Opinion
No. 05-10-01080-CV
02-07-2012
SUSIE WARE, Appellant v. CYBERDYNE SYSTEMS, INC., Appellee
AFFIRM; Opinion Filed February 7, 2012.
On Appeal from the 192nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. 09-06881-192
MEMORANDUM OPINION
Before Justices Lang, Murphy, and Myers
Opinion By Justice Lang
In six issues, Susie Ware contends the trial court erred in granting Cyberdyne Systems Inc.'s no evidence motion for summary judgment and in granting Cyberdyne Systems Inc.'s motion to strike portions of Ware's affidavit filed in opposition to the motion for summary judgment. We affirm.
I. Background
Ware's suit arises from her 2007 purchase of the stock of Hard Knox, LLC, a corporation which owned and operated the Ultra Lounge nightclub. The terms of the sale were contained in an "Offer to Purchase and Earnest Money Receipt" contract ("Offer") signed by Ware and sellers Henry Hoang ("H. Hoang") and Tony Hoang ("T. Hoang") and in a stock purchase agreement ("Stock Agreement') signed by Ware and H. Hoang. Ware purchased the stock for $400,000. Ware claimed she was "misled to sign the Stock Purchase Agreement believing the website" used as a marketing tool by the nightclub was owned by Cyberdyne and the site could be transferred to Ware at any time.
Two years after the purchase, Ware sued the Hoangs for breach of contract, negligence, gross negligence, and fraud. In the same suit, Ware sued Cyberdyne, made the same legal claims as against the Hoangs, and specifically alleged that, since the date of closing, she had discovered that Cyberdyne, whose sole officer and director was H. Hoang, provided the content and upkeep of the club's website. Ware alleged further that Cyberdyne "refused to release the website, and then shut down the website to give the appearance the [nightclub] had closed."
Ware contended she had discovered since the date of closing that the Hoangs knowingly failed to disclose (1) unpaid liquor taxes in an amount in excess of $650,000.00, (2) actual income for the 2006 calendar year, (3) certain valet parking funds that had been collected, and (4) two pending lawsuits against the nightclub. Additionally, she contended that the Hoangs "failed to execute the necessary documents which would allow for the corporate bond . . . held by the Texas Alcohol and Beverage Commission to be released to [her]."
Following discovery, Cyberdyne filed a no-evidence motion for summary judgment. Cyberdyne asserted no evidence existed (1) of a valid and enforceable contract between Cyberdyne and Ware; (2) that, as to the negligence and gross negligence claims, Cyberdyne owed a "duty of care" to Ware or that the duty was breached with regard to the night club's website; or (3) that, as to the fraud claim, Cyberdyne made any material and false representations to Ware. Ware responded, arguing substantive factual disputes existed precluding summary judgment. Specifically, regarding her breach of contract and negligence claims, Ware argued that, although Cyberdyne did not sign any "writing" regarding the ownership and hosting of the website, Cyberdyne's "long term relationship" with her and the club and its owning and hosting the website "created" (1) "if not an actual contract, an implied contract in the least," and (2) "a duty and a relationship which was fiduciary, if not contractual." Ware argued Cyberdyne breached its duty of care by "turning off the website and refusing to transfer ownership or control." As to her fraud claim, Ware argued H. Hoang, as Cyberdyne's officer and director, represented that Cyberdyne owned the website and it "could be moved at any time."
Ware supported her contentions with a three-page affidavit. She attached to her affidavit a "Texas Franchise Tax Public Information Report," which reflected Cyberdyne's president was "Nghiep Hoang" and its registered agent was "Henry Nghiep Hoang," and a copy of counsel's demand letter to Cyberdyne concerning the website.
Cyberdyne objected to parts of Ware's affidavit and moved to strike these specific statements:
1. Since the date of closing, I have discovered the following items which were undisclosed items . . . Defendant Cyberdyne Systems, Inc., provided the content and upkeep of the Club's website, . . . refused to release the website, and then shut down the website to give the appearance the Club had closed . . .Cyberdyne argued these statements were improper summary judgment evidence because the statements were "nothing more than either mere legal conclusions or mere factual conclusions with no underlying facts to support the conclusions." Cyberdyne also moved to strike counsel's demand letter, arguing it contained inadmissible hearsay. Following the summary judgment hearing and after considering Ware's response to Cyberdyne's motion to strike, the trial court overruled Cyberdyne's objection to the fourth statement listed above, sustained the objections to the other statements, and struck those statements. Without explicitly ruling on Cyberdyne's objection to counsel's demand letter, the trial court also granted summary judgment, dismissed Ware's claims against Cyberdyne, and subsequently severed those claims from the claims Ware brought against the Hoangs.
2. In June of 2007, Defendant Cyberdyne, who provided the website hosting, optimization, and information gathering and forwarding to the Club, shut down the web site (a major marketing and advertising venue), and refused to allow me to transfer control of the site, or even access the site.
3. Defendant Henry Hoang, as the officer and director of Defendant Cyberdyne, had explicitly informed me that it owned its own web site and could be moved at any time.
4. Defendant Cyberdyne, according to Defendant Henry Hoang, had owned and operated the web site since the inception of the Club.
5. Due to the actions of Defendant Cyberdyne, and the lack of use of the web site for a period of almost one year, I was damaged in an amount of not less than two hundred thousand dollars ($200,000.00).
II. WARE'S ISSUES
Ware contends the summary judgment should be reversed because the trial court erred in (1) considering the issue of capacity of H. Hoang as authorized agent to speak for Cyberdyne when the issue was not raised; (2) finding H. Hoang "made no statements in his capacity as an owner or director of [Cyberdyne];" (3) ruling that no evidence existed that she entered into a contract with Cyberdyne; (4) ruling Cyberdyne owed no duty of care to her; and (5) ruling that Cyberdyne did not make any material, false representations to her. Additionally, in her sixth issue, Ware contends the court erred in striking the four statements from her affidavit when Cyberdyne did not timely obtain a ruling and her statements were not conclusory. Alternatively, Ware argues she should have been given the opportunity to amend her affidavit.
III. Applicable Law
A. No-Evidence Summary Judgment
After adequate time for discovery, a party may move for summary judgment on the ground that no evidence exists to support an essential element of the non-movant's claim. Tex. R. Civ. P. 166a(i). Once the movant specifies the elements as to which no evidence exists, the non-movant bears the burden of bringing forth probative evidence that raises a genuine issue of material fact as to each essential element identified in the motion. Id.; King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003).
B. Proper Summary Judgment Evidence
Summary judgment evidence must be presented in a form that would be admissible at trial and may not be conclusory. Paragon Gen. Contractors, Inc. v. Larco Constr., Inc., 227 S.W.3d 876, 883 (Tex. App.-Dallas 2007, no pet.); Hou-Tex, Inc. v. Landmark Graphics, 26 S.W.3d 103, 112 (Tex. App.-Houston [14th Dist.] 2000, no pet.). Evidence that is conclusory is substantively defective. Paragon, 227 S.W.3d at 883. A substantive defect leaves the evidence legally insufficient and may be raised for the first time on appeal. Stewart v. Sanmina Tex. L.P., 156 S.W.3d 198, 207 (Tex. App.-Dallas 2005, no pet.). Evidence that contains hearsay is defective as to form; that is, it is competent, but inadmissible. S & I Mgmt., Inc. v. Choi, 331 S.W.3d 849, 855 (Tex. App.-Dallas 2011, no pet.); Coleman v. Woolf, 129 S.W.3d 744, 748 (Tex. App. -Fort Worth 2004, no pet.). A defect in form must be raised at the trial court, the opposing party must be given an opportunity to amend, and the trial court must rule upon the objection or the objection is waived. Choi, 331 S.W.3d at 855. Although the Texas Rules of Civil Procedure do not prescribe a period of time in which a trial court is required to rule on summary judgment objections, the "better practice" is for the court to rule on any objections at or before the time it signs an order granting or denying summary judgment. Stewart, 156 S.W.3d at 207 (quoting Allen ex rel. B.A. v. Albin, 97 S.W.3d 655, 683 (Tex. App.-Waco 2002, no pet.)).
C. Breach of Contract
A breach of contract occurs when a party fails to perform an act it has explicitly or impliedly promised to perform. Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 299 (Tex. App.-Dallas 2009, no pet.). The elements of a breach of contract claim are (1) the existence of a valid contract between plaintiff and defendant; (2) the plaintiff's performance or tender of performance; (3) the defendant's breach of the contract; and (4) the plaintiff's damage as a result of the breach. Id. Terms of a contract are implied when they are necessarily involved in the contractual relationship such that the parties must have intended to include them, but failed due to inadvertence or because they were too obvious to need expression. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 850 (Tex. 2009)(quoting 11 Richard A. Lord, Williston on Contracts § 31.7 (4th ed. 1999)).
D. Negligence and Gross Negligence
A negligence cause of action has three elements: (1) a legal duty by the defendant; (2) a breach of that duty; and (3) damages proximately resulting from that breach. D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). The threshold inquiry in a negligence case is duty. Alcoa, Inc. v. Behringer, 235 S.W.3d 456, 459 (Tex. App.-Dallas 2007, pet. denied) (op. on reh'g). Duty, for purposes of a negligence claim, is a question of whether the defendant has a legally enforceable obligation to comply with a general standard of conduct. Ling v. BDA& K Bus. Serv., Inc., 261 S.W.3d 341, 347 (Tex. App.-Dallas 2008, no pet.). It is separate from a fiduciary duty which arises from a relationship involving a high degree of trust and confidence. See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 176-77 (Tex. 1997). It generally is imposed by law and will not arise from a contract or promise. Sw. Bell Tel. Co. v. Delaney, 809 S.W.2d 493, 495 n.2 (Tex. 1991). In other words, failure to perform on a promise in the absence of a duty to act apart from the promise made will not give rise to negligence. See id. If no legal duty exists, liability for negligence may not be imposed. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995); Alcoa, 235 S.W.3d at 459. And, subject to an exception in worker's compensation cases, if no liability for negligence exists, liability for gross negligence cannot be imposed. See Sonic Syst. Intern, Inc. v. Croix, 278 S.W.3d 377, 395 (Tex. App.-Houston [14th Dist.] 2008, pet. denied); Shell Oil Co. v. Humphrey, 880 S.W.2d 170, 174 (Tex. App.-Houston [14th Dist.] 1994, writ denied).
E. Fraud
The elements of fraud are (1) a material representation by the defendant, (2) that was false, (3) and was made knowingly or recklessly without knowledge of its truth, (4) with the intent that the plaintiff act on it, (5) the plaintiff relied on the representation, and (6) the representation caused the plaintiff injury. Forney 921 Lot Development Partners I, L.P. v. Paul Taylor Homes, Ltd., 349 S.W.3d 258, 270 (Tex. App.-Dallas 2011, no pet.) (citing Formosa Plastics Corp., USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998)). For purposes of a fraud claim, a false promise of future performance qualifies as a false representation. Reservoir Syst., Inc. v. TGS- NOPEC Geophysical Co., L.P., 335 S.W.3d 297, 306 (Tex. App.-Houston [14th Dist.] 2010, pet. denied) (citing Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986)). A promise to act in the future is actionable fraud when made with the intent, design, and purpose to deceive, and no intent to perform the act. Spoljaric, 708 S.W.2d at 434. Failure to perform is a factor to be considered in determining intent, but is not, standing alone, evidence of the promisor's intent not to perform when the promise is made. Id. at 435.
IV. Standard of Review
A. Evidentiary Ruling
We review a trial court's ruling sustaining an objection to summary judgment evidence for abuse of discretion. Owens v. Comerica Bank, 229 S.W.3d 544, 548 (Tex. App.-Dallas 2007, no pet.). A trial court abuses its discretion if it acts arbitrarily and unreasonably. Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004). We will reverse a judgment on the ground of improperly excluded evidence if the error probably caused the rendition of an improper judgment. Owens, 229 S.W.3d at 548. Errors in the exclusion of evidence are generally not reversible unless the whole case turned on the challenged evidence. Id.
B. No-Evidence Summary Judgment
We review a no-evidence summary judgment under the same legal sufficiency standard used in reviewing a directed verdict, focusing on whether the non-movant produced more than a scintilla of probative evidence to raise a genuine issue of material fact. King Ranch, 118 S.W.3d at 751. More than a scintilla of evidence exists if the evidence would allow reasonable and fair-minded people to reach the verdict under review. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). Less than a scintilla exists when the evidence "is so weak as to do no more than create a mere surmise or suspicion of its existence . . . and, in legal effect, is no evidence." Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). In conducting our review, we look only to the grounds expressly asserted in the motion for summary judgment and consider the evidence in the light most favorable to the non-movant. G.H. Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011) (per curiam); Merrell Dow Pharms., 953 S.W.2d at 711. We will reverse if the non-movant produced more than a scintilla of evidence to raise a genuine issue of material fact or if the motion was granted on a claim not raised. G.H. Towing Co., 347 S.W.3d at 297 (Tex. 2011); Merrell Dow Pharms., 953 S.W.2d at 711.
V. Application of Law to Facts
The foundation of Ware's complaint against Cyberdyne is H. Hoang's alleged statement to Ware that the nightclub "owned its own website and could be moved at any time" and that Cyberdyne subsequently failed to transfer the nightclub's website to Ware or allow Ware access to it. To defeat Cyberdyne's summary judgment motion, Ware was required to present evidence raising a genuine issue of material fact that (1) a valid and enforceable contract existed between Cyberdyne and Ware; (2) Cyberdyne owed a "duty of care" to Ware and the duty was breached; and (3) Cyberdyne made a material and false representation to Ware.
In Ware's first two issues, she contends the trial court erred in considering the issue of capacity when it was not raised and in concluding H. Hoang did not act as an agent for Cyberdyne. Ware maintains that H. Hoang's statement regarding the website was made in his capacity as officer and director of Cyberdyne. Ware contends the court must have concluded H. Hoang did not make "any statements in his capacity as an owner or director of [Cyberdyne]." However, Ware cites nothing in the record that supports her contentions. Nowhere in the record can we find any contention made by Cyberdyne that H. Hoang did not make the alleged statement in his capacity as officer and director of Cyberdyne. Nor can we find anything in the record showing the trial court considered the issue of H. Hoang's capacity. We decide Ware's first two issues against her.
In issues three and four, Ware asserts the trial court erred in ruling that no evidence existed that she entered into a contract with Cyberdyne and that Cyberdyne owed no duty of care to her. In issue five, she asserts the court erred in ruling that Cyberdyne did not make any material, false representations to her. Before we address the substance of the third, fourth, and fifth issues, we consider her sixth issue where she contends the trial court erred in striking the four statements from her affidavit. In the alternative, she argues she should have been given the opportunity to amend her affidavit.
Assuming without deciding the trial court erred in striking portions of Ware's affidavit, for the reasons stated below, we conclude the error is not reversible and resolve this issue against her. Even had the trial court considered all of Ware's affidavit, the judgment was not granted in error because the evidence in Ware's affidavit did not raise a fact issue on each of the challenged elements of her claims. See Owens, 229 S.W.3d at 548.
Viewed in the light most favorable to Ware, Ware's summary judgment evidence reflects that H. Hoang, as the officer and director of Cyberdyne, informed Ware that "it owned its own website and could be moved at any time." Ware relied upon this information in determining the purchase price of the business. After the closing, Ware discovered that Cyberdyne provided the content and upkeep of the nightclub's website and had done so since the nightclub's inception. Cyberdyne refused to release the website and refused to allow Ware to use the site. Cyberdyne then closed the website to give the appearance that the nightclub had closed. According to Ware's affidavit testimony, she suffered a minimum of $200,000 in damages as a result of Cyberdyne's actions.
Ware maintains H. Hoang's statement concerning the website provided the basis for each of her causes of action. In particular, as to her breach of contract claim, she asserts that, although Cyberdyne did not sign any 'writing" regarding the ownership and hosting of the website, Cyberdyne's long term relationship" with her and its owning and hosting the website "created" (1) "if not an actual contract, an implied contract in the least." However, the statement allegedly made by H. Hoang does not make a promise to transfer the website to Ware. The statement is merely a representation that the website was transferable ("could be moved at any time"). Also, Ware argues an agreement to transfer the website could be implied from the parties' "long term" relationship. However, no evidence was presented in response to the motion for summary judgment that a relationship, contractual or otherwise, existed between her and Cyberdyne prior to the stock purchase. Without such evidence, no contract can be implied. See Mann Frankfurt, 289 S.W.2d at 850. We decide against Ware on issue number three.
As to Ware's fourth issue, she argues Cyberdyne's long-term relationship with the club created a fiduciary, if not contractual, relationship that was the basis for a duty of care and her negligence and gross negligence claims. However, a duty for purposes of a negligence claim is separate from a fiduciary duty and cannot arise from a contract or promise alone. See Schlumberger, 959 S.W.2d at 176-77; Delaney, 809 S.W.2d at 495 n.2. Rather, it is generally imposed by law. Delaney, 809 S.W.2d at 495 n.2. Aside from presenting no evidence of a long term relationship as alleged, Ware also failed to present any evidence that Cyberdyne owed her a duty separate from the alleged representation the website was transferable. See id. Without such a duty being shown, there can be no liability for negligence or gross negligence. See Centeq Realty, 899 S.W.2d at 197; Sonic Syst., 278 S.W.3d at 395. We decide issue four against Ware.
Finally, as to Ware's argument in her fifth issue that the trial court erred in ruling H. Hoang did not make any material and false representations to her, we have concluded that H. Hoang's statement does not constitute a promise to transfer the website to Ware. While a false promise of future performance qualifies as a false representation for purposes of a fraud claim, Ware presented no evidence in response to the motion for summary judgment of any promise of future performance and thus no evidence of any material and false representation as necessary for her fraud claim. See Reservoir Syst., 335 S.W.3d at 306. We resolve Ware's fifth issue against her.
VI. Conclusion
Because Ware failed to provide evidence of a promise that could be the basis for a contract or fraud claim and failed to identify evidence that supported her claim of a duty arising from a relationship between her and Cyberdyne, she failed to meet her burden of bringing forth probative evidence raising a genuine issue of material fact as to each essential element of each claim Cyberdyne challenged in its summary judgment motion. We affirm the trial court's judgment.
DOUGLAS S. LANG
JUSTICE
101080F.P05