David Schum v. Munck Wilson Mandala, LLP

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
No. 06-16-00006-CV
DAVID SCHUM, Appellant
V.
MUNCK WILSON MANDALA, LLP, Appellee
On Appeal from the 193rd District Court
Dallas County, Texas
Trial Court No. DC-14-13841
Before Morriss, C.J., Moseley and Burgess, JJ.
Opinion by Justice Moseley
OPINION
After the trial court granted Munck Wilson Mandala, LLP’s (Munck), motion for partial
summary judgment, Munck nonsuited the remainder of its claims against David Schum, and the
order granting Munck partial summary judgment became the final judgment of the trial court. In
its order, the 193rd Judicial District Court of Dallas County1 granted Munck’s summary judgment
against Schum on its claims for breach of contract and sworn account and awarded damages and
attorney fees. In this appeal, Schum contends (1) that the trial court erred in granting summary
judgment and (2) that the trial court abused its discretion in awarding attorney fees. We find that
there remain issues of materal fact and reverse the judgment of the trial court.
I. Background
Schum retained Munck to represent him for the preparation and filing of a non-provisional
United States patent application for a wind turbine, pursuant to an engagement letter dated June 3,
2011 (“the Patent Application Matter”).2 Munck completed and filed the patent application within
one month and thereafter periodically followed up on the status of the application. Munck sent
invoices to Schum for the services it performed and the expenses it incurred in representing Schum.
After Schum failed to pay the invoices, Munck made written demand for payment, and, when
Schum still failed to pay the invoices, Munck filed suit seeking judgment against Schum for breach
1
Originally appealed to the Fifth Court of Appeals, this case was transferred to this Court by the Texas Supreme Court
pursuant to its docket equalization efforts. See TEX. GOV’T CODE ANN. § 73.001 (West 2013). We are unaware of
any conflict between precedent of the Fifth Court of Appeals and that of this Court on any relevant issue. See TEX.
R. APP. P. 41.3.
2
At the time of the engagement letter and some of the legal services performed by Munck, the name of its limited
liability partnership was “Munck Carter, LLP,” but during the course of its representation of Schum, Munck changed
the name of its partnership to “Munck Wilson Mandala, LLP.”
2
of contract and on a sworn account, as well as several other causes of action that were later
abandoned. Initially, Schum filed a general denial, but later filed a first amended answer
containing a verified denial of the sworn account.
After a hearing on its first motion for summary judgment, 3 Munck filed a second motion
for summary judgment on its breach of contract and sworn account claims. In support of its motion
for summary judgment, Munck attached, inter alia, the affidavit of Ted P. Ainsworth, its finance
director, and copies of its invoices that purported to reflect its fees and expenses related to the
representation of Schum in the Patent Application Matter. The total amount of fees and expenses
claimed by Munck for the Patent Application Matter, according to Ainsworth’s affidavit and
Munck’s statement of account, was $8,453.89. Munck also attached the affidavit of one of its
attorneys, Jeffrey S. Carona, who stated that his hourly rate was $205.00, that the hourly rate of
his overseeing partner was $350.00, and that attorneys in the firm had spent “in excess of ten (10)
hours” in attempting to collect the amount owed by Schum. Nevertheless, Carona expressed his
opinion that a reasonable attorney fee for prosecuting the case would be $6,500.00, that $5,000.00
would be a reasonable attorney fee if an appeal to the Court of Appeals was successfully defended,
and that $3,500.00 would be a reasonable attorney fee for services in the Texas Supreme Court.
Based on this evidence, the trial court granted summary judgment on Munck’s breach of contract
3
In his brief, Schum states that a hearing on the first motion for summary judgment was held on July 13, 2015. The
record does not reflect the trial court’s ruling, if any, at that hearing.
3
and sworn account causes of action and awarded damages of $8,453.89, attorney fees of $6,500.00
through trial, and attorney fees of $8,000.00 in the event of an unsuccessful appeal.4
On appeal, Schum asserts (1) that the trial court erred in granting partial summary
judgment5 and (2) that the trial court abused its discretion in awarding attorney fees to Munck.
Since we agree that the trial court erred in granting partial summary judgment, we do not address
Schum’s second point of error.
II. Standard of Review
A traditional motion for summary judgment may only be granted when the movant
establishes that there are no genuine issues of material fact and that it is entitled to judgment as a
matter of law. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
2009); Rhine v. Priority One Ins. Co., 411 S.W.3d 651, 657 (Tex. App.—Texarkana 2013, no pet.).
We review the grant of a motion for summary judgment de novo “to determine whether a party’s
right to prevail is established as a matter of law.” Lamar Corp. v. City of Longview, 270 S.W.3d
609, 613 (Tex. App.—Texarkana 2008, no pet.); see Nash v. Beckett, 365 S.W.3d 131, 136 (Tex.
App.—Texarkana 2012, pet. denied) (citing Mann, 289 S.W.3d at 848). On appeal, the burden
remains with the movant to show that there is no material fact issue and that the movant is entitled
to judgment as a matter of law. Limestone Prods. Distribution, Inc. v. McNamara, 71 S.W.3d 308,
4
Although Munck was awarded appellate attorney fees of $8,000.00, we note that it neglected to file a brief in this
appeal.
5
Schum’s first point of error is that the trial court erred in granting partial summary judgment. Such a point is sufficient
“to allow argument as to all the possible grounds upon which summary judgment should have been denied.” Malooly
Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970). In his brief, Schum sufficiently argued that fact questions
remained that would preclude summary judgment under both the breach of contract and sworn account bases recited
in the trial court’s judgment.
4
311 (Tex. 2002) (per curiam); Rhone–Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999). In
our review of the grant of a traditional summary judgment, we take as true all evidence favorable
to the nonmovant and indulge every reasonable inference and resolve any doubts in the
nonmovant’s favor. McNamara, 71 S.W.3d at 311; Steel, 997 S.W.2d at 223; Rhine, 411 S.W.3d
at 657.
Typically, the nonmovant’s “written answer or response to the motion must fairly apprise
the movant and the court of the issues the non-movant contends should defeat the motion.” City
of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). However, even if the
nonmovant does not raise the grounds in his response, if the grounds expressly raised by the
movant in his motion are legally insufficient, the trial court may not grant summary judgment. See
id. As the Supreme Court has explained,
The trial court may not grant a summary judgment by default . . . when the movant’s
summary judgment proof is legally insufficient. The movant still must establish
his entitlement to a summary judgment on the issues expressly presented to the trial
court by conclusively proving all essential elements of his cause of action or
defense as a matter of law.
Id. (footnote omitted).
III. Analysis
In this case, the trial court granted partial summary judgment on Munck’s breach of
contract and sworn account causes of action. In order to establish its claim for breach of contract,
Munck had to come forward with competent summary judgment proof (1) that there was a valid
contract, (2) that Munck had performed under the contract, (3) that Schum breached the contract,
and (4) that Munck suffered damages as a result. See Petras v. Criswell, 248 S.W.3d 471, 477
5
(Tex. App.—Dallas 2008, no pet.). A suit on a sworn account is based in Rule 185. See TEX. R.
CIV. P. 185. “Rule 185 . . . . is a rule of procedure with regard to evidence necessary to establish
a prima facie right of recovery.” Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862
(Tex. 1979) (citing Meaders v. Biskamp, 316 S.W.2d 75 (Tex. 1958)). Rule 185 provides that if
an action “is founded on an open account . . . on which a systematic record has been kept, and is
supported by [an] affidavit of the party, his agent or attorney,” then the account “shall be taken as
prima facie evidence.” TEX. R. CIV. P. 185. If “the defendant fails to file a sworn denial of the
account, no further evidence is required.” Brown Found. Repair & Consulting, Inc. v. Friendly
Chevrolet Co., 715 S.W.2d 115, 116 (Tex. App.—Dallas 1986, writ ref’d n.r.e.) (citing Airborne
Freight Corp. v. CRB Mktg., Inc., 566 S.W.2d 573, 575 (Tex. 1978) (per curiam)). However, when
the defendant timely files a verified denial of the correctness of the account,6 the evidentiary effect
of the sworn account is destroyed, and the plaintiff must present further proof of his claim. Rizk,
584 S.W.2d at 862; Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821,
6
Schum timely filed his first amended answer containing the following denial of the sworn account: “In the alternative
and if necessary, in compliance with the Texas Rules of Civil Procedure Rule 93(10) and Rule 185, Defendant denies
the sworn account claims of Plaintiff. The fee billings introduced by Plaintiff are inflated and inaccurate and do not
reflect work that was performed.” It also contained a verification that “the Answer is in every statement and allegation
thereof true and correct and is made based upon my personal knowledge.” In addition, he attached his affidavit in
which he swore that the invoices “are inflated and inaccurate and do not reflect work that was performed for Defendant
by the Plaintiff” and denied that he owed “the sworn account amount claimed by the Plaintiff.” Under Rule 185, no
particular form is required for the sworn denial. Canter v. Easley, 787 S.W.2d 72, 74 (Tex. App.—Houston [1st Dist.]
1990, writ denied). It is sufficient that the affidavit recite under oath that the factual statements contained in the
answer are true and correct and that it is based on the affiant’s personal knowledge. See Rizk, 584 S.W.2d at 862–63
(affidavit that stated that “the facts and statements contained [in the answer] are true and correct of [affiant’s] own
personal knowledge” sufficient verified denial under Rule 185); Canter, 787 S.W.2d at 73–74 (affidavit that stated
that “all of the allegations and statements of fact contained in [defendant’s original answer] are true and correct” meets
the requirements of Rule 185); Norcross v. Conoco, Inc., 720 S.W.2d 627, 629–30 (Tex. App.—San Antonio 1986,
no writ) (affidavit that recited that affiant “has read and fully understands that above and foregoing allegations set out
in paragraph II of Defendant’s First Amended Original Answer” and that “from personal knowledge that said
allegations are true and correct” sufficient verified denial under Rule 185). We find Schum’s verified denial of the
account meets the requirements of Rule 185.
6
833 (Tex. App.—Dallas 2014, no pet.); So. Mgmt. Servs., Inc. v. SM Energy Co., 398 S.W.3d 350,
354 (Tex. App.—Houston [14th Dist.] 2013, no pet.); Norcross, 720 S.W.2d at 629–30. If a
verified denial has been filed, a plaintiff may still prevail on a motion for summary judgment if he
presents competent summary judgment evidence showing that he is entitled to judgment as a
matter of law. Woodhaven Partners, Ltd., 422 S.W.3d at 834.
In support of its motion for summary judgment on its breach of contract and sworn account
claims, Munck filed Ainsworth’s affidavit stating that Schum had retained it to represent him
regarding the preparation and filing of a United States nonprovisional patent application related to
a wind turbine and that Schum had entered into a written engagement agreement for that
representation. It also attached a copy of the written engagement letter, signed by both Schum and
William A. Munck, on behalf of Munck, which also stated that the representation was for this same
purpose. Ainsworth also swore that the invoices attached as Exhibit C to the motion for summary
judgment were for legal services it performed and expenses it incurred pursuant to the engagement
agreement and that the total amount of the invoices that remained unpaid was $8,453.89. As part
of its Exhibit C, Munck attached a statement of account summarizing the date, number, and amount
due on each invoice as follows:
Statement of Account
David Schum
Inv Date Inv # Amt Due
7/31/2011 153786 $6,159.38
9/15/2011 155596 151.08
1/31/2012 160027 26.00
2/29/2012 161104 131.68
3/30/2012 162567 195.80
7
6/30/2012 164110 197.00
7/11/2012 164446 922.95
4/30/2013 182806 670.00
$8,453.89
To support a summary judgment based on a suit on a sworn account, the “account must show on
its face with reasonable certainty the nature of each item sold, the date of each sale and the
reasonable charge therefor.” Gallini v. Whelan, 625 S.W.2d 755, 760 (Tex. App.—San Antonio
1981, no writ). The statement of account does not show the nature of the services rendered and,
thus, would not, of itself, support a summary judgment on a sworn account. See id. In addition,
there is nothing in the statement of account that unequivocally shows that the charges were
incurred pursuant to the engagement agreement, i.e., the contract sued upon, and therefore it would
not, of itself, support summary judgment for breach of contract.
Munck also attached copies of the invoices listed on the statement of account in Exhibit C.
The first six listed invoices and the last invoice each shows that the invoice is charged to Schum,
reflects an account number of “SCHU01 00002,” and refers to the file as “IN RE: United States
Patent Application for ‘Wind Turbine.’” In addition, each of these invoices contains recitations of
professional services performed that are clearly related to the preparation and filing of the patent
application, notices received from the patent office, and communications with Schum regarding
the application and related issues.
However, the seventh invoice, invoice number 164446, shows that it is charged to Schum,
but reflects an account number of “SCHU01 00001” and refers to the file as “IN RE: General
Intellectual Property Matters.” Further, the entry for the services rendered states, “Review
8
documents and draft demand letter; communicate with Schum regarding payment.” The invoice
also reflects expenses of $6.60 for photocopying and $6.35 for postage, with a total amount for
fees and expenses charged on the invoice of $922.95. Since this invoice recites a different account
number, refers to a different matter, and details professional services that are not clearly related to
the Patent Application Matter, a reasonable inference is that these fees and expenses were not
incurred pursuant to the engagement agreement, but rather in an attempt to collect other unpaid
fees and expenses from Schum. Thus, since the $922.95 charge under this invoice was included
in the $8,453.89 that Munck claimed was owed under its breach of contract and sworn account
claims, Munck’s summary judgment proof would not support a damage award of $8,453.89.
Therefore, material fact issues remain regarding whether all of the fees and expenses that
Munck sought to recover in its breach of contract and sworn account causes of action were incurred
pursuant to the engagement agreement. We hold that the trial court erred in granting Munck’s
motion for summary judgment.
We reverse the judgment of the trial court and remand this cause to the trial court for a new
trial.
Bailey C. Moseley
Justice
Date Submitted: April 4, 2016
Date Decided: June 9, 2016
9