Opinion
NUMBER 13-14-00212-CV
04-07-2016
DIRECT ADVERTISING, INC., Appellant, v. WILLOW LAKE, LP, Appellee.
On appeal from the 172nd District Court of Jefferson County, Texas.
MEMORANDUM OPINION
Before Justices Garza, Perkes, and Longoria
Memorandum Opinion by Justice Perkes
Pursuant to a docket-equalization order issued by the Supreme Court of Texas, the appeal has been transferred to this Court from the Ninth Court of Appeals in Beaumont, Texas. See TEX. GOV'T CODE ANN. § 73.001 (West, Westlaw through 2015 R.S.).
Appellee Willow Lake, LP ("Willow Lake") filed a breach of contract action against appellant Direct Advertising, Inc. ("Direct Advertising") alleging a violation of an agreed judgment between the parties. After both parties moved for summary judgment, the trial court granted summary judgment in favor of Willow Lake. By two issues, Direct Advertising argues: (1) the trial court erred in denying its motion for summary judgment on the affirmative defense of res judicata; and (2) there is no evidence to support the trial court's award of damages in the amount of $105,000. We reverse and remand.
I. BACKGROUND
The parties entered into a "Land Lease for Outdoor Advertising." Pursuant to the lease, Willow Lake agreed to allow Direct Advertising to place an outdoor advertising sign on its land for a term of ten years. Direct Advertising agreed to pay $350 per month for the term of the agreement. Willow Lake filed suit alleging Direct Advertising erected a sign on a nearby parcel of land which precluded it from erecting a sign on Willow Lake's property and fulfilling its obligations under the lease. The suit resulted in an agreed judgment, which provided: (1) Direct Advertising will pay Willow Lake $11,600; (2) Direct Advertising will move the advertising sign to the location listed in the lease within thirty days; and (3) the original lease will remain in effect and Direct Advertising will resume making monthly payments through the end of the term of the lease.
Willow Lake thereafter filed the instant breach-of-contract action, alleging Direct Advertising failed to: (1) make timely payments under the lease; and (2) relocate the sign to Willow Lake's property. Willow Lake filed a motion for traditional summary judgment on its breach-of-contract action and requested damages consisting of "the present day value of the rental income it would be able to receive, but for [Direct Advertising's] breach for the next 25 years, in addition to the required payments under the current lease[.]" Willow Lake's summary-judgment motion was supported by the lease agreement, the agreed judgment, and the affidavit of Eric Marroquin, principal owner of Willow Lake. By his affidavit, Marroquin testified that Direct Advertising did not relocate the sign as required by the agreed judgment which prevented Willow Lake from having an advertising sign on its property due to "state regulations on sign location." Marroquin further testified that "[t]he fair market rental rate for a sign on this property is $4,200 a year" which is the same as the rental amount set forth in the land-lease agreement.
Direct Advertising filed a "Response to Plaintiff's Motion for Summary Judgment and Cross-Motion for Summary Judgment" on the basis of its affirmative defense of res judicata. Direct Advertising argued that the agreed judgment constituted a prior final judgment barring re-litigation of Willow Lake's claims. Direct Advertising supported its motion with a copy of Willow Lake's original petition, agreed judgment, and order granting the agreed judgment from the earlier lawsuit.
The trial court granted Willow Lake's motion for summary judgment and ordered Direct Advertising to "move [the] sign that forms the basis of this suit to the location listed in the original rental agreement . . . within 30 days from the date [of the judgment.]" The trial court further ordered "that should [Direct Advertising] fail to move the sign within 30 days from the date of this order then judgment is entered against [Direct Advertising] for the fair rental rate of sign location ($4,200) for a term of 25 years, for a total of $105,000."
The record does not reflect whether Direct Advertising moved the sign within thirty days of the trial court's judgment. --------
II. STANDARD OF REVIEW
We review a summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). The party moving for traditional summary judgment bears the burden of showing no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); see TEX. R. CIV. P. 166a(c). A defendant is entitled to summary judgment on an affirmative defense if the defendant conclusively establishes all of the elements of the affirmative defense. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508-09 (Tex. 2010); Chau v. Riddle, 254 S.W.3d 453, 455 (Tex. 2008); see TEX. R. CIV. P. 166a(b), (c).
In this review, we will assume that all evidence favorable to the non-movant is true and indulge every reasonable inference in favor of the non-movant. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). The non-movant has no burden to respond to a traditional motion for summary judgment unless the movant conclusively establishes each element of his cause of action or defense as a matter of law. Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222-23 (Tex. 1999). If the movant establishes it is entitled to summary judgment, then the burden shifts to the non-movant to raise a genuine issue of material fact to defeat the summary judgment. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995); Lundstrom v. United Servs. Auto. Ass'n-CIC, 192 S.W.3d 78, 84 (Tex. App.—Houston [14th Dist.] 2006, pet. denied). Unless the grounds for summary judgment are specified, a summary judgment order must be affirmed if any of the summary judgment grounds are meritorious. FM Prop's Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). "When both sides move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both sides' summary judgment evidence and determine all questions presented." Id. "The reviewing court should render the judgment that the trial court should have rendered." Id.
III. RES JUDICATA
By its first issue, Direct Advertising argues the trial court "err[ed] in denying [its] motion for summary judgment on its affirmative defense of res judicata." Direct Advertising argues that Willow Lake's current breach-of-contract action is barred by res judicata because Willow Lake seeks the same relief as it did in its earlier action which resulted in an agreed judgment. Therefore, Direct Advertising maintains that "Willow Lake's exclusive remedy for failure to perform under the [a]greed [j]udgment [was] an action to enforce the judgment[.]" We disagree.
A. Applicable Law
"Res judicata bars the relitigation of claims that have been finally adjudicated or that could have been litigated in the prior action." Igal v. Brightstar Info. Tech. Grp., 250 S.W.3d 78, 86 (Tex. 2008). Res judicata is an affirmative defense, and the party asserting the defense has the burden of pleading and proving its elements. Calabrian Corp. v. Alliance Specialty Chems., Inc., 418 S.W.3d 154, 158 (Tex. App.—Houston [14th Dist.] 2013, no pet.). For res judicata to apply, the defendant must show: (1) there is a prior final judgment on the merits by a court of competent jurisdiction; (2) the parties in the second action are the same or in privity with those in the first action; and (3) the second action is based on claims that were or could have been raised in the first action. Igal, 250 S.W.3d at 86; Dardari v. Tex. Commerce Bank Nat'l Ass'n, 961 S.W.2d 466, 470 (Tex. App.—Houston [1st Dist.] 1997, no pet.). Res judicata does not operate as a bar to litigation when the second claim could not have been raised in the previous litigation. See Abbott Labs. v. Gravis, 470 S.W.2d 639, 642 (Tex. 1971); Voskamp v. Arnoldy, 749 S.W.2d 113, 126 (Tex. App.—Houston [1st Dist.] 1987, writ denied).
B. Analysis
We first note that an agreed judgment must be interpreted as if it were a contract between the parties and the interpretation is, accordingly, governed by the laws relating to contracts. See Hutchings v. Bates, 406 S.W.2d 419, 420 (Tex. 1966) (child support agreement is largely governed by rules relating to contracts); Wagner v. Warnasch, 295 S.W.2d 890, 893 (Tex. 1956) (judgment by consent is contractual in nature); see also Pate v. Pate, 874 S.W.2d 186, 188 (Tex. App.—Houston [14 Dist.] 1994, writ denied) ("Agreed judgments, once rendered, are contracts between the parties that excuse error and operate to end all controversy between the parties."). The proper way to enforce an agreed judgment is by a lawsuit in the nature of a contract action. Ex parte Jones, 358 S.W.2d 370, 375 (Tex. 1962); see McGoodwin v. McGoodwin, 671 S.W.2d 880, 882 (Tex.1984) (settlement agreement incorporated into divorce decree is treated as a contract).
Willow Lake properly brought suit on its breach-of-contract action regarding Direct Advertising's alleged failure to comply with terms of the agreed judgment. This action could not have been brought as part of its earlier suit because Direct Advertising did not engage in the conduct alleged—i.e., breaching the agreed judgment—until after it was signed. See Compania Financiara Libano, S.A. v. Simmons, 53 S.W.3d 365, 367 (Tex. 2001) (holding res judicata did not bar plaintiff's breach of contract action where breach of settlement agreement did not occur until after entry of agreed judgment in prior suit). Most specifically, Direct Advertising's alleged wrongdoing occurred after the date of the agreed judgment; namely, subsequent late rental payments and failure to relocate the advertising sign post judgment. Therefore, res judicata does not bar Willow Lake's current suit. See id.
Direct Advertising is not entitled to summary judgment on its res judicata defense. See TEX. R. CIV. P. 166a(b), (c); Frost Nat'l Bank, 315 S.W.3d at 508-09; Chau, 254 S.W.3d at 455. We overrule Direct Advertising's first issue.
IV. DAMAGES
By its second issue, Direct Advertising argues "[t]here is no evidence to support [the trial court's] damage award." Specifically, Direct Advertising maintains that there is no evidence to support an award of damages "for the fair rental rate of sign location ($4,200) for a term of 25 years, for a total of $105,000" because there is no summary-judgment evidence to support a term of 25 years and because the trial court "used the wrong measure of damages." Willow Lake responds that the trial court's damage award was supported by the summary judgment evidence, and that "factual and legal sufficiency challenges cannot be raised for the first time on appeal."
A. Preservation
The record does not show Direct Advertising objected to the evidence respecting the measure of damages or otherwise raised the issue in the trial court. However, an attack on the legal sufficiency of the grounds raised by a summary-judgment movant is an exception to the general rule that "[i]ssues not expressly presented to the trial court by written motion, answer, or other response shall not be considered on appeal as grounds for reversal." TEX. R. CIV. P. 166a(c); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993). We conclude Direct Advertising did not waive error pertaining to the legal sufficiency of the evidence respecting breach-of-contract damages. See McConnell, 858 S.W.2d at 343 ("[S]ummary judgments must stand or fall on their own merits, and the non-movant's failure to answer or respond cannot supply by default the summary judgment proof necessary to establish the movant's right.").
B. Damage Amount
"A successful breach of contract claim requires proof of the following elements: (1) a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach." Petras v. Criswell, 248 S.W.3d 471, 477 (Tex. App.—Dallas 2008, no pet.); see Barnett v. Coppell N. Tex. Court, Ltd., 123 S.W.3d 804, 815 (Tex. App.—Dallas 2003, pet. denied). Damages must be measured by a legal standard, and that standard must be used as to guide the factfinder in determining what sum would compensate the injured party. Jackson v. Fontaine's Clinics, Inc., 499 S.W.2d 87, 90 (Tex. 1973). "The ultimate goal in measuring damages for a breach-of-contract claim is to provide just compensation for any loss or damage actually sustained as a result of the breach." Mays v. Pierce, 203 S.W.3d 564, 577 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) (citing Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 328 (Tex. App.—Houston [14th Dist.] 2003, pet. denied)). Generally, the measure of damages for a breach of contract is the benefit-of-the-bargain measure, the purpose of which is to restore the injured party to the economic position it would have been in had the contract been performed. Mays, 203 S.W.3d at 577. "Where damages evidence does not relate to the amount of damages sustained under the proper measure of damages, that evidence is both irrelevant and legally insufficient to support a judgment." De Escabedo v. Haygood, 283 S.W.3d 3, 6 (Tex. App.—Tyler 2009), aff'd, 356 S.W.3d 390 (Tex. 2011).
C. Analysis
The trial court's summary-judgment order states that in the event Direct Advertising fails to move the sign at issue within 30 days from the date of the order, Willow Lake shall be awarded judgment in the amount of "the fair rental rate of sign location ($4,200) for a term of 25 years, for a total of $105,000."
Willow Lake's pleadings and motion for summary judgment fail to clearly demonstrate the basis for its alleged damages. In its petition, Willow Lake simply alleges, "[a]s a result of [Direct Advertising's] breach, [Willow Lake] has suffered damages." In its motion for summary judgment, Willow Lake asserts that if Direct Advertising does not move the sign within thirty days, it is entitled to damages in the amount of "the present day value of the rental income it would be able to receive, but for [Direct Advertising's] breach for the next 25 years, in addition to the required payments under the current lease[.]"
The only evidence of damages supplied by Willow Lake was the affidavit of Marroquin, in which he testified "[t]he fair market rental rate for a sign on this property is $4,200 a year[,]" and "[i]f [the] sign is not moved as agreed, Willow Lake will be prevented from erecting a sign on its property." The affidavit, however, does not show how the "fair market rental rate" was determined, and is silent regarding any applicable time period. Further, the affidavit makes no reference to any past-due amounts owed by Direct Advertising under the lease agreement. An affidavit that states only legal or factual conclusions without providing factual support is not proper summary-judgment evidence because it is not credible or susceptible to being readily controverted. See Rizkallah v. Conner, 952 S.W.2d 580, 587 (Tex. App.—Houston [1st Dist.] 1997, no pet.). Self-serving affidavits from interested parties must be clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and readily controvertible to support summary judgment. Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997). Marroquin's affidavit does not support summary judgment because it does not provide a factual basis for the 25-year term and states only a conclusion regarding the fair market rental rate without factual support. See Paragon Gen. Contractors, Inc. v. Larco Constr. Inc., 227 S.W.3d 876, 882 (Tex. App.—Dallas 2007, no pet.) ("An affidavit that is conclusory is substantively defective, and the failure to object or obtain a ruling on an objection does not waive the substantive defect.").
In conclusion, Willow Lake: (1) did not provide evidence to show what, if any, amount had not actually been paid under the lease agreement; (2) did not provide evidence to support its contention that it was entitled to damages for a "term of twenty- five years", much less state the legal basis for such damages; and (3) provided only a conclusory affidavit as to the fair-market rental rate. We hold the trial court erred in granting summary judgment in favor of Willow Lake on its claim for breach of contract because Willow Lake failed to establish the amount of damages as a matter of law. See TEX. R. CIV. P. 166a(c); Mann Frankfort, 289 S.W.3d at 848. We sustain Direct Advertising's second issue.
V. DISPOSITION
Rule 166a(a) of the Texas Rules of Civil Procedure provides, "[a] summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to amount of damages." TEX. R. CIV. P. 166a(a). Rule 166a(a) permits a trial court to adjudge liability by partial summary judgment and then try damages issues on their merits. See, e.g., Hanover Fire Ins. Co. v. Bock Jewelry Co., 435 S.W.2d 909, 919 (Tex. Civ. App.—Dallas 1968, writ ref'd n.r.e.). However, Rule 166a(a) does not allow an appellate court to affirm the trial court's summary judgment in its entirety when the claimants have failed to show there is no genuine issue regarding the amount of damages. See TEX. R. CIV. P. 166a(a); see also Rosales v. Williams, No. 01-09-00454-CV, 2010 WL 457536, at *6 (Tex. App.—Houston [1st Dist.] Feb. 11, 2010, no pet.).
In addition, Rule 44.1(b) of the Texas Rules of Appellate Procedure provides, "[t]he court may not order a separate trial solely on unliquidated damages if liability is contested." TEX. R. APP. P. 44.1(b). "If a party files a general denial in the trial court, that pleading puts a plaintiff to his or her proof on all issues, including liability; its effect extends to contesting liability in the event of remand on appeal." Estrada v. Dillon, 44 S.W.3d 558, 562 (Tex. 2001). "A party's failure to present on appeal an additional discrete challenge to liability when that party challenges damages does not defeat the plain language of rule 44.1(b) proscribing a separate trial on unliquidated damages when liability is contested." Id. Inasmuch as Direct Advertising contested liability and the unliquidated damages awarded, we are required to remand both issues. See TEX. R. APP. P. 44.1(b); Estrada, 44 S.W.3d at 562.
VI. CONCLUSION
We reverse the trial court's judgment and remand the cause to the trial court for further proceedings consistent with this opinion.
GREGORY T. PERKES
Justice Delivered and filed the 7th day of April, 2016.