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finding that appellant Morales was liable under a guaranty contract after he did not dispute that he had not paid "for the materials at issue purchased on credit from Cemex."
Summary of this case from Mockingbird Pharma LLC v. FLTX Holdings LLCOpinion
No. 14-10-00727-CV
Opinion filed August 18, 2011.
On Appeal from the 334th District Court, Harris County, Texas, Trial Court Cause No. 2008-64322.
Panel consists of Chief Justice HEDGES and Justices SEYMORE and BOYCE.
MEMORANDUM OPINION
Appellant, Roberto Morales, appeals the portion of a judgment in favor of appellee, Cemex Construction Materials South, LLC ("Cemex"), imposing personal liability on Morales for a debt of BM Ready Mix Concrete, LLC ("BM"). In five issues, Morales contends the trial court erred by determining he was liable for the debt under the Texas Trust Fund Act. We affirm.
I. BACKGROUND
At pertinent times, Morales was 50% owner and president of BM. It is undisputed that BM failed to pay for $118,972.41 in materials it purchased on credit from Cemex. Cemex sued BM as well as Morales, alleging he was personally liable for the debt under several alternative theories.
Cemex also sued several other "officers, directors, and principals" of BM. However, these claims were either non-suited or dismissed with prejudice.
The court conducted a bench trial. Although they had answered the suit, neither BM nor Morales appeared for trial. At the outset of trial, Cemex informed the court that it was seeking to impose liability against Morales on two of the theories alleged in its petition: (1) Morales's personal guaranty of the debt; and (2) the Texas Trust Fund Act. After Cemex presented evidence, the trial court orally announced that it found in favor of Cemex against both BM and Morales.
On May 24, 2010, the trial court signed a final judgment awarding Cemex the following against BM and Morales jointly and severally: $118,972.41 for the principal debt; $11,675.59 in pre-judgment interest; $36,263.05 in attorneys' fees for trial; conditional attorneys' fees of $7,500 for each stage of an appeal; post-judgment interest; and costs. Morales filed a motion to modify or, alternatively, motion for new trial, which the court denied by written order. Only Morales now appeals the judgment.
II. ANALYSIS
A. Grounds for the Judgment
We must first address a preliminary issue regarding the grounds on which judgment was rendered. The only theory of liability against Morales that he challenges on appeal is the trust fund doctrine. In five issues, he presents various reasons the trial court allegedly erred by applying this doctrine. Cemex contends that we therefore must uphold the judgment because Morales does not challenge Cemex's other theory for imposing liability — the guaranty.
Cemex also asserts that Morales must satisfy the Craddock test for setting aside a default judgment but presents no argument regarding Craddock. Morales responds that, in a post-answer default situation, the plaintiff must still prove its case at trial; thus, he may challenge the judgment on the merits without satisfying Craddock. We need not resolve this dispute because, even if Morales may challenge the judgment without satisfying Craddock, we nonetheless uphold the judgment on its merits.
In his reply brief, Morales asserts that, in the judgment, the trial court unambiguously limited the basis for recovery against Morales to the trust fund doctrine, and, by submitting the proposed judgment which the court signed, Cemex waived recovery against Morales under the guaranty. Thus, Morales suggests he is required on appeal to challenge only the court's application of the trust fund doctrine and we may not affirm based on the guaranty even if the evidence supports recovery under this theory. Alternatively, he contends the evidence does not support recovery under this theory.
No party requested, and the trial court did not issue, findings of fact and conclusions of law. In the judgment, the trial court recited that "the following judgment should be granted concerning the account for goods sold and delivered to [BM] and on the trust fund doctrine as against [Morales]." We disagree that this recitation unambiguously limited the ground for recovery against Morales to the trust fund doctrine. Rather, relative to the first part of the above-quoted language, the entire suit, including the claims against Morales, "concern[ed] the account for goods sold and delivered to [BM]" because Cemex sought to hold Morales liable for the account. Therefore, the court's recitation that "judgment should be granted concerning the account" encompasses any theory of liability alleged against Morales. The court then added, in the conjunctive, "and on the trust fund doctrine as against [Morales]." Although the court essentially recited that judgment against Morales was proper under the trust fund doctrine, it did not explicitly exclude recovery against him under any other theory.
At most, the judgment is ambiguous regarding whether any other theory formed a basis for Morales's liability. Therefore, we may consider the record and the context in which the trial court rendered the judgment. See Hatfield v. Solomon, 316 S.W.3d 50, 58 (Tex. App.-Houston [14th Dist.] 2010, no pet.) (citing Lone Star Cement Corp. v. J. Roll Fair, District Judge, 467 S.W.2d 402, 404-05 (Tex. 1971)); see also Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 422 (Tex. 2000) (holding that language of unambiguous judgment must be enforced without considering extrinsic evidence regarding its meaning).
At trial, Cemex clearly sought recovery under both the guaranty and trust fund doctrine and never abandoned the guaranty theory during or after trial. Significantly, the parties' interpretation of the basis for the judgment against Morales was the subject of a post-judgment dispute. In his motion to modify or, alternatively, motion for new trial, Morales suggested judgment was rendered against him based solely on the trust fund doctrine. Cemex responded that the judgment did not expressly limit recovery to this theory. Nonetheless, Cemex also filed a motion for judgment nunc pro tunc, asserting that omission of any specific mention of the guaranty theory in the judgment was merely a clerical error.
The trial court did not sign a judgment nunc pro tunc. However, in its written order denying Morales's motion to modify or, alternatively, motion for new trial, the court stated, "and after argument, the Court announced that it was denying Defendant's Motion and no recital in the Final Judgment was intended to limit the grounds of Plaintiff's judgment to the trust fund doctrine." Thus, the court's own clarification of its judgment demonstrates recovery against Morales was not limited to the trust fund doctrine. Morales posits that we may give no effect to the court's statement because it did not amend the judgment. However, this position is contrary to the above-cited principle that we may consider the entire record if the judgment is ambiguous. See Hatfield, 316 S.W.3d at 58.
Because the judgment is arguably ambiguous and clarification through an order denying a motion for new trial was somewhat unusual, we will evaluate whether the evidence supported recovery under the guaranty rather than simply affirming based on Morales's failure to challenge this ground in his original brief.
B. The Guaranty
To recover under a guaranty, the plaintiff must establish (1) existence and ownership of the guaranty agreement, (2) the terms of the underlying contract by the holder, (3) occurrence of the conditions upon which liability is based, and (4) failure or refusal to perform the promise by the guarantor. Marshall v. Ford Motor Co., 878 S.W.2d 629, 631 (Tex. App.-Dallas 1994, no writ).
Relative to the second, third, and fourth elements, Morales does not dispute that neither he nor BM paid for the materials at issue purchased on credit from Cemex. With respect to the first element, Cemex presented at trial a "CREDIT APPLICATION AND AGREEMENT" submitted by BM for its potential purchases from Cemex. The first page of the document containing the applicant's information was signed only by Francisco Bunt, CEO of BM, although Morales was listed thereon as president.
Cemex also presented a document entitled "Continuing Guaranty," which, according to its regional director of credit, was submitted with the credit application. The guaranty provided in pertinent part:
In consideration of CEMEX . . ., at my request giving or extending terms of credit to ________ hereinafter called debtor, I hereby give this Continuing Guaranty and unconditionally and irrevocably guarantee to CEMEX, its transferees, successors and assigns, for the payment and performance in full of any obligations and indebtedness, direct or contingent, of debtor to CEMEX, plus all interest, attorneys' fees, costs of court and charges of whatsoever nature and kind, whether due or to become due and whether now existing or hereafter arising. It is expressly understood that this guaranty covers any debt that may now be existing, or any renewals thereof, as well as any other or further indebtedness that may be made, and renewals thereof, during the life of this guaranty; and I hereby bind and obligate myself, heirs, successors and assigns, with debtor, jointly and severally for the payment of such indebtedness precisely as if the same had been contracted and was due or owing by me personally, hereby agreeing to, and binding myself, my heirs, successors and assigns, by all the terms and conditions contained in the credit agreement and all other documents incorporated therein by reference and any note or notes, signed or to be signed by the debtor, making me a party thereto; . . . I agree to pay upon demand at any time to CEMEX, its transferees, successors or assigns the full amount of debtor's indebtedness plus interest, attorneys' fees, costs of court and charges, as set forth above. . .
As Morales notes, the blank space for identification of "debtor" was left blank on this guaranty, and "debtor" was not otherwise identified therein. However, the guaranty was executed in conjunction with BM's credit application, and the guaranty reflects its purpose was to secure credit for the "debtor." Consequently, the trial court could have reasonably concluded that the "debtor" referenced in the guaranty was BM.
Cemex presented testimony from Bunt acknowledging that he signed the guaranty in one of the spaces provided for signature of each "Guarantor." The guaranty apparently also contains the signatures of Morales, his spouse, and Bunt's spouse. Morales contends the evidence is insufficient to establish that he indeed signed the guaranty. However, Bunt testified that he asked Morales if he signed the guaranty, and Morales replied, "the documents are complete and in your desk." Bunt did not recall whether Morales specifically stated he "signed" the guaranty, but Bunt indicated he understood "complete" to mean that Morales signed it. Additionally, because the only matter to be completed by BM's representatives relative to the document was supplying their signatures, the trial court could have reasonably inferred that "complete" meant Morales signed the guaranty.
Moreover, the guaranty form included the following notation: "Principal corporate owners, all partners, or individual owners, AND, if applicable, their spouses must sign the Continuing Guaranty as a condition of the approval of credit." Cemex presented deposition testimony from Morales admitting that he and Bunt were each 50% owners of BM. Thus, this notation combined with Morales's admission of an ownership interest supported the trial court's implicit finding that he signed the guaranty.
In sum, Cemex proved existence and ownership of a guaranty enforceable against Morales. Accordingly, the trial court did not err by determining Morales was liable for BM's debt based on his personal guaranty thereof.
We affirm the trial court's judgment.