No take backs: trial court reversed for initially allowing supplemental affidavit and then granting summary judgment before supplemental affidavit is filed

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In KLZ Diamond Tools, Inc. v. TKG General Agency, Inc. (July 18, 2016), the Dallas Court of Appeals considered an appeal of summary judgment granted in favor of TKG, the insurer defendant, against KLZ, the plaintiff insured. KLZ claimed that the insurer failed to pay the full amount owed under a policy relating to approximately $400,000 in stolen merchandise. The insurer advanced half, but requested additional documentation relating to the merchandise. KLZ contended that the request was just stalling, and after the insurer failed to pay the full amount of the claim, sued for breach of contract, insurance code violations, deceptive trade practices, among other claims. The insurer filed a motion for summary judgment. The district court struck KLZ’s responsive summary judgment evidence due to the failure to properly prove up the attached documents and said at the hearing that it had no choice but to grant summary judgment in the absence of responsive evidence. The district court did tell KLZ’s counsel that it would allow KLZ to supplement. But the district court entered an order granting summary judgment before the deadline it gave to KLZ for the supplement, which was timely filed.

The first issue on appeal was whether the trial court erred by orally stating that KLZ was permitted to supplement an affidavit but then granting summary judgment before the deadline given. Recognizing that the summary judgment rule anticipates a party’s summary judgment evidence may not initially be properly presented and allows supplementation, the Dallas Court of Appeals held that it was an abuse of discretion to grant summary judgment without waiting for the supplemental affidavit and without explaining its ruling after having initially granting leave to supplement. Considering the supplemental evidence, the Court further concluded that summary judgment was improper because KLZ had offered summary judgment evidence creating a question of fact as to whether the insurer had improperly refused to pay the entire claim.

KLZ Diamond Tools v TKG General Agency (July 18, 2016)

How not to respond to a summary judgment motion.

msjThe unfortunate plaintiff in K.W. Ministries v. Auction Credit Enterprises had trouble responding to the defendant’s summary judgment motions. They were set for hearing on September 15, 2014.  On September 8, the plaintiff filed a response that addressed only one of the claims and included no evidence. Three days before the hearing, it filed a “Document Supplement” to its response, but not a motion seeking leave to file that supplement.  Then, on the morning of the hearing, the plaintiff filed an amended response accompanied by an affidavit and other materials. At the hearing, its counsel asked the court to “receive my oral motion for leave to amend and accept our response to the summary judgment that was filed this morning.” Asked why he had not provided an affidavit to support the respSeptember-2014-PDF-Calendar-Letter-Format-US-Holidaysonse on the day it was due instead of that morning, counsel answered: “I don’t have a satisfactory answer for that, Your Honor.”  The response was thus not considered, and the Fifth Court affirmed, using the plain language of the relevant rule of procedure to reject plaintiff’s arguments about why it should have been.  No. 05-14-01392-CV (March 21, 2016) (mem. op.)

Experts, show your work or it isn’t summary judgment evidence.

Show your work

In Starwood Management, LLC v. Swaim, the Dallas Court of Appeals affirmed a summary judgment in favor of the defendant by holding that the plaintiff’s evidence of causation, an opinion from their expert witness, was conclusory and therefore not admissible summary judgment evidence. The opinion is a reminder that expert opinion evidence on summary judgment must be more than mere conclusions.

The facts of the case arose from plaintiff hiring the defendants, an attorney and his law firm, to recover an aircraft that was seized by the DEA for an allegedly illegal registration. The defendants were late in filing a claim with the DEA’s Forfeiture Counsel to recover the aircraft, causing the plaintiff’s federal claim for the aircraft to be dismissed. The affidavit offered by the plaintiff as evidence of causation was that of an attorney who had successfully represented the plaintiff in five previous aircraft seizure cases. His opinion was that if the plaintiff had timely filed its claim with the DEA such that the federal lawsuit would not have been dismissed, the DEA would have returned the aircraft as it had in those prior five case. The district court excluded the opinion and granted summary judgment in favor of the defendants.

The Dallas Court of Appeals affirmed because it held the expert’s opinion of causation was conclusory. Inexcusably passing on an opportunity to use one of this blogger’s favorite Latin phrases, ipse dixit, the Dallas Court of Appeals instead described the legal standard in less colorful but ultimately more helpful terms. “To avoid being conclusory, ‘[t]he expert must explain the basis of his statements to link his conclusions to the facts.’ An expert must also ‘[e]xplain how and why the negligence caused the injury.’” Or as I was told in math class, the expert must show his work. This expert failed to do that because, although he had past experience in other aircraft seizure cases in which the outcome was positive, he failed to describe the facts of those cases. As a result, he failed to link those cases to the one at hand, rendering his causation opinion a mere conclusion.

Starwood Management v. Swaim

Fact issues = Summary judgment reversal. Again.

Graman v. Graman involved a contentious dispute about the operation of a family restaurant business.  On a fraud claim related to a loan, a witness testified to a conversation with the defendant: “We ended up talking about his loans his parents made to him and he told me that he never intended to pay his parents back at that point in time . . . He told me that he never intended on paying them back — and that’s why he never signed on what I recall him telling me was approximately $850,000.  Finding that the first statement was not evidence of the defendant’s intent at the time of the loans, the Fifth Court then found: “As for the second statement, a fact finder could determine that statement showed Jason’s intent at the time of all the loans,” and reversed a no-evidence summary judgment on this claim.  No. 05-14-01254-CV (Jan. 20, 2016) (mem. op.)

Fact issues = Summary judgment reversal.

The issue in Tempay, Inc. v. Tanintco, Inc. was whether a notice of assignment, required to be sent to an account debtor as part of a factoring arrangement, satisfied section 9.406 of the UCC.  That provision requires that the notice “reasonably identify the rights assigned,” and courts have divided about exactly what it requires, and whether summary judgment is appropriate.  Here, in an analysis of broader interest about the appropriate standards for summary judgment, the Fifth Court found fact issues about the adequacy of the notice and whether it had been revoked.  No. 05-15-00130-CV (Jan. 15, 2016) (mem. op.)

How much precision does a summary judgment motion need?

precision chartDefendant won summary judgment, with a combination of no-evidence and traditional grounds, on fraudulent transfer claims.  Renate Nixdorf v. Midland Investors LLC, No. 05-14-01258-CV (Dec. 8, 2015) (mem. op.)  The Dallas Court of Appeals reversed, finding problems with what defensive matters were appropriately addressed by a no evidence summary judgment motion and what specific transactions were at issue, as well as proof of “reasonably equivalent value” that was conclusory.

Witnesses Needed

After a night of drinking in Uptown, Shawn Strumph was found by a jogger the next morning in a creekbed beneath a bridge owned by CC-Turtle Creek. Medical records contained several versions of how he ended up there, including assault, jumping, or simply falling. Shawn and his parents sued for dram shop and premises liability, but the trial court granted no-evidence summary judgment on the element of proximate cause. Because Shawn remembered nothing of how his injuries happened, and because there were no witnesses to the incident, the plaintiffs could not carry their burden under any theory of liability.

Stumph v. Dallas Lemmon West, Inc., No. 05-14-01044-CV

Evidence Held to Be Insufficient on Interlocutory Appeal Is Still Insufficient on Summary Judgment

In early 2012, the Dallas Court of Appeals reversed a temporary injunction that would have prevented BB&T from foreclosing on a pair of properties secured by a $10 million promissory note. Two and a half years later, matters have not improved for the borrowers, as the Court has now affirmed summary judgment for the bank.

In responding to the no-evidence summary judgment motion, the borrowers had “relied entirely on evidence presented at the temporary judgment hearing” to show that they had a valid contract with BB&T that superseded the bank’s right to foreclose. Because the Court had previously held that this evidence amounted to nothing more than an unenforceable “agreement to agree,” the law of the case doctrine prevented the outcome from being any different in this subsequent appeal. The same evidence was also held to be insufficient to support the borrowers’ claims for fraud and declaratory judgment, while a money had and received claim failed because the borrowers had made a $1.8 million payment with full knowledge of the facts and without fraud or duress. Finally, the trial court had not abused its discretion by striking the borrowers’ fifth amended petition because it had been filed outside the deadline in the court’s scheduling order, was not filed with leave of court, and was prejudicial to the bank because it sought to add a claim that “would effectively inject new substantive matters into the litigation by reinjecting old ones.”

TCI Luna Ventures, LLC v. Branch Banking & Tr. Co., No. 05-13-01221-CV

It Takes Evidence to Dispute Ownership of a Promissory Note

The guarantors of a construction loan agreement and promissory note sought to avoid a deficiency judgment by disputing a successor bank’s summary judgment evidence that it was the holder of the note. The Dallas Court of Appeals was having none of that oft-repeated claim. In the absence of controverting evidence, affidavit testimony and a copy of the note are sufficient to prove it up for summary judgment purposes, and an affidavit is likewise sufficient to establish ownership or assignment of the note. Because none of the summary judgment evidence contradicted the bank’s affidavit testimony, summary judgment for the deficiency was properly granted. The Court went on to rule that the bank was not required to include a complete history of payment activity on the account as part of its summary judgment evidence, and that the guarantors’ own affidavits did not create a fact issue on the issue of the property’s fair market value.

Cha v. Branch Banking & Trust Co., No. 05-14-00926-CV

All Independent Grounds

The owner of an apartment complex sued the builder for construction defect claims. The defendant moved for summary judgment on limitations and lack of notice, which is an element of the plaintiff’s express warranty claim. The trial court granted the summary judgment motion without specifying the grounds. For reasons that are not clear from the opinion, the appellant limited its issues on appeal to the express warranty claim, but only addressed the limitations argument. That resulted in affirmation of the summary judgment ruling.  Because the appellant failed to challenge the other ground — i.e., lack of notice — on which summary judgment could have been granted, the Court of Appeals upheld the judgment based on the unchallenged ground.

ZZ&Z Props., Ltd. v. ZCC-ZPL,LLP, No. 05-14-00812-CV