_____________________________________________________________________________

NO. 05-10-01499-CV_____________________________________________________________________________

IN THE COURT OF APPEALS

FOR THE FIFTH DISTRICT, DALLAS, TEXAS_____________________________________________________________________________

R. MICHAEL LAGOW and BRENDA S. LAGOW, Appellants,

v.

NANCY B. HAMON, by and through her agent andattorney-in-fact, John L. Roach,

Appellee._____________________________________________________________________________

BRIEF OF APPELLEE

DONOVAN CAMPBELL, JR.State Bar No. 03725300

MCCORD WILSON

State Bar No. 00785266RADER & CAMPBELL

(A Professional Corporation)Stemmons Place

2777 Stemmons Fwy., Suite 1125Dallas, Texas 75207

Telephone No.: (214) 630-4700Telecopy No.: (214) 630-9996

COUNSEL FOR APPELLEE

ORAL ARGUMENT REQUESTED BY APPELLEEONLY IF GRANTED TO APPELLANT

May 31, 2011

5th Court of A

ppealsF

ILED

: 05/31/2011

Lisa Matz, C

lerk

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LIST OF PARTIES AND COUNSEL

Appellants/Defendants

R. Michael Lagow Brenda S. Lagow

Appellee/Plaintiff

Nancy B. Hamon, by and through her agentand attorney-in-fact, John L. Roach

Trial and Appellate Counsel

Robert H. Renneker, Esq.State Bar No. 167788001412 Main Street, Suite 210Dallas, TX 75202Tel: (214) 742-7100Fax: (214) 742-7110

Trial and Appellate Counsel

Donovan Campbell, Jr.State Bar No. 03725300McCord WilsonState Bar No. 00785266RADER & CAMPBELL

(A Professional Corporation)Stemmons Place2777 Stemmons Fwy., Suite 1125Dallas, Texas 75207Telephone No.: (214) 630-4700Telecopy No.: (214) 630-9996

J. Patrick BredehoftState Bar No. 00787132THOMPSON & KNIGHT LLPOne Arts Plaza1722 Routh Street, Suite 1500Dallas, Texas 75201-2533Telephone No.: (214) 969-1395Telecopy No.: (214) 999-1541

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TABLE OF CONTENTS

PageList of Parties and Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Index of Authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Statement Regarding Record Citations and Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii

Statement of the Case.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Statement Regarding Oral Argument.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Issues Presented. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x

Restated Issue No. 1

Whether Appellants have waived significant factual points and legal issues by failing toinclude record references and citations to legal authorities such that this appeal should be dismissed,in whole or in part.

Restated Issue No. 2 (In Reply to Appellants’ Points of Error Nos. 2 and 3, Alleging Errorin Granting Plaintiff’s Motions for Summary Judgment and Denying Defendant’s Motion forSummary Judgment)

Whether Appellant Brenda Lagow (as the borrower) submitted any competent summaryjudgment evidence whatsoever: (a) proving that Plaintiff (as the lender) “required” Brenda Lagow“to assume or pay the debt” of Michael Lagow “as a condition to” Plaintiff’s extension of theoverdue debt owed by Brenda Lagow; or (b) controverting Plaintiff’s summary judgment evidencethat Plaintiff imposed no such requirement on Brenda Lagow and that, in fact, Plaintiff would haveextended those debts whether or not Brenda Lagow agreed to assume or pay them.

Restated Issue No. 3 (In Reply to Appellants’ Point of Error No. 1, Alleging Error in Abatingthe Case)

Whether Plaintiff, effectively and without waiver, sought abatement of Brenda Lagow’scounterclaim for usury and took corrective action to negate any claim of “usury.”

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Restated Issue No. 4 (In Reply to Appellants’ Points of Error Nos. 2 and 3, Alleging Errorin Granting Plaintiff’s Motions for Summary Judgment and Denying Defendant’s Motion forSummary Judgment)

Whether, as a matter of law, no usury could have occurred because husband Michael Lagow’sNotes constitute debts for which wife Brenda Lagow was already obligated under the doctrines ofcommunity debts, ratification, and agency.

Restated Issue No. 5 (In Reply to Appellants’ Point of Error No. 4 Alleging Error in the TrialCourt’s Offsetting Brenda Lagow’s Fee Award Against the Judgment of Plaintiff Adverseto Brenda Lagow)

Whether the trial court, in light of the complete lack of authority on the issue, properlyexercised its discretion to offset Brenda Lagow’s fee award against the much larger judgment ofPlaintiff adverse to Brenda Lagow.

Statement of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Summary of the Arguments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Arguments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Restated Issue No. 1

I. Appellants have waived significant factual points and legal issues by failing to include recordreferences and citations to legal authorities such that this appeal should be dismissed, in whole orin part.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Restated Issue No. 2 (In Reply to Appellants’ Points of Error Nos. 2 and 3, Alleging Errorin Granting Plaintiff’s Motions for Summary Judgment and Denying Defendant’s Motion forSummary Judgment)

II. Appellant Brenda Lagow (as the borrower) failed to submit any competent summaryjudgment evidence whatsoever: (a) proving that Plaintiff (as the lender) “required” Brenda Lagow“to assume or pay the debt” of Michael Lagow “as a condition to” Plaintiff’s extension of theoverdue debt owed by Brenda Lagow; or (b) controverting Plaintiff’s summary judgment evidencethat Plaintiff imposed no such requirement on Brenda Lagow and that, in fact, Plaintiff would have

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extended those debts whether or not Brenda Lagow agreed to assume or pay them.. . . . . . . . . . 17

Restated Issue No. 3 (In Reply to Appellants’ Point of Error No. 1, Alleging Error in Abatingthe Case)

III. Plaintiff, effectively and without waiver, sought abatement of Brenda Lagow’s counterclaimfor usury and took corrective action to negate any claim of “usury.”. . . . . . . . . . . . . . . . . . . . . . 22

Restated Issue No. 4 (In Reply to Appellants’ Points of Error Nos. 2 and 3, Alleging Errorin Granting Plaintiff’s Motions for Summary Judgment and Denying Defendant’s Motion forSummary Judgment)

IV. As a matter of law, no usury could have occurred because husband Michael Lagow’s Notesconstitute debts for which wife Brenda Lagow was already obligated under the doctrines ofcommunity debts, ratification, and agency.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Restated Issue No. 5 (In Reply to Appellants’ Point of Error 4 Alleging Error in the TrialCourt’s Offsetting Brenda Lagow’s Fee Award Against the Judgment of Plaintiff Adverseto Brenda Lagow)

V. The trial court, in light of the complete lack of authority on this issue, properly exercised itsdiscretion to offset Brenda Lagow’s fee award against the much larger judgment of Plaintiff adverseto Brenda Lagow.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Conclusion and Prayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Certificate of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Appendices

A – Texas Finance Code §§ 305.006 and 305.103. . . . . . . . . . . . . . . . . . . . . . . . Tab A

B – Plaintiff’s Response to Defendant Brenda S. Lagow’s AmendedMotion for Partial Summary Judgment (filed February 15, 2010),including its Exhibits 1 and 2 (the Second and Third Affidavits ofJohn L. Roach)(SCR ).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tab B

C – Defendant’s Response to Plaintiff’s Motion for Partial SummaryJudgment (filed January 28, 2010), including its Exhibits consistingof the Affidavits of R. Michael Lagow and Brenda S. Lagow (SCR ). . . . Tab C

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INDEX OF AUTHORITIES

Page(s)

CASES

Alamo Lumber Co. v. Gold, 661 S.W.2d 926 (Tex. 1983). . . . . . . . . . . . . . . . . . 11, 18, 20, 29, 31

Bolling v. Farmers Branch ISD, 315 S.W.3d 892 (Tex. App. - - Dallas 2010, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 16

Boyd v. Diversified Financial System, 1 S.W.3d 888 (Tex. App. - - Dallas 1999, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Burnett Ranches, Ltd. v. Cane Pet., Inc., 289 S.W.3d 862 (Tex. App. - - Amarillo 2009, pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Burns v. Burns, 439 S.W.2d 452 (Tex. Civ. App. - - Texarkana 1969, writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Carr v. Brasher, 776 S.W.2d 567 (Tex. 1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Cathey v. Booth, 900 S.W.2d 339 (Tex. 1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chanowsky v. Friedman, 219 S.W.2d 501 (Tex. Civ. App. - - Fort Worth 1949, writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Cockerham v. Cockerham, 527 S.W.2d 162 (Tex. 1975). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Coffey v. Singer Asset Financing Company, 233 S.W.3d 559 (Tex. App. - - Dallas 2007, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Davis v. City of San Antonio, 752 S.W.2d 518 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Dow Chemical Company v. Francis, 46 S.W.3d 237 (Tex. 2001).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 17

First Bank v. Tony’s Tortilla Factory, Inc., 877 S.W.2d 285 (Tex. 1994).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Frazier v. Wynn, 472 S.W.2d 750 (Tex. 1971). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Fredonia State Bank v. General American Life Insurance Company,

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881 S.W.2d 279 (Tex. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 16, 17

Gabel v. Blackburn Operating Corp., 442 S.W.2d 818 (Tex. App. - - Amarillo 1969, no writ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Grebe v. First State Bank, 136 Tex. 226, 150 S.W.2d 64 (Tex. 1941).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Hines v. Hash, 843 S.W.2d 464 (Tex. 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

In Re CPDC, Inc., 337 F.3d 436 (5 Cir. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .th 26

Johnson County Sheriff’s Posse, Inc. v. Endsley, 926 S.W.2d 284 (Tex. 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Kendall Builders, Inc. v. Chesson, 149 S.W.3d 796 (Tex. App. - - Austin 2004, pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Lovejoy v. Cockrell, 63 S.W.2d 1009 (Tex. Comm. App. 1933, judgment adopted). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

McConnell v. Southside ISD, 858 S.W.2d 337 (Tex. 1993). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Mercedes Benz Credit Corp. v. Rhyne, 925 S.W.2d 664 (Tex. 1996).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 33

Mock v. Mock, 216 S.W.3d 370 (Tex. App. - - Eastland 2006, pet. denied).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Nagle v. Nagle, 633 S.W.2d 796 (Tex. 1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Nationwide of Brian, Inc. v. Dyer, 969 S.W.2d 518 (Tex. App. - - Austin 1998, no pet.).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30, 31

Nixon v. Mr. Property Management Company, 690 S.W.2d 546 (Tex. 1985).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Pagel v. Whatley, 82 S.W.3D 571 (Tex. App. - - Corpus Christi 2002, pet. denied).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Patel v. Kuciemba, 82 S.W.3d 589 (Tex. App. - - Corpus Christi 2002, pet. denied).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

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Proctor v. White, 172 S.W.3d 649 (Tex. App. - - Eastland 2005, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Republic Underwriters Insurance Company v. Mex-Tex, Inc., 150 S.W.3d 423 (Tex. 2004). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492 (Tex. 1991).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 18

Schlafly v. Schlafly, 33 S.W.3d 863 (Tex. App. - - Houston [14 Dist.] th

2000, pet. denied).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Sotelo v. Interstate Financial Corporation, 224 S.W.3d 517 (Tex. App - - El Paso 2007, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-26

Southwestern Fire & Casualty Company v. Larue, 367 S.W.2d 162 (Tex. 1963).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

United States Fidelity & Guaranty Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353 (Tex. 1971). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Wheeler v. Security State Bank, 159 S.W.3d 754 (Tex. App. - - Texarkana 2005, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

STATUTES

Texas Civil Practice & Remedies Code Chapter 31 and Chapter 63.. . . . . . . . . . . . . . . . . . . . . . 33

Texas Finance Code 305.006. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 12, 22-27, 31-33

Texas Finance Code § 305.103. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Texas Probate Code §§ 156, 160, and 168.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Texas Rule of Appellate Procedure 38.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Texas Rule of Civil Procedure 166a(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Texas Rule of Civil Procedure 166a(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Texas Rule of Civil Procedure 93(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 10

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STATEMENT REGARDING RECORD CITATIONS

Prior to the filing of Appellee’s Brief, the record submitted by Appellants consisted of a

Reporter’s Record containing the transcript of the February 26, 2010 Plea in Abatement hearing,

along with the Exhibits admitted at that hearing, as well as a Clerk’s Record consisting of selected

pleadings, orders and judgments, and other trial court documents in pages 1-347. Appellee’s citation

to this Reporter’s Record will be designated as “RR [page number],” and Appellee’s citations to this

Clerk’s Record will be designated as “CR [page number].”

Appellee believes that Appellants have submitted an incomplete and misleading Clerk’s

Record to this Court, the deficiencies of which have required Appellee to request a Supplemental

Clerk’s Record from the Dallas County District Clerk. Appellee expects that this Supplemental

Clerk’s Record will be transmitted to this Court and available to counsel on or before May 31, 2011,

the date on which the instant Brief is due to be filed. In addition, due to the inadvertent omission

from the Supplemental Clerk’s Record of certain of the pleadings requested by Appellee, a Second

Supplemental Clerk’s Record is being transmitted from the Dallas County District Clerk to this

Court and available to counsel before the end of the day on May 31, 2011. Appellee will cite the

Supplemental Clerk’s Record as “SCR ” and the Second Supplemental Clerk’s Record as

“2SCR .” As Appellee has not had ample time to review these supplemental records prior to

the time this Brief has to be electronically filed, Appellee will supply the specific page references

as soon as feasibly possible.

Appellee will cite Appellants’ principal Brief dated March 16, 2011 herein as the “Lagow

Brief,” and Appellee will refer to Appellants collectively as “Appellants” or “Defendants” and to the

individual Appellants as “Michael Lagow” or “Michael” and “Brenda Lagow” or “Brenda.”

Appellee will refer to herself as the “Plaintiff” or the “Appellee.” Other less frequently cited

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abbreviations may be defined in the body of this Brief.

STATEMENT OF THE CASE

Because the Lagow Brief omits the required Statement of the Case, Texas Rule of Appellate

Procedure 38.1(d), Appellee will supply this statement.

This case involves basically a suit to enforce payment of a series of promissory notes

executed by Defendants and payable to Plaintiff. (CR 8) Plaintiff’s Original Petition was filed on

September 16, 2008. (CR 8; 341) One of the two Defendants, Brenda Lagow, eventually filed a

counterclaim alleging usury against Plaintiff. (CR 24) On January 8, 2010, Plaintiff filed her Motion

for Partial Summary Judgment and a No-Evidence Motion for Summary Judgment regarding the

counterclaim (CR 41, 123), and on January 13, 2010, Defendant Brenda Lagow filed her motion for

partial summary judgment regarding her usury counterclaim. (CR 342)

After granting an abatement of the case for sixty (60) days (CR 343), the trial court held a

hearing on July 8, 2010 regarding all summary judgment motions (CR 344), and the court granted

Plaintiff’s motions and denied Defendant’s motion (CR 344-45), eventually reducing these rulings

to a Final Judgment dated August 27, 2010. (CR 327-30) Defendants filed their Notice of Appeal

on November 24, 2010 (CR 335), and this appeal followed.

STATEMENT REGARDING ORAL ARGUMENT

Pursuant to Texas Rule of Appellate Procedure 39.1, Appellee maintains that oral argument

is unhelpful and unnecessary on several grounds. As referenced in Restated Issue No. 1 herein,

because of their utter failure to include record references and citations to relevant legal authorities

to support factual allegations and legal contentions critical to Appellants’ appeal, they have waived

those points and issues, and the entire appeal should be dismissed, obviating the need for any oral

argument. In addition, as explained in Restated Issue No. 2, Appellants submitted below and cited

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herein no competent summary judgment evidence whatsoever to prove their only defense to payment

under the promissory notes, that is, their usury allegation. Accordingly, there is nothing substantive

to orally argue about, and any such argument would entail an irreplaceable loss of time and effort

on the part of this Court and all counsel and a complete waste of judicial resources. Nevertheless,

if the Court determines to grant oral argument to Appellants, then Appellee requests oral argument

as well.

ISSUES PRESENTED

Restated Issue No. 1

Whether Appellants have waived significant factual points and legal issues by failing to

include record references and citations to legal authorities such that this appeal should be dismissed,

in whole or in part.

Restated Issue No. 2 (In Reply to Appellants’ Points of Error Nos. 2 and 3, Alleging Errorin Granting Plaintiff’s Motions for Summary Judgment and Denying Defendant’s Motion forSummary Judgment)

Whether Appellant Brenda Lagow (as the borrower) submitted any competent summary

judgment evidence whatsoever: (a) proving that Plaintiff (as the lender) “required” Brenda Lagow

“to assume or pay the debt” of Michael Lagow “as a condition to” Plaintiff’s extension of the

overdue debt owed by Brenda Lagow; or (b) controverting Plaintiff’s summary judgment evidence

that Plaintiff imposed no such requirement on Brenda Lagow and that, in fact, Plaintiff would have

extended those debts whether or not Brenda Lagow agreed to assume or pay them.

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Restated Issue No. 3 (In Reply to Appellants’ Point of Error No. 1, Alleging Error in Abatingthe Case)

Whether Plaintiff, effectively and without waiver, sought abatement of Brenda Lagow’s

counterclaim for usury and took corrective action to negate any claim of “usury.”

Restated Issue No. 4 (In Reply to Appellants’ Points of Error Nos. 2 and 3, Alleging Errorin Granting Plaintiff’s Motions for Summary Judgment and Denying Defendant’s Motion forSummary Judgment)

Whether, as a matter of law, no usury could have occurred because husband Michael Lagow’s

Notes constitute debts for which wife Brenda Lagow was already obligated under the doctrines of

community debts, ratification, and agency.

Restated Issue No. 5 (In Reply to Appellants’ Point of Error No. 4 Alleging Error in the TrialCourt’s Offsetting Brenda Lagow’s Fee Award Against the Judgment of Plaintiff Adverseto Brenda Lagow)

Whether the trial court, in light of the complete lack of authority on the issue, properly

exercised its discretion to offset Brenda Lagow’s fee award against the much larger judgment of

Plaintiff adverse to Brenda Lagow.

1

STATEMENT OF FACTS

This action originated as a suit to enforce a series of promissory notes executed by

Defendants and payable to Plaintiff. (CR 8, 10-13; 41-47) At all times relevant to the issues

presented, Defendants Michael Lagow and Brenda Lagow were married to each other. (CR 63-64;

SCR ) Such promissory notes began with a June 12, 2002 note in the principal amount of

$500,000 and culminated in two promissory notes dated August 24, 2006 in the principal amounts

of $1,300,000 and $105,000, both jointly signed by Brenda Lagow and Michael Lagow and payable

to Plaintiff. (CR 45-47, 64-66) The faces of these two August 24, 2006 notes expressly recite that

they are executed “in renewal and extension of the unpaid balances of” the prior notes. (CR 88, 89)

Plaintiff’s attorney-in-fact, John L. Roach, Esq. (“Mr. Roach”), testified on affidavit that he met with

both Michael and Brenda Lagow regarding extensions of the prior notes, and Brenda “confirmed and

ratified the principal obligation” of these prior notes. (CR 64-65) Additionally, the faces of these

August 24, 2006 notes recite that both Michael and Brenda Lagow “received value for” the notes,

that is, they benefitted therefrom. (CR 88, 89) These notes also contain “no unwritten oral

agreements” clauses set out in all capital letters dictating that the notes represent the final agreement

among the parties regarding these loans, the notes may not be contradicted by evidence of prior,

contemporaneous, or subsequent oral agreements, and there are no unwritten oral agreements

regarding these debts. (CR 88, 89) Moreover, Plaintiff consistently pled that Brenda Lagow

executed all three of the earlier notes by herself or by her authority, specifically utilizing the

language of Texas Rule of Civil Procedure 93(7) (SCR ; CR 123, 124-25), and Defendants never

filed any answer containing the requisite Rule 93(7) verified, sworn plea denying such execution.

(CR 20-21, 22-23, 247-48)

Defendants did not pay these notes at or after their maturity dates. (CR 65-66) In November

2

2004 Michael and Brenda Lagow admitted to Mr. Roach that they could not make the payment due

on December 1, 2004 of the outstanding $1,000,000 loan and, in fact, needed an additional loan of

$300,000 to maintain their “lifestyle.” (CR 63-64) In August of 2006, both Brenda and Michael

Lagow discussed with Mr. Roach their inability to pay the $1,300,000 loans outstanding, and they

admitted that they could not even pay the $105,000 interest due thereon. (CR 64) Since that time,

neither Michael nor Brenda Lagow has made any payment on these outstanding debts, even though

Mr. Roach has made several demands for same. (CR 65-66) After these demands went unmet,

Plaintiff filed her Plaintiff’s Original Petition on September 16, 2008, seeking to enforce payment

on said series of promissory notes. (CR 8)

Defendants originally responded to this lawsuit with a general denial and, as to Brenda

Lagow, a verified denial that the consideration had failed. (CR 20) No mention of any allegation of

usury was made in Defendants’ pleadings (CR 20) until Defendants’ September 4, 2009 Defendants’

First Supplemental Answer, which alleged usury as an “Affirmative Defense.” (CR 22) This

allegation echoed Defendants’ First Amended Response to Plaintiff’s Request for Disclosure dated

July 29, 2009 (RR Exhibit 1, at 1-2) wherein Defendants explain that Brenda Lagow asserts usury

“as an affirmative defense,” although Defendants “are not seeking economic damages at the present

time.” (Id.) The September 4, 2009 Original Counterclaim of Defendant Brenda S. Lagow (CR 24)

fails to provide detailed total figures for the amount of the alleged usury violation and the attorneys’

fees claimed. (CR 25-27)

Not until the December 31, 2009 First Amended Counterclaim of Brenda S. Lagow did

Brenda finally allege that “all conditions precedent to Counter-Plaintiff’s right to recovery have

occurred.” (CR 38) Within six business days thereafter, Plaintiff filed her Plaintiff’s Answer to

Defendants’ First Amended Counterclaim and Plea in Abatement and Plaintiff’s First Supplemental

3

Petition and Plea in Abatement, both filed January 8, 2010 and both of which specifically denied that

Defendants had complied with all conditions precedent and denied that Defendants had complied

with Texas Finance Code § 305.006. (CR 133-42)

Also on January 8, 2010, Plaintiff filed her Plaintiff’s Motion for Partial Summary Judgment

and Plaintiff’s No-Evidence Motion for Summary Judgment, the first said Motion affirmatively

seeking to recover under the promissory notes against both Defendants. (CR 41-132) Plaintiff

promptly set her plea in abatement for hearing first on February 4, 2010, but that hearing was reset

by the trial court after the judge was unavailable on that date. (CR 343; SCR ) On February 15,

2010, Plaintiff again requested that the court set and hear these abatement pleas first, before the

summary judgment matters. Plaintiff’s Response to Defendant Brenda S. Lagow’s Amended Motion

for Partial Summary Judgment ¶ 3.3. (SCR ) On February 26, 2010, the pleas in abatement were

heard and granted by the trial court, abating the case for sixty (60) days pursuant to Texas Finance

Code § 305.006. (CR 343) During that 60-day timeframe, Plaintiff filed and served upon Defendants

her Plaintiff’s Notice of Filing “Usury” Correction Letter and Partial Release dated May 10, 2010

(SCR ), which Notice and Letter expressly stated that Plaintiff disagreed with Defendants’

allegation of “usury.” (SCR )

In connection with said promissory notes and Defendants’ allegation of usury, Mr. Roach

testified by affidavit that, during his discussions with Michael and Brenda Lagow concerning their

affirmative request for an extension of the subject notes, neither Plaintiff nor Mr. Roach required

Brenda to assume or pay any debt that Michael owed to Plaintiff as a condition of extending the due

dates on either of those notes. (SCR ) Indeed, the subject notes would have been extended by

Plaintiff and Mr. Roach whether or not Brenda agreed to assume or pay them because the motivating

goal of Plaintiff and Mr. Roach at that time was to prevent the notes from lapsing and their

4

enforcement from being barred by limitations. (SCR ) In fact, Brenda confessed as much in her

affidavit testimony, wherein she admitted that she had “no discussions with either Nancy Hamon or

John L. Roach” concerning the $300,000 note and, with respect to the $1,300,000 note: “In August

26, 2006 Michael asked me to sign a note dated August 24, 2006 . . . at no time in connection with

the execution of that note (or the other note dated August 24, 2006 in the amount of $105,000) did

I have any conversations with either Nancy nor [sic] John L. Roach concerning that or any prior

indebtedness owed by Michael.” (SCR )

On July 8, 2010, the trial court held a hearing on Plaintiff’s motions for summary judgment

and Brenda’s motion for summary judgment, and the court granted Plaintiff’s motions and denied

Brenda’s motion, without stating any grounds or reasoning therefor. (CR 344-45, 327-30; SCR

) After these rulings became final (CR 327), Defendants filed their Notice of Appeal on November

24, 2010 (CR 335), and its appeal followed.

SUMMARY OF THE ARGUMENTS

Appellants have waived substantial factual points and legal issues by failing to include record

references and citations to legal authorities in the Lagow Brief. These blatant omissions are so

systemic and pervasive throughout the entire Lagow Brief that such brief should be stricken in its

entirety and this appeal dismissed.

Brenda Lagow (as the borrower) failed to submit any competent summary judgment evidence

whatsoever: (a) proving that Plaintiff (as the lender) “required” Brenda “to assume or pay the debt”

of Michael Lagow “as a condition to” Plaintiff’s extension of the overdue debt owed by Brenda; or

(b) controverting Plaintiff’s summary judgment evidence that Plaintiff and Mr. Roach imposed no

such requirement on Brenda and that, in fact, Plaintiff would have extended those debts whether or

not Brenda agreed to assume or pay them. Because of such failure of proof on the part of Brenda,

5

her usury claims fail, and the judgment below should be affirmed.

Plaintiff, effectively and without waiver, sought abatement of Brenda’s counterclaim for

usury and took timely corrective action to negate any such claim. Thus, as a matter of law, Plaintiff

cannot be liable to Brenda for any such alleged usury violation under Texas Finance Code

§ 305.006(d).

As a matter of law, no usury could have occurred because husband Michael’s notes constitute

debts for which wife Brenda was already obligated under the doctrines of community debt,

ratification, agency, and third-party beneficiary. Thus, the judgment should be affirmed.

In light of the complete lack of authority on this precise issue, the trial issue properly

exercised its discretion to offset Brenda’s minor fee award against the much larger judgment of

Plaintiff adverse to Brenda. The judgment on this score should be affirmed.

ARGUMENTS

When a trial court’s order disposing of a summary judgment motion does not specify the

grounds upon which it was based, the court’s ruling will be affirmed on appeal if any of the grounds

advanced by the prevailing party are meritorious. Dow Chemical Company v. Francis, 46 S.W.3d

237, 242 (Tex. 2001); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989). The orders and judgment

herein do not identify any particular grounds. (SCR , ; CR 327-30) As demonstrated below,

all of the following grounds asserted by Appellee regarding the summary judgment motions at issue

are meritorious, so this Court should affirm the orders and judgment below in favor of Appellee.

I. Appellants Have Waived Significant Factual Points and Legal Issues by Failing to IncludeRecord References and Citations to Legal Authorities Such That this Appeal Should BeDismissed, in Whole or in Part.

Regarding appellate briefs, every statement of facts must be followed by a parenthetical page

reference to the record supporting that statement. Schlafly v. Schlafly, 33 S.W.3d 863, 873 n.8 (Tex.

Appellants have submitted an incomplete and misleading Clerk’s Record to this Court, requiring1

Appellee to order a Supplemental Clerk’s Record to be filed with this Court. For example, Appellants’ Clerk’s Record

does not even contain their live pleading at the crucial times of the February 26, 2010 Plea in Abatement hearing (CR

343) or the summary judgment hearing on July 8, 2010 (CR 344), namely, the Second Amended Counterclaim of

Defendant Brenda S. Lagow filed on January 28, 2010 (CR 343; SCR ). Instead, Appellants tendered to this Court

their then-superceded and null First Amended Counterclaim of Defendant Brenda S. Lagow filed on December 31, 2009

(CR 36). Similarly, Appellants omit from their Clerk’s Record their own January 28, 2010 Defendants’ Response to

Plaintiff’s Motion for Partial Summary Judgment (CR 343; SCR ) containing the only affidavit testimony of

Defendant-summary judgment movant Brenda Lagow, even though Appellants cite and rely on this very affidavit in their

argument to this Court. Lagow Brief at 16. Appellants further neglect to submit the February 15, 2010 Plaintiff’s

Response to Defendant Brenda Lagow’s Amended Motion for Partial Summary Judgment (SCR ) directly replying

to said Defendant’s Amended Motion for Partial Summary Judgment (CR 145), which Appellant did deliver to this Court.

These and many other like omissions by Appellants clearly signal their anxiety about revealing to this Court a complete

record of their own deficient live pleadings and summary judgment evidence, but these omissions have required extra

effort by Appellee to correct, complete, and clarify the appellate record. Appellee requests that this Court consider this

factor in assessing Appellee’s argument presented in this § I of her Brief.

6

App. - - Houston [14 Dist.] 2000, pet. denied); Texas Rule of Appellate Procedure 38.1(g). If theth

appellant does not include proper record references, the appellate court will consider the point

waived. Fredonia State Bank v. General American Life Insurance Company, 881 S.W.2d 279, 284

(Tex. 1994). Similarly, an appellate brief, in the argument section, must be supported by appropriate

citations to applicable legal authority, and if such legal citations are omitted, the unsupported issues

are waived, and the entire appeal may be dismissed. Republic Underwriters Insurance Company v.

Mex-Tex, Inc., 150 S.W.3d 423, 427 (Tex. 2004); Bolling v. Farmers Branch ISD, 315 S.W.3d 892,

896-97 (Tex. App. - - Dallas 2010, no pet.)(appeal dismissed because appellant’s record references

provided no guidance, and alleged legal authority citations were inapplicable); Burnett Ranches, Ltd.

v. Cane Pet., Inc., 289 S.W.3d 862, 870 (Tex. App. - - Amarillo 2009, pet. denied)(error waived

because legal argument was conclusory).

The Lagow Brief suffers from all of these deficiencies, including wholesale omissions to cite

any record references supporting factual allegations and failures to provide legal authority citations

supporting Appellants’ primary arguments. Thus, Appellants’ entire appeal should be dismissed,1

or at least those portions thereof not supported by record references or legal authorities, as set out

7

below. For example, the following list presents some of the factual allegations and legal issues

utterly unsupported by any reference to the record or legal citations:

(a) “This case arises out of a suit to enforce two promissory notes.” Lagow Brief at 1,

lines 3 and 8 and at 3, line 10.

(b) “Lagow provided Hamon with notice of the usury violation after suit was filed, but

prior to asserting her usury counterclaim.” Lagow Brief at 2, lines 7-8.

(c) “After the continuance was granted, Hamon took no steps to cure the usury.” Lagow

Brief at 2, lines 10-11.

(d) “Nor did Hamon set the request for abatement for hearing until after Lagow had

responded to the motion for summary judgment.” Lagow Brief at 2, lines 14-15.

(e) “Hamon notified Lagow that she was not seeking to enforce the portions of the note

that were usurious as to her.” Lagow Brief at 2, lines 18-20.

(f) “Nancy Hamon is in her nineties . . . her affairs have been managed by an attorney

. . . the funds . . . were advanced at her direction, and the transactions were all

structured by Mr. Roach.” Lagow Brief at 3, footnote 1.

(g) “Roach’s requirement that Brenda Lagow execute the $1,300,000 note and the

$105,000 [sic], thereby assuming her husband’s indebtedness as a condition for

renewing the $300,000 obligation, constituted a charge of usurious interest.” Lagow

Brief at 4, lines 2-5. This factual and legal allegation is particularly egregious

because no record citation is supplied, it is flagrantly false, and Appellants have no

underlying pleading to support this false allegation; indeed, their live pleading before

the trial court contradicts this allegation. That is, Appellants’ live pleading at the

time of the summary judgment hearing regarding the usury claim, the Second

8

Amended Counterclaim of Defendant Brenda S. Lagow (SCR ), actually alleges

that the renewal of the notes “was apparently conditioned on her agreement to

assume responsibility for” payment of the other notes. (SCR ) A court must

determine a summary judgment motion based upon the pleadings on file at the time

of the hearing, Texas Rule of Civil Procedure 166a(c), and if the party’s filed

pleadings do not support the contentions in her summary judgment papers, with

appropriate objection, that contention may not be considered. Roark v. Stallworth

Oil & Gas, Inc., 813 S.W.2d 492, 495 (Tex. 1991); Proctor v. White, 172 S.W.3d

649, 652 (Tex. App. - - Eastland 2005, no pet.). Appellee objected to this specific

pleading deficiency in Plaintiff’s Response to Defendant Brenda S. Lagow’s

Amended Motion for Partial Summary Judgment ¶ 6.1 (SCR ). Accordingly, not

only is Appellants’ allegation that Mr. Roach required Brenda Lagow to assume her

husband’s indebtedness egregiously false, Appellants have no pleading to support

that allegation, so their appeal must fail on this ground alone.

(h) “The first three notes . . . were for advances made solely to Michael Lagow and used

in connection with his business . . . only after Michael Lagow submitted a business

plan to Roach.” Lagow Brief at 4, lines 6-8. This allegation similarly suffers from

several defects. First, Appellants had no underlying live pleading to support this

summary judgment allegation at the time of the summary judgment hearing. That is,

the record demonstrates that Appellants’ live pleading concerning usury at the time

of the summary judgment hearing on July 8, 2010 (CR 344), the Second Amended

Counterclaim of Defendant Brenda S. Lagow dated January 28, 2010 (SCR ),

contained no such statements. Indeed, that Second Amended Counterclaim

9

affirmatively omitted these allegations that were previously contained in the First

Amended Counterclaim of Defendant Brenda S. Lagow dated December 31, 2009

(CR 36-40). Consequently, these unsupported allegations were not set out in the live

pleading of Appellants at the time of the summary judgment hearing, and Appellee

timely objected to this omission in Plaintiff’s Response to Defendant Brenda S.

Lagow’s Amended Motion for Partial Summary Judgment ¶ 1.3 (SCR ). Because

Defendant’s subsequent amended pleading omitted allegations crucial to Appellant’s

summary judgment motion, this Court should affirm the trial court’s denial of

Appellant’s summary judgment motion on this ground alone.

(i) “The first three notes were not executed by Brenda Lagow nor did she receive any

of the funds advanced pursuant to those notes.” Lagow Brief at 4, lines 9-10. Not

only do Appellants utterly fail to support this factual contention with any citations to

the record, they are absolutely prohibited from even making this allegation at this

stage of the proceedings because of Appellants’ prior pleading defects. That is, in

Plaintiff’s live pleading at the time of the summary judgment hearing, Plaintiff’s First

Amended Original Petition (¶¶ 5.2-5.5)(SCR ), as well as in Plaintiff’s Response

to Defendant Brenda S. Lagow’s Amended Motion for Partial Summary Judgment

(¶ 5.3)(SCR ) and Plaintiff’s No-Evidence Motion for Summary Judgment (¶

2.2)(CR 123, 124-25), Plaintiff pled that Brenda Lagow executed all three of the

earlier notes by herself or by her authority, specifically utilizing the language of

Texas Rule of Civil Procedure 93(7), and Defendants never filed any answer

containing the requisite Rule 93(7) verified, sworn plea denying such execution. See

Defendants’ First Amended Answer (CR 20-21); Defendants’ First Supplemental

10

Answer (CR 22-23); Defendants’ Second Supplemental Answer (CR 247-48).

According to Rule 93(7): “In the absence of such a sworn plea, the instrument shall

be received in evidence as fully proved.” Case law enforces this mandatory provision

of Rule 93(7). Southwestern Fire & Casualty Company v. Larue, 367 S.W.2d 162,

163 (Tex. 1963)(a party must raise by sworn pleadings the defenses of denial of

execution of a promissory note); Wheeler v. Security State Bank, 159 S.W.3d 754,

756-57 (Tex. App. - - Texarkana 2005, no pet.)(a party denying the execution of

notes must file a verified pleading of their contentions; absent such a verified answer,

the document is fully proved), citing Boyd v. Diversified Financial System, 1 S.W.3d

888, 891 (Tex. App. - - Dallas 1999, no pet.). Consequently, said first three

promissory notes must be received in evidence for purposes of the summary

judgment hearings as fully signed by Brenda Lagow, and she may not now deny her

execution of same by herself or by her authority, since she never filed the required

verified answer containing such denial. Because Brenda Lagow is treated as having

executed these prior notes, she was already liable for same, and her core usury claim

must fail as a matter of law because any requirement that a debtor merely assume her

own prior indebtedness as a condition of extending further debt cannot constitute

usury. Alamo Lumber Co. v. Gold, 661 S.W.2d 926, 928 (Tex. 1983). This appeal

should be dismissed, or the trial court’s orders and judgment affirmed, on this ground

alone, and Appellee prays for such relief.

(j) “Renewal of the $300,000 note on which Brenda Lagow was obligated was therefore

expressly conditioned on her assuming the obligation for the repayment of the

$1,000,000 [sic] executed solely by Michael Lagow.” Lagow Brief at 5, lines 8-10.

11

Not only do Appellants utterly fail to cite any record evidence for this contention,

pursuant to those authorities set out in ¶ (g) above, Appellants are barred from

making any such contention because they had no live pleading asserting same at the

time of the summary judgment hearings. Appellee incorporates herein those

arguments and authorities referenced in ¶ (g) above.

(k) “Renewal of the $300,000 note Brenda Lagow was obligated on was therefore further

expressly conditioned on her assuming the obligation for the repayment of the

interest due on the $1,000,000 [sic] executed solely by Michael Lagow.” Lagow

Brief at 5, lines 17-19. As explained in ¶¶ (g) and (j) above, no record citation is

provided for this factual allegation, and it is not supported by the live pleadings of

Appellants at the time of the summary judgment hearings.

(l) “On September 4, 2009, Brenda Lagow filed her counterclaim, asserting that the

$1,300,000 note and the $105,000 note were usurious because they included amounts

due by her husband for which she was not personally liable.” Lagow Brief at 6, lines

1-4. Again, Appellants fail to cite any portion of the record to substantiate this

contention.

(m) “After being served with the motions, Brenda Lagow prepared a counter-motion for

summary judgment on the usury claims. At the hearing on the motions for summary

judgment, Hamon argued that she was entitled to abatement of the case under Section

305.006 of the Texas Finance Code. Over Lagow’s objection, the court abated the

case for sixty (60) days.” Lagow Brief at 6, lines 5-9. No support in the record is

cited for these allegations.

(n) “After the abatement period ended, Hamon reasserted her motion for summary

12

judgment, which had been modified only to seek recovery of the $300,000 obligation

from Brenda Lagow and the full amount from Michael Lagow.” Lagow Brief at 6,

lines 11-14. Once again, Appellants provide no citations to the record for these

statements, which are inaccurate.

(o) “It should be noted that neither the motion for summary judgment nor the no-

evidence motion for summary judgment were conditioned upon or subject to the plea

in abatement - - in fact, both motions for summary judgment were wholly silent as

to the plea in abatement contained in the answer to the counterclaim. Both of

Hamon’s motions for summary judgment were set for hearing on February 26, 2010.”

Lagow Brief at 10, lines 1-5. Appellants fail utterly to supply any record references

supporting these allegations.

(p) “Lagow obtained a setting of her motion on the same date as Hamon’s motions.”

Lagow Brief at 10, lines 9-10. Again, no record citations are supplied supporting this

contention.

(q) “Although artfully worded, this motion for continuance was an acknowledgment of

the right to cure the violation, and the continuance that was subsequently granted by

the trial court was a de facto abatement of the lawsuit which allowed Hamon ample

opportunity to cure the usury. After the continuance was granted, Hamon made no

effort to cure the usury violation nor otherwise raise abatement as a defensive issue

until the date she filed her Plaintiff’s Answer to Defendant’s First Amended Answer

[sic] and Plea in Abatement (which was filed contemporaneously with her two

motions for summary judgment). Notwithstanding detailed notice of Brenda

Lagow’s claim, Hamon (or her attorneys) chose not to seek abatement of the case but

13

instead went on the attack by filing and setting both traditional and no-evidence

motions for summary judgment, neither of which were made subject to the plea in

abatement.” Lagow Brief at 11, lines 5-14. Once again, no record citations

whatsoever are supplied to substantiate these allegations.

(r) “Had abatement been the relief her attorneys truly sought, then rather than filing and

setting the motions for summary judgment for hearing, her attorneys should have set

the plea in abatement for hearing. By the time the abatement was heard by the court,

Brenda Lagow had been forced to respond to both motions for summary judgment

and had incurred significant expense and attorneys’ fees. Not only was the request

for abatement untimely under the doctrine of Hines v. Hash, it had been waived

because Hamon and her attorneys elected to pursue a remedy inconsistent with

abatement.” Lagow Brief at 12, lines 2-9. Again, Appellants supply no record

references nor any legal authorities to support these contentions, which are largely

false. In fact, Plaintiff did set her plea in abatement for hearing first on February 4,

2010, but that hearing was reset by the trial court after the judge was unavailable on

that date. (CR 343; SCR ) On February 15, 2010, Plaintiff again requested that

the court set and hear these abatement pleas first, before the summary judgment

matters. Plaintiff’s Response to Defendant Brenda S. Lagow’s Amended Motion for

Partial Summary Judgment ¶ 3.3. (SCR )

(s) “Notwithstanding the untimeliness and prior waiver of the right to abatement, the

district court abated the case to allow Hamon’s attorneys to extricate themselves from

a trap of their own making. Hamon’s attorneys offered not [sic] explanation why

they waited so long to request abatement or the motions for summary judgment were

14

filed without being subject to any plea in abatement.” Lagow Brief at 12, lines 13-

17. Again, no record references and no legal authorities are cited for these erroneous

propositions, which are further addressed in § III below.

(t) “But for the abatement of this case and Hamon’s belated attempt at a cure, Brenda

Lagow would have prevailed on her motion for partial summary judgment. . . .

When Brenda Lagow was required to assume the debts incurred separately by her

husband (i.e., the obligation for repayment of the $1,000,000 [sic] and the accrued

interest thereon) in connection with the renewal and extension of the $300,000 [sic],

the interest rate went through the ceiling.” Lagow Brief at 13, lines 1-9. Once more,

no record references nor any citations to legal authority are provided for these

misstatements.

(u) “The $1,000,000 advanced to Michael Lagow was advanced after he had submitted

a business plan to Plaintiff and the proceeds were used in the operation of his

business, which was his sole management community property. The first $1,000,000

advanced by Plaintiff was not for necessaries and therefore Brenda Lagow is not

personally liable for the first $1,000,000 advanced by Plaintiff to Michael Lagow.”

Lagow Brief at 15, lines 10-14. Monotonously, these factual and legal allegations are

not supported by any record references or citations to legal authorities.

(v) “The evidence is also undisputed that Michael Lagow was not acting as agent for

Brenda Lagow when he executed the notes for the first $1,000,000 advanced. The

notes are all signed by him and there is no indication that he was acting in any sort

of representative capacity. There is no summary judgment evidence that Michael

Lagow was acting as agent for Brenda Lagow in connection with the $1,000,000

15

note, the $300,000 note, or the $1,300,000 note. Also, contrary to the conclusory

allegations in the Affidavit of John L. Roach, Brenda Lagow never ratified any

conduct on Michael Lagow’s part in connection with the $1,000,000 note. . . .

Reference to two separate obligations - - one by Michael Lagow individually and the

other by Michael Lagow and Brenda Lagow jointly - - is an express recognition of

two separate obligations, not a ratification by Brenda Lagow that Michael Lagow

ever acted as an agent on her behalf.” Lagow Brief at 16, lines 1-16. Appellants

supply no record citations nor any legal authorities to support these allegations.

(w) “In fact, the only summary judgment evidence presented on this topic is Brenda

Lagow’s affidavit testimony that she was not involved with any of the loans leading

up to the $1,000,000 note, the use of the proceeds, or any attempt by Michael Lagow

to act on her behalf. Therefore, there was no summary judgment evidence in the

record that Michael Lagow was acting as an agent of Brenda Lagow or that she ever

ratified any such conduct. Based on this undisputed summary judgment record and

but for the abatement incorrectly granted by the district court, Brenda Lagow is

entitled to summary judgment on her usury counterclaim . . . .” Lagow Brief at 16,

line 16-at 17, line 3. Once more, Appellants supply no record citations nor any

references to legal authorities supporting these erroneous contentions. Indeed,

Appellants apparently intentionally omitted the Brenda Affidavit from their requested

Clerk’s Record, as explained more fully in the Statement Regarding Record Citations

and footnote 1 supra.

These blatant omissions to cite record references or legal authorities for Appellants’

propositions are so systemic and pervasive that these points are waived, and the entire Lagow Brief

16

should be stricken and this appeal dismissed; Appellee prays for such relief. See Fredonia State

Bank, 881 S.W.2d at 284; Bolling, 315 S.W.3d at 896-97. Appellants are not pro se litigants who

may not be expected to know of or precisely follow Texas Rule of Appellate Procedure 38.1; these

parties have been represented by experienced counsel from the outset of this litigation, see

Defendants’ Original Answer (SCR ), who is presumed to know Rule 38.1. As this Court held

in Bolling, 315 S.W.3d at 895-96, the Court is not responsible for identifying possible trial court

error, for searching the record regarding facts favorable to an appellant, or for doing legal research

on behalf of an appellant, and neither is Appellee or Appellee’s counsel. “If record references are

not made or are inaccurate, misstated, or misleading, the brief fails. And . . . existing legal authority

applicable to the facts and the questions . . . must be accurately cited. . . . If we are not provided with

existing legal authority . . . , the brief fails.” Id. at 896. This Court clearly has discretion to deem

all of these points of Appellants waived, and Appellee prays that the Court exercise that discretion

in favor of such waiver. See Fredonia State Bank, 881 S.W.2d at 284; Davis v. City of San Antonio,

752 S.W.2d 518, 521 (Tex. 1998).

II. Appellant Brenda Lagow (As the Borrower) Failed to Submit Any Competent SummaryJudgment Evidence Whatsoever: (a) Proving That Plaintiff (As the Lender) “Required”Brenda Lagow “To Assume or Pay the Debt” of Michael Lagow “As a Condition To”Plaintiff’s Extension of the Overdue Debt Owed by Brenda Lagow; or (b) ControvertingPlaintiff’s Summary Judgment Evidence That Plaintiff Imposed No Such Requirement onBrenda Lagow and That, in Fact, Plaintiff Would Have Extended Those Debts Whether orNot Brenda Lagow Agreed to Assume or Pay Them.

In denying Brenda Lagow’s summary judgment motion on her usury counterclaim, the trial

court should be upheld unless Brenda demonstrated that there was no genuine issue as to any

material fact involved in the elements of her usury claim and that she was entitled to judgment as

a matter of law. See Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). In applying this test, a

court must resolve all doubts concerning the existence of a genuine issue of material fact against the

17

movant, here Brenda. Johnson County Sheriff’s Posse, Inc. v. Endsley, 926 S.W.2d 284, 285 (Tex.

1996); Nixon v. Mr. Property Management Company, 690 S.W.2d 546, 548-49 (Tex. 1985).

Conversely, in granting Plaintiff’s motions for summary judgment, the trial court’s orders should be

upheld unless Brenda can prove that more than a scintilla of evidence establishing the material facts

necessary for each element of her usury claim has been demonstrated by her summary judgment

evidence. See Dow Chemical Company v. Francis, 46 S.W.3d 237 (Tex. 2001); Texas Rule of Civil

Procedure 166a(i). Application of these standards to the summary judgment motions at issue can

result only in the affirmance of the orders and judgment below.

With respect to one of the crucial elements of Brenda’s counterclaim for usury, she submitted

no competent summary judgment whatsoever. The essential elements of a claim for usury are: (1)

a loan of money; (2) an absolute obligation that the principal be repaid; and (3) the exaction of a

greater compensation than allowed by law for the borrower’s use of the money. First Bank v. Tony’s

Tortilla Factory, Inc., 877 S.W.2d 285, 287 (Tex. 1994). On element number 3, Brenda submitted

not a scintilla of competent summary judgment evidence, so her motion must fail as a matter of law.

This third essential element requires proof of the exaction of a greater compensation than

allowed by law for the borrower’s use of the money. Brenda’s only argument that Plaintiff exacted

a greater compensation than allowed by law is her pled contention that “the renewal and extension

of the November 24, 2004 note was apparently conditioned on her agreement to assume

responsibility for payment of the April 15, 2004 note.” Second Amended Counterclaim of

Defendant Brenda S. Lagow (the “Counterclaim” ¶ 1.5 (SCR ). The grounds for a summary

judgment motion must be fully set out in the motion and must be founded on grounds contained in

the movant’s live pleadings. McConnell v. Southside ISD, 858 S.W.2d 337, 341 (Tex. 1993); Roark,

813 S.W.2d at 495; Rule 166a(c). The only pleading ground set out in Brenda’s live Counterclaim

18

(as of the July 8, 2010 summary judgment hearing, CR 344) is that quoted immediately above, that

is, that the renewal and extension of a prior note was “apparently conditioned on” Brenda’s

agreement to assume payment of a different note. This hypothetical allegation does not meet the

Alamo Lumber test explained below and cannot constitute competent summary judgment evidence;

it merely represents speculation, conjecture, and assumption, which cannot substitute for a definite

pleading or constitute evidence conclusively proving this necessary element of usury.

Moreover, the only affidavit evidence cited by Brenda to support her motion is the First

Roach Affidavit, cited sporadically throughout the motion (at ¶¶ 2.3-2.6)(CR 145-54). Shockingly,

Brenda submitted absolutely no affidavit of herself even purporting to affirmatively state that

Plaintiff or Mr. Roach required Brenda to assume or pay the prior notes as a condition of extending

her overdue note. Under the applicable law, this omission on Brenda’s part defeats her motion by

itself. Indeed, in the only Affidavit presented by Brenda herein, she expressly negated the possibility

of Plaintiff or Mr. Roach expressly requiring her to assume any prior note as a condition of extending

her overdue note when she admitted, with respect to the $300,000.00 note, “I had no discussions

with either Nancy Hamon or John L. Roach concerning that note” and, with respect to the

$1,300,000.00 note: “In August 2006 Michael asked me to sign a note dated August 24, 2006 . . .

at no time in connection with the execution of that note (or the other note dated August 24, 2006 in

the amount of $105,000.00) did I have any conversations with either Nancy Hamon nor [sic] John

L. Roach concerning that or any prior indebtedness owed by Michael.” (SCR , )(emphasis

added) Because Brenda judicially admitted that she had no communications whatsoever with

Plaintiff or Mr. Roach concerning either of these questioned notes, Brenda submitted absolutely no

evidence that Plaintiff or Mr. Roach expressly required her to assume or pay the debt of another

person (including Michael Lagow) as an express condition to the extension of Brenda’s overdue

19

debt. Thus, Brenda’s motion should have been, and was, summarily denied.

The subject notes themselves do not, on their faces, state a rate of interest exceeding those

rates allowed by law (CR 75-89), nor does Brenda claim differently. Moreover, the notes themselves

do not, on their faces, expressly require Brenda to assume or pay the debt of Michael as an express

condition to Plaintiff’s extension of Brenda’s overdue debt. (CR 75-89) Brenda’s only allegation

to support the third element of usury (a greater compensation than allowed by law) is her utterly

unsupported contention that Plaintiff’s renewal and extension of Brenda’s prior note was “apparently

conditioned on” her agreement to assume payment of a separate note. Under Texas Supreme Court

authority, this tenuous allegation fails as a matter of law. In Alamo Lumber Co. v. Gold, 661 S.W.2d

926 (Tex. 1983), the Court held that the amount of the allegedly assumed debt could constitute

interest at “a greater compensation than allowed by law” only if the borrower proved that the lender

“required” the borrower “to assume or pay the debt” of an independent third party already owed to

the lender “as a condition to” the lender’s extension of an overdue debt owed by the borrower. 661

S.W.2d at 927. Brenda submitted absolutely no summary judgment evidence, competent or

otherwise, proving that Plaintiff or Mr. Roach required Brenda to assume or pay a prior note of an

independent third person on which Brenda was not already liable as a condition to extending

Brenda’s existing note. (SCR ) Thus, Brenda utterly failed to submit competent summary

judgment evidence conclusively proving this required element of her usury claim.

Furthermore, in the Second Affidavit of John L. Roach (the “Second Roach Affidavit”), at

¶ 2 (SCR ), Mr. Roach specifically testified that, during his discussions with Michael Lagow and

Brenda Lagow concerning their affirmative request for an extension of the subject notes, neither

Plaintiff nor Mr. Roach required Brenda to assume or pay any debt that Michael Lagow owed to

Plaintiff as a condition of extending the due dates on either of those notes. Indeed, the subject notes

20

would have been extended by Plaintiff and Mr. Roach whether or not Brenda agreed to assume or

pay them because the motivating goal of Plaintiff and Mr. Roach at that time was to prevent the

notes from lapsing and their enforcement from being barred by limitations. Third Affidavit of John

L. Roach ¶ 2 (SCR ). Accordingly, these statements alone created a genuine issue of material fact

on an essential element of Brenda’s usury Counterclaim and precluded the grant of her motion.

Finally, as pled and briefed by Plaintiff in the trial court (CR 52-54; 126-27), Defendants

waived and are barred and estopped, contractually and under the statutes of fraud and the parol-

evidence rule, from submitting any competent summary judgment or other evidence putatively

substantiating the allegation that Brenda was required to assume obligations of Michael in

connection with the renewal notes of her own debts. That is, the August 24, 2006 promissory notes

expressly set forth the mutual understanding and admission that each note represented a stand-alone,

formal, written agreement which could not be contradicted by any oral representations: “THIS NOTE

REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE

LOANS . . . AND IT MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,

CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE

ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES WITH RESPECT TO

THE INDEBTEDNESS EVIDENCED HEREBY.” (CR 88, 89) Accordingly, this contractual

estoppel and waiver, combined with the statute of frauds and the parol-evidence rule, bar Defendants

from submitting any alleged evidence of prior, additional, and/or other agreements, such as the

putative agreement for Brenda to assume the preexisting debts of Michael. See Nagle v. Nagle, 633

S.W.2d 796, 799 (Tex. 1982); Coffey v. Singer Asset Financing Company, 233 S.W.3d 559, 569-70

(Tex. App. - - Dallas 2007, no pet.)(contractual estoppel prevents a party from contradicting the

written terms of a contract).

21

Consequently, the trial court’s orders and judgment granting Plaintiff’s summary judgment

motions and denying Brenda’s summary judgment motion should be affirmed.

III. Plaintiff, Effectively and Without Waiver, Sought Abatement of Brenda Lagow’sCounterclaim for Usury and Took Corrective Action to Negate Any Claim of “Usury.”

Appellants contend that Plaintiff waived her right to abatement by not requesting same in a

timely fashion and by seeking relief inconsistent with same. Lagow Brief at 8. Appellants are

incorrect. The starting point in this analysis is Texas Finance Code §§ 305.006(d) and 305.103. The

former provision states:

(d) With respect to a defendant filing a counterclaim actionalleging usurious interest in an original action by the creditor,the defendant shall provide notice complying with Subsection(b) at the time of filing the counterclaim and, on applicationof the creditor to the court, the action is subject to abatementfor a period of 60 days from the date of the court order.During the abatement period the creditor may correct aviolation. As part of the correction of the violation, thecreditor shall offer to pay the obligor’s reasonable attorney’sfees as determined by the court based on the hours reasonablyexpended by the obligor’s counsel with regard to the allegedviolation before the abatement. A creditor who corrects aviolation as provided by this subsection is not liable to anobligor for the violation.

Id. § 305.006(d) (emphasis added). The defendant’s notice mandated to be given at the time of filing

the counterclaim must state “in reasonable detail the nature and amount of the violation.” Id. §

305.006(b). A creditor corrects the alleged violation “by taking any necessary action and making

any necessary adjustment.” Id. § 305.103(a)(1). Examination of the summary judgment record will

demonstrate that Defendants failed to comply with the requirement to provide detailed notice of the

nature and amount of the violation at the time of filing the counterclaim, and promptly after

Defendants eventually supplied the necessary detailed information to Plaintiff, and asserted that they

had done so, Plaintiff filed her plea in abatement.

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In the July 29, 2009 Defendants’ First Amended Response to Plaintiff’s Request for

Disclosure (RR Exhibit 1, at 1-2), Defendants explain: “Defendant Brenda Lagow has also raised

an affirmative defense that any notes that were executed by her were without consideration because

she was not personally liable on the original note executed by Michael Lagow. By requiring Brenda

Lagow to assume the obligation owed by her husband as his separate debt, Plaintiff has charged

Brenda Lagow interest in excess of the amount allowed by law. . . . Defendants are not seeking

economic damages at the present time.” (emphasis added) Obviously, providing notice to Plaintiff

of affirmative defenses and disclaiming any attempt to recover damages certainly cannot comply

with said § 305.006. Indeed, in this “Disclosure,” no dollar amount of alleged unlawful interest or

attorneys’ fees is provided whatsoever. (Id.) On September 4, 2009, the Original Counterclaim of

Defendant Brenda S. Lagow was filed (CR 24), and it also failed to provide detailed total figures for

the amount of the alleged violation and attorneys’ fees claimed. (CR 25-27) Moreover, Texas case

law definitively holds that a pleading itself asserting usury cannot provide the separate notice

required by § 305.006. Sotelo v. Interstate Financial Corporation, 224 S.W.3d 517, 522 (Tex. App -

- El Paso 2007, no pet.)(where litigant raised her usury claim for the first time in an amended

pleading and argued that the pleading itself provided the necessary notice, court rejected that

argument and held that separate notice was required; court further held that a January 10, 2005

abatement sought and ordered after the March 17, 2004 amended pleading asserting usury, a period

of almost 10 months, was timely and upheld the creditor’s corrective action taken within 60 days

thereafter). Defendants’ First Supplemental Answer, also filed below on September 4, 2009 (RR

Exhibit 2, at 1-2), merely describes Defendant’s usury claim as an affirmative defense entitling

Defendants only to an offset and credit, not to any actual damages or attorneys’ fees. Obviously,

these statements cannot possibly meet the statutory requirement for a detailed description of the

23

nature and amount of the counterclaim violation. This deficiency is admitted by Defendants sub

silentio by virtue of their omission from the Original Counterclaim of any allegation that Defendants

have complied with all conditions precedent to Defendant’s right to recover under the usury claim

(CR 24-26), since the statutory notice obviously constitutes such a condition precedent.

Defendants’ next relevant pleading tacitly admits their prior failure to comply with all

conditions precedent because their December 31, 2009 First Amended Counterclaim of Defendant

Brenda S. Lagow finally contends in ¶ 2.4: “All conditions precedent to Counter-Plaintiff’s right

to recovery have occurred.” (CR 38) Within six business days after Defendants filed said First

Amended Counterclaim alleging, for the first time, that they had complied with all conditions

precedent, Plaintiff filed her Plaintiff’s Answer to Defendants’ First Amended Counterclaim and

Plea in Abatement and Plaintiff’s First Supplemental Petition and Plea in Abatement, both filed

January 8, 2010, both of which specifically denied that Defendants had complied with all conditions

precedent and denied that Defendants had complied with Texas Finance Code § 305.006, while

expressly requesting an abatement under that statutory provision and even citing the Sotelo case.

(CR 133-42)

Considering this factual scenario, there is no doubt but that Plaintiff timely requested an

abatement under said § 305.006 promptly after Defendants contended, for the first time, that they

had complied with all conditions precedent to their usury counterclaim, which would include

providing the statutorily required detailed notice of the nature and amount of the alleged violation.

Such § 305.006(d) establishes no time limit within which to request an abatement after the defendant

filing the usury counterclaim provides the required notice. That is, the statutory language states that

such defendant “shall provide notice” at the time of “filing the counterclaim,” and “on application

of the creditor to the court, the action is subject to abatement.” Texas Finance Code § 305.006(d)

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(emphasis added). No timeframe is set out in the statute for the creditor’s application or plea for

abatement to be filed, but once such plea is filed, the action must be abated for sixty (60) days. Id.

Plaintiff has found no reported Texas case directly on point, and Defendants cite none, but

the Sotelo opinion represents the most closely analogous authority. In that case, the court of appeals

expressly held that the amended pleading first alleging the usury claim could not itself serve as the

required statutory notice and that the opposing party’s abatement requested almost ten months after

that amended pleading was timely; the court allowed the responding party the opportunity to take

corrective action. 224 S.W.3d at 518-23. As in the case at bar, the Sotelo court affirmed the trial

court’s traditional and no-evidence summary judgments in favor of the creditor/usury defendant. Id

at 523. Indeed, the trial judge below expressly cited Plaintiff’s “good faith belief” that Defendants

had not complied with all conditions precedent to the usury counterclaim and had not provided

adequate notice (RR 36-37) in granting the abatement. In view of the complete paucity of reported

case law on this specific subissue of timely abatement under § 305.006(d), such decision cannot

constitute an abuse of discretion. See Mercedes Benz Credit Corp. v. Rhyne, 925 S.W.2d 664, 666

(Tex. 1996)(a trial court abuses its discretion only if it acts arbitrarily, unreasonably, or without

reference to any guiding principles).

Moreover, the Sotelo court expressly contradicts Appellants’ only legal argument on this

abatement issue reflected in their reliance on the Hines case, 843 S.W.2d 464 (Tex. 1992), in which

the pre-suit notice requirement of the DTPA was declared to be based upon the legislative intent “to

encourage pre-suit negotiation so as to avoid the expense of litigation” and to further settlement

possibilities. 843 S.W.2d at 468. In contrast to this pre-suit DTPA intent, Texas Finance Code §

305.006(d) cannot possibly be based upon that same legislative intent since this statute presumes that

litigation has already ensued and that the defendant has already filed her counterclaim. This statute

25

further presumes that the defendant/obligor has already incurred litigation expenses in the form of

attorney’s fees and expenses before the abatement because the statute requires the creditor to offer

to pay the obligor’s “reasonable attorney’s fees as determined by the court based on the hours

reasonably expended by the obligor’s counsel with regard to the alleged violation before the

abatement.” Texas Finance Code § 305.006(d). The Sotelo court pinpoints this distinction in

legislative intent by identifying that “the legislature’s goal in enacting these provisions was to

encourage creditors to amend usurious contracts in the borrower’s favor” and “to provide an

alternative ‘safe harbor’ method for correction,” 244 S.W.3d at 522, putting the legislative emphasis

on protecting well-intentioned creditors from the “often draconian penalties” imposed upon them

by the usury statutes. Id. at 522 and n.7. In fact, the Final Judgment in the case at bar preserves the

interests of both Plaintiff and Defendants in this alleged usurious context by recognizing Plaintiff’s

effective usury-cure steps but by awarding Defendant $14,700.00 in attorney’s fees “regarding the

alleged usury violation of Plaintiff before the March 12, 2010 abatement,” pursuant to Texas Finance

Code § 305.006(d). (CR 330)

In addition, while Appellants do not appear to contest the efficacy of (as opposed to the

timing of) Plaintiff’s “usury-correction” steps, Lagow Brief at 8-12, there can be no doubt but that

Plaintiff’s Notice of Filing “Usurious” Correction Letter and Partial Release (SCR ) complies

with the statute and case law governing same. See Sotelo, 224 S.W.3d at 519 and n.5; In Re CPDC,

Inc., 337 F.3d 436, 441 (5 Cir. 2003); Pagel v. Whatley, 82 S.W.3D 571, 576-77 (Tex. App. - -th

Corpus Christi 2002, pet. denied).

Finally, Appellants have cited this Court to absolutely no direct evidence whatsoever of any

intent by Plaintiff to waive her right to abatement under § 305.006(d). Lagow Brief at 11-12. Texas

law definitively dictates that waiver is the intentional relinquishment of a known right or intentional

26

conduct inconsistent with such a known right. United States Fidelity & Guaranty Co. v. Bimco Iron

& Metal Corp., 464 S.W.2d 353, 357 (Tex. 1971); Kendall Builders, Inc. v. Chesson, 149 S.W.3d

796, 804 (Tex. App. - - Austin 2004, pet. denied). As presented in Restated Issues Nos. 1(i), 2, and

4 hereof, Plaintiff had (and has) several persuasive legal and factual arguments and authorities why

both Defendants were liable on the notes and why Plaintiff’s actions (or lack thereof) could not

constitute usury, totally independent of any admission of “usury” and need to take corrective steps

under § 305.006(d). Plaintiff was entitled to pursue these independent grounds for summary

judgment without any need for a “usury” abatement, and such pursuit is not inconsistent with

Plaintiff’s separate right to claim such abatement with respect solely to the usury defense and

counterclaim of only Brenda Lagow. Michael Lagow had no such usury defense or counterclaim and

never asserted one, and Plaintiff was free to pursue him completely independently of § 305.006.

Consequently, Appellants have failed to demonstrate any such waiver by Plaintiff, and the judgment

below should be affirmed on this issue.

IV. As a Matter of Law, No Usury Could Have Occurred Because Husband Michael Lagow’sNotes Constitute Debts for Which Wife Brenda Lagow Was Already Obligated under theDoctrines of Community Debts, Ratification, and Agency.

Appellants rail against the long-standing precept under Texas law concerning “community

debts,” proffering merely the opinions expressed by Professor Thomas Featherston in a 2010 Texas

Bar Journal article. Lagow Brief at 14-15. Appellee is well aware of the long-standing academic

battle waged by Professor Featherston against the concept of community debts and the sincerity of

his beliefs. Nevertheless, with due deference to Professor Featherston’s educational acumen,

Appellee submits that his commentary opinions do not outweigh well-established and continuing

legislative and case authority (including Texas Supreme Court opinions) sustaining the viable and

logical doctrine of community debts or obligations.

27

The fact is that the long-time concept of community debts is alive, well, and vibrant in the

current statutory and decisional jurisprudence of this State. This concept holds that debts contracted

during marriage are presumed to be on the credit of the community and, thus, are joint community

obligations. Cockerham v. Cockerham, 527 S.W.2d 162, 171 (Tex. 1975); Mock v. Mock, 216

S.W.3d 370, 374 (Tex. App. - - Eastland 2006, pet. denied). For example, the current language of

the Texas Probate Code provides as follows: “The surviving spouse or personal representative shall

keep a separate, distinct account of all community debts allowed or paid in the administration and

settlement of such estate”; “the surviving spouse, . . . as the surviving partner of the marital

partnership has power . . . to sell, mortgage, lease, and otherwise dispose of community property for

the purpose of paying community debts . . . and has such other powers as shall be necessary to . . .

discharge community obligations”; and “The survivor shall keep a fair and full account and

statement of all community debts and expenses paid by him, and . . . shall deliver to the heirs . . .

their interest in such estate . . . after deducting therefrom the proportion of the community debts

chargeable thereto.” Texas Probate Code §§ 156, 160, and 168.

Moreover, in addition to the 2006 Mock opinion and the 1975 Cockerham decision, a long

and unbroken line of Texas Supreme Court and Texas appellate court decisions continues to sustain

this concept of community debts or obligations. E.g., Frazier v. Wynn, 472 S.W.2d 750, 752-53

(Tex. 1971)(widow held leasehold estate from marriage to deceased husband, subject to payment of

community debts); Burns v. Burns, 439 S.W.2d 452, 453-55 (Tex. Civ. App. - - Texarkana 1969,

writ ref’d n.r.e.)(two notes executed and assumed by husband in his marriage to wife and prior to

husband’s death constitute community debts and community indebtedness created by husband, and

surviving wife had duty to satisfy such community debts); Chanowsky v. Friedman, 219 S.W.2d 501,

503-05 (Tex. Civ. App. - - Fort Worth 1949, writ ref’d n.r.e.)(third-party plaintiff obtained judgment

28

against only husband during marriage of husband and wife, and wife subsequently died; plaintiff

sued wife’s executor to recover against property of wife; executor had duty to pay such “community

debts and contracts” from wife’s property); Grebe v. First State Bank, 136 Tex. 226, 150 S.W.2d

64, 66-68 (Tex. 1941)(debts incurred by one spouse during marriage constitute community debts and

debts owing by the community estate, and surviving spouse “is personally liable for the community

debts”); Lovejoy v. Cockrell, 63 S.W.2d 1009-11 (Tex. Comm. App. 1933, judgment

adopted)(community property of husband and wife is chargeable with deceased husband’s debts, and

executor could utilize wife’s interest in such property to pay husband’s debts).

In light of this unbroken and uncontradicted line of statutory and case authority from at least

1933 to the present upholding the concept of community debts, and especially the sub-precept of the

wife being subject to payment of such community debts and contracts incurred by the husband,

Appellee respectfully suggests that this Court follow this established statutory and decisional

precedent rather than the proffered, unsupported critical commentary of Professor Featherston.

Application of such actual precedent results in affirmation of the trial court rulings herein because

Brenda Lagow was already liable on the community debts and contracts represented by Michael

Lagow’s Notes, so no usury could have occurred, as a matter of law. See Alamo Lumber, 661

S.W.2d at 928.

As to ratification, Brenda’s execution of the August 24, 2006 notes constitutes a confirmation

and ratification of the prior notes since the faces of said August 24, 2006 notes expressly recite that

they are executed “in renewal and extension of the unpaid balances of” the prior notes. (CR 88, 89)

Moreover, Mr. Roach testified that he met with both Michael and Brenda Lagow regarding

extensions of these notes, and Brenda “confirmed and ratified the principal obligation” of these prior

notes. (CR 64-65) Thus, the record evidence sustains a finding of ratification of Michael’s debt by

29

Brenda, particularly when considered in connection with the contractual estoppel effect of the notes’

“no unwritten oral agreements” clauses explained in § II above. Additionally, the faces of the notes

recite that both Michael and Brenda Lagow “received value for” these notes, that is, they benefitted

therefrom. (CR 88, 89)

In light of such evidence, Texas case law declares that the wife Brenda has ratified the prior

notes of husband Michael. See Patel v. Kuciemba, 82 S.W.3d 589, 598 (Tex. App. - - Corpus Christi

2002, pet. denied)(evidence that wife had knowledge of, assented to, or benefitted from prior notes

executed by husband constitutes ratification and makes wife individually liable along with husband);

Nationwide of Brian, Inc. v. Dyer, 969 S.W.2d 518, 520 (Tex. App. - - Austin 1998, no pet.)(if a

wife received any benefit from a note or contract signed by the husband, the wife is bound by the

terms thereof).

Regarding agency liability, Texas Family Code § 3.201 provides that one spouse is personally

liable for the acts of the other spouse if the other spouse serves as agent for the spouse or the other

spouse incurs a debt for necessaries. The undisputed evidence herein demonstrates that the subject

debts were incurred to maintain the “lifestyle” of Michael and Brenda Lagow (CR 64), and such a

“lifestyle” debt qualifies as indebtedness for necessaries. See Gabel v. Blackburn Operating Corp.,

442 S.W.2d 818, 820 (Tex. App. - - Amarillo 1969, no writ)(debts incurred by one spouse to

purchase merchandise at a store for the benefit of both spouses represent a contract for necessities

for which both spouses are liable). Additionally, if the non-signatory spouse benefits from the

written instrument signed by the other spouse, the non-signing spouse can be liable under theories

of agency and third-party beneficiary. Dyer, 969 S.W.2d at 520.

Accordingly, under these doctrines of community debts, ratification, agency, and third-party

beneficiary, Brenda was already obligated on the notes executed by Michael, and, as a matter of law,

30

assumption of debts on which a party is already liable cannot constitute usury. Alamo Lumber, 661

S.W.2d at 928. Thus, the trial court’s judgment should be affirmed on this ground as well.

V. The Trial Court, in Light of the Complete Lack of Authority on this Issue, Properly Exercisedits Discretion to Offset Brenda Lagow’s Fee Award Against the Much Larger Judgment ofPlaintiff Adverse to Brenda Lagow.

Appellants contend that, without the offer to pay the obligor’s reasonable attorney’s fees

under Texas Finance Code § 305.006(d), “the transaction has not been purged of usury.” Lagow

Brief at 17. Initially, this Court should note that Appellee asserts that no usury whatsoever occurred,

as explained above. Moreover, Appellants cite no authority for this argument, so their point should

be ignored or denied. The actual language of § 305.006(d) does not state that payment of such fees

is required to “purge the usury,” and no case authority has been found announcing any such holding.

In any event, as evidenced by the Final Judgment (CR 330), this argument is pointless

because the trial court awarded Brenda $14,700.00 in such attorney’s fees “regarding the alleged

usury violation of Plaintiff before the March 12, 2010 abatement.” Appellants’ only real argument

is that the trial court should not have allowed offset of this $14,700.00 against the much larger

$467,701.37 awarded Plaintiff against Brenda and Michael Lagow, jointly and severally. (CR 330)

Because there is no case law directly on point addressing the propriety of such an offset under said

§ 305.006(d), and Appellants cite none (Lagow Brief at 17-18), Appellants are reduced to arguing

attenuated, improbable future hypothetical examples in their attempt to overturn this ruling.

That is, Appellants contend (Lagow Brief at 17-18) that Plaintiff might collect her judgment

in full from Michael Lagow, thus causing Brenda never to recover said attorney’s fees. All evidence

in the record dictates that Michael Lagow has no hope or reasonable ability to pay the total judgment

against him of $1,927,342.32 (plus post-judgment interest at 10% compounded annually, CR 329).

For example, on December 1, 2004, the outstanding $1,000,000 loan from Plaintiff was due and

31

payable, but in November 2004 Michael and Brenda Lagow admitted to Mr. Roach that they could

not make such payment and, in fact, needed an additional loan of $300,000 to maintain their

“lifestyle.” (CR 63-64) In August of 2006, Both Brenda and Michael Lagow discussed with Mr.

Roach their inability to pay the $1,300,000 loans outstanding, and they admitted that they could not

even pay the $105,000 interest due thereon (CR 64). Since that time, neither Michael nor Brenda

Lagow has made any payment on these outstanding debts, even though Mr. Roach has made several

demands for same. (CR 65-66) Brenda herself admitted in her Affidavit that “Michael and I were

unable to repay the $300,000 note when it matured.” (SCR ) In light of this uncontradicted record

evidence, it strains credulity to suggest that there is any realistic prospect of Michael voluntarily

paying almost $2,000,000 on this debt in the future, and such attenuated improbability certainly does

not warrant reversal of the trial court on this issue.

Appellants next argue that this issue should be analogized to “the attorneys’ fees that a party

may be required to pay for setting aside a default judgment” (Lagow Brief at 18), but Appellants cite

absolutely no legal authorities for any such analogy. Accordingly, this point should be ignored,

dismissed, or rejected. To the contrary, there are several logical arguments against requiring Plaintiff

to pay out of pocket these attorney’s fees, rather than offsetting them, some of which the trial judge

himself expressed during the fee hearing. For example, in the unlikely event that Michael Lagow

pays the entire almost $2,000,000 judgment (including interest), then Brenda Lagow will not be

called upon to pay her $467,701 (plus interest) liability, and she will thus have been monetarily

benefitted far above the $14,007 in fees awarded. Moreover, as a practical matter, Brenda would

almost certainly never actually receive any cash payment from Plaintiff of $14,007 because Plaintiff

could immediately file a turnover claim against Brenda under Texas Civil Practice & Remedies Code

Chapter 31 and/or a garnishment action under Chapter 63 against the bank account of Brenda and/or

32

the payor bank issuing any such $14,007 check, which actions would effectively prohibit any real

receipt by Brenda of such payment.

Finally, because a trial court abuses its discretion only if it acts arbitrarily, unreasonably, or

without reference to any guiding principles, Rhyne, 925 S.W.2d at 666, and since there is no case law

directly applying this § 305.006(d) attorney’s fee provision in the context of an offset, the Final

Judgment cannot possibly constitute such an abuse of discretion. Accordingly, the trial court’s order

on this issue should be affirmed.

CONCLUSION AND PRAYER

The record evidence demonstrates that Appellants borrowed over $1,300,000 from Plaintiff

Nancy Hamon (admitted to be an over-90 year-old lady)(Lagow Brief at 3) to support their lavish

“lifestyle” (CR 64) and then declined to repay same, even after several generous extensions granted

by Plaintiff (CR 64-66). Instead, Appellants have vigorously resisted such repayment and have

utilized suspect, attenuated legal and factual arguments in the attempt to avoid making good on their

promises to repay the generosity of Plaintiff. This Court should countenance such avoidance

techniques no longer and should dismiss this appeal in whole or summarily affirm the trial court’s

orders and judgments against these Defendants, without oral argument, and Appellee respectfully

prays for such relief and all other relief requested above. Appellee further prays for such other and

additional relief, special or general, at law or in equity, including general relief, to which she may

be justly entitled.

33

Respectfully submitted,

s/Donovan Campbell, Jr. Donovan Campbell, Jr.State Bar No. 03725300McCord WilsonState Bar No. 00785266RADER & CAMPBELL

(A Professional Corporation)Stemmons Place2777 Stemmons Fwy., Suite 1125Dallas, Texas 75207Telephone No.: (214) 630-4700Telecopy No.: (214) 630-9996

J. Patrick BredehoftState Bar No. 00787132THOMPSON & KNIGHT LLPOne Arts Plaza1722 Routh Street, Suite 1500Dallas, Texas 75201-2533Telephone No.: (214) 969-1395Telecopy No.: (214) 999-1541

COUNSEL FOR PLAINTIFF/APPELLEE

34

CERTIFICATE OF SERVICE

I certify that on this 31 day of May, 2011, a true and correct copy of the foregoing documentst

(and any attachments) was forwarded by E-mail transmission, hand delivery, and/or certified mail,return receipt requested, to the Clerk of the Fifth Court of Appeals and to all counsel of record, asfollows:

Robert H. Renneker, Esq. VIA E-MAIL1412 Main Street, Suite 210 and CERTIFIED MAILDallas, TX 75202.

s/Donovan Campbell, Jr.Donovan Campbell, Jr.

35

CERTIFICATE OF COMPLIANCE

I certify that this submitted CD or e-mail attachment of the brief complies with the followingrequirements of the Court:

1. The brief is submitted on a CD or by e-mail attachment;

2. The CD or e-mail attachment is labeled with the following information:

A. Case Name: Michael Lagow and Brenda S. Lagow, Appellants, v. Nancy B.Hamon, by and through her agent and attorney-in-fact, John L. Roach, Appellee;

B. The Appellate Case Number:05-10-01499-CV

C. The Type of Brief: Brief of Appellee

D: Party for whom the brief is being submitted: Appellee, Nancy B. Hamon

E. The Word Processing Software and Version Used to Prepare the Brief:WordPerfect 12

3. The CD or e-mail attachment contains only an electronic copy of the brief and theappendix. The documents in the appendix conform to the requirements of Texas Rules ofAppellate Procedure 9.8 and 38.1(k).

4. The CD or e-mail attachment is free of viruses or any other files that would be disruptiveto the Court's computer system. The following software, if any, was used to ensure the briefis virus-free: Malwarebytes’ Anti-Malware

5. I understand that a copy of this brief may be posted on the Court's website and that theelectronically filed copy of the brief becomes part of the Court's record.

6. Copies have been sent to all parties associated with this case.

s/Donovan Campbell, Jr. May 31, 2011

Donovan Campbell, Jr.

Rader & Campbell, P.C.

_____________________________________________________________________________

36

NO. 05-10-01499-CV_____________________________________________________________________________

IN THE COURT OF APPEALS

FOR THE FIFTH DISTRICT, DALLAS, TEXAS_____________________________________________________________________________

R. MICHAEL LAGOW and BRENDA S. LAGOW, Appellants,

v.

NANCY B. HAMON, by and through her agent andattorney-in-fact, John L. Roach,

Appellee._____________________________________________________________________________

APPENDIX TO BRIEF OF APPELLEE

DONOVAN CAMPBELL, JR.State Bar No. 03725300MCCORD WILSON

State Bar No. 00785266RADER & CAMPBELL

(A Professional Corporation)Stemmons Place2777 Stemmons Fwy., Suite 1125Dallas, Texas 75207Telephone No.: (214) 630-4700Telecopy No.: (214) 630-9996

PATRICK BREDEHOFT

State Bar No. 00787132THOMPSON & KNIGHT LLPOne Arts Plaza1722 Routh Street, Suite 1500Dallas, Texas 75201-2533Telephone No.: (214) 969-1395Telecopy No.: (214) 999-1541

COUNSEL FOR APPELLEE

37

Appendix

A – Tab A Texas Finance Code §§ 305.006 and 305.103

B – Tab B Plaintiff’s Response to Defendant Brenda S. Lagow’sAmended Motion for Partial Summary Judgment(filed February 15, 2010), including its Exhibits 1 and2 (the Second and Third Affidavits of John L.Roach)(SCR )

C – Tab C Defendant’s Response to Plaintiff’s Motion for PartialSummary Judgment (filed January 28, 2010), including itsExhibits consisting of the Affidavits of R. Michael Lagowand Brenda S. Lagow (SCR )

NO. 05-10-01499-CV

IN THE COURT OF APPEALS

FOR THE FIFTH DISTRICT, DALLAS, TEXAS

R MICHAEL LAGOW and BRENDA S. LAGOW, Appellants,

v.

NANCY B. HAMON, by and through her agent and attorney-in-fact, John L. Roach,

Appellee.

APPENDIX TO BRIEF OF APPELLEE

DONOVAN CAMPB~ JR.

State Bar No. 03725300 McCORD WILSON

State Bar No. 00785266 RADER & CAMPBELL (A Professional Corporation) Stemmons Place 2777 Stemmons Fwy., Suite 1125 Dallas, Texas 75207 Telephone No.: (214) 630-4700 Telecopy No.: (214) 630-9996

PATRICK BREDEHOFf State Bar No. 00787132 THOMPSON & KNIGHT LLP One Arts Plaza 1722 Routh Street, Suite 1500 Dallas, Texas 75201 ~2533 Telephone No.: (214) 969-1395 TelecopyNo.: (214) 999-1541

CoUNSEL FOR APPEU.EE

37

A- TabA

B- TabB

C - TabC

APPendix

Texas Finance Code§§ 305.006 and 305.103

Plaintiff's Response to Defendant Brenda S. Lagow's Amended Motion for Partial Sutlll113I)' Judgment (filed Februaty 15, 2010), including its Exhibits 1 and 2 (the Second and Third Affidavits of John L. Roach)(SCR _)

Defendant's Response to Plaintiffs Motion for Partial Summary Judgment (filed January 28, 201 0), including its Exhibits consisting of the Affidavits ofR. Michael Lagow and Brenda S. Lagow (SCR _)

38

Appendix Tab A

Texas Finance Code §§ 305.006 and 305.103

V.T.C.A., Finance Code§ 305.103

c Effective: I See Text Amendments!

Vernon's T~xas Statutes and Code::; Annotated Currentness Fin~nce Code ~Refs~~ :\nnos)

Title 4. Regulation of Interest, Loans, and Financed Transactions (Ref~ ..iG Annos) Subtitle A. Interest (Refs & Anno~)

"JI Chapttr 305. Penalties and Remedies 'e:J Snbdmpter B. Exception from Liability

-+ § 305.103. Correction of Violation

(a) A creditor is not liable to an obligor for a violation of this subtitle if:

Page I

(I) not later than the 60th day after the date the creditor actually discovered the violation, the creditor corrects the violation as to that obligor by taking any necessary action and making any necessary adjustment, including the payment of interest on a refund, if any, at the applicable rate provided for in the contract of the parties; and

(2) the creditor gives written notice to the obligor of the ,.·iolation before the obligor gives written notice of the violation or tiles an action alleging the violation.

(b) For the purposes of Subsection (a), a violation is actually discovered at the time of the discove11 of the viola­tion in fact and not at the time when an ordinarily prudent person, through reasonable diligence, could or should have discovered or known of the violation. Actual discovery of a ..-iolation in one transaction may constitute ac­tual discovery of the same violation in other transactions if the violation is of such a nature that it would neces­sarily be r~peated and would be clearly apparent in the other transactions without the necessity of examining all the other transactions.

(c) For purposes of Subsection (a), written notice is given when the notice is delivered to the person or to the person's authorized agent or attome) of record personally, by telecopier, or by United States mail to the address shown on the mrut recent documents in the transaction. Deposit of the notice as registered or certified mail in a postage paid, properly addressed wrapper in a post office or official deposito!)' under the care and custody of the United States Postal Service is prima facie evidence of the delivery of the notice to the person to whom the no­tice is addressed.

CREDIT(S)

Amended by f,cts 19oq. 76tiJ L.:g .. ch. c;J.. § 7.18(a), cff. ~~pr. !, 1999.

V 20 II Thomson Reuters. No Claim to Orig. US Gov. Works.

http://web2 .westlaw .com/print/printstream. aspx?destination=atp&prid=ia7 4487040000013 02d2c23. .. 5/26/20 11

V.T.C..\., Finance Code§ 305.006

c Effective: September I, 2005

Vernon's Texas Statute.:; and Codes Annot.tteJ Cun ;Jntne~s finance CoJe (Rds & _\nno!s)

Title 4. Regulation of Interest, Loans. and Financed Transactions (R;;fs & .\nnosl Subtitle A. Jnterest (Refs & Annos)

~cl Clnpter 305. Penalties and Remedies "~4 Suoch::pter .\.Civil Liability; Criminal Penalty .. § 305.006. Limitation on Filing Suit

Page I

(a) An action under this chapter must be brought within four years after the date on which the usurious interest was contracted for, charged, or received. The action must be brought in the county in which:

(I) the transaction was entered into;

(2) the usurious interest was charged or received;

(3) the creditor rc~idcs at the time of the cause of action, if the creditor is an individual;

(4) the creditor maintains its principal office, iftht creditor is not an individual; or

(5) the obligor resides at the time ofthe accrual ofthe cause of action.

(b) Not later than the 6lst da} before the date an obligor files a suit seeking penalties for a transaction in which a creditor has contracted for, charged, or received usurious interest, the obligor shall give the creditor written notice stating in reasonable derail the nature and amount of the violation.

(c) A creditor who receives a notice under this section may correct the violation as provided by s~ ctioil 305.103 during the period beginning on the date the notice is received and ending on the 6.0th day after that date. A cred­itor who corrects a violation as provided by this section is not liable to an obligor for the violation.

(d) With respect to a defendant filing a counterclaim action alleging usurious interest in an original action by the creditor, the defendant shall provide notice complying with Subsection (b) at the time of filing the counterclaim and, on applil.:ation of the creditor to the court, the action is subject to abatement for a period of 60 days from the date of the court order. During the abatement period th~ creditor may correct a violation. As part of the cor-

~ 201 I Thomson Reuters. No Claim to Orig. US Gov. Works.

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V.T.C.A., Finance Code§ 305.006 Page2

rection of the violation, the creditor shall offer to pay the obligor's reasonable attorney's fees as determined by the court based on the hours reasonably expended by the obligor's counsel with regard to the alleged violation before the abatement. A creditor who corrects a violation as provided by this subsection is not liable to an oblig­or for the violation.

CREDIT(S)

Added by Acts lit9(), 76lh L~g., ch. 62, § 7. 18(a). ~rf S~pt. l. 1999. Amended by Acts 2005, 791.h L.::g., ch. I 0 18, ' :!.07, .:~1: Sept. I, ' !005.

HISTORICAL AND STATUTORY NOTES

2006 Main Volume

Acts 2005, 79th Leg., ch. 1018 in subsec. (b) substituted ", charged, or received usurious interest" for "or charged usurious interest", and rewrote subsec. (d) which prior thereto read:

"(d) The notice requirement of Subsection (b) does not apply to a defendant filing a counterclaim action alleging usurious interest in an original action b} the creditor."

Prior Laws:

Rev.Civ.St.l895, art. 3106.

Acts 1907, 30th Leg., p. 277.

Rev.Civ.St. l9 I 1, art 4982.

Acts l 963, 58th Leg., p. 550, ch. 205, § 28.

V\!iOO.l's :\nn.Civ.St. J at. )U73.

Acts 1967, 60th Leg., p. 610, ch. 274, § 2.

Acts 1979, 66th Leg., p. 604, ch. 281, § 1.

Vcm_;,n's, \nn.Civ.St. art . . '>069-1 .06(3).

Acts 1997, 75th Leg., ch. 1008, § I.

V.T.C.A., Finun,:~ Co<.ll' § 305.00~.

LAW REVIEW COMMENT ARIES

;.J 20 I 1 Thomson Reuters. No Claim to Orig. US Gov. Works.

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Appendix Tab B

Plaintiff's Response to Defendant Brenda S. Lagow' s Amended Motion for Partial Summary Judgment (filed February 15, 201 0), including its Exhibits 1

and 2 (the Second and Third Affidavits of John L. Roach)(SCR _)

':""" • .., , 9! - ~ · ,' • f:• ., :·u .; ,. c ,, ..,

No. 08~11922-F

NANCY B. HAMON, by and through her Agent and Attorney-in-Fact, John L. Roach,

§ § § § § § § § § § § § §

2010 FE3 15 :.H 1: 38

1N THE DIS'foRlCT COURT ~~. ; : :.: i ~· . . .

G/.lJ . . : : .; .. t ~/. -:

.. . :';r' J ·y

Plaintiff

v. 116m JUDICIAL DISTRICT

R. MICHAEL LAGOW and BRENDA S. LAGOW,

Defendants. DALLAS COUNTY, TEXAS

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT

TO THE HONORABLE JUDGE OF SAID COURT:

Plaintiff Nancy B. Hamon, by and through her Agent and Attorney-in-Fact, John L. Roacl1

(the "Plaintiff'~, files this his Response to Defendant Brenda S. Lagow's Amended Motion for

Partial Summary Judgment (the "Response''), and for the same would respectfully show the Court

as follows:

I. Objections to Movant's Purported "Evidence"

1.1. fu her Amended Motion for Partial Summary Judgment (the "MSJ"), Brenda S.

Lagow (the "Movant" or "Brenda") purports to rely on a number of materials listed on pages 2-3 of

the MSJ. To the extent that Movant contends that same represent competent summary judgment

evidence, Plaintiff hereby objects to same on the following bases. Plaintiff objects to all of the

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Pagel

pleadings listed in MSJ § l.S(A) through (0), except to the extent that Defendants' pleadings

represent judicial admissions and admissions against Defendants' interest. Otherwise, such

pleadings cannot constitute competent summary judgment evidence to support the MSJ. Plaintiff

prays that the Court strike any and all such references in the MSJ to any such pleadings to the extent

that same are argued to constitute competent summary judgment evidence. Plaintiff further objects

to the Original Petition referenced in§ l.S(A) of the MSJ because said Original Petition has been

completely supplanted and replaced by Plaintiff's First Amended Original Petition filed herein on

or about November 12, 2008. Similarly, Plaintiff objects to the Motion for Partial Summary

Judgment referenced in §§ 1.5{G) and (J) of the MSJ because said document has been completely

supplanted and replaced by the instant Amended MSJ.

1.2. Plaintiff further objects to the entire MSJ because it admits, in § 1.2 thereof, that the

instant MSJ is based upon "the First Amended Counterclaim of Defendant Brenda S. Lagow," a

pleading that has been completely supplanted and replaced by a subsequent amended pleading of this

Defendant; consequently, there is no operative, effective pleading to support this MSJ, and it should

be summarily denied.

1.3. Plaintiff further objects to the factual allegations contained in MSJ § 2.2 regarding

advances allegedly used in colUlection with Michael Lagow's business and that such funds were

advanced only after Michael Lagow submitted a business plan because Defendants have no live

pleading making or supporting these allegations. Since any summary judgment motion must be

based upon contentions set out in the movant's live pleading, Plaintiff moves to strike such

unsupported allegations in said § 2.2, after which this MSJ should be summarily denied.

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Page2

II. Summary Judment Evidence

2.1. Plaintiff's Response is supported by the following competent summary judgment

evidence, aU of which is incorporated herein by reference:

1. Defendants' First Amended Answer; Defendant's First Supplemental Answer; and First and Second Amended Counterclaims of Defendant Brenda S. Lagow; all of same only as to the specific judicial admissions and admissions-against-interest referenced below.

2. Plaintiff's Motion for Partial Summary Judgment and Plaintiff's No-Evidence Motion for Summary Judgment (both of which were filed herein on or about January 8, 20 I 0), including especially the Affidavit of John L. Roach in Support ofPlaintiffs Motion for Partial Summary Judgment (the "First Roach Affidavit") attached as Exhibit A to said Plaintiffs Motion for Partial Summary Judgment.

3. Plaintiff's First Amended Original Petition; Plaintifrs Amended Answer to Defendant's First Amended Counterclaim and Plea in Abatement; Plaintiff's Answer to Defendant's Second Amended Counterclaim and Plea in Abatement; and Plaintiff's Amended First Supplemental Petition and Plea in Abatement.

4. Defendant Brenda S. Lagow's Original and Amended Motions for Partial Summary Judgment and any Reply of said Defendant to this Response, to the extent of said Defendant's judicial admissions and admissions-against-interest referenced below.

5. The Second Affidavit and Third Affidavit of John L. Roach, which are attached hereto as Exhibit 1 and Exhibit 2.

2.2. In accordance with Rule 166a(d), Plaintiff hereby files his statement of intent to use

previously unftled discovery products as summary judgment proof. Such products are referenced

in the above subparagraphs.

lli. Plaintiff's Pleas in Abatement

3 .1. Defendants have failed to comply with the statutory mandates ofTexas Finance Code

§§ 305.006(b) and (c) requiring that, before Defendants may file a claim or defense asserting usury,

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Page3

Defendants must give Plaintiff at least sixty-one ( 61) days advance written notice of same, stating

in reasonable detail the nature and amount of the violation. Thereafter, Plaintiff will have at least

sixty (60) days to correct any such alleged violation before Defendants may~ any such claim or

defense as contained in the First Amended Counterclaim of Defendant Brenda S. Lagow (the

''Counterclaim") filed herein on or about December 31, 2009, upon which the MSJ based, as

admitted by Brenda. MSJ at, 1.2. The same statutory mandates apply to the Original Counterclaim

of Defendant Brenda S. Lagow filed herein on or about September 4, 2009 and the Second Amended

Counterclaim of Defendant Brenda S. Lagow filed herein on or about January 28, 2010. Moreover,

with specific reference to counterclaims, Texas Finance Code§ 305.006(d) specifically mandates

that, "at the time of filing the counterclaim ... the defendant shall provide notice" complying with

subsection (b) above. After the plaintiff has received such complying notice from the defendant

filing the counterclaim, on application by the plaintiff to the court, ''the action is subject to abatement

for a period of60 days." Texas Finance Code§ 30S.006(d).

3.2. Texas courts have specifically applied these statutory requirements to usury claims

and defenses asserted for the first time in ongoing litigation by means of amended pleadings (such

as the instant Counterclaim), and in such situations, abatement of the case is mandatory. Sotelo v.

Interstate Financial Corp., 224 S.W.3d 517, 518-23 (Tex. App.-- El Paso 2007, no pet.). Sotelo

also directs that the amended pleading itself cannot constitute the required statutory notice; a separate

written notice stating in reasonable detail the nature and amount of the violation must be sent to the

creditor, separate and apart from the amended pleading itself. I d.

3.3. Plaintiffhas previously asserted this specific Plea in Abatement in Plaintiffs Answer

and Amended Answer to Defendant's First Amended Counterclaim and Plea in Abatement, in

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Page4

Plaintiff's Original and Amended First Supplemental Petition and Plea in Abatement, and in

Plaintiff's Answer to Defendant's Second Amended Counterclaim and Plea in Abatement, all of

which are incorporated herein by reference. These Pleas in Abatement have previously been set for

hearing before this MSJ on February 4, 2010. Accordingly, the Court should hear these Pleas first,

before considering the MSJ, and the Court should sustain these Pleas in Abatement and order this

case, along with the MSJ bearing, abated for a reasonable time period in which to allow Defendants

the opportunity to comply the statutory mandates referenced above. In the event that Defendants fail

to comply with such statutory requirements within such timeframe, Plaintiff prays that the Court

dismiss the Counterclaim and the MSJ in their entireties, with prejudice.

IV. Judicial Standards Applying to Motions for Summary Jud&ment

4.1. This Response is expressly filed subject to and without waiving those Pleas in

Abatement referenced in § Ill above.

4.2. A claimant's motion for summary judgment may be granted only when the movant's

competent summary judgment evidence conclusively proves all the elements of the movant's cause

of action. Cathey v. Booth, 900 S. W.2d 339, 341 (Tex. 1995). In assessing a motion for summary

judgment, the court must assume that all the non-movant's proof is true. Science Spectrwn, Inc. v.

Martinez, 941 S.W.2d 910-911 (Tex. 1997); Nixon v. Mr. Property Management Company, 690

S.W.2d 546, 548-49 (Tex. 1985). Moreover, the court must indulge every reasonable inference in

favorofthenon-movant. Science Spectrum, 941 S.W.2dat 911;Nixon, 690 S.W.2d at 549. Under

Rule 166a(c), the movant must demonstrate that there is no genuine issue as to any material fact

involved in the elements of the movant's claim and that the movant is entitled to judgment as a

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT PageS

matter of law. In applying this test, the court must resolve all doubts concerning the existence of a

genuine issue of material .fact against the movant. Johnson County Sheriffs Posse, Inc. v. Endsley,

926 S.W.2d 284,285 (Tex. 1996); Nixon, 690 S.W.2d at 548-49.

v. Factual Background

5 .1. Most of the accurate facts regarding the instant MSJ have been adequately sef out in

mf 2-11 ofthe First Roach Affidavit, which are incorporated herein by reference.

5.2. Moreover, with respect to one of the crucial elements of Brenda's Counterclaim for

usury, she has submitted no competent summary judgment whatsoever, as will be demonstrated

below. The essential elements of a claim for usury are: (1) a loan of money; (2) an absolute

obligation that the principal be repaid; and (3) the exaction of a greater compensation than allowed

by law for the borrower's use of the money. First Bankv. Tony 's Tortilla Factory, Inc., 877 S. W.2d

285, 287 (Tex. 1994). On element number 3, Brenda bas submitted no competent summary

judgment whatsoever, so her MSJ must fail as a matter oflaw.

5.3. Additionally, as properly pled by Plaintiff in Plaintiffs First Amended Original

Petition (at , 5.2-5 .5) and Plaintiff's No-Evidence Motion for Summary Judgment (at, 2.2 ), Brenda

executed all of the earlier notes by herself or by her authority leading up to the August 24, 2006

Promissory Notes, and Brenda's execution of said August 24, 2006 Notes constitutes a confirmation

and ratification of those prior notes.

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY .nJDGMENT Page6

VI. ARGUMENTS & AUTHORITIES

A. Plaintiff's Evidence Creates A Fact Issue On the Essential Elements ofBrenda's Usuty Counterclaim

6.1 . As referenced above, the third essential element of a claim of usury requires proof

of the exaction of a greater compensation than allowed by law for the borrower's use of the money.

Brenda's only argument that Plaintiff exacted a greater compensation than allowed by law is her pled

contention that "the renewal and extension of the November 24, 2004 note was apparently

conditioned on her agreement to asswne responsibility for payment of the Apri115, 2004 note."

Counterclaim 1 1.5. The grounds for a summary judgment motion must be fully set out in the

motion and must be founded on grounds contained in the movant's live pleadings. McConnell v.

Southside ISD, 858 S.W.2d 337, 341 (Tex. 1993); Rule 166a(c). The only pleading ground set out

in Brenda's live Counterclaim is that quoted immediately above, that is, that the renewal and

extension of a prior note was "apparently conditioned onH Brenda's agreement to asswne payment

of a different note. This hypothetical allegation does not constitute competent summary judgment

evidence and merely represents speculation, conjecture, and assumption, which cannot constitute

evidence conclusively proving this necessary element of usury.

6.2. Moreover, the only affidavit evidence cited by Brenda to support her MSJ is the First

Roach Affidavit, cited sporadically throughout the MSJ (at ~1 2.3-2.6). Shockingly, Brenda submitS

absolutely no affidavit of herself even purporting to affirmatively state that Plaintiff or Mr. Roach

required Brenda to assume or pay the prior note as a condition of extending her OYerdue note. Under

the applicable law, this omission on Brenda's part defeats the MSJ by itself. Indeed, in the only

Affidavit presented by Brenda herein, she expressly negates the possibility ofPlaintiff or Mr. Roach

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Page 7

expressly requiring her to asswne any prior note as a condition of extending her overdue note when

she admits, with respect to the $300,000.00 note, "I had no discussions with either Nancy Hamon

or JohnL. Roach concerning that note•• and, with respect to the $1,300,000.00 note: "ln.August2006

Michael asked me to sign a note dated August 24, 2006 ... at no time in connection with the

execution of that note (or the other note dated August 24, 2006 in the amount of $1 05,000.00) did

I have any conversations with either Nancy Hamon nor John L. Roach concerning that or any prior

indebtedness owed by Michael., Because Brenda judicially admits that she had no communications

whatsoever with Plaintiff or Mr. Roach concerning either of these questioned notes, Brenda has

submitted absolutely no evidence that Plaintiff or Mr. Roach expressly required her to assume or pay

the debt of another person (including Michael Lagow) as an express condition to the extension of

Brenda's overdue debt. Thus, the MSJ must be swnmarily denied.

6.3. The subject notes themselves do not, on their faces, state a rate of interest exceeding

those rates allowed by law, nor does Brenda claim differently. Moreover, the notes themselves do

not, on their faces, expressly require Brenda to assume or pay the debt of Michael as an express

condition to Plaintiff's extension of Brenda's overdue debt. Brenda's only allegation to support the

third element of usuzy (a greater compensation than allowed by law) is her utterly unsupported

contention that Plaintiff's renewal and extension ofBrenda' s prior note was "apparently conditioned

on" her agreement to assume payment of a separate note. Under Texas Supreme Court authority,

this tenuous allegation fails as a matter of law. In Alamo Lumber Co. v. Gold, 661 S.W.2d 926,928

(Tex. 1983), the Court held that the amount of the allegedly assumed debt could constitute interest

at "a greater compensation than allowed by law" only if the borrower proved that the lender

"required" the borrower "to assume or pay the debt" of an independent third party already owed to

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT PageS

.<•

the lender "as a condition to" the lender's extension of an overdue debt owed by the borrower. 661

S.W.2d at 927. Brenda has submitted absolutely no summary judgment evidence, competent or

otherwise, proving that Plaintiff or Mr. Roach required Brenda to assume or pay a prior note of an

independent third person on which Brenda was not already liable as a condition to extending

Brenda's existing note. Thus, Brenda has utterly failed to submit competent summary judgment

evidence conclusively proving this required element of her usury claim.

6.4. Furthermore, in the Second Affidavit of John L. Roach (the "Second Roach

Affidavit"), at~ 2, Mr. Roach specifically testifies that, during his discussions with Michael Lagow

and Brenda Lagow concerning their affirmative request for an extension of the subject Notes, neither

Plaintiff nor Mr. Roach required Brenda to assume or pay any debt that Michael Lagow owed to

Plaintiff as a condition of extending the due dates on either of those Notes. Indeed, the subject Notes

would have been extended by Plaintiff and Mr. Roach whether or not Brenda agreed to assume or

pay them because the motivating goal of Plaintiff and Mr. Roach at that time was to prevent the

notes from lapsing and their enforcement from being barred by limitations. Third Affidavit of John

L. Roach~ 2. Accordingly, these statements alone create a genuine issue of material fact on an

essential element of Brenda's usury Counterclaim and precludes the grant of her MSJ.

6.5. Moreover, according to the Texas Supreme Court, as a matter of law, when a

borrower is required, as a condition of making or extending a loan, merely to assume and/or pay

another one of his own debts, such requirement cannot constitute usurious interest. Alamo Lumber,

651 S. W.2d at 928. The subject Note(s) that Brenda alleges she was "apparently required to assume"

were, as a matter oflaw, already existing debt of Brenda. Thus, even if she were actually required

to assume that debt (which she was not), same cannot result in usurious interest, as a matter of law.

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Page9

....

6.6. Under at least three different legal precepts, the prior Note(s) that Brenda alleges she

might have apparently been required to assume (but which factually she was not) represent debt on

which Brenda was already liable. First, Brenda and Michael Lagow were married at all relevant

times (First Roach Affidavit~~ 4 & 5; Brenda Affidavit ~2), and if a wife receives any benefit from

a note or contract signed by the husband, the wife is bound by the terms of that note or contract, as

a matter of law. Patel v. Kuciemba, 82 S. W .3d 589, 598 (Tex. App. - - Corpus Christi 2002, pet.

denied); Nationwide of Brian, Inc. v. Dyer, 969 S.W.2d 518, 520 (rex. App. - - Austin 1998, no

pet.). Second, the August 24, 2006 Promissory Notes which Brenda signed constitute ratification

and confirmation of her liability on the prior notes. Patel, 82 S. W.3d at 598. Third, because none

of the prior notes agrees to look solely to the separate estate of Michael Lagow for satisfaction and

payment, those notes represent joint community obligations on which Brenda and Michael Lagow

(and their community property) are jointly obligated. See Mock v. Mock, 216 S. W.3d 3 70, 3 7 4 (Tex.

App. - - Eastland 2006, pet. denied); Cockerham v. Cockerham, 527 S. W.2d 162, 171 (Tex. 1975).

These arguments and authorities are explained more fully in Plaintiffs No·Evidence Motion for

Summary Judgment (at W 2.1 through 2.3) and in Plaintiffs Motion for Partial Summary Judgment

(at ft 3.20 through 3.22), which are expressly incorporated herein by reference.

VII. Conclusion

As discussed above, Brenda has wholly failed to submit any competent summary judgment

evidence conclusively proving at least one of the required elements of her usury claim. Moreover,

Plaintiff has submitted competent summary judgment evidence raising genuine issues of material

fact on at least one of these required elements of Brenda's usury CoWlterclaim. Accordingly,

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY .roDGMENT Page 10

,.

Brenda's MSJ must be denied.

WHEREFORE, PREMISES CONSIDERED, Plaintiff prays that this Court deny Brenda's

MSJ in its entirety, and for such other and further relief, both at law and in equity, to which Plaintiff

shows himself justly entitled.

Respectfully submitted,

~~~hr: Donovan Campbell, J . ~ ~ , State Bar No. 03725300 McCord Wilson State Bar No. 00785266 RADER & CAMPBELL (A PROFESSIONAL CORPORATION) Stemmons Place 2777 Stemmons Fwy., Suite 1125 Dallas, Texas 75207 Telephone No.: (214) 630-4700 Telecopy No.: (214) 630-9996

J. Patrick Bredehoft State Bar No. 00787132 Bredehoft & Associates 2777 N. Stemmons Freeway, Suite 1124 Dallas, Texas 75207 Telephone No.: {214) 819-8085 TelecopyNo.: (214) 630-9996

ATTORNEYS FOR PLAINTIFF

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Page 11

CERTIFICATE OF SERVICE

~ I hereby certify that on this L day of February, 2010, a true and correct copy of the

foregoing document (and any attachments) was forwarded by hand delivery, telecopy transmittal, and/or certified mail, return receipt requested, to all counsel of record, as follows:

Robert H. Renneker, Esq. 1412 Main Street, Suite 21 0 Dallas, TX 75202

VIA CM # 7002 1000 0004 8879 1319

PLAINTIFF'S RESPONSE TO DEFENDANT BRENDA S. LAGOW'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT Page 12

:

No. 08-11922-F

NANCY B. HAMON, by and through her Agent and Attorney-in-Fact, John L. Roach,

Plaintiff

v.

R MICHAEL LAGOW andBRENDA S. LAGOW,

Defendants.

§ § § § § § § § § § § § §

IN 1HE DISTRICT COURT

116m JUDICIALDISTRICT

DAllAS COUNTY, TEXAS

SECOND AFFIDAVIT OF JOHN L ROACH

STATEOFTEXAS § §

COUNTY OF DALLAS §

EXHIBIT

1.

BEFORE ME, the undersigned authority, on this day personally appeared John L. Roach,

who being by me duly sworn on his oath deposed and said:

1. "My name is John L. Roach. I am over twenty-one (21) years of age and am of sound

mind and fully competent to make this Affidavit I have never been convicted of a felony or a crime

involving moral turpitude. I am an attorney licensed by the State of Texas. I currently am .and, at

all relevant times hereto, have been the agent and attorney-in-filet for Nancy B. Hamon, Plaintiff

herein. fn this capacity, I am responsible for the management ofMs. Hamon's financial and business

affairs, and I had personal involvement in the transactions on which this lawsuit is based. This

involvement specifically included participating in the negotiation of the series of loans of monies

from Ms. Hamon to Defendants R. Michael Lagow and Brenda S. Lagow, drafting the Promissory

Notes which the Lagows signed to evidence the loans from Ms. Hamon, and taking actions in an

SECOND AFFIDAVIT OF JOHN L. ROACH Pa,el

.-

effort to collect principal and interest amounts due and owing under the Promissory Notes.

Accordingly, the following facts are within my personal knowledge and are 1rue and correct. I

attach hereto as Exhibit 1 a true and correct copy of the Power of Attorney that I bold from Nancy

B. Hamon; on page 5 thereof appears Nancy B. Hamon's signature, which I know and recognize.

2. Regarding the August 24, 2006 Promissory Notes (as defined and discussed on pages

4·6 of the "Affidavit of John L. Roach in Support of Plaintiff's Motion for Partial Summary

Judgment'' (the "First Roach Affidavit")), during my discussions with Michael Lagow and Brenda

Lagow (the "Lagowsn) in or about August 2006 concerning their affirmative request for an extension

ofboth the $1,000,000.00 Aprill5, 2004 Promissory Note and the $300,000.00 November 24,2004

Promissory Note, neither Nancy Hamon nor I required Brenda Lagow to assume or pay any debt that

Michael Lagow owed to Ms. Hamon as a condition of extending the due dates on either of said

Promissory Notes."

Further Affiant sayeth not.

SUBSCRIBED AND SWORN TO BE certify which witness my hand and official sea .

SECOND AFFIDAVIT OF IOHN L ROACH

ME on thed day of January, 2010, to

Pagel

No. 08-11922-F

NANCY B. HAMON, by and through her Agent and Attorney-in-Fact, John L. Roach,

Plaintiff

v.

R MICHAEL LAGOW and BRENDA S. LAGOW,

Defendants.

§ § § § § § § § § § § § §

IN THE DISTRICT COURT

116m JUDICIAL DISTRICT

DALLAS COUNTY, TEXAS

TIDRD AFFIDAVIT OF JOHN L. ROACH EXHIBIT

STATE OF TEXAS § I.:L §

COUNTY OF DALLAS §

BEFORE .ME, the undersigned authority, on this day personally appeared John L. Roach,

who being by me duly sworn on his oath deposed and said:

1. "My name is John L. Roach. I am over twenty-one (21) years of age and am of sound

mind and fully competent to make this Affidavit. I have never been convicted of a felony or a crime

involving moral turpitude. I am an attorney licensed by the State of Texas. I currently am and, at

all relevant times hereto, have been the agent and attorney-in-fact for Nancy B. Hamon, Plaintiff

herein. In this capacity, I am responsible for the management ofMs. Hamon's financial and business

affairs, and I had personal involvement in the transactions on which this lawsuit is based. Tiris

involvement specifically included participating in the negotiation of the series of loans of monies

from Ms. Hamon to Defendants R. Michael Lagow and Brenda S. Lagow, drafting the Promissory

Notes which the Lagows signed to evidence the loans from Ms. Hamon, and taking actions in an

THffiD AFFIDAVIT OF JOHN L. ROACH Pagel

effort to collect principal and interest amowt.ts due and owing under the Promissory Notes.

A~rdingly, the following facts are within my personal knowledge and are true and correct.

2. Regarding the August 24, 2006 Promissory Notes (referred to as Notes 5 and 6 in

Brenda's MSJ and as defined and discussed on pages 4-6 of the "Affidavit of John L. Roach in

Support of Plaintiff's Motion for Partial Summary Judgment .. (the "First Roach Affidavit")}, during

my discussions and communications with Michael Lagow and Brenda Lagow (tbe "Lagows,.) in or

about August 2006 concerning their affinnative request for an extension of both the $1,000,000.00

AprH 1.5, 2004 Promissory Note and the $300,000.00 November 24, 2004 Promissory Note, neither

Nancy Hamon nor I required Brenda Lagow to assume or pay any debt tbat Michael Lagow owed

to Ms. Hamon as a condition of extending the due dates on either of said Promissory Notes. In fact,

these Notes would have been extended by Ms. Hamon and me whether or not Brenda Lagow agreed

to assume or pay them (or any other debt of Michael Lagow) because the motivating goal of Ms.

Hamon and myself at tbat time was to prevent said earlier Notes from lapsing and their enforcement

from being barred by limitations."

Further Affiant sayeth not.

SUBSCRIBED AND SWORN TO BEF certify wbicb witness my hand and official seal.

TIURD AFnDA VJT OF JOHN L. ROACH

ME on tbe/.J.d_ dayofFebruary, 2010, ro

LJC)A J. OIH.VA.'tt M'f CO+.ut!S!nN £XJIIm

Qltioar ao. 2012

Appendix Tab C

Defendant's Response to Plaintiffs Motion for Partial Summary Judgment (filed January 28, 201 0), including Its Exhibits consisting of the Affidavits of

R. Michael Lagow and Brenda S. Lagow (SCR _)

NANCY B. HAMON, by and through her Agent and Attomey~in-Fact, John L. Roach,

Plaintiff,

NO. 08-11922-F

IN TIIE DISTRICT COURT

vs.

§ § § § § § § § § § §

116111 JUDICIAL DISTRICT

R. :MICHAEL LAGOW and BRENDA S. LAGOW,

Defendants. DALLAS COUNTY,_-TEXAS ..

DEFENDANTS' RESPONSE TO PLAINTIFF'S ~ MOTION FOR PARTIAL SUMMARY JUDGMENT ~

-

I ,

Defendants R. MICHAEL LAGOW and BRENDA S. LAGOW file t~their Defeh,4ants' ·-<

Response to Plaintiff's Motion for Partial Summary Judgment and in support thereof would show

the following:

1.0 Scope of the Response.

1.1 This Defendants' Response to Plaintiffs Motion for Partial Summary Judgment is

based on the following pleadings, affidavits, and exhibits on file herein:

A. Plaintiff's Original Petition;

B. Defendants' First Amended Answer;

C. Defendants' First Supplemental Answer;

D. First Amended Counterclaim of Defendant Brenda S. Lagow;

E. Second Amended Counterclaim of Defendant Brenda S. Lagow;

F. Plaintiffs Answer to Defendants' First Amended Counterclaim and Plea in Abatement;

G. Plaintiff's Motion for Partial Summary Judgment and the Affidavit of John L. Roach in Support of Plaintiff's Motion for Partial Summary Judgment;

DEFENDANTS~ RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT- Page 1

H. Defendant Brenda S. Lagow's Motion for Partial Summary Judgment;

I. Defendant Brenda S. Lagow's Response to Plaintiff's No-Evidence Motion for Summary Judgment;

J. the Affidavit of Brenda S. Lagow;

K. the Affidavit ofRobe11 H. Renneker; and

L. this Defendants' Response to Plaintiff's Motion for PartiaJ Summary Judgment.

2.0 Factual Basis of This Response.

2.1 Plaintiff bas brought this action to enforce two promissory notes executed by

Defendants R. Michael Lagow and Brenda S. Lagow on August 24, 2006-one for $1,300,000 and

one for $105,000. The two notes represent the culmination of a series of four prior notes spanning

the course of four years and are surnm.arized as follows:

Date of Note Principal Maker(s) Amount

Note 1 June 12, 2002 $500,000 Michael Lagow

Note2 December 1, 2003 $750,000 Michael Lagow

Note3 Aprill5, 2004 $1,000,000 Michael Lagow

Note4 November 24, 2004 $300,000 Michael Lagow & Brenda Lagow

Note 5 August 24, 2006 $1)300,000 Michael Lagow & Brenda Lagow

Note 6 August 24, 2006 $105,000 Michael Lagow & Brenda Lagow

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT - Page 2

Comments

renewal ofNote I plus advance of additional $250,000

renewal ofNote 2 plus advance of additional $250,000

additional advance of $300,000 for personal expenses

renewal of Note 3 and Note 4

interest on Note 3

The notes listed above are attached to the Affidavit of John L. Roach attached to Plaintiffs Motion

for Partial Summary Judgment. Defendants do not challenge the execution of the notes.

2.2 Defendant Brenda S. Lagow has challenged Plaintiff's claims in this case on the

groWld that the notes charge usurious interest and has asserted a counterclaim seeking recovery for

usurious interest. The evidence is undisputed that Notes I through 3 were for advances that were

made solely to Michael Lagow and were used in connection with his business. In fact, these notes

were executed and the fimds were advanced only after Michael Lagow submitted a business plan to

Plaintiff. Notes 1 through 3 were not executed by Brenda Lagow nor did she receive any of the

funds advanced pursuant to those notes.

2.3 The $300,000 note [Note 4] represents a personal loan to both Michael and Brenda

Lagow of$300,000 that was advanced to maintain the Lagow's lifestyle. [See, Affidavit of John L.

Roach, ~ 5]. Brenda Lagow does not deny the execution of this note or the receipt of the funds

represented by the $300,000 note.

2.4 The $300,000 note [Note 4) matured on March 31, 2005. On August 24, 2006, the

Lagows executed anew note in the principal amountof$1,300,000 [Note 5]. The $1,300,000 note

recited that it was "executed in renewal and extension of the unpaid balances of (i) the note dated

April15, 2004 [i.e., Note 3 ], payable by R. Michael Lagow to the payee herein in the principal sum

of One Million Dollars ($1,000,000) and (ii) the note dated November 24, 2004 [i.e. , Note 4),

payable by the makers hereof to the payee herein in the principal sum ofTirree Hundred Thousand

Dollars." Renewal of the $300,000 note on which Brenda Lagow was obligated was therefore

expressly conditioned on her assuming the obligation for the repayment of the $1,000,000 executed

solely by Michael Lagow.

DEFENDA.m'S.~ RESPONSE. TO-PLAINTIFF'S MOTION. FOR PARTIAL SUMMARY JUDGI\.IENT - Page 3

2.5 In addition to the $1,3 00,000 note, the Lagows were required to execute a note in the

amountof$105,000 [i.e., Note 6], which wasfortheoutstandinginterestdueonNotes3 and4. [See

Affidavit off John L. Roach,~~ 6 -7]. The $105,000 note recited that it was "executed in renewal

and extension of the \mpaid interest accrued to the date hereof on (i) the note dated April 15, 2004

[i.e., Note 3], payable by R. Michael Lagow to the payee herein in the principal sum of One Million

Dollars ($1, 000, 000) and (ii) the note dated November 24, 2004 (i.e., Note 4 ], payable by the makers

hereof to the payee herein in the principal sum of Three Hundred Thousand Dollars." Renewal of

the $300,000 note Brenda Lagow was obligated on was therefore further expressly conditioned on

her assuming the obligation for the repayment of the interests due on the $1,000,000 executed solely

by Michael Lagow.

2.6 According to the affidavit of John L. Roach, Plaintiff has charged Defendant Brenda

S. Lagow the following sums of interest through August 3 I, 2009:

"Principal" on Note 5 dated August 24,2006: • interest through December 31, 2006: • interest from January I, 2007 through August 31, 2009:

"Principal" on Note 6 dated August 24, 2006: • interest through December 31, 2006: • interest from January 1, 2007 through August 31, 2009:

Total "principal" and interest charged by Plaintiff:

$ 1,300,000.00 27,567.12

353,532.94

$105,000.00 2,226.57

28.554.56

$ 1,816.881.19

[These numbers are derived from the Affidavit of John L. Roach, 1~ 9 and 10]. Deducting the

principal amount of the November 24, 2004 note [Note 4] that represented an actual advance to

Brenda Lagow, it is clear from Plaintiff's own proof that Brenda Lagow was charged interest of

$1,516,881.19 from November 24, 2004 through August 31,2009.

DEFENDANTS' .RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDG:MENT - Page 4

2. 7 The maximum amount of interest that Plaintiff could charge Brenda Lagow was 18%

per annum. For the period from November 24, 2004 through August 31, 2009, the maximum

amount of interest that could be charged on the $300,000.00 note at 18% per annum, compounded

annually, is $331,946.53. The excess interest charged by Plaintiff is $1,1 84,934.66, which is more

than three times the amount that could be lawfully charged.

3.0 Objections to the Affidavit of John L. Roach.

3.1 Defendants object to Paragraph 6 of the Affidavit of John L. Roach where be states:

... both Michael Lagow and Brenda Lagow agreed to sign new Promissory Notes: under which Brenda Lagow confirmed and ratified the principal obligation consisting of the total outstanding principal and interest due on the $1,000,000 Aprill5, 2004 Note; which extended the maturity dates for the principal amounts due and owing under both Notes; and pursuant to which they would agree to pay the outstanding interest due.

The promissory notes signed by the Lagows are the best evidence oftheir terms. None of the notes,

including the $1,000,000 note, recite that they are a ratification of any prior action,. loan, or advance.

Mr. Roach • s statement that the note was a confirmation and ratification by Brenda Lagow is merely

a legal conclusion that is unsupported by any competent summary judgment evidence.

states:

3.2 Defendants also object to Paragraph 7 of the Affidavit of John L. Roach where he

This Note represented for Michael Lagow. a renewal and extension of the principal balances due under the April 15, 2004 Promissory Note (for $1,000,000) and the November 24, 2004 Promissory Note (for $300,000) and, for Brenda Lagow, the confirmation and ratification of the principal obligation consisting (in part) of the $1,000,000 amount and the renewal and extension of the $300,000 amount.

Mr. Roach's statement that the $1,300,000 note was a confirmation and ratification by Brenda

Lagow is merely a legal conclusion that is unsupported by any competent summary judgment

evidence and is contrary to the express language of the $1,300,000 note which carefully recited that

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT - Page 5

the $1,000, 000 note was the payable by Michael Lagow and that the $300,000 note was payable by

both Michael and Brenda Lagow.

3.3 Defendants also object to the additional gratuitous statement contained in the

Affidavit of Jolm L. Roach where be states:

Thls Note [i.e., the $105,000 note] represented, for Michael Lagow, the amount of interest then due and owing under the April 15, 2004 Promissory Note and, for Brenda Lagow, the confirmation and ratification of the principal obligation consisting (in part) ofthe $105,000 amount.

Mr. Roach's statement that the $105,000 note was a confirmation and ratification by Brenda Lagow

is merely a legal conclusion that is unsupported by any competent summary judgment evidence and

is contrary to the express language of the $105,000 note which carefully recited that the $1,000, 000

note was the payable by Michael Lagow and that the $300,000 note was payable by both Michael

and Brenda Lagow.

4.0 There Is No Such Thing As Community Debt.

4.1 In her motion for partial summary judgment, Plaintiff argues that Defendants are

"jointly and severally liable in their personal and community capacities for all monies due and owing

under the August 24, 2006 promissory notes." [Plaintiffs Motion for Partial Summary Judgment,

~ 3.18]. P1aintiffinvokes-incorrectly-''the long-standing presumption that debts contracted during

marriage are presumed to be on the credit of the conununity and, thus, are joint C<>mmunity

obligations," citingMockv. Mock, 216 S.W.3d 370, 374 (Tex. App.-Eastland, 2006, pet denied),

and Cockerham v. Cockerham, 527S.W.2d 162, 171 (Tex. 1975).

4.2 Mock v. Mock, was recently discussed in an article appearing in the January 2010

Texas Bar Journal, T. FEATHERSON AND A. DICKSON, Marital Property Liabilities: Dispelling the

Myth of Community Debt. 13 TEx. BAR J. 16 (2010). In the article, the authors noted that the so-

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT - Page 6

called presumption [that debts contracted during marriage are community debts] doesn't really exist:

"There is no presumption that debts contracted during the marriage are on the credit of the

community and thus are joint conununity obligations. The correct long-standing presumption is that

property acquired on credit is community property unless the creditor agreed to look only to the

acquiring spouse's separate property for satisfaction., In other words, where the creditor agrees to

look only to a spouse's separate property for repayment, the property acquired by that extension of

credit may be considered as separate property-under the Texas Family Code, there is no such thing

as a community debt. In fact, this "long-standing presumption" flies in the face of Section 3.201 of

the Texas Family Code, which provides that:

Sec. 3201. SPOUSAL LIABILITY. (a) A person is personally liable for the acts of the person's spouse only if:

(1) the spouse acts as an agent for the person; or

(2) the spouse incurs a debt for necessaries as provided by Subchapter F, Chapter 2.

(b) Except as provided by this subchapter, community property is not subject to a liability that arises from an act of a spouse.

(c) A spouse does not act as an agent for the other spouse solely because of the marriage relationship.

In the present case, the undisputed summary judgment evidence establishes that the first $1,000,000

that was advanced by Plaintiff was advanced solely to Michael Lagow. Brenda Lagow did not sign

any of the notes until she signed the November 24, 2004 note for $300,000. The $1,000,000

advanced to Michael Lagow was advanced after he had submitted a business plan to Plaintiff and

the proceeds were used in the operation ofhis business, which was his sole management community

property. The first $1 ,000, 000 advanced by Plaintiff was not for necessaries and therefore Brenda

-DEFENDANTS'. RESPONSE TO PLAINTIFF'S MOTION. FOR PARTIAL SUMMARY JUDG.MENT - Page 7

, . ........... ,

Lagow is not personally liable for the first $1,000,000 advanced by Plaintiff to Michael Lagow.

4.3 The evidence is also undisputed that Michael Lagow was not acting as agent for

Brenda Lagow when he executed the notes for the first $1,000,000 advanced. The notes are all

signed solely by him and there is no indication that be was acting in any sort of representative

capacity. There is no evidence before the court that Michael Lagow was acting as agent for Brenda

Lagow in connection with the $1,000,000 note, the $300,000 note, or the $1,300,000 note.

4.4 Contrary to the conclusory assertions contained in the Affidavit of John L. Roach,

Brenda Lagow never ratified any conduct on Michael Lagow's part in connection with the

$1,000,000 note. In fact, both the $1,300,000 note and the $105,000 evidence two separate

obligations by stating that the notes were executed in renewal and extension of the unpaid balances

and interest due "of (i) the note dated April 15, 2004, payable by R. Michael Lagow to the payee

herein in the principal sum of One Million Dollars ($1,000,000) and (ii) the note dated November

24,2004, payable by the makers hereof to the payee herein in the principal sum of Three Hundred

Thousand Dollars.'' Reference to two separate obligatioD£-One by Michael Lagow individually and

the other by Michael Lagow and Brenda Lagow jointly-is an express recognition of two separate

obligations, not a ratification by Brenda Lagow that Michael Lagow ever acted as an agent on her

behalf. In fact, the only summary judgment evidence presented on this topic is Brenda Lagow's

testimony that she was not involved with any of the loans leading up to the $1,000,000 note, the use

of the proceeds, or any attempt by Michael Lagow to act on her behalf Therefore, there is no

summary judgment evidence before the court that Michael Lagow was acting as an agent on behalf

of Brenda Lagow or that she ever ratified any such conduct.

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMJ\1ARY JUDGMENT - Page 8

5.0 Plaintiff Is Not Entitled to Abatement of This Action.

5.1 Plaintiff has asserted in her no-evidence motion summary judgment that Brenda

Lagow carmot prevail on her claim for usury because she has failed to provide written notice of usury

on the "6lst day before Defendants filed said counterclaim" as required by TEx. FIN. CODE ANN.§

305.006. Plaintiffs are incorrect in asserting that a defendant must give 60 days notice prior to

asserting a counterclaim- because usury was raised as a defense and as a counterclaim, the notice

requirements are governed by subparagraph (d) of Section 305.006 which provides that the party

claiming usury may give notice of the offense at the time of the filing of the counterclaim. Brenda

Lagow has complied with all statutory prerequisites to brining this usury claim.

5.2 Although prior notice of usury is not required when asserted as a counterclaim,

Brenda Lagow provided Plaintiff notice of the usury violation on July 29, 2009 by serving

Defendants' First Amended Response to Plaintiff's Request for Disclosure that stated:

By requiring Brenda Lagow to assume the obligation owed by her husband as his separate debt, Plaintiff has charged Brenda Lagow interest in excess of the amount allowed by law. As a result, Plaintiff has forfeited the principal amount of the "loan" to Brenda Lagow, forfeited the interest charged, and is liable to Brenda Lagow for three times the amount of unlawful interest charged, together with attorneys' fees.

S .3 On September 4, 2009 Brenda Lagow filed her original counterclaim, asserting her

usury claim for the first time. On the same date, Defendants served their Defendants' Second

Amended Response to Plaintiffs' Request for Disclosure. In addition to the language contained the

same language as Defendants' First Amended Response to Plaintiff's Request for Disclosure, the

Seconded Amended Response also provided a calculation of Brenda Lagow's damages:

Brenda S. Lagow is seeking the recovery of $2,969,648.1 0. The maximum amount of interest that Plaintiff could charge Defendant Brenda S. Lagow on the $300,000 note from April 15, 2004 through August 24, 2006 was no more than $110,118. By requiring Brenda S. Lagow to assume the obligation evidenced by the

DEFENDANTS' ·RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT - Page 9

April 15, 2004 note, Plaintiff contracted for and charged Brenda S. Lagow $889,882.70 interest in excess of the maximum amount allowed by law. Brenda S. Lagow is entitled to recover from Plaintiff three times the amount of excess interest charged by Plaintiff. Because Plaintiff has charged more than twice the amount of lawful interest, Brenda S. Lagow is also entitled to recover from Plaintiff the sum of $300,000, which is amount of principal of the November 24, 2004 note.

This disclosure was made prior to Defendants having the benefit of John L. Roach's calculations of

interest as asserted in Plaintiffs Motion for Partial Swnmary Judgment, although the underlying

basis for calculation remains the same.

5.4 Section305.006(d)allowsfor-butdoesn'tmandate-a60-dayperiodofabatement

during which period the creditor may correct the violation. The language of§ 305.006(d) is

reproduced below:

(d) With respect to a defendant filing a counterclaim action alleging usurious interest in an original action by the creditor, the defendant shall provide notice complying with Subsection (b) at the time of filing the counterclaim and, on application of the creditor to the court, the action is subject to abatement for a period of 60 days from the date of the court order. During the abatement period the creditor may correct a violation. As part of the correction of the violation, the creditor shall offer to pay the obligor's reasonable attorney's fees as determined by the court based on the hours reasonably expended by the obligor's counsel with regard to the alleged violation before the abatement. A creditor who corrects a violation as provided by this subsection is not liable to an obligor for the violation.

5.5 Plaintiff has received the 60-day period and failed to correct that violation. On

September 22 , 2009 Plaintiff filed Plaintiff's Uncontested First Motion for Continuance of Trial

Setting. In the motion, Plaintiff asserted as the reason for continuance of the trial setting that

Plaintiff has asserted her usury counterclaim on September 4, 2009. As an additional reason for

continuance the Plaintiff stated:

4. In addition, more time is needed for all parties to pursue settlement negotiations and mediation. Some initial settlement inquiries have been made between the parties, but the present trial setting does not allow for significant, substantive settlement negotiations and any potential mediation. While it is

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT - Page 10

premature to anticipate whether full settlement could be reached, even if partial settlement can be accomplished in the near future, any necessary trial could be significantly streamlined. Additional time is necessary to devote to such settlement­mediation efforts, as opposed to consuming that time in trial-preparation activities.

This motion for continuance is an express acknowledgment of Plaintiffs usury claims and an

implicit acknowledgment of Plaintiffs right to cure the violation.

5.6 The court granted Plainti:fPs motion and reset the trial from October 5, 2009 to

February 15,2010, granting Plaintiff a de facto abatement in this case. During that period of time

Plaintiff made no effort to cure the usury violation. In fact, Plaintiff did not raise abatement as a

defensive issue until the date she filed her Plaintiff's Motion for Partial Summary Judgment and

Plaintiff's No-Evidence Motion for Summary Judgment.

5. 7 Abatement is not an absolute prerequisite to asserting a counterclaim for usury and

may be waived. Like the Texas usury laws, the Deceptive Trade Practices Act also contains

provision for notice ofDTP A violations and abatement of actions to cure the violation. In Hines v.

Hash 843 S. W.2d 464 (Tex. 1992), the supreme court held that the defendant waived abatement of

the action by failing to request it in a timely fashion. In Hines, the court noted that while the notice

requirement of the DTP A is clearly mandatory, that feature alone does not determine the

consequences for failing to comply with it. Comparing the DTP A notice provision with similar

provisions in the Medical Liability and Insurance Improvement Act (and a number of other acts), the

court in Hines held that "the purpose of the notice requirement, to encourage pre-suit negotiations

so as to avoid the expense oflitigation, is better served by abating an action filed without notice for

the duration of the statutory notice period to allow the parties to negotiate, than by dismissing the

action altogether." 843 S.W.2d at 468. A request for abatement must be timely. "To be timely, the

request for abatement must be made while the purpose of notice--settlement and avoidance of

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION· FOR PARTIAL SUMMARY JUDGMENT - Page 11

..

litigation expense-remains viable. Thus, defendant must request an abatement with the filing of

an answer or very soon thereafter." 843 S.W.2d at 469. "A defendant who fails to make a timely

request for abatement must be considered to have waived his objection to the lack of notice." Jd

5.8 Plaintiff was placed on notice of the usury violation on July 29, 2009 and again on

September 4, 2009. On September 22, 2009 Plaintiff moved for a "continuance" of this action to

enable the parties to pursue settlement discussions. Tills continuance constitutes an abatement of

this action, and allowed Plaintiff ample opportunity to cure the usury. From July 29, 2009 to present,

neither Plaintiff nor her counsel bas taken any steps to correct the violation. Section 305.006 of the

Texas Finance Code has been satisfied and Plaintiff is not entitled to assert lack of notice or

abatement as a defense to Brenda Lagow's usury counterclaim.

5.9 Even if this court were to hold that Plaintiff has not been offered an ample

opportunity to cure the usury violation, the evidence is Wldisputed that Plaintiffhas waived any right

to abatement she might otherwise have. Plaintiff first raised abatement in Plaintiff's Answer to

Defendant's First Amended CoWlterclaim and Plea in Abatement (filed on January 8, 20 I 0) and in

the contemporaneously-filed Plaintiff's No~Evidence Motion for Summary Judgment (also filed on

January 8, 201 0). Filing a motion for summary judgment seeking the recovery of usurious interest

is inconsistent with seeking an abatement to cure the usury violation, therefore, Plainti:ffhas waived

her right to abate this action by failing to timely request abatement. A summary judgment hearing

is considered to be a trial on the merits. By filing a request for abatement concurrently with a motion

for suminazy judgment and a no~ evidence motion for summary judgment, Plaintiff has essentially

waited until the time of trial to seek abatement. Defendants have been prejudiced by this delay and

have been forced to respond to both motions for sununary judgment and to file a counter motion for

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT- Page 12

summary judgment. This is the type of polarization that a prompt request for abatement would

avoid. A summary judgment is considered a trial setting and waiting until the time of trial to request

abatement is not timely. Consequently, Plaintiff has, as a matter of law, waived any right to

abatement of this action under§ 305.006 of the Texas Finance Code.

6.0 Usury Renders the Notes Unenforceable as a Matter of Law.

6.1 A lender who requires as a condition to making a loan that a borrower assume a third

party's debt, as distinguished from a requirement that the borrower pay another of his own debts,

must include the amount of the third party's debt in the interest computation. Alamo Lumber Co.

v. Gold, 661 S.W.2d 926, 928 (fex. 1983). As noted above, Brenda Lagow had no liability for

$1,000,000 note executed by her husband, Michael Lagow. When determining the interest charged

Brenda Lagow under the $300,000 note, the amount of principal and interest associated with the

$1,000,000 note and the $105,000 note must be included in the interest computation. In this case,

including the $1,000,000 note, the $105,000 note, and the post maturity interest charged by Plaintiff,

it is clear that Plaintiffhas charged Brenda Lagow more than twice the amount ofinterest authorized

by law.

6.2 Defendant moves that the court take judicial notice that the maximum amount of

interest that Plaintiff could charge under the note was 18% per annum. See, published rates of the

Texas Office of Consumer Credit Conunissioner.

6.3 A creditor who contracts for, charges, or receives interest that is greater than the

amount authorized by the Texas Finance Code is liable to the obligor for an ammmt that is equal to

the greater of: (1) three times the amount computed by subtracting 1he amount of interest allowed

by law from the total amount of interest contracted for, charged, or received; or (2) $2,000 or 20

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT - Page 13

percent of the amount of the principal, whichever is less. TEx. FJN. C ODE ANN. § 305.001 . In

addition, a creditor who charges and receives interest that is greater than twice the amount authorized

by this subtitle is liable to the obligor for: (1) the principal amount on which the interest is charged

and received; and (2) the interest and all other amounts charged and received.

6. 4 Defendant Brenda Lagow is entitled to recover from Plaintiff three times the amount

of excess interest charged by Plaintiff($1,184,934.66 x 3 = $3,554,803.98). TEX. FIN. CoDE ANN.

§ 305.00l(a)(l). Because the interest charged by Plaintiff is more than twice the lawfuJ rate, Brenda

Lagow is also entitled to recover the principal amount on which the interest is charged and received

($300,000), and the interest and all other amounts charged and received ($1,516.881.19).

6.5 In addition, a creditor who bas charged usurious interest is also liable to the obligor

for reasonable attorney's fees set by the court. True FIN. CODE ANN. § 305.005.

6.6 Because the $1,300,000 note and the $105,000note were usurious, in addition to the

statutory penalties, the transactions are against public policy and unenforceable as a matter oflaw.

7.0 A Fact Issue Exists on the Issue of Attorneys' Fees.

7.1 Plaintiff is also seeking the recovery of attorneys' fees in this case, supported by the

Affidavit of Donovan Campbell, Jr.

7.2 Defendants object to the Affidavit of Donovan Campbell, Jr. on the ground that is is

vague and ambiguous and fails to segregate (other than in a conclusory fashion) the fees charged for

seeking recovery on the notes rather than defending the usury counterclaim. In addition, Defendants

object to the affidavit to the extent that it purports to rely on the hearsay business records of

Bredehoft & Associates.

7.3 Campbell's evidence of attorneys' fees is also controverted by the Affidavit ofRobert

DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION FOR PARTIAL SUI\1MARY JUDGMENT- Page 14

H. Renneker. Therefore, a fact issues exists concerning the reasonableness and necessity of

Plaintiffs attorneys' fees in this case.

WHEREFORE, Defendants R. Michael Lagow and Brenda Lagow pray that the court

overrule Plaintiff's Motion for Partial Summary Judgment and Plaintiff's No-Evidence Motion for

Summary Judgment, that it grant Defendant Brenda S. Lagow's Motion for Partial Summary

Judgment and award her damages for Plaintiffs usury violation in the amount of$5,3 71,685.17, and

that Defendants have such further relief to which they may be entitled.

Rob H. Reoneker Texas Bar No. 16778800

1412 Main Street Suite 210 Dallas, Texas 75202 (214) 742-7100 (214) 742~7110 (telecopier) E-Mail: renneker@verizon.net

AITORNEY FOR DEFENDANTS

CERTIFICATE OF SERVICE

A true and correct copy of the foregoing Defendants' Response to Plaintiff's Motion for Partial Summary Judgment, together with the Affidavits ofR. Michael Lagow, Brenda Lagow, and Robert H. Renneker, was served on the attorneys for the Plaintiff, Mr. Donovan Campbell, Jr., Rader & Campbell, 2777 Sternmons Freeway, Suite 1125, Dallas, Texas 75207, and Mr. J. Patrick Bredeho.ft, Bredehoft & Associates, 2777 Stemmons Freeway, Suite I 125, Dallas, Texas 7 07, by hand delivery on this the 28th day of January, 2010

DEFENDANTS' RESPONSE TO PLAINTIFF'S. MOTION · FOR PARTIAL SUMMARY JUDGMENT - Page 15

NANCY B. HAMON, by and through her Agent and Attorney-in-Fact, Jolm L. Roach,

Plaintiff,

vs.

R. MICHAEL LAGOW and BRENDA S. LAGOW,

NO. 08-11922-F

Defendants.

§ § § § § § § § § § §

IN THE DISTRICT COURT

I 16TH JUDICIAL DISTRICT

DALLAS COUNTY, TEXAS

AFFIDAVIT OF R. MICHAEL LAGOW

STATE OF TEXAS § §

COUNTY OF DALLAS §

BEFORE ME, the undersigned authority, on this day personally appeared R. Michael Lagow

who, being duly sworn deposes and says:

1. My name is R. Michael Lagow. I am one of the Defendants in the above-styled and

numbered cause. I am over twenty-one years of age and am of sound mind and fully competent to

make this affidavit, the facts of which are within my personal knowledge and are tn\e and correct.

2. I am married to Brenda S. Lagow, the other defendant in this action.

3. In 2002, Nancy Hamon offered to advance me money for use in my business. At her

request, I submitted a business plan for her and John L. Roach to review. Between June 12, 2002

and Apri115, 2004, Nancy Hamon advanced the sum of$1,000,000 to me. These advances are

evidenced by promissory notes that I signed on June 12, 2002 for $500,000 (representing the initial

advance); on December 1, 2003 (representing a renewal of the June 12,2002 note plus the advance

of an additional $250,000), and on April I 5, 2004 for $1,000,000 (representing a renewal of the

AFFIDAVIT OF R. MICHAEL LAGOW- Page I

December I, 2003 note plus the advance of an additional $250,000). I invested and used the funds

evidenced by the three notes in my business, Systems Group. Each of the notes was submitted to

me by Jolu1 L. Roach and I had no input in their terms and conditions.

4. Brenda Lagow was not involved in any of the transactions in which the $1,000,000

in funds was advanced to me. Other than providing accounting services through her separate

business, The Lagow Group, Brenda has never been involved in the operations of Systems Group,

has never served as an officer or director of Systems Group, and has never exercised any role in the

management of Systems Group. Within our marriage, Systems Group is, and always has been, my

sole responsibility.

5. On November 24, 2004 Nancy Hamon advanced another $300,000, this time to me

and my wife, Brenda Lagow. John L. Roach presented a note to me for us to sign. TI1is note was

dated November 24, 2004 in the original principal amount of $300,000.

6. Brenda Lagow and I were unable to repay the $1,000,000 note and the $300,000 note

when they matured. John L. Roach wrote me on August 22, 2006 that he and Ms. Hamon had

discussed the status of the two notes and could not continue with the notes in past due status.

Enclosed with his letter was a renewal note for $1,300,000. Mr. Roach stated in his letter: "I am

enclosing a form of renewal note dated August 24, 2006, which renews both ofthe existing notes."

Brenda and 1 signed the note as submitted by Mr. Roach without discussion and returned it to him.

A copy of Mr. Roach's letter enclosing the $1,300,000 note is attached to this affidavit as Exhibit

A.

7. Because I was unable to pay the interest that was outstanding on my debt to Ms.

Hamon, Mr. Roach prepared and submitted a separate note for $1 05,000. This note was for interest

on the $I ,000,000 note. A copy of Mr. Roach's letter dated October 13, 2006 transmitting the

AFFIDAVIT OF R. MICHAEL LAGOW - Page 2

$105,000 note is attached hereto as Exhibit B.

8. At the time Brenda and I executed the $1,300,000 note and the $105,000, we were

unable to repay t11e either the $1,000,000 note or the $3000,000 note, and were i11 no position to

negotiate the te1ms of renewal. The $1,300,000 note and the $105,000 note were presented to us as

a "take it or leave it" proposition.

9. To the best of my knowledge, Brenda Lagow never had any discussions or

negotiations with Nancy Hamon or John L. Roach conceming the four notes that I executed, the

$1,300,000 note, or the $105,000 note, or any of the funds that were advanced.

Further Affiant sayeth not.

SUBSCRIBED AND SWORN TO BEFORE ME on 's the 28th day of January, 2010/;

JOSEPH L ROSENFIELD Notary Public

STATE OF TEXAS My Comm. Ellp.Apr.16. 2013

AFFIDAVIT OF R. MICHAEL LAGOW- Page 3

./'

y Commission Expires:

JOHN L. ROACH, INc. A P:llol"ESSlONAL Co.aPO&&:ri ON

ATTO;Rzn;:YS KX LAW

4150 LINCOLN PLAZA

soo NOR"IH .Ax.uiD

DALLAS, TEXAS 75201

August 22, 2006

PERSONAL AND CONFIDENTIAL

Mr. R . Michael Lagow C/0 Systems Group, Inc. 3102 Oak Lawn Avenue Suite 700 Dallas, Texas 75219

Dear Michael :

Tll:tEl'liONE

(2!4) 922·98:!0

TELECOPT

(2!4) 9:13-1.965

B·MA.n. jlr.itlc@oinnw.net

Mr s. Hamon and I have discussed the status ·of your two notes payable to her. We cannot continue on the books notes that have been past due for the periods these notes have been owing. She has instructed me to have the principal balances of the notes renewed, with the interest now accrued paid to date.

The note in the sum of $1,000,000 is dated April 15, 2004, and was due November 24, 2004. The interest the n owing on such note was paid from the proceeds of the s econd note. Mrs . Hamon has ins true ted me to collect intere st only at the 6% rate owing prior to maturity and not charge interest at the past due or compounded rate s .

Thus, the interest owing on the $1, 000, 000 note as of August 24, 2006, is $105,000 .

The note in the sum of $300,000 is dated November 24, 2004, and was due March 31, 2005. The interest calculated on such note as instructed is $31,500.

Exhibit A

Mr. R. Michael Lagow August 22, 200 6 Page 2

I am enclosing a form of renewal note dated Augus t 24 , 2006, which renews both of the existing notes. Please return to me the fully executed note 1 together with a check t o bring the interest current to such date.

- ------

JLR:ld

Enclosure

cc: Mrs. Nancy B. Hamon

Mr. R. Michael Lagow c/o Systems Group, Inc. 3 1 02 Oal< Lawn A venue Suite 700 Dallas, Texas 75219

Dear Michael:

JoHN L~ RoA.c:s:. INc. 1>.. PRO:PE&stoN.u. Coli.Po&.UlON

ATTO.R.NEYS .&:X LAW

4150 L INCOI.ZI' PLAZA

500 No.:a-r:a: .AxAil.D

DALLAS , T EXAS 75201

October 13,2006

Tlll.EJ'BOifE

(214) 922 · 98~0

TS:Ll!COJ'Y

(214) 9Stl · 196B

.E·M..a..u. jlr.inc@airllltil.nel

Inasmuch as the interest accrued on your two notes payable to Mrs. Hamon is not being paid l am enclosing for execution by you and your wife a note payable to Mrs. Hamon in the sum of $1 0?,000, the amoUnt of such interest, calculated as I advised you. Please return the note to this office on its completion.

JLR/crh

_)f'e;;9y y urs, / ------··--· / .... •/ ,£' ---- -(' .. -,• ..... /~~f.. {/f?-1'.___-------·. . ... --;;! /1. ~ '--Jo~

/ 1/ ( / _ _/

Enclosure

Exhibit B

NANCY B. HAMON, by and through -her Agent and Attorney-in-Fact, John L. Roach,

Plaintiff,

vs.

R MICHAEL LAGOW and BRENDA S. LAGOW,

NO. 08-11922-F

Defendants.

§ § § § § § § § § § §

IN 1HE DISTRICT COURT

I 16TH JUDICIAL DISTRICT

DALLAS COUNTY, TEXAS

AFFIDAVIT OF BRENDA S. LAGOW

STATEOFTEXAS § §

COUNTY OF DALLAS §

BEFORE ME, the undersigned authority, on this day personally appeared Brenda S. Lagow

who, being duly sworn deposes and says:

I. My name is Brenda S. Lagow. I am one of the Defendants in the above-styled and

numbered cause. I am over twenty-one years of age and am of sound mind and fully competent to

make this affidavit, the facts of which are within my personal knowledge and are true and correct.

2. I am married to R. Michael Lagow, the other defendant in this action.

3. During 2002 and through most of2003, Michael Lagow and I were married, but

separated and living apart.

4. At all times material hereto, I own and operate my own business, The Lagow Group,

and through that business provide accounting services to individual, families, sole proprietors, small

businesses. I have owned this business for over seventeen years. My husband is not involved in the

management, business decisions, or affairs of The Lagow Group, which is my sole responsibility.

AFFIDAVIT OF BRENDA S. LAGOW - Page 1

5. Likewise, Michael Lagow has his own business, Systems Group. Although Systems

Group is now a publicly traded company, it started out as a corporation in which he was the sole

shareholder. Other than providing accounting services (i.e., paying bills and generating reports) for

Systems Group, I am not nor have I ever been an officer or director of that company nor am I or have

I ever been involved in the management or control of Systems Group, all of which is handled solely

by Michael (in association with the officers and directors of the corporation).

6. I was not involved in any of the transactions related to or involving the June 12, 2002

note executed by Michael Lagow and payable to Nancy Hamon in the amount of $500,000, the

December 1, 2003 note executed by Michael Lagow and payable to Nancy Hamon in the amount of

$750,000.00, or the April IS, 2004 note executed by Michael Lagow and payable to Nancy Hamon

in the amount of $1,000,000. Based on my discussions with Michael, I learned that the funds

represented by those notes were invested by him in Systems Group.

7. I do not deny the execution of the November 24, 2004 note in the amount of

$300,000, although I had no discussions with either Nancy Hamon or John L. Roach concerning that

note.

8. Michael and I were unable to repay the $300,000 note when it matured. In August

2006 Michael asked me to sign a noted dated August 24, 2006 payable to Nancy Hamon in the

amount of $1,300,000. At no time in connection with the execution of that note (or the other note

dated August 24, 2006 in the amount of $1 05,000) did I have any conversations with either Nancy

Hamon nor John L. Roach concerning that or any prior indebtedness owed by Michael. I never told

either Nancy Hamon or John L. Roach that I was responsible for repayment of the $1,000,000 note

that had previously been signed by Michael or that Michael was authorized to act on my behalf in

borrowing any of the money evidenced by that note.

AFFIDAVIT OF BRENDA S. LAGOW - Page 2

9. I have reviewed the Mfidavit of John L. Roach and the interest he has charged based

on the $1,300,000 note and the $105,000 note through August 31 , 2009. Those charges are

summarized as follows:

"Principal" on the $1,3000,000 note dated August 24, 2006: • interest through December 31, 2006: • interest from January 1, 2007 through August 31, 2009:

"Principal" on the $105,000 note dated August 24, 2006: • interest through December 31,2006: • interest from January I, 2007 through August 31, 2009:

Total amo1.mt charged:

$ 1,300,000.00 27,567.12

353,532.94

$105,000.00 2,226.57

28.554.56

$ 1,816.881.19

10. Asstuning an annual rate of 18%, compounded annually, the interest that would

accrue on $300,000 from November 24, 2004 through August 31, 2009 is $331,946.53. Deducting

the $300,000 principal of the November 24,2004 note and the interest of$331,946.53 from the total

amount charged by John L. Roach leaves the smn of $1,184,934.66.

Further Affiant sayeth not.

SUBSCRIBED AND SWORN TO BEFORE ME on this the 28th day of January, 2010.

JOSEPH L. ROSENFIELD Notary Public

STATE OF TEXAS My Contm. Exp. ~~!·_ 16. 2013 .

AFFIDAVIT OF BRENDA S. LAGOW - Page 3

/ / . .'/

My Commission Expires:_--:ff-0-~--~~;/'---/~3~-

NANCY B. HAMON, by and through her Agent and Attorney-in-Fact, John L. Roach,

Plaintiff,

vs.

R. MICHAEL LAGOW and BRENDA S.LAGOW,

NO. 08-11922-F

Defendants.

§ § § § § § § § § § §

IN THE DISTRICT COURT

116TH JUDICIAL DISTRJCT

DALLAS COUNTY, TEXAS

AFFIDAVIT OF ROBERT H. RENNEKER

STATE OF TEXAS § §

COUNTY OF DALLAS §

BEFORE .ME, the undersigned authority, on this day personally appeared Robert H.

Renneker, who being duly sworn by me on his oath deposed and said as follows:

1. My name is Robert H. Renneker. I am over the age of twenty-one years, duly

competent, and authorized to make this affidavit, the facts of which are within my personal

knowledge true and correct. I am the attorney of record for the Defendants in the above-styled cause.

2. Attached to this affidavit as Exhibit A is a copy of Defendant's First Amended

Response to Plaintiff's Request for Disclosure. I prepared this document and served it on Donovan

Campbell Jr. by fax on July 29,2009.

3. Attached to this affidavit as Exhibit B is a copy of Defendant's Second Amended

Response to Plaintiff's Request for Disclosure. I prepared this document and served it on Donovan

Campbell Jr. by fax on September 4, 2009.

4. I am an attorney practicing law in Dallas County, Texas. I am licensed to practice in

AFFIDAVIT OF ROBERT H. RENNEKER - Page 1

all courts of the State of Texas and have been admitted to practice and have practiced before the

federal district courts in the Northern, Eastern, Southern, and Western Districts of Texas, the Fifth

and Ninth Circuit Courts of Appeal, and the United States Supreme Court. I graduated from the

University ofTexas School ofLaw in 1978 and between 1978 and 1980 served as a briefing attorney

for the Hon. William J. Cornelius, Chief Justice of the Court of Civil Appeals for the Sixth Supreme

Judicial District of Texas.

3. Since November 1978 I have actively practiced law in the State of Texas and am

familiar with legal fees charged in Dallas County, Texas.

4. In arriving at the detennination of whether a fee is reasonable, an attorney must

consider the elements set out in Section 1.04(b)the Texas Disciplinary Rules of Professional

Conduct, including time and labor required to render the services on a client's behalf, the novelty

and difficulty of the questions presented, the skill requisite to perfonn the services properly; the

preclusion of other employment; the fee customarily charged in the locality for similar legal services;

the amount involved and the results obtained; the time limitations imposed by the client or the

circumstances; the nature and length of the professional relationship with the client; the experience,

reputation, and ability of the lawyer or lawyers performing the services; and whether the fee is fLXed

or contingent on results obtained or uncertainty of collection before the legal services have been

rendered.

5. I have reviewed the Affidavit of Donovan Campbell, Jr. with attached invoices for

his flrm and the firm ofBredehoft and Associates. Based on the invoices, it appears that counsel

have accrued fees and expenses in excess of$28,000.00 through the date of Plaintiff's Motion for

Summary Judgment.

AFFIDAVIT OF ROBERT H. RENNEKER - Page 2

6. I have represented the defendant in this case since the suit the date the answer was

filed. Although Plaintiff is seeking the recovery of principal and interest of $1,184,934.66, this is

still just a suit on two promissory notes. Plaintiffs counsel have conducted minimal discovery in

this case and filed one unsuccessful motion to compel discovery. Although this case has been

complicated by Brenda Lagow's counterclaim for usury, that counterclaim was not filed until

September 4, 2009. This case was continued shortly after that filing and other than presenting a

motion for partial summary judgment and a no-evidence motion for summary judgment, there has

been no apparent activity in this case by Plaintiff's counsel since July 2009. In my opinion, a legal

fee in excess of $28,000.00 for filing a petition and motion for summary judgment to enforce two

promissory notes is excessive. A reasonable fee, based on the activity in this case up to the filing

of Plaintiff's motions for summary judgment, is no more than $10,000.00.

4. Further, affiant sayeth not.

SUBSCRIBEDANDSWORNTOBEFOREME,theundersignedauthority,onthisthe28th day of J anuruy, 2010, to certifY which witness my hand and of office.

JO!EPl-1 L. ROSENFIELD Notary Public

STATE OF TEXAS My comm. Exp. Apr. 16. 2013

AFFIDAVIT OF ROBERT H. RENNEKER - Page 3

NANCY B. HAMON, by and through her Agent and Attorney~ in-Fact> John L. Roach,

Plaintiff,

VS.

R. WCHAEL LAGOW and BRENDA S.LAGOW,

NO. 08-11922~F

Defendants.

§ § § § § § § § § § §

IN THE DISTRlCT COURT

116111 JUDICIAL DISTRlCT

DALLASCOUNTY,TEXAS

DEFENDANTS' FIRST AMENDED RESPONSE TO PLAlNTIFF'S REQUEST FOR DISCLOSURE

TO: PlaintinffNancy Hamon, by and through her attorney of record, Mr. Donovan Campbell, Jr., Rader & Campbell, 2777 Stemmons Freeway, Suite 1125, Dallas, Texas 75207

R. MICHAEL LAGOW and BRENDA S. LAGOW, make tllis their Defendants' Response

to Plaintiff's Request for Disclostue and would show the following:

1. The con'ect names of the parties to the lawsuit.

The names of the parties are coiTect1y stated.

2. The name, address, and telephone number of any potential parties.

Defendants are tmaware of any potential parties at this time.

3. The legal theories and, in general, the factua) bases of the responding party's daims and defenses.

Defendants have denied generally the allegations raised in Plaintiffs lawsuit. Defendant Brenda Lagow has also raised an affirmative defense that any notes that were executed by her were without consideration because she was not personally liable on the original note executed by Michael Lagow. By requiring Brenda Lagow to assume the obligation owed by her husband as lris separate debt. Plaintiff has charged Brenda Lagow interest in excess of the amotmt allowed by law. As a result, Plaintiff has forfeited the principal amount of the "loan'' to Brenda Lagow, forfeited the interest charged, and is liable to Brenda Lagow for three times the amount of unlawful interest charged, together with attmneys' fees.

DEFENDANTS' FIRST AMENDED RESPONSE.TO. .: PLAINTIFF,S REQUEST FOR DISCLOSURE - Page 1 . ExhiblfA

4. The amount and any method of calculating economic damages.

Defendants are not seeldng economic damages at the present time.

5. The name, address, and telephone number of persons having lmowledge of relevant facts, and a b1ief statement of each identified person's connection with the case.

Nancy Hamon % Donovan Campbell, Jr. Rader & Campbell 2777 Stenunons Freeway Suite 1125 Dallas, Texas 75207

Ms. Hamon is the Plaintiff in this lawsuit.

John L. Roach % Donovan Campbell, Jr. Rader & CampbeU 2777 Stemmons Freeway Suite 1125 Dallas, Texas 75207

Ms. Roach purports to act as the attorney-in-fact for the Plaintiff in tbis lawsuit.

R. Michael Lagow Brenda S. Lagow 6627 Velasco Dallas, Texas 75214 (214) 828-0703

The Lagows are the Defendants in this lawsuit.

6. For any testifying expert: (1) the expert's name, address, and telephone number; (2) the subject matter on which the expert will testify; (3) the general substance of the expert's mental impressions and opinions and a

brief summary of the basis for them, or if the expert is not retained by, employed by, or otherwise subject to the control of the responding party, documents reflecting such information;

(4) if the expert is retained by, employed by, or otherwise subject to the control of the responding party:

D.EFENQ.t\Nf.S, :FIR~:r Al\1EMDED.RESP.QN.SE 1:.0 PLAINTIFF'S REQUEST FOR DISCLOSURE - Page 2

(A) all documents, tangible things, reports, models, or data compilations that have been provided to, reviewed by, or prepared by or for the expert in anticipation of the expert's testimony; and

(B) the expert's current resume and bibliography.

Robert H .. Renneker The Adolphus Tower 1412 Main Street, Suite 210 Dallas, Texas 75202 (214) 742-7100

Robert H. Renueker is Defendants' counsel and may be called to render an opinion concerning the reasonableness and necessity of attorney's fees incmred in tllis case. Renneket's testimony, if any, will be based on the number of hours and services rendered on behalf of a party and the factors generally considered in determining a reasonable fee, namely the elements set out in Section 1.04(b)the Texas Disciplinary Rules of Professional Conduct, including time and labor required to render the services a client's beha.l.f. the novelty and difficulty of the questions presented, the skill requisite to perform the services properly; the preclusion of other employment; the fee customarily charged in the locality foJ similar legal services; the amount involved and the results obtained; the time limitations imposed by the client or the circumstances; the nature and length of the professional relationship with the client; the experience, reputation, and ability of the lawyer or lawyers perfonning the services; and whether the fee is fixed or contingent on results obtained or unce1tainty of collection before the legal services have been rendered.

Robert H. Rennelrer is a 1978 graduate oftbe University of Texas School ofLaw. Between 1978 and 1980 he served as a briefing attorney for the Court of Civil Appeals for the Sixth Supreme Judicial District of Texas. Renneker has been actively engaged in the practice of law in Dallas County, Texas (and throughout the State of Texas) since 1980 and is rated "av'' by Martindale Hubbell. Renneker is admitted to practice before all the courts in the State of Texas, the United States District Courts for the Northem, Eastern, Southem, and Westem Districts of Texas, the Fifth and Nn1th Circuit CoUrts of Appeals, and the United States Suprenie Court."

7. Any discoverable indemnity and insuring agreements.

None.

8. Any discoverable settlement agreements.

Norie.

9. Any discoverable witness statements.

None.

DEFENDANTS' FIRST .Al\1ENDED RESPONSE TO . ; .... PLAINTIFF'S REQUEST FOR DISCLOSURE - Page 3

10. In a suit alleging physical or mental injury and damages from the occurrence that is the subject of the case, all medical records and bills that are reasonably related to the injuries or damages asserted or, in lieu thereof, an authorization permitting the disclosure of such medical records and bills.

Not applicable.

11. In a suit alleging physical or mental injury and damages from the occurrence that is the subject of the case, all medical records and bills obtained by the responding party by virtue of an authorizntion furnished by the requesting party.

Not applicable.

12. The name, address, and telephone number of any person who may be designated as a responsible third party.

Defendant is tmawm:e of any responsible third party at the present time.

1412 Main Street Suite 210 Dallas, Texas 75202 (214) 742-7100 (214) 742-7110 (teiecopier) E-Mail: rem1eker@verizou.net

ATTORNEY FOR DEFENDANTS

DEFENDANTS' Fm.ST.Al\1ENDED RESPONSE TO PLAINTIFF'S REQUEST FOR DISCLOSURE - Page 4

CERTIFICATE OF SERVICE

A true and correct copy of the foregoing Defendants' First Amended Response to Plaintiffs Request for Disclosure was served on the attorney for the Plaintiff, Mr. Donovan Campbell, Jr., Rader & Campbell,_2777 Stemmons Freeway, Suite ? Dallas, Texas 75207 b telecopy and regular mail on this the 29th day of July, 2009.

DEFENDANTS' FIRST AMENDED RESPONSE TO PLAINTIFF'S REQUEST FOR DISCLOSURE - Page 5

NANCY B. HAMON, by and through her Agent and Attorney-in-Fact, John L. Roach,

Plaintiff,

VS.

R.NflCHAELLAGOWandBRENDA S. LAGOW,

NO. 08-1 1922-F

Defendants.

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IN THE DISTRICT COURT

116TH JUDICIAL DISTRICT

DALLAS COUNTY, TEXAS

DEFENDANTS' SECOND AMENDED RESPONSE TO PLAINTIFF'S REQUEST FOR DISCLOSURE

TO: PlaintiffNancy Hamon, by and through her attorney of record, Mr. Donovan Campbell, Jr., Rader & Campbell, 2777 Stemmons Freeway, Suite 1125, Dallas, Texas 75207

R MICHAEL LAGOW and BRENDA S. LAGOW, make this their Defendants' Response

to Plaintiff's Request for Disclosure and would show the following:

1. The correct names of the parties to the Jawsuit.

The names of the parties are correctly stated.

2. The name, address, and telephone number of any potential parties.

Defendants are unaware of any potential parties at this time.

3. The legal theories and, in genera), the factual bases of the responding party's claims and defenses.

Defendants have denied generally the allegations raised in Plaintiff's lawsuit Defendant Brenda Lagow has also raised an affirmative defense that any notes that were executed by her were without consideration because she was not personally liable on the original note executed by Michael Lagow. By requiring Brenda Lagow to asswne the obligation owed by her husband as his separate debt, Plaintiff has charged Brenda Lagow interest in excess of the amount allowed by law. As a result, Plaintiff has forfeited the principal amount of the "loan" to Brenda Lagow, forfeited the interest charged, and is liable to Brenda Lagow for three times the amount of unlawful interest charged, together with attorneys, fees.

DEFENDANTS'. SECOND AMENDED RESPONSE TO PLAINTIFF'S REQUEST FOR DISCLOSURE- Page 1 Exhibit a· ··-

4. The amount and any method of calculating economic damages.

Brenda S. Lagow is seeking the recovery of$2,969 ,648 .1 0. The maximwn amollllt of interest that Plaintiff could charge Defendant Brenda S. Lagow on the $300,000 note from April 15, 2004 throughAugust24, 2006 was no more than $110,118. By requiring Brenda S. Lagow to assume the obligati<;>n evidenced by the April 15, 2004 note, Plaintiff contracted for and charged Brenda S. Lagow $889,882.70 interest in excess of the maximum amoWlt allowed by law. Brenda S. Lagow is entitled to recover from Plaintiff three times the amount of excess interest charged by Plaintiff. Because Plaintiffhas charged more than twice the amount of) awful interest, Brenda S. Lagow is also entitled to recover from Plaintiff the sum of$300,000, which is amount of principal of the November 24, 2004 note.

5. The name, address, and telepl10ne number of persons baving knowledge of relevant facts, and a brief statement of each identified person's connection witb the case.

Nancy Hamon %Donovan Campbell, Jr. Rader & Campbell 2777 Stenunons Freeway Suite 1125 Dallas, Texas 75207

Ms. Hamon is the Plaintiff in this lawsuit

John L. Roach % Donovan Campbell, Jr. Rader & Campbell 2777 Stemmons Freeway Suite 1125 Dallas, Texas 75207

Ms. Roach purports to act as the attorney-in-fact for the Plaintiff in this lawsuit

R. Michael Lagow Brenda S. Lagow 6627 Velasco Dallas, Texas 75214 (214) 828-0703

The Lagows are the Defendants in this lawsuit.

DEFENDANTS' SECOND AMENDED RESPONSE TO PLAINTIFF,S REQUEST FOR DISCLOSURE - Page 2

6. For any testifying expert: (1) the expert's name, address, and telephone number; (2) the subject matter on which the expert will testify; (3) the general substance of the expert)s mental impressions and opinions and a

brief summary of the basis for them, or if the expert is not retained by, employed by, or otherwise subject to the control of the responding party, documents reflecting such information;

(4) if the expert is retained by, employed by, or otbenvise subject to the control of the responding party: (A) a]) documents, tangible things, reports, models, or data compilations that

have been provided to, reviewed by, or prepared by or for the expert in anticipation of the expert's testimony; and

(B) the expert's current resume and bibliography.

Robert H. Renneker The Adolphus Tower 1412 Main Street, Suhe 210 Dallas, Texas 75202 (214) 742-7100

Robert H. Renneker is Defendants' counsel and may be cailed to render an opinion concerning the reasonableness and necessity of attorney's fees incurred in this case. Renneker's testimony, if any, will be based on the number of hours and services rendered on behalf of a party and the facto IS generally considered in determining a reasonable fee, namely the elements set out in Section 1.04(b)tbe Texas Disciplinary Rules of Professional Conduct, including time and labor required to render the services a client's behalf, the novelty and difficulty of the questions presented, the skill requisite to perform the services properly; the preclusion of other employment; the fee customarily charged in the locality for similar legal services; the amount involved and the results obtained; the time limitations imposed by the client or the circumstances; the nature and length of the professional relationship with the client; the experience, reputation, and ability of the lawyer or lawyers performing the services; and whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.

Robert H. Renneker is a 1978 graduate of the University of Texas School of Law. Between 1 978 and 1980 he served as a briefing attorney for the Court of Civil Appeals for the Sixth Supreme Judicial District of Texas. Renneker has been actively engaged in the practice of law in Dallas County, Texas (and throughout the State of Texas) since 1980 and is rated "av" by Martindale Hubbell Renneker is admitted to practice before all the courts in the State of Texas, the United States District Courts for the Northern, Eastern, Southern, and Western Districts ofTexas, the Fifth and Ninth Circuit Courts of Appeals, and the United States Supreme Court.

7. Any discoverable indemnity and insuring agreements.

None.

DEFENDANTS' SECOND AMENDED RESPONSE TO PLAINTIFF'S REQUEST FOR DISCLOSURE - Page 3

8. Any discoverable sett]ement agreemeots.

None.

9. Any discoverable witness statements.

None.

10. In a suit aUeging physical or mental injury and damages from the occurreD ce tba tis the subject of the case, all medical records and bills that are reasonably related to the injuries or damages asserted or, in lieu thereof, an authorization permitting the disclosure of such medical records and bills.

Not applicable.

11. In asuitaJlegingphysical or mental injury and damages from the occurrence that is the subject of the case, aiJ medical records and biJJs obtained by the responding party by virtue of an authorization furnished by the requesting party.

Not applicable.

12. The name, address, and telephone number of any person who may be designated as a responsib~e third party.

Defendant is unaware of any responsible third party at the present time.

1412 Main Street Suite 210 Dal1as, Texas 75202 (214) 742-7100 (214) 742-7110 (telecopier) E-Mail: renneker@verizon.net

ATTORNEY FOR DEFENDANTS

DEFENDANTS' SECOND AMENDED RESPONSE TO PLAINTIFF,S REQUEST FOR DISCLOSURE- Page 4

CERTIFICATE OF SERVICE

A true and correct copy of the foregoing Defendants' Second Amended Response to Plaintiffs Request for Disclosure was served on the attorneys for the Plaintiff, Mr. Donovan Campbell, Jr., Rader & Campbell, 2777 Stemmons Freeway, Suite I 125, Dallas, Texas 75207, and Mr. J. Patrick Bredehoft, Bred~hoft & Associates, 2777 Stemmons Freeway, Suite 1125, Dallas, Texas 75207by telecopy and regular mail on this the of September,-~

DEFENI>A,NT.S' SEC.OND.AMENl>ED RESPONSE TO PLAINTIFF'S REQUEST FOR DISCLOSURE - Page 5