William Edward Baty and Melody Prather v. Morequity, Inc. ( 2012 )

Opinion issued November 29, 2012
In The
Court of Appeals
For The
First District of Texas
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NO. 01-11-00887-CV
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WILLIAM EDWARD BATY AND MELODY PRATHER, Appellants
V.
MOREQUITY, INC., Appellee
On Appeal from the County Civil Court at Law Number Four
Harris County, Texas
Trial Court Case No. 995238
MEMORANDUM OPINION
Following a nonjudicial foreclosure sale, Appellee MorEquity, Inc. brought
a forcible detainer action in justice court seeking possession of property located at
26318 Watercypress Court, Cypress, Texas 77433. The justice court entered a
judgment in favor of MorEquity and against the property’s occupants, appellants
William Edward Baty and Melody Prather. On de novo review, the County Civil
Court of Law Number Four awarded MorEquity a writ of possession.
Appellants William Edward Baty and Melody Prather appeal the county
court’s judgment, contending that (1) they were entitled to, but did not receive, 30
days’ written notice to vacate; (2) the trial court erred in admitting Plaintiff’s
Exhibit 3, comprised of a business records affidavit, the notice to vacate, and
certified mail receipt, over their hearsay objection; and (3) the trial court erred in
excluding appellant Baty’s testimony about whether appellants received notice to
vacate.
MorEquity counters that (1) appellants were entitled to 3 days’ notice, not 30
days; (2) MorEquity’s Exhibit 3 was properly admitted as a business record; and
(3) the trial court did not abuse its discretion in refusing to hear Baty’s testimony
about notice. We affirm.
BACKGROUND
On December 9, 2005, appellants signed a deed of trust granting Mortgage
Electronic Registration Systems, Inc. a first lien security interest in the property
located at 26318 Watercypress Court, Cypress, Texas 77433. Section 22 of the
deed of trust provided that in the event of a foreclosure sale, the borrowers would
surrender possession of the property:
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If the Property is sold pursuant to this Section 22, Borrower or any
person holding possession of the Property through Borrower shall
immediately surrender possession of the Property to the purchaser at
that sale. If possession is not surrendered, Borrower or such person
shall be a tenant at sufferance and may be removed by writ of
possession or other court proceeding.
Appellants defaulted on the note and the property was sold to MorEquity
through a non-judicial foreclosure sale. Because appellants did not immediately
surrender the property, they became tenants at sufferance under the terms of the
deed.
On April 18, 2011, MorEquity, through its attorneys, sent appellants a
written notice to vacate. MorEquity filed a forcible detainer action against
appellants in justice court, and, on June 14, 2011, the justice court entered a
judgment of possession for MorEquity. Appellants appealed to the County Court
at Law Number Four. During the bench trial, the court admitted three documents
in evidence: (1) a copy of the notarized Substitute Trustee’s Deed, (2) a certified
copy of the Deed of Trust, and (3) a business records affidavit authenticating the
April 18, 2011 notice to vacate and a photocopy of the certified mail receipt. The
business records affidavit was signed by Karl Terwilliger, Operations Manager and
custodian of records at the law firm representing MorEquity in the case, McCarthy,
Holthus & Ackerman, LLP (hereinafter “MHA”). At the conclusion of the trial,
the county court entered judgment for MorEquity.
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Lack of Notice
In Appellants’ first issue, they contend that section 24.005 of the Texas
Property Code entitles them to 30 days’ written notice to vacate prior to the filing
of a forcible detainer action and that MorEquity failed to provide them with that
required 30 days’ notice. Appellee MorEquity argues section 24.005 only entitles
appellants to 3 days’ notice.
A. Standard of Review
Statutory construction is a legal question that appellate courts review de
novo. City of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008). The
reviewing court will try to determine and give effect to the Legislature’s intent.
State v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002). In so doing, we look first to
the “plain and common meaning” of the statute’s words, and if the statute is
unambiguous, we will adopt the interpretation supported by the plain meaning of
the statutory language. Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996
S.W.2d 864, 865 (Tex. 1999). We determine the meaning of the statute from its
whole, not from isolated portions. Harris Cnty. Hosp. Dist. v. Tomball Reg’l
Hosp., 283 S.W.3d 838, 842 (Tex. 2009).
B. Analysis
Section 24.005(b) provides in part:
If the occupant is a tenant at will or by sufferance, the landlord must
give the tenant at least three days’ written notice to vacate before the
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landlord files a forcible detainer suit unless the parties have contracted
for a shorter or longer notice period in a written lease or agreement. If
a building is purchased at a tax foreclosure sale or a trustee’s
foreclosure sale under a lien superior to the tenant’s lease and the
tenant timely pays rent and is not otherwise in default under the
tenant’s lease after foreclosure, the purchaser must give a residential
tenant of the building at least 30 days’ written notice to vacate if the
purchaser chooses not to continue the lease.
TEX. PROP. CODE ANN. § 24.005(b) (Vernon 2000). Appellants argue that this
section entitles them to 30 days’ notice because of their uncontested status as
tenants at sufferance. However, the first sentence of section 24.005(b), which
requires 3 days’ notice, is the one applicable to appellants as tenants at sufferance.
Weatherbee v. GMAC Mortg., LLC, No. 01–11–00546–CV, 2012 WL 1454494, at
*2 (Tex. App.—Houston [1st Dist.] Apr. 26, 2012, pet. filed) (mem. op.) (“Under
Texas Property Code section 24.005, the landlord must give a tenant at sufferance
at least three days’ written notice to vacate before the landlord files a forcible
detainer action.”). The second sentence of section 24.005(b) does not apply to
appellants, but guarantees 30 days’ notice to vacate to tenants under a lease
following foreclosure of the leased property, as long as the tenants are not in
default on their lease. See Russell v. Am. Real Estate Corp., 89 S.W.3d 204, 208
(Tex. App.—Corpus Christi 2002, no pet.). Appellants were not tenants under a
lease. Accordingly, appellants were only entitled to 3 days’ notice to vacate. We
thus overrule Appellants’ first issue.
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Admission of Business Records Affidavit
Appellants contend in their second issue that the trial court abused its
discretion in admitting Plaintiff’s Exhibit 3, which consists of a business records
affidavit made by the custodian of records at MHA, the notice to vacate, and the
certified mail receipt. Specifically, appellants argue that a business records
affidavit itself is inadmissible hearsay, that the affidavit does not fully comply with
Texas Rule of Evidence 902(10)(b) because the affidavit does not state that the
affiant is “of sound mind,” and that the affiant as an employee of MHA cannot
attest to records that were kept by MorEquity or to certified mail receipts created
by the United States Postal Service.
A. Standard of Review
We review a trial court’s decision to admit or exclude evidence for an abuse
of discretion. In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005). A trial court abuses
its discretion when it acts without reference to any guiding rules and principles.
Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex. 1999). We must uphold the trial
court’s evidentiary ruling if there is any legitimate basis for the ruling. Owens–
Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998); Oyster Creek
Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307, 317 (Tex. App.—Houston
[1st Dist.] 2004, pet. denied).
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B. Business Records
“‘Hearsay’ is a statement, other than one made by the declarant while
testifying at the trial or hearing, offered in evidence to prove the truth of the matter
asserted.” TEX. R. EVID. 801(d). Rule 803(6) provides an exception from the rule
excluding hearsay for business records
made at or near the time by, or from information transmitted by, a
person with knowledge, if kept in the course of a regularly conducted
business activity, and if it was the regular practice of that business
activity to make the memorandum, report, record, or data compilation,
all as shown by the testimony of the custodian or other qualified
witness, or by affidavit that complies with Rule 902(10), unless the
source of information or the method or circumstances of preparation
indicate lack of trustworthiness.
TEX. R. EVID. 803(6). The witness does not need to have personal knowledge of
the facts contained within the business records; the witness need only have
personal knowledge of how the records were prepared, in order to be able to attest
to the conditions laid out in Rule 803(6). See TEX. R. EVID. 902(10)(a); In re
E.A.K., 192 S.W.3d 133, 142 (Tex. App—Hous. [14th Dist.] 2006, pet. denied).
C. Analysis
It is well established that business records affidavits may be admitted along
with the records themselves, as long as the requirements of Rules 803(6) and
902(10) are satisfied. See, e.g., Simien v. Unifund CCR Partners, 321 S.W.3d 235,
240, 245 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (finding affidavit properly
admitted along with business records); Fullick v. City of Baytown, 820 S.W.2d 943,
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944 (Tex. App.—Houston [1st Dist.] 1991, no writ). Appellant cannot contest the
admission of the affidavit as inadmissible hearsay without some evidence that the
affidavit is not in compliance with rules 803(6) and 902(10).
1. Requirements of Rule 902(10)
Rule 902(10) provides a form for the affidavit, which includes the following
language: “My name is ___, I am of sound mind, capable of making this affidavit,
and personally acquainted with the facts herein stated.” TEX. R. EVID. 902(10)(b).
Rule 902(10) also states “this form shall not be exclusive, and an affidavit which
substantially complies with the provisions of this rule shall suffice.” Id.; see also
Simien, 321 S.W.3d at 240. A business records affidavit need not recite the exact
words of Rule 902(10)(b). Kyle v. Countrywide Home Loans, Inc., 232 S.W.3d
355, 360–61 (Tex. App.—Dallas 2007, pet. denied).
The equivalent portion of the affidavit in the instant case reads: “My name is
Karl Terwilliger, I am over the age of eighteen (18) years, have never been
convicted of a felony, and have personal knowledge of the facts contained in this
Affidavit and that they are true and correct.” This language substantially complies
both in substance and in form with Rule 902(10). Because there is no requirement
that an affidavit track the exact language in Rule 902(10)(b), the affidavit is not
inadmissible for failure to include the specific words “of sound mind.”
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2. Business Records of a Third Party
“A document authored or created by a third party may be admissible as
business records of a different business if: (a) the document is incorporated and
kept in the course of the testifying witness’s business; (b) that business typically
relies upon the accuracy of the contents of the document; and (c) the circumstances
otherwise indicate the trustworthiness of the document.” Simien, 321 S.W.3d at
240–41 (citing Bell v. State, 176 S.W.3d 90, 92 (Tex. App.—Houston [1st Dist.]
2004, pet. ref’d)).
Terwilliger testified that the records were kept by MHA in the file according
to MHA’s regular course of business. In Rodriguez v. Citimortgage, Inc., the court
held that an employee of Citimortgage’s law firm who had custody of all records
related to the suit, including documents obtained from and kept by Citimortgage in
its regular course of business, could properly attest to the documents obtained from
Citimortgage, as well as the certified mail receipt, as business records. No. 03–10–
00093–CV, 2011 WL 182122, at *5 (Tex. App.—Austin Jan 6, 2011, no pet.)
(mem. op.) (citing Simien, 321 S.W.3d at 240–45). The trial court did not err in
finding case files kept by a law firm to be records kept in the regular course of
business.
Terwilliger’s affidavit states that he has custody and control of all records in
Appellant’s file, and further states that he has personal knowledge of the facts
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contained in the affidavit, including the procedure by which an employee or
representative of MHA “with knowledge of the act, event, condition, opinion, or
diagnosis recorded [made] the record or [transmitted] information thereof to be
included in such record” and that the record was made “at or near the time or
reasonably soon thereafter.” The affidavit further states that the records attached
are “the originals or exact duplicates of the original.” Id. Thus, as in Simien, even
though MHA did not itself create part of the records, the trial court could have
concluded that appellee reasonably relied on the accuracy of the records in the
ordinary course of its business. See Simien, 321 S.W.3d at 243 (finding reasonable
reliance on accuracy of third-party documents when affiant had reviewed file, was
designated agent for file, had personal knowledge of documents, and maintained
control and supervision of files).
Finally, the trial judge did not abuse her discretion in finding the
circumstances indicated that the documents were trustworthy. See Fleming v.
Fannie Mae, No. 02–09–00445–CV, 2010 WL 4812983, at *3–4 (Tex. App.—Fort
Worth Nov. 4, 2010, no pet.) (mem. op.) (holding circumstances adequately
showed trustworthiness of notice to vacate and accompanying business records
affidavit, when affidavit was made by paralegal employed by plaintiff’s law firm
and included substantially same language as affidavit in instant case); Harris v.
State, 846 S.W.2d 960, 964 (Tex. App.—Houston [1st Dist.] 1993, writ ref’d)
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(finding manufacturer’s certificate of origin admissible as business record attested
to by dealership employee); Rodriguez, 2011 WL 182122, at *5 (holding certified
mail return receipts and notice to vacate admissible in forcible detainer action as
business records kept by law firm). Appellants brought forward no reason to
question the trustworthiness or authenticity of Plantiff’s Exhibit 3. The trial court
did not abuse its discretion by admitting Plaintiff’s Exhibit 3 into evidence. We
overrule Appellants’ second issue.
Exclusion of Evidence
Appellants, in their third issue, argue that the trial court improperly excluded
testimony from appellant Baty concerning whether appellants received the notice
to vacate, and that the exclusion of this evidence caused harm to appellants.
A. Harmless Error Doctrine
“To establish that the trial court’s ruling on the admission or exclusion of
evidence constitutes reversible error, the party complaining of the ruling must
show (1) that the trial court committed error and (2) that the error was reasonably
calculated to cause and probably did cause the rendition of an improper judgment.”
Tex. Dept. of Transp. v. Able, 981 S.W.2d 765, 770 (Tex. App.—Houston [1st
Dist.] 1998), aff’d, 35 S.W.3d 608 (Tex. 2000); TEX. R. APP. P. 44.1(a)(1). If the
substance of excluded evidence was placed before the finder of fact in other
evidence, no reversible error will exist. Tex. Dept. of Transp., 981 S.W.2d at 770.
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Because the exclusion of evidence is committed to the trial court’s sound
discretion, a successful challenge to a ruling excluding evidence usually requires
the complaining party to show that the judgment turns on the evidence excluded.
G4 Trading, Inc. v. NationsBank of Tex., N.A., 937 S.W.2d 137, 141 (Tex. App.—
Houston [1st Dist.] 1996, no writ). We review the entire record to determine
whether the evidence excluded was controlling to the judgment. Gee v. Liberty
Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex. 1989).
B. Analysis
Appellants contend that the trial court abused its discretion in excluding
testimony in response to the questions from appellants’ attorney, “Have you ever
received a 30-day notice letter?” and “Have you received any of the notice—any
notices whatsoever?” asked of Baty. However, the trial court allowed Baty to
answer the question “Did you receive the letter attached as Exhibit 3?” —i.e. the
notice to vacate—to which Baty answered “I’m not sure if I did or not. I’m not
aware.” The court further allowed testimony from Baty that though there was a
copy of a card showing that appellants had received Exhibit No. 3, there was no
card with Baty’s signature on it. Therefore, the court heard and considered
appellants’ evidence on whether notice to vacate was received by appellants.
Baty’s answers to the questions to which objections were sustained would have
been cumulative evidence.
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Because Appellants cannot show harm from any error in the exclusion of
evidence, we overrule Appellants’ third issue.
CONCLUSION
We affirm the trial court’s judgment.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
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