Vince Poscente International, Inc., Vince Poscente, and Michelle Poscente v. Compass Bank , 460 S.W.3d 211 ( 2015 )

AFFIRM; and Opinion Filed March 19, 2015.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00165-CV
VINCE POSCENTE INTERNATIONAL, INC.,
VINCE POSCENTE, AND MICHELLE POSCENTE, Appellants
V.
COMPASS BANK, Appellee
On Appeal from the 380th Judicial District Court
Collin County, Texas
Trial Court Cause No. 380-02889-2011
OPINION
Before Chief Justice Wright, Justice Stoddart, and Justice Schenck
Opinion by Justice Schenck
In a previous appeal, we reversed a summary judgment in favor of appellee Compass
Bank (Compass) and remanded the cause to the trial court. See Vince Poscente Int’l, Inc. v.
Compass Bank, No. 05-11-01645-CV, 2013 WL 1320511 (Tex. App.—Dallas Mar. 28, 2013, no
pet.) (mem. op.). On remand, Compass again moved for summary judgment. The trial court
granted the motion. In five issues, appellants Vince Poscente International, Inc., Vince Poscente,
and Michelle Poscente (the Poscentes) complain the trial court’s ruling was error. We affirm the
trial court’s judgment.
BACKGROUND
Vince Poscente International, Inc. (VPI) 1 executed a promissory note to Compass dated
September 22, 2009, in the amount of $144,951.63. Vince and Michelle Poscente, owners of
VPI, signed the promissory note on VPI’s behalf. Vince and Michelle Poscente also each signed
a continuing guaranty to secure the debt. In 2011, Compass sued the Poscentes for amounts it
alleged were due and owing under the note and guaranties.
Compass moved for summary judgment, alleging that the note was in default, the account
had been accelerated, and Compass was entitled to recover damages of $138,646.37, plus interest
and attorney’s fees. The trial court granted the motion, and the Poscentes appealed, asserting
among other issues that the affidavit of Paula Shaw submitted by Compass in support of its
motion was not competent evidence. See id. at *1. In the previous appeal, we concluded that
Shaw’s affidavit was legally insufficient because it did not show the basis for Shaw’s personal
knowledge. Id. at *4–5.
On remand, Compass filed an amended motion for summary judgment, submitting a new
affidavit, by Robert Graham, in support of its motion. The Poscentes filed a response, asserting
among other complaints that Graham’s affidavit showed, without explanation, a lower balance
due on the promissory note than the balance shown two years earlier in the Shaw affidavit.
Compass then filed a supplemental affidavit of John Lehman. Lehman explained that the
Graham affidavit contained an error. Graham stated that the “payoff” balance—meaning the
outstanding principal and accumulated interest—on the promissory note was $130,488.54, when
that figure was actually only the “principal” balance. Lehman explained that the actual payoff
1
Although the promissory note and guaranties list the borrower as Vince Poscente International, the pleadings in this case refer to Vince
Poscente International, Inc. As in our previous opinion, we refer to Vince Poscente International, Inc. for consistency. See id. at *1 n.1.
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balance was $135,263.46. The trial court rendered summary judgment for Compass in this
amount, plus statutory pre- and post-judgment interest and attorney’s fees. This appeal followed.
STANDARD OF REVIEW
We review the granting of a summary judgment de novo. Kyle v. Countrywide Home
Loans, Inc., 232 S.W.3d 355, 358 (Tex. App.—Dallas 2007, pet. denied). The movant for a
traditional summary judgment has the burden of showing there is no genuine issue of material
fact and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop.
Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). In deciding whether there is a disputed fact issue
precluding summary judgment, we take evidence favorable to the nonmovant as true, indulging
every reasonable inference in favor of the nonmovant; we resolve any doubts in the nonmovant’s
favor. Nixon, 690 S.W.2d at 548–49. Once the movant establishes its right to summary
judgment as a matter of law, the burden shifts to the nonmovant to present evidence raising a
genuine issue of material fact, thereby precluding summary judgment. Kyle, 232 S.W.3d at 358.
DISCUSSION
To prevail on its motion for summary judgment against VPI, Compass was required to
prove the note in question; that VPI signed the note; that Compass is the legal owner and holder
of the note; and that a certain balance is due and owing on the note. See TrueStar Petroleum
Corp. v. Eagle Oil & Gas Co., 323 S.W.3d 316, 319 (Tex. App.—Dallas 2010, no pet.).
Compass had the burden to prove all elements of its claim as a matter of law. Id. To prevail on
its motion against the Poscentes, Compass was required to conclusively establish the existence
and ownership of the guaranties; its performance of the terms of the guaranties; the occurrence of
the condition on which liability is based; and the guarantors’ failure or refusal to perform the
promise. See Stone v. Midland Multifamily Equity REIT, 334 S.W.3d 371, 378 (Tex. App.—
Dallas 2011, no pet.). When summary judgment proof establishes these elements, the holder of
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the note or guaranty is entitled to recover, unless the maker or guarantor establishes a defense.
See Blankenship v. Robins, 899 S.W.2d 236, 238 (Tex. App.—Houston [14th Dist.] 1994, no
writ).
Compass submitted the Graham and Lehman affidavits to establish the elements of its
causes of action. Unlike the Shaw affidavit, the Graham and Lehman affidavits describe how
Graham and Lehman obtained personal knowledge of the facts to which they testified. Graham
verified that true and correct copies of the note and guaranties were attached to his affidavit. He
testified that Compass is the owner and holder of the note and guaranties, and that the Poscentes
defaulted by failing to tender payments when due. He testified that the account had been
accelerated, and stated the amount due. Lehman corrected Graham’s error in the amount due,
attaching supporting documents from Compass’s records showing the amount borrowed, the
payment history, and the credits applied, and explaining Graham’s error. Compass therefore
established its right to judgment as a matter of law on the note and guaranties, unless the
Poscentes established a defense. See True Star, 323 S.W.3d at 319; Stone, 334 S.W.3d at 378;
Blankenship, 899 S.W.2d at 238.
The Poscentes, however, raise five issues contending that Compass is not entitled to
judgment as a matter of law. Notably, none of the Poscentes’ issues seek to substantiate either a
genuine or material dispute as to their liability or a defense that would yield a different judgment
below. The first two issues challenge the form of Compass’s proof of the indebtedness and its
amount. In the remaining issues, the Poscentes allege that fact issues exist precluding summary
judgment. We address these issues in turn.
1. Amount owed under the note and guaranties
In their first issue, the Poscentes challenge the court’s entry of summary judgment based
on a claimed fact issue as to the amount of damages. The Poscentes do not point to evidence of
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an amount they urge correctly reflects the quantum of damages or explain why this alleged
dispute as to the amount of damages would result in the wholesale reversal of the summary
judgment they seek on appeal. See TEX. R. CIV. P. 166a(c) (“The judgment sought shall be
rendered forthwith if” the summary judgment record shows “except as to the amount of
damages, there is no genuine issue as to any material fact . . .” [emphasis added]). Instead, they
contend that the Compass summary judgment affidavits conflict with each other, raising fact
issues as to the amount owed under the note and guaranties rendering summary judgment
improper. They argue that even if the Lehman affidavit corrects the error in the Graham
affidavit, the Lehman affidavit is in conflict with the Shaw affidavit. In the earlier appeal of this
case we determined, at the Poscentes’ urging, that the Shaw affidavit was not competent
summary judgment evidence and reversed the earlier judgment on that basis.
Despite their earlier argument, our prior judgment, and the law-of-the-case implications
they carry, the Poscentes now contend that the Shaw affidavit is competent evidence sufficient to
create a genuine factual dispute to preclude summary judgment. They cite several cases for the
proposition that an amended summary judgment filing “does not preclude the consideration of
the summary judgment evidence attached to the original . . . .” E.g., Dixie Dock Enters. v.
Overhead Door Corp., No. 05-01-00639-CV, 2002 WL 244324, at *3 (Tex. App.—Dallas Feb.
21, 2002, no pet.) (not designated for publication). The Poscentes’ cases, however, do not
address consideration of affidavits found legally insufficient in a previous appeal. See, e.g., id.
(only issue was whether affidavit attached to original response could be considered in support of
amended response; no challenge to legal sufficiency of affidavit itself).
In our previous opinion, we concluded that the statements in Shaw’s affidavit regarding
the amounts due under the note and guaranties “amount to no evidence.” Vince Poscente Int’l,
Inc., 2013 WL 1320511, at *5. Having obtained reversal of the trial court’s original summary
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judgment on the ground that Shaw’s affidavit was legally insufficient, the Poscentes may not rely
on the affidavit now to raise a fact issue precluding summary judgment. See, e.g., Gotham Ins.
Co. v. Warren E&P, Inc., No. 12-0452, 2014 WL 1190049, at *3 n.8 (Tex. Mar. 21, 2014) (court
of appeals is ordinarily bound by its initial determination in subsequent appeal); Briscoe v.
Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003); Ryland Group, Inc. v. Hood, 924 S.W.2d
120, 122 (Tex. 1996) (per curiam) (conclusory affidavit was insufficient to raise fact issue
precluding summary judgment). We overrule the Poscentes’ first issue.
2. Proof of the note
In their second issue, the Poscentes argue that summary judgment under the guaranty was
precluded because Compass did not submit the original promissory note in its summary
judgment proof, 2 in violation of Rule 4.1 of the rules of practice for the district courts in Collin
County. See Collin County (Tex.) Rules of Practice—District Courts, R. 4.1. 3 The Poscentes
made this complaint in their summary judgment responses, but never filed a verified denial. See
TEX. R. CIV. P. 93(7) (requiring verified denial of execution of any instrument in writing; absent
sworn plea, instrument “shall be received in evidence as fully proved”); see also Boyd v.
Diversified Fin. Sys., 1 S.W.3d 888, 891 (Tex. App.—Dallas 1999, no pet.) (under rule 93(7),
note and guaranty admissible where defendant did not deny execution of instruments under
oath). In the only summary judgment affidavit offered by the Poscentes, Vince Poscente did not
deny that he executed the note and guaranty or challenge the authenticity of the copies attached
to Graham’s affidavit.
2
The Poscentes lodge an argument that has been repeated regularly in connection with a variety of foreclosure proceedings, colloquially
described as the “wet ink signature” or “show me the note” theory. See Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253–54 (5th
Cir. 2013) (rejecting argument that the original signed note must be produced in order to foreclose)..
3
Local Rule 4.1, entitled “Suits on Promissory Notes,” provides:
In any case involving a suit on a promissory note, the original of the note sued on must be offered and admitted into
evidence before any judgment thereon will be rendered, subject, however, to good cause shown and pursuant to Rule 1003,
Texas Rules of Civil Evidence. The original of the promissory note shall thereafter remain in the custody of the Court.
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Rule 3a of the Texas Rules of Civil Procedure addresses the adoption of local rules. See
TEX. R. CIV. P. 3a. Subsection (1) requires “that any proposed rule or amendment shall not be
inconsistent with these rules.” TEX. R. CIV. P. 3a(1). Subsection (6) provides that “no local rule
. . . other than local rules and amendments which fully comply with all requirements of this Rule
3a, shall ever be applied to determine the merits of any matter.” TEX. R. CIV. P. 3a(6); see also
Polk v. Sw. Crossing Homeowners Ass’n, 165 S.W.3d 89, 93 (Tex. App.—Houston [14th Dist.]
2005, pet. denied) (no court in Texas is authorized or empowered to enact or amend rules of civil
procedure inconsistent with rules promulgated by supreme court).
Under rule 1003 of the Texas Rules of Evidence, which is embraced in Local Rule 4.1,
“[a] duplicate is admissible to the same extent as an original unless (1) a question is raised as to
the authenticity of the original or (2) in the circumstances it would be unfair to admit the
duplicate in lieu of the original.” TEX. R. EVID. 1003. Further, extrinsic evidence of authenticity
is not a condition precedent to the admissibility of business records accompanied by an affidavit
meeting the requirements of rule 902(10) of the Texas Rules of Evidence. See TEX. R. EVID.
902(10). Graham’s affidavit attaching copies of the note and guaranties meets these
requirements. And rule 166a(c) of the Texas Rules of Civil Procedure provides that summary
judgment “shall be rendered forthwith” if the pleadings, discovery responses, admissions,
affidavits, stipulations, and other records specified in the rule “show that, except as to the amount
of damages, there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law on the issues expressly set out in the motion or in an answer or any
other response.” TEX. R. CIV. P. 166a(c). A photocopy of a promissory note, attached to an
affidavit in which the affiant swears that the photocopy is a true and correct copy of the original
note, is proper summary judgment proof which establishes the existence of the note.
Blankenship, 899 S.W.2d at 238.
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Relying on a footnote in In re Columbia Medical Center of Las Colinas, Subsidiary, L.P.,
the Poscentes argue that Compass failed to show “good cause” for admission of copies of the
note as required by Local Rule 4.1. See 290 S.W.3d 204, 210 n.3 (Tex. 2009) (stating that “good
cause” in context of rule governing new trials “does not mean just any cause”). Local Rule 4.1
calls for an original promissory note, permitting use of a photocopy for good cause shown and
pursuant to Rule of Evidence 1003. We understand the Poscentes to read this language not as
two independent bases for resort to a duplicate, but as adding a good cause requirement on any
invocation of Rule 1003 in cases to which the Local Rule applies. We cannot apply Local Rule
4.1, however, to conflict with the well-established rules of civil procedure and evidence
providing that (1) in the absence of a verified denial, an instrument “shall be received in
evidence as fully proved,” see Boyd, 1 S.W.3d at 891; (2) a duplicate is admissible “to the same
extent as an original” absent questions as to authenticity or fairness, see TEX. R. EVID. 1003; 4
(3) extrinsic evidence of authenticity is not a condition precedent to business records
accompanied by the requisite affidavit, see TEX. R. EVID. 902(10); and (4) summary judgment
“shall be rendered forthwith” if the pleadings, affidavits, and other specified documents show
that the moving party is entitled to judgment as a matter of law, see TEX. R. CIV. P. 166a(c). See
also Valls v. Johanson & Fairless, L.L.P., 314 S.W.3d 624, 629 n.5 (Tex. App.—Houston [14th
Dist.] 2010, no pet.) (refusing to apply local rule “in such a fashion as to trump Rule 166a(c)” by
altering summary judgment burdens). We overrule the Poscentes’ second issue.
4
Prior to the adoption of the Rules of Evidence, this Court read the predecessor of Rule 1003 as placing the burden of demonstrating an
exception to the rule permitting admission of a duplicate on the opponent of the admission. Holloway v. Holloway, 671 S.W.2d 51, 56 (Tex.
App.—Dallas 1983, writ dismissed) (applying TEX. REV. CIV. STAT. article 3731c). The text of the adopted rule, which is identical to its federal
counterpart, appears to maintain that requirement. Ford Motor Co. v. Leggat, 904 S.W.2d 643, 646 (Tex. 1995) (absent challenge to authenticity
“submission of a copy is not grounds for rejecting it”); United States v. Georgalis, 631 F.2d 1199, 1205 (5th Cir. 1980) (duplicate may be
admitted “unless opposing counsel meets the burden of showing that there is a genuine issue as to the authenticity of the unintroduced original, or
as to the trustworthiness of the duplicate, or as to the fairness of substituting the duplicate for the original”).
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3. Lack of evidentiary support for conclusions in motion
In their third issue, the Poscentes complain that the trial court erred in granting summary
judgment because Compass’s motion “relied on material factual conclusions” for which
Compass “failed to even attempt to provide competent evidentiary support.” The Poscentes
identify two such conclusions: (1) “Compass Bank has no intent in pursuing execution against
any property which is properly exempted under Texas law”; and (2) “Compass Bank chooses to
sue the individual Defendants on their Continuing Guaranties.” Because these statements relate
to the Poscentes’ fourth and fifth issues, we address them below. For the reasons we discuss,
summary judgment was proper regardless of whether there was evidentiary support for these
conclusions. We overrule the Poscentes’ third issue.
4. Homestead waiver provisions
In their fourth issue, the Poscentes argue that their guaranties are unenforceable because
they contain homestead waiver provisions that contravene Texas law. Among other waiver
provisions, each guaranty states: “Each guarantor waives all rights of redemption, homestead,
and other rights or exemptions of every kind, whether arising under common law or statute.”
Each guaranty also includes a provision regarding the inclusion of invalid terms:
If any of the provisions of this Guaranty or the application thereof to any person
or circumstance shall, to any extent, be invalid or unenforceable, the remainder of
the provisions of this Guaranty . . . shall not be affected thereby, and every
provision of this Guaranty shall be valid and enforceable to the fullest extent
permitted by law.
The Poscentes argue (1) the homestead waiver is illegal and unconstitutional in Texas;
and (2) there is a fact issue whether the illegal provision is severable. They rely on our opinion
in Rogers v. Wolfson, 763 S.W.2d 922, 924 (Tex. App.—Dallas 1989, writ denied). Compass
does not argue the homestead waiver is enforceable, but contends that summary judgment was
proper because the provision was severable.
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An illegal provision of a contract may generally be severed as long as it does not
constitute the essential purpose of the agreement. In re Poly-America, L.P., 262 S.W.3d 337,
360 (Tex. 2008). Whether or not the invalidity of a particular provision affects the rest of the
contract depends upon whether the remaining provisions are independent or mutually dependent
promises, which courts determine by looking to the language of the contract itself. Id. The
relevant inquiry is whether or not the parties would have entered into the agreement absent the
unenforceable provisions. Id. Where the invalid provisions are “only a part of the many
reciprocal promises in the agreement” and “[do] not constitute the main or essential purpose of
the agreement,” courts have allowed severance of illegal contract provisions. Id. (quoting
Williams v. Williams, 569 S.W.2d 867, 871 (Tex. 1978)).
In Rogers, defendant/appellee Wolfson obtained summary judgment on the ground that
his contract with the plaintiffs could not be enforced because it contained a provision that
violated Texas antitrust law. See Rogers, 763 S.W.2d at 925. We reversed this judgment on
appeal, explaining that if the subject matter of a contract is legal, and only an ancillary provision
is illegal, the illegal provision may be severed and the remainder of the contract enforced. Id. at
924. We explained, “[o]n this point, the issue is whether Wolfson and the Rogers would have
entered into the agreement absent the illegal parts.” Id. at 926. We reversed the trial court’s
summary judgment in favor of Wolfson, concluding that a fact issue existed on the issue of
severability. Id. at 925–26. In Rogers, however, there was no express provision in the parties’
agreement that if any provision was invalid, all other provisions remained enforceable. See id. at
925 (“Wolfson responds that the contract contained no severability clause . . . .”).
Relying on Rogers, the Poscentes argue that a fact issue exists regarding whether the
parties would have entered into the guaranties absent the homestead waiver provision. In his
summary judgment affidavit, Vince Poscente testified: “When [Compass] presented me with a
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guaranty document, I recall it had a homestead waiver provision in it. Although I would have
preferred not to have a homestead waiver in any of the bank documents, both the note and the
guaranty were presented by Plaintiff as non-negotiable form documents.” He also testified, “The
guaranty was required by [Compass] as a condition of entering into the note agreement.” The
Poscentes argue that although Compass stated in its motion that it did not intend to pursue
execution against exempt property, this statement was not supported by any evidence and did not
controvert Vince Poscente’s testimony that the homestead waiver was a non-negotiable term of
the guaranty.
We disagree that the Poscentes raised a fact issue as to severability. The homestead
waiver provision did not “constitute the essential purpose of the agreement”; the purpose of the
guaranties was to secure the indebtedness created by the promissory note. See Panasonic Co. v.
Zinn, 903 F.2d 1039, 1041 (5th Cir. 1990) (citing Rogers, 763 S.W.2d at 924, and Williams, 569
S.W.2d at 871). As the court in Panasonic Co. stated:
The homestead waiver provision clearly is not an essential feature of the guaranty.
The essential purpose of the guaranty was for Panasonic to extend ECI an open
account credit line on Zinn’s promise to repay the debt. The homestead waiver
provision is ancillary and merely provides additional security for Zinn’s
obligation.
Panasonic Co., 903 F.2d at 1041–42. Therefore, the homestead waiver provision was severable.
Id. at 1042. Especially where the contract itself expressly contemplates and provides for the
severance of an illegal provision, the valid portion of the contract may be enforced. See
Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 722 (5th Cir. 1995). We overrule the Poscentes’
fourth issue.
5. Conflicting choice of law provisions
In their fifth issue, the Poscentes contend that the trial court erred in granting summary
judgment because the guaranties and the promissory note contain inconsistent choice of law
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provisions “requiring a factual inquiry to resolve.” The promissory note provides for application
of federal and Texas law, while the guaranties provide for the application of Alabama law. The
Poscentes contend that Compass’s attempt to avoid the conflict by “choosing” to sue only on the
guaranties is not supported by the record. They argue that Compass sued on both obligations,
raising fact issues that must be resolved in order to determine which state’s law applies.
Although the Poscentes asserted this argument in their summary judgment response, they
did not argue that Alabama law differs from Texas law or furnish any information to the trial
court upon which the trial court could take judicial notice of an applicable or conflicting
provision of Alabama law. See TEX. R. EVID. 202 (court may take judicial notice of law of
another state; party requesting that judicial notice be taken “shall furnish the court sufficient
information to enable it properly to comply with the request”). Unless a party requests the court
to take judicial notice of or introduces proof of another state’s law, or the court on its own
motion takes judicial notice of another state’s law, the court presumes the other state’s law is the
same as Texas law. Keene Corp. v. Gardner, 837 S.W.2d 224, 227 (Tex. App.—Dallas 1992,
writ denied) (citing Ogletree v. Crates, 363 S.W.2d 431, 435 (Tex. 1963)); see TEX. R. APP. P.
33.1.
In their summary judgment response and in their appellate brief, the Poscentes rely on
three cases to support their argument that the conflicting choice of law provisions present a fact
question precluding summary judgment. See Saturn Capital Corp. v. Dorsey, No.
01-04-00626-CV, 2006 WL 1767602 (Tex. App.—Houston [1st Dist.] June 29, 2006) (pet.
denied) (mem. op.); Georgetown Assocs., Ltd. v. Home Fed. Sav. & Loan Ass’n, 795 S.W.2d 252
(Tex. App.—Houston [14th Dist.] 1990, writ dism’d w.o.j.), and Hughes Wood Prods., Inc. v.
Wagner, 18 S.W.3d 202 (Tex. 2000). In each of these cases, the courts undertook a choice of
law analysis because the parties raised a specific conflict between Texas law and the law of
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another state on a contested issue. See Saturn Capital Corp., 2006 WL 1767602, at *2 (conflict
between Oregon and Texas usury law); Georgetown Associates, Ltd., 795 S.W.2d at 253–54
(conflict between California and Texas law regarding deficiency judgments); Hughes Wood
Products, Inc., 18 S.W.3d at 204 (conflict between Louisiana and Texas worker’s compensation
law). No such conflict was raised here. 5 We overrule the Poscentes’ fifth issue.
CONCLUSION
Having overruled the Poscentes’ five issues, we affirm the trial court’s judgment.
/David J. Schenck/
DAVID SCHENCK
JUSTICE
140165F.P05
5
On appeal, the Poscentes still point to no authority to suggest that application of any potentially applicable law would lead to a different
result. See TEX. R. APP. P. 44.1(a).
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
VINCE POSCENTE INTERNATIONAL, On Appeal from the 380th Judicial District
INC., VINCE POSCENTE, AND Court, Collin County, Texas
MICHELLE POSCENTE, Appellants Trial Court Cause No. 380-02889-2011.
Opinion delivered by Justice Schenck,
No. 05-14-00165-CV V. Chief Justice Wright and Justice Stoddart
participating.
COMPASS BANK, Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellee COMPASS BANK recover its costs of this appeal from
appellants Vince Poscente International, Inc., Vince Poscente, and Michelle Poscente.
Judgment entered this 19th day of March, 2015.
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