The court affirmed summary judgment in a mortgage foreclosure case against Givens, the mortgagor. Givens defaulted on a Note and Deed of Trust. The lender, MidFirst, noticed Givens of the default through its servicer, Midland. Midland eventually noticed the Note’s acceleration and foreclosure sale through its legal counsel, BD, and filed this notice with the Dallas County Clerk. Givens was provided with a reinstatement opportunity but did not tender the required funds by the deadline, and the property was sold in foreclosure. Givens sued Midland, MidFirst, and BD asserting various claims. The court granted summary judgment for the defendants on each claim.

On appeal, Givens first argued that because the Deed of Trust provides that either the lender or trustee shall give notice of the foreclosure sale, notice from BD was inadequate. The court rejected this argument because the evidence conclusively established that BD acted as legal counsel for Midland, who in turn acted as mortgage servicer for MidFirst, and such notice is adequate under Texas law. The court next rejected Givens’s argument that the recording of notice of the foreclosure sale was inadequate, holding that a party need not record such notice in the permanent deed records, but may do so with the county clerk. Finally, the court held that Givens’s was given adequate opportunity to reinstate the loan.

Givens v. Midland Mortgage Co, et al., 05-11-00524-CV

The court affirmed the trial court’s judgment in this commercial real estate lawsuit. Jarvis provided a loan through its loan servicer, NAC, to CAS for the purchase of an apartment complex. The loan documentation identified NAC as the “servicer” and the lender as Jarvis “c/o” NAC. CAS made monthly loan payments directly to NAC, who then disbursed them to Jarvis. CAS later sold the property to K&E through Stewart Title. Stewart Title paid the loan payoff amount directly to NAC for payment to Jarvis, as NAC had done for two other loan payoff transactions to Jarvis in the past. But in this case, NAC did not provide the funds to Jarvis and instead purported to continue making CAS’s monthly payments without notifying Jarvis of the sale. When NAC stopped making those payments, evidently due to insolvency, Jarvis learned of the property sale and sought to foreclose on the property.

K&E filed a declaratory action asserting that the loan was paid off and seeking to prevent foreclosure. Jarvis filed a third-party petition against CAS, Stewart Title asserting negligence and breach of contract claims against Stewart Title for making the loan payment to NAC instead of directly to Jarvis. Jarvis also sought a declaration that the loan was not discharged and sought to quiet title. At trial, Jarvis moved to exclude evidence of the other loans serviced by NAC in which NAC received the payoff amount and disbursed it to Jarvis, which was denied. Based on this evidence, the trial court found that Jarvis and NAC established a procedure where NAC received payoff funds and disbursed them to Jarvis and that NAC had actual and apparent authority to accept the payoff amount here. It entered judgment for K&E, declaring that the loan was fully paid, enjoining Jarvis from attempting to foreclose on the party, and awarding K&E attorney’s fees. The court also granted K&E and Stewart Title summary judgment on Jarvis’s negligence and breach of contract claims and severed out Jarvis’s claims against CAS.

On appeal, Jarvis argued that the trial court erred by denying its motion to exclude because the loan documents dictated the relationship between the parties, and thus the parol evidence rule precluded the evidence of Jarvis and NAC’s other course of dealings. The court held that the loan documents indicated that NAC had authority to act for Jarvis, but the scope of that authority was unclear. Thus, parol evidence showing the scope of NAC’s authority to accept loan payoff amounts and not contradicting the terms of the documents was not barred. Additionally, the evidence was sufficient to show that NAC had implied actual authority to accept the loan payoff. This holding also disposed of Jarvis’s claims against Stewart Title, whose transfer of funds to NAC constituted payment to Jarvis rather than a breach of any duty to Jarvis, and Jarvis’s declaratory action because its lien and deed of trust on the property was discharged. Finally, K&E’s attorney’s fees recovery was warranted because the UDJA permits a declaratory action brought to invalidate a real estate note, as well as any lien securing the note.

Jarvis v. K&E RE One, LLC, et al., 05-11-00341-CV

The court affirmed the dismissal of a condemnation case in which the defendant failed to appear at trial. The City petitioned for condemnation and special commissioners made an award to McKinney for the taking. McKinney filed an objection, but when the case was called for trial McKinney’s attorney withdrew and another person, Boles, attempted to file a motion for continuance on behalf of McKinney, who was absent. Boles stated that he had “power of attorney” to represent McKinney, though he was not, in fact, a licensed attorney. The court refused to consider the motion and dismissed the case due to McKinney’s absence. On pro se appeal, the court held that the trial court did not abuse its discretion because McKinney presented no evidence that he was not negligent for failing to find representation to replace his original attorney, and the could determine that such a failure was his own fault.

W.A. McKinney v. City of Cedar Hill, No. 05-12-00368-CV

Van Peterson entered into a contract with ADT to provide commercial alarm services to his jewelry store. Allegedly, an unidentified man wearing an ADT uniform and driving an ADT van came to the jewelry store and sold Van Peterson a device for its alarm system, but instead of installing the device, the man disabled the alarm. Van Peterson’s store was burgled soon after. Van Peterson brought various tort, fraud and DTPA claims against ADT. ADT filed a traditional motion for summary judgment on the tort claims, arguing that Van Peterson waived liability for these claims in the contract, and a no-evidence motion on the other claims. The trial court eventually denied the motions but permitted an interlocutory appeal under former section 51.014(d) of the Texas Civil Practice and Remedies Code.

On appeal, the court first held that ADT could not raise issues first advanced in its reply in support of its no-evidence motion for summary judgment. The court reversed the trial court’s denial of summary judgment on the tort claims because the parties’ contract included a limitation-of-liability provision as to those claims. Such waivers are not invalidated by the DTPA, which only limits waivers of DTPA claims. Finally, the court held that ADT could not challenge on appeal Van Peterson’s subrogated insurer’s pursuit of a DTPA claim because only Van Peterson was a party to the litigation and any opinion as to the insurer would be advisory.

ADT Security Services, Inc. v. Van Peterson Fine Jewelers, No. 05-11-01468-CV

The court dismissed an agreed interlocutory appeal from the trial court’s denial of competing motions for summary judgment related to a home foreclosure for want of jurisdiction. The Guzmans obtained a home mortgage on which the Bank eventually foreclosed. The Guzmans sued for wrongful foreclosure and breach of contract and argued that the Bank lacked standing to foreclose on the property or enforce the original note. Both sides moved for summary judgment, and the trial court denied the competing motions on the basis that the parties failed to satisfy their burdens for summary judgment. In agreement on the facts and the relevant legal issues, the parties filed a joint motion to appeal from interlocutory order under section 51.014(d) of the Civil Practice and Remedies Code contending that the “issues raised in [the] dispositive motions involve controlling questions of law as to which there is a substantial ground for difference of opinion, and obtaining a ruling on those issues of law from the appeals court will materially advance the outcome of this case.”

In its jurisdictional analysis, however, the court of appeals emphasized the fact that the trial court did not substantively rule on the controlling legal issues presented in the agreed interlocutory appeal. Instead, it submitted the issues to the appellate court for an advisory opinion – contrary to the purpose of section 51.014(d) – and thus the court had no jurisdiction over the appeal under that section.

Bank of New York Mellon v. Guzman, 05-12-00417-CV

The court affirmed a summary judgment in favor of the bank in a foreclosure case dealing with the waiver statutory offset rights contained in Chapter 51 of the Texas Property Code. A builder entered construction loan agreement secured by four properties and signed a personal guaranty of the loan, eventually defaulting. The bank foreclosed on and sold the properties and sued the builder for the deficiency. The builder invoked Chapter 51, asking the court to determine the fair market value of the properties for the deficiency calculation rather than the foreclosure sale price. Town North moved for summary judgment arguing that the guaranty included a waiver of his right to claim any deductions or offsets from the amount guaranteed including any right to seek a reduction in the deficiency under section 51.003, which the trial court granted and then entered a judgment on the deficiency.

On appeal, the court cited its opinion in Interstate 35/Chisam Road, L.P. v. Moayedi, No. 05-11-00209-CV, 2012 WL 3125148 (Tex. App.—Dallas Aug. 2, 2012, no pet.) holding that the rights provided by section 51.003 are subject to waiver. It also cited King v. Park Cities Bank, No. 05-11- 00593-CV, 2012 WL 3144881, at *3 (Tex. App.—Dallas Aug. 3, 2012, no pet. h.) to reject the builder’s argument that language in the guaranty waiving “any defenses given to guarantors at law or in equity other than actual payment and performance of the indebtedness” did not encompass a waiver of section 51.003’s right of offset despite the guaranty’s later reference to a “claim of setoff.” Thus, the court held that the builder waived his rights under section 51.003.

Smith v. Town North Bank, 05-11-00520-CV

The court affirmed a judgment in a construction contract dispute between two subcontractors. The general contractor of a shopping center project, Mycon, subcontracted with Bulldog to fabricate the steel and erect the steel-reinforced concrete panels around the center’s trash dumpsters. Bulldog subcontracted Top Flight to erect the panels. Top flight testified that Mycon directed the concrete pouring to take place well outside of the range that Top Flight had instructed. Top Flight then requested a $7,500 change order from Bulldog for the extra erection cost, which Mycon refused. Under pressure from Mycon, Bulldog eventually installed the panels themselves, without notifying Top Flight, and then invoiced and eventually sued Top Flight for the cost of installation. Top Flight counterclaimed for the 10% retainage amount left on the contract. Finding that Bulldog did not notify Top Flight to complete installation of the panels breached the subcontract by preventing Top Flight’s performance, the trial court rendered judgment for Top Flight for its retainage, interest, and attorney’s fees.

On appeal, Bulldog did not challenge the trial court’s finding that Top Flight was never notified to complete the installation of the dumpster panels despite the extra cost, and without allowing Top Flight an opportunity to perform, Bulldog undertook to install the dumpster panels using its own employees. The court held the fact that Bulldog prevented Top Flight from performing under the contract, which supported the conclusion that Top Flight did not breach the contract and that Bulldog did.

Bulldog Ironworks, LLC v. Top Flight Steel, Inc., 05-10-01360-CV

The court issued a memorandum opinion clarifying the appellate timetable after the filing of a foreign judgment in a Texas court. Appellee received a judgment in a New York court and filed it in the Texas trial court on September 29, 2011. Appellant filed a notice of appeal on June 20, 2012. The court questioned whether the notice of appeal was untimely. In her jurisdictional brief, appellant argued that the deadlines for post-judgment motions set forth in Tex. R. Civ. P. 329b run from the date the judgment was signed in the New York court, and thus contended that she never had an opportunity to contest the foreign judgment because the deadlines to do so had expired before appellee filed the foreign judgment in the Texas court.

The court held that Rule 329b applies only to Texas judgments. Under Tex. R. App. P. 26.1(a)(1), the ninety day deadline for the appellant to filed her notice of appeal ran from the date that the appellee filed the foreign judgment in the Texas court. Thus, she had filed her notice of appeal more than five months past the deadline, and the court dismissed the appeal for want of jurisdiction.

Watel v. Dunmann Realty, LLC, No. 05-12-00938-CV

The court affirmed a judgment in favor of a hauling company on its breach of contract claim against subcontractors on a city construction project. The parties disputed whether a contract was formed to haul dirt and concrete debris from the project for $40 an hour or for $40 a load, and both presented competing evidence and witnesses that testified to their contended contractual rate. After a bench trial, the trial court found that Mejia offered to use his trucks and drivers to haul dirt and concrete debris from the project on behalf of appellants for $40 an hour, that Mejia communicated that offer to De Los Santos, and that De Los Santos accepted the offer. It then rendered judgment in favor of Mejia for $11,794 plus attorney’s fees.

On appeal, Appellants challenged the legal sufficiency of the evidence supporting the trial court’s judgment, and the central challenge was to the evidence supporting the finding that the parties formed a contract at the hourly rate. Appellants also argued that the conflict in the evidence about whether they would pay $40 a load or $40 an hour made the contract ambiguous. The court held that the dispute did not present an issue of contract ambiguity but instead an issue of fact about the actual terms of the contract. Because the evidence was sufficient to support both $40 a load and $40 an hour, the resolution of the conflict turned on the credibility and demeanor of the witnesses – a finding that an appellate court will not disturb.

De Los Santos v. Mejia, No. 05-10-01662-CV

The court reversed a judgment awarding an law firm lost profits in an action against a litigation services company. Elrod, a litigation law firm, hired A-Legal to perform support services related to E-Discovery. Two days later, Elrod pulled the job when A-Legal doubled the price it previously quoted. Both parties sued each other for breach of contract. Elrod claimed damages from lost revenue and lost business opportunities due to the time its attorney’s and staff lost dealing with A-Legal’s breach. Elrod presented evidence of lost revenue, which it valued at $20,000, but the only specific evidence relating to a worker’s time lost dealing with the breach came from one attorney, Nassar. Nassar testified that her hourly rate is $325 and that she spent about eighty hours in total “dealing with the situation.” Elrod made no attempt to establish what expenses would have been attributable to Nassar’s billable hours or whether the firm lost any specific business or billing during that time. The trial court entered a judgment awarding $20,000 lost profits plus attorney’s fees.

On appeal, the court noted that the only calculation that can be made from Elrod’s evidence is potential gross revenue brought in by Nassar, not net profits, because Elrod presented no evidence to show any expenses related to that revenue or that she actually billed less time because of the breach than she would have otherwise. Thus, the evidence was legally insufficient to show lost profits, the only measure of damages presented, and the court reversed and rendered a take nothing judgment.

A-Delta Overnight Legal Reproduction Services Corp. v. David W. Elrod, PLLC, No. 05-11-00708-CV

The Texas Supreme Court will be down to eight justices again at the end of this month, as Justice Dale Wainwright announced his resignation from the court last week.  Justice Wainwright served on the court for almost a decade.  He authored a number of important opinions during that time, including Texas Department of Parks and Wildlife v. Miranda and Severance v. Patterson.  I had the honor of serving as his law clerk during the 2009-10 term, where I was able to see the strength of his convictions and his passion for the law first-hand.  We wish him well in his future endeavors.

The court affirmed the trial court’s summary judgment dismissing a plaintiff’s claims against his former employer for breach of the employment contract. Twin Lakes Golf Course hired Holloway to move from Illinois and serve as its head pro for three years. After further negotiations in July 2008, Twin Lakes and Holloway orally agreed to an employment term lasting one year with an agreement to extend for another three years based on his performance. Holloway started working on August 5, 2008, and soon after Twin Lakes presented a written contract, dated July 23, containing the terms of the agreement. Holloway signed the document but Twin Lakes never did. Holloway was fired eight weeks later and he sued for breach of contract and fraudulent inducement. The trial court granted summary judgment in favor of Twin Lakes.

On appeal, the court determined that the agreement was not enforceable because, as an agreement that could not be performed within one year, it fell within the statute of frauds. The court noted that the contract was negotiated in July 2008 and the document that Holloway signed was dated July 23. Thus, the agreement was made in July 2008 and performance was to end in August 2009 – over one year. Additionally, Holloway’s employment was to last from August 5, 2008 to August 5, 2009 – one year and one day. The court also held that Holloway’s affidavit testimony stating that the agreement could be performed within one year was conclusory. Finally, his partial performance did not remove the agreement from the statute of frauds because he was compensated. Thus, the agreement was unenforceable and Holloway’s claims failed as a matter of law.

Holloway v. Dekkers and Twin Lakes Golf Course, Inc., 05-10-01132-CV

For further analysis of ARGO and the related shareholder oppression cases recently issued by the Dallas Court of Appeals, please see our “hot topic” section on shareholder oppression.

Another installment in the court’s recent spate of shareholder oppression opinions finds the court reversing a judgment in favor of the minority shareholder. Martin and Shagrithaya started a software company named ARGO in 1980 with $1000. Martin and Shagrithaya retained 53% and 47% interests in ARGO respectively and were the sole board members, but Martin had the right to appoint a tiebreaker. There was no express agreement as to employment or compensation, which was determined on a year to year basis. For 25 years, they received equal compensation. By 2008, ARGO was valued at $152 million.

In the early 2000s, tensions arose as Martin became unhappy with what he saw as Shagrithaya’s refusal to take on executive responsibilities. In 2006, Martin unilaterally cut Shagrithaya’s annual compensation from $1 million to $300,000. Soon after, Martin and ARGO’s management began to isolate Shagrithaya. Around this time, the IRS performed an audit of ARGO and found assess it over $7 million in retained earnings tax. ARGO contested this assessment and won. Shagrithaya was not informed of the assessment or contest.

After an independent appraisal of ARGO, Martin offered Shagrithaya $66 million for his shares, representing their values less a 35% minority holder discount. Shagrithaya refused, arguing that there should be no discount because ARGO is not a third-party. Shagrithaya demanded an audit of ARGO and proposed an alternative plan to restore his previous salary, explore a sale of ARGO, and issue an $85 million dividend. ARGO allowed the audit, which uncovered that Martin had misappropriated ARGO funds to his personal use. Martin reimbursed ARGO the amount appropriated plus some amount more. In a final board meeting in December 2008, Martin appointed ARGO president Engebos as the third board member. They voted in favor of Martin’s plans regarding compensation, executive positions, and a$25 million dividend.

After losing the vote on all three issues, Shagrithaya resigned and filed a suit for shareholder oppression and other torts. At trial, Shagrithaya advanced the theory that Martin schemed to withhold compensation and dividends to ARGO so that ARGO could purchase Shagrithaya’s shares at a minority discount and force Shagrithaya out of the company. The jury found in Shagrithaya’s favor, and the trial court entered a judgment awarding Shagrithaya back compensation and ordering ARGO to issue an $85 million dividend.

On appeal, Martin and ARGO challenged the legal and factual sufficiency of the evidence supporting the jury’s finding of suppression. The court reviewed eleven of Martin and AGRO’s actions that the jury found to be oppressive to determine whether they (1) substantially defeated Shagrithaya’s objectively reasonable expectations central to his decision to join the venture or (2) constituted “burdensome, harsh, or wrongful conduct; a lack of probity and fair dealing in the company’s affairs to the prejudice of [Shagrithaya]; or a visible departure from the standards of fair dealing and a violation of fair play.”

ACTS 1 and 7: Martin reduced Shagrithaya’s annual compensation by 70 percent and forced him to report to ARGO’s president, Engebos, without the approval of the Board of Directors or shareholders. The court held that it was not reasonable for Shagrithaya to expect to maintain a level of compensation equal to Martin’s indefinitely without an employment contract. Additionally, the absence of board approval was later corrected at the December 2008 board meeting and the board retroactively cured the discrepancy in Shagrithaya’s actual past compensation. Though Shagrithaya voted against the reduction, the court noted that the inability to control board decisions is inherent in the position of a minority shareholder, citing Patton v. Nicholas. Finally, it did not prejudice Shagrithaya’s rights as a board member because these issues were purely employment matters.

ACT 2: ARGO maintained Martin’s compensation at $1 million without board approval. Shagrithaya argued that this constituted a de facto dividend to Martin, but the court found no evidence of such. And again, the boards retroactively approved and cured this action.

ACTS 3-4: Martin schemed to buy out Shagrithaya retaining earnings and refusing to pay dividends. The court held that these actions alone did not constitute oppression. The dividend were equally suppressed for Martin, and some dividends were issued and shared accordingly with Shagrithaya. Further, there was no evidence that these actions reduced Shagrithaya’s share value. The court noted that Shagrithaya had no specific expectation of dividends, and shareholders have not general expectation of dividends.

ACTS 5 and 11: Martin did not disclose the IRS assessment or ARGO’s engagement of a law firm to challenge it. The court held that because the assessment was reversed, there was no harm to Shagrithaya’s interests, and the legal representation benefited ARGO by securing the reversal.

ACT 6: Martin offered Shagrithaya $66 million for his shares at a minority discount and forced him to accept by withholding dividends. The court held that because Shagrithaya was never forced to relinquish ownership – his intent to sell was voluntary – the fair market value of his minority shares, including the discount, was the proper valuation. Using the shares’ enterprise value in the sale would only be required if ARGO or Martin were forced to purchase them. Further, the mere purchase offer, without other financial pressure, was not oppressive.

ACTS 8-10: Martin’s misappropriation of ARGO assets for his personal use. Martin’s repayment remedied any harm to Shagrithaya prior to trial.

The jury also found for Shagrithaya on his claims for fraud, breach of implied agreement, and breach of fiduciary duty. The fraud claim related to Martin’s failure to disclose his buyout scheme. The court held that his failure to disclose did not harm Shagrithaya because Shagrithaya could not force a dividend and possible sale of shares at that time were to speculative. Shagrithaya’s alleged Martin breached an implied agreement to continue their practice of equal compensation. The court held that this practice was not sufficient to establish an agreement, and in any case the terms of any agreement were too indefinite. Finally, Martin’s retaining of earnings, misuse of funds, and sale of ARGO’s assets did not cause Shagrithaya harm even if it breached his fiduciary duties.

ARGO Data Resource Corporation and Max Martin v. Balkrishna Shagrithaya, 05-10-00690-CV

The court affirmed a take-nothing summary judgment on fraud and promissory estoppel claims arising out of the purchase of land. Mavex purchased property, which was subject to subject to a easement, for the construction of a condominium complex. The parties to the easement amended it to allow for the condominium and the use of an adjacent parking deck subject to approval of the construction plans. Metzler, one of the easement holders, later refused to approve the condominium plans due to a dispute over the correct allocation of parking spaces for the exclusive use of the condominium tower as Mavex’s plans specified. Mavex sued Metzler and its predecessors-in-interest. Mavex alleged that before and after they entered into the purchase agreement for the property, the defendants assured Mavex that the plans were acceptable and that they relied on this approval of the condominium plans. The trial court granted summary judgment against Mavex.

On appeal, the court held that Mavex presented no evidence to support their promissory estoppel and fraud claims because Mavex’s affidavit evidence merely provided conclusory allegations that the appellees made assurances Mavex relied on, but did not identify with any specificity when the statements were made nor what actions appellants took in reliance on them. The court further held that, at any rate, the alleged statements were insufficient to support Mavex’s claims, and affirmed the summary judgment.

Mavex Management Corporation v. Hines Dallas Hotel Limited Partnership, et al, 05-09-01281-CV

In this certificate of merit case, the court affirmed the trial court’s denial of the defendant-architect’s motion to dismiss. After walking into a very clean glass wall in the lobby of a condominium complex, Zion sued the owners of the building and added claims against the architect, MSM, for negligently designing the wall. He included with his petition a certificate of merit, which was an affidavit authored by architect James R. Drebelbis, as required by § 150.002 of the Texas Civil Practice and Remedies Code. MSM filed a motion to dismiss, arguing the affidavit did not meet the requirements of § 150.002. The trial court denied MSM’s motion to dismiss.

On appeal, the court first held that a certificate of merit need not demonstrate the affiant’s practice in the same sub-specialty as the defendant. Drebelbis’s affidavit, which stated he was knowledgeable in the area of architecture, was therefore sufficient. Next, the court held that the certificate of merit need not state the applicable standard of care to satisfy the statute’s requirement that it allege a negligent action, error, or omission. Finally, the court held that the affidavit included a sufficient factual basis for Zion’s claims, as opposed to merely conclusory opinions, to meet the requirements of § 150.002. Thus, the affidavit was sufficient and the court affirmed the trial court’s order.

Morrison Seifert Murphy, Inc. v. Buck Zion, 05-11-00621-CV

The court reversed the dismissal of a claim against an engineering consultant in an opinion dealing with the “certificate of merit” requirement in section 150.002 of the Texas Civil Practice and Remedies Code. Though there was no written contract between JJW and Strand, JJW originally asserted claims against Strand for breach of contract and negligence arising from a cracked foundation Strand designed. JJW later dropped its negligence claims and asserted only the contract action against Strand in its third amended petition, claiming that it entered an oral or implied contract with Strand to perform a “pre-pour” inspection of the foundation. JJW alleged that Strand breached this contract by failing to measure the depth of the concrete slab. Strand moved to dismiss the action because JJW failed to file a certificate of merit with its petition. JJW responded that the applicable 2005 version of section 150.002 does not apply to a claim for breach of contract. The trial court dismissed the claim.

On appeal, the court first held that it would consider the live pleadings at the time of the trial court’s ruling on the motion to dismiss to determine whether and how section 150.002 applied to the plaintiff’s claims. Examining the third amended petition, the court agreed with the majority of the Texas courts of appeals and held that the 2005 version of section 150.002 requires a certificate for negligence claims only and not for non-negligence claims. In doing so, the court rejected the approach recently taken by an en banc panel of the Austin court of appeals. The court noted, however, that it still must determine whether JJW’s contract claim was truly based on Strand’s alleged contractual obligations to JJW or was merely a negligence claim recast as breach of contract.

To determine the nature of the claim, the court looked to the source of the duty owed and the nature of the remedy sought. The court held that because JJW alleged that Strand had an express or implied contractual obligation to measure the depth of the slab – independent from its duty to exercise a professional degree of care, skill, and competence in performing the pre-pour inspection – the duty arose from the contract. The court also held that the remedy – consequential damages for the diminution in value of the residence and the loss of use and other damages due to necessary repairs – was based in contract because those damages are “consequences of the alleged failure to perform a pre-pour inspection.” Thus, the court concluded that the nature of the claim was, indeed, contractual.

JJW Development, LLC v. Ramer Concrete, Inc. and Strand Systems Engineering, Inc., 05-10-01359-CV

In a memorandum opinion, the court affirmed the trial court’s judgment in a forcible detainer action. Felix Hornsby executed a promissory note secured by a deed of trust covering the property at issue. After he defaulted on the note, U.S. Bank bought the property at foreclosure sale and conveyed it to the Secretary of Veteran Affairs. The SVA brought this forcible detainer action against Hornsby, and the trial court rendered judgment in favor of the SVA. On appeal, Hornsby argued that the SVA had to show it was entitled to enforce the terms of the deed of trust in order to establish a landlord-tenant relationship between them, but failed to do so. The court held that SVA presented sufficient evidence to show its superior right to possession of the property and that Hornsby’s challenge to the chain of title could not be properly adjudicated in a forcible detainer action.

Hornsby v. Secretary of Veterans Affairs, No. 05-11-01075-CV

In a memorandum opinion, the court affirmed a trial court’s judgment in a declaratory action regarding the validity of a warranty deed. Knight brought the underlying action to declare the deed, which evidenced the transfer of his ownership in property to Minter, a forgery. The trial court concluded that Knight had indeed signed the deed transferring ownership of the Property to Minter. On appeal, Knight argued that the trial court erred by denying his motion for new trial based on “newly discovered evidence,” including evidence that the notary who witnessed Minter’s warranty deed had been indicted for fraud and entered a plea agreement, as well as the affidavit of a mortgage loan underwriter stating the transaction required a sales contract. The court rejected Knight’s argument because he failed to establish that he lacked actual knowledge of the notary’s criminal history and exercised appropriate diligence before trial in relation to the expert testimony he obtained after trial.

Knight v. Minter, No. 05-11-00829-CV

In this memorandum opinion, the court reaffirmed some basic litigation procedures. The plaintiff was fired by his law firm employer and sued alleging 37 separate claims. The trial court granted summary judgment, and Cruz appealed the first time. The court of appeals affirmed on every claim but two and remanded. The trial court severed those claims and Cruz appealed a second time. On appeal, the court first determined that on remand, the trial court only had jurisdiction to consider issues regarding the two claims included in the scope of the remand as stated in the court of appeals’ mandate. Thus, Cruz’s issues related to claims outside the trial court’s jurisdiction were rejected. Because of the court’s limited jurisdiction, issues that Cruz failed to preserve prior to the first appeal were not reopened by the mandate and the trial court did not err by limiting discovery to the remaining matters over which it had jurisdiction. Finally, the trial court did not err by severing Cruz’s remaining claims and requiring him to replead under Texas Rules of Civil Procedure 41 and 68.

Cruz v. Schell, Beene & Vaughn, L.L.P., et al., 05-01-00565-CV

The court affirmed summary judgment in favor of the defendant on a breach of fiduciary duty claim. Balestri was a lawyer who left his practice to become CFO of an internet company. Balestri’s friend Kiger later contacted Balestri to ask about certain industry contacts that Kiger believed could help him to implement a new business idea. Kiger’s business never materialized. Balestri subsequently invested in a business in the same industry, and Kiger sued for breach of fiduciary duty. Kiger alleged that Balestri acted as his attorney and then revealed his confidential and trade secret information to the new business. The trial court granted both traditional and no evidence summary judgment against Kiger. The court of appeals affirmed, holding that despite Kiger’s contention that an implied attorney-client relationship existed between him and Balestri, no evidence of such a relationship existed in the record. Additionally, even if Kiger believed that such a relationship formed, one party’s subjective beliefs are not evidence of an implied attorney-client relationship.

Kiger v. Balestri, 05-10-01308-CV

The court reversed a summary judgment in favor of a guarantor on his Property Code Chapter 51 offset defense against a creditor. Moayedi guaranteed a loan made by I-35 to Villages. I-35 sued Moayedi based upon his guaranty to recover the balance remaining on Villages’s promissory note after a Property Code section 51.003 foreclosure sale. Moayedi contended that he was entitled to offset the deficiency by the difference between the fair market value and the sale price pursuant to section 51.003(c). I-35 replied that Moayedi waived “any defense” in the guaranty, including the right of offset. After considering competing summary judgment motions, the trial court granted Moayedi’s and held that the right of offset pursuant to section 51.003(c) could not be waived by the general terms in the guaranty agreement.

The court of appeals reversed. First, it engaged in a thorough analysis of waiver and section 51.003(c)’s offset provision. It held that a section 51.003(c) offset is indeed a “defense” as the term was used in the guaranty. Next, the court analyzed the contract language and held that “any defense” included the section 51.003(c) offset defense. The court then looked at the guaranty as a whole, finding four other provisions supporting such a broad waiver. Finally, the court rejected the argument that a waiver of section 51.003(c) rights violates public policy, citing Texas’s strong policy in favor of freedom of contract and other courts that have held that Chapter 51 rights of offset may be contractually waived. Thus, the court reversed and rendered judgment in favor of I-35.

Interstate 35/Chisam Road, L.P. and Malachi Development Corporation v. Moayedi, No. 05-11-00209-CV

In a memorandum opinion the court reversed as insufficient a summary judgment award to a neighborhood association against a delinquent property owner. Gashaye’s property is subject to a covenant to pay assessments to Candlewood, which Gashaye failed to do. Candlewood sought foreclosure of the lien securing Gashaye’s obligation and attorney’s fees, presenting evidence proving $1545 in unpaid assessments and late fees and $2500 in attorney’s fees. The trial court awarded Candlewood $50. The court reversed, holding that the award of $50 under these circumstances was so contrary to the overwhelming weight of the evidence that it was clearly wrong and unjust. The court noted that attorney’s fees are recoverable on a breach of a homeowner’s association covenant, but remanded for the determination of a proper damages and attorney’s fees award.

Candlewood Creek Neighborhood Association, Inc.v. Gashaye, No. 05-11-00380-CV

by Chris Patton

Citibank sued a credit card account holder for breach of contract and account stated to collect the balance due on a cardholder’s credit card account.  In the trial court, Citibank moved for summary judgment, which the trial court granted in its favor.  On appeal, the defendant challenged the trial court’s decision on a number of grounds.  However, because the defendant, who was proceeding pro se, repeatedly cited to exhibits and other evidence that were not in the record, the court refused to address the issues related to breach of contract raised by the defendant.  The court also refused to address the issues related to account stated claim.  Because Citibank moved for summary judgment  on the alternative grounds of breach of contract and account stated, and because the trial court did not specify the grounds on which summary judgment was granted, the court found that it need not resolve the issues related to the suit on account claim.  Because “even if we resolved it in [Defendant’s] favor our decision would not change the outcome of this appeal.”

Burruss v. Citibank, No. 05-10-01376-CV

The court reversed and rendered judgment in a breach of contract action related to a letter of intent (“LOI”) to acquire the stock of a corporation. Corilant and FFSS executed an LOI for Corilant’s acquisition of FFSS’s stock. The LOI provided for future “Definitive Agreements” memorializing the precise terms and conditions of the sale. FFSS scuttled the deal before executing the Definitive Agreements. Corilant sued for breach of the LOI and a jury awarded it $1.8 million.

On appeal, the court held that the LOI was not an enforceable contract because the essential terms of two of its provisions were uncertain. First, the LOI provided for structured earn-out payments to Corilant but failed to sufficiently characterize the payments. The evidence showed the parties’ lack of mutual understanding with respect to this provision. Second, the LOI provided that FFSS’s Chairman would continue to be involved in management of the company but failed to specify the terms of his employment. This provision also specifically contemplated a future management agreement, which was actually drafted but never executed. Finally, the court rejected Corilant’s argument that enforceability of uncertain terms is a factual determination. In doing so it distinguished an earlier case in which parties disputed whether an LOI was intended to be the final expression of a contract, which neither Corilant nor FFSS argued.

Fiduciary Financial Services of The Southwest v. Corilant Financial, No. 05-10-00471-CV

The court issued a significant ruling related to the remedy for shareholder oppression, holding that the equitable relief of a “fair value” buy-out was not precluded by a provision in an Agreement mandating a “book value” buy-out. Joubran, the sole shareholder of a cardiac perfusion company, hired Hughes, sold him 10% of the corporation’s outstanding shares, and entered into an Agreement requiring Joubran to purchase Hughes’s stock at book value upon the severance of his employment. Years later a dispute arose, Hughes was terminated, and Hughes sued Joubran for shareholder oppression. The trial court held that that Joubran engaged in shareholder oppression and awarded Hughes what the jury found to be the fair value of his shares in the company.

On appeal, Joubran argued that the trial court should have calculated the value of the shares based on their book value as required in the Agreement because a party to a contract generally cannot recover equitable relief inconsistent with that contract. But the court held that the trial court had the equitable power to order a buy-out at fair value because the book value of Hughes’s shares was reduced by Joubran’s oppressive conduct and, additionally, Hughes was not suing for breach of contract. This holding squares with the court’s recent decision in Ritchie v. Rupe that the “enterprise value” method for determining stock’s fair value, i.e. determining the pro rata value of each share without any discount based on the stock’s minority status or marketability, is appropriate in shareholder oppression suits when the oppressive conduct of the majority forces a minority shareholder to relinquish his ownership position. 339 S.W.3d 275, 289 (Tex. App.—Dallas 2011, pet. filed)

As a secondary issue, the court addressed whether a shareholder that exercises dominating control over a corporation owes a formal fiduciary duty to the minority shareholders. In its verdict, the jury found that no informal fiduciary duty existed between the shareholders, but nonetheless found that Joubran breached a fiduciary duty to Hughes and awarded Hughes almost $2 million in actual and exemplary damages. The trial court declined to render judgment in favor of Hughes, who argued on appeal that the trial court should have disregarded the first jury finding because, under the circumstances, Joubran owed Hughes a formal fiduciary duty. The court disagreed, citing numerous Texas cases to the contrary and noting that the Texas Supreme Court expressly declined to recognize such a duty in Willis v. Donnelly, 199 S.W.3d 262, 276 (Tex. 2006).

Cardiac Perfusion Services, Inc. v. Hughes, No. 05-10-00286-CV

The court reversed a no-summary judgment against the employees of a lawn service company. The employees alleged that the lawn service issued them worthless paychecks for two months. The employer filed a no-evidence motion for summary judgment that neither referred to the facts alleged nor specified in what way the evidence failed to support the claims. The employees responded, attaching affidavit evidence and wage statements. The employers objected to the evidence as hearsay, but the court ruled that objection was waived because they failed to obtain a ruling from the trial court on their objection. The court also held that the affidavits and wage statements were sufficient evidence to defeat summary judgment because they indicated at least an implied employment contract that the employer breached, damaging the employees.

Gaspar, et al., v. Lawnpro Inc., No. 05-11-00861-CV

The court has issued some interesting comments in connection with the denial of a motion for rehearing in a condemnation case.  In the jury charge conference, Dallas County objected to the property owner’s proposed definition of “Cost to Cure,” but the specific basis of the objection was unclear.  The trial judge eventually summarized the objection as being that the instruction amounted to a comment on the weight of the evidence, and the County agreed.  The trial judge fixed that problem by modifying the instruction to award cost to cure damages, “if any.”  On appeal, the County attempted to argue that the definition was actually “an incorrect statement of Texas law,” but the court of appeals rejected that claim:

A party objecting to the jury charge must “point out distinctly the objectionable matter and the grounds of the objection.” Tex. R. Civ. P. 274. When the complaining party’s objection is, “in the opinion of the appellate court, obscured or concealed by voluminous unfounded objections, minute differentiations or numerous unnecessary requests, such objection or request shall be untenable.” Id.
Reviewing the reporter’s record of the charge conference, we cannot determine the County’s exact complaint to the trial court concerning “cost to cure” except that it constituted a comment on the weight of the evidence. The trial court addressed that complaint by modifying the statement of the definition.

The court also rejected the County’s argument that the property owner’s expert had offered conclusory opinion testimony, since the County had failed to raise an issue as to the legal sufficiency of the testimony.  In its appellate briefing, the County had challenged the trial court’s admission of the expert testimony as being an abuse of discretion, but did not attack the legal sufficiency of the testimony.  For that reason, the court declined to evaluate whether the testimony was conclusory, and therefore denied the County’s motion for rehearing.

Dallas County, Texas v. Crestview Corners Car Wash, No. 05-09-00623-CV

In a consolidated appeal, the court affirmed a district court’s summary judgment and a  county court at law’s forcible retainer judgment related to the foreclosure sale of the property. The court held that Texas Property Code Section 51.002(b)(2), which requires notice of a foreclosure sale to be filed “in the office of the county clerk of each county in which the property is located,” does not require notice to be recorded in the permanent deed records. The court also rejected the argument in the forcible retainer lawsuit that the mortgage servicer had no authority to sell the property because the only issue in a forcible retainer action is the right to actual possession – not the merits of the title.

Montgomery v. Aurora Loan Services, LLC, No. 09-11836

In a simple breach of guarantee case, the court of appeals issued a memorandum opinion affirming a summary judgment in favor of a creditor against a debtor on the debtor’s personal guaranty of an open account for his business.  The debtor raised several issues, contending that (1) the court erred by failing to grant his motion for continuance of the summary judgment hearing; (2) the summary judgment affidavit evidence was conclusory; (3) the motion failed to identify evidence in the record to support summary judgment; (4) the motion for summary judgment did not specifically seek attorney’s fees; and (5) both the guaranty and underlying contract were unenforceable and lacked consideration.  The court overruled each issue, holding that the motion for summary judgment was sufficiently specific to support the award, that it was supported by adequate evidence proving the creditor’s claims, and that the court’s refusal to continue the hearing was not an abuse of discretion.

Long v. Motheral Printing Company, No. 05-10-01128-CV

In a construction contract case, the court has reversed summary judgment in favor of an electrician subcontractor against a retail property leaseholder. The subcontractor alleged that he had performed 80% of the work at the property when the general contractor’s check bounced, and the subcontractor sued the property leaseholder for the difference. The district court granted summary judgment in favor of the subcontractor. The court of appeals reversed and remanded, holding that (1) a fact issue existed as to the proper amount of retainage the leaseholder was to retain and (2) the court erroneously awarded the subcontractor certain amounts under the Texas “Fund Trapping” statute that the leasehold had paid to replacement contractors.

Jewelry Manufacturer’s Exchange, Inc. v. Tafoya, No. 05-11-00065-CV

The court also issued a memorandum opinion in another governmental immunity case.  In this instance, the court of appeals affirmed the trial court’s denial of a plea to the jurisdiction, concluding that the plaintiff had properly alleged a waiver of sovereign immunity based on the government body’s use or condition of tangible personal property – namely, the 4×8-foot, improperly secured whiteboard that had fallen on the plaintiff’s head.

Dallas Metrocare Services v. Juarez, No. 05-11-01144-CV

In a governmental immunity case, the court has sustained a plea to the jurisdiction asserted by the City of Dallas in response to a slip-and-fall case.  The plaintiff alleged she had fallen while trying to open a locked door that had a puddle of fallen rainwater in front of it.  The City filed an interlocutory appeal after the trial court denied its plea to the jurisdiction.  The court of appeals reversed and rendered judgment dismissing the plaintiff’s claims, concluding that (1) the plaintiff had failed to raise a fact issue showing the City had knowledge of the allegedly dangerous condition, and (2) a plaintiff injured by a premises defect on governmental property can only assert a premises defect claim under the Texas Tort Claims Act, not a claim for general negligence.  Without an express waiver of governmental immunity under the TTCA, the court dismissed the case for lack of subject matter jurisdiction.

City of Dallas v. Prado, No. 05-11-01598-CV