Opinion
05-23-00539-CV
12-27-2024
VISIONARY INDUSTRIAL INSULATION, INC., Appellant v. TTHREI, LLC AND TIMOTHY HOLLAND, Appellees
On Appeal from the County Court at Law No. 2 Grayson County, Texas Trial Court Cause No. 2021-2-130CV
Before Justices Reichek, Nowell, and Carlyle
MEMORANDUM OPINION
CORY L. CARLYLE JUSTICE
Appellant Visionary Industrial Insulation, Inc. appeals from the trial court's summary judgment in favor of appellees TTHREI, LLC and Timothy Holland. We reverse in part and affirm in part in this memorandum opinion. See Tex. R. App. P. 47.4.
Appellees brought a suit on sworn account and in the alternative made claims for quantum meruit, unjust enrichment, and breach of contract. VII made counterclaims for breach of fiduciary duty and breach of contract. The parties agree that VII hired Holland as a consultant via his company TTHREI, that Holland signed a contract stating he would "consider converting from '1099' to 'Employee' status at a later date," and that Holland subsequently accepted a full-time position as VII's Chief Operating Officer. Appellees allege VII hired Holland via TTHREI "to provide consulting services on a contractor basis" and that even after VII hired Holland as its COO, TTHREI "continued to provide consulting services" pursuant to their contract because it was not expressly terminated. Appellees allege VII owed them $90,822.50. TTHREI moved for traditional summary judgment on its sworn account claim and both appellees moved for traditional and no-evidence summary judgment on VII's counterclaims. Appellant VII filed a traditional motion for summary judgment on appellees' claims based on its affirmative defense of limitations. The trial court granted appellees' motions for summary judgment and denied appellant's motion.
Visionary added a counterclaim for "Restitution (Unjust Enrichment)" after appellees moved for summary judgment.
We review a trial court's summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). When both sides move for summary judgment and the trial court grants one and denies the other, we review both sides' summary judgment evidence and determine all questions presented, rendering the judgment the trial court should have rendered. FM Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 972 (Tex. 2000).
Genuine issues of material fact exist as to TTHREI's and Holland's affirmative claims
We begin with TTHREI's affirmative traditional motion for summary judgment, and in turn, VII's motion on TTHREI's claims based on the affirmative defense of limitations. We conclude there is a genuine question of material fact as to whether appellees' account with VII closed when VII hired him as a salaried COO or remained open, which means the trial court should have denied both motions. "Under rule 185, a party may use a suit on sworn account to pursue recovery on an action founded on, among other things, an open account for goods or personal service rendered or labor or materials furnished." Hale v. Rising S Co., LLC, No. 05-21-01103-CV, 2023 WL 3714751, at *4 (Tex. App.-Dallas May 30, 2023, pet. denied) (mem. op.). Appellees contend the account remained open from 2016 through 2019 while VII argues the account closed in November 2016 when it hired Holland as its Chief Operating Officer, based on VII CEO Chang Jang's testimony. Appellees' claims are only timely if the account remained open because they did not bring suit until July 2021.
Holland testified that he, through TTHREI, remained a consultant to VII even after VII hired him as a COO and began paying him a salary. VII urges he admitted otherwise in an August 2019 email when he said "TTHREI consulting fees were incurred before I became an employee and we had a signed consulting agreement." The parties have not submitted any written agreement regarding Holland's shift to COO. Their original consulting agreement provides no support for this issue, stating only, "Upon mutual agreement Consultant will consider converting from '1099' to 'Employee' status at a later date." Whatever Holland may have "considered" doing provides no support for what actually happened.
Invoices attached to the parties' summary judgment motions demonstrate that, beginning with TTHREI's November 27, 2016 biweekly invoice, it began subtracting Holland's $3,000 salary from amounts otherwise billed hourly. The record includes TTHREI invoices through July 23, 2017, and other summary documents until the end of 2017 indicating TTHREI's claimed $90,822.50 balance. VII, via its CEO Jang, claims any invoices from TTHREI after it hired Holland as CEO are "a false record" and something it "did not agree to." VII also points to the $20,000 in payments it made to Holland during the six months after he offered to settle his claims for $60,000 as evidence that the matter was settled and that VII owed him nothing further based on his acceptance. The trial court's judgment awarded the full $90,822.50 with no offset. There is a fact issue as to offset. See Tex. R. Civ. P. 185.
Construing the evidence in the light most favorable to nonmovant VII, we conclude there are fact issues as to appellants' suit on sworn account precluding traditional summary judgment. The trial court erred by granting appellees' summary judgment on the sworn account claim because there are genuine issues of material fact and on the other claims because appellees did not include them in its affirmative motion for summary judgment. See Nall v. Plunkett, 404 S.W.3d 552, 555 (Tex. 2013) (trial court cannot grant greater summary judgment relief than movant asked for). The trial court did not err in denying VII's motion for summary judgment due to the fact issues.
We note, though VII did not raise the issue, that appellees' live petition is not sworn as required, though the original petition included an affidavit. See Tex. R. Civ. P. 185. VII's live answer includes a sworn denial, as did its original answer.
The trial court should have denied appellees' no-evidence motions for summary judgment on VII's counterclaims
VII first claims that appellees' no-evidence motion for summary judgment as to its counterclaims lacks sufficient specificity. We disagree. A no-evidence motion for summary judgment must specifically state which elements of the non-movant's claims lack supporting evidence. Jose Fuentes Co., Inc. v. Alfaro, 418 S.W.3d 280, 283 (Tex. App.-Dallas 2013, pet. denied) (en banc); see Tex. R. Civ. P. 166a(i). "A no-evidence motion that only generally challenges the sufficiency of the non-movant's case and fails to state the specific elements that the movant contends lack supporting evidence is fundamentally defective and cannot support summary judgment as a matter of law." Jose Fuentes Co., 418 S.W.3d at 283 (citing Roehrs v. FSI Holdings, Inc., 246 S.W.3d 796, 805 (Tex. App.-Dallas 2008, pet. denied)). A no-evidence motion for summary judgment "may be directed at specific factual theories or allegations within a claim or defense only if the challenge to the factual allegation is connected to a no-evidence challenge to a specified element of a claim or defense." Id.
Appellees' no-evidence motion for summary judgment specifically argued "The claim that Timothy Holland charged for work that he was not contracted to do is not supported and [VII] has produced no evidence to the contrary." This is a direct attack on the breach element of VII's breach-of-fiduciary-duty claim, as well as VII's allegation in its live counterpetition that Holland acted in his own self-interest by "operating as both COO and purportedly as a self-authorized/appointed consultant simultaneously." The law will not operate to penalize appellees for making a direct, uncomplicated assertion in their no-evidence summary judgment motion. And in any event, as we explained in a later case, the Jose Fuentes Co. no-evidence motion the en banc court held insufficient under rule 166a(i) listed the claims, their elements, and stated only that there was no evidence to support "one or more" of the elements of the claim. See De La Cruz v. Kailer, 526 S.W.3d 588, 593 (Tex. App.-Dallas 2017, pet. denied). Appellees' no-evidence motion is sufficiently specific.
As to the merits, we conclude VII has produced more than a scintilla of evidence to support each element of its counterclaims for breach of fiduciary duty and breach of contract. VII first claims breach of fiduciary duty, the elements of which are: (1) a fiduciary relationship between plaintiff and defendant; (2) breach of that duty; that (3) results in injury to plaintiff or benefit to defendant. Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.-Dallas 2006, pet. denied). Considering the evidence in the light most favorable to VII as nonmovant, Jang's testimony-when considered in concert with Holland's version of events, TTHREI's invoices, and VII's financial statements-is "evidence a reasonable jury could credit." See Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). We note Holland's version of events because, though it is contrary to Jang's testimony and VII's evidence, a reasonable jury could disregard it. See id. VII points to Holland's authority as COO to order himself paid or to order payments deferred as a portion of its proof of a breach of fiduciary duty because he was not allowed to be paid both as COO and a contractor through TTHREI. Holland seems to claim implicit authority to undertake these actions. Again, because a reasonable jury could disregard Holland's evidence, at the no-evidence summary judgment phase, so must we. See id. VII has produced more than a scintilla of evidence that Holland owed a fiduciary duty as VII's COO and breached that duty by authorizing hourly payments to TTHREI while a salaried employee of VII, costing VII additional money. See Jones, 196 S.W.3d at 447.
VII also produced more than a scintilla of evidence on each element of its breach of contract claim. The elements of breach of contract are (1) a valid contract; (2) plaintiff performed or tendered performance as contractually required; (3) defendant breached by failing to perform or tender performance as contractually required; and (4) plaintiff sustained damages due to the breach. Pathfinder Oil & Gas, Inc. v. Great Western Drilling, Ltd., 574 S.W.3d 882, 890 (Tex. 2019). VII's claim is that it settled Holland's claim and that Holland has breached the settlement agreement by "bringing this suit despite accepting the $20,000.00 in consideration for, among other things, satisfaction of any outstanding disputes." VII claims the costs of defending the lawsuit as its damages.
VII produced Holland's offer to accept $60,000 to settle the approximately $90,000 he claimed VII owed TTHREI. VII also produced its counsel's letters to Holland, which include VII's offer to pay him $20,000 to satisfy any obligations and the uncontroverted assertion in a May 29, 2020 email that VII paid and Holland accepted $20,000. A written contract is not required in this situation. See Tex. Bus. & Com. Code § 26.01(6). This is more than a scintilla of evidence to support a formation of a valid contract: offer, counteroffer, acceptance, meeting of the minds, mutual consent to the terms, and execution and delivery of the contract with the intent that it be mutual and binding. See Tyco Valves & Controls, L.P. v. Colorado, 365 S.W.3d 750, 771 (Tex. App.-Houston [1st Dist.] 2012), aff'd on other grounds 432 S.W.3d 885 (Tex. 2014). In their brief, appellees appear to focus on accord and satisfaction as a defense to the parties' original contract for Holland and TTHREI to consult with VII. They further suggest the letters from counsel are "a disingenuous attempt to manipulate a settlement." This misses the point of addressing whether there is more than a scintilla of evidence to support VII's counterclaim, which is for breach of an alleged settlement agreement.
See BPX Operating Co. v. Strickhausen, 629 S.W.3d 189, 201 (Tex. 2021) (quoting Yelderman v. McCarthy, 474 S.W.2d 781, 784 (Tex. Civ. App.-Houston [1st Dist.] 1971, writ ref'd n.r.e.) ("A creditor who accepts and cashes a check tendered as full payment of a disputed claim cannot vary the legal effect of such acceptance as an accord and satisfaction by protesting that he is accepting the check as part payment only.") (citations omitted)).
As noted, we view the evidence in the light most favorable to VII as nonmovant. See Merriman, 407 S.W.3d at 248. In addition to producing more than a scintilla of evidence to support the existence of a valid contract, VII produced evidence showing it performed by paying the $20,000 and that it has been sued based on its performance, incurring damages. The trial court erred by granting the no-evidence motion for summary judgment on VII's breach of contract counterclaim as well.
The state of the evidence at this point indicates these claims should proceed to trial. See Jose Fuentes Co., Inc., 418 S.W.3d at 286 ("The purpose of a motion for no-evidence summary judgment is to assess the proof on an element of a claim or defense the movant believes in good faith is unsupported by evidence, after there has been adequate time for discovery, to determine if there is a genuine need for trial."). The trial court erred when it granted appellees' motion for summary judgment and did not err when it denied appellant's motion for summary judgment.
We affirm the trial court's judgment in part, reverse in part, and remand for further proceedings not inconsistent with this opinion.
JUDGMENT
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED in part and REVERSED in part. We REVERSE that portion of the trial court's judgment that granted appellees' motion for summary judgment. In all other respects, the trial court's judgment is AFFIRMED. We REMAND this cause to the trial court for further proceedings not inconsistent with this opinion.
It is ORDERED that each party bear its own costs of this appeal.