Bank of America, N.A. v. Linda Lilly--Appeal from 146th District Court of Bell County (majority)Annotate this Case
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
JULY 31, 2012
BANK OF AMERICA, N.A., APPELLANT
LINDA LILLY, APPELLEE
FROM THE 146TH DISTRICT COURT OF BELL COUNTY;
NO. 247955; HONORABLE RICK MORRIS, JUDGE
Before CAMPBELL and HANCOCK and PIRTLE, JJ.
Appellant Bank of America, N.A., appeals from the trial court’s judgment granting
Linda Lilly’s no-evidence motion for summary judgment. We will affirm.
By a December 1997 note, Lilly Homes, Inc. borrowed $100,000 from the bank.
The corporation later defaulted on the loan. The bank sued both the corporation and
Linda Lilly, who the bank alleged had personally guaranteed the note.1
Lilly Homes, Inc. also filed a motion for summary judgment. That motion was
denied and the corporation’s liability is not at issue in this appeal.
Lilly filed a no-evidence motion for summary judgment on the bank’s claim
against her on the guaranty. The motion asserted, among other grounds, that the bank
had no evidence of the terms of Lilly’s purported guaranty and no evidence of the
occurrence of the conditions that would give rise to her liability under the guaranty. In
its response, the bank submitted and relied on an affidavit of one of its vice presidents,
to which was appended what the affidavit said was a true copy of the note containing
the personal guaranty. The summary judgment record contains the bank’s responses to
discovery propounded by Lilly, in which the bank acknowledged it did not have in its
possession the original note or guaranty. The guaranty language in the note copy
appended to the affidavit is mostly illegible.
The trial court granted Lilly’s motion and a final judgment in her favor was later
entered. The bank appeals.
A no-evidence motion for summary judgment is essentially a pretrial motion for
directed verdict, and we apply the same legal sufficiency standard of review. King
Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003); Gray v. Woodville
Health Care Center, 225 S.W.3d 613, 616 (Tex.App.--El Paso 2006, pet. denied). After
the movant specifies which essential elements of the non-movant’s case are devoid of
evidentiary support, the burden shifts to the non-movant to produce summary judgment
evidence raising a genuine issue of material fact regarding each challenged element.
Aguilar v. Morales, 162 S.W3d 825, 834 (Tex.App.--El Paso 2005, pet. denied). The
non-movant meets this burden, thereby defeating the no-evidence motion, by producing
more than a scintilla of evidence in support of each challenged element. Gray, 225
S.W.3d at 616. A no-evidence motion is properly granted when the non-movant fails to
produce proper summary judgment evidence, or the evidence produced is so weak as
to create no more than a mere surmise or suspicion. Ford Motor Company v. Ridgway,
135 S.W.3d 598, 601 (Tex. 2004).
On appeal, we conduct a de novo review of the trial court's ruling to determine
whether the non-movant's evidence demonstrated the existence of a material fact issue
on each of the challenged elements. King Ranch, Inc., 118 S.W.3d at 751. When
conducting such a review, we must view the evidence in the light most favorable to the
non-movant. Gray, 225 S.W.3d at 616. When, as here, the trial court fails to specify
which no-evidence ground served as the basis for its ruling, we must review each
ground raised in the motion, and the judgment will be affirmed if any of the theories
prove meritorious. Id. at 617.
A guaranty agreement is a person's promise to perform the same act that
another person is contractually bound to perform. Simmons v. Compania Financiera
Libano, S.A., 830 S.W.2d 789, 792 (Tex. App.--Houston [1st Dist.] 1992, writ denied).
A guaranty creates a secondary obligation under which the guarantor promises to
answer for the debt of the primary obligor if the primary obligor fails to perform. Garner
v. Corpus Christi Nat'l Bank, 944 S.W.2d 469, 475 (Tex. App.--Corpus Christi 1997, writ
denied). To recover under a guaranty agreement, a plaintiff must show (1) the existence
and ownership of the guaranty agreement, (2) the terms of the underlying contract by
the holder, (3) the occurrence of the conditions on which liability is based, and (4) the
failure or the refusal to perform the promise by the guarantor. Byrd v. Estate of Nelms,
154 S.W.3d 149, 157 (Tex. App.--Waco 2004, pet. denied); Escalante v. Luckie, 77
S.W.3d 410, 416 (Tex.App.—Eastland 2002, pet. denied).
A guarantor is entitled to have her guaranty strictly construed.2 Reece v. First
State Bank of Denton, 566 S.W.2d 296, 297 (Tex. 1978); Escalante, 77 S.W.3d at 417.
This rule prohibits the extension, by construction or implication, of the guarantor's
obligations beyond the precise terms of her agreement. Escalante, 77 S.W.3d at 417;
Preston Ridge Financial Services Corp. v Tyler, 796 S.W.2d 772, 780 (Tex. App.-Dallas
1990, writ denied).
On appeal, the bank maintains its vice president’s affidavit and the attached copy
of the note were sufficient to preclude summary judgment against it. Lilly argues the
document the bank was able to produce, containing no legible language setting out the
terms of a guaranty, is no evidence of the conditions on which her liability as guarantor
The printed note agreement consists of several pages. The signatures appear
on the second page, where Lilly’s signature appears twice.
The second signature
underlies a paragraph bearing the title, “Personal Guaranty.” The paragraph contains
Reece and other Texas cases refer to this treatment of a guaranty as an
application of the rule of strictissimi juris. See Reece, 566 S.W.2d at 297; McKnight v.
Virginia Mirror Co., 463 S.W.2d 428, 430 (Tex. 1971).
about nine lines of text. To us, the text is entirely illegible, even when examined with a
strong magnifying glass.3
Although the bank’s summary judgment evidence showed that the note Lilly
signed contained some terms on the subject of a guaranty, we agree with Lilly there is
no evidence of the terms of the guaranty agreement. It follows that there is no evidence
of the occurrence of the conditions under which Lilly would be liable under the guaranty.
See UBS Fin. Servs. v. Branton, 241 S.W.3d 179, 186 (Tex.App.—Fort Worth 2007, no
pet.) (finding signatory to master account agreement not bound by terms when most of
the wording directly above signature was illegible).
The bank’s brief also mentions the statement in the affidavit, by which its vice
president stated, “The Note included language wherein [Lilly] personally guaranteed the
Note.” To any degree the bank relies on that statement as evidence, we agree with Lilly
that it constitutes merely a legal conclusion and is therefore not competent summary
See Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984)
(affidavits stating legal conclusions, not facts, incompetent summary judgment proof).
Moreover, the statement suffers from the same inadequacy as the illegible paragraph
from the note agreement; it tells nothing about the terms of the asserted personal
guaranty. See, e.g., Reece, 566 S.W.2d at 296 (guaranty limited to a maximum dollar
The record contains a reporter’s record of the summary judgment hearing. The
trial judge on that occasion indicated he was able to read a few words.
The bank has failed to produce summary judgment evidence raising a fact issue
as to the occurrence of the conditions on which Lilly’s liability under her asserted
personal guaranty would be based. Summary judgment in her favor was proper. Ford
Motor Company, 135 S.W.3d at 601. We overrule the bank’s issue and affirm the
judgment of the trial court.
James T. Campbell