eLaws | Code of Federal Regulations | United States Code |
 All Courts
 State Courts
 Court of Appeals of Texas
 2005-08

Brownsville Advanced Medical Imaging, L.P. v. Capitalwerks, LLC D/B/A Preferred Lease ( 2005 )


Menu:

  •                                                                    

     

     

     

     

     

     

                                 NUMBER 13-04-419-CV

     

                             COURT OF APPEALS

     

                   THIRTEENTH DISTRICT OF TEXAS

     

                      CORPUS CHRISTI - EDINBURG

     

     

     

    BROWNSVILLE ADVANCED MEDICAL IMAGING, L.P.,     Appellant,

     

                                                v.

     

    CAPITALWERKS, LLC D/B/A PREFERRED LEASE,             Appellee.

     

     

     

                      On appeal from the 139th District Court

                                of Hidalgo County, Texas.

     

     

     

                         MEMORANDUM OPINION[1]

     

                  Before Justices Rodriguez, Castillo, and Garza

                      Memorandum Opinion by Justice Castillo  

     

    Based on a forum selection clause, the trial court granted a motion to dismiss  in favor of appellee, CapitalWerks, L.L.C. d/b/a Preferred Lease, and against appellant Brownsville Advanced Medical Imaging, L.P. ("Brownsville Imaging").[2]  By one issue, Brownsville Imaging asserts dismissal was improper.  We reverse and remand. 

    I.  BACKGROUND

    CapitalWerks filed a motion to dismiss, asserting the parties agreed that all disputes arising from the contract between them would be resolved in a California state or federal court.  CapitalWerks requested that the trial court decline to exercise jurisdiction and dismiss the case pursuant to section 15.020(b) of the Texas Civil Practice and Remedies Code.  Tex. Civ. Prac. & Rem. Code Ann. ' 15.020(b) (Vernon 2002).  Brownsville Imaging responded that section 15.020(b) did not apply because the forum selection clause was contained in an instrument CapitalWerks "never accepted." 

    II. FORUM SELECTION CLAUSEBSTANDARD AND SCOPE OF REVIEW

    In Texas, forum selection clauses are enforceable provided (1) the parties have contractually consented to submit to a particular jurisdiction, and (2) the other state recognizes the validity of such provisions.  CMS Partners, Ltd. v. Plumrose USA, Inc., 101 S.W.3d 730, 732 (Tex. App.BTexarkana 2003, no pet.).  When a trial court denies a motion to enforce a valid, enforceable forum‑selection clause that specifies another state or country as the chosen forum, the trial court's final judgment is subject to automatic reversal at the request of the party seeking enforcement of the clause.  In re AIU Ins. Co., 148 S.W.3d 109, 118 (Tex. 2004).  A trial in a forum other than that contractually agreed upon will be a meaningless waste of judicial resources.  See id.  The error is not harmless.  Id.

    We review de novo a trial court's application of the law to the facts to determine the correctness of the trial court's legal conclusions.  BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).  We are not obligated to give any particular deference to those conclusions.  Pegasus Energy Group v. Cheyenne Petroleum Co., 3 S.W.3d 112, 121 (Tex. App.BCorpus Christi 1999, pet. denied).  As the final arbiter of the law, we have the power and the duty to evaluate legal determinations of the trial court independently.  Id.

    III.  THE AGREEMENTS

    At the heart of the parties' dispute is the lease to purchase imaging equipment.  The parties essentially disagree on (1) which instrument controls the disposition of this appeal, and (2) whether CapitalWerks accepted a lease agreement on February 19, 2003, and notified Brownsville Imaging of its acceptance.  Brownsville Imaging sued CapitalWerks for breach of contract and for deceptive trade practices alleging, in part, that CapitalWerks breached an agreement by "failing to approve and tender the lease and equipment."

     

    A. Brownsville Imaging:  The Proposal For a Lease ("Letter Agreement")

    Brownsville Imaging asserts that the agreement attached to Brownsville Imaging's live pleading controls.  The instrument states as follows, in pertinent part:

    Preferred Lease[3]

    February 7, 2003

     

    [Brownsville Advanced Medical Imaging LP

    Address]

     

    Dear [General Partner],

     

    Capital Werks, L.L.C. dba Preferred Lease (CapitalWerks) is pleased to submit the following proposal for a lease transaction with [Brownsville Imaging] (hereinafter referred to as "Lessee"). . . .

     

    Equipment:                   Used GE Imaging Machine, Scanners, etc.

    Line Amount:                $1,500,000.00

    Term:                           66 months . . .

    First and Last Payment:  $63,930.46 . . .

    Documentation Fee:      $1,500.00 . . .

    . . .

    This transaction is subject to a final due diligence of the Lessee and approval by the appropriate officers of CapitalWerks.  CapitalWerks will notify the Lessee in writing of its approval.  This transaction, if approved, is contingent upon the successful execution of all required final documentation, including Master Lease, Addendums, and Schedules.

     

    Upon receipt of an executed copy of this letter along with the required check in the amount of $65,430.46, CapitalWerks will finalize its due diligence of this transaction. This letter will remain in effect until the close of business on February 15, 2003. 

    . . .

    We at CapitalWerks, L.L.C. dba Preferred Lease look forward to pursuing  a mutually beneficial relationship. . . .


    The Letter Agreement is dated February 7, 2003, and signed by CapitalWerks's commercial account manager.  Brownsville Imaging's general partner signed on the line marked "accepted by." Brownsville Imaging asserts that CapitalWerks breached the agreement by failing to approve and tender the actual lease agreement and equipment.  CapitalWerks counters that it accepted the lease and timely provided the "Lease Agreement" to Brownsville Imaging.

    B. CapitalWerks:  The "Lease Agreement"

    1. The two-page instrument

    CapitalWerks argues that, on February 7, 2003, Brownsville Imaging and CapitalWerks signed and, thus, entered into both the Letter Agreement and the actual "Lease Agreement."  CapitalWerks further argues that the Letter Agreement to lease "provides for a letter of credit for [Brownsville Imaging]" and, thus, the forum selection clause in the Lease Agreement controls.  CapitalWerks relies on an instrument, which it refers to as the Lease Agreement, that bears the company name and address.  The instrument identifies Brownsville Imaging as the lessee. The "supplier of the equipment" is not identified.  Under a heading for "Description of Equipment Leased," the following language is provided:  "Equipment description as delineated on separate invoice, shall be attached hereto and made a part hereof upon receipt of final invoicing."  The instrument contains the following paragraph above the signature of Brownsville Imaging's managing partner:

    GUARANTY

    . . . THIS GUARANTY AND ALL TRANSACTIONS UNDER THIS GUARANTY, AND ALL RIGHTS AND LIABILITIES OF EACH OF THE GUARANTORS, WILL BE DETERMINED AND GOVERNED AS TO VALIDITY, INTERPRETATION, ENFORCEMENT AND EFFECT BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.  EACH OF THE GUARANTORS AGREES THAT ALL ACTIONS AND PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY FROM THIS GUARANTY MAY BE LITIGATED, AT THE LESSOR'S ELECTION AND EACH OF THE GUARANTORS AGREES THAT ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF CALIFORNIA SHALL HAVE PERSONAL JURISDICTION OVER EACH OF THEM. EACH OF THE GUARANTORS AGREES THAT IF ANY ACTION IS BROUGHT TO ENFORCE THIS GUARANTY, ORANGE COUNTY SHALL BE A PROPER PLACE FOR THE TRIAL.  EACH OF THE GUARANTORS WAIVES ITS RIGHT TO HAVE ANY PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY TRIED BY JURY.

     

    The instrument bears the signature of Brownsville Imaging's managing partner again under the heading "Delivery and Acceptance Acknowledgment" as "Lessee."  At the same location is a signature of CapitalWerks's funding manager.  Below is a paragraph addressing the terms of acceptance:

    (2) ACCEPTANCE:  We agree to lease to you, and you agree to lease from us, the equipment, items, products, software, services, and other personal property described or referenced above and as modified by supplements to this Master Agreement ("Equipment") for the term shown above ("Initial Term").[4]  We shall have no obligations hereunder until we accept and sign this Agreement at our offices.  If this Agreement is executed by you and thereafter sent to us by facsimile transmission, then until such time as we have received the Agreement with your manual signature thereon, such facsimile transmission shall constitute, upon acceptance and execution by us in our offices, the original Agreement and chattel paper and shall be admissible for all purposes as the original Agreement. You agree to promptly forward to us the Agreement with your manual signature thereon and upon receipt by us, the Agreement with your manual signature thereon shall constitute the chattel paper in lieu of such facsimile transmission.  You agree that the terms and conditions contained on both pages hereof are the complete and exclusive statement of our agreement and they may be modified only by written agreement signed by all of the parties hereto and not by course of performance.  You agree that the original of this Agreement may be microfilmed or electronically duplicated and a photo static copy of such microfilm or electronic duplication may be presented in lieu of the original thereof and without further foundation.  The parties hereto expressly waive the secondary evidence rule.  You acknowledge receipt of your copy of this agreement.

     

    3)  TERM.  This Agreement will become effective when we accept the Agreement at our principal office.  The Agreement will terminate on the date when you have paid and performed all of your obligations under the Agreement in accordance with the terms of the Agreement. Your obligation to pay rent and all other sums due under this Agreement is absolute and unconditional and not subject to abatement, reduction or set-off and you will make all payments to us under this Agreement promptly when due and irrespective of any claim or other right that you may have against us or the manufacturer, seller and/or supplier of the Equipment or any other party.  YOU MAY NOT CANCEL THIS AGREEMENT.

    Page 1 of 2

    TERMS AND CONDITIONS CONTINUES ON PAGE 2 OF 2[5]

    (Italics added).

    2.  The first attachmentBa payment schedule

    The attached payment schedule identifies "Preferred Lease, A CapitalWerks Company" and is titled "Purchase Agreement."  The payment schedule bears the signature of Brownsville Imaging's managing partner and is dated February 7, 2003.  It also shows the signature of the funding manager of and "accepted by" Preferred Lease.  Brownsville Imaging denied below and now on appeal that it ever received the "Purchase Agreement," and argues that CapitalWerks failed to provide notice of acceptance as required by the letter agreement. Further, Brownsville Imaging argues that the instrument is not dated, and, thus, the date of acceptance is presumptively beyond the February 15, 2003, deadline and of no legal effect.[6]

    3.  The second attachmentBan equipment description

    A schedule "A," also attached to the "Lease Agreement," bears the heading "Equipment Description;" that portion of the document is blank.[7]  The Lease number is also blank.  Brownsville Imaging's managing partner signed the document.

    4.  The third attachmentB"Purchase Agreement"

    The third attachment states, in part:

    That certain lease Schedule entered into by and between Preferred Lease, a CapitalWerks Company as Lessor and [Brownsville Imaging] as Lessee dated _________, in consideration of the mutual covenants herein contained and upon having met all the terms and conditions of the Lease Agreement and for other good and valuable consideration, is hereby amended to include the following:

    . . .

     

    Within 15 days after receipt of the Purchase Price, Lessor shall execute and deliver to Lessee a Bill of Sale for the Equipment, "AS IS" and "WHERE IS", in its then condition and its then location, without any warranty or representation by or recourse against the Lessor.

     

    . . .

    IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first shown above.  Please be further advised that this document will be null and void unless executed by an officer of Preferred Lease, A CapitalWerks Company.

     

    The attachment is signed by the general partner for Brownsville Imaging.  The signature for CapitalWerks appears to be the signature of its funding manager.  There is no "date first shown above."

    5.  The fourth attachmentBBrownsville Imaging's checks

    CapitalWerks also attached copies of two checks from Brownsville Imaging.  The first, in the amount of $63,930.46, is for the first and last payment on the lease.  The second, in the amount of $1,500.00, is for the documentation fee.[8]

    C.  Common Elements

    The signature of Brownsville Imaging's managing partner appears on all documents.  The signature on the Letter Agreement on behalf CapitalWerks is by a commercial account manager.  The signatures on the Lease Agreement and attachments for CapitalWerks appear to be by its funding manager.  Only the Letter Agreement is dated.  The Letter Agreement remained "in effect until the close of business on February 15, 2003." 

     

    IV.  THE AFFIDAVITS

    Both parties attached evidence to their respective pleadings concerning the issue of forum non conveniens before the trial court.  Along with the instruments each extolled as the controlling "agreement," each party attached an affidavit.

    A. CapitalWerks's Affidavit:

    James Raeder, President and Custodian of Records

     

    Attached to Raeder's affidavit was a copy of the Letter Agreement.  Raeder stated:

    Capitalwerks, L.L.C. d/b/a Preferred Lease entered into a lease contract with plaintiff which plaintiff attached as Exhibit 1 to Plaintiff's Original Petition and forms the basis of plaintiff's lawsuit and causes of action against Capitalwerks, L.L.C. d/b/a Preferred Lease ("Contract").  I have attached a copy of the Contract as Exhibit "A-1" to this affidavit.  The Contract is a record of acts and conditions made at or near the time by or from information transmitted by, a person with knowledge of the acts, events or conditions.  This bond is kept in the course of the regularly conducted business of Captialwerks, L.L.C. d/b/a Preferred Lease and it is the regular practice of Capitalwerks, L.L.C. d/b/a Preferred Lease to make a record of this contract. 

     

    Attached to the affidavit as Exhibit A-1 was the Letter Agreement.  Though the Lease Agreement and its three attachments are identified as Exhibit A-2, Raeder did not address these documents in his affidavit.

    B. Brownsville Imaging's Affidavit: Attorney Sameer Ahmed

     

    As part of its response to CapitalWerks' motion to dismiss, Brownsville Imaging attached (1) the Letter Agreement, (2) the Lease Agreement (two pages without attachments), and (3) the affidavit of its attorney, Sameer Ahmed.  Ahmed attested he "participated in the negotiations for the February 7, 2003 Proposal For A Lease Transaction [the Letter Agreement]."  Ahmed further attested that "Brownsville Imaging never received any oral or written notification of any approval by Capitalwerks of the [Letter Agreement] as required by the February 7, 2003 [Letter Agreement] between Brownsville Imaging and Capitalwerks."

    C.  The Order and Appeal

    The trial court granted CapitalWerks's motion to dismiss without prejudice.  This appeal ensued.  By its first issue, Brownsville Imaging contends that the trial court committed reversible error by enforcing an unenforceable forum selection clause. Essentially, Brownsville Imaging argues that the trial court bound it to a forum selection clause that was not enforceable because CapitalWerks never notified Brownsville Imaging that CapitalWerks had accepted the Letter Agreement, a condition precedent to finalizing the lease-to-purchase Lease Agreement, which contained the forum selection clause. 

    V.  DISCUSSION

    CapitalWerks asserted section 15.020(b) of the civil practice and remedies code as grounds for dismissal in its motion.  Tex. Civ. Prac. & Rem. Code Ann. ' 15.020(b) (Vernon 2002).  The section states, in part, "An action arising from a major transaction shall be brought in a county if the party against whom the action is brought has agreed in writing that a suit arising from the transaction may be brought in that county."  See id.  The question squarely before us is whether the parties contractually agreed in writing that the action would be brought in Orange County, California. 


    We have reviewed the Letter Agreement and the Lease Agreement.  The Letter Agreement, in effect until February 15, 2003, required CapitalWerks to "finalize its due diligence of this transaction" upon receipt of an executed copy of the letter and a check in the amount of $65,430.46. The parties do not dispute that Brownsville Imaging executed the letter or that it made the required payment. Alleging that CapitalWerks breached the Letter Agreement, Brownsville Imaging filed suit on February 20, 2004. CapitalWerks argues on appeal that the Letter Agreement "provides for a letter of credit for [Brownsville Imaging]."  Because Brownsville Imaging does not contradict the assertion, we will accept it as true.  See Tex. R. App. P. 38.1(f).  Thus, in essence, Brownsville Imaging's breach of contract claim is based on the failure of CapitalWerks to either approve or communicate its approval of a line of credit a year after the parties executed the Letter Agreement, coupled with the failure to deliver any of the equipment. The Letter Agreement, the sole document bearing a date of signing, does not contain a forum selection clause. The Letter Agreement does require that CapitalWerks "finalize its due diligence of this transaction" and execute the Lease Agreement by February 15, 2003.  Most compelling is that the Letter Agreement states:

    This transaction is subject to a final due diligence of the Lessee and approval by the appropriate officers of CapitalWerks.  CapitalWerks will notify the Lessee in writing of its approval.  This transaction, if approved, is contingent upon the successful execution of all required final documentation, including Master Lease, Addendums, and Schedules.

     

    The Letter Agreement is not ambiguous.[9]  The Letter Agreement required CapitalWerks to use due diligence and notify Brownsville Imaging "in writing of its approval" by the indicated deadline.[10]  The sole evidence before the trial court was Brownsville Imaging's counsel's affidavit, attesting that "Brownsville Imaging never received any oral or written notification of any approval by Capitalwerks of the [Letter Agreement] as required by the [Letter Agreement]."  Though controvertible, CapitalWerks did not controvert this statement.

    The Lease Agreement, together with its attachments, is incomplete in several respects.  Among other things, (1) the instruments are not dated, (2) the equipment is not described (as required in Schedule ABsecond attachment), and (3) there is no final invoice indicating either the equipment being purchased or the price of such equipment and any attendant financing charge.  The sole evidence before the trial court was that CapitalWerks did not (1) use due diligence to finalize the transaction, (2) successfully execute all required final documentation, or (3) notify Brownsville Imaging "in writing of its approval," as the parties agreed in the Letter Agreement. 


    We have reviewed the Lease Agreement and its attachments.  It is the Lease Agreement that contains the forum selection clause made the basis of CapitalWerks's dismissal motion.  We have concluded the instrument is incomplete.  The evidence shows that, after almost a year, Brownsville Imaging sued because  it had not received written (or oral) notice of CapitalWerks's acceptance.  Thus, the Lease Agreement is, at best, an executory contract.  See Lee v. Cherry, 812 S.W.2d 361, 364 (Tex. App.BHouston [14th Dist.] 1991, writ denied) ("An executory contract is one that is unperformed by both parties or one with respect to which something still remains to be done on both sides."); B.L. Nelson & Assocs. v. City of Argyle, 535 S.W.2d 906, 909 (Tex. Civ. App.BFort Worth 1976, writ ref'd n.r.e.) ("An executory contract is one that is still unperformed by both parties or one with respect to which something still remains to be done on both sides.").  By its terms, the Lease Agreement requires Brownsville Imaging to make periodic payments ("Purchase Agreement"Bfirst attachment) upon CapitalWerks's approval of a line of credit for a lease of "used GE Imaging Machine, Scanners, etc." (Letter Agreement).  We conclude Brownsville Imaging was not bound by the terms of an executory contract, much less by a forum selection clause within the same executory instrument.


    Implied in the trial court's order is that it enforced the forum selection clause in the Lease Agreement, the sole instrument that contains the clause.  Because the Lease Agreement is executory, the forum selection clause is unenforceable.  See CMS Partners, Ltd., 101 S.W.3d at 732.  Thus, the order dismissing Brownsville Imaging's case is unsupported as a matter of law.[11]  We also conclude that Brownsville Imaging was harmed by the dismissal of its lawsuit, which was properly filed in a court of competent jurisdiction and in a proper venue. Tex. Gov't Code Ann. __ 24.007, 24.008 (Vernon 2004); Tex. Civ. Prac. & Rem. Code Ann. _ 15.002(a)(4) (Vernon 2002).  Accordingly, we sustain Brownsville Imaging's sole issue presented.

    VI.  CONCLUSION

    Because we sustain Brownsville Imaging's issue, we reverse and remand for proceedings consistent with this opinion 

    ERRLINDA CASTILLO

    Justice

     

    Memorandum Opinion delivered and filed

    this the 11th day of August, 2005.

     


    [1] See Tex. R. App. P. 47.2, 47.4.

    [2] "CapitalWerks" is referred to in the various documents in the appellate record as "Capital Werks," "Capitalwerks," and "CapitalWerks."  For ease of reference, we refer to appellee as "CapitalWerks."

     

     

    [3] Other documents attached as exhibits to CapitalWerk's motion to dismiss show that "Preferred Lease" is a "CapitalWerks Company." 

    [4] The "initial term" box shows "66," explained as the total number of payments and itemized in the "Purchase Agreement" attached to the instrument.

    [5] Page 2 contains terms including a forum clause:

     

    4) CONSENT TO JURISDICTION AND CHOICE OF LAW.  This Agreement shall be interpreted and all rights and liabilities of you and us hereunder shall be determined, interpreted, governed and enforced according to the Laws of the State of California or the home state of whoever holds the Lessor's interest as it may be assigned from time to time per paragraph 20.  Without limiting our right to bring action against you in any Court of competent Jurisdiction, you hereby irrevocably submit to the Jurisdiction of any State [or] Federal Court located in California. You and we hereby waive any right to a [trial] by Jury.

    [6] Brownsville Imaging argues that it first received notice of acceptance on the date it received a copy of CapitalWerks's motion to dismiss, because the acceptance was attached to the motion as an exhibit.

    [7] The document's sole paragraph states, "This Schedule 'A' is attached to and part of the Lease between Preferred Lease, A CapitalWerks Company, and Brownsville Advanced Medical Imaging, L.P. (Lessee) and constitutes a true and accurate description of the equipment for Preferred Lease, A CapitalWerks Company Lease No. ______."

    [8] A copy of Brownsville Imaging's managing partner's driver's license was also attached.

    [9] If a written contract is so worded that it can be given a definite or certain legal meaning, then it is not ambiguous.  Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).

    [10] Courts should give terms their plain, ordinary, and generally accepted meaning unless the contract indicates otherwise.  Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). Courts are to construe technical words and terms in a contract as those terms are usually understood by persons in the profession or business to which the terms relate, unless it is clear that the terms were used in a different sense.  Oil Ins. Ass'n v. Royal Indem. Co., 519 S.W.2d 148, 150 (Tex. Civ. App.BHouston [14th Dist.] 1975, writ ref'd n.r.e.); Frost v. Martin, 203 S.W. 72, 74 (Tex. Civ. App.BFort Worth 1918, no writ). When interpreting contracts, the primary concern is to give effect to the parties' intentions as expressed in the contract.  CMS Partners, Ltd. v. Plumrose USA, Inc., 101 S.W.3d 730, 733 (Tex. App.BTexarkana 2003, no pet.). In determining the parties' intentions, intent must be taken from the agreement itself, not from the parties' present interpretation.  Id. The agreement will be enforced as the parties have made it, without regard to whether they contracted wisely.  Id.

    [11] To establish an abuse of discretion, an appellant must show the trial court's actions were arbitrary or unreasonable in light of all the circumstances.  Jackson v. TDCJ-ID, 28 S.W.3d 811, 813 (Tex. App.CCorpus Christi 2000, pet. denied) (citing Smithson v. Cessna Aircraft Co., 665 S.W.2d 439, 443 (Tex. 1984)).  The standard is clarified by asking whether the trial court acted without reference to any guiding rules or principles.  Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985); Spurlock v. Schroedter, 88 S.W.3d 733, 735‑36 (Tex. App.BCorpus Christi 2002, no pet.).  That CapitalWerks asserted forum non conveniens as grounds for its motion to dismiss does not compel a different result.  See Tex. Civ. Prac. & Rem. Code Ann. ' 75.051 (Vernon Supp. 2004‑05).  The trial court granted the dismissal motion on the forum non conveniens contention.  We review a forum non conveniens determination for an abuse of discretion. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 511 (1947); In re Smith Barney, 975 S.W.2d 593, 596 (Tex. 1998).  Our review of the record de novo establishes that CapitalWerks did not show itself entitled to dismissal on forum non conveniens grounds.  See id.; Flaiz v. Moore, 359 S.W.2d 872, 874‑75 (Tex. 1962) ("Factors relevant to an FNC determination include:  (1) private interests, such as relative ease of access to sources of proof; and (2) public interests, such as administrative difficulties for the courts.  Unless the balance of factors strongly favors the defendant, the plaintiff's choice of forum should rarely be disturbed." (citations omitted)).