Eagle Insurance Company v. Gerald F. D'Angelo and Apple Dodge, Inc.

eagle insurance v. d'angelo IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN









NO. 3-92-048-CV





EAGLE INSURANCE COMPANY,

APPELLANT

vs.





GERALD F. D'ANGELO AND APPLE DODGE, INC.,

APPELLEES

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT

NO. 483,462, HONORABLE F. SCOTT MCCOWN, JUDGE PRESIDING

This appeal arises from claims against a Motor Vehicle Dealer's Surety Bond issued by appellant Eagle Insurance Company ("Eagle") to its principal, John Darrien Hays, doing business as Hays Auto Sales. The parties in this appeal are Eagle, the defendant below, and two bond claimants, Gerald F. D'Angelo, plaintiff below, and Apple Dodge, Inc. ("Apple"), intervenor below. ⁽¹⁾ Eagle brings five points of error in its appeal of a judgment rendered in favor of D'Angelo and Apple, while Apple brings one cross-point. We will affirm the trial court's judgment.

BACKGROUND

Texas law requires that motor vehicle dealers purchase a properly executed surety bond in the amount of $25,000. The bond must be conditioned on (1) the dealer's payment of all valid bank drafts for the purchase of motor vehicles and (2) the dealer's transfer of good title to each motor vehicle it offers for sale. Tex. Rev. Civ. Stat. Ann. art. 6686(a)(1-A)(vii) (West Supp. 1993). Eagle issued a bond to Hays containing these required conditions. A person may recover against a Motor Vehicle Dealer's Surety Bond if he obtains a judgment against the dealer assessing damages for an act or omission on which the bond is conditioned. Id. D'Angelo obtained a default judgment against Hays for damages totalling $36,376.93, while Apple obtained a default judgment against Hays in the amount of $7,050.00. D'Angelo's judgment reflected that Hays was indebted to D'Angelo for (1) the failure to pay seven valid bank drafts drawn by Hays for the purchase of motor vehicles and (2) the failure to transfer good title to motor vehicles he purported to sell. Although Pavilion Lincoln Mercury originally brought this present action, Eagle, Apple, and D'Angelo were the only parties remaining at trial. After trial to the bench, the trial court rendered judgment in favor of the bond claimants. It awarded D'Angelo $16,546.93 for his claim on the bond, $1,411.70 in pre-judgment interest, and $6,300 in attorney's fees, for a total of $24,258.63. It awarded Apple $5,000 for its claim on the bond, $290.13 in pre-judgment interest, and $3,450 in attorney's fees, for a total of $8,740.13.

VALIDITY OF D'ANGELO'S CLAIM

The parties dispute the business relationship between Hays and D'Angelo. Eagle challenges D'Angelo's ability to recover on Hays's bond on the basis that D'Angelo was actually a "floor-plan lender" and not a valid claimant. Even if this characterization were true, Eagle cites no authority that would prohibit recovery by one in the role of such a lender, so long as he meets the conditions of the surety bond.

D'Angelo testified at trial about the parties' transactions. The trial court expressly found in its second finding of fact that D'Angelo's claims on the bond were for Hays's dishonored bank drafts for the purchase of motor vehicles and for Hays's failure to transfer good title to motor vehicles he purported to sell to D'Angelo. The court further found that D'Angelo obtained a default judgment against Hays. This default judgment, as noted above, contained similar descriptions of the nature of D'Angelo's claims.

Eagle's first point of error states:

Regardless of how Appellees characterize the Principal's non-payment of drafts, neither Article 6686, nor bonds pursuant thereto, impose liability on Appellant-Surety for non-payment of a floor planning lender given drafts for security, because there was no ``purchase' or ``sale' within the meaning of the bonding statute; default on such extensions of credit leave [sic] such party in the position of a guarantor of a mortgagee.

This general complaint is confusing and multifarious, as it embraces more than one ground of error. We may disregard a multifarious assignment of error. Pooser v. Lovett Square Townhomes, 702 S.W.2d 226, 228 (Tex. App.--Houston [1st Dist.] 1985, writ ref'd n.r.e.); see also Slentz v. American Airlines, Inc., 817 S.W.2d 366, 370 (Tex. App.--Austin 1991, writ denied). More importantly, this point fails to attack the trial court's findings of fact; Eagle's record reference under this point merely directs us to its motion for new trial. The relevant question is not how appellees characterize the transaction but what facts were found by the trial court. In effect, Eagle asks this Court to hold that no evidence supports these findings and contrary facts were established as a matter of law. Findings of fact unchallenged by point of error, however, are conclusive and binding on appeal. Whitten v. Alling & Cory Co., 526 S.W.2d 245, 248 (Tex. Civ. App.--Tyler 1975, writ ref'd); Ervin v. Ervin, 624 S.W.2d 264, 266 (Tex. App.--Eastland 1981, writ dism'd). The trial court found that Hays had committed acts or omissions upon which the surety bond was conditioned: the failure to pay bank drafts drawn for the purchase of motor vehicles and the failure to transfer good title to motor vehicles Hays offered for sale. The trial court also found that D'Angelo had obtained a default judgment for resulting damages. Under article 6686(a)(1-A)(vii), these facts are sufficient to support the judgment in favor of D'Angelo. We overrule Eagle's first point of error.

Eagle's third point of error asserts the trial court's finding of a conditional sale was against the great weight of the evidence. Eagle's record reference again directs us to its motion for new trial as well as the fourth conclusion of law. We can locate no finding of fact in the record that mentions the term "conditional sale." In its discussion on this point, Eagle suggests that is the construction of the trial court's finding that D'Angelo's claims were for Hays's failure to pay drafts drawn for the purchase of motor vehicles and the failure to transfer good title to vehicles Hays attempted to sell D'Angelo. We fail to read the court's finding as stating that the transactions between Hays and D'Angelo were conditional sales. To the extent this point could be considered a challenge to the trial court's second finding of fact, we hold the record contains factually sufficient evidence in support of the finding.

Eagle's third point also asserts that the trial court's fourth conclusion of law that a mortgage is a sale within the meaning of the bonding statute is against the great weight of the evidence. Conclusions of law cannot be challenged on factual sufficiency grounds. First Nat'l Bank v. Kinabrew, 589 S.W.2d 137, 146 (Tex. Civ. App.--Tyler 1979, writ ref'd n.r.e.). Furthermore, incorrect conclusions of law will not require reversal if the trial court's findings of fact will support a correct legal theory. Benavides v. Warren, 674 S.W.2d 353, 362 (Tex. App.--San Antonio 1984, writ ref'd n.r.e.). The trial court made no finding that the transaction between D'Angelo and Hays was a mortgage. Its conclusion of law that a mortgage is a sale does not affect the validity of the judgment, which is supported by the trial court's finding that D'Angelo obtained a default judgment for damages caused by acts or omissions by Hays that were conditions under the terms of the bond. We overrule the third point of error.

In its fourth point of error, Eagle complains that the trial court erred in permitting D'Angelo to introduce evidence contradicting what it characterizes as his prior judicial admissions. Eagle asserts that D'Angelo's testimony about the nature of his transactions with Hays contradicts his pleadings in his default judgment action against Hays, where he described the transactions as a floor plan arrangement.

Assertions of fact in the live pleadings of a party are regarded as formal judicial admissions, and any fact admitted is conclusively established. Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767 (Tex. 1983). A party may not introduce evidence to contradict its judicial admissions. Davis v. Quality Pest Control, 641 S.W.2d 324, 329 (Tex. App.--Houston [14th Dist.] 1982, writ ref'd n.r.e.); Canales v. Bank of California, 316 S.W.2d 314, 318 (Tex. Civ. App.--Eastland 1958, writ ref'd n.r.e.). However, the party relying on its opponent's pleadings as judicial admissions of fact must protect its record by objecting to the introduction of evidence contrary to that admission of fact. Musick, 650 S.W.2d at 769. Eagle did not object when D'Angelo testified about the nature of his transactions with Hays. Eagle has waived any error on this matter. Tex. R. Civ. Evid. 103(a)(1).

Furthermore, Eagle cites no authority for the proposition that D'Angelo's pleadings in a prior action are judicial admissions in the present cause. The bonding statute only mentions the judgment the bond claimant must obtain against the dealer, not the pleadings in that proceeding. The description in the default judgment against Hays of the transactions between D'Angelo and Hays is consistent with D'Angelo's testimony in this cause. We overrule Eagle's fourth point of error.

ATTORNEY'S FEES AND PRE-JUDGMENT INTEREST

In point of error two, Eagle complains that the trial court erred in awarding D'Angelo attorney's fees and pre-judgment interest. Further, although Eagle does not dispute the validity of Apple's claim or the propriety of the trial court's award of attorney's fees and pre-judgment interest to Apple, it asserts that the total recovery by D'Angelo and Apple must be limited to the $25,000 face value of the bond.

Eagle does not dispute its liability for attorney's fees and pre-judgment interest on valid claims against the surety bond. However, Eagle notes that the trial court deducted $8,200 from the amount D'Angelo sought at trial as a credit for motor vehicles involved in his transactions with Hays that he had repossessed and sold. Eagle contends the trial court erred in awarding D'Angelo attorney's fees since he did not recover the entire amount he sought at trial. Eagle also contends that the trial court erred in awarding pre-judgment interest from April 3, 1990, the date that D'Angelo asserted his claim on the bond, until the date of judgment. Eagle argues that because the court deducted $8,200 at trial, no "ascertainable sum of money" existed on April 3, 1990.

Eagle does not attack the trial court's findings of fact awarding D'Angelo attorney's fees and pre-judgment interest. Further, Eagle does not attack the trial court's conclusion of law that D'Angelo was entitled to attorney's fees as the successful party in a declaratory judgment action ⁽²⁾ and as the recovering party on a contract claim. ⁽³⁾

Moreover, we hold that Eagle has failed to show why the trial court's award of attorney's fees to D'Angelo as the successful party, even though he did not recover all the damages he sought, was a clear abuse of discretion, the appropriate standard in a declaratory judgment action. See Oake v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985); Edwin M. Jones Oil Co. v. Pend Oreille Oil & Gas Co., 794 S.W.2d 442, 448 (Tex. App.--Corpus Christi 1990, writ denied). Judgments have been upheld where the trial court failed to award fees to the prevailing party and where the trial court awarded fees to the losing party. Edwin M. Jones Oil Co., 794 S.W.2d at 448-49.

The Texas Supreme Court has held that pre-judgment interest is recoverable against a surety of a statutory bond as a matter of right where an ascertainable sum of money is determined to have been due and payable at a date certain prior to judgment. Howze v. Surety Corp. of Am., 584 S.W.2d 263, 268 (Tex. 1979). D'Angelo's claim against the bond on April 3, 1990, was for a specific, ascertainable sum. The trial court correctly awarded pre-judgment interest only on the damages it awarded D'Angelo after giving Eagle credit for the value of the cars D'Angelo had sold between April 3, 1990, and the date of judgment.

Eagle also asserts that the trial court erred when it awarded D'Angelo $24,258.63 and Apple $8,740,13. Eagle claims that because its liability as a surety is limited to $25,000 under the terms of the bond, Apple is not entitled to recover more than $741.37. Eagle admits that if D'Angelo's claim were not valid, Apple should recover its entire claim plus attorney's fees and interest.

The trial court made findings of fact that D'Angelo could recover $16,546.93 and Apple could recover $5,000 against the bond. It also found that the total sum debited against the bond was $21,546.93 and that all pre- and post-judgment interest and attorney's fees would not be debited against the bond. Eagle does not attack these findings of fact. Nor does Eagle attack the trial court's conclusion of law that Apple could recover attorney's fees as the recovering party in a contract claim. ⁽⁴⁾

The supreme court, on motion for rehearing, reformed its judgment to award a claimant on a statutory bond pre-judgment interest, despite the fact that the total award then exceeded the face amount of the bond. Howze, 584 S.W.2d at 268; see also Collins v. Tarrant County, 242 S.W. 1105, 1105-06 (Tex. Civ. App.--Fort Worth 1922, no writ) (interest recoverable even though total recovery exceeded face value of bond). Although the total damages awarded against Eagle in this case exceed the face amount of the bond, the trial court carefully segregated the damages awardable against the bond and the attorney's fees and interest recoverable under statute. We overrule Eagle's second point of error.

Eagle's fifth point of error challenges the trial court's failure to award it attorney's fees incurred in bringing its declaratory judgment action. The award of attorney's fees in a declaratory judgment action is discretionary and will not be reversed on appeal absent an abuse of discretion. Oake, 692 S.W.2d at 455; Jennings v. Minco Technology Labs, Inc., 765 S.W.2d 497, 503 (Tex. App.--Austin 1989, writ denied). Eagle has not shown how the trial court abused its discretion by denying it attorney's fees, especially considering Eagle did not prevail at trial. See Edwin M. Jones Oil Co., 794 S.W.2d at 448-49. We overrule Eagle's fifth point.

APPLE'S CROSS-POINT

Apple raises one cross-point on appeal. It asks this Court to award it additional damages of ten percent as a sanction against Eagle for bringing a frivolous appeal. We decline to do so. Although we find no merit in Eagle's argument, we cannot hold that its appeal was taken for delay and without sufficient cause. See Tex. R. App. P. 84; see also Standard Container Corp. v. Dragon Realty, 683 S.W.2d 45, 48 (Tex. App.--Dallas 1984, writ ref'd n.r.e.). We overrule Apple's cross-point.

Accordingly, we affirm the judgment of the trial court.

Marilyn Aboussie, Justice

[Before Justices Powers, Aboussie and B. A. Smith]

Affirmed

Filed: May 26, 1993

[Do Not Publish]

1.   Pavilion Lincoln Mercury, a bond claimant, originally brought suit against Eagle, which later brought an action for declaratory relief against the claimants on the bond, including D'Angelo as a third-party defendant. Pavilion and another bond claimant settled with Eagle before trial. The trial court's judgment designates the remaining parties as described in the text above.

2.   See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1986).

3.   See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (West 1986).

4.   See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (West 1986).