Robert v. Mark and Dianne L. Mark v. Household Finance Corporation III ( 2009 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-191-CV
ROBERT V. MARK AND APPELLANTS
DIANNE L. MARK
V.
HOUSEHOLD FINANCE APPELLEE
CORPORATION III
------------
FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY
------------
OPINION
------------
The trial court granted summary judgment for Appellee Household Finance
Corporation III on its foreclosure action against Appellants Robert V. Mark and
Dianne L. Mark (collectively, “the Marks”), and the Marks appeal. Because we
hold that the trial court erred by granting summary judgment, we reverse.
Household Finance sued the Marks seeking judicial foreclosure of the
Marks’ homestead property under a deed of trust. After the Marks filed a
general denial, Household Finance filed a traditional motion for summary
judgment, asserting that it had brought suit on a sworn account under rule 185
of the rules of civil procedure and that its evidence established its right to
recover on that cause of action as a matter of law. The trial court granted
summary judgment, and this appeal followed.
We review a summary judgment de novo.1 A plaintiff is entitled to
summary judgment on a cause of action if it conclusively proves all essential
elements of the claim.2 When reviewing a summary judgment, we take as true
all evidence favorable to the nonmovant, and we indulge every reasonable
inference and resolve any doubts in the nonmovant’s favor. 3
The Marks bring four points on appeal. In their first point, they assert
that summary judgment was improper because Household Finance sought and
was granted summary judgment on an impermissible basis under a sworn
account theory inapplicable to the case. They allege that Household Finance’s
claims, which relate to an alleged balance on a promissory note, are not
susceptible to resolution by an action on a sworn account. Because Household
Finance did not seek summary judgment on a ground for which such relief
1
… Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
2
… See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59,
60 (Tex. 1986).
3
… IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143
S.W.3d 794, 798 (Tex. 2004).
2
might be granted, they argue, the trial court’s summary judgment should be
reversed.
To constitute an action on a sworn account under rule 185, “the account
or liquidated money demand based upon a written contract must involve a claim
for goods, wares, merchandise, personal services rendered or labor done or
labor or materials furnished.” 4 A suit to foreclose on real property, on the other
hand, is a legal proceeding seeking the satisfaction of a debt through
foreclosure of lien on real property.5 The basis of such an action is a
promissory note secured by a deed of trust or mortgage on real property.6 In
Household Finance’s brief, it states that its suit was a suit to foreclose on a lien
and not a suit on a sworn account.
In its original petition, Household Finance did seek judicial foreclosure of
the deed of trust. But in its summary judgment motion, it stated that its cause
of action was “based on an itemized and verified statement of account.” It
further stated that the “evidence establishes [Household Finance’s] right to
4
… Great-Ness Prof'l Servs., Inc. v. First Nat'l Bank of Louisville, 704
S.W.2d 916, 917 (Tex. App.—Houston [14th Dist.] 1986, no writ).
5
… See Sloan v. Owners Assoc. of Westfield, Inc., 167 S.W.3d 401,
403–04 (Tex. App.—San Antonio 2005, no pet.).
6
… See Cunningham v. Buel, 287 S.W. 683, 686 (Tex. Civ. App.—San
Antonio 1926, no writ).
3
recover under the Sworn Account cause of action.” It unequivocally states that
“[Household Finance’s] suit is brought on a sworn account under [rule 185].”
Finally, it argued that the Marks had not filed a verified denial of the sworn
account, entitling Household Finance to judgment as a matter of law under rule
185.7 Thus, although Household Finance’s pled cause of action was for
foreclosure of the deed of trust, its summary judgment motion sought judgment
based on the right to judgment on an action on a sworn account.
Summary judgment may only be granted on the specific grounds asserted
in the motion.8 In Great-Ness Professional Services, Inc. v. First National Bank
of Louisville, the Fourteenth Court of Appeals considered whether the trial court
erred by granting summary judgment on a breach of a lease agreement action
when the only specific ground for relief asserted in the summary judgment
motion was that on a sworn account.9 There was no allegation in the motion
that the specific ground for recovery was breach of contract or breach of a
7
… See Tex. R. Civ. P. 185 (stating that if a party resisting a sworn claim
under the rule “does not timely file a written denial, under oath, he shall not be
permitted to deny the claim, or any item therein”).
8
… McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex.
1993); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.
1979); see also Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex.
1993) (holding that “a summary judgment cannot be affirmed on grounds not
expressly set out in the motion or response”).
9
… 704 S.W.2d at 917.
4
lease agreement.10 The court noted that “[a] lawsuit based upon breach of a
lease agreement is not a suit based upon a sworn account because there has
been no purchase and sale, and title to personal property has not passed from
one party to the other.” 11 And a movant must establish its right to summary
judgment on issues expressly presented to the trial court; the movant “cannot
be granted a judgment as a matter of law on a cause of action not specifically
addressed in the summary judgment proceeding.” 12 Although the movant’s
motion may have alluded to a cause of action based upon a breach of a lease
agreement, the trial court could not infer or imply grounds for summary
judgment.13 Accordingly, the court of appeals concluded that because the
movant’s cause of action was for breach of a lease agreement, but its summary
judgment ground was for an action on a sworn account, the trial court erred by
granting summary judgment.14
Similarly, in this case, the only specific ground Household Finance
expressly asserted in its motion was for an action on a sworn account. An
10
… Id.
11
… Id.
12
… Id. at 918 (emphasis added).
13
… Id.
14
… Id.
5
action for judicial foreclosure on a lien on real property is not an action on a
sworn account because it is not a claim founded upon the provision of personal
property or personal services.15 Thus, because the only specific ground in the
summary judgment motion was Household Finance’s right to judgment on an
action on a sworn account, the trial court erred by granting summary judgment
for Household Finance on its foreclosure action.
We note that this court’s opinion in Gillis 16 is distinguishable. The issue
in that case was whether the trial court had granted summary judgment on a
cause of action that was never pled. MBNA referred to its claim as a “suit on
an account,” i.e., a credit card account. In its summary judgment motion,
MBNA did not characterize its suit as a “suit on a sworn account,” it did not
use other language to indicate its claim was for a suit on a sworn account (for
example, by asserting the lack of a verified denial as a ground for judgment),
and it specifically incorporated its pleadings by reference and prayed for
summary judgment “as prayed for in [its original petition].” That original
15
… See Tex. R. Civ. P. 185; see, e.g., Dulong v. Citibank (S.D.), N.A.,
261 S.W.3d 890, 893 n.3 (Tex. App.—Dallas 2008, no pet.) (noting that suit
on account “requires personal property or services be provided by the creditor
to the debtor”); Hou-Tex Printers, Inc. v. Marbach, 862 S.W.2d 188, 190 (Tex.
App.—Houston [14th Dist.] 1993, no writ) (holding that action on a promissory
note is not included within definition of action on a sworn account).
16
… Gillis v. MBNA Am. Bank, N.A., No. 02-08-00058-CV, 2009 WL
51027 (Tex. App.—Fort Worth Jan. 8, 2009, no pet.) (mem. op.).
6
petition asked the trial court to confirm an arbitration award on its suit on an
account that it had brought against Gillis. Its motion for summary judgment
was clearly based on and pointed to the claims it pled in its original petition.
And the ground asserted by incorporation was the ground on which summary
judgment was granted. That case does not stand for the proposition that a trial
court may grant summary judgment on a ground not asserted in a summary
judgment motion.
Here, the issue is whether the only ground asserted in Household
Finance’s summary judgment motion is one for which it could obtain the judicial
foreclosure it prayed for in its petition. Unlike in Gillis, Household Finance did
not expressly incorporate its pleadings into its motion for the purpose of stating
summary judgment grounds, so this court could not consider the pleadings as
alleging another ground for summary judgment.17 Although nonmovants must
make an exception should they wish to complain on appeal that the movant’s
grounds were unclear or ambiguous,18 the Marks make no such complaint here.
17
… See, e.g., Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267, 272
(Tex. App.—Houston [1st Dist.] 2004, pet. dism’d) (noting that the parties filed
summary judgment motions that did not themselves state any grounds but
instead incorporated by reference other motions or responses and that
“[n]ormally, summary judgment grounds must be stated in the motion itself, not
in an attached brief or evidence” but that “no party complains on appeal of any
other party’s use of the incorporation-by-reference procedure”).
18
… McConnell, 858 S.W.2d at 342.
7
Household Finance had to establish its entitlement to summary judgment on the
issue expressly presented to the trial court and could not be granted judgment
as a matter of law on a cause of action not specifically addressed in its motion
for summary judgment. This court’s holding in Gillis did not deviate from the
supreme court’s mandate that “‘[a]n appellate court cannot “read between the
lines, infer or glean from the pleadings or the proof” any grounds for granting
the summary judgment other than those grounds expressly set forth before the
trial court in the motion for summary judgment.’” 19 We sustain the Marks’ first
point.
Having sustained the Marks’ first point, which is dispositive, 20 we reverse
the judgment of the trial court and remand this case for further proceedings.
LEE ANN DAUPHINOT
JUSTICE
PANEL: CAYCE, C.J.; DAUPHINOT and WALKER, JJ.
CAYCE, C.J. filed a dissenting opinion.
DELIVERED: August 31, 2009
19
… Id. (quoting Great-Ness Prof’l Servs., 704 S.W.2d at 918); see also
Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex. 1990) (stating that
“[a] summary judgment movant may not be granted judgment as a matter of
law on a cause of action not addressed in a summary judgment proceeding” and
that “in order to conclusively establish the requisite essential element or
elements, the motion must identify or address the cause of action or defense
and its elements”) (emphasis added).
20
… See Tex. R. App. P. 47.1.
8
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-191-CV
ROBERT V. MARK AND APPELLANTS
DIANNE L. MARK
V.
HOUSEHOLD FINANCE APPELLEE
CORPORATION III
------------
FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY
------------
DISSENTING OPINION
------------
I respectfully dissent. The summary judgment order reflects that the relief
awarded by the trial court—a judicial foreclosure to recover on a loan agreement
and deed of trust—is exactly the relief Household sought in its live pleading and
in its summary judgment motion. The record does not contain any special
exceptions from the Marks seeking clarification about the relief sought by way
of the summary judgment motion. Under these circumstances, any error in the
summary judgment motion in identifying or labeling the cause of action under
which relief was sought is harmless.1 I would, therefore, overrule the Marks’s
first point.
In their second point, the Marks contend that summary judgment was
improper because Household did not establish legal ownership of the promissory
note and lien upon which it sued. Under Texas law, to recover on a promissory
note, a plaintiff must prove four elements: (1) the existence of the note; (2)
that defendants signed the note; (3) that plaintiff is the legal owner and holder
of the note; and (4) that a certain balance is due and owing on the note.2
In FFP Marketing Co. v. Long Lane Master Trust IV,3 we stated that “a
photocopy of a note attached to the affidavit of the holder, who swears that
it is a true and correct copy of the note, is sufficient as a matter of law to prove
the status of owner and holder of the note absent controverting summary
judgment evidence.” 4 Household verified two documents—its original petition
1
… See Tex. R. App. P. 44.1(a)(1).
2
… See Montgomery First Corp. v. Caprock Inv. Corp., 89 S.W.3d 179,
186 (Tex. App.—Eastland 2002, no pet.); see also Cadle Co. v. Bankston &
Lobingier, 868 S.W.2d 918, 921 (Tex. App.—Fort Worth 1994), writ denied
per curiam on other grounds, 893 S.W.2d 949 (Tex.) (stating that plaintiff must
prove that “plaintiff is the present holder of the note” to recover under the
note), cert. denied, 516 U.S. 810 (1995).
3
… 169 S.W.3d 402 (Tex. App.—Fort Worth 2005, no pet.).
4
… Id. at 410.
2
and the demand letter from its counsel—that identify it as the legal owner and
holder of the note. This evidence sufficiently established that Household owned
and held the note and lien, shifting the burden to the Marks to present
controverting summary judgment evidence. 5 The Marks did not present any
summary judgment evidence. I would, therefore, overrule the Marks’s second
point.
In their third and fourth points, the Marks challenge Household’s summary
judgment evidence as incompetent, inconsistent, and unreliable. I address each
of the Marks’s specific complaints in turn:
The Marks assert that the affidavit of Tom Lenz, filed in support of
Household’s summary judgment motion, is incompetent as a business record
affidavit. However, the Marks did not obtain a ruling from the trial court on any
objections to the Lenz affidavit. Accordingly, this ground is waived.6
The Marks also argue that the Lenz affidavit is incompetent because Lenz
does not assert directly in the affidavit that Household is the legal owner and
holder of the note and lien. But the Lenz affidavit states that Lenz has
reviewed the assertions of fact in Household’s original petition and swears that
5
… See id.
6
… See Tex. R. App. P. 33.1(a); Kyle v. Countrywide Home Loans, Inc.,
232 S.W.3d 355, 358 (Tex. App.—Dallas 2007, pet. denied); see also Tex. R.
Evid. 902(10)(b).
3
those assertions are true and correct. Among the assertions in Household’s
petition is that Household “is the legal owner and holder of the Loan Agreement
and Deed of Trust.” The affidavit sufficiently alleged ownership.
The Marks further assert that the Lenz affidavit is unreliable and
inconsistent because it refers to an interest rate different than the one stated
on the promissory note. The Marks failed, however, to present this issue to the
trial court and raise it for the first time on appeal. This issue is, therefore,
waived.7
Finally, the Marks contend that Household’s failure to produce the
promissory note as part of its summary judgment evidence precludes summary
judgment for Household. The Marks overlook that Household did not sue
directly on the note but rather sought a declaratory judgment for judicial
foreclosure based on the loan agreement and deed of trust. Accordingly, I
would hold that the trial court did not err by granting summary judgment,
despite the absence of the promissory note from the summary judgment proof,8
and overrule the Marks’s third and fourth points.
7
… See Tex. R. App. P. 33.1(a).
8
… See Kyle, 232 S.W.3d at 362 (rejecting argument that original note
was required as proof when lender did not seek to recover on note but sued to
quiet title and for declaratory judgment for judicial foreclosure pursuant to deed
of trust).
4
For the foregoing reasons, I would affirm the trial court’s summary
judgment.
JOHN CAYCE
CHIEF JUSTICE
DELIVERED: August 31, 2009
5