Opinion
01-21-00543-CV
12-20-2022
RICHARD BENITEZ, Appellant v. APPEL FORD, INC., Appellee
On Appeal from the 21st District Court Washington County, Texas Trial Court Case No. 36069
Panel consists of Justices Goodman, Countiss, and Farris.
MEMORANDUM OPINION
Gordon Goodman Justice
This appeal involves an employment dispute between a car salesman, Richard Benitez, and a car dealership, Appel Ford, Inc. Benitez alleged that Appel Ford did not pay him according to his compensation contract. The trial court struck the evidence Benitez offered in response to Appel Ford's no-evidence and traditional summary-judgment motion and then granted the motion. We conclude the trial court did not abuse its discretion in striking Benitez's evidence and did not err in granting summary judgment for Appel Ford. We affirm the trial court's judgment.
BACKGROUND
Benitez worked for Appel Ford as a car salesman from March 2014 through August 2015. Appel Ford would pay its salesmen commissions and bonuses based on how many cars they sold and the dollar amount of those sales. The more cars a salesman sold, the more he would receive in commissions and bonuses. Benitez signed a compensation contract that showed how his commissions and bonuses were to be calculated.
Appel Ford would also deduct "chargebacks" from the salesmen's wages. A chargeback is any amount Appel Ford paid to repair or accessorize a car after its sale. For instance, if a salesman sold a car to a customer, and after the sale the customer returned to the dealership and said the price of the car was supposed to include a window tint but the windows were not tinted, then Appel Ford would pay to have the windows tinted. The cost of the window tint is an example of a chargeback. Appel Ford would deduct these chargebacks from the salesmen's wages.
When Benitez left employment with Appel Ford, he indicated that he was going to sue Appel Ford for miscalculating his wages by deducting chargebacks without authorization. He also claimed that Appel Ford sent him a fraudulent 1099 form, requiring him to pay taxes on wages he never received. Appel Ford filed a declaratory-judgment suit in 2016, asking the court to interpret Benitez's compensation contract. Benitez filed counterclaims against Appel Ford; he pleaded breach of contract, money had and received, unjust enrichment, and fraudulent filing of a 1099 form.
The case stalled as the parties attempted mediation, but then in 2021 Appel Ford filed a no-evidence and traditional summary-judgment motion. Appel Ford claimed, among other things, that Benitez could produce no evidence that Appel Ford breached the compensation contract or that Benitez suffered damages as a result.
Benitez responded by producing his compensation contract, his payroll records, and the 1099 forms. Benitez argued that the payroll records showed his wages had not been calculated in accordance with his compensation contract. He claimed that Appel Ford would deduct chargebacks from his gross sales, without authorization, which led to lower commissions and bonuses. Benitez also provided a chart with calculations of what he argued were the correct amounts that he should have been paid according to the contract.
Appel Ford moved to strike the evidence Benitez offered in his summary-judgment response. Appel Ford argued that Benitez had not previously disclosed his calculations and had not supplemented his discovery responses in accordance with the rules of civil procedure, so it was surprised by his new damage model and amount. The trial court granted Appel Ford's motion to strike, and then granted Appel Ford's summary-judgment motion. Benitez now appeals.
DISCUSSION
Benitez contends on appeal the trial court abused its discretion in striking his summary-judgment evidence and erred in granting no-evidence and traditional summary judgment for Appel Ford.
A. Striking of Summary-judgment Evidence
1. Standard of review and applicable law
Texas Rule of Civil Procedure 193.5 imposes a duty on a party to supplement a written discovery response when the party learns that the earlier response is incomplete. Tex.R.Civ.P. 193.5. If a party fails to supplement a written discovery response with complete information, the party may not use that information as evidence at trial or on summary judgment. Tex.R.Civ.P. 193.6; Fort Brown Villas III Condo. Ass'n, Inc. v. Gillenwater, 285 S.W.3d 879, 882 (Tex. 2009) (per curiam). Application of the rule is mandatory, and the exclusion of the evidence is automatic unless the party establishes an exception. Lopez v. La Madeleine of Tex., Inc., 200 S.W.3d 854, 860 (Tex. App.-Dallas 2006, no pet.). The exceptions are: (1) there was good cause for failing to supplement the discovery response; or (2) the failure to supplement will not "unfairly surprise or unfairly prejudice" the other party. Tex.R.Civ.P. 193.6(a). The party seeking to introduce the evidence bears the burden of establishing good cause or the lack of unfair surprise or unfair prejudice. Tex.R.Civ.P. 193.6(b). The trial court has broad discretion to determine whether the party has met its burden, and the record must support the trial court's findings. Id; Syrian Am. Oil Corp., S.A. v. Pecten Orient Co., 524 S.W.3d 350, 366 (Tex. App.-Houston [1st Dist] 2017, no pet).
The purpose of this exclusionary rule is to encourage full discovery before trial so parties can "make realistic assessments of their respective positions in order to facilitate settlements and prevent trial by ambush." Lopez, 200 S.W.3d at 860.
We review a trial court's decision to admit or exclude evidence for an abuse of discretion. Id. at 859. A trial court abuses its discretion if it acts arbitrarily or without regard to any guiding rules or principles. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). We must uphold a trial court's evidentiary ruling if there is a legitimate basis for it. Jones v. Pesak Bros. Constr., Inc., 416 S.W.3d 618, 632 (Tex. App.-Houston [1st Dist.] 2013, no pet.). We cannot conclude that a trial court abused its discretion just because we might have ruled differently in the same circumstances. E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 558 (Tex. 1995).
2. Analysis
Appel Ford moved to strike Benitez's summary-judgment evidence because Benitez had not previously disclosed his damage model or amount. During written discovery in 2017, Appel Ford requested "the amount and any method of calculating economic damages." Benitez responded: "At this early stage in litigation, the specific economic damages are unknown. Economic [d]amages will be determined by adding the total amount of unauthorized deductions from [Benitez]'s paychecks." Benitez never supplemented this response with a specific amount of damages or method of calculation.
Benitez only disclosed the specific amount of damages he was seeking and his method for calculating them after Appel Ford moved for summary judgment in 2021. Benitez sought $76,602 in unauthorized chargebacks, as well as $30,000 in lost commissions and bonuses resulting from the chargebacks and $20,737.94 that had been incorrectly reported on his 1099 forms. Benitez also provided a chart explaining how he calculated these damages: he added the amount of chargebacks, which amounted to $76,602, and then he calculated what his commissions and bonuses would have been if the chargebacks had not been deducted, and calculated the difference between what the commissions and bonuses should have been and what he was actually paid. Benitez does not dispute that the first time he disclosed these amounts and calculations was in response to Appel Ford's summary-judgment motion.
Benitez gave a vague response to the discovery request for the amount and method of calculating damages, never supplemented his response, and only disclosed the evidence when responding to a summary-judgment motion. Therefore, the evidence was automatically excluded unless Benitez established an exception: (1) good cause for failing to supplement; or (2) lack of unfair surprise or unfair prejudice. Tex.R.Civ.P. 193.6; Lopez, 200 S.W.3d at 860. Benitez has not argued good cause; in the trial court and on appeal, he relies on lack of unfair surprise or unfair prejudice.
Benitez argues, essentially, that Appel Ford was not surprised or prejudiced by his amount and method of calculating damages because his legal theory has been the same throughout the case: he has always alleged that Appel Ford improperly deducted chargebacks from his wages, and those deductions led to lower wages, commissions, and bonuses for him. "As a result of the chargeback[s]," he asserted in his second amended pleading, he was "deprived of his rightfully earned wages, and oftentimes would be deprived of bonuses in addition to those wages." Benitez argues that in his discovery responses he claimed he would calculate damages by adding the total amount of unauthorized chargebacks deducted from his paychecks, and, in response to Appel Ford's summary-judgment motion, that is what he did.
While that is true, Appel Ford specifically requested the amount of economic damages he was seeking and his method for calculating those damages. Benitez had a duty to supplement that information once he knew the complete response. See Tex. R. Civ. P. 193.5. We agree with Benitez that his legal theory of recovery has been the same throughout the lawsuit, but that is not the standard to establish lack of unfair surprise or unfair prejudice. Courts have found a party is not surprised or prejudiced by late-disclosed evidence where substantially the same evidence had already been disclosed. See, e.g., Elliott v. Elliott, 21 S.W.3d 913, 921 (Tex. App.- Fort Worth 2000, pet. denied) (party not surprised by late identification of expert doctor when doctor identified in other discovery responses); Best Indus. Unif. Supply Co. v. Gulf Coast Alloy Welding, Inc., 41 S.W.3d 145, 146, 148-49 (Tex. App.- Amarillo 2000, pet. denied) (party not surprised by testimony from company's current employee who had not been timely identified in disclosures, but predecessor in same position had been, when testimony would be substantially identical); Rutledge v. Staner, 9 S.W.3d 469, 472 (Tex. App.-Tyler 1999, pet. denied) (party not surprised by undisclosed witness's testimony because that party had listed same person in its own discovery responses as person with knowledge of relevant facts). Courts have also found a party is not surprised or prejudiced by late-disclosed evidence when the evidence is disclosed in time for the opposing party to respond or conduct further discovery relating to the evidence. See, e.g., City of Houston v. Ellis, No. 01-17-00423-CV, 2018 WL 4087415, at *3 (Tex. App.-Houston [1st Dist.] Aug. 28, 2018, no pet.) (mem. op.) (no unfair prejudice where opposing party had opportunity to respond, and did respond, to late-disclosed affidavits before hearing); State v. Target Corp., 194 S.W.3d 46, 50-51 (Tex. App.-Waco 2006, no pet.) (no unfair surprise or unfair prejudice where opposing party had opportunity to question witness about late-disclosed document at second deposition). Benitez has not shown that materially the same information had already been disclosed or that Appel Ford had an opportunity to depose him or anyone else regarding the calculations, so the trial court could have reasonably found Benitez did not meet his burden to establish lack of unfair surprise or unfair prejudice.
We thus disagree with Appel Ford's claim that Benitez asserted an entirely new theory of liability by alleging that his bonuses were miscalculated. Benitez had consistently asserted that miscalculation of his wages led to miscalculation of bonuses. However, we ultimately agree with Appel Ford that Benitez did not meet his burden to establish lack of unfair surprise or unfair prejudice. See Tex. R. Civ. P. 193.6(b).
Benitez also claims Appel Ford could not have been surprised by the calculation because it could have easily calculated this amount-Appel Ford had his payroll records. But Rule 193.6 places the burden on Benitez to show that Appel Ford was not surprised or prejudiced by the calculations, not that it could have determined the amount for itself. See Tex. R. Civ. P. 193.6(b); Allan v. Nersesova, 307 S.W.3d 564, 576 (Tex. App.-Dallas 2010, no pet.) ("The issue, however, is not whether the evidence shows appellees suffered surprise or unfair prejudice but whether the record establishes that they did not suffer surprise or unfair prejudice.").
Further, even though Appel Ford was aware Benitez had alleged miscalculation of his paychecks, disclosure of the amount and method of calculating damages was particularly important in this case because Appel Ford disputed that his paychecks were miscalculated. If the paycheck amounts were miscalculated as Benitez alleged, Benitez needed to disclose how they were miscalculated so that Appel Ford could make a "realistic assessment" of settlement or else develop evidence to show the paychecks had not been miscalculated in the way Benitez alleged. See Lopez, 200 S.W.3d at 860; Cresson Int., LLC v. Beane, No. 02-21-00366-CV, 2022 WL 3904968, at *9 (Tex. App.-Fort Worth Aug. 31, 2022, no pet. h.) (mem. op.) (defendant entitled to know how much plaintiff claimed as damages, even if defendant knew which allegedly stolen items were in dispute, to know value plaintiff placed on those items and develop evidence supporting different value).
The trial court could have reasonably concluded Benitez did not meet his burden to establish lack of unfair surprise or unfair prejudice, so the trial court did not abuse its discretion in excluding Benitez's evidence. See Tex. R. Civ. P. 193.6; Jones, 416 S.W.3d at 632; Lopez, 200 S.W.3d at 859. Benitez's first point of error is overruled.
B. No-evidence Summary Judgment
In Benitez's second point of error, he contends the trial court erred in granting Appel Ford's no-evidence summary-judgment motion.
1. Standard of review
After an adequate time for discovery, the party without the burden of proof may move for a no-evidence summary judgment on the basis that there is no evidence to support an essential element of the nonmoving party's claim. Tex.R.Civ.P. 166a(i); Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008) (per curiam). The trial court must grant summary judgment unless the nonmovant produces competent summary-judgment evidence raising a genuine issue of material fact on the challenged elements. Tex.R.Civ.P. 166a(i); Hamilton, 249 S.W.3d at 426.
The trial court must sustain a no-evidence point when: (1) there is a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or 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 mere scintilla; or (4) the evidence conclusively establishes the opposite of a vital fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). 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, and the legal effect is that there is no evidence. Id. (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). In other words, we review a no-evidence summary judgment by considering whether the nonmovant produced evidence that would enable reasonable and fair-minded jurors to differ in their conclusions. Hamilton, 249 S.W.3d at 426.
We review summary judgments de novo. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We review the evidence in the light most favorable to the nonmovant, crediting favorable evidence if reasonable jurors could do so, and disregarding contrary evidence unless reasonable jurors could not. Id. We indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When the trial court's summary-judgment order does not state the basis for the trial court's decision, we must affirm the order if any of the theories advanced in the motion are meritorious. Id. at 216.
2. Analysis
a. Breach-of-contract claim
A plaintiff asserting a claim for breach of contract must prove: (1) a valid contract exists; (2) the plaintiff performed or tendered performance as contractually required; (3) the defendant breached the contract by failing to perform or tender performance as contractually required; and (4) the plaintiff sustained damages as a result of the breach. Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 890 (Tex. 2019). The parties do not dispute the first two elements, that a contract existed or that Benitez performed under the contract.
Appel Ford moved for no-evidence summary judgment on Benitez's breach-of-contract claim on two grounds: (1) there was no evidence that Appel Ford breached the compensation contract; and (2) there was no evidence that Benitez suffered any damages as a result of the alleged breach. See id. (stating breach-of-contract elements).
Benitez argues that the evidence he provided in response to Appel Ford's summary-judgment motion was more than a scintilla of evidence that Appel Ford breached the compensation contract. Benitez claims that his calculations show that Appel Ford breached the compensation contract by improperly deducting chargebacks, and the calculations also offer proof that he suffered damages as a result-he lost wages and bonuses because of Appel Ford's improper deductions.
However, we may not consider that evidence because it was struck and thus not a part of the summary-judgment record considered by the trial court. McCollum v. Bank of N.Y. Mellon Tr. Co., 481 S.W.3d 352, 362 (Tex. App.-El Paso 2015, no pet.) ("In reviewing whether a summary judgment was properly granted, we may not consider struck portions of the record because that evidence is not a part of the summary judgment record."). Benitez has not provided any other evidence of damages. Therefore, Benitez has not produced competent summary-judgment evidence to raise a genuine issue of material fact on the challenged element of damages. See Tex. R. Civ. P. 166a(i); Hamilton, 249 S.W.3d at 426.
Even if Benitez had raised a fact issue on the damages element, we would still conclude summary judgment was proper because Benitez provided no evidence of another element of his claim: breach. Benitez alleged Appel Ford breached his compensation contract by improperly deducting chargebacks from his wages. But Benitez provided no evidence that deducting the chargebacks was improper. His calculations showed the amount that was deducted from his wages as a result of the chargebacks, but nothing he provided suggests that Appel Ford was breaching his compensation contract by deducting the chargebacks. In fact, the contract suggests that chargebacks are routinely factored into regular wages by basing commission percentages on gross sales after chargebacks:
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Benitez relies on a handwritten note in the bottom corner of the compensation contract: "Calculate Bonus before chargebacks. Only for Gross Bonus Level." In the trial court, he argued that "bonus" is undefined in the contract, so the phrase "Calculate Bonus before chargebacks" applied to his commissions, meaning that his commissions should have been calculated based on his gross sales before deducting chargebacks. The compensation contract, although it does not define "bonus" or "commission," identifies two types of bonuses that are separate from the commission-a unit volume bonus and a gross bonus:
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Benitez's claim that a commission is the same as a bonus, when those items are described differently and treated differently in the compensation contract, is unavailing. It also ignores the second part of the handwritten note: "Only for Gross Bonus Level." The contract itself suggests that chargebacks are routinely deducted from commissions, and Benitez has provided no evidence that the chargebacks should not have been deducted from his commissions. Thus, even if we could consider his evidence of damages, we would still conclude the trial court's granting of no-evidence summary judgment on his breach-of-contract claim was correct because Benitez provided no evidence of Appel Ford's breach. See Tex. R. Civ. P. 166a(i); Hamilton, 249 S.W.3d at 426.
B. EQUITABLE CLAIMS
Appel Ford also moved for summary judgment on Benitez's two equitable claims: (1) money had and received; and (2) unjust enrichment.
As for the money-had-and-received claim, Appel Ford argued Benitez had provided no evidence that Appel Ford held any money that in equity and good conscience belonged to Benitez. See MGA Ins. Co. v. Charles R. Chesnutt, P.C., 358 S.W.3d 808, 814 (Tex. App.-Dallas 2012, no pet.) ("To prove a claim for money had and received, a plaintiff must show that a defendant holds money which in equity and good conscience belongs to him.").
As for the unjust enrichment claim, Appel Ford claimed Benitez had provided no evidence that Appel Ford obtained any benefit from Benitez as the result of fraud, duress, or the taking of an undue advantage. See Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) ("A party may recover under the unjust enrichment theory when one person has obtained a benefit from another by fraud, duress, or the taking of an undue advantage.").
In the trial court, Benitez argued that his calculations of damages showed that Appel Ford held money that in equity and good conscience belonged to him and showed that Appel Ford took advantage of him by not complying with the compensation contract and depriving him of his rightfully earned bonuses. However, because the trial court struck this evidence and we have already concluded the trial court did not err in doing so, we may not consider this evidence. McCollum, 481 S.W.3d at 362 (appellate court may not consider struck portions of record in reviewing summary judgment). Benitez provided no other evidence to raise a genuine issue of material fact on these claims. See Tex. R. Civ. P. 166a(i); Hamilton, 249 S.W.3d at 426.
Even if we could consider Benitez's evidence, we would still conclude the trial court properly granted summary judgment on these equitable claims. Both money had and received and unjust enrichment are equitable claims. See Stonebridge Life Ins. Co. v. Pitts, 236 S.W.3d 201, 203 n.1 (Tex. 2007) (per curiam) ("A claim for 'money had and received' is equitable in nature."); Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 683-84 (Tex. 2000) (unjust enrichment claims are based on equitable theory of quasi-contract). Generally, when a dispute is covered by a valid, express contract, a party may not recover under an equitable theory. Fortune Prod. Co., 52 S.W.3d at 684. "When a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express agreement." Id. Because Benitez and Appel Ford agree that the compensation contract covers the dispute in this case, Benitez cannot recover under an equitable theory like money had and received or unjust enrichment.
Benitez provided no evidence to raise a genuine issue of material fact on his challenged claims of money had and received and unjust enrichment. Therefore, the trial court properly granted summary judgment for Appel Ford on these claims. Tex.R.Civ.P. 166a(i); Hamilton, 249 S.W.3d at 426.
c. Fraudulent-filing claim
Appel Ford moved for traditional summary judgment on Benitez's claim for "fraudulent filing of 1099." Benitez alleged that Appel Ford fraudulently sent him 1099 forms-forms for payments made to independent contractors-even though he was a regular, payroll employee, thereby forcing him to pay taxes on money he never received. Appel Ford argued in its summary-judgment motion that Benitez's claim must fail because there is no such cause of action under Texas law, and, to the extent his claim could be construed as one for fraud, then Appel Ford was incorporating the fraud claim into its no-evidence motion because Benitez had provided no evidence to support that fraud claim.
In response, Benitez cited 26 U.S.C. Section 7434, which provides a civil cause of action under federal law for filing fraudulent tax forms. To establish a claim for tax fraud under 26 U.S.C. Section 7434, a plaintiff must prove: (1) that the employer issued a specified tax form; (2) that the form was fraudulent; and (3) that the employer willfully issued the fraudulent form. Soliman v. SOBE Miami, LLC, 312 F.Supp.3d 1344, 1356 (S.D. Fla. 2018). Even assuming Benitez had properly stated a claim for fraudulent tax filing under 26 U.S.C. Section 7434, he provided no evidence that the 1099 forms were fraudulent. In his response to Appel Ford's summary-judgment motion, Benitez argued, without evidentiary support, "[i]t is clear that Appel Ford issued a 1099 illegally claiming that Mr. Benitez owed it money" and that Appel Ford did so "without authorization." Benitez included the 1099 forms as attachments to his summary-judgment response, but he did not produce any evidence to suggest the forms were fraudulent. Thus, the trial court properly granted summary judgment on this claim. Tex.R.Civ.P. 166a(i); Hamilton, 249 S.W.3d at 426.
26 U.S.C. Section 7434 provides in part: "If any person willfully files a fraudulent information return with respect to payments purported to be made to any other person, such other person may bring a civil action for damages against the person so filing such return." 26 U.S.C. § 7434(a).
Because we conclude the trial court did not err in granting Appel Ford's no-evidence summary-judgment motion on Benitez's claims, Benitez's second point of error is overruled.
C. Traditional Summary-Judgment Motion
In his third point of error, Benitez argues the trial court should not have granted Appel Ford's traditional summary-judgment motion. We have already concluded that Benitez did not provide more than a scintilla of evidence under the no-evidence summary-judgment standard, so we need not analyze whether the trial court erred in granting summary judgment under the traditional standard. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004); Torres v. Pasadena Refin. Sys., Inc., No. 01-18-00638-CV, 2022 WL 1467374, at *6 (Tex. App.-Houston [1st Dist.] May 10, 2022, no pet.) (mem. op.). Benitez's third point of error is overruled.
CONCLUSION
We affirm the trial court's judgment.