Augusta Court Co-Owners' Ass'n v. Levin, Roth & Kasner, CO-OWNERS

• Decision Date: 04 June 1998
• Docket Number: No. 14-96-00057-CV,CO-OWNERS,14-96-00057-CV
• Citation: 971 S.W.2d 119
• Parties: . LEVIN, ROTH & KASNER, P.C., Appellee. Court of Appeals of Texas, Houston (14th Dist.)
• Court: Texas Court of Appeals

Page 119

971 S.W.2d 119

AUGUSTA COURT CO-OWNERS' ASSOCIATION, Appellant, v. LEVIN, ROTH & KASNER, P.C., Appellee.

No. 14-96-00057-CV.

Court of Appeals of Texas Houston (14th Dist.).

June 4, 1998.

Robert D. Green, Houston, for appellant.

Donald B. McFall, Richard A. Sheehy, Lauren L. Beck, Houston, for appellee.

Before MURPHY, C.J., and ANDERSON and O'NEILL, JJ.

OPINION

MURPHY, Chief Justice.

This is an appeal from a summary judgment in a legal malpractice case. Augusta Court Co-Owners Association, Inc. ("the Association"), a condominium homeowners association, sued the law firm of Levin, Roth & Kasner, P.C. ("LRK"), alleging LRK failed to timely sue the surety on a standard performance bond issued for construction of the condominiums. Finding that the limitations period set forth in the performance bond expired before LRK was retained, the trial court ruled LRK did not cause the Association's injury and granted summary judgment in its favor on all causes of action. The trial court denied summary judgment on alternate grounds presented in LRK's motion. Raising five points of error, the Association appeals from the summary judgment. LRK brings three cross-points complaining of the denial of summary judgment on alternate grounds. We affirm the judgment below, but on an alternate ground.

I. FACTUAL BACKGROUND

A. The Augusta Court Condominium Project

In 1979, Augusta Court Associates, Ltd. ("Augusta Ltd."), a limited partnership, entered into a contract ("the construction contract") with Urban Construction Company ("Urban") for the construction of the Augusta Court Condominiums located at 1819 Augusta Drive in Houston. The project was financed by Wells Fargo Realty Advisors, Inc. ("Wells Fargo"), who retained a security interest. Aetna Casualty and Surety Company ("Aetna") issued a performance bond that named the developer, Augusta Ltd., as the owner and primary obligee, and Wells Fargo, as an additional obligee. When Augusta Ltd. encountered financial problems in late 1981 or early 1982, Wells Fargo took over the project. Although the project was substantially complete by the time of the takeover, there were allegedly numerous problems with the construction.

B. The Default

In April 1982, Augusta Ltd. defaulted on the Wells Fargo loan. By that time, Augusta Ltd. had sold 16 of the 152 condominium units. In lieu of foreclosure, Augusta Ltd. deeded the land and improvements (including the remaining 134 units), and assigned its rights in the construction contract, to Montgomery Estates, Inc. ("Montgomery Estates") a wholly-owned subsidiary of Wells Fargo. Augusta Ltd., however, reserved any pre-assignment claims it had on the construction contract. In July 1982, Montgomery Estates conveyed the 134 units, and assigned its rights in the construction contract, to SCIW Partners, Ltd. ('SCIW'), a limited partnership. Montgomery Estates also conveyed the land and improvements, save for the 134 units, to the Association. Like the previous assignment, Montgomery Estates reserved any pre-assignment claims it had on the construction contract. In April 1983, Wells Fargo made final payment to the contractor, Urban. In November 1983, SCIW conveyed the 134 units and its rights in the construction contract to Augusta Court Holdings Associates ("Augusta Holdings"), a partnership comprised of SCIW and another entity.

C. The Suit Against the Contractor

In May 1984, SCIW hired LRK to represent Augusta Holdings in a lawsuit against Urban and the architects for faulty construction and design. In January 1985, Augusta Holdings assigned its rights in the construction contract to the Association. A month later, LRK filed suit on behalf of both Augusta Holdings and the Association against Urban and the architects. In November 1985, the case was transferred to the law firm of Griggs & Harrison. In December 1986, Wells Fargo foreclosed on the 134 units and acquired ownership of those units at the foreclosure sale. Wells Fargo conveyed three units to various related entities of Wells Fargo Bank and the remaining 131 units to its subsidiary, Montgomery Estates. The litigation against Urban and the architects proceeded to arbitration. In 1987, a final judgment confirmed an arbitration award in favor of the Association and Augusta Holdings. The judgment, however, ordered that the Association and Augusta Holdings take nothing on their claims against the architects.

D. This Suit

In March 1989, the Association filed this legal malpractice suit against LRK and Griggs & Harrison. The Association alleged the attorneys failed to timely sue the surety on the performance bond and failed to "accomplish service" on the architects. Based on these allegations of malpractice, the Association asserted causes of action for negligence, breach of contract, breach of warranty, breach of fiduciary duty, and violation of the DTPA. In February 1993, LRK filed its motion for summary judgment. On April 13, 1993, the trial court granted an interlocutory partial summary judgment in favor of LRK based on a lack of causation. The trial court also denied summary judgment on three alternate grounds asserted in LRK's motion.

The Association moved to set aside the partial summary judgment and LRK moved for reconsideration of the alternate grounds. The court ultimately denied these motions, severed the claims against Griggs & Harrison, and entered a final take-nothing judgment in favor of LRK. The Association then non-suited its malpractice claim relating to the architects. Following the denial of its motion for new trial, the Association perfected this appeal.

II. THE STANDARD OF REVIEW

This is a summary judgment case. In five points of error, the Association contends the trial court erred in granting summary judgment based on a lack of causation. A movant for summary judgment has the burden of showing there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984). In deciding whether there is a disputed material fact issue precluding summary judgment, proof favorable to the non-movant is taken as true, with the court indulging every reasonable inference and resolving any doubts in favor of the non-movant. Nixon, 690 S.W.2d at 548-49; Montgomery, 669 S.W.2d at 310.

In other words, the issue on appeal is not whether the non-movant raised a material issue of fact precluding summary judgment; rather, the issue is whether the movant proved it was entitled to judgment as a matter of law. See TEX.R. CIV. P. 166a(c); Gibbs v. General Motors Corp., 450 S.W.2d 827, 828-29 (Tex.1970). If the appellate court finds the movant has not met its burden, it must reverse and remand the case for further proceedings. Gibbs, 450 S.W.2d at 828-29. To prevail on summary judgment, the defendant, as the movant, must establish as a matter of law all the elements of an affirmative defense or conclusively negate at least one element of the plaintiff's cause of action. Montgomery, 669 S.W.2d at 310-11; Gibbs, 450 S.W.2d at 828.

In the instant case, LRK moved for summary judgment on the following grounds: (1) LRK was not the cause of the Association's injury because limitations as set forth in the performance bond expired before LRK was retained; (2) LRK did not commit malpractice by failing to sue the surety because the Association lacked standing to sue on the bond as a mere assignee of the named obligee; (3) LRK did not commit malpractice by failing to sue the surety because the contractor, Urban, was never declared in default; and (4) the Association did not have standing to sue LRK for legal malpractice because it was never the client of LRK. The trial court granted summary judgment based on causation but denied summary judgment on the remaining grounds. Therefore, we will first address the causation issue.

III. CAUSATION

LRK contends its failure to sue the surety in the prior litigation against Urban did not cause injury to the Association because limitations as set forth in the performance bond had expired before LRK was retained. The performance bond provides:

Any suit under this bond must be instituted before the expiration of two (2) years and ten (10) days from the date on which final payment under the contract falls due. (emphasis added).

Under the unambiguous terms of the performance bond, suit on the bond had to be filed within two years and ten days of the date final payment under the construction contract fell due. Thus, to prevail on summary judgment, LRK was required to establish, as a matter of law, when final payment under the contract fell due. This requires interpretation of the construction contract itself. Despite this mandate, the construction contract was not properly presented to the trial court. Although the construction contract was incorporated by reference in the performance bond, neither party addressed or otherwise argued the specific terms of the contract in their summary judgment motion, response, or reply. ¹

A motion for summary judgment must stand or fall on the grounds expressly presented in the motion, without reference to briefs or summary judgment proof. McConnell v. Southside School Dist., 858 S.W.2d 337, 341 (Tex.1993). Grounds not expressly presented to the trial court in a motion for summary judgment are waived on appeal. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 (Tex.1979). Likewise, issues a non-movant contends avoid summary judgment that are not expressly presented to the trial court by written answer or other written response to the summary judgment motion are waived on appeal. TEX.R. CIV. P. 166a(c); City of Houston, 589 S.W.2d at 677.

In this case, both parties failed to raise the proper contract issues below and thus failed to carry their summary judgment burden. This error, however, was fatal only to LRK, who, as the movant, bore the burden of...