Court Opinion

ID: 2857160
Source: CourtListenerOpinion
Date Created: 2015-09-04 19:31:50.789138+00
Date Added: 2024-06-11T10:02:33.541402
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                              NO. 2-06-430-CV

A.J. MORRIS, M.D., P.A., RIO                                 APPELLANTS
GRANDE VALLEY IMAGING,
INC., AND A.J. MORRIS, M.D.

                                       V.

DE LAGE LANDEN FINANCIAL                                         APPELLEE
SERVICES, INC.

                                   ------------

          FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY

                                   ------------

                        MEMORANDUM OPINION 1

                                   ------------

     Appellants A.J. Morris, M.D., P.A. (“AJMPA”), Rio Grande Valley

Imaging, Inc. (“RGVI”), and Dr. A.J. Morris appeal from a summary judgment

granted for Appellee De Lage Landen Financial Services, Inc. (“DLFS”).

Because we hold that DLFS established its right to summary judgment on some

     1
         … See Tex. R. App. P. 47.4.
of its claims for damages but not for others, we affirm in part and reverse in

part.

                               Background Facts

        DLFS is in the business of arranging for the leasing and financing of

commercial equipment, sometimes under a name other than DLFS. For a time,

DLFS had a business agreement with Toshiba American Medical Systems, Inc.

(“TAMS”) under which DLFS leased out equipment made by TAMS.              The

business agreement provided that DLFS would use the name Toshiba American

Medical Credit (“TAMC”) in executing the leases.

        Using the TAMC name, DLFS entered into a lease with AJMPA in 1998

(the “1998 lease”). The lease stated that the lessor was “Toshiba American

Medical Credit, a program of Toshiba American Medical Systems, Inc.” Dr.

Morris also entered into a guaranty covering that lease. Appellants claim that

they did not know that TAMC was the same entity as DLFS or that TAMC,

rather than TAMS, was the lessor.

        In 2000, AJMPA and RGVI entered into a lease with TAMC (the “2000

lease”), and Dr. Morris executed a guaranty for the lease. TAMC subsequently

sent AJMPA letters notifying it that both leases had been assigned to DLFS.

        Under both the 1998 lease and the 2000 lease, AJMPA and RGVI agreed

to pay sales tax on the equipment as well as property tax assessed against the

                                      2
equipment.   The leases also provided for the payment of late charges and

finance charges for untimely rental payments. The leases allowed AJMPA and

RGVI to purchase the equipment at the end of the lease for ten percent of the

original acquisition amount so long they were not in default and they exercised

the option not less than 180 days before the end of the lease term.

      After AJMPA and RGVI ceased making payments on the leases, DLFS

sent notice of default to Dr. Morris, demanding compliance with the lease

obligations and notifying him that it was entitled to declare him, as guarantor,

liable for the entire amount owing under the leases. When no payments were

made, DLFS filed suit against Appellants.

                              Procedural History

      A number of Appellants’ issues depend on what pleadings were filed and

when. In DLFS’s original petition, it asserted breach of contract and unjust

enrichment claims and sought attorney’s fees. Appellants filed an answer and

counterclaims.

      DLFS then filed a motion for summary judgment.             DLFS sought

$941,753.81 in damages for unpaid rent, property tax, and sales tax; late

charges and finance charges; the remaining accelerated payments on the 2000

lease; and the purchase option value of the equipment.       DLFS also sought

$55,000 in attorney’s fees. With its motion, DLFS attached the affidavit of

                                       3
Jake Hornung and various business records. DLFS also sought no-evidence and

traditional summary judgment on Appellants’ counterclaims.

      Appellants filed an amended answer and an amended counterclaim,

adding a claim for rescission. Appellants also filed a response to the summary

judgment motion to which they attached as evidence an affidavit from Dr.

Morris; a letter from Dr. Morris to DLFS from April 2003, informing DLFS that

he wished to exercise the purchase option at the end of the 1998 lease; and a

letter from TAMC to Dr. Morris, offering him terms for the 2000 lease.

      DLFS filed a motion to strike portions of Dr. Morris’s affidavit and a

motion for leave to file additional summary judgment evidence. The trial court

granted both motions and granted partial summary judgment (“first summary

judgment”) disposing of DLFS’s breach of contract claims.

      Appellants then filed a second amended answer and second amended

counterclaim and a motion to set aside the first summary judgment. DLFS filed

an answer and special exceptions to the second amended counterclaim.

      Appellants filed a third    amended answer and second amended

counterclaim. DLFS filed another answer and again filed special exceptions to

the second amended counterclaim. Appellants filed a response to the special

exceptions as well as a first supplement to the second amended counterclaim.

      DLFS filed an answer and special exceptions to the first supplement. The

                                      4
trial court held a hearing on the special exceptions, and at the conclusion of the

hearing stated that it granted the special exceptions, dismissed Appellants’

counterclaims, and granted final judgment. The court requested the parties to

provide an order to that effect. DLFS filed a proposed order. The proposed

order does not appear in the record, nor does any written order from this

hearing.

      Appellants next filed an amended motion to vacate or modify the first

summary judgment.      DLFS filed a response to that motion.       It then filed a

second motion for summary judgment incorporating by reference evidence filed

with its first summary judgment motion. In the motion, DLFS asked the trial

court for a judgment clarifying that DLFS was entitled to the return of the

leased equipment as a result of the favorable judgment on its breach of contract

claims. It also sought judgment on Appellants’ counterclaims. Appellants filed

a response, with evidence attached, and objections to DLFS’s summary

judgment evidence. At the hearing on the motion, DLFS stated that it did not

object to Appellants’ evidence being considered for purposes of the second

motion but that it did object to any attempt by Appellants to use the evidence

to relitigate the first summary judgment.

      After a hearing, the trial court granted the second summary judgment for

DLFS. The order stated that it “supercede[d] and replace[d]” the first summary

                                        5
judgment order.      The trial court subsequently entered an order denying

Appellants’ objections to DLFS’s summary judgment evidence. After the trial

court denied Appellants’ motion for reconsideration and for new trial, they filed

this appeal.

                                    Analysis

      A plaintiff is entitled to summary judgment on a cause of action if it

conclusively proves all essential elements of the claim.2 When reviewing a

summary judgment, we take as true all evidence favorable to the nonmovant,

and we indulge every reasonable inference and resolve any doubts in the

nonmovant’s favor. 3

      In Appellants’ first issue, they argue that the evidence and objections they

filed in response to DLFS’s second summary judgment motion were also

applicable to DLFS’s first summary judgment motion.

      Assuming for the moment that DLFS’s evidence established its right to

judgment, the burden then shifted to Appellants to raise a genuine issue of

material fact to prevent summary judgment.4 Objections to Appellee’s evidence

      2
      … See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59,
60 (Tex. 1986).
      3
     … IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143
S.W.3d 794, 798 (Tex. 2004).
      4
          … See Tex. R. Civ. P. 166a.

                                        6
and any evidence on which Appellants relied to raise fact issues had to be

presented to the trial court before it ruled on the claims.5 Thus, if in the second

summary judgment proceedings, the same claims were not before the trial

court, any objections to the evidence would come too late, as would any

evidence produced by Appellants to raise fact issues.

      The question is therefore whether DLFS’s breach of contract claims were

before the trial court after the first summary judgment. The issues determined

by a summary judgment are final even though the judgment is interlocutory, and

a party may not continue to litigate the issues so determined unless the

judgment is set aside by the trial court or reversed on appeal.6 If a trial court

decides some of the contested issues prior to trial in a partial summary

judgment, the trial court may later revisit those issues while it retains plenary

power over the judgment as long as the parties are given a fair opportunity to

      5
       … See Tex. R. Civ. P. 166a(c) (stating the summary judgment shall be
rendered if the evidence on file before judgment shows there is no genuine
issue as to any material fact).
      6
       … Martin v. First Republic Bank, Fort Worth, N.S., 799 S.W.2d 482,
488–89 (Tex. App.—Fort Worth 1990, writ denied); see also Robles v. Consol.
Graphics, Inc., 965 S.W.2d 552, 558 n.5 (Tex. App.—Houston [14th Dist.]
1997, pet. denied) (stating that because the trial court had already decided an
issue in the first summary judgment, that issue was not before the court in a
second summary judgment and the court properly refused to consider it).

                                        7
present evidence on the issues. 7      A statement in a final judgment that it

supercedes and replaces a previous partial summary judgment does not

necessarily demonstrate that the trial court revisited the previously litigated

issues.8 That the trial court’s final judgment is inconsistent with its prior grant

of partial summary judgment and that, during trial on the remaining issues, the

trial court heard evidence relating to the issues previously decided are

indications that a trial court reconsidered previously litigated issues. 9

      Consideration of the record of the hearing on the second summary

judgment and a comparison of the two orders granting summary judgment

show that in the second summary judgment proceeding, the trial court

determined only those issues raised in the second summary judgment

motion—DLFS’s entitlement to the return of the equipment and Appellants’

counterclaims. The trial court repeatedly mentioned in the hearing that it had

already granted final summary judgment in the previous hearing on the special

exceptions.       The court stated that it understood that the parties disputed

whether the second summary judgment motion was “just more of a clean up”

      7
      … Elder Constr., Inc. v. City of Colleyville, 839 S.W.2d 91, 92
(Tex.1992); see also Luecke v. Wallace, 951 S.W.2d 267, 275 (Tex.
App.—Austin 1997, no writ).
      8
          … Luecke, 951 S.W.2d at 275.
      9
          … Id.

                                         8
or whether the court could consider Appellants’ objections to DLFS’s summary

judgment evidence. The court ultimately overruled Appellants’ objections, and

it entered a judgment that is entirely consistent with the first summary

judgment.     The second summary judgment expanded the amount of

prejudgment interest to include the time from the first summary judgment to the

second and addressed the issues raised by the second summary judgment

motion but in all other respects matched the first summary judgment. The trial

court did not revisit the issues of existence of lease contracts, performance by

DLFS, breach of contract by Appellants, or damages; those issues were not

litigated in the second summary judgment proceeding. Thus, Appellants could

not rely on objections made in or evidence attached to their response to the

second summary judgment to revisit those issues previously adjudicated. We

overrule Appellants’ first issue.

      But although Appellants could not rely on objections made after judgment

to prevent summary judgment, on appeal, Appellants may raise new objections

to the substance of DLFS’s evidence to challenge whether DLFS’s evidence

was sufficient to establish its right to judgment.10 In Appellants’ third issue,

      10
        … Wrenn v. G.A.T.X. Logistics, Inc., 73 S.W.3d 489, 498 (Tex.
App.—Fort W orth 2002, no pet.) (holding that defects in substance may be
raised for the first time on appeal).

                                       9
they argue that DLFS’s evidence was insufficient because it was based entirely

on the affidavit of Jake Hornung, a “litigation specialist” with DLFS, which they

contend was not competent summary judgment evidence. We note that under

this issue, Appellants do not object to this evidence with respect to their

counterclaims.

      Appellants object that Hornung’s affidavit fails to meet the business

records exception to the hearsay rule because the affidavit was not made by

a person with knowledge of the facts asserted and does not state or prove that

Hornung or another DLFS employee made the records in the regular scope of

business or made the records at or near the time of the event. They also object

that the affidavit does not satisfy rule 902(10) of the Texas Rules of Evidence.

These are objections to the form of the affidavit and had to be timely raised in

the trial court to be raised on appeal.11 Appellants also object that Hornung’s

lack of personal knowledge prevents the affidavit from constituting competent

      11
        … See Tex. R. Civ. P. 166a(f) (stating that defects in the form of
affidavits “will not be grounds for reversal unless specifically pointed out by
objection”); Grand Prairie ISD v. Vaughan, 792 S.W.2d 944, 945 (Tex. 1990)
(noting that failure to object to a defect of form in an affidavit results in waiver
of the objection); St. Paul Ins. Co. v. Mefford, 994 S.W.2d 715, 721 (Tex.
App.—Dallas 1999, pet. denied) (stating that hearsay in an affidavit is a defect
of form).

                                        10
summary judgment evidence.      This objection is also an objection to form.12

Appellants did not make these objections to the affidavit until after the trial

court had entered judgment on the breach of contract claims, and therefore we

will not consider them in determining whether DLFS established its breach of

contract claims.

      But Appellants also object to statements in Hornung’s affidavit that they

allege are conclusory.   An objection that a statement is conclusory is an

objection to substance, not form, and may be raised for the first time on

appeal.13 We therefore consider Appellants’ arguments on these objections.

      Appellants’ first objection is that the statement by Hornung that DLFS

was the lessor of the equipment is a legal conclusion.     Appellants refer to

Hornung’s repeated statements that DLFS entered into the leases with AJMPA

and RGVI using the TAMC name. Appellants appear to argue that because they

      12
        … See Vaughan, 792 S.W.2d at 945 (stating that an objection that an
affidavit is not based on personal knowledge is a defect of form); Tri-Steel
Structures, Inc. v. Baptist Found. of Tex., 166 S.W.3d 443, 448 (Tex.
App.—Fort Worth 2005, pet. denied) (noting same parenthetically).
      13
        … Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp., 136
S.W.3d 227, 232 (Tex. 2004) (holding that conclusory statements cannot
support a judgment even when no objection was made to the statement at
trial).

                                      11
dispute the identity of the lessor and contend that the lessor was TAMS rather

than TAMC or DLFS, Hornung’s statements constitute legal conclusions.

      A statement is conclusory when it does not provide the underlying facts

to support it.14 To the extent that these statements are conclusory, any error

by the trial court in considering them was harmless as to DLFS’s breach of

contract claims because sufficient summary judgment evidence demonstrates

that DLFS is currently the lessor under the two leases.15 DLFS’s summary

judgment evidence included: (1) the 1998 lease between TAMC, a program of

TAMS, as lessor, and AJMPA as lessee; (2) a letter from TAMC to Dr. Morris

confirming changes in the monthly payment under the 1998 lease, as provided

in the lease; (3) a letter from TAMC to AJMPA stating that the 1998 lease had

been assigned to DLFS; (4) the 2000 lease between TAMC, a program of

TAMS, as lessor, and AJMPA and RGVI; (5) a letter from TAMC to AJMPA and

RGVI stating that the 2000 lease had been assigned to DLFS; (6) the 1998

guaranty between Morris and TAMC; and (7) the 2000 guaranty between

      14
        … Residential Dynamics, LLC v. Loveless, 186 S.W.3d 192, 198 (Tex.
App.—Fort Worth 2006, no pet.); see also Black’s Law Dictionary 308 (8th ed.
2004) (defining “conclusory” as “[e]xpressing a factual inference without
stating the underlying facts on which the inference is based”).
      15
        … See Tex. R. App. P. 44.1(a)(1) (stating that judgment may not be
reversed on appeal unless the complained of error probably caused the rendition
of an improper judgment).

                                      12
Morris and TAMC. Appellants do not deny that they entered into the leases

and guaranties at issue in this case. In their brief, Appellants acknowledge that

letters were forwarded to AJMPA and RGVI that “purportedly indicat[ed] that

the 1998 and 2000 [leases] had been assigned to [DLFS],” although they

contend that the letters were sent by TAMS.

      Appellants’ response to the first summary judgment motion included a

2003 letter from Dr. Morris, on behalf of AJMPA, to DLFS indicating that he

wished to exercise the purchase option at the end of the 1998 lease. Thus, Dr.

Morris understood that DLFS was the lessor at that time with respect to at least

the 1998 lease. As for the 2000 lease, Appellants included with their evidence

a proposal letter from TAMC to Dr. Morris and RGVI offering contract terms for

the 2000 lease. The letter is from TAMC and signed by a TAMC representative

and does not refer to TAMS as lessor in any capacity. The letter states that

TAMS is the manufacturer of the equipment and that TAMC would be the

lessor. Thus, Appellants’ own evidence demonstrates that they were aware

that the 2000 lease contract was being offered by TAMC as lessor. And, as

with the 1998 lease, Appellants received a letter indicating that the 2000 lease

had been assigned to DLFS.

      Appellants produced no evidence raising a fact issue as to whether DLFS

is now the lessor under the leases and guaranties, and DLFS demonstrated as

                                       13
a matter of law the existence of the contracts at issue between it and

Appellants. Whether DLFS fraudulently represented to Appellants that TAMS

was the lessor at the time the leases were entered into is relevant to

Appellants’ counterclaims but not to DLFS’s burden of proving that it is

currently the lessor who may enforce the leases and guaranties with respect to

its breach of contract claims.

      Appellants also object that Hornung’s statement that DLFS “has

performed its obligations under the Lease and Guaranties” is conclusory. We

agree but hold that any error by the trial court in considering it was harmless.

Under the lease agreements, AJMPA and RGVI agreed to lease certain medical

equipment, and it is undisputed by the parties that the equipment was delivered

as agreed.

      Appellants argue, however, that DLFS breached the leases by failing to

comply with the lease end option in the 1998 lease by never providing AJMPA

with the original acquisition cost of the equipment so that it could calculate the

lease end purchase price. They also argue that DLFS breached the leases by

wrongfully attempting to repossess the equipment in November 2005,

damaging the equipment in the process.

      Although Dr. Morris may have notified DLFS in 2003 that AJMPA wished

to exercise the purchase option at the end of the lease, the lease provided that

                                       14
such option could only be exercised if no event of default had occurred and

remained uncured. Dr. Morris admitted in his affidavit attached to Appellants’

response to the first summary judgment motion that he stopped making

payments on the equipment, which is an event of default under the leases. In

addition to statements in Hornung’s affidavit regarding Appellants’ payment

history, DLFS provided as summary judgment evidence an accounting history

showing that the monthly rent payment for May 2004, the final month of the

original lease term, was not paid until 2005.       Furthermore, AJMPA was

provided with what DLFS contends is the acquisition cost in a letter it sent to

Dr. Morris in March of 1999. Although Dr. Morris disputes that this amount is

the actual acquisition cost of the equipment, the fact that he disputes how

much DLFS expected him to pay to exercise the option does not raise a fact

issue on whether he was furnished with the information. We also note that Dr.

Morris did not indicate a disagreement with the quoted acquisition cost when

he sent the letter in 2003 stating that he wished to exercise the lease end

purchase option. Because there existed an uncured event of default at the

expiration of the 1998 lease and therefore DLFS was under no obligation to

allow Appellants to purchase the equipment and because DLFS did provide

Appellants with the acquisition cost, Appellants failed to raise a fact issue as

to whether DLFS performed under the leases.

                                      15
      Furthermore, Appellants cannot argue on appeal that DLFS wrongfully

attempted to repossess the equipment and thereby breached the leases.

DLFS’s attempt to repossess the equipment occurred after the trial court had

entered the first summary judgment ruling on DLFS’s breach of contract claims.

An event occurring after adjudication of a breach of contract claim cannot be

a consideration in the trial court’s determination of the plaintiff’s prior breach. 16

Thus, because DLFS sufficiently established that it performed its obligations

under the leases and guaranties, and because Appellants did not raise a genuine

issue of material fact on the issue, any error by the trial court in considering

Hornung’s statement to that effect was harmless.

      Appellants next object to statements by Hornung with respect to

Appellants’ breach of the leases.       They first object to his statement as to

Appellants’ (1) delay or failure to make lease payments; (2) failure to exercise

the purchase option on the equipment; (3) retaining possession of the

equipment; (4) failure to pay property taxes; (5) defaults on the leases; (6)

failure to cure the defaults; and (7) refusal to perform under the lease

      16
        … See, e.g., Hussong v. Schwan's Sales Enters., Inc., 896 S.W.2d 320,
323 (Tex. App.—Houston [1st Dist.] 1995) (op. on reh'g) (stating that “a trial
court can only consider pleadings and proof on file at the time of the hearing,
or filed after the hearing and before judgment with the permission of the
court”).

                                         16
agreements and personal guaranties.          Rather than point out specific

objectionable statements by Hornung, Appellants point to nine paragraphs,

which we note take up almost three full pages, that they say contain

conclusory statements about these seven subjects.17 In our review of these

three pages, we found only one conclusory statement—that DLFS had

performed its contractual obligations, a statement we have already discussed.

      Finally, Appellants object to Hornung’s statements over nine pages of his

affidavit regarding DLFS’s alleged damages resulting from the breaches of the

1998 and 2000 leases. Appellants do not point out which specific statements

they believe are conclusory. After reviewing the nine pages at issue, we found

only one conclusory statement. On page ten of his affidavit, Hornung states

that DLFS “has determined that the amount of taxes associated with the [1998

lease] for the calendar year of 2005 is $10,159.38.” Unlike the amount of

taxes billed for the 2003 and 2004 years, Hornung does not provide the basis

for this calculation, support the statement with documentary evidence, or

demonstrate any personal knowledge of how DLFS arrived at this figure.

      17
        … See Churchill v. Mayo, 224 S.W.3d 340, 347 (Tex. App.—Houston
[1st Dist.] 2006, pet. denied) (citing former rule 38.1(h) of Texas Rules of
Appellate Procedure and concluding that Mayo presented nothing for review on
her objection to an affidavit as conclusory by failing to identify any particular
statement in the affidavit).

                                       17
Because this statement was conclusory, the trial court should not have

considered it.18 We sustain Appellants’ third issue as to this statement and

overrule their issue as to the remainder of their objections.

      In Appellants’ second issue, they contend that DLFS failed to prove that

no genuine issue of material fact existed on its breach of contract claims and

its asserted damages. To establish its right to judgment, DLFS first had to

establish the existence of a valid contract between it and Appellants; its

performance under the contract; breach of the contract by Appellants; and

damages sustained by DLFS as a result of Appellants’ breach.19

      As discussed above, DLFS established as a matter of law the existence

of a contract between it and Appellants and performance by DLFS. DLFS also

established that Appellants breached the leases. And, because the guaranties

provided that an event of default under the lease constituted an event of default

under the guaranty, DLFS also established that Appellants breached the

guaranties. Appellants argue, however, that they made all of the requisite lease

payments and timely and properly exercised the lease end option under the

1998 lease.      Although Appellants may have made the requisite number of

      18
        … See Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996)
(stating that a conclusory affidavit does not raise a fact issue).
      19
           … See Residential Dynamics, 186 S.W.3d at 198.

                                       18
monthly payments under the 1998 lease, they did not do so until 2005 and

therefore did not do so without first breaching the lease agreements.

Furthermore, as discussed above, Dr. Morris’s attempt to exercise the lease end

purchase option on the 1998 lease had no effect because of the existence of

an uncured event of default at the end of the lease term.

       Appellants also argue that a genuine issue of material fact exists as to

whether AJMPA and RGVI complied with the 2000 lease. In his own affidavit,

Dr. Morris stated that he stopped making payments on the equipment, which

under the lease was an event of default. Appellants did not timely offer any

other evidence raising a fact issue on compliance with the lease.            DLFS

established a prima facie case that Appellants breached the 2000 lease, and

Appellants failed to demonstrate that a genuine issue of material fact exists on

the matter.   Appellants attempted to introduce evidence that they contend

raised a fact issue on the matter, but they did not do so until after the first

summary judgment.       Because the issue of breach of contract was never

relitigated after that judgment, that evidence, even if it raised a fact issue, was

not timely before the trial court on the issue of Appellants’ breach.

       We now consider whether DLFS established its damages as a matter of

law.   With respect to the 1998 lease, DLFS asked the court to award

$285,871.80 in damages for unpaid monthly rent payments.                 Although

                                        19
Appellants assert on appeal that the 1998 lease only required fifty-seven

payments, in their counterclaims filed before the first summary judgment, they

alleged that the 1998 lease required sixty payments. The lease itself failed to

provide the rental payment for the last several months of the lease. It expressly

set out that for the first three months, no payment would be required, and it

expressly set out the rent due for months four through sixty – $19,257.43 in

base rent, $5,200 for a service agreement, and $2,017.81 in taxes.              But

through an omission, the lease says nothing about what rent, if any, would be

due for months sixty-one through sixty-three. Because the parties clearly knew

how to specify when no rent was required, we cannot assume that they

intended for no rent to be due for the last several months of the term.

      Appellants are bound, however, by their judicial admissions. “Assertions

of fact, not plead in the alternative, in the live pleadings of a party are regarded

as formal judicial admissions.” 20 Appellants in their counterclaim filed before

the first summary judgment asserted that the 1998 lease “provided for 60

payments in the sum of $26,475.24 each which allegedly included sales tax in

the amount of $2,017.81.”       They repeated this assertion in their amended

      20
       … Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 568
(Tex. 2001) (quoting Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767
(Tex. 1983)).

                                        20
counterclaim, also filed before the first summary judgment. The statement is

clear and unequivocal and was not pleaded in the alternative. 21 They did not

repeat this assertion in their amended counterclaims filed after the first

summary judgment; however, at the time the trial court ruled on DLFS’s breach

of contract claim, their live pleadings did contain this statement of fact. Thus,

the terms of the original contract were established to include 60 payments of

$26,475.24 each, which included the base payment of $19,257.43, sales tax,

and the service agreement payment.22

      Because the actual cost of the equipment differed from the cost on which

the lease payments were calculated, TAMC sent a letter to AJMPA modifying

the rent payment. The lease allowed TAMC to change the amount of rent by

up to fifteen percent if the actual cost differed from the estimate.

      As with the original lease, the letter contained a mistake. Where the

original lease had an omission, the letter amending the lease contained a

typographical error stating that the new lease term requires “36 payments.”

But the letter taken as a whole demonstrates that “36 payments” was a

      21
       … Id. at 568 (noting that judicial admission that is clear and unequivocal
has conclusive effect).
      22
       … Houston First Am. Sav., 650 S.W.2d at 767 (stating that “[a]ny fact
admitted is conclusively established in the case without the introduction of the
pleadings or presentation of other evidence”).

                                       21
typographical error.   The original contract had a lease term of sixty-three

months. The letter reasserts that the original contract had a lease term of sixty-

three months.    The letter’s purpose was to change the lease payments to

reflect the actual cost of the equipment, and it states that all other lease terms

and conditions would remain the same. The letter states that as amended the

lease calls for no payment through the third month and payments of

$19,058.12, plus sales tax and $5,200 as the service agreement payment, for

months four through sixty-three, for a total of $26,058.12. Taking the letter

in its entirety, “36 payments” is clearly a typographical error. The amendment

letter obviously did not intend to change the duration of the lease.

      Under the terms of the lease, DLFS’s change of the rent payment amount

was valid. A contract may provide a party to it with the right to amend the

contract.23 The lease agreement provided TAMC with such a right—the right

to change the amount of rent by up to fifteen percent. TAMC could therefore

validly adjust the monthly base rent payment for months four through sixty-

three from $19,257.43 to $19,058.12 because the adjustment changed the

      23
       … See Couch v. Southern Methodist Univ., 10 S.W.2d 973, 974 (Tex.
Com. App.1928, judgm’t adopted) (noting that contract may include the right
to amend the contract but the right “implies only those changes contemplating
a correction, improvement, or reformation of the agreement rather than a
complete destruction of it”).

                                       22
base rent by less than fifteen percent. The trial court therefore could determine

that the base rent payments should have been $19,058.12.

      Having determined as a matter of law the amount owed for each month

under the 1998 lease, the trial court then had to determine whether DLFS

established as a matter of law the number of payments that Dr. Morris failed

to pay. Although Dr. Morris admitted in his affidavit that he stopped making

payments on the equipment, he did not say when this occurred, and thus the

affidavit did not establish how much unpaid rent he owed to DLFS. A DLFS

accounting report that DLFS included as summary judgment evidence showed

that Appellants did not pay the May 2004 payment until 2005 and showed no

payment for any months after May 2004. And Hornung’s affidavit stated that

Appellants had missed fifteen payments, for the months of June 2004 to

August 2005. Fifteen months of payments of $19,058.12 is $285,871.80, the

amount claimed by DLFS. DLFS therefore established the amount of damages

the trial court awarded it for unpaid rent under the 1998 lease.

      DLFS also established the amount of sales tax owed on those months of

unpaid rent. Hornung’s affidavit stated that the tax rate is 8.25 percent. That

percentage applied against the monthly rent payment is $1,572.29 per month,

for a total of $23,584.35. DLFS apparently opted not to ask for an award of

the additional costs for collecting and administering tax payments that under

                                       23
the lease it was entitled to be paid. DLFS thus established the amount of

damages the trial court awarded it for unpaid sales tax under the 1998 lease.

      DLFS also claimed $20,971.48 in late charges and finance charges.

Hornung’s affidavit stated that Appellants had not paid this amount. DLFS’s

accounting report showed that DLFS charged that amount for late charges and

finance charges and indicated that those charges were not paid. Thus, the trial

court did not err by awarding that amount in damages.

      DLFS further claimed damages for unpaid property taxes on the

equipment, taxes that Appellants agreed to pay as part of the lease agreement.

Hornung asserted that the taxes assessed against the equipment came to

$13,682.61 for 2003 and $11,110.76 for 2004. For tax years 2003 and

2004, DLFS included statements from the city and county taxing authorities

showing the amounts owed for all of DLFS’s personal property in the county,

checks from DLFS to the taxing authorities paying the billed amounts, and an

accounting report showing that DLFS billed Appellants for the taxes and that

Appellants had not paid them. According to Hornung, the accounting reports

show that the bills DLFS sent to Appellants failed to reflect two small discounts

from the taxing authorities ($64.98 for 2003 and $52.44 for 2004) but

correctly showed two administrative fees of $62.50, charged each year and

provided for under the leases as a cost for collecting and making the tax

                                       24
payments. The damages sought by DLFS include the amounts charged by the

taxing authorities, including the discounts, plus the administrative fees. The

evidence demonstrates the amount of property taxes that DLFS was entitled to

recover for 2003 and 2004.

      Although Dr. Morris argued in his affidavit that the assessed value of the

equipment was out of line with the fair market value of the equipment and that

he had attempted to appeal the assessment with the appropriate taxing

authorities, this does not defeat DLFS’s right to summary judgment on this

claim for damages. Appellants agreed to pay the assessed taxes, which is what

DLFS billed them for and what they did not pay, and under the leases DLFS was

entitled to recover the amounts sought in its summary judgment motion. Thus,

the trial court did not err by awarding damages of $13,807.61 for the 2003 tax

year and $11,235.76 for the 2004 tax year.

      For tax year 2005, DLFS claimed damages of $10,159.38. The only

evidence in the record supporting this amount is a statement in Hornung’s

affidavit that DLFS “has determined the amount of taxes associated with the

1998 [lease] for the calendar year of 2005 is $10,159.38.” We have already

held that this statement is conclusory, and therefore it is not competent

evidence of the 2005 taxes. Because DLFS included no other evidence of the

                                      25
2005 taxes, the trial court erred by awarding damages for property taxes for

the 2005 tax year under the 1998 lease.

       Finally, DLFS asked for damages for the agreed-upon purchase option

value of the equipment, if Appellants wanted to purchase the equipment. The

trial court did not award damages for this amount and instead awarded DLFS

possession of the equipment. We therefore do not need to consider whether

DLFS established the purchase option value of the equipment as a matter of

law.

       With respect to the 2000 lease, DLFS asked for unpaid rent in the amount

of $148,964.31. DLFS produced summary judgment evidence of the lease,

which established the monthly base payment of $16,551.59.           Dr. Morris

admitted in his affidavit that he stopped making payments on the leased

equipment. Hornung stated in his affidavit that AJMPA and RGVI did not make

the monthly payments for the months of December 2004 through August

2005.    Nine months of unpaid rent at a rate of $16,551.59 a month is

$148,964.31.     DLFS therefore met its burden of establishing damages for

unpaid rent under the 2000 lease.

       DLFS further sought damages for the remaining payments that were

accelerated under the lease and the purchase option value of the equipment.

The lease permitted DLFS to accelerate the payments due under the lease upon

                                      26
an event of default, discounted “at an annual rate equal to the lesser of six

percent (6%) or the implicit rate of interest of the Lease.” Hornung stated in

his affidavit that DLFS was entitled to $198,619.08 in damages for the

accelerated payments, based on the monthly rent provided for by the lease

multiplied by the number of months left on the lease. Hornung stated that the

purchase option value of the equipment as set out in the lease was

$79,868.70.    The two sums together equals a total of $278,487.78 in

damages.

      According to Hornung, $278,487.78 discounted to present value comes

to $267,540.55. Hornung expressly stated that DLFS used a discount rate of

six percent. Hornung did not, however, state separately the present day value

of each of the two categories of damages. Thus, if the trial awarded only one

category of damages, Hornung’s affidavit provided no basis for the trial court

to determine the amount of that category discounted to present day value.

      The trial court awarded DLFS $192,463.87, purportedly the amount of

accelerated future payments discounted to present value. Not only is this figure

not provided anywhere in the affidavit, but this appears to be a calculation of

present day value that uses a discount rate of four percent, rather than six

percent. DLFS did not include any other evidence on which this figure could be

                                      27
based. Accordingly, the trial court erred by awarding this amount of damages

for accelerated monthly rent payments.

      As for damages of the agreed-upon purchase option value of the

equipment, as with the 1998 lease, the trial court did not award damages for

this amount and instead awarded DLFS possession of the equipment.          We

therefore do not need to consider whether DLFS established the purchase

option value of the equipment as a matter of law.

      DLFS also asked for unpaid property taxes for 2003 and 2004. Hornung

stated in his affidavit that the taxing authorities billed DLFS $16,240.77 for

2003 and that, as with the 1998 lease, DLFS charged two administrative fees

of $62.50 for the tax year, as provided under the lease. Hornung also stated

that DLFS was taxed $14,122.55 for 2004 and that DLFS charged two

administrative fees of $62.50 for the tax year. Hornung stated in his affidavit

that DLFS never received payments from Appellants for the taxes. DLFS thus

asked for a total of $16,365.77 for the 2003 taxes and $14,247.55 for the

2004 taxes. Hornung stated that these amounts were unpaid. Appellants

failed to timely introduce any evidence that they paid when due the property

taxes on the 2000 lease. DLFS established its damages for the amount of

taxes owed under the 2000 lease for 2003 and 2004.

                                      28
      For tax year 2005, DLFS claimed damages of $12,882.78 under the

2000 lease. The only evidence in the record supporting this amount was a

statement in Hornung’s affidavit that DLFS “has determined the amount of

taxes associated with the 2000 [lease] for the entire calendar year of 2005 is

$12,882.78.” Like Hornung’s statement with respect to the 1998 lease, this

statement is conclusory and not competent evidence of the amount of 2005

taxes. Because DLFS included no other evidence of the amount of 2005 taxes,

the trial court erred by awarding damages for property taxes for the 2005 tax

year under the 2000 lease.

      DLFS’s final category of damages was for the costs of inspecting the

equipment in September 2005. DLFS alleged in its summary judgment motion

that as part of its expenses in connection with its remedies under the leases,

it had the equipment inspected. DLFS included the invoice from DLFS’s agent,

Medical Marketplace, for its costs of $8,212.97. The leases provided that

Appellants were liable for any expenses incurred by the lessor in connection

with the enforcement of any remedies under the leases, including expenses of

repossessing the equipment. Hornung stated in his affidavit that the inspection

was “as a result of [Appellants’] conduct.”

      The only evidence introduced by Appellants addressing this evidence was

the affidavit of Dr. Morris, which, after the trial court sustained DLFS’s motion

                                       29
to strike portions of it, asserts that “[t]here is simply no reason to hire someone

from California to inspect the equipment.” This statement does not raise a fact

issue as to whether DLFS was entitled to recover these damages under the

leases. DLFS therefore established its entitlement to these damages under the

leases.

      Because DLFS’s evidence was legally insufficient as to the amount owed

on 2005 property taxes or the amount of damages for accelerated payments

under the 2000 lease, we sustain Appellants’ second issue on those points.

We overrule the remainder of Appellants’ second issue.

      In Appellants’ fourth issue, they argue that the trial court erred by

granting summary judgment on Appellants’ affirmative defense of DLFS’s prior

material breach, their counterclaims for fraud and intentional or negligent

misrepresentation, and their claim of rescission of the lease agreements.

      With respect to Appellants’ affirmative defenses, they first argue that

Morris signed the leases and guaranties under duress. Duress is an affirmative

defense that Appellants had to plead and raise a fact issue on before the trial

                                        30
court ruled on the breach of contract claims.24 Appellants failed to do so, and

thus, we will not consider this argument.25

      Appellants next argue that DLFS failed to comply with the lease end

option for the 1998 lease and that DLFS breached both leases by wrongfully

attempting to repossess the equipment in November 2005 and that by these

acts, DLFS breached the leases. Appellants never pleaded in the trial court that

DLFS breached the leases by wrongfully attempting to repossess the

equipment, 26 and as discussed above, the attempt by DLFS to remove the

equipment did not occur until after the trial court had granted the first summary

judgment on DLFS’s breach of contract claims. 27 As for Appellants’ argument

that DLFS breached the 1998 lease by failing to comply with the 1998 lease

end option, we have already held that because Dr. Morris and AJMPA were in

      24
        … See Tex. R. Civ. P. 94 (requiring a party to affirmatively plead the
affirmative defense of duress); Brownlee v. Brownlee, 665 S.W.2d 111, 112
(Tex. 1984) (stating that when “the party opposing a summary judgment relies
on an affirmative defense, he must come forward with summary judgment
evidence sufficient to raise an issue of fact on each element of the defense to
avoid summary judgment”).
      25
       … See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671,
678 (Tex. 1979).
      26
           … See Clear Creek Basin, 589 S.W.2d at 678; Brownlee, 665 S.W.2d
at 112.
      27
           … See Hussong, 896 S.W.2d at 323.

                                       31
default at the end of the 1998 lease, DLFS had no obligation to allow Dr. Morris

to exercise the lease end option. We therefore reject Appellants’ arguments

that these actions allegedly taken by DLFS, if true, constituted a breach of the

leases.

      Appellants next make the point that in DLFS’s first motion for summary

judgment, DLFS did not move for summary judgment on Appellants’ affirmative

defenses.      But DLFS did not need to move for summary judgment on

Appellants’ affirmative defenses.28         Rather, to avoid summary judgment,

Appellants had to produce evidence raising a fact issue on each element of their

affirmative defenses.29 We reject Appellants’ argument and hold that the trial

court did not err by granting summary judgment on Appellants’ affirmative

defenses.

      We now consider whether the trial court erred by granting the second

summary       judgment   on   Appellants’    counterclaims.   In   their   amended

      28
         … See Tesoro Petroleum Corp. v. Nabors Drilling USA, Inc., 106 S.W.3d
118, 124 (Tex. App.—Houston [1st Dist.] 2002, pet. denied) (noting that a
plaintiff moving for summary judgment has no obligation to negate the
defendant’s affirmative defenses); see also Barrand, Inc. v. Whataburger, Inc.,
214 S.W.3d 122, 143 (Tex. App.—Corpus Christi 2006, pet. denied) (stating
that Whataburger had no burden to address the defendant’s affirmative
defenses in moving for summary judgment).
      29
           … See Brownlee, 665 S.W.2d at 112.

                                        32
counterclaims, filed after DLFS filed its first summary judgment motion but

before the trial court granted the first summary judgment, Appellants asserted

for the first time several DTPA claims.     DLFS did not amend its summary

judgment motion to address these new counterclaims.

      In their third amended counterclaim, filed after the trial court granted the

first summary judgment, Appellants dropped their DTPA claims and asserted the

right of rescission based on intentional misrepresentation or negligent

misrepresentation.    In the supplement, Appellants added a fraud claim,

contending that DLFS fraudulently represented to Appellants that the lessor was

TAMS and promised to sell the leased equipment at ten percent of the lessor’s

acquisition cost.

      DLFS filed special exceptions arguing numerous grounds for the dismissal

of Appellants’ counterclaims, including (1) the trial court had already ruled on

the claims as a matter of law and (2) Appellants had waived the claims by not

asserting them before the first summary judgment.          The trial court orally

granted the special exceptions and dismissed Appellants’ counterclaims. In its

second motion for summary judgment, DLFS reasserted those two grounds. In

the trial court’s order granting the second summary judgment, the court stated

that at the special exceptions hearing, the court had orally ruled that the

counterclaims “had previously been expressly ruled on by the Court or

                                       33
otherwise adjudicated and/or were waived.”        The court then ordered that

Appellants take nothing on their counterclaims.

      Because the trial court’s summary judgment rests on more than one

ground, Appellants had to raise error as to each ground.30 On appeal, however,

Appellants argue only that the trial court had not considered and rejected their

claims in the first summary judgment. They do not address DLFS’s argument

that their claims were waived because they were not timely asserted.

Accordingly, we must affirm the summary judgment on their counterclaims

based on the unchallenged ground of waiver.

      Similarly, we hold that the trial court did not err by not allowing

Appellants to replead because they could not cure their untimeliness by

repleading.31 We overrule Appellants’ fourth issue.

      30
        … See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970)
(holding that summary judgment must stand since it may have been based on
a ground not specifically challenged on appeal); see also Haire v. Nathan
Watson Co., 221 S.W.3d 293, 301–02 (Tex. App.—Fort Worth 2007, no pet.)
(affirming summary judgment on unchallenged ground); Long v. Long, 196
S.W.3d 460, 468–69 (Tex. App.—Dallas 2006, no pet.) (holding that an
appellate court must affirm trial court’s judgment if a separate and independent
ground supporting it is not challenged on appeal); Shelton v. Sargent, 144
S.W.3d 113, 129 (Tex. App.—Fort Worth 2004, pet. denied) (affirming
summary judgment on unchallenged ground).
      31
        … Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007)
(noting that trial court need not give pleader opportunity to amend pleading
when the pleading defect is of a type that cannot be cured by amendment).

                                      34
                                  Conclusion

      We reverse the trial court’s judgment in part and affirm it in part. Having

sustained Appellants’ second and third issues in part as to the awards of

property taxes for the 2005 calendar year for both leases and the accelerated

payments due under the 2000 lease, we reverse that part of the trial court’s

judgment awarding those damages and remand those three damages issues to

the trial court for further proceedings. Having overruled Appellants’ remaining

issues, we affirm the remainder of the trial court’s judgment.

                                                 LEE ANN DAUPHINOT
                                                 JUSTICE

PANEL: CAYCE, C.J.; DAUPHINOT and GARDNER, JJ.

DELIVERED: January 22, 2009

                                       35