Gary Derrick and Trouba Derrick v. AmWest Savings Association

Citation: Not availableDocket: 03-93-00679-CV

Court: Court of Appeals of Texas; March 7, 1995; Texas; State Appellate Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

AmWest Savings Association initiated a lawsuit against appellants Gary and Trouba Derrick to recover $250,000 on a promissory note originally issued to Heart O'Texas Savings Association, later assigned to AmWest by the Federal Savings and Loan Insurance Corporation (FSLIC). The appellants raised defenses including failure of consideration, violations of the "Bank Tying Act," and breaches of the Texas Business and Commerce Code, but the trial court granted summary judgment in favor of AmWest. The court affirmed AmWest’s entitlement to summary judgment based on the D'Oench Duhme doctrine, which barred the appellants' defenses.

AmWest successfully established its case by proving the existence of the note, the appellants' signatures, its legal ownership of the note, and the outstanding balance due. An affidavit by Marvin Henkes confirmed the authenticity of the note, and the court accepted the instrument as proven since the appellants did not contest its execution with a verified pleading. AmWest also demonstrated that it obtained the note through an assignment from FSLIC as receiver for the insolvent Heart O'Texas. The court found that AmWest provided adequate proof of the amount owed, including principal and interest, and that the appellants failed to present any material fact issues regarding their affirmative defenses. Consequently, the trial court's judgment was upheld, including the award of attorney's fees.

Appellants claimed that HOT misrepresented the stock's value purchased with part of a $50,000 loan, which contributed to a $250,000 note. They asserted that borrowing the $50,000 was contingent upon buying HOT stock, leading to three affirmative defenses: (1) failure of consideration for the note, (2) violation of the Bank Tying Act by requiring stock purchase as a loan condition, and (3) entitlement to offsets on the note due to the violations of the Bank Tying Act and section 27.01 of the Business and Commerce Code. Appellants argued these offsets created a factual dispute regarding the amount owed on the note. Appellees countered that these defenses were barred by the D'Oench Duhme doctrine, which prevents obligors from asserting defenses based on unrecorded side agreements that alter the terms of a valid note. This doctrine applies even if the borrower did not intend to deceive banking authorities. Appellants contended that the doctrine was inapplicable since the notes were in the files and indicated the defense. However, the $250,000 note did not reference the $50,000 note or indicate it was a renewal or secured by stock. The documentation showed that while the $50,000 note referred to a stock purchase, it did not provide evidence of misrepresentation regarding the stock's value at the time of purchase. Appellants cited a case (First Heights Bank, FSB, v. Gutierrez) as precedent, but the court in that instance found that the entire transaction was documented, allowing for a defense that the loan had been paid, distinguishing it from the current case.

The court emphasized that the repayment of funds from Orange to Rio Grande was clear and did not require outside agreements to support the repayment defense, thus D'Oench did not apply. Appellants failed to demonstrate a clear connection between the $50,000 note and the $250,000 note or show any impropriety regarding the $50,000 note based solely on their face value. In the precedent case Fair v. NCNB Texas National Bank, the court ruled that the mere presence of appraisal and construction documents in the bank's files did not negate D'Oench's applicability, as these did not provide sufficient evidence of fraud. The court reiterated that any defense to the collection of a note must be clearly reflected in the bank's documentation. Unlike in Fair, appellants did not identify additional documentation in the files beyond the notes themselves, and the notes did not provide any evidence of an agreement or representation for a defense. Consequently, appellants' defenses were barred under D'Oench principles. Furthermore, appellants did not adequately challenge the trial court's award of attorney's fees, leading to the waiver of this point of error. The trial court's summary judgment was affirmed.