AUTOMAKER INC v. COMPANY LTD USA 1911 (1998)

OPINION

We consider whether a nonmovant for summary judgment can amend its pleadings after the trial court has rendered a final summary judgment.   We conclude it cannot.

Facts

Appellants Automaker, Inc. and U.S. Modular, Inc. sued appellees USA Factors and Financial Services Company, C.C.R.T. Company, Ltd., 1911 Financial Services, Inc., Howard B. Chapman, Glen C. Runnels, Richard B. Tribe, and Richard B. Cole in Fort Bend County over a financial agreement between the parties.   The parties eventually settled this initial lawsuit.   Automaker, U.S. Modular, and appellant Daniel H. Stinger later filed a third-party action against USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole in Harris County.   The third-party action initially included claims for usury, breach of the duty of good faith and fair dealing, negligence, and gross negligence.

USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole filed a motion for summary judgment based on res judicata, release, estoppel, and lack of individual liability of Chapman, Runnels, Tribe, and Cole. On October 14, 1994, the trial court heard the motion, and it rendered and signed a general summary judgment on November 11, 1994.¹  The day before the trial court rendered summary judgment, Automaker, U.S. Modular, and Stinger filed an amended third-party action, adding a claim for breach of the settlement and compromise agreement that ended the Fort Bend County lawsuit.   Although Automaker, U.S. Modular, and Stinger did not file a motion requesting leave of court to file their amended pleading, the trial court on February 21, 1995 signed an “Order Granting Leave to File Late Response to C.C.R.T.'s Motion for Summary Judgment.” ²  The trial court signed the order on the last day the court possessed plenary power.   See Tex.R. Civ. P. 329b(e).

Discussion

In points of error one and two, Automaker, U.S. Modular, and Stinger contend the trial court erred in rendering a summary judgment because their amended pleadings raised additional causes of action not addressed by the motion for summary judgment.   We disagree.

 It is well-settled summary judgment law that if a nonmovant for summary judgment (1) files an amended pleading after the summary judgment hearing and (2) the amended pleading raises an additional claim not mentioned in the summary judgment motion, then the trial court does not err in granting the summary judgment motion because “the pleadings ․ on file at the time of the hearing, or filed thereafter and before judgment with permission of the court, show ․ there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.”  Tex.R. Civ. P. 166a(c) (emphasis added);  see Tex.R. Civ. P. 63;  Hussong v. Schwan's Sales Enters., Inc., 896 S.W.2d 320, 323 (Tex.App.-Houston [1st Dist.] 1995, no writ);  West Tex. Gas, Inc. v. 297 Gas Co., 864 S.W.2d 681, 685 (Tex.App.-Amarillo 1993, no writ);  Leinen v. Buffington's Bayou City Serv. Co., 824 S.W.2d 682, 685 (Tex.App.-Houston [14th Dist.] 1992, no writ).   A nonmovant must secure the court's permission if it files the amended pleading after the summary judgment hearing.  Leinen, 824 S.W.2d at 685;  cf.  Goswami v. Metropolitan Sav. & Loan Ass'n, 751 S.W.2d 487, 490 (Tex.1988) (if amended pleading filed before summary judgment hearing and within seven days of hearing, trial court presumed to have given permission to file).

 In this appeal, even if we were to interpret the trial court's February 21, 1995 order as granting leave to file an amended pleading, the order would be ineffective because rule 166a provides that the amended pleadings must be filed before judgment with permission of the court.   See Hussong, 896 S.W.2d at 323.   Here the trial court did not grant permission to file the amended pleadings until after it rendered judgment.   A trial court cannot grant a motion to amend the pleadings once the trial court renders judgment.  Texas Gen. Indem. Co. v. Ellis, 888 S.W.2d 830, 831-32 (Tex.App.-Tyler 1994, no writ);  Boarder to Boarder Trucking, Inc. v. Mondi, Inc., 831 S.W.2d 495, 498-99 (Tex.App.-Corpus Christi 1992, no writ);  Briercroft Serv. Corp. v. Perez, 820 S.W.2d 813, 818 (Tex.App.-Corpus Christi 1990), aff'd in part, rev'd in part on other grounds, 809 S.W.2d 216 (Tex.1991);  Morris v. Hargrove, 351 S.W.2d 666, 668 (Tex.Civ.App.-Austin 1961, writ ref'd n.r.e.);   see Merckling v. Curtis, 911 S.W.2d 759, 771 (Tex.App.-Houston [1st Dist.] 1995, writ denied) (“A party, upon leave of court, may amend its pleadings to include issues tried by consent at any time up to the submission of the case to the court or jury ․”) (citing Tex.R. Civ. P. 67).

 The rendition of judgment is obviously a significant event in the life of a lawsuit.   If an adversely affected party seeks to set aside or modify that judgment, it should do so openly by filing a motion for new trial or a request to modify, correct, or reform the judgment.   Public policy concerns favoring the finality of judgments counsel against allowing a party to set aside a judgment covertly, e.g., by a postjudgment motion requesting permission to file amended pleadings.   Accordingly, we conclude the trial court did not err in rendering summary judgment when the nonmovants did not timely file amended pleadings and did not obtain the trial court's prejudgment permission to file the untimely amended pleadings.

We overrule points of error one and two.   The discussion of the remaining points of error does not meet the criteria for publication set forth in Texas Rule of Appellate Procedure 47.4.   Accordingly, the remainder of the opinion is not designated for publication.

We affirm the judgments of the trial courts.

Expanded Statement of Facts

In these consolidated appeals, we review related summary judgments rendered by the 268th District Court of Fort Bend County 3 (the bill-of-review lawsuit) and the 334th District Court of Harris County 4 (the Harris County lawsuit).

Automaker builds robots and U.S. Modular builds laboratories and clean rooms. 5  C.C.R.T., USA Factors,6 and 1911 Financial agreed to purchase Automaker's and U.S. Modular's accounts receivable.   In 1993, Automaker and U.S. Modular sued USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole 7 for usury, breach of the duty of good faith and fair dealing, negligence, and gross negligence.   Automaker, Inc. v. USA Factors & Fin. Servs. Co., No. 82,410 (268th Dist. Ct., Fort Bend County, Tex.) (the first Fort Bend County lawsuit).   In July 1993, the parties signed a settlement and compromise agreement, and as part of that agreement Automaker and U.S. Modular signed a release and covenant not to sue.   The settlement required the defendants to lend $150,000 to Automaker and U.S. Modular and to pursue “on a good faith basis” implementing a proposed settlement plan. 8

The defendants lent Automaker and U.S. Modular the $150,000 called for in the settlement and compromise agreement, and on July 20, 1993 Automaker and U.S. Modular dismissed the lawsuit with prejudice.   After disputes arose between the parties, Automaker, U.S. Modular, and Stinger filed a second lawsuit in Fort Bend County against the defendants.   Automaker, Inc. v. USA Factors & Fin. Servs.   Co., No. 85,748 (268th Dist. Ct., Fort Bend County, Tex. filed Mar. 14, 1994) (the second Fort Bend County lawsuit).   Automaker, U.S. Modular, and Stinger then filed a third-party action against USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole in Harris County as a part of a lawsuit Texas Capital Bank, N.A. filed against Automaker, U.S. Modular, and Stinger.   Texas Capitol Bank, N.A. v. Automaker, Inc., No. 93-026724 (334th Dist. Ct., Harris County, Tex. lawsuit filed May 21, 1993) (the Harris County lawsuit).   C.C.R.T. had already sued Stinger, Automaker, and U.S. Modular in federal court for failure to repay the $150,000 loan and for fraud.  C.C.R.T. Company, Ltd. v. Stinger, No. 94-0449 (S.D. Tex. filed Feb. 10, 1994) (the federal lawsuit).

On May 27, 1994, the parties filed a rule 11 agreement to consolidate all causes of action from the second Fort Bend County lawsuit, the Harris County lawsuit, and the federal lawsuit in the Harris County lawsuit.  Tex.R. Civ. P. 11.   On September 15, 1994, USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole filed their motion for summary judgment in the Harris County lawsuit based on res judicata, release, estoppel, and lack of individual liability of Chapman, Runnels, Tribe, and Cole. On October 14, 1994, the trial court heard the motion, and it rendered a general summary judgment on November 11, 1994.9

Three days before the summary-judgment hearing in the Harris County lawsuit, Automaker and U.S. Modular filed a bill of review in Fort Bend County.   Automaker, Inc. v. USA Factors & Fin. Servs.   Co., No. 88,290 (268th Dist. Ct., Fort Bend County, Tex. filed Oct. 11, 1994) (the third Fort Bend County/bill-of-review lawsuit).   On April 28, 1995, USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole filed their motion for summary judgment in the bill-of-review lawsuit based on res judicata, release, and estoppel.   On May 26, 1995, the trial court heard the motion, and it rendered a general summary judgment on June 2, 1995.   Automaker and U.S. Modular appealed both summary judgments, and we consolidated the appeals for argument.

The Harris County Lawsuit (Cause Number 01-95-01223-CV)

Automaker, U.S. Modular, and Stinger bring six points of error alleging the Harris County trial court erred in rendering a summary judgment because:  (1) their amended pleadings raised additional causes of action not addressed by the motion for summary judgment;  (2) “[t]he trial court erred in granting summary judgment” 10;  (3) res judicata does not bar their claims;  (4) their retention of part of the $150,000 consideration did nor bar their suit for breach of the settlement agreement and they were not estopped from attacking the validity of the release;  (5) they raised issues in avoidance of the release;  and (6) Chapman, Runnels, Tribe, and Cole are individually liable for their tortious and “contractual” conduct.

The standards for reviewing a motion for summary judgment are well established:  (1) the movant for summary judgment has the burden of showing there is no genuine issue of material fact and that it is entitled to judgment as a matter of law;  (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true;  and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor.  Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985).   The appellate court should consider all summary judgment grounds on which the trial court rules and the movant preserves for appellate review that are necessary for final disposition of the appeal.  Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.1996).

In point of error five, Automaker, U.S. Modular, and Stinger contend the trial court erred in rendering a summary judgment because they raised issues in avoidance of the release and covenant not to sue.   Based on the Texas Supreme Court's recent opinion in Schlumberger Tech. Corp. v. Swanson, we hold that Automaker, U.S. Modular and Stinger's disclaimer-of-reliance clause in their release and covenant not to sue precludes any fraudulent-inducement claim.   Schlumberger Technology Corporation v. Swanson, 959 S.W.2d 171, 181 (Tex.1997).

The settlement and compromise agreement contains the following disclaimer:

This Settlement and Compromise Agreement and the Release represent the full and final understanding of the parties hereto with respect to the matters contained herein and therein, and supersede all prior understandings, agreements, offers, and negotiations, whether written or oral, between the parties and may not be amended except in a writing signed by all parties hereto.

The release and covenant not to sue contains the following disclaimer:

THAT, for good and valuable consideration ․ each of the undersigned [Automaker, U.S. Modular, and Stinger] ․ hereby unconditionally and irrevocably compromise, settle, and fully release, and forever discharge ․ [USA Factors, C.C.R.T., 1911 Financial Services, Chapman, Cole, Runnels, and Tribe] ․ from any and all costs, expenses, claims, damages, demands, actions, causes of action, liabilities or suits, of whatever kind or nature, known or unknown, at law or in equity, in tort, contract or otherwise, including, but not limited to, any constitutional, statutory, common law, or other claim for usury, that either of them has ever had or may now have or in the future may have against any of the Defendant Releasees which in any manner whatsoever may have arisen, directly or indirectly, out of any event, act, circumstance, or occurrence transpiring prior to July 16, 1993, including, without limitation, any claim or cause of action asserted or underlying any claim or cause of action that was or could have been asserted in [the first Fort Bend County lawsuit].

Finally, the release and covenant not to sue contains the following language concerning reliance:

Each Plaintiff hereby warrants and represents that ․ before executing this instrument, it has fully informed itself of its terms, contents, conditions, that no promise or representation of any kind has been made to it by any other person or by anyone acting for such person except as it is expressly stated in this instrument, and each has relied solely and completely upon its own judgment and that each has had the opportunity to seek and receive the advice of its legal counsel before entering into this Release and Covenant Not to Sue [,] that each fully understands that this is a full, complete and final settlement and release of any and all claims that it may have had against the other persons and entities described above.

As in Schlumberger, the parties here unequivocally disclaimed any reliance on statements or representations outside the release or the settlement agreement.   See id. at 180.   The parties here were also represented by counsel, as they were in Schlumberger.   See id. at 180.   Accordingly, Automaker, U.S. Modular, and Stinger's claim is precluded by the release.

Automaker, U.S. Modular, and Stinger also contend in point of error five that the trial court should not have rendered summary judgment based on the release because of lack of consideration.   The defendants' consideration for the settlement and compromise agreement was:  (1) a $150,000 loan;  (2) implementation, on a good faith basis, of the proposed settlement plan;  (3) taking all actions reasonably necessary to implement the proposed settlement plan;  and (4) dismissing lawsuits filed by the defendants.   The settlement and compromise agreement specifically stated that “the parties acknowledge that full implementation of the Settlement Plan may not be possible in that certain of its terms depend on the actions of independent third parties and its consummation is subject to the execution and delivery of mutually satisfactory documentation.”

However, Automaker, U.S. Modular, and Stinger's third-party action petition, the live pleading in this summary judgment, does not assert any claims for events arising after July 16, 1993, the date the release and covenant was executed.   Automaker, U.S. Modular, and Stinger correctly state in their appellate brief that “the Settlement Agreement [cannot] prohibit Automaker from suing appellees for breach of the Settlement Agreement.”   The fact remains that they have not asserted any such claim.

We overrule point of error five.

In point of error six, Automaker, U.S. Modular, and Stinger claim, without any citation to authority, that the trial court erred in rendering summary judgment because Chapman, Runnels, Tribe, and Cole are individually liable for their tortious and “contractual” conduct.   We have held that points of error unsupported by citation of authority present nothing for review.  Harris County Mun. Util. Dist. No. 48 v. Mitchell, 915 S.W.2d 859, 866 (Tex.App.-Houston [1st Dist.] 1995, writ denied).   Furthermore, we note that the release and covenant not to sue expressly released and discharged Chapman, Runnels, Tribe, and Cole.

We overrule point of error six.   Because of our disposition of points one, two, five, and six, we do not reach points of error three and four because the trial court properly rendered summary judgment.

The Bill-of-Review Lawsuit (Cause Number 01-95-00893-CV)

Automaker and U.S. Modular bring seven points of error alleging the Fort Bend County trial court erred in rendering a summary judgment because:  (1) they raised material fact issues;  (2) “[t]he trial court erred in granting summary judgment” (argued in connection with point of error one);  (3) affirmative defenses were not proved;  (4) res judicata does not bar their claims;  (5) estoppel does not bar their claims;  (6) release does not bar their claims;  and (7) they “were entitled to proceed with their bill of review.”   As with the Harris County summary judgment, the Fort Bend County summary judgment did not state the specific grounds on which the trial court granted the motion for summary judgment.   We, therefore, consider all the summary judgment grounds that are necessary for final disposition of the appeal.11  Cincinnati Life, 927 S.W.2d at 626.

In point of error six, Automaker and U.S. Modular contend the Fort Bend County trial court erred in rendering a summary judgment because their claims were not released.   We disagree with this argument for the same reasons detailed above. 12

We overrule point of error six.   Because of our disposition of point six, we do not reach points of error one through five and seven because the trial court properly rendered summary judgment.

Conclusion

We affirm the judgments of the trial courts.

FOOTNOTES

1.   The summary judgment order reads in part:On October 14, 1994, came on for hearing [USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole's] Motion for Summary Judgment, and the Court, having considered the pleadings, evidence, and arguments of counsel, is of the opinion that the motion is meritorious and should be GRANTED;  it is therefore;ORDERED that [USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole's] Motion for Summary Judgment is GRANTED in all respects․

2.   The order reads in part:  Order Granting Leave toFile Late Response to C.C.R.T.'SMotion for Summary JudgmentOn the 11th day of November, 1994, the court considered [Automaker and U.S. Modular's] motion for leave to file their response to [USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole's] motion for summary judgment.   After considering the pleadings, the motion, the response, affidavits, and other evidence on file, the Court GRANTS [Automaker and U.S. Modular's] motion.It is ORDERED that Automaker's, (et al) First Amended Cross-Action and Supplemental Response be filed and deemed a timely response to C.C.R.T. Company's, (et al) Motion for Summary Judgment pursuant to Rule 166a of the Texas Rules of Civil Procedure.(Emphasis added.)   Nothing in this order indicates that on judgment day (November 11, 1994) the court was considering a motion requesting leave to file the first amended cross-action.

FN3.  Trial cause number 88,290;  appellate cause number 01-95-00893-CV..  FN3.  Trial cause number 88,290;  appellate cause number 01-95-00893-CV.

FN4.  Trial cause number 93-026724B;  appellate cause number 01-95-01223-CV.   This cause was actually appealed before the bill-of-review lawsuit, but it was originally transferred by the Texas Supreme Court to the San Antonio Court of Appeals.   After the Harris County lawsuit was appealed to this Court, the supreme court transferred the bill-of-review lawsuit back from San Antonio so the two appeals could be decided together..  FN4.  Trial cause number 93-026724B;  appellate cause number 01-95-01223-CV.   This cause was actually appealed before the bill-of-review lawsuit, but it was originally transferred by the Texas Supreme Court to the San Antonio Court of Appeals.   After the Harris County lawsuit was appealed to this Court, the supreme court transferred the bill-of-review lawsuit back from San Antonio so the two appeals could be decided together.

FN5.  Stinger is president of both Automaker and U.S. Modular..  FN5.  Stinger is president of both Automaker and U.S. Modular.

FN6.  USA Factors is a general partnership.   The partners are Chapman, Runnels, and Tribe..  FN6.  USA Factors is a general partnership.   The partners are Chapman, Runnels, and Tribe.

FN7.  Cole is associated with C.C.R.T..  FN7.  Cole is associated with C.C.R.T.

FN8.  The settlement and compromise agreement states in part:In consideration of Defendants' agreement to:  (a) make the [$150,000] Loan ․;  (b) to pursue, on a good faith basis, the implementation of the Proposed Settlement Plan ․;  (c) to take all actions reasonably necessary to implement the Settlement Plan (but not on a best efforts basis);  and (d) to dismiss the lawsuit filed by Defendants against Plaintiffs ․, the Plaintiffs have agreed to:  (i) release any and all claims which they may have against Defendants and dismiss the Plaintiffs' lawsuit with prejudice;  (ii) pursue, on a good faith basis, the implementation of the Settlement Plan;  and (iii) take all actions reasonably necessary to implement the Settlement Plan (but not on a best efforts basis);  provided, however, that the parties acknowledge that full implementation of the Settlement Plan may not be possible in that certain of its terms depend on the actions of independent third parties and its consummation is subject to the execution and delivery of mutually satisfactory documentation.(Emphasis added.).  FN8.  The settlement and compromise agreement states in part:In consideration of Defendants' agreement to:  (a) make the [$150,000] Loan ․;  (b) to pursue, on a good faith basis, the implementation of the Proposed Settlement Plan ․;  (c) to take all actions reasonably necessary to implement the Settlement Plan (but not on a best efforts basis);  and (d) to dismiss the lawsuit filed by Defendants against Plaintiffs ․, the Plaintiffs have agreed to:  (i) release any and all claims which they may have against Defendants and dismiss the Plaintiffs' lawsuit with prejudice;  (ii) pursue, on a good faith basis, the implementation of the Settlement Plan;  and (iii) take all actions reasonably necessary to implement the Settlement Plan (but not on a best efforts basis);  provided, however, that the parties acknowledge that full implementation of the Settlement Plan may not be possible in that certain of its terms depend on the actions of independent third parties and its consummation is subject to the execution and delivery of mutually satisfactory documentation.(Emphasis added.)

FN9.  At the time it rendered judgment, the trial court also severed the claims between the summary-judgment parties and assigned cause number 93-026724B to the severed cause..  FN9.  At the time it rendered judgment, the trial court also severed the claims between the summary-judgment parties and assigned cause number 93-026724B to the severed cause.

FN10.  This Malooly point is argued in connection with point of error one.   See Malooly Bros. v. Napier, 461 S.W.2d 119, 121 (Tex.1970)..  FN10.  This Malooly point is argued in connection with point of error one.   See Malooly Bros. v. Napier, 461 S.W.2d 119, 121 (Tex.1970).

FN11.  USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole's motion for summary judgment argued summary judgment was appropriate because of res judicata, release, and estoppel..  FN11.  USA Factors, C.C.R.T., 1911 Financial, Chapman, Runnels, Tribe, and Cole's motion for summary judgment argued summary judgment was appropriate because of res judicata, release, and estoppel.

FN12.  Automaker and U.S. Modular rely on our opinion in Texacadian Fuels, Inc. v. Lone Star Energy Storage, Inc. in which we said, “We hold that, as a matter of law, a release agreement cannot release a claim of fraudulent inducement to the agreement itself.”  896 S.W.2d 233, 236 (Tex.App.-Houston [1st Dist.] 1995), writ granted w.r.m. per curiam, 922 S.W.2d 549 (Tex.1996).   We recognize that the quoted language in Texacadian Fuels has been impliedly overruled by Schlumberger.   See 959 S.W.2d at 181..  FN12.  Automaker and U.S. Modular rely on our opinion in Texacadian Fuels, Inc. v. Lone Star Energy Storage, Inc. in which we said, “We hold that, as a matter of law, a release agreement cannot release a claim of fraudulent inducement to the agreement itself.”  896 S.W.2d 233, 236 (Tex.App.-Houston [1st Dist.] 1995), writ granted w.r.m. per curiam, 922 S.W.2d 549 (Tex.1996).   We recognize that the quoted language in Texacadian Fuels has been impliedly overruled by Schlumberger.   See 959 S.W.2d at 181.

SCHNEIDER, Chief Justice.