Diversified Finan. Sys. v. Hill, Heard Etc.
| Decision Date | 13 February 2003 |
| Docket Number | No. 2-98-276-CV.,2-98-276-CV. |
| Citation | 99 S.W.3d 349 |
| Parties | DIVERSIFIED FINANCIAL SYSTEMS, INC. and Diversified Financial Southeast, Inc., Appellants, v. HILL, HEARD, O'NEAL, GILSTRAP & GOETZ, P.C. a/k/a Hill, Gilstrap, Moorhead, White, Bodoin & Webster, A Professional Corporation, Dwight A. Heard, Frank Hill, Jointly and Severally, Appellees. |
| Court | Texas Court of Appeals |
Holman Law Firm, P.C., Levon G. Hovnatanian, Houston, Settle & Pou, P.C., J. Allen Smith, Scott J. Conrad, Ralph E. (Gene) Roberts, Jr., Dallas, for Appellant. Hill Gilstrap, Frank Gilstrap, Arlington, for Appellee.
Panel A: CAYCE, C.J.; DAY and DAUPHINOT, JJ.
Appellants Diversified Financial Systems, Inc. ("Systems") and Diversified Financial Southeast, Inc. ("Southeast") (collectively "Diversified") appeal from the trial court's summary judgment in favor of Appellees Hill, Heard, O'Neal, Gilstrap & Goetz, P.C. a/k/a Hill, Gilstrap, Moorhead, White, Bodoin & Webster, a Professional Corporation ("Hill Gilstrap"), Dwight A. Heard ("Heard"), and Frank Hill ("Hill") (collectively "the Firm"). In five issues, Diversified complains that the trial court erred in granting the Firm's no-evidence motion for summary judgment because: (1) the affidavit attached to Diversified's response to the motion establishes that the affidavit was based upon the personal knowledge of the affiant; (2) Diversified's summary judgment evidence raised a genuine issue of material fact whether Southeast was the owner and holder of the note and guaranties; (3) Diversified's summary judgment evidence raised a genuine issue of material fact regarding the Federal Deposit Insurance Corporation's ("FDIC") receivership of Commonwealth Bank ("Commonwealth"); (4) Diversified's summary judgment evidence raised a genuine issue of material fact regarding the amount due and owing by the Firm under the note and guaranties; and (5) the Firm did not present any evidence in support of its statute of limitations affirmative defense. We reverse the trial court's judgment and remand this case for trial on the merits.
This case involves a dispute over a promissory note. Commonwealth allegedly loaned $50,000 to the Firm. Heard and Mazel Merrill signed the promissory note on behalf of the Firm, and Heard and Hill each signed a guaranty. Systems purchased the note and guaranties from the FDIC. Systems filed suit against the Firm because of the Firm's failure to make payments on the loan and against Heard and Hill for their failure to perform as guarantors. Systems assigned the note and guaranties to Southeast, and Southeast intervened in the suit.
The Firm moved for summary judgment arguing that there was no evidence to support Diversified's claims against the Firm. Diversified filed a response, attaching the affidavit of Southeast employee Charles Olson ("Olson" or "the Olson Affidavit") as summary judgment proof. The Firm objected to the affidavit on the ground that some of Olson's statements were not within his personal knowledge, were legal conclusions or constituted speculation or hearsay and on the ground that the documents attached to the affidavit were hearsay. The trial court sustained some but not all of the Firm's objections and struck several portions of the affidavit, including several exhibits. On January 6, 1998, the trial court granted the Firm's motion for summary judgment, ordered that Diversified take nothing on its claims against Hill Gilstrap, and assessed costs against Diversified. Diversified now brings this appeal.
Diversified contends in its first, second, and fourth issues that Diversified's summary judgment evidence raised a material fact issue as to Diversified's ownership of the note and guaranties and to the amount of money the Firm owed on the note. We sustain Diversified's first, second, and fourth issues.
After an adequate time for discovery, the party without the burden of proof may, without presenting evidence, move for summary judgment on the ground that there is no evidence to support an essential element of the nonmovant's claim or defense.1 The motion must specifically state the elements for which there is no evidence.2 The trial court must grant the motion unless the nonmovant produces summary judgment evidence that raises a genuine issue of material fact.3
A no-evidence summary judgment is essentially a pretrial directed verdict, and we apply the same legal sufficiency standard in reviewing a no-evidence summary judgment as we apply in reviewing a directed verdict.4 We review the evidence in the light most favorable to the party against whom the no-evidence summary judgment was rendered, disregarding all contrary evidence and inferences.5 If the nonmovant brings forward more than a scintilla of probative evidence that raises a genuine issue of material fact, then a no-evidence summary judgment is not proper.6
To collect on the promissory note Diversified must establish that: (a) a note exists; (b) Diversified is the legal owner and holder of the note; (c) Hill Gilstrap is the maker of the note; and (d) a certain balance remains due and owing on the note.7 The Firm argued in its motion for summary judgment that Diversified had no evidence of the amount due and owing on the note and no evidence that Diversified was the owner and holder of the note.
To defeat the Firm's no-evidence motion, Diversified responded with the Olson Affidavit. The affidavit included a sworn copy of the note upon which Diversified is suing the Firm, and the note shows on its face: (1) that Hill Gilstrap is the maker of the note; (2) the amount of the note; and (3) the endorsements of both the FDIC in its corporate capacity ("FDIC-C") and Systems. The Olson Affidavit also states in paragraph 4 that "[a] true and correct copy of the original of the Note is attached hereto as Exhibit No. 1A and incorporated herein for all purposes." The trial court struck neither this portion of the Olson Affidavit nor the note itself. Accordingly, the note is considered valid summary judgment evidence for purposes of this appeal.
a. Amount Due and Owing
According to the note, Hill Gilstrap promised to pay Commonwealth $50,000; however, the note also contemplated that multiple advances were allowed and that $50,000 was the maximum Hill Gilstrap could have borrowed. The note also stated that the credit arrangement was openended, meaning the $50,000 could have been borrowed more than once as long as the balance was paid off each time. Both parties agreed at the time the note was signed that Commonwealth had advanced $13,000 to Hill Gilstrap and that future advances were contemplated.
The Olson Affidavit also included a statement in paragraph 10 that
[a]fter all just and lawful offsets, payments and credits, Defendants are indebted to Southeast with regard to the Note, Guaranty 1, and Guaranty 2, in the amount of $114,084.93, which includes principal and accrued interest to August 6, 1997, with prejudgment interest continuing to accrue from August 7, 1997, in the amount of $24.66 per day until date of judgment.
Olson based his statement on an account statement which broke the figure down into components of principal ($50,000), accrued interest to August 6, 1997 ($64,084.93), and a daily dollar amount of interest ($24.66). This account statement was attached to the affidavit as an exhibit. The Firm objected to all of the exhibits attached to the Olson Affidavit arguing that because the documents were not generated by Southeast, Olson could have no personal knowledge about whether the documents were exact duplicates or true and correct copies of the originals. The Firm further argued that the exhibits cannot constitute business records of Southeast and are hearsay. We only review the trial court's decision to strike the account statement.
On appeal, we review a trial court's decision to admit or exclude evidence under an abuse of discretion standard of review.8 An appellate court must uphold the trial court's evidentiary ruling if there is any legitimate basis in the record for the ruling.9
To determine whether a trial court abused its discretion, we must decide whether the trial court acted without reference to any guiding rules or principles; in other words, whether the act was arbitrary or unreasonable.10 Merely because a trial court may decide a matter within its discretion in a different manner than an appellate court would in a similar circumstance does not demonstrate that an abuse of discretion has occurred.11
An abuse of discretion does not occur where the trial court bases its decisions on conflicting evidence.12 Furthermore, an abuse of discretion does not occur as long as some evidence of substantive and probative character exists to support the trial court's decision.13
The Firm argues in its objection that the account statement was not generated by Southeast. However, of the two pages that make up the statement of the account, the first page bears the initials "DFSE" in the header of the document along with an address. The second page includes in its header the name "Chuck Olson." In light of the fact that the affiant's name is Charles Olson and the name of the company for which he works is "Diversified Financial Southeast, Inc." or "DFSE" for short, there is no evidence to support the trial court's conclusion that the account statement was generated by a third party.14 In fact, such a conclusion would be unreasonable and arbitrary under the circumstances.15 We also note that on page 30 of its Appellee's Brief before this court, the Firm judicially admitted that the account statement was produced by an employee of Southeast and that "the documents themselves confirm this."16
The Firm also argues that the account statement...
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