Summary
looking to previous demand letters sent by the defendants
Summary of this case from WFG Nat'l Title Ins. Co. v. Peniel Holdings, LLCOpinion
No. 3:02-CV-0470-P.
June 25, 2003.
MEMORANDUM OPINION AND ORDER
Presently before the Court are summary-judgment motions of Steel Plan Australia Pty., Ltd. ("SPA") and Hirschfeld Steel Company, Inc. ("HSC"), each filed December 23, 2002. After reviewing the pleadings, the briefing, the summary-judgment evidence, and the applicable law, the Court GRANTS the motion of HSC and GRANTS IN PART and DENIES IN PART the motion of SPA.
Factual Background
Plaintiff Steelplan, Ltd. ("SPL"), is a Colorado corporation with its principal place of business in Colorado Springs, Colorado, Defendant SPA is a business entity formed and based in the Commonwealth of Australia, and Defendant HSC is a Nevada corporation with its principal place of business in Nevada. HSC maintains an office in Irving, Texas. The parties agree that the amount in controversy exceeds $75,000.
The summary-judgment evidence indicates that Bill Parrish and Bob Iodice of Draftpro.com, Ltd. ("Draftpro"), met with Barry Skinner and David Medcroft of SPA on June 25, 2001, in San Antonio, Texas, and came to an agreement about a business relationship. Pl.'s Compl. ¶ 6; SPA's Am. Ans. ¶ 6(c). The agreement was oral, and its substance is a matter of hot dispute. Plaintiff contends that the parties agreed that Draftpro would be the sole representative of SPA in North America to secure business opportunities. Parrish Aff. ¶ 3. The term of this representation would be four years. Id. Draftpro became SPL for this purpose on July 13, 2001. Id. ¶ 5. The parties agreed that Plaintiff "would receive a thirty percent (30%) commission for all work secured by SPA in North America." Id. ¶ 3. Further, SPA represented that it was capable of performing $2 million worth of detailing work over the course of the first year, July 1, 2001, through June 30, 2002, and that SPA would be able to handle an additional million dollars' worth of work each year through 2005, reaching $5 million worth of work by 2005. Id. Draftpro ceased working with other clients to begin an exclusive representation of SPA, and, in late June 2001, originated and submitted a proposal for SPA to perform detailing at Soldier Field in Chicago, Illinois, for $1,138,000.00. Id. ¶ 4.
SPA contends that the parties agreed that SPA would pay SPL 30% of gross revenue generated and received on the Soldier Field project, as well as "any other projects won by [SPA] through the Plaintiff's sales and marketing efforts with other parties (other than [companies] for whom [SPA] previously worked) during the [Soldier Field project] on the condition that the Plaintiff undertook the whole project management and coordination of the steel detailing work for and on behalf of SPA on each of these projects." SPA's Am. Ans. ¶ 6(e). In addition, SPL was to provide all technical support to HSC in relation to HSC's work on the Soldier Field project. Id. SPA claims the parties "discussed generally the capacity of [SPA] to undertake detailing work in North America and the value of such work" but denies making any offer with respect to detailing work other than in relation to the Soldier Field project. Id. ¶ 6(f).
SPL contends that it continued to seek further detailing projects for SPA but "was continuously notified by SPA that SPA was overloaded with work, and that SPA could not undertake any new projects until March 2002." Iodice Aff. ¶ 6. SPA, on the other hand, contends that it became apparent during the fall of 2001 that SPL "had not or could not undertake the full project management and coordination of the steel detailing work on the [Soldier Field project]." SPA's Am. Ans. ¶ 8(c). SPA "was forced to become directly involved in the project management and coordination and had no choice but to send some of its employees to the [Soldier Field project] to provide technical support HSC." Id. SPA claims to have incurred about $80,000 in costs in doing so. Id. ¶¶ 12(d) 29. SPA also provided SPL a software license it claims was necessary for project management services; SPL admits that it received "a hardware device necessary to access and utilize software" but denies that the device or the software were related to management services. SPA's Am. Ans. ¶ 33; Pl.'s Ans. ¶ 10. In the course of the Soldier Field project, Plaintiff extended $4,500.00 credit to HSC for steel detailing. SPA's Am. Ans. ¶ 32; Pl.'s Ans. ¶ 9.
On January 15, 2002, SPA informed SPL by electronic mail that it was terminating the contract. Iodice Aff. ¶ 5; SPA's Am. Ans. ¶¶ 12(i) 30. The next day, SPL responded by e-mail, stating it would continue to fully support SPA and the Soldier Field project and suggesting that the parties meet to discuss the future of their agreement. Iodice Aff. ¶ 6. On January 17, 2002, Barry Skinner agreed to meet with Bill Iodice that weekend. Pl.'s Ex. A-1; Iodice Aff. ¶ 6; SPA's Am. Ans. ¶¶ 10(f) 30. The next day, SPA informed HSC that SPL was no longer acting as its agent. Pl.'s Compl. ¶ 12; SPA's Am. Ans. ¶ 12(f). See also HSC's Ans. ¶ 12 ("[A]t some period of time, after January 18, 2002, HSC was notified that Plaintiff was not acting as [SPA's] representative effective January 18, 2002."). That same day, January 18, 2002, SPL "instructed HSC to make the next payment on the [Soldier Field] project directly to Plaintiff." Pl.'s Compl. ¶ 11; HSC's Ans. ¶ 11. HSC wired Plaintiff $145,596.25 on January 24, 2002. Id. HSC sent Plaintiff a letter on February 6,2002, suggesting that Plaintiff had wrongfully accepted the wire payment, and demanded return of the money. Pl.'s Compl. ¶ 13; HSC's Ans. ¶ 13. A second letter, dated March 1,2002, set a March 5 deadline for returning the money. Pl.'s Resp., Ex. A-3. SPA subsequently demanded that SPL repay the money. SPA's Am. Ans. ¶ 31; Pl.'s Ans. ¶ 8.
SPL brought suit against SPA and HSC on March 6, 2002, seeking declaratory relief. Specifically, SPL asked the Court to "declare the respective rights and duties of the parties in this matter and, in particular, [to] declare that Plaintiff is entitled to 30% of all monies earned by [SPA] in North America through June 30, 2005, which was the consideration promised to Plaintiff by [SPA]." Pl.'s Compl. ¶ 14. SPL further asked the Court to declare it was entitled to 30% of monies received in connection with the Soldier Field project and that SPL owes no money or other duty to HSC. Id. In addition, SPL asked that the Court order HSC to pay into the Court registry any remaining payment due to SPA. Id. ¶ 17. Finally, SPL "request[ed] that the court assess and award damages to [SPL] arising from [SPA's] breach of contract and misrepresentations." Id. ¶ 18.
In its Original Answer, Counterclaim, and Third-Party Action, SPA asserted the following affirmative defenses: lack of consideration, estoppel, unclean hands, and offset. By leave of the Court, SPA amended its Answer on March 31, 2003, adding that the statute of frauds precludes enforcement of any agreement between SPA and SPL. SPA asserted counterclaims of breach of contract, money had and received, conversion, breach of fiduciary duty, and fraud, and sought a declaratory judgment that "Plaintiff is not entitled to 30% of all monies or to any percentage of monies earned by [SPA] in North America through June 30, 2005." SPA's Am. Ans. ¶¶ 35-45. SPA also instituted a third-party action against Draftpro.com relating to a debt allegedly owed in connection with services provided to Continental Airlines in Houston, Texas.
SPA now moves for summary judgment on all claims asserted by SPL on grounds that the oral agreement is not enforceable as a matter of law. SPA also moves for summary judgment on its counterclaim against SPL for money had and received and its third-party claim against Draftpro.com. By separate motion, HSC asks this Court to grant summary judgment in its favor on grounds that no actual controversy exists between itself and SPL.
Summary-Judgment Standard
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Cattrett, 477 U.S. 317, 323 (1986). The moving party bears the burden of informing the district court of the basis for its belief that there is an absence of a genuine issue for trial, and pointing out those portions of the record that demonstrate such an absence. Id. All evidence and the reasonable inferences to be drawn therefrom must be viewed in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
When the moving party bears the burden of proof on a matter, "[it] must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in [its] favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis original). The nonmoving party may but need not present evidence casting doubt on the sufficiency of the moving party's proof. Summary judgment must be denied if a genuine issue of material fact remains in spite of the evidence traduced by the moving party.
When the party moving for summary judgment does not bear the burden of proof, it need only point to a lack of evidence concerning an essential element of the nonmoving party's case. Once the moving party has made this initial showing, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The burden-bearing party defending against a motion for summary judgment can defeat the motion by presenting specific facts that show the case presents a genuine issue of material fact, such that a reasonable jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Mere assertions of a factual dispute unsupported by probative evidence will not prevent summary judgment. Id. at 248-50; Abbot v. Equity Group, Inc., 2 F.3d 613, 619 (5th Cir. 1993). In other words, conclusory statements, speculation and unsubstantiated assertions will not suffice to defeat a motion for summary judgment. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc). If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to is case — on which he bears the burden of proof at trial — summary judgment must be granted. Celotex, 477 U.S. at 322-23. The Court has no duty to search the record for triable issues. Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
HSC's Motion for Summary Judgment on Plaintiff's Claims
The Court begins with HSC's motion, which first posits that summary judgment is appropriate with respect to SPL's request for declaratory judgment. SPL has asked this Court to "declare the respective rights and duties of the parties in this matter . . ." Pl.'s Compl. ¶ 14. SPL further "requests the Court to declare that Plaintiff does not owe any money or other duty to HSC." Id. To state a claim for declaratory relief, a plaintiff must allege (i) facts showing the existence of an actual controversy (ii) regarding a matter or claim that is otherwise within the court's subject-matter jurisdiction. See Heimann v. Nat'l Elevator Indus. Pension Fund, 187 F.3d 493, 510-511 (5th Cir. 1999). HSC contends that it is entitled to summary judgment because there is no evidence of an actual controversy. "An actual controversy exists where `a substantial controversy of sufficient immediacy and reality exists between parties having adverse legal interests.'" Shields v. Norton, 289 F.3d 832, 835 (5th Cir. 2002) (quoting Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 896 (5th Cir. 2000)). A specific, concrete threat of litigation can demonstrate the existence of a case or controversy upon which a declaratory judgment can be based. Orix, 212 F.3d at 897. The party suing for declaratory relief bears the burden of proving, by a preponderance of the evidence, that an actual controversy exists. Texas v. West Pub'g Co., 882 F.2d 171, 175 (5th Cir. 1989).
In Orix, the parties were already engaged in litigation in bankruptcy court when the declaratory-judgment defendants circulated a draft motion to set aside a judgment. The defendants argued that they should be permitted discovery in order to prove up their right to this proposed relief. The declaratory-judgment action begged the district court to find the issues raised in the draft motion to be barred under the doctrine of res judicata. 212 F.3d at 894. Vacating the district court's findings, the Fifth Circuit held that "the possibility that this motion will be filed is [not] sufficiently immediate and real so as to constitute a justiciable controversy." Id. at 897. Not only did the filing of the motion depend on the occurrence of numerous contingencies, but the plaintiff failed to allege facts showing those contingencies were likely to occur. Id. Further, the threatened dispute had not "`taken on final shape so that the court [could] see what legal issues it [was] deciding.'" Id. at 898 (quoting El Paso Bldg. Constr. Trades Council v. El Paso Chapter Ass'n Gen. Contrs. of Am., 376 F.2d 797, 800 (5th Cir. 1967)). "[T]he contours of the motion could, and likely would, change depending upon, amongst other things, the content of the subpoena production." Id.
By contrast, in Nucor Corp. v. Aceros y Maquilas de Occidente, 28 F.3d 572, 575 (7th Cir. 1994), the plaintiff filed a declaratory-judgment action after receiving a letter from the defendant "stating that [a third party] had represented to Aceros that it had authority to bind NUCOR, that NUCOR was bound to the March 7 agreement between United and Aceros, and that NUCOR had failed to perform the contract." The letter also "demanded payment of $658,000 in damages within 60 days" and indicated that "failure to comply would lead to litigation under the Texas Deceptive Trade Practices Act . . ." Id. In the view of the Seventh Circuit, the letter demonstrated that the disagreement was no mere abstract question and that further factual development would be unnecessary to the resolution of the dispute. Id. at 578-79. Thus, a declaratory-judgment action was appropriate. Similarly, in Dow Agrosciences, LLC, v. Bates, No. 5:01-CV-033 1-C, 2002 WL 1205143, * 1 (N.D. Tex. Mar. 12, 2002), the declaratory-judgment defendants alleged, in a letter to the plaintiff, "false advertising, breach of warranty, and statutory claims for alleged deceptive and fraudulent trade practices." The letter also "demanded payment from [the plaintiff] for certain damages, including consequential and incidental damages, treble damages, and attorneys' fees and expenses." Judge Cummings found that the defendant's threats were sufficiently specific and concrete to demonstrate the existence of an actual controversy between the plaintiff and the defendants.
SPL's reliance on Bounty-Full Entertainment, Inc. v. Forever Blue Entertainment Group, Inc., 923 F. Supp. 950 (S.D. Tex. 1996) is misplaced because that court did not rule on the question whether an actual controversy existed.
In the case at hand, SPL has presented evidence that HSC sent two letters demanding that SPL return the money it obtained from HSC. The February 6, 2002, letter stated that if SPL "refuses to return the funds to HSC, then HSC will have no choice but to consider [SPL's] actions to be wrongful and criminal. If this reaches such a point, the HSC will refer this matter to others for appropriate action." Pl.'s Resp. to HSC Mot., Ex. A-2. The March 1, 2002, letter reads: "If the funds are not returned by March 5, then HSC will consider such conduct by [SPL] to be intentional and wrongful possession of funds that [SPL] obtained from HSC under false pretenses. Under such circumstances, HSC will have no choice but to report such misconduct to appropriate authorities for action." Id., Ex. A-3.
The Court begins by making the following observations. First, the letters do not threaten the filing of a civil lawsuit, nor do they make reference to specific civil causes of action. Second, the letters indicate how HSC will "consider" SPL's conduct to constitute intentional and wrongful possession of funds obtained under false pretenses. Third, a variety of legal theories correspond to such "considerations," including fraud, conversion, and deceptive trade practices. Fourth, the letters plainly and portentously state that HSC will turn the matter over to the "appropriate authorities," presumably criminal authorities. Fifth, the second letter indicates a deadline for returning the money: March 5, 2002. Sixth, SPL filed suit on March 6, 2002. Seventh, the Complaint asks the Court "to declare that Plaintiff does not owe any money or other duty to HSC." Compl. ¶ 14. Eighth, HSC has not asserted any counterclaim against SPL in the fifteen months since this suit was instituted and there is no evidence that HSC ever filed criminal charges against SPL. Finally, as discussed below, the issue of whether SPL is in possession of monies that rightfully belong to SPA has been joined by those two parties.
SPL has not demonstrated, by a preponderance of the evidence, the existence of a controversy between it and HSC that should be resolved by this Court at this time. The demand letters are ambiguous and do not threaten specific civil litigation by HSC against SPL. The letters simply assert HSC's belief that SPL obtained from HSC, by false pretenses, money that belonged to SPA. In the fifteen months since it sent the second demand letter, HSC has asserted no civil claim against SPL. Any such claim remains speculative. As for the threat of criminal prosecution, it is not sufficiently immediate: any such prosecution is contingent on numerous occurrences, including referral by HSC to the "authorities" and the "authorities" to a grand jury and a finding of probable cause by the grand jury. SPL has failed to allege sufficient facts showing that these contingencies are likely to occur. The only contingency that appears to have occurred is the passage of the March 5 deadline for returning the money. HSC asserts that it has no claims against SPL. All in all, SPL has failed to show that a dispute is likely to arise.
The real dispute in this case is between SPL and SPA, and the issue of whether SPL is in possession of monies that rightfully belong to SPA has been joined. Summary judgment is therefore GRANTED in favor of HSC on all claims asserted by SPL. All requested injunctive relief against HSC is DENIED.
SPA's Motion for Summary Judgment on Plaintiff's Claims
SPL's primary cause of action against SPA seeks a judicial declaration of "the respective rights and duties of the parties in this matter." Pl.'s Compl. ¶ 14. First, SPL asks the Court to "declare that Plaintiff is entitled to 30% of all monies earned by [SPA] in North America through June 30, 2005 . . ." Id. Second, SPL seeks a declaration "that Plaintiff is entitled to 30% of all moniesgenerated or to be generated by [SPA] in its work on the HSC project." Id. SPL also asserts causes of action for breach of contract and misrepresentation.
SPA contends that the oral agreement alleged in the Complaint is unenforceable under the statute of frauds because it cannot be performed within one year from the date of the making of the agreement. See TEX. Bus. COM. CODE § 26.01(a) (b)(6). It is undisputed that no writing commemorates this alleged agreement. The statute of frauds therefore bars enforcement unless some exception withdraws the agreement from the statute's scope or SPA is otherwise barred from asserting this defense. Gold Kist, Inc. v. Carr, 886 S.W.2d 425, 430 (Tex.App. — Eastland 1994); Chevalier v. Lane's Inc., 208 S.W.2d 113, 114 (Tex.Civ.App.-Beaumont 1948).
SPL first argues that SPA cannot rely on the statute of frauds to avoid enforcement of this alleged agreement because SPA failed to raise this affirmative defense in its pleadings. "All affirmative defenses must be specially pleaded in the answer or in an amended answer permitted under Federal Rule of Civil Procedure 15(a) or be deemed waived." Morgan Guar. Trust Co. v. Blum, 649 F.2d 342 (5th Cir. Unit B 1981). See also La Freniere Park Found. v. Broussard, 221 F.3d 804, 808 (5th Cir. 2000). While it is true that SPA had not plead the statute of frauds at the time the parties briefed the summary-judgment motion, SPA did subsequently request leave to amend its answer to raise the statute-of-frauds defense. SPL did not respond to SPA's motion for leave to amend, and the Court permitted the amendment. It has long been the rule in the Fifth Circuit that failure to raise an affirmative defense in an answer will not constitute waiver of the defense if it is nevertheless raised at a pragmatically sufficient time and the plaintiff would not be prejudiced in its ability to respond. Allied Chem. Corp. v. Mackay, 695 F.2d 854, 855 (5th Cir. 1983); Lucas v. United States, 807 F.2d 414, 418 (5th Cir. 1986); United States v. Shanbaum, 10 F.3d 305, 312 (5th Cir. 1994). That SPL has not been prejudiced in its ability to respond to the defense is evidenced by its discussion of the merits of the defense in its Response to the Motion for Summary Judgment. In light of the fact that SPA has amended its pleadings to add the defense and SPL is not prejudiced by the manner in which it was first raised, the Court finds that SPA has not waived its statute-of-frauds defense. See Echols v. Strickland, 92 F.R.D. 75, 77 (S.D. Tex. 1981) ("Because this case is still in the pre-trial stage and because the Defendants would therefore generally be permitted to avail themselves of the liberal amendment provisions of Rule 15 by filing amended answers with proper invocation of the defense, the better view is that the defense has not been waived.").
SPL next argues that the alleged oral agreement should be enforced because it has partially performed. "Under the partial performance exception to the statute of frauds, contracts that have been partly performed, but do not meet the requirements of the statute of frauds, may be enforced in equity if denial of enforcement would amount to a virtual fraud." Exxon Corp. v. Breezevale, Ltd., 82 S.W.3d 429,439 (Tex.App.-Dallas 2002). By "virtual fraud," it is meant that "the party acting in reliance on the contract has suffered a substantial detriment, for which he has no adequate remedy, and the other party, if permitted to plead the statute, would reap an unearned benefit." Carmack v. Beltway Dev. Co., 701 S.W.2d 37, 40 (Tex.App. — Dallas 1985).
The partial-performance exception, however, does not apply to agreements that cannot be performed within one year. See Chevalier v. Lane's Inc., 213 S.W.2d 530, 533 (Tex. 1948); San Antonio Light Publishing Co. v. Moore, 101 S.W. 867, 869 (Tex. 1907); Wiley v. Bertelsen, 770 S.W.2d 878,882 (Tex.App. — Texarkana 1989); Choleva v. Spartan Aviation, Inc., 524 S.W.2d 739, 742 (Tex.Civ.App.-Corpus Christi 1975); Mercer v. C.A. Roberts Co., 570 F.2d 1232, 1237 (5th Cir. 1978). See also E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 6.09 (3d ed. 1999); RESTATEMENT (SECOND) CONTRACTS § 130. SPL cites Central Power Light Co. v. Del Mar Conservation Dist., 594 S.W.2d 782, 790 (Tex.Civ.App.-San Antonio 1980), which affirmed a district court's finding that the plaintiff's partial performance of an agreement would support a finding that the statute of frauds did not render the agreement unenforceable. That case is similar to the one at hand in that CPL allegedly agreed to pay a 2% commission on the sale of electricity in exchange for an exclusive right to furnish electrical service in the area. Unlike the case at hand, however, the district court found a variety of written memoranda to satisfy the writing requirement. The court of appeals did not discuss the line of cases holding that the partial-performance exception does not apply to agreements that cannot be performed within a year, and its affirmance of the district court on this ground was an alternative holding. Thus, CPL does not persuade this Court to go against the weight of authority and permit SPL to avail itself of the partial-performance exception.
Even if the Court were so inclined, SPL is not entitled invoke the exception because it cannot show that denying enforcement of the agreement alleged in the Complaint would amount to a virtual fraud. To invoke the exception, the party seeking to enforce the agreement must have no other adequate remedy available. See Carmack, 701 S.W.2d at 40. Plaintiff, however, is not without a remedy. Indeed, it has alleged that it is entitled to 30 percent of the monies generated by SPA in its work on the Soldier Field project. That claim survives this summary-judgment motion. Thus, it would not be unfair to Plaintiff not to enforce the contract it allegedly partially performed.
Therefore, the Court finds the agreement alleged in the Complaint to be unenforceable under the statute of frauds. SPA is not obliged under that alleged agreement to pay SPL 30% of all monies earned by SPA in North America through June 30,2005. Summary judgment is GRANTED in favor of SPA on the first declaratory-judgment claim and the breach-of-contract action.
SPA's Motion for Summary Judgment on its Counterclaim
SPA has asserted a counterclaim against SPL for money had and received. To maintain an action for money had and received, SPA must establish that SPL held money which in equity and good conscience belonged to SPA. Amoco Prod. Co. v. Smith, 946 S.W.2d 162,164 (Tex.App.-El Paso 1997). An action for money had and received "`aims at the abstract justice of the case, and looks solely to the inquiry whether the defendant holds money, which * * * belongs to the [claimant].'" Staats v. Miller, 243 S.W.2d 686 (Tex. 1951) (quoting United States v. Jefferson Elec. Mfg. Co., 291 U.S. 386, 403 (1934), in turn quoting Clafin v. Godfrey, 38 Mass. 1, 6 (1838)). See also Merryfield v. Willson, 14 Tex. 224, 225 (1855). The key element of this action is the claimant's ownership of the money at issue. Miller-Rogaska, Inc. v. Bank One, Tex., N.A., 931 S.W.2d 655, 662 (Tex.App.-Dallas 1996). In S.W. Elec. Power Co. v. Burlington N.R.R., 966 S.W.2d 467,471 (Tex. 1998), the petitioner-plaintiff attempted to recover "overcharges" paid under a contract with the respondent-defendant. A unanimous court rejected this argument because, if the factfinder were to find that the disputed payments represented contracted-for rates, the "overcharges" were not monies owned by the petitioner-plaintiff — "there was no `money had' by [respondent-defendant] that should be returned to [petitioner-plaintiff]." Id. See also Hunt v. Baldwin, 68 S.W.3d 117 (Tex.App.-Houston [14th Dist.] 2001) (plaintiff could not show that the money belonged to her).
In the case at hand, there is evidence that SPA may have owed SPL money, either because SPL extended credit on SPA's behalf or because SPL performed valuable services for SPA. Insofar as fact questions remain concerning the ownership of the money at issue, summary judgment on SPA's counterclaim for money had and received is DENIED.
SPA's Motion for Summary Judgment on its Third-Party Action
Finally, SPA has asserted a third-party claim against Draftpro.com, alleging a right to recover on a sworn account. Draftpro first argues that summary judgment should be denied because SPA did not assert the claim in its Original Answer, Counterclaim and Third-Party Action. By leave of the Court, SPA amended its Answer, adding a suit-on-account claim. See SPA's Am. Ans. ¶ 46. The Court therefore considers the merits of the motion.
SPL argues against SPA's motion on grounds that "a suit on account is not a statutory or common law claim under Texas law, but a claim created by Texas Rule of Civil Procedure 185." Pl.'s Resp. at 10. And, insofar as the Federal Rules of Civil Procedure apply in federal court, it is argued, summary judgment must be denied. Id. This argument is not well taken. Rule 185 does not create a substantive cause of action. Hou-Tex Printers v. Marbach, 862 S.W.2d 188, 190 (Tex.App.-Houston [14th Dist.] 1993). Rather, the rule is strictly procedural — it "facilitate[s] the presentation of evidence by providing that, absent verified denial, the pleadings, if they conform to the rule and are pleadings of facts rather than mere conclusions, constitute prima facie evidence of the justness of the claim, avoiding the necessity of further proof." Achimon v. JI. Case Credit Corp., 715 S.W.2d 73, 76 (Tex.App.-Dallas 1986) (Stephens, J., concurring); Hou-Tex Printers, 715 S.W.2d at 190. Consequently, the procedural requirements of rule 185 are not binding on federal courts. See Sneed Shipbuilding, Inc. v. Spanier Marine Corp., 125 F.R.D. 438,444 (E.D. Tex. 1989).
This is not to say that no substantive right to bring suit on an account exists independently of rule 185. "The essential elements of a common law action on account are (1) that there was a sale and delivery of merchandise, (2) that the amount of the account is just, that is, that the prices are charged in accordance with an agreement, they are the usual, customary and reasonable prices for that merchandise, and (3) that the amount is unpaid." Pat Womack, Inc. v. Weslaco Aviation, Inc., 688 S.W.2d 639, 641 (Tex.App.-Corpus Christi 1985) (emphasis added); Pro Connectors, Inc. v. Parker Hannifin Corp., 889 S.W.2d 555, 558 (Tex.App.-Houston [14th Dist.] 1994); Interstate Battery Sys. of Am., Inc. v. Wright, 811 F. Supp. 237, 245 (N.D. Tex. 1993) (concerning an account for services rendered). See also Rizk v. Fin'l Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979) (noting that plaintiff must prove entitlement to relief if account verified according to rule 185 is properly denied, the implication being that the cause of action exists independently of the rules).
Draftpro has presented evidence indicating that the price charged for the services rendered was not just; specifically, Draftpro contends that the drawings provided by SPA were defective and that it is not customary or reasonable to pay almost $69,000 for defective drawings. See Parrish Aff ¶ 10; Iodice Aff. ¶ 10. Draftpro has also created a fact issue concerning the validity of its defense of waiver; the evidence indicates that SPA may have knowingly relinquished its right to exercise its right to payment. Id. Summary judgment is therefore DENIED with respect to SPA's third-party action on account against Draftpro.
Conclusion
Insofar as SPL has failed to demonstrate by a preponderance of the evidence that an actual controversy exists between itself and HSC, the Court GRANTS summary judgment in favor of HSC on all claims asserted by SPL. The agreement between SPL and SPA is unenforceable under the statute of frauds, and SPL cannot escape the statute's application under the partial performance exception. Fact questions remain concerning SPL's claim of entitlement to 30 percent of all monies generated or to be generated by SPA in its work on the Soldier Field project, SPA's counterclaim of money had and received, and SPA's suit on account against Draftpro.com. Summary judgment is therefore DENIED on these claims.