Vince Poscente International, Inc. v. Compass Bank ( 2013 )

REVERSE and REMANI); and Opinion issued March 28. 2013.
In The
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No. 05-1 i-01645-CV
VINCE POSCENTE INTERNATIONAL. INC., VINCE POSCENTE,
AND MICHELLE POSCENTE, Appellants
V.
COMPASS BANK, Appellee
On Appeal from the 380th Judicial District Court
Collin County, Texas
rril Court Cause No. 380-02889-2011
MEMORANDUM OPINION
Before Justices O’Neill, FitzGerald, and Lang-Miers
Opinion By Justice Lang—Miers
Appellee Compass Bank brought this suit against appellants Vince Poscente International,
Inc., Vince Poscente. and Michelle Poscente (collectively, the Poscentes) to recover sums allegedly
due and owing under a promissory note and guaranties. The trial court granted summary judgment
in favor of Compass. In four issues on appeal, the Poscentes argue that the affidavit Compass
submitted in support of its motion for summaryjudgment was not competent evidence, Compass did
not comply with local rules, Compass did not provide competent evidence to support factual
conclusions in its motion for summary judgment, and guaranties executed by Vince and Michelle
Poscente were illegal and unenforceable. Because all dispositive issues are settled in law, we issue
this memorandum opinion. lEx. R. AM’. P. 47.2( a. 47.4. We reverse the trial court’s summary
judgment and remand the case to the trial court for lurther proceedings consistent with this opinion.
flAcxcRo1I
Compass filed suit against the Poscentes to recover sums it alleged were due and owing under
a promissory note executed by Vince Poscente International, Inc.,’ and guaranties executed by Vince
Poseente and Michelle Poscente.
2 In its petition, Compass alleged that it was the owner and holder
of the note and entitled to receive the money due under the terms of the note, that Vince and
Michelle Poscente personally guaranteed payment of the note, that the Poscentes defaulted in paying
the note, and that the account had been accelerated. Compass sought to recover the alleged payoff
balance, pre-judgment and posi*judgment interest, costs of court, and attorney’s fees. In response,
the Poscentes asserted special exceptions, a general denial, and affirmative defenses.
Compass filed a motion for summary judgment. In support of its motion. Compass relied
upon an Affidavit in Support of Motion for Sununary Judgment and for Admission of Business
Records under rule of evidence 902(10) of Paula Shaw .See Thx. R. EvID. 902(10). in the affidavit,
Shaw attested that she was custodian of the records at Compass concerning the Poscentes’ account
and that she had personal knowledge of the facts stated in the affidavit. Attached to her affidavit
were copies of the note and two guaranties, Compass also submitted an affidavit of its attorney
supporting recovery of attorney’s fees. The Poscentes responded to Compass’s motion for summary
judgment and raised the arguments that they present in this appeal, including objections to the
affidavit of Paula Shaw.
The note lists the borrower as vince Poscente International, The pleadings in this case refer to Vince Poscente International, Inc. For
t
consistency, we refer to Vince Poscente International, Inc.
Compass filed suit in a district court in Dallas County. After the Poscentes filed a motion to transfer venue, the Dallas County court entered
an Agreed Order Granting Defendants’ Motion to Transfer Venue transferring this case to a district court in Collin County.
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The court grantc(1 Compass s n]otion for sunimary judgment and rendeied judgment against
the Poscentes for S I 38,646.37. pre-judLment and post—jtidgiient Interest, costs, attorney’s Fees, and
conditional appellate attorneys fees. The Poscentes subsequently filed a request for findings of fact
and conclusions of law and a motion for reconsideration of summary judgment, but the court did not
rule on the request or the motion. This appeal followed.
AppLIc,nLJ LAW I STDARn OF R1vaEw
[0 prevail on summary judgment on a claim on a note, the plaintiff must prove the note in
question, that the defendant signed the note, that the plaintiff is the legal owner and holder of the
note, and that a certain balance is due and owing on the note. See TrueStar Petroleum Corp. e. Eagle
Oil & Gas Co., 323 S.W.3d 316, 319 (Tex. App.—Dallas 2010, no pet.). To prevail on summary
judgment on a claim of breach of a guaranty, the plaintiff must present competent summary judgment
proof that conclusively establishes the existence and ownership of the guaranty. the performance of
the terms of the guaranty by the plaintiff, the occurrence of the condition on which liability is based,
and the guarantor s failure or refusal to perform the promise. See Sto,ie v. Mjdland MultitimiIv
Equity REIT. 334 S.W.3d 371, 378 (Tex. App.—Dallas 2011, no pet.); Corona v. Pilgrim’s Pride
Corp., 245 S.W.3d 75, 80 (Tex. App.—Texarkana 2008, pet. denied).
A plaintiff who moves for traditional summary judgment has the burden to conclusively
prove all elements of its claim as a matter of law .See TEx. R. Civ. P. 166a(c); City Qf Houston e.
Clear Creek Basin A jith., 589 S.W.2d 671, 678 (Tex. 1979). If the plaintiff satisfies its burden, the
burden shifts to the defendant to preclude summary judgment by presenting evidence that raises a
genuine issue of material fact. Westland Oil Dee. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 907
(Tex. 1982); Affordable Motor Co., Inc. v. LNA, LLC, 351 S.W.3d 515, 519 (Tex. App.—Dallas
2011, pet. denied). We review a trial court’s decision to grant summary judgment de novo to
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determine whether a party’s right to prevail is established as a matter of law. Montgomery r. Aurora
Luan Servs.. LU’. 375 S.W.3d 617. 619 (Tex. App.—Dal1as 20! 2. pet. denied).
We review a trial court s decision to admit or exclude summary j udgment evidence for an
abuse of discretion. iVclson v. Patan. 377 S.W 3d 823. 830 (Tex. App.—- Dallas 2(312, no pct... We
will not reverse a judgment on the ground of improperly admitted evidence unless a party shows that
the error probably caused the rendition of an improper judgment. TEx. R. APP. P. 44.1(a); Main r.
Royaii, 348 S.W.3d 381, 388 (Tex. App.—Dallas 201 1, no pet.). To make this showing, the
complaining party typically must demonstrate that the judgment turns on the particular evidence
admitted or excluded. Main, 348 S.W.3d at 388.
SuFFicIENCY OF AFFIDAVIT SUPPORTING MOTION FOR SUMMARY JUDGMENT
In their first issue, the Poscentes argue that, even if the affidavit Compass submitted to
support its motion for summary judgment was sufficient for admission of the note and guaranties as
business records, the affidavit was incompetent evidence for any other fact asserted therein.
including the vistence a/a defriult by Appellants.”
Content of Affidavit
In Shaw’s affidavit, Shaw attested that she had “personal knowledge of facts herein stated
all of which are true and correct” and that she was “the custodian of the records of Compass Bank
in regard to the account of Vince Poscente International, Inc., Vince Poscente, and Michelle
Poscente.” She testified that the records attached to her affidavit were the original or exact
duplicates of the note and guaranties and were business records of Compass. Shaw also testified that
(1) Compass was the owner and holder of the note and entitled to receive amounts due on the note,
(2) Vince and Michelle Poscente personally guaranteed the debt, as evidenced by the attached
guaranties, (3) the Poscentes defaulted in paying the note and the account had been accelerated, (4)
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the 1Iy(I balance due as of January .31 2011 was $1 38.64637, (5) interest was accruing at the
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contract rate of 7.280%. (6) the Poscentes’ account as described in Compass’s motion br summary
judgment was “within her personal knowledge just and truej ,1” (7) the total amount of the account
was due Compass and “all just and lawful offsets, payments, and credits haldi been allowedl,1” and
(8) “each and every statement of fact contained in thiel Motion for Summary Judgment is true and
colTect.”
Summary of Arguments
The Poscenles argue that the business records did not support and Shaw’s affidavit was not
competent to prove Shaw’s conclusions and factual assertions concerning the occurrence and manner
of the default, Compass’s subsequent actions, the application of payments, credits, and offsets, the
accrual of interest, and the payoff balance due as of a certain date. The Poscentes contend that
“Shaw’s factual testimony Iwals insufficiently specific, conclusory. not based on her personal
knowledge, not supported by the records that are the basis of her testimony, and d[ id I not fall under
the business records exception to the hearsay rule, or any other hearsay exception.” The Poscentes
argue that, even though the affidavit identified Shaw as custodian of the records, it did not state
whether she was employed by Compass, identify Shaw’s job title or position with Compass, or
explain the basis of her personal knowledge. Quoting Valenzuela v. State & Mutual Fire Insurance
Co., 317 S.W.3d 550. 553 (Tex. App.—Houston 114th Dist.1 2010, no pet.), the Poscentes argue that
Shaw’s affidavit did not “positively show a basis for the knowledge” and, as a result, Shaw’s
affidavit was not competent summary judgment evidence. The Poscentes argue that, because Shaw’s
affidavit was not competent evidence, there was no competent evidence to prove a default or that a
balance was due and owing on the note and, consequently, Compass failed to meet its burden to
conclusively prove all elements of its claim as a matter of law.
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Compass argues that the trial court acted within its discretion and correctly relied upon Paula
Shaw’s affidavit when it granted summary judgment in Compass’s favor. Compass contends that
Shaw’s affidavit was a verified business records affidavit under rule of evidence 902(10) with
“unchallenged copies” of the note and guaranties attached and was also a sworn account affidavit
that conformed with rule of civil procedure 185 as evidence of the debt. See TEx. R. EvID, 902(10>;
TEX. R. Civ, P. 185. Compass also argues that Shaw’s affidavit satisfied the personal knowledge
requirement and was not conclusory. Compass argues that Shaw’s affidavit satisfied the personal
knowledge requirement because Shaw was “the unchallenged custodian of the records of Compass
Bank” and she “swore that she had personal knowledge of the facts of the Motion for Summary
Judgment.”
In addition, Compass argues that the Poscentes did not file a verified denial of their execution
of the note and guaranties under rule of civil procedure 93(7), did not assert affirmative defenses
under rule of civil procedure 94, did not plead payment under rule of civil procedure 95, did not
challenge the amount Compass alleged to be due and owing on the note in their summary judgment
affidavits, and did not deny that all conditions precedent had occurred for recovery by Compass
under rule of civil procedure 54. See TEx. R. Civ. P. 54, 93(7), 94, 95. Compass argues that the
Poscentes did not offer any contradictory or rebuttal summary judgment evidence to challenge the
instruments, their default, the amount Paula Shaw testified was due and owing, Compass’s right to
interest, or the amount of attorney’s fees. Compass argues that the trial court acted within its
discretion when it admitted Shaw’s affidavit. Additionally, Compass argues that, even if the trial
court abused its discretion when it admitted Shaw’s affidavit, this Court should not reverse the trial
court’s decision because Compass otherwise established the elements of its claim and, as a result,
the error did not cause the court to render an improper judgment.
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I)iscLission
Sworn A ccoui:I A rgiimenh
First. we note that, although Compass ClaiflTh in its appellate brief that Shaw’ s affidavit is a
sworn account affidavit under rule of civil procedure 185, Compass did not allege in its petition,
motion for summary judgment, or appellate brief that this is a suit on a sworn account under rule
l85. See Thx. R. Civ. P. 185. And Compass did not object below or argue on appeal that the
Poscenies did riot tile a verified denial to a sworn account claim. See id.; see also Pa,idili v. Apostle.
ISO S.W.3d 923,926 (Tex. App.—Dallas 2006. no pet.) (“I lit is within the province of the court of
appeals to determine, as a matter of law, whether the pleadings are sufficient on their face to
constitute a sworn account.”); Robinson v, Faulkner, 422 S,W.2d 209. 213 (Tex, Civ. App.—Dallas
1967, writ ref’d n.r.c.) (finding that, even if stated claim was a claim on a sworn account, appellant
waived argument that appellee did not verify his answer because appellant did not bring this defect
to the attention of the trial court prior to judgment). But regardless of whether Compass waived its
position that it submitted a orn account affidavit and even if Shaw’s affidavit met the
requirements of rule 185 for a suit on a sworn account, Compass still had to satisfy the requirements
of rule of civil procedure 166a(f) to support its motion for summary judgment. See TEx, R. Civ. P.
l66a(f; McC’ollu,n v. May, 396 S.W.2d 170, 171, 173 (Tex. Civ. App.—Dallas 1965, no writ)
(finding affidavit complied with rule 185 for a suit on a sworn account but did not meet the
requirements of formerly designated rule 166-A to support summaryjudgment because affidavit did
not state that affidavit was made on personal knowledge and that affiant was competent to testify).
The record contains three references to a sworn account: (1) the title of Shaw’s affidavit that was attached to Compass’s original petition was
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“Affidavit for Sworn Account (Tex. R. Civ. P. 185) and for Admission Business Records (Tex. R. Civ. Evid. 902[lOl)” but the title of Shaw’s
affidavit attached to Compass’s motion for summary judgment did not refer to a sworn account, but only that it was in support of the summary
judgment and for the admission of business records under rule of evidence 902(10), (2) Compass’s counsel stated in his affidavit trir attorney’s fees
that “[t]his case involves a suit on sworn account[,1” and (3) some of the language in Shaw’s affidavits attached to the original petition and motion
for summary judgment tracked the language in rule of civil procedure 185 concerning a suit on account. See TEX. R. Civ. P. 185.
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Pcrso,ial knowledge Requirement
Rule I 66a(f) of the rules of civil procedure requires that affidavits submitted to support or
oppose a motion for summary judgment “shall he made on personal knowledge, shall set forth such
facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent
to testify to the matters stated therein.” Ti:x. R. Civ. P. 1 66a(f); see Rat/ia .Station A.SCS v. Jcn,iingv,
750 S.W,2d 760, 761 —62 (Tex. 1988); Stone, 334 S.W.3d at 375. A recitation of “personal
knowledge” does not convert unsupported conclusions into admissible evidence. Ned v. Tenet
HealthSystern Hosps. Dallas, Inc., 378 S.W.3d 597, 608 (Tex. App.-—Dallas 2012, pet. filed). An
affidavit must affirmatively show the basis [or the affiant’s personal knowledge. Id. It may do so
by describing the affiant’s position or job responsibilities and how he acquired knowledge through
the job or responsibilities. Stone, 334 S.W.3d at 375; Vaienuelu, 317 S.W.3d at 553—54; see
Saronikos, Inc. v. City of Dallas, 285 S.W.3d 512, 516 (Tex. App.—Dallas 2009, no pet.) (finding
affiant’ s testimony stating her position and responsibilities, which included managing a park project,
demonstrated her personal knowledge of issues concerning park); C’ooper v. Circle Ten council Boy
Scouts ojAin., 254 S.W.3d 689, 698 (Tex. App.—Dallas 2008, no pet.) (finding affiant established
personal knowledge through his testimony that he was the Scout Executive and CEO of defendant
and that he had knowledge of its operations and organization). An affidavit that does not show a
basis for personal knowledge is legally insufficient. Kerlin v. Arias, 274 S.W.3d 666, 668 (Tex.
2008>.
Although Shaw stated in her affidavit that her testimony was based on her personal
knowledge, the affidavit did not establish how Shaw obtained personal knowledge of the facts to
which she testified. The affidavit did not demonstrate whether she was employed by Compass, what
herjob position and responsibilities were, or how her job duties gave her personal knowledge of the
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facts. The two cases that Compass cites to support its position that Shaw’s alhdavit met the personal
knowledge requirement are distinguishable because, unlike Shaw’s affidavit, the affidavit in each
o( those cases established how the affiant obtained personal knowledge 01 the matters stated in the
alhdavit. See Stucki i. Noble, 963 S.W.2d 776, 780 (lex. App. —San Antonio 1998, pet. denied)
(noting affiant identified himself as a party to the suit and settlement agreement at issue, owner and
landlord of property that was subject to the lease at issue, and holder of the promissory note at issue>;
(loss V. G.ve Creek Consol. Indep. Sub. 1)1st.. 874 S.W.2d 859. 868 (Tex. App.—Texarkana 1994,
no writ) (stating affiani asserted that he was superintendent of schools and custodian of school
district records and attested that attached copies of school records were true and correct).
As a result, Shaw’s statements—other than those concerning the admission of the note and
guaranties as business records—amount to no evidence. See Ned, 378 S.W.3d at 608 (finding
affidavit of officer of entity did not establish basis for personal knowledge of other party’s efforts
or decisions concerning mitigation of damages); Primary Media, Ltd v. Cliv ofRockwall. No. 0509-
011 16-CV, 2011 WL 908353. at *3 (Tex. App.—Dallas Mar. 17, 2011. no pet.) (mem. op.)
(concluding that affidavit was incompetent summary judgment evidence because affidavit did not
demonstrate that affiant held any position with city during relevant time period that would provide
the basis for his personal knowledge of attested facts); Stone, 334 S.W.3d at 375—77 (stating that an
affidavit that does not demonstrate a basis for personal knowledge is incompetent summary
judgment evidence and concluding that affiant’s statement that he was officer and managing director
at company that was advisor to appellee did not demonstrate how affiant’ s job responsibilities during
the relevant time period afforded him personal knowledge of facts he attested to in affidavit);
Valenuela, 317 S.W.3d at 554 (finding affidavit incompetent to prove stated facts because, although
affidavit stated affiant was claims manager for insurance company, it did not establish how her job
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duties gave her knowledge of facts at issue, whether she was claims manager during the relevant time
period, or how she was familiar with claim). Because we conclude that Shaw’s affidavit was not
competent summary judgment evidence, we need not discuss the other arguments raised by the
parties in this first issue.
SUFFICIENCY OF THE EvIDENCE
The Poscentes argue that, because there was no competent summary judgment evidence of
a balance due and owing under the note or a delault in payment. Compass did not meet its burden
to conclusively establish all elements of its claim as a matter of law. and, consequently, the trial court
erred in granting Compass summary judgment. We agree. Because Shaw’s affidavit was the only
summary judgment evidence of the amount due and owing on the note and the indebtedness for
which Vince and Michelle Poscente were liable as guarantors, and because we have concluded that
Shaw’s affidavit was not competent summary judgment evidence, we conclude that Compass did
not conclusively prove all essential elements of its cause of action as a matter of law and the trial
Court erred in granting summaryjudgmentto Compass. See Clear Creek, 589 S.W.2d at 678 (stating
the movant for summary judgment must conclusively prove all essential elements as a matter of law).
We sustain the Poscentes’ first issue. Because of our resolution of the first issue, we do not
need to reach the Poscentes’ other three issues.
CoNcius1oN
We reverse the trial court’s summary judgment and remand this case to the trial court for
further proceedings consistent with this opinion.
111645F.P05
EL1ZETH LANG-MIERS
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Qtuurt øf Appeals
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JUDGMENT
VIN(’E POSCENTE INTERNATIONAL Appeal trom the 380th Judicial I)istricl
INC VINCE POSCENTE, AND Court of Collin County. Texas. (Tr.Ct.No.
MICHELLE POSCENTE, Appellants 3804)2889-2011).
Opinion delivered by Justice Lang-Miers,
No. 051 L01645CV V. Justices O’Neill and FitzGerald
participating.
COMPASS BANK, Appellee
In accordance with this Court’s opinion of this date, the trial court’s summary judgment
dated September 9. 2011 is REVERSED and this cause is REMANDED to the trial court for
further proceedings consistent with the opinion. It is ORDERED that appellants Vince Poscente
International, Inc., Vince Poscente, and Michelle Poscente recover their costs of this appeal from
appellee Compass Bank.
Judgment entered March 28, 2013.
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ELI1ABET-I LANG-MlRS
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