Summary
noting that "the sequence of events under the sham affidavit doctrine contemplates deposition testimony followed by the filing of a contradictory sham affidavit" but "[t]his case does not fit the pattern"
Summary of this case from Lujan v. Navistar, Inc.Opinion
Nos. 14-07-00206-CV, 14-07-00396-CV
Opinion filed December 9, 2008.
On Appeal from the 309th District Court Harris County, Texas, Trial Court Cause No. 2005-05236;2005-05236A.
Panel consists of Chief Justices HEDGES, and Justices ANDERSON and BOYCE.
MEMORANDUM OPINION
In this dispute over the disposition of assets in connection with a divorce, Paddy Argovitz appeals an order granting summary judgment in favor of Jerry Argovitz in Cause Number 14-07-00396-CV (the "Forfeiture Appeal"). Paddy also appeals an order granting summary judgment in favor of Jerry in Cause Number 14-07-00206-CV (the "Fiduciary Duty Appeal"). We affirm in part and reverse and remand in part.
Overview
Paddy and Jerry Argovitz acquired extensive assets during their marriage. The disposition of these assets in connection with their divorce involved several steps.
After multiple mediation conferences, the parties executed a mediated settlement agreement on January 9, 2004. The trial court held a hearing regarding a proposed divorce decree on April 8, 2004. Because Paddy claimed that the proposed divorce decree did not accurately incorporate the mediated settlement agreement's terms, and that the settlement agreement failed to address certain matters, the trial court did not sign the submitted decree at the April 8 hearing. Instead, the trial court signed an order on April 23, 2004 directing the parties to submit their drafting disputes to binding arbitration. Paddy, Jerry, and their respective counsel arbitrated their disputes at a hearing on May 7, 2004. The arbitrator signed the Decision and Award of Arbitrator on May 11, 2004. The trial court signed the Final Divorce Decree on July 30, 2004, which incorporated the arbitrator's rulings.
The two appeals before us arise from post-divorce disputes between Paddy and Jerry regarding (1) the forfeiture of certain trust property by Paddy; and (2) the operation, management, and accounting of jointly held trust property by Jerry as trustee.
The first dispute focuses on whether Paddy forfeited her rights to certain jointly held assets after failing to make a cash call required by the Final Divorce Decree. Paddy contends that she was not required to make a cash call because Jerry's cash call was improper under the Final Divorce Decree.
The second dispute involves Jerry's management and liquidation of certain jointly owned trust assets. Under the Final Divorce Decree, Jerry was appointed trustee for Paddy in connection with Paddy's one-half undivided interest in certain assets. Jerry was to manage and liquidate these jointly owned assets; he also maintained a separate bank account, the Argovitz Asset Management Account, to pay for expenses relating to these assets. After the sale of one asset, Jerry made two payments before disbursing Paddy's portion of the net sale proceeds. Paddy contends that Jerry should not have made these payments before calculating her one-half portion of the sale proceeds, and that he failed to provide her with an adequate accounting explaining these payments.
Factual Background
A. The Forfeiture Appeal
Jerry managed the parties' jointly owned assets as required by the Final Divorce Decree. The Final Divorce Decree contains an "Operating Trust Provisions" section providing that the parties own certain assets as tenants in common. The provision also states that "[b]ecause these properties are difficult to evaluate, may periodically require cash contributions, and may periodically be sold, refinanced, or forfeited . . ., IT IS ORDERED that JERRY ARGOVITZ shall act as trustee for PADDY ARGOVITZ in connection with [her] one-half undivided interest in the properties."
Pursuant to the Final Divorce Decree, Jerry and Paddy each were required to deposit $25,000 into the Argovitz Asset Management Account to pay expenses related to the jointly owned assets described in the Final Divorce Decree as they became due. The Final Divorce Decree further provided:
that such Asset Management Account shall be maintained in the name of JERRY ARGOVITZ and shall be used by JERRY ARGOVITZ to pay actual expenses related to any project related to the above listed jointly held assets while he manages these assets. When the Asset Management Account reaches $10,000.00, IT IS ORDERED that each party shall deposit another $20,000.00 into the Asset Management Account within ten days of notification of the balance. For a period of eighteen months from the date this Final Decree of Divorce is signed or until all of the jointly held assets are disposed, whichever occurs earlier, IT IS ORDERED that JERRY ARGOVITZ shall be authorized to withdraw $3,000.00 from such Asset Management Account each month for his overhead expenses related to his management of the assets. Funds held in the Asset Management Account for the purpose of paying income taxes shall not be counted as a balance in the account for the purpose of the $10,000.00 minimum balance provisions in this paragraph. In the event either party fails to contribute to this Asset Management Account . . . that party's interest in all of the [specifically described] jointly held assets shall be forfeited to the other party. If a party is in default, such defaulting party shall be provided written notice and given an opportunity of at least ten days to fully cure such default.
On September 21, 2004, Jerry sent a letter to Paddy stating that the first cash call was due. Jerry asked her to deposit $25,000 in the Asset Management Account because it was $9,400 in the red. Jerry deposited $25,000 in the account; Paddy failed to do so within 10 days of notification. Jerry sent Paddy a "Notice of Right to Cure" on October 5, 2004, stating that Paddy was in default and giving Paddy 10 days to make the cash call as required by the Final Divorce Decree. On October 18, 2004, Paddy's counsel sent a letter to Jerry's counsel asking him to explain when and how Paddy breached her agreement to fund the Asset Management Account. Jerry's counsel responded by letter on October 21, 2004, attaching the September 21 and October 5 letters Jerry already had sent to Paddy.
Five months later, Jerry received a $20,000 check dated March 21, 2005 from Paddy. On March 28, 2005, Jerry's counsel sent a letter to Paddy's counsel returning Paddy's check; the letter asserted that Paddy was five months late with payment and in default under the Final Divorce Decree. Jerry's counsel also included Jerry's Original Counter-Petition for Declaratory Judgment, in which he asked the trial court to sign a judgment declaring that Paddy had forfeited her rights in the jointly held assets Jerry was managing under the Final Divorce Decree by failing to make required cash calls.
B. The Fiduciary Duty Appeal
Paddy and Jerry agreed to resolve the division of their marital assets and liabilities on January 9, 2004 after several mediation conferences. Jerry submitted an inventory listing Jerry's and Paddy's assets. One asset was a 50 percent interest in an entity called Land Baron West LLC ("LBW").
At the time of the divorce and mediation, Paddy and Jerry jointly owned a 50 percent interest in LBW; Kevin Kean owned the remaining 50 percent interest. In turn, LBW joined Lakes California Land Development, Inc. ("Lakes") to form a real estate venture, 2022 Ranch LLC ("2022 Ranch"). LBW and Lakes each owned a 50 percent interest in 2022 Ranch, which was created to purchase 2,022 acres located at Honey Springs Ranch. In order to fund more expenditures, 2022 Ranch had required additional capital contributions. Lakes contributed its portion and also contributed $675,000 on behalf of LBW. Thus, at the time of the January 2004 mediation, LBW owed Lakes $675,000.
There was an existing contract in January 2004 to sell 1,978 acres of 2022 Ranch's land to Riverside Land Conservancy. LBW and Lakes agreed that LBW would reimburse Lakes for Lakes' prior $675,000 contribution from LBW's share of the sale proceeds. Paddy and Jerry also were litigating a lawsuit involving title issues with the 2022 Ranch acreage; the parties refer to this as the "Chicago Title suit."
The Final Divorce Decree authorized Jerry to manage and liquidate certain jointly owned assets, including the existing contract to sell 1,978 acres of 2022 Ranch's land. The marital estate, including money from the acreage sale, was to be divided between Jerry and Paddy under the Final Divorce Decree. Jerry was awarded separate property as follows:
With the exception of one-half of the parties' portion of the net cash proceeds from the existing contract to sell the 2,022 acres located at Honey Springs Ranch to Riverside Land Conservancy, which is awarded to PADDY ARGOVITZ . . . JERRY ARGOVITZ is awarded the remainder of the parties' 50% interest (which is 100% of the remaining community interest) in the limited liability corporation known as Land Baron West, LLC, including but not limited to all real property, assets, contingent assets, furniture, fixtures, machinery, equipment, inventory, cash, receivables, accounts, goods, supplies, claims and causes of action, debts and liabilities and contingent debts and liabilities; all personal property . . .; and all rights and privileges, past, present, or future, arising out of or in connection with the operation of the business.
The following assets were awarded to Paddy as her separate property:
One-half of the parties' portion of the net cash proceeds from the existing contract to sell the 2,022 acres located at Honey Springs Ranch to Riverside Land Conservancy (after payment to JERRY ARGOVITZ for funds advanced by him). This contingent asset shall be operated and managed by JERRY ARGOVITZ subject to Section 13 in this Final Decree of Divorce and subject to the terms of the Promissory Note in the amount of $1,000,000.00 payable by PADDY ARGOVITZ to JERRY ARGOVITZ.
After the sale of 1,978 acres to Riverside Land Conservancy was completed, Jerry paid $675,000 to Lakes to reimburse it for Lakes' prior capital contribution to 2022 Ranch on behalf of LBW. Jerry also paid $650,000 to himself to reimburse himself for prior advances he made to LBW. Jerry then distributed to Paddy her one-half of the remaining net proceeds from the sale to Riverside Land Conservancy. A dispute arose between Paddy and Jerry regarding whether Jerry properly made payments from the sale proceeds without properly allocating certain expenses for the remaining 44 acres of 2022 Ranch; proceeds from the later sale of these 44 acres; and expenses paid out of community funds for the Chicago Title suit. This dispute prompted Paddy to sue Jerry for breach of fiduciary duty, accounting, and a declaratory judgment.
Procedural Background
After Paddy and Jerry signed a mediated settlement agreement on January 9, 2004, disputes arose regarding the drafting of a divorce decree. In accordance with the mediated settlement agreement and based upon the trial court's order signed April 23, 2004, these drafting disputes were submitted to binding arbitration.
On May 6, 2004, Paddy filed a writ of mandamus asking this court to compel the trial court to set aside its orders (1) finding that the parties' agreement was a binding mediated settlement agreement; and (2) referring the case to arbitration pursuant to the mediated settlement agreement. In re Argovitz, No. 14-04-00437-CV, 2004 WL 1058946 (Tex.App.-Houston [14th Dist.] May 7, 2004, orig. proceeding [mand. denied]). This court denied Paddy's petition for writ of mandamus on May 7, 2004. Id. Paddy attempted to appeal the trial court's order referring the case to arbitration, but then filed a motion to dismiss the appeal on May 6, 2004 because the trial court's order was not appealable. This court granted Paddy's motion and dismissed the appeal on May 13, 2004. Argovitz v. Argovitz, No. 14-04-00436-CV, 2004 WL 1066681 (Tex.App.-Houston [14th Dist.] May 13, 2004, no pet.) (mem. op.).
On May 7, 2004, Paddy and Jerry together with their respective counsel appeared at the scheduled arbitration hearing. The arbitrator signed the Decision and Award of Arbitrator on May 11, 2004. On July 30, 2004, the trial court signed the Final Divorce Decree based on the mediated settlement agreement and the incorporated Decision and Award of Arbitrator. Paddy then filed a notice of appeal on August 30, 2004. Paddy contended on appeal that (1) she withdrew her consent to the mediated settlement agreement before the Final Divorce Decree was signed; and (2) her initial consent to the mediated settlement agreement was fraudulently induced. Argovitz v. Argovitz, No. 14-04-00885-CV, 2005 WL 2739152, at *1 (Tex.App.-Houston [14th Dist.] Oct. 25, 2005, no pet.)(mem.op). This court dismissed Paddy's appeal on October 25, 2005, and held that Paddy was estopped to challenge the trial court judgment because she voluntarily accepted benefits under that judgment. Id. at *1-5.
Paddy then sued Jerry, leading to the two appeals presently before this court. In her live pleadings, Paddy claimed that Jerry breached his fiduciary duty as a trustee; asked the trial court to order Jerry to give an accounting because he failed to provide an adequate accounting; and asked for a declaratory judgment regarding "her rights and legal relations in respect to the trust as well as the trust subject matter." On March 28, 2005, Jerry filed a counter-claim against Paddy for a declaratory judgment establishing that, under the terms of the Final Divorce Decree, Paddy had forfeited her rights to certain jointly held properties because she failed to make a required cash call to the Argovitz Asset Management Account.
On January 9, 2006, Jerry filed his Amended Motion for Summary Judgment or, in the alternative, Partial Summary Judgment on Paddy's claims for breach of fiduciary duty, accounting, and declaratory judgment. Jerry's motion consisted of both a traditional motion for summary judgment under Rule 166a(c) and a no-evidence motion under Rule 166a(i). The traditional summary judgment motion addressed Paddy's claims for breach of fiduciary duty, an accounting, and a declaratory judgment. Jerry's no-evidence summary judgment motion addressed Paddy's claims for breach of fiduciary duty and accounting.
In the traditional summary judgment portion, Jerry contended there was no breach of fiduciary duty or lack of accounting as a matter of law because (1) Paddy's own expert testified that Jerry has been forthcoming and has shown him all requested documents with respect to the payments Jerry made to Lakes and himself; (2) Paddy's expert refuted her allegations that Jerry (a) failed to properly account for his management and distribution of property, (b) falsified and manipulated the accounting to favor himself, (c) withheld funds to which Paddy was entitled and diverted these funds, and (d) failed to produce documentation that he in fact advanced the $650,000 for which he reimbursed himself; (3) Jerry properly accounted for the $650,000 and $675,000 amounts in the inventory he provided to Paddy and her expert before the mediation; and (4) Paddy's expert established that (a) Jerry provided Paddy with a timely accounting upon request and with supporting documentation, and (b) there were no documents or evidence to support Paddy's assertion that Jerry used improper accounting to deprive her of assets awarded to her in the Final Divorce Decree.
In the alternative, Jerry requested a no-evidence summary judgment because Paddy failed to present evidence to sustain her claim for breach of fiduciary duty and her claim that Jerry failed to provide an accounting.
Paddy responded to Jerry's summary judgment motion by arguing that Jerry owed a fiduciary duty to Paddy, that he breached his fiduciary duty, and that damage resulted from his breach. Paddy contended that Jerry breached his fiduciary duty and violated the Final Divorce Decree when he paid $650,000 to himself because this amount was advanced by Jerry, during the parties' marriage, to LBW's capital account for 2022 Ranch with community property funds and not Jerry's separate property. Paddy also claimed that she was entitled to one-half of the net cash proceeds from the sale of the entire 2,022 acres at Honey Springs Ranch, and not just the net proceeds from the existing contract to sell 1,978 acres to Riverside Land Conservancy. According to Paddy, Jerry breached his fiduciary duty when he failed to disburse any of the sales proceeds from a subsequent sale of the remaining 44 acres of 2022 Ranch.
Paddy alternatively — and as part of her breach of fiduciary duty argument — contended that two ambiguities exist in the Final Divorce Decree. First, she argued that the reference in the Final Divorce Decree regarding reimbursement of funds "advanced by him" was ambiguous because it reasonably could mean that Jerry advanced community property funds, or that Jerry advanced his separate property funds. The second asserted ambiguity focused on the Final Divorce Decree's language providing that the parties should receive one-half of the net cash proceeds from the "existing contract to sell the 2,022 acres located at Honey Springs Ranch to Riverside Land Conservancy." Paddy contended an ambiguity exists because the contract with Riverside Land Conservancy encompassed only 1,978 of the 2,022 acres.
Paddy supplemented her live petition with this ambiguity contention as part of her breach of fiduciary duty claim.
Within Paddy's ambiguity discussion, Paddy asserted that Jerry breached his fiduciary duty by making payments of $650,000 and $675,000 from the sale proceeds of 1,978 acres at Honey Springs Ranch before allocating to her one-half of the net proceeds. She contends that substantial portions of both amounts were used for expenses unrelated to this asset. Paddy argued that the "$650,000 and $675,000 in issue were advanced by the community estate of the parties and/or by Lakes on behalf of the community estate for: a. [m]ortgage and taxes on the entire 2,022-acre parcel; b. [t]o fund the Chicago Title lawsuit; and c. [o]ther expenses related to both the 1,978 and 44 acres comprising [2022 Ranch]." According to Paddy, Jerry failed "to segregate what part of either the $650,000 or $675,000 should be allocated between the 3 components of 2022 Ranch: (a) 1,978 acres, (b) 44 acres, (c) the Chicago Title suit." Thus, Paddy contends that Jerry breached his fiduciary duty by self-dealing, and by failing to account to and deal with Paddy fairly and honestly.
Jerry filed a reply to Paddy's response to his summary judgment motion, arguing that there is no genuine issue of material fact concerning whether he breached his fiduciary duty to Paddy by not properly accounting for the $650,000 he advanced to LBW for 2022 Ranch, or by failing to provide specific accounting to establish that the $675,000 offset was related solely to the jointly owned portion of the 2022 Ranch acreage. Jerry also asserted that no genuine fact issue exists regarding Paddy's claimed entitlement to half of the parties' net cash proceeds from the sale of the entire 2,022 acres, and that no ambiguity exists in the Final Divorce Decree.
On August 11, 2006, the trial court signed an interlocutory order granting Jerry's summary judgment motion and signed an interlocutory judgment decreeing that Paddy take nothing on her claims for breach of fiduciary duty, accounting, and declaratory judgment. On September 19, 2006, the trial court signed an order severing this interlocutory summary judgment from Jerry's remaining counter-claim for declaratory judgment; with this severance, the summary judgment order in favor of Jerry became final and appealable. On October 12, 2006, Paddy filed a notice of appeal challenging the order granting summary judgment to Jerry on Paddy's claims for breach of fiduciary duty, accounting, and declaratory judgment. This appeal was docketed as Cause Number 14-07-00206-CV.
On October 23, 2006, Jerry filed a motion for summary judgment on his sole remaining claim seeking a declaration that Paddy forfeited her rights to certain jointly held properties under the Final Divorce Decree because she failed to make a required cash call. Paddy filed no summary judgment response; instead, on November 2, 2006, she filed a Motion to Abate Jerry's Counter-Petition for Declaratory Judgment or, in the alternative, Request for Continuance Regarding Response to Motion for Summary Judgment.
Jerry filed a response and objection to Paddy's motion to abate and request for continuance on November 21, 2006. On that same day, the trial court held a hearing on Jerry's motion for summary judgment and Paddy's motion to abate. The trial court also gave Paddy until December 1, 2006 to compile case law in support of her motion to abate.
On November 22, 2006, Paddy filed a (1) First Amended Motion to Abate Jerry's Counter-Petition for Declaratory Judgment; (2) Motion for Leave to Amend Motion for Continuance and Filing of Amended Motion for Continuance to Respond to Jerry's Motion for Summary Judgment; (3) Motion for Leave to File Late Response to Jerry's Motion for Summary Judgment; and (4) Response to Jerry's Motion for Summary Judgment. Jerry filed a Response and Objection to Paddy's Motions and to Paddy's Response to Jerry's Motion for Summary Judgment on November 30, 2006.
The trial court held a hearing on December 1, 2006 on Paddy's motion to abate and allowed Paddy "to present evidence of proffer on both the continuance and the abatement." The trial court did not hear substantive argument on Jerry's summary judgment motion at that time. On February 23, 2007, Paddy filed a Supplemental Motion for Leave to File Late Supplemental Response to Jerry's Motion for Summary Judgment and a Supplemental Response to Jerry's Motion for Summary Judgment.
The trial court signed an order granting Jerry's summary judgment motion on March 16, 2007. Paddy filed a notice of appeal challenging the trial court's order on April 9, 2007, docketed in this court as Cause Number 14-07-00396-CV. On February 6, 2008, Paddy filed her counsel's affidavit with an attached February 26, 2007 letter drafted by her counsel and addressed to the trial judge. In the letter, Paddy's counsel requested that the trial judge set a hearing on Paddy's supplemental motion for leave to file her late supplemental response and on her supplemental summary judgment response of February 23, 2007. The trial court did not set the requested hearing. The trial court did not expressly rule on any of Paddy's motions filed on November 22, 2006 or her supplemental motion for leave and supplemental summary judgment response filed on February 23, 2007.
Standard of Review
An appellate court applies de novo review to a grant of summary judgment, using the same standard that the trial court used in the first instance. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A party may move for a traditional summary judgment after the adverse party has appeared or answered, and may move for a no-evidence summary judgment after an adequate time for discovery has passed. Tex. R. Civ. P. 166a(a), (i).
A traditional summary judgment may be granted if the motion and evidence show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). In reviewing a summary judgment we take as true all evidence favorable to the nonmovant, indulge every reasonable inference in favor of the nonmovant, and resolve any doubts in the nonmovant's favor. Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006).
The movant must establish his entitlement to summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of his cause of action or defense as a matter of law. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). The non-movant must expressly present to the trial court any ground that would defeat the movant's right to a summary judgment by filing a written answer or response to the motion, and if he fails to do so, he may not later assign any new ground as error on appeal. Id. at 678-79. However, a non-movant needs no answer or response to the motion to contend on appeal the grounds expressly presented to the trial court by the summary judgment motion are insufficient as a matter of law to support the judgment. Id. at 678.
A no-evidence motion for summary judgment must be granted if (1) the moving party asserts that there is no evidence of one or more specified elements of a claim or defense on which the adverse party would have the burden of proof at trial; and (2) the respondent produces no summary judgment evidence raising a genuine issue of material fact on those elements. See Tex. R. Civ. P. 166a(i). In reviewing a no-evidence motion for summary judgment, we view all of the summary judgment evidence in the light most favorable to the non-movant, "crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not." Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). The non-moving party is not obligated to marshal its proof, but it is required to present evidence that raises a genuine fact issue on the challenged element. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002).
When the trial court does not specify the basis for its summary judgment ruling, the appellant must show that each independent ground alleged is insufficient to support the judgment. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).
Analysis
As noted earlier, this case involves two appeals stemming from the trial court's orders granting Jerry's two summary judgment motions. We address each appeal in turn.
After reviewing the briefs and records in these two appeals, the court on its own motion orders these appeals consolidated.
A. The Forfeiture Appeal
Paddy raises five issues in connection with the Forfeiture Appeal.
In her first three issues, Paddy contends that Jerry was not entitled to summary judgment as a matter of law because Jerry's summary judgment evidence shows that (1) "the cash call and notice of forfeiture were not performed by Jerry" in accordance with the Final Divorce Decree and therefore are without legal effect; (2) there is no factual basis to support the amount of the cash call; and (3) the cash call did not comport with the Texas Trust Code and did not provide Paddy with reasonable notice of the facts Jerry relied on to calculate the Argovitz Asset Management Account balance to make the demand.
In her fourth issue, Paddy contends that the trial court abused its discretion by impliedly overruling her Motion for Leave to File Late Response to Jerry's Motion for Summary Judgment. See Tex. R. App. P. 33.1(a)(2)(A) ("As a prerequisite to presenting a complaint for appellate review, the record must show that the trial court ruled on the request, objection, or motion, either expressly or implicitly. . . ."). She argues that she established "good cause, that the failure to file a response was not intentional or as a result of indifference and the allowance of a late response would have occasioned no undue delay or otherwise injury to Jerry."
In her fifth issue, Paddy contends that the trial court's failure to set a hearing before impliedly overruling her Supplemental Motion for Leave to File Late Supplemental Response to Jerry's Motion for Summary Judgment and her Supplemental Response to Jerry's Motion for Summary Judgment constitutes a denial of Paddy's right to due course of law and access to the courts. She contends that Local Rule 3.3.4 of the Rules of the Civil Trial Division Harris County Courts requires a hearing.
It is undisputed that Paddy did not file a timely summary judgment response. A non-movant need not file a summary judgment response to contend on appeal the grounds expressly presented to the trial court by the motion are insufficient as a matter of law to support the judgment. Clear Creek Basin Auth., 589 S.W.2d at 678. However, the non-movant must expressly present to the trial court any ground, other than insufficiency as a matter of law, that would defeat the movant's right to a summary judgment by filing a written answer or response to the motion; the non-movant who fails to do so may not later assign any new ground as error on appeal. Id. As a threshold matter, we will resolve Paddy's fourth and fifth issues to determine which of Paddy's remaining issues need to be addressed on appeal.
1. Paddy's Motion for Leave to File Late Response
In her fourth issue, Paddy argues that the trial court abused its discretion by failing to grant leave to file an untimely response to Jerry's summary judgment motion after the hearing on his motion. The trial court overruled Paddy's motion for leave to file an untimely response by implication. See Tex. R. App. P. 33.1(a).
A trial court's ruling on a motion for leave to file a late summary judgment response is reviewed for an abuse of discretion. Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 686 (Tex. 2002). A trial court abuses its discretion when it acts without reference to any guiding rules or principles. Id. at 687. A motion for leave to file a late summary judgment response should be granted when the nonmovant establishes good cause by showing that (1) the failure to timely respond was not intentional or the result of conscious indifference, but the result of an accident or mistake; and (2) allowing a late response will occasion no undue delay or otherwise injure the party seeking summary judgment. Id. at 688.
We conclude that the trial court acted within its discretion when it denied leave to file an untimely summary judgment response. Paddy's fourth issue is merely a conclusory statement that her motion established good cause for filing a late response, and that the trial court therefore abused its discretion in failing to grant her motion. Although Paddy had notice of Jerry's summary judgment motion filed on October 23, 2006, she did not file a timely response to his motion. Instead, Paddy filed a Motion to Abate Jerry's Counter-Petition for Declaratory Judgment or, in the alternative, Request for Continuance Regarding Response to Motion for Summary Judgment on November 2, 2006. The trial court held a hearing on Jerry's motion for summary judgment and Paddy's motion to abate on November 21, 2006. At that time, Paddy argued her motion to abate. Only after the hearing did Paddy file her Motion for Leave to File Late Response.
Paddy's motion for leave does not establish good cause for failure to file a timely summary judgment response. To the contrary, her motion establishes that her failure to respond timely was intentional. Paddy waited for Jerry's attorney to make an appearance in the breach of fiduciary duty appeal so she could request an agreement to accelerate the appeal; she argued that Jerry's declaratory judgment action was dependent upon the fiduciary duty appeal. She then argued to the trial court that the declaratory judgment action and summary judgment motion should be abated because they were inseparable from the appeal. The trial court never granted Paddy's request to abate. Paddy asserts that her failure to file a response was based on her belief that Jerry's declaratory judgment action would be abated pending the breach of fiduciary duty appeal.
The record demonstrates that Paddy's failure to file a timely response to Jerry's summary judgment motion was a conscious strategic choice; it was not the result of an accident or mistake. She opted to pursue abatement of Jerry's declaratory judgment action instead of filing a timely summary judgment response. Her strategy choice did not succeed. Paddy's asserted belief that this strategy choice would succeed does not establish good cause. Further, Paddy's motion failed to support her assertion that granting her motion for leave would not cause delay or injury to Jerry. Under these circumstances, the trial court acted within its discretion in implicitly overruling her Motion for Leave to File Late Response to Jerry's Motion for Summary Judgment.
We overrule Paddy's fourth issue.
2. Hearing on Paddy's Supplemental Motion for Leave
In her fifth issue, Paddy contends that the trial court's failure to set a hearing on her Supplemental Motion for Leave to File Late Supplemental Response to Jerry's Motion for Summary Judgment and her Supplemental Response to Jerry's Motion for Summary Judgment constitutes a denial of her right to due course of law and access to the courts. The trial court implicitly denied Paddy's motions. See Tex. R. App. P. 33.1(a).
Paddy relies on Local Rule 3.3.4 of the Rules of the Civil Trial Division Harris County Courts, which states as follows: " Oral Hearings. Settings for oral hearings should be requested from the court clerk. The notice of oral hearing shall state the time and date." 309th (Tex.) Dist. Ct. Loc. R. 3.3.4 (Harris County). Local Rule 3.3.4 provides that oral hearings should be requested from the court clerk; it does not require the trial court to grant a request for oral hearing.
An oral hearing also is not required under Texas Rule of Civil Procedure 166a. See Martin v. Martin, Martin Richards, Inc., 989 S.W.2d 357, 359 (Tex. 1998). "An oral hearing on a motion for summary judgment may be helpful to the parties and the court . . . but since oral testimony cannot be adduced in support of or opposition to a motion for summary judgment, an oral hearing is not mandatory." Id. "Unless required by the express language or the context of the particular rule, the term `hearing' does not necessarily contemplate either a personal appearance before the court or an oral presentation to the court." Id. If no oral hearing is required on a motion for summary judgment, it follows that no oral hearing is required on a motion for leave to file a late supplemental response to a motion for summary judgment. See id.
Because the trial court was not required to grant Paddy's request for oral hearing under Local Rule 3.3.4, the trial court acted within its authority when it denied Paddy's supplemental motion for leave to file an untimely response to Jerry's summary judgment motion and Paddy's supplemental summary judgment response without an oral hearing. We overrule Paddy's fifth issue.3. Sufficiency of Jerry's Summary Judgment Grounds
In light of our disposition of Paddy's fourth and fifth issues, we deny Jerry's Motion to Strike Portions of Appellant's Brief and Appendix.
We have determined that the trial court acted within its discretion in overruling Paddy's Motion for Leave to File Late Response. In her appellate brief, Paddy acknowledges that "in the absence of an answer to a motion for summary judgment the standard for review of a summary judgment is legal sufficiency." Therefore, Paddy can challenge on appeal only the sufficiency as a matter of law of the express grounds presented in Jerry's summary judgment motion. See Clear Creek Basin Auth., 589 S.W.2d at 678.
In the absence of a summary judgment response raising them, Paddy is precluded from raising on appeal the following arguments: fraud; estoppel; waiver; accord and satisfaction; ambiguity; variances between the Final Divorce Decree and the mediated settlement agreement; the $25,000 cash call should have been limited to $20,000; conditions precedent for the cash call; proper computation of the minimum balance in the Argovitz Asset Management Account; failure to provide accounting showing the basis for the cash call under the Trust Code; and breach of fiduciary duty under the Texas Trust Code in connection with the forfeiture. We do not address these arguments.
We next turn to whether the grounds presented to the trial court in Jerry's summary judgment motion are sufficient as a matter of law to support the judgment. As the movant, Jerry must establish his entitlement to a summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of his cause of action or defense as a matter of law. Id. at 678.
Jerry moved for summary judgment requesting the trial court to issue a declaration that Paddy had forfeited certain jointly owned assets to Jerry by failing to properly contribute to the Asset Management Account as set forth in the Final Divorce Decree. Jerry contended that (1) he sent a letter to Paddy informing her that a cash call was due pursuant to the Final Divorce Decree; (2) he did not receive the money from Paddy within 10 days of notifying her of the amount due; (3) he then sent Paddy a "Notice of Right to Cure" letter stating that she was in default under the Final Divorce Decree because she failed to send $25,000 he requested; and (4) Paddy responded to the cash call five months later by sending him a check for $20,000, but he returned the check.
a. Jerry's cash call
Jerry attached to his summary judgment motion a letter he sent to Paddy on September 21, 2004, informing her that the first cash call was due. In the letter, Jerry asked her to deposit $25,000 in the Asset Management Account: "After deducting the amount to set up separate escrow accounts for income tax liabilities and your $20,000.00 N.I.G.C. License Fee; as of 9/15/2004 AAMA would be approximately $9,400.00 negative. Please send me a check for $25,000.00 for deposit into AAMA and I will deposit the like amount."
"N.I.G.C. License Fee" stands for Nevada Indian Gaming Commission License Fee.
The Final Divorce Decree provides when and how Jerry was to make a cash call. It specifically states that the
Asset Management Account shall be maintained . . . to pay actual expenses related to any project related to . . . jointly held assets while [Jerry] manages these assets. When the Asset Management Account reaches $10,000.00, IT IS ORDERED that each party shall deposit another $20,000.00 into the Asset Management Account within ten days of notification of the balance . . . Funds held in the Asset Management Account for the purpose of paying income taxes shall not be counted as a balance in the account for the purpose of the $10,000.00 minimum balance provisions in this paragraph. In the event either party fails to contribute to this Asset Management Account . . . that party's interest in all of the . . . jointly held assets shall be forfeited to the other party. If a party is in default, such defaulting party shall be provided written notice and given an opportunity of at least ten days to fully cure such default.
There is no requirement under the Final Divorce Decree for Jerry to provide an accounting under the Trust Code before making a cash call. Nonetheless, Jerry's letter explained that "[a]fter deducting the amount to set up separate escrow accounts for income tax liabilities and [Paddy's] $20,000.00 N.I.G.C. License Fee; as of 9/15/2004 AAMA would be approximately $9,400.00 negative. Please send me a check for $25,000.00 for deposit into AAMA and I will deposit the like amount."
In addition to his cash call letter, Jerry filed a summary judgment affidavit. He stated that "[o]n September 21, 2004 I sent a letter to Paddy Argovitz informing her that a cash call was due to be made by her to the Asset Management Account pursuant to the Divorce Decree." As quoted above, the Final Divorce Decree provides that a cash call is due when the Asset Management Account reaches $10,000. Jerry's letter and affidavit show that the account balance passed the threshold to require a cash call. Paddy did not challenge the propriety or admissibility of Jerry's letter or his affidavit. Therefore, Jerry proffered legally sufficient evidence to establish that he made a cash call and notified Paddy pursuant to the Final Divorce Decree when the Asset Management Account reached the threshold for a cash deposit.
b. Jerry's notice of right to cure
After Paddy failed to deposit the requested sum within 10 days of notification of the balance as required by the Final Divorce Decree, Jerry sent Paddy a "Notice of Right to Cure" on October 5, 2004. The notice stated that Paddy was in default and gave Paddy 10 days to make the cash call as required by the Final Divorce Decree. Paddy acknowledges receiving Jerry's notice of default and right to cure.
In addition to the notice to cure letter Jerry attached as evidence to his motion, Jerry also attached his affidavit stating, "I did not receive the money from Paddy Argovitz I requested in the September 21, 2004 letter and I sent Paddy Argovitz a Notice of Right to Cure letter on October 5, 2004 asking again that she send in money to be deposited into the Asset Management Account pursuant to the Decree."
Jerry further provided his counsel's affidavit with attached copies of (1) an October 18, 2004 letter from Paddy's counsel to Jerry's counsel asking for an explanation of when and how Paddy breached her agreement to fund the Asset Management Account; (2) an October 21, 2004 response from Jerry's counsel to Paddy's counsel, attaching the two letters Jerry had sent Paddy making the first cash call and then requesting she cure her default. Paddy did not challenge the propriety or admissibility of this summary judgment evidence.
This evidence establishes as a matter of law that Paddy received Jerry's notice of her right to cure.
c. Paddy's failure to make the cash call
Paddy does not dispute that she responded to the cash call five months after the deadline imposed by the Final Divorce Decree. After Jerry twice requested that Paddy make a cash call, Paddy still had not deposited the money in the Asset Management Account. Five months after the deadline to make the cash call, Jerry received a $20,000 check dated March 21, 2005 from Paddy. On March 28, 2005, Jerry's counsel sent Paddy's counsel a letter returning Paddy's check and explaining that Paddy was five months late with payment and in default under the Final Divorce Decree. Jerry attached a copy of the check, his counsel's letter returning Paddy's check with an explanation that it was sent too late, and his counsel's affidavit as summary judgment evidence.
Jerry also attached an affidavit stating, "I did not receive any money from Paddy Argovitz until March 21, 2005 by hand delivery to the guard gate at my house in the amount of $20,000.00. I sent this check to [my counsel] to return to Paddy Argovitz." This evidence establishes as a matter of law that Paddy failed to make the cash call until months after her right to cure deadline expired in October 2004.
Additionally, the Final Divorce Decree clearly states that if a party fails to contribute to the Asset Management Account as provided for in the Decree, that party forfeits his or her interest in the jointly held assets to the other party. Accordingly, there is legally sufficient evidence to support Jerry's claim that Paddy failed to timely make the cash call after a notice of default and right to cure, and, therefore, forfeited her rights in the jointly held assets at issue under the Final Divorce Decree.
The jointly owned assets include: American Rural Homes; AOJ One, LLC; AOL Two, LLC; San Jacinto Plantation, Ltd.; Tealbrook, Ltd.; Timberbrook, Ltd.; Winds West, Ltd.; The existing contract to sell the 2,022 acres located at Honey Springs Ranch to Riverside Land Conservancy; The sale of Mississippi property awarded herein jointly to the parties; Kean Argovitz Resorts, Inc. — Michigan; Kean Argovitz Resorts — Shingle Springs, LLC, including any lawsuits/claims related thereto; and Kean Argovitz Resorts — Jamul LLC, including any lawsuits/claims related thereto.
We overrule Paddy's issues in the forfeiture appeal.
B. The Breach of Fiduciary Duty Appeal
Paddy raises five issues in connection with the fiduciary duty appeal.
In her first issue, Paddy contends that Jerry was not entitled to summary judgment because the evidence shows that Jerry breached his fiduciary duty to Paddy by (1) failing to give a timely accounting of the trust in general and specifically with respect to the $675,000 and $650,000 payments; (2) manipulating the accounting of the trust to his personal benefit and to the detriment of Paddy; (3) wrongfully making a cash call; and (4) wrongfully declaring a forfeiture.
Paddy argues in her second issue that Jerry's summary judgment evidence was insufficient to support summary judgment because it was not clear, positive, direct, credible, and free from contradictions and inconsistencies. In her third issue, Paddy lists evidence and record cites that she contends controverted Jerry's summary judgment evidence and precluded the trial court from granting Jerry's traditional summary judgment motion.
In her fourth issue, Paddy asserts that the summary judgment motion and evidence demonstrate "material ambiguities and inconsistencies in and between the Final Decree and the MSA which can only be completely resolved by determination of the intent of parties which inherently creates fact issues and as a matter of law precluded the trial court from granting" Jerry's summary judgment motion.
Paddy contends in her fifth issue that Jerry was not entitled to a no-evidence summary judgment because she presented more than a scintilla of evidence that Jerry failed to timely give an accounting and breached his fiduciary duty by failing to correctly allocate expenses between the sales of the 1,978-acre and 44-acre parcels of 2022 Ranch for which she sustained monetary damages.
In the trial court, Jerry moved for traditional summary judgment on Paddy's claims for breach of fiduciary duty, an accounting, and a declaratory judgment, contending that there was no breach of fiduciary duty or lack of accounting as a matter of law because (1) Paddy's own expert testified that Jerry has been forthcoming and has shown him all requested documents with respect to the reimbursements Jerry made to Lakes and himself; (2) Paddy's expert refuted her allegations that Jerry (a) failed to properly account for his management and distribution of property, (b) falsified and manipulated the accounting to favor himself, (c) withheld funds to which Paddy was entitled and diverted these funds, and (d) failed to produce documentation that he in fact advanced the $650,000 for which he reimbursed himself; (3) Jerry properly accounted for the $650,000 and $675,000 amounts in the inventory he provided to Paddy and her expert before the mediation; and (4) Paddy's expert established that (a) Jerry provided Paddy with a timely accounting upon request and with supporting documentation, and (b) there were no documents or evidence to support Paddy's assertion that Jerry used improper accounting to deprive her of assets awarded to her in the Final Divorce Decree.
Jerry's no-evidence summary judgment motion addressed Paddy's claims for breach of fiduciary duty and accounting; Jerry contended that Paddy failed to present any evidence to sustain her claim for breach of fiduciary duty and her claim that Jerry failed to provide an accounting.
Paddy responded to Jerry's summary judgment motion arguing that Jerry breached his fiduciary duty when he paid $650,000 to himself because this amount was advanced by Jerry to LBW with community property funds and not Jerry's separate property. Paddy also claimed that she was entitled to one-half of the net cash proceeds from the sale of the entire 2,022 acres at Honey Springs Ranch, and not just the net proceeds from the existing contract to sell 1,978 acres to Riverside Land Conservancy.
Paddy alternatively contended that ambiguities exist in the Final Divorce Decree. Within Paddy's ambiguity argument, Paddy asserted that Jerry breached his fiduciary duty by failing "to segregate what part of either the $650,000 or $675,000 should be allocated between the 3 components of 2022 Ranch: (a) 1,978 acres, (b) 44 acres, (c) the Chicago Title suit." Paddy pointed to her expert's testimony that such accounting would be inappropriate under accounting principles. According to Paddy, Jerry breached his fiduciary duty by self-dealing and by failing to account to and deal with Paddy fairly and honestly.
As the non-movant, Paddy was required to expressly present to the trial court any ground, other than sufficiency as a matter of law, that would defeat Jerry's right to a summary judgment. See Clear Creek Basin Auth., 589 S.W.2d at 678. If she failed to do so, she may not assign any new ground as error on appeal. Id. Therefore, Paddy is precluded from raising on appeal the following claims and arguments she failed to assert in her summary judgment response: fraud; declaratory judgment; wrongfully made cash call; wrongful declaration of forfeiture; failure to provide an accounting that comports with the Trust Code; failure to timely provide an accounting; failure to provide an accounting within 90 days as required by the Trust Code; failure to credit Paddy for reimbursements received from Kevin Kean; variances between the Final Divorce Decree and mediated settlement agreement; and ambiguities in the mediated settlement agreement.
We next address whether the trial court erred by granting summary judgment in light of the grounds presented in Jerry's summary judgment motion and Paddy's response.
1. Breach of Fiduciary Duty
In her first issue, Paddy contends that Jerry was not entitled to summary judgment on her claim for breach of fiduciary duty because the evidence shows that Jerry breached his fiduciary duty to Paddy by failing to give an accounting of expenses associated with the $675,000 and $650,000 payments, and by failing to properly allocate "to his portion of the proceeds of the 1,978-acre sale the expenses related to the property awarded to him along with related debt." Because Paddy's third issue contains no substantive argument but merely provides record cites pertaining primarily to her first issue, we will address issues one and three together.
Paddy predicates part of her breach of fiduciary duty contention on the assertion that Jerry "admits not giving [to her] an accounting of expenses of either the $675,000.00 or $650,000.00 reimbursements." She cites only the following exchanges between Jerry and Paddy's counsel at a receivership hearing as support for her assertion:
COUNSEL: You're aware of numerous requests for an accounting of monies that have been received and reimbursement of expenses that have been paid on behalf of the joint held assets that we've been testifying to, correct?
JERRY ARGOVITZ: I'm aware of letters you have written requesting some things, letters you have written saying you're not going to sign the note until she — until we see the records. Your mischaracterization and misunderstanding of the entire divorce decree, and I've never, you know, and I've made some hints to my lawyer you was always —
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COUNSEL: And that your duty is to account for the beneficiary of all trust transactions?
JERRY ARGOVITZ: I'm aware of that.
COUNSEL: And have you accounted regarding the reimbursement of the expenses of the 675,000 or the 650,000 that were reimbursed to you and/or paid to Lakes?
JERRY ARGOVITZ: Yes, I have that information.
COUNSEL: Have you provided that documentation?
JERRY ARGOVITZ: I've not been asked to provide it, Mr. Von Blon.
The cited exchanges do not raise a fact issue or establish that Paddy requested an accounting and that Jerry failed to provide it. Therefore, we reject this part of Paddy's breach of fiduciary duty argument.
Next, Paddy argues that Jerry breached his fiduciary duty "by failing to properly allocate to his portion of the proceeds of the 1,978-acre sale the expenses related to the property awarded to him along with related debt." According to Paddy, Jerry manipulated the accounting to his benefit and to her detriment.
It appears that Paddy refers only to the accounting and allocation of expenses and debts relating to the $675,000 payment in connection with this argument. The evidence Paddy cites in support of her argument relates to the $675,000 payment Jerry made to Lakes after the 1,978-acre sale — not to the $650,000 payment he made to himself. Paddy relies on the testimony of her expert, Bill Stewart, at the March 15, 2005 receivership hearing and Stewart's affidavit of January 26, 2006 to support her assertion of improper allocation and accounting relating to the $675,000 payment.
Jerry counters that Paddy's expert provided uncontroverted evidence that Jerry provided a proper accounting and complied with general accounting principles. He relies on Stewart's deposition testimony of May 11, 2005. Jerry dismisses Paddy's evidence, claiming that it "amounts to no evidence of any material fact issue" because Paddy relies on Stewart's earlier testimony at the March receivership hearing. According to Jerry, Paddy's evidence is of no consequence because, after the receivership hearing in March, Stewart clearly testified that Jerry provided a proper accounting for the $675,000 cash call and that Jerry's accounting was in accordance with generally accepted accounting principles. However, Jerry does not address how Stewart's subsequent affidavit of January 26, 2006 — in which Stewart contradicts his May deposition testimony — affects this issue and why it does not create a fact issue.
The following are relevant excerpts from Stewart's testimony and affidavit. Paddy points to Stewart's testimony at the March 15, 2005 receivership hearing. Stewart testified in pertinent part:
COUNSEL: Now, the 2022, what we refer to as 2022 acreage, the Honey Spring Ranch, are there several components of that asset?
STEWART: Yes, sir.
COUNSEL: What are those components?
STEWART: Well, there was a large tract of land in which Mrs. Argovitz participated. There was another smaller tract of land that had not been sold prior to the divorce and there was an ongoing lawsuit pertaining to several matters on the property.
COUNSEL: When you say that Mrs. Argovitz participated in the larger tract of land, what do you mean by that?
STEWART: I'm talking about H in the — 13-H, in the decree itself.
COUNSEL: So, you're saying that she had an interest in that pursuant to the divorce decree?
STEWART: Yes, sir.
COUNSEL: Now, as to the smaller tract of land, did Mrs. Argovitz have an interest in that pursuant to the divorce decree?
STEWART: No, sir.
COUNSEL: And in the lawsuit, what was that lawsuit about?
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STEWART: It had to deal with the title company, a few other things, making assertions on what they could do with the land. They were later found not to be able to do what they thought they could do with the land.
COUNSEL: And does Mrs. Argovitz participate in that aspect of the 2022?
STEWART: No. No, sir, she didn't.
COUNSEL: Did you get any accounting from Mr. Argovitz at any time to see if that 675 related to only the large tract of land or whether related to the large tract of land, the small tract of land and the Chicago Title lawsuit that Mrs. Argovitz didn't even have an interest in?
STEWART: No, sir. That was a lump sum.
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COUNSEL: So, you have not [sic] see any [sic] accountant to show whether Mr. Argovitz is being reimbursed for expenditures on some interest that only he has ownership in pursuant to the decree?
STEWART: That's correct.
COUNSEL: That being, more specifically, that smaller tract of land and that lawsuit?
STEWART: Yes, sir. That's correct.
COUNSEL: Now, if some of that 675 was to fund that lawsuit of which Mr. Argovitz is the only one that has an interest in it amongst these two parties or to pay taxes or something of that nature on the smaller tract of land, in your opinion, would it be appropriate for him to be reimbursed and Mrs. Argovitz leaves the —
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STEWART: Well, it would not be under accounting principles applicable. They don't match. The expenses don't match the assets that went with it.
COUNSEL: And the proceeds from the sum was from the sale of a larger tract of land?
STEWART: Only. Yes, sir.
COUNSEL: Only. And so, you're saying it's not appropriate to take the proceeds from the larger tract of land which both of these parties shared an interest and reimburse Mr. Argovitz from those proceeds that may belong to Mrs. Argovitz for his expenditures of those other two assets of which he only had an interest?
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COUNSEL: What is your concern about the — from an accounting standpoint of how that was done?
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STEWART: Well, under a matching concept, it would seem that the expenses of the project would go with the assets that were awarded to the various individuals.
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COUNSEL: Now, if hypothetically someone is being reimbursed for expenses that were incurred in connection with the other two parcels of that 2022 entity, that being the lawsuit and the smaller tract of land. That would not be — Paddy would not be receiving one-half of the net proceeds, would she?
STEWART: Of this? No. Of this one tract, no.
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COUNSEL: And you heard that some of that's — well, some of the 675 was spent, and I'm jumping around a little bit, was spent regarding signing the lawsuit?
STEWART: Yes, sir.
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COUNSEL: And, you also understood that he said some of it was in reference to the smaller parcel of land?
STEWART: Yes, sir.
COUNSEL: He had not provided you any accounting to segregate those out, has he?
STEWART: No, sir.
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COUNSEL: And based upon Dr. Argovitz's testimony this morning that some of that 675 that he reimbursed were debts and liabilities associated with the lawsuit and a smaller tract of land; does it appear that those debts are his responsibility?
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STEWART: Under — just strictly for financial purposes, Judge, under the matching concept, if you're going to match revenues you're going to have to match the same expenses with them. The revenues go with expenses. The liabilities go with the assets, if you will.
Jerry relies on Stewart's deposition testimony of May 11, 2005. Paddy's counsel was not present at Stewart's deposition. When questioned by Jerry's counsel, Stewart testified as follows at his deposition:
COUNSEL: Since January 9th of 2004, are there any lack of documents that you have any concern about?
STEWART: No.
COUNSEL: Okay. And — `And Mr. Stewart may testify to generally acceptable accounting procedures and the adherence or lack thereto in this matter by Dr. Argovitz.' Do you have any complaints about Dr. Argovitz failing to adhere to general accounting procedures?
STEWART: No.
COUNSEL: . . . `The general substance of Mr. Stewart's opinions and mental impressions are that Dr. Argovitz took reimbursements and/or offsets for which he has failed to provide documentation to substantiate that such reimbursements/offsets were according to the terms of the parties' Final Decree of Divorce.' Is that your opinion or not?
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STEWART: This is a compound question, Mr. Conner. The first part, has he failed to provide documents, no.
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COUNSEL: So he has — so your opinion is that, in fact, he has provided documents rather [sic] that he has failed to provide documents?
STEWART: That's correct.
COUNSEL: Okay.
STEWART: As to whether what he did within those documents that he's reporting within those documents that were — or were according to the terms of the parties final decree of divorce, I can't opine to that. That's a legal opinion.
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COUNSEL: . . . `Respondent had failed to properly receive and account for his management, disposition and distribution of the property.' From your accounting perspective as her representative, do you agree or disagree with that statement?
STEWART: I disagree.
COUNSEL: Okay. You believe he has properly received and accounted for the — his management, disposition and distribution of the property?
STEWART: That's correct.
* * *
COUNSEL: But as far as his accounting and documentation, did you find any evidence from either as an accountant or a certified fraud examiner that he has falsified anything?
STEWART: I — I have not found any such information.
COUNSEL: Okay. And do you find that he manipulated this in any way from an accounting standpoint?
STEWART: No.
COUNSEL: Okay. And you are unable to have an opinion because it's a legal opinion as to whether or not it was in favor or for his personal benefit to her detriment?
STEWART: That's correct.
COUNSEL: . . . `Respondent withheld funds to which Petitioner is entitled and diverted them to his own personal benefit.' From an accounting standpoint, have you found that to be correct?
STEWART: Again, sir, that's — that's a legal conclusion. I'm — I can't opine to that.
COUNSEL: All right. But from an accounting procedure though, you don't find where he's done anything — for lack of a better term — funny or dishonest or falsification or anything of that nature regarding these books and these — this accounting.
STEWART: That's correct, Mr. Conner.
* * *
COUNSEL: All right. Let's go back and refresh our recollection. The $675,000 that was the cash call; correct?
STEWART: Correct.
COUNSEL: Okay. And he certainly has accounted for that; has he not?
STEWART: That's correct.
COUNSEL: And when she says she's — he's failed to account for that, that is an incorrect statement?
STEWART: That's correct.
COUNSEL: In your opinion as her expert?
STEWART: That's correct.
Finally, Paddy relies on her expert's affidavit of January 26, 2006, which she filed in opposition to Jerry's motion for summary judgment regarding her breach of fiduciary duty claim. Stewart's affidavit provides in pertinent part:
Further, the accounting which I reviewed reveals that the $675,000 was monies not advanced by Jerry Argovitz but advanced by a third party, Lakes Entertainment, Inc. toward the parties' and Kevin Kean's capital account on the entire 2022 acre project. Further, these funds were not utilized for expenses only related to the asset which Ms. Argovitz was awarded an interest in with Jerry Argovitz, but for expenses, (legal fees) related to a separate asset comprising the 2022 acre project in which Ms. Argovitz received no interest — specifically, the Chicago Title Lawsuit. As I stated in my deposition, such creative accounting would be inappropriate under generally acceptable accounting principles, as reimbursement for expenses on one investment ought to be reimbursed from the net sales proceeds of that specific investment, and not from the net sales proceeds of a different investment. The result of Jerry Argovitz's accounting is that expenses incurred on an asset awarded solely to Dr. Argovitz were paid from net proceeds of a different asset awarded fifty percent to Dr. Argovitz and fifty percent Ms. Argovitz.
These excerpts reveal conflicts arising from Stewart's statements at the hearing, at his deposition, and in his affidavit. "[A] deposition does not have controlling effect over an affidavit in determining whether a motion for summary judgement should be granted." Randall v. Dallas Power Light Co., 752 S.W.2d 4, 5 (Tex. 1988) (per curiam). "Thus, if conflicting inferences may be drawn from a deposition and from an affidavit filed by the same party" in opposition to a summary judgment motion, a fact issue is presented that will preclude summary judgment. Id. This evidence creates a conflict between Stewart's hearing testimony and deposition testimony, and between Stewart's deposition testimony and his affidavit. This conflict precludes summary judgment with respect to Paddy's claim that, with respect to the $675,000 payment, Jerry breached his fiduciary duty by failing to allocate to Jerry's portion of the 1,978-acre sale proceeds those expenses and debts associated with assets awarded to Jerry under the Final Divorce Decree.
Under the sham affidavit doctrine recognized by several courts of appeals, a contradictory affidavit prepared by the same witness after a deposition should be disregarded if (1) the discrepancy is not explained, and (2) it appears the affidavit was drafted solely as a sham to defeat summary judgment. Pando v. Sw. Convenience Stores, L.L.C., 242 S.W.3d 76, 79 (Tex.App.-Eastland 2007, no pet.); Trostle v. Trostle, 77 S.W.3d 908, 915 (Tex.App.-Amarillo 2002, no pet.); Eslon Thermoplastics v. Dynamic Sys., Inc., 49 S.W.3d 891, 901 (Tex.App.-Austin 2001, no pet.); Burkett v. Welborn, 42 S.W.3d 282, 286 (Tex.App.-Texarkana 2001, no pet.); Farroux v. Denny's Rests., Inc., 962 S.W.2d 108, 111 (Tex.App.-Houston [1st Dist.] 1997, no pet.). Other courts of appeals have rejected or limited this doctrine. Pierce v. Wash. Mut. Bank, 226 S.W.3d 711, 717-18 (Tex.App.-Tyler 2007, pet. denied); Del Mar Coll. Dist. v. Vela, 218 S.W.3d 856, 862 (Tex.App.-Corpus Christi 2007, no pet.); Davis v. City of Grapevine, 188 S.W.3d 748, 756 (Tex.App.-Fort Worth 2006, pet. denied); Thompson v. City of Corsicana Hous. Auth., 57 S.W.3d 547, 557 (Tex.App.-Waco 2001, no pet).
This Court has acknowledged the recognition of a sham affidavit doctrine by other courts. See Blan v. Ali, 7 S.W.3d 741, 747 n. 3 (Tex.App.-Houston [14th Dist.] 1999, no pet.) ("While we agree that [ Farroux] precludes the trial court from considering an affidavit that contradicts deposition testimony without an explanation for the change in testimony, the supplemental affidavit does not contradict Dr. Reisbord's deposition testimony") (emphasis in original). However, we need not decide the degree, if any, to which this doctrine is recognized by the Fourteenth Court of Appeals or may be applicable to this case. This is so for two reasons.
First, Jerry did not object to Stewart's subsequent affidavit in the trial court as being a sham; he has not argued the sham affidavit doctrine on appeal; and he has not addressed on appeal the conflict between Stewart's deposition testimony and his subsequent affidavit.
Second, the sequence of events under the sham affidavit doctrine contemplates deposition testimony followed by the filing of a contradictory sham affidavit. See Pando, 242 S.W.3d at 79; Trostle, 77 S.W.3d at 915; Eslon Thermoplastics, 49 S.W.3d at 901; Burkett, 42 S.W.3d at 286; Farroux, 962 S.W.2d at 111. This case does not fit the pattern because Stewart's hearing testimony occurred first, and then was contradicted by testimony at a deposition that Paddy's attorney did not attend. Then, a subsequent affidavit created more contradiction as between the deposition and the affidavit. Stewart's affidavit contradicts his deposition testimony but is consistent with his earlier hearing testimony. Even if the contradiction between the deposition and the affidavit is disregarded, a contradiction sufficient to raise a fact issue still exists between the earlier hearing testimony and the subsequent deposition.
We therefore hold that a fact issue exists regarding Paddy's claim that, with respect to the $675,000 payment, Jerry breached his fiduciary duty by failing to allocate to Jerry's portion of the 1,978-acre sale proceeds those expenses and debts associated with assets awarded to Jerry under the Final Divorce Decree.2. Ambiguity in Final Divorce Decree
In her second issue, Paddy asserts in conclusory fashion that Jerry's testimony was full of contradictions and inconsistencies and that Jerry made numerous conclusory statements that he provided a complete accounting. However, Paddy fails to identify which evidence in particular she claims is inadequate to support Jerry's summary judgment motion; she also fails to explain how and why this evidence is contradictory, conclusory, and inconsistent. She fails to inform the court where this objectionable evidence can be found in the appellate record by failing to provide any citations to the record to support this issue. Therefore, we do not consider her argument under her second issue that Jerry's testimony is contradictory, conclusory, and inconsistent. See Tex. R. App. P. 38.1(h), (i). Paddy also attacks the propriety of Jerry's reliance on certain portions of Stewart's testimony and asks us to reverse and remand. In light of our disposition of Paddy's first issue, we need not address Paddy's subsidiary argument that Jerry improperly relied on Stewart's testimony.
In her fourth issue, Paddy asserts that the summary judgment motion and evidence show there are "material ambiguities and inconsistencies in and between the Final Decree and the [mediated settlement agreement] which can only be completely resolved by determination of the intent of parties which inherently creates fact issues."
As noted earlier, Paddy waived any argument regarding asserted variances between the Final Divorce Decree and the mediated settlement agreement, and ambiguities in the mediated settlement agreement, because she failed to raise these grounds in the trial court in her response to Jerry's summary judgment motion on her breach of fiduciary duty claim. See Clear Creek Basin Auth., 589 S.W.2d at 678. Because it was raised in the trial court, we address on appeal Paddy's argument relating to an asserted ambiguity in the Final Divorce Decree's language.
Paddy contends that an ambiguity exists within the four corners of the Final Divorce Decree because the Final Divorce Decree does not specify whether the "funds advanced by him" language refers to separate property funds advanced by Jerry or community property funds advanced by him. However, at the May 19, 2006 hearing on the Motion for Reconsideration of Summary Judgment, Paddy disclaimed any contention relating to an ambiguity in the language of the Final Divorce Decree.
In particular, the following exchange occurred between the trial court and Paddy's counsel:
THE COURT: I mean, I think it's clear the issue, whether the language is ambiguous, has already gone to arbitration there's an arbitration award. I don't think you're even arguing with that, about the ambiguity of the language.
COUNSEL: I am not.
Therefore, Paddy now is foreclosed from arguing ambiguity in the Final Divorce Decree's language.
We overrule Paddy's fourth issue.
3. No-Evidence Summary Judgment
In her fifth issue, Paddy argues that Jerry was not entitled to a no-evidence summary judgment because she presented more than a scintilla of evidence that Jerry failed to timely give an accounting and breached his fiduciary duty by failing to correctly allocate expenses between the sales of the 1,978-acre and 44-acre parcels of 2022 Ranch for which she sustained monetary damages.
Because Paddy was required to fairly apprise the trial court of the issues that defeated Jerry's no-evidence summary judgment motion, and to identify evidence that raises a fact issue on the elements challenged by Jerry's motion, Paddy has waived any argument regarding Jerry's failure to provide a timely accounting by failing to expressly present this issue to the trial court and failing to point to evidence that raises a fact issue. See Tex. R. Civ. P. 166a(i) cmt. Therefore, we overrule Paddy's issue with regard to this argument.
We already have held that a fact issue exists regarding whether Jerry breached his fiduciary duty by failing to properly allocate expenses and debts associated with assets awarded to Jerry under the Final Divorce Decree to his portion of the proceeds of the 1,978-acre sale. In light of our disposition of Paddy's first issue regarding Jerry's allocation of expenses, and considering that the same evidence supporting a fact issue in issue one also supports Paddy's argument here, we hold that Paddy produced enough evidence to raise a fact issue regarding Paddy's claim that, with respect to the $675,000 payment, Jerry breached his fiduciary duty by failing to allocate to Jerry's portion of the 1,978-acre sale proceeds those expenses and debts associated with assets awarded to Jerry under the Final Divorce Decree.
Accordingly, we sustain Paddy's fifth issue with respect to her claim for breach of fiduciary duty predicated on the lack of allocation of expenses and debts associated with assets awarded to Jerry under the Final Divorce Decree to his portion of the proceeds of the 1,978-acre sale.
Conclusion
The trial court's judgment in Cause Number 14-07-00396-CV is affirmed. The trial court's judgment in Cause Number 14-07-00206-CV is affirmed in part and reversed and remanded in part. A material fact issue exists regarding Paddy's claim that, with respect to the $675,000 payment, Jerry breached his fiduciary duty by failing to allocate to Jerry's portion of the 1,978-acre sale proceeds those expenses and debts associated with assets awarded to Jerry under the Final Divorce Decree. We reverse the trial court's judgment in Cause Number 14-06-00206-CV solely with respect to that claim and remand for further proceedings in accordance with this opinion; we affirm the remainder of the trial court's judgment.