Opinion
No. 05-05-00239-CV
Opinion Filed February 23, 2006.
On Appeal from the 68th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 03-11354-C.
Reverse and Render.
Before Justices MORRIS, WRIGHT, and RICHTER.
MEMORANDUM OPINION
This is an appeal from the trial court's order granting Colonial American Casualty Surety Company's motion for summary judgment and denying Jeffrey Roger Guyton's motion for summary judgment. We reverse the judgment of the trial court and render judgment in favor of Guyton.
BACKGROUND
Guyton was employed as a salesman for Trinity Contractors, Inc. A dispute ensued regarding Trinity's responsibility for a $30,886.75 debt incurred by Guyton during the course of his employment. On May 22, 1997, Guyton executed a document evidencing (1) his resignation from Trinity, (2) his admission that he had deceived Trinity with respect to the debt, and (3) his agreement to repay the $30,886.75 to Trinity. Trinity agreed not to report Guyton to law enforcement "as long as the payments are made as described." This payment schedule provided that, after subtracting all payroll money and commissions due to Guyton from the total of $30,886.75, the remaining debt would be retired through weekly payments of $300 per week (due no later than Friday of each week) from Guyton to Trinity. The document specifically provided that the first payment was due June 27, 1997.
Guyton made only three payments totaling $529.40 over the next several months. In January of 1998, Trinity filed criminal charges against Guyton for theft. This criminal case was not resolved for more than a year.
In the meantime, Trinity filed a proof of loss with Colonial, its insurer, on July 13, 1998. Trinity's policy with Colonial provided coverage for, among other things, losses caused by the dishonesty of or theft by Trinity's employees. Trinity claimed a total net loss of $26,583.72, reflecting $3247.48 in credits for salary and commission and $1055.55 in "other credits." Colonial paid Trinity the sum of $23,308.72 in settlement of the claim. In return, Trinity assigned the "note," as Colonial and Trinity call the document, to Colonial on November 12, 1998. During this time, Guyton made no additional payments toward the balance, although payments continued to be due each Friday.
It is not clear whether the "other credits" include the $529.40 actually paid by Guyton.
On April 19, 1999, the criminal case against Guyton was dismissed because he contracted to provide restitution to Trinity. Guyton began payments to Trinity on April 23, 1999, and he continued to make biweekly payments of $100 to Trinity until July 30, 2000. In all, he paid Trinity $3275, which is the difference between the amount Trinity claimed in its proof of loss ($26,583.72) and the amount that Colonial paid on the claim ($23,308.72). In its response to Guyton's motion for summary judgment, Colonial acknowledged this restitution contract as "an obligation by Guyton to pay the balance of the loss that was not covered by Trinity's insurance."
Demand regarding the unpaid balance on the note was not made until July of 2000. By letter dated July 11, 2000, a collection specialist for Zurich North American, the parent company of Colonial, informed Guyton of the assignment of the note and demanded reimbursement in the amount of $23,308.72. Guyton failed to respond to the demand letter.
On October 23, 2003, over three years later, Colonial filed suit against Guyton to recover the outstanding balance on the note. Colonial's original causes of action included failure to make payments due under a promissory note, breach of contract, conversion, violation of the Texas Theft Liability Act, and unjust enrichment; however, Colonial later non-suited the last three causes of action. Guyton's original answer set forth eight affirmative defenses. Both parties filed motions for summary judgment. Colonial claimed that summary judgment should be granted in its favor because it is the legal owner and holder of the note made by Guyton, who owed a balance of $27,082.35 on that note. In his motion for summary judgment, Guyton challenged Colonial's ownership of the note and reiterated several of his affirmative defenses: statute of limitations, lack of consideration, duress, and accord and satisfaction. The trial court denied Guyton's motion for summary judgment. The court granted Colonial's motion, awarding Colonial $27,082.35 as the balance owed on the note, $9,180.48 in attorney's fees, and post-judgment interest at five percent per annum.
Colonial appears to have used the following calculation: $30,886.75 (the original amount of the note) minus $3275 (the amount Guyton paid to Trinity pursuant to the restitution contract after assignment of the note to Colonial) minus $529.40 (the amount Guyton paid on the note to Trinity prior to the assignment of the note). The total credit of $4,303.03 that appeared on Trinity's proof of loss does not appear to have been considered.
Guyton appeals the trial court's order granting Colonial's motion for summary judgment and denying his motion for summary judgment. He specifically argues that the trial court erred because (1) Colonial's claim is time-barred by the statute of limitations; (2) the note is unenforceable; and (3) Colonial's claim is barred by application of accord and satisfaction.
STANDARD OF REVIEW
The standard of review in summary judgment cases is well-established. When both parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 (Tex. 2000). A plaintiff moving for summary judgment on its own cause of action must conclusively prove all essential elements of its claim. MMP Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). A defendant moving for summary judgment on an affirmative defense has the burden to conclusively establish that defense. McIntyre v. Ramirez, 109 S.W.3d 741, 748 (Tex. 2003). When reviewing cross-motions for summary judgment, the appellate court considers all evidence presented by both parties. Howard v. INA County Mut. Ins. Co., 933 S.W.2d 212, 217 (Tex.App.-Dallas 1996, writ denied). The reviewing court will render the judgment that the trial court should have rendered. City of Garland, 22 S.W.3d at 356.
ISSUE ONE: STATUTE OF LIMITATIONS
In his first issue, Guyton argues that the trial court erred in granting Colonial's motion for summary judgment and in denying his motion because Colonial's claims are barred by the statute of limitations. After carefully reviewing the record before us, we agree.
The applicable statute of limitations begins to run when a right of action accrues. Atkins v. Crosland, 417 S.W.2d 150, 152 (Tex. 1967). When recovery is sought on an obligation payable in installments, the statute of limitations runs against each installment from the time it becomes due. Hollander v. Capon, 853 S.W.2d 723, 726 (Tex.App.-Houston [1st Dist.] 1993, writ denied). In other words, a separate cause of action arises for each missed payment and the cause of action begins accruing when each payment is due. F.D. Stella Products Co. v. Scott, 875 S.W.2d 462, 465 (Tex.App.-Austin 1994, no writ). This applies in determining the accrual of a cause of action with respect to promissory notes that require periodic payments. Id. A suit to collect on a debt must be brought within four years after the day the cause of action accrues. Tex. Civ. Prac. Rem. Code Ann. § 16.004 (Vernon 2002). The same holds true for an action for breach of contract. Tex. Civ. Prac. Rem. Code Ann. § 16.051 (Vernon 2002). Thus, when a plaintiff brings suit on a contract or note requiring periodic payments, recovery of any payments due more than four years before the filing of suit is barred . Id.
Here, the record shows that the note required weekly payments of $300 to retire the debt ($30,886.75 minus any credits for payroll money and commissions due to Guyton). The document specifically provided that the first payment was due June 27, 1997. If no credits had been given to Guyton to reduce the total, the last payment under the note would have been due on June 18, 1999. However, Trinity's proof of loss indicates that some credit was given to Guyton. Because this reduced the total debt and the time required to retire it, the last payment would have been due prior to June 18, 1999. Colonial filed suit on October 23, 2003, more than four years after the last payment was due.
Colonial argues that Guyton continued to perform under the note and that, by accepting payments on a schedule different from what was specified in the note, "Trinity and Colonial" impliedly accepted a change in the terms of the note. According to Colonial, this extended its time to bring suit on the note. However, the record reflects that the payments totaling $3275 were made to Trinity after the note was assigned to Colonial; Trinity no longer had an interest in the note. There is no evidence that Colonial actually received any of these payments. Moreover, the record indicates that these payments were made pursuant to the restitution contract between Trinity and the Guytons (Guyton and his wife). There is no evidence that Colonial was a party to that agreement. Based on the record before us, we cannot agree that Guyton's payments to Trinity after assignment of the note to Colonial in any way affected the statute of limitation requirements with respect to Colonial. We conclude that recovery of all payments due on the note was barred by the four-year statute of limitations.
Because Colonial's claims were barred, we therefore conclude that the trial court erred in granting Colonial's motion for summary judgment and in denying Guyton's motion. We sustain Guyton's first issue.
CONCLUSION
Our disposition of Guyton's first issue obviates any need to discuss the remaining issues. See Tex.R.App.P. 47.1. We conclude that Guyton's motion for summary judgment should be granted and that Colonial's motion for summary judgment should be denied. We reverse the trial court's judgment and render judgment in favor of Guyton. Colonial shall take nothing on its claims against Guyton.