The creditor (the “Creditor bank”) entered into multiple loan agreements with various LLCs, all of which were represented by the same individual. In November 2019, the Creditor bank entered into a loan agreement with business 1, the principal of which executed a promissory note for the loan. The loan was secured by multiple lots of real property as evidenced by the deed of trust. The owner of business 1 (the “debtor”) further secured the loan by individually executing an unlimited continuing guaranty agreement. In September of the following year, the Creditor bank entered into loan agreements with business 2 and business 3, both also owned by the debtor, who pledged the same collateral as used in the first loan to secure these obligations. The following month, the Creditor bank granted another loan to business 4, which was again secured using the same collateral as the prior agreements. However, the businesses and the debtor soon breached each of the loan agreements in several respects. In December of 2020, the debtor granted a special warranty deed on part of the collateral to a different third-party creditor. Next, in March. 2021, the debtor transferred tax liens on the collateral properties to yet another creditor. In November 2021, the debtor granted another creditor a security interest in part of the collateral. In January 2022, the Creditor bank sent default and acceleration notices to the debtor and the four businesses for failure to make timely payments on the loans. The Creditor bank attempted to work with the debtor to arrange for him and the businesses to be brought back into good standing; however, at that point, the debtor failed to disclose the additional breaches (the granting of security interests or mortgages on the same collateral) to the Creditor bank. Soon after, an investigation by the Creditor bank revealed the debtor had impaired the collateral securing all the loans. The next month, the Creditor bank sent a notice of continuing default and reservation of rights to the debtor. In April 2022, the debtor further encumbered business 1’s collateral by granting a cross-access easement on some of the property securing the loans. The Creditor bank then filed a motion for summary judgment, seeking a judgment that the four businesses and the debtor were indebted to the Creditor bank, as well as seeking recovery of attorneys’ fees. The debtor and the businesses failed to respond in a timely manner (or at all) to the motion or request an extension to respond.
In Chub Cay, LLC v. Bank OZK, No. SA-22-CV-317-FB, 2025 U.S. Dist. LEXIS 45882 (W.D. Tex. Mar. 12, 2025) (opinion not yet released for publication), the court granted the Creditor bank’s motion for summary judgment against the debtor and the four businesses. Applying Federal Rule of Civil Procedure 56, the court explained that a moving party must demonstrate the absence of a genuine issue of material fact by citing specific evidence in the record. The failure to respond by the non-moving party does not automatically entitle the movant to summary judgment, however; the court must still assess the merits of the case. Here, the court found that the debtor and the four businesses defaulted on the loan and guaranty agreements. The court described the debtor as the “sole person directing the interrelated and fraudulently transferr[ing] assets and pledges.” The court explained that the Creditor bank acted properly by reiterating its demand for full payment on all loans and by requesting complete information on all its collateral; the debtor, however, failed to comply with or perform the terms of the loan agreements. Because neither the debtor nor the four businesses rebutted the Creditor bank’s evidence, the facts were considered to be undisputed. Accordingly, the court awarded judgment in favor of the creditor, including recovery of attorneys’ fees.
By Callighan Ard [email protected]
Edited By Jace Brown [email protected]
Edited By Kristin Meurer [email protected]
Edited By Hayden Mariott [email protected]