Opinion
No. 01-09-01062-CV
Opinion issued June 10, 2010.
On Appeal from County Court at Law No. 2, Fort Bend County, Texas, Trial Court Cause No. 09-CCV-039015.
Panel consists of Justices JENNINGS, ALCALA, and MASSENGALE.
MEMORANDUM OPINION
Appellant, Clifton Calbert, challenges the trial court's rendition of summary judgment in favor of appellee, Associates Asset Management, LLC ("Associates"), in Associates' suit against Calbert for defaulting on a promissory note. In three issues, Calbert contends that there is no evidence that Associates was the owner of the note and the trial court erred in admitting the promissory note into evidence and denying his cross-motion for summary judgment.
We affirm.
Background
Associates filed suit to collect on a promissory note executed by Calbert in favor of Sterling Capital Mortgage Company ("Sterling") and secured by a deed of trust on the property identified in the note. Associates alleged that Calbert defaulted on the note, did not comply with Associates' written demand for payment, and owed to Associates $22,591.96 plus interest from June 1, 2005.
Calbert answered, generally denying Associates' allegations and pleading the affirmative defenses of laches, failure to "take adequate action to protect [Associates'] interests," limitations, waiver, estoppel, "patent and latent ambiguity as to the ownership of the property in question," ratification, failure to give Calbert "proper setoffs" for payments made, and failure of consideration. Calbert attached to his answer his affidavit ratifying the affirmative defenses and affirming that the statements and facts alleged are "true and correct to my personal knowledge."
Associates subsequently filed its summary judgment motion. Associates attached to its motion a copy of the promissory note and the affidavit of Michele Neal, who testified that she had "personal knowledge of the facts" averred; she was "responsible for the collection" of Calbert's account; Associates was the "owner and holder" of the promissory note; Calbert had executed the promissory note on or about May 22, 2002 in favor of Sterling, defaulted on the note, and owed Associates $22,591.96 plus interest; and a "true and correct copy of the Note [was] attached." On the face of the note appeared the following endorsement:
Pay to the order of Associates Asset Management, LLC without recourse Sterling Capital Mortgage Company
By: /s/
Name: Kathy Thorp
Title: Asst. Vice President
In his response to Associates' summary judgment motion, Calbert objected to Neal's affidavit as "hearsay" on the ground that she did not "have personal knowledge of the manner in which the records were prepared." Calbert also asserted that Associates had "[provided no] evidence of how [it] came to be the owner to the Promissory note." Calbert attached to his response his affidavit in which he testified that he had "never borrowed money from [Associates], [had] no contractual relationship with them, and [did] not know who they [were]."
Along with his response to Associates' summary judgment motion, Calbert filed a cross-motion for no-evidence summary judgment. He asserted that Associates had "no evidence to prove standing to sue for this debt" and had refused to respond to discovery requests for "documents evidencing any kind of assignment from [Sterling] to [Associates]." Calbert provided notice that the hearing on his motion was set nineteen days after he had filed it.
In its response, Associates objected to the lack of 21-days notice of the hearing, requested that the trial court continue the hearing until such time as Associates had received proper notice, and asserted that it had standing on the ground that the promissory note had been "assigned to Associates by Sterling, as evidenced by the endorsement on the face of the note."
After a hearing on Associates' summary judgment motion, but not Calbert's, the trial court entered judgment granting Associates' motion and awarding it $22,591.96 plus interest against Calbert.
Standard of Review
To prevail on a summary judgment motion, a movant has the burden of proving that it is entitled to judgment as a matter of law and that there is no genuine issue of material fact. TEX. R. CIV. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). When a plaintiff moves for summary judgment on its claim, it must establish its right to summary judgment by conclusively proving all the elements of its cause of action as a matter of law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); Anglo-Dutch Petroleum Int'l, Inc. v. Haskell, 193 S.W.3d 87, 95 (Tex. App.-Houston 2006, pet. denied). A defendant moving for a no-evidence summary judgment must allege that there is no evidence of an essential element of the non-movant's cause of action. TEX. R. CIV. P. 166a(i); Fort Worth Osteopathic Hosp., Inc. v. Reese, 148 S.W.3d 94, 99 (Tex. 2004). The non-movant must then produce "more than a scintilla of evidence" to create a genuine issue of material fact on the challenged elements. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). When deciding whether there is a disputed, material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Every reasonable inference must be indulged in favor of the non-movant and any doubts must be resolved in its favor. Id. at 549.
Ownership of the Note
In his first issue, Calbert argues that the trial court erred in granting Associates' summary judgment motion because Associates had no "standing to bring suit" in that it provided "no proof as to how [it] became the owner" of the note. Calbert asserts that the statement in Neal's affidavit that "on or about May 22, 2002, [Calbert] executed a promissory note in favor of [Sterling], [Associates'] predecessor in interest" is conclusory and does not explain how Associates obtained the note from Sterling.
To establish its entitlement to summary judgment on the note Associates was required to conclusively prove (1) the existence of the note; (2) Calbert signed the note; (3) Associates is the owner or holder of the note; and (4) a certain balance is due and owing on the note. Clark v. Dedina, 658 S.W.2d 293, 295 (Tex. App.-Houston 1983, writ dism'd). In the absence of controverting summary judgment evidence, a photocopy of a note, attached to an affidavit, in which the affiant swears that the photocopy is a true and correct copy of the original note, is sufficient to prove the existence of the note. Id. at 296. Thus, the introduction into evidence of the note is prima facie evidence for the holder where the maker has not denied under oath the execution of the note. Id. If the affidavit is made by the holder of the note, it is also sufficient to prove the status of owner and holder of a note. Ecurie Cerveza Racing Team, Inc. v. Tex. Commerce Se., 633 S.W.2d 574, 575 (Tex. App.-Houston 1982, no writ). Moreover, the transfer of possession of a promissory note with the necessary endorsement is negotiation of the note such that the transferee becomes the holder of the note. TEX. BUS. COM. CODE ANN. §§ 3.201, 3.203 (Vernon 2002); Jernigan v. Bank One, Tex., N.A., 803 S.W.2d 774, 776 (Tex. App.-Houston. [14th Dist.] 1991, no writ). Here, Calbert attacks the third prong, asserting that Associates produced no summary judgment evidence of its status as owner of the note.
Associates based its summary judgment motion on Neal's affidavit, which was based on her "personal knowledge" as the "custodian" of Associates' records and the person "responsible for the collection" of the note. Neal testified that "a true and correct copy of the note," taken "from the records of [Associates]," was attached and Associates was the "owner and holder" of the note. Additionally, the face of the note bears Sterling's endorsement of the note to Associates. These averments and Associates' possession of the note with the endorsement from Sterling conclusively establish that Associates is the holder of the note. See Clark, 658 S.W.2d at 296; Jernigan, 803 S.W.2d at 776. To raise a fact issue on Associates' status as the holder, Calbert produced only his affidavit in which he testified that he "[had] never borrowed money from [Associates]." This evidence does not controvert Sterling's endorsement of the note to Associates. Additionally, Calbert did not, as required by Texas Rule of Civil Procedure 93(8), deny in a verified pleading the genuineness of Sterling's endorsement. Accordingly, we hold that the evidence is sufficient to establish as a matter of law that Associates is the owner of the note. See TEX. R. CIV. P. 93(8) (in absence of sworn denial of genuineness of endorsement, endorsement "shall be held as fully proved").
We overrule Calbert's first issue.
Evidence of the Note
In his second issue, Calbert argues that the trial court erred in considering the note as summary judgment evidence because Neal's affidavit contained hearsay and her testimony was conclusory. He asserts that Associates was not a party to the original transaction between Calbert and Sterling, Neal could not testify from personal knowledge "how [Sterling] kept their records," and, thus, she could not satisfy the requirements of the business records exception to the hearsay rule. See TEX. R. EVID. 803(6).
We review the decision of the trial court to admit or exclude summary judgment evidence for an abuse of discretion. Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 365 (Tex. App.-Houston 2007, no pet.). In the trial court, Calbert objected to Neal's affidavit on the ground that it contained hearsay and did not meet the business records exception. However, he failed to secure a written ruling on his objection; thus, he has waived review of this issue. See Clarendon Nat'l Ins. Co. v. Thompson, 199 S.W.3d 482, 490 n. 7 (Tex. App.-Houston [1st Dist.] 2006, no pet.) (objection that summary judgment affidavit contains hearsay is objection to form requiring written ruling for appellate review, while objection to conclusory statement is objection to substance that may be raised for first time on appeal).
Calbert also objected that Neal's testimony that "[Sterling is] [Associates'] predecessor in interest in the principal sum of $23,000.00" was conclusory because Associates did not "provide evidence as to how [Associates] came to be the owner of the promissory note." For the note to be admissible into evidence, Neal was not required to swear as to how the note was made by Calbert or negotiated to Associates. See Clark, 658 S.W.2d at 295-96. Neal, as the person responsible for collecting the note held by Associates, need only have sworn, as she did, that the photocopy of the note was a "true and correct copy" of the original note. See id. This constituted a sworn copy within the meaning of Texas Rule of Civil Procedure 166a(f) and, absent contrary evidence, was sufficient proof of the note. Zarges v. Bevan, 652 S.W.2d 368, 369 (Tex. 1983). Calbert produced no controverting summary judgment evidence or any verified pleading denying that he had executed the note. See TEX. R. CIV. P. 93(7). Accordingly, we hold that the trial court did not err in considering the note as summary judgment evidence.
We overrule Calbert's second issue.
Denial of Calbert's Cross-Motion for Summary Judgment
In his third issue, Calbert argues that the trial court erred in denying his no-evidence summary judgment motion because Associates produced no evidence that it had standing to sue, i.e., that it was the holder of the note.
Associates objected to the lack of 21-days notice of the hearing on Calbert's no-evidence summary judgment motion. Evidently sustaining Associates' objection, the trial court, in its judgment, indicated that it had "heard plaintiff's motion" and granted Associates' motion, but it did not deny Calbert's motion. Calbert does not complain that the trial court did not hear his motion. Moreover, Calbert's motion is a mere restatement of his first issue. For the reasons noted above, Associates proved as a matter of law that it was the holder of note. Accordingly, we hold that the trial court did not err in not hearing Calbert's no-evidence summary judgment motion.
We overrule Calbert's third issue.
Conclusion
We affirm the judgment of the trial court.