Court Opinion

ID: 3115472
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:34:51.716415+00
Date Added: 2024-06-11T11:45:05.493780
License: Public Domain

Opinion issued August 1, 2013

                                    In The

                             Court of Appeals
                                   For The

                         First District of Texas
                          ————————————
                             NO. 01-12-00476-CV
                          ———————————
      TRACY BROWN D/B/A RHINESTONES IN DESIGN, Appellant
                                      V.
                   MESA DISTRIBUTORS, INC., Appellee

            On Appeal from the County Civil Court at Law No. 3
                          Harris County, Texas
                       Trial Court Case No. 990817

                                OPINION

      Appellee, Mesa Distributors, Inc. (“Mesa”), sued appellant, Tracy Brown

d/b/a Rhinestones in Design (“Brown”), for breach of contract and conversion,

alleging that Brown had defaulted on his equipment lease agreement by failing to
make the agreed-upon monthly payments and failing to return the equipment after

default. In eight issues, Brown challenges the trial court’s grant of summary

judgment in favor of Mesa, arguing that: (1) the trial court erred in denying his

motion to dismiss based on the lease agreement’s forum-selection clause

specifying Pennsylvania as the forum for litigation; (2) Mesa did not have standing

to bring suit on the debt at issue; (3) Mesa lacked capacity to sue; (4) the evidence

was factually insufficient to support the judgment; (5) the trial court erred in

admitting the affidavit of Mesa’s president, James Buck, because it was defective

in form and substance, contained conclusory statements, and was not based on

personal knowledge; (6) Brown’s constitutional rights to due process and equal

protection were violated; (7) the trial court erred in denying his motion for a

continuance; and (8) the trial court’s grant of attorney’s fees to Mesa was

improper.

      We reverse and remand.

                                   Background

      Brown entered into an equipment lease agreement with Susquehanna Patriot

Leasing Company (“Susquehanna”).         The lease stated that Brown would pay

$911.32 per month for 60 months to lease a CAMS IV-69 rhinestone machine from

Susquehanna. The lease between Susquehanna and Brown also stated that Mesa

was the vendor of the machine. It further stated that Brown was not to pay sales

                                         2
tax and that his total monthly payment was to be $911.32. On April 1, 2005,

Brown accepted delivery of the machine from Mesa and subsequently began

making payments to Susquehanna according to the terms of the lease.

      On February 17, 2010, Susquehanna assigned its interest in Brown’s lease to

Mesa, apparently pursuant to its previous agreement with Mesa that, in the event

Brown defaulted on the lease, Susquehanna would assign its interest to Mesa. On

July 1, 2010, Mesa sued Brown for breach of contract and conversion in Tarrant

County, Texas. Mesa sought $13,877.25 in payments owed on the lease, a writ of

sequestration, attorney’s fees, and applicable charges such as taxes, official fees,

delinquency charges, and interest.

      On January 28, 2011, Brown filed an answer and a motion to transfer venue.

Brown argued that he had paid the equipment lease in full and that the proper

venue was Harris County, Texas. On March 7, 2011, Brown filed a motion to

dismiss, claiming that the forum-selection clause in the lease required litigation in

Pennsylvania and, therefore, Tarrant County lacked subject matter jurisdiction. On

April 4, 2011, Brown’s motion to transfer venue was granted, and the case was

transferred to Harris County Civil Court at Law No. 3.

      On December 16, 2011, Mesa moved for summary judgment. Mesa argued

that it was entitled to summary judgment on its breach of contract claim because

Brown “breached the contract by ceasing the monthly payments of $911.32,

                                         3
resulting in an outstanding balance of $13,877.25 . . . and retaining possession of

the Machine.” It also argued, “By the terms of the agreement, [Mesa] is due

possession of the Machine, past due rent on the lease, continuing rent on the

Machine (for the time defendant [h]as had possession and use of the Machine since

the end of the term of the lease), pre- and post-judgment interest on monies owed,

and attorney’s fees and court costs.” Mesa argued that it was entitled to judgment

as a matter of law on its conversion claim because, as Susquehanna’s assignee, it

“had the right of immediate possession when defendant failed to make payments

required by the lease.” It argued that Brown refused to return the machine, refused

to turn the machine over to a constable serving a writ of sequestration, and still has

possession of the machine. It stated that its damages for conversion included the

value of the machine itself and the lost profits for rental fees on the machine.

      Attached to its motion, Mesa filed Brown’s equipment lease with

Susquehanna, which was largely illegible except for the basic terms regarding the

monthly payment and the length of the lease. It also attached the bill of sale

assigning Brown’s lease to Mesa, the equipment delivery receipt, and Brown’s

response to Mesa’s requests for admissions, in which Brown admitted that he

refused to turn the machine over to the constable because it was not in his

immediate possession at that time and that he still had the machine in his

possession. Finally, Mesa submitted the affidavit of its president, James Buck.

                                          4
Buck made the following statements: (1) Brown “agreed to possess” the machine

and “make monthly payments in the amount of $911.32” for the use of the

machine; (2) “The value of [the machine] is $39,470.00”; (3) Brown failed to make

payments as required by the lease and “[t]he amount due and owing on the Lease is

$13,877.25”; (4) Mesa demanded the return of the machine, but Brown failed to

comply; and (5) “The fair market value of the equipment will continue to decrease

and waste will occur. In fact, the product has depreciated in value since the

execution of the lease.”

      The equipment lease stated that Brown was to make monthly payments of

$911.32 for 60 months to lease the equipment. Inside the box for sales tax charged

to the lessee, the agreement reads $0. Inside the box for total monthly payment of

the lessee, the agreement reads $911.32. The only other amount the agreement

requires Brown to pay is the first payment amount of $2,022.64.          This first

payment includes the first period payment, the last period payment, and a

documentation fee.

      The “Surety Agreement” section of the lease agreement states, “Surety

hereby knowingly and voluntarily consents and submits to the jurisdiction of the

court of Pennsylvania.”    Directly underneath this section is a signature line

containing Brown’s signature to the right of the word “surety” with a colon. Also,

the jurisdiction and venue section of the lease agreement states, “Lessee knowingly

                                        5
and voluntarily consents and submits to the jurisdiction of the Federal and State

courts of Pennsylvania.” Under this section is a signature line containing Brown’s

signature below the words “Lessee: Tracy Brown dba Rhinestones in Design.”

      In his response to Mesa’s summary judgment motion, Brown argued that a

genuine issue of fact existed as to whether he had defaulted on his lease payments.

Brown argued that he had “paid the money that was required pursuant to the lease

agreement” and that he “paid over $54,000 to Susquehanna.”            He attached

Susquehanna’s accounting sheet for Brown’s lease which documented all monetary

transactions on his account. The accounting sheet Brown submitted reflected that

Brown paid $47,388.64 in lease payments, $3,355.29 in property taxes, and

$2,505.17 in miscellaneous charges, totaling $53,249.10, and that he also paid late

fees. He argued that the original lease obligated him “to make 60 payments at

$911.32, which amounts to a total of $54,679.20.” He argued that he paid $2,022

“up front” as required by the lease, and that that amount plus the more than

$53,000 he paid over the course of five years fulfilled his obligation under the

lease. He argued that the payments for property tax and “miscellaneous” payments

were not part of the original lease agreement and were the result of improper

billing by Susquehanna.

      Brown also attached an affidavit in which he stated that he made all

payments required by the lease agreement, he paid taxes on the machine that were

                                        6
not listed on the lease agreement, and he paid miscellaneous fees for which he was

billed but not told why they were owed. He also stated, “I paid continuously for

nearly five years until an issue came up regarding the payoff amount. I was

originally told [one cent]. Then as I got toward the end of the contract, I was told I

would have to pay thousands more.”

      The trial court granted Mesa summary judgment on February 16, 2012. It

awarded Mesa immediate possession of the equipment, $13,877.25 in outstanding

lease payments, $13,669.80 for the loss of use and profit for the machine for a

period of fifteen months, 5% prejudgment and postjudgment interest, and

$6,962.80 in attorney’s fees.

      On March 16, 2012, Brown filed a motion for a new trial, which was denied.

This appeal followed.

                                Forum-Selection Clause

      In his first issue, Brown argues the trial court erred in denying his motion to

dismiss because the suit was not filed in compliance with the mandatory forum-

selection clause in the equipment lease agreement. Mesa argued in the trial court

that because only Brown, the lessee, consented to the forum-selection clause

contained in the lease agreement, application of the clause was voluntary on the

                                          7
part of Mesa, as the assignee of the lessor, and that it had the right to waive the

clause and pursue its cause of action in any court of proper venue. 1

      We review the enforcement of a forum-selection clause for an abuse of

discretion. Phoenix Network Techs. (Europe) Ltd. v. Neon Sys., Inc., 177 S.W.3d
605, 610 (Tex. App.—Houston [1st Dist.] 2005, no pet.). A forum selection clause

is not per se invalid because it restricts only one party’s choice of forum leaving

the other party unrestricted in venue. See In re Lyon Fin. Servs. Inc., 257 S.W.3d
228, 233 (Tex. 2008). Also, a bargain is not negated because one party may have

been in a more advantageous bargaining position. Id. Parties have the right to

contract as they see fit as long as their agreement does not violate the law or public

policy. Id. The Texas Supreme Court has treated the enforcement of forum-

selection clauses as analogous to the enforcement of arbitration clauses. See id.

(“[A]rbitration clauses generally do not require mutuality of obligation so long as

adequate consent supports the underlying contract.”)

      The lease agreement provided that the surety and lessee, Brown, “knowingly

and voluntarily consents and submits” to the jurisdiction of Pennsylvania state

courts. Thus, under the plain language of the agreement, only Brown, as the surety

and the lessee, consented to and submitted to jurisdiction in Pennsylvania, and he

is the only party bound by the forum-selection clause. Brown has not argued, and

1
      We note that Mesa did not file a brief on appeal.
                                           8
the record does not indicate, that Mesa consented to the jurisdiction of

Pennsylvania in any other clause of the lease agreement. Therefore, Mesa is not

bound to litigate its claim in Pennsylvania. See id. (holding that forum-selection

clauses do not require mutuality of obligation). The trial court did not refuse to

enforce the forum-selection clause because the clause does not require Mesa to

litigate in Pennsylvania. See In re AIU Ins. Co., 148 S.W.3d 109, 112 (Tex. 2004)

(orig. proceeding). We conclude that the trial court did not abuse its discretion by

holding that Harris County is an appropriate venue. See Lyon, 257 S.W.3d at 233.

        We overrule Brown’s first issue.

                                           Standing

        In his second issue, Brown argues that Mesa lacked standing to bring suit for

breach of contract and conversion. Specifically, he argues that the record does not

contain sufficient evidence to show that his lease was assigned from Susquehanna,

the original lessor, to Mesa because the bill of sale contract was not signed by

Mesa.

        “Standing is implicit in the concept of subject matter jurisdiction,” which is

never presumed, cannot be waived, and may be raised for the first time on appeal.

Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–45 (Tex. 1993).

Whether the trial court has subject matter jurisdiction is a question of law that we

review de novo. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226

                                           9
(Tex. 2004). A pleader is required to allege facts that affirmatively demonstrate

the court’s jurisdiction to hear the cause. Tex. Ass’n of Bus., 852 S.W.2d at 446.

Without a breach of a legal right belonging to himself, a plaintiff has no standing

to litigate. See Nobles v. Marcus, 533 S.W.2d 923, 927 (Tex. 1976).

      In order to establish standing to maintain a breach of contract action, a

plaintiff must show either third-party-beneficiary status or privity.         OAIC

Commercial Assets, L.L.C v. Stonegate Vill. L.P., 234 S.W.3d 726, 738 (Tex.

App.—Dallas 2007, pet. denied). Privity is established by proof that the defendant

was a party to an enforceable contract with either the plaintiff or a party who

assigned its cause of action to the plaintiff. Id.

      An assignment is a manifestation by the owner of a right of his intention to

transfer such right to the assignee. Pape Equip. Co. v. I.C.S., Inc., 737 S.W.2d
397, 399 (Tex. App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.). Assignments

are governed by contract law. Cadle Co. v. Henderson, 982 S.W.2d 543, 546 (Tex.

App.—San Antonio 1998, no pet.) (citing Univ. of Tex. Med. Branch at Galveston

v. Allan, 777 S.W.2d 450, 453 (Tex. App.—Houston [14th Dist.] 1989, no writ)).

Under contract law, the determination of a meeting of the minds, and thus offer

and acceptance, is based on an objective standard. DeClaire v. G&B McIntosh

Family Ltd. P’ship, 260 S.W.3d 34, 44 (Tex. App.—Houston [1st Dist.] 2008, no

pet.). Therefore, a contract can still be effective if signed by only one party. See

                                           10
id. Specifically, if one party signs, the other may accept by his acts, conduct, or

acquiescence in the terms of the contract. Id.

       Mesa provided a copy of Brown’s equipment lease agreement with

Susquehanna, the bill of sale contract that assigned Brown’s lease to Mesa, and an

affidavit of James Buck, president of Mesa, averring that Brown’s lease was

assigned to Mesa by Susquehanna. Thus, Mesa presented evidence demonstrating

its own interest in the equipment lease agreement. See Jackson v. Thweatt, 883
S.W.2d 171, 174 (Tex. 1994) (“An assignee receives the full rights of the

assignor. . . .”).

       Brown’s argument that the assignment is not valid because Mesa failed to

sign the contract is not in accordance with contract law. See DeClaire, 260 S.W.3d

at 44. Susquehanna signed the bill of sale, and Mesa accepted by its conduct and

acquiescence to the terms of the contract. Id. Mesa attempted to collect damages

under the lease assigned to it in the bill of sale. Furthermore, Brown has provided

no evidence that Susquehanna retained any rights under or control over the lease.

See Pape, 737 S.W.2d at 401 (“Another factor working against the assignment . . .

is the retention by Dow of some control over the settlement process.”)

       Thus, we conclude that the trial court did not err in determining that Mesa

provided sufficient evidence of the assignment of Brown’s lease and, therefore, its

                                         11
standing to sue for breach of contract. See OAIC Commercial Assets, 234 S.W.3d

at 738.

      We overrule Brown’s second issue.

                                      Capacity

      In his third issue, Brown argues the trial court lacked subject matter

jurisdiction because Mesa did not have capacity to sue.           “When capacity is

contested, Rule 93(2) of the Texas Rules of Civil Procedure requires that a verified

plea is filed anytime the record does not affirmatively demonstrate the

plaintiff’s . . . right to bring the suit . . . in whatever capacity he is suing.” Nine

Greenway LTD. v. Heard, 875 S.W.2d 784, 787 (quoting Pledger v. Schoellkopf,

762 S.W.2d 145, 146 (Tex. 1988)). A party who fails to raise the issue of capacity

through a verified pleading waives the issue on appeal. Id.

      Here, the record does not contain a verified pleading.             While Brown

questioned the validity of Mesa’s bill of sale contract, he never raised the issue of

Mesa’s capacity to sue. Because Brown failed to challenge Mesa’s capacity to sue

in a verified pleading, he has waived the issue of Mesa’s capacity to sue. See id.

Thus, this issue is not preserved for consideration on appeal. See id.

      We overrule Brown’s third issue.

                                          12
                                Summary Judgment

      In his fourth issue, Brown argues that the trial court erred in granting Mesa’s

summary judgment motion on its breach of contract and conversion claims against

him because the evidence was insufficient to establish a breach of contract or

conversion. Specifically, he argues that the evidence attached to Mesa’s motion

for summary judgment does not prove as a matter of law that Brown defaulted on

the lease agreement or that he owes an outstanding balance.

A.    Standard of Review

      We review de novo the trial court’s ruling on a summary judgment motion.

Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848

(Tex. 2009). To prevail on a traditional summary judgment motion, the movant

must establish that no genuine issues of material fact exist and that it is entitled to

judgment as a matter of law. TEX. R. CIV. P. 166a(c); Little v. Tex. Dep’t of

Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). When, as here, the trial

court’s summary judgment order does not state the basis for the court’s decision,

we must uphold the judgment if any of the theories advanced in the motion are

meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216

(Tex. 2003).

      The standards for reviewing a motion for summary judgment are well

established. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985).

                                          13
The movant for summary judgment has the burden of showing that there is no

genuine issue of material fact and that it is entitled to judgment as a matter of law.

Id. In deciding whether there is a disputed material fact issue precluding summary

judgment, evidence favorable to the non-movant will be taken as true. Id. at 548–

49. Every reasonable inference must be indulged in favor of the non-movant and

any doubt resolved in its favor. Id. at 549. When the plaintiff moves for summary

judgment, the plaintiff must conclusively prove all elements of its cause of action

as a matter of law. Kyle v. Countrywide Home Loans, Inc., 232 S.W.3d 355, 358

(Tex. App.—Dallas 2007, pet. denied). A matter is conclusively proven if ordinary

minds could not differ as to the conclusion to be drawn from the evidence. Hall v.

Sonic Drive-In of Angleton, Inc., 177 S.W.3d 636, 643–44 (Tex. App.—Houston

[1st Dist.] 2005, pet. denied) (citing Triton Oil & Gas Corp. v. Marine Contractors

& Supply, Inc., 644 S.W.2d 443, 446 (Tex. 1982)).

      If a movant does not show its entitlement to judgment as a matter of law, we

must remand the case to the trial court for further proceedings. Ridenour v.

Herrington, 47 S.W.3d 117, 121 (Tex. App.—Waco 2001, pet. denied). Unless the

movant’s summary judgment evidence is legally sufficient, the non-movant is not

required to produce summary judgment evidence to avoid an adverse summary

judgment. Hubert v. Ill. State Assistance Comm’n, 867 S.W.2d 160, 163 (Tex.

App.—Houston [14th Dist.] 1993, no pet.).

                                         14
B.    Breach of Contract

      To be entitled to summary judgment on its breach of contract claim, Mesa

was required to show, as a matter of law: (1) the existence of a valid contract

between itself and Brown; (2) its performance or tender of performance;

(3) Brown’s breach of the contract; and (4) its damage as a result of the breach.

See Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—

Houston [1st Dist.] 2002, pet. denied).

      Here, Mesa argued that Brown failed to make payments as required by the

lease agreement and that it was entitled to damages as a result of his breach.2 To

support its argument that Brown breached the lease, it included only Buck’s

affidavit, stating that Brown owed $13,877.25 in payment on the lease.                 An

affidavit from a company officer claiming personal knowledge of the issue and the

company’s records is sufficient evidence for summary judgment. See Requipco,

Inc. v. Am-Tex Tank & Equip., Inc., 738 S.W.2d 299, 301 (Tex. App.—Houston

[14th Dist.] 1987, writ. ref’d n.r.e.). However, such an affidavit is sufficient

summary judgment evidence only when it gives detailed accounts of the facts it

attests to or when it provides supporting documents which tend to support the

2
      Brown argues that Mesa did not prove the existence of a valid contract between
      them. However, Brown does not challenge the existence of an agreement between
      himself and Susquehanna, Mesa’s predecessor in interest. As discussed above, the
      bill of sale assigning Susquehanna’s interest in the lease is a binding contract even
      without Mesa’s signature, and Mesa has adequately demonstrated that it was
      Susquehanna’s assignee of rights under the lease agreement.
                                           15
statements made. See Am. 10 Minute Oil Change, Inc. v. Metro. Nat’l Bank-

Farmers Branch, 783 S.W.2d 598, 601 (Tex. App.—Dallas 1989, no writ)

(principal balance along with interest was designated in detail); see also Rockwall

Commons Assocs., Ltd. v. MRC Mortg. Grantor Trust I, 331 S.W.3d 500, 513

(Tex. App.—El Paso 2010, no pet.) (“Because Loughlin’s statements regarding

balances owed for principal and interest under the terms of the letter agreement are

supported by facts or documentation, her conclusion regarding those balances is

not impermissibly conclusory.”).

      An affidavit that states only legal or factual conclusions without providing

factual support is not proper summary judgment evidence because it is not credible

or susceptible to being readily controverted. Rizkallah v. Conner, 952 S.W.2d 580,

587 (Tex. App.—Houston [1st Dist.] 1997, no pet.). Furthermore, self-serving

affidavits from interested parties must be clear, positive, direct, otherwise credible,

free from contradictions and inconsistencies, and readily controvertible to support

summary judgment. Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex.

1997).

      Buck’s affidavit does not support summary judgment because it states only

the legal conclusion that Brown breached the contract by failing to make payments

under the lease. It does not provide specific factual information regarding the

circumstances surrounding the alleged breach. Buck further makes the conclusory

                                          16
statement that Brown still owed over $13,000 under the terms of the lease.

However, the affidavit does not contain any factual support or additional evidence

demonstrating how Buck reached that determination. Nor does the affidavit state

that Brown’s outstanding balance has been determined with all offsets, payments,

and credits, and the calculations provided by the affidavit are inconsistent. Cf.

TEX. R. CIV. P. 185 (providing that affidavit for supporting suit on sworn account

must state that “all just and lawful offsets, payments, and credits have been

allowed”); Requipco, 738 S.W.2d at 301 (discussing Rule 185).

      Furthermore, Brown controverted Buck’s affidavit with his own affidavit,

averring that he had paid over $54,000 under the terms of the lease and did not

default on his obligations, that he was entitled to a “1¢” buyout at the end of the

lease, and that he had been improperly billed under the terms of the lease. Brown

also submitted Susquehenna’s accounting sheet demonstrating that he had made

payments over a period of approximately five years totaling at least $53,249.10,

and he averred that he had paid an additional $2,022 at the time of delivery.

      The conclusory nature of Buck’s affidavit—the only evidence Mesa

introduced to support its claim that Brown breached the lease and that it suffered

damages—and the controverting evidence presented by Brown—including

evidence of his actual payment and his own affidavit that he had not breached the

                                         17
lease and his alleged right to possess the machine based on a “1¢ buyout”—raise

material fact issues precluding summary judgment.

      We hold that Mesa failed to establish as a matter of law that Brown breached

the lease. Therefore, the trial court erred in granting summary judgment on Mesa’s

breach of contract claim.

C.    Conversion

      Brown also challenges the trial court’s grant of summary judgment in favor

of Mesa on its conversion claim.

      To be entitled to summary judgment on its claim of conversion, Mesa was

required to establish, as a matter of law, that (1) it had entitlement to possession of

the machine; (2) Brown unlawfully and without authorization assumed and

exercised control over the property to the exclusion of, or inconsistent with,

Mesa’s rights as an owner; (3) it demanded return of the machine; and (4) Brown

refused to return the machine. See Burns v. Rochon, 190 S.W.3d 263, 268 (Tex.

App.—Houston [1st Dist.] 2006, no pet.).

      Mesa presented no evidence that it was entitled to possession of the

machine.    Buck’s affidavit states only that “[t]he value of the machine is

$39,470.00,” that Mesa demanded the return of the machine, and that Brown failed

to comply. Brown’s admissions that he did not turn over the machine to the

constable and that he still retained possession of the machine are not proof that

                                          18
Mesa is entitled to possess the machine.       Thus, Mesa failed to establish its

conversion claim as a matter of law.

      We sustain Brown’s fourth issue.

      Because we conclude that the trial court erred in granting Mesa’s motion for

summary judgment and remand for further proceedings in the trial court, we need

not address Brown’s remaining issues, including his complaint regarding the award

of attorney’s fees.

                                   Conclusion

      We reverse the judgment of the trial court and remand for proceedings

consistent with this opinion.

                                              Evelyn V. Keyes
                                              Justice

Panel consists of Justices Keyes, Higley, and Bland.

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