Tyhan, Inc D/B/A Auto Fix Unlimited v. Cintas Corporation No. 2

Opinion issued October 30, 2018
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00027-CV
———————————
TYHAN, INC. D/B/A AUTO FIX UNLIMITED, Appellant
V.
CINTAS CORPORATION NO. 2, Appellee
On Appeal from the County Civil Court at Law No. 4
Harris County, Texas
Trial Court Case No. 1093315
MEMORANDUM OPINION
Tyhan, Inc., doing business as Auto Fix Unlimited, appeals from a default
summary judgment in favor of Cintas Corporation No. 2. We reverse and remand.
BACKGROUND
Tyhan signed a five-year contract with Cintas for the rental of uniforms and
the provision of associated services. After about two and a half years, Tyhan stopped
paying for Cintas’s goods and services. Cintas sued Tyhan for breach of contract.
Cintas sought past due amounts owed for goods and services rendered, liquidated
damages for the remainder of the contract’s five-year term, and the replacement cost
of lost and damaged items rented to Tyhan.
In response to Cintas’s lawsuit, Tyhan’s president filed a letter on behalf of
the company, which was not represented by counsel in the trial court. On appeal,
both parties characterize this letter as Tyhan’s answer.
Cintas moved for a traditional summary judgment on its cause of action for
breach of contract. In support, Cintas attached the parties’ contract, four invoices, an
affidavit by the general manager of the location that serviced the contract, and an
affidavit by its attorney as to reasonable and necessary attorney’s fees incurred in
prosecuting the suit.
Tyhan filed a verified response to Cintas’s summary-judgment motion, in
which its president represented that it had not yet retained counsel, stated that Cintas
had not served it with a copy of the summary-judgment motion, and argued that
genuine issues of material fact precluded summary judgment.
2
The trial court held a hearing on Cintas’s summary-judgment motion. Neither
Tyhan’s president nor any other representative of Tyhan attended the hearing.
The trial court entered a final summary judgment in Cintas’s favor. The
judgment awarded Cintas $11,230.16 for unpaid invoices, $34,621.43 in liquidated
damages, $2,823 for lost or damaged items, pre- and post-judgment interest, costs,
and attorney’s fees.
Tyhan filed a verified motion for new trial. In its motion, Tyhan’s president
represented that the company did not receive notice of the summary-judgment
hearing and that it had a meritorious defense to Cintas’s suit. Tyhan’s new-trial
motion was denied by operation of law.
Tyhan subsequently retained counsel, who filed this appeal.
DISCUSSION
I. Unpreserved Issues
A. Motion for New Trial
Tyhan first contends that the trial court abused its discretion by denying
Tyhan’s motion for a new trial because Tyhan did not receive notice of the hearing
on Cintas’s motion for summary judgment.
We review a trial court’s denial of a motion for new trial for abuse of
discretion. Waffle House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010). But
we do so only if the movant has preserved its complaint for appellate review; if a
3
movant seeks a new trial on a ground on which evidence must be heard by the trial
court, the movant must obtain a hearing on its new-trial motion to preserve error.
See TEX. R. APP. P. 33.1(b); Felt v. Comerica Bank, 401 S.W.3d 802, 808 (Tex.
App.—Houston [14th Dist.] 2013, no pet.). A movant must present evidence to show
lack of notice as to a trial setting or hearing. Hendricks v. Barker, 523 S.W.3d 152,
157 (Tex. App.—Houston [14th Dist.] 2016, no pet.); Wilson v. Gen. Motors
Acceptance Corp., 897 S.W.2d 818, 820 (Tex. App.—Houston [1st Dist.] 1994, no
writ).
The record does not show that Tyhan set its motion for hearing, or requested
that the trial court consider it by written submission, and the trial court never acted
on the motion. Instead, Tyhan’s motion for new trial was overruled by operation of
law. Tyhan therefore has not preserved its complaint as to lack of notice for our
review. See TEX. R. APP. P. 33.1(b); Felt, 401 S.W.3d at 808; see also R&G Transp.
v. Fleetmatics, No. 01-14-00891-CV, 2016 WL 268553, at *2 (Tex. App.—Houston
[1st Dist.] Jan. 21, 2016, no pet.) (mem. op.) (no abuse of discretion when movant
fails to set new-trial motion for hearing and it is overruled by operation of law).
B. Liquidated-Damages Provision
Next, Tyhan challenges the trial court’s liquidated damages award as an
unenforceable penalty.
4
An assertion that a contractual liquidated-damages provision is an
unenforceable penalty is an affirmative defense. Phillips v. Phillips, 820 S.W.2d
785, 789 (Tex. 1991); Magill v. Watson, 409 S.W.3d 673, 679 (Tex. App.—Houston
[1st Dist.] 2013, no pet.). Unless it is apparent from the face of the plaintiff’s petition
that the provision is a penalty, the defendant must plead the defense or it is waived.
See TEX. R. CIV. P. 94; Phillips, 820 S.W.2d at 789–90. Moreover, the defendant
cannot raise this affirmative defense for the first time on appeal even if it is apparent
from the face of the plaintiff’s petition that the liquidated-damages provision is an
unenforceable penalty. See Phillips, 820 S.W.2d at 790; Excela Energy v. Exalt Real
Estate Grp., No. 14-16-00388-CV, 2017 WL 2292586, at *2–3 (Tex. App.—
Houston [14th Dist.] May 25, 2017, pet. denied) (mem. op.).
Tyhan did not challenge that the contract’s liquidated-damages provision as
an unenforceable penalty either in its answer or in its response to Cintas’s summary-
judgment motion. Tyhan raised this issue for the first time in its appellate brief.
Tyhan therefore has not preserved this issue for review. See Phillips, 820 S.W.2d at
790; Excela Energy, 2017 WL 2292586, at *2–3.
II. Summary Judgment
Tyhan challenges the evidence the trial court relied on in awarding the default
damages. In its motion for summary judgment, Cintas relied on the affidavit of one
5
of its general managers, John Ayers, for proof of its damages. Tyhan asserts that this
affidavit is conclusory and thus no evidence.
A. Standard of review and applicable law
We review summary judgments de novo. City of Richardson v. Oncor Elec.
Delivery Co., 539 S.W.3d 252, 258 (Tex. 2018). Traditional summary judgment is
proper when the material facts are not disputed and the moving party is entitled to
judgment as a matter of law. TEX. R. CIV. P. 166a(c); Oncor, 539 S.W.3d at 258–59.
If the movant seeks summary judgment on its own affirmative claim for relief, it
must conclusively prove all elements of its cause of action. Havlen v. McDougall,
22 S.W.3d 343, 345 (Tex. 2000). The trial court cannot grant summary judgment if
the movant’s summary-judgment proof is legally insufficient. See Amedisys, Inc. v.
Kingwood Home Health Care, 437 S.W.3d 507, 512 (Tex. 2014).
A conclusory affidavit is legally insufficient to raise a genuine issue of
material fact on summary judgment, let alone conclusively prove a fact. See
Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984); Prime Prods. v. S.S.I.
Plastics, 97 S.W.3d 631, 637 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). A
witness’s affidavit is conclusory when he offers nothing more than unexplained
conclusions or opinions by failing to specify the facts on which his conclusions or
opinions rest. See Arkoma Basin Expl. Co. v. FMF Assocs. 1990-A, Ltd., 249 S.W.3d
6
380, 389 n.32 (Tex. 2008); Brookshire Katy Drainage Dist. v. Lily Gardens, 333
S.W.3d 301, 308 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).
B. Analysis
Ayers averred that Tyhan defaulted on the contract by failing to make its
weekly rental payments. He stated that the contract had a term of five years and that
Tyhan owed a balance of $11,230.16. Ayers did not explain how he calculated the
balance or attach records accounting for the tally. Cintas attached four invoices to
its summary-judgment motion. They state total amounts of $64.56, $184.84,
$171.29, and $178.24, and are dated February 21, 2017, February 21, 2017,
December 2, 2016, and November 10, 2016 respectively. They do not substantiate
the outstanding balance of $11,230.16 stated by Ayers in his affidavit, which does
not even refer to these four invoices.
Ayers further testified that Tyhan owed $34,621.43 under the liquidated-
damages provision of the contract. This provision obligates Tyhan to pay “the
greater of 50% of the average weekly invoice total multiplied by the number of
weeks remaining in the unexpired term, or buy back all garments and other products
allocated to [Tyhan] at the then current replacement values” if Cintas terminates the
contract for cause. Ayers testified that Cintas terminated the contract with 139 weeks
of its term remaining and stated that the weekly invoice amount was $498.15. Thus,
the basis for his calculation is clear: 139 x $498.15 x .5 = $34,621.43. Ayers,
7
however, did not explain how the $498.15 average weekly invoice amount was
calculated or attach records substantiating this average. Ayers’s average weekly
amount cannot be derived from the four invoices attached to Cintas’s summary-
judgment motion.
Finally, Ayers testified that Tyhan owes $2,823 under a provision of the
contract requiring Tyhan to “pay the then current replacement values” for lost or
damaged items. Ayers, however, neither identified the lost or damaged items nor
itemized the current replacement values for them.
Ayers’s statements as to the balance owed on the contract, liquidated
damages, and replacement costs each suffer from the same essential flaw: they fail
to provide the underlying factual basis for the amounts claimed. His affidavit
therefore is conclusory and is no evidence of Cintas’s damages. See Brownlee, 665
S.W.2d at 112 (affidavit that stated contract was modified but failed to specify the
time, place, and exact nature of modification was conclusory); see, e.g., Brown v.
Mesa Distribs., 414 S.W.3d 279, 287 (Tex. App.—Houston [1st Dist.] 2013, no pet.)
(affidavit that stated $13,000 was owed under lease but didn’t provide factual
support or additional evidence showing how that figure was calculated was
conclusory). Accordingly, we hold that the proof of damages is legally insufficient
to support the amount awarded. Because Cintas’s proof of damages is legally
8
insufficient, the trial court erred in granting summary judgment. See Brownlee, 665
S.W.2d at 112; Prime Prods., 97 S.W.3d at 637.
III. Undecided Issues
Tyhan also contends that the trial court erred in granting summary judgment
on the issue of liquidated damages because the record raises a genuine issue of
material fact as to their amount and in awarding attorney’s fees because the evidence
of fees is legally insufficient. We need not decide these additional issues, given our
reversal of the trial court’s judgment on other grounds. See TEX. R. APP. P. 47.1.
CONCLUSION
We reverse the judgment of the trial court and, as Tyhan contests liability and
the alleged damages are unliquidated, we remand this cause for a new trial on both
liability and damages. See TEX. R. APP. P. 44.1(b); Pointe W. Ctr. v. It’s Alive, Inc.,
476 S.W.3d 141, 150 (Tex. App.—Houston [1st Dist.] 2015, pet. denied).
Jane Bland
Justice
Panel consists of Justices Keyes, Bland, and Lloyd.
9