Husaini v. Pawnee Leasing Corp.

• Decision Date: 10 May 2022
• Docket Number: 14-20-00415-CV
• Parties: INNAD H. HUSAINI, Appellant v. PAWNEE LEASING CORP., Appellee
• Court: Texas Court of Appeals

INNAD H. HUSAINI, Appellant v. PAWNEE LEASING CORP., Appellee

No. 14-20-00415-CV

Court of Appeals of Texas, Fourteenth District

May 10, 2022

On Appeal from the County Civil Court at Law No. 2 Harris County, Texas Trial Court Cause No. 1137782

Panel consists of Justices Jewell, Bourliot, and Poissant.

MEMORANDUM OPINION

Margaret "Meg" Poissant Justice

Appellee Pawnee Leasing Corp. ("Pawnee") filed suit against appellant Innad H. Husaini ("Husaini") for breach of contract. In what we construe as two issues, Husaini argues that the trial court erred by: (1) granting Pawnee's motion for summary judgment when there is a genuine issue of material fact on his impossibility and mitigations defenses; and (2) granting summary judgment before discovery was completed. We affirm.

I. Background^[1]

On March 22, 2019, Pawnee entered into a leasing agreement with Verimed Medical Health & Wellness Clinic, Inc. ("Verimed") and Husaini; the lease concerned a neural-scan medical device valued at $42, 538.12. Verimed the lessee, contracted to pay Pawnee $1, 378.78 per month for use of the neural-scan device, which included a laptop, software, and several electrode sensors. Husaini signed the contract as a guarantor.

In April 2019, the U.S. government raided Verimed because of allegedly false Medicare claims-totaling over $1, 000, 000-filed by Verimed's previous office manager. Much of Verimed's property was seized by the government, including the neural-scan device leased by Pawnee. Because of the property seizures, Verimed was unable to continue business operations.

On July 22, 2019, Pawnee filed suit against Verimed and Husaini for breach of contract. Pawnee's petition demanded Verimed and Husaini pay the outstanding balance of $61, 352, but Verimed and Husaini refused to pay. Furthermore, Pawnee asserted that the neural-scan device remained in Verimed and Husaini's possession. Pawnee also sought $20, 450 in attorney's fees. Verimed and Husaini filed an answer generally denying Pawnee's claim, asserting various affirmative defenses, including failure to mitigate damages, and requested damages and attorney fees.

On September 3, 2019, Pawnee filed a traditional motion for summary judgment on its breach of contract claim. Verimed and Husaini filed a response to Pawnee's motion, arguing that their performance under the contract was excused because (1) the government's seizure of the equipment was a force majeure that made it impossible for them to perform under the contract; (2) Pawnee was aware that the equipment was in the government's possession; (3) seizure of Pawnee's equipment was an unforeseeable event; (4) Verimed could not anticipate its employee's criminal conduct; (5) Pawnee cannot determine damages until after the equipment is returned by the government because the equipment was never used; (6) the claim for damages in the full contractual amount of $61, 352.02 was improper because Pawnee could mitigate its damages after the equipment was released by the government; (7) Pawnee failed to detail the basis for the award of attorney's fees; and (8) there is no provision in the contract to recover a one-third attorney contingency fee. An affidavit by Husaini was attached in support of Verimed and Husaini's response to Pawnee's summary judgment motion.

On March 5, 2020, Verimed filed a Suggestion of Bankruptcy. On March 6, 2020, Pawnee withdrew its motion for summary judgment as to Verimed, informing the court that it would continue its claims only against Husaini. Husaini filed a supplemental response to summary judgment, asserting genuine issues of material fact exist to defeat the motion for summary judgment based on impossibility of performance and an unforeseeable supervening act, and again disputed attorney fees.

By way of response, Pawnee waived its request for legal fees and argued that none of the arguments advanced by Husaini were relevant because Husaini is a guarantor under the contract.

On March 10, 2020, a hearing was conducted on Pawnee's motion for summary judgment.^[2] On April 23, 2020, the trial court granted Pawnee's motion, awarding Pawnee $61, 352.02, plus interest and court costs. Husaini filed a timely appeal.

II. Analysis

In two issues, Husaini argues that the trial court erred in granting Pawnee's motion for summary judgment, asserting there were genuine issue of material fact and discovery was not completed, and that the trial court erred in awarding Pawnee $61, 352.02 in damages without considering Pawnee's duty to mitigate damages. We address Husiani's arguments regarding the duty to mitigate and his defenses, before turning to what we construe as his issue regarding discovery.

A. Standard of Review

We review the granting of a traditional motion for summary judgment de novo. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). In a traditional motion for summary judgment, the movant has the burden to show both that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Provident Life & Acc. Ins. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). Once the movant meets its burden, the burden shifts to the non-movant to present evidence raising a genuine issue of material fact; if the non-movant raises a fact issue, summary judgment is not appropriate. See Wyly v. Integrity Ins. Sols., 502 S.W.3d 901, 905 (Tex. App.- Houston [14th Dist] 2016, no pet.); Ayeni v. State, 440 S.W.3d 707, 709 (Tex. App.-Austin 2013, no pet.). "To defeat summary judgment by raising an affirmative defense, the nonmovant must do more than just plead the affirmative defense. He must come forward with evidence sufficient to raise a genuine issue of material fact on each element of his affirmative defense." Lujan v. Navistar Fin. Corp., 433 S.W.3d 699, 704 (Tex. App.-Houston [1st Dist.] 2014, no pet.) (internal quotations omitted).

All evidence favorable to the non-movant must be taken as true, and all reasonable doubts must be resolved in non-movant's favor. See City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005); Childs v. Haussecker, 974 S.W.2d 31, 40 (Tex. 1998). When a trial court's order granting summary judgment does not specify the ground or grounds relied on for its ruling, summary judgment will be affirmed on appeal if any of the theories advanced are meritorious. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989).

B. Applicable Law

"[I]mpossibility is a defense to a cause of action for breach of contract." Internacional Realty, Inc. v. 2005 RP W., Ltd., 449 S.W.3d 512, 527 (Tex. App.- Houston [1st Dist] 2014, pet. denied); see Tractebel Energy Mktg., Inc. v. E.I. Du Pont De Nemours & Co., 118 S.W.3d 60, 66 (Tex. App.-Houston [14th Dist.] 2003, pet. denied) (observing that Texas has recognized impossibility of performance, commercial impracticability, and frustration of purpose as related, if not identical, excuses for non-performance under a contract). "Where . . . a party's performance is made impracticable . . . by the occurrence of an event the nonoccurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged." Internacional Realty, 449 S.W.3d at 527 (quoting Centex Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex. 1992)); see Tractebel Energy, 118 S.W.3d at 66 ("Because courts cannot simply rewrite the parties' contract, the excuse is limited to circumstances in which both parties held a basic (though unstated) assumption about the contract that proves untrue.").

The following are general, non-exhaustive contexts in which the defense of impossibility may be applicable: (1) the death or incapacity of a person necessary for performance; (2) the destruction or deterioration of an item necessary for performance; and (3) government regulation prevents performance. See Tractebel Energy, 118 S.W.3d at 66; see also Restatement (Second) of Contracts § 261 (1981). "Generally, impossibility excuses a party's breach of contract when the contract itself doesn't provide an escape clause and the doctrine's other requirements are satisfied." See Tractebel Energy, 118 S.W.3d at 66. A party relying on the defense of impossibility must also demonstrate that it made reasonable efforts to overcome the obstacle to performance. See id.

The party seeking to excuse its performance under a contractual force majeure clause-in the present case, Husaini-bears the burden of proof to establish that defense. See Virginia Power Energy Mktg., Inc. v. Apache Corp., 297 S.W.3d 397, 402 (Tex. App.-Houston [14th Dist.] 2009, pet. denied); see also Moore v. Jet Stream Invs., Ltd., 261 S.W.3d 412, 420 (Tex. App.-Texarkana 2008, pet. denied). In interpreting a force majeure provision in a contract, our primary concern is to determine the parties' intent. See Zurich Am. Ins. v. Hunt Petrol. (AEC), Inc., 157 S.W.3d 462, 465 (Tex. App.-Houston [14th Dist.] 2004, no pet.).

The failure to mitigate damages is also an affirmative defense. See Zimmerman Truck Lines, Inc. v. Pastran, 587 S.W.3d 847, 862 (Tex. App.-El Paso 2019, no pet.); see also Haddad v. JP Morgan Chase Bank, N.A., No. 01-20-00283-CV, 2021 WL 5056651, at *7 (Tex. App.-Houston [1st Dist.] Nov. 2, 2021, pet. denied) (mem. op.). A party to a contract has a duty to mitigate damages if it can do so "at a trifling expense or with reasonable exertions." Great Am. Ins. Co. v. N. Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415, 426 (Tex. 1995); see Kartsotis v. Bloch, 503 S.W.3d 506, 522 (Tex. App.-Dallas 2016, pet. denied) ("The party raising the failure to mitigate defense must prove lack of diligence as well as the amount by which the damages were increased as a result of the failure to mitigate."); see also Haddad, 2021 WL 5056651, at *7.

C....