Bayou City Fish Company v. South Texas Shrimp Processors, Inc. ( 2007 )

NUMBER 13-06-438-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

BAYOU CITY FISH COMPANY, Appellant,

v.

SOUTH TEXAS SHRIMP PROCESSORS, INC., Appellee.

On appeal from the 197th District Court of Cameron County, Texas. MEMORANDUM OPINION

Before Justices Rodriguez, Garza, and Benavides Memorandum Opinion by Justice Benavides

In this appeal, we review a no-evidence summary judgment in a breach of contract suit in which virtually all of the documentary evidence of damages presented by the nonmovant plaintiff was unverified. We find that because of these deficiencies, the proffered evidence was not competent summary judgment evidence. Accordingly, we agree with the trial court's ruling that the nonmovant plaintiff did not raise a genuine issue of material fact as to the damages element of its claim. See Tex. R. Civ. P. 166a(I). We affirm the no-evidence summary judgment.

I. Factual and Procedural Background

South Texas Shrimp Processors, Inc. ("South Texas") is a company in San Benito, Texas that cleans and counts shrimp. Bayou City Fish Co. ("Bayou City") is a seafood company in Houston, Texas that distributes shrimp to grocers and restaurants. Through a series of faxes in the summer of 2001, the two companies executed a contract under which South Texas agreed to process Bayou City's shrimp. ⁽¹⁾ Bayou City had contracted to supply the processed shrimp to prominent seafood sellers, such as Fiesta Mart, Inc. ("Fiesta Mart"), Alpine Foods International, Inc. ("Alpine"), and Sunnyvale Seafood, Inc. ("Sunnyvale"). These clients, however, soon began complaining to Bayou City about the poor quality of the processed shrimp, and they began canceling orders or seeking to negotiate lower purchase prices.

Bayou City believed that deficiencies in South Texas's processing may have been responsible for the dissatisfaction of their clients. Accordingly, on October 3, 2003, Bayou City filed suit against South Texas for breach of contract. South Texas responded with a general denial and a counterclaim alleging breach of contract for payments not received from Bayou City.

South Texas waited two years to receive discovery documents from Bayou City's former counsel. On November 2, 2005, South Texas still had not received the discovery documents from Bayou City and subsequently filed a motion for no-evidence summary judgment with the trial court. See Tex. R. Civ. P. 166a(I). In the motion, South Texas asserted that Bayou City could present no evidence that: (1) the contract had been breached, (2) Bayou City had suffered damages, or (3) South Texas had been the cause of any damages suffered by Bayou City.

On December 28, 2005, Bayou City addressed the three arguments in a response to the motion for summary judgment. In its response, Bayou City attached several documents as evidence, virtually all of which were unaccompanied by sworn affidavits. Every piece of documentary evidence specifically cited by Bayou City on the damages issue was unsworn. This evidence included correspondence from clients, correspondence from Bayou City's former counsel, cancelled checks, and an expert report by Bayou City's damages expert, Richard Cortez.

In the unverified expert report, Cortez, a certified public accountant with thirty years of experience, purportedly opined that Bayou City's damages totaled $1,397,300 as a result of (1) overpayment for shrimp that was misclassified and/or misgraded, (2) lost profits from sales to customers with supply agreements, (3) lost sales and profits resulting from loss of reputation, and (4) property damage.

On the day of the summary judgment hearing, Bayou City sought to file an affidavit from Cortez that would swear to the contents of the expert report and opine that the damages total was slightly lower than originally estimated. At the hearing, South Texas argued that because Bayou City sought to file the affidavit at such a late juncture, leave of court was required. See Tex. R. Civ. P. 166a© ("Except on leave of court, the adverse party, not later than seven days prior to the day of hearing may file and serve opposing affidavits or other written response."). A visiting judge presided over the hearing, and he refused to rule on the motion for leave to file the late evidence or the motion for no-evidence summary judgment.

The sitting trial judge eventually granted South Texas's motion for no-evidence summary judgment and dismissed South Texas's counterclaim without prejudice on May 9, 2006. The order did not specify the reasons for granting summary judgment, nor did the court issue an order specifying whether it had granted Bayou City's motion for leave to attach Cortez's affidavit. Bayou City now brings this appeal.

II. Standard of Review

A no-evidence summary judgment is a determination by the trial court, after an adequate time for discovery and upon the motion of a party, that there is no evidence of one or more essential elements of a claim or defense on which the adverse party would have the burden of proof at trial. Tex R. Civ. P. 166a(I). A motion under Texas Rule of Civil Procedure 166a(I) is essentially a motion for a pretrial directed verdict. Id.; Mack Trucks v. Tamez, 206 S.W.3d 572, 581 (Tex. 2006). Once the motion is filed, the burden shifts to the nonmoving party to present evidence raising a genuine issue of material fact as to the elements specified in the motion. W. Invs., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005).

A no-evidence summary judgment is reviewed de novo. Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006) (per curiam). "We review the evidence presented by 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." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).

III. Analysis

In this case, South Texas moved for no-evidence summary judgment, and Bayou City responded with evidence that purportedly established a genuine issue of material fact on the breach of contract claim. As we explain below, however, Bayou City did not present any competent summary judgment evidence on the issue of damages. See Tex. R. Civ. P. 166a(f). Because we are barred from giving weight to the incompetent evidence, we are compelled to affirm the summary judgment. See City of Keller, 168 S.W.3d at 812-13 (citing Robert W. Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex. L. Rev. 361, 362-63 (1960)).

We also address Bayou City's contentions that it did not receive sufficient discovery time or adequate notice that the court was considering summary judgment, and we disagree with both arguments.

A. Bayou City Did Not Raise A Genuine Issue of Material Fact on Damages

In order to maintain an action for breach of contract, a plaintiff must establish all four of the following elements: (1) a valid enforceable contract existed; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) the defendant's breach was the cause of plaintiff's injury. Doss v. Homecomings Fin. Network, Inc., 210 S.W.3d 706, 713 (Tex. App-Corpus Christi 2006, pet. dism'd). South Texas attacked Bayou City's breach of contract action on the fourth element--damages. Bayou City responded by providing the trial court with (1) ten documents--including letters, faxes, and memoranda--exchanged between parties involved in the claim; (2) the expert report on damages from Richard Cortez; and (3) an affidavit from Bayou City's vice-president, Oscar Samaniego. The ten documents and the expert report were unauthenticated, and therefore incompetent, summary judgment evidence. See City of Keller, 168 S.W.3d at 812-13. The Samaniego affidavit, although it is sworn, fails to raise a genuine issue of material fact. See W. Invs., 162 S.W.3d at 550.

1. Documentary Evidence

Rule 166a(f) of the rules of civil procedure provides:

"Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith."

Tex. R. Civ. P. 166a(f). If, therefore, a statement is unauthenticated, unsworn, and unaccompanied by an affidavit, it is not competent summary judgment evidence. Hall v. Rutherford, 911 S.W.2d 422, 426 (Tex. App.-San Antonio 1995, writ denied) (citing Diaz v. Sw. Wheel, Inc., 736 S.W.2d 770, 773-74 (Tex. App.-Corpus Christi 1987, writ denied)); Kotzur v. Kelly, 791 S.W.2d 254, 256 (Tex. App.-Corpus Christi 1990, no writ). In its response to South Texas's motion for summary judgment, Bayou City specifically cited ten attached documents as evidence of damages. These documents included several letters, faxes, and memoranda exchanged between Bayou City and its clients (specifically Alpine, Sunnyvale, and Fiesta) purportedly showing clients negotiating lower purchase prices because they were dissatisfied with shrimp quality; correspondence between Cowen & Bodden, Bayou City's former counsel, and South Texas; and cancelled checks from Alpine. ⁽²⁾ None of these documents, however, was submitted with an affidavit. Therefore, none of the documents were properly authenticated, and they could not serve as competent summary judgment evidence before the trial court. See Hall, 911 S.W.2d at 426.

Bayou City argues that South Texas has waived the right to argue the authentication deficiency errors at the appellate level because it failed to object in writing at the trial level. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex. 1979) (stating that "both the reasons for the summary judgment and the objections to it must be in writing and before the trial judge at the hearing"). This rule, however, applies only to defects of form, and an absence of authentication is not merely a defect of form. See Kotzur, 791 S.W.2d at 257; Tucker v. Atl. Richfield Co., 787 S.W.2d 555, 557 (Tex. App.-Corpus Christi 1990, writ denied) (citing Trimble v. Gulf Paint & Battery, Inc., 728 S.W.2d 887, 889 (Tex. App.-Houston [1st Dist.] 1987, no writ)). Lack of authentication is a defect of substance that may be raised for the first time on appeal. Kotzur, 791 S.W.2d at 257; Blanche v. First Nationwide Mortgage Corp., 74 S.W.3d 444, 451 (Tex. App.-Dallas 2002, no pet.). Therefore, none of the ten documents are competent summary judgment evidence.

2. Expert Report of Richard Cortez

In addition to the ten unauthenticated documents, Bayou City also attached the unsworn expert report from Richard Cortez in which Bayou City's damages were estimated to total $1,397,300. An expert report on damages from someone with the "appropriate knowledge, skill, experience, training, or education" is permissible evidence and could have weighed in Bayou City's favor. See, e.g., Toshiba Mach. Co. v. SPM Flow Control, Inc., 180 S.W.3d 761, 778 (Tex. App.-Fort Worth 2005, pet. granted, judgm't vacated w.r.m.) (permitting an accountant who had over thirty years of experience and who had contacted customers about their cancelled sales to testify as an expert on damages and lost profits in a breach of contract suit). Cortez's report, however, was unauthenticated and thus incompetent summary judgment evidence--much like the letters, faxes, memoranda, and checks. See Tucker, 787 S.W.2d at 557; see also Twist v. Garcia, No. 13-05-00321-CV, 2007 Tex. App. LEXIS 7187, *12-14 (Tex. App.-Corpus Christi Aug. 30, 2007, no pet. h.) (mem. op.) (applying the authentication requirement for summary judgment documentary evidence to expert reports).

While it is true that on the day of the hearing Bayou City sought leave of court to attach an affidavit from Cortez to the expert report, the trial court never ruled on the motion for leave before handing down the summary judgment. When the record lacks any indication of how a court ruled on a motion seeking leave of court for a late filing, "we must presume the court did not consider it and we must do likewise." Neimes v. Kien Chung Ta, 985 S.W.2d 132, 138 (Tex. App.-San Antonio 1998, pet. dism'd) (citing Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex. 1996); Goswami v. Metro. Sav. & Loan Ass'n, 751 S.W.2d 487, 491 (Tex. 1988); INA of Tex. v. Bryant, 686 S.W.2d 614, 615 (Tex. 1985)). Thus, we must presume that the trial court, in its discretion, did not consider Cortez's affidavit. This would have left the trial court with an expert report that was unauthenticated and therefore incompetent.

3. Affidavit of Oscar Samaniego

The only evidence of damages that is verified, and thus competent, is an affidavit from Bayou City's vice-president, Oscar Samaniego, stating that "as a result of [South Texas's] breach and wrongful acts, Bayou City sustained damages, including direct losses, lost profits, lost business and sales, and its reputation was damaged." However, this conclusory affidavit from the plaintiff's vice-president, which makes no direct reference to any other attached evidence and which is unaccompanied by a single other piece of competent summary judgment evidence, is not sufficient to raise a genuine issue of material fact on the damages element. Paragon Gen. Contractors, Inc. v. Larco Constr., Inc., 227 S.W.3d 876, 883 (Tex. App.-Dallas 2007, no pet.) ("Conclusory affidavits do not raise fact issues.").

Because none of the documentary evidence on damages that was offered by Bayou City was properly authenticated, none of the documents could have been considered. See City of Keller, 168 S.W.3d at 812-13. Bayou City was left with a damages argument that was supported by no evidence other than a conclusory affidavit from its own vice-president. We agree with the trial court's assessment that this was not enough to present a genuine issue of material fact. Moreover, because Bayou City failed to present any competent damages evidence, its entire claim for breach of contract failed regardless of the evidence that it may have presented on the other three elements of its claim. See Doss, 210 S.W.3d at 713 (explaining that all four elements of a breach of contract must be met in order to maintain the claim). We need not, therefore, address the merits of Bayou City's liability argument. Due to the complete absence of competent damages evidence in Bayou City's response to South Texas, we are compelled to affirm the trial court's grant of no-evidence summary judgment.

B. Bayou City Received Adequate Time for Discovery from the Trial Court

Bayou City also argues that even if we determine there was no evidence of breach of contract, reversal is warranted because the trial court failed to provide Bayou City with adequate time for discovery. We disagree.

To determine whether adequate time for discovery has passed, we consider the following list of non-exclusive factors: (1) the nature of the case; (2) the nature of the evidence necessary to controvert the no-evidence motion; (3) the length of time the case was active; (4) the amount of time the no-evidence motion was on file; (5) whether the movant had requested stricter deadlines for discovery; (6) the amount of discovery already taken place; (7) whether the discovery deadlines in place were specific or vague. Madison v. Williamson, No. 01-05-00678, 2007 Tex. App. LEXIS 7844, at *18-19 (Tex. App.-Houston [1st Dist.] Sept. 27, 2007, no pet. h.); see also McNeal v. Thomas, No. 13-03-347-CV, 2005 Tex. App. LEXIS 1338, at *25 (Tex. App.-Corpus Christi Feb. 17, 2005, no pet.) (mem. op.). It is extremely unusual to reverse a no-evidence summary judgment on the ground that adequate time for discovery has not passed. In fact, as recently as 2001, the San Antonio Court of Appeals observed that no Texas appellate court had ever done so. See Martinez v. City of San Antonio, 40 S.W.3d 587, 591 (Tex. App.-San Antonio 2001, pet. denied) ("No Texas appellate court has overturned a no-evidence summary judgment on the ground that adequate time for discovery had not passed.").

Applying some of the factors outlined in Madison, we see no reason why this case should be an exception. The dispute was a breach of contract that turned principally on documentary evidence which the Bayou City had approximately two years to gather before the motion for summary judgment was filed. Then, as the January 4th summary judgment hearing date approached, Bayou City sought and received a continuance delaying the hearing until February 1st. Bayou City had well over two years--far more than adequate time--to conduct discovery in this case. See Specialty Retailers, Inc. v. Fuqua, 29 S.W.3d 140, 146 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) (finding that sixteen months was adequate discovery time before a motion for no-evidence summary judgment).

We believe Bayou City had more than adequate time to conduct discovery in this case, and reversal on this basis is not warranted.

C. Bayou City Received Adequate Notice that the Trial Court was Considering the Motion for Summary Judgment

Bayou City also argues that even if we determine there was no evidence of breach of contract and that Bayou City had adequate time for discovery, reversal is warranted because Bayou City was not provided with adequate notice that the trial court was considering the motion for summary judgment. In particular, Bayou City argues that after the visiting judge declined to rule on the motion, it was entitled to renewed notice that the sitting judge was now considering the motion. We disagree.

Parties to a summary judgment are not entitled to a hearing. In re Am. Media Consol., 121 S.W.3d 70, 74 (Tex. App.-San Antonio 2003, orig. proceeding) (citing Timothy Patton, Summary Judgments in Texas § 7.01 (3rd ed. 2002)). If the trial court grants a summary judgment hearing, however, the nonmovant is entitled to twenty-one days notice of the hearing. Tex. R. Civ. P. 166a©. The purpose of notice is "to prevent rendition of summary judgment without the non-movant having full opportunity to respond on the merits of the motion." Winn v. Martin Homebuilders, Inc., 153 S.W.3d 553, 556 (Tex. App.-Amarillo 2004, pet. denied) (citing Williams v. City of Angleton, 724 S.W.2d 414, 417 (Tex. App.-Houston [1st Dist.] 1987, writ ref'd n.r.e.)). After the hearing, trial courts are widely recognized to have "considerable discretion" in the time they take to issue a summary judgment decision. Zalta v. Tennant, 789 S.W.2d 432, 433 (Tex. App.-Houston [1st Dist.] 1990, orig. proceeding) (refusing to grant mandamus relief to relator because the trial court's over one-year-long wait to decide on a motion for summary judgment was not an abuse of discretion).

South Texas moved for summary judgment on November 2, 2005, and the trial court set a hearing for January 4, 2006. Bayou City was given twenty-one days notice of this hearing. Bayou City then filed a motion for continuance. The motion was granted, and the summary judgment hearing was reset for February 1, 2006. Bayou City had twenty-one days notice of this hearing date also. At the February 1 hearing, a visiting judge declined to rule on the motion, leaving it a pending motion for summary judgment. Approximately three months later, on May 9, 2006, the sitting judge issued an order granting the motion.

When the trial court issued its May 9 summary judgment, Bayou City had already received notice and properly met its response and reply deadlines for the February 1 hearing. Therefore, it was not entitled to any further notice. See Winn, 153 S.W.3d at 556. Bayou City, however, appears to argue that once the sitting judge returned to consider the motion, it was entitled to additional notice that a different judge--one who had not been present at the hearing--was considering the motion. The argument fails, however, because there is no recognized distinction between the visiting judge and the sitting judge--both judges equally hold the power of the trial court. See Tex. Gov't Code Ann. § 74.059 (Vernon 2007) ("A judge assigned under the provisions of this chapter has all the powers of the judge of the court to which he is assigned.").

In short, Bayou City was granted a February 1 summary judgment hearing, for which it received adequate notice. A decision on the summary judgment was issued on May 9. This interval of slightly over three months is not beyond the "considerable discretion" a trial court has in the time it takes to issue a decision. See Zalta, 789 S.W.2d at 433. The trial court did not fail to provide adequate notice that it was considering a motion for summary judgment.

IV. Conclusion

Because virtually all of the damages evidence presented by Bayou City was unauthenticated, Bayou City provided no evidence of damages in its breach of contract claim. This deficiency alone--regardless of what evidence Bayou City may have presented as to the other breach of contract elements--compelled the trial judge to find that no genuine issue of material fact existed and to grant South Texas's no-evidence summary judgment motion. We agree with the decision of the trial court, and furthermore, because we believe the trial court provided Bayou City with adequate discovery time and adequate notice of its decision, we affirm the judgment.  

   _____________________________  

GINA M. BENAVIDES,

Justice

Memorandum Opinion delivered and

filed this the 20th day of November, 2007.  

1. Specifically, it is undisputed that South Texas had the following contractual responsibilities: (1) to hire the truck and fill totes (large plastic vats) with ice slush prior to the shrimp harvest; (2) to organize the collection, weighing, and counting of the shrimp; (3) to defrost and wash the shrimp; (4) to inspect the shrimp prior to weighing; (5) to provide quality assurance personnel to evaluate the size of the shrimp; (6) to weigh the shrimp at a rate of at least 10,000 pounds per hour with weights agreed upon by buyer and seller; (7) to load the product, after weighing, into totes and then onto a tractor trailer for delivery to Bayou City; (8) to pack 20.8 pounds of shrimp into 20 pound individually quick frozen ("IQF") shrimp packs (IQF shrimp are processed differently than shrimp which are stored in ice slush); and (9) to maximize the amount of glaze used on the shrimp after they had been placed in the shrimp packs.

2. Bayou City describes the checks as cancelled, but they are also stamped "N.S.F." which, as South Texas notes, is an indicator that the checks may simply have been returned due to insufficient funds. Whatever the proper characterization of the checks may be, they are unauthenticated, and therefore not proper evidence before this court. See City of Keller, 168 S.W.3d at 812-13. Indeed, this is an example of why authentication rules exist, and why we are obligated to enforce them strictly. Had Bayou City included an affidavit from Alpine swearing to the cancelled checks, there would be no dispute about whether the checks were cancelled or returned, and we could consider them as competent summary judgment evidence. Id.