Brown v. Mesa Distribs., Inc.

• Decision Date: 17 October 2013
• Docket Number: No. 01–12–00476–CV.,01–12–00476–CV.
• Citation: 414 S.W.3d 279
• Parties: Tracy BROWN d/b/a Rhinestones in Design, Appellant v. MESA DISTRIBUTORS, INC., Appellee.
• Court: Texas Court of Appeals

414 S.W.3d 279

Tracy BROWN d/b/a Rhinestones in Design, Appellant

v.MESA DISTRIBUTORS, INC., Appellee.

No. 01–12–00476–CV.

Court of Appeals of Texas, Houston (1st Dist.).

Aug. 1, 2013.

Rehearing En Banc Overruled Oct. 17, 2013.

Tracy Brown, Katy, TX, for Appellant.

Jason M. Sweny, Garcia & Sweny, PLLC, Houston, TX, for Appellee.

Panel consists of Justices KEYES, HIGLEY, and BLAND.

OPINION

EVELYN V. KEYES, Justice.

Appellee, Mesa Distributors, Inc. (“Mesa”), sued appellant, Tracy Brown d/b/a Rhinestones in Design (“Brown”), for breach of contract and conversion, alleging that Brown had defaulted on his equipment lease agreement by failing to make the agreed-upon monthly payments and failing to return the equipment after default. In eight issues, Brown challenges the trial court's grant of summary judgment in favor of Mesa, arguing that: (1) the trial court erred in denying his motion to dismiss based on the lease agreement's forum-selection clause specifying Pennsylvania as the forum for litigation; (2) Mesa did not have standing to bring suit on the debt at issue; (3) Mesa lacked capacity to sue; (4) the evidence was factually insufficient to support the judgment; (5) the trial court erred in admitting the affidavit of Mesa's president, James Buck, because it was defective in form and substance, contained conclusory statements, and was not based on personal knowledge; (6) Brown's constitutional rights to due process and equal protection were violated; (7) the trial court erred in denying his motion for a continuance; and (8) the trial court's grant of attorney's fees to Mesa was improper.

We reverse and remand.

Background

Brown entered into an equipment lease agreement with Susquehanna Patriot Leasing Company (“Susquehanna”). The lease stated that Brown would pay $911.32 per month for 60 months to lease a CAMS IV–69 rhinestone machine from Susquehanna. The lease between Susquehanna and Brown also stated that Mesa was the vendor of the machine. It further stated that Brown was not to pay sales tax and that his total monthly payment was to be $911.32. On April 1, 2005, Brown accepted delivery of the machine from Mesa and subsequently began making payments to Susquehanna according to the terms of the lease.

On February 17, 2010, Susquehanna assigned its interest in Brown's lease to Mesa, apparently pursuant to its previous agreement with Mesa that, in the event Brown defaulted on the lease, Susquehanna would assign its interest to Mesa. On July 1, 2010, Mesa sued Brown for breach of contract and conversion in Tarrant County, Texas. Mesa sought $13,877.25 in payments owed on the lease, a writ of sequestration, attorney's fees, and applicable charges such as taxes, official fees, delinquency charges, and interest.

On January 28, 2011, Brown filed an answer and a motion to transfer venue. Brown argued that he had paid the equipment lease in full and that the proper venue was Harris County, Texas. On March 7, 2011, Brown filed a motion to dismiss, claiming that the forum-selection clause in the lease required litigation in Pennsylvania and, therefore, Tarrant County lacked subject matter jurisdiction. On April 4, 2011, Brown's motion to transfer venue was granted, and the case was transferred to Harris County Civil Court at Law No. 3.

On December 16, 2011, Mesa moved for summary judgment. Mesa argued that it was entitled to summary judgment on its breach of contract claim because Brown “breached the contract by ceasing the monthly payments of $911.32, resulting in an outstanding balance of $13,877.25 ... and retaining possession of the Machine.” It also argued, “By the terms of the agreement, [Mesa] is due possession of the Machine, past due rent on the lease, continuing rent on the Machine (for the time defendant [h]as had possession and use of the Machine since the end of the term of the lease), pre- and post-judgment interest on monies owed, and attorney's fees and court costs.” Mesa argued that it was entitled to judgment as a matter of law on its conversion claim because, as Susquehanna's assignee, it “had the right of immediate possession when defendant failed to make payments required by the lease.” It argued that Brown refused to return the machine, refused to turn the machine over to a constable serving a writ of sequestration, and still has possession of the machine. It stated that its damages for conversion included the value of the machine itself and the lost profits for rental fees on the machine.

Attached to its motion, Mesa filed Brown's equipment lease with Susquehanna, which was largely illegible except for the basic terms regarding the monthly payment and the length of the lease. It also attached the bill of sale assigning Brown's lease to Mesa, the equipment delivery receipt, and Brown's response to Mesa's requests for admissions, in which Brown admitted that he refused to turn the machine over to the constable because it was not in his immediate possession at that time and that he still had the machine in his possession. Finally, Mesa submitted the affidavit of its president, James Buck. Buck made the following statements: (1) Brown “agreed to possess” the machine and “make monthly payments in the amount of $911.32” for the use of the machine; (2) “The value of [the machine] is $39,470.00”; (3) Brown failed to make payments as required by the lease and “[t]he amount due and owing on the Lease is $13,877.25”; (4) Mesa demanded the return of the machine, but Brown failed to comply; and (5) “The fair market value of the equipment will continue to decrease and waste will occur. In fact, the product has depreciated in value since the execution of the lease.”

The equipment lease stated that Brown was to make monthly payments of $911.32 for 60 months to lease the equipment. Inside the box for sales tax charged to the lessee, the agreement reads $0. Inside the box for total monthly payment of the lessee, the agreement reads $911.32. The only other amount the agreement requires Brown to pay is the first payment amount of $2,022.64. This first payment includes the first period payment, the last period payment, and a documentation fee.

The “Surety Agreement” section of the lease agreement states, “ Surety hereby knowingly and voluntarily consents and submits to the jurisdiction of the court of Pennsylvania.” Directly underneath this section is a signature line containing Brown's signature to the right of the word “surety” with a colon. Also, the jurisdiction and venue section of the lease agreement states, “ Lessee knowingly and voluntarily consents and submits to the jurisdiction of the Federal and State courts of Pennsylvania.” Under this section is a signature line containing Brown's signature below the words “Lessee: Tracy Brown dba Rhinestones in Design.”

In his response to Mesa's summary judgment motion, Brown argued that a genuine issue of fact existed as to whether he had defaulted on his lease payments. Brown argued that he had “paid the money that was required pursuant to the lease agreement” and that he “paid over $54,000 to Susquehanna.” He attached Susquehanna's accounting sheet for Brown's lease which documented all monetary transactions on his account. The accounting sheet Brown submitted reflected that Brown paid $47,388.64 in lease payments, $3,355.29 in property taxes, and $2,505.17 in miscellaneous charges, totaling $53,249.10, and that he also paid late fees. He argued that the original lease obligated him “to make 60 payments at $911.32, which amounts to a total of $54,679.20.” He argued that he paid $2,022 “up front” as required by the lease, and that that amount plus the more than $53,000 he paid over the course of five years fulfilled his obligation under the lease. He argued that the payments for property tax and “miscellaneous” payments were not part of the original lease agreement and were the result of improper billing by Susquehanna.

Brown also attached an affidavit in which he stated that he made all payments required by the lease agreement, he paid taxes on the machine that were not listed on the lease agreement, and he paid miscellaneous fees for which he was billed but not told why they were owed. He also stated, “I paid continuously for nearly five years until an issue came up regarding the payoff amount. I was originally told [one cent]. Then as I got toward the end of the contract, I was told I would have to pay thousands more.”

The trial court granted Mesa summary judgment on February 16, 2012. It awarded Mesa immediate possession of the equipment, $13,877.25 in outstanding lease payments, $13,669.80 for the loss of use and profit for the machine for a period of fifteen months, 5% prejudgment and postjudgment interest, and $6,962.80 in attorney's fees.

On March 16, 2012, Brown filed a motion for a new trial, which was denied. This appeal followed.

Forum–Selection Clause

In his first issue, Brown argues the trial court erred in denying his motion to dismiss because the suit was not filed in compliance with the mandatory forum-selection clause in the equipment lease agreement. Mesa argued in the trial court that because only Brown, the lessee, consented to the forum-selection clause contained in the lease agreement, application of the clause was voluntary on the part of Mesa, as the assignee of the lessor, and that it had the right to waive the clause and pursue its cause of action in any court of proper venue.¹

We review the enforcement of a forum-selection clause for an abuse of discretion. Phoenix Network Techs. (Europe) Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 610 (Tex.App.-Houston [1st Dist.] 2005, no pet.). A forum selection clause is not per se invalid because it restricts only one party's choice of forum leaving the other party unrestricted in venue. See In re Lyon Fin. Servs. Inc., 257 S.W.3d 228, 233 (Tex.2008). Also, a bargain is not negated because one party may have been in a more advantageous bargaining position. Id. Parties have the right...