institutions Reform,

Recovery, and Enforcement Act (FIRREA), 12 U.S.C. §

1821(d)(14).

FIRREA provides that the statute of limitations on

contract claims is the longer of the six-year period

beginning on the date the claim accrues or the period

applicable under state law. See, 12 U.S.C. §

1821(d)(14)(A). The statue of limitations begins to run on

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the date the FDIC3 is appointed receiver or conservator

or the date the cause of action accrues, whichever is

later. See, 12 U.S C. § 1821(d)(14)(B)

As a general rule, a special federal limitations

period will not revive a claim already barred under state

law FDIC v Belli, 981 F.2d 838, 842 (Sth Cir. 1993);

Jackson v Thweatt, 883 S.W 2d 171, 177 (Tex.), cert.

denied, 115 S.Ct 196 (1994). This rule does not apply in

this case, however, as the claim against Lundquist was

not stale against Lundquist when the RTC was appointed

conservator of Victoria Savings Association on June 29,

1989. Under the last extension and renewal agreement,

the Note matured on September 19, 1987. As a result,

the RTC's claim against the Debtor, Nueces

Development Company, and Lundquist for payment of

the Note was not time barred under the Texas four-year

statute of limitations period since the RTC was appointed

conservator less than two years after Note matured

under the last extension agreement.

3 The RTC was appointed conservator of Victoria Savings

Association on June 29, 1989 The RTC has the same rights and

powers as the FDIC under 12 U.S.C. § 1821(d)(14)(A) and (B).

When acting as receiver or conservator of an insured

depository institution, the RTC is deemed to be an agent of the

United States by virtue of the provisions of 12 U.S.C. §

1441a(b)(1)(A). Under the provision of 12 U.S.C. §

1441a(b)(4)(A), the RTC, as receiver, has the same rights and

powers as does the FDIC under 12 U.S C §§ 1821-1823.

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Since a cause of action for payment of the Note was

not stale when the RTC was appointed conservator on

June 29, 1989, the RTC obtained the benefits of the six-

year limitation period under section 1821(d)(14). Even

though FIRREA became effective on August 9, 1989,

before the RTC was appointed conservator of Victoria

Savings Association, the RTC still benefited from this

1821(d)(14)'s limitations period as the Fifth Circuit and

Texas Supreme Court hold that this provision applies

retroactively to causes of action in-existence when

FIRREA was enacted on August 9, 1989. Davidson v.

FDIC, 44 F.2d 246, 248 (Sth Cir 1995); Belli, 981 F.2d at

842; Jackson, 883 S.W 2d at 177.

Here, it is established that Texas's four-year statute

of limitations did not bar the RTC’'s action for payment

under the note when it was appointed conservator.

Therefore, since this claim existed on August 9, 1989, the

RTC benefited from the six-year limitations period under

section 1821(d)(14).

FIRREA's six-year limitations period applies to

Premier's claim against Defendant Lundquist. The Fifth

Circuit and the Texas Supreme Court hold that section

1821(d)(14) applies to actions brought by purchasers of

assets from the FDIC or RTC pursuant to the common-

law maxim that an assignee stands in the shoes of its

assignor. FDIC v. Bledsoe, 989 F.2d 805, 810 (Sth Cir.

1993); Jackson, 883 S.W.2d at 174. On January 14, 1994,

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the RTC, while acting as receiver for Victoria Savings

Association, transferred the Note and Guaranty

Agreement along with all right, title, and interest therein

to Plaintiff Premier. Since Premier brought this cause of

action to recover amounts owed and due under the

Guaranty on December 16, 1994, Premier's action was

not barred by FIRREA's six-year limitations period

which expired in June 1995. Therefore, Defendant's

contention that Texas's four-year statute of limitations

period bars Plaintiff/s suit fails as a matter of law.

In addition, Defendant contends that the limitations

period in TEX.PROP CODE ANN. § 53 001 et seq.

(Vernon 1995) bars Plaintiff's suit Section 53 of the Texas

Property Code applies to mechanic's, contractor's or

materialman’s liens. As a matter of law, the Court finds

that these provisions are not relevant Plaintiff's cause of

action as this case does not involve a mechanic's,

contractor's or materialman's lien.

The Court notes that Defendant may have made a

typographical error when he cited Section 53.001 et seg.

in his pleading. Possibly, Defendant intended to cite

TEX.PROP.CODE. ANN. § 51.003 (Vernon 1995). Section

51 et_seq. would be relevant to this case as it contains

general lien provisions and since § 51.003 is a statute of

limitations provision. Section 51.003 provides that, if real

property is sold at a foreclosure sale for a price less than

the unpaid balance of the indebtedness securing it, "any

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action brought to recover the deficiency must be

brought within two years of the foreclosure sale and is

governed by this section.” TEX.PROP.CODE.ANN. §

51.003 (Vernon 1995).

! Assuming arguendo that Lundquist actually

intended to argue that section 51.003 bars Plaintiff's suit,

this contention fails as a matter of law. As established

earlier, Premier is an assignee of the RTC, and

accordingly, benefits from the six-year statute of

limitations in § 1821(d)(14). Jackson, 883 S.W.2d at 174;

Trunkhill Capital Inc. v. Jansma, 905 S.W.2d 464, 467-

469 (Tex App.--Waco 1995, n w.h.).

(b) Equitable Doctrine of Laches Defense

In the alternative, Defendant contends that if the

statute of limitations does- not bar Plaintiff's suit, then

the equitable doctrine of laches precludes Plaintiff's

cause of action.

Under Texas law, laches is an affirmative defense

that must be considered in light of the facts of each case.

A defendant asserting laches as a defense must plead

and prove (1) an unreasonable delay in bringing a claim

and (2) detrimental good faith change of position

because of the delay. Clark _v. Amoco Production Co.,

794 F.2d 967, 971 (Sth Cir. 1986). Texas law provides

that doctrine of laches does not apply to an action that

comes within the provisions of a particular statute of

limitations. Id. at 972; FDIC v. Spain, 796 F.Supp. 241,

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meres tae ee ecu en agai ie eee emer

243 (W.D. Tex. 1992); Transportation League. Inc. v.

Morgan Express _Inc., 436 S.W 2d 378, 388

(Tex.Civ.App.--Dallas 1969, ref. n.r.e ).

In the instant case, the six-year statute of

limitations in 12 U.S.C § 1821(d)(14) applies to Premier's

cause of action. Bledsoe, 989 F.2d at 810. This period did

not expired when Premier brought this suit. Therefore, as

a matter of law, the doctrine of laches is unavailable as a

defense. Clark, 794 F 2d at 972.

(c) Wrongful Foreclosure Defense

As an affirmative defense, Defendant contends that the

predecessor to the Guaranty conducted an improper

foreclosure sale in violation of TEX.PROP.CODE ANN. §

51.002 (Vernon 1995).

However, a guaramor's right to insist upon the

proper disposition of realty securing a promissory note

can be waived Long v. NCNB-Texas Nat'l Bank, 882 S.W

2d 861, 869 (Tex App.Corpus Christi 1994, n w.h.)

(citations omitted) See also. FDIC v Coleman, 795 S.W.2d

706, 710 (Tex. 1990). Notice of sale to be made in

connection with foreclosure can be waived contractually

Micrea Inc. v Eureka Life Ins Co of Am , 53 S.W.2d 348,

356 (Tex.Civ.App.--Fort Worth 1976, ref n r.e.).

Plaintiff contends that Defendant waived the defense

of irregular or wrongful foreclosure under the clear terms

of the Guaranty Agreement. The clear language of the

Guaranty provides:,

A-23

Guarantors hereby agree that the Lender may,

from time to time without notice to the

Guarantors, at its discretion, and with or.

without valuable consideration, renew, extend

or change the time of payment and/or the

manner, place or terms of payment of said

promissory note, or any part thereof, allow

substitution or withdrawal of any collateral, or

may release any security held in connection

with said promissory note or any person or

party liable thereon; and the exercise by the

Lender of any right or power conferred upon it

by any agreement with any of the Borrowers

or with any of the Guarantors individually, or

with any other person or party, shall be wholly

discretionary with the Lender, and such

exercise of, or failure to exercise, such right or

power shall in nowise impair or diminish the

obligations and liability of the Guarantors

hereunder.

The Lender, its successors and assigns, shall

not be liable for failure to use diligence in

collection of any amounts due or which may

become due under the terms of said

promissory note hereby guaranteed, or in

presuming the liability of any person under

said promissory note or this guaranty; and

the Guarantors hereby expressly waive notice

to the Guarantors of the acceptance of this

guaranty, presentment for payment, notice of

dishonor, notice of protest, and protest of said

promissory notice, diligence in bringing suit

against any person, natural or artificial, liable

on said promissory note or this guaranty, and

waive notice of and consent to any of

A-24

forbearance by the Lender any renewal,

extensions, rearrangement or assignment of

said promissory note.

(Pl 's Mot. Summ. J. Ex. A-2, Guaranty Agreement at 2).

The Court finds that the preceding provisions

demonstrate that Defendant relinquished his rights to

insist upon proper disposition of the collateral securing

the promissory note Under Coleman and Long , supra,

such an explicit disavowal of any interest in the security

precludes the right to object to the manner of the

collateral's disposition. Therefore, under the clear terms

of the Guaranty Agreement, the Court finds that

Defendant contractually waived his rights to insist upon

proper disposition of the realty securing the Note or

notice of the foreclosure sale.

(d) Usury

This affirmative defense also fails as discussed

earlier by the Court in section III., subsection B.

IV. CONCLUSION

For the Forgoing reasons, the Court hereby

GRANTS

Plaintiffs Motion for Summary Judgment on Defendant's

counterclaim against Plaintiff for usury, and on its entire

claim against Defendant

SIGNED and ENTERED on this 4th day of

December 1995.

A-25

/s/ Janis Graham Jack

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

A-26

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

PREMIER FINANCIAL §

SERVICES - §

TEXAS, L-P., §

Plaintiff §

§ C.A. No. C-94-545

VS. S

§

WAYNE A. LUNDQUIST, §

JR. §

and JAMES E. GUNN, §

Defendants. §

ORDER GRANTING MOTION TO CORRECT

FINAL JUDGMENT

On this 28th day December 199 __ , came on to be

considered Plaintiffs Motion to Correct Final Judgment,

and the Court, after having considered the same, is of the

opinion and finds that the Motion is with merit and

should be GRANTED; it is therefore

ORDERED that Plaintiff's Motion to Correct Final

Judgment is hereby GRANTED in its entirety; it is

further

ORDERED that Plaintiffs Motion for Default

Judgment, as reurged by Plaintiff, against Defendant

James E. Gunn is hereby granted; it is further

ORDERED that the Final Judgment entered in this

cause on December 6, 1995 is hereby amended to add

the following:

In accordance with the Court's Order Granting

Plaintiff's Motion for Summary Judgment, it is

ORDERED, ADJUDGED AND DECREED that Plaintiff,

Premier Financial Services - Texas, L.P., have and

recover, from Defendants, Wayne A. Lundquist, Jr. and

James E. Gunn, jointly and severally, judgment for:

1. Six Hundred Six Thousand Three Hundred

Forty-Five and 08/100 Dollars ($606,345.08);

2. (Deleted by Judge).

3. Post-judgment interest on the judgment at the

rate of five and 45/100 per cent (5.45%) per annum from

date of judgment until paid; and

4. Costs of court;

for all of which let execution issue.

SIGNED this 28th day of December, 1995.

/s/ Janis Graham Jack

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

Order submitted by:

Julia A. Cook

State Bar No. 01196200

5847 San Felipe, Suite 1700

Houston, Texas 77057

A-28

Telephone: (713) 785-1700

Facsimile: (713) 785-2091

Of Counsel:

SCHLANGER, MILLS, MAYER &

GROSSBERG, L.L-P.

5847 San Felipe, Suite 1700

Houston, Texas 77057

Telephone: (713) 785-1700

Facsimile: (713) 785-2091

Attorneys for Plaintiff

A-29

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

PREMIER FINANCIAL §

SERVICES - §

TEXAS, LP., §

Plaintiff §

§ C.A. No. C-94-545

VS. s

§

WAYNE A. LUNDQUIST, §

JR. S

and JAMES E. GUNN, §

Defendants. §

FINAL JUDGMENT

In accordance with its Order Granting Motion for

Summary Judgment, the Court enters final judgment

dismissing this cause.

Final Judgment is rendered.

Signed on the 4th day of December, 1995.

/s/ Janis Graham Jack

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

A-30

IN THE UNITED STATES DISTRICT COURT

: FOR THE SOUTHERN DISTRICT OF TEXAS

vi CORPUS CHRISTI DIVISION

ry PREMIER FINANCIAL

SERVICES -

TEXAS, LP.,

Plaintiff

C.A. No. C-94-545

VS.

WAYNE A. LUNDQUIST,

JR

and JAMES E. GUNN,

Defendants.

CO? COR 60? 60? LOR CO? CO? OP CO? 607 COR

On this date came on to be considered a Motion for

Leave to File Fourth Amended Answer, Affirmative

Defenses, and to Refile Second Amended Counterclaim

by Defendant Wayne A. Lundquist, Jr. ("Lundquist") filed

November 27, 1995.

The deadline for amendment of the pleadings on

the scheduling order was set for July 21, 1995. Defendant

has not shown this Court "good cause" for modifying the

scheduling order's deadline for amendment of the

— sation ll

5 -_

rns eh tik

A-31

pleadings. See, Fed.R.Civ.P. 16(b); Spiller v. Ella Smithers

Geriatric Ctr, 919 F.2d 339, 343 (Sth Cir. 1990).

Defendant has further failed to comply with the Court's

order of November 20, 1995.

For the forgoing reasons, the Court DENIES

Defendant's Motion.

SIGNED and ENTERED on this the 4th day of

December 1995.

7

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

A

32

q

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

PREMIER FINANCIAL §

SERVICES - §

TEXAS, LP., s

Plaintiff §

§ C.A. No. C-94-545

VS. §

§

WAYNE A. LUNDQUIST, §

JR. §

and JAMES E. GUNN, §

Defendants. §

ORDER

On February 14, 1995, Plaintiff Premier Financial

Services Texas, L.P. ("Premier") moved to dismiss

Defendant Wayne A. Lundquist Jr.'s (“Lundquist”)

| counterclaim and affirmative defenses in his original

answer.

On April 21, 1995, the Court granted Defendant

Wayne Lundquist Jr.'s ("Lundquist") oral motion to

withdraw all of his counterclaims against Plaintiff

Premier. The Court also ordered Defendant Lundquist to

respond to Plaintiff Premier's motion to strike

Defendant's affirmative defenses on or before April 28,

1995.

However, Defendant did not respond to Plaintiff's

motion to sirike on April 28, but instead requested an

extension of two business days to file a brief which this

Court granted on May 4, 1995. Rather than filing a

response brief as ordered by the Court, on May 4, 1995,

Defendant Lundquist moved unopposed for leave to file

first amended answer, affirmative defenses, and

counterclaim ("first amended answer") with a certificate

of conference dated May 4, 1995. In this motion,

Defendant indicated that he intended to withdraw his

counterclaims of breach of contract and wrongful

foreclosure. Defendant also indicated that he intended to

omit the affirmative defenses of failure of consideration,

estoppel, and laches.

Or May 5, 1995, Plaintiff Premier moved

unopposed for leave to file second amended complaint

(“second amended complaint”) in order to add a party

defendant, James E. Gunn ("Gunn"). The certificate of

conference is dated May 4, 1995.

On June 14, 1995, this Court granted Premier's

motion for leave to file second amended complaint which

only added an additional defendant, and granted

Defendant's motion for leave to file first amended answer.

On September 20, 1995, Plaintiff Premier moved for

summary judgment on its entire claim against

Defendant Lundquist and on Defendant Lundquist’s

counterclaim against Premier for usury.

A-34

On September 21, 1995, Defendant Lundquist filed,

without moving for leave, a second amended answer and

affirmative defenses ("second amended answer"). The

deadline for amendment of the pleadings was July 21,

1995. Defendant Lundquist filed the second amended

answer in an apparent attempt to circumvent the

scheduling order, and add additional defenses and

counterclaims.

On October 4, 1995, Premier moved to strike the

second amended answer. On November 2, 1995, this

Court held a hearing on Plaintiff's motion to strike

Defendant's second amended answer. The Court hereby

GRANTS Plaintiff's motion to strike Defendant's second

amended answer for the reason that Defendant failed to

move for leave to amend or to show good cause for

modifying the amendment of pleadings deadline in the

scheduling order.

On November 3, 1995, Defendant filed a third

amended answer and affirmative defenses, and second

amended counterclaim (“third amended answer"),

without leave to amend, and which did not comply with

the Court's oral ruling on November 2, 1995. On

November 9, 1995, Plaintiff moved to strike Defendant's

third amended answer. At a hearing on November 20,

1995, and in an order signed on that date, the Court

GRANTED Plaintiff's motion to strike third amended

answer.

A-35

On November 27, 1995, Defendant moved for leave

to file a fourth amended answer which contained new

affirmative defenses ("fourth amended answer). The

fourth amended answer appears to be a refiling of the

third amended answer which was struck as it did not

comply with the Court's order of November 20, 1995.

On November 29, 1995, Defendant supplemented

his motion for leave to file the fourth amended answer by

seeking to withdraw the reference to the defense of

waiver in the fourth amended answer. However, the

fourth amended answer stilled contained affirmative

defenses not allowed by this Court pursuant to its ruling

on November 2, 1995, and order signed November 20,

1995. In particular, Defendant failed to comply with this

ruling and order in that he added the affirmative defenses

of satisfaction by performance, material alteration,

release of the guaranty, and equitable estoppel.

Defendant has repeatedly attempted to add defenses and

counterclaims after the deadline for amendment of the

pleadings and after direct orders from this Court to plead

only certain defenses, and the counterclaim for usury.

The Court DENIES Defendant's motion for leave to

amend fourth amended answer for failing to show good

cause for modifying the scheduling order's deadline for

amendment of the pleadings and for failure to comply

with the Court's order of November 20, 1995.

SIGNED this the 4th day of December 1995.

A-36

ls/ Janis Graham Jack _

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

A-37

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

PREMIER FINANCIAL

SERVICES -

TEXAS, LP.,

Plaintiff

C.A. No. C-94-545

VS.

WAYNE A. LUNDQUIST,

JR.

and JAMES E. GUNN,

Defendants.

COR COR COR WOR COR WOR COP COR WOn Or LP

ORDER DENYING DEFENDANT'S MOTION FOR

PARTIAL SUMMARY JUDGMENT

On this day came on to be considered Defendant

Wayne A. Lundquist, Jr.'s ("Lundquist") Motion for

Partial Summary Judgment on his affirmative defense of

discharge and on his counter claim of usury against

Plaintiff Premiere Financial Services-Texas, L.P.

("Premiere"). For the reasons hereinafter discussed, the

Court DENIES the Partial Motion for Summary

Judgment urged by the Defendant.

L JURISDICTION

This Court has jurisdiction on the basis of the

diversity of citizenship of the parties, pursuant to 28

U.S.C. § 1332.

A-38

ae eee "

IL FACTS AND PROCEEDINGS

On October 24, 1983, Nueces Development

Company ("Debtor") executed and delivered to Victoria

Savings Association a Promissory Note ("Note")

where »y Nueces Development Company promised to

pay unto the order of Victoria Savings Association the

principal sum of $793,000.00, together with interest

thereon on or before the expiration of 365 days from the

date of the execution of the Note. The Note was

subsequently extended and renewed by various

extension and renewal agreements dated November 21,

1984, July 24, 1984, July 22, 1986, and March 30, 1987.

Pursuant to the terms of the last extension and renewal

agreement, the Note matured on September 19, 1987.

Also on October 24, 1983, Nueces Development

Company executed and delivered a Deed of Trust

Security Agreement Financing Statement, conveying to

the Trustee for the benefit of Victoria Savings

Association, and its successors and assigns, certain

property (hereinafter "property") as security for the debt

owed on the Note. Further, on that same date, Defendant

Lundquist, along with others, by and through a Guaranty

Agreement, individually guaranteed in writing the

payment of the indebtedness evidenced by the note.

The Resolution Trust Corporation (RTC) was

appointed conservator of Victoria Savings Association on

June 29, 1989. On December 11, 1990, in its capacity as

A-39

conservator of Victoria Savings Association, the RTC

made demand upon Nueces Development Company and

Defendant Lundquist for payment of the Note. Both

Nueces Development Company and Lundquist failed to

meet such demand. As a result, the RTC proceeded with

the foreclosure sale of the secured property pursuant to

the terrms of the Deed of Trust. The property sold at

public auction for the sum of $161,028. After the

application of the sale price to the unpaid balance on the

Note, a balance of $606,345.08 remained due and owing

on the Note, including principle, interest, and attorney's

fees.

On January 14, 1994, the RTC as receiver for

Victoria Savings Association, F.S.A., transferred the

subject Note and Guaranty, along with all right, title and

interest therein to Plaintiff Premier Financial Services-

Texas, L.P. On December 16, 1994, Premier brought this

cause of action to recover the amount owed and due plus

interest against Defendant Lundquist based upon his

guarantee of the note.

Lundquist filed the motion presentiy before the

Court on June 16, 1995, to which Premiere responded on

July 6, 1995. Lundquist alleges that Premiere is

precluded from enforcing Lundquist's guaranty on

anything other than the original note. Lundquist argues

that the guaranty was not a continuing guaranty, nor did

he assume liability for any modifications or extensions of

A-40

the original note made by the lender and related or

unrelated third parties. Therefore, because the Note was

extended and renewed, Lundquist contends that he is

relieved of liability under the Guaranty Agreement.

Lundquist further alleges that the Guaranty Agreement

is usurious on its face, and, therefore, may not be

enforced. Based on the alleged usurious nature of the

Guaranty Agreement, Lundquist moves the Court for an

affirmative recovery from Premiere.

Premiere contends that the arguments supporting

Lundquist's Motion for Summary Judgment depend on

an improper and strained construction of the Guaranty

Agreement, and that, as such, the Motion should be

denied.

lil. DISCUSSION

A. Summary Judgment Standard

Summary judgment is proper, pursuant to FED. R.

CIV. P. 56(c), when "the pleadings, depositions, answers

to interrogatories, and admissions file, together with the

affidavits, if any, show that there is no genuine issue of

material fact and that the moving party is entitled to

judgment as a matter of law.” A party seeking summary

judgment bears the initial burden of informing the Court

of the basis for its motion and of identifying those

portions of the record and affidavits which evidence an

absence of material fact. Celotex Corp. v. Catrett, 477

U.S. 317, 324 (1986). Once the movant has met its

A-4l

burden, it is then incumbent upon the non-movant to

show that disputed issues of fact remain. State Farm Life

Ins. Co. v. Gutterman, 896 F.2d 116, 118 (Sth Cir. 1990).

The Court, in turn, must view all inferences from the

evidence in the light most favorable to the non-movant.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255

(1986).

The movant's summary judgment evidence must

sufficiently indicate the failure of an essential element of

the non-movant's claim. Celotex Corp., 477 U.S. at 322.

A complete failure of proof on an essential element

renders all other facts immaterial because there is no

longer a genuine issue of material fact. Id. at 323. Rule

56(c) requires the Court to enter summary judgment if

the evidence favoring the non-moving party is not

sufficient for the jury to enter a verdict in his favor.

Anderson, 477 U.S. at 249.

Because the claims on which Lundquist seeks

summary judgment are an affirmative defense and a

counter claim, respectively, the burden falls on

Lundquist to conclusively prove the elements of his

contentions in order to prevail on his Motion for

Summary Judgment. In regard to Lundquist's discharge

defense, he must prove 1) the existence of a material

alteration to the original note; 2) a lack of consent on his

part to such material alteration; and 3) that harm

resulted from such alteration. Sonne v. Federal Deposit

A-42

Insurance Corporation, 881 S.W.2d 789, 793 (Tex. Civ.

App.--Houston [14th Dist.] 1994, n.w.h.).

In order to prove his usury counter claim,

Lundquist must demonstrate 1) that a loan of money

occurred; 2) that an absolute obligation to repay the

principal exists; and 3) that there exists an exaction from

the borrower (or guarantor) of greater compensation

than the amount allowed by law. Holley v. Watts, 629

S.W.2d 694, 696 (Tex. 1982).

B. _ Discharge

Lundquist argues that he has been discharged on

his guaranty because the original note was extended and

renewed. Lundquist relies on the language in the

Guaranty Agreement which provides that Lundquist

guaranteed only the payment of "...that certain

promissory note of even date herewith executed by the

Borrowers and payable to the Lender..." in order to

establish that he guaranteed only the original note and

not any extensions or renewals thereof.

Lundquist contends that the Guaranty Agreement

does not require, nor did Lundquist otherwise agree, that

he would become liable on any of the future contract

agreements between the Lender and third parties,

including contracts in the form of renewals or extensions

of the original note. Lundquist further asserts that the

renewal and extension provisions of the Guaranty

Agreement does not waive his discharge defense but

A-43

simply allows the Lender to enter into extension and

renewal agreements without notice to the Guarantor, and

without affecting Lundquist's liability under the original

promissory note. The Court disagrees.

It is well settled under Texas law that the guarantor

of a note is discharged from his obligation to answer for

that debt if the creditor grants an extension of time for

the payment of the note to the principal debtor. Federal

Deposit Ins. Corp. v. Woolard, 889 F.2d 1477, 1479 (Sth |

Cir. 1989); United States v. Vahico Corp., 800 F.2d 462,

465 (5th Cir. 1986). There are, however, two exceptions

to this general rule. First, a guarantor will not be

discharged if his guaranty is a continuing guaranty

which encompasses future renewals or extensions.

Woolard, 889 F.2d at 1479; Holland v. First Nat. Bank in

Dallas, 597 S.W.2d 406, 409 (Tex. Civ. App.--Dallas 1980,

writ dism'd). Second, a guarantor may expressly consent

to future renewals or extensions and thereby waive any

discharge defense. Woolard, 889 F.2d at 1479; Sonne v.

Federal Deposit Ins. Corp., 881 S.W.2d 789, 792 (Tex. Civ.

App. -- Houston [14th Dist.] 1994, n.w.h.).

With respect to the first exception to the general

rule, the language of the Guaranty Agreement expressly

limits Lundquist's guaranty to “that certain promissory

note". As a result, the guaranty can not qualify as a

continuing obligation and the exception does not apply.

See Woolard, 889 F.2d at 1479 (holding that language

A-44

| oe q

guaranteeing "that one certain promissory note" did not

contemplate a future course of dealing as required by a

continuing guaranty). However, the second exception to

the general rule is not so easily disposed.

In order to determine whether Lundquist did er did

not consent to future extensions and renewais of the

Note, it becomes necessary to strictly interpret the

language of the Guaranty Agreement along with the

language of the Note, and to resolve any ambiguity in

favor of Lundquist. See Commons West Office Condos

Ltd. v. Resolution Trust Corp., 5 F.3d 125, 127 (Sth Cir.

1993) (construing together note and guaranty that were

executed contemporaneously as part and parcel of same

transaction); Resolution Trust Corp. v. Cramer, 6 F.3d

1102, 1106 (Sth Cir. 1993) (interpreting any uncertainty

as to meaning of contract of guaranty in favor of

guarantor). Because both the Guaranty Agreement and

the Note are worded in such a way as to convey a

definite legal meaning, the Court finds that it is not

ambiguous and will construe it as a matter of law. Coker

v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).

The Guaranty Agreement contains the foilowing

provision regarding extensions and renewals:

“Guarantors hereby agree that the Lender

may, from time to time without notice to the

Guarantors, at its discretion, and with or

without valuable consideration, renew, extend

or change the time of payment and/or the

A-45

manner, place or terms of payment of said

promissory note, or any part thereof...; and the

exercise by the Lender of any right or power

conferred upon it by any agreement with any

of the Borrowers or with any of the Guarantors

individually, or with any other person or

party... shall in nowise impair or diminish the

obligations and liability of the Guarantors

hereunder.” Guarantee Agreement, p. 2, § 2

(emphasis added).

The Guaranty Agreement continues as follows:

"Guarantors hereby...waive notice of and

consent to any act of forbearance by the

Lender, any renewal, extensions,

rearrangement or assignment of said

promissory note.” Guarantee Agreement p 2 fl

(emphasis added).

Further, the Promissory Note itself states that

"All.. guarantors...waive...defense on account of

the extension of time of payments or change

in the method of payments, and consent to

any and all renewals and extensions in the

time of payment hereof..." Promissory Note, p.

2, 4, 2 (emphasis added).

The language of the Guaranty Agreement and the

Note is abundantly clear. The agreement between the

lender and the guarantors in this case accounted for any

potential extensions and renewals of the Note, and, quite

obviously, intended to maintain the validity of the

individual guaranties in spite of such extensions and/or

renewals.

Lundquist's argues that while the Guaranty

Agreement established that the lender could extend and

renew ihe note without notice to the guarantors, such

extension and renewal was not consented to by the

guarantors. This argument is without merit. See NCNB

Texas Nat. Bank v. Johnson, 11 F.3d 1260, 1266 (Sth Cir.)

(modification did not affect liability when guarantor

expressly waived notice of modifications), reh'g denied

19 F.3d 17 (5th Cir. 1994); Lenamond v. North Shore

Supply Co., 667 S.W.2d 283, 286 (Tex. Civ. App.--

Houston [14th Di-t.] 1984, no writ) (waiver of notice of

alteration resulted in implied consent to alteration).

Furthermore, Lundquist has offered no explanation for

the actual (and fatal) consent language contained in the

Guaranty Agreement and in the Promissory Note.

Consent is determined on an individual basis

according to the particular language of the guaranty.

Federal Deposit Ins. Corp. v. Attayi, 745 $.W.2d 939, 944

(Tex. Civ. App.--Houston [14th Dist.] 1988, no writ). In

the present case, by signing the Guaranty Agreement,

Lundquist expressly agreed to incur liability for

extensions and renewal of the original Promissory Note.

Lundquist has failed to offer any competent summary

judgment evidence suggesting a lack of consent on his

part of any material alteration of the original note. As

A-47

ae aaaaeee

such, Lundquist's Motion for Summary Judgment on his

affirmative defense of discharge fails as a matter of law.

us Usury

To support his counter claim of usury, Lundquist

directs the Court's attention to language in the Guaranty

Agreement providing that if the

"...[b]orrowers are not liable, for any reason,

for the amounts due or which may become

due under the said promissory note...such

facts shall in no manner affect the liability of

the Guarantors hereunder, but the Guarantors

Shall be and remain liable herein

notwithstanding said Borrowers be not liable

for such indebtedness, and to the same extent

as the Guarantors would have been liable if the

indebtedness of said Borrower has been

enforceable against them." Guaranty

Agreement, p. 2, J 4. (emphasis added by

Lundquist).

Lundquist claims that the Guaranty Agreement is

usurious because, as written, it provides for Lundquist’s

liability even if the Borrower has satisfied his obligations

under the note. Such an interpretation of the Guaranty

Agreement is unconvincing at best.

There is no evidence that, under the Guaranty

Agreement, the guarantors would remain liable if the

Note was paid in full by the Borrower. As Premiere

correctly notes, the use of the words “amount due" and

“indebtedness” in the above cited guaranty provisions

A-48

clearly indicate that the parties did not intend for the

guarantors’ liability to continue should the Note be paid.

Lundquist has offered the Court no credible

evidence establishing that the Guaranty Agreement is

usurious. Accordingly, his Motion for Summary

Judgment on his counter claim of usury must fail as a

matter of law.

IV. CONCLUSION

For the foregoing reasons, the Court is convinced

that Defendant Wayne A. Lundquist, Jr. has failed to

show an absence of a genuine issue of material fact in his

affirmative defense of discharge and his counter claim of

usury against Plaintiff Premiere Financial Services-Texas,

L.L.P. Accordingly, Defendant's Motion for Partial

Summary Judgment is hereby and in all things DENIED.

SIGNED AND ENTERED this the 24th day of July,

1995.

/s/ Janis Graham Jack

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

A-49

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

PREMIER FINANCIAL

C.A. No. C-94-545

WAYNE A. LUNDQUIST,

JR.

and JAMES E. GUNN,

Defendants.

CO? (OP (O02 (0? 60? (O02 CO? CO? COR KOA

ORDER DENYING PLAINTIFF'S MOTION TO

DISMISS

DEFENDANT'S COUNTERCLAIM AND TO

STRIKE

AFFIRMATIVE DEFENSES

On this day came to be considered Plaintiff's

motion (1) to dismiss Defendant Wayne A. Lundquist,

Jr.'s ("Lundquist') Counterclaim, as set forth in the First

Amended Answer, Affirmative Defenses, and

Counterclaim and (2) to strike certain affirmative

defenses alleged by Defendant Lundquist in his First

Amended Answer as insufficient defenses. The Court,

after consideration of Plaintiff's motions and pleadings

on file, is of the opinion that both of Plaintiff's motions

should be denied.

A-50

Accordingly, it is ORDERED that Plaintiff's Motion

to Dismiss Defendant's Counterclaim and to Strike

Affirmative Defenses is hereby and in all other things

DENIED.

SIGNED AND ENTERED on this the 28th day of

August, 1995.

s/ Janis Gr

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

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IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

PREMIER FINANCIAL

C.A. No. C-94-545

WAYNE A. LUNDQUIST,

JR.

and JAMES E. GUNN,

Defendants.

CO? OP OP 0? COR WOR COP GOR GOP LOR COR

ORDER

On September 20, 1995, Plaintiff Premier Financial

Services, Texas, L.P., ("Premier") moved for summary

judgment on its entire claim against Defendant Wayne

A. Lundquist ("Lundquist") and on Lundquist's

counterclaim against Premier for usury. Plaintiff's motion

for summary judgment was written in response to

Defendant's first amended answer, affirmative defenses,

and counterclaim ("first amended answer"). On

September 21, 1995, without leave of Court or Plaintiff's

consent, Defendant filed a response to Plaintiff's second

amended complaint, second amended answer, and

affirmative defenses ("second amended answer"). The

deadline for amendment of the pleadings was July 21,

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1995. On October 4, 1995, Premier moved to strike the

second amended answer.

On November 2, 1995, this Court held a hearing on

Plaintiff's motion to strike Defendant's second amended

answer and motion for summary judgment. At this

hearing, the Court allowed Lundquist to file a

supplemental amended answer on November 3, 1995,

limiting his affirmative defenses to the following: (1)

promissory estoppel; (2) laches; (3) usury; and (4) that

the guaranty is not enforceable by its own terms. The

Court also allowed Lundquist to file a counterclaim for

usury. In addition, the Court ordered that Plaintiff shall

be allowed to supplement its motion for summary

judgment to address these affirmative defenses and this

counter claim.

SIGNED AND ENTERED on this the 20th day of

November, 1995.

/s/ Janis Graham Jack

JANIS GRAHAM JACK

UNITED STATES DISTRICT JUDGE

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