What is the remedy for breach of a Rule 11 settlement agreement?

Generally, the remedy for a breach of a Rule 11 agreement is a breach-of-contract claim filed by a party. See In re Build by Owner, LLC, No. 01- 11-00513-CV, 2011 WL 4612790, at *7 (Tex. App.—Houston [1st Dist.] Oct. 6, 2011, no pet.) (mem. op.) (holding Rule 11 agreement enforced by breach-of contract claim); see also Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995) (holding courts construe Rule 11 agreements as any other contract).

SOURCE: HOUSTON COURT OF APPEALS - 01-17-00364-CV - 5/14/2019

Texas Rule of Civil Procedure 11 provides that,

Unless otherwise provided in these rules, no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record.

TEX. R. CIV. P. 11. Rule 11 agreements "are contracts relating to litigation." Trudy's Tex. Star, Inc. v. City of Austin, 307 S.W.3d 894, 914 (Tex. App.-Austin 2010, no pet.). "The purpose of Rule 11 is to ensure that agreements of counsel affecting the interests of their clients are not left to the fallibility of human recollection and that the agreements themselves do not become sources of controversy." ExxonMobil Corp. v. Valence Operating Co., 174 S.W.3d 303, 309 (Tex. App.-Houston [1st Dist.] 2005, pet. denied).  

Trial courts have a ministerial duty to enforce valid Rule 11 agreements. Id.

IN RE BUILD BY OWNER, LLC, Relator.

No. 01-11-00513-CV.

Court of Appeals of Texas, First District, Houston.

Opinion issued October 6, 2011.

Panel consists of Justices Keyes, Higley, and Massengale.

MEMORANDUM OPINION

EVELYN V. KEYES, Justice.

Relator, Build by Owner, LLC ("Build by Owner"), filed a petition for writ of mandamus seeking to compel the trial court to vacate its order granting real parties in interest John-Baptist and Ellen Sekumade's motion to transfer venue from Galveston County to Harris County.^[1] Build by Owner contends that the trial court abused its discretion in granting the motion because, at a prior hearing before the original trial judge, Build by Owner and Sekumade allegedly entered into a Rule 11 agreement providing that venue would remain in Galveston County because Sekumade sought affirmative relief from the Galveston County trial court on a counterclaim.

We deny the petition for writ of mandamus.

Background

In 2008, Sekumade and Build by Owner entered into a contract for the construction of a house. On June 22, 2009, Build by Owner sued Sekumade for breach of contract, alleging that Sekumade "failed to provide payment for [Build by Owner's] work and reimbursement of labor and materials provided in the construction of [Sekumade's] residence." In his original answer, Sekumade moved to transfer venue from Galveston County to either Brazoria County—where Sekumade resided—or Harris County—where Sekumade signed the contract at issue—and also asserted a counterclaim for breach of contract.

During the course of the litigation, Sekumade served Build by Owner with discovery requests, including requests for admissions, requests for production of documents, and interrogatories. Sekumade also moved for summary judgment on his breach of contract counterclaim, contending, among other things, that Build by Owner failed to either fully or substantially perform its contractual obligations. He did not make this motion subject to his motion to transfer venue. Sekumade later amended his pleadings to drop his breach of contract claim and to assert a claim for violation of the Deceptive Trade Practices Act ("DTPA").

On April 22, 2010, after a lengthy discovery battle, the trial court heard argument on Build by Owner's motion for discovery sanctions and motion to strike Sekumade's pleadings. At the beginning of the hearing, the trial court asked the parties which motion they wanted to address first. Sekumade stated, without previous reference to his motion to transfer venue:

If I may, we filed a Motion to Transfer Venue. We would probably pass that motion because we have filed a counter-suit based on a DTPA claim. So, that probably will be less the Court has to consider.

After the parties and the trial court discussed Build by Owner's discovery-related motions, the trial court asked if there were any other matters to consider. Sekumade said, "As I stated earlier, Your Honor, we had a Motion to Transfer Venue. Because we had filed a DTPA claim, we're going to pass that motion."

Shortly thereafter, the parties and the trial court had the following exchange:

[Build by Owner]: Second of all, based on Counsel's statement about the motion to transfer, it appears that we've entered into a Rule 11 Agreement in open court on the record that the case is going to be here in Galveston County as the county of mutually agreed venue and jurisdiction before this Honorable Court. So, then, rather than [d]efense counsel saying we're passing the hearing, I think what he said, based on his DTPA counterclaim, is that he's agreed and has purposefully availed himself that we have a Rule 11 agreement and I would like that clarified.

The Court: Mr. Sekumade, that's the Court's interpretation of that also. Is that incorrect?

Sekumade: In reference to the—

The Court: To the Motion to Transfer Venue, you're essentially waiving that. If you say that "I want the Court to rule on my DTPA case," you're availing this Court of this jurisdiction.

Sekumade: That's correct, Your Honor. That's why I stated—

The Court: So, it is of record, then.

[Build by Owner]: Then that's mutually agreeable.

The next day, the trial court issued an order granting Build by Owner's motion to compel. The court ordered Sekumade to pay $3,000 in attorney's fees to Build by Owner's counsel within thirty days and to fully comply with all outstanding discovery requests within forty-five days or the court would require payment of an additional $10,000 in discovery sanctions and completion of forty hours of community service, and it would strike Sekumade's pleadings. This order did not mention Sekumade's motion to transfer venue.

Approximately one month later, Sekumade again amended his answer, moved to transfer venue to Brazoria or Harris County, and asserted a counterclaim for breach of contract. In response to this motion to transfer venue, Build by Owner argued that, at the April 22, 2010 hearing, it and Sekumade entered into a Rule 11 agreement providing that venue would remain in Galveston County. In reply, Sekumade argued that proper venue could not be waived pursuant to Civil Practice and Remedies Code section 15.035, the venue provision that governed this dispute, and that Build by Owner never presented any evidence demonstrating that venue was proper in Galveston County or that venue was improper in Brazoria or Harris County. Sekumade also denied that the parties ever entered into a Rule 11 agreement regarding venue at the April 22, 2010 hearing. The trial court explicitly denied Sekumade's motion to transfer venue on August 2, 2010.

After Sekumade failed to pay Build by Owner's counsel within the allotted thirty days after the April 23, 2010 order, Build by Owner moved for enforcement of the order and for the imposition of sanctions on Sekumade for his failure to comply. At a hearing on September 2, 2010, the trial court granted Build by Owner's motion to enforce and ordered Sekumade to pay $13,000 to Build by Owner's counsel by 5:00 p.m. on September 10, 2010, ordered Sekumade to complete forty hours of community service, and struck Sekumade's pleadings.

Sekumade subsequently filed a petition for writ of mandamus in this Court.^[2] In addition to complaining about Judge Ellisor's discovery rulings and his actions allegedly preventing Sekumade from filing a motion to compel arbitration, Sekumade also complained that, by making a statement at the April 22, 2010 hearing that Sekumade waived his motion to transfer venue because he filed a counterclaim, Judge Ellisor "stifled" and "dissuaded" him from pursuing his motion and that Judge Ellisor erroneously denied his motion to transfer venue. In its response to Sekumade's petition for writ of mandamus, Build by Owner informed this Court that Sekumade had filed a civil rights suit against Judge Ellisor and his court coordinator in the Southern District of Texas. As a result, the Administrative Judge of Galveston County transferred the underlying lawsuit, Build by Owner, LLC v. John-Baptist Sekumade and Ellen Carol Sekumade, No. 09-CV-1019, from the 122nd District Court of Galveston County to the 56th District Court of Galveston County. The Administrative Judge then transferred the underlying case back to the 122nd District Court, but it appointed another judge, the Honorable Hugo Touchy, to hear the dispute.

On March 10, 2011, this Court issued an order abating Sekumade's petition for writ of mandamus pursuant to Texas Rule of Appellate Procedure 7.2(b) to allow Judge Touchy to reconsider Judge Ellisor's rulings on Sekumade's motion to transfer venue and Build by Owner's motion to compel and motion to strike Sekumade's pleadings. See TEX. R. APP. P. 7.2(b); In re Baylor Med. Ctr. at Garland, 280 S.W.3d 227, 228 (Tex. 2008) ("Mandamus will not issue against a new judge for what a former one did. . . . As a new judge now presides over the trial court, [Texas Rule of Appellate Procedure] 7.2 requires abatement of this original proceeding to allow the successor to reconsider the order.").

At the hearing before Judge Touchy, Build by Owner informed the court of Sekumade's two statements from the April 22, 2010 hearing informing Judge Ellisor that he was "passing" his motion to transfer venue because of his DTPA counterclaim and of the Rule 11 agreement discussion. Sekumade argued:

At no time was I party to any Rule 11 Agreement. The record does not reflect it. All I said was I will pass the motion because the Court was telling me I had forfeited my rights to waive venue. So, as [Build by Owner's counsel] properly read, I passed my motion. I did not waive my right. [Build by Owner's counsel] waived my right for me. He acted as my counsel and came up with a Rule 11 Agreement between himself and the Court and that's how we got to this Rule 11 argument.

At the close of the hearing, the trial court granted Sekumade's motion to transfer venue to Harris County, reasoning that "[Sekumade] never voluntarily waived his plea to transfer the venue willfully."^[3]

Standard of Review

Mandamus relief is available only to correct a clear abuse of discretion when there is no adequate remedy by appeal. In re Odyssey Healthcare, Inc., 310 S.W.3d 419, 422 (Tex. 2010) (per curiam); In re Team Rocket, L.P., 256 S.W.3d 257, 259 (Tex. 2008) ("We grant the extraordinary relief of mandamus only when the trial court has clearly abused its discretion and the relator lacks an adequate appellate remedy."). A trial court commits a clear abuse of discretion when its action is "so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." In re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003) (per curiam); In re Stern, 321 S.W.3d 828, 837 (Tex. App.-Houston [1st Dist.] 2010, no pet.). A trial court has no discretion in determining what the law is or in applying the law to the particular facts. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004).

Motion to Transfer Venue

Although mandamus review is available to enforce the Civil Practice and Remedies Code's mandatory venue provisions, a party generally may not seek mandamus review of a permissive venue determination.^[4] See TEX. CIV. PRAC. & REM. CODE ANN. § 15.0642 (Vernon 2002) ("A party may apply for a writ of mandamus with an appellate court to enforce the mandatory venue provisions of [Chapter 15.]"); In re Mo. Pac. R.R. Co., 998 S.W.2d 212, 215-16 (Tex. 1999) ("We reiterated in early 1995 that 2017Texas law is quite clear that venue determinations are not reviewable by mandamus.' But a few months later, the Legislature enacted section 15.0642 authorizing parties to seek mandamus 2017to enforce the mandatory venue provisions,' along with a timetable for seeking mandamus.") (quoting Polaris Inv. Mgmt. Corp. v. Abascal, 892 S.W.2d 860, 862 (Tex. 1995) (per curiam)).

The Texas Supreme Court has held that "venue determinations generally are incidental trial rulings that are correctable on appeal." Bridgestone/Firestone, Inc. v. Thirteenth Court of Appeals, 929 S.W.2d 440, 441 (Tex. 1996) (per curiam)(citing Montalvo v. Fourth Court of Appeals, 917 S.W.2d 1, 2 (Tex. 1995) (per curiam)); see In re Masonite Corp., 997 S.W.2d 194, 197 (Tex. 1999) ("[V]enue determinations as a rule are not reviewable by mandamus."); see also In re Team Rocket, 256 S.W.3d at 261 ("The only remedy afforded by the Legislature when a party loses a venue hearing is to proceed with trial in the transferee county and appeal any judgment from that court on the basis of alleged error in the venue ruling."). "[T]he mere fact that a trial court's erroneous order will result in an eventual reversal on appeal does not mean that a trial will be a 2017waste of judicial resources' . . . . To hold otherwise would mean that virtually any reversible error by a trial court would be a proper subject for mandamus review." In re City of Irving, 45 S.W.3d 777, 779 (Tex. App.-Texarkana 2001, orig. proceeding).

The Texas Supreme Court has also held, however, that mandamus review of permissive venue determinations is appropriate in "extraordinary circumstances." In re Team Rocket, 256 S.W.3d at 262; see also In re Masonite Corp., 997 S.W.2d at 197 ("But on rare occasions an appellate remedy, generally adequate, may become inadequate because the circumstances are exceptional. Specifically, a trial court's action can be 2017with such disregard for guiding principles of law that the harm . . . becomes irreparable.'") (quoting Nat'l Indus. Sand Ass'n v. Gibson,897 S.W.2d 769, 771 (Tex. 1995)); Bridgestone/Firestone, 929 S.W.2d at 441(noting that court had previously granted mandamus relief when trial court failed to afford venue movant reasonable opportunity to supplement venue record). The court has "granted mandamus relief in the context of Rule 87 venue rulings where . . . the trial court made no effort to follow the rule." In re Team Rocket, 256 S.W.3d at 262; see also Woods v. Alvarez, 925 S.W.2d 119, 122 (Tex. App.-Corpus Christi 1996) (noting that mandamus relief is available when "the trial court fails to follow the procedural requirements of Texas Rule of Civil Procedure 87 concerning each party's right to sufficient notice of the venue hearing"), overruled on other grounds, Bridgestone/Firestone, 929 S.W.2d at 442; Cone v. Gregory, 814 S.W.2d 413, 414-15 (Tex. App.-Houston [1st Dist.] 1991, orig. proceeding) (listing as exceptions to general rule of no mandamus relief for venue determinations: (1) trial court has mandatory, ministerial duty to transfer, (2) trial court issues a void order on venue, and (3) trial court violates mandatory notice procedure).

In Team Rocket, for example, the plaintiffs originally filed suit in Harris County for, among other things, negligence arising out of a fatal plane accident that occurred in Fort Bend County. 256 S.W.3d at 258. Team Rocket moved to transfer venue to Williamson County, its principal place of business, and the trial court granted the motion. Id. at 259. The plaintiffs nonsuited and then immediately filed an identical suit in Fort Bend County. Id. The Fort Bend County trial court denied Team Rocket's motion to transfer venue to Williamson County. Id. The Texas Supreme Court found that "extraordinary circumstances" for granting mandamus review of a non-mandatory venue determination existed, and reasoned that when "a trial court improperly applied the venue statute and issued a ruling that permits a plaintiff to abuse the legal system by refiling his case in county after county, which would inevitably result in considerable expense to taxpayers and defendants, requiring defendants to proceed to trial in the wrong county is not an adequate remedy." Id.at 262; see also In re Masonite Corp., 997 S.W.2d at 198 (finding "exceptional circumstances" present when trial court denied motion to transfer venue to defendant's requested county and "on its own motion" severed claims into sixteen different cases and transferred cases to counties of plaintiffs' residence).

Build by Owner contends that such exceptional circumstances justifying mandamus relief exist in this case because Judge Touchy, in refusing to enforce the parties' Rule 11 agreement on venue, abused his discretion by incorrectly applying Texas Rule of Civil Procedure 87(3)(b), which provides that the trial court shall determine a venue motion "on the basis of the pleadings [and] any stipulations made by and between the parties. . . ." See TEX. R. CIV. P. 87(3)(b).

Texas Rule of Civil Procedure 11 provides that,

Unless otherwise provided in these rules, no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record.

TEX. R. CIV. P. 11. Rule 11 agreements "are contracts relating to litigation." Trudy's Tex. Star, Inc. v. City of Austin, 307 S.W.3d 894, 914 (Tex. App.-Austin 2010, no pet.). "The purpose of Rule 11 is to ensure that agreements of counsel affecting the interests of their clients are not left to the fallibility of human recollection and that the agreements themselves do not become sources of controversy." ExxonMobil Corp. v. Valence Operating Co., 174 S.W.3d 303, 309 (Tex. App.-Houston [1st Dist.] 2005, pet. denied). Trial courts have a ministerial duty to enforce valid Rule 11 agreements. Id. (citing EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 91 (Tex. 1996) and Fed. Lanes, Inc. v. City of Houston, 905 S.W.2d 686, 690 (Tex. App.-Houston [1st Dist.] 1995, writ denied)).

"[I]t is not sufficient that a party's consent to a Rule 11 agreement may have been given at one time; consent must exist at the time that judgment is rendered." Id.; see also Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995) ("[C]onsent must exist at the very moment the court undertakes to make the agreement the judgment of the court."). A party may revoke his consent to a Rule 11 agreement at any time before rendition of judgment. ExxonMobil, 174 S.W.3d at 309. "A court is not precluded from enforcing a Rule 11 agreement once it has been repudiated by one of the parties, but an action to enforce a Rule 11 agreement to which consent has been withdrawn must be based on proper pleading and proof." Id.; see also Padilla, 907 S.W.2d at 462 ("An action to enforce a settlement agreement [pursuant to Rule 11], where consent is withdrawn, must be based on proper pleading and proof."). If a party revokes his consent to a Rule 11 agreement, the opposing party may attempt to enforce the Rule 11 agreement under contract law. ExxonMobil, 174 S.W.3d at 309; see Staley v. Herblin, 188 S.W.3d 334, 336 (Tex. App.-Dallas 2006, pet. denied) ("[W]here consent [to a Rule 11 agreement] has been withdrawn, a court may not render judgment on the settlement agreement, but may enforce it only as a written contract. Accordingly, the party seeking enforcement must pursue a separate breach of contract claim which is subject to the normal rules of pleading and proof."); see also Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (per curiam) (holding same).

If fact issues are raised or a party has withdrawn consent, "the only method available for enforcing a [Rule 11] agreement is through summary judgment or trial." Staley, 188 S.W.3d at 336. The non-breaching party should raise its claim to enforce the disputed agreement "through an amended pleading or counterclaim asserting breach of contract." Id.; see also Padilla, 907 S.W.2d at 462 (approving of Padilla's counterclaim seeking enforcement of Rule 11 agreement); Baylor College of Med. v. Camberg, 247 S.W.3d 342, 348 (Tex. App.-Houston [14th Dist.] 2008, pet. denied) ("[N]othing in the record indicates that Baylor employed a proper procedure for enforcing a Rule 11 settlement agreement once the parties proffered differing interpretations of the agreement. For example, Baylor did not file a motion for summary judgment seeking interpretation of the Rule 11 agreement."). "To allow enforcement of a disputed [Rule 11] agreement simply on motion and hearing would deprive a party of the right to be confronted by appropriate pleadings, assert defenses, conduct discovery, and submit contested fact issues to a judge or jury." Staley, 188 S.W.3d at 336-37.

Build by Owner contends that it and Sekumade entered into an enforceable Rule 11 agreement at the April 22, 2010 hearing before Judge Ellisor that venue would remain in Galveston County. Sekumade contends that a Rule 11 agreement never existed between the parties and that, if one did so exist, he revoked his consent by filing a second motion to transfer venue and informing Judge Ellisor that he did not consent to venue in Galveston County.

Even if Build by Owner and Sekumade entered into a Rule 11 agreement at the April 22, 2010 hearing agreeing that venue was proper in Galveston County, Sekumade revoked his consent to this agreement before either Judge Ellisor or Judge Touchy ruled on his venue motion. The trial court issued an order on April 23, 2010, solely relating to discovery sanctions against Sekumade; the order did not reference Sekumade's motion to transfer venue or any alleged Rule 11 agreement on venue. On May 28, 2010, Sekumade filed a second motion to transfer venue, seeking to transfer the case to Brazoria or Harris County. After Build by Owner responded to the venue motion and argued that the trial court should deny the motion based on the purported Rule 11 agreement, Sekumade argued, among other things, that he did not enter into a Rule 11 agreement on venue at the April 22, 2010 hearing. Sekumade repeatedly argued that venue was proper in Brazoria or Harris County, not Galveston County.

Judge Ellisor denied Sekumade's venue motion on August 2, 2010. Sekumade then sought mandamus relief from this ruling, among other rulings, in this Court. After the Administrative Judge of Galveston County assigned Judge Touchy to hear the underlying dispute, we abated Sekumade's mandamus petition for Judge Touchy to reconsider Judge Ellisor's rulings on the discovery sanctions issue and Sekumade's venue motion. See TEX. R. APP. P. 7.2(b). Judge Touchy ultimately agreed that Sekumade did not "voluntarily waive[] his plea to transfer the venue willfully" and transferred venue to Harris County on April 11, 2011.

Build by Owner never filed an amended pleading, counterclaim for breach of contract, or motion to enforce the Rule 11 agreement.

Because Sekumade revoked any consent to the purported Rule 11 agreement before Judge Touchy ruled on his motion to transfer venue, consent did not exist at the time the trial court decided the issue, and, therefore, the court could not have rendered an agreed decision on venue. See Padilla, 907 S.W.2d at 461 (holding that, for agreed judgment, "consent must exist at the very moment the court undertakes to make the agreement the judgment of the court"); ExxonMobil, 174 S.W.3d at 309 ("[I]t is not sufficient that a party's consent to a Rule 11 agreement may have been given at one time; consent must exist at the time that judgment is rendered."). Although a trial court may not render an agreed judgment when one party has withdrawn his consent to a Rule 11 agreement, the trial court may still enforce the agreement as a binding contract, but only upon "proper pleading and proof." See Padilla, 907 S.W.2d at 462; ExxonMobil, 174 S.W.3d at 309. The party seeking to enforce the Rule 11 agreement must file a separate breach of contract claim, and the alleged breaching party must be afforded the opportunity to assert defenses, conduct discovery, and submit contested fact issues, if any, to a judge or jury. See Staley, 188 S.W.3d at 336-37; see also ExxonMobil, 174 S.W.3d at 309("In such a case [when a party withdraws consent to a Rule 11 agreement], a party may seek to enforce the agreement under contract law."). Because Build by Owner never attempted to enforce the Rule 11 agreement by pursuing a separate breach of contract claim, we conclude that the trial court did not abuse its discretion in refusing to enforce the disputed agreement. See Camberg, 247 S.W.3d at 348(holding that party seeking enforcement of Rule 11 agreement did not employ "proper procedure" for enforcing when parties offered different interpretations of agreement).

We hold, therefore, that Build by Owner has not established that this case involves the "extraordinary circumstances" necessary to depart from the general rule that permissive venue determinations are not reviewable by mandamus. See In re Team Rocket, 256 S.W.3d at 262.

Build by Owner further contends that mandamus review of Judge Touchy's venue ruling is appropriate because "[t]his Court is already exercising its mandamus jurisdiction based on [Sekumade's] petition challenging Judge Ellisor's rulings on his motion for sanctions and motion for transfer of venue" and cites the Texas Supreme Court's decision in General Motors Corp. v. Gayle, 951 S.W.2d 469 (Tex. 1997), for the proposition that an appellate court may review an issue on mandamus that may ordinarily be reviewable only on appeal—such as an incidental trial ruling—if the court is already addressing another issue for which mandamus review is appropriate. In Gayle, the court noted that two of the issues presented—denial of a jury trial and denial of a motion for continuance—were generally not appropriate for mandamus review because parties had an adequate appellate remedy, but it held that that particular case presented "special circumstances" because mandamus review was appropriate for another issue that had been presented to the court. Id. at 477. The court concluded that "the interests of judicial economy dictate that [it] should also remedy the trial court's denial of the right of jury trial by mandamus." Id.

This case, however, does not present such special circumstances. Judge Touchy's rulings on Build by Owner's discovery motions and Sekumade's venue motion vacated Judge Ellisor's initial rulings. Thus, Sekumade's original petition for writ of mandamus is moot. See In re Baylor Med. Ctr., 280 S.W.3d at 228. Because the parties have presented no other issue that is proper for us to review by mandamus, we will not exercise our mandamus jurisdiction to review Judge Touchy's venue ruling.^[5]

Conclusion

We deny the petition for writ of mandamus.

[1] The Honorable Hugo Touchy, Judge of the 122nd District Court of Galveston County, Texas, Respondent. The underlying lawsuit is Build by Owner, LLC v. John-Baptist Sekumade and Ellen Carol Sekumade, No. 09-CV-1019 (122nd Dist. Ct., Galveston County, Tex.).

[2] See In re John-Baptist Sekumade and Ellen Carol Sekumade, No. 01-10-00817-CV (Tex. App.-Houston [1st Dist.] Oct. 6, 2011, orig. proceeding) (mem. op.).

[3] Judge Touchy also granted Build by Owner's motion to compel and ruled that Sekumade had twenty days to comply with all written discovery requests or the court would strike his pleadings. The trial court awarded Build by Owner's counsel $4,000 in attorney's fees to be included in the final judgment. Neither Build by Owner nor Sekumade complain of Judge Touchy's discovery rulings.

[4] The venue statute applicable here, Civil Practice and Remedies Code section 15.035(b), is a permissive venue provision. TEX. CIV. PRAC. & REM. CODE ANN. § 15.035(b) (Vernon 2002). This statute provides that, "[i]n an action founded on a contractual obligation of the defendant to pay money arising out of or based on a consumer transaction for goods [or] services . . . intended primarily for personal, family, household, or agricultural use, suit by a creditor on or by reason of the obligation may be brought against the defendant either in the county in which the defendant in fact signed the contract or in the county in which the defendant resides when the action is commenced." Id. It is undisputed that Sekumade signed the contract in Harris County and that he resided in Brazoria County when Build by Owner filed suit against him. Other than its Rule 11 agreement and general waiver contentions, Build by Owner has not, at any point, presented arguments or evidence for why Galveston County is a county of proper venue under section 15.035(b). See TEX. R. CIV. P. 87(2)(a) ("A party who seeks to maintain venue of the action in a particular county . . . has the burden to make proof . . . that venue is maintainable in the county of suit.").

[5] Build by Owner also contends that we should vacate Judge Touchy's venue ruling because Sekumade waived his venue motion on two grounds: (1) Sekumade failed to obtain a hearing on his motion within a reasonable time, and (2) Sekumade pursued counterclaims and dispositive motions before the trial court heard his venue motion. Build by Owner, however, cites no authority for the proposition that no adequate appellate remedy exists for addressing these contentions, and that, therefore, mandamus relief is appropriate. See Toliver v. Dallas Fort Worth Hosp. Council, 198 S.W.3d 444, 446-48 (Tex. App.-Dallas 2006, no pet.) (addressing on ordinary appeal whether defendant waived motion to transfer venue); Carlile v. RLS Legal Solutions, Inc., 138 S.W.3d 403, 406 (Tex. App.-Houston [14th Dist.] 2004, no pet.) (addressing same). We therefore decline to address these arguments on mandamus review.

Cases cited for breach-of-contract elements in 2014

FIRST COURT OF APPEALS IN HOUSTON

The essential 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 sustained as a result of the breach. E.g., N. & W. Ins. Co. v. Sentinel Inv. Grp., LLC, 419 S.W.3d 534, 539 (Tex. App.—Houston [1st Dist.] 2013, no pet.).

SOURCE: FIRST COURT OF APPEALS IN HOUSTON - 01-13-00855-CV - 12/30/2014 

The essential 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 sustained as a result of the breach. B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 16 (Tex. App.-Houston [1st Dist.] 2009, pet. denied) (citing Valero Mktg. & Supply Co. v. Kalama Int'l, 51 S.W.3d 345, 351 (Tex. App.-Houston [1st Dist.] 2001, no pet.)). "A breach of contract occurs when a party fails or refuses to do something he has promised to do." Id. (quoting Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.-Houston [14th Dist.] 2006, pet. denied)). The elements of a valid contract are: (1) an offer, (2) an acceptance, (3) a meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. DeClaire v. G & B McIntosh Family Ltd. P'ship, 260 S.W.3d 34, 44 (Tex. App.-Houston [1st Dist.] 2008, no pet.).

SOURCE: COURT OF APPEALS FOR THE FIRST APPELLATE DISTRICT - 01-13-00384-CV - 7/10/2014 

DALLAS COURT OF APPEALS 

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. Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 838 (Tex.App.-Dallas 2014, no pet.).

ASSIGNABILITY OF CONTRACTS

Generally, all contracts are assignable. See Crim Truck & Tractor Co. v. Navistar Int'l Transp. Co., 823 S.W.2d 591, 596 (Tex. 1992); In re FH Partners, L.L.C., 335 S.W.3d 752, 761 (Tex. App.-Austin 2011, no pet.).

CORPUS CHRISTI COURT OF APPEALS

To prevail on a breach of contract action, the plaintiff must prove the following elements: (1) a valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) the plaintiff was damaged as a result of the breach. See Keszler v. Mem'l Med. Ctr. of E. Tex., 105 S.W.3d 122, 128 (Tex. App.-Corpus Christi 2003, no pet.).

TEXARKANA COURT OF APPEALS

"The elements of a breach of contract claim are (1) the existence of a valid contract, (2) the plaintiff's performance or tendered performance, (3) the defendant's breach of the contract, and (4) damages as a result of the breach." Jespersen v. Sweetwater Ranch Apartments, 390 S.W.3d 644, 658 (Tex. App.-Dallas 2012, no pet.).

Legal sufficiency of evidence to support credit card debt claim: Proof of contract terms required

CREDITOR MUST PROVE AGREEMENT ON SPECIFIC TERMS OF GOVERNING EXTENSION OF CREDIT 

In a bench trial in which no findings of fact or conclusions of law are requested by the parties or filed by the trial court, we imply all findings of fact necessary to support the judgment. See, e.g., BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). When the appellate record includes the reporter's and clerk's records, these implied findings are not conclusive and may be challenged for legal and factual sufficiency in the appropriate appellate court. Id. We review the sufficiency of the evidence supporting the findings by applying the same standards that we use in reviewing the legal or factual sufficiency of the evidence supporting jury findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994); see Dittman v. Cerone, No. 13-11-00196-CV, 2013 WL 5970356, at *3 (Tex. App.-Corpus Christi Oct. 31, 2013, no pet.) (mem. op. on reh'g).

The test for legal sufficiency is "whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In making this determination, we credit favorable evidence if a reasonable fact-finder could, and disregard contrary evidence unless a reasonable fact-finder could not. Id. So long as the evidence falls within the zone of reasonable disagreement, we may not substitute our judgment for that of the fact-finder. Id. at 822. The trier of fact is the sole judge of the credibility of the witnesses and the weight to give their testimony. Id. at 819. Although we consider the evidence in the light most favorable to the challenged findings, indulging every reasonable inference that supports them, we may not disregard evidence that allows only one inference. Id. at 822.

To recover for breach of contract, a plaintiff must show: (1) the existence of a valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the terms of the contract; and (4) the plaintiff suffered damages as a result of the defendant's breach. Woodhaven Partners, Ltd. v. Shamoun & Norman, LLP, 422 S.W.3d 821, 837 (Tex. App.-Dallas 2014, no pet.); Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 235-36 (Tex. App.-Houston [1st Dist.] 2008, no pet.); McLaughlin, Inc. v. Northstar Drilling Tech., Inc., 138 S.W.3d 24, 27 (Tex. App.-San Antonio 2004, no pet.).

Thus, in this case, Pharia had the burden to prove each element of a breach of contract claim at trial. See Preston State Bank v. Jordan, 692 S.W.2d 740, 744 (Tex. App.-Fort Worth 1985, no writ) (affirming a take-nothing judgment in a suit to recover a credit card debt when the bank failed to present evidence of the contract between the bank and the credit card holder).

Parties form a binding contract when the following elements are present: (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party's consent to the terms; and (5) the execution and delivery of the contract with the intent that it be mutual and binding. Williams, 264 S.W.3d at 236. To be enforceable, a contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the parties. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). The material terms of a contract must be agreed upon before a court can enforce the contract; the interest rate is a material term. Id.

SOURCE: Court of Appeals of Texas, Thirteenth District,Corpus Christi, Edinburg. - No. 13-13-00551-C - 7/17/2014

ASSIGNEE OF CREDIT CARD ISSUER FAILED TO PROVE THE CONTRACT TERMS

As noted, the only evidence offered by Pharia of a valid contract was two pages reflecting a copy of a Bank of America cardholder agreement in print so small that the copies are rendered illegible. 

Although the "Affidavit of Indebtedness and Assignment" by Halpin states that the balance due on Uribe's account is "$2,789.70 plus interest per the terms of the agreement between the defendant and the original creditor at the rate of 28.99% per annum," there is no evidence establishing Uribe's specific obligations under the agreement or that Uribe agreed to the interest rate asserted by Halpin. 

Also, there is no evidence explaining how the $2,789.70 balance stated by Halpin became the $4,285.31 balance claimed by Pharia. The several account statements and several pages of text that appear to be a card member agreement were in Spanish, and Pharia provided no translation of the documents. See TEX. R. EVID. 1009(a) (providing that English translations of foreign-language documents are admissible in certain circumstances, not applicable here). 

We conclude that, although there is evidence of a credit-card agreement of some kind, there was no evidence proving the terms of that agreement or Uribe's intent to be bound by a specific agreement. See Williams, 264 S.W.3d at 236 (holding evidence was insufficient to establish the terms of a valid contract as a matter of law where creditor failed to produce actual credit-card agreement or any other document that established the agreed terms, including the applicable interest rate or method for determining finance charges); Tully v. Citibank (S.D.), N.A., 173 S.W.3d 212, 216-17 (Tex. App.-Texarkana 2005, no pet.) (holding evidence insufficient to show interest rate charged was agreed on where the only evidence was the rates specified in monthly statements); Jordan, 692 S.W.2d at 744 (holding evidence insufficient to establish a contract where creditor failed to introduce contract or its terms and conditions); see also Hooper v. Generations Cmty. Fed. Credit Union, No. 04-12-00080-CV, 2013 WL 2645111, at *3 (Tex. App.-San Antonio June 12, 2013, no pet.) (mem. op.) (reversing judgment for creditor where cardholder agreement was not offered into evidence and there was no evidence establishing debtor's specific obligations under an agreement); Colvin v. Tex. Dow Employees Credit Union, No. 01-11-00342-CV, 2012 WL 5544950, at *6 (Tex. App.-Houston [1st Dist.] Nov. 15, 2012, no pet.) (mem. op.) (reversing summary judgment for creditor where creditor failed to offer the original agreement, monthly statements, or other evidence establishing how it calculated its alleged damages); Martin v. Federated Capital Corp., No. 01-12-00116-CV, 2012 WL 4857835, at **2-3 (Tex. App.-Houston [1st Dist.] Oct. 11, 2012, no pet.) (mem. op.) (reversing summary judgment for creditor where creditor's evidence failed to explain how it calculated its damages); Ayers v. Target Nat'l Bank, No. 14-11-00574-CV, 2012 WL 3043043, at **2-4 (Tex. App.-Houston [14th Dist.] July 26, 2012, no pet.) (mem. op.) (reversing summary judgment for creditor where creditor failed to present cardholder agreement and a portion of the form language on the credit-card application was illegible and form language was in Spanish); Wande v. Pharia, No. 01-10-00481-CV, 2011 WL 3820774, at *5 (Tex. App.-Houston [1st Dist.] Aug. 25, 2011, no pet.) (mem. op.) (reversing summary judgment for creditor where creditor presented the cardholder agreement but important portions of the agreement were illegible, including a section entitled "Finance Charges," and creditor presented no evidence regarding the calculations it used to arrive at claimed outstanding balance); Jaramillo v. Portfolio Acquisitions, LLC, No. 14-08-00938-CV, 2010 WL 1197669, at **5-6 (Tex. App.-Houston [14th Dist.] March 30, 2010, no pet.) (mem. op.) (holding evidence insufficient to establish a valid contract where card member agreement was entered into evidence, but many of its material terms were missing; "This court and its sister court have drawn a distinction between cases where a card member agreement is entered into evidence and where there is no card member agreement.").

Considering the evidence in the light most favorable to the challenged finding, see City of Keller, 168 S.W.3d at 822, we conclude that no reasonable fact-finder could have found the evidence sufficient to establish the existence of a valid contract. See Williams, 264 S.W.3d at 236; T.O. Stanley Boot Co., 847 S.W.2d at 221. The evidence was therefore legally insufficient to establish the existence of a valid contract. We sustain Uribe's second issue.

CONCLUSION

Because we hold the evidence insufficient to establish the existence of a valid contract, we reverse the trial court's judgment and render judgment that Pharia take nothing.  

SOURCE: CORPUS CHRISTI COURT OF APPEALS - 13-13-00551-C - 7/17/2014 (Uribe v Pharia) 

Credit card debt claim as breach of contract (breach of cardmember or account agreement) in Texas courts

FINANCIAL INSTITUTION'S LEGAL THEORY FOR COLLECTION OF CREDIT CARD DEBT IN TEXAS COURTS: BREACH OF CONTRACT

In Texas, collection of the amount due under a credit card agreement is treated as a claim for a breach of contract. In re Tran, 351 B.R. 440, 445 (Bankr. S.D. Tex. 2006), aff'd, 369 B.R. 312 (S.D. Tex. 2007); see Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212, 215-20 (Tex. App.-Texarkana 2005, no pet.).

ELEMENTS OF BREACH OF CONTRACT CLAIM  

To recover for breach of contract, a plaintiff must show (1) the existence of a valid contract, (2) the plaintiff performed or tendered performance, (3) the defendant breached the terms of the contract, and (4) the plaintiff suffered damages as a result of the defendant's breach. Transworld Leasing Corp. v. Wells Fargo Auto Fin., LLC, No. 04-12-00036-CV, 2012 WL 4578591, at *3 (Tex. App.-San Antonio 2012, pet. denied); McLaughlin, Inc. v. Northstar Drilling Tech., Inc., 138 S.W.3d 24, 27 (Tex. App.-San Antonio 2004, no pet.).

Thus, in this case, the Credit Union had the burden to prove each element of a breach of contract claim at trial. See Preston State Bank v. Jordan, 692 S.W.2d 740, 744 (Tex. App.-Fort Worth 1985, no writ) (affirming a take-nothing judgment in a suit to recover a credit card debt when the bank failed to present evidence of the contract between the bank and the credit card holder).

CONTRACT FORMATION, MATERIAL TERMS (CREDIT AND REPAYMENT TERMS), AND BREACH  

 

Parties form a binding contract when the following elements are present: (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party's consent to the terms; and (5) the execution and delivery of the contract with the intent that it be mutual and binding. Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 236 (Tex. App.-Houston [1st Dist.] 2008, no pet.).

 

To be enforceable, a contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the parties. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). The material terms of a contract must be agreed upon before a court can enforce the contract. Id. A breach of contract occurs when a party to the contract fails or refuses to do something he has promised to do. West v. Triple B Services, LLP, 264 S.W.3d 440, 446 (Tex. App.-Houston [14th Dist.] 2008, no pet.).  

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-12-00080-CV – 6/12/2013

Hooper v. Generations Community Federal Credit Union

Credit Union failed to prove breach-of-contract claim by failing to submit the contract under which it sought to hold the customer liable, and failing to show breach of specific terms.

 

We conclude the record discloses the complete absence of evidence of the third element of the Credit Union's breach of contract claim, i.e., that Hooper breached the terms of an agreement with the Credit Union. In the absence of evidence that Hooper failed or refused to do something he promised to do under an agreement, the Credit Union failed to prove its breach of contract claim. See Pioneer Land & Cattle Co. v. Collier, No. 07-12-00320-CV, 2013 WL 2150814, at *6 (Tex. App.-Amarillo 2013, no pet. h.) (concluding the trial court did not err in granting a no-evidence summary judgment on the plaintiff's breach of contract claim when there was no evidence of the first, third, or fourth elements of the claim). We, therefore, hold the evidence was legally insufficient to support the trial court's judgment. Hooper's second issue is sustained.
 

Proving revenue loss and lost profits - expert testimony, evidence to aid quantification

LOST PROFITS - HOW DO YOU PROVE THAT?

Since how much a biz would have made $$$-wise [if such and such would not have happend] can hardly be known with perfect certainty, and is almost always somewhat speculative, it's not as simple as quantifying and accounting for lost monthly salary or hourly wages.

Lost profits "must be shown by competent evidence with reasonable certainty." Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992). "The requirement of `reasonable certainty' in the proof of lost profits is intended to be flexible enough to accommodate the myriad circumstances in which claims for lost profits arise." Texas Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994).
 
Competent evidence consists of "opinions or estimates of lost profits . . . based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates." Holt Atherton, 835 S.W.2d at 84 (citations omitted).

Conflicting evidence about the value of property generally falls into two categories: evidence of two distinct options or evidence of a range for value based on certain factors. See, e.g., Waterways on the Intercoastal, Ltd. v. State, 283 S.W.3d 36, 46 (Tex. App.-Houston [14th Dist.] 2009, no pet.); Pleasant v. Bradford, 260 S.W.3d 546, 559-60 (Tex. App.-Austin 2008, pet. denied). When the testimony supports a range for valuation rather than two distinct options, determination of an award within that range is left to the jury's discretion. Waterways, 283 S.W.3d at 46. If the determination is within that range, "a reviewing court is not permitted to speculate on how the jury actually arrived at its award." Drury Sw., Inc. v. Louie Ledeaux #1, Inc., 350 S.W.3d 287, 292 (Tex. App.-San Antonio 2011, pet. denied).

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013

The testimony concerning the value of the lost profits was not based on a precise and fixed formula. Instead, Albrecht testified about the maximum Potter could have earned from the billboards. He also acknowledged other factors that could have impacted Potter's ability to reach that maximum, such as prolonged vacancies and not being able to reach as many customers.

None of CBS Outdoor's experts offered competing testimony about the lost profits that Potter could have realized. Instead, CBS Outdoor's experts' testimony consisted of critiques of the reliability of Potter's estimation of costs and Albrecht's estimation of lost revenue. The testimony of all of the experts involved established that the jury was presented with an inexact range for determining Potter's lost profits, not a precise set of competing fixed values. The jury's damage award does not exceed the range presented to the jury. Because the jury's damage award is within the permissible range, the amount awarded was within the jury's discretion, and we cannot speculate on how the jury reached its determination. See id. "[U]ncertainty as to the fact of legal damages is fatal to recovery, but uncertainty as to the amount will not defeat recovery." Sw. Battery Corp. v. Owen, 115 S.W.2d 1097, 1099 (Tex. 1938); see also ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 877 (Tex. 2010) (citing Sw. Battery and holding "discrepancy between two reasonably certain amounts will not defeat recovery"). Accordingly, we overrule CBS Outdoor's seventh issue.

Proof that one expert testified to the contrary of the opponent's expert is not proof that the opponent's methodology is flawed. Instead, conflicts between the experts' testimony are left to the jury to resolve. See Hous. Lighting & Power Co. v. Dickenson Indep. Sch. Dist., 641 S.W.2d 302, 310 (Tex. App.-Houston [14th Dist.] 1982, writ ref'd n.r.e.) (holding "Texas courts have held that use of any one particular approach as the sole standard from which to derive value is fundamentally wrong" and that it is the jury's duty to weigh conflicting expert testimony on value).

An expert's opinion must be disregarded when it is conclusory or speculative. See Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex. 2004) (holding conclusory or speculative expert testimony cannot support a judgment). "An expert's opinion might be unreliable, for example, if it is based on assumed facts that vary from the actual facts . . . or it might be conclusory because it is based on tests or data that do not support the conclusions reached." Whirlpool Corp. v. Camacho, 298 S.W.3d 631, 637 (Tex. 2009).

The Supreme Court of Texas held in Texas Instruments, "The fact that a business is new is but one consideration in applying the `reasonable certainty' test." Id. at 280. This does not mean that a new business cannot recover lost profits. Id. Instead, profits are only denied when "profits which might have been made from such businesses are not susceptible of being established by proof to that degree of certainty which the law demands." Id. The determination of lost profits in such a situation focuses on the experience of the persons involved in the enterprise, the nature of the business activity, and the relevant market. Id.

Nothing in Texas Instruments categorically denies using the revenue obtained on CBS Outdoor's billboards to determine the lost profits Potter would have received on those exact same billboards. To the contrary, as Potter points out, profits of one business can be used to estimate the lost profits of another similarly situated business. See Bright v. Addison, 171 S.W.3d 588, 603 (Tex. App.-Dallas 2005, pet. denied) (upholding trial court's consideration of "actual data from an existing business" to determine the lost profits of a similar business).

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013

Litigating contracts: declaratory judgment vs. contract damages and enforcement

DECLARATORY JUDGMENT INDEPENDENT OF
DAMAGES CAUSED BY BREACH OF CONTRACTUAL OBLIGATION.

 

Different types of lawsuits may be brought relating to a contract. A suit seeking damages for breach is not the only variety.  

"A person interested under a . . . written contract. . . may have determined any question of construction or validity arising under the . . . contract . . . and obtain a declaration of rights, status, or other legal relations thereunder." TEX. CIV. PRAC. & REM. CODE ANN. § 37.004(a) (Vernon 2008). "A contract may be construed either before or after there has been a breach." Id. § 37.004(b).

Accordingly, a person can bring a declaratory judgment action following a breach of contract and have the rights under the contract declared. While such an action has much in common with a breach of contract action, they are distinct from each other. Specifically, a declaratory judgment action has the effect of determining liability without awarding damages, while a breach of contract action seeks both a determination of liability and an award of damages. See Intercontinental Group P'ship v. K.B. Home Lone Star, L.P., 295 S.W.3d 650, 660-61 (Tex. 2009).

"Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper." TEX. CIV. PRAC. & REM. CODE ANN. § 37.011 (emphasis added). "Necessary or proper" is disjunctive, not conjunctive. Additionally, the further relief available is not limited only to actions necessary to enforce the judgment. Instead, further relief is available for anything that "serve[s] to effectuate the underlying judgment." State v. Anderson Courier Service, 222 S.W.3d 62, 65 (Tex. App.-Austin 2005, pet. denied).

When a case is remanded for further proceedings, res judicata does not apply at all because there is no second action. Jay Petroleum, L.L.C. v. EOG Resources, Inc., 332 S.W.3d 534, 540 (Tex. App.-Houston [1st Dist.] 2009, pet. denied). Further relief sought under section 37.011 is not limited to claims brought in the same cause. Valley Oil, 499 S.W.2d at 336. Instead, it "may be sought in the same proceeding or in a later proceeding." Lakeside Realty, 202 S.W.3d at 191.

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013 – CBS Outdoor, Inc. v. Potter  

 

Winchek v. American Express: Proof requirements for Breach of contract (breach of credit card agreement)

Winchek v. Amex is a much-cited case for the elements of a breach of contract claim under Texas law, and the elements of contract formation. The case involved a credit card account, but the articulation of the relevant law applies generally, whether contracts are signed or not. American Express cardmember agreements typically have a Utah choice-of-law provision, but that rarely becomes an issue in debt collection litigation in Texas courts, which are routinely resolved under Texas law. 
  

To prove a claim for breach of contract, a party must establish: (a) a valid contract; (b) the party performed or tendered performance; (c) the opposing party breached the contract; and (d) the party was damaged as a result of that breach. Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-Houston [1st Dist.] 2007, no pet.); Hackberry Creek Country Club, Inc. v. Hackberry Creek Home Owners Ass'n, 205 S.W.3d 46, 55 (Tex. App.-Dallas 2006, pet. denied).

To prevail on a breach of contract claim, a plaintiff must prove the following essential elements: (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 sustained as a result of the breach. Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-Houston [1st Dist.] 2007, no pet.).

Parties form a binding contract when the following elements are present: (1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Id. at 202. To be enforceable, a contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the parties. Id. (citing T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992)).

Attorney fees available in breach-of-contract cases in Texas courts in addition to damages

ATTORNEY’S FEES ON BREACH-OF-CONTRACT CLAIM
   

As one of the exceptions to “the American Rule”, attorneys fees are available to successful plaintiffs in breach of contract cases under the Texas Civil Practice and Remedies Code even if the contract itself does not provide for recovery of legal fees arising from disputes under the contract. Trial court judges must award some, if requested and supported with evidence, although the amount is discretionary. Certain requirements must be met.  

   

STATUTORY AUTHORIZATION AS EXCEPTION TO THE AMERICAN RULE

A party may recover reasonable attorney's fees if its claim is for "an oral or written contract." TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (Vernon 2008).

ELEMENTS OF CLAIM FOR ATTY’S FEES UNDER CHAPTER 38 OF THE CPRC

To recover attorney's fees under section 38.001(8), a claimant must: (1) be represented by an attorney; (2) present the claim to the opposing party or to a duly authorized agent of the opposing party; and (3) show that payment was not tendered before the expiration of the 30th day after the claim was presented. Id. § 38.002(1)-(3) (Vernon 2008). Presentment of a claim is required to allow the debtor to pay the claim before incurring an obligation to pay attorney's fees. Panizo v. Young Men's Christian Ass'n of the Greater Houston Area, 938 S.W.2d 163, 168 (Tex. App.-Houston [1st Dist.] 1996, no writ).

AMOUNT TO BE REASONABLE

"Reasonable" attorney's fees are available to a prevailing party on a breach of contract claim. Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8) (West 2008). Although the trial court has discretion to fix the amount of attorney's fees, it does not have discretion to deny attorney's fees entirely if they are proper. Hassell Constr. Co., Inc. v. Stature Comm. Co., Inc., 162 S.W.3d 664, 668 (Tex. App.-Houston [14th Dist.] 2005, no pet.).

CITE FOR FEE FACTORS CASE FROM THE TEXAS SUPREME COURT

Arthur Anderson & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (listing eight factors a factfinder should consider when determining the reasonableness of attorney's facts).

A litigant is not required to present evidence on each of these factors. Acad. Corp. v. Interior Buildout & Turnkey Constr., Inc., 21 S.W.3d 732, 742 (Tex. App.-Houston [14th Dist.] 2000, no pet.).

Sworn account suit under TRCP 185 not available for any and all types of claims involving an unpaid account

  
Suit for unpaid electrical power service may be brought as sworn account, but claim for early termination fee required proof of breach of the underlying contract, according to an opinion issued by Houston's First Court of Appeals.   
  
SUIT ON A SWORN ACCOUNT
   
Rule 185 of the Texas Rules of Civil Procedure, entitled Suit on Account, provides:
 
When any action or defense is founded upon an open account or other claim for goods, wares and merchandise, including any claim for a liquidated money demand based upon written contract or founded on business dealings between the parties, or is for personal service rendered, or labor done or labor or materials furnished, on which a systematic record has been kept, and is supported by the affidavit of the party, his agent or attorney taken before some officer authorized to administer oaths, to the effect that such claim is, within the knowledge of affiant, just and true, that it is due, and that all just and lawful offsets, payments and credits have been allowed, the same shall be taken as prima facie evidence thereof, unless the party resisting such claim shall file a written denial, under oath. A party resisting such a sworn claim shall comply with the rules of pleading as are required in any other kind of suit, provided, however, that if he does not timely file a written denial, under oath, he shall not be permitted to deny the claim, or any item therein, as the case may be. No particularization or description of the nature of the component parts of the account or claim is necessary unless the trial court sustains special exceptions to the pleadings.
 
The elements of a suit on a sworn account claim are thus (1) the sale and delivery of merchandise or performance of services; (2) that the amount of the account is “just,” that is, the prices charged are pursuant to an express agreement, or in the absence of an agreement, that the charges are usual, customary, or reasonable; and (3) that the outstanding amounts remain unpaid. E.g., Powers v. Adams, 2 S.W.3d 496, 499 (Tex. App.—Houston [14th Dist.] 1999, no pet.).
 
“Rule 185 is a procedural tool that limits the evidence necessary to establish a prima facie right to recovery on certain types of accounts.” Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 234 (Tex. App.—Houston [1st Dist.] 2008, no pet.). “Rule 185 applies only to ‘transactions between persons, in which there is a sale upon one side and a purchase upon the other, whereby title to personal property passes from one to the other, and the relation of debtor and creditor is thereby created by general course of dealing . . . .’” Id. (quoting Meaders v. Biskamp, 316 S.W.2d 75, 78 (Tex. 1958) (emphasis in original)). “It does not apply to transactions between parties resting upon a special contract.” Id. (quoting Meaders, 316 S.W.2d at 78).
 
SOURCE: HOUSTON COURT OF APPEALS - FIRST DISTRICT - 01-11-00027-CV - 1/12/12
 
The trial court’s $29,615.04 award was made up of $12,994.18 for unpaid electrical service and a $16,620.86 early termination fee. A suit on a sworn account applies to the sale of electric service. See generally Rimco Enters., Inc. v. Texas Elec. Serv. Co., 599 S.W.2d 362, 365 (Tex. Civ. App.—Fort Worth 1980, writ ref’d n.r.e.).
  
While the defendants dispute here that the electric service charges were reasonable, accurate, or just, Affordable Power’s petition attached an affidavit, made on the affiant’s personal knowledge, attesting that:
 
Attached to this affidavit is the final bill and/or invoice that was sent to the listed customer. The final invoice was based on an open account with the customer for goods and/or services rendered. The final invoice is part of our systematic records, based on goods and/or services provided to the customer. A true and correct copy of the Contract Agreement with the listed customer and Terms of Service is attached as Exhibit “1” of this Petition.
 
The final invoice accurately reflects charges for goods and/or services provided. The amount of the account is just and true, it is due, the prices were charged according to a written contract with the customer and the charges are usual, customary and reasonable. The just and true amount of $29,615.04 plus interest, is currently due having been unpaid by the customer. This amount includes all lawful offsets, payments and credits.
 
Because this affidavit meets the requirements to establish a prima facie case under Rule 185, the defendants’ failure to file a verified denial would have precluded them from disputing the $12,994.18 charges for electrical service on Affordable Power’s suit on a sworn account at trial. See Vance v. Holloway, 689 S.W.2d 403, 404 (Tex. 1985).
  
For the reasons further explained below, however, we nonetheless remand Affordable Power’s claim based on unpaid electrical services to the trial court because judgment on that claim is not “separable without unfairness to the parties” from the judgment on Affordable Power’s breach of contract claim related to the termination fee, which is not supported by legally sufficient evidence. Tex. R. App. P. 44.1(b); Iron Mountain Bison Ranch, Inc. v. Easley Trailer Mfg., Inc., 42 S.W.3d 149, 162 (Tex. App.—Amarillo 2000, no pet) (“Given the intertwined nature of appellee’s promissory estoppels theory and its other theories, we remand the promissory estoppel issue for a new trial in the interest of justice.”).
 
SOURCE: HOUSTON COURT OF APPEALS - FIRST DISTRICT - 01-11-00027-CV - 1/12/12

Default on installment plan or re-payment schedule

Accrual of claim when periodic payments are required and not made under a contract and acceleration does not apply.

BREACH OF A CONTRACT REQUIRING PAYMENT IN INSTALLMENTS ENTAILS MULTIPLE CAUSES OF ACTION    

 

When the debtor/obligor defaults on a payment or re-payment schedule involving periodic installments, each missed payment gives rise to separate cause of action. Therefore, a claim for earlier missed installment payments may be time-barred, whereas a claim for more recent ones may be within the limitations period.

The limitations period for breach of contract claims is four years. TEX. CIV. PRAC. & REM. CODE ANN. § 16.051 (West 2008); Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002). "Limitations begins to run upon accrual of the cause of action." Barker v. Eckman, 213 S.W.3d 306, 311 (Tex. 2006). A breach of contract claim accrues when the contract is breached. Stine, 80 S.W.3d at 592. When recovery is sought on an obligation payable in installments, the statute of limitations runs against each installment from the time it becomes due. Hollander v. Capon, 853 S.W.2d 723, 726 (Tex. App.-Houston [1st Dist.] 1993, writ denied).

SOURCE: DALLAS COURT OF APPEALS - 05-10-00252-CV – 1/3/12 [Name of Plaintiff replaced with “PLANTIFF”]