Parkchester Holdings v. GE Life Annuity Co

*Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
United States Court of Appeals
Fifth Circuit
F I L E D
May 10, 2004
Charles R. Fulbruge III
Clerk
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
No. 03-20811
PARKCHESTER HOLDINGS, INC.,
Plaintiff, Counter Defendant, Appellant-Cross-Appellee,
versus
GE LIFE AND ANNUITY ASSURANCE COMPANY,
Defendant, Counter Claimant, Appellee-Cross-Appellant.
Appeal from the United States District Court
for the Southern District of Texas
(H-03-CV-762)
Before BARKSDALE, EMILIO M. GARZA, and STEWART, Circuit Judges.
PER CURIAM:*
Parkchester Holdings, Inc. executed a promisory note in favor
of GE Life and Annuity Assurance Company for $1,675,000.00, with
interest at eight percent per annum, payable monthly for 180
months. The note contained a prepayment penalty clause.
Parkchester repaid its obligation prior to the maturity date of the
note and, pursuant to the prepayment clause, paid GE Life
$267,236.07. Parkchester then filed this action in Texas state

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court, claiming the prepayment was an unreasonable and
unenforceable penalty. GE Life removed the action to federal court
and counterclaimed for a declaratory judgment that the prepayment
was enforceable and for attorney’s fees pursuant to the note and
corresponding deed of trust. Pursuant to GE Life’s FED. R. CIV. P.
12(b)(6) motion, the district court dismissed Parkchester’s claim
and entered final judgment, referencing the reasons stated in its
order of dismissal; but, in so doing, it did not rule on GE Life’s
claims.
Under Texas law, there is no merit to the contention that a
prepayment of the type at issue must be reasonable; therefore,
Parkchester’s claim was properly dismissed. See, e.g., TEX. FIN.
CODE ANN. § 306.005 (Vernon 2002) (“A creditor and an obligor may
agree to a prepayment penalty in a loan subject to this chapter.”);
Bearden v. Tarrant Sav. Ass’n, 643 S.W.2d 247, 249 (Tex. App.—Fort
Worth 1982, writ ref’d n.r.e.) (holding, under Texas law, no
requirement for prepayment penalty to be reasonable). Presumably
through oversight, the district court did not address GE Life’s
claims for declaratory judgment and attorney’s fees.
Accordingly, dismissal of Parkchester’s claim is AFFIRMED; the
remainder of the judgment is VACATED; and this matter is REMANDED
for consideration of GE Life’s claims. Parkchester’s motion to
certify the reasonableness vel non issue to the Texas Supreme Court
is DENIED.

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MOTION TO CERTIFY DENIED; AFFIRMED IN PART;
VACATED AND REMANDED IN PART

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