Opinion
Civil Action No. 3:00-CV-1578-M.
December 21, 2001.
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Alex Yarto's Motion for Partial Summary Judgment, filed on November 14, 2001. After having considered the Motion, along with the Response and Reply thereto, the Court is of the opinion that the Motion should be DENIED.
Defendant Alex Yarto moves for partial summary judgment on Plaintiffs' claim against him for breach of contract on a promissory note dated May 25, 1999, in the face amount of $500,000 ("the 1999 note"). The note was signed by Roberto and Alex Yarto. Alex Yarto contends that this note was replaced with another note, executed on February 14, 2000, which was signed by Roberto Yarto and his wife, Jennifer Yarto ("the 2000 note"). Defendant argues that the replacement note extinguished the original note and any liability he may have had thereunder. In support of his argument, Defendant proffers Plaintiffs' answers to Intraco's First Set of Interrogatories, in which Plaintiffs state:
Defendant also proffers a document entitled "Identified schemes, breaches and collusion," which defense counsel represents was procured in discovery and which counsel "believes" was prepared by Plaintiffs (although the document itself does not contain any information that would show who created it). The relevant portion of the document states:
[a]s of February 14th[,] 2000[,] Alex Yarto was no longer (known by Eastern to be) associated with Intraco, and Roberto Yarto wanted to accept his brother[']s portion of the obligation made to Eastern. Therefore, an original note between Eastern and Roberto and Alex Yarto dated May 25th, 1999 was replaced by a note between Eastern Roberto and Jennifer Yarto on February 14th[,] 2000.
Appendix to Defendant Alex Yarto's Motion for Partial Summary Judgment at 11. Plaintiffs object to the Court considering this document because it is unauthenticated. The Court sustains Plaintiffs' objection, finding that the document, which contains nothing identifying the author and is only accompanied by defense counsel's affidavit stating that he "believes" the document was created by Plaintiffs, cannot be relied upon as summary judgment evidence.
Eastern believes it has suffered actual damages, for which Intraco, Inc. is jointly and severally liable with the other Defendants, approximately as follows:
(a) A Note payable to Eastern Poultry Distributors, Inc. was executed by Robert[o] Yarto and Alex Yarto on May 25, 1999 in the amount of $500,000. This note was replaced by a note executed by Robert[o] Yarto and Jennifer Yarto on February 14, 2000 in the amount of $500,000. In addition, Robert[o] Yarto and Jennifer Yarto executed another note on February 15, 2000 in the amount of $466,649.53, also payable to Eastern. The makers of these Notes have wholly defaulted and failed to pay their obligations thereon. Therefore, Eastern seeks damages for non-payment of these Notes accruing in Intraco's benefit in the amount of $966,649.53, with accrued interest.
Plaintiffs' Answers to Intraco, Inc.'s First Set of Interrogatories to Eastern at 12-13 (emphasis added). Alex Yarto argues that Texas Business and Commerce Code § 3.604(a) allows a note obligee such as Eastern Poultry, with or without consideration, to discharge the obligation of a party to a promissory note "by an intentional voluntary act." TEX. Bus. COMM. CODE § 3.604(a) (Vernon 2001). Defendant asserts that Eastern Poultry discharged Alex and Roberto Yarto from liability for payment on the 1999 note by allowing Roberto and Jennifer Yarto to execute the second promissory note in the same amount as the note signed by Alex and Roberto in 1999, and that Eastern Poultry's interrogatory response is a judicial admission of the release of liability. Section 3.604(a) provides:
Defendant does not contend that the 2000 note is a novation or an accord and satisfaction. See Defendant's Reply at 3, ¶ 4.
(a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument:
(1) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party's signature, or the addition of words to the instrument indicating discharge; or
(2) by agreeing not to sue or otherwise renouncing rights against the party by a signed writing.
The 2000 note signed by Jennifer and Roberto Yarto does not state that the note was to replace the 1999 note executed by Roberto and Alex Yarto, or that it released Alex and Roberto Yarto from liability on the first note. Although Defendant argues that Plaintiffs' interrogatory answer shows that Plaintiffs intended the 2000 note to vitiate his liability on the 1999 note, Plaintiffs respond that, although a replacement note was executed, they never intended the replacement note to release the original debtors from liability.
Summary judgment is only proper if the evidence, when viewed in a light most favorable to the non-moving party, demonstrates that no genuine issue of material fact exists. Morris County Nat'l Bank v. John Deere Ins. Co., 254 F.3d 538, 540 (5th Cir. 2001). Based on the parties' contentions in the case at hand, the Court, viewing the evidence in a light most favorable to Plaintiffs, finds that a genuine issue of material fact exists with respect to Plaintiffs' intent in executing the second promissory note. The Fifth Circuit has instructed that summary judgment is improper in such circumstances: "[A] district court . . . may not grant summary judgment when a contract is ambiguous and the parties' intent presents a genuine issue of material fact." S. Natural Gas Co. v. Pursue Energy, 781 F.2d 1079 (5th Cir. 1986); see also R P Enters. v. LaGuarta, Gavrel Kirk, Inc., 596 S.W.2d 517, 519 (Tex. 1980) ("If . . . a written instrument [is] reasonably susceptible to more than one meaning, extraneous evidence is admissible to determine the true meaning of the instrument. Normally, a summary judgment based on such a record is improper."). Because the 2000 promissory note, on its face, is ambiguous as to whether it releases the signers of the 1999 note from liability, and it is unclear whether Plaintiffs intended the replacement note to effectuate a total release from liability on the first note, the Court must deny Defendant Yarto's Motion for Summary Judgment.
SO ORDERED.