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On remand from Supreme Court, justices enter take nothing judgment in First Bank's favor in lender-liability case

SOUTHEAST TEXAS RECORD

Wednesday, December 25, 2024

On remand from Supreme Court, justices enter take nothing judgment in First Bank's favor in lender-liability case

Lawsuits
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HOUSTON – After attempting to sell stocks through a bank and suing it over allegations of breach of contract, a local investor has lost his appeal in court as the decision was reversed.

State Justice Kem Frost, on the bench of the Texas 14th Court of Appeals, issued an 11-page ruling on Nov. 20, reversing the Harris County 334th District Court decision in the lawsuit filed by Richard Brumitt against First Bank.

In her ruling, Frost stated that Brumitt's claim of negligent misrepresentation "sounds in contract," adding that he "may not recover under it as a matter of law."

Frost also added that "because Brumitt may not recover on the only tort claim on which the trial court based its judgment, Brumitt may not recover exemplary damages."

In addition to reversing the lower court decision regarding Brumitt's claims, Frost also rendered a take-nothing judgment in favor of the bank.

The Supreme Court of Texas previously reversed an earlier decision of the Appellate Court after an appeal from First Bank.

In addition to that reversal, per the ruling, the Supreme Court "rendered judgment for the bank on the owner’s breach-of-contract claim, and remanded the owner’s negligent misrepresentation claim" to the 14th Court of Appeals.

Brumitt sued the bank on allegations of breach of contract as an alleged third-party beneficiary and of negligent misrepresentation.

"Don Oprea, president of DTS Group LLP, approached appellant/defendant First Bank seeking to obtain a United States Small Business Administration (SBA) loan to provide funds to be used to purchase the stock of two companies from appellee/intervenor Richard Brumitt," the ruling states.

Oprea was a customer of First Bank and met with the bank's SBA Loan Division President Tim Duffy.

DTS decided that it would purchase stocks of only one of Brumitt's companies, Southway Systems Inc. The group's president said, per the ruling, that "on numerous occasions, First Bank promised to fund a loan for the purchase of the stock, with the proposed loan amount varying," adding that "Duffy made the promises in oral statements, in emails, and in three commitment letters."

First Bank never funded the operation and Brumitt never had the stocks sold, the ruling states.

In a lawsuit filed by the DTS Group, it claimed that First Bank breached the contract and acted with negligent misrepresentation. Brumitt then intervened, sustaining the same claims.

A jury decided in favor of Brumitt and DTS, awarding damages and attorney's fees. First Bank appealed to the 14th Court of Appeals, which ruled that the First Bank's arguments challenging the breach of contract claims had merit, and then the case went to the state's Supreme Court.

14th Court of Appeals case number 14-13-00694-CV

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