HOUSTON – Wells Fargo Bank NA will have to explain how two breach-of-contract lawsuit defendants could have racked up $81,070.79 in unpaid debt on an alleged $30,000 business line of credit after the 14th Court of Appeals reversed a summary judgment entered in Wells Fargo’s favor and sent the case back to 113th District Court, Harris County for further proceedings.

In its Jan. 11 opinion, the appeals court said Wells Fargo alleged that it extended to defendant debtors Lannsys Inc. and Prakash M. Verghese a $100,000 line of credit and that the debtors owed $81,070.79 on that line of credit as of Aug. 9, 2013.

Justice Tracy Christopher
Justice Tracy Christopher | Texas courts

However, the appeals court said Wells Fargo also claimed in its motion for summary judgment that the debtors’ credit application “evidenc[es] a line of credit in the original amount of $30,000 and that the debtors have failed to repay the principal and interest, for which, as of Sept. 15, 2015, they now owe $81,070.79.”

The appeals court said an affidavit exhibit provided by Wells Fargo witness Kyle Cullen included an application in which the amount requested by the debtors was $100,000, but the court said “the body of the application is printed in a font so small as to be at least partly illegible.”

In addition, the appeals court said Cullen’s affidavit provided a statement that said “the account has an $80,000 credit line, and the account’s balance is $81,070.79.”

According to the appeals court opinion, Cullen "repeated the same assertions made in the motion.”

In its objections to Wells Fargo’s summary judgment request, the appeals court said the debtors “argued that Wells Fargo’s summary-judgment evidence raised genuine issues of material fact by failing to explain how they were indebted for $81,070.79 on a $30,000 line of credit.”

After the summary judgment motion was approved by the 113th District Court, the appeals court said in its opinion that Lannsys and Verghese requested a new trial, claiming “that the trial court erred in failing to rule on and sustain their objections to Wells Fargo’s summary-judgment motion and evidence.

The 113th District Court overruled the debtors’ request for a new trial, the appeals court said.

The appeals court said it agreed that Wells Fargo did not do enough to explain the discrepancy between the line-of-credit amount and the debt owed.

“We know only that Wells Fargo contends the debtors owe it nearly three times the amount that Wells Fargo purportedly agreed to lend,” the appeals court opinion said. “We agree with the debtors that the absence of supporting facts renders the Wells Fargo’s summary-judgment affidavit conclusory, and thus, no evidence at all.”

As a result of its finding on appeal that Wells Fargo needs to provide more evidence to explain how the debtors could owe more than they allegedly borrowed, the appeals court said in its opinion that “because Wells Fargo’s summary-judgment motion is supported only by a conclusory, non-probative affidavit, we reverse the trial court’s judgment and remand the cause for further proceedings consistent with this opinion.”

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