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NCNB Texas National Bank v. Travelers Indemnity Co.
Citations: 770 F. Supp. 330; 1991 U.S. Dist. LEXIS 12094; 1991 WL 166319Docket: Civ. A. CA 3-90-0559-G
Court: District Court, N.D. Texas; June 14, 1991; Federal District Court
NCNB Texas National Bank filed a motion for summary judgment against The Travelers Indemnity Company and Doal Ventures in a case concerning a temporary injunction bond related to a $100,000 investment in Longcrier Farms, Inc. Doal Ventures secured the investment with a letter of credit from Forestwood National Bank, which was later assigned to InterFirst Bank. Following the insolvency of First Republicbank, NCNB, as the successor, sought to recover on the bond after a court ruled the temporary injunction against the letter of credit was improperly issued and dissolved. Travelers contended that the injunction was void ab initio due to a lack of specified reasons, which they argued absolved them of liability. However, the court found that Texas law's requirement for stating reasons was intended to inform the enjoined party, not to allow sureties to evade payment. Since all parties acted under the assumption the injunction was valid, Travelers was estopped from denying liability. The court also determined that NCNB's damages were directly caused by Doal and Travelers' failure to comply with the court's requirement to deposit $110,000, which impeded NCNB’s ability to collect on its judgment against the insolvent Forestwood. As a result, the court granted NCNB's motion for summary judgment, holding Doal and Travelers accountable under the bond. Judge Sanders signed a final judgment against Doal, dissolving the injunction and holding Doal liable as the principal on the bond, with Travelers as the surety. Travelers' arguments regarding proximate cause were rejected, as the negligence cases cited were deemed inapplicable. The events claimed by Travelers as intervening causes do not impact its obligations as surety for the amounts owed by Doal. Additionally, the foreseeability of Forestwood's insolvency does not relieve Travelers of its bond obligations. NCNB is entitled to attorney's fees. Travelers argued that Texas law prohibits recovery of fees for defending against an injunction in wrongful injunction claims, referencing Howard Gault Company v. Texas Rural Legal Aid, Inc. However, NCNB succeeded in its claim under the injunction bond, which is contractual, and thus attorney's fees are recoverable. The court cited Valdina Farms, Inc. v. Brown, Beasley Associates, Inc. to support that fees incurred in defending against the injunction do not need to be segregated from those incurred for the contract claim recovery. Under Texas Civil Practice and Remedies Code § 38.001(8), NCNB is awarded $23,328.19 in attorney's fees, with potential increases for any appeal processes. NCNB's motion for summary judgment was granted, and counsel is instructed to submit a judgment form within ten days.