Pennwell Corp. v. Ken Associates, Inc.

• Decision Date: 11 December 2003
• Docket Number: No. 14-02-00218-CV.,14-02-00218-CV.
• Citation: 123 S.W.3d 756
• Parties: PENNWELL CORPORATION, Appellant, v. KEN ASSOCIATES, INC., Appellee.
• Court: Texas Court of Appeals

123 S.W.3d 756

PENNWELL CORPORATION, Appellant, v. KEN ASSOCIATES, INC., Appellee.

No. 14-02-00218-CV.

Court of Appeals of Texas, Houston (14th Dist.).

December 11, 2003.

William P. Tunell, Jr., Tulsa, OK, Jon L. Tankersley, Houston, for appellants.

Christopher L. Ashby, Michael O. Whitmire, Houston, for appellees.

Panel consists of Justices ANDERSON, SEYMORE, and EVA M. GUZMAN.

OPINION

EVA M. GUZMAN, Justice.

In this breach of contract action, appellant, PennWell Corporation ("PennWell"), appeals a summary judgment awarding damages and attorney's fees in favor of appellee, Ken Associates, Inc. ("Ken"). By cross-appeal, Ken complains of the trial court's refusal to award statutory treble damages under the Texas Sales Representative Act (the "TSRA").¹ We affirm.

I. Factual Background

In 1992, PennWell and Ken entered into an oral agreement wherein Ken became the exclusive sales representative of exhibition booth space at PennWell's conferences and exhibitions. Under the agreement, evidenced by a letter from a PennWell representative, Ken was to be paid a commission of 20% of the value of the exhibit space it sold. Ken's sales territory was limited to Japan. Between 1992 and 1999, Ken acted in this capacity, maintaining the business relationship apparently without problem. In 1999, however, a dispute arose between PennWell and Ken following PennWell's refusal to pay sales commissions on exhibition space sold to Mitsubishi Heavy Industries, Ltd. ("Mitsubishi") and Hitachi, Ltd., Japan ("Hitachi").

Ken filed suit against PennWell in a Texas court for breach of contract, suit on a sworn account, quantum meruit, and violations of the TSRA. Both parties moved for a traditional summary judgment: PennWell argued the TSRA was inapplicable, and Ken moved for judgment on all of its claims. The trial court granted both motions in part, entering judgment for Ken on its breach of contract and sworn account claims for damages, attorneys' fees, and 10% judgment interest, while denying Ken's TSRA and quantum meruit claims.

On appeal PennWell contends the trial court erred in granting judgment for Ken because: (1) Japanese law applies and prohibits recovery of attorneys' fees and 10% judgment interest; (2) PennWell's affidavit sufficiently responded to Ken's sworn account claim; (3) a material fact issue existed as to the breach of contract claim; and (4) Japanese law applies to Ken's sworn account claim. By cross-appeal, Ken argues the trial court erred in denying recovery of treble damages under the TSRA.²

II. Standard of Review

A summary judgment is proper only when a movant establishes that there is no genuine issue of material fact and he is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c). The propriety of a summary judgment is a question of law and we review the trial court's decision de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex.1994); Taub v. Aquila Southwest Pipeline Corp., 93 S.W.3d 451, 462 (Tex.App.-Houston [14th Dist.] 2002, no pet.). We review the summary judgment evidence in the light most favorable to the nonmovant, indulging every inference and resolving all doubts in his favor. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 549 (Tex.1985). Once the movant has established a right to summary judgment, the burden then shifts to the nonmovant to raise any issues that would preclude summary judgment. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984).

III. Analysis

In its first issue, PennWell argues Japanese law applies to the parties' dispute and the trial court erred in failing to apply Japanese substantive law. Although there is nothing in the record to affirmatively indicate which substantive law the court applied, PennWell argues the court "obviously" applied Texas law, as attorneys' fees and judgment interest in excess of 6% are not recoverable under Japanese law.

Interestingly, PennWell does not argue that Japanese law and Texas law differ in any respect regarding a breach of contract. PennWell does not contend that application of Japanese law would render a different result regarding the contract issue, nor does it make any attempt to argue the issue under Japanese law.³ Instead, PennWell merely asserts that Ken would not be entitled to attorneys' fees and judgment interest had the trial court applied Japanese law. In response, Ken argues that PennWell's motion for judicial notice was insufficient under Texas Rule of Evidence 203 to request the court apply Japanese law, that recovery of interest and attorneys' fees are not subject to a choice of law analysis, and under either forum's laws, a breach of contract was still established.

We conclude Ken was entitled to an award of attorney's fees on its sworn account claim, a procedural matter governed by Texas law. In addition, because PennWell failed to sufficiently apprise the trial court of Japanese law regarding judgment interest or any issues in the case other than attorney's fees, we cannot conclude the trial court improperly applied Texas law in awarding those fees.

A. Choice of Law Issues

Under Rule of Evidence 203, a party intending to raise an issue concerning foreign law must give notice in the pleadings or "other reasonable written notice," and at least thirty days before trial furnish to all parties copies of any written materials or sources the party intends to use as proof of foreign law. Tex.R. Evid. 203; see Pittsburgh Corning Corp. v. Walters, 1 S.W.3d 759, 769 (Tex.App.-Corpus Christi 1999, pet. denied) ("A preliminary motion is ... necessary to assure the application of the laws of another jurisdiction."). The trial court determines the laws of the foreign country, and that determination is reviewed as a question of law. Tex.R. Evid. 203; Long Distance Int'l, Inc. v. Telefonos de Mexico, S.A., 49 S.W.3d 347, 351 (Tex.2001). Rule 203 is a "hybrid rule" by which presentation of foreign law to the court resembles the presentment of evidence, although it is ultimately decided as a question of law. Long Distance Int'l, 49 S.W.3d at 351. In determining the foreign law, the trial court can consider any material or source, whether or not admissible under the rules of evidence, including affidavits, testimony, briefs, and treatises. Tex.R. Evid. 203.

Although appearing under the subtitle "Judicial Notice" in the Texas Rules of Evidence, the procedure established under Rule 203 for presentment of foreign law is not considered a judicial notice procedure because that term refers only to adjudicative facts and not to matters of law. Lawrenson v. Global Marine, Inc., 869 S.W.2d 519, 525 (Tex.App.-Texarkana 1993, writ denied). Thus, the specific procedures set forth in Rule 203 must be followed for the determination of foreign law. Id. Moreover, a party requesting judicial notice must furnish the court with sufficient information to enable it to properly comply with the request; otherwise, the failure to provide adequate proof results in a presumption that the law of the foreign jurisdiction is identical to that of Texas. Pittsburgh Corning, 1 S.W.3d at 769.

In this case, PennWell filed a Motion for Judicial Notice, submitting to the court various excerpts, totaling over 100 pages of materials, from a treatise entitled Doing Business in Japan and a copy of an Illinois case which makes reference, indirectly, to attorney's fees under Japanese law. In its motion, PennWell requested the court take judicial notice of Japanese law, noting that recovery of treble damages by sales representatives and an award of attorney's fees in a contract action were prohibited under that country's laws. Significantly, there was no mention in Penn-Well's motion concerning judgment interest or any distinctions between Japanese and Texas law regarding contract claims, nor any mention of Ken's sworn account claim.

Subject to its argument that Texas substantive and procedural law applied, Ken also filed a motion for judicial notice of sources for Japanese law. Attached to Ken's motion were excerpts from Martindale-Hubbell International Law Digest, indicating attorney's fees are not recoverable under Japanese law except in tort actions, and excerpts from the Doing Business in Japan treatise.

Neither party presented expert witness testimony or affidavits regarding the laws of Japan. Also, there is no indication in the record that the trial court provided the parties with notice it was intending to rely on a source other than those presented and, as no such notice appears in the record, we conclude the trial court reached its decision based on the information submitted by the parties. See Lawrenson, 869 S.W.2d at 525; see also Ahumada v. Dow Chem. Co., 992 S.W.2d 555, 558-59 (Tex. App.-Houston [14th Dist.] 1999, pet. denied).

We find PennWell's motion adequately requested the trial court take notice of Japanese law regarding attorney's fees, and the trial court had sufficient information before it regarding that issue. Penn-Well noted in its motion that Japanese law did not allow for an award of attorney's fees in a contract action. Although the case furnished by PennWell as evidence of its assertion was insufficient to demonstrate Japanese law, any deficiency in PennWell's proof on the issue was cured through Ken's motion, supplying the Martindale-Hubbell Digest pages evidencing attorney's fees were recoverable only in tort actions.⁴ Therefore, at least with respect to attorney's fees, the trial court had enough information before it to ascertain Japanese law regarding that issue.⁵

However, although the trial court was sufficiently apprised of attorney's fees in a contract action under Japanese law, we cannot conclude that PennWell also apprised the trial court of any distinction in the laws of the two countries regarding judgment interest. First, PennWell failed to direct the trial court's attention to any distinctions regarding judgment interest in its...