Opinion
No. 11-02-00014-CV.
July 24, 2003.
Appeal from Harris County.
Panel consists of: ARNOT, C.J., and WRIGHT, J., and MCCALL, J.
Memorandum Opinion
Heady Financial Corporation filed suit against Patrick R. McStay to recover on a Note and Security Agreement. McStay filed a counterclaim against Heady, alleging violation of the Fair Debt Collection Practices Act, violation of the Deceptive Trade Practices Consumer Protection Act, usury, and breach of contract. The trial court granted summary judgment in favor of Heady and ordered McStay to pay $2,324.74, the balance on the note, plus 18 percent interest accruing from August 9, 1994, until the date of judgment. The trial court also ordered the foreclosure of personal property securing the note and awarded Heady attorney's fees. The trial court further ordered that McStay take nothing on his counterclaim. McStay appeals from the trial court's judgment. We affirm.
15 U.S.C.A. § 1692 et seq. (West 1998).
TEX. BUS. COM. CODE ANN. § 17.41 et seq. (Vernon 2002).
On January 24, 1991, McStay executed a Note and Security Agreement in the amount of $3,709.09 with ITT Financial Services. The note had a maturity date of February 3, 1995, and was payable in monthly installments. Over the course of the note, McStay was to pay $1,632.45 in interest which was calculated into the payments making the total amount of McStay's payments $5,341.54. The note was secured by personal property, including furniture.
McStay made payments on the note until August 9, 1994. ITT Financial sold the note to Household Finance Company, who sold the note to The Sagres Company. The Sagres Company sold the note to Heady on December 10, 1999. On February 16, 2000, Heady sent a letter notifying McStay that it had acquired the note and seeking payment on the note.
In his sole issue on appeal, McStay contends that the trial court erred in granting Heady's motion for summary judgment because the statute of limitations had run on Heady's claim to collect on the note. When reviewing a traditional motion for summary judgment, the following standards apply: (1) the movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true; and (3) every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor. TEX.R.CIV.P. 166a; Goswami v. Metropolitan Savings and Loan Association, 751 S.W.2d 487, 491 (Tex. 1988); Nixon v. Mr. Property Management Company, Inc., 690 S.W.2d 546, 548-49 (Tex. 1985); City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 676 (Tex. 1979).
A trial court must grant a motion for summary judgment if the moving party establishes that no genuine issue of material fact exists and that he is entitled to judgment as a matter of law. Rule 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991). Once the movant establishes a right to a summary judgment, the non-movant must come forward with evidence or law that precludes summary judgment. City of Houston v. Clear Creek Basin Authority, supra at 678-79. When reviewing a summary judgment, the appellate court takes as true evidence favorable to the non-movant. American Tobacco Company, Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997); Nixon v. Mr. Property Management Company, Inc., supra at 548-49.
McStay contends that the trial court incorrectly applied the six-year statute of limitations applicable to negotiable instruments. See TEX. BUS. COM. CODE ANN. § 3.118(a) (Vernon 2002). McStay argues that the trial court should have applied a four-year statute of limitations because the note was a secured transaction. See TEX. CIV. PRAC. REM. CODE ANN. § 16.004(a)(3) (Vernon 2002).
TEX. BUS. COM. CODE ANN. § 3.104(a) (Vernon 2002) provides that a negotiable instrument means:
[A]n unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:
(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain:
(A) an undertaking or power to give, maintain, or protect collateral to secure payment;
(B) an authorization or power to the holder to confess judgment or realize on or dispose of collateral; or
(C) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
TEX. BUS. COM. CODE ANN. § 3.109(a) (Vernon 2002) states that a promise or order is payable to bearer if it:
(1) states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;
(2) does not state a payee; or
(3) states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person.
The note executed by McStay is not a negotiable instrument as defined in Section 3.104(a). The note is not payable to bearer or to order. See Texas State Investors, Inc. v. Kent Electric Co., Inc., 620 S.W.2d 841, 843 (Tex.Civ.App.-Houston [14th Dist.] 1981, no writ). Therefore, the six-year statue of limitations for negotiable instruments as provided in Section 3.118(a) is not applicable. The note is governed by the four-year statute of limitations set out in Section 16.004(a)(3).
The parties agree on appeal that the note had a maturity date of February 3, 1995, and that the statute of limitations period began to run on that day. Although he argues that the four-year limitations period barred Heady's suit on the note, McStay filed an affidavit in support of his response to Heady's motion for summary judgment in which he stated that he established residency in Akron, Ohio, in October 1995. The record showed that McStay was a resident of Texas at the time he executed the note and at the time the note matured but that McStay was subsequently out of the state for extended periods of time. See Guardia v. Kontos, 961 S.W.2d 580, 584-85 (Tex.App.-San Antonio 1997, no pet'n). TEX. CIV. PRAC. REM. CODE ANN. § 16.063 (Vernon 1997) states that the "absence from this state of a person against whom a cause of action may be maintained suspends the running of the applicable statute of limitations for the period of the person's absence." In his affidavit, McStay stated that, from the time the note matured on February 3, 1995, until the time Heady filed suit to collect on the note, he was present in the State of Texas for 1,210 days. Therefore, during that time frame, McStay was absent from the State of Texas for 655 days. A person's absence from the state, for whatever purpose, will not be included in calculating the period of limitations. Ray v. O'Neal, 922 S.W.2d 314, 317 (Tex.App.-Fort Worth 1996, writ den'd). The time of a person's absence includes each departure from the state and the whole time of each absence. Ray v. O'Neal, supra. Although the applicability of Section 16.063 does not depend on proof of the precise periods of the defendant's absence from the state, there must be evidence from which the fact finder might reasonably conclude that the defendant had not, in the aggregate, been in the state the full statutory period. Ray v. O'Neal, supra.
The statute of limitations would have run on the note on February 3, 1999; and Heady filed suit on the note on March 13, 2000. Section 16.004(a)(3). However, because McStay was absent from the state for 655 days, the running of the statute of limitations was suspended for that amount of time. Section 16.063. Therefore, the statute of limitations did not run on the note until November 20, 2000. Heady's suit to collect on the note was timely filed. The trial court did not err in granting Heady's motion for summary judgment. McStay's sole issue on appeal is overruled.
The judgment of the trial court is affirmed.