Opinion
No. 14-04-00953-CV
Memorandum Opinion filed March 2, 2006.
On Appeal from the County Civil Court at Law No. 4, Harris County, Texas, Trial Court Cause No. 785,809.
Affirmed, in part; Reversed and Remanded, in part; Reversed and Rendered, in part.
Panel consists of Justices HUDSON, FROST, and SEYMORE.
MEMORANDUM OPINION
David Piper ("Piper") files this restricted appeal after the trial court granted a default judgment in favor of Gerald Edwards ("Edwards"). In two issues, Piper challenges (1) whether the trial court should have dismissed Edwards' case for want of prosecution when Edwards failed to appear for mediation and (2) the legal and factual sufficiency of the evidence to support the judgment on grounds of breach of contract, conversion, and fraud. We affirm, in part; reverse and render, in part; and reverse and remand to the trial court, in part, to determine damages.
On August 31, 2001, Piper and Edwards entered into a handwritten contract to "trad[e] Texas motor vehicles." Piper owned a 1970 Chevrolet Chevelle LS6 and Edwards owned a 1964 Dodge 330 sedan. Piper agreed to accept the Dodge not in running condition, unpainted and partially disassembled, and Edwards agreed to let Piper complete work on the Chevelle "in a timely manner at [the] expense of David Piper." Edwards also agreed "to assist in some minor capacity" in "assembly and detail work as time permits."
The Chevelle was to be repainted and have a rebuilt motor and transmission, reconditioned front suspension, wheels, tires, and rear axle. Edwards remained responsible for the interior work and detail including carpeting, seat covers, trim, the exhaust system, shocks, trunk and engine compartment detail, rechroming the bumpers, and painting the wheels.
The two men exchanged the unsigned titles of their respective vehicles and Edwards awaited Piper's completion of repairs on the Chevelle. At some point, Edwards gave Piper approximately $30,000 in car parts for the 1964 Dodge. He did not do this as part of the original bargain, but because Piper "kind of insisted on it" and "to motivate [Piper] to go and finish [the Chevelle]." After several unsuccessful attempts to obtain the Chevelle, Edwards sued in January of 2003, for breach of contract, conversion, quantum meruit, promissory estoppel, and fraud. Piper filed a general denial, but failed to appear for trial. The trial court — in a final judgment silent as to its grounds — awarded Edwards $100,000 in actual damages, $40,000 in punitive damages, and $40,000 in attorney fees. The court also signed a turnover order requiring Piper to return the car parts. Piper filed this restricted appeal of the post-answer default judgment.
Edwards added the fraud claim ten days before trial in his third amended petition, where he also increased the amount prayed for by almost $100,000 and asked for the jurisdictional cap on exemplary damages. Piper did not object to the amendment, and now alleges the trial court erred by accepting it because it operated as a surprise. Edwards did not need leave of court to file this timely amendment. See TEX. R. CIV. P. 63 (providing that amended pleadings may be filed within 7 days of trial and thereafter with leave of the trial court); Food Source, Inc. v. Zurich Ins. Co., 751 S.W.2d 596, 599 (Tex.App.-Dallas 1988, writ denied) (same). Even when an amendment is timely, it is prejudicial on its face if it asserts a new cause of action. Smith v. Heard, 980 S.W.2d 693, 698 (Tex.App.-San Antonio 1998, pet. denied). Therefore, if the opposing party objects, the trial court may, in its discretion, refuse to allow it. Id. Piper never objected, and there is no error in the trial court's acceptance of this petition. See Greenhalgh v. Service Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex. 1990) (explaining trial court has no discretion to refuse amendment unless it asserts a new cause of action or defense and the opposing party objects).
A direct attack on a judgment by restricted appeal must (1) be brought within six months after the trial court signs the judgment, (2) by a party to the suit, (3) who did not participate in the actual trial, and (4) the error complained of must be apparent on the face of the record. Tex.R.App.P. 30. The scope of review in a restricted appeal is the same as an ordinary appeal — review of the entire case, except that the error must appear on the face of the record. Norman Commc'n v. Tex. Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (per curiam). For purposes of a restricted appeal, the face of the record consists of all papers on file before the judgment, including the reporter's record. Id. Neither party contests that Piper has met the first three requirements for bringing a restricted appeal. The only question, therefore, is whether there is error apparent on the face of the record.
Mediation
Piper asks this Court to reverse and remand because Edwards failed to appear at mediation. Piper relies on a written notice sent by the trial court that warns it will dismiss a party's claims on the first day of the week the case is set for trial if that party fails to attend mediation. Piper argues Edwards failed to appear and, relying on the court's notice, Piper assumed the court would simply dismiss Edwards' claims. Piper, however, points to no error apparent on the face of the record. We find his argument is beyond the scope of this restricted appeal, and we overrule his first issue.
Both parties attached post-trial affidavits to their appellate briefs to evidence their arguments about whether mediation occurred. We will not consider these affidavits on this restricted appeal. See Norman Commc'n, 955 S.W.2d at 270 (affirming holding that affidavit attached to appellate brief did not satisfy restricted appeal requirement that error be apparent on face of record).
Legal and Factual Sufficiency of the Evidence
Piper argues is there is legally and factually insufficient evidence to show breach of contract, conversion, or fraud. In reviewing a legal insufficiency claim, we consider only the evidence and inferences tending to support the judgment and disregard all evidence and inferences to the contrary. Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936 (Tex. 1998). If there is more than a scintilla of evidence to support the findings, the no-evidence challenge cannot be sustained. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). Evidence is legally sufficient when it rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 922 (Tex. 1998). In reviewing a factual sufficiency challenge, we examine the evidence and reverse only if the finding is against the great weight and preponderance of the evidence. Jackson v. Gutierrez, 77 S.W.3d 898, 902 (Tex.App.-Houston [14th Dist.] 2002, no pet.).
Breach of Contract
The elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to the plaintiff resulting from that breach. Frost Nat'l Bank v. Burge, 29 S.W.3d 580, 593 (Tex.App.-Houston [14th Dist.] 2000, no pet.). Piper and Edwards agree they had a valid contract; however, Piper denies there is sufficient evidence to show Edwards' performance, Piper's breach, or damages.
Piper argues the contract obligated Edwards to perform repairs on the Chevelle before any swap was to occur, and because Edwards admitted at trial that he completed only "some" of these repairs, he did not prove full or substantial performance of his contractual obligations and, therefore, could not sue on the contract. In construing a contract, we must ascertain and give effect to the parties' intentions as expressed in the document. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). We "will avoid . . . a construction which is unreasonable, inequitable, and oppressive." Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987).
There are two contract terms describing the work Edwards will perform. The first lists the repairs for which Edwards is "responsible." It follows a list of work Piper promises to complete on the Chevelle prior to delivery. This provision merely explains which work Piper need not complete by defining the work that is left to Edwards; it does not obligate Edwards to complete certain repairs before Piper's obligation becomes due.
The second term provides that Edwards will assist Piper "in some minor capacity" in the assembly and detail work on the Chevelle "as time permits." Had the parties wished to make Edwards' assistance a condition of contract completion, they could have drafted it into the contract, as they did with Piper's repair of the Chevelle. This second provision does not create a condition precedent upon Edwards that must be performed before Piper's performance becomes due, and we will not endorse such an unreasonable interpretation.
See Helena Chemical Co. v. Wilkins, 47 S.W.3d 486, 507 (Tex. 2001) (defining condition precedent as "an event that must happen or be performed before a right can accrue to enforce an obligation"); see also Hohenberg Bros. Co. v. George E. Gibbons Co., 537 S.W.2d 1, 3 (Tex. 1976) (finding conditions are disfavored in the law and when a condition imposes an absurd or impossible result the agreement is to be interpreted as creating a covenant rather than imposing a condition). Edwards need not have shown that he completed either of these tasks before filing suit.
The contract specified Piper must complete work on the Chevelle "in a timely manner." Piper argues Edwards failed to prove what a reasonable time would be under the contract. Determining whether a contract was performed within a "reasonable time" depends on the circumstances in each case, and requires a finding by the trier of fact. Continental Casing Corp. v. Siderca Corp., 38 S.W.3d 782, 789 (Tex.App.-Houston [14th Dist.] 2001, no pet.). The record shows approximately sixteen months passed between when the contract was made and when Edwards filed suit. During that time, Edwards asked Piper on several occasions when the car would be ready and was consistently met with a standard answer that the body shop had "started on it." Piper asserts that, because the shop was still working on the Chevelle, Edwards could not have filed suit. As it is, Piper was given almost one-and-a-half years to perform. Because the trial court did not issue findings of fact, we presume it resolved all factual disputes in favor of its judgment. American Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002). We presume the trial court viewed the period between contract formation and filing suit as providing more than a reasonable time for Piper's performance. This evidence is more than a scintilla and, as there is no evidence to the contrary, the court's fact finding on this record is not against the great weight and preponderance of the evidence.
Piper contends that Edwards presented no evidence of breach. Piper claims he was "essentially" responsible for painting the Chevelle and that Edwards never testified Piper breached this obligation. Piper's argument is flawed, as the contract explicitly required him to swap his vehicle after completing a laundry list of work. Edwards presented more than a scintilla of undisputed evidence that Piper did not complete this work, and never delivered the car to Edwards. Piper's failure to complete a condition of delivery — to complete repairs in a timely manner — and the resulting failure to deliver the car breached the contract. Piper's claim on this basis is overruled.
Piper finally challenges Edwards' injury by attacking evidence of the Chevelle's value. Although the record contains evidence that Edwards suffered damage, the only evidence supporting an award of $100,000 is the testimony of Edwards' proffered expert, Edward Galen ("Galen"). Galen stated he is not an expert on Chevelles but he has been "messing with them for over twenty years." There is no evidence Galen ever saw the Chevelle in question or understood in what condition Piper agreed to deliver it. He testified only that "that one there" has a value between $95,000 and $100,000 because it is rare — 1970 is the only year the car was made with a 454-LS6 V8 engine. Galen's testimony amounts to no evidence of Edwards' damages, and we find the trial court erred in relying upon it. The only remaining evidence regarding actual damage is Edwards' testimony and the NADA online classic car pricing guide, which lists the Chevelle's value from $25,470 at a low retail value to $95,220 at the high end. Edwards' testimony and the underlying contract establish Piper was not supposed to deliver the car in a "completely finished" condition because he was not responsible for completing all repair work. While there is evidence of actual damage, there is legally insufficient evidence to support an award of $100,000. We reverse the actual damages award and remand to the trial court to determine the appropriate amount of actual damages and the attorney fees, if any, based on those damages.
The record does not show to what Galen was referring, whether it was the National Automobile Dealers Association's ("NADA") online classic car pricing guide printout already offered into evidence, or to some other document or article.
Piper alleges this report is inadmissible hearsay. Hearsay evidence must be objected to when it is admitted — this is true in contested proceedings or proceedings upon default judgment. TEX. R. EVID. 802; Tex. Commerce Bank, Nat'l. Ass'n v. New, 3 S.W.3d 515, 517 (Tex. 1999) (per curiam). Piper failed to appear and, therefore, to object; he cannot successfully make this argument now, on appeal.
When asked whether Piper was supposed to deliver the Chevelle in a "completely restored condition," Edwards replied "[t]he body was supposed to be painted, finished on the outside. I was supposed to do some of the inside work, which I've already done some of that." Edwards also testified that, at the time of the contract, he believed his unfinished 1964 Dodge ("it was in parts and not right") was an "even swap" for the 1970 Chevelle as delivered "in a finished condition." This evidence is insufficient to trigger NADA high-end valuation.
Conversion, Quantum Meruit, and Promissory Estoppel
Piper argues Edwards failed to prove Piper converted the car parts listed in the trial court's turnover order. The elements of conversion require a plaintiff to prove: (1) he owned, had legal possession of, or was entitled to possession of the property; (2) the defendant assumed and exercised dominion and control over the property in an unlawful and unauthorized manner to the exclusion of and inconsistent with the plaintiff's rights; (3) the plaintiff made a demand for the property; and (4) the defendant refused to return the property. Ojeda v. Wal-Mart Stores, Inc., 956 S.W.2d 704, 707 (Tex.App.-San Antonio 1997, pet. denied). A plaintiff must demand return of the property if the defendant legally obtained possession. Presley v. Cooper, 155 Tex. 168, 284 S.W.2d 138, 141 (1955). Testimony at trial established only that (1) Edwards gave car parts appraised at $29,850 to Piper, (2) giving Piper the parts was not part of the original contract, (3) Edwards gave Piper the parts because Piper "kind of insisted on it" and Edwards "was trying to motivate [Piper] to go and finish the [Chevelle]," and (4) Edwards wants the car parts back. Edwards presented no evidence that he ever demanded the return of the parts, and does not allege he made a demand. We find this evidence is legally insufficient to support the court's turnover order based on conversion.
Edwards also pled for recovery under quantum meruit and promissory estoppel theories. Piper does not challenge the trial court's judgment on either of these grounds. Because the trial court did not state the grounds for its judgment, we must determine whether the auto parts were properly ordered turned over to Edwards on either of these theories.
Quantum meruit is an equitable theory of recovery based on an implied agreement to pay for benefits received. Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). To recover under quantum meruit, Edwards must establish (1) valuable materials were furnished, (2) to Piper, (3) which he accepted (4) under such circumstances as reasonably notified him that Edwards, in performing, expected to be paid by Piper. Id. A party may recover under quantum meruit only when there is no express contract covering the services or materials furnished. Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990). Edwards acknowledges there is no contract regarding the exchange of the auto parts. His testimony showed delivery of valuable materials to Piper and that Piper accepted those parts. Edwards testified Piper "kind of insisted" on receiving the parts, and that Edwards acquiesced by delivering them because he "was trying to motivate" Piper to finish work on the Chevelle. We do not find this testimony is more than a scintilla of evidence that Piper was reasonably notified Edwards expected to be "paid" for the car parts.
"The requisites of promissory estoppel are: (1) a promise, (2) foreseeability of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his detriment." English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983). Edwards attempted to show Piper promised he would finish work on the car if Edwards would only deliver the valuable car parts. The record, however, shows no such promise made by Piper, and so the trial court could not have rested its turnover order upon this ground.
The turnover order could not be founded on any theory Edwards pled or proved in this record. We, therefore, find error apparent on the face of the record and reverse the trial court's judgment as to the turnover order.
Fraud
In his fraud claim, Edwards alleges Piper never intended to honor the agreement, and he tried to pass after-market parts off as original Chevelle parts. To recover for fraud, a party must prove: (1) a material representation was made, (2) the representation was false, (3) when the speaker made the representation, he knew it was false or made it recklessly without knowledge of the truth as a positive assertion, (4) the speaker made it with the intention that it should be acted upon by the party, (5) the party acted in reliance upon it, and (6) the party thereby suffered injury. Johnson Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex. 1998).
Edwards testified that Piper, after telling Edwards he had an original engine block, later stated he did not have the original part but that he could grind out the serial numbers on a replacement part and stamp it to make the part appear to be an original. The contract only states that Piper will provide a "rebuilt motor" and makes no mention of an original engine block. The record does not show whether Piper made this representation to Edwards before or after the contract was made. We can only guess whether this statement induced Edwards to enter into the contract with Piper, or whether it was part of post-contractual discussions. We, therefore, have no evidence of Edwards' reliance on Piper's representation.
There is scant evidence Piper did not intend to honor the contract when he entered into it, including his failure to complete performance for sixteen months. As a general rule, the failure to perform the terms of a contract is a breach of contract, not a tort. IKON Office Solutions, Inc. v. Eifert, 125 S.W.3d 113, 130 (Tex.App.-Houston [14th Dist.] 2003, pet. denied) (quoting Crim Truck Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 597 (Tex. 1992), superseded by statute on other grounds as stated in Subaru of America, Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212 (Tex. 2002)). An exception to the general rule arises if a party enters into a contract with no intention of performing; that misrepresentation may give rise to a claim of fraud. Id. Because intent to deceive or defraud is not susceptible to direct proof, it invariably must be proven by circumstantial evidence, which must transcend mere suspicion. Id. at 124. Reasoning from circumstantial evidence often involves linking apparently insignificant and unrelated events to establish a pattern. Id.
The trial included testimony about Piper's prior arrests for "thievery" with no resultant convictions, Edwards' bald statements that Piper falsely claimed he could not afford to pay a court filing fee, that Piper has numerous judgments against him arising from "debt or theft," a prior summary judgment against Piper "to show [he is] a bad actor," and Edwards' claim that Piper has filed for bankruptcy on other occasions and had his filings dismissed "to get other lawsuits defeated." We find this "evidence" insufficient to show Piper never intended to honor the contract with Edwards. We hold there is legally insufficient evidence to support Edwards' fraud claim. Because Edwards cannot recover any actual damages for fraud, we must reverse the trial court's exemplary damage award of $40,000. See Fed. Exp. Corp. v. Dutschmann, 846 S.W.2d 282, 284 (Tex. 1993) (holding there can be no recovery of punitive damages without a finding of an independent tort with accompanying actual damages).
The summary judgment issued does not identify the underlying claim or claims prevailed upon.
Accordingly, we affirm the trial court's implied finding that Piper breached the contract. However, we reverse the award of $100,000 in actual damages for the breach of contract and remand to the trial court to determine the appropriate amount of actual damages and the attorney fees, if any, based on those damages. We also reverse the trial court's award of any damages based on Edward's claims for conversion, quantum meruit, promissory estoppel, and fraud, and render judgment that Edwards take nothing on those claims. Finally, we reverse the trial court's turnover order, and render judgment that Edwards take nothing on his request for a turnover order.