Russell Scott Jones and Westex Notrees, LP v. R.O. Pomroy Equipment Rental, Inc. D/B/A Roper, Inc.

Opinion filed June 30, 2014
In The
Eleventh Court of Appeals
__________
No. 11-12-00167-CV
__________
RUSSELL SCOTT JONES AND WESTEX NOTREES, LP,
Appellants/Cross-Appellees
V.
R.O. POMROY EQUIPMENT RENTAL, INC.
D/B/A ROPER, INC., Appellee/Cross-Appellant
On Appeal from the County Court at Law
Ector County, Texas
Trial Court Cause No. CC-22,135
OPINION
Russell Scott Jones and Westex Notrees, LP appeal the judgment of the trial
court that awarded $9,994.53 plus prejudgment interest and 5% postjudgment
interest as well as attorney’s fees of $10,000 to R.O. Pomroy Equipment Rental,
Inc. d/b/a Roper, Inc. (Roper) based upon their breach of rental agreements with
Roper.
Jones and Westex present five issues on appeal, while Roper presents one
issue in its cross-appeal. Jones and Westex challenge the trial court’s ruling that
the two equipment rental agreements 1 were ambiguous and that Daniel Florez was
authorized to sign one of the equipment rental agreements on behalf of Westex.
They also challenge the trial court’s ruling that there was one large rental
agreement, that Roper never demanded 18% interest per annum on unpaid
invoices, and that Jones and Westex failed to prove their usury claim. Roper cross-
appealed and complains that the trial court’s award of prejudgment interest of
$364.73 and the award of 5% postjudgment interest should have been 18% interest
for both prejudgment and postjudgment interest. We modify and affirm, but
remand for the calculation of prejudgment interest.
I. Evidence at Trial
Jennifer Pomroy was an employee of, and secretary for, Roper in April
2010. Roper, an equipment rental business, rented an air compressor and one
loader to Westex. Pomroy testified that Westex’s representatives, Russell Scott
Jones and Daniel Florez, signed two equipment rental agreements (the
Agreements). Jones is the general partner and owner of Westex, while Florez is an
equipment operator for Westex.
Jones testified that his employees could sign equipment receipts or delivery
tickets at the jobsite. Jones testified that Florez was authorized to sign documents
for equipment delivery at the jobsite, just as Jones himself had done, but that
company employees could not sign equipment rental contracts on Westex’s behalf.
Jones testified that Westex rented an air compressor from Roper. Jones also
acknowledged that Westex had rented a loader and had Roper pick up an excavator
for repair.
1
The parties refer to the agreements as equipment receipts or delivery tickets.
2
Pomroy testified that Roper’s Exhibits One and Four were copies of the
Agreements; Jones signed Exhibit One, the air compressor rental, while Florez
signed Exhibit Four, the loader rental. Pomroy identified Roper’s Exhibits Two
and Three as invoices for the rental of the air compressor. Roper’s Exhibits Five
and Six were invoices for the loader delivery and pickup, while Exhibit Seven was
a rental invoice for the loader for the second month. Plaintiff’s Exhibit Eight was a
credit memo. Pomroy also said that Roper picked up an excavator, on behalf of
Westex, and brought it back for repair.
Pomroy testified that a customer does not have to pay in advance to rent
equipment but that invoices are sent requesting payment, as was done with Westex.
Pomroy said the Agreements allowed for interest to be charged on unpaid
accounts, and Roper’s Exhibits One and Four provided that all past-due balances
were subject to the maximum amount of interest allowed by law.
Jones complained that, in Invoice 20554, Roper had tried to charge him for
an excavator that had been picked up on behalf of another customer. Jones also
argued that he had never agreed to pay 18% interest per annum on his unpaid
accounts. Pomroy admitted that Invoice 20554 was for another customer, and
prior to trial, she credited the entire amount of that invoice to Westex’s account.
She also indicated that Invoice 20554 provided that finance charges of “one and a
half percent” would be applied to unpaid accounts, but Invoice 20554 was not
Westex’s invoice.
Pomroy testified that Roper’s Exhibit Nine reflected that Westex owed
Roper $9,994.53 in unpaid rental invoices and that Roper sought payment for
$9,994.53. Jones said that he had paid $15,000 to Roper, but he admitted that he
owed $9,994.53 to Roper for unpaid invoices. Westex also admitted, in a written
admission response, that payment for $9,994.53 was more than thirty days overdue
prior to the date of the suit. Although Jones did not contest that he owed
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$9,994.53, he claimed that he never agreed to 18% interest being charged for
unpaid balances.
Jones claimed that the interest demanded was $7,879.37, but he thought he
only owed $2,415.43. Jones said he thought he was being overcharged $5,463.94
for interest. Jones admitted the totals on his Exhibit 11 were incorrect because of
the credits and other changes that were made to the invoices. Jones also admitted
that the demand letter only made a demand for principal amounts due and owing to
Roper by Westex.
In the final judgment, signed on March 26, 2012, the trial court entered
judgment awarding Roper $9,994.53 as damages from Jones and Westex, jointly
and severally. The trial court also awarded prejudgment interest of $364.73; 5%
postjudgment interest from the date of the judgment; $10,000 in attorney’s fees;
and taxable costs of court, including costs incurred in satisfying the judgment.
II. Findings of Fact and Conclusions of Law
On April 18, 2012, Westex prepared proposed findings of fact and
conclusions of law, which the trial court signed on May 1, 2012. Later, Roper filed
a request for amended and additional findings of fact and conclusions of law, to
which Westex objected. The trial court entered amended findings of fact and
conclusions of law on June 22, 2012, in which the trial court kept some of the
May 1, 2012 findings of fact but deleted others. The trial court’s amended findings
of fact also added thirty-eight findings of fact. The trial court entered one
conclusion of law on May 1, 2012, and entered additional conclusions of law on
June 22, 2012.
III. Issues Presented
Jones and Westex present five issues on appeal. First, the trial court erred in
finding that the Agreements were ambiguous. Second, the trial court erred in
finding that Florez was authorized to sign an Agreement on behalf of Westex.
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Third, the trial court erred in finding that Roper never charged or demanded an
18% per annum charge on Westex’s account. Fourth, the trial court erred when it
held that the parties’ agreement for an air compressor and loader rentals was one
large rental agreement. Fifth, the trial court erred when it denied Westex’s usury
claim. In its cross-appeal, Roper presents one issue challenging the prejudgment
and postjudgment interest rates and urging that both should have been 18%.
IV. Standard of Review
On appeal, a trial court’s findings of fact have the same force and effect as a
jury’s verdict. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex.
1991). As the factfinder, the trial court is the sole judge of the credibility of the
witnesses and the weight to be given their testimony. Nat’l Freight, Inc. v..
Snyder, 191 S.W.3d 416, 422 (Tex. App.—Eastland 2006, no pet.). A trial court’s
findings of fact are reviewable for legal and factual sufficiency. Anderson, 806
S.W.2d at 794. Sufficiency challenges to a trial court’s findings of fact are
reviewed under the same standards used to review a jury’s findings. Catalina v.
Blasdel, 881 S.W.2d 295, 297 (Tex. 1994); Kennon v. McGraw, 281 S.W.3d 648,
650 (Tex. App.—Eastland 2009, no pet.) (citing Girdner v. Rose, 213 S.W.3d 438,
445 (Tex. App.—Eastland 2006, no pet.)).
To analyze a legal sufficiency challenge, we must determine whether the
evidence would enable reasonable and fair-minded people to reach the verdict
under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We
review the evidence in the light most favorable to the challenged finding. Id. at
821–22. We give credit to favorable evidence if a reasonable factfinder could do
so, and we disregard contrary evidence unless a reasonable factfinder could not do
so. Id. at 827.
We may sustain a legal sufficiency challenge only when (1) the record
discloses a complete absence of a vital fact, (2) the court is barred by rules of law
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or evidence from giving weight to the only evidence offered to prove a vital fact,
(3) evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the
evidence conclusively establishes the opposite of a vital fact. Id. at 810 (citing
Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38
TEX. L. REV. 361, 362–63 (1960)).
To analyze a factual sufficiency challenge, we must consider and weigh all
the evidence and may set aside a verdict only if the evidence is so weak or the
finding is so against the great weight and preponderance of the evidence that it is
clearly wrong and unjust. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.
2001). We review a trial court’s conclusions of law, including those mislabeled as
findings of fact, de novo. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789,
794 (Tex. 2002).
V. Analysis
A. Authority
We first address Jones and Westex’s second issue that the trial court erred in
finding that Florez was authorized to enter into an Agreement for Westex. An
agent’s authority to act on behalf of a principal depends on some communication
by the principal either to the agent (actual or express authority) or to the third party
(apparent or implied authority). Protocol Techs., Inc. v. J.B. Grand Canyon Dairy,
L.P., 406 S.W.3d 609, 616 (Tex. App.—Eastland 2013, no pet.) (citing Gaines v.
Kelly, 235 S.W.3d 179, 183 (Tex. 2007)). There is no presumption of an agency
relationship; rather, the party asserting agency has the burden of proving the
relationship. IRA Res., Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007). “An
agent cannot bind a principal absent either actual or apparent authority.”
Sanders v. Total Heat & Air, Inc., 248 S.W.3d 907, 913 (Tex. App.—Dallas 2008,
no pet.).
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Actual authority includes both express and implied authority and generally
represents the authority a principal intentionally confers upon an agent;
intentionally allows the agent to believe he possesses; or by want of due care,
allows the agent to believe he possesses. R & R Marine, Inc. v. Max Access, Inc.,
377 S.W.3d 780, 787 (Tex. App.—Beaumont 2012, no pet.) (citing 2616 S. Loop
L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349, 356 (Tex. App.—
Houston [14th Dist.] 2006, no pet.)). Actual authority is based on the principal’s
written or spoken words or conduct that is communicated to the purported agent.
R & R Marine, 377 S.W.3d at 787 (citing Walker Ins. Servs. v. Bottle Rock Power
Corp., 108 S.W.3d 538, 549–50 (Tex. App.—Houston [14th Dist.] 2003, no pet.)).
Jones had accounts with Roper. Jones testified that Westex was not buying
the air compressor, but had rented it from Roper; he also agreed that he signed the
Agreement for the compressor rental. Jones also said that he did not have a
problem with his employees signing equipment receipts or delivery tickets for him
at the jobsite. Jones admitted that he had signed Roper’s Exhibit One and would
not have a problem with Florez signing a document that Jones would sign, like
Roper’s Exhibit One, which Jones signed, and Roper’s Exhibit Four, which Florez
signed. Consequently, Jones had conferred on Florez actual authority to sign an
equipment receipt for delivery of equipment to a jobsite, which commenced a
rental of the delivered equipment under the terms outlined in the Agreement. The
trial court did not err when it found that Florez was an agent authorized by Jones
and Westex to sign the Agreement that acknowledged delivery of the loader to
Westex’s jobsite. We overrule Jones and Westex’s second issue.
B. Ambiguity
We next turn to Jones and Westex’s first and fourth issues that the trial court
erred in finding that the Agreements were ambiguous because the documents failed
to specify the numerical interest rate Roper would charge and when that charge
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would commence on past-due accounts and in finding that the Agreements were
one large agreement. Roper argues that the proper interest rate for collections on
past-due accounts was 18% interest, but Jones and Westex argue they never agreed
to that term.
The primary concern of a court in construing a contract is to ascertain and
give effect to the parties’ intentions as expressed in the writing itself. El Paso
Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 805 (Tex. 2012); Nat’l
Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520
(Tex. 1995). We begin by analyzing the contract’s express language. El Paso
Field Servs., 389 S.W.3d at 805–06. To discern the parties’ intent, we must
examine and consider the entire writing in an effort to harmonize and give effect to
all of the provisions of the contract so that none of the provisions will be rendered
meaningless. Id. at 805. We are to look at the contract as a whole in light of the
circumstances present when the contract was entered. Nat’l Union Fire Ins., 907
S.W.2d at 520. No one phrase, sentence, or section of a contract should be isolated
from its setting and considered apart from the other provisions. Forbau v. Aetna
Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994).
A contract is ambiguous when its meaning is uncertain and doubtful or when
it is reasonably susceptible to more than one meaning. Kelley-Coppedge, Inc. v.
Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998); Heritage Res., Inc. v.
NationsBank, 939 S.W.2d 118, 121 (Tex. 1996); Coker v. Coker, 650 S.W.2d 391,
393–94 (Tex. 1983). Whether a contract is ambiguous is a question of law for the
court to decide by looking at the contract as a whole in the light of the
circumstances present when the contract was entered. Nat’l Union Fire Ins., 907
S.W.2d at 520. Only when a contract is determined to be ambiguous may a court
consider the parties’ interpretation and admit extraneous evidence to determine the
true meaning of the instrument. Id. When the meaning of the contract is plain and
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unambiguous, a party’s construction is immaterial. Sun Oil Co. (Del.) v. Madeley,
626 S.W.2d 726, 732 (Tex. 1981).
Jones and Westex argue that there are four sets of documents in dispute, but
the record reflected only two sets: the Agreements and invoices. The invoices
were generated from information contained in the Agreements. The Agreements
reflected shipments of rental equipment—an air compressor2 and a loader3—to a
specific jobsite, the applicable rental rate, the start date, the terms of the
Agreement on the front and back of the document, and a signature of acceptance
by Westex’s representative. Once Westex’s representative received the equipment
and signed for the delivery, the rental period began in accordance with the terms in
the Agreement. The documents together, taken as a whole, were one single rental
agreement as to the interest to be charged on the account because Exhibit One
reflected that interest would be collected and that it would accrue at the maximum
amount allowed by law.
As to Jones and Westex’s complaint about the interest rate to be charged, the
parties did not contract for interest on a loan or credit sale or for a lease-purchase,
all of which are regulated by our usury statutes. See TEX. FIN. CODE ANN. tit. 4
(West 2006 & Supp. 2013); see also Potomac Leasing Co. v. Hous. Auth. of City of
El Paso, 743 S.W.2d 712, 713 (Tex. App.—El Paso 1987, writ denied) (citing
Transamerican Leasing Co. v. Three Bears, Inc., 586 S.W.2d 472 (Tex. 1979));
Apparel Mfg. Co. v. Vantage Props., Inc., 597 S.W.2d 447, 448 (Tex. Civ. App.—
Dallas 1980, writ ref’d n.r.e.). The parties, instead, contracted for the rental of a
compressor and a loader. Under Texas law, prejudgment interest is an additional
damage award for the loss of use of money between the time of the accrual of the
2
Roper’s Exhibit One covered the rental of the air compressor.
3
Roper’s Exhibit Four covered the rental of the loader.
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claim and the date of the judgment. Johnson & Higgins of Texas, Inc. v. Kenneco
Energy, Inc., 962 S.W.2d 507, 528 (Tex. 1998). Two separate bases exist in Texas
for prejudgment interest: (1) an enabling statute and (2) general principles of
equity. Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S.W.2d 480, 485 (Tex.
1978). The former applies to judgments for credit transactions, wrongful death,
personal injury, property damage, and condemnation cases, while the latter applies,
under common law, to a breach-of-contract claim. FIN. §§ 302.002, 304.102,
304.201; Kenneco, 962 S.W.2d at 530; Adams v. H & H Meat Prods., Inc., 41
S.W.3d 762, 780 (Tex. App.—Corpus Christi 2001, no pet.).
Where a contract for the rental of equipment, which is not a credit
transaction, specifies that interest will be collected on unpaid rental charges, the
interest rate can be determined by the judgment rate statutes. FIN. §§ 304.002,
304.003. If the contract specifies that interest will be charged at the maximum rate
allowed by law, then a numerical rate is not needed and the rate can be determined
by the judgment interest statutes. FIN. §§ 304.002, 304.003. In addition, Texas
common law and the judgment rate statutes allow prejudgment interest to accrue at
the same rate as postjudgment interest on damages awarded for breach of contract.
FIN. § 304.002; Kenneco, 962 S.W.2d at 532; Whitehead Utils., Inc. v. Emery Fin.
Corp., 697 S.W.2d 460, 461 (Tex. App.—Beaumont 1985, no writ); see also
ExxonMobil Corp. v. Valence Operating Co., 174 S.W.3d 303, 319 (Tex. App.—
Houston [1st Dist.] 2005, pet. denied).
Jones signed an Agreement that stated: “All past due balances subject to the
maximum amount of interest allowed by law.” Jones signed an Agreement and, in
so doing, agreed that interest would be collected on unpaid balances. The
Agreement also provided that the rate of interest would be the maximum allowed
by law, which is determined by the respective judgment rate statutes. FIN.
§§ 304.002, 304.003. Jones admitted that Westex had paid some of the rental
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charges but had not paid the entire amount owed. Jones admitted that he owed
$9,994.53 and that the amount was more than thirty days past due. The applicable
postjudgment rate is 18% interest, as set out in the judgment rate statute for
contracts that provide for interest. See FIN. § 304.002. The prejudgment interest
rate is the same as the postjudgment rate of 18% simple interest. See FIN.
§ 304.002; Emery, 697 S.W.2d at 461. We overrule Jones and Westex’s first and
fourth issues and sustain Roper’s cross-issue.
C. Jones and Westex’s Usury Claim
Jones and Westex assert, in their third and fifth issues, that the trial court
erred when it rejected their usury claim because Roper charged or demanded an
18% per annum charge on Westex’s account. The Texas Supreme Court has
outlined what type of transaction is subject to the usury statutes. In Holley v.
Watts, the court stated:
The essential elements of a usurious transaction are: (1) a loan of
money; (2) an absolute obligation that the principal be repaid; and
(3) the exaction of a greater compensation than allowed by law for the
use of the money by the borrower.
629 S.W.2d 694, 696 (Tex. 1982). Before the usury statutes can be applied to
leases, it is necessary to first establish that the leases were not mere leases but
were, instead, lease-purchase agreements. Potomac Leasing, 743 S.W.2d at 713
(citing Three Bears, 586 S.W.2d 472).
In this case, there is no claim of a lease-purchase agreement. Pomroy
testified that both of the Agreements were rental or lease transactions. Jones
agreed that the transactions were strictly rentals and that Westex was not buying
any equipment. The trial court found that Roper’s Exhibits One and Four were
rental or lease transactions for Westex to rent an air compressor and a loader from
Roper. We have previously held that there can be no usury in a lease transaction.
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Maloney v. Andrews, 483 S.W.2d 703, 704 (Tex. Civ. App.—Eastland 1972, writ
ref’d n.r.e.); see also Potomac Leasing, 743 S.W.2d at 713; Brokers Leasing Corp.
v. Standard Pipeline Coating Co., 602 S.W.2d 278 (Tex. Civ. App.—Dallas 1980,
writ ref’d n.r.e.); Apparel Mfg., 597 S.W.2d at 449; Sw. Park Outpatient Surgery,
Ltd. v. Chandler Leasing Div., 572 S.W.2d 53, 55 (Tex. Civ. App.—Houston [1st
Dist.] 1978, no writ).
The two sets of documents at issue were the Agreements and their
accompanying invoices, which, as we have explained earlier, did not specify a
numerical interest rate but did state that Roper would collect interest on unpaid
balances and that the interest would accrue at the maximum rate allowed by law.
Jones signed the first Agreement.
We hold that the trial court did not err when it ruled that the Agreements did
not charge usurious interest because the usury laws do not apply to rental
transactions. See Apparel Mfg., 597 S.W.2d at 449; Maloney, 483 S.W.2d at 704.
We also hold that Roper never charged usurious interest because a contract that
specifies that interest will be collected on unpaid balances from a rental agreement
and that the interest will accrue at the maximum rate allowed by law is not, as a
matter of law, usurious. Apparel Mfg., 597 S.W.2d at 449 (citing Maloney, 483
S.W.2d at 704). We further hold that Roper is entitled to postjudgment interest, as
provided in the Agreements, and that the applicable rate is 18% simple interest.
Likewise, because the prejudgment rate is the same as the postjudgment rate, the
prejudgment rate is 18% simple interest. We overrule Jones and Westex’s third
and fifth issues.
VI. This Court’s Ruling
We agree with Roper that there is no ambiguity in the Agreements and we
overrule Jones and Westex’s first issue. We overrule their second issue on the
agency of Florez and their third issue on interest. As to their fourth issue, we hold
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that the trial court’s ruling that there were two Agreements that encompassed one
larger rental Agreement was not erroneous. As to their final issue, we hold that the
trial court correctly determined that the usury statutes do not apply and that Roper
did not charge usurious interest. Jones and Westex’s final issue is overruled.
We sustain Roper’s issue on cross-appeal that the trial court (1) erred in its
award of $364.73 in prejudgment interest and (2) erred in its award of 5% interest
for postjudgment interest.
We modify the judgment of the trial court to reflect that Roper is entitled to
recover prejudgment interest at the rate of 18% simple interest on the unpaid
balance of $9,994.53 and that Roper is entitled to collect postjudgment interest at
the rate of 18% from the date of the trial court’s judgment until the judgment is
paid in full. As modified, the judgment of the trial court is affirmed. We remand
the cause to the trial court for the calculation of the amount of prejudgment interest
and for rendition of judgment in accordance with this opinion.
MIKE WILLSON
JUSTICE
June 30, 2014
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
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