Date: 10-06-2017

Case Style: Danny Barforough v. Nationstar Mortgage, LLC and U.S. Bank National Association

Case Number: 01-16-00266-CV

Judge: Higley

Court: Texas Court of Appeals, First District on appeal from the 133rd District Court, Harris County

Plaintiff's Attorney: George A. Kurisky Jr.

Defendant's Attorney: Stephen R. Cochell for Danny Barforough

Description: Appellant Danny Barforough sued appellees Nationstar Mortgage, LLC and U.S. Bank National Association, alleging breach of a previous settlement agreement after appellees notified Barforough that his mortgage was being accelerated and posted the subject property for foreclosure. Barforough claimed that a previous
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settlement released him from all obligations related to the note encumbering the
property. The trial court granted appellees summary judgment on Barforough’s
claims. We affirm.
Background
In March 2007, Barforough purchased real property located at 9830 Cynthia
Ann Court, Houston, Texas. That same day, Barforough obtained an adjustable rate
note (the “Note”) secured by a deed of trust for the property from LaSalle Bank,
trustee for the Merrill Lynch First Franklin Mortgage Loan Trust. The deed of trust
was subsequently assigned to U.S. Bank.
In October 2012, Barforough received an acceleration letter stating that he had
defaulted under the terms of the Note and deed of trust by failing to remit mortgage
payments. Barforough subsequently received notice that a foreclosure sale of the
property would be held in December 2012. Barforough sued U.S. Bank, Mortgage
Electronic Registration Systems (MERS)1, and Bank of America2 alleging breach of
contract, wrongful foreclosure, slander of title, fraud, misrepresentation, and
negligent misrepresentation, seeking monetary damages and injunctive relief,
including a temporary restraining order.
1 MERS was the nominee for the lender, Merrill Lynch First Franklin Financial
Corporation and its successors and assigns.
2 At the time, Bank of America was the mortgage servicer. It later transferred the
loan servicing function to Nationstar.
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The parties entered into a Confidential Settlement and Release Agreement
(the “Agreement”), resolving the claims alleged in that lawsuit, in which the
defendants agreed to pay Barforough $6,000 as consideration for his release of all
claims asserted in the litigation. Barforough agreed to release the defendants from
and against “any and all past and present claims, counterclaims, actions, defenses,
affirmative defenses, suits, rights, causes of action, lawsuits, set-offs, costs, losses,
controversies, agreements, promises and demands, or liabilities” and to pay any
property taxes and insurance that came due after the Agreement’s execution. The
Agreement also included release language related to the defendants’ release of
certain claims against Barforough:
Defendants for themselves and each of their predecessors,
affiliates, subsidiaries, divisions, departments,
subdivisions, owners, partners, principals, trustees,
creditors, shareholders, joint ventures, co-venturers,
officers and directors (whether acting in such capacity or
individually), servicing companies, attorneys,
accountants, insurers, agents (alleged apparent or actual),
representatives, successors, assigns and all those who
claim through them or could claim through them
(collectively “Defendant Releasors”) unconditionally
and irrevocably remises, waive, satisfy, release, acquit,
and forever discharge [Barforough] his heirs, agents and
assigns [collectively the “Plaintiff Releasees”], and each
of them respectively, from and against any and all past and
present claims, counterclaims, actions, defenses,
affirmative defenses, suits, rights, causes of action,
lawsuits, set-offs, costs, losses, controversies, agreements,
promises and demands, or liabilities, of whatever kind or
character, direct or indirect, including, without limitation,
the claims made or which could have been made by
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Defendants arising from the origination or servicing of the
Loan (in any manner) as well as in any way related to the
underlying property, Notes, Mortgages, and/or Deeds of
Trust, any servicing act or omission thereon as well as any
claim or issue which was or could have been brought in
the litigation (collectively “Released Matters”).
The Agreement expressly limited its coverage, noting that “[a]side from any current
claims relating to the Loan and/or Property, this Agreement does not apply to any
separate continuing contractual and/or equitable obligations as may currently exist
between or among the Parties.” It specifically noted that, to the extent the loan and
underlying Note, deed of trust, and mortgage remained in force (as modified or
otherwise in the Agreement), the Agreement “shall not alter the rights, duties and
obligations of said Loan by the Parties, including but not . . . limited to such actions
as acceleration and foreclosure as may be appropriate in the event of a future
default.” The lawsuit was dismissed in March 2014.
In December 2014, Barforough received another notice of acceleration,
stating that Barforough had defaulted on the deed of trust, and notifying him that all
sums secured by the deed of trust, totaling $240,538.88, were immediately due and
payable. The notice also stated that the substitute trustee would sell the subject
property to the highest bidder for cash on Tuesday, January 6, 2015.
Barforough sued appellees U.S. Bank and Nationstar, alleging that the
Agreement reached in the previous lawsuit released him from any indebtedness
related to the Note. Barforough and appellees filed cross-motions for summary
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judgment, relying on the plain language of the Agreement. Appellees argued that
the Agreement did not release Barforough from his obligations on the underlying
mortgage and that such language should not be read into the Agreement. Barforough
argued that the plain language of the Agreement released him from any outstanding
indebtedness related to the Note. The trial court granted appellees’ summaryjudgment
motion and Barforough appealed.
Discussion
In his sole issue on appeal, Barforough contends that the trial court abused its
discretion in granting appellees’ summary-judgment motion.
A. Standard of Review and Applicable Law
We review de novo the trial court’s ruling on a motion for summary
judgment. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). If a
trial court grants summary judgment without specifying the grounds for granting the
motion, we uphold the trial court’s judgment if any of the grounds are meritorious.
Beverick v. Koch Power, Inc., 186 S.W.3d 145, 148 (Tex. App.—Houston [1st Dist.]
2005, pet. denied).
We construe settlement agreements under normal rules of contract
construction. McWhinney v. Ameriquest Mortg. Sec., Inc., No. 01-13-00761-CV,
2014 WL 6853602, at *3 (Tex. App.—Houston [1st Dist.] Dec. 4, 2014, no pet.)
(mem. op.). “In construing a written contract, the primary concern of the court is to
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ascertain the true intentions of the parties as expressed in the instrument.” J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). To determine the
intent of the parties, we examine the entire writing and strive to harmonize and give
effect to all provisions in the contract, so that no provision is rendered meaningless.
In re Serv. Corp. Int’l, 355 S.W.3d 655, 661 (Tex. 2011). In doing so, we give
contract terms “their plain and ordinary meaning unless the instrument indicates the
parties intended a different meaning.” Reeder v. Wood Cty. Energy, LLC, 395
S.W.3d 789, 794–95 (Tex. 2012) (quoting Dynegy Midstream Servs., Ltd. P’ship v.
Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009)). “No single provision taken alone
will be given controlling effect; rather, all the provisions must be considered with
reference to the whole instrument.” Coker v. Coker, 650 S.W.2d 391, 393 (Tex.
1983). “We must enforce the contract as written: we may not rewrite or enlarge a
party’s obligations as stated in the contract.” Taylor v. Henry, No. 01-14-00650-
CV, 2016 WL 1389151, at *5 (Tex. App.—Houston [1st Dist.] Apr. 7, 2016, no pet.)
(mem. op).
The interpretation of an unambiguous contract is a matter of law to be
determined by the trial court. See Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d
417, 423 (Tex. 2000). We review the trial court’s interpretation and enforcement of
a settlement agreement de novo. McWhinney, 2014 WL 6853602, at *4.
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B. Analysis
In his sole issue, Barforough asserts that the trial court erred in granting
appellees’ summary-judgment motion because the parties entered into a previous
settlement and release agreement that discharged him from his obligations under the
Note and deed of trust. Specifically, Barforough argues that the Agreement mutually
released the parties of all claims, causes of action, or liabilities in any way related to
the underlying property, Notes, mortgage, and Deeds of Trust that were or could
have been raised and litigated in the underlying lawsuit. He contends that such
release specifically identified the Note, mortgage, and deed of trust, thereby
releasing him of the underlying debt. Appellees respond that the broad language of
the release does not specify that Barforough’s obligations under the Note were
released, and should be narrowly construed. Appellees further contend that
Barforough defaulted under the terms of the Agreement by failing to maintain
insurance or pay ad valorem taxes, vitiating his breach of contract claim.3
“In order to effectively release a claim in Texas, the releasing instrument must
‘mention’ the claim to be released.” Victoria Bank & Trust Co. v. Brady, 811 S.W.2d
931, 938 (Tex. 1991). “The court will ascertain and give effect to the intention of
3 For the first time on appeal appellees also assert that Barforough failed to establish
the existence of a valid contract, noting that the record does not include a copy of
the Agreement signed by Barforough. However, appellees relied on the Agreement
in their summary-judgment motion and failed to challenge the Agreement in the trial
court. Thus, they failed to preserve this issue for appeal. See TEX. R. APP. P. 33.1.
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the parties as of the time of execution of the release.” Sanus/New York Life Health
Plan, Inc. v. Dube-Seybold-Sutherland Mgmt., Inc., 837 S.W.2d 191, 196 (Tex.
App.—Houston [1st Dist.] 1992, no pet.). Any claims not clearly within the subject
matter of the release are not discharged. Brady, 811 S.W.2d at 938; Sanus, 837
S.W.2d at 197. And general, categorical release clauses are narrowly construed.
Brady, 811 S.W.2d at 938; Sanus, 837 S.W.2d at 197.
In support of his interpretation of the Agreement, Barforough relies on Keck,
Mahin, & Cate v. National Union Fire Insurance Company of Pittsburgh, 20 S.W.3d
692 (Tex. 2000). In Keck, a law firm and its client entered into a release agreement
that unequivocally stated their intention “to resolve the issue of Unpaid Fees to their
mutual satisfaction.” Id. at 697. The Texas Supreme Court concluded that the
parties’ release agreement expressly forgave the client’s existing debt for legal
services rendered during a certain time period in exchange for the client’s release of
all present and future claims attributable to the law firm’s legal work during the same
period. Id. at 698. In interpreting the release, the Texas Supreme Court clarified its
previous holding in Brady, noting that broad-form releases were not forbidden but
such releases must “mention” the claims to be released. Id. at 698. The Keck court
held that parties need not anticipate and identify each potential cause of action
relating to the subject’s released matter and that a valid release may encompass
unknown claims and damages that develop in the future. Id. at 698. Accordingly,
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the Keck court held that, pursuant to the parties’ release, the asserted claims arising
from the released time period were barred even though the specific cases were not
listed in the release. Id. at 698.
Here, the parties’ Agreement includes a general, categorical release clause.
Similar to the agreement in Keck, the parties’ Agreement releases “claims made or
which could have been made” by those defendants “related to the underlying
property, Notes, Mortgages, and/or Deeds of Trust.” However, releasing the then
existing “claims” is distinct from releasing the underlying mortgage obligation and
any future claims arising from it. See Biggs v. ABCO Props., Inc., No. 13-03-00398-
CV, 2006 WL 414919, at *3 (Tex. App.—Corpus Christi Feb. 23, 2006, pet. denied)
(holding that release did not mention guaranties or security interests so they were
not discharged, noting that phrase “claims” in release refers to potential causes of
action between parties, not all previous obligations between or among parties).
Unlike the release in Keck, here, the Agreement does not “mention” or expressly
release Barforough from his mortgage obligations under the Note and deed of trust;
nor does it unequivocally state the parties’ intention to resolve Barforough’s
obligations under the Note. To the contrary, the Agreement expressly limits its
coverage, noting that it “does not apply to any separate continuing contractual and/or
equitable obligations as may currently exist between or among the parties.” Notably,
the Agreement refers to the $6,000 that the defendants paid Barforough in exchange
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for his dismissal of all the claims alleged in that lawsuit as the bargained-for
consideration. The Agreement does not state that it releases Barforough from his
obligations under the $180,800 Note and deed of trust as consideration for the
Agreement.
Because we must narrowly construe the release clause and harmonize and give
effect to all of the provisions of the entire agreement, we conclude that the parties’
Agreement did not expressly release Barforough from his obligations under the Note
and deed of trust.4 See Brady, 811 S.W.2d at 938 (concluding claims not mentioned
or clearly within subject matter of settlement agreement were not released); Sanus,
837 S.W.2d at 197 (same). Thus, Barforough’s underlying mortgage obligation
continued and appellees were entitled to subsequently pursue payment of the
underlying debt. Accordingly, the trial court did not err in granting appellees’
summary-judgment motion.
We overrule Barforough’s sole issue.
4 Barforough also argues that a lien on the property could not exist without a mortgage
or debt, which was extinguished by the previous settlement. Because we conclude
that the debt was not released by the previous settlement, we need not address this
argument.

Outcome: We affirm the judgment of the trial court.

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Defendant's Experts:

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