Melissa Rogers v. Nina Leeann Propst

Opinion issued March 17, 2015
In The
Court of Appeals
For The
First District of Texas
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NO. 01-14-00114-CV
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MELISSA ROGERS, Appellant
V.
NINA LEEANN PROPST, Appellee
On Appeal from the County Court at Law No. 3
Galveston County, Texas
Trial Court Case No. CV-0069811
MEMORANDUM OPINION
This is an appeal from a judgment in an eviction suit. Appellee and landlord
Nina Propst sued appellant and tenant Melissa Rogers for possession of leased
premises and past-due rent. Propst prevailed on a summary-judgment motion and
was awarded past-due rent in the amount of $6,000.
On appeal, Rogers argues that material fact issues regarding the lease
precluded summary judgment. She also challenges the amount of damages. We
agree that the trial court should not have awarded summary judgment, because
material fact issues were raised as to each element of an affirmative defense that
the lease was fraudulently induced. Accordingly, we reverse the trial court’s
judgment and remand for further proceedings.
Background
This case arises out of a divorce dispute over control of a rental property,
which also ensnared the tenant.
Melissa Rogers entered into a two-year agreement to lease a home from
Kenny Propst. Mr. Propst’s wife, Nina, later contacted Rogers and claimed that
she, not Kenny, owned the property and that a new lease would be required with
her as the landlord. By this time, the Propsts were in the middle of a divorce.
Wary of Nina’s claim, Rogers asked for evidence to support her position. In
response, Rogers received copies of a “Deed of Trust” and a “Warranty Deed with
Vendor’s Lien,” dated June 2, 2010, which purported to show the conveyance of
the property from its previous owners, the Tomlinsons, to Nina Propst, reserving a
vendor’s lien and a deed of trust to secure a promissory note payable to the sellers.
Rogers then signed a new lease for the property with Nina as landlord on January
1, 2013, and she paid the first month’s rent due under that lease. The new lease
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stated that it was “an amended agreement due to divorce, and previous agreement
no longer valid (sic).”
Later that month, Kenny Propst and the Tomlinsons met with Rogers at the
property. Kenny presented copies of two documents which purportedly
demonstrated the falsity of Nina’s claim that she was the owner of the property: a
“General Warranty Deed,” dated June 9, 2010, by which Nina conveyed a one-half
interest in the property to Kenny, and a “Mutual Release,” dated February 14,
2012, which required Nina to “sign over her half of deeded interest in [the
property]” to Kenny. The Tomlinsons informed Rogers that her rental payment that
month to Nina had not been used to pay them and that the promissory note
therefore was in default.
They agreed that, going forward, rental payments would be made directly to
the Tomlinsons, not to either of the Propsts, in satisfaction of the promissory note.
To memorialize their agreement, Kenny prepared a copy of part of their original
lease and wrote on it by hand that payments were to be made to the Tomlinsons
“[t]ill further notice.” He signed the agreement before a notary.
Days later, Rogers was contacted by Nina, who similarly instructed her that
the rent for February should be paid to the Tomlinsons. After Rogers requested this
directive in writing, Nina sent her an e-mail with her notarized signature, stating:
I Nina L Propst am requesting Melissa Rogers to send the entire
payment of 1500.00 to [N. Tomlinson] for the month of February.
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After that it will be deposited into [an] account set up at Bay Area
Credit Union. This is a legal binding contract.
The next day, Rogers responded, informing Nina that the Tomlinsons had
requested that she speak to their attorney. She replied that she had spoken to the
attorneys, and she demanded that Rogers immediately pay her the February rent.
Rogers declined, referencing her agreement with Kenny, so Nina demanded that
she immediately vacate the property.
On April 8, 2013, Nina filed a sworn complaint against Rogers for forcible
detainer in Galveston County justice court. That court ruled in favor of Nina,
awarding her possession of the property and $4,600.50 in past-due rent.
The case was appealed to the county court at law, and the final pleadings in
that court consisted of Nina’s original complaint in the justice court and Rogers’s
third amended answer. Among other things, Rogers asserted an affirmative defense
of fraudulent inducement, arguing that her lease agreement with Nina was induced
by Nina’s misrepresentation as to the ownership of the property. Nina filed a
traditional motion for summary judgment arguing that Rogers could not prevail on
her affirmative defense of fraudulent inducement, and requesting attorney’s fees, a
writ of possession, and $4,600.50 in past-due rent. The court granted Nina’s
motion for summary judgment and awarded her a judgment against Rogers for
$6,000 for past-due rent from the months of April through July 2013.
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Rogers appealed from the summary judgment granted by the county court at
law.
Analysis
On appeal, Rogers argues that the trial court erred when it granted Nina’s
motion for summary judgment, because there are material fact issues regarding the
existence of a valid lease contract between them. Nina did not file an appellee’s
brief with this court.
We review de novo the trial court’s ruling on a summary judgment motion.
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex. 2009). To prevail on a traditional motion for summary judgment, a movant
must establish that no genuine issues of material fact exist and that it is entitled to
judgment as a matter of law. TEX. R. CIV. P. 166a(c); Mann Frankfort, 289 S.W.3d
at 848. We review all the evidence in the light most favorable to the nonmovant,
crediting favorable evidence if reasonable jurors could do so, and disregarding
contrary evidence unless reasonable jurors could not. Mann Frankfort, 289 S.W.3d
at 848. We must indulge every reasonable inference and resolve any doubts in the
nonmovant’s favor. Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 215
(Tex. 2002).
If the movant meets its burden, then the burden shifts to the nonmovant to
raise a genuine issue of material fact precluding summary judgment. See Centeq
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Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). To defeat summary
judgment by raising an affirmative defense, the nonmovant must come forward
with sufficient evidence to raise a genuine issue of material fact on each element of
her affirmative defense. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984).
The mere pleading of an affirmative defense will not, without more, defeat a
motion for summary judgment. American Petrofina, Inc. v. Allen, 887 S.W.2d 829,
830 (Tex. 1994).
I. Affirmative defense of fraudulent inducement
A lease agreement is subject to avoidance on the ground of fraudulent
inducement. See Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341
S.W.3d 323, 331 (Tex. 2011). Rogers asserted the affirmative defense of
fraudulent inducement in her pleadings. See TEX. R. CIV. P. 94. Thus, we must
review the record to determine whether she produced sufficient summary-judgment
evidence to raise a fact issue on each element of the affirmative defense. Brownlee,
665 S.W.2d at 112; see also First Bank of Deer Park v. Harris Cnty., 804 S.W.2d
588, 594 (Tex. App.—Houston [1st Dist.] 1991, no writ).
To raise a fact issue on her affirmative defense of fraudulent inducement,
Rogers had to present competent summary-judgment evidence that: (1) Nina made
a material representation; (2) the representation was false; (3) Nina knew the
representation was false or made it recklessly as a positive assertion without
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knowledge of the truth; (4) Nina intended for Rogers to act upon the
representation; (5) Rogers relied on the representation; and (6) Rogers suffered
injury as a result of the representation. See Aquaplex, Inc. v. Rancho La Valencia,
Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam); DeSantis v. Wackenhunt
Corp., 793 S.W.2d 670, 688 (Tex. 1990) (applying the elements of fraud to the
affirmative defense of fraudulent inducement).
Rogers’s summary-judgment evidence consisted of her own affidavit and
attached exhibits. In the affidavit, Rogers averred that Nina “approached” her with
the claim that she was the owner of the property, stating that “a new lease would be
required with her.” Rogers further averred that in response to her request for
documentation, Nina provided documents purporting to demonstrate her ownership
as a result of a 2010 conveyance. The exhibits attached to Rogers’s affidavit
included documents that contradicted Nina’s claim of ownership and supported
Kenny’s superior claim, including a general warranty deed transferring Nina’s
interest in the property to Kenny, as well as a release, signed by Nina, which
reflected the abandonment of her legal rights with respect to a dispute about the
property.
We conclude that this evidence, viewed in the light most favorable to the
nonmovant, is sufficient to demonstrate genuine issues of material fact as to
Rogers’s affirmative defense of fraudulent inducement. The evidence suggested
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that Nina’s claim to own the leasehold was false and that it induced Rogers to enter
into the new lease agreement. Since Nina signed the documents transferring her
interest in the property to Kenny, those documents were also evidence that when
Nina later represented herself to Rogers as the true owner of the property, she must
have known that her representation was false. This evidence supports an inference
that Nina intended for Rogers to act on her false representations by signing a new
lease agreement, and Rogers’s affidavit indicates that she did rely on those
representations in signing the new lease. Finally, to the extent that this evidence is
believed by the relevant factfinder and Nina is determined to have fraudulently
induced Rogers to enter into the lease agreement, the injury to Rogers is self-
evident. Rogers was evicted from the premises based on Nina’s claims under the
lease and is at risk of being held responsible for damages. We hold this evidence
was sufficient to raise a material fact issue on each element of the affirmative
defense of fraudulent inducement. See Aquaplex, 297 S.W.3d at 744; Brownlee,
665 S.W.2d at 112.
II. Other arguments raised in the trial court
Although she filed no appellee’s brief in this court, in her summary-
judgment motion Nina made two further arguments as to why Rogers could not
prevail on an affirmative defense of fraudulent defense. She claimed the parol-
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evidence rule barred the introduction of extrinsic evidence to prove fraud. She also
claimed that Rogers ratified the second lease.
A. Parol-evidence rule
Nina argued that because the lease agreement was fully integrated, Rogers
could not offer extrinsic evidence necessary to raise a fact issue on each element of
her affirmative defense. But for more than fifty years, it has been the rule that a
written contract—even one containing a merger clause—can nevertheless be
avoided for antecedent fraud or fraud in its inducement and that the parol-evidence
rule does not stand in the way of proof of such fraud. Italian Cowboy, 341 S.W.3d
at 331. Because Rogers offered extrinsic summary-judgment evidence seeking to
prove fraudulent inducement, the parol-evidence rule does not bar its
consideration. See id.
B. Ratification of the lease agreement
Nina also argued that even if fraud occurred, Rogers nevertheless ratified the
lease agreement by continuing to live at the property for several months after
discovering the alleged fraud. By continuing to accept the benefits of the lease
agreement, Nina argued, Rogers ratified the lease agreement.
A contract procured by fraud is voidable, not void. PSB, Inc. v. LIT Indus.
Tex. Ltd. P’ship, 216 S.W.3d 429, 433 (Tex. App.—Dallas 2006, no pet.). “If a
party fraudulently induced to enter into a contract continues to receive benefits
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under the contract after learning of the fraud, or otherwise engages in conduct
recognizing the agreement as subsisting and binding, then the party has ratified the
agreement and waived any right to assert the fraud as a basis to avoid the
agreement.” Id.
Courts have recognized the “difficulty in stating a general rule” about which
acts will or will not ratify an agreement and waive a claim of fraud. See Fortune
Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 678 (Tex. 2000). In the past, this court
has described the elements of ratification as: (1) approval by act, word, or conduct;
(2) with full knowledge of the facts of the earlier act; and (3) with the intention of
giving validity to the earlier act. Motel Enters., Inc. v. Nobani, 784 S.W.2d 545,
547 (Tex. App.—Houston [1st Dist.] 1990, no pet.). If the evidence of ratification
is controverted, then the question is for the trier of fact. Spangler v. Jones, 797
S.W.2d 125, 131 (Tex. App.—Dallas 1990, writ denied). Because ratification is an
affirmative defense, the party raising the issue bears the burden to offer proof on
each element of the defense. Nobani, 784 S.W.2d at 547.
A nonmovant who asserts ratification as an affirmative defense to a claim of
fraud in a summary-judgment proceeding is only required to offer some evidence
raising a genuine issue of material fact on each element of the affirmative defense.
Id. But here, Nina was the summary-judgment movant, asserting ratification as an
affirmative defense to Rogers’s affirmative defense of fraud. Thus, in this context,
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in order to obtain summary judgment Nina was required to conclusively establish
that there was no genuine issue as to any material fact concerning Rogers’s
ratification of the lease agreement. See TEX. R. CIV. P. 166a(c). Because she was
the summary-judgment movant, evidence favoring Nina’s defense of ratification
cannot be considered unless it is uncontroverted. See Spangler, 797 S.W.2d at 131.
Nina asserted that Rogers’s affidavit established that she learned of the
alleged fraud in January 2013, yet she continued to accept the benefits of the
agreement by living in the property through July. However, Nina has not
conclusively proven that Rogers continued living at the property with the intention
of validating the second lease agreement. See Nobani, 784 S.W.2d at 547. Rogers’s
summary-judgment evidence establishes that she had signed a lease agreement for
the same property with Kenny, and Nina does not offer evidence to establish that
by remaining at the property, Rogers intended to ratify the January lease agreement
as opposed to simply carrying out the original lease agreement with Kenny.
Because Nina has not conclusively demonstrated that there is no genuine
issue of material fact as to her ratification defense, the trial court could not have
granted summary judgment in her favor based on that defense. See TEX. R. CIV.
P. 166a(c); Nobani, 784 S.W.2d at 547.
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Conclusion
We reverse the trial court’s judgment and remand the case for further
proceedings consistent with this opinion.
Michael Massengale
Justice
Panel consists of Justices Keyes, Bland, and Massengale.
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