Lujan v. Navistar Fin. Corp.

• Decision Date: 03 April 2014
• Docket Number: No. 01–12–00740–CV.,01–12–00740–CV.
• Citation: 433 S.W.3d 699
• Parties: Albert LUJAN d/b/a Texas Wholesale Flower Company, Appellant v. NAVISTAR FINANCIAL CORPORATION, Appellee.
• Court: Texas Court of Appeals

433 S.W.3d 699

Albert LUJAN d/b/a Texas Wholesale Flower Company, Appellant

v.NAVISTAR FINANCIAL CORPORATION, Appellee.

No. 01–12–00740–CV.

Court of Appeals of Texas,

Houston (1st Dist.).

April 3, 2014.

Wesley S. Coddou, Coddou & Coddou, Houston, TX, for Appellant.

Michael P. Ridulfo, Logan R. Burke, Kane Russell Coleman & Logan PC, Houston, TX, for Appellee.

Panel consists of Justices KEYES, HIGLEY, and MASSENGALE.

OPINION

EVELYN V. KEYES, Justice.

Appellee, Navistar Financial Corporation (“NFC”), filed a breach of contract suit against appellant, Albert Lujan d/b/a Texas Wholesale Flower Company (“Lujan”), alleging that he had defaulted on the loan NFC had issued him to finance the purchase of his truck fleet. Lujan asserted the affirmative defense of duress or business coercion. Both parties moved for summary judgment, and the trial court granted summary judgment in favor of NFC. Lujan contends on appeal that the trial court erred: (1) and (2) in denying his motion for summary judgment and in granting NFC's motion for summary judgment because he proved each element of his duress or business coercion affirmative defense as a matter of law; (3) in granting NFC's motion for summary judgment because “there is no controverting evidence and therefore no genuine issues of material fact regarding [his] duress and business coercion affirmative defense”; and, alternatively, (4) in granting NFC's motion for summary judgment because he raised genuine issues of material fact regarding his duress or business coercion affirmative defense.

We affirm.

Background

NFC is a wholly-owned subsidiary of Navistar, Inc. Navistar manufactures vans, and NFC finances the sale of those vans. Lujan's business sells and delivers flowers and floral products. The business requires vans with refrigeration units that can regularly drive long distances. Lujan purchased five 4300M LP vans from NFC in March 2007, and NFC held a purchase money security interest in those vehicles. Lujan financed the purchase of the vehicles through a Commercial Loan and Security Agreement (“the Agreement”) entered into with NFC. Additionally, Lujan executed a personal guaranty along with the Agreement. The Agreement also containeda choice of law provision stating that the law of Illinois “and applicable federal law” controlled the construction and validity of the Agreement and that the “validity and enforcement of the security interest granted hereunder shall be controlled by the law of the jurisdiction where the [vehicles] are to be kept and used.”

Lujan defaulted on the loan, and NFC repossessed and sold the 4300M LPs according to the terms of the Agreement. Under the Agreement, Lujan was responsible for the net deficiency after the sale of the vehicles. Lujan did not pay the deficiency, which was between $31,000 and $35,500 for each vehicle.

On June 13, 2011, NFC sued Lujan for breach of contract, alleging that he had breached the Agreement and that NFC had suffered damages totaling nearly $170,000 plus interest. NFC also sought attorney's fees pursuant to Civil Practice and Remedies Code section 38.001. Lujan filed his original answer, entering a general denial. He did not plead the affirmative defense of duress or business coercion at that time.

On December 16, 2011, NFC moved for traditional summary judgment. NFC argued that Lujan had originally breached the Agreement by failing to pay in accordance with its terms. Accordingly, NFC had repossessed the trucks and sold them at a private sale after giving Lujan the required notice, and it had provided him with notice of the deficiency amounts for each vehicle following the repossession of his truck fleet. NFC further argued that Lujan had breached the Agreement by failing to pay the deficiencies in accordance with the Agreement's terms.

Accompanying NFC's motion for summary judgment was the affidavit of Tim Majchrowicz, a “Loss Recovery Specialist” for NFC. Majchrowicz averred that Lujan owed $198,258.64, “[a]fter allowing all just and lawful offsets, credits, and payments,” and that “[t]he Note has not been pledged, assigned, transferred, or conveyed.” Along with Majchrowicz's affidavit, NFC also provided copies of the Agreement and guaranty executed by Lujan, notices of acceleration sent by NFC to Lujan regarding past-due amounts on his loan, notices that NFC intended to sell the repossessed trucks in a private sale and that Lujan would be liable for any deficiency remaining following the sale, and notices of the deficiency amounts following the sale of the truck fleet. NFC also provided the affidavit of its counsel regarding the amount of attorney's fees, including numerous billings reflecting the amount of attorney's fees NFC had incurred.

On February 24, 2012, Lujan amended his answer, alleging, in relevant part, that the Agreement had he made with NFC was the product of duress or business coercion. At this time, he did not file a response to the motion for summary judgment or produce any summary judgment evidence supporting his allegations of duress or business coercion.

On March 2, 2012, the trial court granted NFC's motion for summary judgment and ordered Lujan to pay damages to NFC on the breach of contract claim, as well as paying NFC's attorneys' fees.

Lujan filed a motion for rehearing, arguing that the court should reexamine its summary judgment decision in light of his affirmative defense of duress or business coercion. On April 9, 2012, Lujan filed an amended motion for rehearing, an affidavit supporting his affirmative defense, and a motion for summary judgment on his affirmative defense. In his motion for summary judgment, Lujan alleged in a conclusory manner that Illinois law was applicable in the case because that was what the loan documents provided. He also cited an Illinois case for the definition of duress, and he referred to the allegations in his affidavit to support his motion.

In his affidavit, Lujan set out the facts for his affirmative defense. He averred that in December 2005, following a sales call from Rick DeNolf, who Lujan asserted was an employee of Navistar, Lujan purchased five CF600 vans that were covered by a warranty for thirty-six months or 150,000 miles. Lujan stated that the CF600s broke down regularly, but they were towed and repaired, and DeNolf or his dealership, Santex, provided a loaner vehicle in accordance with the warranty. In February 2007, DeNolf approached Lujan about replacing the CF600 vans with another model, the 4300M LPs. Lujan averred that he was hesitant to replace the CF600s because the 4300M LPs would cost more. Regarding DeNolf's representations, Lujan averred:

Finally, he said to me, bottom line, they were done. They would no longer provide warranty support for my CF600 fleet. They would cease to honor warranty obligations and other commitments to my CF600 fleet, although the warranties otherwise would be in effect through December 2008. DeNolf said I would have full responsibility for breakdowns, including towing, repair and substitute delivery trucks during the repair period.

Lujan further stated that the warranty made the fleet serviceable, and without it, his business would be severely affected. He averred that “one of the trucks was in the shop when the threat was made” and that he was able to make his Valentine's Day deliveries only because he had the use of a loaner van. He also stated that he did not have “immediate legal recourse that would compel compliance with the warranty obligations.” Lujan stated that, through this alleged pressure, NFC forced him to buy five 4300M LPs.

Lujan attached as an exhibit to his affidavit a copy of the “Limited Standard Warranty for Medium Duty CF500/CF600 Series” vehicles that he averred was given to him by DeNolf at the time he purchased the CF600s. The warranties provided for “limited warranty coverage” for thirty-six months or 150,000 miles, and it provided warranties for various components for periods ranging between six and forty-eight months. The warranty excluded coverage of “repairs and maintenance” or “vehicle misuse, negligent care, improper maintenance, [or] improper operation” and numerous other conditions.

NFC filed objections to Lujan's motions for rehearing and summary judgment as well as a response to Lujan's motion for rehearing. The trial court granted Lujan's motion for rehearing and stated that it would “reconsider [NFC's] motion for summary judgment and [Lujan's] cross-motion for summary judgment.” Upon consideration of the motions for summary judgment, the trial court found that there were no genuine issues of material fact, that NFC had conclusively established each element of its cause of action, that Lujan had failed to submit sufficient summary judgment evidence to raise a fact issue as to each element of his affirmative defense, and that NFC was entitled to judgment as a matter of law. Again, the court ordered Lujan to pay damages on the breach of contract claim as well as attorney's fees.

Lujan filed a supplemental motion for summary judgment and a motion for new trial. The trial court did not rule on these motions, and the motion for new trial was overruled by operation of law. This appeal followed.

Standard of Review

We review de novo the trial court's ruling on a summary judgment motion. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009). To prevail on a traditional motion for summary judgment, the movant must establish that no genuine issues of material fact exist and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Little v. Tex. Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex.2004).

“[S]ummary judgments must stand or fall on their own merits, and the nonmovant's failure to answer or respond cannot supply by default the summary judgment proof necessary to establish the movant's right.” McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex.1993). The standards for reviewing a ...