Kenneth M. Hardin v. Joseph Lella

ACCEPTED
03-14-00607-CV
4718189
THIRD COURT OF APPEALS
AUSTIN, TEXAS
3/31/2015 5:00:08 PM
JEFFREY D. KYLE
CLERK
No. 03-14-00607-cv
FILED IN
3rd COURT OF APPEALS
IN THE COURT OF APPEALS FOR AUSTIN, TEXAS
THE THIRD DISTRICT OF TEXAS AT AUSTIN
3/31/2015 5:00:08 PM
JEFFREY D. KYLE
Clerk
KENNETH M. HARDIN,
Appellant
vs.
JOSEPH LELLA,
Appellee
BRIEF OF APPELLANT KENNETH M. HARDIN
On appeal from the County Court at Law No. 2 of Travis County, Texas
Cause No. C-1-CV-14-006415
Honorable Eric Shepperd, Judge Presiding
Mark L. Aschermann
SBN 01368700
BARRON & NEWBURGER, PC
6300 West Loop South, Suite 341
Bellaire, Texas 77401
Telephone (713) 942-0808
Facsimile (713) 942-0449
maschermann@bn-lawyers.com
ATTORNEYS FOR APPELLANT
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
The following is a complete list of all parties to the trial court’s final
judgment as well as the name and addresses of trial counsel and appellate counsel,
in accordance with Rule 38.1 of the Texas Rules of Appellate Procedure.
APPELLANT
Appellant Kenneth M. Hardin’s trial and appellate counsel is Mark L.
Aschermann, BARRON & NEWBURGER, PC, 6300 West Loop South, Suite 341,
Bellaire, Texas 77401. Telephone (713) 942-0808, Facsimile (713) 942-0449.
E-mail maschermann@bn-lawyers.com
APPELLEE
Appellee Joseph Lella’s trial and appellate counsel is William M. Nichols,
WILLIAM M. NICHOLS, P.C., 9601 McAllister Freeway, Suite 1250, San Antonio,
Texas 78216-5150. Telephone (210) 340-8880, Facsimile (210) 340-8885.
E-mail william@wmnlawsa.com
2
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . 2
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
I. STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II. STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
III. STATEMENT REGARDING ORAL ARGUMENT. . . . . . . . . . . . . . . . . . 9
IV. ISSUES PRESENTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
V. SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
VI. ARGUMENT AND AUTHORITIES
Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claims are barred by limitations . 16
2. The trial court erred in granting the Motion for Summary Judgment
because a fact issue exists as to whether Joseph Lella unreasonably
delayed in making demand for payment of the First Promissory Note . 16
3. The trial court erred in granting the Motion for Summary Judgment
because the Second Promissory Note was a novation of the First
Promissory Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4. The trial court erred in granting the Motion for Summary Judgment
because the Second Promissory Note creates a fact issue on the novation
element of consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5. The trial court erred in granting the Motion for Summary Judgment
because the Trial Court abused its discretion by excluding Hardin’s
evidence of the affirmative defenses of novation, modification and
ratification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3
6. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claims for unjust enrichment and
quantum meruit are barred by the existence of an express contract. . . . 31
7. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claim for declaratory judgment is
duplicative of the above issues and the trial court made no specific
declaration in the Final Judgment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
VII. CONCLUSION AND REQUEST FOR RELIEF. . . . . . . . . . . . . . . . . . . . . 36
CERTIFICATE OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4
INDEX OF AUTHORITIES
Cases
801 Nolana, Inc. v. RTC Mortgage Trust, 944 S.W.2d 751, 754 (Tex. App.—
Corpus Christi 1997, writ denied) .........................................................................30
Allstate Ins. Co. v. Clarke, 471 S.W.2d 901, 907 (Tex. Civ. App.--Houston [1st
Dist.] 1971, writ ref'd n.r.e.) ..................................................................................24
Aurora Petroleum, Inc. v. Newton, 287 S.W.3d 373, (Tex. App. Amarillo 2009)..33
Barnes v. LPP Mortg., Ltd., 358 S.W.3d 301, 303 (Tex. App. Dallas 2011)..........20
Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984) ......................................30
Chastain v. Cooper & Reed, 152 Tex. 322, 257 S.W.2d 422, 424 (1953) ..............24
Crego v. Lash, 2014 Tex. App. 3272 (Tex. App.—Corpus Christi, 2014, no pet.) 18
CTTI Priesmeyer v. K & O Ltd. Partnership, 164 S.W.3d 675, 680-681 (Tex. App.-
-Austin 2005, no pet.)............................................................................... 23, 24, 25
Dunn v. Reliance Life and Accident Insurance Company of America, 405 S.W.2d
389 (Tex.Civ. App.-Corpus Christi 1966, writ ref'd n.r.e.) ..................................19
Foreman v. Graham, 363 S.W.2d 371 (Tex.Civ.App.-Beaumont 1962, no writ)...19
Fortune Production Co. v. Conoco, Inc. 52 S.W.3d 671, 683-685 (Tex. 2000) .. 13, 32
Fulcrum Central v. Autotester, Inc., 102 S.W.3d 274, 277 (Tex. App.--Dallas 2003,
no pet.) ...................................................................................................................23
Gabriel v. Alhabbal, 618 S.W.2d 894, 896 (Tex. Civ. App.--Houston [1st Dist.]
1981, writ ref'd n.r.e.) ............................................................................................19
Goodyear Tire and Rubber Co., v. Mayes, 236 S.W.3d 754, 756-757 (Tex. 2007)16
Hartman v. Hartman, 135 Tex. 596, 599, 138 S.W.2d 802, 803 (1940).................19
Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173 (Tex. 1995) ......15
In re Laibe Corp., 307 S.W.3d 314 (Tex. 2010)......................................................18
Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex. App.--Houston [1st Dist.]
1985, writ ref'd n.r.e.) ............................................................................................19
Joiner v. Elrod, 716 S.W.2d 606, 609 (Tex. App.- Corpus Christi 1986, no pet.)..21
5
Lede v. Aycock, 630 S.W.2d 669, 673 (Tex. App.--Houston [14th Dist.] 1981, writ
ref'd n.r.e.) .............................................................................................................35
Life Ins. Co. v. Gar-Dal, Inc., 570 S.W.2d 378, 381-82 (Tex. 1978)......................30
Martin v. Ford, 853 S.W.2d 680, 682 (Tex. App. Texarkana 1993) .......................20
Mercer v. Daoran Corp., 676 S.W.2d 580, 583 (Tex. 1984) ..................................31
Moreno v. Sterling Drug, 787 S.W.2d 348, 351 (Tex. 1990) ..................................18
Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990) .................18
National Family Care Life Ins. v. Fletcher, 57 S.W.3d 662, 668 (Tex. App. –
Beaumont 2001, pet denied) .......................................................................... 27, 28
Nixon v. Mr. Property Management, 690 S.W.2d 546, 548 (Tex. 1985) ................15
Pace Corp. v. Jackson, 284 S.W.2d 340, 350 (1955) ..............................................35
Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76, 79-80 (Tex. 1989) .................15
Scalise v. McCallum, 700 S.W.2d 682, 684 (Tex. App.--Dallas 1985, writ ref'd
n.r.e) ......................................................................................................................23
Vandeventer v. All American Life & Casualty Co., 101 S.W.3d 703, 712 (Tex.
App.--Fort Worth 2003, no pet.) .................................................................... 23, 25
Vickery v. Vickery, 999 S.W.2d 342, 356, (Tex. 1999) ...........................................23
Wiman v. Tomaszewicz, 877 S.W.2d 1, 5 (Tex. App. Dallas 1994) ................. 18, 20
Woodward v Southwest States, Inc. 384 S.W.2d 674, 675 (Tex. 1964) .......... 14, 32
Rules
Tex. R. CIV. P. 194.2(c) ..........................................................................................27
Statutes
Tex. Civ. Prac. Rem. Code §16.003 .........................................................................32
Tex. Civ. Prac. Rem. Code §16.004 .................................................................. 16, 18
Tex. Civ. Prac. Rem. Code §37.003(b) ....................................................................33
Tex. Civ. Prac. Rem. Code §37.006(a) ....................................................................34
6
I. STATEMENT OF FACTS
This is an appeal of a Summary Judgment granted by the trial court in favor
of the Appellee Joseph Lella, who filed suit to collect upon a Promissory Note
issued originally by Kenneth M. Hardin, together with his then business partner
Richard A. Crawford. He did not file suit against Crawford.
On September 5, 1996, Appellant Kenneth Hardin and his partner Richard
Crawford borrowed $30,000.00 at 10% per annum interest from Appellee Joseph
Lella. The transaction was documented with a Promissory Note. (C.R. 50). The
promissory note stated:
The initial loan shall be for a minimum period of six months,
thereafter paymant [sic] of the entire balance plus any unpaid interest
compounded monthly, is due upon demand in writing prior to the
expected date of receipt thereof, to the undersigned at the address
herein below.
On July 1, 2003, Hardin and Crawford signed a new Promissory Note payable to
Lella’s wife, Elizabeth Lella, at the reduced interest rate of 7% per annum. (C.R.
52-53) This Second Promissory Note appears to recognize the payment of the
interest to Elisabeth Lella since at least 1999. (C.R. 85) On July 20, 2006, Richard
Crawford, who had purchased Hardin’s interest in the Americus Diamonds
business, issued a Third Promissory Note to Elisabeth Lella and raised the interest
rate to 8% per annum. (C.R. 55) These are referred to as the First, Second, and
Third Promissory Notes.
7
Crawford sent a letter to Lella with the new Third Promissory Note
explaining that he had purchased Hardin’s interest in the business. (C.R. 54)
Hardin did not sign the Third Promissory Note. Crawford, through his business,
Americus Diamonds, paid the interest as obligated by the Third Promissory Note
(C.R. 130-136) and Elizabeth Lella accepted the payments. No payments were
attributed to principal reduction. Richard Crawford defaulted on the payment of
the Third Promissory Note to Elisabeth Lella as of January 1, 2012, leading to the
underlying lawsuit at hand. (C.R. 56-57) Joseph Lella has made no demand and
makes no claim for recovery under the Second Promissory Note or the Third
Promissory Note.
On May 9, 2013, Joseph Lella filed suit in the Travis County Court at Law
under cause number C-1-CV-13-04334 (“the Original Suit”), seeking enforcement
of the First Promissory Note. Kenneth M. Hardin, as Defendant, filed his Original
Answer and Third Party Complaint on September 13, 2013, naming Vivian
Crawford as Third Party Defendant and seeking indemnity from Vivian Crawford,
the wife of Richard A. Crawford, with regard to the Lella obligation. A Motion for
Summary Judgment was filed by Lella as Plaintiff, and was ultimately granted on
June 26, 2014 by the Honorable Eric Sheppard, awarding Lella $36,521.23 plus
attorneys’ fees and interest. Concurrently, the trial court severed the Lella matter
from the original cause, leaving Hardin’s Third Party Claims against the Crawfords
8
(Richard A. Crawford having been added in the interim as another Third Party
Defendant) in the original cause number, and assigning the Lella claims against
Hardin, including the Summary Judgment and a subsequent Motion for New Trial
filed by Hardin, to the new cause number C-1-CV-14-006415.
II. STATEMENT OF THE CASE
Appellee Joseph Lella (“Lella”) brought a suit on a Promissory Note against
maker Kenneth M. Hardin (“Hardin”). Lella filed a traditional summary judgment
and a no evidence summary judgment with causes of action for breach of contract,
unjust enrichment and a declaratory judgment. (C.R. 31) Hardin responded to the
Lella Motion for Summary Judgment with the affirmative defenses of the statute of
limitations, novation and ratification. (C.R. 114) The Trial Court granted Lella’s
summary judgment motion. (C.R. 153) Hardin appeals that summary judgment
decision.
On October 17, 2014, Hardin placed a cash deposit with the trial court in
lieu of a supersedeas bond. On October 24, 2014, the trial court granted an Order
suspending the enforcement of the Summary Judgment pending this appeal.
III. STATEMENT REGARDING ORAL ARGUMENT
Appellant Hardin requests oral argument. Oral argument will assist the
Court in considering the issues in this case.
9
IV. ISSUES PRESENTED
1. The trial court erred in granting the Motion for Summary Judgment because the
Appellee Joseph Lella’s claims are barred by limitations.
2. The trial court erred in granting the Motion for Summary Judgment because a
fact issue exists as to whether Joseph Lella unreasonably delayed in making
demand for payment of the First Promissory Note.
3. The trial court erred in granting the Motion for Summary Judgment because the
Second Promissory Note was a novation of the First Promissory Note.
4. The trial court erred in granting the Motion for Summary Judgment because the
Second Promissory Note creates a fact issue on the novation element of
consent.
5. The trial court erred in granting the Motion for Summary Judgment because the
Trial Court abused its discretion by excluding Hardin’s evidence of the
affirmative defenses of novation, modification and ratification.
6. The trial court erred in granting the Motion for Summary Judgment because the
Appellee Joseph Lella’s claims for unjust enrichment and quantum meruit are
barred by the existence of an express contract.
7. The trial court erred in granting the Motion for Summary Judgment because the
Appellee Joseph Lella’s claim for declaratory judgment is duplicative of the
10
above issues and the trial court made no specific declaration in the Final
Judgment.
V. SUMMARY OF THE ARGUMENT
Issues Number One and Two
1. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claims are barred by limitations.
2. The trial court erred in granting the Motion for Summary Judgment
because a fact issue exists as to whether Joseph Lella unreasonably delayed in
making demand for payment of the First Promissory Note.
Three Promissory Notes (C.R. 50-55) are at issue in this matter, each for the
principal amount of $30,000.00 plus interest. Each included the following
language: “The initial loan shall be for a minimum period of six months, thereafter
paymant [sic] of the entire balance plus any unpaid interest compounded monthly,
is due upon demand in writing, sixty days prior to expected date of receipt thereof,
to the undersigned at the address herein below.” The Appellee Lella argues that
his cause of action did not accrue and limitations did not begin to run until he made
demand for payment of the First Promissory Note in February 2013. (C.R. 56)
Appellant Hardin argues that no interest was paid to Lella after 2003, as all
interest was paid to his wife consistent with the Second and Third Promissory
Notes. Accordingly, the First Promissory Note was in default, the cause of action
11
accrued, and the statute of limitations began to run in 2003. Alternatively, a fact
issue precluding summary judgment exists as to the date of accrual of the cause of
action related to the unreasonable delay in making demand for payment.
Issues Number Three and Four
3. The trial court erred in granting the Motion for Summary Judgment
because the Second Promissory Note was a novation of the First Promissory
Note.
4. The trial court erred in granting the Motion for Summary Judgment
because the Second Promissory Note creates a fact issue on the novation
element of consent.
In 2003 the First Promissory Note was replaced by the Second Promissory
Note, which lowered the interest rate and changed the Payee to Elisabeth Lella,
Appellee’s wife. In 2006 Appellant Hardin sold his interest in the Americus
Diamonds partnership to his partner Richard Crawford, who assumed the Elisabeth
Lella obligation. Crawford created the Third Promissory Note, which raised the
interest rate but made Crawford the only maker to Elisabeth Lella. The facts and
circumstances of these transactions create a fact issue as to novation which
precludes summary judgment.
12
Issue Number Five
5. The trial court erred in granting the Motion for Summary Judgment
because the trial court abused its discretion by excluding Hardin’s evidence of
the affirmative defenses of novation, modification and ratification.
The Trial Court abused its discretion by improperly excluding Appellant’s
evidence on the novation and ratification defenses for a failure to adequately
update TRCP Rule 194 Disclosure Responses. The evidence on these defenses
was improperly excluded because there was no surprise or prejudice to the
Appellee Lella. In fact, Lella attempted to pre-empt these defenses by offering
rebuttal argument in his Motion for Summary Judgment. Additionally, Appellant
Hardin properly amended his Answer (C.R. 109) to assert these defenses. The
facts giving rise to the defenses were sufficiently alleged in other pleadings (C.R.
18) and discovery responses. (C.R. 63-88)
Issue Number Six
6. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claims for unjust enrichment and
quantum meruit are barred by the existence of an express contract.
If a valid express contract covering the subject matter exists, there generally can
be no recovery on a contract implied in law. In Fortune Production Co. v. Conoco,
Inc. 52 S.W.3d 671, 683-685 (Tex. 2000), a cause of action for unjust
13
enrichment was not available to recover payments in addition to the contract price
agreed on by parties. The recovery on an express contract and on quantum meruit
are inconsistent with each other. Woodward v Southwest States, Inc. 384 S.W.2d
674, 675 (Tex. 1964). The First Promissory Note is an express contract so no
recovery is available to Lella for unjust enrichment. Lella advanced the money in
1996 and received interest pursuant to the First Promissory Note through 2003.
Unjust enrichment claims are governed by the two-year statute of limitations in
section 16.003 of the Civil Practice and Remedies Code. Elledge v. Friberg-
Cooper Water Supply Corp., 240 S.W.3d 869, 871 (Tex. 2007). As noted in Issue
Number One, Lella’s cause of action accrued no later than January 2004. Thus, the
limitations period expired in January 2006, more than 7 years before he made this
claim. As a result, the trial court’s summary judgment on unjust enrichment must
be reversed.
Issue Number Seven
7. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claim for declaratory judgment is
duplicative of the above issues and the trial court made no specific declaration
in the Final Judgment.
The trial court made no finding or statement in the Final Judgment that could
be considered a basis for declaratory relief. Assuming the Court of Appeals
14
determines that the trial court granted declaratory relief, which is omitted from the
trial court’s judgment, the requested declaratory relief fails because the Court’s
order is not clear; the relief requested in the Motion for Summary Judgment
exceeds the pleading relief requested in the First Amended Petition; the Appellee
failed to bring all affected parties before the court, namely Elizabeth Lella; and
Joseph Lella failed to meet its burden of proof on his effort to declare any novation
as invalid.
VI. ARGUMENT AND AUTHORITIES
STANDARD OF REVIEW
If a judgment does not specify any particular grounds, the appellant must
challenge each ground alleged in the motion for summary judgment. Rogers v.
Ricane Enterprises, Inc., 772 S.W.2d 76, 79-80 (Tex. 1989) However, if the
judgment specifies a ground as its basis, the movant (as appellee) should present
by cross-point any other grounds set out in the motion for summary judgment.
Summary judgment is proper when the movant establishes that no genuine
issue of material fact exists, so that the movant is entitled to summary judgment as
a matter of law. Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173
(Tex. 1995); Nixon v. Mr. Property Management, 690 S.W.2d 546, 548 (Tex.
1985). The reviewing court must consider all the evidence in the light most
favorable to the nonmovant, indulging every reasonable inference in favor of the
15
nonmovant and resolving any doubts against the motion. However, the reviewing
court may not ignore undisputed evidence in the record that is favorable to the
movant. Goodyear Tire and Rubber Co., v. Mayes, 236 S.W.3d 754, 756-757 (Tex.
2007).
Issues Number One and Two
1. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claims are barred by limitations.
2. The trial court erred in granting the Motion for Summary Judgment
because a fact issue exists as to whether Joseph Lella unreasonably delayed in
making demand for payment of the First Promissory Note.
Joseph Lella filed his Plaintiff’s Original Petition on May 9, 2013. (C.R. 8)
Thus, if Lella’s cause of action accrued on or before May 9, 2009, Lella’s claim is
barred by the statute of limitations. Tex. Civ. Prac. Rem. Code §16.004.
The statute of limitations bars recovery by Appellant Joseph Lella because
the First Promissory Note has been in default since 2003, when the interest
payments on the Second Promissory Note were sent to Elisabeth Lella at the lower
interest rate.
Lella complained about this in his demand letter saying:
Disregarding the unpaid interest accrued through December 31, 2003
by failure to compound monthly as required, for the sake of simplicity
16
only I calculate that, with accrued unpaid interest, compounded
monthly at the rate of 10% per annum beginning January 1, 2004, the
amount now owed on Exhibit “A” is $42,972.90.
Lella Demand letter (C.R. 56).
As noted by Lella’s attorney, the interest paid to Elisabeth Lella is consistent with
the 7% interest rate on the Second Promissory Note (C.R. 53) and the 8% interest
rate on the Third Promissory Note (C.R. 55). Even if this money is considered to
have been paid to Joseph Lella, it would be a default of the 10% interest rate under
the First Promissory Note.
More importantly, NO payments have been made to Joseph Lella since
2003, and perhaps as long ago as 1999 (C.R. 85), as the interest payments were
made to his wife Elisabeth. (C.R. 53-56, 85, 130-136) Accordingly, the First
Promissory Note has been in default since the first interest installment to Elisabeth
Lella after July 1, 2004. This default triggers the cause of action, which starts the
beginning of the limitations period.
Appellant’s Answer properly raised the statute of limitations as a defense.
(C.R. 16, 109). In his Response to the Motion for Summary Judgment, Appellant
designated the date that the cause of action accrued as a disputed issue of fact
precluding summary judgment. (C.R. 116).
Lella argues that the First Promissory Note is a demand note for which no
cause of action accrues until demand is made, i.e. the demand letter. (C.R. 56-57)
17
However, this argument means that a contractual obligation with a demand feature
could survive decades or more in default, tolling the limitations period until a
demand is made. This position is in conflict with the principle that parties may not
sleep on their rights. In re Laibe Corp., 307 S.W.3d 314 (Tex. 2010).
The statute of limitations begins to run on a demand note on the date of its
making unless demand is a condition precedent to filing suit on the note. Crego v.
Lash, 2014 Tex. App. 3272 (Tex. App.—Corpus Christi, 2014, no pet.). The note
in this case provided that payment could be demanded at any time after six months
from execution. The First Note did not make demand a condition precedent for its
enforcement. Rather, the language with regard to the “expected date of receipt
thereof” indicates that demand was a mere courtesy so that the maker could plan
for when the payment would be due.
In Wiman v. Tomaszewicz, 877 S.W.2d 1, 5 (Tex. App. Dallas 1994) the
court stated:
Section 16.004(a)(3) of the Texas Civil Practices and Remedies Code
provides that a person must bring suit on a debt, such as Wiman's suit
against Tomaszewicz on the guaranty, no later than four years after
the day the cause of action accrues. TEX. CIV. PRAC. & REM.
CODE ANN. § 16.004 (a)(3) (Vernon 1986). The question of when a
cause of action accrues is a question of law for the court to decide.
Moreno v. Sterling Drug, 787 S.W.2d 348, 351 (Tex. 1990). A cause
of action generally accrues at the time when facts come into existence
which authorize a claimant to seek a judicial remedy. Murray v. San
Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990); Hartman v.
18
Hartman, 135 Tex. 596, 599, 138 S.W.2d 802, 803 (1940). If demand
is an integral part of a cause of action or a condition precedent to the
right to sue, the statute of limitations does not begin to run until
demand is made, unless the demand is waived or unreasonably
delayed. Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex. App.-
-Houston [1st Dist.] 1985, writ ref'd n.r.e.); Gabriel v. Alhabbal, 618
S.W.2d 894, 896 (Tex. Civ. App.--Houston [1st Dist.] 1981, writ ref'd
n.r.e.).
Wiman, supra, at 5. (emphasis added).
In Gabriel v. Alhabbal, 618 S.W.2d 894, 896-897 (Tex. Civ. App. Houston 1st
Dist. 1981, writ ref'd n.r.e.), the court ruled that):
In a case involving loans not evidenced by writings the court
recognized the general rule that money payable upon demand is
payable immediately and no demand is necessary to start the running
of the Statute of Limitations. However, the court also recognized the
general rule applicable where demand is an integral part of a cause
[*897] of action, or a condition precedent to the right to sue. The court
stated that parties to a contract should be permitted to make an
agreement that the money loaned was not to become due until a
demand was made, thereby making a demand a condition precedent to
the accrual of the cause of action.
It held that the demand must be made within a reasonable time,
which depends upon the circumstances of each case, and ordinarily
is a question of fact for the jury. The court further stated that in the
absence of mitigating circumstances, a time coincident with the
running of the Statute will be deemed reasonable, and if the demand
is not made within that period the action will be barred. Foreman v.
Graham, 363 S.W.2d 371 (Tex.Civ.App.-Beaumont 1962, no writ);
Dunn v. Reliance Life and Accident Insurance Company of America,
405 S.W.2d 389 (Tex.Civ. App.-Corpus Christi 1966, writ ref'd
n.r.e.).
19
Gabriel, supra, at 896-7 (emphasis added).
As noted above, even if a Note is payable on demand, the demand must be made in
a reasonable time, depending on the circumstances of each case. Absent
mitigating circumstances, demand is reasonable if made within the period of
limitations. Martin v. Ford, 853 S.W.2d 680, 682 (Tex. App. Texarkana 1993),
Barnes v. LPP Mortg., Ltd., 358 S.W.3d 301, 303 (Tex. App. Dallas 2011), Wiman
v. Tomaszewicz, 877 S.W.2d 1, 3 (Tex. App. Dallas 1994).
Joseph Lella loaned $30,000.00 to his nephew Richard Crawford and
Crawford’s partner Kenneth Hardin in 1996. As early as 1999, but no later than
2004, the Second Promissory Note to his wife effectively replaced the First
Promissory Note to Joseph Lella. The Crawford-Hardin partnership, and later
Richard Crawford as a sole proprietor, paid interest to Elisabeth Lella consistent
with the Second Promissory Note and later the Third Promissory Note. Joseph
Lella received no payment of any nature after 2003 yet did not make demand until
2013, a delay of ten years. That is an unreasonable delay in the making of the
demand as a matter of law.
Lella does not deny that the interest payments were made to his wife. In fact
he confirms it in his Reply to Defendant’s Response to Summary Judgment:
“Defendant’s position that this is a demand note, (that is, one that is due upon
demand) and that Plaintiff should have demanded it 11 years ago in 2003, when he
20
and his partners began making interest payment at a reduced level to Plaintiff’s
wife, thus barring this claim by limitations.” (C.R. 148) (emphasis added).
Lella defends his inaction by saying that “Plaintiff did not make formal
demand earlier “in an attempt to help (his) niece’s husband in his business.” (C.R.
148). Lella attempts to excuses this forbearance with the statement “A party can
waive contractual provisions for his own benefit. Joiner v. Elrod, 716 S.W.2d 606,
609 (Tex. App.- Corpus Christi 1986, no pet.).” In Joiner, the real estate buyer
Elrod, through a Trustee, offered to buy real estate owned by Joiner. A written
offer was sent to Joiner with a deadline by which the offer expired. Joiner
accepted the offer after the deadline and mailed the contract to Elrod but later that
day sent a telegram revoking that consent. Elrod sued for specific performance.
The above quote needs to be placed in context as a few lines later the Joiner
court said:
Moreover, a party can waive provisions for his benefit. As
notification of acceptance is required for the benefit of the person who
makes the offer, the person who makes the offer may dispense with
notice to himself. If the offeror intimates a particular mode of
acceptance is sufficient to make the bargain binding, it is only
necessary that the offeree follow the indicated method of acceptance.
Joiner, supra, at 609.
Joiner can be distinguished from the instant case because Hardin and Crawford
acted in reliance on the Second and Third Promissory Notes, paying interest to
Elizabeth Lella, not Joseph Lella, and paying a lower rate of interest. Additionally,
21
the timing was a minor matter in the Joiner transaction for which agreement was
readily made. Lella attempts to waive 10 years of continued effort by Hardin and
then Crawford. Lella’s attempted waiver is not only for his own benefit and should
be disregarded.
In the alternative, if the claim on the First Promissory Note is not barred by
limitations as a matter of law, a fact issue precluding summary judgment exists as
to the day the cause of action accrued as Lella unreasonably delayed making
demand for payment of the First Promissory Note. When a cause of action accrues
is uniquely a fact issue. At a minimum, Appellant raised a fact issue as to whether
Lella’s cause of action accrued more than four years before the date of suit.
Issue Number Three
3. The trial court erred in granting the Motion for Summary Judgment
because the Second Promissory Note was a novation of the First Promissory
Note.
Appellant raised novation as a fact issue precluding summary judgment in
his Response to Motion for Summary Judgment. Appellant supported his
Response with competent summary judgment evidence establishing that the
Second Promissory Note and Third Promissory Note were given in replacement of
the First Promissory Note. As a result, there was a fact issue as to whether
novation applied and summary judgment was improper.
22
Novation is the creation of a new obligation in place of an old one. Under
the novation, the parties may agree that a new obligor is substituted to perform the
duties agreed on in the old contract and the original obligor is released from
performing those duties. Vandeventer v. All American Life & Casualty Co., 101
S.W.3d 703, 712 (Tex. App.--Fort Worth 2003, no pet.).
In CTTI Priesmeyer, Inc. v. K&O Ltd. Partnership, 164 S.W.3d 675, 680-
681 (Tex. App. Austin 2005, no pet.) this Court discussed novation of a
construction contract between the Contractor CTTI Priesmeyer and the Owner
K&O Ltd. Partnership. K&O complained of cracks in the slab of a commercial
building and through a Repair Agreement undertook the repair of a test area. The
full repairs were never completed and K&O sued CTTI. CTTI argued that the
Repair Agreement was a novation of the construction contract and the Court
analyzed the novation:
Thus, CTTI had the burden to prove (1) the validity of the previous
obligation; (2) an agreement among all parties to accept a new
contract; (3) the extinguishment of the previous obligation; and (4) the
validity of the new agreement. Vickery v. Vickery, 999 S.W.2d 342,
356, (Tex. 1999); Fulcrum Central v. Autotester, Inc., 102 S.W.3d
274, 277 (Tex. App.--Dallas 2003, no pet.). A court may infer that a
new agreement is a novation of an earlier agreement when the new
agreement is so inconsistent with the earlier agreement that the two
agreements cannot subsist together. Fulcrum Central, 102 S.W.3d at
277; Scalise v. McCallum, 700 S.W.2d 682, 684 (Tex. App.--Dallas
1985, writ ref'd n.r.e).
23
Where there are no inconsistent provisions, "a second contract will
operate as a novation of a first contract only when the parties to both
contracts intend and agree that the obligations of the second shall
[**10] be substituted for, and operate as a discharge of, the
obligations of the first." Chastain v. Cooper & Reed, 152 Tex. 322,
257 S.W.2d 422, 424 (1953). A new agreement can establish
novation as a matter of law when the state of the evidence is such that
reasonable minds cannot differ as to its effect. Id. Whether a later
agreement works a novation of an earlier one is a question of intent.
Allstate Ins. Co. v. Clarke, 471 S.W.2d 901, 907 (Tex. Civ. App.--
Houston [1st Dist.] 1971, writ ref'd n.r.e.). The intent must be clear;
novation is never presumed. Id.
CTTI, supra, at 680-681.
A jury found that CTTI and K&O did not intend that the Repair Agreement should
replace the Construction Contract so the Court determined that CTTI could not
prove novation as a matter of law. In contrast, the evidence in this case shows that
the Lellas did in fact intend to replace the First Promissory Note as shown by the
decade that Elizabeth Lella accepted payments without complaint from Joseph
Lella. Crawford and Hardin demonstrated their intent by making payments
according to the terms of the new instruments.
Issue Number Four
4. The trial court erred in granting the Motion for Summary Judgment
because the Second Promissory Note creates a fact issue on the novation
element of consent.
24
As noted above, the actions of the parties in exchanging and performing
upon the Three Promissory Notes creates a fact issue as to whether they intended
to substitute the Second Promissory Note for the First Promissory Note.
The consent to substitute a new obligor and release the original obligor may
be express or implied. Vandeventer v. All American Life & Cas. Co., 101 S.W.3d
703, 712-713 (Tex. App.--Fort Worth 2003, no pet.). In the absence of an express
agreement, whether a new contract operates as a novation of an earlier contract is
usually a question of fact. It becomes a question of law only if the evidence would
not cause reasonable minds to differ as to its effect. CTTI Priesmeyer v. K & O
Ltd. Partnership, 164 S.W.3d 675, 680-681 (Tex. App.--Austin 2005, no pet.).
The Three Promissory Notes and related correspondence (C.R. 50-55, 83)
show that Hardin and Lella intended for the Second Promissory Note to replace the
First Promissory Note. Hardin’s affidavit (C.R. 125) stated that Joseph Lella
agreed, and in fact asked, that his wife Elisabeth be the payee on the Second
Promissory Note(s) and that interest payments be directed to her. Even without
this testimony from Hardin, the actions (and lack of action) of the Lellas speak
loudly to this outcome.
Lella himself agreed that the earlier obligation be replaced by the later. The
language of the Second Promissory Note is identical to the First Promissory Note
with the only difference being the Payee is Elizabeth Lella, not Joseph Lella and
25
the interest rate is 7%, not 10%. The makers of the Second Promissory Note are
Kenneth Hardin and Richard Crawford, the same as the First Promissory Note and
the balance is the same. Thus, if the First Promissory Note is a valid obligation,
the Second Promissory Note is also a valid obligation.
The Appellee Joseph Lella argues that the Second Promissory Note and the
Third Promissory Note are ineffectual modifications of the First Promissory Note,
leaving Kenneth Hardin liable for Richard Crawford’s nonpayment of the
Promissory Note. Alternatively, the First Promissory Note was modified and/or
replaced by novation by the Second Promissory Note and later the Third
Promissory Note.
Joseph Lella was aware of the Second Promissory Note and accepted the
benefit of the changes, while failing to protest for over 10 years.
Issue Number Five
5. The trial court erred in granting the Motion for Summary Judgment
because the trial court abused its discretion by excluding Hardin’s evidence of
the affirmative defenses of novation, modification and ratification.
Lella objected to Hardin’s defenses of novation and ratification because they
were not specifically included in Disclosure Responses. The Trial court granted
26
Lella’s objection to the novation, modification and ratification defenses and ruled
that “So I don’t believe – I will not allow the evidence to be done with regard to
those. You (Hardin) can raise them as defenses but no evidence associated with
them because they failed to be disclosed. The whole thing with that has to do with
notice. You have to be able to know what it is you are supposed to be objecting
to.” (Record p. 9:21-10). This ruling is not clear as to whether it excluded
Hardin’s summary judgment evidence or ALL summary judgement evidence,
including the considerable evidence offered by Lella that supported the novation
defense. Given that Lella himself raised the issue, the ruling is an abuse of
discretion and should be reversed.
In National Family Care Life Ins. v. Fletcher, 57 S.W.3d 662, 668 (Tex. App.
– Beaumont 2001, pet denied) the appeals court overruled the trial court’s
exclusion of evidence based upon a supposedly incomplete Tex. R. CIV. P.
194.2(c) disclosure response:
We believe the trial court based its decision to restrict appellants'
cross-examination on an overly restrictive interpretation of appellants'
response to the request for disclosure. The governing rule, Tex. R.
CIV. P. 194.2(c), provides that a party may request, among other
things, "the legal theories and, in general, the factual bases of the
responding party's claims or defenses (the responding party need not
marshal all evidence that may be offered at trial)[.]" We do not view
appellants' response -- which moves from their general denial of
termination, to their defensive theory, to specific evidence pertaining
to that theory -- as permitting the trial court to restrict cross-
27
examination to the incident with Ford and Fletcher's refusal to
apologize to him.
The disclosure response encompassed more than the Ford incident, as
is evidenced by the express references in appellants' response to two
letters written by Sandra Erwin, the president and CEO of NFC, to
Fletcher's supervisor and to Fletcher herself. Also included in
appellants' response to the disclosure request was a list of persons
with knowledge of relevant facts. Appellants named Ford as one of
those persons and described his knowledge of relevant facts as
follows:
Mr. Ford is a customer of [NFC] who wrote a letter of
complaint concerning several items, including Ms. Fletcher rewriting
his policies and insulting the office staff at [NFC].
****
We conclude that appellants' response, when read in the context
of the content of the letters referenced in the response, as well as
appellants' description of the relevant facts known by Ford, was
clearly adequate to put Fletcher on notice of appellants' legal theory,
as well as the factual bases of that theory. To the extent that the trial
court limited cross-examination because of appellants' response to the
request for disclosure, the trial court erred. Appellants were not
required to marshal all their evidence in responding to this discovery
tool, whose purpose is to obtain early disclosure of basic information.
National Family Care Life, supra at 668-669.
The Disclosure Response, while referring to additional pleadings and discovery,
gave sufficient notice to Lella of Hardin’s defenses. Lella was not surprised by the
defenses, and in fact, was well prepared for them.
Hardin properly disclosed his novation and ratification defense in his
Response to Request for Disclosure in that:
28
a. Hardin’s Response to Request for Disclosure stated:
Defendant would refer Plaintiff to its most recent pleadings on file
herein, its responses to any and all discovery requests herein
including, but not limited to, requests for disclosure, requests for
production and inspection of documents and tangible things, requests
and motions for entry upon and examination of real property,
interrogatories to a party, requests for admission, oral or written
depositions; and motions for mental or physical examinations, all of
which are incorporated herein the same as if fully copied and set forth
at length. The Plaintiff’s claims are barred by limitation, waiver
and/or laches.
(C.R. 71)
b. Hardin’s Original Answer and Third Party Complaint stated:
If valid, the Promissory Note claimed by Plaintiff was a debt assumed
by Crawford pursuant to this provision. Crawford was to retire the
Lella debt and/or replace the Lella note with a new note obligating
only Crawford. It is not known whether Crawford did so.
(C.R. 18)
c. Lella attached Exhibits that evidenced the amended Notes, the intent of the
parties, and the acquiescence to the amended terms by the Lellas; (C.R. 50-
55)
d. Lella was not surprised by the novation/reformation argument. To the
contrary, Lella’s Motion for Summary Judgment anticipated the affirmative
defense of novation and modification. (C.R. 37 paragraph 19)
e. Joseph Lella offered his affidavit to pre-emptively rebut the novation
defense:
29
There were no notes between Americus Diamond and Elisabeth Lella
for Exhibit 6 to replace or invalidate. I never agreed to the
amendments or modifications to Exhibit 1 as proposed in Exhibits 5
and 6, and no new or additional consideration for such amendments or
modifications was ever tendered to me or accepted by me. I certainly
did not agree to remove Defendant Hardin for his personal liability for
Exhibit 1, nor for him to remove himself, nor to release him form any
such liability. No new or additional consideration for doing so was
ever tendered to me or accepted by me.
(C.R. 47)
f. Richard Crawford introduced the June 30, 2006 Promissory Note (Exhibit
A-6 with a cover letter that stated: “I hope you are (ya’ll) both doing well.
This new note is showing that I bought my partner Kenny out (yea!!). Also
I’ve raised your interest to 8%.” (C.R. 54)
Thus, it was an abuse of discretion to exclude any evidence from Hardin on the
affirmative defenses of novation or ratification and the summary judgment must be
reversed.
The court erred by granting the motion for summary judgment because the
affidavits of Joseph and Elisabeth Lella stated a mere legal conclusion and did not
provide any summary-judgment evidence. Brownlee v. Brownlee, 665 S.W.2d 111,
112 (Tex. 1984); Life Ins. Co. v. Gar-Dal, Inc., 570 S.W.2d 378, 381-82 (Tex.
1978); 801 Nolana, Inc. v. RTC Mortgage Trust, 944 S.W.2d 751, 754 (Tex.
App.—Corpus Christi 1997, writ denied). Specifically, Lella offered his
affidavit, (C.R. 47) that he did not agree to any change to the First Promissory
30
Note. The actions of the parties, indeed even his own summary judgment
evidence, contradicts that statement and should be disregarded as a legal
conclusion.
The court erred by granting the summary judgment based on the affidavits of
Joseph and Elisabeth Lella because the affidavit is not the best evidence of the
contents of the Promissory Notes. (C.R. 50-55). Mercer v. Daoran Corp., 676
S.W.2d 580, 583 (Tex. 1984). The Promissory Notes speak for themselves, and the
silence of the Lellas in failing to complain about the Second Promissory Note and
Third Promissory Note speak more loudly than an affidavit with legal conclusions.
Issue Number Six
6. The trial court erred in granting the Motion for Summary Judgment
because the Appellee Joseph Lella’s claims for unjust enrichment and
quantum meruit are barred by the existence of an express contract.
Joseph Lella sought recovery on the First Promissory Note, a valid contract
as well as unjust enrichment, “Pleading in the alternative, Plaintiff would show that
he is entitled to recovery of all principal and unpaid interest under the theory of
unjust enrichment.” (C.R. 26) In his summary judgment motion, Lella stated:
“Defendant sought the money from Plaintiff. Defendant received the money from
Plaintiff. Defendant used and benefitted from that money. Unjust enrichment has
been established conclusively.” (C.R. 36).
31
If a valid express contract covering the subject matter exists, there generally
can be no recovery on a contract implied in law. In Fortune Production Co. v.
Conoco, Inc. 52 S.W.3d 671, 683-685 (Tex. 2000), a cause of action for unjust
enrichment was not available to recover payments in addition to the contract price
agreed on by parties. The recovery on an express contract and on quantum meruit
are inconsistent with each other. Woodward v Southwest States, Inc. 384 S.W.2d
674, 675 (Tex. 1964). The evidence shows that Lella advanced money
documented by the First Promissory Note. There was no other advance of money
by Lella, especially one not evidenced in writing as the First Promissory Note.
Lella advanced the money in 1996 and received interest pursuant to the First
Promissory Note through 2003. Unjust enrichment claims are governed by the
two-year statute of limitations in Tex. Civ. Prac. Rem. Code §16.003. Elledge v.
Friberg-Cooper Water Supply Corp., 240 S.W.3d 869, 871 (Tex. 2007). As noted
in Issue Number One, Lella’s cause of action accrued no later than January 2004.
Thus, the limitations period expired in January 2006, more than 7 years before he
made this claim. As a result, the trial court’s summary judgment on unjust
enrichment must be reversed.
Issue Number Seven
7. The trial court erred in granting the Motion for Summary Judgment
because The Appellee Joseph Lella’s claim for Declaratory Judgment is
32
duplicative of the above issues and the Trial Court made no specific
declaration in the Final Judgment.
The declaration (of a declaratory judgment) may be either affirmative or
negative in form and effect, and the declaration has the force and effect of a final
judgment or decree. Tex. Civ. Prac. Rem. Code §37.003(b). The Lella trial court
made no declaratory finding in its Summary Judgment Order (C.R. 153), only
stating: “The Court, after considering the Motion, Defendant’s Response,
Plaintiffs’ Reply to Defendant’s Response and argument of counsel, find that such
Motion should be and hereby is GRANTED.”
In Aurora Petroleum, Inc. v. Newton, 287 S.W.3d 373, (Tex. App. Amarillo
2009) the trial court entered a take nothing judgment which did not mention the
declaratory judgment. The court found the omission of declaratory language
combined with the Take Nothing judgment to be a denial of the requested for a
declaratory judgment relief. The failure to make a declaration is a denial of Lella’s
requested relief. Without such an affirmative or negative declaration, there is no
declaratory judgment to appeal.
In his First Amended Petition (C.R. 26), Lella asked, alternative to his other
claims, for a Declaratory Judgment: “Plaintiff requests the Court to determine the
parties respective rights and liabilities under the terms of Exhibits [sic] 1.” Exhibit
33
1 was the First Promissory Note. Yet Lella exceeded that simple pleading in his
Motion for Summary Judgment:
Plaintiff seeks declarations that the terms of the Note as signed are
enforceable against Defendant; that the several unilateral attempts by
Defendant and Crawford to modify them were ineffectual and not
supported by consideration; and that Plaintiff is entitled to payment
from Defendant of the total amount of principal and unpaid interest.
(Plaintiff only seeks interest at the rate of 10% per annum from
January 1, 2012 until paid.) The Court has before it all that is needed
to make those declarations of rights and liabilities.
Lella Motion for Summary Judgment (C.R. 37) (emphasis added)
By asking the trial court to declare “that the several unilateral attempts by
Defendant and Crawford to modify them were ineffectual and not supported by
consideration,” Lella effectively asked the Court to declare the Second Promissory
Note and Third Promissory Note as invalid. This request is problematic for two
reasons:
a) In a declaratory judgment action, all persons who have or who
claim any interest that would be affected by the declaration sought
must be made parties. Tex. Civ. Prac. Rem. Code §37.006(a);
Lella’s wife Elizabeth Lella is the payee of the Second and Third
Promissory Notes so she had an interest in the proceeding that
would be affected by any declaration. Without Elizabeth as a
party the court had no jurisdiction;
34
b) The requested summary judgment relief, is an attempt to declare
that there was no novation of the First Promissory Note. The
burden of proof rests on the party who wants active relief from the
court, which is usually the party who commenced the action Pace
Corp. v. Jackson, 284 S.W.2d 340, 350 (1955); Lede v. Aycock,
630 S.W.2d 669, 673 (Tex. App.--Houston [14th Dist.] 1981, writ
ref'd n.r.e.).
c) The Declaratory Judgment is subject to the same limitations
period as the underlying facts, otherwise the cause of action would
be become the safe haven for all time barred claims.
Assuming the Court of Appeals determines that the trial court granted
declaratory relief, which is omitted from the trial court’s judgment, the requested
declaratory relief fails because the Court’s order is not clear; the relief requested
in the Motion for Summary Judgment exceeds the pleading relief requested in the
First Amended Petition; the Appellee failed to bring all affected parties before the
court, namely Elizabeth Lella; and Joseph Lella failed to meet its burden of proof
on his effort to declare any novation as invalid.
35
VII. CONCLUSION AND REQUEST FOR RELIEF
In 2003, if not earlier, Lella asked that interest on the First Promissory Note
be paid to his wife Elizabeth. Hardin and his partner Richard A. Crawford
accommodated this request by preparing, signing, and forwarding the Second
Promissory Note to Joseph and Elizabeth Lella and paying the required interest to
her. Joseph Lella did not object to this change until he made demand in 2013,
almost a decade later. Lella’s breach of contract claim on the First Promissory
Note is barred by the statute of limitations as he unreasonably delayed his demand
for payment.
The claim for relief under the theory of unjust enrichment is invalid because
the existence of the First Promissory Note, a valid existing contract, precludes
recovery on the theory of unjust enrichment and as with the claim for breach of
contract, is barred by limitations. Finally, the request for declaratory relief is not
supported by either pleadings or an order so that no relief should be granted.
For these reasons, Kenneth M. Hardin, Appellant, requests that this court
reverse and remand this matter to the trial court. Hardin also requests any other
relief to which he may be entitled.
36
Respectfully Submitted,
_/s/ Mark L. Aschermann______
Mark L. Aschermann
SBN 01368700
BARRON & NEWBURGER, PC
6300 West Loop South, Suite 341
Bellaire, Texas 77401
Telephone (713) 942-0808
Facsimile (713) 942-0449
maschermann@bn-lawyers.com
ATTORNEYS FOR APPELLANT
CERTIFICATE OF COMPLIANCE
I certify , according to the word count feature of the Word program used to
create this Brief, this Brief contains a total of 7,070 words in pages numbered 5
through 35.
_/s/ Mark L. Aschermann______
Mark L. Aschermann
CERTIFICATE OF SERVICE
This is to certify that on the 30th day of March, 2015, a true and correct
copy of the foregoing document was served on the parties listed below at the
address and in the manner indicated.
William M. Nichols _/s/ Mark L. Aschermann______
WILLIAM M. NICHOLS, P.C. Mark L. Aschermann
9601 McAllister Freeway, Suite 1250
San Antonio, Texas 78216-5150
Via Facsimile to (210) 340-8885
37
No. 03-14-00607-cv
IN THE COURT OF APPEALS FOR
THE THIRD DISTRICT OF TEXAS AT AUSTIN
KENNETH M. HARDIN,
Appellant
vs.
JOSEPH LELLA,
Appellee
APPELLANT’S APPENDIX
NECESSARY DOCUMENTS
1. FINAL SUMMARY JUDGMENT signed June 26, 2014. . . . . . . . . . . . . . . . . . . . 2
Record, p. 153
2. FINDINGS OF FACT and VERDICT (none). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. TEXAS RULES OF CIVIL PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Tex. R. CIV. P. 194.2
4. TEXAS CIVIL PRACTICE AND REMEDIES CODE. . . . . . . . . . . . . . . . . . . . . . 12
Tex. Civ. Prac. Rem. Code §16.003
Tex. Civ. Prac. Rem. Code §16.004
OPTIONAL CONTENTS
5. FIRST PROMISSORY NOTE dated September 5, 1996. . . . . . . . . . . . . . . . . . . . . 15
Record, p. 50
6. SECOND PROMISSORY NOTE dated July 1, 2003. . . . . . . . . . . . . . . . . . . . . . . . 17
Record, p. 53
7. THIRD PROMISSORY NOTE dated June 30, 2006. . . . . . . . . . . . . . . . . . . . . . . . 19
Record, p. 55
1
DOCUMENT 1
FINAL SUMMARY JUDGMENT
signed June 26, 2014
Record, p. 153
2
3
4
5
6
DOCUMENT 2
FINDINGS OF FACT and VERDICT
7
There were no findings of facts or verdicts made by the trial court in this matter.
8
DOCUMENT 3
TEXAS RULES OF CIVIL PROCEDURE
Tex. R. CIV. P. 194
9
Tex. R. Civ. P. 194 (2015)
Rule 194 Requests for Disclosure
194.1. Request. --A party may obtain disclosure from another party of the
information or material listed in Rule 194.2 by serving the other party - no later
than 30 days before the end of any applicable discovery period - the following
request: "Pursuant to Rule 194, you are requested to disclose, within 30 days of
service of this request, the information or material described in Rule [state
rule, e.g., 194.2, or 194.2(a), (c), and (f), or 194.2(d) - (g)]."
194.2. Content. --A party may request disclosure of any or all of the following:
(a) the correct names of the parties to the lawsuit;
(b) the name, address, and telephone number of any potential parties;
(c) the legal theories and, in general, the factual bases of the responding party's
claims or defenses (the responding party need not marshal all evidence that may be
offered at trial);
(d) the amount and any method of calculating economic damages;
(e) the name, address, and telephone number of persons having knowledge of
relevant facts, and a brief statement of each identified person's connection with the
case;
(f) for any testifying expert:
(1) the expert's name, address, and telephone number;
(2) the subject matter on which the expert will testify;
(3) the general substance of the expert's mental impressions and opinions and a
brief summary of the basis for them, or if the expert is not retained by, employed
by, or otherwise subject to the control of the responding party, documents
reflecting such information;
(4) if the expert is retained by, employed by, or otherwise subject to the control
of the responding party:
(A) all documents, tangible things, reports, models, or data compilations that
have been provided to, reviewed by, or prepared by or for the expert in anticipation
of the expert's testimony; and
(B) the expert's current resume and bibliography;
(g) any indemnity and insuring agreements described in Rule 192.3(f);
(h) any settlement agreements described in Rule 192.3(g);
(i) any witness statements described in Rule 192.3(h);
(j) in a suit alleging physical or mental injury and damages from the occurrence
that is the subject of the case, all medical records and bills that are reasonably
10
related to the injuries or damages asserted or, in lieu thereof, an authorization
permitting the disclosure of such medical records and bills;
(k) in a suit alleging physical or mental injury and damages from the occurrence
that is the subject of the case, all medical records and bills obtained by the
responding party by virtue of an authorization furnished by the requesting party;
(l) the name, address, and telephone number of any person who may be
designated as a responsible third party.
194.3. Response. --The responding party must serve a written response on the
requesting party within 30 days after service of the request, except that:
(a) a defendant served with a request before the defendant's answer is due need
not respond until 50 days after service of the request, and
(b) a response to a request under Rule 194.2(f) is governed by Rule 195.
194.4. Production. --Copies of documents and other tangible items ordinarily must
be served with the response. But if the responsive documents are voluminous, the
response must state a reasonable time and place for the production of documents.
The responding party must produce the documents at the time and place stated,
unless otherwise agreed by the parties or ordered by the court, and must provide
the requesting party a reasonable opportunity to inspect them.
194.5. No Objection or Assertion of Work Product. --No objection or assertion of
work product is permitted to a request under this rule.
194.6. Certain Responses Not Admissible. --A response to requests under Rule
194.2(c) and (d) that has been changed by an amended or supplemental response is
not admissible and may not be used for impeachment.
11
DOCUMENT 4
TEXAS CIVIL PRACTICE AND REMEDIES CODE
Tex. Civ. Prac. Rem. Code §16.003
Tex. Civ. Prac. Rem. Code §16.004
12
Texas Civil Practice and Remedies Code
Sec. 16.003. TWO-YEAR LIMITATIONS PERIOD.
(a) Except as provided by Sections 16.010, 16.0031, and 16.0045, a person must
bring suit for trespass for injury to the estate or to the property of another,
conversion of personal property, taking or detaining the personal property of
another, personal injury, forcible entry and detainer, and forcible detainer not later
than two years after the day the cause of action accrues.
(b) A person must bring suit not later than two years after the day the cause of
action accrues in an action for injury resulting in death. The cause of action
accrues on the death of the injured person.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985. Amended by Acts 1995,
74th Leg., ch. 739, Sec. 2, eff. June 15, 1995; Acts 1997, 75th Leg., ch. 26, Sec. 2,
eff. May 1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch. 97 (S.B. 15), Sec. 3, eff. September 1, 2005.
13
Texas Civil Practices and Remedies Code
Sec. 16.004. FOUR-YEAR LIMITATIONS PERIOD.
(a) A person must bring suit on the following actions not later than four years after
the day the cause of action accrues:
(1) specific performance of a contract for the conveyance of real property;
(2) penalty or damages on the penal clause of a bond to convey real
property;
(3) debt;
(4) fraud; or
(5) breach of fiduciary duty.
(b) A person must bring suit on the bond of an executor, administrator, or guardian
not later than four years after the day of the death, resignation, removal, or
discharge of the executor, administrator, or guardian.
(c) A person must bring suit against his partner for a settlement of partnership
accounts, and must bring an action on an open or stated account, or on a mutual
and current account concerning the trade of merchandise between merchants or
their agents or factors, not later than four years after the day that the cause of
action accrues. For purposes of this subsection, the cause of action accrues on the
day that the dealings in which the parties were interested together cease.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985. Amended by Acts 1999,
76th Leg., ch. 950, Sec. 1, eff. Aug. 30, 1999.
14
DOCUMENT 5
FIRST PROMISSORY NOTE
dated September 5, 1996
Record, p. 50
15
16
DOCUMENT 6
SECOND PROMISSORY NOTE
dated July 1, 2003
Record, p. 53
17
18
DOCUMENT 7
THIRD PROMISSORY NOTE
dated June 30, 2006
Record, p. 55
19
20