Summary
holding defects in authentication are defects of form
Summary of this case from Petro-Hunt, L.L.C. v. Wapiti Energy, L.L.C.Opinion
No. 01-09-00787-CV
Opinion issued April 7, 2011.
On Appeal from the 165th District Court, Harris County, Texas, Trial Court Case No. 2007-70840.
Panel consists of Chief Justice RADACK and Justices ALCALA and BLAND.
MEMORANDUM OPINION
Virginia David sued Norma and Robert David for an unpaid debt. The trial court granted Virginia's summary judgment and awarded actual damages, prejudgment and post-judgment interest, and attorney's fees. Norma appeals, contending that the trial court erred by granting summary judgment because: (1) no competent evidence supported Virginia's claim; (2) the statute of limitations barred Virginia's suit on the debt; (3) a fact issue remained regarding whether a letter written by Norma was sufficient to constitute an acknowledgment of an otherwise time-barred debt; (4) the trial court granted summary judgment based on a theory of recovery that Virginia never pleaded; (5) no evidence existed for the award of attorney's fees; (6) no evidence existed for the award of actual damages; and (7) the trial court miscalculated prejudgment and post-judgment interest.
We hold that the statute of limitations does not bar Virginia's suit on the debt because Norma acknowledged the debt and thus revived it, the trial court did not grant summary judgment on a theory that Virginia never pleaded, and Norma waived her complaints about the competency of the summary judgment evidence. Virginia failed, however, to meet her summary judgment burden to conclusively prove the amount of actual damages and her reasonable and necessary attorney's fees. We therefore reverse the summary judgment and remand for further proceedings.
Background
In 1991, Virginia loaned Norma money in exchange for a promissory note signed by Norma. The promissory note states:
TO WHOM IT MAY CONCERN:
This will serve as promissory note to Virginia Wong David for the following:
. . .
[$]13,000.00 loan + interest of $1,049.87 (12/91)
[$]9,641.36 current Credit Union share interest included
[$]8,000.00 [loan] + interest of $1,690[.00] due 3/92
This supersedes any promissory notes written prior to this date. All other notes . . . are void.
In 2006, Norma sent a certified, signed letter to Virginia regarding the the loans. In the letter, she stated:
Dear Ms. Virginia David[,]
I apologize[] for not responding sooner[.] I had to review your amortization schedules[,] and I am enclosing the schedules that I prepared based on the interest rate agreed when the loans were originated and eventually changed by you. I always [had] the intentions to pay out debts but unfortunately, our job situation did not allow us to do that on a timely basis.
. . . .
We are very grateful for your help[,] and I would like to ask if you can PLEASE stop the interest since I will not be able to pay it off when it keeps on increasing . . . I am overwhelmed by the amount of increase. However, I will make every effort to pay and I am enclosing a money order for $200[.00] as my monthly payment. We will believe God [will] help us so we can pay you sooner.
. . . . My repeated request to deduct the interest we earned for you has been ignored repeatedly[,] and I pray that you will be fair and deduct the net amount from the interest that you are charging me. The total interest we earned for you from 1987-1992 was $11,574.29 and after subtracting the income tax paid, you netted $9,442.95 the amount I have been requesting to be subtracted from the balance due.
I did not send any more money after I [sent] you all the copies of the cancelled checks because I was waiting for your statement since I have already given you $27,300[.00] plus the net of the interest I earned for you of $9,442.95, which totaled $36,742.95. The original loan amount is $30,707.43.
. . . .
I am enclosing the corrected amortization schedules per my records.
Schedule 1 $5,000[.00] + $8,000[.00]
Paid in full and overpayments credited to Loan #2.
Schedule 2 $9,707.43
The [s]chedule you sent me showed this loan amount to be $9,641[.00] starting on 8/1/91. The Promissory Note dated 12/16/91 references an amount of $9,641.36, which you had on deposit in a credit union account in our name. This deposit was originally opened in 1/90 with $9,386.72. Interest earned on that money, net taxes, grew the money to $9,707.43 on 1/93. You converted this credit union deposit into a loan and began charging 10% compounding monthly on 1/93.
Schedule 3 $8,000.00
In my schedule I included a payment of $1,000[.00] on 4/92 that you incorrectly attributed to Loan #1.
. . . .
In 2007, Norma stopped making payments on the two outstanding loans to Virginia. Later that year, Virginia sued Norma and her husband, Robert, for the unpaid debt. Norma and Robert answered and moved for summary judgment. In their answer, they asserted that Norma had paid Virginia all amounts due on the loans. To support this contention, they attached copies of payments they made to Virginia between 1987 and 2002. According to their summary judgment motion, the statute of limitations barred Virginia's claim against them. Virginia filed her own motion for summary judgment, contending that she was entitled to judgment on the unpaid debt as a matter of law. See Leavings v. Mills, 175 S.W.3d 301, 309 (Tex. App.-Houston [1st Dist.] 2004, no pet.) ("To prevail on a summary judgment motion, a party seeking to enforce a note must prove (1) that a certain note is in question, (2) that the party sued signed the note, (3) that the plaintiff is the owner or holder of the note, and (4) that a certain balance is due and owing on the note.").
The trial court granted Virginia's motion for summary judgment and denied Norma and Robert's motion. The court awarded Virginia: (1) $17,707.43; (2) prejudgment interest at the rate of 10% per year commencing from the 30th day from the date the balances were due; (3) post-judgment interest of 10% per year until the total amount is paid; (4) $5,000.00 in attorney fees, and (4) all costs of court and reasonable expenses incurred by Virginia in prosecuting the claim.
Discussion
Standard of Review
We review de novo the trial court's ruling on a motion for summary judgment. Mann Frankfort Stein Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). In a traditional motion for summary judgment, the movant must establish that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). To determine if the nonmovant raised a fact issue, 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. See Fielding, 289 S.W.3d at 848 (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)). When both sides move for summary judgment, and the trial court grants one motion and denies the other, the reviewing court considers both sides' summary judgment evidence and determines all issues presented. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
Competency of Summary Judgment Evidence
Norma contends that the trial court erred in granting Virginia's summary judgment motion because Virginia did not present competent evidence to support her claim for the unpaid debt. Virginia submitted the following evidence: (1) a copy of the 1991 promissory note signed by Norma; (2) a copy of the 2006 letter, (3) copies of payments by Norma from 2006 and 2007 and (4) amortization schedules prepared by Virginia for the three loans showing an unpaid balance for each of them. Norma maintains that Virginia's evidence, specifically the copy of the 2006 letter, was not competent evidence because it was unauthenticated, unsworn, and unaccompanied by affidavits. See Hall v. Rutherford, 911 S.W.2d 422, 426 (Tex. App.-San Antonio 1995, writ denied) (holding that unauthenticated, unsworn, and unsupported letter is not entitled to consideration as summary judgment evidence).
Copies of original documents are acceptable in summary judgment proceedings if accompanied by a properly sworn affidavit that states the attached documents are "true and correct" copies of the original. Republic Nat'l Leasing Corp. v. Schindler, 717 S.W.2d 606, 607 (Tex. 1986). A nonmovant waives defects in the form of summary judgment evidence by not timely objecting and obtaining a ruling. TEX. R. CIV. P. 166a(f); see also Mathis v. Bocell, 982 S.W.2d 52, 59 (Tex. App.-Houston [1st Dist.] 1998, no pet.). But a nonmovant need not object to substantive defects in summary judgment evidence. See id. Defects in the authentication of attachments in support of a motion for summary judgment or response are defects of form, and they are waived without proper objection in the trial court. See Watts v. Hermann Hosp., 962 S.W.2d 102, 105 (Tex. App.-Houston [1st. Dist.] 1997, no pet.) (holding that objection to authentication of hospital discharge records attached to motion for summary judgment waived because not raised in trial court); Jones v. Jones, 888 S.W.2d 849, 852 (Tex. App.-Houston [1st Dist.] 1994, no writ.) (holding that objection to uncertified copies of documents attached to summary judgment motion was waived because lack of certification was formal defect, and nonmovant did not raise it at trial); Marchal v. Webb, 859 S.W.2d 408, 417 n. 6 (Tex. App.-Houston [1st Dist.] 1993, writ denied)(same); see also Nichols v. Lightle, 153 S.W.3d 563, 569 (Tex. App.-Amarillo 2004, pet. denied) (holding that lack of authentication or other verification for attachments to summary judgment motion was formal defect).
Because Norma did not object to the authentication of Virginia's attachments in support of her motion for summary judgment in the trial court, Norma waived her complaints about them on appeal. Norma cites Tucker v. Atl. Richfield Co., 787 S.W.2d 555, 557 (Tex. App.-Corpus Christi 1990, writ. denied), and Trimble v. Gulf Paint Battery, Inc. 728 S.W.2d 887, 889 (Tex. App.-Houston [1st Dist.] 1987, no writ), but these cases are distinguishable because they involve affidavits, not authentication of documents. In both cases, the courts of appeals held that the absence of a jurat on a purported affidavit is not just a formal defect but is substantive and this is not waived by failure to bring it to the trial court's attention. Tucker, 787 S.W.2d at 557; Trimble, 728 S.W.2d at 889.
Norma also challenges the 2006 letter as hearsay. Hearsay is a defect in form, and a nonmovant waives the hearsay objection if she does not raise it at the trial court. Wilson v. Gen. Motors Acceptance Corp., 897 S.W.2d 818, 821-22 (Tex. App.-Houston [1st Dist.] 1994, no writ) (holding hearsay in affidavit is defect in form). Norma did not object that the 2006 letter was hearsay at the trial court, but it is not hearsay in any event as the letter is an admission by a party opponent. See TEX. R. EVID. 801(e)(2).
Statute of Limitations and Acknowledgment of Loans
Norma asserts that the trial court erred in granting Virginia's summary judgment motion and denying her own motion because Virginia's cause of action based on the 1991 promissory note accrued in 1991 when the note matured, and Norma neither extended nor acknowledged the loans after that date, causing the statute of limitations to run in 1995. See TEX. CIV. PRAC. REM. CODE ANN. § 16.004 (West 2002) (statute of limitations is four years for claims involving a debt). In addition, she maintains that fact issues exist as to whether the 2006 letter was sufficient to constitute an acknowledgment of her debt to Virginia.
The statute of limitations for a claim involving a debt may be avoided if the party to be charged acknowledges the debt in writing. See TEX. CIV. PRAC. REM. CODE ANN. § 16.065 (West 2008). An acknowledgment of a debt must (1) be in writing and signed by the party to be charged; (2) contain an unequivocal acknowledgment of the justness or the existence of the particular obligation; and (3) refer to the obligation and express a willingness to honor that obligation. Stine v. Stewart, 80 S.W.3d 586, 591 (Tex. 2002). "The amount of the obligation the acknowledgment describes must be susceptible of ready ascertainment." Id. at 591-92. An acknowledgment of an existing debt creates a new obligation. Id. at 591. Whether a writing sufficiently acknowledges a debt is a question of law. Bright Co. v. Holbein Family Mineral Trust, 995 S.W.2d 742, 745 (Tex. App.-San Antonio 1999, pet. denied); Medal, L.P. v. Kvaerner Process Sys. US, Inc., No. 14-03-01334-CV, 2004 WL 1192894, at *1 (Tex. App.-Houston [14th Dist.] June 1, 2004, no pet.).
Here, Norma signed the 2006 letter she sent to Virginia. In the letter, she writes that it was her intent to honor the debt owed to Virginia. She explicitly references the 1991 promissory note and states she has three loans with Virginia for $13,000.00, $9,707.43, and $8,000.00. She maintains that she would continue to make payments on the remaining amounts owed, even though she had not been able to do so in a timely manner. The letter indicates that she included amortization schedules with the letter for each of the three loans and a payment of $200.00. Norma unequivocally acknowledges the loans owed to Virginia and expresses a willingness to honor the obligations. See Stine, 80 S.W.3d at 592 (holding agreement referring to creditor and amount of unpaid principal and expressly providing how and when debtor would pay was acknowledgment that debt existed); Andrews v. Cohen, 664 S.W.2d 826, 828-29 (Tex. App.-Tyler 1984, writ ref'd n.r.e.) (noting debtor's statement "we will agree that the total indebtedness . . . is $90,000" was acknowledgment of indebtedness). The fact that Norma asks Virginia to stop charging her interest on the loans does not make her acknowledgment equivocal; she states that although the increase due to the interest overwhelms her, she will make every effort to pay the debt. Cf. Mandela v. Oggero, 508 S.W.2d 861, 863 (Tex. Civ. App.-Houston [14th Dist.] 1974, no writ) (holding debtor's statement that debtor "had or may have certain liabilities or obligations" was equivocal and did not constitute an acknowledgment of debt). Accordingly, we hold that the letter meets the statutory prerequisites for an acknowledgment. See TEX. CIV. PRAC. REM. CODE ANN. § 16.065; Stine, 80 S.W.3d at 591. We hold that the statute of limitations does not bar Virginia's claim for the unpaid debt against Norma because Norma acknowledged the debt in 2006, and Virginia brought this action in 2007. See TEX. CIV. PRAC. REM. CODE ANN. § 16.004.
Pleading Objection
In both her original petition and first amended petition, Virginia relies on the 1991 promissory note to support her claim for her unpaid debt. She supports her motion for summary judgment with the 2006 letter to prove that Norma acknowledged the debt and made a "new promise" to pay it. See Stine, 80 S.W.3d at 591. Norma contends that Virginia should have pleaded acknowledgment of the debt to obtain summary judgment.
We disagree. The statute of limitations is an affirmative defense. TEX. R. CIV. P. 94. It was not necessary that Virginia plead her defense or exception to the statute of limitations until Norma raised the issue. Glendon Invs, Inc. v. Brooks, 748 S.W.2d 465, 467-68 (Tex. App.-Houston [1st Dist.] 1988, writ denied) (holding that plaintiff was not required to plead exception to affirmative defense raised by defendant); see also N. Am. Land Corp. v. Boutte, 604 S.W.2d 245, 247 (Tex. Civ. App.-Houston [14th Dist.] 1980, writ ref'd n.r.e.) (holding that defendant did not need to plead that statute of limitation did not bar his counterclaim against plaintiff); Martin v. Moore, 562 S.W.2d 274, 278 (Tex. Civ. App.-Austin 1978, no writ) ("[T]he plaintiff does not have to anticipate defenses but it is the burden of the defendant to plead and prove matters in confession and avoidance.").
Damages
Norma contends that the trial court erred in awarding damages as a matter of law because fact issues exist. We agree. The principal amounts of the three loans, according to the 2006 letter, were $13,000.00, $9,707.43, and $8,000.00. In the letter, Norma states that she paid off the loan for $13,000.00. The total principal of the two remaining loans is $17,707.43. The trial court's award of $17,707.43 plus interest, however, does not take into account the payments Norma made from 1991 until 2007 on the two loans. According to the 2006 letter, Norma disagreed with Virginia's amortization schedules on the loans submitted to her. In addition, she claimed that she overpaid on the loan of $13,000.00 and that the excess should be applied to the loan for $9,707.43. She also stated in the letter that Virginia incorrectly attributed a payment of $1,000.00 to the loan for $13,000.00 when she should have attributed it to the loan for $9,707.43. The letter indicates that Norma created her own amortization schedules, which were not part of the summary judgment evidence. We hold that the summary judgment evidence raises an issue of material fact as to the amounts due and owing on the loans and thus on the corresponding interest accrued.
Attorney's Fees
Norma contends that the trial court erred in awarding Virginia attorney's fees. In her petition and motion for summary judgment, Virginia sought $5,000.00 in reasonable attorney's fees incurred in the prosecution of the lawsuit. Norma observes that no contractual right to attorney's fees existed and that no evidence existed in the trial court record regarding the fees.
Under section 38.001 of the Civil Practice and Remedies Code, which Virginia invokes here, a person may recover attorney's fees from an opposing party in addition to the amount of a valid claim and costs, if the claim is for an oral or written contract. TEX. CIV. PRAC. REM. CODE ANN. § 38.001(8) (West 2008). To warrant recovery under this section, attorney's fees must be "reasonable." See Id. § 38.001. Chapter 38 affords the party seeking fees the presumption that the usual and customary fees for the eligible claim are reasonable. Id. §§ 38.001, 38.003. A trial court determines the reasonableness of an attorney's fee award by considering the factors enumerated in Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (quoting TEX. DISCIPLINARY R. PROF'L CONDUCT 1.04). The reasonableness of an attorney's fee award generally presents a question of fact. See Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881-82 (Tex. 1990); Tesoro Petroleum Corp. v. Coastal Ref. Mktg., Inc., 754 S.W.2d 764, 767 (Tex. App.-Houston [1st Dist.] 1988, writ denied). An award of attorney's fees must be supported by evidence that the fees were both reasonable and necessary. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991); see also Bastine v. Comm'n for Lawyer Discipline, 252 S.W.3d 413, 416 (Tex. App.-Houston [1st Dist.] 1996, no writ) ("A demand for reasonable attorneys' fees is a claim for unliquidated damages, and an award of fees must be based upon evidence in support of the pleadings."); Van Es v. Frazier, 230 S.W.3d 770, 784 (Tex. App.-Waco 2007, pet. denied) (holding that trial court erred in granting plaintiff attorney's fees because plaintiff presented no summary judgment evidence that supported award of such fees). As a general rule, the party seeking to recover attorney's fees carries the burden of proof. Stewart Title Guar. Co., 822 S.W.2d at 10.
Here, no evidence exists in the trial court record that attorney's fees of $5,000.00 is reasonable. Virginia did not attach a bill from her attorney to either her petition or her summary judgment motion. She did not attach an affidavit from her attorney averring to the work he did on the case, the amount he charged, or the usual and customary fees for prosecuting a claim of an unpaid debt. Likewise, her attorney did not testify about his fee or work on the case. Virginia stated in her petition and summary judgment motion that she was entitled to $5,000.00 in reasonable attorney's fees incurred through prosecution of the case. The petition and motion for summary judgment, however, are not evidence. See Kendall v. Whataburger, Inc., 759 S.W.2d 751, 754 (Tex. App.-Houston [1st Dist.] 1988, no writ) (holding that the motion for summary judgment itself is not summary judgment evidence). Because no evidence exists in the record that $5,000.00 is reasonable, we hold that the trial court erred in awarding this amount to her. See Stewart Title Guar. Co., 822 S.W.2d at 10; Bastine, 252 S.W.3d at 416; Van Es, 230 S.W.3d at 784. Accordingly, we reverse the trial court's summary judgment on the attorney's fee award.
Conclusion
The statute of limitations does not bar this suit on the debt because Norma acknowledged the debt. The summary judgment evidence, however, presents material fact issues on the amount owed, and thus the corresponding interest accrued. We therefore reverse and remand the case for trial.