                               NUMBER 13-17-00277-CV

                                   COURT OF APPEALS

                       THIRTEENTH DISTRICT OF TEXAS

                          CORPUS CHRISTI - EDINBURG


PINEDA REO, LLC,                                                                           Appellant,

                                                        v.

THE LOMIX LIMITED PARTNERSHIP, ET AL.,                                                     Appellees.


                       On appeal from the 138th District Court
                            of Cameron County, Texas.


                            MEMORANDUM OPINION
 Before Chief Justice Contreras and Justices Rodriguez and Benavides1
             Memorandum Opinion by Justice Benavides

        On the panel’s own motion, we withdraw the original memorandum opinion and

judgment and replace them with this memorandum opinion and accompanying judgment.2


       1
           The Honorable Nelda V. Rodriguez, former Justice of this Court, was a member of the panel
when this case was orally argued but did not participate in this decision because her term of office expired
on December 31, 2018.
        2
         Drs. Guajardo and Wong’s motions to clarify and Guarantors’ motion for rehearing are, without
consideration of the merits, dismissed as moot.
Appellant Pineda REO, LLC appeals from a take-nothing judgment from its suit to collect

on commercial loan guaranties.3 Appellees, collectively referred to as Guarantors,4 also

cross-appeal5 challenging the trial court’s grant of partial summary judgment in Pineda’s

favor before trial.      In addition, Guarantors also raise two conditional cross points

challenging Pineda’s attorneys’ fees and the manner in which the cap on the guaranties

should be applied.

       By issues one and two, Pineda contends it should prevail as a matter of law on

Guarantors’ defense of wrongful foreclosure and its claim for offset by the anti-deficiency

statute because Guarantors waived their rights in the 2007 Guaranties. By issues three,

four, and seven, Pineda challenges the sufficiency of the evidence on Guarantors’

defense of wrongful foreclosure. By issue five, Pineda asserts that as a matter of law

the 2007 Guaranties did not release Drs. Guajardo and Wong from their previous

guaranties. By issue six, Pineda challenges the trial court’s failure to issue a deficiency

judgment based upon the jury verdict.

       We reverse and render in part, reverse and remand in part, and affirm in part.




       3
         Pineda REO, LLC is the current note holder, although the note was originally purchased by
Pineda Grantors Trust in 2012. We refer to them jointly as Pineda.
       4
         Appellees consist of The Lomix Limited Partnership, The Guajardo Family Limited Partnership,
C. Lynn Anderson, Chester Gonzalez, Manuel G. Guajardo, Jose Humberto Jimenez, Robert Lekach,
Miguel Molinas, Bradley Nordyke, Madhaven Pisharodi, Vicki Miles Rodriguez, Gerardo Jesus Sanchez,
She Ling Wong, and Charles Zavala.
       5
           Appellees Jimenez and Sanchez did not file a notice of cross-appeal.

                                                   2
                                            II.   BACKGROUND6

A.       Factual Background

         In 2004, a group of Brownsville physicians and others formed Brownsville MD

Ventures, L.L.C. (MD Ventures) to purchase the Brownsville Surgical Hospital (BSH).

The purchase was supported by an $8,000,000 loan from Texas State Bank (TSB) and

guaranteed by the investors.7

         In September 2006, MD Ventures borrowed another $6,000,000 from TSB which

was also guaranteed by the investors. The 2004 and 2006 guaranties were nearly

identical.

         In November 2007, TSB loaned MD Ventures additional money and consolidated

the 2004 and 2006 notes for a total loan amount of $16,852,317.                            New guaranty

documents were signed in 2007, and the 2007 Note stated:

         The note hereby secured is a master note and represents funds to be
         advanced to grantor pursuant to request for draws and to be used for the
         renewal and extension of two existing loans in favor of Texas State Bank
         . . . with the remaining balance to be used for the expansion of the existing
         facility located on the above-described property . . . .

The Loan Agreement listed the Guarantors as: Gerardo Jesus Sanchez, Asim Zamir, The

Guajardo Family Limited Partnership, C. Lynn Anderson, Jose Humberto Jimenez,

Charles Zavala, Bradley Nordyke, The Lomix Limited Partnership, Robert Lekach,

Michael S. Gomez, Madhaven Pisharodi, Vicki Miles Rodriguez, Chester Gonzalez, and

Miguel A. Molinas. Each of the listed Guarantors executed new guaranty documents.


         6
             The background facts are taken from the summary judgment submissions and the evidence at
trial.
         7
             Over time, the investor group varied but most of the present Guarantors were original investors.
                                                       3
Several of the Guarantors testified that TSB’s attorney drew up all of the loan and

guaranty documents in 2004, 2006, and 2007.

      In 2009, TSB merged with Compass Bank (Compass). Compass, an Alabama

corporation, also acquired several other Texas banks at the same time. Compass was

owned by BBVA, a Spanish bank.

      In 2010, BSH discovered that it had water infiltration and mold resulting from

construction defects during renovations. The mold eventually caused BSH to seal off

the second floor which included operating and patient rooms. In 2011, the entity that

operated BSH stopped paying rent. By the end of 2012, the entity operating BSH owed

MD Ventures $3,000,000 in past-due rent.

      By 2012, MD Ventures decided to either renegotiate the loan or sell BSH. MD

Ventures approached Compass and negotiated interest only payments on the note.

      In 2012, Compass decided to liquidate some of its commercial loan portfolio. It

privately auctioned several portfolios of commercial loans, including MD Ventures’ 2007

Note, to large corporate bidders who participated by invitation. Compass kept the sale

of the commercial loan portfolios confidential. The information available to the bidders

included the Guarantors’ confidential financial information.    The Guarantors knew

nothing about the planned sale of their loan. In June 2012, Compass commissioned an

appraisal of BSH. The appraisal estimated BSH’s fair market value at $21.9 million.

Investor bidding on Compass’ loan portfolio including MD Ventures’ note began

September 4, 2012.

      In September 2012, MD Ventures advised Compass of a $15 million offer to buy


                                           4
BSH by Alamo Street Development, but Compass did not respond.                        MD Ventures

furnished Compass with the proposed real estate contract on October 2, 2012 with a

projected closing date of November 15, 2012. If Compass approved the contract, it

would receive $12,000,000, which was less than the amount due on the note. Compass

never responded regarding this prospective sale.              MD Ventures did not know that

Compass was trying to sell the note at this time.

       On October 19, 2012, MD Ventures gave Compass permission for prospective

purchasers of the note to review confidential financial information related to BSH and the

Guarantors. The bank sold one loan portfolio, including MD Ventures’ note, to Istrouma

Trustee, LLC as trustee for Pineda Grantor Trust, II8 on November 1, 2012. The amount

Pineda paid for the 2007 Note was excluded from evidence at trial.                        However,

Guarantors learned in discovery in other litigation that Pineda’s accepted bid for the 2007

Note was approximately 54% of its value to Compass, as part of Pineda’s overall bid for

the entire loan portfolio.

       On January 7, 2013, Pineda’s attorney sent the first of a series of letters to MD

Ventures and the Guarantors advising them that the note was in default and that Pineda

would seek to exercise all of its rights under the note and the guaranties. In August 2013,

Pineda accelerated the note and demanded payment in full by September 3, 2013.

       On August 26, 2013, MD Ventures filed a voluntary petition in bankruptcy and

obtained a stay of actions related to BSH. Pineda then initiated this action against the



       8
          Pineda Grantor Trust II purchased the note. Before foreclosure, the note was transferred to
Pineda REO. Neither Pineda entity has employees. The purchase and servicing of the Note was handled
by Capital Crossing Servicing Company (Capital Crossing) on behalf of Pineda.
                                                 5
Guarantors to collect the alleged deficiency.

       On June 16, 2014, the bankruptcy court lifted the automatic stay to allow

foreclosure. Pineda posted BSH for foreclosure in August 2014 and sent the Guarantors

a letter dated August 12, 2014 with a Notice of Substitute Trustee’s Sale scheduled for

September 2, 2014. By that time BSH was vacant. The Guarantors sought a temporary

restraining order and temporary injunction in this action to prevent foreclosure on the

grounds that they had a prospective buyer for BSH for $18 million. The trial court denied

the motion on August 19, 2014.       BSH was scheduled to be sold at foreclosure on

September 2, 2014 at 1:00 p.m.

       Before the September 2, 2014 sale, Dennis Stratford, the senior vice president in

charge of asset management for Capital Crossing, received several calls regarding the

BSH sale. The inquiries were from two different entities who were interested in BSH,

one of which was Optima.       Optima was trying to prevent the foreclosure sale and

purchase BSH through the bankruptcy proceedings. Another prospective buyer asked

what Pineda’s position was going to be at the auction. According to Stratford, he refused

to discuss Pineda’s bidding position and invited the prospective buyer to attend the

foreclosure auction.

       On the morning of September 2, 2014, MD Ventures attempted to postpone the

foreclosure sale in the bankruptcy court.       MD Ventures had reached a tentative

agreement with Optima for an immediate payment of $400,000 to Pineda.                 The

bankruptcy court refused to stay the sale but told Pineda that if $400,000 was delivered

to it by 1:00 p.m., they could not foreclose: “if you’ve got $400,000 I’m going to stop the


                                            6
sale. You get $400,000 before 1:00 o’clock . . . the sale is off.” The bankruptcy court

did not sign an order but the clerk made the following entry on the bankruptcy court’s

electronic docket sheet: “Arguments heard. Motion approved. Debtor was ordered to

include specific aspects in the plan. The sale was cancelled. Parties are to process

payment later today. A detailed order will follow.”

       The foreclosure auction was held shortly after 1:00 p.m. on September 2, 2014 on

the Cameron County Courthouse steps. According to Jeffrey Livingston, the attorney

hired by Pineda to bid on the hospital at the foreclosure sale, he made a $7 million credit

bid for BSH. No one else bid. The Substitute Trustee’s Deed memorializing the sale

was filed with Cameron County later that day, but the amount paid for BSH was left blank.

       On September 3, 2014, MD Ventures filed a motion to dismiss the bankruptcy

proceedings. MD Ventures filed a petition in intervention in this case in November 2014

in which it claimed wrongful foreclosure against Pineda.            Pineda opposed the

intervention.

B.     Procedural Background

       Pineda filed its first no-evidence motion for summary judgment in November 2014

as to the Guarantors’ defenses of: usury, failure to mitigate damages, fraud, unclean

hands, material alteration of the note, offset/setoff, limitations, and negligence. Pineda

also sought a ruling dismissing other defenses as not recognized by Texas law.

       Pineda filed a traditional motion for partial summary judgment seeking recovery of

a deficiency judgment against the Guarantors and daily interest. Alternatively, Pineda

sought summary judgment declaring that it: owned the Guaranties; MD Ventures was in


                                            7
default by August 14, 2014; the Guarantors defaulted; they breached their guaranties;

and Pineda was damaged. Pineda next filed traditional and no-evidence motions for

summary judgment on the Guarantors’ counterclaims9 in December 2014.

        After a full day hearing on February 11, 2015, the trial court issued an order on

February 19, 2015:

1. striking MD Venture’s plea in intervention;

2. granting Pineda’s motion for protective order and precluding discovery on the value

of BSH and Pineda’s purchase of BSH note and guaranties; and

3. granting Pineda’s motion for summary judgment in part and dismissing with prejudice

Guarantors’ alleged counterclaims for:

        a. civil conspiracy to breach the common law duty of good faith and fair dealing,

        b. breach of the duty of good faith and fair dealing, and

        c. bad faith and unreasonable foreclosure.

        The Guarantors filed responses to Pineda’s additional motions and sought

reconsideration of the protective order. The trial court denied the motion to reconsider.

        Additionally, Drs. Guajardo and Wong filed motions for summary judgment

asserting that they were not liable on the 2007 Note because they did not sign personal

guaranties. The Guarantors also sought a continuance of the hearing on the motions for

summary judgment to obtain and compel discovery against Pineda.

        On October 7, 2015, the trial court conducted another lengthy hearing and took the

matters under advisement. On October 30, 2015, without ruling on Guarantors’ pending


        9
          Guarantors’ counterclaims included: breach of duty to act reasonably and in good faith, breach
of contract, unjust enrichment and illegal contract, and usury.
                                                   8
discovery motions, the trial court advised the parties that Pineda’s various motions for

summary judgment to dismiss Guarantors’ remaining counter-claims and defenses, and

Pineda’s motion for a deficiency judgment would be granted. The Guarantors objected.

The trial court held another hearing and signed a final judgment dated February 16, 2016,

disposing of all claims in Pineda’s favor. The trial court awarded Pineda a deficiency

judgment against each of the Guarantors, including Drs. Guajardo and Wong, up to the

limits of liability set forth in the individual guaranties.   Guarantors filed motions to

reconsider the grants of summary judgment against them and Drs. Guajardo and Wong

filed a motion for new trial.

       On March 18, 2016, the Guarantors filed a motion to recuse the trial judge. After

the motion was filed, the trial judge voluntarily recused himself and a visiting judge was

appointed.

       On April 20, 2016, the newly-appointed visiting judge heard the motions for new

trial and to reconsider the summary judgments granted on February 2016. The newly-

appointed judge determined there was a fact issue regarding release of the 2006

guaranties and granted Drs. Guajardo and Wong’s motion for new trial. The trial court

later determined there was a fact issue as to the Guarantors’ defense of wrongful

foreclosure and granted their motion for reconsideration only on that issue. Those two

issues proceeded to jury trial.

       The jury found that Pineda wrongfully foreclosed, that the market value of BSH at

the time of foreclosure was $14 million, and that Drs. Guajardo and Wong were not

individually liable on the 2007 Note. It assessed $225,000 for Pineda’s past attorneys’


                                             9
fees and assessed conditional attorneys’ fees for appeal against the Guarantors.

       During a hearing on post-judgment motions, Guarantors’ counsel argued that the

finding of wrongful foreclosure precluded a deficiency judgment for Pineda. The trial

court agreed and signed a judgment on May 17, 2017, that Pineda take nothing against

the Guarantors, and dismissed Guarantors’ counterclaim for wrongful foreclosure. This

appeal followed.

                              II.   WRONGFUL FORECLOSURE

       By issues three and four, and part of issue seven, Pineda argues that Guarantors’

evidence of wrongful foreclosure is legally and factually insufficient.

A.     Standard of Review

       In reviewing a legal sufficiency challenge, we consider the evidence “in the light

favorable to the verdict, crediting favorable evidence if reasonable jurors could, and

disregarding contrary evidence unless reasonable jurors could not.” City of Keller v.

Wilson, 168 S.W.3d 802, 807 (Tex. 2005). “Our traditional legal sufficiency—or ‘no

evidence’—standard of review upholds a finding supported by ‘[a]nything more than a

scintilla of evidence.’” State Office of Risk Mgmt. v. Pena, 548 S.W.3d 84, 90 (Tex.

App.—Corpus Christi–Edinburg 2018, no pet.). “More than a scintilla exists when the

evidence would enable reasonable and fair-minded people to reach different

conclusions.” Burbage v. Burbage, 447 S.W.3d 249, 259 (Tex. 2014). Because it is the

jury’s province to resolve conflicting evidence, we must assume that jurors resolved all

conflicts in accordance with their verdict if reasonable jurors could do so. City of Keller,

168 S.W.3d at 819.


                                             10
      In a factual sufficiency review, we consider and weigh all the evidence supporting

and contradicting the finding in question. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d

442, 445 (Tex. 1989); Pope v. Moore, 722 S.W.2d 683, 624 (Tex. 1986). We will set

aside a finding only if the evidence supporting it is so weak or it is so against the

overwhelming weight of the evidence that the finding is clearly wrong and unjust. See

Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986); Cain v. Bain, 709 S.W.2d 175,

176 (Tex. 1986).

B.    Applicable Law

      In this case, the Guarantors pleaded wrongful foreclosure as an affirmative

defense to Pineda’s request for a deficiency judgment. See UMLIC VP LLC v. T & M

Sales & Envt’l Sys., Inc., 176 S.W.3d 595, 611 (Tex. App.—Corpus Christi–Edinburg

2005, pet. denied) (“Wrongful foreclosure is an appropriate affirmative defense to a suit

to collect on a note.”).   The purpose of a wrongful foreclosure action is to protect

mortgagors against mistake, fraud, or unfairness in the conduct of a foreclosure sale.

Hurd v. BAC Home Loans Servicing, LP, 880 F.Supp. 2d 747, 766 (N.D. Tex. 2012)

(applying Texas law); In re Keener, 268 B.R. 912, 921 (N.D. Tex. 2001). The trial court

submitted this case to the jury based upon the elements of wrongful foreclosure set out

in Estate of Broughton v. Financial Freedom Senior Funding Corp.: (1) a defect in the

foreclosure sale proceedings; (2) an inadequate selling price; and (3) a causal connection

between the defect and the inadequate selling price. No. 13-14-00091-CV, 2016 WL

2955058, at *2 (Tex. App.—Corpus Christi–Edinburg May 19, 2016, pet. granted, judgm’t

vacated w.r.m.) (mem. op.); see also Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135,


                                           11
139 (Tex. App.—Corpus Christi–Edinburg 2008, no pet.) (reciting the elements of

wrongful foreclosure); Charter Nat’l Bank–Hous. v. Stevens, 781 S.W.2d 368, 375 (Tex.

App.—Houston [14th Dist.] 1989, writ denied).10

         “[T]he rule is well established that mere inadequacy of consideration is not

grounds for setting aside a trustee’s sale if the sale was legally and fairly made.” Am.

Sav. & Loan Ass’n of Hous. v. Musik, 531 S.W.2d 581, 587 (Tex. 1975). “There must be

evidence of irregularity, though slight, which irregularity must have caused or contributed

to cause the property to be sold for a grossly inadequate price.” Id.; see also Charter

Nat’l Bank–Hous., 781 S.W.2d at 371.

C.      Defects in the Foreclosure Proceedings

        The first element in a wrongful foreclosure action is proof of a defect in the

foreclosure proceedings.          Guarantors argue that there were multiple irregularities or

defects in the foreclosure sale including an inadequate sales price. The first alleged

irregularity is the blank in the Trustee’s deed. Guarantors also criticize the notice of sale

because it failed to state the name and address of the mortgagee and the mortgage

servicer in violation of §§ 51.002(b) and 51.0025 of the property code. See TEX. PROP.

CODE ANN. §§ 51.002(b), 51.0025.11 Next, the Guarantors argue that the bankruptcy

         10
            “It never was intended that there should be an automatic need to prove a grossly inadequate
selling price in a situation where the bidding at a non-judicial foreclosure sale was deliberately ‘chilled’ by
the affirmative acts of a mortgagee and the injured mortgagor seeks a recovery of damages rather than a
setting aside of the sale itself.” Charter Nat’l Bank–Hous. v. Stevens, 781 S.W.2d 368, 375 (Tex. App.—
Houston [14th Dist.] 1989, writ denied).
        11
             Section 51.0025 provides:

        A mortgage servicer may administer the foreclosure of property under Section 51.002 on
        behalf of a mortgagee if:

                 (1) the mortgage servicer and the mortgagee have entered into an agreement
                                                     12
court stayed the sale and the sale was conducted in violation of that court’s order.

Guarantors finally argue that the bankruptcy court’s docket entry chilled prospective

buyers.

       1. Blank in Trustee’s Deed

       Pineda argues that the blank where the sales price should be in the Trustee’s Deed

is not a defect in the foreclosure because the deed was filed after the sale and thus could

have had no effect on the adequacy of the price paid. Pineda further argues that Chapter

51 does not require that the price be stated in the deed. See Peterson v. Black, 980

S.W.2d 818, 822 (Tex. App.—San Antonio 1998, no pet.) (holding that failure to record

trustee’s deed did not invalidate foreclosure).

       Guarantors argue that the blank supports a finding that the sale occurred only on

paper and did not qualify as a foreclosure sale pursuant to § 51.002. See TEX. PROP.

CODE ANN. § 51.002; Estate of Broughton, 2016 WL 2955058, at *3 n.7. Guarantors

alternatively argue that the blank cast doubt on the amount allegedly bid at the sale and

that other evidence of the bid amount is suspect. However, Livingston testified he bid

$7 million on behalf of Pineda. Livingston further testified that he attended the sale, and

although there were others standing around at the time of the sale, no one else bid on


              granting the current mortgage servicer authority to service the mortgage; and

              (2) the notices required under Section 51.002(b) disclose that the mortgage
              servicer is representing the mortgagee under a servicing agreement with the
              mortgagee and the name of the mortgagee and:

                      (A) the address of the mortgagee; or

                      (B) the address of the mortgage servicer, if there is an agreement granting
                      a mortgage servicer the authority to service the mortgage.

TEX. PROP. CODE ANN. § 51.0025 (emphasis added).
                                                 13
BSH. In addition, Kevin Shea, who was acting for Capital Crossings, Pineda’s servicing

company, testified he was on the telephone with Livingston at the time of the foreclosure

sale although he did not recall the details when he testified at trial.

       Livingston did not know why the substitute trustee’s deed did not include the bid

amount or why his and the substitute trustee’s affidavits were not completed in September

2014. He was not aware of the proceedings in bankruptcy court earlier that morning and

did not see the docket entry.

       We agree with Pineda that because the deed was filed after the sale, it could not

have had an impact on the conduct of any other prospective bidders. See Peterson, 980

S.W.2d at 822 (holding that trustee’s failure to record deed did not affect the bidding at

the foreclosure sale); see also Powell v. Stacy, 117 S.W.3d 70, 74 (Tex. App.—Fort Worth

2003, no pet.) (holding that trustee’s duty is to conduct the sale fairly in accord with the

deed and the property code requirements).

       2. Defective Notice of Sale

       Although the Guarantors waived notice of sale, Chapter 51 of the property code

requires specific information in the notice of sale posted and filed at the courthouse. See

TEX. PROP. CODE ANN. § 51.002. “The statutory notice provisions of section 51.002 seek

to [] protect the debtor by affording him a lengthy notice period in which he may cure, but

also adequately inform the . . . public . . . to maximize the likelihood of a profitable public

sale at market value . . . .” Jasper Fed. Sav. & Loan Ass’n v. Reddell, 730 S.W.2d 672,

674–75 (Tex. 1987); see also Senger Creek Dev., LLC v. Fuqua, No. 01-15-1098-CV,

2017 WL 2376529, *9 (Tex. App.—Houston [1st Dist.] June 1, 2017, no pet.) (mem. op.).


                                              14
        Guarantors criticize the Notice of Substitute Trustee’s Sale because it does not

include an address for the note-holder Pineda, nor does it identify the mortgage servicer,

Capital Crossings. Section 51.0025 provides that a mortgage servicer “may administer

the foreclosure of property” under specified conditions, which include providing “the

address of the mortgagee,” or “the address of the mortgage servicer” in the notice of

foreclosure.       See TEX. PROP. CODE ANN. § 51.0025.                  Although Capital Crossings

serviced Pineda’s mortgage, Capital Crossings did not conduct the foreclosure. The

foreclosure was conducted by a substitute trustee. Thus, we agree with Pineda that

§ 51.0025 does not apply because the sale was not conducted by a mortgage servicer.

Id. Instead, the notice included the address for the substitute trustee as required by

§ 51.0075(e). See id. § 51.0075(e).12

        3. Bankruptcy Court

        Guarantors next argue that the bankruptcy court stayed the sale and alternatively



        12
             Section 51.0075 states in pertinent part as follows:

        (a) A trustee or substitute trustee may set reasonable conditions for conducting the public
        sale if the conditions are announced before bidding is opened for the first sale of the day
        held by the trustee or substitute trustee. . . .

         (c) Notwithstanding any agreement to the contrary, a mortgagee may appoint or may
        authorize a mortgage servicer to appoint a substitute trustee or substitute trustees to
        succeed to all title, powers, and duties of the original trustee. A mortgagee or mortgage
        servicer may make an appointment or authorization under this subsection by power of
        attorney, corporate resolution, or other written instrument.

        (d) A mortgage servicer may authorize an attorney to appoint a substitute trustee or
        substitute trustees on behalf of a mortgagee under Subsection (c).

        (e) The name and a street address for a trustee or substitute trustees shall be disclosed
        on the notice required by Section 51.002(b).

Id. § 51.0075.

                                                      15
that its docket entry chilled prospective buyers. The evidence contradicts Guarantors’

argument; the bankruptcy stay was lifted three months before the foreclosure sale and

the bankruptcy court transcript reflects that the bankruptcy court did not stay the sale at

the hearing. The bankruptcy court judge stated at the hearing that the sale would be

cancelled only if Pineda received $400,000 before 1 p.m., when the foreclosure sale was

scheduled. Shea and Gonzalez testified that Pineda did not receive the funds.

       Guarantors further argue that dissemination of the bankruptcy court’s docket sheet

entry chilled the sale.   The docket entry states in pertinent part, “Arguments heard.

Motion approved. . . . The sale was cancelled. Parties are to process payment later

today. A detailed order will follow.” (emphasis added). Shea testified that the docket

entry was issued at 9:59 a.m. on September 2, 2014. Livingston testified that there were

others present, but no one else bid at the foreclosure sale. Guarantors contend, based

upon the following argument of Pineda’s bankruptcy counsel, that other bidders were

expected at the sale:

       There is interest—I mean, there is evidently, there are going to be people
       at the auction today, I mean, so there is a very—and I don’t know what
       those—nobody has told me what they have in mind . . . but I’ve had a call
       from someone in the Valley and I know that [Pineda’s counsel] has had a
       call, so there are potential bidders for this property, and a lot could be done
       through this auction process.

       Texas law recognizes that a mortgagee is under a duty to avoid affirmatively

deterring third party bidding by acts or statements made before or during the foreclosure

sale. Powell v. Stacy, 117 S.W.3d 70, 74 (Tex. App.—Fort Worth 2003, no pet.); accord

Peterson, 980 S.W.2d at 822 (stating a trustee “must conduct a foreclosure sale fairly and

not discourage bidding by acts or statements made before or during the sale”); Sanders

                                             16
v. Shelton, 970 S.W.2d 721, 724 (Tex. App.—Austin 1998, pet. denied) (providing that a

mortgagee “is under a duty to avoid affirmatively deterring third party bids . . . but is under

no duty to take affirmative action, beyond that required by statute or deed of trust, to

secure a fair sale”); Gainesville Oil & Gas v. Farm Credit Bank of Tex., 847 S.W.2d 655,

659–60 (Tex. App.—Texarkana 1993, no writ) (holding that actions of the foreclosing

bank discouraged bidding at foreclosure sale); see also Pentad Joint Venture v. First Nat’l

Bank of LaGrange, 797 S.W.2d 92, 96 (Tex. App.—Austin 1990, writ denied) (“Texas law

recognizes that a mortgagee is under a duty to avoid affirmatively deterring third party

bidding by acts or statements made before or during the foreclosure sale.”).

         Texas courts also recognize that not all defects in the foreclosure process create

a chilling effect on prospective buyers. See Musik, 531 S.W.2d at 587–88 (holding that

procedure of appointing substitute trustee and alleged alteration of deed of trust did not

constitute irregularity in foreclosure), First State Bank v. Keilman, 851 S.W.2d 914, 923

(Tex. App.—Austin 1993, writ denied) (collecting cases); see also Resolution Tr. Corp. v.

Summers & Miller Gleneagles Joint Venture, 791 F.Supp. 653, 655 (N.D. Tex. 1992)

(finding that incorrect property description in notice of foreclosure sale did not chill the

sale).

         The defects that ordinarily impair a foreclosure are those in which notice is not

given as required by statute or the deed, or when the party controlling the process chills

the bidding. See Gainesville Oil & Gas, 847 S.W.2d at 664 (reversing foreclosure after

holding that mortgage-holder’s representations chilled bidding at foreclosure sale);

Pentad Joint Venture, 797 S.W.2d at 96 (“A mortgagee’s duty is to avoid affirmatively


                                              17
deterring prospective bidders by acts or statements made before or during a foreclosure

sale.”). The docket entries Guarantors rely on are the act of the bankruptcy court clerk

and are not attributable to any party.

        However, even if Texas law recognizes that the chilling effect of actions by a

stranger to the foreclosure could cause a wrongful foreclosure, the party claiming

wrongful foreclosure must still establish a causal effect between that chilling conduct and

inadequate price. See Saucedo, 268 S.W.3d at 139 (reciting elements); Gainesville Oil

& Gas, 847 S.W.2d at 664 (holding that evidence of bank’s misrepresentations prevented

property owner from appearing at foreclosure sale).13 Guarantors failed to produce any

evidence that the docket sheet had any effect on the bidding or on the price of BSH.

Accordingly, the evidence was insufficient to support the jury’s wrongful foreclosure

finding.

D.      Summary of Wrongful Foreclosure

        We sustain Pineda’s third and fourth issue and part of its seventh issue. Because

we found legally insufficient evidence to support the jury’s wrongful foreclosure finding of

a defect in the foreclosure proceedings, we need not address: (1) the jury’s finding as to

the value of BSH on the date of foreclosure; (2) Pineda’s fourth issue (regarding the jury



        13
           In Gainesville Oil & Gas Co., Inc. v. Farm Credit Bank of Texas, the Texarkana Court reversed
a foreclosure after holding:

        [e]vidence tending to prove the Ward couple relied upon representations by the Bank that
        the oil lease would not be included in the foreclosure sale caused the Ward couple to forego
        their right to attend the foreclosure sale and protect their interest. Such evidence tends to
        show conduct by the Bank which diminished competition and stifled a free and open sale
        and was, therefore, an irregularity in the foreclosure that was damaging to the appellants.

847 S.W.2d 655, 664 (Tex. App.—Texarkana 1993, no writ). There was no similar evidence here.
                                                    18
instruction on inadequate selling price); or (3) the portion of Pineda’s seventh issue

challenging the factual sufficiency of the jury’s finding of fair market value. See TEX. R.

APP. P. 47; Lance v. Robinson, 543 S.W.3d 723, 740 (Tex. 2018).

                               III.   WAIVER OF DEFENSES

       By its first and second issues, Pineda contends it should prevail as a matter of law

on Guarantors’ claim of wrongful foreclosure and their claim for relief under the anti-

deficiency statute because Guarantors waived their rights in the 2007 Guaranties. See

TEX. PROP. CODE ANN. § 51.003. Because we held in Part II that the evidence in support

of Guarantors’ claim of wrongful foreclosure is legally insufficient, we do not address

Pineda’s waiver argument. See TEX. R. APP. P. 47.1.

            IV.   DRS. GUAJARDO AND WONG’S LIABILITY ON 2006 GUARANTY

       Throughout this litigation, Drs. Guajardo and Wong have asserted that they were

not individually liable for the 2006 guaranties because the 2007 Note extinguished their

individual liability. The jury found that TSB intended to release Drs. Guajardo and Wong

from liability on the 2006 Guaranties. By its fifth issue, Pineda argues that as a matter

of law, Drs. Guajardo and Wong’s continuing guaranties were not released by the 2007

Loan Agreement or the 2007 Guaranties. By the remainder of its seventh issue, Pineda

argues that the evidence is factually insufficient to support the jury’s finding that TSB

intended to release Drs. Guajardo and Wong from their 2006 guaranties.

A.     Background Facts

       In 2004, when the original note and guaranties were signed, the note did not

identify the guarantors. The Lomix was one of the guarantors, and the guaranty was


                                            19
signed by Dr. Wong, as president of the general partner of The Lomix. The Guajardo

Family Partnership was also a guarantor, signed by Dr. Guajardo as president, however

both Drs. Guajardo and Wong also signed individual guaranties. The guaranties for The

Lomix and for Dr. Wong, individually, were limited to a maximum of $800,000 each, as

were the guaranties for the Guajardo Family Partnership and Dr. Guajardo, individually.

The guaranties provided that the guarantors “consent[ed] to all renewals, extensions,

modifications, and substitutions of the Debt . . . .” The guaranties further stated: “This

Guaranty may not be amended or modified by oral agreement.                No amendment or

modification of this Guaranty is effective unless made in writing and executed by you

[guarantor] and me [Bank].”

       The 2006 note states that it is a Master Note and all liens securing the note are

second and inferior to the 2004 note. Again, it does not identify the guarantors. The

Lomix and the Guajardo Family Partnership continue to be guarantors but with no limit to

their liability, although the individual liability of Dr. Guajardo is limited to $2,500,000 and

Dr. Wong’s individual liability is limited to $1,250,000. The 2006 guaranties and the 2004

guaranties include identical language regarding amendment and modification.

       The 2007 Note states that the “Note secured is a Master Note and represents

funds to be advanced . . . and to be used for the renewal and extension of two existing

loans in favor of [TSB] . . . .” The Note is signed by Dr. Guajardo as President of MD

Ventures and by Dr. Wong as president of the general partner of The Lomix. The loan

agreement for the 2007 Note identifies the guarantors to include The Lomix and the

Guajardo Family Partnership but does not identify Drs. Guajardo or Wong individually.


                                              20
The 2007 loan agreement further states that, “This loan will be guaranteed by limited

guaranties from the Guarantors. In this regard, each Guarantor will execute a separate

limited Guaranty Agreement for the amounts that will be set forth in said Guaranty

Agreement.” At trial, Dr. Guajardo testified that his family partnership owned a share of

MD Ventures, but he did not.

       Dr. Guajardo testified that until 2010, he was the president of the board of directors

for MD Ventures and was involved with loan negotiations with TSB in 2004, 2006, and

2007. According to both Dr. Guajardo and Jose Jimenez, TSB’s attorney prepared the

guaranties in 2007, as he had done in 2004 and 2006. In 2007, TSB’s attorney said he

wanted the guaranties to track ownership of the shares in MD Ventures. The earlier

guaranties added up to 240% of the note, with Dr. Guajardo and his family partnership

responsible for up to 41% of the note in 2006, even though the family partnership owned

only a single share of MD Ventures. The changes in 2007 were intended to correct the

inequities that had found their way into the guaranties. When the guaranties were first

executed in 2004, the intent was for each guarantor to guarantee an amount that related

to the extent of his or her ownership in MD Ventures. The limitation of liability would then

vary such that Dr. Anderson who owned three shares would have greater guarantor

liability than those guarantors who owned a single share. Dr. Guajardo and Jimenez

testified that the Bank and its attorney intended for the 2007 Guaranties to replace the

previous guaranties.

       Dr. Wong testified that The Lomix owned one share of MD Ventures. He did not

own a share individually. He understood during the process of negotiation of the 2007


                                             21
Note, that TSB was trying to ensure that only the owners of interests in MD Ventures

would be guarantors.

B.     Standard of Review

       The interpretation of an unambiguous contract is a question of law that we review

de novo. TRO-X, L.P. v. Anadarko Petroleum Corp., 548 S.W.3d 458, 462 (Tex. 2018);

EOG Res., Inc. v. Hanson Prod. Co., 94 S.W.3d 697, 701 (Tex. App.—San Antonio 2002,

no pet.). Whether a contract is ambiguous is also a question of law for the court. TRO-

X, L.P., 540 S.W.3d at 462. “If contract language can be given a certain or definite

meaning, then it is not ambiguous; it should be interpreted by a court as a matter of law.”

Universal Health Servs, Inc., 121 S.W.3d at 746. Extrinsic evidence may be used to aid

the understanding of an unambiguous contract, but not to create ambiguity. URI, Inc. v.

Kleberg County, 543 S.W.3d 755, 758 (Tex. 2018). We may consider extrinsic evidence

of the facts and circumstances surrounding the contract’s execution as an aid to

construction of an unambiguous contract without running afoul of the parol evidence rule.

Id.

       When there are multiple documents pertaining to the same transaction, they may

be read together to ascertain the parties’ intent, even if they were executed at different

times and they do not expressly refer to each other. See Fort Worth Indep. Sch. Dist. v.

City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000).

C.     Continuing Guaranties

       “A continuing guaranty is one which contemplates a future course of dealing

between the lender and debtor and is intended to apply to other liabilities as they accrue.”


                                            22
Sonne v. Fed. Dep. Ins. Corp., 881 S.W.2d 789, 793 (Tex. App.—Houston [14th Dist.]

1994, writ denied). The 2004 and 2006 guaranties are continuing guaranties. The 2006

guaranty is subtitled “(Continuing Debt—Unlimited).”14 The documents provide that the

guarantors “consent to all renewals, extensions, modifications and substitutions of the

Debt” initially incurred by MD Venture. However, each document also provides that it

may be amended or modified only if done in writing and signed by the parties.

       The law on guaranties is well-established. A guarantor may require that the terms

of his guaranty be followed strictly, and the guaranty agreement may not be extended

beyond its precise terms by construction or implication. Reece v. First State Bank, 566




       14
            Paragraphs 2 and 3 of the 2006 Guaranty are reproduced below:

       2. I absolutely and unconditionally agree to all terms of and and guaranty to you the
       payment and performance of each and every Debt, of every type, purpose, and description
       that the Borrower [MD Ventures] either individually, among all or a portion of themselves,
       or with others, may now or at any time in the future owe you, including, but not limited to
       the following described Debt(s) including without limitation, all principal, accrued interest,
       attorneys’ fees and collection costs, when allowed by law, that may become du from the
       Borrower to you in collecting and enforcing the Debt and all other agreements with respect
       to the Borrower.

       A promissory note or other agreement, No. 31095654, dated September 321, 2000, from
       Brownsville MD Venture, L.L.C. (borrower) to you in the amount of $6,000,000.

       In addition, Debt refers to debts, liabilities, and obligations of the Borrower (including, but
       limited to, amounts agreed to be paid under the terms of any notes or agreements securing
       the payment of any debts, loan, liability, or obligation, overdrafts, letters of credit,
       guaranties, advances for taxes, insurance, repairs, and storage, and all extensions,
       renewals, refinancings, and modifications of these debts) whether now existing or created
       or incurred in the future, due or to become due, or absolute or contingent, including
       obligations and duties arising from the terms of all documents prepared or submitted for
       the transaction such as applications, security agreements, disclosures, and the Note.

       3. I consent to all renewals, extensions, modifications, and substitutions of the Debt which
       may be made by you upon such terms and conditions as you may see fit from time to time
       without further notice to me and without limitation as to the number of renewals, extensions,
       modifications, or substitutions.

2006 Guaranty.
                                                    23
S.W.2d 296, 297 (Tex. 1978); McKnight v. Va. Mirror Co., 463 S.W.2d 428, 430 (Tex.

1971).

D.       Intent of the Parties Regarding 2007 Guaranties

         Pineda argues that the nature of the continuing guaranties makes Drs. Guajardo

and Wong liable on the 2006 guaranties because they were not explicitly released in the

2007 Note or loan agreement.

         All three documents, the 2007 Note, the 2007 loan agreement, and the 2007

guaranties were prepared by TSB’s attorney.       The 2007 loan agreement and note

specifically identify the Guarantors as a defined term which was not done in the 2004 and

2006 notes. The 2007 loan agreement is in writing, signed by both TSB and the identified

Guarantors which included the Guajardo Family Partnership and The Lomix but excluded

Drs. Guajardo and Wong individually.        Guarantors, as defined in the 2007 loan

agreement drafted by TSB, are those guarantors specifically listed. The note guaranteed

by the 2007 guaranty is the “promissory note or other agreement, No. 91088188 dated

November 20, 2007, from Brownsville MD Ventures, LLC (Borrower), to you, in the

amount of $16,852,317.00.”

         Pineda relies in part on Chambers v. NCNB Texas National Bank and argues that

an explicit release is required. 841 S.W.2d 132, 134 (Tex. App.—Houston [14th Dist.]

1992, no writ).     Chambers involved a partnership that borrowed money that was

guaranteed by the partners. See id. The partnership later incorporated and obtained

another loan.     Id.   The guarantor argued that the new loan created a totally new

corporate obligation, which removed any further personal obligation on his part. Id. The


                                           24
trial court disagreed and granted summary judgment to the lender. The court of appeals

affirmed, holding that the partnership note explicitly applied to all renewals and extensions

and the guaranty document stated that it applied to changes in the debtor’s status by

“merger, consolidation, or otherwise.” Id. at 134. The court’s decision was predicated

on the plain language of the guaranty, not on any requirement of an explicit release. Id.

       Pineda also relies on Travelers Insurance Company v. Bosler for its claim that

executing a new guarantee does not extinguish a previous guarantee. 906 S.W.2d 635,

643 (Tex. App.—Fort Worth 1995, pet. granted, judgm't vacated w.r.m) (“The giving of a

new note for a debt evidenced by a former note does not extinguish the old note unless

expressed by the parties.”). Bosler relies in part on Shepherd v. Eric Schuster Corp.,

424 S.W.2d 693, 697 (Tex. App.—Houston [14th Dist.] 1968 writ ref’d n.r.e.).            The

Shepherd Court stated the rule as follows: “The fact that an additional guaranty was

provided does not prove that the original continuing guaranty was destroyed. It must be

shown that the later guaranty was intended and accepted as a substitute for the former.”

Id. “The act of acquiring a new guaranty, in and of itself, does not release or destroy the

original guaranty.”   Fed. Dep. Ins. Corp. Attayi, 745 S.W.2d 939, 947 (Tex. App.—

Houston [14th Dist.] 1988, no writ).        Whether the guarantor is released by the

subsequent guaranty depends on whether “the new guaranty is intended and accepted

as a substitute for the former.” Shepherd, 424 S.W.2d at 697; Warner v. First Nat’l Bank

of Waco, 369 S.W.2d 651, 653 (Tex. App.—San Antonio 1963, no writ) (affirming

judgment for the bank because the original guaranty was not revoked in writing as

required by its terms).


                                             25
       According to the uncontroverted evidence at trial, the terms of the 2007 Guaranty

omitted Drs. Guajardo and Wong individually, not inadvertently, but as a negotiated term.

Pineda was also on notice that the 2007 guaranties were intended to replace the 2006

guaranties. Before Pineda bought the 2007 Note, Capital Crossings prepared a Due

Diligence Report that listed the Guarantors. In its analysis, the Report notes that MD

Ventures is owned by “14 physician/individuals/entities” and there are fourteen

guarantors, one of which is a limited partnership owned by Dr. Wong. When describing

the guaranties, the report included only the Guarantors on the 2007 Note. The report

further stated that the author “believe[d] the intent was for the 2007 Note to replace the

previous notes and to become the sole operative note.” But the report recommended

obtaining assignment of the 2004 and 2006 notes as part of the acquisition of the 2007

Note. In addition to the due diligence report, Pineda’s foreclosure authorization only

listed the 2007 Guarantors, and omitted Drs. Guajardo and Wong. Although Pineda’s

internal documents cannot address the intent between TSB and Drs. Guajardo and Wong,

the information Pineda relied upon is consistent with the testimony of the Drs. Guajardo

and Wong, as well as others, that TSB intended to release Drs. Guajardo and Wong from

their 2006 individual guaranties.

       The trial court withdrew its summary judgment on this issue after finding there was

a fact issue as to the parties’ intent. The jury answered the question of intent, finding

that TSB intended to release Drs. Guajardo and Wong from the 2006 Guaranty. We

conclude this finding is supported by factually sufficient evidence and was not precluded

as a matter of law.    Accordingly, we overrule Pineda’s fifth issue and overrule the


                                           26
remainder of its seventh issue.

                                V.   CROSS-APPEAL ISSUES

       Guarantors filed two conditional cross-appeal issues: (1) the trial court erred in

granting summary judgment on Guarantors counterclaims and defenses and (2) the trial

court erroneously granted summary judgment without allowing time for adequate

discovery; the motions were conclusory and mischaracterized the claims and defenses;

and Guarantors presented evidence in support of their claims and defenses.

       By their second cross-appeal issue that we address first, Guarantors complain that

the trial court erred in granting Pineda’s no-evidence motions for summary judgment

when Guarantors did not have adequate time for discovery.

A.     Standard of Review and Applicable Law

       “Under Rule 166a(i), a party may move for summary judgment on the ground that

there is no evidence of one or more essential elements of a claim or defense on which an

adverse party would have the burden of proof at trial.” W. Invs., Inc. v. Urena, 162

S.W.3d 547, 550 (Tex. 2005); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex.

2002). A party may move for summary judgment on no-evidence grounds only “[a]fter

adequate time for discovery.” TEX. R. CIV. P. 166a(i). The official comment to Rule

166a(i) states that “[a] discovery period set by pretrial order should be adequate

opportunity for discovery unless there is a showing to the contrary, and ordinarily a [no-

evidence] motion . . . would be permitted after the period but not before.” Id. cmt. “This

comment, unlike other notes and comments in the rules of civil procedure, was specifically

intended to inform the construction and application of the rule.” Aguirre v. Phillips Props.,


                                             27
Inc., 111 S.W.3d 328, 344 (Tex. App.—Corpus Christi–Edinburg 2003, pet. denied) (op.

on reh’g); see also Castillo v. Mizpah Residential Care, No.13-12-00719-CV, 2014 WL

2159255, at *2 (Tex. App.—Corpus Christi–Edinburg May 22, 2014, pet. denied) (mem.

op.).

        In addition to the rule commentary on adequate time for discovery, a trial court may

order a continuance of a summary judgment hearing if it appears “from the affidavits of a

party opposing the motion that he cannot for reasons stated present by affidavit facts

essential to justify his opposition.” TEX. R. CIV. P. 166a(g); Joe v. Two Thirty Nine Joint

Venture, 145 S.W.3d 150, 161 (Tex. 2004).           We review the trial court’s decision

regarding a continuance for an abuse of discretion. Joe, 145 S.W.3d 161. “A trial court

abuses its discretion when it reaches a decision so arbitrary and unreasonable as to

amount to a clear and prejudicial error of law.” Id.

        We have considered the following nonexclusive factors when deciding
        whether a trial court abused its discretion in denying a motion for
        continuance seeking additional time to conduct discovery: the length of time
        the case has been on file, the materiality and purpose of the discovery
        sought, and whether the party seeking the continuance has exercised due
        diligence to obtain the discovery sought.

Id.; McInnes v. Malia, 261 S.W.3d 197, 201 (Tex. App.—Houston [14th Dist.] 2008, no

pet.). The McInnes Court noted that “a no-evidence summary judgment motion ordinarily

is not permitted before the expiration of the discovery period set by the pre-trial order,”

based upon commentary to the rule change allowing a no-evidence motion for summary

judgment. Id. at 200.

        In McInnes, the trial court granted a no-evidence summary judgment more than

five months before the end of the discovery period in a complex legal malpractice case

                                             28
arising out of the plaintiff’s previous medical malpractice case. Id. at 202–03. “The time

allocated for discovery in the docket control order is a strong indicator of adequate time,

though the deadline for discovery is not a conclusive measure of ‘adequate time.’” Id. at

203. The court of appeals reversed, holding that the plaintiff had not had an adequate

time for discovery.   Id.; see also Castillo, 2014 WL 2159255, at *11 (reversing no

evidence summary judgment for lack of adequate time for discovery).             “[T]he no-

evidence rule, by its very language, is to be used following discovery.” Fort Brown Villas

III Condo. Ass’n v. Glllenwater, 285 S.W.3d 879, 882 (Tex. 2009) (emphasis added).

B.     Relevant Background Facts

       Pineda filed its original petition in September 2013.     Many of the Guarantors

answered and sent requests for disclosures to Pineda in October 2013.               Some

Guarantors were not served until December 2013 and February 2014.                  Pineda

foreclosed on BSH on September 2, 2014, which changed the posture of the litigation.

The Guarantors sent additional discovery to Pineda in October 2014 and sought a date

for Pineda’s corporate representative deposition. In November 2014, Pineda filed its first

motion for no-evidence summary judgment on the Guarantor’s defenses. No scheduling

order was in place at the time Pineda filed its motion.

       After the motion for summary judgment was filed, the parties agreed to a

scheduling order that set trial for February 2015, closed discovery on January 15, 2015,

and required dispositive motions to be filed by January 28, 2015. In late November 2014,

Pineda filed a motion for protective order seeking protection from certain discovery. In

December 2014, Pineda filed a second no-evidence motion for summary judgment on


                                            29
certain issues.   The depositions of the Guarantors were taken in November and

December 2014.

       Pineda refused to respond to discovery related to the value of BSH, any due

diligence performed by Pineda before acquiring BSH, bids to purchase BSH, advertising

of the notes and liens purchased by Pineda related to BSH, and documents related to

ownership and transfer of the note and liens. According to Pineda, these same topics

were off-limits during any corporate representative deposition. Pineda also refused to

appear for corporate representative depositions according to Guarantors. Guarantors

filed their motion to continue the summary judgment hearing, their response to Pineda’s

motion for protective order, and their motion to compel discovery from Pineda, a week

before the scheduled February 11, 2015 hearing.

       After the hearing, on February 19, 2015, the trial court granted Pineda’s motion for

protective order and sustained Pineda’s objections to discovery on the amount paid for

the 2007 Note and the value of BSH. That same date, the trial court granted Pineda’s

no-evidence motion for summary judgment on Pineda’s duty to act reasonably or in good

faith. The trial court further dismissed with prejudice Guarantor’s counterclaims for civil

conspiracy, breach of good faith and fair dealing, and bad faith and unreasonable

foreclosure.

       Pineda’s traditional motion for partial summary judgment seeking a deficiency

judgment against the Guarantors and its two no-evidence motions on Guarantors’

defenses and counterclaims remained pending. After substantial briefing and additional

motions were filed, supplemented, and amended, a new scheduling order was signed


                                            30
setting trial for April 11, 2016.      The motions for summary judgment were heard on

October 7, 2015, after which the trial court advised the parties that Pineda’s summary

judgment motions would be granted. The trial court did not rule on the pending discovery

motions.15 The final judgment was signed on February 17, 2016.

C.     Discussion

       In its February 2015 order, the trial court found that the value of BSH and the

amount Pineda paid for the 2007 note were not relevant in the suit to collect on the

guaranties. The record does not state the trial court’s reasoning, but Pineda argued that

the 2007 guaranties waived any rights the Guarantors had to seek relief from their

unconditional guaranties.       The Guarantors argued that they had counterclaims and

unwaived defenses to which the evidence was relevant.                      After it disallowed the

discovery, the trial court found the Guarantors’ claims to be without merit. The trial

court’s summary judgment ruling that foreclosure was properly conducted was in effect

at the time of trial, although in Spring 2016 the later-appointed judge permitted the

Guarantors to conduct further discovery and allowed them to try the wrongful foreclosure

defense.

       Pineda filed its no-evidence summary judgment motions before and at the very

beginning of the discovery period and stonewalled discovery. See McInnes, 261 S.W.3d

at 201. Discovery disputes between the parties were still unresolved when the trial court



       15
           Guarantors’ pending discovery motions included a motion to compel corporate representative
depositions for which Pineda had never appeared after notices were issued beginning in September 2014,
October 2014, and in mid-2015, a description of documents that were allegedly wrongfully withheld by
Pineda that supported Guarantor’s claims of civil conspiracy between Pineda and Compass, fraud and
fraudulent inducement by Compass which could be defensive against Pineda. Part of the relief Guarantors
sought was a continuance of the summary judgment hearing date.
                                                  31
granted its second round of summary judgments in favor of Pineda six months before the

second trial date and before the close of the second scheduling order’s discovery period.

        This case involves a complex commercial transaction with numerous defendants

(Guarantors) whose interests are not fully aligned. The Guarantors raised numerous

defenses to the collection of the deficiency judgment by Pineda. Pineda successfully

prevented discovery of documents and postponed its corporate representative’s

testimony until after the summary judgments were granted.

        Some discovery was obtained before trial, but it was not obtained before the first

summary judgment in February 2015 and was disregarded by the trial court before the

grant of the first “final judgment” in February 2016.16 The denial of that discovery harmed

the Guarantors, in part, by preventing them from demonstrating that Pineda was not a

holder in due course and that Guarantors had a viable breach of contract counterclaim

they could assert against Pineda that arose from Guarantors’ dealings with Compass.17

See Ford Motor Co. v. Castillo, 279 S.W.3d 656, 667 (Tex. 2009) (requiring a finding of

harm from abuse of discretion); Remaley v. TA Operating LLC, 561 S.W.3d 675, 683

(Tex. App.—Houston [14th Dist.] 2018, pet. denied).



        16
           The deposition of Jeffrey Livingston, the attorney hired by Pineda to bid on the hospital at the
foreclosure sale, was not taken until July 2015. Dennis Stratford, the senior vice president in charge of
asset management for Capital Crossing, was not deposed until January 2017, and Guarantors complained
of Pineda’s continued lack of document production in readable form in February 2017.
        17
            According to Guarantors’ evidence, Compass breached its agreement to maintain the
confidentiality of Guarantors’ confidential financial information to Guarantors’ detriment by allowing Pineda
and other prospective commercial purchasers of Compass’s bundled portfolios to bid on the notes knowing
which ones had guarantees while concealing from Guarantors the pending sale of their note. See 2007
Loan Agreement ¶ 6.08. The trial court granted Pineda’s motion for summary judgment and failed to rule
on Guarantors’ competing motions for summary judgment. Guarantors’ evidence raised a fact question
on the issue of Compass’s breach and on Pineda’s status as a holder in due course.

                                                    32
      Under these circumstances, we conclude the trial court abused its discretion by

granting Pineda’s no-evidence summary judgment motions before adequate time for

discovery. See TEX. R. CIV. P. 166a(i); McInnes, 261 S.W.3d at 205; see also Castillo,

2014 WL 2159255, at *11. In addition, because the trial court granted Pineda’s motion

for summary judgment on the guarantees without considering Guarantors’ defenses to

payment, including Guarantors’ claims that Pineda was not a holder in due course and

was subject to any defenses available as to Compass, and Guarantors’ competing breach

of contract and other claims, the affirmative summary judgment for Pineda on the

guarantees must be reversed as well.

      We sustain Guarantors’ second cross-appeal issue.

      We do not address Guarantors’ conditional cross points because the Court did not

grant relief that involves those cross points. See TEX. R. APP. P. 47.1

                               VI.   DEFICIENCY JUDGMENT

      Pineda’s sixth issue argues that the trial court erred by failing to render a deficiency

judgment. Because of our resolution of other issues we need not address Pineda’s sixth

issue. See TEX. R. APP. P. 47.1; Lance, 543 S.W.3d at 740.

                                     VII.   CONCLUSION

      We affirm the judgment of the trial court insofar as it found Drs. Guajardo and

Wong are not liable on the 2007 Loan Agreement and that Texas State Bank intended to

release them from the 2006 Loan Guaranties.              We reverse the judgment as to

Guarantors’ claim for wrongful foreclosure and we render judgment that Guarantors take

nothing on that claim. We reverse the trial court’s grant of summary judgment for Pineda


                                             33
on its claim for deficiency judgment, and reverse the summary judgments granted against

the Guarantors on their counterclaims and defenses. We remand for further proceedings

consistent with this memorandum opinion.



                                                            GINA M. BENAVIDES,
                                                            Justice


Delivered and filed the 7th
day of November, 2019.




                                           34
