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holding trial court erred in deeming requests admitted where evidence indicated requests were returned "unclaimed" and appellant directly told trial judge he knew nothing about certified mail containing the requests
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No. 05-06-00216-CV.
Opinion Filed February 23, 2007.
On Appeal from the County Court at Law No. 5, Dallas County, Texas. Trial Court Cause No. 04-08996-E.
Before Justices MORRIS, LANG, and LANG-MIERS.
MEMORANDUM OPINION
Appellant Evan R. Daniels, pro se, appeals the trial court's judgment against him, rendered after a non-jury trial, in a suit on a sworn account brought by Thomas H. Lavery, d/b/a National Furniture Liquidators, appellee. In six issues, Daniels asserts generally that the trial court erred (1) in holding him personally liable on the alleged sworn account debt; (2) in not hearing his pending motions before entering judgment against him; and (3) in not granting him an offset for any amounts paid by a co-defendant pursuant to an agreed judgment between the co-defendant and Lavery. Lavery did not file a brief in this Court.
For the reasons set forth below, we conclude the evidence is legally insufficient to show Daniels is personally liable on the sworn account debt alleged by Lavery. Because we decide in favor of Daniels on the issue of legal sufficiency, we need not reach his remaining issues. We reverse the judgment of the trial court and render judgment that Lavery take nothing on his claim against Daniels.
I. FACTUAL AND PROCEDURAL BACKGROUND
According to the testimony at the non-jury trial on the merits, Lavery was in the business of buying and selling used office furniture. A mutual business acquaintance arranged for Lavery to meet with Daniels, who had expressed interest in viewing some office furniture. Lavery testified that at the time of that meeting, it was his understanding Daniels was representing a business known as Trio Industries Holdings and furniture purchased would be for business use.
After viewing furniture with Daniels, Lavery "went through and tagged pieces of furniture that [Daniels] wanted for his use for the company." Lavery stated that the tagged pieces were grouped into three categories. Pursuant to Daniels's instructions, the furniture in the first category was to be installed quickly. The pieces in the second category were to be installed shortly thereafter. Furniture in the third category was to be installed "when space was available."
At Daniels's direction, the furniture in the first category was delivered to Trinity River Capital Ventures in Dallas, Texas. D. Elliot, an individual affiliated with Trinity River Capital Ventures, paid for that furniture using a personal credit card. The furniture in the second category was also delivered and installed as directed. Although Lavery was unable to recall at trial who paid for the furniture in the second category, he testified payment was not made by Daniels or Trio Industries Holdings.
Lavery was instructed by Daniels to store the furniture in the third category for future installation. That furniture was stored in two trailers. Lavery testified he received a "corporate check" for storage costs, but could not recall who signed that check. He testified Daniels did not give him a personal check for storage costs. Due to the length of storage time in the trailers, the furniture became damaged. No instructions were received by Lavery regarding delivery of the furniture in the third category. Lavery retained possession of that furniture.
Pursuant to Daniels's instructions on payment of the price for the furniture in the third category, an invoice in the amount of $41,805 was sent to "MacArthur Business Credit, LLC" in Irvine, California. Under the section of the invoice labeled "P.O. No.," the name "Evan Daniels" was printed. Under the section labeled "Ship To," the invoice read "Attention: Jim Moore, Trio." After receiving no payment for this furniture, Lavery filed suit on August 5, 2004 against Daniels and Trio Industries Holdings seeking payment on the alleged sworn account debt and attorney's fees. In his petition, Lavery asserted, in relevant part, that he had "sold to Defendant or Defendant's Agent at Direct one or more items of goods, wares, merchandise, or services" and that "Defendant has defaulted by failing to make payments on the account." Lavery's affidavit, attesting to the facts of the account, was filed on November 8, 2004.
After Daniels's counsel withdrew, Daniels proceeded pro se and filed a "First Original Answer." In that pleading, Daniels asserted, inter alia, that he did not assume personal liability for the actions of Trio Industries Holdings and was not personally obligated to pay any debt pertaining to the transaction sued upon by Lavery.
At trial, during presentation of Lavery's case in chief, counsel for Lavery testified that on July 17, 2005, discovery documents, including requests for admissions, were sent by certified mail to the address listed by Daniels's former counsel as Daniels's last known address. Further, Lavery's counsel testified the envelope containing the documents was returned to him by the United States Postal Service stamped "unclaimed." Daniels objected to the testimony of Lavery's counsel, stating:
I got no notice in the mail in my mailbox, nothing. And there was nothing-other than shown today, there was no phone calls, no faxes, no other correspondence that would let me know. And it could have been kids in the neighborhood grabbing it. I was on business trips a lot this last year, so I've never seen this.
The court admitted into evidence Lavery's requests for admissions and the envelope. Then, Lavery asked the court to deem admitted only request for admission number 11, which stated, "Defendant is obligated to Plaintiff in the amount of $41,805.00 plus interest, costs and reasonable attorney fees." Again, Daniels objected, stating, "I've never seen this. If I have [sic] an opportunity to look at it I would have denied." Without ruling on Lavery's request, the trial court told Daniels, "[W]hen you testify, I'll let you-we'll put you under oath and I'll let you testify about not receiving this."
After being duly sworn, both Lavery and Daniels testified regarding the transaction underlying the alleged sworn account. Following closing arguments, the trial court stated, "Let me take it under advisement and send you a letter by tomorrow afternoon." Then, in closing, Daniels once more addressed the issue of the "unclaimed" discovery requests:
DANIELS:And again, Your Honor, for the record, it is not my normal course of business to refuse or deny this. I-
COURT: Well, is your address 5915 Edinburgh Court?
DANIELS: Yes, Your Honor. And I have received many, many certified documents, and this is the first certified document that I have not gotten. And I don't quite understand. And when I called [counsel for Lavery]-and I have, over the summer, called him many times and asked him to talk to me about the case-he said, I don't have to supply you anything; I don't have to do anything. He was very hostile. At one of those five or six calls-and there was no less than five calls-[counsel for Lavery] had the opportunity to say, "By the way, I sent you these things and it came back. What's the deal?" He had all of this opportunity. Never told me that they were sent, never indicated. So he's now using this as a ploy to say, well, you must be guilty. But he never gave me the opportunity. Because, if he would have, I would have gone to his office to pick them up and I would have filled them out and given them back to him. So he did have many opportunities to tell me, Your Honor.
In a letter ruling dated January 20, 2006, the trial judge ruled that Lavery's requests for admissions were deemed admitted and that Lavery recover from Daniels "$41,805 in contract damages, plus $4000 in attorney's fees, plus pre and post judgment interest as allowed by law, plus costs of court." The trial court signed a final judgment dated May 5, 2006, providing for recovery by Lavery of the previously decreed amounts jointly and severally against Daniels and Trio Industries Holdings. This appeal followed.
II. LEGAL SUFFICIENCY
In his first issue, Daniels asserts he "did not receive the merchandise `sold,' was not billed for the merchandise sold and did not order the merchandise `sold' by Lavery." Daniels's argument may fairly be read as a challenge to the legal sufficiency of the evidence to support the trial court's judgment that he is personally liable on the alleged sworn account debt. See Tex. R. App. P. 38.1(e) (providing that "[t]he statement of an issue or point will be treated as covering every subsidiary question that is fairly included."); see also Tex. R. App. P. 38.9 (directing that briefing rules are to be liberally construed). Accordingly, we address Daniels's first issue as one contending the evidence is legally insufficient to support a judgment against him, personally.
A. Standard of Review
In determining the legal sufficiency of the evidence, we consider all the evidence in the light most favorable to the challenged finding, crediting favorable evidence if a reasonable fact-finder could, and disregarding contrary evidence unless a reasonable fact-finder could not. 2218 Bryan St., Ltd. v. City of Dallas, 175 S.W.3d 58, 65 (Tex.App.-Dallas 2005, pet. denied) (citing City of Keller v. Wilson, 168 S.W.3d 802, 809 (Tex. 2005)). We will uphold the challenged finding if more than a scintilla of evidence supports it. Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995); see also City of Keller, 168 S.W.3d at 813-14. More than a scintilla of evidence exists where the evidence supporting the finding, as a whole, "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Burroughs, 907 S.W.2d at 499 (quoting Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994)); see also City of Keller, 168 S.W.3d at 822. Legal sufficiency challenges are questions of law. City of Keller, 168 S.W.3d at 822. As a general matter, the remedy when a legal sufficiency point is sustained is for the court of appeals to render judgment on that point. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 86 (Tex. 1992); Armstrong v. Benavides, 180 S.W.3d 359, 359 (Tex.App.-Dallas 2005, no pet.).
B. Applicable Law
Under rule 185 of the Texas Rules of Civil Procedure, when an action is founded on an open account on which a systematic record has been kept and is supported by an affidavit, the account shall be taken as prima facie evidence of the claim, unless the party resisting the claim files a written denial under oath. See Tex. R. Civ. P. 185; Panditi v. Apostle, 180 S.W.3d 924, 926 (Tex.App.-Dallas 2006, no pet.). The essential elements to prove a sworn account are: (1) that there was a sale and delivery of merchandise or performance of services; (2) that the amount of the account is just, that is, that the prices were charged in accordance with an agreement or were customary and reasonable prices; and (3) that the amount is unpaid. Adams v. H H Meat Prods., Inc., 41 S.W.3d 762, 773 (Tex.App.-Corpus Christi 2001, no pet.). See also Cass v. Stephens, 156 S.W.3d 38, 70 (Tex.App.-El Paso 2004, pet. denied); Burch v. Hancock, 56 S.W.3d 257, 264 (Tex.App.-Tyler 2001, no pet.); Tex. R. Civ. P. 185.
C. Application of Law to Facts
The heart of Daniels's contention is the evidence is legally insufficient to support the trial court's judgment that he is personally liable on the alleged sworn account debt because there is no evidence to prove a sale of merchandise by Lavery to Daniels, personally. Daniels asserts he was acting on behalf of Trio Industries Holdings in the underlying transaction and any furniture purchased was for business use.
At trial, Lavery testified he knew Daniels was not buying furniture for himself, but rather, was representing Trio Industries Holdings. However, Lavery's counsel argued that "the deemed admissions are damaging to Mr. Daniels." No other evidence of Daniels's personal liability is in the record. Lavery raised no objection to Daniels's having proceeded with presentation of evidence and his defense at trial.
1. The Deemed Admissions as Evidence
We look first at Lavery's requests for admissions, which the trial court deemed admitted. Rule 198.1 of the Texas Rules of Civil Procedure entitles a litigant to serve requests for admissions on another party. Tex. R. Civ. P. 198.1. Depending upon the time they are served, the party to whom they are addressed has thirty to fifty days to respond to them. Tex. R. Civ. P. 198.2(a). Should the receiving party's response be untimely or nonexistent, each request is deemed admitted without the necessity of a court order. Id. at 198.2(c).
It is axiomatic that, before one has an obligation to answer admissions or before any inaction on the part of an individual can give rise to deemed admissions, the requests for admissions must be served. Payton v. Ashton, 29 S.W.3d 896, 898 (Tex.App.-Amarillo 2000, no pet.) (reasoning that, in utilizing the words "after service," rule 198.2(a) undoubtedly conditions the duty to respond upon service of the requests). Implicit in the concept of service is the need for the party upon whom an item is served to actually receive it. Etheredge v. Hidden Valley Airpark Ass'n, Inc., 169 S.W.3d 378, 381 (Tex.App.-Fort Worth 2005, pet. denied) (quoting Payton, 29 S.W.3d at 898).
Rule 21a of the Texas Rules of Civil Procedure addresses service of items such as discovery requests. Tex. R. Civ. P. 21a. Such documents may be served on a party by delivering a copy by certified or registered mail to the party's last known address. Id. Service by mail is "complete upon deposit of the paper, enclosed in a postpaid, properly addressed wrapper, in a post office or official depository under the care and custody of the United States Postal Service." Id.
A certificate by a party or attorney of record is prima facie evidence of the fact of service. Id. Accordingly, rule 21a creates a presumption that documents mailed as provided in the rule were received by the addressee. See Etheredge, 169 S.W.3d at 381. However, the opposing party may rebut that presumption by offering proof the document was not received. Id.; see also Tex. R. Civ. P. 21a ("[n]othing herein shall preclude any party from offering proof that the notice or instrument was not received"). Even when a party does not receive actual notice of requests for admissions, where the serving party has complied with the requirements of rule 21a, "constructive notice" may be established if the serving party presents evidence "that the intended recipient engaged in instances of selective acceptance or refusal of certified mail relating to the case." Etheredge, 169 S.W.3d at 382.
In the case before us, the record contains evidence showing Lavery sent requests for admissions by certified mail to Daniels's last known address. However, counsel for Lavery testified at trial that the envelope containing the requests for admissions was returned, stamped "unclaimed." Further, Daniels responded directly to the trial court's questions, stating he knew nothing about the certified mail containing the requests for admissions sent to him. Thus, the presumption of receipt created by rule 21a was rebutted by proof on the face of the record that Daniels did not receive the requests for admissions. See Etheredge, 169 S.W.3d at 382-83 (where evidence showed certified mail envelope containing requests for admissions was returned, stamped "unclaimed," presumption of receipt was rebutted).
Further, a review of the record shows, in addition to the certified mail having been returned "unclaimed," there is no evidence Daniels dodged or refused delivery of certified mail. See Rabie v. Sonitrol of Houston, Inc., 982 S.W.2d 194, 197 (Tex.App.-Houston [1st Dist.] 1998, no pet.) (notations of attempted delivery on "unclaimed" envelope constituted no evidence to controvert defendant's sworn statement that he never received notice of certified mail). Without such evidence in this record, constructive notice of the requests for admissions cannot be imputed to Daniels. See Etheredge, 169 S.W.3d at 383 See also Pessel v. Jenkins, 125 S.W.3d 807, 810 (Tex.App.-Texarkana 2004, no pet.) (where notice of trial setting was returned unclaimed and plaintiffs offered no proof of "selective acceptance/refusal" of certified mail, trial court abused its discretion by failing to grant new trial); Rabie, 982 S.W.2d at 197 (where no evidence controverted defendant's sworn statement that he never received notice of certified mail containing plaintiff's motion for summary judgment, trial court's denial of new trial was abuse of discretion). Cf. Wembley Inv. Co. v. Herrera, 11 S.W.3d 924, 927 (Tex. 1999) (where defendant's affidavits overcame any presumption of receipt of nonsuit motion and plaintiff's affidavits were not based upon personal knowledge or supported by corroborating evidence to the contrary, elements necessary for defendant's bill of review proceeding were established as a matter of law).
"[A] party's duty to respond to requests for admission is dependent upon receipt of those requests." Payton, 29 S.W.3d at 898. Because the record shows Daniels received neither actual nor constructive notice of Lavery's requests for admissions, we conclude the trial court erred in deeming Lavery's requests admitted. See Etheredge, 169 S.W.3d at 383. Accordingly, such admissions were not properly before the trial court in the record as evidence.
2. Evidence at Trial
Next, we consider whether the record contains evidence to support the trial court's judgment that Daniels is personally liable on the sworn account debt alleged by Lavery. Although we have concluded Lavery's requests for admissions should not have been deemed admitted, even had they been properly deemed admitted, we conclude the evidence at trial, including the erroneously deemed admissions, is legally insufficient to support a conclusion that Daniels, personally, bought the furniture in question.
A "sale and delivery of merchandise or performance of services" is one of the elements essential to prove a sworn account. Adams, 41 S.W.3d at 773. A "sale" consists in the passing of title from the "seller" to the "buyer" for a price. Tex. Bus. Com. Code Ann. § 2.106(a) (Vernon 1994). "Buyer" means a person who buys or contracts to buy goods. Tex. Bus. Com. Code Ann. § 2.103(a)(1) (Vernon Supp. 2006). "Seller" means a person who sells or contracts to sell goods. Id. § 2.103(a)(4). Unless otherwise agreed by the parties, title to goods passes to the buyer at the time and place of delivery. Tex. Bus. Com. Code Ann. § 2.401(b) (Vernon Supp. 2006).
Lavery's requests for admissions, of which Lavery asked only specifically that number 11 be deemed admitted, are quoted as follows:
1. The sales price was the price agreed to by the Defendant.
2. The balance shown on the invoice, attached as Exhibit A of the Petition, represents the value of the goods, wares, merchandise, or services delivered to Defendant by Plaintiff.
3. That the price charged for the goods, wares, merchandise, or services referred to in request number 2 was the usual and customary price therfor [sic] at the time when delivered and the county where delivered.
4. The principal amount due to Plaintiff from Defendant for the goods, wares, merchandise or services referred to in request number 2, was $41,805.00 as of the date of filing of Plaintiff's Original Petition.
5. Defendant has failed to pay the amount due to Plaintiff on the account that is the subject of this suit.
6. That on or about April 1, 2003, Plaintiff presented to Defendant a claim for payment of the outstanding balance referred to in request number 4.
7. That the goods, wares, merchandise, or services received by Defendant from Plaintiff conform to all representations and warranties made, if any.
8. That the goods, wares, merchandise or services referred to in request number 2 were never rejected, disputed or returned by Defendant.
9. That there is presently due the obligation referred to in request number 6, the amount of $41,805.00, plus accrued interest.
10. That the Plaintiff is the present owner and holder of obligation referred to in request number 4.
11. Defendant is obligated to Plaintiff in the amount of $41,805.00, plus interest, costs and reasonable attorney fees.
Lavery's requests for admissions do not specifically address facts which could support a conclusion there was a "sale" between Lavery and Daniels, or that Daniels, personally, was the "buyer" of the goods at issue, to whom title passed at the time of the alleged delivery. Adams, 41 S.W.3d at 774 (evidence was sufficient to show restaurant employee, individually, was "buyer" of goods at issue, i.e., "a person who buys or contracts to buy goods"); Tex. Bus. Com. Code Ann.
§ 2.103(a)(1). See also Joyner v. Alban Group, Inc., 541 S.W.2d 292, 294 (Tex.Civ.App.-Houston [1st Dist.] 1976, no writ) (where evidence showed plaintiff knew work was being performed for defendant corporation, president of defendant corporation was not personally liable on account debt).
Importantly, request number 11, providing "Defendant is obligated to Plaintiff," the only request Lavery specifically requested be deemed admitted, is, at best, a conclusion of law. Such a deemed admission is of no effect. See Neal v. Wisconsin Hard Chrome, Inc., 173 S.W.3d 891, 894 (Tex.App.-Texarkana 2005, no pet.) (although any matter admitted in response to a request for admissions about facts is conclusively established unless the court on motion permits otherwise, answers merely constituting admissions of conclusions of law are not binding on the court). See also Stelly v. Papania, 927 S.W.2d 620, 622 (Tex. 1996) (requests for admissions are not intended to be used as a demand to a party to admit that the party has no cause of action or ground of defense). Accordingly, even if deemed admitted, Lavery's requests for admissions do not constitute sufficient evidence to prove a sale between the parties, the first essential element of a sworn account. See Tex. Bus. Com. Code Ann. § 2.106(a); Adams, 41 S.W.3d at 773.
Moreover, the record reflects this critical testimony of Lavery when cross-examined by Daniels:
DANIELS: When I introduced-when we were introduced, did I indicate to you that I was acting on my own behalf or did I give you a business card and tell you that I was, at that time, a corporate officer of Trio Industries Holdings?
LAVERY: You gave me a Trio card.
DANIELS: Okay. Was it your understanding that I was representing myself as a corporate officer of Trio?
LAVERY: It was my understanding that you were representing Trio.
. . . .
DANIELS: Is it your understanding that I was doing all of this directing, that you're saying, as a corporate officer?
LAVERY: I don't know the nature of the individual companies. I don't know what your part was in the individual companies. As I stated before, there were too many companies and there was too much movement as to what was going on. I don't know if you were an officer of all three or one or . . .
DANIELS: Is it your understanding that I was not directing this personally?
LAVERY: Yes.
According to Lavery's testimony, Daniels was "representing Trio" and was not directing the transaction "personally." The record contains no evidence showing Lavery understood Daniels to be acting in an individual capacity with regard to the transaction at issue. Thus, there is no evidence to support a conclusion Daniels, personally, was a "buyer" of goods to whom title passed as a result of the transaction at issue. See Tex. Bus. Com. Code Ann. §§ 2.103(a)(1), 2.106(a).
Personal liability of Daniels for the alleged sworn account debt must be premised upon evidence demonstrating a sale by Lavery to Daniels, personally. See Adams, 41 S.W.3d at 773-74. There is no such evidence in the record. Accordingly, we conclude the evidence is legally insufficient to support the trial court's judgment that Daniels is personally liable on the sworn account debt alleged by Lavery.
III. CONCLUSION
Because we conclude the evidence in the record is legally insufficient to support the trial court's judgment that Daniels is personally liable on the sworn account debt alleged by Lavery, we reverse the judgment of the trial court and render judgment that Lavery take nothing on his claim against Daniels. We need not address Daniels's remaining issues. See Tex. R. App. P. 47.1.
REVERSE and RENDER.