In Re Albert Ortiz

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In Re Albert Ortiz

State: Texas

Court: Texas Northern District Court

Docket No: 14-10-01262-CV

Case Date: 11/20/2012

Preview:Opinion and Dissenting Opinion of November 20, 2012 Withdrawn and Judgment Vacated; Appellee's Amended Motion for Rehearing Granted in Part and Denied in Part; Appellant's Motion for Rehearing Denied as Moot; Petition Denied; Affirmed in Part; Reversed in Part; Remanded; and Opinion and Dissenting Opinion on Rehearing filed May 16, 2013.

In The

Fourteenth Court of Appeals
NO. 14-10-01125-CV NATIONAL CITY BANK OF INDIANA AND NATIONAL CITY HOME LOAN SERVICES, INC., Appellants/Cross-Appellees V. ALBERT ORTIZ, Appellee/Cross-Appellant On Appeal from the 164th District Court Harris County, Texas Trial Court Cause No. 2006-61178

NO. 14-10-01262-CV IN RE ALBERT ORTIZ, Relator ORIGINAL PROCEEDING

WRIT OF MANDAMUS

DISSENTING OPINION ON REHEARING
I respectfully dissent.

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APPEAL
The main issue in this case is whether there is more than one reasonable interpretation of two letters signed on behalf of National City Bank of Indiana (the "Bank") by National City Home Loan Services, Inc. (the "Servicer"), at the request of one of the Bank's borrowers, Albert Ortiz. There is only one, and it is this: without receiving any consideration, the Bank expressly waived all of its rights against Ortiz under the promissory note dated March 15, 2004 ("Note"). Because of this unambiguous waiver, the Bank is not entitled to recover under the Note. For this reason, this court should affirm the trial court's partial take-nothing summary judgment in favor of Ortiz on claims arising from the Note. The majority errs by concluding that the letters are ambiguous. As explained below, there is nothing unclear or uncertain about the waiver language or its effect. Under a straightforward application of Texas law, the letters mean precisely what they say. Though the Bank and the Servicer (collectively, the "Bank Parties") assert that they did not intend to waive all the claims under the Note, the words they used could hardly be clearer. The Bank may have acted imprudently in renouncing its rights under the Note without obtaining its own release or waiver from Ortiz but imprudent acts have consequences under the law. The Bank stated that it "releases and waives . . . all . . . claims regarding any obligations or

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The dissenting opinion of November 20, 2012, is withdrawn, and this dissenting opinion on rehearing is issued in its place. 2

liabilities of [Ortiz] in connection with the above-referenced property, including the note and deed of trust associated with such property."2 The legal consequence of this act is a renunciation of the Bank's claims under the Note. This is the only reasonable interpretation of the language. Instead of holding the Bank to its unambiguous words, the majority finds an ambiguity where none exists and remands this case for a new trial. Today's decision is bad for borrowers and bad for lenders. By stretching and straining to find that the unambiguous waiver language is ambiguous, the majority not only contravenes the directives of the Supreme Court of Texas but also creates bad precedent from this court that will make it more difficult for courts in this jurisdiction to find any waiver language unambiguous. Unwelcome Consequences of Today's Decision Parties count on waivers and releases to bring an immediate and final end to claims and disputes. An unambiguous waiver or release of claims serves a crucial purpose in our economy. By giving and receiving waivers or releases, parties can avoid the time, expense, and distraction of protracted litigation if the waiver or release is unambiguous. The ambiguous/unambiguous distinction is significant. Unambiguous

provisions can be enforced by summary judgment; ambiguous ones usually cannot. Often, parties will not settle disputes if there is no reasonable expectation that courts will enforce a waiver of rights without putting them to the inconvenience, expense, and uncertainty of a full-blown trial. Because the waiver language at issue in today's case is commonly used to settle claims, today's holding that this language is ambiguous jeopardizes summary judgment as a viable option in future cases. Quite simply, by refusing to hold the Bank to its unambiguous waiver, the
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(emphasis added).

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majority reaches the wrong result in this case and devalues all unambiguous waiver language. This time it is the Bank trying to avoid its unambiguous waiver of claims against the borrower; next time, it may be a borrower who seeks to avoid the unambiguous waiver of lender-liability claims against a bank. Simple issues previously resolved at the summary-judgment stage may have to be determined through trials to fix the meaning of documents that should be declared clear and unambiguous as a matter of law. Borrowers who have been released from debt obligations face uncertainty because what they reasonably believed was an unambiguous renunciation of debt claims now holds only the hope of enforcement at the end of protracted and costly litigation. Likewise, lenders and other parties holding releases from borrowers may end up paying twice for the same waiver or release just to avoid the time, expense, and uncertainty of full-scale trials they already bargained to escape. Unambiguous waivers and releases are valued precisely because of the expectation that courts will enforce them as written in response to a properly filed and presented summary-judgment motion. When courts fail to do so, parties' legitimate expectations are frustrated, and the law becomes uncertain and unpredictable. Predictability is especially important in this area of the law because it enables parties to evaluate the strength of a proposed written waiver or release and the likely outcome should its enforceability become an issue in court. Knowing how a court interprets standard waiver and release language is critical to the settlement decision. When parties can trust courts to enforce unambiguous waivers and releases, they will engage in settlement transactions. Without that assurance, more often they will not. The citizens of this state are best served by a jurisprudence that will foster predictability by holding parties to their written word. Today's decision undermines this objective.

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Disposition Under a Plain-Meaning Analysis Application of longstanding Texas law demonstrates that the waiver language at issue in today's case is susceptible to only one reasonable interpretation. For this reason, the Bank's claims under the Note fail as a matter of law. The trial court granted summary judgment as to the Bank Parties' claims under the Note, concluding that these claims were waived or released under section 3.604 of the Texas Business and Commerce Code. The trial court granted partial summary judgment in Ortiz's favor, ordering that the Bank Parties take nothing on any claim arising from the Note. The trial court based this summary-judgment ruling upon its conclusion that the claims under the Note were waived or released under section 3.604 of the Texas Business and Commerce Code.3 This statute, entitled "Discharge by Cancellation or Renunciation," provides in pertinent part: (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument: (1) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party's signature, or the addition of words to the instrument indicating discharge; or (2) by agreeing not to sue or otherwise renouncing rights against the party by a signed record.4 Discharge by written renunciation, the type of waiver addressed in section

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Unless otherwise stated, all statutory citations in this opinion are to the Texas Business and Commerce Code.
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Tex. Bus. & Comm. Code Ann.

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