Court Opinion

ID: 2953022
Source: CourtListenerOpinion
Date Created: 2015-09-16 22:16:10.551186+00
Date Added: 2024-06-11T11:41:50.697714
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-07-00571-CV

Restaurant Enterprises, L.P. d/b/a or f/d/b/a Austin's Pizza, Appellant

v.

Travelers Indemnity Co., Appellee

FROM COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY
NO. C-1-CV-04-279012, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING

M E M O R A N D U M   O P I N I O N

		Appellant, Restaurant Enterprises, L.P. d/b/a or f/d/b/a Austin's Pizza ("Restaurant"),
appeals from a summary judgment granted in favor of appellee, Travelers Indemnity Co.
("Travelers"), in a suit on a sworn account.  The suit arose from a dispute over the number of
"Austin's Pizza" stores that were insured by Travelers.  Restaurant claimed that it owed Travelers
insurance premiums for only four stores, while Travelers claimed that Restaurant owed premiums
for several additional stores.  On appeal, Restaurant contends that Travelers failed to prove as a
matter of law that:  (1) it was entitled to premiums for the additional stores; (2) it was entitled to the
specific amount of damages alleged; (3) it conclusively negated Restaurant's counterclaims; and (4)
it was entitled to attorney's fees.  Because we conclude that Travelers failed to prove that there are
no issues of material fact and that it was entitled to summary judgment as a matter of law, we reverse
the trial court's summary judgment and remand this case for further proceedings consistent
with this opinion.  

BACKGROUND		In October 1999, Restaurant opened its first "Austin's Pizza" store.  Shortly before
opening the store, Restaurant's operations manager, Timothy McLaughlin, contacted an insurance
agency to obtain insurance for the store.  McLaughlin spoke with an agent named John Bustamante,
who sold him an insurance policy provided by Travelers.  McLaughlin testified in his deposition that
Bustamante informed him more than once that Travelers would insure Restaurant for only up to
four stores and that McLaughlin would have to seek different insurance if Restaurant expanded
beyond four stores.  Restaurant opened its fourth store in January 2002 and its fifth store the
following June.  Shortly after opening its fifth store, Restaurant began looking for a different
insurance provider for additional stores it planned to open.  McLaughlin testified that Restaurant
eventually obtained insurance from insurance providers other than Travelers for the additional stores. 
		Restaurant continued to expand the number of its stores, so much so that by the time
of McLaughlin's deposition in June 2005, Restaurant had opened fourteen "Austin's Pizza" stores
and four barbecue stores.  Earlier, during Restaurant's continued expansion, Travelers conducted an
audit of Restaurant's operations, and based on the number of stores existing at the time, assessed
premiums for seven stores in the total amount of $64,806.90.  A dispute arose over whether
Restaurant owed premiums for more than the initial four stores, and in June 2004, Travelers filed
a suit on a sworn account to recover the money.  Restaurant filed a counter-suit against Travelers,
alleging claims for breach of contract, common-law fraud, negligent misrepresentations, and
DTPA violations.  Travelers filed a motion for summary judgment, which was granted by the trial
court.  The trial court awarded damages and attorney's fees.  This appeal followed.          

STANDARD OF REVIEW
		We review the trial court's summary judgment de novo.  Valence Operating Co.
v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).  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.  Id.  A movant is entitled to summary judgment if it demonstrates
that there are no genuine issues of material fact and establishes all the elements of its claim as a
matter of law.  See Tex. R. Civ. P. 166a(c); Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211,
215 (Tex. 2002).      

DISCUSSION
		In its first issue, Restaurant contends that Travelers failed to prove that there are no
issues of material fact and that Travelers was entitled to summary judgment as a matter of law on
its claim on a sworn account.  A suit on a sworn account is an "action or defense . . . founded upon
an open account or other claim for goods, wares and merchandise, including any claim for a
liquidated money demand based upon written contract or founded on business dealings between the
parties . . . ."  See Tex. R. Civ. P. 185.  To prevail in such a suit, a plaintiff must prove that:  (1) there
was a sale and delivery of merchandise or performance of services; (2) the amount of the account
is "just"; and (3) the outstanding amounts remain unpaid.  See Powers v. Adams, 2 S.W.3d 496, 499
(Tex. App.--Houston [14th Dist.] 1999, no pet.).
		In challenging Travelers' summary-judgment evidence, Restaurant focuses only on
the first element of Travelers' claim: that Travelers performed services for Restaurant, or more
specifically in this case, that Travelers and Restaurant entered into an agreement in which Travelers
agreed to provide insurance coverage for all of Restaurant's stores--whether the stores were then
existing or would be opened in the future--and in return, Restaurant agreed to pay premiums for all
existing and future stores.  See Tex. R. Civ. P. 185 (suit on sworn account includes claim for money
demand based upon written contract or founded on business dealings between parties). 
		As evidence that Restaurant agreed to pay Travelers premiums on all of
Restaurant's locations, Travelers submitted the affidavit of Michael Kronander, the director of
Travelers' accounting department.  In the affidavit, Kronander stated that he had personal knowledge
of Travelers' account with Restaurant "for premiums due on various policies" and that "[e]ach of
the policies covered the entire business of [Restaurant], and none were [sic] limited to any particular
location."  Kronander also stated that:

		[u]nder the terms of the policies in question, [Travelers] was liable
for claims made under the policies arising out of operations at any
and all locations of [Restaurant], unless other insurance coverage
existed, and, accordingly, [Restaurant] [sic] is entitled, as is standard
custom in the insurance industry, to charge premiums based upon the
entire operations of [Restaurant], including all locations.

		Restaurant contends that summary judgment was improper because an issue of
material fact exists regarding whether Restaurant had other insurance coverage during the time
period for which Travelers seeks premiums.  Kronander's affidavit states that under the terms of the
relevant insurance policies, Travelers was liable for claims made at all of Restaurant's locations and
could charge premiums for all of Restaurant's locations "unless other insurance coverage existed." 
The statement of account attached to Kronander's affidavit describes the policies Travelers claims
to have issued to Restaurant.  Based on the statement of account, the period of time covered by the
policies spans from November 12, 1999 to April 13, 2003.  
		Restaurant contends that exhibits attached to the affidavit and deposition of Timothy
McLaughlin, Restaurant's operations manager, raise an issue of material fact as to whether
Restaurant had insurance coverage other than that provided by Travelers during the relevant time
period.  For example, one exhibit shows payments made by Restaurant to an insurance company
named Zurich on March 1, 2003, and April 1, 2003, both dates within the relevant time period. 
Another exhibit shows a payment made by Restaurant to an insurance company called American
International Group ("AIG") on March 14, 2003.  Other exhibits further support the existence of a
policy with AIG, including:  (1) a letter from Restaurant to its insurance agent in which Restaurant
refers to the cancellation of an existing worker's-compensation policy and the issuance of a new
policy with AIG effective January 13, 2003; and (2) a worker's-compensation incident report
completed by Restaurant on January 17, 2003, identifying AIG as the worker's-compensation carrier
and listing January 13, 2003, as the effective date of the policy.  Because the exhibits reference
policies and payments falling within the relevant time period, we conclude that the exhibits raise an
issue of material fact as to whether Restaurant owed Travelers premiums on all of its locations. 
Accordingly, summary judgment was improper.  See Tex. R. Civ. P. 166a(c); Southwestern Elec.,
73 S.W.3d at 215.                         
		We also agree with Restaurant's assertion that Kronander's affidavit is insufficient
to support summary judgment because the statements regarding the insurance policies are
"conclusory"--i.e., they state conclusions without providing the underlying facts on which the
conclusions are based--and Kronander did not submit copies of the policies as factual support for
his statements.  Affidavits must contain specific factual bases that would be admissible in evidence
and upon which any conclusions are drawn.  See Southtex 66 Pipeline Co. v. Spoor, 238 S.W.3d 538,
542 (Tex. App.--Houston [14th Dist.] 2007, pet. denied); Nichols v. Lightle, 153 S.W.3d 563, 570
(Tex. App.--Amarillo 2004, pet. denied); see also Paragon Gen. Contractors, Inc. v. Larco Constr.,
Inc., 227 S.W.3d 876, 883 (Tex. App.--Dallas 2007, no pet.) (statement is "conclusory" if it does
not provide underlying facts to support conclusion).  Similarly, when an affidavit in a summary-judgment proceeding refers to other documents, the affiant must attach sworn or certified copies of
those documents to the affidavit.  See Tex. R. Civ. P. 166a(f); Paragon, 227 S.W.3d at 884.  The
failure to attach the referenced documents can leave an affidavit devoid of factual support for
conclusions made regarding the documents, which in turn renders the affidavit substantively
defective. (1) See Brown v. Brown, 145 S.W.3d 745, 752 (Tex. App.--Dallas 2004, pet. denied).  
		In this case, Kronander refers to certain insurance policies and the terms of the
policies in concluding that the policies covered all of Restaurant's existing and future stores, but he
did not attach the policies to the affidavit.  Without copies of the policies, Kronander fails to
provide a factual basis for his conclusions.  See Paragon, 227 S.W.3d at 883-84; Brown, 145 S.W.3d
at 752-53.  His statements are therefore incompetent summary-judgment evidence.  See City of
San Angelo Fire Dep't v. Hudson, 179 S.W.3d 695, 701 n.6 (Tex. App.--Austin 2005, no pet.)
(statement in affidavit was incompetent summary-judgment evidence because affidavit did not
provide underlying facts to support conclusion); Brown, 145 S.W.3d at 753 (affidavit that referred
to other documents but did not attach them was incompetent summary-judgment evidence).  Because
Kronander's affidavit was the only evidence offered to prove that there was an agreement between
the parties requiring Restaurant to pay premiums on all of its locations, summary judgment was
improper.  Thus, we not only reverse the trial court's summary judgment based on Travelers' failure
to prove that there are no issues of material fact, but we also do so based on Travelers' failure to
prove its entitlement to summary judgment as a matter of law. 
		Given our reversal of the trial court's summary judgment, we need not address
Restaurant's second and fourth issues regarding the damages and attorney's-fees awarded to
Travelers because both awards must also necessarily be reversed.  See Powers, 2 S.W.3d at 500;
Friedman v. Atlantic Funding Corp., 936 S.W.2d 38, 42 (Tex. App.--San Antonio 1996, no writ).
		Turning to Restaurant's remaining issue regarding its counterclaims, the record shows
that the trial court erred in granting summary judgment on the claims.  Although the trial court's
judgment stated that it "finally dispose[d] of all parties and all claims and [was] appealable,"the
judgment did not in fact dispose of all of the claims in this case. The record shows that Travelers'
motion for summary judgment addressed only its own claim on a sworn account (2) and that Restaurant
did not file a summary-judgment motion on its counterclaims.  There is also no indication in the
record that the counterclaims were dismissed from the suit.  Thus, the trial court was correct in
stating that its judgment was appealable but erred in claiming that the judgment disposed of all
claims in the case.  See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 206 (Tex. 2001) (concluding
that judgment containing clear and unequivocal statement that it finally disposes of all claims when
record shows otherwise must be appealed and reversed).  Accordingly, in addition to reversing the
trial court's summary judgment based on Travelers' failure to prove that there are no issues of
material fact and that it was entitled to summary judgment as a matter of law, we also reverse the
judgment on the ground that it did not dispose of Restaurant's counterclaims.  See id.    

CONCLUSION 
 Because we conclude that the trial court erred in granting summary judgment in favor
of Travelers, and because the trial court did not dispose of all claims between the parties, we reverse
the trial court's summary judgment and remand this case to the trial court for further proceedings
consistent with this opinion.  

						___________________________________________
						David Puryear, Justice
Before Chief Justice Law, Justices Puryear and Pemberton  
    Chief Justice Law Not Participating  
Reversed and Remanded
Filed:   January 15, 2009
1.   Defects in the substance of an affidavit may be raised for the first time on appeal.  See
Brown v. Brown, 145 S.W.3d 745, 751 (Tex. App.--Dallas 2004, pet. denied);
McMahan v. Greenwood, 108 S.W.3d 467, 498 (Tex. App.--Houston [14th Dist.] 2003,
pet. denied). 
2.   The only portion of Travelers' summary-judgment motion that could be interpreted as
referring to at least some of Restaurant's counterclaims was Travelers' assertion that Kronander's
affidavit established that "any person or persons who potentially might have made representations
to [Restaurant] concerning the locations covered by the policies are not or were not agents or
employees of [Travelers]."  However, this statement was made under a heading titled "[Travelers']
Case-in-Chief," and in the conclusion section of the motion, Travelers stated that the evidence
attached to its motion established as a matter of law that it was entitled to judgment "on its principal
claim."  At no point in the motion did Travelers mention Restaurant's counterclaims or state that it
was entitled to judgment on the claims.