Autonation v. Thomas A. Moorehead

• Citation: 278 S.W.3d 470
• Decision Date: 20 January 2009
• Docket Number: No. 14-07-00539-CV.,14-07-00539-CV.
• Parties: AUTONATION DIRECT.COM, INC. d/b/a Auto Advertising Services, Appellant, v. THOMAS A. MOOREHEAD, INC. d/b/a BMW of Sterling, Appellee.
• Court: Court of Appeals of Texas

278 S.W.3d 470

AUTONATION DIRECT.COM, INC. d/b/a Auto Advertising Services, Appellant, v. THOMAS A. MOOREHEAD, INC. d/b/a BMW of Sterling, Appellee.

No. 14-07-00539-CV.

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

January 20, 2009.

William T. Green, III, Houston, for appellant.

Laura Beckman Hedge, Houston, for appellee.

Panel consists of Justices ANDERSON and FROST and Senior Justice HUDSON.^*

MAJORITY OPINION

JOHN S. ANDERSON, Justice.

This is an appeal from the granting of a summary judgment in favor of the defendant in litigation arising out of a contract dispute. Because appellee, Thomas A. Moorehead, Inc. d/b/a/ BMW of Sterling, failed to meet its summary judgment burden, we reverse and remand to the trial court for further proceedings in accordance with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

In November 2003 appellant, Autonation Direct.com, Inc. d/b/a Auto Advertising Services, and appellee executed an Advertising Agreement. Among other things, appellant agreed to provide appellee "with referrals from the New Car Advertising Service." In addition, the parties agreed that because appellant "is not a broker or an agent, but merely an advertising service, fees due to [appellant] are in no way dependent or contingent on a sale to the consumer." In exchange for these new car referrals, appellee agreed to pay appellant an amount determined by the number of new car referrals provided. Appellee also agreed to pay appellant an $850.00 flat monthly fee in exchange for used car referrals. Finally, the parties agreed Virginia law would govern the interpretation of the Advertising Agreement.

Following the execution of the Advertising Agreement, appellant invoiced appellee the $850 flat monthly fee, which appellee paid. However, when appellant notified appellee that appellee owed appellant more than $23,000 for new car referrals, appellee refused to pay. Appellant then filed suit seeking to collect the outstanding amount. Arguing it was entitled to judgment as a matter of law because the Advertising Agreement was illegal under Virginia law and was therefore unenforceable, appellee moved for summary judgment on appellant's cause of action. In addition, appellee sought the award of attorney's fees as the prevailing party under the Advertising Agreement. The trial court agreed the Advertising Agreement was illegal under Virginia law and granted appellee's motion as to appellant's cause of action. However, because it had found the Advertising Agreement was illegal and unenforceable under Virginia law, the trial court denied appellee's motion for summary judgment to the extent it sought the award of costs and attorney's fees and entered a final judgment. Both parties have appealed from that final judgment.

DISCUSSION

In a single issue on appeal, appellant challenges the trial court's granting of appellee's motion for summary judgment as to appellant's cause of action seeking payment of $23,360.00 for the provision of new car referrals. In addition, in three cross-issues, appellee challenges the trial court's denial of appellee's request for attorney's fees and costs.

A. Choice of Law and the Standard of Review

The parties contractually agreed to apply the law of Virginia to their contract. Texas courts will respect that choice and apply the law the parties chose. Illinois Tool Works, Inc. v. Harris, 194 S.W.3d 529, 532 (Tex.App.-Houston [14th Dist.] 2006, no pet.). However, while the substantive law of Virginia may apply, we as the forum will apply our own law to matters of remedy and procedure. Id. Procedure includes standards of review. Id. Therefore, we use Texas law to determine what deference to give the trial court's ruling, and Virginia law to construe the contract and statutes at issue.

Appellee moved for a traditional summary judgment pursuant to rule 166a(c) of the Texas Rules of Civil Procedure. The movant for a traditional summary judgment has the burden to show there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). In determining whether there is a genuine fact issue precluding summary judgment, evidence favorable to the non-movant is taken as true and the reviewing court makes all reasonable inferences and resolves all doubts in the non-movant's favor. Id. at 548-49. We review a trial court's summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). A defendant is entitled to summary judgment if it conclusively negates at least one of the essential elements of a plaintiff's cause of action or conclusively establishes all necessary elements of an affirmative defense. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex.1995). Only when the defendant establishes its right to summary judgment, does the burden shift to the plaintiff to come forward with competent controverting evidence raising a genuine issue of material fact. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995).

B. Is the Advertising Agreement Illegal and Unenforceable Under Virginia Law?

Appellee contends the Advertising Agreement is illegal under Virginia law and is therefore unenforceable. Accordingly, we look to Virginia law on statutory construction. Statutory construction is a question of law which is reviewed de novo on appeal. Johnson v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.1989). When construing statutes, courts apply the plain language of the statute unless the terms are ambiguous. Lynchburg Div. of Social Services v. Cook, 276 Va. 465, 666 S.E.2d 361, 368 (2008). If the language is plain, certain, and unambiguous, so that no doubt arises from its own terms as to its meaning, then there is no room for interpretation. Id. The rules of statutory interpretation argue against reading any legislative enactment in a manner that will make a portion of the statute useless, repetitious, or absurd. Id. at 370. On the contrary, it is well established that every act of the legislature should be read as to give reasonable effect to every word. Id.

Under Virginia law, in general, a contract based on an act forbidden by a statute is void and no action will lie to enforce the contract. Blick v. Marks, Stokes & Harrison, 234 Va. 60, 360 S.E.2d 345, 348 (1987). However, the law looks with favor upon the making of contracts between competent parties upon valid consideration and for lawful purposes. Estes Express Lines, Inc. v. Chopper Express, Inc., 273 Va. 358, 641 S.E.2d 476, 478 (2007). Furthermore, although contracts that violate public policy are void, courts are averse to holding contracts unenforceable on the ground of public policy unless their illegality is clear and certain. Id.

In support of its contention that the Advertising Agreement is illegal, appellee cites only section 46.2-1537 of the Code of Virginia.¹ Section 46.2-1537 provides:

Prohibited solicitation and compensation It shall be unlawful for any motor vehicle dealer or salesperson licensed under this chapter, directly or indirectly, to solicit the sale of a motor vehicle through a pecuniarily interested person, or to pay, or cause to be paid, any commission or compensation in any form whatsoever to any person in connection with the sale of a motor vehicle, unless the person is duly licensed as a salesperson employed by the dealer. It shall also be unlawful for any motor vehicle dealer to compensate, in any form whatsoever, any person acting in the capacity of a salesperson as defined in § 46.2-1500 unless the person is licensed as required by this chapter.

VA.CODE ANN. § 46.2-1537 (West 2008).

Appellee argues this statute prohibits the type of advertising called for by the Advertising Agreement because, in appellee's view, the disputed payment is connected with the sale of a motor vehicle. Appellee cites no Virginia caselaw construing this section of the Virginia Code. Instead, appellee relies exclusively on a small section of a document entitled "Internet Task Force Report" ("ITF Report"). The section of the ITF Report appellee relies on provides:

D. Unlicensed Third-Party Vendors, Including Brokers and Dotcoms

The ITF supports the idea that an unlicensed third-party vendor may establish a website that includes the inventory of different dealers, so long as consumers must visit the dealer where a vehicle is located to purchase the vehicle. This situation includes, but is not limited to, "referrals" sent to dealers from the unlicensed third-party. However, the ITF limits support of this model to situations where payment for this service from the motor vehicle dealer to the unlicensed third-party vendor is not "transactional." That is the ITF supports the idea that licensed motor vehicle dealers may only compensate an unlicensed third-party vendor by a flat payment structure (e.g. per month) rather than per sale, per referral or any other transactional basis.

Internet Task Force Report, p. 6.

We disagree the ITF Report supports appellee's construction of the Virginia statute. Initially, appellee brought forward no summary judgment evidence demonstrating that the ITF Report has any legal significance, much less the same legal effect as a Virginia statute, a Virginia regulation, or the common law of Virginia. Instead, appellee argues that because the title page of the report provides that it was adopted on January 9, 2001, it somehow assumes the force of law. Instead of making the ITF Report the law of Virginia, we believe the statement "Adopted January 9, 2001" means only that the Internet Task Force, which was created by the Virginia Motor Vehicle Dealer Board² ("MVDB") to review emerging internet and associated e-commerce vehicle sales industry issues, adopted the report and submitted it to the MVDB for its future consideration. This conclusion is reinforced by the statement found on page 2 of the ITF Report that "[t]he objective of this review was to submit recommendations to the Motor Vehicle...