H&H Steel Fabricators, Inc. v. Wells Fargo Equip. Fin., Inc.
| Decision Date | 27 October 2016 |
| Docket Number | NO. 02-15-00391-CV,02-15-00391-CV |
| Parties | H&H STEEL FABRICATORS, INC.; TOWNCREEK INDUSTRIAL, LLC; AND JAMES TOBEY APPELLANTS v. WELLS FARGO EQUIPMENT FINANCE, INC. APPELLEE |
| Court | Texas Court of Appeals |
FROM THE 43RD DISTRICT COURT OF PARKER COUNTY
Appellants H&H Steel Fabricators, Inc.; Towncreek Industrial, LLC; and James Tobey appeal from the trial court's summary judgment entered in favor of appellee Wells Fargo Equipment Finance, Inc. on its claim for breach of contract. Because Wells Fargo established its right to judgment as a matter of law on itsclaim and because Appellants failed to present evidence sufficient to raise a fact issue on each element of their affirmative defense of mitigation, we affirm the trial court's judgment.
On November 15, 2013, H&H executed a promissory note in favor of Wells Fargo, showing that Wells Fargo had loaned H&H $451,829.40 at 4.84% annual interest. To secure the loan, H&H contemporaneously signed a security agreement, granting Wells Fargo a lien on H&H's equipment.2 Towncreek—an affiliate of H&H—and Tobey—the president of H&H and the managing partner of Towncreek—signed continuing guaranties under which they agreed to be jointly and severally liable for H&H's payment obligations. Appellants concede that the note, the security agreement, and the continuing guaranties are valid and enforceable.
In December 2014, H&H failed to make its required installment payment on the note, which triggered a default of the note. On February 2, 2015, Gary Dreyling, a vice president with Wells Fargo, sent Appellants a notice of their default occurring in December 2014 and January 2015, provided an opportunity to cure, and notified Appellants that Wells Fargo would accelerate theirobligations to repay the entire indebtedness if the default was not cured. On March 30, 2015, Wells Fargo's counsel sent Appellants a formal acceleration notice, based on their failure to make payments on the note in December 2014, January 2015, and February 2015, and demanded full payment of the remaining balance on the note: $345,046.58. Appellants never cured their default of their payment obligations.
On April 20, 2015, Wells Fargo filed suit against Appellants for breach of contract—the note and the continuing guaranties—and sought to recover the accelerated balance under the note of $345,046.58, jointly and severally. On June 19, 2015, Wells Fargo filed a traditional motion for summary judgment on its breach-of-contract claim, seeking an award of the then-outstanding balance of $353,668.02 against Appellants jointly and severally.3 On June 22, 2015, Wells Fargo notified Appellants that the trial court would hear its motion for summary judgment on July 20, 2015. See Tex. R. Civ. P. 166a(c). On June 26, 2015, Appellants filed an answer to Wells Fargo's petition and raised the affirmative defenses of mitigation of damages, offset, and payment.4
Also on June 26, 2015, Appellants filed a verified motion for continuance of the summary-judgment hearing, arguing that an extension was necessary to enable them to take the deposition of Wells Fargo's corporate representative and to conduct discovery regarding the circumstances of Wells Fargo's foreclosure sale of H&H's equipment and Wells Fargo's efforts to mitigate its damages. See Tex. R. Civ. P. 166a(g), 251-52. The trial court's docket reflects that the trial court heard the motion for continuance on July 7, 2015, and that a "Rule 11 Agreement" would be "forthcoming." The docket also reflects that the July 20, 2015 hearing was "CANCELED." On August 13 and 14, 2015, the docket shows that letters were issued reflecting that the summary-judgment hearing had been rescheduled for September 17, 2015.
On August 24, 2015, Wells Fargo filed a no-evidence motion for summary judgment on each of Appellants' affirmative defenses on the basis that Appellants had no evidence to support "several elements of their affirmative defenses." Wells Fargo requested judgment in its favor in the amount of $353,781.46. In H&H and Towncreek's September 10, 2015 response to Wells Fargo's no-evidence motion for summary judgment,5 they argued only that the no-evidence motion must be denied because an adequate time for discovery had not passed to allow H&H and Towncreek to marshal its proof. See Tex. R. Civ. P. 166a(i). H&H and Towncreek attached Tobey's affidavit in which he assertedthat he could not locate, and Wells Fargo had failed to produce, the "review and appraisal of the value of H&H's equipment," which was conducted at the time of the note in 2013. That same day, Appellants also responded to Wells Fargo's traditional motion for summary judgment and asserted that Wells Fargo had failed to produce any evidence that it attempted to mitigate its damages, that more time for discovery was needed, and that Dreyling's affidavit attached to Wells Fargo's motion was conclusory and relied on inadmissible hearsay documents. Appellants again attached Tobey's affidavit regarding his attempts to locate and gain production of the "review and appraisal" of H&H's equipment.
On September 17, 2015, the trial court held a hearing on Wells Fargo's motions and considered "the Motion for Summary Judgment" filed by Wells Fargo, "any timely response filed by [Appellants]," the pleadings, and "the argument and authority of counsel."6 No record was made of this hearing, but the trial court signed a docket notation that it took the motion "[u]nder advisement-ruling forthcoming." On September 21, 2015, the trial court granted the motion "because there is no genuine issue of material fact and [Wells Fargo] is entitled to judgment as a matter of law." The trial court "OVERRULED" Appellants' affirmative defenses and entered judgment against Appellants for $353,668.02 in actual damages. Appellants filed a motion for new trial and argued that the summary judgment was in error because Dreyling's affidavit wasconclusory and based on inadmissible hearsay documents and because Wells Fargo failed to mitigate its damages or sell the equipment in a commercially reasonable manner. The motion was overruled by operation of law. See Tex. R. Civ. P. 329b(c).
In their third issue, Appellants argue that the trial court abused its discretion by denying their motion to continue the hearing on Wells Fargo's no-evidence motion for summary judgment. Appellants specifically do not contend that it was an abuse of discretion for the trial court to refuse to continue the hearing on Walls Fargo's traditional motion for summary judgment directed to its breach-of-contract claim. We review a trial court's decision on a motion to continue a summary-judgment hearing for an abuse of discretion. See D.R. Horton-Tex., Ltd. v. Savannah Props. Assocs., L.P., 416 S.W.3d 217, 222 (Tex. App.—Fort Worth 2013, no pet.).
Even though the trial court granted summary judgment in an unusually expedited manner, we cannot conclude that the trial court abused its discretion for several reasons. First, Appellants did not file a verified motion for continuance directed to Wells Fargo's no-evidence motion for summary judgment. See Tex. R. Civ. P. 251-52; Kelly v. Ocwen Loan Servicing, LLC, No. 02-14-00232-CV, 2016 WL 279262, at *2 (Tex. App.—Fort Worth Jan. 14, 2016, pet. denied) (mem. op.). Appellant's motion for continuance, which resulted in the summary-judgment hearing being held two months later than itsoriginal setting, was filed before Wells Fargo filed its no-evidence motion. See Tex. R. App. P. 33.1(a). Second, the record does not reflect that H&H and Towncreek brought its continuance arguments to the attention of the trial court or sought a ruling on them. See McKinney Ave. Props. No. 2, Ltd. v. Branch Bank & Trust Co., No. 05-14-00206-CV, 2015 WL 3549877, at *5 (Tex. App.—Dallas June 5, 2015, no pet.) (mem. op.); Bench Co. v. Nations Rent of Tex., L.P., 133 S.W.3d 907, 909 (Tex. App.—Dallas 2004, no pet.); see also Tex. R. App. P. 33.1(a). Third, Appellants do not attack the propriety of the timing of the hearing regarding Wells Fargo's traditional motion for summary judgment, which arguably was the only motion that the trial court expressly granted. Fourth, Appellants did not ensure that the court reporter recorded the hearing at which their argument requesting more time for discovery could have been made. Therefore, we cannot assay whether the trial court's decision to hold the summary-judgment hearing on September 20—even in light of H&H and Towncreek's arguments that they needed more time for discovery, which they raised in their summary-judgment responses—was outside the zone of reasonable disagreement. See McKinney, 2015 WL 3549877, at *6; Barnes v. Athens, No. 02-12-00173-CV, 2012 WL 4936624, at *2 (Tex. App.—Fort Worth Oct. 18, 2012, no pet.) (mem. op.). See generally Tex. Gov't Code Ann. § 52.046(a)(2) (West 2013) (); Judge David Hittner & Lynne Liberato, Summary Judgments in Texas: State and Federal Practice, 52 Hous. L. Rev. 773, 809-12, 814 (2015) (). We overrule issue three.
In their second issue, Appellants argue that the trial court erred by considering Dreyling's affidavit on summary judgment because it was conclusory and because he relied on inadmissible hearsay documents to attest to the balance due on the note.7 A trial court may not consider inadmissible evidence over a party's objection in ruling on a motion for summary judgment. Dolcefino v. Randolph, 19 S.W.3d 906, 927 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (op. on reh'g). An...
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