Opinion
No. 13-05-085-CV
Memorandum Opinion Delivered and Filed May 18, 2006.
On Appeal from the 61st District Court of Harris County, Texas.
Before Chief Justice VALDEZ and Justices RODRIGUEZ and CASTILLO.
MEMORANDUM OPINION
Appellant, Gene Bailey ("Bailey"), appeals from the trial court orders granting no-evidence motions for summary judgment in favor of CarMax Auto Superstores, Inc. ("CarMax"), Phillip Smith d/b/a Elite Truck Sales ("Elite"), and Christopher Fleck ("Fleck"). He also appeals the trial court order granting CarMax's motion to strike Bailey's third amended petition as to CarMax, Elite, and Fleck. We affirm in part, reverse in part, and remand.
On appeal, Elite and Fleck have filed a joint brief in which they do not differentiate between their arguments.
I. Factual Background
Title to a Mercedes vehicle was originally issued in Florida in 1995. The vehicle was apparently stolen in 1999. In June 2000, CarMax appraised the car. On September 23, 2000, CarMax purchased the vehicle for $22,000, after determining the person holding title transferred what appeared to be a good title. CarMax purchased the vehicle as a "buy-bid"; it already had a wholesaler, Fleck, committed to purchase the vehicle. Although Fleck arranged the purchase of the vehicle from CarMax for $23,000, title transferred on September 25, 2000, directly to Elite and not to Fleck. Neither Fleck nor Elite were affiliated with CarMax. Elite never had any intent to keep the vehicle. Fleck contacted the financing person for Roland Jackson ("Jackson") and Derrick Taylor ("Taylor"), d/b/a Integrity Imports Enterprise, a/k/a Integrity Motors (collectively "Integrity"). On October 10, 2000, Elite sold the vehicle and transferred title to Integrity for $26,500.
Fleck asserted he was acting as agent for Elite and had conducted several similar purchases in the past on its behalf. Elite agreed it did business with Fleck on occasion.
The financing person for Integrity is also the owner of MRD Investments, Inc. ("MRD").
Integrity similarly has no affiliation with CarMax.
In December 2000, Bailey paid $34,480.65 to purchase the vehicle from Integrity. Bailey received money for his trade-in vehicle and financed the balance of the purchase price through his firefighters union.
With each of these transactions, good and valid title appeared to transfer with the vehicle and, indeed, Bailey received a Texas title. However, Bailey learned the vehicle was stolen when the Houston police department recovered it from him in April 2001.
After Bailey learned the car had been stolen, he notified Integrity in May 2001. Integrity notified Elite, which notified CarMax. CarMax refunded $23,000 to Elite, with the intent that it ultimately reach Bailey; Elite refunded $26,500 to Integrity, with the same intent that it ultimately be paid to Bailey. However, Integrity gave the check to MRD which deposited the money; none was transferred to Bailey.
The record contains little relating to MRD's role. The money refunded by Elite was apparently transferred to MRD and used by Integrity to finance the purchase of another vehicle which was offered to Bailey to replace the Mercedes. Bailey declined. Bailey was ultimately paid $35,596.68 by his insurance company, Geico, which included the purchase price and interest paid. Geico filed a petition in intervention in March 2004, asserting a subrogation claim.
II. Procedural Background
In November 2001, Bailey brought suit against Integrity, Elite, and CarMax. Bailey brought claims for breach of contract and conversion against Integrity. He brought claims for breach of express and implied warranty of title, Deceptive Trade Practices Act ("DTPA"), negligent misrepresentation, negligence and gross negligence, and fraud against Integrity, Elite, and CarMax.
On June 28, 2002, a default judgment was entered in favor of Bailey as against Taylor and Jackson, individually and d/b/a Integrity Imports. Neither ever answered or appeared in the suit. Damages, attorney fees, and costs were left to be determined with the remainder of the action.
Beginning in fall 2002, CarMax and Elite each filed motions for summary judgment. Subsequent to the filing of these motions for summary judgment but prior to any ruling thereon, Bailey filed a first amended petition adding Fleck as a defendant, and adding (1) a cause of action for negligence per se for violation of the Texas Certificate of Title Act as to CarMax, Elite, and Fleck, and (2) a cause of action for civil conspiracy as between Fleck and Elite. Fleck was also named as a defendant to the causes of action for breach of express and implied warranty of title, DTPA, negligent misrepresentation, negligence and gross negligence, and fraud.
On October 24, 2002, the trial court, in separate orders, granted summary judgment in favor of CarMax and Elite as to all claims brought by Bailey. These orders were effective as to all claims raised in the original petition, but new causes of action raised in the first amended petition remained outstanding.
On December 26, 2002, CarMax filed a second motion for summary judgment addressing the new cause of action against it for negligence per se. On December 31, 2002, Elite similarly filed a second motion for summary judgment addressing Bailey's claims against it for negligence per se and civil conspiracy. Fleck filed his no-evidence motion for summary judgment as to all claims against him on January 31, 2003. On December 7, 2002, Bailey filed a second amended petition adding MRD as a defendant for the same causes of action brought against Integrity, including conversion.
In October 2002, CarMax filed a third party petition against MRD for contribution and indemnity, unjust enrichment, and money had and received. In June 2003, CarMax filed a motion for partial summary judgment against MRD, which was granted in July 2003. CarMax was awarded $23,000 (the amount of money refunded by Carmax to Elite, which was intended for Bailey), plus interest and attorney fees.
In January 2004, the trial court entered three orders granting summary judgment in favor of CarMax, Elite, and Fleck, as to all claims brought by Bailey. None of the trial court's orders on summary judgment specify the grounds for the rulings.
Summary judgment in favor of CarMax was granted as against Geico in May 2004.
In May 2004, an order for default judgment was entered in favor of CarMax as to liability and damages as against Roland Jackson. In July 2004, the trial court entered an "Interlocutory Default Judgment" in favor of CarMax as against Taylor as to issues of liability, with damages to be determined at a later date.
Trial between Bailey and MRD, the only remaining defendant, was set for November 29, 2004. On November 17, 2004, Bailey filed a third amended petition in which he included a new cause of action against CarMax, Elite, Fleck, Integrity, and MRD for "money had and received." This third amended petition was ordered stricken on November 29, 2004, as being a surprise and prejudicial on its face. Trial proceeded between Bailey and MRD, and the jury returned a verdict of no liability for MRD. The jury also assessed liquidated damages. The trial court entered its final judgment on December 28, 2004. This appeal followed.
Bailey brings no issue on appeal relating to the jury's no-liability verdict in favor of MRD.
III. Issues on Appeal
Bailey appeals the trial court orders granting no-evidence motions for summary judgment in favor of CarMax (issue one), Elite (issue three), and Fleck (issue four). In issue two, he appeals the trial court order granting CarMax's motion to strike his third amended petition as to CarMax, Elite, and Fleck.
IV. Analysis A. The Orders Granting Summary Judgment 1. Standard of Review
The function of summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a jury trial. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 n. 5 (Tex. 1979); Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex. 1972); Alaniz v. Hoyt, 105 S.W.3d 330, 344 (Tex.App.-Corpus Christi 2003, no pet.). On appeal, the standard of review for the grant of a motion for summary judgment is determined by whether the motion was brought on no-evidence or traditional grounds. See TEX. R. CIV. P. 166a(i), (c); Alaniz, 105 S.W.3d at 344; Ortega v. City Nat'l Bank, 97 S.W.3d 765, 771 (Tex.App.-Corpus Christi 2003, no pet.) (op. on reh'g).
A no-evidence motion for summary judgment asserts that there is no evidence of one or more essential elements of a claim on which the adverse party will bear the burden of proof at trial. TEX. R. CIV. P. 166a(i); Alaniz, 105 S.W.3d at 344; Scripps Tex. Newspapers, L.P. v. Belalcazar, 99 S.W.3d 829, 840 (Tex.App.-Corpus Christi 2003, pet. denied). This type of motion must specifically identify the elements of the claim for which there is no evidence. Meru v. Huerta, 136 S.W.3d 383, 386 (Tex.App.-Corpus Christi 2004, no pet.). Conclusory motions or general no-evidence challenges to an opponent's case are not appropriate under this rule. Id. at 387.
We apply the same legal-sufficiency standard of review to a no-evidence summary judgment as we apply to a directed verdict. Alaniz, 105 S.W.3d at 344; Belalcazar, 99 S.W.3d at 840. "Like a directed verdict, then, the task of the appellate court is to determine whether the plaintiff has produced any evidence of probative force to raise fact issues on the material questions presented." Belalcazar, 99 S.W.3d at 840.
The movant has no burden to attach any evidence to a no-evidence motion for summary judgment. See TEX. R. CIV. P. 166a(i); Ortega, 97 S.W.3d at 772. The non-movant bears the entire burden of producing evidence to defeat a no-evidence motion for summary judgment. Alaniz, 105 S.W.3d at 344. To raise a genuine issue of material fact, all that is required of the non-movant in responding to a no-evidence motion for summary judgment is to produce a scintilla of probative evidence. Alaniz, 105 S.W.3d at 344; Ortega, 97 S.W.3d at 772. "Less than a scintilla of evidence exists when the evidence is `so weak as to do no more than create a mere surmise or suspicion' of a fact." Alaniz, 105 S.W.3d at 344; see Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). Conversely, more than a scintilla exists when the evidence "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Alaniz, 105 S.W.3d at 344; Ortega, 97 S.W.3d at 772 (quoting Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994)).
A no-evidence summary judgment will be sustained when (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence conclusively establishes the opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005); King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). Where the trial court does not specify the basis for its summary judgment, the appealing party must show it is error to base it on any ground asserted in the motion. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 474 (Tex. 1995); Lewis v. Adams, 979 S.W.2d 831, 833 (Tex.App.-Houston [14th] 1998, no pet.) (holding that summary judgment must be affirmed where multiple grounds are asserted and the appellant does not attack all grounds on appeal).
2. Bailey's Evidence
Bailey argues that not only his immediate seller, Integrity, but also all upstream sellers breached their duty to convey good title, and in doing so became liable to him under various theories. In response to numerous motions for summary judgment, Bailey tendered evidence designed to show that paperwork and procedures associated with the initial purchase by CarMax were inconsistent with CarMax's general practice. CarMax generally accompanies each purchase with an "Appraisal Purchase Checklist" form. In completing this form, the vehicle registration, title, and owner's driver's license and/or any accompanying power of attorney are all reviewed for consistency. All these documents are required in this process, which is then reviewed by a manager. Bailey tendered evidence to suggest some deviations from CarMax's standard procedures, questioning whether there was review by a manager or confirmed receipt of the seller's registration form. Internal purchase documentation of CarMax was tendered to show differing addresses for the owner's purported attorney-in-fact, a discrepancy in mileage of the vehicle, and two different powers of attorney from the owner to the person effecting the sale, dated one day apart but executed in two different states.
Evidence suggested the out-of-state title for the five-year-old car presented to CarMax in 2000 reflected only sixty-eight miles on the vehicle. The mileage certified by both CarMax and Elite on the September 2000 purchase and sale from CarMax to Elite was 78,619.
Bailey's evidence also included deposition testimony of a CarMax salesman and another used car dealer, tendered as an expert, to show that the discrepancies should have raised "red flags" prompting further inquiry to verify title information. Bailey contends that CarMax's failure to investigate further, in the face of such discrepancies, constituted negligence. Bailey contends Elite and Fleck were similarly negligent, and that the evidence also establishes fact issues with respect to several other causes of action.
This salesman, a senior CarMax buyer, was not involved in this particular purchase. He testified he would know such a vehicle would be resold and that others would rely on CarMax's representation of good title. He testified that, had he handled the paperwork, the "red flags" would have caused him to conduct more due diligence.
Expert testimony was tendered to support Bailey's contention that CarMax failed to meet normal dealer standards of care. Bailey's evidence also reflected that CarMax failed to fill in the mileage on its bills of sale; Bailey contends this raises a reasonable inference that CarMax knew of a problem with the title but sold the vehicle anyway.
3. The Causes of Action and Challenged Elements a. Claim for Breach of Express and Implied Warranty of Title
The Uniform Commercial Code, as adopted by Texas, provides that "there is in a contract for sale a warranty by the seller that the title conveyed shall be good," and that "goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no notice." TEX. BUS. COM. CODE ANN. § 2.312.(a)(2) (Vernon 1994). A seller therefore breaches the implied warranty of title where he purports to give good and clear title when he does not actually have good and clear title. Id.
An express warranty is created when a seller states an affirmative fact or promise to a buyer which relates to goods sold and becomes part of the basis of the bargain. See TEX. BUS. COM. CODE ANN. § 2.313 (Vernon 1994). It is undisputed that neither CarMax, Elite, nor Fleck sold the vehicle to Bailey or had any type of communications with Bailey prior to or respecting the sale of the vehicle to Bailey. Therefore, none of them made an express warranty of title to Bailey, and we restrict our analysis to implied warranty.
A buyer of a stolen automobile fails as a matter of law to obtain good title. Jamison v. Sockwell, 405 S.W.2d 618, 622 (Tex.Civ.App.-Dallas 1966, writ ref'd n.r.e.). However, section 2.607 of the business and commerce code provides that once a buyer has accepted goods, he must within a reasonable time after he discovers or should have discovered any breach notify the seller of the breach or be barred from any remedy. See TEX. BUS. COM. CODE ANN. § 2.607(c)(1) (Vernon 1994); Lochinvar Corp. v. Myers, 930 S.W.2d 182, 189 (Tex.App.-Dallas 1996, no writ) (observing that this notice requirement is designed to provide the seller an opportunity to cure any defect). Under this statute, some courts of appeals districts in Texas conclude that a buyer is required to give notice of an alleged breach of warranty to a remote as well as an immediate seller/manufacturer. See, e.g., Wilcox. v. Hillcrest Mem'l Park of Dallas, 696 S.W.2d 423, 424-25 (Tex.App.-Dallas 1985), writ ref'd per curiam, 701 S.W.2d 842 (Tex. 1986); cf. Vintage Homes, Inc. v. Coldiron, 585 S.W.2d 886, 888 (Tex.App.-El Paso 1979, no writ) (holding the notice requirement applies only between buyer and immediate seller). The Houston First District Court of Appeals holds that under section 2.607(c)(1), a buyer is required to give notice of an alleged breach of warranty not only to the immediate but also to a remote seller/manufacturer. U.S. Tire-Tech, Inc. v. Boeran, B.V., 110 S.W.3d 194, 199 (Tex.App.-Houston [1st] 2003, pet. denied) ("The drafters of the UCC did not read section 2.607 as referring solely to the relationship between a buyer and an immediate seller.").
The Supreme Court expressly reserved judgment on the question of whether a buyer must notify a remote seller-manufacturer of an alleged breach of warranty within a reasonable time. See Wilcox v. Hillcrest Mem'l Park of Dallas, 701 S.W.2d 842, 843 (Tex. 1986) (per curiam). It has not since decided the issue. See Compaq Computer Corp. v. Lapray, 135 S.W.3d 657, 674 n. 14 (Tex. 2004).
Bailey urges that comment 4 to section 2.607 provides that notification requirements are judged differently as between a remote and an immediate seller. However, this comment instead addresses a distinction between a retail and a merchant buyer, noting that additional time may be encompassed within what is a "reasonable time" for a lay purchaser or consumer. See U.S. Tire-Tech, Inc. v. Boeran, B.V., 110 S.W.3d 194, 199 (Tex.App.-Houston [1st] 2003, pet. denied). The U.S. Tire-Tech case also terms this notice requirement as a condition precedent for a buyer's cause of action, rather than an affirmative defense. Id. at 200.
In summary judgment motions, both Carmax and Fleck urged that Bailey had no evidence that he had ever notified either of them of any problem. Facts reflect Bailey notified only his immediate seller, Integrity. Bailey essentially concedes this point, and instead urges that notice to his immediate seller is effective as to all those up the chain of title, and that no additional notice is required.
It was undisputed that Bailey did not know that either Carmax or Elite had been holders in the chain of title until after the Houston police department recovered the vehicle. However, after Bailey notified Integrity, information that the car was stolen was passed up to prior owners in the chain of title. CarMax took steps to effect a cure by refunding the purchase price of the vehicle to Elite; Elite similarly acted to cure by refunding the purchase price to Integrity. Evidence reflected that both CarMax and Elite intended that money to reach Bailey.
We agree with our sister courts in Dallas and Houston, following the plain reading of the statute and concluding that no policy concerns are presented in this case requiring that we advance a remedy additional to that available against an immediate seller, where only that immediate seller has been notified. See U.S. Tire-Tech, 110 S.W.3d at 199; Wilcox, 696 S.W.2d at 424-25.
We note that in its first motion for summary judgment, Elite argued only that it could not have breached any express warranty because it never appeared in the chain of title and only served as a financier of the vehicle. This was patently incorrect; summary judgment evidence tendered by Bailey clearly controverted that claim and reflected that Elite held title and was not solely a financier. A supplement to the motion for summary judgment was filed, but attached only an affidavit of Smith which did not address the issue of notice. No amended motion for summary judgment appears in the record in which Elite raised any other argument as to this claim. There is no mention of lack of notice in Elite's pleadings.
Bailey tendered as evidence copy of a title on the vehicle transferred to Phillip Smith, and signed by Smith (d/b/a Elite).
Elite did raise as a defense its full compliance with the certificate of title act. TEX. TRANSP. CODE ANN. 501.001 et seq. (Vernon 1999 and Supp. 2005). Its no-evidence motion for summary judgment asserts that the original title was included in the transaction, was inspected, and that Elite had not previously encountered any such problem with a stolen vehicle, such that this was all unforeseeable. We note that a no-evidence motion for summary judgment is limited to an essential element of a claim or defense on which the adverse party would have the burden of proof at trial. See Keszler v. Mem'l Med. Ctr. of E. Tex., 105 S.W.3d 122, 128 (Tex.App.-Corpus Christi 2003, no pet.). To the extent that the motion could be considered as a traditional motion for summary judgment, Elite attached no evidence in support of these assertions. We further note that although Elite raises the argument of no notice in its appeal brief, this ground for summary judgment was not presented by Elite to the trial court.
It is the movant's burden in a no-evidence motion for summary judgment to identify the challenged element of the claim. Meru, 136 S.W.3d at 386. A non-movant has no burden to bring forward evidence on a non-challenged element of a claim. Alaniz, 105 S.W.3d at 344 (finding the question to be whether the plaintiff produced any evidence of probative force to raise fact issues on the material questions presented).
[T]he proper procedure to raise a new no-evidence point is to file an amended or supplemental no-evidence motion for summary judgment specifically setting forth the new element or elements of the non-movant's cause of action or affirmative defense for which it is claimed no evidence has been presented[;] . . a new element asserted as a basis for a no-evidence motion may not first be presented in a reply to a response to a no-evidence motion for summary judgment.
Larue v. Chief Oil Gas, L.L.C., 167 S.W.3d 866, 876 (Tex.App.-Fort Worth 2005, no pet.) (citing Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex. 1993)). Rule 166a(i) provides that the "motion must state the elements as to which there is no evidence." This element was not identified by Elite. Although the argument is raised in Elite's appellate brief, it was not placed before the trial court. We therefore conclude that the basis for granting Elite's no-evidence motion for summary judgment could not properly have been the absence of notice.
We note that Elite did file a response to Bailey's motion for rehearing or new trial with respect to the summary judgment order in favor of Elite. In that response, Elite asserted the defense of no notice. However, although this ground was before the trial court when it denied Bailey's motion for rehearing or new trial, it was not before the trial court prior to its ruling on the summary judgment motion.
Although Elite attached an affidavit to its first motion for summary judgment, signed by Phillip Smith, it asserted only that Smith had no knowledge the vehicle was stolen, had made no representations about the vehicle to anyone, and, when he did learn it was a stolen vehicle, contacted CarMax, secured a refund and refunded the purchase money to Integrity. It does not address the issue of notice. Similarly, in an affidavit attached to Elite's second motion for summary judgment, there is no reference to notice or lack thereof.
Summary judgment may not be affirmed on a basis not raised in Elite's motion, and evidence was tendered to controvert the basis which was raised before the trial court. Issues not expressly presented to the trial court by written motion or response to the motion for summary judgment cannot be considered as grounds for reversal. Tex. R. Civ. P. 166(a); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993). We may only consider the record as it existed at the time of the motion and may not consider sua sponte grounds for reversing the judgment. San Jacinto River Authority v. Duke, 783 S.W.2d 209, 210 (Tex. 1990) (citing Central Education Agency v. Burke, 711 S.W.2d 7, 9 (Tex. 1986)). Accordingly, on the record before us, we cannot uphold summary judgment granted in favor of Elite on the claim for breach of warranty of title.
We overrule Bailey's issues one, three, and four as to the claim for breach of warranty as it relates to CarMax and Fleck. We sustain Bailey's issues one, three and four as to the claim for breach of warranty as it relates to Elite.
b. Negligence Per Se
Bailey's claim for negligence per se is based upon alleged violations of the Texas Certificate of Title Act (the "Act"). See TEX. TRANSP. CODE ANN. § 501.001 et seq. (Vernon 1999 and Supp. 2005). Bailey specifically references section 503.033(b)(2)(B) of the Act, summarily stating in his brief that since CarMax failed to deliver good title, the act was violated. See id. § 503.033(b)(2)(B) (Vernon 1999).
CarMax and Elite both contend that no tort duty arises under the Act and, further, there was no evidence of duty owed by either of them to Bailey (no foreseeability). They urge this act was never meant to enlarge the tort liability of a seller. CarMax also argues that Bailey sustained only economic loss for the value of the contract with Integrity.
Elite also attached the affidavit of Phillip Smith to this motion, in which he asserts his lack of any knowledge that the vehicle was stolen.
Section 503.033(b)(2)(B) of the Act, relied upon by Bailey, relates to the issuance or renewal of a motor vehicle dealer's distinguishing number and requires that the applicant have purchased a properly executed security bond. Id. § 503.033(b)(2)(B). That bond must be conditioned upon a payment and the transfer by the applicant of good title to each motor vehicle the applicant offers for sale. Id. Nothing in this section creates an avenue for recourse, other than to state that a surety company can be liable in the event damages are awarded against an automobile dealer for failure to deliver either payment or title.
See, e.g., Old Republic Sur. Co. v. Reyes, 2002 Tex. App. LEXIS 5649, at *6-*7 (Tex.App.-Dallas 2002, pet. denied) (designated as opinion); Geters v. Eagle Ins. Co., 834 S.W.2d 49, 50 (Tex. 1992) (per curiam) (addressing the predecessor statute). We note that, in his response to Elite's second motion for summary judgment, Baily also cited section 503.093 for the proposition that it permits an individual to sue for damages where a provision of the certificate of title act was allegedly not satisfied. TEX. TRANSP. CODE ANN. § 503.093 (Vernon 1999). Although this section enables an individual to bring an enforcement action, it does not address or permit an action to recover personal damages. See id.
Bailey tenders no authority to lead us to conclude that the Act was designed to provide a remedy to a consumer in addition to that already provided for under other available law. The legislative intent behind enactment of the Act was indeed to "lessen and prevent theft of motor vehicles, traffic in stolen vehicles, and sale of encumbered vehicles without disclosure of existing liens." Hudson Buick v. Gooch, 7 S.W.3d 191, 197 (Tex.App.-Tyler 1999, pet. denied) (citing Najarian v. David Taylor Cadillac, 705 S.W.2d 809, 811 (Tex.App.-Houston [1st] 1986, no writ)). However, the Act neither provides for nor prohibits penalties for persons who have transferred interest in motor vehicles without compliance with its provisions thereof. Id. Moreover, "[t]he Certificate of Title Act was never intended to enlarge the tort liability of a seller." Id. (citing Rush v. Smitherman, 294 S.W.2d 873, 878 (Tex.Civ.App.-San Antonio 1956, writ ref'd)). "The Act does not provide for an independent cause of action for violations; instead, it renders void any transfer of title until the requirements of the Act are met." Gourrier v. Joe Meyers Motors, Inc., 115 S.W.3d 570, 575 (Tex.App.-Houston [14th] 2002, no pet.) (finding no showing of any legislative intent to provide a civil cause of action for any violations). If the legislature grants private standing to bring an action for violation of a statute, it must clearly do so. Brown v. De La Cruz, 156 S.W.3d 560, 566 (Tex. 2004). Legislative silence may reflect many things, including implied delegation to the courts or administrative agencies, lack of consensus, oversight, or mistake. Id. Regardless, we do not have authority "to legislate . . . to fill any hiatus Congress has left." Id. (citing PPG Indus., Inc. v. JMB/Houston Centers Partners Ltd. P'ship, 146 S.W.3d 79, 84 (Tex. 2004)).
We conclude no authority exists to support the interpretation that the Act encompasses or contemplates a civil cause of action. We overrule Bailey's issues one, three, and four as to the cause of action of negligence per se as to CarMax, Elite, and Fleck.
c. Negligence and Gross Negligence
Recovery under a claim for common-law negligence requires that a plaintiff establish (1) a legal duty, (2) a breach of that duty, and (3) damages proximately resulting from the breach. Mellon Mortg. Co. v. Holder, 5 S.W.3d 654, 665 (Tex. 1999). A defendant is grossly negligent when a plaintiff establishes by clear and convincing evidence that the act or omission complained of involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others (the objective element), and that the defendant was aware of the risk involved, but nevertheless proceeded in conscious indifference to the rights, safety, or welfare of others (the subjective element). Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 23 (Tex. 2004) (citing Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 23 (Tex. 1994)). A finding of negligence is a prerequisite to any finding of gross negligence. Wright v. Gifford-Hill Co., 725 S.W.2d 712, 714 (Tex. 1987); Shell Oil Co. v. Humphrey, 880 S.W.2d 170, 174 (Tex.App.-Houston [14th] 1994, writ denied).
The threshold inquiry in a negligence case is whether the defendant owes a legal duty to the plaintiff. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). CarMax, Elite, and Fleck argue that they owe no duty to Bailey as a remote purchaser; the crux of their argument is the absence of foreseeability. They urge it was unforeseeable that a stolen vehicle would be either purchased or financed where appropriate procedures were followed and there was a title which appeared "so valid on its face, that even the State of Texas accepted it as good title."
The parties also urge lack of proximate cause. CarMax is the only appellee also alleging in a summary judgment motion that Bailey may not recover in tort because he sustained only economic damages. The economic loss rule precludes recovery of economic losses in negligence when the loss is the subject matter of a contract between the parties. Coastal Conduit Ditching, Inc. v. Noram Energy Corp., 29 S.W.3d 282, 285 (Tex.App.-Houston [14th] 2000, no pet.) (citing Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991)). The economic loss rule also bars recovery of economic losses in a negligence claim brought against the manufacturer or seller of a defective product where the defect results in damage only to the product and not to a person or to other property. Id. The Houston Court has also determined that, in the absence of privity of contract and accompanying personal injury or property damages, a plaintiff cannot recover for purely economic losses resulting from another's negligence. Id. at 288-89. However, several of Bailey's causes of action include a plea for mental anguish damages.
In response to CarMax's no-evidence motion for summary judgment on this point, Bailey included an affidavit asserting that, as a result of the title misrepresentation, he "went into a severe depression and [his] pre-existing post-traumatic distress syndrome disability ('PTSD') . . . was exacerbated. . . . [He] suffered headaches, panic attacks, delusions and massive depression . . . [and] sought and receive[d] medical treatment for [his] physical and mental health." Bailey also attached an affidavit of a treating physician reflecting treatment for PTSD. The foregoing constitute some evidence of non-economic damages, such that a no-evidence summary judgment motion could not properly be granted on this ground.
Appellees also urged it was unforeseeable that refunded money would not have been transferred to Bailey, as intended by both CarMax and Elite. However, evidence of such a transfer is not an element of the plaintiff's cause of action challenged by a no-evidence summary judgment; it is more in the line of an affirmative defense on which CarMax and Elite bore the burden of proof.
It is firmly established in Texas that the existence and elements of a common law duty are ordinarily legal issues for the court to decide, whether the duty (for products liability) is not to distribute a defective product or (for negligence) to act with ordinary care. . . . The considerations include social, economic, and political questions and their application to the facts at hand. We [weigh] the risk, foreseeability, and likelihood of injury against the social utility of the actor's conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant . . . "[W]hether a legal duty exists, including the foreseeability element, is typically a legal question."
Humble Sand Gravel, Inc. v. Gomez, 146 S.W.3d 170, 181-82 (Tex. 2004).
Foreseeability is not solely a component of duty; it can also be an element of proximate cause, which also encompasses cause in fact (or substantial factor). D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). Foreseeability exists when "the actor as a person of ordinary intelligence should have anticipated the dangers his negligent act creates for others." Id. (citing El Chico Corp. v. Poole, 732 S.W.2d 306, 313 (Tex. 1987)).
Here, Bailey tenders evidence to raise a fact question as to whether CarMax, Elite, or Fleck indeed followed proper procedure or were negligent in conducting their examination and approval of the title. We must determine whether any such negligence, if it existed, constituted a breach of a duty to a remote purchaser.
Appellees rely on the argument that no duty in tort arises in conjunction with the certificate of title act because it is a law of property, not of negligence. See Gourrier v. Joy Meyers Motors, Inc., 115 S.W.3d 570, 575 (Tex.App.-Houston [14th] 2002, no pet.). However, we determine that this argument more appropriately relates to the claim for negligence per se.
Our sister court has reviewed whether a seller higher in the chain of title could have breached a warranty of title or owed a duty not to be negligent to a later purchaser. See Perry d/b/a Car Town v. Breland d/b/a Darrell Breland Motors, 16 S.W.3d 182, 191(Tex.App.-Eastland 2000, pet. denied). That court concluded that it was "not prepared at this time to say that this duty does not extend to remote buyers of the vehicle." Perry cites to Nobility Homes of Texas for the proposition that lack of privity between a plaintiff and a remote vendor will not preclude a claim for breach of warranty. See id. (citing Nobility Homes of Tex., Inc. v. Shivers, 557 S.W.2d 77, 81 (Tex. 1997)). Bailey, seizing on this principle that privity of contract is not required, relies on 3Z Corp. v. Stewart Title Guar., Co., 851 S.W.2d 933, 937 (Tex.App.-Beaumont 1993, writ denied) to state summarily that appellees "owed a duty to all subsequent purchasers of the vehicle" because each "endorsed the title and made representations and certification of title to the vehicle." 3Z Corp. was brought under the DTPA against a title company for specific representations it made with respect to title on a parcel of real property. Id. The court concluded that while the title company had no duty to discover and disclose a title defect, it did have a duty to know if its representations were true, and it could be liable under DTPA for affirmatively misrepresenting the absence of any title defect even if it had no affirmative duty to discover and disclose the defect. Id. However, no remote seller was involved in 3Z Corp. The case simply does not stand for the proposition that a remote seller may be liable to an end purchaser. The case is further distinguishable in that Stewart Guaranty, as a potential indemnitor, had no involvement whatsoever in assessing or certifying condition of the title at any step in the process, or any role in failing to make an appropriate disclosure. Id. at 937-38. Such is not the case here, where CarMax, Elite, and Fleck were all at some point affirmatively involved in assessing and/or representing (even if impliedly) the condition of the title.
The 3Z Corp. court was careful to distinguish between the issuer of the title and the indemnitor on any issuing title:
Stewart Guaranty cannot be liable for Keller's misrepresentation. Keller was the agent of Stewart Title, not Stewart Guaranty. The relationship between Stewart Guaranty and Stewart Title is established by law. Stewart Guaranty would have become an indemnitor under a title policy had such policy issued. A policy did not issue, thus, there was nothing to indemnify. Stewart Guaranty would not be liable under any of the pleaded theories of liability under the set of facts before us.
3Z Corp. v. Stewart Title Guar., Co., 851 S.W.2d 933, 937-38 (Tex.App.-Beaumont 1993, writ denied) (citations omitted). Appellees appear to rely on this case for the proposition that none of them can be liable for the wrongful acts (or implied misrepresentations of good title) made by Integrity to Bailey since all were unaffiliated with Integrity.
We also address the element of proximate cause. See Gen. Motors Corp. v. Saenz, 873 S.W.2d 353, 357 (Tex. 1993). Proximate cause consists not only of foreseeability, but also cause in fact. Union Pump Co. v. Allbritton, 898 S.W.2d 773, 775 (Tex. 1995) (citing Travis v. City of Mesquite, 830 S.W.2d 94, 98 (Tex. 1992)). Cause in fact means that the defendant's act or omission was a substantial factor in bringing about the injury which would not otherwise have occurred. Id. (citing Prudential Ins. Co. v. Jefferson Assocs., 896 S.W.2d 156, 161 (Tex. 1995)). There can be concurrent proximate causes of an accident. Travis, 830 S.W.2d at 98 (citing El Chico Corp., 732 S.W.2d at 313; Strakos v. Gehring, 360 S.W.2d 787, 789 (Tex. 1962)). "All persons whose negligent conduct contributes to the injury, proximately causing the injury, are liable." Id.
However,
at some point in the causal chain, the defendant's conduct or product may be too remotely connected with the plaintiff's injury to constitute legal causation. . . . The law does not hold one legally responsible for the remote results of his wrongful acts and therefore a line must be drawn between immediate and remote causes.
Union Pump, 898 S.W.2d at 775 (citing City of Dallas v. Maxwell, 248 S.W. 667, 670 (Tex. Comm'n App. 1923, holding approved)).
In order to be a legal cause of another's harm, it is not enough that the harm would not have occurred had the actor not been negligent. . . . The negligence must also be a substantial factor in bringing about the plaintiff's harm. The word "substantial" is used to denote the fact that the defendant's conduct has such an effect in producing the harm as to lead reasonable men to regard it as a cause, using that word in the popular sense, in which there always lurks the idea of responsibility, rather than in the so-called "philosophic sense," which includes every one of the great number of events without which any happening would not have occurred.
Id. at 776 (citing Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 472 (Tex. 1991) (quoting RESTATEMENT (SECOND) OF TORTS § 431 cmt. a (1965)). Legal cause is not established if the defendant's conduct or product does no more than furnish the condition that makes the plaintiff's injury possible. Id.
We conclude that no duty was owed to an ultimate purchaser in the circumstances of this case. We overrule Bailey's issues one, three, and four, as they pertain to his claim for negligence with respect to CarMax, Elite, and Fleck.
d. Negligent Misrepresentation
The elements of a cause of action for negligent misrepresentation are (1) the representation is made by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplies "false information" for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the plaintiff suffers pecuniary loss by justifiably relying on the representation. Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n. 24 (Tex. 2002) (citing Fed. Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991)). A claim for negligent misrepresentation does not require knowledge of the falsity or reckless disregard of the truth or falsity of the representation at the time it was made, but only a failure to exercise reasonable care in obtaining or communicating the information. See Fed. Land Bank, 825 S.W.2d at 442.
Texas has adopted section 552 of the Restatement (Second) of Torts and the theory of negligent misrepresentation. McCamish, Martin, Brown Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex. 1999) (citing RESTATEMENT (SECOND) OF TORTS § 552 (1977) (addressing the issue in the context of misrepresentations by a law firm)). This theory permits plaintiffs who are not parties to a contract to recover from the contracting parties:
Under the tort of negligent misrepresentation, liability is not based on the breach of duty a professional owes his or her clients or others in privity, but on an independent duty to the nonclient based on the professional's manifest awareness of the nonclient's reliance on the misrepresentation and the professional's intention that the nonclient so rely.
Id. at 792. Accordingly, in McCamish, lack of privity did not preclude a cause of action for negligent misrepresentation brought by a nonclient. Nevertheless, the prong of justifiable reliance limits liability "to situations in which the attorney who provides the information is aware of the nonclient and intends that nonclient rely on the information." Id. at 794. In other words, the cause of action is available only when information is transferred to a known party for a known purpose. Id. Such is not the case here, where the record reflects that no information was transferred by CarMax, Elite, or Fleck to Bailey. In their motions for summary judgment, Carmax, Elite, and Fleck raised as grounds for summary judgment on the claim of negligent misrepresentation the absence of either any evidence of a representation to Bailey, or any intent that Bailey be an intended recipient of any representation.
In McCamish, the Victoria Savings Association ("VSA") entered into an order for voluntary supervision by the Texas Savings and Loan Commissioner which provided that no action taken at any Board meeting would be valid or binding absent approval in writing by the supervisor or Commissioner. While under such supervision, VSA entered into a settlement agreement. McCamish, Martin, Brown Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 789-90 (Tex. 1999). Appling was hesitant to enter into the agreement absent affirmation by VSA's lawyers, the McCamish firm, that the agreement complied with relevant statutes. Id. Although it provided that affirmation, the McCamish firm never advised Appling of the supervision order, and the settlement was ultimately found to be invalid. Id. McCamish claimed it owed no duty to Appling, a nonclient. Id.
McCamish provides:
Under section 552(2), liability is limited to loss suffered: (a) by the person or one of a limited group of persons for whose benefit and guidance [one] intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that [one] intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. This formulation limits liability to situations in which the attorney who provides the information is aware of the nonclient and intends that the nonclient rely on the information. In other words, a section 552 cause of action is available only when information is transferred by an attorney to a known party for a known purpose.
McCamish, 991 S.W.2d at 794 (citing RESTATEMENT (SECOND) OF TORTS § 552(2) (1977)).
In addressing viability of a Restatement section 552 claim against a lawyer, McCamish refers to a lawyer's duties to a nonclient, irrespective of privity, in situations where the attorney "invites reliance by a nonclient," that person so relies, and the nonclient is not too remote from the lawyer to be entitled to protection. McCamish, 991 S.W.2d at 794-95.
The Supreme Court has expressly adopted the language of Restatement section 552B, which limits damages for negligent misrepresentation to pecuniary loss alone. Fed. Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) (citing RESTATEMENT (SECOND) OF TORTS § 552 cmt. a; § 552B (1977)). The Restatement advances several policy reasons for limiting damages, including a lower degree of fault indicated by a less culpable mental state and the need to keep liability proportional to risk. Id. "We decline to extend damages beyond those limits provided in Restatement section 552B." Id.
We overrule Bailey's issues one, three, and four, as to the claim for negligent misrepresentation as against CarMax, Elite, and Fleck.
e. DTPA
The DTPA contains a list, commonly referred to as the "laundry list," of actions declared to constitute false, misleading, or deceptive acts. Tex. Bus. Com. Code Ann. § 17.46(b) (Vernon Supp. 2005); Checker Bag Co. v. Washington, 27 S.W.3d 625, 634 (Tex.App.-Waco 2000, pet. denied) (citing Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 386 (Tex. 2000)). Private parties are empowered to maintain an action for damages, whether economic or for mental anguish, where a laundry-list violation is the producing cause. TEX. BUS. COM. CODE ANN. § 17.50(a)(1) (Vernon Supp. 2005). To succeed in a DTPA laundry-list action, a plaintiff must show that (1) he is a consumer, (2) the defendant engaged in false, misleading, or deceptive acts, (3) on which the plaintiff relied, and (4) these acts constituted a producing cause of the consumer's damages. Henry Schein, 102 S.W.3d at 705 (citing TEX. BUS. COM. CODE ANN. § 17.50(a)(1); Checker Bag, 27 S.W.3d at 634).
A producing cause is "an efficient, exciting, or contributing cause, which in a natural sequence, produced injuries or damages complained of, if any." Union Pump, 898 S.W.2d at 775. Common to both proximate and producing cause is causation in fact, including the requirement that the defendant's conduct or product be a substantial factor in bringing about the plaintiff's injuries. Id. While foreseeability is an element of proximate cause, it is not of producing cause. Id.
CarMax, Elite, and Fleck urge there is no evidence of either reliance by Bailey, or that any of their conduct was a producing cause of Bailey's damages. They urge there is no evidence that any conduct by them was "inextricably intertwined" with the consumer transaction in which Bailey purchased the vehicle. They point to Bailey's acknowledged ignorance of their being in the chain of title prior to the reclamation of the vehicle by the police. Indeed,
Elite also urged in its motion for summary judgment that Bailey was not a consumer as to Elite and acquired no goods or services from it. Because of our conclusion as to the nonavailability of a DTPA claim to a subsequent purchaser, we do not reach this argument on appeal.
Although the DTPA was designed to supplement common-law causes of action, we are not persuaded that the Legislature intended the DTPA to reach upstream manufacturers and suppliers when their misrepresentations are not communicated to the consumer. Despite its broad, overlapping prohibitions, we must keep in mind why the Legislature created this simple, nontechnical cause of action: to protect consumers in consumer transactions. Consistent with that intent, we hold that the defendant's deceptive conduct must occur in connection with a consumer transaction.
Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996). Amstadt rejected DTPA claims against upstream manufacturers where none of their representations reached the consumer, while upholding the viability of claims for negligence. Id. at 647.
CarMax, Elite, and Fleck also urge that since their conduct was not "inextricably intertwined" with the sale to Bailey, they cannot be liable. "Inextricably intertwined" does not add a theory or condition of liability under the DTPA; instead, it is a means of addressing whether conduct was a "producing cause of the consumer's damages." Qantel Bus. Sys., Inc. v. Custom Controls Co., 761 S.W.2d 302, 305 (Tex. 1998). "We find no authority for shifting the focus of a DTPA claim from whether the defendant committed a deceptive act to whether a product that was sold caused an injury." Amstadt, 919 S.W.2d at 650. In PPG Indus., the Supreme Court determined that a right to a DTPA claim could not be obtained by virtue of an assignment from a prior purchaser. PPG Indus., 146 S.W.3d at 87, n. 27. Moreover, it concluded that Amstadt appeared to overrule the earlier Gupta v. Ritter Homes, Inc., 646 S.W.2d 168 (Tex. 1983), in which that court held that an implied warranty asserted under the DTPA could be brought by a subsequent purchaser. PPG Indus., 146 S.W.3d at 87 n. 27 (citing Amstadt, 919 S.W.3d at 649-50; Gupta, 646 S.W.2d at 169). The PPG Indus. court observed:
[I]n Amstadt v. U.S. Brass Corp., we held downstream purchasers of non-mobile homes could not bring DTPA claims against remote manufacturers and suppliers of a defective plumbing system, because the deceptive acts alleged were not committed against or communicated to them in connection with their own purchases. Recognizing the similarity to this case, JMB asserted no DTPA claims in its own right, as it had no connection with PPG's original Twindows sale, and never saw any PPG advertisements or warranties before it bought the building.
PPG Indus., 146 S.W.3d at 88 (citing Amstadt, 919 S.W.2d at 649-50) (noting the clear distinction between DTPA and warranty claims, by which a downstream buyer can sue a remote seller for breach of an implied warranty, but cannot sue under the DTPA). For the same reasons, we conclude that the sales by CarMax, Elite, and Fleck, and any representations associated therewith, in light of the absence of any evidence that Bailey had knowledge of them, cannot form the basis of a DTPA claim for Bailey. We overrule Bailey's issues one, three, and four with respect to his DTPA claim as against CarMax, Elite, and Fleck.
f. Fraud
The elements of a cause of action for fraud include (1) that a material representation was made, (2) the representation was false, (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion, (4) the speaker made the representation with the intent that the other party should act upon it, (5) the party acted in reliance on the representation, and (6) the party thereby suffered injury. Johnson v. Brewer Pritchard, P.C., 73 S.W.3d 193, 211 n. 45 (Tex. 2002) (quoting In re FirstMerit Bank, 52 S.W.3d 749, 758 (Tex. 2001)). More particularly, the speaker must have made the false statement with the intent that the recipient rely upon it, and the recipient must then have acted on that reliance. Green Int'l v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).
CarMax, Elite and Fleck contend there is no evidence that any of them made any statement directly to Bailey, intended that Bailey rely on any statement by them, had knowledge of any false statement or that title was defective, or that any representations that were made about the condition of the title were given in the face of information that transformed them into a reckless disregard for the truth in the face of an extreme risk.
Bailey urges that false statements were made in reckless disregard for the truth, and that the appellees can be liable for "indirect fraud," relying on Atlantic Richfield Co. v. Misty Prod., Inc., 820 S.W.2d 414 (Tex.App.-Houston [14th] 1991, writ denied). However, Misty Prod. acknowledges only that a person can indirectly make a false representation by making it to another "with the intent that it be repeated to the intended party for the purpose of deceiving him." Id. at 418. Additionally, there must be the requisite intent to deceive the particular individual.
We agree there is no evidence that CarMax, Elite, or Fleck, whether or not they were negligent, knew of the falsity of any statements made with respect to the vehicle's condition of title, or disregarded known facts such that they recklessly disregarded the truth. Further, there is no evidence of intent on the part of CarMax, Elite, or Fleck to deceive Bailey or any other potential purchaser. We overrule Bailey's issues one, three, and four as they pertain to his cause of action for fraud as to CarMax, Elite, and Fleck.
g. Civil Conspiracy
Bailey alleged that Elite and Fleck conspired together to violate the certificate of title act, asserting they had knowledge of, agreed to, and intended to violate the act. Bailey contended in his second amended petition that Elite and Fleck violated the act by embarking on a course of action permitting Fleck to buy and sell vehicles in Texas without a license, thereby evading the statutory requirements to obtain a surety bond and maintain records. Bailey alleged that they actively violated the act by failing to secure title to the vehicle in Fleck's name and then reassigning the title to Integrity and/or MRD under Elite's dealer number, when in fact Fleck was the owner whose name and signature was required to transfer title. Bailey contends that these acts proximately caused his damages.
A civil conspiracy is a combination by two or more persons to accomplish an unlawful purpose by unlawful means. Operation Rescue-Nat'l v. Planned Parenthood of Houston S.E. Tex., Inc., 975 S.W.2d 546, 553 (Tex. 1998). Elements of a cause of action for civil conspiracy include (1) two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages as a proximate result. Chon Tri v. J.T.T., 162 S.W.3d 552, 556 (Tex. 2005) (citing Juhl v. Arlingon, 936 S.W.2d 640, 644 (Tex. 1996)); Baty v. Protech Ins. Agency, 63 S.W.3d 841, 864 (Tex.App.-Houston [14th] 2001, pet. denied). Because the defendant's liability depends on its participation in some underlying tort for which the plaintiff seeks to hold the defendant liable, conspiracy is considered a derivative tort. Baty, 63 S.W.3d at 864 (citing Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996)). The plaintiff must show that the defendant was liable for some underlying tort. Id. (citing Trammel Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631, 635 (Tex. 1997)). However, negligence will not support a claim for conspiracy; civil conspiracy requires a specific intent and the parties must be aware of the harm or wrongful conduct at the inception of the combination or agreement. Triplex Communications Inc. v. Riley, 900 S.W.2d 716, 719 (Tex. 1995).
CarMax, Smith, and Fleck contend there was not evidence that (1) any violations of any of them were made in connection with Bailey's purchase (based on the existence of the intervening sales), (2) their individual conduct was a producing cause of Bailey's damages, or (3) any of them knowingly or intentionally committed any alleged violations.
Bailey alleges the acts were the proximate cause of his injuries; appellees contend they were not a producing cause of Bailey's injuries. The elements of conspiracy require that the wrongful conduct be the proximate cause of injury. Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 675 (Tex. 1998) (citing Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983)). As we noted above, proximate cause consists not only of foreseeability, but also cause in fact. Union Pump Co., 898 S.W.2d at 775 (noting that cause in fact means that the defendant's conduct was a substantial factor in bringing about the injury which would not otherwise have occurred). Id. Here, Bailey was required to tender evidence that Fleck's failure to secure his own dealer's license and bond was a substantial factor in bringing about the sequence of events that damaged Bailey. We remain mindful that "at some point in the causal chain, the defendant's conduct or product may be too remotely connected with the plaintiff's injury to constitute legal causation;" a party is not legally responsible for remote results of his wrongful acts and a line must be drawn between immediate and remote causes. Id. We conclude that in this instance, Fleck's failure to obtain a dealer's license or bond, even if he was required to possess such, was too remote to constitute a legal cause of the sequence involving the passage of title of a stolen vehicle.
We further conclude there is less than a scintilla of evidence of either the requisite "meeting of the minds," or a specific intent to violate the certificate of title act. "Less than a scintilla of evidence exists when the evidence is `so weak as to do no more than create a mere surmise or suspicion' of a fact." Alaniz, 105 S.W.3d at 344.
One without knowledge of the object and purpose of a conspiracy cannot be a co-conspirator; he cannot agree, either expressly or tacitly, to the commission of a wrong which he knows not of. In 15A C.J.S. CONSPIRACY § 1(2), p. 599, it is said that one of the essential elements required to establish a civil conspiracy is "a meeting of the minds on the object or course of action." And, of course, one without knowledge of a conspiratorial plan or scheme to injure another by the commission of a particular wrong cannot share the intent to injure such other.
Laxson v. Giddons, 48 S.W.3d 408, 410 (Tex.App.-Waco 2001, pet. denied) (citing Schlumberger Well Surveying Corp. v. Nortex Oil Gas Corp., 435 S.W.2d 854, 856-57 (Tex. 1968)). We overrule Bailey's first, third, and fourth issues as they relate to his cause of action for civil conspiracy as to Elite and Fleck.
B. Issue Two-The Order Striking the Third Amended Petition
In his second issue, Bailey asserts that the trial court erred in striking his third amended petition. We review a trial court's decision to strike an amended petition or trial amendment for abuse of discretion. TEX. R. CIV. P. 63; Hardin v. Hardin, 597 S.W.2d 347, 349-50 (Tex. 1980); J.M. Huber Corp. v. Santa Fe Energy Resources, Inc., 871 S.W.2d 842, 844 (Tex.App.-Houston [14th] 1994, no writ); City of Austin v. Houston Lighting Power Co., 844 S.W.2d 773, 783 (Tex.App.-Dallas 1992, writ denied).
In reviewing a trial court decision under an abuse of discretion standard, we determine whether the trial court acted without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). The exercise of discretion is within the sole province of the trial court, and an appellate court may not substitute its discretion for that of the trial judge. Johnson v. Fourth Ct. App., 700 S.W.2d 916, 918 (Tex. 1985). Rather, an abuse of discretion occurs only when the trial court reaches a decision that is "so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." Id. at 917.
A trial court has no discretion to refuse an amendment that is filed more than seven days before the date of trial unless (1) the opposing party presents evidence of surprise or prejudice, or (2) the amendment asserts a new cause of action or defense, and thus is prejudicial on its face." Chapin Chapin, Inc. v. Texas Sand Gravel Co., 844 S.W.2d 664, 665 (Tex. 1992). In this instance, the amended petition was filed November 18, 2004; trial was scheduled to begin November 29, 2004. The amendment was thus filed more than seven days before trial. However, the petition added another cause of action against CarMax, Elite, Fleck, Integrity, and MRD for "money had and received/assumpsit;" Bailey argued that all had received monies from the sale of the vehicle which properly belonged to Bailey.
Included in the earlier summary judgment record are affidavits from CarMax and Elite, reflecting that each had refunded all monies received for the vehicle back down the chain of title, to Integrity, who paid them to MRD but not Bailey. Bailey does not contest the affidavits but instead argued in his response to the motion to strike and on appeal that monies given to MRD were improperly used to settle the cross-claims brought against MRD by CarMax, and those monies instead should have been forwarded to Bailey. We note that Bailey had already received a judgment for damages against Taylor and Jackson d/b/a Integrity. Bailey proceeded to trial but received a take-nothing judgment against MRD. The manner in which MRD and CarMax may have settled claims between them is immaterial to Bailey's claim for money had and received/assumpsit against appellees.
At the time the third amended petition was filed, all other causes of action against CarMax, Elite, and Fleck had already been disposed of by summary judgment in favor of them. Summary judgments in favor of CarMax and Elite had been entered on October 24, 2002 and January 29, 2004, and in favor of Fleck in January 2004. Since January 2004, CarMax, Elite and Fleck had no participation in the suit until the filing of the third amended petition. In its motion to strike the amended petition, CarMax asserted surprise and that the petition was prejudicial on its face because it raised an entirely new cause of action. See Chapin, 844 S.W.2d at 665.
Summary judgment issued in favor of CarMax against MRD on July 11, 2003, and against the intervenor Geico on May 27, 2004.
The new petition was prejudicial on its face. Id. Further, CarMax, Elite, and Fleck had not participated in the suit for the preceding ten months and had not participated in and had no knowledge of any intervening discovery. They alleged surprise. We conclude that the trial court did not abuse its discretion in granting the motion to strike the third amended petition in the circumstances. Chapin, 844 S.W.2d at 665; Hardin, 597 S.W.2d at 350. We overrule Bailey's second issue on appeal.
V. Conclusion
We affirm the trial court's order striking Bailey's third amended petition. We affirm the trial court's orders granting summary judgment in favor of CarMax and Fleck in all respects. We affirm the trial court order granting summary judgment in favor of Elite except as to the breach of warranty claim; we reverse that order as to the breach of warranty claim against Elite and remand for further proceedings consistent with this opinion.