Court Opinion

ID: 2897588
Source: CourtListenerOpinion
Date Created: 2015-09-08 00:59:45.100297+00
Date Added: 2024-06-11T11:35:11.566631
License: Public Domain

NO. 07-06-0199-CV

                              IN THE COURT OF APPEALS

                       FOR THE SEVENTH DISTRICT OF TEXAS

                                      AT AMARILLO

                                         PANEL D

                                  MARCH 14, 2008
                          ______________________________

                                  RANDY BIRKENFELD,

                                                                Appellant

                                             v.

                       METRO GENERAL MANAGEMENT, INC.,

                                                                Appellee

                        _________________________________

             FROM THE 99TH DISTRICT COURT OF LUBBOCK COUNTY;

             NO. 2003-523,580; HON. WILLIAM C. SOWDER, PRESIDING
                       ________________________________

                                 Memorandum Opinion
                           _______________________________

Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.

       Appellant Randy Birkenfeld (Birkenfeld) appeals from a judgment entered by the trial

court with respect to his claims against appellee Metro General Management, Inc. (Metro).

Metro also appealed. The dispute between the two arose from Metro’s sale of an auto

stereo business to Birkenfeld. The latter, through four issues, contends that the trial court

erred in 1) denying his motion for partial summary judgment under the Structured
Settlement Protection Act, 2) entering judgment based upon a finding that he failed to pay

the franchise purchase fee, and 3) denying him attorney’s fees. In turn, Metro asserts that

the trial court erred in 1) submitting to the jury the question whether its attempt to lock

Birkenfeld from the premises and business was a breach of the Franchise/Purchase

Agreement, 2) submitting jury questions regarding its violation of the Deceptive Trade

Practices Act (DTPA), 3) failing to disregard the jury’s answer regarding Birkenfeld’s

damages because that evidence did not constitute present sense recorded, 4) rendering

judgment in accordance with the jury’s finding that Birkenfeld did not fail to pay the

franchise purchase fee or price and that no damages should be awarded for Birkenfeld’s

failure to pay operating fees, 5) failing to award it attorney’s fees, and 6) dissolving the

deed of trust Birkenfeld gave it. We modify the judgment and affirm it as modified.

                                       Background

       Metro owned two retail stores in Lubbock. Birkenfeld worked at one of the stores

for approximately ten years and considered purchasing the 34th Street location. Eventually,

the two entered into a Franchise/Purchase Agreement encompassing the sale of the 34th

Street location. According to the agreement, Birkenfeld was to pay Metro $60,000 for

goodwill and a license to operate the store, $10,000 for furniture, fixtures, and equipment,

$30,000 for current inventory, and $22,000 for a Dodge pickup. So too did Birkenfeld

agree to pay a weekly operating fee of $400 or 8% of all gross income, whichever was

greater. The parties also contemplated that Birkenfeld would pay $100,000 of the expense

through an assignment of a $100,000 payment he was to receive on September 8, 2003.

The payment was part of a structured settlement periodically received by Birkenfeld after

suffering injuries as a minor.

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         The parties also executed a separate lease agreement for Birkenfeld’s use of the

building. Under that agreement, he obligated himself to pay a monthly rental of $2,000

plus property taxes. And, as security for performing these obligations, Birkenfeld granted

Metro a deed of trust on some property he owned.

         Birkenfeld began operating the 34th Street location in August 2002. However, he

fell behind in paying the operating fees and rent. Thereafter, he conveyed to Metro a 1992

Dodge Viper in satisfaction of approximately $47,000 worth of the arrearage. Metro

nonetheless continued to assert that it was owed money. So, on September 11, 2003, and

without prior notice, Metro locked Birkenfeld and his employees out of the business

premises. It then sold the business, the inventory, tools, and Birkenfeld’s personalty to

another party. These circumstances formed the basis of the suit from which this appeal

arose.

                        Issue 1 - Assignment of Annuity Benefits

         Birkenfeld’s first issue is twofold. First, he asserts that the trial court erred in

refusing to grant his motion for partial summary judgment wherein he sought a ruling that

vitiated his assignment of the $100,000 payment. Then he argues that the trial court erred

in refusing to void the assignment after trial. Birkenfeld believed himself entitled to such

relief because the transfer purportedly failed to comply with the Texas Structured

Settlement Protection Act and, therefore, was void. We overrule the issue.

         As for the failure to grant the partial summary judgment, we note that the issue

underlying said motion was ultimately tried to the jury.        Having been so tried, any

complaints about the trial court’s decision viz the motion were rendered moot. Fling v.

                                              3
Steed, No. 07-99-0450-CV, 2001 Tex. App. LEXIS 1585 at *11 (Tex. App.–Amarillo March

12, 2001, pet. denied).

       Next, whether the assignment was valid formed the basis of a prior declaratory

action. That action resulted in the entry of an agreed order wherein the trial court ruled that

the assignment was “valid and enforceable,” that Metro owned the $100,000 payment, and

that the insurance company from which payment was to come pay the sum to Metro. More

importantly, no one appealed the decree; rather each party “approved” it “as to form and

content” and allowed it to become final.

       Once the dispute between the parties began, however, Birkenfeld again questioned

the enforceability of the assignment and asked the trial court to rule on the matter as part

of this legal proceeding. According to Birkenfeld, the conveyance was void because it

failed to comport with various provisions of the Texas Structured Settlement Protection Act,

TEX . CIV. PRAC . & REM . CODE ANN . §§141.001-141.007 (Vernon 2005), and that those

provisions could not be waived.

       That the current effort to question the assignment constitutes a collateral attack

upon the prior decree is clear. See Browning v. Prostok, 165 S.W.3d 336, 346 (Tex. 2005)

(describing a collateral attack as an attempt to avoid the binding effect of a judgment in a

proceeding brought to obtain some specific relief which the prior judgment bars). While

one may collaterally attack a void judgment, Browning v. Placke, 698 S.W.2d 362, 363

(Tex. 1985), a judgment is void only when the rendering court lacked personal or in rem

jurisdiction over the parties or res, lacked subject matter jurisdiction, lacked jurisdiction to

enter the particular judgment, or lacked the capacity to act. Browning v. Prostock, 165
4
S.W.3d at 346. Moreover, a distinction must be drawn between a trial court’s failure to

exercise a power in accordance with a statute and the ability to exercise a particular power

to begin with; while lacking the ability to exercise a power may render the act void, having

the ability to act but failing to do so in accordance with the law merely renders the decision

voidable. Parkins v. Martin, 395 S.W.2d 862, 866 (Tex. Civ. App.–Amarillo 1965, writ ref’d

n.r.e.). And, we construe the circumstances before us as falling within the latter category.

       According to the record, the trial court that executed the prior decree was a district

court. Furthermore, we know of no other court (county, justice or the like) that had

exclusive jurisdiction over the amount or topic in dispute. Consequently, the district court

rendering the prior decree had general subject matter jurisdiction to act on the matter. See

TEX . CONST . art. 5, §8 (stating that a district court has original and concurrent jurisdiction

over all matters not within the exclusive jurisdiction of another court).

       Additionally, it cannot be doubted that the parties submitted themselves to the

court’s jurisdiction.   Indeed, their signature on the decree evinces as much.            And,

concerning the prior court’s authority or capacity to adjudicate whether the assignment was

valid, the statute mentioned by Birkenfeld states that an assignment of the ilk in question

shall be ineffective “unless the transfer has been approved in advance in a final court order

. . . .” TEX . CIV. PRAC . & REM . CODE ANN . §141.004 (Vernon 2005). Since the statute

contemplates approval by a trial court, we cannot but hold that district courts have the

capacity to determine the enforceability of an agreement through which one assigns

settlement benefits to another.

       So, given the circumstances before us, we cannot say that the district court

rendering the prior decree lacked either jurisdiction or capacity to do so. Thus, the decree

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was not void. At most, the prior court simply failed to abide by aspects of the Structured

Settlement Protection Act which merely rendered its decision voidable through a direct

appeal. And, being voidable as opposed to void, it was not susceptible to collateral attack

via the cause now before us.

       Issue 2 and Cross-Issue 4 – Breach of Franchise/Purchase Agreement

        Birkenfeld next asserts that the trial court erred in entering judgment against him for

damages related to his failure to pay the franchise fee when the jury found that he had not

failed to pay it. We overrule the issue.

        In response to Question No. 7, the jury answered “no” when asked whether

Birkenfeld breached the agreement by failing to pay the aforementioned fee or purchase

price. However, in response to Question No. 10(1), it answered $60,000 when asked to

determine the sum which would reasonably compensate Metro for that supposed breach.1

These two answers purportedly conflicted because damages could not be awarded to

recompense an act that did not breach the contract. So, the answer to issue 10(1) had to

be discarded, according to Birkenfeld. Yet, he did not complain about the alleged conflict

before the trial court discharged the jury. That was required to preserve the complaint for

appeal. KMG Kanal-Muller-Gruppe Deutschland GMBH & Co. KG v. Davis, 175 S.W.3d
379, 392 (Tex. App.–Houston [1st Dist.] 2005, no pet.); Columbia Medical Center of Las

        1
         The jury found in response to Question No. 6 that Birkenfeld failed to com ply with the
Franchise/Purchase Agreem ent by failing to pay the operating fee but found in response to Question No. 10(2)
that no dam ages should be awarded for that act.

                                                     6
Colinas v. Bush, 122 S.W.3d 835, 861 (Tex. App.–Fort Worth 2003, pet. denied).

Therefore, the alleged conflict was waived.2

        Through cross-issue four, Metro complains about the jury’s decision to award no

damages for Birkenfeld’s failure to pay operating fees. Assuming arguendo that the

contention has merit, we conclude that Metro suffered no harm from the purported mistake.

This is so because the damages awarded it per the jury’s answer to question 10(1) (i.e.

failure to pay the franchise fee or purchase price) totaled $60,000. Yet, according to

Metro, all that was due it from Birkenfeld’s omission regarding the payment of the purchase

price was $22,000. So, Metro effectively received $38,000 to which it was not entitled.

More importantly, this excess more than covered the range of operating fees Metro

considered due from its opponent, that range being from $1,127.93 to approximately

$10,000.

        We further reject Metro’s allegation that it proved, as a matter of law, that Birkenfeld

omitted to pay the remaining $22,000 of the franchise purchase fee. The fee apparently

consisted of a licensing fee and goodwill equal to $60,000, furniture, equipment and

fixtures valued at $10,000, inventory worth $30,000, and $22,000 for a Dodge pickup that

Birkenfeld was to buy. Combining each item revealed a total fee of $122,000. Moreover,

the record illustrates that $100,000 of that total was paid through the assignment of the

aforementioned structured settlement payment. This left a balance of $22,000, a sum

which happened to equal the cost of the Dodge truck. Yet, as of the time of trial, Metro had

        2
          Our disposition of this point effectively m oots that portion of Metro’s fourth cross-issue involving the
jury’s answer to question seven. According to Metro, it had proved, as a m atter of law, that Birkenfeld did fail
to pay the fee. Since we determ ined that Birkenfeld waived com plaint about the jury’s award of $60,000, it
m atters not how the jury answered question seven.

                                                        7
possession of that vehicle. Because Metro had possession of it, some evidence existed

upon which a jury could have reasonably concluded that Birkenfeld did not owe the

$22,000 attributable to it and that the answer to issue seven was “no.”

                  Issues 3 and 4 and Cross-Issue 5 - Attorney’s Fees

       Issues three and four and cross-issue five deal with the trial court’s refusal to award

either party their attorney’s fees. Both litigants assert that they were prevailing parties and,

thus, entitled to same. Moreover, the jury found that both litigants incurred reasonable

attorney’s fees equal to $30,000 “for preparation of trial,” $10,000 “for an appeal to the

Court of Appeals,” and $7,500 “for an appeal to the Supreme Court . . . .” We overrule the

complaint of Metro and sustain that of Birkenfeld.

       An award of attorney’s fees for prevailing upon a claim of breached contract or

deceptive trade practice is mandatory. Manon v. Tejas Toyota, Inc., 162 S.W.3d 743, 751

(Tex. App.–Houston [14th Dist.] 2005, no pet.). But, to prevail, one must both successfully

prosecute a cause of action and recover damages related to that cause. Mustang Pipeline

Co. v. Driver Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004); Green Int’l, Inc. v. Solis, 951
S.W.2d 384, 390 (Tex. 1997).

       Here, while the jury determined that Birkenfeld had breached the agreement by

neglecting to pay the operating fees and report gross weekly sales, it awarded Metro no

damages related to those acts. And, to the extent that damages were awarded for

Birkenfeld’s purported failure to pay the franchise purchase fee or price, the jury found that

he had not breached the agreement in that way. So, the circumstances before us do not

                                               8
satisfy the requirements of Mustang or Green, and the trial court did not err in denying

Metro attorney’s fees.

       As for Birkenfeld’s request for attorney’s fees, we note that the jury found that Metro

breached the purchase agreement by locking him out of the premises and business. So

too was Birkenfeld awarded damages for breaching the agreement. Consequently, the trial

court was obligated to award him attorney’s fees, and it erred by not doing so.

       Cross-Issue 1 - Breach of Franchise/Purchase Agreement by Lockout

       Through its first cross-issue, Metro contends that the trial court erred in asking the

jury whether Metro breached the purchase agreement by locking out or excluding

Birkenfeld from the business premises. This was purportedly so because Metro had no

obligation to allow Birkenfeld on the premises that he leased since the lease said nothing

about granting him access to the property. We overrule the issue.

       Implicit in every lease is a covenant of peaceful enjoyment. Four Bros. Boat Works,

Inc. v. Tesoro Petroleum Companies, Inc., 217 S.W.3d 653, 666-67 (Tex. App.–Houston

[14th Dist.] 2006, pet. denied). In other words, the law expressly grants the lessee a right

to enjoy that which he leased without impermissible interference from the lessor. So too

does the law recognize the requirement that one party to a contract avoid interfering with

the other party’s performance of its contractual duties. Case Corp. v. Hi-Class Business

Systems of America, Inc., 184 S.W.3d 760, 770 (Tex. App.–Dallas 2005, pet. denied). So,

it matters not whether Metro and Birkenfeld expressly stated in the lease before us that

Birkenfeld had access to the leased property; the right was implied by law.

                                              9
                             Cross-Issue 2 - Consumer Status

         Next, Metro argues that the trial court erred in also asking the jury if Metro violated

the DTPA because Birkenfeld was not a consumer under that statute. We overrule the

issue.

         According to the DTPA, a consumer is one who “seeks or acquires by purchase or

lease, any goods or services.” TEX . BUS. & COM . CODE ANN . §17.45(4) (Vernon Supp.

2007). Moreover, goods are defined as “tangible chattels or real property purchased or

leased for use,” id. §17.45(1), and services are defined as “work, labor, or service

purchased or leased for use, including services furnished in connection with the sale or

repair of goods.” Id. §17.45(2).

         Here, Birkenfeld purchased not only the right to sell electronic equipment and like

intangibles but also $30,000 worth of purportedly merchantable inventory located on the

premises, a 1999 Dodge pickup, the services of one of Metro’s advisory personnel, and the

option to purchase inventory through Metro (which could be categorized as a service as

well). Given these circumstances, we cannot say that the primary object in purchasing the

business in question consisted of acquiring general intangible assets (as suggested by

Metro) and find no error in the trial court determining that Birkenfeld was a consumer under

the DTPA. See Clary Corp. v. Smith, 949 S.W.2d 452, 464-65 (Tex. App.–Fort Worth

1997, pet. denied) (finding services such as factory leads, local trade show support, copies

of a sales video, one percent annual advertising discount, annual prospect lists, an

engineering, testing, and sales support package, and a sales training program to be the

primary object of the purchase of a distributorship).

                                               10
                         Cross-Issue 3 - Admission of Damages

       Metro next complains of the admission into evidence of Exhibits 17, 19, 20, 22, and

23 which were lists made by Birkenfeld of his damages related to his conversion claim. In

these exhibits, Birkenfeld assigned a value to various items of his personal property within

the store when Metro locked him out and sold the business to a third party. Before us,

Metro contends that the items were not admissible as an exception to the hearsay rule.

We overrule the issue.

       To the extent that the court’s reference, during trial, to “present sense recorded”

intimated that the documents here were admissible as an exception to the hearsay rule,

Birkenfeld did not object to that determination. Indeed, his objection said nothing of

hearsay.   Moreover, when read in context, the trial court was not considering the

documents as some form of hearsay and admitting them under an exception to the

hearsay rule. Rather, it viewed the evidence simply as Birkenfeld’s effort to itemize, in

writing, the nature of the property Metro converted and place a value on them. And, Metro

does not attempt to illustrate on appeal why the evidence, when viewed in that context,

was inadmissible. Nor does it reassert here the objections it uttered below. Consequently,

the dispute was waived. See Hoxie Implement Co., Inc. v. Baker, 65 S.W.3d 140, 151

(Tex. App.–Amarillo 2001, pet. denied) (holding that when the complaint on appeal does

not comport with that asserted at trial, the issue is waived).

                             Cross Issue 6 - Deed of Trust

       Finally, Metro asserts that if we modify the final judgment in its favor, then we must

also reverse the trial court’s decision to dissolve the deed of trust granted Metro by its

                                             11
opponent. Because our decision does not so modify the judgment, the foundation

underlying Metro’s argument is missing. Thus, we overrule the contention.

       Accordingly, we modify that portion of the judgment wherein the trial court denied

Birkenfeld his attorney’s fees, order that Birkenfeld recover attorney’s fees from Metro in

the sums found by the jury, that is, $30,000 for trial preparation, $10,000 for an appeal to

this court, and $7,500 for an appeal to the Texas Supreme Court, and affirm the judgment

as modified.

                                                 Brian Quinn
                                                 Chief Justice

Pirtle, J., concurs in the result.

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