Tracey Suttles NBC Holdings, Inc. Orbit Resources, Inc. And Mopac Windridge One Ltd. v. Bryan Kastleman and Jon Blum ( 2002 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-01-00719-CV
Tracey Suttles; NBC Holdings, Inc.; Orbit Resources, Inc.; and Mopac
Windridge One Ltd., Appellants
v.
Bryan Kastleman and Jon Blum, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. GN001853, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
The issue on appeal is whether a trial court may, without making a record or hearing
additional evidence, rely on summary judgment proof filed in a prior proceeding on the same cause as a
basis for rendering its judgment. Because appellees= summary judgment evidence supported their
entitlement to a contracted-for amount of attorney=s fees and to judgment as a matter of law, and appellants
failed, either in their summary judgment response or at trial, to present competent contradictory evidence,
we hold that the trial court did not err in rendering judgment against appellants. Accordingly, we affirm the
district court=s judgment.
BACKGROUND
Appellees Bryan Kastleman and Jon Blum sued Tracey Suttles, NBC Holdings, Inc., Orbit
Resources, Inc., and Mopac Windridge One Ltd. (collectively ANBC@) on a promissory note. Kastleman
and Blum filed a motion for summary judgment, attaching thereto a copy of the promissory note. After a
series of replies from both sides, the district court granted Kastleman and Blum=s motion and, finding no
additional issues to be decided, entered a final judgment. NBC filed a motion to reconsider or, alternatively,
a motion for new trial. The district court granted NBC=s motion in part and denied it in part, reversing its
prior order as to attorney=s fees but affirming it as to liability and damages. NBC failed to appear at the
subsequent trial and the trial court entered a default judgment against it, awarding Kastleman and Blum their
requested attorney=s fees. NBC appeals the district court=s judgment.
DISCUSSION
In its first issue, NBC contends that the district court erred in awarding Kastleman and Blum
attorney=s fees. NBC asserts that, because the district court did not conduct a hearing on the record or
take evidence at the subsequent trial, Kastleman and Blum failed to prove that the contracted-for attorney=s
fees were reasonable. And, according to NBC, this lack of a record or evidentiary support requires
reversal of the district court=s judgment. It is well-settled law in Texas that the legal owner and holder of a
promissory note is, upon the happening of an agreed contingency, entitled to recover from the obligor of the
note the amount of attorney=s fees stipulated therein. F. R. Hernandez Constr. & Supply Co. v. National
Bank of Commerce, 578 S.W.2d 675, 677 (Tex. 1979) (citing Kuper v. Schmidt, 338 S.W.2d 948, 950
(Tex. 1960)). Unless the defendant affirmatively demonstrates otherwise, it is not necessary for the plaintiff
to prove that the contracted-for fees are reasonable. Kuper, 338 S.W.2d at 950. To establish its
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affirmative defense of unreasonableness of attorney=s fees, Athe obligor must first plead and prove that the
contractual fee is unreasonable. To complete the showing, however, the obligor must also prove a lesser
amount that is reasonable under the circumstances.@ National Bank of Commerce, 578 S.W.2d at 677
(citations omitted).
Here, appellees and NBC reduced to writing, as evidenced by the promissory note
attached to their summary judgment motion, an agreement between the parties that, Aif suit is brought for
collection or enforcement . . . then maker [NBC] shall pay all costs of collection and enforcement, including
reasonable attorney=s fees . . . . Reasonable attorney=s fees shall be 10% of all amounts due unless either
party pleads otherwise.@ The summary judgment entered against NBC awarded Kastleman and Blum
damages of $155,550.00, the full amount of the promissory note. Thus, at the trial on attorney=s fees, NBC
had the burden of establishing not only that the amount of attorney=s fees due under the promissory note was
unreasonable, but also of proving Aa lesser amount that [was] reasonable under the circumstances@ of this
case. Id. Although NBC provided an affidavit asserting that the contracted-for amount of attorney=s fees
was unreasonable, it failed to provide any evidence showing (i) that the agreed upon fees were in fact
unreasonable and (ii) what lesser amount was reasonable. Because NBC failed to establish the essential
elements of its affirmative defense of unreasonableness of attorney=s fees, the district court was under no
obligation to hear additional evidence before awarding Kastleman and Blum attorney=s fees.
Assuming, however, that there must be evidence to support the district court=s judgment, we
nonetheless disagree with NBC=s contention that Kastleman and Blum=s summary judgment evidence fails to
establish the reasonableness of the award of attorney=s fees. Texas law provides that reasonable attorney=s
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fees are recoverable from an individual or corporation, in addition to the amount of a valid claim and costs,
Aif the claim is for an oral or written contract.@ Tex. Civ. Prac. & Rem. Code Ann. ' 38.001(8) (West
1997). There is a presumption that the usual and customary attorney=s fees for a claim under section
38.001 are reasonable. Id. ' 38.003; see also Woollett v. Matyastik, 23 S.W.3d 48, 53 (Tex.
App.CAustin 2000, pet. denied) (recognizing that there is a Arebuttable presumption that the usual and
customary attorney=s fees for section 38.001 claims are reasonable@). Section 38.004 provides that a
Acourt may take judicial notice of the usual and customary attorney=s fees and of the contents of the case file
without receiving further evidence in a proceeding before the court.@ Tex. Civ. Prac. & Rem. Code Ann. '
38.004(a); see also Gill Sav. Ass=n v. Chair King, Inc., 797 S.W.2d 31, 32 (Tex. 1990) (AThe trial
court=s own proceedings together with the fact that it may take judicial notice of usual and customary fees
constitute some evidence to support the award of appellate attorney=s fees.@). In interpreting and applying
these provisions, we are cognizant of the legislative mandate to liberally construe chapter 38 Ato promote its
underlying purpose.@ See Tex. Civ. Prac. & Rem. Code Ann. ' 38.005.
Here, the district court based its judgment upon Kastleman and Blum=s original motion for
summary judgment and the proof attached thereto. Applying the aforementioned provisions, we hold that
the district court properly considered the affidavits, promissory note, and summary judgment order
contained in the case file. Because the case file contains no evidence to rebut the reasonableness of the
attorney=s fees as provided for in the promissory note, we further hold that the district court did not err in
entering judgment in favor of Kastleman and Blum. Accordingly, we overrule NBC=s first issue.
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NBC=s second issue challenges the propriety of the district court=s granting of summary
judgment in favor of Kastleman and Blum. Specifically, NBC alleges that it raised issues of fact regarding
its affirmative defense of fraud in the inducement. The standard for reviewing a motion for summary
judgment is well established: (1) the movant for summary judgment has the burden of showing that no
genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law; (2) in
deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to
the non-movant will be taken as true; and (3) every reasonable inference must be indulged in favor of the
non-movant and any doubts resolved in its favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
548-49 (Tex. 1985). Once the movant establishes its entitlement to a summary judgment, the burden of
proof shifts to the non-movant to present evidence raising a question of fact in support of its claim or
defense. State v. Durham, 860 S.W.2d 63, 68 (Tex. 1993). Mere conclusory statements do not
constitute effective summary judgment proof. Abbott Labs., Inc. v. Segura, 907 S.W.2d 503, 508 (Tex.
1995).
By way of pleadings and proper summary judgment proof, Kastleman and Blum
demonstrated their entitlement to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Town N. Nat=l
Bank v. Broaddus, 569 S.W.2d 489, 494 (Tex. 1978). In opposition, NBC asserted the affirmative
defense of fraud in the inducement, i.e., NBC claims that Kastleman and Blum fraudulently induced NBC
into signing the promissory note. To avoid a summary judgment in favor of Kastleman and Blum, it was
NBC=s burden as defendant to show the existence of an issue of fact with respect to its defensive claim of
fraud in the inducement. See Broaddus, 569 S.W.2d at 494. Attempting to satisfy this burden, NBC
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asserted that, by representing that they would not enforce the promissory note, Kastleman and Blum
induced NBC to execute the promissory note. As proof, NBC attached to its summary judgment response
copies of correspondence between the parties and recounted in an affidavit certain oral representations
allegedly made by Kastleman and Blum.
In determining parties= contractual rights, parol evidence is generally inadmissible. See
Friendswood Dev. Co. v. McDade + Co., 926 S.W.2d 280, 283 (Tex. 1996) (AOnly after a contract is
found to be ambiguous may parol evidence be admitted for the purpose of ascertaining the true intentions of
the parties expressed in the contract.@). An exception to the parol-evidence rule exists that permits extrinsic
evidence to show fraud in the inducement of a contract. See Broaddus, 569 S.W.2d at 491. Before NBC
may invoke this exception to the parol-evidence rule, however, it must show that Kastleman and Blum (i)
represented to NBC that NBC would not be liable on the note and (ii) employed some type of trickery,
artifice, or device. See id. at 493 (stating that common element of ATexas decisions involving promissory
notes in which fraud in the inducement was recognized as an exception to the parol evidence rule@ is the
element of trickery or deception); see also Caraway v. Land Design Studio, 47 S.W.3d 696, 698 (Tex.
App.CAustin 2001, no pet.). Viewing the evidence in the light most favorable to NBC, its summary
judgment proof alleges only that Kastleman and Blum represented that they would not enforce the
promissory note. Absent evidence showing that they employed trickery or fraud, however, NBC cannot
introduce parol evidence to support its claim. That the parties might have contemplated future business
dealings or considered altering future commission percentages in exchange for amending a current contract
evidences business negotiationsCnot, as NBC contends, that Kastleman and Blum engaged in fraud or
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trickery. None of NBC=s evidence demonstrates that Kastleman and Blum used fraud or trickery, nor does
it raise a fact question on its claim of fraud in the inducement. Therefore, we overrule NBC=s second issue
and hold that the district court properly granted summary judgment in favor of Kastleman and Blum.
CONCLUSION
Because NBC failed to rebut the reasonableness of the contracted-for attorney=s fees, the
district court properly entered judgment in favor of Kastleman and Blum. Also, NBC=s failure to satisfy the
two-part test regarding the parol-evidence-rule exception precludes consideration of its extrinsic evidence
for purposes of the summary judgment motion. The district court correctly determined that NBC failed to
raise a genuine issue of material fact; thus, it properly granted summary judgment in favor of Kastleman and
Blum. For these reasons, we overrule NBC=s two issues and affirm the district court=s judgment.
Jan P. Patterson, Justice
Before Justices Kidd, Patterson and Puryear
Affirmed
Filed: July 26, 2002
Do Not Publish
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