Cintas Corporation v. Lissette A. Quevedo, Individually, and Playa Seafood, Inc. D/B/A/ La Playa Seafood Restaurant ( 2012 )

MEMORANDUM OPINION
No. 04-11-00142-CV
CINTAS CORPORATION,
Appellant
v.
Lissette A. QUEVEDO, Individually, and Playa Seafood, Inc. D/B/A/ La Playa Seafood
Restaurant,
Appellees
From the County Court at Law No. 7, Bexar County, Texas
Trial Court No. 354116
Honorable Karen Crouch, Judge Presiding
Opinion by: Karen Angelini, Justice
Sitting: Catherine Stone, Chief Justice
Karen Angelini, Justice
Rebecca Simmons, Justice
Delivered and Filed: May 30, 2012
REVERSED AND RENDERED
Cintas Corporation sued Lissette A. Quevedo, Individually, and Playa Seafood, Inc. d/b/a
La Playa Seafood Restaurant (“Quevedo”) for breach of contract. In its petition, Cintas sought to
recover liquidated damages under the contract. The case was tried to the court. The trial court
found Quevedo terminated the contract but awarded no liquidated damages. On appeal, Cintas
argues the trial court erred in failing to award liquidated damages under the contract and
attorney’s fees under section 38.001 of the Texas Civil Practice and Remedies Code. Because we
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agree the trial court erred in failing to award liquidated damages and attorney’s fees, we reverse
the trial court’s judgment. We render judgment in favor of Cintas on its claims for liquidated
damages and attorney’s fees.
BACKGROUND
On April 7, 2008, Cintas and Quevedo entered into a written contract. In the contract,
Cintas agreed to furnish products and services to Quevedo for her restaurant. Many of the
products furnished were linens that Cintas picked up, laundered, and returned to Quevedo on a
weekly basis. The duration of the contract was sixty months. In the event of a breach, Quevedo
promised to pay Cintas 50% of the average weekly invoice total multiplied by the number of
weeks remaining in the unexpired term, or buy back all products allocated at the current
replacement values, whichever was greater. On October 13, 2009, Quevedo wrote a letter to
Cintas explaining that she was discontinuing its service because the price was too high for her at
the time.
In November 2009, Cintas sued Quevedo for breach of contract. Quevedo answered,
denying the allegations in the petition. Quevedo also pled Cintas’s claim was barred by duress.
According to her pleadings, Cintas made promises and statements to her when the contract was
signed, and pressured her into signing the contract. Additionally, Quevedo alleged Cintas
engaged in deceptive trade practices. In support of this counterclaim, Quevedo alleged that when
she signed the contract, she was told by the sales representative that she was required to abide by
the contract for only one year. She further alleged she was never given the second page of the
contract.
At trial, Cintas presented a copy of the written contract, which was admitted into
evidence. The first page of the contract contains an itemization of the products to be provided by
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Cintas and the cost of the products. The first page also states, “This agreement is effective as of
the date of execution for a term of 60 months from date of installation.” The initials “L.A.Q.”
appear above “60 months.” The second page of the contract contains additional provisions
including provisions for early termination of the contract and liquidated damages. The signatures
of a Cintas representative and Quevedo appear at the bottom of the first page. Also appearing at
the bottom of the first page are the phrases, “Page one of two” and “Form Distribution: (1)
White-Office; (2) Canary-Customer; and (3) Pink-Corporate Office.” Appearing at the bottom of
page two is the phrase “Page two of two.”
Cintas also presented the testimony of Edward Gonzalez, who was a sales associate and
former service manager for Cintas. Gonzalez testified that Cintas would never do business with a
customer without a contract. The typical term of a Cintas contract was sixty months, which was
the industry standard. Gonzalez stated that a shorter term contract would result in higher prices
per product. Gonzalez also testified the original contract with Quevedo appeared on a single
page—front and back—and was in triplicate. In September 2009, a service representative called
him and told him that Quevedo wanted to terminate the contract. Quevedo’s reason for
terminating the contract involved the cost of the service, not the quality of the service. Gonzalez
indicated he could reduce Quevedo’s costs by reducing the number of products and services
provided by Cintas. Quevedo refused this option.
Cintas also called Quevedo to testify. Quevedo acknowledged she signed the contract and
placed her initials above the phrase “a term of 60 months.” However, Quevedo stated she was
told by a Cintas sales representative, Jimmy Sanchez, that she would be required to abide by the
contract for only one year. Quevedo indicated she was never given the second page of the
contract; the first time she saw the second page of the contract was after Cintas filed suit against
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her. Quevedo said she no longer had her copy of the contract, but she recalled that it was canary.
Quevedo also said she wrote a letter to Cintas on October 13, 2009, advising the company that
she was terminating the contract. Her reason for terminating the contract was because
“unfortunately the price [was] just too high for me at this time.” A copy of the letter was
admitted into evidence.
After hearing all of the evidence, the trial court ruled the contract was terminated on
October 13, 2009, and Quevedo owed Cintas nothing under the contract from that day forward.
The trial court rendered judgment in accordance with its ruling. The trial court filed findings of
fact and conclusions of law. The trial court found Cintas and Quevedo entered into a contract for
services on or about April 7, 2008, and this contract was terminated by Quevedo on October 13,
2009. The trial court concluded that because the contract between Cintas and Quevedo was
terminated, Quevedo owed Cintas only for services provided up to the date of termination. The
trial court also found Cintas did not violate the Deceptive Trade Practices Act by causing
Quevedo to sign the contract under duress or by committing fraud. Cintas requested additional
findings of fact and conclusions of law; however, no additional findings of fact and conclusions
of law were filed by the trial court. Cintas appealed.
In its brief, Cintas argues the trial court erred (1) by allowing Quevedo to present parol
evidence of an oral agreement concerning the duration of the contract; (2) by not awarding
liquidated damages as provided in the contract; (3) by not awarding attorney’s fees under section
38.001 of the Texas Civil Practice and Remedies Code; and (4) by not making additional
findings of fact and conclusions of law. Although given the opportunity to do so, Quevedo has
not filed a brief in this appeal.
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PAROL EVIDENCE
In its fourth issue, Cintas argues the trial court erred in allowing Quevedo to present
evidence of an oral agreement that varied the sixty-month term of the written contract. Although
not included in its express findings, the trial court apparently found Quevedo was authorized to
terminate the contract prior to the expiration of sixty months. The only evidence to support this
finding, however, was Quevedo’s testimony that she and the sales representative had an oral
agreement that she would be required to comply with the contract for only one year. 1
In Texas, the parol evidence rule generally bars enforcement of prior or contemporaneous
agreements introduced to vary, add to, or contradict terms of a fully integrated written
instrument. Beijing Metals & Minerals Import/Export Corp. v. Amer. Bus. Ctr., Inc., 993 F.2d
1178, 1182-83 (5th Cir. 1993) (citing Tripp Village v. MBank Lincoln Centre, 774 S.W.2d 746,
749 (Tex. App.—Dallas 1989, no writ)); Hubacek v. Ennis State Bank, 317 S.W.2d 30, 31 (Tex.
1958). A written agreement presumes that all prior agreements of the parties relating to the
transaction have been merged into the written instrument. Beijing Metals, 993 F.2d at 1183
(citing Weinacht v. Philips Coal. Co., 673 S.W.2d 677, 679 (Tex. App.—Dallas 1989, no writ)).
“An unambiguous contract will be enforced as written, and parol evidence will not be received
for the purpose of creating an ambiguity or to give the contract a different meaning from that
which its language imports.” David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008)
(citing Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex. 1951)).
The parol evidence rule is not a rule of evidence, but a rule of substantive law. Hubacek,
317 S.W.2d at 31. If a contract is unambiguous, the parol evidence rule precludes consideration
1
According to the contract, the only way Quevedo was authorized to terminate the contract early was if she had
made a formal complaint “sent by registered letter to the Company’s General Manager” about the quality of the
service, and if that complaint was not resolved in a reasonable period of time. There was no evidence showing
Quevedo made any complaint about the quality of service.
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of evidence of prior or contemporaneous agreements unless an exception to the parol evidence
rule applies. Sacks, 266 S.W.3d at 451 (citing Hubacek, 317 S.W.2d at 31). In the absence of any
ambiguity, accident, mistake, or fraud shown in connection with the contract, the parol evidence
rule renders inadmissible any testimony to vary the legal effect of a writing. Hartford Ins. Co. v.
Commerce & Industry Ins. Co., 864 S.W.2d 648, 650 (Tex. App.—Houston [1st Dist.] 1993, writ
denied). Testimony that varies the legal effect of a writing, whether objected to or not, is without
probative force and will not support a finding. Huddleston v. Fergeson, 564 S.W.2d 448, 452
(Tex. Civ. App.—Amarillo 1978, no writ).
We conclude Quevedo’s testimony that she and a sales representative had an oral
agreement that she would be required to abide by the contract for only one year varied the legal
effect of the contract. Moreover, there was no ambiguity, accident, mistake, or fraud shown in
connection with the contract. Quevedo’s testimony about the oral agreement was parol evidence.
Because Quevedo’s testimony was parol evidence, it had no probative force and could not
support a finding that Quevedo was authorized to terminate the contract early. See id. (holding
trial court erred in not excluding testimony that varied the terms of the written contract). We
sustain Cintas’s fourth issue.
LIQUIDATED DAMAGES
In its second issue, Cintas argues the trial court erred in not awarding liquidated damages
based on Quevedo’s early termination of the contract. The contract included the following
liquidated damages provision:
If this agreement is terminated early, the parties agree that the damages sustained
by Company will be substantial and difficult to ascertain. Therefore, if this
agreement is terminated by Customer prior to the applicable expiration date for
any reason other than for documented quality of service reasons which are not
cured as set forth above, or terminated by Company for cause at any time,
Customer will pay to Company as liquidated damages and not as a penalty, the
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greater of 50% of the average weekly invoice total multiplied by the number of
weeks remaining in the unexpired term, or buy back all Facility Services Products
allocated to Customer at the then current replacement values.
We conclude Cintas was entitled to liquidated damages under the contract.
We next address the calculation of liquidated damages under the contract. According to
the contract, Cintas was entitled to liquidated damages calculated as follows: “the greater of 50%
of the average weekly invoice total multiplied by the number of weeks remaining in the
unexpired term, or buy back all Facility Services Products allocated to Customer at the then
current replacement values.” (emphasis added). The evidence presented at trial supported the
former, rather than the latter, method of calculating liquidated damages. The trial court found,
and the evidence showed, the parties entered into a sixty-month contract on or about April 7,
2008. The trial court also found, and the evidence showed, Quevedo terminated the contract on
October 13, 2009. When the contract was terminated by Quevedo, 181 weeks remained on the
contract. The evidence showed the average weekly invoice was $75.67. 2 Fifty-percent of the
average weekly invoice was $37.83. Based on the contract and the evidence, Cintas was entitled
to liquidated damages in the amount of $6,847.23. We conclude the trial court erred in failing to
award Cintas liquidated damages in the amount of $6,847.23. We sustain Cintas’s second issue.
ATTORNEY’S FEES
In its third issue, Cintas argues the trial court erred in not awarding it attorney’s fees
under section 38.001 of the Texas Civil Practice and Remedies Code. Section 38.001 authorizes
the recovery of reasonable attorney’s fees for a claim based on a contract. TEX. CIV. PRAC. &
REM. CODE. ANN. § 38.001 (West 2008). The award of reasonable and necessary attorney’s fees
2
Cintas’s representative testified the average weekly invoice was $75.67. Quevedo indicated in her testimony that
the amount was actually higher but did not otherwise challenge the average weekly invoice amount.
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is mandatory under Section 38.001 if there is proof of the reasonableness of the fees. Budd v.
Gay, 846 S.W.2d 521, 524 (Tex. App.—Houston [14th Dist.] 1993, no writ).
At the conclusion of the trial, Cintas attempted to present testimony concerning its claim
for attorney’s fees. In lieu of testimony, the trial court allowed Cintas to present this evidence by
affidavit. The trial court asked Quevedo if she had any objection to the affidavit. Quevedo stated
she had no objection to the affidavit. In the affidavit, counsel for Cintas stated Cintas had
incurred $8,000.00 in reasonable and necessary attorney’s fees in the trial of this case. Counsel
further stated that if an appeal was taken, Cintas would incur an additional $5,000.00 in
reasonable and necessary attorney’s fees.
When evidence of attorney’s fees is not contradicted by any other witness, or attendant
circumstances, and the evidence is clear, direct and positive, and free from contradiction,
inaccuracies, and circumstances tending to cast suspicion thereon, it is taken as true, as a matter
of law. Brown v. Bank of Galveston, N.A., 930 S.W.2d 140, 145 (Tex. App.—Houston [14th
Dist.] 1996, aff’d, 963 S.W.2d 511 (Tex. 1998)) (citing Ragsdale v. Progressive Voters League,
801 S.W.2d 880, 882 (Tex. 1990)). Here, the evidence presented by Cintas in favor of its claim
for attorney’s fees was clear, direct and positive, and free from contradiction, inaccuracies, and
circumstances tending to cast suspicion thereon. In addition, Quevedo was afforded an
opportunity to contradict this evidence, but declined to do so. See id. (concluding uncontroverted
amount of attorney’s fees was established as a matter of law, and the trial court erred by not
awarding attorney’s fees). We sustain Cintas’s third issue. We award Cintas $8,000.00 in
attorney’s fees for the trial of this case, and $5,000.00 in attorney’s fees for the instant appeal.
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CONCLUSION
In light of our disposition of the other issues in this case, we find it unnecessary to
address Cintas’s remaining issue concerning the absence of additional findings of fact and
conclusions of law. See TEX. R. APP. P. 47.1 (requiring appellate courts to address only issues
necessary to the final disposition of the appeal). We reverse the judgment of the trial court and
render judgment that Quevedo pay Cintas liquidated damages in the amount of $6,847.23, and
attorney’s fees in the amount of $13,000.00. See id. 43.3 (requiring appellate courts, as a general
rule, to render the judgment the trial court should have rendered).
Karen Angelini, Justice
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