Umlic Vp LLC v. T & M Sales
| Decision Date | 10 November 2005 |
| Docket Number | No. 13-02-00634-CV.,13-02-00634-CV. |
| Citation | 176 S.W.3d 595 |
| Parties | UMLIC VP LLC, Appellant, v. T & M SALES AND ENVIRONMENTAL SYSTEMS, INC., Tomas Lozano, Perla Lozano, and Walter M. Ezell, Appellees. |
| Court | Texas Supreme Court |
Beverly A. Whitley, Bell, Nunnally & Martin L.L.P., Dallas, for appellant.
Rene B. Gonzalez, Asst. Dist. Atty., Brownsville, Ruben R. Pena, Law Office of Ruben R. Pena, P.C., Harlingen, for appellees.
Before Justices HINOJOSA, RODRIGUEZ, and GARZA.
Appellant, UMLIC VP LLC ("UMLIC"), sued appellees, T & M Sales and Environmental Systems, Inc. ("T & M"), Tomas and Perla Lozano,1 and Walter M. Ezell,2 to recover the overdue balance on a note and guaranty agreement. Appellees asserted the affirmative defense of wrongful foreclosure and counter-claimed for breach of contract and negligence. After a jury found in favor of appellees, the trial court signed a judgment against UMLIC. UMLIC challenges the trial court's judgment by twenty-eight issues. We reverse and render in part. The remaining part of the trial court's judgment is reformed and, as reformed, is affirmed.
On July 19, 1989, T & M obtained a business loan from the Small Business Administration ("SBA") in the amount of $150,000. Under the terms of the promissory note, T & M agreed to pay $1,992 per month for ten years, with a balloon payment for the unpaid principal being due and payable at the end of the ten-year period. The note was secured by a deed of trust on the land on which T & M was located, a security agreement, and a guaranty executed by the Lozanos and Ezell in their personal capacities. The note matured by its own terms on July 19, 1999. The last payment T & M made on the note was on November 19, 1998. The parties stipulated that as of that date, the remaining principal balance was $49,602.24.
On October 15, 1999, UMLIC purchased the note, deed of trust, security agreement, and guaranty from the SBA. In January 2000, Tomas Lozano contacted UMLIC and offered to continue making payments on the note in the amount of $1,000 per month. UMLIC rejected the offer and decided to pursue foreclosure. UMLIC never informed appellees of its intention to foreclose.
In preparation of the contemplated foreclosure, UMLIC conducted a title search on the property secured by the deed of trust. During the search, UMLIC discovered that local taxing authorities had foreclosed on the property because appellees had failed to pay property taxes. On February 1, 2000, the sheriff sold the property at a public auction to Pablo Gonzalez for $10,000. On June 6, 2000, UMLIC redeemed the property from Gonzalez for $12,500, the amount Gonzalez had paid for the property plus the statutory twenty-five percent penalty. Gonzalez then executed a special warranty deed in favor of UMLIC.
On July 24, 2000, UMLIC sent T & M a notice to vacate the property.3 On August 25, 2000, UMLIC offered to let T & M redeem the property, on the condition that T & M also pay the balance due on the note. On October 9, 2000, UMLIC filed a petition for forcible detainer in justice court, seeking possession of the property. By letter dated October 20, 2000, T & M tendered a cashier's check in the amount of $12,500 to UMLIC in an attempt to redeem the property, but T & M made no attempt to pay the note. UMLIC rejected the offer and returned the check. On November 3, 2000, the justice court granted UMLIC possession of the property.
On February 16, 2001, UMLIC made demand for payment on the note and guaranty, but it received no response. On March 6, 2002, UMLIC sold the property to LSS Investments, Inc. for $66,000. UMLIC did not credit the amount received at the sale to the balance due on the note. On June 11, 2001, UMLIC filed the underlying suit to collect the unpaid principal balance and interest. T & M filed a counterclaim, alleging both tort and contract violations.
The jury found against UMLIC on both the note and the guaranty. The jury further found in favor of T & M and the Lozanos on their counterclaims of wrongful foreclosure, negligence, breach of the deed of trust, fraud, and malice. UMLIC filed a motion for judgment notwithstanding the verdict, which the trial court denied. Based on the jury's findings, the trial court's judgment awarded T & M the fair market value of the property as determined by the jury, damages for loss of business reputation, and exemplary damages. The judgment also included damages to Tomas and Perla Lozano for mental anguish. UMLIC subsequently filed motions to modify the judgment, for a new trial, and remittitur. The trial court denied the motions. This appeal followed.
In its second issue, UMLIC contends the trial court erred in submitting a question to the jury on the issue of fraud because appellees failed to sufficiently plead fraud as a cause of action and the issue was not tried by consent.
A pleading should "consist of a statement in plain and concise language of the plaintiff's cause of action or the defendant's grounds of defense." TEX. R. CIV. P. 45(b). The purpose of pleadings is "to give the adverse parties [fair] notice of each party's claims and defenses, as well as notice of the relief sought." Woolam v Tussing, 54 S.W.3d 442, 447 (Tex.App.-Corpus Christi 2001, no pet.) (citing Perez v. Briercroft Serv. Corp., 809 S.W.2d 216, 218 (Tex.1991)); see TEX. R. CIV. P. 47(a). A pleading provides sufficient fair notice of the claim involved when "an opposing attorney of reasonable competence could examine the pleadings and ascertain the nature and basic issues of the controversy and the relevant testimony." Woolam, 54 S.W.3d at 448 (citing State Fid. Mortgage Co. v. Varner, 740 S.W.2d 477, 478 (Tex.App.-Houston [1st Dist.] 1987, writ denied)).
In determining whether a cause of action was pleaded, the pleadings must be sufficiently adequate so the court is able, from an examination of the pleadings alone, to ascertain with reasonable certainty and without resorting to information from another source, the elements of a plaintiff's cause of action and the relief sought with sufficient information upon which to base a judgment. Id. (citing Stoner v. Thompson, 578 S.W.2d 679, 683 (Tex.1979)). Petitions are construed liberally in favor of the pleader. Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 186 (Tex.1977). "The court will look to the pleader's intendment" and uphold the pleading as to a cause of action even if some element of that cause of action has not been specifically alleged. Gulf, C. & S.F. Ry. Co. v. Bliss, 368 S.W.2d 594, 599 (Tex.1963); see Boyles v. Kerr, 855 S.W.2d 593, 601 (Tex.1993) (op. on reh'g). "Every fact will be supplied that can reasonably be inferred from what is specifically stated." Bliss, 368 S.W.2d at 599. "Mere formalities, minor defects and technical insufficiencies" will not invalidate a cause of action in a petition, so long as the pleading gives fair notice to the opposing party. Stoner, 578 S.W.2d at 683.
A cause of action for fraud requires (1) a material misrepresentation, (2) which was either known to be false when made or was asserted without knowledge of its truth, (3) was made with the intention that it be acted upon by the other party, (4) the other party acts in reliance upon it, and (5) the other party suffers harm as a result of that reliance. Bradford v. Vento, 48 S.W.3d 749, 755 (Tex.2001). Fraud may also occur when (1) a party conceals or fails to disclose a material fact within their knowledge, (2) the party knows that the other party is ignorant of the fact and does not have an equal opportunity to discover the truth, (3) the party intends to induce the other party to take some action by concealing or failing to disclose the fact, and (4) the other party suffers injury as a result of acting without knowledge of the undisclosed fact. Id. at 755-56.
Appellees's pleadings do not specifically allege that UMLIC committed fraud. Appellees argue that a cause of action for fraud can be deduced from their pleadings. In support of their argument, appellees direct our attention to certain sections of their petition. In relevant part, these sections provide:
(A) ... The subsequent actions undertaken by [UMLIC] were in violation of the Texas Finance Code in that the actions were usurious and constituted wrongful debt collection practices as defined in the Texas Finance Code. [T & M] not having had proper notice of the foreclosure or sale were never advised by [UMLIC] of the redemption of the property until after the expiration of 180 days. [UMLIC] then took the position that T & M's time for redemption of the property permitted under Texas law had expired. [UMLIC] then wrongfully and illegally filed a forcible entry and detainer action in the justice of the peace court, wherein UMLIC obtained possession of the premises, causing [T & M] to vacate their long established business premises. Finally, on or about March 6, 2002, UMLIC sold the property the subject of this suit....
* * * *
(C) [UMLIC] owed [T & M] a duty of good faith and fair dealing which it breached in failing to properly accelerate and give proper notice of its intention to accelerate the note and debt, in failing to accept the payment of $12,500 which amount was the sum [UMLIC] paid to redeem the property from the buyer at the sheriff's sale....
While the pleadings must be construed as favorably as possible to the pleader, the inference that a cause of action has been pleaded must be reasonable in light of what is specifically stated in the pleading. See Boyles, 855 S.W.2d at 601. In this case, we conclude that a cause of action for fraud is not an inference that reasonably results from the statements...
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