Foster v. Centrex Capital Corp., 03-01-00603-CV.

CourtCourt of Appeals of Texas
Citation80 S.W.3d 140
Docket NumberNo. 03-01-00603-CV.,03-01-00603-CV.
PartiesRoy D. FOSTER, Appellant, v. CENTREX CAPITAL CORP.; Centrex Capital Automobile Assets, Inc.; Oxford Resources Corp.; NationsBank; Bank of America Texas, N.A., and Bank of America Corporation, Appellees.
Decision Date06 June 2002

Thomas D. Kennedy, Gregory P. Propes, Johnson Finkel DeLuca & Kennedy P.C., Houston, Thomas W. Hamrick, El Paso, for appellant.

Eric Lipper, Michael D. Conner, Hirsch & Westheimer, P.C., Houston, for appellees.

Before Chief Justice ABOUSSIE, Justices B.A. SMITH and YEAKEL.

BEA ANN SMITH, Justice.

Appellant Roy D. Foster appeals the trial court's order granting summary judgment in favor of appellees Centrex Capital Corp., Centrex Capital Automobile Assets, Inc., Oxford Resources Corp., Nations-Bank, Bank of America, Texas, N.A., and Bank of America Corporation (collectively "Bank of America"). Foster claims that he was overcharged by Bank of America when he elected to prepay the balance on a retail installment contract he signed to finance a used car. Specifically, Foster contends that Bank of America charged him a $25 fee which was not authorized by the terms of the contract. Foster sued for breach of contract. Bank of America moved for both no-evidence and traditional summary judgments, asserting that the fee was authorized by statute and that, in any event, Foster had no evidence of damages because the total payoff amount was less than he would have paid under the statutory default provision. See TEX.R. CIV. P. 166a(a), (c), (i). The trial court denied appellees' no-evidence motion but granted the traditional summary judgment motion. We will affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

On August 16, 1997, Foster bought a 1995 Cadillac Seville from Cleo Bay Used Cars and signed a retail installment contract. All retail installment transactions are governed by chapter 348 of the Texas finance code (Motor Vehicle Installment Sales). See Tex. Fin.Code Ann. § 348.007 (West 1998). A retail installment transaction occurs when a retail buyer purchases a motor vehicle from a retail seller (other than for resale purposes) and agrees with the retail seller to pay part or all of the cash price in one or more deferred installments. Id. § 348.001(7). A retail installment contract is an instrument that evidences such a transaction. Id. § 348.001(6). The terms of a retail installment contract are determined by calculating a "time price differential" component in addition to the principal balance owed for the vehicle. The time price differential is added to the principal to determine the total amount of the retail buyer's indebtedness under a retail installment contract. Id. § 348.001(9).

The code specifies several methodologies to calculate the rate or amount of the time price differential. Id. § 348.103. Section 348.103 states that a retail installment contract can provide for any amount of time price differential permitted under section 348.104, .105, or .106, or any rate of time price differential that does not exceed a yield permitted under those three sections. Id. Alternatively, a chapter 348 retail installment contract may also provide for a time price differential according to the ceilings set out in chapter 303 (Optional Rate Ceilings). See id. § 303.001 (West Supp.2002). Section 303.001 provides that a contract that is subject to chapter 348 "may, as an alternative to an interest rate or amount of time price differential allowed under that chapter, provide for a simple or precomputed rate or amount of time price differential that does not exceed the applicable ceiling provided by this chapter or by the equivalent yield authorized by Chapter 348." Id. § 303.001(b).1

A retail buyer has the option to prepay a retail installment contract in full at any time before maturity. Id. § 348.118 (West 1998). If a buyer prepays in full or if the holder of the contract demands payment of the unpaid balance of the contract in full before the contract's final installment is due, the buyer is entitled to receive a refund credit of a portion of the finance charges. Id. § 348.119. Section 348.119 further provides that a buyer is entitled to a refund credit as provided by section 348.120 or 348.121, "as applicable." Id. Section 348.120 applies to refund credits upon the prepayment of a retail installment contracts payable in "substantially equal successive monthly installments beginning one month after the date of the contract." Id. § 348.120(a). Section 348.121 applies to all other retail installment contracts. Id. § 348.121; see also id. § 348.119.

The retail installment contract Foster signed indicates that he financed an amount totaling $22,340.66, for which he agreed to pay a time price differential of $8,259.34. The contract lists $30,600.00 as the total amount of payments to be paid in seventy-two monthly installments of $425.00. After making scheduled payments for over a year, Foster decided to prepay the balance of the contract in late 1998 or early 1999. In calculating the refund credit under section 348.120, the statute directs the holder to subtract from the original time price differential an acquisition cost of $25, and then multiply the remaining amount by "the percentage of refund computed under subsection (d)." See id. § 348.120(b).2 At the time of prepayment, Foster's contract had been assigned by the seller to Bank of America, which calculated the payoff amount to be $18,411.22. According to Exhibit No. 2-2 of appellee's motion for summary judgment, this payoff included a $25 fee.3

Foster filed suit against the appellees for breach of contract, alleging that Bank of America included in the final payoff amount a $25 acquisition fee not contracted for by the parties.4 Foster's first amended original petition also included claims for breach of contract and fraud based on the method in which the finance charge was calculated: "The Contract entered into by Plaintiff provided that interest was to be calculated using simple interest. Defendants violated the terms of the Contract by utilizing a different interest calculation that effectively gave them a higher rate of interest and a greater return than the rate contracted for between the parties." Foster further asserted that the retail installment contract that he signed was a simple interest contract.

Bank of America disputed this assertion and contended that the contract provided for a precomputed rate. Bank of America moved for summary judgment on both traditional and no-evidence grounds. Bank of America contended that Foster's contract did not call for the finance charges to he calculated by a simple interest method, and additionally, it produced evidence that indicated that the payoff amount it quoted to Foster resulted in a lower payoff amount than that advocated by Foster, i.e., the simple interest method. Accordingly, Bank of America asserted, Foster had presented no evidence of damages. The motion also asserted that there was no breach of contract because the $25 acquisition fee is specifically authorized in a monthly retail installment transaction by section 348.120 of the finance code. Alternatively, Bank of America asserted that any damages surrounding the allegedly improper fee, if proven, would be de minimis.

After Bank of America filed its motion for summary judgment, Foster again amended his original petition, dropping his claim based on Bank of America's alleged use of an improper interest rate calculation to arrive at the payoff amount. Foster filed its response to the appellee's summary judgment motion in which he argued that the finance code does not authorize the $25 acquisition fee in this case. He also asserted that his damages were not de minimis but did not otherwise respond to Bank of America's assertion that there was no evidence of damages.

The trial court denied Bank of America's "no-evidence" motion but granted its traditional summary judgment motion on the ground that the finance code provided for a $25 acquisition fee to be charged in this transaction. After Foster's motion for new trial was overruled by operation of law, he filed a notice of appeal. Bank of America urges that the judgment he affirmed on the ground specified, or in the alternative, it raises cross-points requesting that the judgment be affirmed on other grounds raised in the motion.

DISCUSSION
Standard of Review

Because the propriety of a summary judgment is a question of law, we review the trial court's decision de novo. Natividad Alexsis. Inc., 875 S.W.2d 695, 699 (Tex.1994); Texas Dep't, of Ins. v. American Home Assurance Co., 998 S.W.2d 344, 347 (Tex.App.-Austin 1999, no pet.). The standards for review of a traditional summary judgment are well-established: (1) the movant must show there is no genuine issue of material fact and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, the court must take evidence favorable to the nonmovant as true; and (3) the court must indulge every reasonable inference in favor of the nonmovant and resolve any doubts in the nonmovant's favor. Nixon Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). A defendant who moves for traditional summary judgment has the burden of disproving one essential element of each pleaded cause of action or showing that the plaintiff cannot succeed on any theory pleaded. See San Antonio Express News v. Dracos, 922 S.W.2d 242, 247 (Tex.App.-San Antonio 1996, no writ). Where, as here, the trial court specified the grounds on which it was basing its decision for summary judgment, we must review the grounds on which the trial court ruled, whether granted or denied, and which are dispositive of the appeal. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex.1996); Baker Hughes, Inc. v. Kcco R. & D., 12 S.W.3d 1, 5 (Tex.1999).

On a suit for breach of contract, ...

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