Yetter Coleman won an appeal in the First Court of Appeals, Houston, on behalf of a borrower and guarantor in their dispute with a large lending institution. The primary issue on appeal was whether the lender could recover from the borrower and guarantor after the lender had foreclosed on a promissory note secured by commercial property.
At issue was whether the lender could recover various out-of-pocket costs and what it claimed was the diminution in the value of the property due to the failure to make certain repairs. The Court, in its 44-page opinion held that the lender could, at most, only recover the unpaid amount of the loan, plus reimbursement of any costs incurred as a result of the borrower’s default. But the Court further held that the borrower and guarantor were entitled to an offset against those amounts based on the property’s fair market value at foreclosure. The Court remanded the case for a new trial on the issue of the property’s fair market value and reversed the judgment in favor of the lender, which had awarded over $660,000 in damages and up to $385,000 in legal fees.