George E. Hilburn v. Storage Trust Properties, LP ( 2019 )

Reversed and Remanded in Part, Vacated and Dismissed in Part, and
Majority and Concurring Opinions filed September 17, 2019.
In The
Fourteenth Court of Appeals
NO. 14-18-00184-CV
GEORGE E. HILBURN, Appellant
V.
STORAGE TRUST PROPERTIES, LP, Appellee
On Appeal from the 189th District Court
Harris County, Texas
Trial Court Cause No. 2015-36631
MAJORITY OPINION
This lawsuit involves the disposal of personal property from storage units
without the consent of the property owner. In three issues, the property owner,
George E. Hilburn, challenges the trial court’s grant of final summary judgment in
favor of the storage unit owner, Storage Trust Properties, LP. Concluding that the
trial court erred in granting summary judgment on Hilburn’s breach of contract and
noncontractual claims and that there is no justiciable controversy as to Hilburn’s
request for declaratory judgment, we reverse and remand the trial court’s judgment
in part, vacate the judgment in part, and dismiss the appeal in part for want of
jurisdiction.
Background
Hilburn leased five storage units in Webster, Texas from Storage Trust. Parts
of the storage facility were subsequently flooded during a rain event in May 2015.
According to Hilburn, his units took on about a foot of water that receded quickly.
Hilburn paid the June rent for all five units. Two days after he paid the rent,
Hilburn received a call from a Storage Trust representative regarding the flood.
Hilburn was notified that some of the contents of his units had been damaged. The
caller notified Hilburn that he previously should have received a letter from
Storage Trust informing him of the flooding and that he needed to remove his
property from the units by June 10, 2015. The letter was dated May 20, 2015, yet it
stated, “We are scheduling appointments for . . . May 19, 2015. You must . . . be
prepared to remove or dispose of any damaged goods.” Hilburn responded that he
had not received the letter and he could not remove his property by the time
requested by Storage Trust, in part because of a medical emergency for his wife.
According to Hilburn, he was told “not to worry.”
Approximately two weeks after he received the first call, Hilburn received a
second call from another Storage Trust representative. The representative told
Hilburn that the locks on his units had been cut and the contents of the units were
being thrown away. When Hilburn went to the storage facility, he asked for
additional time to remove his property. He left and returned four days later with a
moving truck. When he returned, much of his property had been removed from the
units, and some of it had been hauled away to the dump. According to Hilburn,
some of his property that had been disposed of was not damaged, and some of it
2
was damaged but salvageable.
Hilburn filed suit, bringing claims against Storage Trust for breach of
contract, conversion, waiver, estoppel, promissory estoppel, and violations of the
Texas Deceptive Trade Practices Act (DTPA).1 Hilburn also sought a declaratory
judgment that he had paid the June rent. He sought damages of $150,000, plus
attorney’s fees and costs.
Storage Trust filed a traditional motion for summary judgment challenging
Hilburn’s claims on the grounds that (1) Hilburn expressly agreed that in the event
of an emergency, Storage Trust could remove Hilburn’s locks, enter the storage
units, and take action to preserve the facility; (2) Hilburn agreed to a damages cap
for any loss related to claims resulting from fraud, willful injury, or willful
violations of law; (3) Hilburn cannot recover attorney’s fees from Storage Trust;
(4) the economic loss rule bars Hilburn’s conversion, waiver, estoppel, promissory
estoppel, and DTPA claims; and (5) Hilburn is not entitled to a declaratory
judgment on an undisputed fact. Hilburn objected to certain evidence in support of
the motion as hearsay and responded in relevant part that (1) there is a fact
question regarding whether the flooding event constituted an emergency
authorizing Storage Trust to enter the units and dispose of Hilburn’s property
under the five lease agreements; (2) Hilburn did not agree to waive or limit liability
resulting from Storage Trust’s fraud, willful injury, or willful violations of law;
(3) Hilburn is not prohibited from recovering attorney’s fees as to all his claims;
(4) the economic loss rule does not apply to Hilburn’s noncontractual claims; and
(5) Hilburn would accept a stipulation that he made the June 2015 rent payments.
The trial court granted Storage Trust’s motion for summary judgment and rendered
final summary judgment disposing of all Hilburn’s claims.
1
Tex. Bus. & Com. Code §§ 17.01–.955.
3
Discussion
In one issue, Hilburn challenges the trial court’s grant of summary judgment
as to each of his claims. We review a summary judgment de novo. Mann Frankfort
Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We
review the evidence presented in the motion and response in the light most
favorable to the party against whom the summary judgment was rendered,
crediting evidence favorable to that party if reasonable jurors could, and
disregarding contrary evidence unless reasonable jurors could not. Id.
The party moving for traditional summary judgment bears the burden of
showing no genuine issue of material fact exists and it is entitled to judgment as a
matter of law. Id. (citing Tex. R. Civ. P. 166a(c)). The evidence raises a genuine
issue of fact if reasonable and fair-minded jurors could differ in their conclusions
in light of all of the summary judgment evidence. Goodyear Tire & Rubber Co. v.
Mayes, 236 S.W.3d 754, 755 (Tex. 2007). Summary judgment for a defendant is
proper only when the defendant negates at least one element of each of the
plaintiff’s theories of recovery or pleads and conclusively establishes each element
of an affirmative defense. Grynberg v. Grey Wolf Drilling Co., 296 S.W.3d 132,
135–36 (Tex. App.—Houston [14th Dist.] 2009, no pet.).
I. Fact Question on Breach of Contract
Storage Trust moved for summary judgment on the basis that it did not
breach the lease agreements. See Mays v. Pierce, 203 S.W.3d 564, 575 (Tex.
App.—Houston [14th Dist.] 2006, pet. denied) (listing elements of breach of
contract). Storage Trust relies on the following language from the lease
agreements:
In the event Occupant shall not grant access to the Premises as
required or in the event of an emergency . . . , Owner [or] Owner’s
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Agents . . . shall have the right, but not the obligation, to remove
Occupant’s locks and enter the Premises for the purpose of examining
the premises or the contents thereof or for the purpose of making
repairs or alterations to the Premises and taking such other action as
may be necessary or appropriate to preserve the Premises or to
comply with applicable law including any applicable local, state or
federal law or regulation governing hazardous or toxic substance,
material, or waste, or to enforce any of Owner’s rights.
According to Storage Trust, the flooding event constituted an emergency
under the lease agreements, which allowed Storage Trust to enter the storage units
and dispose of Hilburn’s “hazardous property due to mold.” But Storage Trust did
not present any evidence that there were hazardous materials in the storage units or
that there was mold.
Storage Trust relied on the following deposition testimony from Hilburn:
[E]verything was going to get mold, and they were worried about it
the last time. We’re going to have mold. I said, fumigate and remedy.
[S]tart . . . drying out that side. When its dried out, stick my stuff in
there. I’ll continue to pay rent the whole time. . . . Let me move my
stuff into another unit, and I will pay you. [They said,] No, we can’t
do it. Everything’s got to go, everything.
At most, this testimony creates a fact question regarding whether there
would be hazardous materials—mold—in the storage units in the future. There is
no evidence that Hilburn’s property contained mold or showed signs of mold at the
time Storage Trust entered the units. Accordingly, Storage Trust did not show it
was entitled under the lease agreements to dispose of Hilburn’s property. We
conclude there is a fact question regarding whether Storage Trust breached the
lease agreements.
Storage Trust alternatively argued that even if it breached the lease
agreements, the trial court should limit any damages to $5,000 per storage unit
under the terms of the lease agreements. Storage Trust further argued in the
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alternative that Hilburn is not entitled to attorney’s fees for his breach of contract
claim.2 Because the trial court granted summary judgment, ruling Hilburn could
not recover on his breach of contract claim, the trial court did not reach these
issues.
We must review all summary judgment grounds on which a trial court ruled
that are dispositive of the appeal. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d
623, 626 (Tex. 1996). But we have the discretion to decline to consider summary
judgment grounds on which the trial court has not ruled. See Cohen v. Tour
Partners, Ltd., No. 01-15-00705-CV, 2017 WL 1528776, at *10 (Tex. App.—
Houston [1st Dist.] Apr. 27, 2017, no pet.) (mem. op.); In re TCW Glob. Project
Fund II, Ltd., 274 S.W.3d 166, 170 (Tex. App.—Houston [14th Dist.] 2008, no
pet.) (noting “[t]he court of appeals will usually decline to address the alternative
grounds [for summary judgment] and, instead, remand the case to the trial court for
consideration of the additional grounds” unless the court of appeals decides to rule
on the alternative grounds not expressly ruled on “in the interest of judicial
economy”); cf. Cates, 927 S.W.2d at 626 (“We hold that the appellate court may
consider other grounds that the movant preserved for review and trial court did not
rule on in the interest of judicial economy.”). Given that there is a fact question on
breach and Hilburn’s entitlement to damages, and attorney’s fees is contingent, in
part, on the resolution of that issue, we decline to consider these summary
judgment grounds that were not decided by the trial court. See Cohen, 2017 WL
1528776, at *10 (declining to address summary judgment grounds on which the
trial court did not rule “[g]iven the complex procedural history of [the] case and its
related case as well as [court of appeals’] resolution of the other issues in the
appeal”).
2
See Tex. Civ. Prac. & Rem. Code § 38.001 (allowing recovery of attorney’s fees as to
breach of contract claims against an individual or corporation).
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II. Economic Loss Rule Inapplicable to Conversion, Waiver,
Estoppel, Promissory Estoppel, and DTPA Claims
Storage Trust moved for summary judgment as to Hilburn’s noncontractual
claims of conversion, waiver, estoppel, promissory estoppel, and DTPA violations
on the basis that they are barred by the economic loss rule because, according to
Storage Trust, the only injury alleged by Hilburn is economic loss resulting from
breach of contract. Hilburn contends that the economic loss rule only applies to
negligence claims arising from the contract itself and not to his other claims.
The economic loss rule generally precludes recovery in tort for economic
losses resulting from a party’s failure to perform under a contract when the harm
consists only of the economic loss of a contractual expectancy. Chapman Custom
Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014). But see
Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 419 (Tex. 2011)
(“[T]he ‘economic loss’ rule has never been a general rule of tort law; it is a rule in
negligence and strict product liability.”) (emphasis in original) (quoting William
Powers, Jr. & Margaret Niver, Negligence, Breach of Contract, and the “Economic
Loss” Rule, 23 Tex. Tech. L. Rev. 477, 492 (1992)). But the rule does not bar all
claims arising out of a contractual setting. Chapman Custom Homes, 445 S.W.3d
at 718. As the supreme court has said, “a party [cannot] avoid tort liability to the
world simply by entering into a contract with one party [otherwise the] economic
loss rule [would] swallow all claims between contractual and commercial
strangers.” Id. (quoting Sharyland, 354 S.W.3d at 419). Thus, a party states a
noncontractual claim when the duty allegedly breached is independent of the
contractual undertaking and the harm suffered is not merely the economic loss of a
contractual benefit. Id.
In Chapman Custom Homes, the supreme court recognized that “a common
7
law duty to perform with care and skill accompanies every contract and . . . the
failure to meet this implied standard might provide a basis for recovery in tort,
contract, or both under appropriate circumstances.” Id. (citing Montgomery Ward
& Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508, 510 (1947)). For example,
in that case, a plumber who installed a plumbing system in a house being built
assumed an implied duty not to flood or otherwise damage the home. Id. That duty
was independent of any obligation in the plumber’s subcontract with the builder,
and the alleged damages caused by the breach of that duty extended beyond the
economic loss of any anticipated benefit under the plumbing contract. Id. at 718–
19. Thus, the economic loss rule did not apply.
Factual Allegations. We turn to the allegations in this case to determine
whether Hilburn alleged that Storage Trust breached a duty independent of the
lease agreements. Hilburn alleges that the flooding event occurred in May 2015.
Hilburn paid the June rent for all the units. He was not notified that the property
had flooded until June 7, 2015, when he was contacted by a representative, Bryan,
from Storage Trust, who told Hilburn about the letter that purportedly had been
mailed in May. According to Bryan, Hilburn would need to remove his property
from the storage units by June 10. Hilburn told Bryan he did not receive the letter
and he could not move everything by June 10 because of the size of the units, the
amount of property, and his wife’s medical emergency. Bryan told Hilburn “not to
worry.”
On June 20, another representative from Storage Trust, Carolyn, called
Hilburn and told him the locks had been cut from his units and his property was
being thrown away. Hilburn went to his storage units but could not stop Storage
Trust from removing his property, which was being placed outside the units. He
returned with a truck on June 24 to sort through his property. The contents of four
8
of the units had been moved outside, and the contents of at least two units had been
hauled to a dump. Everything was being thrown away by Storage Trust
representatives, whether it was damaged or not.
As discussed, under the lease agreements, Storage Trust had the right to
enter the storage units “in the event of an emergency” “for the purpose of
examining the [storage units] or the contents thereof or for the purpose of making
repairs or alterations to the [storage units] and taking such other action as may be
necessary or appropriate to preserve the [storage units].” Nothing in the lease
agreements explicitly authorizes Storage Trust to take possession of and dispose of
property in the storage units unless the tenant is in default. We turn to the
allegations specific to each of Hilburn’s claims to determine whether Hilburn
alleged a duty of Storage Trust independent of any obligation in the lease
agreements. See id.
Conversion. Hilburn alleges that Storage Trust disposed of a large amount
of his personal property regardless of whether it was damaged or “hazardous.” The
tort of conversion involves the unauthorized and unlawful assumption and exercise
of dominion and control over the personal property of another to the exclusion of
and inconsistent with the other’s superior rights in the property. See Frankoff v.
Norman, 448 S.W.3d 75, 85 (Tex. App.—Houston [14th Dist.] 2014, no pet.)
(listing elements). The gist of a conversion claim is not the actual taking of
property by the defendant but the wrongful deprivation of property from a person
who is entitled to possession of the property. Branham v. Prewitt, 636 S.W.2d 507,
510 (Tex. App.—San Antonio 1982, writ ref’d n.r.e.). There must be such active
interference with the owner’s right of control to deprive the owner of the free use
and enjoyment of the owner’s property. Id.
Hilburn has alleged in essence that Storage Trust took his property, and in
9
unilaterally deciding to destroy or dispose of it, wrongfully interfered with his right
of control and deprived him of the free use and enjoyment of his property.3 See id.
Storage Trust has pointed to no provisions in the lease agreements that allowed it
to do so under these circumstances.
Waiver, Estoppel, and Promissory Estoppel. Hilburn alleges that Bryan,
as a representative of Storage Trust, told Hilburn not to worry about removing his
property from the storage units, and Storage Trust accepted Hilburn’s June rent and
kept it, despite Storage Trust’s knowledge about the flooding in May. Hilburn
alleges that he relied on Storage Trust’s actions and representations under the lease
agreements after the flooding incident in May. Thus, Storage Trust would be
estopped from relying on the lease agreements to the degree they were inconsistent
with Storage Trust’s post-flooding representations to Hilburn.
Waiver, estoppel, and promissory estoppel are three distinct but related
concepts. Waiver is an affirmative defense that may be asserted against a party
who intentionally relinquishes a known right or engages in intentional conduct
inconsistent with that right. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640,
643 (Tex. 1996). A waivable right may spring from law or, as in this case, from a
contract. Id. A party’s express renunciation of a known right can establish waiver.
Id. Silence or inaction, for so long a period as to show an intention to yield a
known right, may be proof of waiver. Id.
Estoppel arises when, by fault of one, another is induced to change his or her
position for the worse. Herschbach v. City of Corpus Christi, 883 S.W.2d 720, 736
3
Storage Trust also argues that Hilburn waived any conversion claims under the lease
agreements. We disagree. Hilburn agreed under the lease agreements that “all personal property
is stored by occupant at occupant’s sole risk.” He also agreed to limit Storage Trust’s liability for
its “active or passive acts, omissions, negligence or conversion, unless [any] Loss is caused by
Owner’s fraud, willful injury or willful violation of law.” Hilburn has alleged willful injury by
Storage Trust.
10
(Tex. App.—Corpus Christi 1994, writ denied). Ordinarily, estoppel is not
grounded on a promise to do something in the future. Citizens Nat’l Bank at
Brownwood v. Ross Constr. Co., 146 Tex. 236, 206 S.W.2d 593, 595 (1947);
Stanley v. CitiFinancial Mortg. Co., 121 S.W.3d 811, 820 (Tex. App.—Beaumont
2003, pet. denied). Promissory estoppel is an exception to this rule, which includes
the following elements: a promise, foreseeability by the promisor of reliance on the
promise, and substantial reliance by the promisee to his detriment. English v.
Fischer, 660 S.W.2d 521, 524 (Tex. 1983); Jones v. Landry’s Seafood Inn &
Oyster Bar-Galveston, Inc., 328 S.W.3d 909, 913 (Tex. App.—Houston [14th
Dist.] 2010, no pet.).
The supreme court has listed a myriad of torts that the economic loss rule
does not bar, including “negligent misrepresentation, legal or accounting
malpractice, breach of fiduciary duty, fraud, fraudulent inducement, tortious
interference with contract, nuisance, wrongful death claims related to loss of
support from the decedent, business disparagement, and some statutory causes of
action.” Sharyland, 354 S.W.3d at 418–19. The key is whether the defendant owes
a duty independent from the contractual duty. See id.
Here, Hilburn alleged a promise—not to worry about moving his
possessions—along with action by Storage Trust inconsistent with Storage Trust’s
intention to clear out the storage units—accepting the rent after the storage units
had been flooded. These contentions are not related to Storage Trust’s failure to
perform a contractual duty—they are common law duties that arose from
renunciation of a purported known right (clearing the storage units), inducing
Hilburn not to move his property by telling him he did not need to worry, and
promising not to dispose of his property. See Chapman, 445 S.W.3d at 719;
Sharyland, 354 S.W.3d at 418–19.
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DTPA. Hilburn alleged that Storage Trust’s representations and
“inconsistent method of disposal” of his property constituted one or more
violations of the DTPA. Storage Trust argues Hilburn’s DTPA claim is barred
under the economic loss rule because Hilburn has alleged only a breach of
contract.
Storage Trust relies on a case that involved representations that induced the
plaintiff to renew an advertising contract. See Crawford v. Ace Sign, Inc., 917
S.W.2d 12, 14 (Tex. 1996). The supreme court held that the statements amounted
to “nothing more than representations that the defendants would fulfill their
contractual duty to publish [an advertisement], and the breach of that duty sounds
only in contract.” Id. But Hilburn alleges Storage Trust made representations
regarding the disposition of his property that are unrelated to the duty to comply
with the contract.
It is not clear from Hilburn’s petition what violations of the DTPA he
alleges. He alleges only that Storage Trust’s “inconsistent representations . . .
coupled with [Storage Trust’s] inconsistent method of disposal of the [contents of
the units] constitutes one or more violations of the [DTPA].”4 But Storage Trust
moved for summary judgment only on the basis that any DTPA claims are barred
by the economic loss rule. Under these facts, Storage Trust did not conclusively
establish that Hilburn’s DTPA claims are barred under the rule.
Conclusion. For the above reasons, we conclude that the economic loss rule
did not bar Hilburn’s conversion, waiver, estoppel, promissory estoppel, or DTPA
4
We note that Storage Trust did not file special exceptions in the trial court and did not
otherwise complain below regarding any defects in the allegations regarding purported violations
of the DTPA. See Tex. R. Civ. P. 91 (“A special exception shall . . . point out intelligibly and
with particularity the defect, omission, obscurity, duplicity, generality, or other insufficiency in
the allegations in the pleading excepted to.”).
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claims. These claims are based on duties that arose from Storage Trust’s post-
contractual statements and actions independent of any obligation undertaken by
Storage Trust in the lease agreements.
III. Declaratory Judgment
Hilburn requested a declaratory judgment that he paid rent through the end
of June 2015. In its motion for summary judgment, Storage Trust conceded that it
“does not dispute that [Hilburn] paid rent through the end of June 2015.” Hilburn
responded that he would accept a stipulation that he paid the June 2015 rent.
Under the Uniform Declaratory Judgments Act (UDJA), a person whose
rights, status, or other legal relations are affected by a contract may have a court
determine any question of construction or validity arising under the contract and
may obtain a declaration of rights under that instrument. See Tex. Civ. Prac. &
Rem. Code § 37.004(a). The UDJA’s purpose is to settle and to afford relief from
uncertainty and insecurity with respect to rights, status, and other legal relations.
See id. § 37.002(b). To obtain a declaratory judgment, there must be a justiciable
controversy as to the rights and status of the parties that the declaration sought will
resolve. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995); HMT
Tank Serv. LLC v. Am. Tank & Vessel, Inc., 565 S.W.3d 799, 808 (Tex. App.—
Houston [14th Dist.] 2018, no pet.). A justiciable controversy involves a real and
substantial dispute including a genuine conflict of tangible interests, rather than
merely a theoretical disagreement. HMT Tank Serv., 565 S.W.3d at 808.
Based on these facts—where both parties agree on the fact at issue—no case
or controversy exists between Hilburn and Storage Trust other than claims for
monetary damages against Storage Trust. See Spring Branch Wildlife Pres. v. Dow
Chem. Co., No. 14-17-00539-CV, 2018 WL 4868852, at *4 (Tex. App.—Houston
[14th Dist.] Oct. 9, 2018, no pet.) (mem. op.). Because there is no justiciable
13
controversy on this issue, we vacate the trial court’s judgment on this issue and
dismiss the appeal as to this issue for lack of jurisdiction. See id.; see also Di
Portanova v. Monroe, 229 S.W.3d 324, 327 (Tex. App.—Houston [1st Dist.] 2006,
pet. denied).
Conclusion
We conclude that the trial court erred in granting summary judgment in
favor of Storage Trust as to Hilburn’s noncontractual claims, and that the trial
court lacked jurisdiction over Hilburn’s request for declaratory judgment because
there is not a justiciable controversy regarding whether Hilburn paid rent for the
storage units in June 2015.5 We reverse and remand the trial court’s judgment in
part, vacate the judgment in part, and dismiss the appeal in part for want of
jurisdiction.
/s/ Frances Bourliot
Justice
Panel consists of Chief Justice Frost and Justices Bourliot and Poissant (Frost, C.J.,
concurring).
5
Hilburn also argues Storage Trust mischaracterized contested facts as undisputed.
Because we conclude the trial court erred in granting summary judgment as to Hilburn’s contract
and noncontractual claims, we need not reach this issue.
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