                                                                                    ACCEPTED
                                                                                04-15-00255-CV
                                                                    FOURTH COURT OF APPEALS
                                                                         SAN ANTONIO, TEXAS
                                                                          10/26/2015 5:42:50 PM
                                                                                 KEITH HOTTLE
                                                                                         CLERK


                  No. 04-15-00255-CV
_____________________________________________________
                                             FILED IN
                                                      4th COURT OF APPEALS
              IN THE FOURTH COURT                 A
                                              OF PPEALSSAN ANTONIO, TEXAS
                                                      10/26/2015 5:42:50 PM
                      SAN ANTONIO, T          EXAS        KEITH E. HOTTLE
                                                               Clerk
_____________________________________________________

                          SW Loan A, L.P.,
                                                 Appellant,
                                   v.
       Anibal J. Duarte-Viera, Antonio P. Pardo, and
                         Edward M. Reiss,
                                  Appellees.
_____________________________________________________

              REPLY BRIEF OF APPELLANT
_____________________________________________________

   From the 131st District Court, Bexar County, Texas, No. 2012-CI-12742
                 The Honorable John D. Gabriel Presiding
_____________________________________________________
                                        John T. Gerhart, Jr.
                                        jgerhart@hunton.com
                                        State Bar No. 00784122
                                        Bryan C. Bond
   Counsel for Appellant:               bbond@hunton.com
                                        State Bar No. 24082701
                                        Hunton & Williams LLP
                                        1445 Ross Ave., Ste. 3700
                                        Dallas, Texas 75202
                                        Telephone: (214) 979-3000
                                        Facsimile: (214) 880-0011

                  ORAL ARGUMENT REQUESTED
                                     TABLE OF CONTENTS

TABLE OF CONTENTS .................................................................. i

INDEX OF AUTHORITIES............................................................. ii

EXPLANATION OF REFERENCES ............................................... iv

SUMMARY OF THE ARGUMENT ................................................. 2

ARGUMENT .................................................................................. 5
A. The standards of review do not require conclusive proof of the amount of SW
Loan’s damages. ........................................................................................................ 5

B.   SW Loan provided sufficient evidence of the balance due on the Promissory
Note on the date of the foreclosure. ........................................................................... 7

   1.      Mr. Redman testified as to the deficiency on the date of the foreclosure. ..... 7

   2. The Borrower’s bankruptcy statements also provide sufficient evidence of
   the amount due on the Promissory Note. ............................................................ 14

   3.   The cases cited by the Guarantors in support of their argument that SW
   Loan failed to prove its damages do not apply. ..................................................... 15

C. The fact that SW Loan did not offer certain documents into evidence is
irrelevant to this appeal. ........................................................................................... 21

D. The Guarantors’ “cause-the-fault” defense fails to address numerous defaults
conclusively proved by the evidence and ignores authorities that foreclose it as a
matter of law. ........................................................................................................... 23

E.   The trial court’s attorney-fee award cannot stand because the Guarantors’
counterclaim had no greater ramifications than the original suit. ............................. 25

CONCLUSION AND PRAYER .......................................................26

CERTIFICATE OF COMPLIANCE ................................................29

CERTIFICATE OF SERVICE ......................................................... 30

                                                          –i–
                                INDEX OF AUTHORITIES

Cases

Burlington N. R.R. Co. v. Gen. Projection Sys., Inc., No. 05-97-00425-CV, 2000

  WL 1100874 (Tex. App.—Dallas Aug. 8, 2000, pet. denied) (not designated

  for publication) (opinion on rehearing) ........................................................... 25

City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699 (Tex. App.—Fort

  Worth 2008, pet. dism’d) ............................................................................... 24

Dow Chem. Co. v. Francis, 46 S.W.3d 237 (Tex. 2001) ........................................... 5

Favor Ministries, Inc. v. Buttross V, Inc., No. 03-13-00562-CV, 2014 WL 7466769

  (Tex. App.—Austin Dec. 18, 2014, no pet.) (mem. op.) ............................ 17, 18

Fletcher v. Day, No. 04-12-00485-CV, 2013 WL 3963701 (Tex. App.—San

  Antonio July 31, 2013, no pet.) (mem. op.) ............................................... 19, 20

Gulf States Utils. Co. v. Low, 79 S.W.3d 561 (Tex. 2002) ..................................... 20

Hudspeth v. Investor Collection Servs. Ltd. P’ship, 985 S.W.2d 477 (Tex. App.—San

  Antonio 1998, no pet.) ............................................................................... 13, 23

Ingham v. O’Block, 351 S.W.3d 96 (Tex. App.—San Antonio 2011, pet. denied) .. 5

O & B Farms, Inc. v. Black, 300 S.W.3d 418 (Tex. App.—Houston [14th Dist.]

  2009, pet. denied) .................................................................................... 19, 20


                                                    –ii–
Valasquez v. Ramirez, No. 04-13-00319-CV, 2014 WL 5175716 (Tex. App.—San

   Antonio Oct. 15, 2014, no pet.) (mem. op.) .................................................... 19

Vela v. Wagner & Brown, Ltd., 203 S.W.3d 37 (Tex. App.—San Antonio 2006, no

   pet.) ................................................................................................................ 20

Williams v. Henderson, 580 S.W.2d 37 (Tex. Civ. App.—Houston [1st Dist.] 1979,

   no writ) ................................................................................................. 15, 16, 17

Winslow v. Acker, 781 S.W.2d 322 (Tex. App.—San Antonio 1989, writ denied) 25

Statutes

11 U.S.C. § 362 ................................................................................................... 14




                                                          –iii–
                      EXPLANATION OF REFERENCES

Clerk’s Record:                CR.[page 1]

Reporter’s Record:             [Volume].RR.[page][:line (if applicable)]

Brief of the Appellees:        Resp. at [page]
Appendix to Brief of           App. [tab]
Appellant:




   1
     Citations to page numbers are to the page numbers within the .pdf copies of the clerk’s
and reporter’s records on file with the Court.

                                           –iv–
                       No. 04-15-00255-CV
_____________________________________________________

                  IN THE FOURTH COURT OF APPEALS
                            SAN ANTONIO, TEXAS
_____________________________________________________

                                 SW Loan A, L.P.,
                                                           Appellant,
                                             v.
          Anibal J. Duarte-Viera, Antonio P. Pardo, and
                                Edward M. Reiss,
                                  Appellees.
_____________________________________________________

              REPLY BRIEF OF APPELLANT
_____________________________________________________

To the Honorable Court of Appeals:

       The Guarantors’ 2 arguments in response fail for at least the following rea-

sons: (1) the standards of review do not require conclusive proof of the amount

of SW Loan’s damages; (2) SW Loan nevertheless provided sufficient evidence

of the amount due on the date of foreclosure; (3) the jury was not free to ignore

conclusive evidence of the Borrower’s defaults; (4) SW Loan did not cause the

   2
     Unless noted otherwise, capitalized terms in this brief have the same meaning attributed
to them in the Brief of Appellant.

                                            –1–
Borrower’s numerous defaults and, in any event, their “cause-the-default” de-

fense is foreclosed as a matter of law; and (5) the Guarantors’ counterclaim did

not have any significance beyond SW Loan’s underlying lawsuit.

                   SUMMARY OF THE ARGUMENT

      None of the alleged defects in SW Loan’s proof pointed out by the

Guarantors explains how the jury could have failed to conclude that the

Borrower defaulted on the Promissory Note—a conclusion required by

the evidence pointed out in the Brief of Appellant. The standards of re-

view require proof only that the evidence was legally or factually insuffi-

cient to support the jury’s verdict. As has been demonstrated, the evi-

dence conclusively shows that the jury answered Question No. 2 incor-

rectly. Likewise, the evidence shows that both the Borrower and the

Guarantors were liable to SW Loan. The jury’s verdict, therefore, cannot

be supported by the evidence.

      Further, the Guarantors have misinterpreted the record regarding

the evidence of SW Loan’s damages. Specifically, the Guarantors have

mistakenly asserted that SW Loan provided insufficient evidence of the

amount due on the Promissory Note at the time of foreclosure. Although


                                      –2–
Mr. Redman’s testimony could have been clearer, he did in fact testify as

to the amount of the deficiency on the date of the foreclosure. Moreover,

the Borrower’s sworn bankruptcy statements, in which the Borrower

acknowledged owing $10,292,760.61, provide sufficient proof of the

amount due on the Promissory Note. The fact that the jury may have

been presented with inconsistent evidence as to the specific amount of

SW Loan’s damages would not allow the jury to conclude that SW Loan

suffered no damages. Thus, neither the jury’s verdict nor the trial court’s

take-nothing judgment can be supported by SW Loan’s alleged failure to

prove a specific amount of damages with mathematical precision.

     The Guarantors’ argument that SW Loan failed to meet its burden

because it failed to offer certain documents into evidence also has no

merit. As the Brief of Appellant demonstrates, the testimony and docu-

ments offered by SW Loan were more than sufficient to prove the Bor-

rower defaulted as a matter of law. The jury was not free to ignore that

evidence merely because other evidence could have been offered.

     There also is no merit to the Guarantors’ argument that SW Loan

“caused the default.” As explained in the Brief of Appellant, it makes no


                                   –3–
difference who ultimately was responsible for paying the Borrower’s tax-

es to Bexar County. The Guarantors have not explained—nor can they

explain—how a reasonable juror could have concluded that SW Loan’s

alleged failure to take advantage of Bexar County’s split-payment option

caused the Borrower to: (1) fail to make its escrow payments; (2) fail to

make its principal and interest payments; (3) fail to fully repay its Loan;

and (4) file for bankruptcy. Negating one possible ground for the Borrow-

er’s default—the failure to timely pay its property taxes—is not suffi-

cient to negate all of the numerous other defaults conclusively proved by

the evidence.

      Moreover, the Guarantors have not addressed the fact that a de-

fense to liability based on SW Loan’s alleged failure to pay the Borrow-

er’s property taxes is an affirmative defense that was not pleaded, was

not proved, and on which the Guarantors did not obtain an affirmative

finding. Thus, the Borrower’s “cause-the-default” defense fails as a mat-

ter of law.

      Finally, the trial court had no discretion to award attorney fees to

the Guarantors. The Guarantors’ claim for a declaratory judgment had no


                                   –4–
“greater ramifications” on the parties than its application to SW Loan’s

underlying suit. Indeed, the only relief sought by the Guarantors was a

declaration that their liability for SW Loan’s underlying claims was lim-

ited by their affirmative defenses. Accordingly, the trial court’s attorney-

fee award must be reversed, and judgment must be rendered in favor of

SW Loan on the Guarantors’ counterclaim.

                                   ARGUMENT

A.     The standards of review do not require conclusive proof of the amount of SW
       Loan’s damages.

       When a party attacks the legal sufficiency of an adverse finding on an issue

on which it had the burden of proof at trial, it “must demonstrate on appeal that

the evidence establishes, as a matter of law, all vital facts in support of the issue.”

Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (emphasis added);

Ingham v. O’Block, 351 S.W.3d 96, 99–100, (Tex. App.—San Antonio 2011, pet.

denied). Likewise, where a party attacks the factual sufficiency of an adverse

finding on an issue on which it had the burden of proof at trial, it “must demon-

strate on appeal that the adverse finding is against the great weight and prepon-

derance of the evidence.” Dow Chem., 46 S.W.3d at 242; Ingham, 351 S.W.3d at

100.

                                         –5–
         Although the Guarantors claim that “the standard of review is disposi-

tive,” 3 they offer no authorities explaining why the standard of review would re-

quire proof as to the amount of SW Loan’s damages. The amount of SW Loan’s

damages is not an issue that was reached by the jury. Indeed, the only issues

reached by the jury were whether SW Loan held the Guaranty Agreements (to

which the jury responded affirmatively) 4 and whether the Borrower failed to

comply with the Promissory Note (to which the jury responded negatively). 5 In

any event, the specific amount of SW Loan’s damages is not a fact that is vital to

either the jury’s verdict or the trial court’s take-nothing judgment. The most SW

Loan could possibly be required to show is that it was damaged by the Borrow-

er’s and the Guarantors’ failure to repay the Loan. Indeed, the trial court’s take

nothing judgment would be conclusively contradicted by a showing of any dam-

age to SW Loan.

         As pointed out in the Brief of Appellant, SW Loan has conclusively

proved: (1) that it acquired the Loan and that it holds the Promissory Note exe-

cuted by the Borrower, the Guaranty Agreements, and the other Loan Docu-

   3
       See Resp. at 33.
   4
       See App. B.
   5
       See id.

                                       –6–
ments 6; (2) that the Borrower defaulted on its obligations under the Promissory

Note by failing to make its required escrow payments, by failing to make its re-

quired principal and interest payments, by failing to fully repay its Loan, and by

filing bankruptcy 7; (3) that each of the Guarantors signed the Guaranty Agree-

ments in which they guaranteed repayment of the Borrower’s indebtedness 8; and

(4) that there is an unpaid deficiency on the Loan following a valid foreclosure

sale. 9 Consequently, there can be no question that each of the Guarantors is liable

to SW Loan for up to $2,500,000.00 of the deficiency. Thus, there can be no

doubt that the evidence is legally and factually insufficient to support the jury’s

verdict and the take-nothing judgment entered against SW Loan.

B.         SW Loan provided sufficient evidence of the balance due on the Promissory
           Note on the date of the foreclosure.

           1.      Mr. Redman testified as to the deficiency on the date of the
                   foreclosure.

           The Guarantors’ have incorrectly asserted that SW Loan failed to offer ev-

idence of the amount due on the Promissory Note at the time of foreclosure. See



     6
         See Brief of Appellant at 39–44.
     7
         See id. at 46–52.
     8
         See id. at 15–16.
     9
         See id. at 44–45.

                                            –7–
Resp. at 19. To support this assertion, the Guarantors have offered a misinterpre-

tation of Mr. Redman’s testimony. Although it is true that Mr. Redman testified

that the spreadsheet containing SW Loan’s damages calculations showed a defi-

ciency of $3,482,872.63 as of November 17, 2012, he also explained that the

number used for the deficiency on that date is based on the amount of the defi-

ciency at the time of foreclosure:

             Q     Please direct your attention on the first page of that
      exhibit, Mr. Redman, to the number in the column labeled
      “deficiency.” Do you see that?

             A      Uh-huh.

             Q      What is that number?

             A      831,000 --

             Q      The deficiency.

            A     Oh, the 3482? $3,482,872.63. And that was as of
      11/17/2012.

             Q      And 11/17 or seven? I don’t have it --

             A      It’s 17.

             Q     So it was calculated, but it was based on the amount
      of the deficiency at the time of foreclosure; is that correct?

             A      Yes.


                                        –8–
                Q     When was the -- why is the date November 17 if the
         foreclosure was on November 7th?

               A       Well, it’s the way the system was set up, and that was
         most likely the payment date.

                Q      That was --

               A     And as you can see, we only calculate 11 days
         interest and so that would have been 11 days from the date of
         foreclosure, which was 11/06.

               Q      Mr. Redman, do you believe that the correct amount
         of the deficiency on the principal of the loan after the $7 million
         credited was applied -- after that was applied is the
         $3,482,872.63?

                A      Yes, and that includes interest and advances.[ 10]

         In other words, the $3,482,872.63 deficiency was calculated based on the

amount due at the time of the foreclosure on November 6, 2012, after the

$7,000,000 that was received from the foreclosure sale had been credited. That

amount was then used on November 17, 2012 to calculate eleven days’ worth of

interest from the date of the foreclosure. 11 Thus, contrary to the Guarantors’ as-




   10
        2.RR.124:2–125:4 (emphasis added).
   11
      Although the exhibit to which Mr. Redman’s testimony refers (5.RR.151) makes clear
that this interpretation of his testimony is correct, the exhibit was not offered or admitted into
evidence.

                                              –9–
sertions, Mr. Redman did in fact testify as to the amount of the deficiency on the

date of the foreclosure.

         The Guarantors’ statement that “this number cannot be right – even as-

suming arguendo Redman had used the correct date – because appellant’s own

pleadings admit Guarantors’ liability is capped at $2,500,000. C.R.4–5 (§ D, ¶

8)” 12 is mistaken. Specifically, the Guarantors misunderstand: (1) the meaning of

the term deficiency; (2) the meaning of the Limited Guaranty Agreements; and

(3) the meaning of SW Loan’s statements in its pleadings.

         First, the amount of the deficiency is the difference between the amount

due on the Loan and the amount recovered from the foreclosure sale; its calcula-

tion is not based on the Guarantors’ liability. Put differently, the fact that the

Guarantors’ liability may be capped has nothing whatsoever to do with calculat-

ing the amount of the deficiency on the Borrower’s Loan. Thus, the Guarantors’

ultimate liability has no relevance to the issue of whether Mr. Redman’s deficien-

cy calculation was accurate.




   12
        Resp. at 28.

                                       –10–
         Second, the Guarantors misunderstand the liability provisions of the Lim-

ited Guaranty Agreements. As pointed out in the Brief of Appellant, 13 each of the

Guarantors signed a Limited Guaranty Agreement in which he

         guarantee[d] to the Lender the absolute, complete and punctual
         payment and performance when due of all principal indebtedness
         and other monetary obligations evidenced by or owing under the
         [Promissory] Note, the [Loan] Agreement, the Loan Documents,
         and all other documents executed in connection therewith and all
         renewals, consolidations, modifications, amendments, increases and
         extensions thereof, together with all interest thereon and all
         expenses of collection therefor including attorneys’ fees and
         expenses (all of the foregoing items are referred to herein as the
         “Indebtedness”), provided that the Guarantor’s foregoing
         guarantee of payment and performance obligation owing
         hereunder is limited to $2,500,000[.]00 of principal plus all
         interest attributable thereto[.][ 14]

Consequently, each Guarantor is liable for up to $2,500,000.00 of the deficien-

cy, and together they are liable for up to $7,500,000. Thus, even if it were some-

how relevant to Mr. Redman’s calculation of the deficiency, the cap would not

matter in this case: $3,482,872.63 is less than half of the $7,500,000 cap on the

Guarantors’ collective liability.




   13
        Brief of Appellant at 15.
   14
        5.RR.43, 48, 53 (emphasis added).

                                            –11–
         Third, because the Guarantors’ misunderstand the Limited Guaranty

Agreements, they also misunderstand the statements in SW Loan’s pleading.

The portion of SW Loan’s pleading cited by the Guarantors states in relevant

part:

               8.    In connection with the extension of credit by Original
         Lender to Borrower, Original Lender relied, in part, on the
         creditworthiness of the Guarantors, each of whom executed a
         Limited Guaranty Agreement…. Under the Guaranties, each
         Guarantor’s payment and performance obligation is limited to
         $2,500,000.00 of principal plus all interest attributable thereto.[ 15]

Thus, despite the Guarantors’ assertion, SW Loan’s “own pleadings” certainly

do not “admit Guarantors’ liability is capped at $2,500,000.” 16

         The Guarantors’ argument that Mr. Redman’s testimony provided no evi-

dence of the amount due because it was purportedly based on Mr. Redman’s

“belief” also has no merit. As an initial matter, the Guarantors’ never objected

to Mr. Redman’s damages testimony as being based on “belief.” In fact, the

Guarantors raised no objections whatsoever to his damages testimony. 17 Regard-

less, the cases relied on by the Guarantors deal with affidavit testimony where


   15
        CR.11–12 (emphasis added).
   16
        Resp. at 28 (emphasis added).
   17
        See 2.RR.123:5–127:10.

                                          –12–
the statements were based solely on the belief of the affiant. Here, Mr. Redman

did not limit his testimony to his “belief” about the amounts owed to SW Loan.

On the contrary, he stated unequivocally that the amount of the Borrower’s defi-

ciency was $3,482,872.63. 18 He simply responded affirmatively when asked by

counsel whether he believed that number was correct. 19 The cases relied on by

the Guarantors are therefore inapposite.

         The Guarantors’ also attack Mr. Redman’s damages testimony as conclu-

sory because he did not explain how the amounts were calculated or provide de-

tails and documentation to support those calculations. 20 But the law does not re-

quire SW Loan to prove its deficiency in that manner. See Hudspeth v. Investor

Collection Servs. Ltd. P’ship, 985 S.W.2d 477, 479 (Tex. App.—San Antonio

1998, no pet.) (“A lender need not file detailed proof reflecting the calculations

reflecting the balance due on a note; an affidavit by a bank employee which sets

forth the total balance due on a note is sufficient to sustain an award of summary

judgment.”).




   18
        See 2.RR.124:2–125:4.
   19
        See id.
   20
        See Resp. at 15, 20.

                                      –13–
         2.      The Borrower’s bankruptcy statements also provide sufficient evidence
                 of the amount due on the Promissory Note.

         Even if one were to ignore Mr. Redman’s testimony altogether, the Bor-

rower’s bankruptcy statements—signed under the penalty of perjury by one of

the Guarantors—establish that the Borrower owed at least $10,292,760.61 at the

time of the foreclosure. 21 The automatic stay in bankruptcy prohibited SW Loan

from collecting any additional money from the Borrower without prior court ap-

proval. See 11 U.S.C. § 362. Thus, the amount the Borrower acknowledged owing

in bankruptcy could not have materially changed before the stay was lifted 22 to

allow SW Loan to foreclose on the Borrower’s property. Consequently, the

Guarantors cannot dispute that the amount due on the Promissory Note at the

foreclosure was at least $10,292,760.61. 23 With $7,000,000 credited from the

foreclosure sale, 24 the evidence conclusively shows that a deficiency of at least

$3,292,760.61 was owed on the date of the foreclosure.




   21
        See 5.RR.118; see also Brief of Appellant at 45.
   22
        See 5.RR.146–49.
   23
        See 5.RR.118.
   24
        5.RR.272–75.

                                                –14–
      3.     The cases cited by the Guarantors in support of their argument that
             SW Loan failed to prove its damages do not apply.

      The primary case relied upon by the Guarantors in support of their argu-

ment that SW Loan failed to prove its damages is not applicable in this case. See

Williams v. Henderson, 580 S.W.2d 37, 38–41 (Tex. Civ. App.—Houston [1st

Dist.] 1979, no writ). In Williams, the trial court made specific findings of fact that

the plaintiffs failed to establish: (1) the amount due and owing at the time of the

Trustee’s Sale; (2) the amount paid for the property at the Trustee’s Sale; (3)

that the trustee deeded the property to the purchaser; (4) the amount of the defi-

ciency, if any, owed by the defendant to the plaintiffs; and (5) that notice of ac-

celeration was given to the defendant. Id. at *38–39. Here, the jury made no such

findings.

      Moreover, the defendant in Williams pleaded payment as an affirmative

defense, and neither the plaintiff nor the defendant could testify as to the balance

due on the loan. Id. at 38–41. The plaintiff’s testimony in fact demonstrated that

he had no information concerning the payments made by the defendant:

             Q     Mr. Williams, you said you had a bill or a business
      relationship with the defendant, Dock Henderson, and by that you
      sold him some property?

             A      Yes, sir.

                                        –15–
             Q      And he owed you some fifteen thousand and some odd
      dollars?

             A      Yes, sir. That is true.

             Q      Did he make payments on this?

             A      Yes. I don't know exactly how many.

             Q      I am just asking if he made a payment or two.

             A      I do not have that information.

Id. (emphasis added). The defendant then testified that he likewise had no in-

formation with regard to the amount due on the note:

            Q     What was the amount of money due and owing on such
      account on the 9th day of September, 1974?

             A      I do not have that information.

Id. (emphasis added). The court went on to hold that the evidence supported the

trial court’s findings that the plaintiff had failed to meet his burden of proving the

amount due on the loan. Id. at 40.

      The facts in Williams are in stark contrast to those in this case. First, the

Guarantors, unlike the defendant in Williams, have not pleaded payment as an

affirmative defense. That is because the Guarantors do not and cannot dispute

that the debt has not been repaid. Indeed, sworn statements from both SW

                                        –16–
Loan’s representative and the Borrower (through bankruptcy statements signed

under the penalty of perjury by one of the Guarantors) demonstrate that at least

$10,292,760.61 was due on the loan at the time of the foreclosure. Second, as

mentioned in the Brief of Appellant, the Substitute Trustee’s Deed was admitted

into evidence, providing unrebutted prima facie proof of: (1) the Borrower’s de-

fault on its obligations; (2) a valid Trustee’s Sale and foreclosure; and (3) the

amount of the proceeds from the Trustee’s Sale ($7,000,000). 25 Third, the

Guarantors cannot dispute that both they and the Borrower were notified of the

acceleration. 26 Thus, the facts in Williams are in no way analogous to this case.

         The other case cited by the Guarantors is equally inapplicable. See Favor

Ministries, Inc. v. Buttross V, Inc., No. 03-13-00562-CV, 2014 WL 7466769 (Tex.

App.—Austin Dec. 18, 2014, no pet.) (mem. op.). There, the court noted that

“in order for summary judgment awarding [the note holder] any deficiency

amount to have been proper, [the note holder] was required to conclusively prove

each of” the elements of its claim, including the amount due on the note at the

time of foreclosure. Id. at *1 (emphasis added). Summary judgment had been


   25
        See Brief of Appellant at 45, 49–51; 5.RR.273–74.
   26
      See 5.RR.93–96 (showing that the Borrower and each of the Guarantors were notified of
the acceleration by certified mail).

                                              –17–
granted to the note holder based on an affidavit that the appellate court found

was incompetent based on the fact that the affiant, at most, merely verified “the

facts stated in the summary-judgment motion.” Id. at *2. Moreover, the affidavit

(and thus the only evidence submitted) made no mention of the balance due on

the loan at the time of the foreclosure. Id. at *1. Because the note holder failed to

conclusively establish the elements of his claim, summary judgment awarding a

specific amount for the deficiency was inappropriate, and the case needed to be

remanded for trial to resolve factual issues. Id. at *2.

      The facts and procedural posture of Favor Ministries are readily distin-

guishable from those here. First, this case does not involve a summary judgment

that awarded a specific amount of damages. Obviously, a summary judgment

awarding a specific amount of damages cannot be supported by incompetent evi-

dence that cannot establish the specific amount of those damages. But that is not

the case here. The trial court’s judgment did not award SW Loan damages. And

it was not a summary judgment that was granted in SW Loan’s favor. Here, SW

Loan merely has the burden of establishing that the jury’s verdict cannot be sup-

ported by the evidence. The jury made no findings with respect to the amount of

SW Loan’s damages. And, in any event, an award of zero damages would not be


                                         –18–
supported by the evidence—the evidence conclusively shows that SW Loan suf-

fered damages of at least $3,292,760.61 because of the Borrower’s and the Guar-

antors’ failure to repay the Loan. If there is a fact issue with respect to the specif-

ic amount of SW Loan’s damages, that issue must be resolved by the jury at a

new trial.

      The Guarantors appear to be arguing that because the evidence as to the

precise amount of SW Loan’s damages may have been inconsistent, the jury was

simply free to conclude that SW Loan failed to prove that it suffered any damag-

es. That is not the case. “Damages must be established with reasonable certainty,

not mathematical precision.” Valasquez v. Ramirez, No. 04-13-00319-CV, 2014

WL 5175716, at *6 (Tex. App.—San Antonio Oct. 15, 2014, no pet.) (mem. op.);

Fletcher v. Day, No. 04-12-00485-CV, 2013 WL 3963701, at *4 (Tex. App.—San

Antonio July 31, 2013, no pet.) (mem. op.); O & B Farms, Inc. v. Black, 300

S.W.3d 418, 422 (Tex. App.—Houston [14th Dist.] 2009, pet. denied). Thus,

“[i]f the fact of damages has been established, then the inability to calculate the

exact amount of damages is not fatal.” Fletcher, 2013 WL 3963701, at *5; O & B,

300 S.W.3d at 422. On the contrary, “[i]f the best available evidence affords a

reasonable basis for the factfinder to calculate damages, then recovery cannot be


                                        –19–
denied because the exact amount of damages cannot be ascertained.” Fletcher,

2013 WL 3963701, at *5; O & B, 300 S.W.3d at 422. The jury therefore “has dis-

cretion to award damages within the range of evidence presented at trial.” Gulf

States Utils. Co. v. Low, 79 S.W.3d 561, 566 (Tex. 2002); Vela v. Wagner & Brown,

Ltd., 203 S.W.3d 37, 49 (Tex. App.—San Antonio 2006, no pet.).

         Here, there can be no disputing that SW Loan was damaged. Sworn

statements by both the Borrower and SW Loan’s loan servicer, paired with unre-

butted prima facie evidence of the proceeds from the foreclosure sale, demon-

strate a deficiency on the Loan. And although the jury was informed that Mr.

Redman had previously submitted inconsistent affidavits as to the amount of the

deficiency, 27 none of Mr. Redman’s previous affidavits involved a deficiency of

zero. 28 Thus, a zero damages award would not be within the range of the evidence

presented to the jury. Accordingly, the Guarantors’ arguments centered on SW

Loan’s alleged failure to prove its damages could not possibly support the jury’s

verdict or the trial court’s take-nothing judgment.




   27
        See 2.RR.125:5–127:13.
   28
      The first affidavit claimed a deficiency of $2,454,875.69 and the second claimed a defi-
ciency of $3,584,434.98. Id.

                                            –20–
C.         The fact that SW Loan did not offer certain documents into evidence is
           irrelevant to this appeal.

           The Guarantors argue that SW Loan’s failure to introduce the Notice of

Assignment of Note, the Promissory Note, and the spreadsheet containing SW

Loan’s damages calculations is fatal to its appeal. 29 But that is not true. The

standard of review requires only that SW Loan prove that the evidence was insuf-

ficient to support the jury’s verdict. SW Loan has met that burden. As pointed

out in the Brief of Appellant and above, the evidence conclusively shows that the

jury’s verdict was erroneous. The documents referred to by the Guarantors are

not needed to prove the jury’s error.

           The Guarantors argued that the Notice of Assignment of Note, “if admit-

ted and believed to be true, would have shown the jury that Borrower was alleg-

edly notified by Lender of the assignment to appellant.” 30 If it were necessary to

prove that the Borrower was notified, Appellee Pardo’s testimony would be con-

clusive on that issue:

                 Q     Sir, were you aware that an assignment of the loan and
           the other loan documents including the limited guaranty
           agreements had been assigned?


     29
          Resp. at 15–16.
     30
          Id.

                                         –21–
                 A       Yes.[ 31]

                 ***

                Q     I’m handing you, Mr. Pardo, what’s been designated as
         Plaintiff’s Exhibit 4 and would you please read the title of that
         document?

                 A       Notice of Assignment of Note.

                 Q       And what assignment is it referring to, sir?

              A       It’s assigning the Stillwater National Bank loan to SW
         Loan A, L.P.

                Q       And I believe you testified previously a few minutes
         ago, sir, that you were aware that assignment had occurred.

                 A       Yes.[ 32]

         Further, as demonstrated in the Brief of Appellant, the evidence conclu-

sively established: (1) the existence of the Promissory Note; (2) that it was signed

by the Borrower; (3) that SW Loan was the holder of the Promissory Note; (4)

that an amount was due and owing on the Note; and (5) that the Borrower de-

faulted on the Promissory Note. 33 The Promissory Note itself was not needed to


   31
        3.RR.6:10–13; see also Brief of Appellant at 17–19.
   32
        3.RR.8:12–22; see also Brief of Appellant at 17–19.
   33
        Brief of Appellant at 39–52.

                                                –22–
establish those facts. And, as pointed out in the Brief of Appellant and above, in-

troducing the spreadsheet SW Loan used for its damages calculations was un-

necessary. See Hudspeth, 985 S.W.2d at 479. The jury was not free to disregard

conclusive evidence offered by SW Loan merely because SW Loan could have

offered more evidence. Thus, SW Loan’s failure to introduce certain documents

into evidence has no bearing on this appeal.

D.         The Guarantors’ “cause-the-fault” defense fails to address numerous defaults
           conclusively proved by the evidence and ignores authorities that foreclose it
           as a matter of law.

           The Guarantors’ response fails to address any of the arguments or authori-

ties raised in the Brief of Appellant with respect to their “cause-the-default” de-

fense. 34 The arguments made in the Brief of Appellant need not be rehashed in

their entirety. It is sufficient to note that the Guarantors’ response offers no ex-

planation as to how SW Loan’s alleged failure to take advantage of Bexar Coun-

ty’s split-payment option could have caused the Borrower’s numerous defaults,

including: (1) its failure to make its required escrow payments; (2) its failure to

make its principal and interest payments; (3) its failure to fully repay its Loan;




     34
          See Brief of Appellant at 53–56.

                                             –23–
and (4) its filing for bankruptcy. 35 At best, the Guarantors “cause-the-default”

argument could negate the Borrower’s failure to promptly pay taxes as a ground

for default; it could not negate all of the Borrower’s other defaults.

         The Guarantors also failed to address the authorities cited by SW Loan

demonstrating that even if their “cause-the-default” argument were factually

tenable (it is not), it is foreclosed by the fact that it is an unpleaded affirmative

defense on which the jury made no affirmative finding. 36 See City of The Colony v.

N. Tex. Mun. Water Dist., 272 S.W.3d 699, 746 (Tex. App.—Fort Worth 2008,

pet. dism’d); Burlington N. R.R. Co. v. Gen. Projection Sys., Inc., No. 05-97-00425-



   35
       In their “Statement of Facts,” the Guarantors make a curious argument. They con-
tend—without offering any support—that SW Loan cannot use the Borrower’s bankruptcy as
a ground for default because SW Loan “never put either the Borrower or the Guarantors on
notice that it was relying upon any bankruptcy filing (which occurred after the lawsuit was al-
ready filed) as a basis for default.” Resp. at 13 (emphasis removed). In addition to the fact that
the Guarantors offered no support for that argument, the argument makes no sense. Both the
Guarantors and the Borrower were given notice in the Loan Agreement that filing bankruptcy
would constitute a default. See 5.RR.25. Moreover, SW Loan disclosed bankruptcy as a ground
for default in its interrogatories. See CR.679. The fact that the bankruptcy occurred after SW
Loan had already filed suit does not alter the fact that the Borrower’s bankruptcy constituted a
default under the governing Loan Documents. If the Guarantors’ argument were correct, then
a note holder who sued for a non-payment related default would forever be barred from assert-
ing non-payment as a default if the borrower subsequently decided to stop paying its loan. In
any event, SW Loan urged bankruptcy as a ground for default, without objection, both during
the trial and in its Motion to Disregard Jury Findings and for Judgment Notwithstanding the
Verdict. See 4.RR.23:19–23; CR.738–40. The Guarantors cannot now claim that bankruptcy is
not an actionable ground for default.
   36
        See Brief of Appellant at 54–55.

                                             –24–
CV, 2000 WL 1100874, at *6 (Tex. App.—Dallas Aug. 8, 2000, pet. denied) (not

designated for publication) (opinion on rehearing). The jury did not and could

not, as a matter of law, find that the Borrower or the Guarantors were excused

from performance by any alleged breach by SW Loan.

E.         The trial court’s attorney-fee award cannot stand because the Guarantors’
           counterclaim had no greater ramifications than the original suit.

           The Guarantors attempt to defend their attorney-fee award by citing Wins-

low v. Acker for the proposition that “when a declaratory judgment counterclaim

has greater ramifications than the original suit, the court may allow the counter-

claim.” 781 S.W.2d 322, 328 (Tex. App.—San Antonio 1989, writ denied). The

Guarantors then try to place their counterclaim into the exception noted in Wins-

low by arguing that the

                  Guarantors are allowed under the Declaratory Judgment Act
           to ask the trial court to declare the rights and obligations of the
           parties in so far as appellant was seeking relief beyond the principal
           and interest payments that were allegedly requested in the
           underlying Note. C.R. 590. That is a request for relief separate and
           apart from the appellant’s affirmative claims in the underlying
           lawsuit.[ 37]

           The Guarantors’ request for declaratory relief had no greater ramifications

than the extent of their liability for the claims brought by SW Loan—which was

     37
          Resp. at 37.

                                           –25–
unquestionably the subject of the underlying lawsuit. This is made clear by the

fact that the Guarantors’ request for declaratory relief mirrored their affirmative

defenses to SW Loan’s underlying claims. 38 There was no legal basis for awarding

the Guarantors attorney fees under the UDJA. The trial court’s fee award must

therefore be reversed and judgment rendered for SW Loan with respect to the

Guarantors’ counterclaim.

                        CONCLUSION AND PRAYER

         The Guarantors have not offered any facts or arguments that could alter

the inescapable conclusion that the jury got it wrong. Indeed, the evidence of-

fered by SW Loan conclusively proves that the Borrower defaulted on the Prom-

issory Note and that both the Borrower and the Guarantors are liable to SW Loan

for the deficiency. At a minimum, any conclusion that the Borrower had not de-

faulted or that the Borrower and Guarantors were not liable to SW Loan for a de-

ficiency would be against the great weight and preponderance of the evidence.

And it would be both clearly wrong and manifestly unjust to uphold that verdict

in the face of overwhelming controverting evidence. Because the evidence is le-




   38
        CR.587–91.

                                       –26–
gally and factually insufficient to support the jury’s verdict and the take-nothing

judgment entered against SW Loan, the trial court’s judgment must be reversed.

      The trial court also abused its discretion in awarding attorney fees to the

Guarantors for their baseless declaratory-judgment counterclaim. The trial

court’s judgment with respect to both its declaratory ruling and its award of at-

torney fees must therefore be reversed and rendered in favor of SW Loan.

      SW Loan again requests that the Final Judgment of the trial court, signed

January 28, 2015, be reversed, that judgment be rendered in favor of SW Loan

with respect to the Guarantors’ counterclaim for a declaratory judgment and at-

torney fees, and that this case be remanded for a new trial to determine the ex-

tent of the Guarantors’ liability to SW Loan. Alternatively, SW Loan requests

that the Court reverse all portions of the trial court’s judgment that cannot with-

stand SW Loan’s challenges and render its judgment accordingly. SW Loan also

requests any other relief to which it may be entitled.




                                       –27–
Respectfully submitted,

Hunton & Williams LLP

By: /s/ Bryan C. Bond
   John T. Gerhart, Jr.
   jgerhart@hunton.com
   State Bar No. 00784122
   Bryan C. Bond
   bbond@hunton.com
   State Bar No. 24082701

1445 Ross Avenue, Suite 3700
Dallas, Texas 75202-2799
Telephone: (214) 979-3000
Facsimile: (214) 880-0011
Counsel for Appellant




–28–
                   CERTIFICATE OF COMPLIANCE

       I certify that this document contains 5,510 words, excluding the sections
exempted by Texas Rule of Appellate Procedure 9.4. The body font is 14pt, and
the footnote font is 12pt.

                                      /s/ Bryan C. Bond
                                      Bryan C. Bond




                                     –29–
                       CERTIFICATE OF SERVICE

       A copy of this Reply Brief of Appellant was sent on October 26, 2015 to
the following counsel via email:

      Counsel for Appellees

      Brian P. Lauten
      blauten@deanslyons.com
      Robert A. McNiel
      rmcniel@deanslyons.com
      State Bar No. 24043814
      Kathleen Kilanowski
      kkilanowski@deanslyons.com
      State Bar No. 24053303

      Deans & Lyons, LLP
      325 N. Saint Paul Street, Suite 1500
      Dallas, Texas 75201-3891




                                      /s/ Bryan C. Bond
                                      Bryan C. Bond




                                     –30–
