Court Opinion

ID: 2986212
Source: CourtListenerOpinion
Date Created: 2015-09-23 00:28:04.724738+00
Date Added: 2024-06-11T11:38:13.576718
License: Public Domain

Affirmed and Memorandum Opinion filed August 15, 2013.

                                    In The

                   Fourteenth Court of Appeals

                            NO. 14-12-00547-CV

       TED TROUT ARCHITECT & ASSOCIATES, LTD., Appellant
                                      V.
                    DR. MARTIN BASALDUA, Appellee

              On Appeal from County Civil Court at Law No. 4
                           Harris County, Texas
                     Trial Court Cause No. 1000782

                MEMORANDUM                    OPINION

      In this suit to recover on a promissory note, Ted Trout Architect &
Associates, Ltd. (“Trout”) contends that the trial court erroneously granted
summary judgment in favor of Dr. Martin Basaldua because (1) there is no
evidence to support the summary judgment; (2) Basaldua’s statute of limitations
argument cannot support summary judgment; and (3) summary judgment cannot
be supported “on the grounds that [Basaldua] did not sign the Promissory Note,
because this is a breach of contract case.” We affirm.

                       Factual and Procedural Background

      Trout provided architectural services to Greater North Houston Physicians
Alliance, Ltd. (“GNHPA”) for the construction of a hospital.        Trout filed an
architect’s lien after GNHPA failed to pay for Trout’s services. On June 8, 2006,
Basaldua, as CEO of GNHPA, signed a Letter Agreement of Settlement and
Modification of Contract. The Letter Agreement provided that, “[a]t the closing of
GNHPA’s anticipated new development loan, but in no event later than ninety days
from date hereof, unless otherwise agreed, GNHPA will pay Trout the sum of
$400,000.00 and deliver an unsecured promissory note payable in one installment
of $50,000.00 . . . being due and payable on September 16, 2008.”

      There seems to be no dispute that a $400,000.00 check was delivered to
Trout as required by the Letter Agreement.        Further, a promissory note was
delivered to Trout; the note stated: “Northeast Houston Hospital Ltd., a Texas
limited partnership, promises to pay to the order of Ted Trout & Associates the
sum of Fifty Thousand and no/100 ($50,000.00) Dollars . . . . The indebtedness
evidence hereby shall be due and payable on the 16th day of September (“Maturity
Date”).” The date of delivery is unclear because the promissory note states at the
top right-hand corner “As of April 16, 2006,” and a handwritten notation on the
note states “Orig. mailed to client 10/26/06.” The promissory note was signed as
follows:

      NORTHEAST HOUSTON HOSPITAL, LTD.
      By: Northeast Houston GP, L.P.,
           its General Partner
           By: NE Houston GP
               Management, LLC,

                                         2
               its General Partner
              By: T Gallagher
              Name: Tom Gallagher
              Title: President
The note also stated: “This obligation is made and intended as a Tennessee contract
and is to be so construed.”

      Trout sued Basaldua, GNHPA, North East Houston Hospital, Ltd., North
East Houston General Partnership, L.P., and North East Houston General
Partnership Management, LLC on September 14, 2011, to recover on the unpaid
promissory note. In its original petition, Trout alleged that the promissory note
matured on September 16, 2008, but “[t]he maker’s [sic] of the note refused to pay
it. On March 31, 2009, a notice and demand for payment was served on the
appropriate responsible entities more than thirty days prior to filing this lawsuit.”
Trout “further assert[ed] his rights under Senate Bill 323 which added new section
101.002, which incorporates by reference the corporate veil-piercing standards set
forth in Sections 21.223 through 21.226 of the TOBC.” Trout sued for $50,000 in
damages from the named defendants for nonpayment of the promissory note and
attorney’s fees.

      Basaldua filed an answer on December 22, 2011, generally denying Trout’s
allegations and contending that Trout’s claims against him are barred (1) by the
applicable statute of limitations; (2) because Basaldua is not liable in the capacity
in which he has been sued; and (3) because Basaldua “denies the person(s) who
executed the promissory note at issue had any authority to execute the promissory
note on Dr. Basaldua’s behalf.”

      Basaldua also filed a traditional motion for summary judgment on December
22, 2011. He first argued that the trial court may apply Texas law regarding his

                                         3
claim on the promissory note because Tennessee law “identified in the contract
does not differ from the substantive law of Texas.” Basaldua also argued that he is
entitled to summary judgment because he did not sign or make the promissory
note, and because no representative of Basaldua signed the note on his behalf.

      Basaldua further contended that he is not liable for the obligations of (1)
North East Houston Hospital, Ltd. because he is a limited partner and does not
participate in the control of the business; (2) North East Houston GP, L.P., or
North East Houston GP Management, LLC because he “is not, and has never been,
affiliated with or an officer, director, or member of” these two entities; and (3)
GNHPA GP, LLC1 because he is a member only of GNHPA GP, LLC and thus not
liable for its debts, even assuming that GNHPA GP, LLC “assumed the liabilities
of Northeast Houston Hospital when GNHPA GP became its general partner.”

      Basaldua lastly argued that, “[i]f Trout complains that the Letter Agreement
required Dr. Basaldua, through GNHPA, to make and deliver a promissory note
instead of Northeast Houston Hospital, Trout’s claim for the alleged breach of the
Letter Agreement is time-barred” because a breach of contract claim is subject to a
four year statute of limitations. According to Basaldua, the Letter Agreement
required GNHPA to deliver a promissory note “‘in no event later than ninety days
from date thereof;’” therefore, any cause of action “Trout may have had against
GNHPA for any alleged failure to make and deliver a promissory note as set forth
under the Letter Agreement accrued September 7, 2006, the ninety-first day from
the date of the Letter Agreement and the date of the alleged breach.”

      Trout filed its first amended petition on January 25, 2012. The amended

      1
         Basaldua stated in his summary judgment motion that he is a member of GNHPA GP,
LLC, and that GNHPA GP, LLC “became the general partner of Northeast Houston Hospital
after Northeast Houston Hospital made the” promissory note.

                                           4
petition mirrored Trout’s original petition and added a claim for breach of contract;
the petition stated, “Trout pleads the settlement agreement constituted a new or
modified contract between the parties.”       The petition further stated that the
defendants promised and delivered a promissory note for $50,000, and “[w]hen the
note matured, Trout demanded payment thereof – Defendants’ [sic] breached their
contract by failing and refusing to pay the note as agreed.”

        On the same day, Trout filed a response to Basaldua’s summary judgment
motion. Trout argued that the trial court may not apply Texas law in this case
because “the court would be re-writing and/or altering the parties’ intent and
purposes set forth in the contract, which the court is not empowered to do.” Trout
did not argue that Texas law and Tennessee law differ in any respect with regard to
this case. Trout also argued that a question of fact exists regarding whether (1)
Basaldua and “his partners” are responsible for payment of the note because
Basaldua signed the Letter Agreement “authorizing the note;” and (2) “the
signatories on the note were merely accommodation makers, or new players in the
game.”

        Trout further contended that the applicable four-year statute of limitation
with regard to a breach of the Letter Agreement is found in section 16.004 of the
Texas Civil Practice and Remedies Code and not in section 16.051. Finally, Trout
contended that, because the note was issued on April 16, 2006, and matured on
September 16, 2008, the “Texas four year limitation period ran from September 16,
2008 to September 16, 2012,” and Trout timely filed its lawsuit on September 24,
2011.

        Basaldua filed a reply to Trout’s summary judgment response on January 28,
2012, objecting to some of Trout’s summary judgment evidence. Basaldua further
argued that there are no conflicts between Texas and Tennessee law, allowing the

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trial court to apply Texas law in this case and, in particular, the Texas four-year
statute of limitations. Basaldua reiterated his previously asserted argument that
any cause of action Trout may have had for any alleged failure of GNHPA to make
and deliver a promissory note accrued on September 7, 2006, which is the ninety-
first day from the date of the Letter Agreement and the alleged breach. According
to Basaldua, Trout’s claim for breach of the Letter Agreement is time-barred
because he failed to bring the claim by September 7, 2011, and “Trout’s attempt to
use the maturity date of the Note—a separate written agreement—is misplaced.”

      Basaldua also argued that Trout failed to present any evidence that
contradicted his summary judgment evidence. According to Basaldua, Trout did
not present any evidence to (1) contradict Basaldua’s affidavit in which he asserted
that he did not participate in Northeast Houston Hospital Ltd.’s control or act as its
general partner; (2) show that Basaldua had any relationship with North East
Houston GP, L.P. or North East Houston GP Management, LLC; and (3)
demonstrate that Basaldua participated in the control of GNHPA.

      The trial court signed a judgment on March 16, 2012, granting Basaldua’s
summary judgment motion and dismissing Trout’s claims with prejudice. Trout
filed a notice of nonsuit on April 3, 2012, without prejudice with regard to “his
cause of action for breach of contract and other damages against Co-Defendants
Greater North Houston Physicians Alliance, Ltd. (defunct), Greater North Houston
Medical Alliance. Ltd., North East Houston Hospital, Ltd., North East Houston
General GP, L.P., and North East Houston GP Management, LLC.” The trial court
signed the notice on April 5, 2012.

      Trout filed a motion for new trial on May 4, 2012, arguing that the trial court
erred by granting summary judgment because (1) Trout filed suit within the
applicable four-year statute of limitations based on the note’s maturity date; and

                                          6
(2) Basaldua is personally liable for payment of the promissory note (a) under
Texas Business Organizations Code section 153.102 because he “participated in
control of the business, and he negotiated and signed the Settlement Agreement as
the CEO of GNHPA, Ltd.,” and (b) because Texas Civil Practice and Remedies
Code section 17.022 provides that “Citation served on one member of a partnership
authorizes a judgment against the partnership and the partner actually served.”

      Trout also contended that summary judgment was erroneously granted
because there is no evidence to support Basaldua’s summary judgment motion. In
particular, Trout contended that “[n]one of the allegations and/or conclusions
stated therein, or the exhibits attached thereto are admissible evidence because the
proffered exhibits are not certified copies, nor sworn to, or otherwise authenticated,
and therefore have no evidentiary value to support his motion.” Trout added
Basaldua’s personal affidavit “has no evidentiary value because it is merely a
personal disclaimer of any affiliation with NE Houston GP Management, LLC, and
Northeast Houston GP, L.P., neither of which were parties to the Settlement
Agreement made the basis of this lawsuit.         Absent a properly authenticated
affidavit, and properly authenticated exhibits, there was no evidence before the
court supporting the summary judgment granted.”

      Basaldua filed a response to Trout’s motion for new trial on May 11, 2012,
and the trial court signed an order denying Trout’s motion for new trial on May 16,
2012. Trout filed a timely notice of appeal on June 12, 2012.

                                Standard of Review

      A traditional summary judgment is appropriate under Texas Rule of Civil
Procedure 166a(c) when a movant establishes that there is no genuine issue of
material fact and the movant is entitled to judgment as a matter of law. Tex. R.
Civ. P. 166a(c). A trial court’s grant of traditional summary judgment is reviewed
                                          7
de novo on appeal. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.
2005). An appellate court examines “the entire record in the light most favorable
to the nonmovant, indulging every reasonable inference and resolving any doubts
against the motion.” City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005).
When the trial court’s order granting summary judgment does not specify the
grounds upon which it was granted, we must affirm the trial court’s judgment if
any of the theories advanced are meritorious. W. Invs., Inc. v. Urena, 162 S.W.3d
547, 550 (Tex. 2005); Seber v. Union Pac. R.R., 350 S.W.3d 640, 645 (Tex.
App.—Houston [14th Dist.] 2011, no pet.).

                                     Analysis

I.    Summary Judgment Evidence

      In its first issue, Trout argues that summary judgment exhibits A through F
are inadmissible and incompetent evidence to support Basaldua’s summary
judgment motion. Trout argues that Basaldua’s affidavit does not authenticate any
of the exhibits Basaldua attached to his summary judgment motion and that the
affidavit is not based on personal knowledge.       Trout concludes that none of
Basaldua’s proffered exhibits will support his summary judgment motion because
“they are either (1) not sworn or authenticated documents; or (2) not certified
documents; or (3) are irrelevant to the issues presented and therefore have no
evidentiary value to support Basaldua’s motion.”

      Trout did not complain that the attached exhibits have “no evidentiary value
to support” Basaldua’s summary judgment motion before the trial court granted
summary judgment; Trout made this argument for the first time in its motion for
new trial.

      With regard to exhibits A and B, Trout states in its appellate brief: “Exhibit

                                         8
A – Promissory Note that is not certified, sworn, or authenticated. Exhibit B –
Letter Agreement of Settlement and Modification Of Contract that’s not certified,
sworn to or otherwise authenticated.” Basaldua’s summary judgment exhibits A
and B are copies of the Letter Agreement and promissory note that Trout had
attached to its original petition; the copies are not sworn, certified, or
authenticated.

      Trout attached copies of the Letter Agreement and promissory note to the
affidavit of Ted Trout, which it attached to its summary judgment response. In the
affidavit, Ted Trout avers that a true and correct copy of the Letter Agreement is
attached to his affidavit as an exhibit, and an “identical copy of the same document
is attached to [Basaldua’s summary judgment motion] as Exh. B.” In the affidavit,
Ted Trout also avers that “[a]ttached to this affidavit is a true and correct copy of
the original note.” Therefore, the Letter Agreement and the promissory note were
properly before the trial court and have probative value.

      With respect to exhibit C, Trout states in its brief: “Exhibit C – Affidavit Of
Martin Basaldua in which (1) he qualifies himself to make the affidavit; (2)
qualifies his partnership status in NEHH, Ltd., and denies any affiliation with the
NE Houston GP Management, L.L.C.” Trout argues that Basaldua’s affidavit has
“no evidentiary value to support” his summary judgment motion because it does
not authenticate any of the documents attached to his motion, and it “makes no
reference to any exhibit attached to his motion.” However, an affidavit need not
necessarily authenticate documents or reference exhibits attached to a summary
judgment motion in order to have probative value. An affidavit has probative
value beyond document authentication.

      Trout also argues that, although Basaldua stated in his affidavit that he has
personal knowledge of the facts and statements contained in his affidavit, the

                                          9
affidavit does not affirmatively show that Basaldua had personal knowledge. An
affidavit’s failure to affirmatively show it was based upon personal knowledge of a
witness competent to testify is a defect of form which requires an objection in the
trial court in order to preserve error for review. Grand Prairie Indep. Sch. Dist. v.
Vaughan, 792 S.W.2d 944, 945 (Tex. 1990); see also Wash. DC Party Shuttle,
LLC v. IGuide Tours, LLC, No. 14-12-00303-CV, 2013 WL 3226768, at *8-10
(Tex. App.—Houston [14th Dist.] June 27, 2013, no pet. h.) (en banc) (litigant
must object and obtain a ruling from the trial court to preserve a complaint that an
affidavit fails to reveal the basis for the affiant’s personal knowledge of the facts
state therein). Trout made no objection in the trial court that Basaldua’s affidavit is
defective because it does not affirmatively show that Basaldua had personal
knowledge of the facts and statements contained in the affidavit. Trout therefore
waived any defect in the form of Basaldua’s affidavit, and the affidavit is not
denied probative value. See Vaughan, 792 S.W.2d at 945.

      With regard to exhibit D, Trout states: “Exhibit D – A Certificate of Fact
certifying registration of the NEHH, Ltd. with the Secretary of State. (Note: This
entity is not a party to this lawsuit).” Exhibit D is a Certificate of Fact issued by
the Texas Secretary of State on December 21, 2011; it states that “The
undersigned, as Secretary of State of Texas, does hereby certify that the document,
Certificate of Formation for Northeast Houston Hospital, Ltd. (file number
800628924), a Domestic Limited Partnership (LP), was filed in this office on
March 17, 2006.      It is further certified that the entity status in Texas is in
existence.” Exhibit D is properly self-authenticated pursuant to Rule of Evidence
902(1); it contains the seal of the State of Texas and the signature of the Secretary
of State.   See Tex. R. Evid. 902(1) (providing for self-authentication when
domestic public documents are under seal).

                                          10
      With regard to exhibit E, Trout states: “Exhibit E – A Certificate of Fact
certifying that GNHPA GP, LLC is registered with the Secretary of State and
naming Martin Basaldua.”       Exhibit E is a certified copy of a Certificate of
Formation for GNHPA GP, LLC issued by the Secretary of State on December 21,
2011. It states that “The undersigned, as Secretary of State of Texas, does hereby
certify that the attached is a true and correct copy of each document on file in this
office as described below: GNHPA GP, LLC[,] Filing Number: 800627046[,]
Certificate of Formation[,] March 15, 2006.” Exhibit E is generally admissible
under Rule of Evidence 902(4) because it consists of a certified copy of a public
record, certified as correct by its custodian, and, therefore, self-authenticating. See
Tex. R. Evid. 902(4) (providing for self-authentication of certified copies of public
records).

      With regard to exhibit F, Trout states: “Exhibit F – A copy of Plaintiff’s
Original Petition.” Trout makes no further argument regarding exhibit F and does
not explain why this exhibit is inadmissible. Trout presents nothing for our review.
See Tex. R. App. P. 38.1(i).

      We overrule Trout’s first issue.

II.   Liability on the Promissory Note

      In his third issue, Trout argues the trial court erroneously granted summary
judgment “predicated on Basaldua’s argument that he is not personally liable for
payment of the note because he did not sign it.” Trout argues that Basaldua is
personally liable for the payment of the promissory note because Basaldua
negotiated and signed the Letter Agreement with Trout as a party to the Letter
Agreement and as the CEO of GNHPA, Ltd. Trout states that Basaldua is “subject
to personal liability for payment of the note” as a matter of law pursuant to Texas
Business Organization Code section 153.102(a)(1) and (b). Trout argues that
                                          11
“Basaldua was the person with whom Trout negotiated – no one else. Whether
Basaldua was a limited partner or a general partner is a question of fact, because he
signed the [Letter] Agreement as CEO, which suggests he was more than an
uninterested limited partner.”

      Trout sued Basaldua for nonpayment of the promissory note. Trout did not
sue Basaldua for breach of the Letter Agreement.

      To collect on a promissory note, a plaintiff must establish (1) there is a note;
(2) the plaintiff is legal owner and holder; (3) the defendant is the maker; and (4) a
certain balance is “due and owing.” McLernon v. Dynegy, Inc., 347 S.W.3d 315,
324 (Tex. App.—Houston [14th Dist.] 2011, no pet.). There is no dispute that
there is a note; that Trout is the legal owner of the note; and that the note is “due
and owing.” The dispute centers around whether Basaldua is the maker of the note
and is personally liable for payment of the note. To prove that the defendant is the
maker of the note, there must be evidence indicating that the defendant’s signature
appears on the note or that a representative of the defendant signed the note on the
defendant’s behalf. Suttles v. Thomas Bearden Co., 152 S.W.3d 607, 611 (Tex.
App.—Houston [1st Dist.] 2004, no pet.).

      The summary judgment evidence conclusively establishes that Basaldua did
not sign the promissory note, and that no representative signed it on his behalf.
The promissory note provides that Northeast Houston Hospital, Ltd., a Texas
limited partnership, promises to pay Trout $50,000 by September 16, 2008. The
note is signed as follows:

      NORTHEAST HOUSTON HOSPITAL, LTD.
      By: Northeast Houston GP, L.P.,
          its General Partner
          By: NE Houston GP

                                         12
               Management, LLC,
               its General Partner
              By: T Gallagher
              Name: Tom Gallagher
              Title: President
The summary judgment evidence thus establishes that Basaldua did not sign the
promissory note; rather, the note was signed by Tom Gallagher as President of NE
Houston GP Management, LLC, which is the general partner of Northeast Houston
GP, L.P., which in turn is the general partner of Northeast Houston Hospital, Ltd.
Trout also acknowledges in its brief that Basaldua did not sign the promissory note
but that Gallagher signed it.

      Additionally, nowhere in the note is there any indication that Gallagher
signed the note as Basaldua’s representative on behalf of Basaldua; nor is there any
mention of Basaldua anywhere in the note.         Further, Basaldua averred in his
affidavit: “[A]t all relevant times herein, I have been a limited partner of Northeast
Houston Hospital, Ltd. . . . I am not, and have never been, a general partner of
Northeast Houston Hospital. I have never participated in the control of Northeast
Houston Hospital in addition to my rights and powers as a limited partner of
Northeast Houston Hospital.”         Basaldua also averred that he has never been
affiliated with or acted as an officer, director, or member of NE Houston GP
Management, L.L.C., and has never been affiliated with or acted as an officer,
director, general partner, or limited partner of Northeast Houston GP, LP. The
record does not reveal any controverting evidence. The evidence establishes that
neither Tom Gallagher nor any of the other entities referenced on the promissory
note signed the note as Basaldua’s representative on behalf of Basaldua.

      Trout argues that section 153.102(a)(1), (b) of the Texas Business
Organizations supports his argument that Basaldua is personally liable on the
                                           13
promissory note. Section 153.102 provides:

      (a) A limited partner is not liable for the obligations of a limited
      partnership unless:
            (1) the limited partner is also a general partner; or
            (2) in addition to the exercise of the limited partner’s rights and
            powers as a limited partner, the limited partner participates in
            the control of the business.
      (b) If the limited partner participates in the control of the business, the
      limited partner is liable only to a person who transacts business with
      the limited partnership reasonably believing, based on the limited
      partner’s conduct, that the limited partner is a general partner.
Tex. Bus. Orgs. Code Ann. §153.102(a)(1), (b) (Vernon 2012).

      As we have stated, the promissory note was signed by Tom Gallagher as
President of NE Houston GP Management, LLC, which is the general partner of
Northeast Houston GP, L.P. In turn, this entity is the general partner of Northeast
Houston Hospital, Ltd. Basaldua stated in his affidavit that, at all relevant times,
he (1) has been a limited partner of Northeast Houston Hospital, Ltd.; (2) has never
been a general partner of Northeast Houston Hospital, Ltd.; (3) has never
participated in the control of Northeast Houston Hospital, Ltd.; and (4) has never
been affiliated with Houston GP Management, L.L.C. or Northeast Houston GP,
LP. There is no evidence to the contrary. Based on the evidence before us, section
153.102 does not support Trout’s argument that Basaldua is personally liable on
the promissory note.

      We also reject Trout’s contention that Basaldua is personally liable on the
promissory note because he negotiated and signed the Letter Agreement “as a
party” and as the CEO of GNHPA, Ltd.

      Basaldua’s position in GNHPA, Ltd. is irrelevant in this case. Trout did not
sue Basaldua for breach of the Letter Agreement, which was entered into between

                                          14
Trout and GNHPA, Ltd. Nor was there a breach of the Letter Agreement because
Trout acknowledged in his live pleading that, “[i]n addition to the initial
$400,000.00 payment, the defendants promised and in fact delivered a promissory
note for $50,000.00” as required by the Agreement. Trout sued Basaldua for
nonpayment of the promissory note, in which Northeast Houston Hospital, Ltd.,
and not GNHPA, Ltd. or Basaldua, promised to pay Trout $50,000. The Letter
Agreement and the promissory note are separate contracts.2 The fact that Basaldua
signed the Letter Agreement as GNHPA’s CEO does not make him personally
liable for the payment of the promissory note, which is a separate contract that
Northeast Houston Hospital, Ltd. promised to pay.

       We conclude that the trial court did not err in granting summary judgment
on the ground that Basaldua is not personally liable for payment of the promissory
note. We overrule Trout’s third issue.3

                                       Conclusion

       We affirm the trial court’s judgment.

                                          /s/    William J. Boyce
                                                 Justice

Panel consists of Chief Justice Hedges and Justices Boyce and Donovan.

       2
       “A promissory note is a contract evincing an obligation to pay money.” DeClaire v. G
& B McIntosh Family Ltd. P’ship, 260 S.W.3d 34, 44 (Tex. App.—Houston [1st Dist.] 2008, no
pet.).
       3
          We need not address Trout’s argument regarding whether the trial court erroneously
granted summary judgment on the ground that Trout’s claim is barred by the statute of
limitations. When the trial court’s order granting summary judgment does not specify the
grounds upon which it was granted, we must affirm the trial court’s judgment if any of the
theories advanced are meritorious. Urena, 162 S.W.3d at 550; Seber, 350 S.W.3d at 645.

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