Court Opinion

ID: 6340915
Source: CourtListenerOpinion
Date Created: 2022-05-16 07:18:17.821438+00
Date Added: 2024-06-11T09:19:42.066930
License: Public Domain

Affirmed and Memorandum Opinion filed May 10, 2022.

                                      In The

                    Fourteenth Court of Appeals

                             NO. 14-20-00415-CV

                        INNAD H. HUSAINI, Appellant

                                       V.
                    PAWNEE LEASING CORP., Appellee

             On Appeal from the County Civil Court at Law No. 2
                           Harris County, Texas
                      Trial Court Cause No. 1137782

                         MEMORANDUM OPINION

      Appellee Pawnee Leasing Corp. (“Pawnee”) filed suit against appellant
Innad H. Husaini (“Husaini”) for breach of contract. In what we construe as two
issues, Husaini argues that the trial court erred by: (1) granting Pawnee’s motion
for summary judgment when there is a genuine issue of material fact on his
impossibility and mitigations defenses; and (2) granting summary judgment before
discovery was completed. We affirm.
                                    I.      BACKGROUND1

      On March 22, 2019, Pawnee entered into a leasing agreement with Verimed
Medical Health & Wellness Clinic, Inc. (“Verimed”) and Husaini; the lease
concerned a neural-scan medical device valued at $42,538.12. Verimed, the lessee,
contracted to pay Pawnee $1,378.78 per month for use of the neural-scan device,
which included a laptop, software, and several electrode sensors. Husaini signed
the contract as a guarantor.

      In April 2019, the U.S. government raided Verimed because of allegedly
false Medicare claims—totaling over $1,000,000—filed by Verimed’s previous
office manager. Much of Verimed’s property was seized by the government,
including the neural-scan device leased by Pawnee. Because of the property
seizures, Verimed was unable to continue business operations.

      On July 22, 2019, Pawnee filed suit against Verimed and Husaini for breach
of contract. Pawnee’s petition demanded Verimed and Husaini pay the outstanding
balance of $61,352, but Verimed and Husaini refused to pay. Furthermore, Pawnee
asserted that the neural-scan device remained in Verimed and Husaini’s
possession. Pawnee also sought $20,450 in attorney’s fees. Verimed and Husaini
filed an answer generally denying Pawnee’s claim, asserting various affirmative
defenses, including failure to mitigate damages, and requested damages and
attorney fees.

      On September 3, 2019, Pawnee filed a traditional motion for summary
judgment on its breach of contract claim. Verimed and Husaini filed a response to
Pawnee’s motion, arguing that their performance under the contract was excused
because (1) the government’s seizure of the equipment was a force majeure that

      1
          Adequate time has passed, but Pawnee has not filed an appellate brief.

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made it impossible for them to perform under the contract; (2) Pawnee was aware
that the equipment was in the government’s possession; (3) seizure of Pawnee’s
equipment was an unforeseeable event; (4) Verimed could not anticipate its
employee’s criminal conduct; (5) Pawnee cannot determine damages until after the
equipment is returned by the government because the equipment was never used;
(6) the claim for damages in the full contractual amount of $61,352.02 was
improper because Pawnee could mitigate its damages after the equipment was
released by the government; (7) Pawnee failed to detail the basis for the award of
attorney’s fees; and (8) there is no provision in the contract to recover a one-third
attorney contingency fee. An affidavit by Husaini was attached in support of
Verimed and Husaini’s response to Pawnee’s summary judgment motion.

      On March 5, 2020, Verimed filed a Suggestion of Bankruptcy. On March 6,
2020, Pawnee withdrew its motion for summary judgment as to Verimed,
informing the court that it would continue its claims only against Husaini. Husaini
filed a supplemental response to summary judgment, asserting genuine issues of
material fact exist to defeat the motion for summary judgment based on
impossibility of performance and an unforeseeable supervening act, and again
disputed attorney fees.

      By way of response, Pawnee waived its request for legal fees and argued
that none of the arguments advanced by Husaini were relevant because Husaini is a
guarantor under the contract.

      On March 10, 2020, a hearing was conducted on Pawnee’s motion for
summary judgment.2 On April 23, 2020, the trial court granted Pawnee’s motion,
awarding Pawnee $61,352.02, plus interest and court costs. Husaini filed a timely
appeal.
      2
          The court reporter has informed us that no reporter’s record was made in this case.

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                                 II.   ANALYSIS

      In two issues, Husaini argues that the trial court erred in granting Pawnee’s
motion for summary judgment, asserting there were genuine issue of material fact
and discovery was not completed, and that the trial court erred in awarding Pawnee
$61,352.02 in damages without considering Pawnee’s duty to mitigate damages.
We address Husiani’s arguments regarding the duty to mitigate and his defenses,
before turning to what we construe as his issue regarding discovery.

A.    STANDARD OF REVIEW

      We review the granting of a traditional motion for summary judgment de
novo. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). In a
traditional motion for summary judgment, the movant has the burden to show both
that no genuine issue of material fact exists and that the movant is entitled to
judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Provident Life & Acc.
Ins. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). Once the movant meets its burden,
the burden shifts to the non-movant to present evidence raising a genuine issue of
material fact; if the non-movant raises a fact issue, summary judgment is not
appropriate. See Wyly v. Integrity Ins. Sols., 502 S.W.3d 901, 905 (Tex. App.—
Houston [14th Dist.] 2016, no pet.); Ayeni v. State, 440 S.W.3d 707, 709 (Tex.
App.—Austin 2013, no pet.). “To defeat summary judgment by raising an
affirmative defense, the nonmovant must do more than just plead the affirmative
defense. He must come forward with evidence sufficient to raise a genuine issue of
material fact on each element of his affirmative defense.” Lujan v. Navistar Fin.
Corp., 433 S.W.3d 699, 704 (Tex. App.—Houston [1st Dist.] 2014, no pet.)
(internal quotations omitted).
      All evidence favorable to the non-movant must be taken as true, and all
reasonable doubts must be resolved in non-movant’s favor. See City of Keller v.

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Wilson, 168 S.W.3d 802, 824 (Tex. 2005); Childs v. Haussecker, 974 S.W.2d 31,
40 (Tex. 1998). When a trial court’s order granting summary judgment does not
specify the ground or grounds relied on for its ruling, summary judgment will be
affirmed on appeal if any of the theories advanced are meritorious. Carr v.
Brasher, 776 S.W.2d 567, 569 (Tex. 1989).
B.    APPLICABLE LAW
      “[I]mpossibility is a defense to a cause of action for breach of contract.”
Internacional Realty, Inc. v. 2005 RP W., Ltd., 449 S.W.3d 512, 527 (Tex. App.—
Houston [1st Dist.] 2014, pet. denied); see Tractebel Energy Mktg., Inc. v. E.I. Du
Pont De Nemours & Co., 118 S.W.3d 60, 66 (Tex. App.—Houston [14th Dist.]
2003, pet. denied) (observing that Texas has recognized impossibility of
performance, commercial impracticability, and frustration of purpose as related, if
not identical, excuses for non-performance under a contract). “Where . . . a party’s
performance is made impracticable . . . by the occurrence of an event the non-
occurrence of which was a basic assumption on which the contract was made, his
duty to render that performance is discharged.” Internacional Realty, 449 S.W.3d
at 527 (quoting Centex Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex. 1992)); see
Tractebel Energy, 118 S.W.3d at 66 (“Because courts cannot simply rewrite the
parties’ contract, the excuse is limited to circumstances in which both parties held
a basic (though unstated) assumption about the contract that proves untrue.”).
      The following are general, non-exhaustive contexts in which the defense of
impossibility may be applicable: (1) the death or incapacity of a person necessary
for performance; (2) the destruction or deterioration of an item necessary for
performance; and (3) government regulation prevents performance. See Tractebel
Energy, 118 S.W.3d at 66; see also Restatement (Second) of Contracts § 261
(1981). “Generally, impossibility excuses a party’s breach of contract when the
contract itself doesn’t provide an escape clause and the doctrine’s other
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requirements are satisfied.” See Tractebel Energy, 118 S.W.3d at 66. A party
relying on the defense of impossibility must also demonstrate that it made
reasonable efforts to overcome the obstacle to performance. See id.
      The party seeking to excuse its performance under a contractual force
majeure clause—in the present case, Husaini—bears the burden of proof to
establish that defense. See Virginia Power Energy Mktg., Inc. v. Apache Corp., 297
S.W.3d 397, 402 (Tex. App.—Houston [14th Dist.] 2009, pet. denied); see also
Moore v. Jet Stream Invs., Ltd., 261 S.W.3d 412, 420 (Tex. App.—Texarkana
2008, pet. denied). In interpreting a force majeure provision in a contract, our
primary concern is to determine the parties’ intent. See Zurich Am. Ins. v. Hunt
Petrol. (AEC), Inc., 157 S.W.3d 462, 465 (Tex. App.—Houston [14th Dist.] 2004,
no pet.).
      The failure to mitigate damages is also an affirmative defense. See
Zimmerman Truck Lines, Inc. v. Pastran, 587 S.W.3d 847, 862 (Tex. App.—El
Paso 2019, no pet.); see also Haddad v. JP Morgan Chase Bank, N.A., No. 01-20-
00283-CV, 2021 WL 5056651, at *7 (Tex. App.—Houston [1st Dist.] Nov. 2,
2021, pet. denied) (mem. op.). A party to a contract has a duty to mitigate damages
if it can do so “at a trifling expense or with reasonable exertions.” Great Am. Ins.
Co. v. N. Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415, 426 (Tex. 1995); see
Kartsotis v. Bloch, 503 S.W.3d 506, 522 (Tex. App.—Dallas 2016, pet. denied)
(“The party raising the failure to mitigate defense must prove lack of diligence as
well as the amount by which the damages were increased as a result of the failure
to mitigate.”); see also Haddad, 2021 WL 5056651, at *7.
C.    APPLICATION

      1.    Impossibility/Force Majeure

      Husaini first argues that the trial court erred in granting summary judgment

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because there are genuine issues of material fact concerning Husaini’s defense of
impossibility of performance under the contract. According to Husaini, the
criminal acts of the previous office manager and the subsequent government
seizure of Verimed’s property, including the neural-scan device, constituted a force
majeure that prevented Husaini from performing under the contract. All cases
discussing the excusal of performance due to a force majeure do so in the context
of a contract that contains a force majeure clause. See, e.g., MRC Permian Co. v.
Point Energy Partners Permian LLC, 624 S.W.3d 643, 657 (Tex. App.—El Paso
2021, pet. filed) (“‘Force majeure’ is a term that describes a particular type of
event which may excuse performance under a contract. It is a contract provision
that courts must construe to ascertain the parties’ intentions based on the language
the parties ultimately agreed upon.”); Virginia Power Energy, 297 S.W.3d at 402
(“As we interpret the parties’ contract, including the force majeure provisions, our
primary concern is to determine the parties’ intent.”); Zurich Am. Ins., 157 S.W.3d
at 466 (“Regardless of its historical underpinnings, the scope and application of a
force majeure clause depend on the terms of the contract.”); Sun Operating Ltd.
P’ship v. Holt, 984 S.W.2d 277, 283 (Tex. App.—Amarillo 1998, pet. denied)
(“Force majeure, is now little more than a descriptive phrase without much
inherent substance. Indeed, its scope and application, for the most part, is utterly
dependent upon the terms of the contract in which it appears.”).

      In the present case, the agreement does not contain a force majeure clause;
based on the terms of contract, Husaini’s performance cannot be excused due to
force majeure. See Virginia Power, 297 S.W.3d at 402. Similarly, Husaini has not
raised sufficient facts to demonstrate that his performance is excused under the
general principle of impossibility. Assuming Husaini’s allegations are true, none of
the facts he asserted in his defense make performance impossible or impracticable.

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Additionally, none of the general applications of impossibility apply to the present
case: there is no death of a person that is essential to performance, there has been
no destruction of property rendering performance impossible, and there have been
no laws enacted that prevent Husaini from performing. See Tractebel Energy, 118
S.W.3d at 66. Stated differently, Husaini simply argues that the government’s
seizure makes performing under the contract financially more difficult now than
when the agreement was originally enacted, but that is not sufficient to excuse
performance. See Philips v. McNease, 467 S.W.3d 688, 696 (Tex. App.—Houston
[14th Dist.] 2015, no pet.) (“John’s performance cannot be excused simply because
it has become economically burdensome.”). Therefore, we conclude that Husaini
failed to raise a genuine issue of material fact regarding his impossibility defense.
See Lujan, 433 S.W.3d at 704. Summary judgment was proper on this point.
Merriman, 407 S.W.3d at 248.

      2. Failure to Mitigate Damages

      Husaini also argues that the trial court erred in granting summary judgment
because he raised genuine issues of material fact regarding Pawnee’s alleged
failure to mitigate damages. Crediting Husaini’s allegations as true, the
government was soon ready to release the neural-scan device back to Husaini.
Additionally, according to Husaini, the neural-scan device was still brand new and
had not been used, claiming that Pawnee could have easily leased or resold to
mitigate damages. Instead, Husaini asserts that Pawnee rejected the offer to take
back the neural-scan device, which improperly increased the value of the contract
from $42,538.12 to $61,352.02. But these allegations are vague and speculative.
Husaini is arguing that Pawnee might have been able to mitigate damages at an
unspecified time in the future, but Husaini also acknowledges that the government
was still presently in possession of the medical device and there is no indication of

                                         8
a date when the government would release the device. Pawnee cannot take back
the device from Husaini to mitigate damages if the government decides not to
release the device. Likewise, Husaini asserts that Pawnee could resell the device or
lease it to another clinic to mitigate damages; but again, Pawnee cannot resell or
lease a device that the government does not release. Thus, Husaini did not raise a
fact issue concerning whether forcing Pawnee to wait for an indefinite period of
time to recover its device from the government is simply a trifling expense. See
Great Am. Ins, 908 S.W.2d at 426.

      3.     Unconditional Guaranty

      We also find that it is worth noting that Husaini did not respond to Pawnee’s
argument at the trial court in its amended motion for summary judgment—that
none of Husaini’s arguments are relevant because Husaini is a guarantor on the
contract.

      “A guaranty is a promise to a creditor by a third party to pay a debt on behalf
of a principal in the event that the principal defaults on the original obligation.” See
Chahadeh v. Jacinto Med. Grp., P.A., 519 S.W.3d 242, 246–47 (Tex. App.—
Houston [1st Dist.] 2017, no pet.) (citing Republic Nat’l Bank of Dallas v. Nw.
Nat’l Bank of Fort Worth, 578 S.W.2d 109, 114 (Tex. 1978)). To support a claim
for breach of a guaranty, a party must show proof of (1) the existence and
ownership of a guaranty contract; (2) the terms of the underlying contract by the
holder; (3) the occurrence of the conditions upon which liability is based; and (4)
the failure or refusal to perform by the guarantor. Chahadeh, 519 S.W.3d at 246.

      “The law recognizes two distinct types of guaranty: a guaranty of collection
(or conditional guaranty) and a guaranty of payment (or unconditional guaranty).”
Id. (quoting Cox v. Lerman, 949 S.W.2d 527, 530 (Tex. App.—Houston [14th
Dist.] 1997, no pet.)). A guaranty of collection is an undertaking of
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the guarantor to pay if the debt cannot be collected from the primary obligor by the
use of reasonable diligence, and requires the lender to pursue the principal debtor
before collecting. See id. In contrast, a guaranty of payment is an obligation to pay
the debt when due if the debtor does not, and requires no condition precedent to its
enforcement against the guarantor other than a default by the principal debtor. Id.
Unlike a guarantor of collection, a “guarantor of payment is primarily liable and
waives any requirement that the holder of the note take action against the maker as
a condition precedent to his liability on the guaranty.” Id. (emphasis supplied).

      Here, the contract includes a guaranty, stating: “[i]f [Verimed] defaults, you
will immediately pay in accordance with the default provisions of the
Agreement. . . . You agree that we do not have to proceed first against [Verimed]”
and “You unconditionally promise to repay the Equipment Cost.” These terms
indicate that Husaini signed an unconditional guaranty: Pawnee demonstrated the
existence of a guarantee contract; that Verimed defaulted on its payment; and that
Husaini, as the guarantor, failed to perform. Pawnee proved that it was entitled to
recover as a matter of law, and Husaini raised no issues of material fact to
challenge Pawnee’s claims. Thus, we conclude that Husaini failed to raise genuine
issues of material fact concerning his affirmative defense of failure to mitigate and
his obligation to pay the unconditional guaranty. See City of Keller, 168 S.W.3d at
824; Great Am. Ins., 908 S.W.2d at 426.

      We conclude that Husaini failed to raise genuine issues of material fact
concerning his affirmative defense of failure to mitigate and his obligation to pay
the unconditional guaranty. See City of Keller, 168 S.W.3d at 824; Great Am. Ins.,
908 S.W.2d at 426. We overrule Husaini’s first issue.

      4.     Discovery

      In what we liberally construe as Husaini’s third issue, Husiani argues the
                                          10
trial court erred in granting Pawnee’s amended motion for summary judgment
because “discovery was not completed” and because the granting of the summary
judgment denied Husiani the opportunity to conduct discovery.3

       We first note that while a motion for no-evidence summary judgment may
only be granted after an “adequate time” for discovery has passed, traditional
motions for summary judgment are not subject to the same restriction. See Tex. R.
Civ. P. 166a (“A party . . . may, at any time after the adverse party has appeared or
answered, move . . . for a summary judgment.”); Reynolds v. Murphy, 188 S.W.3d
252, 258 n.8 (Tex. App.—Fort Worth 2006, pet. denied). Even when a party files a
motion for continuance to allow for additional discovery, the trial court is not
required to grant it. See Schneider Nat. Carriers, Inc. v. Bates, 147 S.W.3d 264,
292 n.142 (Tex. 2004).

       Here, however, Husiani failed to preserve his discovery argument for
appellate review. “Issues not expressly presented to the trial court by written
motion, answer or other response shall not be considered on appeal as grounds for
reversal.” Tex. R. Civ. Proc. 166a(c). In order to preserve error for appeal, a party
must first bring the complaint to the trial court’s attention through a timely
objection, ruling, or motion so that the trial court has an opportunity to correct the
error. See Tex. R. App. P. 33.1(a)(1); Sorrow v. Harris County Sheriff, 622 S.W.3d
496, 510 (Tex. App.—Houston [14th Dist.] 2021, pet. denied) (Spain, J.,
concurring) (“To complain about an error on appeal, a party must preserve its
complaint in the trial court.”). More importantly, “[w]hen a party contends that it
has not had an adequate opportunity for discovery before a summary judgment
       3
          Husaini does not cite to any authority and does not provide us with any citations to the
record to support this argument. However, where reasonably possible, we construe briefs
liberally so as not to dispose of issues without reaching the merits. See Perry v. Cohen, 272
S.W.3d 585, 587 (Tex. 2008); Reule v. M & T Mortgage, 483 S.W.3d 600, 608 (Tex. App.—
Houston [14th Dist.] 2015, pet. denied). Therefore, we will address this issue.

                                               11
hearing, it must file either an affidavit explaining the need for further discovery or
a verified motion for continuance.” Tenneco Inc. v. Enter. Products Co., 925
S.W.2d 640, 647 (Tex. 1996); see Tex. R. Civ. P. 166a(g). Husaini did neither.
Accordingly, Husaini waived this complaint. We overrule Husaini’s second issue.

                                III.   CONCLUSION

      We affirm the judgment of the trial court.

                                       /s/    Margaret “Meg” Poissant
                                              Justice

Panel consists of Justices Jewell, Bourliot, and Poissant.

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