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ACI DESIGN BUILD CONTRACTORS INC., d/b/a E3D, Appellant v. Philip LOADHOLT, Jr., Appellee
ACI Design Build Contractors Inc. d/b/a E3D (ACI) appeals the district court's grant of Philip Loadholt, Jr.'s motion for summary judgment and severance. We will affirm.
Loadholt sued ACI and several other defendants in January 2019, asserting various causes of action arising from Loadholt's business dealings with an individual named Patrick A. Towne, Jr., and entities affiliated with Towne. Loadholt asserted claims against ACI for breach of contract, fraud, negligent misrepresentation, and money had and received based on ACI's alleged failure to repay a $160,000 revolving line of credit Loadholt extended to that entity. Loadholt asserted that in April 2014 he personally loaned ACI $160,000 at 12% interest, that the loan was repayable on demand, and that ACI failed to repay the loan as agreed. To resolve his claims against ACI, Loadholt filed a “Motion for Partial Summary Judgment and Severance Against [ACI]” that sought $215,904.39 in damages, pre- and post-judgment interest, and attorney's fees. The summary judgment evidence included an unsworn declaration by Loadholt; the Revolving Line of Credit Agreement (LOC Agreement) between Philip Loadholt, LLC, and ACI; a repayment schedule; and deposition excepts from ACI's registered agent, Patrick Towne. ACI argued that Loadholt was not entitled to summary judgment because fact issues existed regarding the terms of the LOC Agreement. ACI specifically urged that there was a genuine issue of material fact as to whether the line of credit was payable on demand; “whether this was [a] loan with an option to take an equity interest [in ACI] with an undetermined due date, or a revolving line of credit, secured by a 16% percent interest in a particular entity [ACI] with an undetermined repayment date,” or whether Loadholt opted “to go with a repayment of the line of credit with a fixed interest rate”; and the amount due under the agreement.
The district court granted Loadholt's motion and awarded him the damages he requested but denied the request for attorney's fees. ACI appeals.
On appeal, ACI contends the trial court erred in granting summary judgment because: (1) Loadholt's unsworn declaration is incompetent summary judgment evidence; (2) Loadholt is not a party to the LOC Agreement; and (3) Loadholt failed to conclusively establish breach of the LOC Agreement.
We review the district court's summary judgment ruling de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). The movant has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Browning v. Prostok, 165 S.W.3d 336, 344 (Tex. 2005). In deciding whether there is a disputed material fact issue, we consider the evidence in the light most favorable to the nonmovant and resolve all doubts in its favor. Little v. Texas Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004); Harwell v. State Farm Mut. Auto. Ins., 896 S.W.2d 170, 173 (Tex. 1995); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985); see Tex. R. Civ. P. 166a(c). When a plaintiff moves for summary judgment, it must conclusively establish each element of its claim. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). In response and in order to resist the motion, a defendant must conclusively negate at least one essential element of each of the plaintiff's causes of action or conclusively establish each element of an affirmative defense. Tex. R. Civ. P. 166a(c); Long Distance Int'l, Inc. v. Telefonos de Mexico, S.A. de C.V., 49 S.W.3d 347, 350-51 (Tex. 2001); Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Further, the non-movant in a summary judgment proceeding must expressly present to the trial court in writing any reason seeking to avoid summary judgment. McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). “Issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal.” Clear Creek Basin Auth., 589 S.W.2d at 678.
In its first issue, ACI asserts that Loadholt's unsworn declaration is incompetent summary judgment evidence because it lacks the statutorily required jurat. See Hays St. Bridge Restoration Grp. v. City of San Antonio, 570 S.W.3d 697, 702 & n.15 (Tex. 2019) (stating that an unsworn declaration “provides no support for the motion” because the declaration, while made under the penalty of perjury, was unverified and lacked the statutorily required jurat). Loadholt's declaration contains a jurat, but rather than placing it at the end of the document, it is at the beginning. Loadholt's declaration states his name and address, then says “I declare under penalty of perjury that the foregoing is true and correct” (emphasis added), after which he states facts relating to his motion, followed by his signature. ACI maintains that the jurat's placement indicates that the only information subject to penalty of perjury is Loadholt's personal information and therefore no jurat applies to the remainder of the information in the declaration.
ACI did not raise this objection in the district court but urges that we may nonetheless consider this issue on appeal because the absence of the statutorily required jurat is a substantive defect. See Tex. Civ. Prac. & Rem. Code § 132.001(c)(1), (2) (requiring an unsworn declaration to “be in writing and subscribed by the person making the declaration as true under penalty of perjury”); Tex. R. App. P. 33.1(a) (stating that generally, to preserve a complaint for appellate review, a party must complain to the trial court by a timely request, objection, or motion, and the trial court must rule or refuse to rule on the request, objection, or motion); see also Fernandez v. Peters, No. 03-09-00687-CV, 2010 WL 4137491 at *4, 2010 Tex. App. LEXIS 8473 at *11 (Tex. App.—Austin Oct. 19, 2010, no pet.) (mem. op.) (stating that “[u]nlike objections to defects in form, objections to defects of substance may be raised for the first time on appeal” and holding that lack of personal knowledge constituted a substantive defect in affidavit). We disagree. We consider this issue with the jurat to be a defect in form. The Texas Supreme Court has addressed the distinction between substantive defects and defects in form in Mansions in the Forest, L.P. v. Montgomery County when considering the competence of an affidavit in support of a motion for summary judgment. 365 S.W.3d 314, 317 (Tex. 2012). Like ACI, the nonmovant in Mansions in the Forest did not complain that the purported affidavit was unsworn until its responsive brief in the court of appeals. See id. The court held that the nonmovant had therefore waived the issue and it could not be considered on appeal. Id. The court explained, “When a purported affidavit lacks a jurat and a litigant fails to provide extrinsic evidence to show that it was sworn to before an authorized officer, the opposing party must object to this error, thereby giving the litigant a chance to correct the error.” Id.; see id. at 318 (acknowledging and disapproving of court of appeals opinions holding that the absence of a jurat is a substantive defect). The court continued:
There are “important prudential considerations” behind our rules on preserving error. In re B.L.D., 113 S.W.3d 340, 350 (Tex. 2003). First, requiring that parties initially raise complaints in the trial court conserves judicial resources by providing trial courts the opportunity to correct errors before appeal. Id. Second, judicial decision-making is more accurate when trial courts have the first opportunity to consider and rule on error. Id. (“Not only do the parties have the opportunity to develop and refine their arguments, but we have the benefit of other judicial review to focus and further analyze the questions at issue.”). Third, a party “should not be permitted to waive, consent to, or neglect to complain about an error at trial and then surprise his opponent on appeal by stating his complaint for the first time.” Id. (quoting Pirtle v. Gregory, 629 S.W.2d 919, 920 (Tex. 1982) (per curiam)).
Id. at 317. Although the court considered the distinction between form and substance in the context of an affidavit rather than an unsworn declaration, its prudential considerations for requiring error preservation apply equally to unsworn declarations. See Tex. Civ. Prac. & Rem. Code § 132.001(a) (stating that generally “an unsworn declaration may be used in lieu of a written sworn declaration, verification, certification, oath, or affidavit”). Accordingly, we conclude that ACI has likewise waived its complaint that Loadholt's declaration lacked a jurat. We overrule ACI's first issue.
Parties to the Contract
In its second issue ACI contends, again for the first time on appeal, that Loadholt failed to conclusively establish that he is a party to the contract at issue because the LOC Agreement, signed by both Loadholt and a representative for ACI, states that it is “by and between” ACI and “PHILLIP LOADHOLT, LLC,” rather than Loadholt individually. See C.W. 100 Louis Henna, Ltd. v. El Chico Rests. of Tex., L.P., 295 S.W.3d 748, 752 (Tex. App.—Austin 2009, no pet.) (listing elements of a breach-of-contract claim as (1) the existence of a valid contract between the parties; (2) performance (or excuse) by the party asserting the claim; (3) breach of the terms of the contract by another party; and (4) damages resulting from the breach). Loadholt argues that ACI waived its right to challenge Loadholt's capacity to sue by failing to challenge Loadholt's status as a party in a verified denial as required by Texas Rule of Civil Procedure 93. Rule 93 requires that certain pleas, including those asserting that “the plaintiff has not legal capacity to sue,” “the plaintiff is not entitled to recover in the capacity in which he sues,” and “there is a defect of the parties,” “shall be verified by affidavit” “unless the truth of such matters appears of record.” Tex. R. Civ. P. 93. Citing Cantu v. Holiday Inns, Inc., ACI argues, correctly, that Rule 93 does not require a verified pleading when the truth of the matter appears on the record. See 910 S.W.2d 113, 115 (Tex. App.—Corpus Christi 1995, writ denied) (concluding that a denial that was not properly verified did not call for reversal of summary judgment because the truth of the asserted defect in parties appeared “of record”). However, while an error “of record” would relieve ACI of the burden of verifying its denial, it would not relieve ACI of the burden of denying in district court that the plaintiff is the proper party. The Texas Supreme Court has “not hesitated in previous cases to hold that parties who do not follow Rule 93's mandate waive any right to complain about the matter on appeal.” Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996) (holding that because appellant first questioned appellee's capacity in its briefing to the supreme court, it waived its complaint about capacity); see also Allen-Mercer v. Roscoe Props., No. 03-15-00674-CV, 2016 WL 4506294 at *3, 2016 Tex. App. LEXIS 9247 at *5 (Tex. App.—Austin Aug. 25, 2016, no pet.) (mem. op.) (concluding appellant failed to preserve error where nothing in the record showed she challenged appellee's capacity to bring suit in the trial court). Because ACI did not challenge Loadholt's capacity to sue in the district court, ACI has not preserved error on this issue. Consequently, we overrule ACI's second issue.
In its final issue ACI contends that Loadholt failed to conclusively establish that a breach of contract occurred because the LOC Agreement does not contain repayment terms and, even if payment was due on demand, Loadholt did not conclusively prove that he demanded full payment on the balance due under the LOC Agreement. The LOC Agreement was less than a page long and included four enumerated terms, none of which specified repayment terms. However, in his declaration, Loadholt asserted that he personally loaned ACI $160,000 at 12% interest; that it was payable on demand; and that ACI “made some partial payments over the last several years” but did not pay the balance on demand. See Jackson v. Carlson, No. 03-08-00429-CV, 2009 WL 638848 at *2, 2009 Tex. App. LEXIS 1758 at *7 (Tex. App.—Austin Mar. 12, 2009, no pet.) (mem. op.) (holding if no due date is specified, loan is due on demand and demand may be made within a reasonable time); see also HECI Expl. Co. v. Clajon Gas Co., 843 S.W.2d 622, 634 (Tex. App.—Austin 1992, writ denied) (stating that when no specific time for performance is stated in the contract, law will imply a reasonable time). ACI did not controvert Loadholt's assertions regarding the terms of the loan. A loan repayment schedule showed that ACI had made monthly payments of $1,600 to Loadholt from May through November of 2014, then paid $25,000 in July 2017 and another $25,000 in October 2018. In his deposition, Towne testified that ACI did not fully repay Loadholt, acknowledging that ACI defaulted and explaining, “ACI was unable to pay that money back.” Towne also testified that although the LOC Agreement would have allowed Loadholt to gain equity in ACI, Loadholt did not gain equity because “[h]e preferred to be repaid.” In response to a follow-up question in which counsel for another party asked “So [Loadholt] could either get his money back or he could get [equity in ACI], is that what you're telling me?” Towne responded, “pretty much.” While ACI correctly observes that the LOC Agreement does not contain repayment terms, the summary judgment evidence conclusively established that the loan was payable on demand, that Loadholt demanded payment, and that ACI breached the parties' agreement. We overrule ACI's third issue.
Having overruled ACI's issues on appeal, we affirm the district court's grant of summary judgment.
Gisela D. Triana, Justice
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Docket No: NO. 03-19-00442-CV
Decided: July 17, 2020
Court: Court of Appeals of Texas, Austin.
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