Opinion
No. 04-04-00380-CV
Delivered and Filed: April 20, 2005.
Appeal from the 218th Judicial District Court, Frio County, Texas, Trial Court No. 03-04-00094-Cvf, Honorable Donna S. Rayes, Judge Presiding.
Reversed and Remanded.
Sitting: Karen ANGELINI, Justice, Sandee Bryan MARION, Justice, Phyllis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
Joy T. Docken appeals the summary judgment rendered in favor of Bank of America, N.A. Docken raises two issues for review. We reverse the summary judgment of the trial court and remand the cause for proceedings consistent with this opinion.
BACKGROUND
Joy T. Docken purchased a 1999 Suzuki automobile from a dealer on or about July 23, 1999, under a retail installment contract ("note"). Docken subsequently fell behind on her payments and defaulted on the note, and the vehicle was repossessed. Docken was given the opportunity to reacquire possession of the vehicle and pay off the note, but she failed to do so. The Bank of America, N.A. ("Bank"), sold the vehicle at an auction and applied the proceeds toward the debt. Docken continued to fail to make her payments, however, so the Bank brought suit against her for the deficient balance of the note.
On December 15, 2003, the Bank filed its motion for summary judgment. In its motion, the Bank alleged that it was the current owner and holder of the note and, therefore, entitled to judgment as a matter of law for the unpaid balance of $13,208.23, plus interest and reasonable attorney's fees. The trial court granted the Bank's motion for summary judgment. Docken appeals from this summary judgment.
DISCUSSION
In two issues, Docken contends that the trial court erred in granting the Bank's motion for summary judgment because there were clear issues of material fact which precluded summary judgment. To prevail on a motion for summary judgment, a plaintiff seeking to enforce payment under the note must establish: (1) the instrument in question; (2) that the party sued on the instrument signed the instrument; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing. See SMS Fin., L.L.C. v. ABCO Homes, Inc., 167 F.3d 235, 238 (5th Cir. 1999); First Gibraltar Bank, FSB v. Farley, 895 S.W.2d 425, 427 (Tex.App.-San Antonio 1995, writ denied); Bean v. Bluebonnet Sav. Bank FSB, 884 S.W.2d 520, 522 (Tex.App.-Dallas 1994, no writ). In deciding whether there are any issues of material fact, all evidence favorable to the nonmovant must be taken as true, and all reasonable inferences, including any doubts, must be resolved in the nonmovant's favor. See TEX. R. CIV. P. 166a(c); KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). Here, on appeal, Docken argues that the summary judgment proof fails to conclusively establish the Bank as the owner or holder of the note. We agree.
In response to the Bank's motion, Docken attested that summary judgment was improper because there "is no evidence that Joy Docken executed a `promissory note' in favor of [the Bank]" and "there is no proof of a note [executed to the Bank] by [Docken] upon which any payments could have been demanded."
A. The Bank as Owner and Holder
The Bank supports its motion for summary judgment with the following: (1) a copy of the installment sales contract between Docken and the dealer dated July 23, 1999; and (2) the affidavit of Carol Farringer, an employee of the Bank. Regarding the issue of ownership, testimony in an affidavit that a particular person or entity owns the note is generally sufficient, even in the absence of supporting documentation, if there is no controverting summary judgment evidence. See Zarges v. Bevan, 652 S.W.2d 368, 369 (Tex. 1983); Farley, 895 S.W.2d at 428. Here, however, the Bank's summary judgment evidence is contradictory and inconsistent. The Bank contends that "[o]n or about July 23, 1999, [Docken] executed a promissory note in favor of Bank. . . ." Yet, the only evidence the Bank presented at trial of a promissory note dated "on or about July 23, 1999," was a copy of the original installment sales contract for the vehicle, as between Docken and the dealer that sold Docken the car. The Bank was not a party to that instrument, however, and neither Farringer's affidavit nor any other evidence in support of the Bank's motion serves to explain or show how title passed from the dealer to the Bank. See Jernigan v. Bank One, Tex., N.A., 803 S.W.2d 774, 776-77 (Tex.App.-Houston [14th Dist.] 1991, no writ) (holding that owner was required to prove the transfer by which it acquired the note). When there is an unexplained gap in the chain of title, there is an issue of material fact regarding the issue of ownership of the note. Id. Therefore, the Bank failed to establish that it was the owner or holder of the note as a matter of law, and summary judgment was improper.
B. Waiver
In response, however, the Bank contends that Docken has waived this argument on appeal due to her failure to comply with Rule 93, subsections 1 and 2, of the Texas Rules of Civil Procedure. See TEX. R. CIV. P. 93(1), (2). Under Rule 93, a challenge to the capacity of a party to bring suit or to recover against another requires the defendant to file a verified denial. Id. Moreover, the failure to raise the issue of capacity through a verified plea results in waiver of that issue both at trial and on appeal. See Champion v. Wright, 740 S.W.2d 848, 851 (Tex.App.-San Antonio 1987, writ denied) (holding that complaint was waived where appellant did not challenge either the existence of a partnership or the appellee's capacity to sue on behalf of the partnership). Therefore, here, the Bank argues that Docken waived this issue by failing to file a verified denial to its Original Petition showing that the Bank could not recover on the note in the capacity in which it sued. This argument is misplaced.
More specifically, Rule 93 provides that a pleading setting up any of the following matters, unless the truth of such matters appear of record, shall be verified by affidavit: (1) the plaintiff does not have the legal capacity to sue, or the defendant does not have the legal capacity to be sued; or (2) the plaintiff is not entitled to recover in the capacity in which he sued, or the defendant is not liable in the capacity in which he is sued must be verified by affidavit. See TEX. R. CIV. P. 93(1), (2).
Docken filed a general denial in its Answer to the Plaintiff's Original Petition.
Here, Docken does not contest the legal capacity in which the Bank brought suit. See Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996) ("[A] party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy"); see, e.g., Mackie v. Guthrie, 78 S.W.3d 462, 465-66 (Tex.App.-Tyler 2001, pet. denied) (holding that whether stockholder may recover damages personally for a wrong done to the corporation was issue of capacity); AU Pharmaceutical, Inc. v. Boston, 986 S.W.2d 331, 339-40 (Tex.App.-Texarkana 1999, no pet.) (holding that whether individual had right to represent the estate or to bring suit on behalf of the estate was issue of capacity). Rather, she contests its standing as a person or entity who has been aggrieved by her alleged failure to pay on the instrument. See Nootsie, 925 S.W.2d at 661 (explaining that "standing" is not the same as "capacity"); see also Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993) (holding that standing, as a component of subject matter jurisdiction, cannot be waived and can be raised for the first time on appeal). Thus, rule 93 does not apply here.
CONCLUSION
Accordingly, we hold that the trial court erred in granting summary judgment in favor of the Bank. We reverse the judgment and remand the cause to the trial court for proceedings consistent with this opinion.