Mechanic’s Lien > Seller’s Security Interest

The buyer of a used Inifiniti M45 brought the car to Crest Infiniti and approved nearly $6,000 in maintenance and repair work. But after the repairs were completed, the owner failed to pay for the work or pick up the car. Unsurprisingly, he had also failed to keep up on his payments to the used vehicle company that had financed his purchase, and the seller sent a repo company over to Crest’s lot to recover the car. Crest sued for tortious interference and conversion but lost a bench trial. The Court of Appeals reversed, holding that the undisputed evidence established Crest had a possessory mechanic’s lien on the vehicle, that the mechanic’s lien took priority over the seller’s security interest as a matter of law, and that the seller had converted the car when the repo driver removed it from Crest’s lot without permission. The Court therefore remanded the case to the trial court to enter judgment in favor of Crest and to consider an award of attorney fees to it as the prevailing party under section 70.008 of the Property Code.

Crest Infiniti II, LP v. Texas RV Outlet, No. 05-13-01285-CV

On Wire Fraud, Quasi-Contract, and Summary Judgment

Gary Cooper thought he was dealing with an authorized representative of Lawyers Title Company when he deposited $1.8 million in escrow for the purchase of property in Fort Worth. In reality, Jason Chumley was an independent contractor working for an attorney for Lawyers Title. But the Fort Worth project never developed, and Chumley and two of Cooper’s business associates instead applied the money to pay off four liens on a McKinney Avenue property in Dallas. That transaction led to federal indictments for wire fraud, as well as a lawsuit by Cooper against numerous parties in an effort to recover the $1.8 million. The trial court granted summary judgment for Cooper on his claims for bailment, conversion, and money had and received, while denying Lawyers Title’s cross-motion. Those claims were then severed from the rest of the case, thereby enabling an immediate appeal. The case turned largely on whether Lawyers Title had ever received Cooper’s funds, as they had been wired to an account maintained by the title company’s attorney. There was conflicting evidence on whether Lawyers Title actually controlled that account, which was a genuine issue of material fact and required reversal of summary judgment on all three quasi-contract claims.

Lawyers Title Co. v. J.G. Cooper Dev,, Inc., No. 05-11-01537-CV

Don’t Ignore Motions for Summary Judgment

The Court affirmed a summary judgment in favor of Frost Bank on counterclaims related to a loan default. TAM failed to pay off a loan it received from Frost by the maturity date stated in the written loan agreement. Frost setoff part of the amount due with money from TAM’s operating account and sued for the remainder. TAM counterclaimed, alleging that Frost had orally extended the maturity date in a meeting with TAM’s representative and that Frost’s wrongful setoff caused TAM significant damage. Frost moved for, and TAM failed to challenge, traditional summary judgment on its breach of contract claims, which the court granted based primarily on the written loan agreement. It then granted no-evidence summary judgments dismissing TAM’s counterclaims related to the alleged oral extension. TAM appealed, challenging the trial court’s judgment on TAM’s counterclaims for breach of contract, promissory estoppel, negligent misrepresentation, fraud, conversion, and wrongful setoff.

On appeal, the court held that because TAM did not challenge the traditional summary judgment on Frost’s breach of contract claim, the trial court’s judgment as to the enforceability of the written agreement between TAM and Frost was binding. Thus, TAM’s corresponding counterclaims for breach of contract, negligent misrepresentation, and fraud, which were based on the alleged oral extension, failed due to the written agreement’s enforceability. The court agreed that there was no evidence that TAM relied on the alleged oral extension in its decision to deposit more money into the operating account, so TAM’s promissory estoppel claim also failed. And because TAM’s conversion and wrongful setoff claims required that TAM be entitled to possession of the funds in the operating account, and thus relied on the success of at least one of TAM’s other failed counterclaims, those claims likewise failed.

Trevino & Associates Mechanical v. Frost National Bank, No. 05-11-00650-CV

What is the Fair Market Value of a Used Walk-in Cooler?

R.J. Suarez Enterprises owned a sandwich shop, which was operated out of a leased location owned by PNYX.  After notifying PNYX that it would not renew the lease, Suarez vacated the premises, but claimed that it was entitled to take the walk-in cooler, walk-in freezer, sandwich unit, beverage cooler, and ice machine. PNYX disagreed. Suarez sued for conversion, and won.  The trial court, however, awarded no damages because Suarez failed to present evidence of the property’s fair market value.

The Court of Appeals sustained the decision, finding that “even when there is evidence supporting a finding of conversion, there must be evidence of fair market value of the converted property to support a damages award.”  Suarez, it held, did not present any evidence of the property’s fair market value, and instead only offered as damages evidence of the property’s replacement cost.  This was insufficient, as replacement value and fair market value are not interchangeable.

R.J. Suarez Enterprises, Inc. v. PNYX LP, et al., No. 05-11-00934

The Case of the Vanishing Bulldozer

Memorandum opinions don’t usually run as long as 12 pages, but that’s how much space it took to sort out a dispute between a property owner and the contractor he hired to do some paving work on the property.  The contractor seemingly abandoned the unfinished project — which was supposed to have taken 7-10 days — after two months, and left behind his rented bulldozer.  The property owner eventually terminated the parties’ contract, but refused to hand over the bulldozer.  The bulldozer subsequently disappeared from the property, with the landowner claiming it had been stolen (a claim the trial court deemed “not credible”).

The trial court found the property owner liable for conversion of the bulldozer, and the court of appeals affirmed.  The court held that the trial testimony adequately supported the findings that (1) the lessor was the proper owner of the vehicle, (2) the landowner had exercised dominion and control over it, (3) the property owner had not acted in good faith in refusing to return the bulldozer, and (4) the alleged superseding cause of the bulldozer’s mysterious disappearance was irrelevant because the alleged theft occurred after the landowner had refused to return it to the rightful owner.  The court of appeals also held that even though the trial court erred by allowing two undisclosed witnesses to testify at trial, that error was harmless because their testimony was cumulative of what other witnesses had also testified.  Finally, the court reversed the trial court’s refusal to grant judgment in favor of the property owner on his breach of contract claim, holding that the evidence supported the breach of contract claim as a matter of law.  Accordingly, the court of appeals remanded the case to the trial court for a determination of the landowner’s damages and the possible recovery of attorney fees.

Miller v. Carter., No. 05-11-00193-CV