     Case: 18-11114      Document: 00515012615         Page: 1    Date Filed: 06/27/2019




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                      No. 18-11114                   United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                        June 27, 2019
TEXAS CAPITAL BANK N.A.,
                                                                       Lyle W. Cayce
              Plaintiff - Appellee                                          Clerk


v.

DANIEL ZEIDMAN,

              Defendant - Appellant




                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:17-CV-3109


Before CLEMENT, DUNCAN, and OLDHAM, Circuit Judges.
PER CURIAM:*
       Daniel Zeidman asserts several affirmative defenses to the breach of a
guaranty agreement (the “Guaranty”) with Texas Capital Bank (the “Bank”).
The Bank misconstrues Zeidman’s defenses and wrongly characterizes them
as a purported oral modification to the Guaranty, which is covered by the
statute of frauds. Finding the Bank’s argument unpersuasive and finding that
Zeidman has introduced evidence supporting several of his theories, we reverse


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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part of the district court’s grant of summary judgment to the Bank and remand
for further proceedings consistent with this opinion.
                          FACTS AND PROCEEDINGS

      Gallery Homestore, PA, LLC (“Gallery Homestore”) secured a $1 million
loan from the Bank. Daniel Zeidman and Scott Cooper, co-members of Gallery
Homestore, each personally and fully guaranteed the debt by executing
separate guarantees.
      In 2010, Zeidman and Cooper ended their business relationship, and
Cooper continued to operate Gallery Homestore. Zeidman contends that he
“had very few communications” with the Bank after that. Yet, over the next six
years, the loan was renewed and extended several times. Each time, Zeidman
renewed his Guaranty. At the time of the last renewal, the loan’s principal
balance was approximately $1,318,058. Zeidman executed another Guaranty.
In 2011, the parties had added another company, Gallery Internet, LLC
(“Gallery Internet”), as a co-borrower. Zeidman was a managing member of
Gallery Internet, but states he had no role in its operations. In 2012, Gallery
Homestore was released as an obligor.
      On August 11, 2016, Kirk Gibson, a Bank agent, emailed Cooper,
confirming the current terms of the loan and setting a payment schedule. Two
days later, Cooper emailed Zeidman, notifying him that he owed 38% of the
debt. Zeidman contends that he and Cooper agreed that each would be
responsible for $500,000, and that one of Cooper’s companies would be
responsible for the remainder. According to Zeidman, he then decided that
since he and Cooper were no longer partners, he preferred to pay his share of
the debt in a lump sum and obtain a release of his Guaranty from the Bank.
      Zeidman emailed Gibson on August 22, 2016 and asked to talk. Zeidman
contends that he then called Gibson to arrange a complete release of liability
in return for paying 38% ($500,000) of the total remaining balance (then,
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$1,318,058). Zeidman claims that Gibson agreed to this arrangement. Zeidman
then wired the Bank $500,000 through another company he controlled.
     In an email addressed to both Zeidman and Cooper on September 1,
2016, Gibson acknowledged receipt of the payment, reduced the loan’s
principal, and stated the loan’s remaining balance. Gibson also recommended
further payment options. The email stated:
     With the pay down of $500,000 on the Term Loan on 08/24/16 – the
     term loan balance is $818,057.62. As originally underwritten, the
     loan was scheduled to amortize over 48 months with a principal
     payment of $27,459.53 per month. If we keep the payment amount
     at the $27k – the loan will pay off in approximately 30 months. We
     could amortize the $818M over 48 months if you guys would like.
     Please advise on which direction you would like us to take.

Cooper responded, but Zeidman did not. Neither Zeidman nor Gibson
mentioned that Zeidman was released from his Guaranty.
     Zeidman claims that, starting in April 2017, the Bank asked him weekly
if he knew how they could contact Cooper because the loan was in default.
Then, on August 10, 2017, the Bank notified Zeidman that the loan and note
were in default and demanded payment from him. Zeidman refused, claiming
he had been released from the Guaranty.
     The Bank sued Zeidman in Texas state court, alleging breach of the
Guaranty. Zeidman removed the case to federal district court under diversity
jurisdiction. The Bank moved for summary judgment, and Zeidman responded
and filed a cross-motion for summary judgment. Zeidman asserted several
affirmative defenses, arguing that he was not liable for the remaining sum
because he had agreed with Cooper that he would be responsible for only
$500,000.
     The district court granted the Bank’s motion for summary judgment and
denied Zeidman’s cross-motion. The district court held summary judgment was

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appropriate since Zeidman “failed to produce any evidence of a written
modification [as required by the Guaranty] agreed to and signed by the
parties.” The district court also held that Zeidman failed to produce evidence
supporting his defenses. It stated that Zeidman’s “subject [sic] belief as to what
the payment constituted is insufficient to create a genuine issue of material
fact—especially in light of the explicit terms contained in the agreement he
executed barring any oral modifications.”
                            STANDARD OF REVIEW
      This court reviews a grant of summary judgment de novo. Renwick v.
PNK Lake Charles, L.L.C., 901 F.3d 605, 611 (5th Cir. 2018). Summary
judgment is appropriate where, viewing the evidence in the light most
favorable to the non-moving party, the pleadings and record show no genuine
dispute as to any material fact and the movant is entitled to judgment as a
matter of law. FED. R. CIV. P. 56(a). “In determining whether a case presents
triable issues of fact, we, like the district court, may not make credibility
determinations or weigh the evidence and we must resolve all ambiguities and
draw all permissible inferences in favor of the non-moving party.”
MetroplexCore, L.L.C. v. Parsons Transp., Inc., 743 F.3d 964, 972 (5th Cir.
2014) (per curiam) (quotation omitted).
      If the moving party initially shows the non-movant’s case lacks support,
“the non-movant must come forward with ‘specific facts’ showing a genuine
factual issue for trial.” TIG Ins. Co. v. Sedgwick James, 276 F.3d 754, 759 (5th
Cir. 2002). To defeat a properly supported motion for summary judgment,
“[t]he mere existence of a scintilla of evidence . . . will be insufficient; there
must be evidence on which the jury could reasonably find for the [non-
movant].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
      One way for a party to support an assertion that a fact “is genuinely
disputed” is to cite to “affidavits.” FED. R. CIV. P. 56(c). “When a motion for
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summary judgment is made . . . , an adverse party may not rest upon the mere
allegations or denials of his pleading, but his response, by affidavits . . . must
set forth a genuine issue for trial.” Beaufort Concrete Co. v. Atl. States Constr.
Co., 352 F.2d 460, 463 (5th Cir. 1965).
                                  DISCUSSION
      Zeidman contends that the trial court erred because there were genuine
issues of material fact stemming from various defenses to the enforcement of
the Guaranty: quasi-estoppel, equitable estoppel, release, and accord and
satisfaction. We consider each defense in turn.
      A.    Quasi-Estoppel
      First, Zeidman claims he offered summary judgment evidence to
establish a quasi-estoppel defense. “Quasi-estoppel precludes a party from
asserting, to another’s disadvantage, a right inconsistent with a position
previously taken. The doctrine applies when it would be unconscionable to
allow a person to maintain a position inconsistent with one to which he
acquiesced, or from which he accepted a benefit.” Lopez v. Munoz, Hockema &
Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000) (citation omitted). But “unlike
equitable estoppel, quasi[-]estoppel requires no showing of misrepresentation
or detrimental reliance.” Atkinson Gas Co. v. Albrecht, 878 S.W.2d 236, 240
(Tex. App.—Corpus Christi 1994, writ denied).
      Zeidman claims that the summary judgment evidence supports his
quasi-estoppel defense. Taking, as we must, the factual allegations in
Zeidman’s affidavit as true, the Bank orally agreed to accept a $500,000
payment in satisfaction of the Guaranty, Zeidman wired that amount to the
Bank, the Bank accepted the payment, and it later demanded additional
payment under the Guaranty. On its face, this alleged scenario appears to
satisfy the elements of quasi-estoppel.


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      But the Bank contends that the Guaranty is subject to the statute of
frauds. So, says the Bank, Zeidman cannot argue that an alleged oral
agreement creates a genuine dispute of material fact as to a modification of the
Guaranty. “Parties to a written contract that is within the provisions of the
statute of frauds . . . may not by mere oral agreement alter one or more of the
terms.” Dracopoulas v. Rachal, 411 S.W.2d 719, 721 (Tex. 1967) (internal
quotation marks omitted); see also Blackstone Med., Inc. v. Phoenix Surgicals,
L.L.C., 470 S.W.3d 636, 647 (Tex. App.—Dallas 2015, no pet.) (“An oral
modification of a written contract is enforceable under the statute of frauds
only if the modification does not materially alter the obligations imposed by
the underlying agreement.”).
      However,    this    argument    is       unavailing   because   it   improperly
recharacterizes Zeidman’s affirmative defense as a claim that the underlying
Guaranty was modified. While it is true that oral modification of the Guaranty
appears to be prohibited by the text of the Guaranty and the statute of frauds,
the Bank has cited to no case holding or even suggesting that the availability
of quasi-estoppel as a defense depends on the existence of a writing.
      The Bank also seems to suggest that Zeidman cannot maintain a quasi-
estoppel claim because the Bank received no benefit from Zeidman when he
wired it $500,000. But this argument represents economic sophistry. Of course,
it is true that, in the event of a default on the underlying loan, Zeidman would
have been bound under the Guaranty to repay the entire balance due (which
at the time of his payment exceeded $500,000). But when Zeidman wired
$500,000 to the Bank, the underlying loan was not in default and accordingly
Zeidman was under no immediate—or even certain future—obligation to pay
the Bank anything. So, it cannot be said that the Bank received no benefit
when it allegedly agreed to accept $500,000 now in exchange for giving up the


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legal right to hold Zeidman to account for any amounts outstanding should the
borrower on the loan default at some point in the future.
      Because Zeidman has offered a specific factual account, in an affidavit,
which could satisfy the elements of quasi-estoppel, and because the Bank
appeals only to the tangentially related doctrine of contract modification, the
district court erred in finding that Zeidman did not produce evidence
supporting this defense.
      B.    Equitable Estoppel
      Zeidman also advances a theory of equitable estoppel.
      The elements of equitable estoppel are: (1) a false representation
      or concealment of material facts made with the intent that another
      party act on the false representation or silence, (2) the false
      representation or concealment of material facts was made by a
      party with knowledge of the facts, (3) the party to whom the
      representation was made or from whom facts were concealed was
      without knowledge or the means of knowledge of the real facts, and
      (4) detrimental reliance.
Steubner Realty 19, Ltd. v. Cravens Rd. 88, Ltd., 817 S.W.2d 160, 163 (Tex.
App.—Houston [14th Dist.] 1991, no writ).
      Zeidman again relies on his affidavit and his payment to the Bank. He
claims that the Bank made a false representation to him by orally agreeing to
modify their written agreement and concealing the fact it would not release
him from his Guaranty. He argues that he made the payment in detrimental
reliance on that representation.
      The Bank adopts essentially the same argument that it advances in
response to Zeidman’s quasi-estoppel defense. First, it argues that Zeidman is
seeking to modify the underlying Guaranty. Then it argues that Zeidman could
not have detrimentally relied on the supposed oral agreement with the Bank
because he was already on the hook for the full amount of the debt. But, as
explained above, neither of these arguments hold water. The Bank cannot

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reformulate Zeidman’s defense as a claim of modification and economic reality
belies the assertion that each party’s position remained unchanged upon
completion of the wire transfer. Because the Bank has offered no plausible
theory undermining Zeidman’s factually supported claim of equitable estoppel,
the district court erred in finding that Zeidman did not produce evidence
supporting this defense.
      C.    Release
      Zeidman next argues that he offered evidence supporting a release
defense. “A release is an agreement or contract in which one party agrees that
a legal right or obligation owed by the other party is surrendered.” D.R. Horton-
Tex., Ltd. v. Savannah Props. Assocs., L.P., 416 S.W.3d 217, 226 (Tex. App.—
Fort Worth 2013, no pet.). “A release extinguishes a claim or cause of action
and is an absolute bar to any right of action on the released matter.” Id.
“Because a release is essentially a contract, a defendant must prove the
elements of a contract to establish the affirmative defense of release of
liability.” Reytec Constr. Res., Inc. v. Baptist Hosps. of Se. Texas, No. 09-15-
00085-CV, 2016 WL 6900874, at *8 (Tex. App.—Beaumont Nov. 23, 2016, no
pet.) (citing Vera v. North Star Dodge Sales, Inc., 989 S.W.2d 13, 17 (Tex.
App.—San Antonio 1998, no pet.)).
      Zeidman claims that “[a] guaranty may be orally released” and that
Gibson agreed on behalf of the Bank to release him from his Guaranty. For this
proposition, he cites Dicker v. Lomas & Nettleton Fin. Corp., 576 S.W.2d 672
(Tex. Civ. App.—Texarkana 1978, writ ref’d n.r.e.). In Dicker, the court held
that where a lender continually advised the guarantor that he would not sue
for deficiency if the guarantor attempted to find a buyer, the guarantor’s
affidavit was “sufficient to raise a fact question as to whether or not the parties’
agreement and subsequent conduct thereunder was sufficient to prevent the
operation of the Statute of Frauds.” Id. at 675.
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      Again, in response, the Bank cites to unhelpful and inapposite caselaw
dealing with general claims of contract modification rather than the particular
affirmative defense of release. Indeed, while contracts subject to the statute of
frauds may not generally be modified orally, “an exception to the rule exists
where the party relying on the oral agreement has performed his undertaking
thereunder so that a refusal to enforce the modified agreement would result in
wrong to him.” McCreless Shopping Vill., Inc. v. Burton, 352 S.W.2d 802, 803
(Tex. Civ. App.—San Antonio 1961, writ ref’d n.r.e.). And here, construing the
facts in Zeidman’s favor, there exists an oral release agreement under which
he performed, and the Bank reaped a benefit. The district court erred in finding
that Zeidman did not produce evidence supporting this defense.
      D.    Accord and Satisfaction
      Finally, Zeidman contends that he offered summary judgment evidence
to establish an accord and satisfaction defense. “Accord and satisfaction is a
defense that rests upon a new contract, express or implied, in which the parties
agree to the discharge of an existing obligation in a manner otherwise than
originally agreed.” Melendez v. Padilla, 304 S.W.3d 850, 852 (Tex. App.—El
Paso 2010, no pet.). “The accord is merely a new agreement whereby one party
agrees to give or perform, and the other to accept something other than or
different from what she is, or considers herself to be, entitled to. Satisfaction is
then the performance of the agreement.” Id. at 852–53 (citation omitted). “[F]or
this defense to prevail, there must be a dispute and an unmistakable
communication to the creditor that tender of the reduced sum is upon the
condition that acceptance will satisfy the underlying obligation.” Lopez, 22
S.W.3d at 863. Additionally, “[t]he parties must specifically and intentionally
agree to the discharge of one of the parties’ existing obligations.” Id.
      Once again, Zeidman argues that his affidavit provides evidence that he
reached an oral agreement with the Bank about his Guaranty. He claims that
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this oral agreement constituted an accord of his obligation and his payment
constitutes satisfaction. He contends that the evidence of the oral agreement
(his affidavit) “creates a genuine issue of material fact on the meeting of the
minds over those simple terms and the parties’ consent to them.” Zeidman
contends that the Bank orally agreed to the arrangement and accepted the
payment although it was initially entitled to a different arrangement—full
guaranty.
      However, Zeidman offers no evidence to support at least one element of
this defense—a dispute. 1 For the defense of accord and satisfaction “to prevail,
there must be a dispute” as to the terms of the underlying agreement. Id.
Because there is no evidence of such a dispute, we affirm the district court’s
decision to grant summary judgment to the Bank on this issue.
                                       CONCLUSION
      For the foregoing reasons we REVERSE and REMAND in part and
AFFIRM in part.




      1   We express no view as to whether he might have satisfied the others.
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