Opinion
NUMBER 13-15-00408-CV
03-31-2016
BRUNO INDEPENDENT LIVING AIDS, Appellant, v. JEREMIAH YZAGUIRRE, MARY L. MENDEZ, AND JAIME HERNANDEZ, Appellees.
On appeal from the County Court at Law No. 3 of Cameron County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Rodriguez and Garza
Memorandum Opinion by Justice Rodriguez
Appellant Bruno Independent Living Aids (Bruno) appeals the grant of summary judgment in favor of appellees Jeremiah Yzaguirre, Mary L. Mendez, and Jaime Hernandez. Bruno sued appellees on a promissory note that Yzaguirre executed in favor of Bruno and upon which Mendez and Hernandez were liable as Yzaguirre's general partners in a healthcare business. Appellees moved for summary judgment on their affirmative defenses of laches and waiver. The trial court granted the motion. By its first two issues, Bruno argues that the trial court erred because appellees were not entitled to summary judgment on laches or waiver. By what we construe as a third issue, Bruno contends that appellees urged other grounds at the hearing which were not in their motion. Bruno asserts that these other grounds were thus not proper bases for summary judgment and that the trial court erred to the extent it based summary judgment on these other grounds. We reverse and remand.
I. BACKGROUND
Donald Driver ran a healthcare business called Southwest Medical Equipment through a partnership, with appellees as the junior partners. In 2001, Driver signed an application for credit from Bruno. Bruno granted the application, allowing Driver's business to purchase medical supplies from Bruno on credit. Bruno's credit application contained a personal guaranty obligating Driver to be personally responsible for past, present, and future obligations incurred by Driver or any successor in interest.
In 2001, Driver sold his business to appellees, who purchased the business using a general partnership called Southwest Medical Homepatient. Appellees continued the supplier relationship with Bruno and accrued a debt by purchasing equipment on credit between 2003 and 2004. In 2005, Yzaguirre executed a promissory note in favor of Bruno. The promissory note prescribed that appellees would make monthly installment payments for thirty-six months, with the balance due and payable on October 30, 2008. However, appellees were unable to pay their obligation under the note. In January 2007, Bruno sued Driver for his personal guarantee of the debt contained in his credit application. Driver in turn sued appellees and their Southwest Medical Homepatient partnership as third-party defendants.
On appeal, appellees argue that Hernandez was not a general partner. We need not address this argument here because it was not presented in either the motion or the response. See TEX. R. CIV. P. 166a(c) ("Issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal.").
From that point, the progress of the suit was hampered by several events. In 2009, appellees' Southwest Medical Homepatient partnership declared bankruptcy, and the suit was stayed through 2011. When the stay was lifted, Driver suffered declining health and passed away soon after, which resulted in continuance. Driver's estate was substituted in, but in 2014 Yzaguirre personally declared bankruptcy, staying the matter once more.
Progress resumed once Yzaguirre's bankruptcy stay was lifted, and on October 8, 2014, Driver's estate reached a settlement with Bruno through mediation. Then, on October 24, 2014, Bruno amended its petition and sued appellees directly for the first time. Bruno filed its claims against appellees just a few weeks after the settlement between Driver and Bruno, and just a few days before the six-year anniversary of the promissory note's maturity on October 30, 2008.
Appellees filed a motion for summary judgment, alleging that Bruno's suit was barred by laches and waiver. Appellees introduced the following summary judgment evidence: (1) an affidavit by Bruno's finance manager verifying the account owed by Driver to Bruno; (2) the settlement agreement between Bruno and Driver and a related deed of trust effectuating the transfer of assets that was contemplated in the settlement; and (3) the agreed motion and order of dismissal of the suit between Bruno and Driver.
A hearing on the summary judgment motion was set for the same day as a bench trial. At the hearing, appellees argued laches and waiver, but also argued other theories including accord and satisfaction and a defense based on the Texas Revised Partnership Act. Bruno argued that these issues were not in appellees' motion for summary judgment, but responded to the substance of these arguments nonetheless.
Specifically, appellees argued at the hearing that the settlement which Bruno entered with Driver had the effect of releasing appellees from any liability. Appellees also argued that the Texas Revised Partnership Act barred Bruno from seeking to hold appellees individually liable without first obtaining a judgment against the general partnership to which they belonged. See TEX. BUS. ORGS. CODE ANN. § 152.306(b)(2) (West, Westlaw through 2015 R.S.); Am. Star Energy & Minerals Corp. v. Stowers, 457 S.W.3d 427, 430 (Tex. 2015).
At the conclusion of the hearing, the trial court granted summary judgment in favor of appellees without specifying grounds. This appeal followed.
II. DISCUSSION
Bruno's first two issues relate to the grounds of laches and waiver. Within these two issues, Bruno argues that the trial court erred in granting summary judgment because: (1) appellees did not carry their burden to conclusively establish laches or waiver; (2) certain of Bruno's claims regarded legal rights that are generally immune from the equitable defense of laches; and (3) appellees were estopped from asserting waiver by the terms of the promissory note signed in 2005. Because Bruno's first argument is dispositive, we need not address Bruno's remaining arguments. See TEX. R. APP. P. 47.1; Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993).
A. Standard of Review
When a party moves for summary judgment based upon an affirmative defense, as here, the movant must establish each element of its defense as a matter of law. Johnson & Johnson Med., Inc. v. Sanchez, 924 S.W.2d 925, 927 (Tex. 1996). Once the movant proves each essential element of its affirmative defense, the burden shifts to the non-movant to raise a fact issue either on the movant's affirmative defense or as to each element of an affirmative defense of its own. See Se. Tex. Indus. v. Helmerich & Payne Int'l Drilling Co., 70 S.W.3d 181, 184 (Tex. App.—San Antonio 2001, no pet.) (citing Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121 (Tex. 1996) (per curiam)). We review the evidence presented by the motion and response in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. Boerjan v. Rodriguez, 436 S.W.3d 307, 311-12 (Tex. 2014).
When there are multiple grounds for summary judgment and the order does not specify the ground on which the summary judgment was granted, the appealing party must negate all grounds on appeal. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 381 (Tex. 1993); Nalle Plastics Family Ltd. P'ship v. Porter, Rogers, Dahlman & Gordon, P.C., 406 S.W.3d 186, 203 n.13 (Tex. App.—Corpus Christi 2013, pet. denied).
B. Laches
To invoke the equitable doctrine of laches, the moving party ordinarily must show an unreasonable delay by the opposing party in asserting its rights and also the moving party's good faith and detrimental change in position because of the delay. In re Laibe Corp., 307 S.W.3d 314, 318 (Tex. 2010) (orig. proceeding); In re Cypress Tex. Lloyds, 437 S.W.3d 1, 6 (Tex. App.—Corpus Christi 2011, no pet.). "Generally in the absence of some element of estoppel or such extraordinary circumstances as would render inequitable the enforcement of petitioners' right after a delay, laches will not bar a suit short of the period set forth in the limitation statute." Caldwell v. Barnes, 975 S.W.2d 535, 538 (Tex. 1998); Barfield v. Howard M. Smith Co., 426 S.W.2d 834, 840 (Tex. 1968). The party asserting laches has the burden of proving it. Brewer v. Nationsbank of Tex., N.A., 28 S.W.3d 801, 804 (Tex. App.—Corpus Christi 2000, no pet.).
By its first issue, Bruno asserts that appellees failed to carry their summary judgment burden to conclusively establish the elements of laches. We agree. Appellees failed to conclusively prove that there was no issue of material fact as to multiple elements of the Texas test for laches, which controls this case.
Appellees instead argued their motion under the federal test for laches, as applied by the Dallas Court of Appeals in a case dealing with trademark law: "(1) an unreasonable delay in asserting a right or claim; (2) that is not excused; and (3) that results in undue prejudice to the defendant." Condom Sense, Inc. v. Alshalabi, 390 S.W.3d 734, 758 (Tex. App.—Dallas 2012, no pet.). While there is some similarity between the Texas and federal tests for laches, appellees' argument for summary judgment was not assisted by the fact that they argued under a different jurisdiction's test.
For instance, appellees' motion pointed to the fact that Bruno did not file suit against appellees until several years after the initial action against Driver. Appellees cite Condom Sense, Inc. v. Alshalabi to argue that by not including appellees in the original suit, Bruno engaged in a legal strategy that communicated to them that it would not bring a subsequent suit. 390 S.W.3d 734, 758 (Tex. App.—Dallas 2012, no pet.). Even assuming, arguendo, that Bruno's delay and timing of suit established appellees' initial summary judgment burden, Bruno's response pointed out several undisputed facts showing that this was not in any sense an "unreasonable delay." See In re Laibe Corp., 307 S.W.3d at 318 (emphasis added). For instance, Bruno pointed out that the case had suffered extensive delays due to events that were beyond Bruno's control, including the declining health and eventual death of a defendant, as well as two bankruptcy stays initiated by defendants. At a minimum, this is sufficient to create an issue of material fact on unreasonable delay. See Ryland Group, 924 S.W.2d at 121.
There are several reasons why Alshalabi does not control our result here—and indeed, the contrast between this case and Alshalabi helps show why we reach the opposite result. We address the comparison here in brief. First, as noted previously, the Alshalabi court applied a different test for laches than that which controls here. See n.3, supra. Second, the plaintiffs in Alshalabi had apparently gone back and forth in their efforts to assert the trademark at issue: at first bringing suit against an alleged infringer, but then selling the mark to the infringer outright and nonsuiting their claim of infringement—only to bring a new suit for infringement two years later, after the infringer had built up his business in reliance on the sale and nonsuit. 890 S.W.3d at 745-47. Here, Bruno simply delayed in filing suit, which provides far less reason to find the "element of estoppel" that may justify laches, as discussed in Caldwell v. Barnes. See 975 S.W.2d 535, 538 (Tex. 1998). Third, the plaintiffs in Alshalabi did not use their intellectual property in any business of their own, but merely sued those who made legitimate commercial use of the mark. 390 S.W.3d at 734; cf. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 396 (2006) (Kennedy, J., concurring) ("An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees."). Here, Bruno delivered legitimate value to appellees by providing heavy medical equipment on credit, which does far less to trigger equity's overarching concern with fairness. See Flores v. Flores, 116 S.W.3d 870, 876 (Tex. App.—Corpus Christi 2003, no pet.) ("Equity acts in accordance with conscience and good faith and promotes fair dealing.").
Appellees also stated the conclusion that they "built up their business and entered into transactions based on the belief that the plaintiff would not bring suit," which arguably relates to the Texas test's element of a "good faith and detrimental change in position because of the delay." See In re Laibe Corp., 307 S.W.3d 314, 318 (Tex. 2010). However, appellees offered no evidence to support this conclusion, let alone evidence sufficient to decisively prove it for purposes of summary judgment. See TEX. R. CIV. P. 166a(c); see also Sanchez, 924 S.W.2d at 927.
In light of appellees' failure to establish the change-in-position element of laches, and Bruno's introduction of a fact issue as to the unreasonable-delay element, we conclude that the trial court could not have properly granted summary judgment on the basis of laches. We sustain Bruno's first issue.
C. Waiver
Appellees next contend that Bruno waived his claim entirely by maintaining a suit against Driver without suing appellees. Waiver is the intentional relinquishment of a right actually or constructively known or intentional conduct inconsistent with claiming that right. Ohrt v. Union Gas Corp., 398 S.W.3d 315, 329 (Tex. App.—Corpus Christi 2012, pet. denied); see Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003). The elements of waiver include: (1) an existing right, benefit, or advantage held by a party; (2) the party's actual or constructive knowledge of its existence; and (3) the party's actual intent to relinquish the right or intentional conduct inconsistent with the right. Ohrt, 398 S.W.3d at 329 (citing Perry Homes v. Cull, 258 S.W.3d 580, 602-03 (Tex. 2008) (Johnson, J., concurring in part and dissenting in part)). Waiver is largely a matter of intent, and for waiver to be implied through a party's actions, intent must be clearly demonstrated by the surrounding facts and circumstances. Crosstex Energy Servs., L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 393 (Tex. 2014); Jernigan, 111 S.W.3d at 156. Silence or inaction, for so long a period as to clearly show an intention to yield the known right, is also enough to prove waiver. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996). Waiver is ordinarily a question of fact, but when the surrounding facts and circumstances are undisputed, as in this case, the question becomes one of law. Id.; Motor Vehicle Bd. v. El Paso Indep. Auto. Dealers Ass'n, Inc., 1 S.W.3d 108, 111 (Tex. 1999); see also Mastin v. Jelinek, No. 13-11-00494-CV, 2013 WL 1188107, at *2 (Tex. App.—Corpus Christi March 21, 2013, no pet.) (mem. op.).
In this case, the first two elements of waiver—here, a right and actual knowledge of the right—are self-evident given the nature of the action: Bruno filed suit to assert its rights on a promissory note, regarding a debt accrued collectively by appellees' partnership. See Ohrt, 398 S.W.3d at 329
We turn to the intent element of waiver. Appellees' motion argued that Bruno waived his claim because Bruno had the opportunity to sue appellees in the initial action against Driver but instead delayed bringing suit against appellees for several years. However, the mere fact of delay here does not "clearly indicate" an intent to waive an entire claim that was still within limitations. See Crosstex Energy, 430 S.W.3d at 393. This is particularly true in light of the evidence that this delay was excusable rather than intentional, which at a minimum is sufficient to create a fact issue as to intent to relinquish. See Se. Tex. Indus., 70 S.W.3d at 184. Appellees' motion cited no other facts demonstrating Bruno's alleged intent to waive the right to bring their claim, such as delay past a decisive point in the case against appellees or a claim that delay was mixed with other circumstances that would clearly indicate such an intent.
Cf. Spinks v. Brown, 211 S.W.3d 374, 378 (Tex. App.—San Antonio 2006, no pet.) (holding waiver applied where a defendant had strategically delayed in raising a certain defense until a first trial had already occurred); Martinez v. Lakshmikanth, 1 S.W.3d 144, 148 (Tex. App.—Corpus Christi 1999, pet. denied) (reaching similar result when a nonsuit had already occurred); see also Jernigan v. Langley, 111 S.W.3d 153, 157 (Tex. 2003) (citing Martinez as a good indicator of the circumstances required before delay will show an intent to waive a right).
Cf. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996) (holding waiver applied where a party delayed while fostering a working relationship which implied that the underlying violation was of no issue); Comiskey v. FH Partners, LLC, 373 S.W.3d 620, 641 (Tex. App.—Houston [14th Dist.] 2012, pet. denied) (holding waiver applied where a party delayed while making overtures that no suit would result from the underlying debt).
On appeal, appellees have attempted to introduce further evidence on the intent element of waiver. They cite several representations made by Bruno's counsel which could, if considered, lend at least some support to appellees' waiver theory. However, this evidence was not properly before the trial court as part of the summary judgment record, and we must not consider it. See Wales v. Williford, 745 S.W.2d 455, 457 (Tex. App.—Beaumont 1988, writ denied); see also Nanda v. Huinker, No. 13-13-00615-CV, 2015 WL 5634367, at *4 (Tex. App.—Corpus Christi Sept. 24, 2015, no pet.) (mem. op.).
We thus conclude that appellees failed to carry their summary judgment burden as to the intent element of waiver, and the trial court erred to the extent that it granted summary judgment on the basis of waiver. Bruno's second issue is sustained.
D. Other Grounds
By its third issue, Bruno contends that appellees urged additional grounds which were not in their motion for summary judgment, including grounds related to accord and satisfaction, a permanent bankruptcy stay, and the Texas Partnership Act. Bruno claims that because they were not argued in appellees' motion, they were not proper grounds for summary judgment.
We note that appellees' motion did address the affirmative defense of accord and satisfaction, however briefly:
Bruno waived its claim against Yzaguirre, Mendez and Hernandez because Bruno had the opportunity to sue Defendants in the initial action against Driver, but nevertheless failed to bring suit and Defendants relied on that litigation strategy to their detriment; further, Bruno satisfied its claim by settling with the guarantor, Driver.(Emphasis added). However, this single clause was the full extent of the motion's content on accord and satisfaction. Appellees' motion provided no argument on this point, no citations to summary judgment evidence which would show satisfaction, no law or elements relating to satisfaction, and no explanation of how the facts related to the law. This does not suffice under Rule 166a. See TEX. R. CIV. P. 166a(c); Mercier v. Sw. Bell Yellow Pages, Inc., 214 S.W.3d 770, 774 (Tex. App.—Corpus Christi 2007, no pet.) (upholding summary judgment because a party "failed to specifically address the elements of each cause of action on which he claimed fact issues existed" and instead simply stated such a conclusion). We conclude that appellees failed to carry their burden to establish each element of the affirmative defense of accord and satisfaction as a matter of law. See Johnson & Johnson Med., 924 S.W.2d at 927.
Appellees' remaining arguments concerning bankruptcy and the partnership act do not appear in the motion in any form. On appeal, appellees argue that because these additional grounds were due to be considered on the date of the trial—they were pleaded in appellees' answers, which notified Bruno that they could be raised on that day—we should consider the merits of these grounds. That is, appellees argue that under the circumstances, there was no need to include all summary judgment grounds in the written motion or to attach any proof in support. Bruno responds that because none of these arguments were urged in the underlying motion, we may not rely upon these grounds to sustain summary judgment on appeal. We agree with Bruno.
"A motion for summary judgment must itself expressly present the grounds upon which it is made, and must stand or fall on these grounds alone." Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex. 1997); Guevara v. Lackner, 447 S.W.3d 566, 571 (Tex. App.—Corpus Christi 2014, no pet.); see TEX. R. CIV. P. 166a(c) ("The motion for summary judgment shall state the specific grounds therefor."). "Although Rule 166a(c) is an admittedly rigorous rule, it must be applied as written." McConnell v. SouthsideIndep. School Dist., 858 S.W.2d 337, 341 (Tex. 1993). "As a uniform rule of procedure, the summary judgment rule leaves little to the imagination." Tex. Dep't of Parks & Wildlife v. Miranda, 133 SW 3d 217, 235 (Tex. 2004) (Wallace, J., dissenting).
It is true that, based on appellees' pleading of these and other affirmative defenses, Bruno had general notice that all grounds would be argued on that day. See Wilson v. Bloys, 169 S.W.3d 364, 369 (Tex. App.—Austin 2005, pet. denied) ("The purpose of a pleading is to provide the defendant with fair notice of the cause of action and character of evidence that will be raised at trial."). However, based on this fact, all that Bruno must have anticipated was that he would partake in a full hearing of the evidence on these issues during a bench trial, after the summary judgment hearing on laches and waiver had concluded. See id. Bruno was entitled to such a fully-presented bench trial in the absence of evidence which clearly showed that "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion . . . ."See TEX. R. CIV. P. 166a(c).
We express no opinion on the validity of appellees' additional grounds, including accord and satisfaction. We simply hold that these grounds cannot support a summary disposition based on the motion that was presented to the trial court. See TEX. R. APP. P. 166a(c). --------
We sustain Bruno's third issue.
III. CONCLUSION
We reverse the trial court's judgment and remand the case for further proceedings. See TEX. R. APP. P. 43.2(d).
NELDA V. RODRIGUEZ
Justice Delivered and filed the 31st day of March, 2016.