Clovis Corporation D/B/A Llano Permain Environmental v. Lubbock National Bank and Diversified Lenders, Inc. ( 2006 )

NO. 07-04-0565-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL D

JUNE 2, 2006 ______________________________

CLOVIS CORPORATION d/b/a LLANO PERMIAN ENVIRONMENTAL,

Appellant

v.

LUBBOCK NATIONAL BANK and DIVERSIFIED LENDERS, INC.,

Appellees

_________________________________

FROM THE 237^TH DISTRICT COURT OF LUBBOCK COUNTY;

NO. 2003-522,192; HON. SAM MEDINA, PRESIDING _______________________________

Opinion _______________________________

Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.

Clovis Corporation d/b/a Llano Permian Environmental (Llano) appeals from a final summary judgment denying it recovery against Lubbock National Bank (the Bank) and Diversified Lenders, Inc. (Diversified). In turn, the Bank and Diversified appeal from an order denying them attorney's fees. According to the record, Llano sued the Bank and Diversified for breach of contract, tortious interference with contract, breach of fiduciary duty, and fraudulent inducement. The claims arose from a factor transaction. That is, Diversified agreed to buy and Llano agreed to sell various accounts receivable. To effectuate that purpose, the two executed a document entitled "Security and Factoring Agreement." Shortly after the document was executed, Diversified assigned its interest in the contract to the Bank. The dispute before us concerned the Bank's decision to increase the amount of reserve it retained under the contract from 12.75% to 17.75%. In so raising the reserve, the Bank and/or Diversified allegedly breached the agreement, engaged in tortious interference with contract, breached various fiduciary duties owed Llano and committed fraud. After being sued, both the Bank and Diversified filed traditional and no evidence motions for summary judgment. So too did they request attorney's fees and court costs. Though the summary judgment motions were granted, those seeking fees and costs were denied.

Through four issues, Llano contends that 1) the trial court erred in granting the motions for summary judgment, 2) a fact issue exists concerning whether the Bank and Diversified acted in bad faith, 3) the Bank and Diversified were not entitled to enforce the contract's early termination penalty provisions due to their bad faith, and 4) the Bank and Diversified may not invoke the contract to bar prosecution of its fraudulent inducement claim. The Bank and Diversified posit that the trial court should have awarded them fees and costs. We affirm the judgment in part and reverse and remand it in part.

Llano Issue Two - Some Evidence of Bad Faith

We initially address issue two because Llano's remaining issues are dependent upon its successful disposition. Through it, Llano alleges that there existed some evidence of material fact sufficient to deny the Bank and Diversified judgment as a matter of law. The evidence purportedly illustrated that Llano's opponents acted in bad faith when raising the reserve from 12.75% to 17.75%. And, this evidence was of import because they had an implied obligation to act in good faith when modifying the reserve. We overrule the issue.

According to paragraph 18 of the contract, the factor (Diversified or the Bank)

may reserve and withhold an amount in a reserve account equal to twelve and three quarters percent (12 3/4%) of the gross face amount of all accounts purchased. Said reserve account may be held by FACTOR and applied by FACTOR against charge-backs or any obligations of [Llano], and said reserve account is not due and payable . . . until any and all potential obligations owing by and satisfied [sic]. [Llano] gives to FACTOR a security interest in this reserve account, which secures all obligations and indebtedness arising under this factoring agreement.

In paragraph 48, the parties also agreed that

. . . between [Llano] and FACTOR . . . FACTOR will fund eighty-seven and one quarter percent (87 1/4%) of the face value of each invoice [and] . . . [a]t the time of purchase FACTOR will deduct the initial factoring fee/discount and the reserve as stated in Section 16 & 18 of the Security Agreement. Additional fees/discounts will be taken by FACTOR from the reserve as described in Provision 48(B). Additional reserve may be taken when deemed necessary by FACTOR.

(Emphasis added). It is the italicized verbiage in paragraph 48 that is pivotal here. While it permitted the factor to increase the percentage of reserve, Llano reads into it an implied term obligating the factor to act in good faith. That is, it believes that the factor could not raise the rate unless it did so in good faith. That Llano attempts to imply this restriction into the agreement is beyond dispute for it appears nowhere in the written document. Yet, our Supreme Court cautioned against implying terms into contracts. Universal Health Serv., Inc. v. Renaissance Women's Group, P.A., 121 S.W.3d 742, 747 (Tex. 2003) (stating that in "rare circumstances, . . . a court may imply a covenant in order to reflect the parties' real intentions" but "courts must be quite cautious in exercising this power"). Indeed, a term "will not be implied simply to make a contract fair, wise, or just." Id. at 748. Rather, they can be declared to exist "'only when there is a satisfactory basis in the express contract[] . . . which makes it necessary to imply duties and obligations . . . to effect the purposes of the parties in the contract[ ] made.'" Id. at 747-48, quoting Freeport Sulphur Co. v. American Sulphur Royalty Co., 117 Tex. 439, 6 S.W.2d 1039 (1928); accord Snyder v. Eanes Indep. Sch. Dist., 860 S.W.2d 692, 697 (Tex. App.-Austin 1993, writ denied) (stating that implied covenants are permitted only on the grounds of necessity). As can be seen, necessity is the triggering agent, and that agent does not exist if the subject encompassed by the supposed implied term is already within the scope of an express term. So, where there already exists an express term covering a particular subject, no implied term can exist encompassing the same subject. Freeport Sulphur Co. v. American Sulphur Royalty Co., 6 S.W.2d at 1043; Snyder v. Eanes Indep. Sch. Dist., 860 S.W.2d at 697. And, there lies the deficiency in Llano's contention.

Nothing was said about acting in good faith when the parties to the agreement before us addressed the topic of increasing the reserve. Rather, they expressly agreed that the reserve could be raised when "deemed necessary by [the] FACTOR." Necessity being the expressed triggering factor, good faith cannot be substituted in its stead. In other words, since there already existed an express provision encompassing when and how the reserve could be modified, neither we nor Llano may imply a covenant involving the same topic. So, we reject the invitation to burden, through implying omitted terms, the factor's right to alter the reserve since the parties had expressly acknowledged the factor's authority to act when it deemed the action necessary.

Next, in urging its point on appeal, Llano focused upon evidence of its opponents' lack of good faith. No effort went into explaining why the increase was not "necessary" from the viewpoint of either Diversified or the Bank. Given this, the fact that Llano's appellate issue lives or dies on our imposition of an implied term of good faith, and our refusal to read such a requirement into paragraph 48, we hold that the trial court did not err in awarding Diversified and the Bank summary judgment as a matter of law.

Llano's Remaining Issues

As previously alluded to, the viability of Llano's remaining issues are dependent upon its success on issue two. Having overruled issue two, we overrule issues one, three and four as well.

Issue One of Diversified and the Bank

Through this issue, Diversified and the Bank allege that the trial court erred in denying them attorney's fees. This is so because they were contractually entitled to such fees as prevailing parties. We overrule the contention.

Via paragraph 34 of the agreement, the signatories provided that the "losing party will pay any and all legal expenses and reasonable attorney's fees that the prevailing party may incur as a result of either CLIENT or FACTOR enforcing this Agreement one against the other." As can be seen, this provision entitles a prevailing party to attorney's fees. Yet, it also requires that the fees be "reasonable." And, assuming arguendo, that Diversified and the Bank were prevailing parties, we have been cited to (and found) no evidence illustrating that the $35,860.55 in fees incurred were reasonable. No affidavit purporting to supply the requisite information accompanied their request. Nor did the unsworn statement appearing in the motion regarding the reasonableness of the fees suffice because unsworn statements in pleadings, as well as motions, are not evidence. In re J.N.F., 116 S.W.3d 426, 436 (Tex. App.-Houston [14^th Dist.] 2003, no pet.). ⁽¹⁾ Consequently, we hold that the trial court did not err in denying the motion for attorney's fees.  

Issue Two - Costs

In their last issue, Diversified and the Bank claim that the trial court erred in failing to award them court costs. We sustain the contention.

Rule 131 provides that "[t]he successful party to a suit shall recover of his adversary all costs incurred therein . . . ." However, a trial court may assess costs differently for good cause. Tex. R. Civ. P. 141; Furr's Supermarkets, Inc. v. Bethune, 53 S.W.3d 375, 376 (Tex. 2001). And, if it opts to assess them differently, then it must memorialize on the record the purported good cause allowing it to do so; otherwise, it abuses its discretion. Marion v. Davis, 106 S.W.3d 860, 869 (Tex. App.-Dallas 2003, pet. denied). Finally, these rules apply to summary judgment proceedings. Texas River Barges v. City of San Antonio, 21 S.W.3d 347, 358 (Tex. App.-San Antonio 2000, pet. denied).

Here, it cannot be denied that Diversified and the Bank were the successful parties in the suit. Thus, they were entitled to their court costs unless the trial court found good cause to deny them same. While the trial court denied their request, it provided no reasons to justify its decision. Thus, it abused its discretion.

In summary, we affirm the take-nothing summary judgment and order denying Diversified and the Bank attorney's fees. We reverse the order denying those two parties their court costs and remand that issue for further proceedings.

Brian Quinn

Chief Justice

1. Reference by Diversified and the Bank to §38.004 of the Texas Civil Practice and Remedies Code and Budd v. Gay, 846 S.W.2d 521 (Tex. App.-Houston [14^th Dist.] 1993, no writ) is unavailing. Those authorities concern effort to recover fees incurred while prosecuting the type of claims itemized in §38.001 of the Civil Practice and Remedies Code. Yet, neither Diversified nor the Bank argue that their defense against the claims of Llano fell within any of the categories specified in §38.001. Nor do we find that they do. Consequently, neither §38.004 nor Budd applies. Coward v. Gateway Nat. Bank, 525 S.W.2d 857, 858-59 (Tex. 1975) (holding that the predecessor of §38.001 et seq. applied solely to claims mentioned in the statute); Southwest Bell Mobile Sys., Inc. v. Franco, 951 S.W.2d 218, 226 (Tex. App.-Corpus Christi 1997), rev'd on other grounds, 971 S.W.2d 52 (Tex. 1998) (holding that §38.001 et seq. applies only to the attempt to recover upon the claims itemized in §38.001).

d to be with Barron "[s]omeday . . . after everything died down"; (13) she knew Barron "was going to take a shot at" Bill; and (14) she "guess[ed]" she wanted Bill dead. Under these circumstances, Barron's testimony was sufficiently corroborated by non-accomplice evidence connecting appellant as a party with the murder of the deceased. Point of error four is overruled.

In point of error five, appellant contends the trial court erred in denying admission of a statement made by Gerringer to Gwenna during Gerringer's interview with Gwenna about the deceased's death. We disagree.

During cross-examination, appellant asked Gwenna about her interview with Gerringer regarding the murder. In this regard, the record shows:

Q. [BY DEFENSE COUNSEL]: So when you walked in . . . Gerringer's office, what happened? What transpired?

A. Well, I told him that I didn't believe [Barron] had done it.

Q. Did [Gerringer] get mad at you?

A. [Gerringer] told me in a very harsh voice that he had been an investigator for over 25 years and that he had no doubt that [Barron] was guilty.

Q. Did he start talking to you -- Did he say that he had been told by a lot of people that you hated your father [the deceased]?

A. Yes.

Q. Did he say that you knew [Barron] was going to kill your father?

[THE PROSECUTOR]: Your Honor --

A. Yes.

[THE PROSECUTOR]: -- I am going to object to that as hearsay.

THE COURT: Sustained.

Subsequently, appellant made the following offer of proof regarding Gwenna's testimony:

Q. [BY DEFENSE COUNSEL]: Okay. In any event, [Gwenna] you had a conversation with . . . Gerringer, right?

A. Yes, I did.

Q. Did he accuse you of participating in your father's death?

A. [Gerringer] informed me that he knew I knew about it.

Q. And did [Gerringer] say that you knew [Barron] was going to kill your daddy?

A. Exactly.

Q. Did [Gerringer] say that he had been told by a lot of people that you hated your father?

A. Yes, he did.

Q. Did [Gerringer] essentially try to say that you were a guilty party?

A. Yes, he did.

Q. Now, was there a tape recording going when this occurred?

A. Not that I knew of.

[DEFENSE COUNSEL]: Your Honor, that is all that we have.

Where the trial court excludes testimony sought to be admitted by the defense and admits essentially the same evidence elsewhere, the error is cured even if the exclusion was error. Gonzales v. State, 571 S.W.2d 11, 13 (Tex.Cr.App. 1978). Here, the trial court sustained the State's hearsay objection to the question about whether Gerringer accused Gwenna of knowing that Barron was going to kill the deceased. However, Gwenna answered the question affirmatively before the objection was sustained, and there was no instruction to disregard or strike the statement from the record. Hence, (1) the evidence underlying appellant's offer of proof was actually already admitted before the jury prior to the trial court's ruling, and (2) the jury could have properly considered the unstricken testimony. Hence, the admission of essentially the same evidence cured any error.

For the first time on appeal, appellant contends that Rule 801(e)(2)(D) provides the basis for admission of Gwenna's excluded testimony about Gerringer's statements. However, we find the error was harmless beyond a reasonable doubt because (1) Gwenna's testimony on the issue was tenuous as to Gerringer's bias or appellant's guilt, (2) cumulative of other testimony already given by her, (3) the examination of Gwenna and Barron by the defense was relatively unrestricted, and (4) appellant tacitly admitted to guilt in her tape recorded confession. Tex. R. App. P. 81(b)(2); Shelby v. State, 819 S.W.2d 544, 546-47 (Tex.Cr.App. 1991).

Appellant also objects for the first time on appeal that the exclusion of the evidence deprived her of her rights to a fair trial under the 5th, 6th, and 14th Amendments to the United States Constitution and Article I, sections 10 and 19 of the Texas Constitution. Since these objections are raised for the first time on appeal, nothing is preserved for review. Gauldin v. State, 683 S.W.2d at 413. Consequently, point of error five is overruled.

By her third and sixth points of error, the appellant challenges the trial court's admission of a tape recording of an oral confession and interview with Officer Gerringer. First, we will address the sixth point by which she asserts the trial court erred by admitting her tape recorded oral interview with Gerringer claiming her confession was involuntary.

The determination of whether an accused knowingly and voluntarily waived his rights is based on the totality of the circumstances surrounding the statement's execution. Ingham v. State, 679 S.W.2d 503, 509 (Tex.Cr.App. 1984). In order for a promise to render a confession involuntary, the promise must be shown to be: (1) of some benefit to appellant, (2) positive, (3) made or authorized by one in authority, and (4) of such a nature as would be likely to influence the confessing party to report untruthful facts. Sossamon v. State, 816 S.W.2d 340, 345-46 (Tex.Cr.App. 1991). To establish the forth prong, the reviewing court must look to whether the promise induced the accused to admit to a crime that was not actually committed by the individual. Id. In this regard, we review some analogous cases. The following are promises not likely to induce a defendant to speak untruthfully: (1) a statement by an officer that certain individuals would not be arrested if they were not involved in the burglary or murder was not a promise likely to cause the defendant to untruthfully admit to a murder offense, Salazar v. State, 687 S.W.2d 502, 503-04 (Tex.App.--Dallas 1985, pet'n ref'd); (2) statements from the prosecutor (a) asking the defendant to give his version so things could be straightened out, and (b) telling the defendant that he could probably go home thereafter, was not an incentive for the defendant to untruthfully confess to murder, Alvarez v. State, 649 S.W.2d 613, 620-21 (Tex.Cr.App. 1982), cert. denied, 464 U.S. 849, 104 S. Ct. 156, 78 L. Ed. 2d 144 (1983); (3) unspecific offers to help a defendant are not likely to cause the suspect to make an untruthful statement, Dykes v. State, 657 S.W.2d 796, 797 (Tex.Cr.App. 1983); (4) offer to help wife and mother of defendant with charitable aid was not sufficient to induce suspect to confess to heinous crime, accord Muniz v. State, 851 S.W.2d 238, 253-54 (Tex.Cr.App.), cert. denied, 114 S. Ct. 116, 126 L. Ed. 2d 82 (1993); and (5) a promise to the defendant that he would be allowed to see his girlfriend was not likely to induce an untruthful statement on his part. Smith v. State, 779 S.W.2d 417, 427 (Tex.Cr.App. 1989).

Here, appellant acknowledged on the tape recording that she knew and understood her statutory warnings. Gerringer advised appellant that she would not be arrested the day she talked to him. When appellant specifically asked if she would be arrested that night or the next day, Gerringer informed appellant that she would not necessarily be arrested but it depended on what she told him after she had received the warnings about her rights. Gerringer promised appellant that she would not be arrested that day. However, Gerringer also explained that any arrest would depend on the information that she gave to him afterwards. Gerringer explained that the prosecutor would make a decision regarding whether she had some culpability in Bill's murder. Under the totality of these circumstances, the promise not to arrest appellant the day of her interview did not likely induce appellant to speak untruthfully and tacitly admit to aiding Barron in murdering Bill. Point of error six is overruled.

In point of error three, appellant contends the trial court erred in admitting a tape recording of her oral confession when there was no proper predicate for its admission. We disagree.

Gerringer interviewed appellant in his office on September 30, 1993. Gerringer said that appellant was a witness to the instant offense, came into his office voluntarily, and initially discussed the circumstances surrounding her husband's murder freely. When appellant made an incriminating statement during the interview, Gerringer stopped the interview and gave appellant verbal warnings and had her sign a written waiver of her rights. Appellant never signed a written confession.

Gerringer initially attempted to record the interview with appellant by using a recorder capable of recording from a standard sized cassette tape. After the first fifteen to twenty minutes of the interview elapsed, Gerringer noticed that the recorder was not recording the interview with appellant. Gerringer then switched to a micro-cassette tape recorder and recorded the remainder of the interview. The micro-cassette tape contained about an hour and forty-five minutes of his interview with appellant.

Gerringer acknowledged that (1) he was competent to record the conversation and operate the micro-cassette recorder, (2) he had subsequently listened to the tape and was certain that the taped confession was accurate, (3) he had the taped conversation transcribed, (4) the transcription was an accurate reflection of the interview with appellant, (5) there had been no alterations or changes to the tape, (6) the tape was maintained in the District Attorney's offices since appellant's interview, and (7) no one tampered with the tape. Gerringer identified his and appellant's voices as those on the tape.

Appellant objected because the tape had about a twenty minute gap since the first recorder did not function properly, and Gerringer "could" have made an offer of immunity during this gap. Soon thereafter, the trial court admitted the tape's transcription into evidence.

Rule 901(a) provides that when identification or authentication of evidence is necessary, the requirement for admissibility is met by evidence adequate to support a finding that the matter is what its proponent claims. Kephart v. State, 875 S.W.2d 319, 321 (Tex.Cr.App. 1994). The adoption of the Rule 901(a) superseded the seven prong test for the admissibility of sound recordings set forth in Edwards v. State, 551 S.W.2d 731, 733 (Tex.Cr.App. 1977). Leos v. State, 883 S.W.2d 209, 211 (Tex.Cr.App. 1994).

Here, Gerringer identified his and appellant's voices on the tape recording and said the recording was an accurate recording of their conversation. Under these circumstances, there was evidence that the challenged transcription was what the State claimed, and the transcription was relevant in that appellant's statements connected her to the offense. Additionally, minor gaps in audio recordings that are a result of accidental or technical problems that are sufficiently explained do not affect the trustworthiness and reliability of the evidence, nor render the tapes inadmissible. Ali v. State, 742 S.W.2d 749, 754-55 (Tex.App.--Dallas 1987, pet. ref'd)(electrical short causing recorder to "short out" did not render tape inadmissible); Gahl v. State, 721 S.W.2d 888, 896-97 (Tex.App.--Dallas 1986, pet. ref'd) (a jammed tape resulting in three to five minute gap did not render recording inadmissible); McEntyre v. State, 717 S.W.2d 140, 145-47 (Tex.App.--Houston [1st Dist.] 1986, pet. ref'd) (frequent interference caused by interruption from police radios and a seven minute gap in the tape recording did not render recording inadmissible).

On appeal, appellant also contends that (1) since the first device quit working, it was not capable of making a recording, (2) Gerringer failed to notice that the device was not working so he was incompetent to operate the equipment, and (3) her statement was induced by Gerringer's promise not to arrest her. With regard to the first two contentions, nothing is preserved for review since these appellate contentions do not comport with the objection made at trial, Cravens v. State, 687 S.W.2d at 752, and these appellate objections are raised for the first time on appeal. Gauldin v. State, 683 S.W.2d at 413. With regard to the third claim, we have previously determined in our resolution of point of error six, that the confession was not involuntary because the promise made by Gerringer that appellant would not be arrested on the day of her interview was not likely to induce appellant into making an untruthful statement tacitly admitting involvement in Bill's death. Consequently, point of error three is overruled.

In point of error one, appellant contends the trial court erred in adding an affirmative finding to the judgment that she used a deadly weapon during the commission of the offense. We disagree.

If a party attempts to invite the court to make an erroneous ruling, and the court rules in accord with the request, the accused cannot complain of that error on appeal. Tucker v. State, 771 S.W.2d 523, 534 (Tex.Cr.App. 1988); Capistran v. State, 759 S.W.2d 121, 124 (Tex.Cr.App. 1982). The correct time to submit a special issue concerning the use of a deadly weapon is at the punishment stage of trial. Luken v. State, 780 S.W.2d 264, 268-69 (Tex.Cr.App. 1989).

Here, the punishment charge did not include a deadly weapon special issue. Appellant expressly stated that she had no objections to the jury charge. Soon thereafter, the prosecutor stated that it was his understanding that if the jury found appellant guilty as charged in the indictment, the trial judge was authorized to find that a deadly weapon was used in the instant offense. Defense counsel agreed with the prosecutor's expression of the law. The trial judge then declared that he would make the deadly weapon finding. Because appellant complains of error she invited the trial court to make, nothing is preserved for review. Consequently, point of error one is overruled.

Accordingly, the judgment is affirmed.

Carlton B. Dodson

Justice

Do not publish. Tex. R. App. P. 90(c).

1. All references to the Rules are the Texas Rules of Criminal Evidence.