CSL Property Management Co. and Greatland Investments, Inc. v. Thyssenkrupp Elevator ( 2013 )

Opinion issued January 31, 2013.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-11-00665-CV
———————————
CSL PROPERTY MANAGEMENT CO. AND GREATLAND
INVESTMENTS, INC., Appellants
V.
THYSSENKRUPP ELEVATOR COMPANY, Appellee
On Appeal from the 11th District Court
Harris County, Texas
Trial Court Case No. 2009-75846
MEMORANDUM OPINION
This is a dispute between an elevator contractor and the manager and owner
of a building over the work performed and payments owed under the parties’
contracts. CSL Property Management Co. and Greatland Investments, Inc. appeal
from the trial court’s summary judgment in favor of ThyssenKrupp Elevator
Company. We affirm the trial court’s judgment.
Background
Greatland owns the Sterling Center, a commercial building managed by
CSL. Hurricane Ike caused damage to the Sterling Center, including its elevator.
Greatland hired Emergency Services 24, Inc. to repair the building, and Emergency
Services subcontracted the elevator work to ThyssenKrupp. The subcontract
provided for upfront payment of 30% of the contract price ($31,393.50), with the
remainder of the contract price (originally $96,558) to be paid later. Emergency
Services paid ThyssenKrupp the $31,393.50 initial payment on a credit card in the
name of Micah Bass, Emergency Services’ owner. After receiving the initial
payment, ThyssenKrupp started work on the elevator. Emergency Services
subsequently had a dispute with Greatland and left the project in December 2008.
After Emergency Services left the project, CSL requested that
ThyssenKrupp remain on the job. CSL and ThyssenKrupp executed a change order
that adjusted ThyssenKrupp’s compensation under the elevator subcontract from
$96,558 to $92,269. At ThyssenKrupp’s request, CSL also sent ThyssenKrupp a
letter, signed by CSL’s president, in which CSL “hereby assum[ed] all terms,
conditions, and obligations of the elevator modernization contract previously held
2
by Emergency Services 24, Inc.” In the letter, CSL stated, “ThyssenKrupp will
retain the $31,393.50 as initial payment toward the contract price.”
In January 2009, Bass and Emergency Services disputed the $31,393.50
credit card payment to ThyssenKrupp.
In March, CSL and ThyssenKrupp executed an assumption agreement, under
which CSL assumed Emergency Services’ rights and obligations under the
subcontract. In the assumption agreement, CSL and ThyssenKrupp modified the
subcontract’s price provision to provide for compensation in the amount of
$60,875.50 (the modified contract price of $92,269 less the initial payment of
$31,293.50 from Emergency Services). The assumption agreement also contained
an indemnity provision:
3.4 Indemnification
In addition to the indemnification provision of the Subcontract CSL
further agrees to defend, indemnify and hold harmless ThyssenKrupp,
its parents, subsidiaries, affiliates, employees, subcontractors,
insurers, attorneys, and agents, from any and all claims, demands,
suits, and/or proceedings brought or made by [Emergency Services],
or any of their parents, subsidiaries, affiliates, employees,
subcontractors, insurers, attorneys, and agents arising out of or related
to this Assumption Agreement, the Subcontract, ThyssenKrupp
Elevator’s retention of the Initial Payment and ThyssenKrupp’s
performance pursuant to the Subcontract from February 20, 2009
forward, excluding any claim(s) by [Emergency Services] for
improper Elevator Work provided by ThyssenKrupp pursuant to the
Subcontract, prior to February 20, 2009. . . .
3
An early draft of the agreement included an “additional compensation”
provision stating, “As consideration for entering into this Assumption Agreement
and in the event that ThyssenKrupp is required to return the $31,293.50 to
[Emergency Services], CSL shall compensate ThyssenKrupp for the full contract
value: $92,269.” This provision was rejected by CSL and not included in the final
written agreement. The parties assert that they were not aware that Bass had
disputed the $31,293.50 payment with his credit card company at the time they
executed the assumption agreement.
In June, Bass’s credit card company charged-back the $31,393.50 payment
to ThyssenKrupp. ThyssenKrupp appealed the chargeback with the credit card
company but lost due to a lack of documentation of the transaction.1 After the
chargeback became final, Greatland sued Bass and Emergency Services seeking to
recover the $31,393.50 payment. In the lawsuit, Greatland alleged that Bass and
Emergency Services “rushed to Houston” from Florida in the wake of Hurricane
Ike and “targeted Hurricane Ike victims who were property owners,” particularly
“business owners in Houston’s local Vietnamese community,” by “promising to
make emergency repairs at no cost” and by obtaining insurance proceeds for the
repairs, which Bass and Emergency Services never intended to complete. With
1
Both parties blame the other party for failing to adequately document Emergency
Services’ role in the project.
4
respect to the subject matter of this lawsuit, Greatland alleged that Bass and
Emergency Services had obtained insurance proceeds from Greatland’s insurer to
cover the $31,393.50 payment to ThyssenKrupp and had retained the insurance
proceeds despite having secured a chargeback of the payment. The court ultimately
dismissed that suit by agreement of the parties to the suit.
In August, ThyssenKrupp demanded that CSL reimburse the $31,393.50
chargeback pursuant to the indemnity provision in the assumption agreement. CSL
disputed any indemnity obligation and also did not pay ThyssenKrupp the
$60,875.50 balance owed under the subcontract for ThyssenKrupp’s elevator work.
ThyssenKrupp initiated this suit in November 2009 to recover both
indemnification for the $31,393.50 initial payment and payment of the $60,875.50
for the elevator work performed. CSL and Greatland filed counterclaims and
“cross-claims” against ThyssenKrupp asserting that ThyssenKrupp had failed to
deliver functioning elevators. According to ThyssenKrupp, the elevators were
completed but not turned on due to CSL’s nonpayment. A few months after
ThyssenKrupp filed suit, CSL sent ThyssenKrupp a check for $60,875.50 but
labeled the check, “Final payment in complete satisfaction of assumption of the
subcontract agreement.” ThyssenKrupp returned the check to CSL’s attorneys.
5
Shortly before trial, the parties filed cross-motions for summary judgment.2
The trial court granted summary judgment in favor of ThyssenKrupp on all of its
claims, awarding ThyssenKrupp $92,269 on its claims against CSL, plus attorneys’
fees and interest, and entering a take-nothing judgment on CSL’s and Greatland’s
claims against ThyssenKrupp. This appeal followed.
ThyssenKrupp’s Claims
CSL’s and Greatland’s first three issues challenge the trial court’s judgment
in favor of ThyssenKrupp on its claims against CSL. ThyssenKrupp sought and
obtained summary judgment against CSL on its claims for breach of contract and
suit on verified account, each of which sought recovery of damages in the amount
of $92,269—the full contract price, including reimbursement for the initial
payment. The trial court granted ThyssenKrupp’s summary judgment motion and
awarded ThyssenKrupp $92,269 in damages.
A. Standard of review
The parties filed cross-motions for traditional summary judgment on
ThyssenKrupp’s claims against CSL. We review summary judgments de novo.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); City of
Galveston v. Tex. Gen. Land Office, 196 S.W.3d 218, 221 (Tex. App.—Houston
2
ThyssenKrupp moved for summary disposition of all claims, including CSL’s and
Greatland’s claims against it. CSL and Greatland moved for traditional summary
judgment on ThyssenKrupp’s claim for contractual indemnity only.
6
[1st Dist.] 2006, pet. denied). When, as here, the parties file cross-motions for
summary judgment on overlapping issues, and the trial court grants one motion and
denies the other, we review the summary judgment evidence supporting both
motions and “render the judgment that the trial court should have rendered.” FM
Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).
ThyssenKrupp was entitled to summary judgment on its claims against CSL
if it conclusively established each element of its claims. See TEX. R. CIV. P.
166a(c); Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508–09 (Tex. 2010);
City of Galveston, 196 S.W.3d at 221. CSL was entitled to summary judgment on
ThyssenKrupp’s claims if it conclusively negated at least one essential element of
the claims or conclusively established each element of an affirmative defense to
the claims. See TEX. R. CIV. P. 166a(c); Frost Nat’l Bank, 315 S.W.3d at 508–09.
Because the summary judgment does not specify the grounds on which it was
granted, CSL and Greatland must demonstrate that none of the proposed grounds is
sufficient to support the judgment. See Rogers v. Ricane Enters., 772 S.W.2d 76,
79 (Tex. 1989); Tilotta v. Goodall, 752 S.W.2d 160, 161 (Tex. App.—Houston [1st
Dist.] 1988, writ denied); West v. SMG, 318 S.W.3d 430, 437 (Tex. App.—
Houston [1st Dist.] 2010, no pet.). Conversely, we will affirm the judgment if any
one of the theories advanced in the motion is meritorious. Joe v. Two Thirty Nine
Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004); West, 318 S.W.3d at 437.
7
B. ThyssenKrupp’s indemnity claim
In their first issue, CSL and Greatland challenge the trial court’s traditional
summary judgment in favor of ThyssenKrupp on its contractual indemnity claim
for the $31,393.50 initial payment.
1. The parties’ arguments
CSL and Greatland contend that CSL’s indemnity obligation applies only to
claims “brought or made . . . from February 20, 2009 forward,” and therefore does
not apply to the $31,393.50 chargeback, which CSL asserts was first initiated with
the credit card company in January 2009. Alternatively, CSL and Greatland
contend that the $31,393.50 charge dispute falls within the indemnity clause’s
exclusion of claims by Emergency Services “for improper Elevator Work provided
by ThyssenKrupp” before February 20, 2009. CSL and Greatland further argue that
the indemnity provision should be construed against ThyssenKrupp, as the drafter,
and should not be construed as applying to the initial payment because CSL
rejected the “additional compensation” draft provision that required CSL to
compensate ThyssenKrupp for the full contract price in the event that
ThyssenKrupp was required to return the initial payment. Finally, CSL contends
that it is ThyssenKrupp’s fault that Bass’s credit card company approved the
chargeback, and therefore ThyssenKrupp seeks indemnification for its own
negligence and is subject to the express negligence doctrine.
8
ThyssenKrupp responds that the indemnity provision expressly contemplates
indemnification relating to “ThyssenKrupp Elevator’s retention of the Initial
Payment” from Emergency Services; that it agreed to deletion of the “additional
compensation” provision only because the assumption agreement contained the
indemnity provision; that January 2009 is not the relevant date for the chargeback,
which the parties were not aware of until April 2009 and which did not actually
occur until June 2009; and that the chargeback did not arise out of “improper
Elevator Work” but rather out of Greatland’s removal of Emergency Services as
general contractor on the project. ThyssenKrupp also disputes that it was the
drafter of the assumption agreement, asserting that the parties worked together to
reach a mutually agreeable contract, and that it was at fault for the chargeback.
2. The summary judgment evidence of Bass’s claim
CSL identifies January 30, 2009 as the relevant date based on a letter to Bass
from his credit card company that Bass filled out and returned. The letter from the
credit card company, dated January 29, 2009, states that it relates to Bass’s
“inquiry about the transaction dated 11/11/2008 in the amount of $31,393.50.” The
letter requests that Bass provide the credit card company with specific information
about when “the order was (CIRCLE ONE) cancelled/ returned,” why the “order
was cancelled,” and “the merchant’s response when you attempted to resolve your
dispute.” The letter also states that a “conditional credit has been issued in your
9
account while we investigate this matter on your behalf.” Handwritten on the letter
is Bass’s response: he circled that the “order” was “returned” and provided the
return date as December 1, 2008. In the blank next to the sentence beginning, “This
order was cancelled because,” he wrote, “cancelled not my contract.” In response
to the request for details about “the merchant’s response when you attempted to
resolve your dispute,” he wrote, “The owner of elevator is to pay for this.” Bass
signed the letter and dated his signature January 30, 2009. The evidence does not
conclusively establish when the credit card company received Bass’s response, but
the letter bears a “received” stamp dated February 12, 2009.
The record also contains a letter from Bass to his credit card company dated
March 3, 2009, with the subject line “re: Unauthorized charge on Personal Account
for Micah D. Bass.” In this letter, Bass asserted that ThyssenKrupp’s contract was
with Emergency Services, not Bass personally, and ThyssenKrupp did not have
authority to charge the initial payment to his personal credit card.
Bass’s credit card company executed an “Expedited Billing Dispute
Resolution Process Form” on April 15, 2009. ThyssenKrupp and CSL each assert
that this is the date on which they became aware of the chargeback procedure.
Bass’s credit card company charged-back the initial payment on June 23, 2009,
and sent ThyssenKrupp notice of the chargeback on the same date.
10
3. Rules of construction
We construe indemnity provisions pursuant to the ordinary principles of
contract interpretation. See Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423
(Tex. 2000). Our primary purpose is to give effect to ThyssenKrupp’s and CSL’s
intent, as expressed in their agreement. See id.; Houston Exploration Co. v.
Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 (Tex. 2011); Don’s
Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 (Tex. 2008). We
construe the assumption agreement in light of the facts and circumstances
surrounding its execution, but we may not consider parol evidence to vary the
terms of the agreement or to create ambiguity where the language of the agreement
is clear and unambiguous. See Houston Exploration, 352 S.W.3d at 469; Don’s
Bldg. Supply, 267 S.W.3d at 23; David J. Sacks, P.C. v. Haden, 266 S.W.3d 447,
450–51 (Tex. 2008). If the contract uses unambiguous language, we enforce it as
written. See David J. Sacks, 266 S.W.3d at 450–51; Fiess v. State Farm Lloyds,
202 S.W.3d 744, 753 (Tex. 2006). This is because the parties’ intent is “governed
by what they said in the agreement, not by what one side or the other alleges they
intended to say but did not.” Gilbert Tex. Const., L.P. v. Underwriters at Lloyd’s
London, 327 S.W.3d 118, 127 (Tex. 2010).
11
4. Construction of the indemnity provision
Under the assumption agreement’s indemnity provision, CSL agreed to
indemnify ThyssenKrupp “from any and all claims, demands, suits, and/or
proceedings . . . brought or made by” Emergency Services and its agents “arising
out of or related to . . . ThyssenKrupp Elevator’s retention of the Initial Payment
. . . from February 20, 2009 forward.” The central issue here is whether the
chargeback of the initial payment was brought or made “from February 20, 2009
forward.” The February 20 date used in the indemnity provision is also used
throughout the assumption agreement, demonstrating the parties’ intent that CSL
would effectively step into Emergency Services’ shoes with respect to the elevator
subcontract, but only from February 20 forward. For example, CSL “accept[ed]
and assume[d] the terms and conditions of the Subcontract from [Emergency
Services] and assume[d] all of the rights, benefits and obligations of [Emergency
Services], from February 20, 2009 forward and covenant[ed] and agree[d] to
observe and perform all of the duties and obligations including but not limited to
the payment directly to ThyssenKrupp for Elevator Work pursuant to the
Subcontract.” The parties do not specify in their briefing why they chose February
20 as the pivotal date. The evidence indicates that the assumption agreement,
which was ultimately executed in March, initially bore a February execution date.
12
Unlike the remainder of the contract, under which CSL’s obligations to
ThyssenKrupp generally arose on February 20 and continue forward in time,
CSL’s obligations under the indemnity provision may extend to events and
occurrences before February 20. So long as a “claim[], demand[], suit[], and/or
proceeding[]”is brought on or after February 20, and the subject matter is within
the scope of the indemnity provision, it does not matter when the events giving rise
to the claim, demand, suit, or proceeding occurred; the exception to this is the
exclusion for “improper” elevator work, discussed below.3 Relatedly, while the
remainder of the contract focuses on CSL’s assumption of pre-existing right and
obligations previously afforded to Emergency Services, the indemnity provision
3
The terms “claim,” “demand,” and “proceeding” are not defined in the assumption
agreement. We therefore give those terms their ordinary meaning, and may look to
dictionaries for commonly accepted usages. See, e.g., Gilbert Tex. Const., 327
S.W.3d at 127; E.I. Du Pont De Nemours & Co. v. Shell Oil Co., 259 S.W.3d 800,
806 (Tex. App.—Houston [1st Dist.] 2007, pet. denied). Black’s Law Dictionary’s
definitions of “claim” include: “[t]he aggregate of operative facts giving rise to a
right enforceable by a court,” “[t]he assertion of an existing right; any right to
payment or to an equitable remedy, even if contingent or provisional,” “[a]
demand for money or property to which one asserts a right,” “[a]n interest or
remedy recognized at law; the means by which a person can obtain a privilege,
possession, or enjoyment of a right or thing,” and “[a] right to payment or to an
equitable remedy for breach of performance if the breach gives rise to a right to
payment.” BLACK’S LAW DICTIONARY 240–41 (7th ed. 1999). It defines a
“demand” as “[t]he assertion of a legal right” and “[a] request for payment of a
debt or an amount due.” Id. at 441. Finally, it defines a “proceeding” as “[t]he
regular and orderly progression of a lawsuit, including all acts and events between
the time of commencement and the entry of judgment,” “[a]ny procedural means
for seeking redress from a tribunal or agency,” “[a]n act or step that is part of a
larger action,” and “[t]he business conducted by a court or other official body; a
hearing.”
13
imposes a new duty on CSL, not defined by Emergency Services’ rights or
obligations under the subcontract.
A primary purpose of the assumption agreement, as evidenced on the face of
the agreement, is to protect ThyssenKrupp from the risks associated with
Greatland’s removal of Emergency Services as the general contractor for the
project after the project commenced, especially with respect to payment of the
contract price. References to this can be found throughout the agreement: “CSL
hereby . . . covenants and agrees to observe and perform all of the duties and
obligations including but not limited to the payment directly to ThyssenKrupp for
Elevator Work pursuant to the Subcontract”; “CSL further acknowledges and
agrees with ThyssenKrupp that, subject to the applicable provision(s) of the
Subcontract, CSL is responsible for the payment of any and all compensation to
ThyssenKrupp for services and/or materials provided or to be provided by
ThyssenKrupp per the subcontract.” And the indemnity provision evidences a
specific intent to protect ThyssenKrupp with respect to the risk that Emergency
Services would seek to rescind the initial payment as a result of Emergency
Services’ removal from the project by requiring CSL to indemnify ThyssenKrupp
“from any and all claims, demands, suits, and/or proceedings brought or made by”
Emergency Services or its agents “arising out of or relating to . . . ThyssenKrupp
Elevator’s retention of the Initial Payment[.]”
14
Additionally, the contract documents demonstrate the parties’ intent that
ThyssenKrupp would receive the full contract price―$92,269―for its elevator
work, as modified by the first change order. The change order executed between
Emergency Services and CSL after Emergency Services left the project reflects a
contract price of $92,269. The assumption agreement recites that CSL requested
that ThyssenKrupp “retain” the $31,393.50 initial payment made by Emergency
Services and that CSL “owe[d] ThyssenKrupp the balance remaining under the
Subcontract . . . $60,875.50.” CSL admits that it submitted the ThyssenKrupp
subcontract to its insurer, and its insurer issued payment “for that full price, the
[$]92,000.”
In light of these provisions, the contract unambiguously establishes the
parties’ intent that CSL would indemnify ThyssenKrupp from Emergency
Services’ revocation of the initial payment. CSL’s alternative interpretation of the
provision would allow CSL to avoid one of its principle obligations to
ThyssenKrupp under the contract by relating the chargeback back to the date on
which Bass filled out one of his credit card company’s charge dispute forms.
Nothing in the contract supports a contention that the parties intended the February
20 date in the indemnity provision to relieve CSL of its indemnity obligation in the
event that, purportedly unbeknownst to the parties, Emergency Services or Bass
15
had contacted his credit card company about the charge before February 20 and the
execution of the agreement.
Instead, we read the February 20 date as excluding any disputes that had
developed into a claim, demand, proceeding or lawsuit between Emergency
Services and ThyssenKrupp before that date. This is consistent with the indemnity
provision’s exclusion, which carves out pre-February 20 disputes between
Emergency Services and ThyssenKrupp relating to ThyssenKrupp’s elevator work
under the subcontract. CSL is obligated under the assumption agreement to
indemnify ThyssenKrupp for claims, demands, proceedings, and suits relating to
the initial payment “from February 20, 2009 forward,” and that obligation was in
effect in April 2009 when the Bass’s credit card company initiated its expedited
billing dispute resolution process and in June 2009 when the credit card company
demanded chargeback of the initial payment. Because the assumption agreement is
unambiguous as to the parties’ intent with respect to ThyssenKrupp’s retention of
the initial payment, we need not consider extrinsic evidence. See Houston
Exploration, 352 S.W.3d at 469–70 (stating that contract negotiations “may have
some relevance in ascertaining the dominant purpose and intent of the parties
embodied in the contract interpreted as a whole”).
We reject CSL’s contention that the chargeback falls within the indemnity
provision’s exclusion for “improper Elevator Work.” There is no evidence in the
16
record that the chargeback related to the nature or quality of ThyssenKrupp’s
elevator work. To the contrary, the evidence establishes that the chargeback is the
result of Bass’s representations to his credit card company that he did not receive
the merchandise for which he paid. The chargeback notice repeatedly represents
that the reason for the charge back was “Non-Receipt of Merchandise” and that
“[t]he chargeback occurred because your customer claims they have paid for items
that were to be delivered from your establishment but have not yet been received.”
Although CSL and Greatland assert that this is evidence that ThyssenKrupp “failed
to install an elevator at the Sterling Center,” it is clear that the customer referenced
by the credit card company is Bass, not CSL or Greatland.
We likewise reject CSL’s reliance on the express negligence doctrine.
Because indemnification of a party for its own negligence is an extraordinary
shifting of risk, indemnity provisions that require one party to indemnify another
for losses caused by the other party’s own negligence are subject to special notice
requirements. See, e.g., Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d
505, 508 (Tex. 1993). One such notice requirement is the express negligence
doctrine. Id. This doctrine states that “a party seeking indemnity from the
consequences of that party’s own negligence must express that intent in specific
terms within the four corners of the contract.” Id.; see Audubon Indem. Co. v.
Custom Site-Prep, Inc., 358 S.W.3d 309, 319 (Tex. App.—Houston [1st Dist.]
17
2011, pet. denied) (“The express negligence doctrine dictates that a party’s intent
to be released or indemnified from its own future negligence must be clear and
unambiguous.”).
The express negligence doctrine applies when the claim for which indemnity
is owed is based on the negligence of the party seeking indemnity; it does not
apply to CSL’s obligation to indemnify ThyssenKrupp from the chargeback when
Bass did not assert that ThyssenKrupp was negligent in obtaining the chargeback
and the credit card company did not rely on any allegation of negligence by
ThyssenKrupp in processing the chargeback. See, e.g., Dresser Indus., 853 S.W.2d
at 508; Audubon Indem., 358 S.W.3d at 319. The only allegation of negligence on
the part of ThyssenKrupp is CSL’s allegation that ThyssenKrupp was negligent in
failing to better document the initial payment charge and would have prevailed in
the chargeback appeal if it had provided better documentation. CSL has not
identified any Texas case extending the express negligence doctrine to such
circumstances, and we decline to do so here. Cf. Audubon Indem., 358 S.W.3d at
319 (declining to apply express negligence doctrine when claim against indemnitee
was not based on indemnitee’s negligence).
We overrule CSL’s and Greatland’s first issue.
18
C. ThyssenKrupp’s breach of contract claim
In their second issue, CSL and Greatland challenge the trial court’s summary
judgment in favor of ThyssenKrupp on its breach of contract claim, arguing that
“ThyssenKrupp refused to fulfill its contractual obligations even though CSL had
offered and had tendered payment of the full amount required under the
Assumption Agreement for the turnover of a working elevator.” Because we have
held that CSL was obligated to indemnify ThyssenKrupp for the chargeback of the
initial payment, CSL’s “tendered payment” necessarily was not fulfillment of
CSL’s contractual obligations to ThyssenKrupp. See Baucum v. Great Am. Ins. Co.
of N.Y., 370 S.W.2d 863, 866 (Tex. 1963) (“A tender is an unconditional offer by a
debtor or obligor to pay another . . . a sum not less in amount than that due . . . .”).
Moreover, the evidence in the record shows an offer of payment only after this
lawsuit was filed and expressly conditioned the payment on acceptance in
“complete satisfaction” of the parties’ dispute.4 See C. R. Bean Corp. v. Rodriguez,
4
In their reply brief, CSL and Greatland contend that there is evidence in the record
that they made an offer of payment before the settlement offer made in the course
of this lawsuit, but the evidence they cite in support of this contention does not
establish any pre-lawsuit offers of settlement. First, they cite to affidavit testimony
that does not provide any dates or otherwise establish the timing of payment
offers, and that is not inconsistent with the evidence that CSL and Greatland
offered a check to ThyssenKrupp only once, after the lawsuit was filed and in
complete satisfaction of all claims. Second, they cite to deposition testimony from
Isabell Howard who, when asked whether Ms. Le (of CSL) “[]ever told you that
they were refusing to pay the payment,” responded, “She didn’t say ‘refused.’ She
wasn’t going to pay this until there was resolution on the – that initial 31,000 and
change.” This testimony supports ThyssenKrupp’s contention that CSL refused to
19
583 S.W.2d 900, 901 (Tex. App.—Corpus Christi 1979, no writ) (“A tender, to be
effective, must be legally valid; it must be unconditional; it is without legal effect
if it is accompanied by conditions which the debtor has no right to impose.”)
(citing Baucum, 370 S.W.2d 863; Plasky v. Gulf Ins. Co., 335 S.W.2d 581 (Tex.
1960)). Thus, we reject CSL’s contention that its post-lawsuit, conditional offer of
$60,875.50 fulfilled its contractual obligations to ThyssenKrupp or constituted a
valid tender of payment that imposed on ThyssenKrupp a duty to turn over the
elevator.
In their reply brief, CSL and Greatland contend that there is no evidence that
ThyssenKrupp ever completed the elevator work or arranged for a final inspection.
But the record does contain evidence that the elevator work was completed—it
contains deposition testimony, affidavit testimony, invoices, and records showing
the elevator parts and services rendered by ThyssenKrupp and the amounts due in
payment for these parts and services under the contract. The record also establishes
that the parties never arranged for the final turnover meeting—at which the
inspection would be performed, payment of any outstanding amounts due under
the contract would be made, and the elevator would be turned on—and that CSL
refused to make payment. This is not limited to CSL’s refusal to indemnify
make any payment unless ThyssenKrupp dropped its demand for indemnity of the
$31,393.50 initial payment.
20
ThyssenKrupp for the $31,393.50 initial payment—CSL had not paid any of
ThyssenKrupp’s invoices and made no payment or offer of payment until after this
lawsuit was filed.
Although there is also evidence in the record that ThyssenKrupp was not
willing to turn over the elevator until CSL paid the full contract price, including the
initial payment, we have held that ThyssenKrupp was entitled to recover this
amount from CSL under the contracts. Additionally, the subcontract does not place
the burden of arranging for turnover of the elevator on ThyssenKrupp, as opposed
to CSL. The only specific duty imposed by the contract with respect to
arrangements for turning over the elevator are imposed on CSL: “Upon notice
from [ThyssenKrupp] that the installation of the elevator has been completed,
[CSL] will arrange to have present at the installation site a person duly authorized
to make the final inspection and to provide a written acceptance.” Moreover, as
CSL and Greatland point out in their briefing, CSL and Greatland demanded that
ThyssenKrupp remove the elevator from the premises.
We overrule CSL’s and Greatland’s second issue.
D. ThyssenKrupp’s suit on sworn account
In their third issue, CSL and Greatland challenge the trial court’s summary
judgment in favor of ThyssenKrupp on its suit on sworn account. Because we have
affirmed the trial court’s summary judgment on the basis of ThyssenKrupp’s
21
breach of contract suit, we need not determine whether the summary judgment
could also be affirmed on the basis of ThyssenKrupp’s suit on sworn account.
We overrule CSL’s and Greatland’s third issue.
CSL’s and Greatland’s Claims against ThyssenKrupp
In their live pleadings, CSL asserted counterclaims against ThyssenKrupp
for “breach of contract, fraud, fraud in the inducement, violations of the Texas
Deceptive Trade Practices – Consumer Protection Act, breach of express and
implied warranties of merchantability, of fitness for a particular purpose, of good
and workmanlike services, and unreasonable collection efforts,” and Greatland
asserted “cross-claims” against ThyssenKrupp for “violations of the Texas
Deceptive Trade Practices – Consumer Protection Act, breach of express and
implied warranties of merchantability, of fitness for a particular purpose, of good
and workmanlike services, and unreasonable collection efforts.” They also asserted
defenses based on, among other things, fraud and estoppel theories. ThyssenKrupp
moved for no-evidence summary judgment on each of CSL’s and Greatland’s
claims and affirmative defenses.
A. Standard of review
ThyssenKrupp was entitled to a no-evidence summary judgment on each of
CSL’s and Greatland’s claims and affirmative defenses as to which (1)
ThyssenKrupp asserted in its motion that there was no evidence of one or more
22
specified elements and (2) CSL and Greatland produced no summary judgment
evidence raising a genuine issue of material fact on those elements. See TEX. R.
CIV. P. 166a(i); Frost Nat'l Bank, 315 S.W.3d at 508–09; LMB, Ltd. v. Moreno,
201 S.W.3d 686, 688 (Tex. 2006); City of Galveston, 196 S.W.3d at 221; Wilson v.
Shanti, 333 S.W.3d 909, 916 (Tex. App.—Houston [1st Dist.] 2011, pet. denied).
To avoid summary judgment, CSL and Greatland were required to file a timely
response identifying evidence in the record sufficient to raise an issue of fact on
each challenged element of their claims and affirmative defenses. See TEX. R. CIV.
P. 166a(i); Imkie v. Methodist Hosp., 326 S.W.3d 339, 343 (Tex. App.—Houston
[1st Dist.] 2010, no pet.) (“If a nonmovant wishes to assert that, based on the
evidence in the record, a fact issues exists to defeat a no-evidence motion for
summary judgment, the nonmovant must timely file a response to the motion
raising this issue before the trial court.”).
B. Fraud claims and defenses
In their fourth issue, CSL and Greatland argue,
The trial court erred in granting no-evidence summary judgment for
ThyssenKrupp on CSL’s and Greatland’s affirmative claims and
defenses of fraud, fraud in the inducement, promissory estoppel, and
equitable estoppel. ThyssenKrupp moved for no-evidence [summary
judgment] on these claims contending that (1) there was no evidence
of a misrepresentation or promise; and (2) there was no evidence of
any reliance on the misrepresentation or promise. The summary
judgment record[] presents evidence as to each of these challenged
elements. ThyssenKrupp represented and promised that it would
deliver a functional elevator upon payment of $60,875.50[].
23
ThyssenKrupp further represented that CSL would only be
responsible for payment of $60,875.50[]. ThyssenKrupp never
disclosed that it would take steps to hold CSL hostage with an
inoperable elevator in the event [Emergency Services’] credit card
payment was returned. CSL and Greatland relied on these
representations and nondisclosures in the execution of the Assumption
Agreement. ThyssenKrupp’s representations were however false.
Accordingly, ThyssenKrupp’s motion for no-evidence summary
judgment should have been denied.
(record citations omitted). CSL and Greatland made the same argument in their
response to ThyssenKrupp’s motion for summary judgment.
CSL and Greatland do not accurately portray ThyssenKrupp’s grounds for
summary judgment on their fraud-related claims. ThyssenKrupp specifically
challenged CSL’s and Greatland’s evidence of each element of fraud, including the
elements that ThyssenKrupp (1) made a false representation with knowledge that
the representation was false or recklessly made a positive assertion without
knowledge as to the truthfulness of the representation and (2) intended that CSL
and Greatland rely on the representation. See Dow Chem. Co. v. Francis, 46
S.W.3d 237, 242 (Tex. 2001) (identifying elements of fraud). These elements are
likewise necessary to a fraudulent inducement claim. See Coastal Bank SSB v.
Chase Bank of Tex., N.A., 135 S.W.3d 840, 843 (Tex. App.—Houston [1st Dist.]
2004, no pet.). Knowledge of falsity and intent are also necessary elements of
24
CSL’s and Greatland’s equitable estoppel defense.5 See Schroeder v. Texas Iron
Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991) (identifying elements of equitable
estoppel), overruled on other grounds by In re United Servs. Auto. Ass’n, 307
S.W.3d 299 (Tex. 2010).
Because CSL and Greatland failed to identify, in their summary judgment
response and on appeal, evidence raising an issue of fact on these necessary
elements of their fraud claims and defenses, we must affirm the trial court’s
summary judgment. See TEX. R. CIV. P. 166a(i); Imkie, 326 S.W.3d at 343, 347.
We overrule CSL’s and Greatland’s fourth issue.
C. Breach of contract and prior breach
In their fifth issue, CSL and Greatland contend that the trial court erred in
granting a no-evidence summary judgment on their breach of contract claim and
prior-breach defense because the summary judgment evidence “conclusively
establish[ed] that ThyssenKrupp was required to provide a working elevator upon
5
CSL’s and Greatland’s promissory estoppel defense is not applicable to the claims
at issue here. Promissory estoppel is an exception to the statute of frauds that
allows the enforcement of an otherwise unenforceable promise. See Nagle v.
Nagle, 633 S.W.2d 796, 800 (Tex. 1982) (holding that Texas Supreme Court had
narrowed promissory estoppel doctrine “to cases where the promise was ‘to sign a
written agreement which itself complies with the Statute of Frauds.’”) (quoting
“Moore” Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 934 (Tex.
1973); Dodson v. Kung, 717 S.W.2d 385, 389 (Tex. App.—Houston [14th Dist.]
1986, writ ref’d n.r.e.) (“Promissory estoppel operates only in those cases where
the promise is to sign a written agreement which complies with the Statute of
Frauds.”).
25
payment of $60,875.50, the agreed-upon purchase price” and that “CSL repeatedly
offered and did make payment of the purchase price.” We have already held that
ThyssenKrupp was also entitled to indemnity from CSL for the initial payment
charged-back by Bass’s credit card company and that CSL’s offer of $60,875.50 in
satisfaction of all of ThyssenKrupp’s claims after ThyssenKrupp filed this lawsuit
was not a full and proper tender under the assumption agreement. These holdings
defeat CSL’s and Greatland’s argument on their breach of contract claim and prior-
breach defense.
We overrule CSL’s and Greatland’s fifth issue.
D. Express negligence rule
In their sixth issue, CSL and Greatland contend that the trial court erred in
granting a no-evidence summary judgment on the express negligence rule because
it is not an affirmative defense but, rather, a rule of contract construction. We have
already addressed the applicability of express negligence rule to this case.
We overrule CSL’s and Greatland’s sixth issue.
E. Comparative or proportionate responsibility
In their seventh issue, CSL and Greatland contend that the trial court erred in
granting a no-evidence summary judgment on their defense of proportionate
responsibility because the chargeback was based on ThyssenKrupp’s negligence.
ThyssenKrupp did not seek, and the trial court did not grant, a no-evidence
26
summary judgment on proportionate responsibility, which is not an independent
cause of action but, rather, the law governing apportionment of liability in certain
tort actions. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.001–.003 (West 2008).
We overrule CSL’s and Greatland’s seventh issue.
F. DTPA claims
In their eighth issue, CSL and Greatland contend that the trial court erred in
granting a no-evidence summary judgment on their DTPA claims. CSL’s and
Greatland’s DTPA claims are all founded on ThyssenKrupp’s purported failure to
deliver a functioning elevator to CSL upon payment of $60,875.50, pursuant to the
assumption agreement. We have already held that CSL and Greatland were in
breach of the assumption agreement because they failed to honor their indemnity
obligations under the agreement and that CSL’s offer to pay ThyssenKrupp
$60,875.50 “in complete satisfaction of the assumption of the subcontract
agreement” during the course of this litigation was not a proper tender of CSL’s
payment obligations under the agreement. The trial court therefore did not err in
granting a no-evidence summary judgment on CSL’s and Greatland’s DTPA
claims.
We overrule CSL’s and Greatland’s eighth issue.
27
G. Unreasonable collection efforts
In their ninth issue, CSL and Greatland contend that the trial court erred in
granting a no-evidence summary judgment on their unreasonable collection efforts
claims. CSL and Greatland assert that ThyssenKrupp “exceeded the bounds of
reason or moderation” by “burden[ing] the Sterling Center with an inoperable
elevator until [ThyssenKrupp] received payment of the chargeback.” Specifically,
CSL and Greatland assert that, in the event CSL failed to make payments due to
ThyssenKrupp under the subcontract, ThyssenKrupp was contractually obligated to
remove its elevator from the building. CSL and Greatland cite page ten of the
elevator subcontract to support this contention. Page ten of the subcontract
contains a “Title and ownership” clause. This clause provides that ThyssenKrupp
retains title to all equipment supplied under the subcontractor until CSL fulfills all
payment obligations, that “ThyssenKrupp may take immediate possession of the
equipment and enter upon the premises where it is located (without legal process)
and remove such equipment or portions thereof,” and that the parties agree that the
equipment “can be removed without material injury to the real property.”
By providing that ThyssenKrupp retains ownership over its equipment and
may remove the equipment in the event of non-payment, the contract authorized
ThyssenKrupp to remove and retain the equipment but did not require
ThyssenKrupp to do so. Given its plain and common meaning, the term “may” is
28
generally permissive rather than mandatory. See Nalle v. Taco Bell Corp., 914
S.W.2d 685, 687 (Tex. App.—Austin 1996, writ denied) (“The word ‘may’ means
possibility, permission, liberty, or power; it does not indicate a mandatory
requirement.”) (citing BLACK’S LAW DICTIONARY 979 (6th ed. 1990)); see also
McCarty v. Montgomery, 290 S.W.3d 525, 534 (Tex. App.—Eastland 2009, pet.
denied) (holding that contract providing, “Buyer may terminate this contract,”
“described [termination] permissively,” and did not limit buyer’s remedies to
termination of contract). Construing the “Title and ownership” provision as giving
ThyssenKrupp a right in the event of default by CSL, rather than imposing an
additional obligation on ThyssenKrupp in the event of default by CSL, is
consistent with the tenor of the provision and with the subcontract agreement as a
whole. “We interpret a word in a contract according to its usual grammatical
meaning unless it clearly appears that the parties intended otherwise.” Nalle, 914
S.W.2d at 687 (holding that lease provision stating that lessee “may” use leased
premises for particular purpose did not obligate lessee to use premises for that
purpose).
Because the elevator subcontract did not require ThyssenKrupp to remove
the elevator from Sterling Center upon CSL’s failure to make payments, and
because CSL identifies no other basis for imposing a duty on ThyssenKrupp to
remove the elevator, ThyssenKrupp’s failure to do so does not constitute an
29
unreasonable collection effort. See Montgomery Ward & Co. v. Brewer, 416
S.W.2d 837, 844 (Tex. Civ. App.—Waco 1967, writ ref’d n.r.e.) (describing
conduct giving rise to common law tort for unreasonable collection efforts as
“efforts that amount to a course of harassment that was willful, wanton, malicious,
and intended to inflict mental anguish and bodily harm.”).
We overrule CSL’s and Greatland’s ninth issue.
H. Trespass
In their tenth issue, CSL and Greatland contend that the trial court erred in
granting a no-evidence summary judgment on Greatland’s claim for trespass. Like
its unreasonable collection efforts claim, Greatland’s claim for trespass is founded
on ThyssenKrupp’s failure to remove the elevator from Sterling Center after CSL
failed to make payment. We have already held that ThyssenKrupp was not
obligated to remove the elevator from Greatland’s premises. The trial court
therefore did not err in granting summary judgment on Greatland’s trespass claim.
We overrule CSL’s and Greatland’s tenth issue.
I. Damages
In their eleventh issue, CSL and Greatland contend that the trial court erred
in granting a no-evidence summary judgment on the grounds that CSL and
Greatland failed to present evidence of damages. Because we have affirmed the
trial court’s summary judgment on each of CSL’s and Greatland’s claims on other
30
grounds, we need not address whether summary judgment was also proper on the
ground that there was no evidence of damages. See Joe, 145 S.W.3d at 157; West,
318 S.W.3d at 437.
We overrule CSL’s and Greatland’s eleventh issue.
Conclusion
We hold that the trial court did not err in granting a traditional summary
judgment in favor of ThyssenKrupp on its breach of contract claims against CSL.
We further hold that the trial court did not err in granting a no-evidence summary
judgment in favor of ThyssenKrupp on CSL’s and Greatland’s claims and
affirmative defenses against it. Accordingly, we affirm the trial court’s judgment.
All outstanding motions are dismissed as moot.
Harvey Brown
Justice
Panel consists of Justices Keyes, Massengale, and Brown.
31