

NO. 07-10-0012-CV
 
IN THE COURT OF APPEALS
 
FOR THE SEVENTH DISTRICT OF TEXAS
 
AT AMARILLO
 
PANEL A
 
JUNE 24, 2011
 
______________________________
 
 
HOME FURNISHINGS, INC., GEORGE C. BURNETT, JR.,
AND MARIE E. BURNETT, APPELLANTS
 
V.
 
JPMORGAN CHASE BANK, NA, APPELLEE
 
 
_________________________________
 
FROM THE 96TH DISTRICT COURT OF TARRANT
COUNTY;
 
NO. 96-229807-08; HONORABLE JEFF WALKER, JUDGE
 
_______________________________
 
Before CAMPBELL and HANCOCK and PIRTLE, JJ.
DISSENTING OPINION
            The memorandum opinions authored by Justices Campbell and Hancock
reach the same final result (affirm), but for different reasons.  While I agree with large portions of both
opinions, because I disagree with the final result, I respectfully dissent.
            


As
stated in both memorandum opinions, this is a suit on a promissory note by a
lender against guarantors for a deficiency judgment.  In that regard, it is undisputed that Home
Furnishings Group, Inc., a non-party, executed and delivered to JPMorgan Chase
Bank NA ("Chase"), a promissory note, in the original principal sum
of $522,000; which note was both guaranteed by Home Furnishings, Inc., George
C. Burnett, Jr. and Marie E. Burnett (Appellants herein; collectively "guarantors"),
and collateralized by assets and inventory located at Home Furnishings Group,
Inc.'s store in Southlake, Texas.  It is
also undisputed that Home Furnishings Group, Inc. defaulted on the note and
that Chase then seized the collateral, foreclosed its security interest, and made
a demand for payment upon the guarantors for the alleged deficiency.  Against those undisputed facts, what is at
issue here is whether Chase met its summary judgment burden of proof in its
suit against the guarantors for the deficiency.  The guarantors contend the trial court
erred in granting Chase summary judgment because a material issue of fact
exists as to the amount due and
owing.  Specifically, guarantors contend,
via an affidavit from George C. Burnett, that Chase has not accounted for or
otherwise allowed credit for certain items of collateral seized by Chase
pursuant to its security agreement; whereas, Chase contends that all credits
have been given.  
            Justice Hancock's opinion takes the position that Burnett’s
affidavit does not raise a material issue of fact as to the disputed credits
because there is a perceived temporal gap between the inventory date relied
upon by Burnett in his affidavit and the date the collateral was seized.  In this regard, I agree with Justice
Campbell's opinion in its finding that Burnett's affidavit should be read as
saying the inventory list appended thereto was the inventory on hand as of the
end of the last day the store was open for business.  Although Burnett’s affidavit does not
definitively state that the inventory listed was the collateral seized by
Chase, it does state that "no inventory was sold . . . removed, relocated,
or otherwise disposed of after that date." 
It further states that "the items listed on Exhibit C of
Defendants' Response to Plaintiff’s Third Amended Motion for Summary Judgment
represent a list of inventory that was in the store at the end of the last day
of business, “but which was not sold at
the foreclosure sales and cannot be accounted for." (Emphasis added.)  A reasonable deduction from that statement is
that the guarantors contend Chase seized assets for which the guarantors
received no credit.  While Chase's
summary judgment evidence does state that credits were allowed for the net
proceeds from four separate liquidation sales and a settlement with an alleged
consignor, it does not aver that Chase has allowed credit for all of the collateral seized.  Therein lies the
rub.
            The opinions of both Justices Campbell and Hancock take
the position that the guarantors contractually waived their defense of
"impairment or loss of collateral." 
Apparently they take this position because, at the time the trial court
considered Chase's motion for summary judgment, the guarantors' live pleading
consisted of nothing more than a general denial and an allegation that Chase's
"disposition of the collateral, including the method, manner, time, and
place of said disposition was not commercially reasonable."  A general denial places in issue the amount allegedly due and owing on a
promissory note and a plaintiff seeking recovery upon a note has the burden of
proving the amount of the balance due.  Fikes and Associates v.
Evans, 610 S.W.2d 245 (Tex.Civ.App.--Fort Worth 1980, no writ).  Whether or not the guarantors have plead either
an affirmative defense or assert a counterclaim regarding the collateral
allegedly retained, to establish its entitlement to judgment as a matter of
law, Chase had the burden of proving every essential element of its claim,
MMP, Ltd. v. Jones, 710 S.W.2d 59 (Tex. 1986), including the amount due and
owing.  
            Justice Campbell's opinion concludes that because the
guaranty agreements waive certain defenses there is no material issue of fact which
precludes summary judgment.[1]  He argues that the applicable waiver listed
is the waiver of claims based upon an allegation that Chase "did not
dispose of any collateral."  While I
will agree Chase was under no obligation to pursue its right to foreclose the security
interest it held in the collateral at issue before it sought to enforce the
guaranty agreements, Christian v. Univ.
Fed. Sav. Ass'n, 792 S.W.2d 533, 555
(Tex.App.--Houston [1st Dist.] 1990, no writ), having chosen to do so, it must
account for the collateral seized. Tanenbaum
v. Economics Laboratory, Inc. 628 S.W. 2d 769, 771-72 (Tex. 1982) (holding
that a note holder is not entitled to a deficiency judgment unless collateral
seized has been disposed of in a commercially reasonable manner).[2]        
            Because a material issue of fact exists as to the
guarantors' right to additional credits, Chase has not met its burden of
conclusively proving the amount of its damages. 
Therefore, I believe the trial court erred in granting summary judgment
in favor of Chase.  Tex.
R. Civ. P. 166a(c).    Accordingly, I would reverse and remand for
further proceedings.
 
                                                                                                Patrick
A. Pirtle
                                                                                                       Justice 

 
 




[1]See Justice Campbell's opinion regarding
waiver of the "defense that the collateral was neglected or lost, and
defenses that Chase impaired the collateral, did not dispose of any of the
collateral or failed to obtain a fair market value for the
collateral."  See also Justice Hancock's opinion regarding Rights, Notices, and Defenses that Guarantor Waives and Duties as to Collateral.
 


[2]Although
neither the guarantors nor Chase have briefed the matter, issues pertaining to
the seizure of collateral, its foreclosure, and entitlement to credit for net
proceeds from a commercially reasonable sale thereof are governed by Chapter 9
of the Texas Uniform Commercial Code.  See Tex. Bus. & Com. Code Ann. §§
9.101 - 9.709 (West 2011)  


