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2011-01-20

Trial ends with Old Texas Square eviction

By Judith Pannebaker & Carolyn Edwards

Bandera City Administrator Gene Foerster announced during the Thursday, Jan. 6, city council meeting that an eviction trial would be held the following morning to deal with Jerry Reed's failure to relinquish the Old Texas Square property.
Ozona National Bank, which held the original note on the property, foreclosed on its lien securing the note in September 2010.
During a city council meeting in September, it was revealed that the property had gone into bankruptcy. Early the next month, Old Texas Square became the subject of a public sale on the "west steps of the Bandera County Courthouse." Since then however, the combo motel, bar, eatery and sometime music venue that sprawls along 703 Main Street between Cherry and Oak streets, has remained locked, boarded and dark.
During the 9 am court proceedings on Friday, Jan. 7, Municipal Judge Lynn Holt postponed the trial for an hour. After reconvening, the trial proceeded and, with no answer filed by defendant Reed AND, in fact, a non-appearance by the defendant, a default judgment was entered against Reed's company, BI Quad, LLC and Reed. According to Chapter 24 of the Texas Property Code, this order requires Reed to surrender possession of the Texas Square complex. For its part, Ozona National Bank must next seek a writ of possession.
Local attorney Cynthia Cox Payne represented Ozona National Bank in the eviction proceedings.
During the trial, Payne stated that Reed and BI Quad, LLC lost all rights, title and interest to the property when Ozona foreclosed and, therefore, had "no remaining interest in the property entitled to protection." Also, Reed had sold the complex earlier in 2010 to Dr. Jenny Ting of Dr. Ting Properties, LLC. Not long after the sale, the limited liability company apparently defaulted on payments to Reed. His intent to foreclose thrust the property into bankruptcy, prompting Foerster to describe the current situation regarding the block long property as "really a mess."
Payne called to the stand Richard A. Tatum, senior vice president of Ozona National Bank since 2009, who offered client testimony.
"Jenny Ting was managing the hotel properties," Tatum said, noting that Reed had agreed to let her manage the property before selling it to Dr. Ting Properties LLC in April 2010 for $2.5 million.
According to Tatum, however, Reed ignored the provisions of the deed of trust when he sold the complex to Ting. Reed then asked Ozona to approve the sale and substitute Ting as the borrower. The bank rejected this proposal.
Additionally, Ozona National Bank had a hearing in October before Judge Ronald B. King of the United States Bankruptcy Court of the Western District of Texas. At that time, King annulled the former stay, which arose when Ting filed bankruptcy, and awarded Ozona Bank possession of Old Texas Square.
However, when Reed's attorney advised bank officers "they weren't leaving," the bank was forced to begin the eviction process.
After Tatum indicated that the bank would not oppose Ting entering the property to retrieve personal files or property, Holt ordered the forcible detainer against Reed.
Additionally, Tatum testified that he had been involved with Reed's BI Quad, LLC of Dallas County since April 2010. He identified a foreclosure deed dated Sept. 7, 2010, that gave title to the bank. After September, the bank had to deal with Ting's interests and convince the federal bankruptcy court to agree to foreclosure, which occurred on Oct. 25 before Judge King.
Tatum answered in the affirmative to Payne's query, "Did Mr. Reed lock the premises?" Tatum also testified that Ozona National Bank had hired Payne to begin a forcible eviction against Reed and that she had sent notices in early December to interested parties, requesting that they vacate the premises.
On Dec. 22, Holt had issued citations about the pending eviction to Reed and BI Quad, LLC of Dallas County.
"Have you had any response from Quad or Reed?" Payne asked.
"He sent a letter to the bank saying something about wanting to continue with operations there, while acknowledging he no longer owns the [facility]," Tatum replied. "The bank did not respond to Reed's letter."
In conclusion, Payne said, "Our purpose today is to get a locksmith over there to get access to the building. The bank has no interest in any personal property of others that may be inside and will, as a responsible owner, pay any taxes due. Our position is that the bank owns the property and we have the permission of the bankruptcy trustee to enter the property."
In response, Holt granted a default judgment to the plaintiff. Included in the judgment is an order that Reed will also be required to pay attorney's fees of $1,834.83
The required notice of judgment, which was duly sent to Reed, prevented the bank from entering the building for five days after the notice was received. Ozona National Bank took possession of Old Texas Square on Wednesday, Jan. 19.
In an interview, Foerster said the representatives from Ozona National Bank had indicated to him that they had received several inquiries about possible purchase of Old Texas Square.
"I told them, however, that the city was going to take a proactive stance with regard to the property," Foerster said. "We're concerned with occupancy of the building. Code deficiencies must be corrected before that building can be occupied again. There are problems that need to be rectified."