Nasser Chehab v. First Service Credit Union ( 2020 )

Affirmed and Memorandum Opinion filed September 3, 2020.
In The
Fourteenth Court of Appeals
NO. 14-18-00969-CV
NASSER CHEHAB, Appellant
V.
FIRST SERVICE CREDIT UNION, Appellee
On Appeal from the 157th District Court
Harris County, Texas
Trial Court Cause No. 2017-80462
MEMORANDUM OPINION
Appellant Nasser Chehab challenges the summary judgment in favor of First
Service Credit Union on Chehab’s breach of contract, breach of fiduciary duty, and
Deceptive Trade Practices Act (DTPA) claims. Chehab asserts he raised genuine
issues of material fact on his damages, which precludes summary judgment. Because
we determine that Chehab failed to raise a genuine fact issue regarding damages, we
affirm.
BACKGROUND
Chehab opened a checking account with First Service Credit Union (“First
Service”), which was governed by a Deposit Account Contract. On September 28,
2017, Chehab received a wire transfer into his account at First Service of
$122,242.67. Before that transfer Chehab’s balance was $8.96. On Friday,
September 29, 2017, Chehab visited the Northwest Branch of First Service and asked
to withdraw almost all of his balance in cash. A teller informed Chehab that First
Service could not process such a large cash transaction without advance notice.
Chehab then requested $80,000 in cash in $100 bills. Again, Chehab was told that
First Service could not process such a large cash request without prior notice. The
branch manager explained that Chehab’s cash would be available the following
Wednesday, October 4, 2017. The manager offered to fulfill Chehab’s withdrawal
request by wire transfer or cashier’s check, but Chehab refused to accept anything
but $100 bills. Chehab eventually agreed to accept $20,000 in cash, which he
received in $100 bills. Before Chehab left, the branch manager explained that he
could return on October 4, 2017, and pick up the remaining cash.
The following Monday, October 2, 2017, Chehab visited the Downtown
Branch of First Service and requested $60,000 in $100 bills. The branch manager of
the Downtown Branch explained, just as the Northwest Branch manager had, that
Chehab would have to place an order for such a large amount of cash and offered to
provide a wire transfer or cashier’s check in the amount Chehab requested. Chehab
refused the alternative methods and insisted on cash in $100 bills. The branch
manager placed an order for $60,000 in $100 bills and informed Chehab that it would
be available on Wednesday, October 4, 2017. Chehab became verbally abusive and
was escorted from the branch by an off-duty police officer working for the branch.
The next day, October 3, 2017, Chehab returned to the Downtown Branch and
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demanded $50,000 or $60,000 in $100 bills. He was given $8,000 in cash and told,
again, to return on October 4, 2017 for the remainder. On October 4, 2017, Chehab
returned to the Downtown Branch where he withdrew $54,000 in $100 bills. The
record does not reflect how Chehab used the funds he obtained from First Service.
Chehab filed suit alleging breach of contract because the deposit contract
required First Service to make Chehab’s funds available immediately. First Service
answered and filed a motion for traditional summary judgment in which it alleged
that Chehab’s allegations did not demonstrate that First Service breached a term of
the contract and Chehab’s claims for lost profits damages were not recoverable as a
matter of law. As to damages, First Service asserted that Chehab’s only damages
related to a missed opportunity to establish a used car business. First Service’s
summary judgment was supported by affidavits from the branch managers at the
Northwest Branch and the Downtown Branch. First Service also attached the
Deposit Account Contract to its motion and Chehab’s responses to interrogatories
and requests for production. In First Service’s interrogatories, it asked Chehab the
amount and any method of calculating economic damages. Chehab responded:
Due to defendant’s breach of contract, Plaintiff missed an opportunity
to establish a used car dealership business. It was projected to sell about
100 cars per week with a profit of $3000.00 per car for the first two
months and about 10 cars per week with a [profit] of $1500.00 per car
for the rest of the first year. Estimated damages: $3,120,000,00.
First Service moved for summary judgment on the grounds that Chehab’s allegations
did not demonstrate that First Service breached the contract and Chehab presented
no evidence of lost profits from the inability to establish the used car dealership
business.
After First Service filed its motion for summary judgment Chehab amended
his petition to include claims for breach of fiduciary duty and violation of the DTPA.
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Chehab also added claims for exemplary damages. On the same day Chehab
responded to First Service’s motion for summary judgment asserting that he
established lost profits with reasonable certainty by focusing on “the experience of
the persons involved in the enterprise and the nature of the business activity, and
relevant market.” Chehab attached no evidence to his response.
First Service replied to Chehab’s response noting that Chehab’s amended
petition did not change the fact that Chehab failed to produce evidence of damages.
Chehab amended his response to the motion for summary judgment attaching the
affidavit of Toma Saman. Saman averred that he had been in the used car business
for over 25 years. According to Saman’s affidavit, immediately following Hurricane
Katrina in New Orleans, Saman’s used car business surged to approximately 100
used car sales per week for several months following the disaster. Chehab hoped to
profit in a similar manner in Houston following Hurricane Harvey. Saman was to
supply 35 to 40 cars to Chehab in exchange for $100,000 cash. Saman averred that
he was unable to provide the cars because “Chehab did not hold his end of the deal.”
Saman’s affidavit did not explain why he could not have accepted a wire transfer or
cashier’s check for the cars, or why he could not accept cash on October 4, three
business days after Chehab initially demanded cash from First Service.
The trial court granted First Service’s summary judgment motion “with
respect to plaintiff’s claims for lost profits” and denied the remainder of the motion.
First Service subsequently amended its answer asserting a counterclaim for
sanctions pursuant to chapter 10 of the Texas Civil Practice and Remedies Code and
Texas Rule of Civil Procedure 13. First Service also filed traditional and no-evidence
motions for summary judgment challenging Chehab’s third-amended petition in
which he added breach of fiduciary duty and DTPA claims. In First Service’s
traditional motion, it asserted that Chehab (1) could not demonstrate recoverable
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damages on his breach of contract claim; (2) could not establish that a fiduciary duty
existed between him and First Service; (3) could not establish a violation of the
DTPA; and (4) could not establish recoverable damages under the DTPA. In First
Service’s no-evidence motion it asserted:
• Plaintiff has no evidence that First Service knowingly or
intentionally committed a violation of the DTPA by not
immediately providing him cash on demand, precluding his
claim for mental anguish under the DTPA.
• Plaintiff has no evidence that First Service misrepresented any
fact to him that he relied upon in entering the Contract with First
Service.
• Plaintiff has no evidence that First Service failed to disclose any
information that First Service believed would be material to his
decision to enter the Contract.
• Plaintiff has no evidence of any economic damages other than
his claims for lost profits for the alleged used car business.
• Plaintiff has no evidence of any special relationship of trust and
confidence necessary to create a fiduciary duty.
• Plaintiff has no evidence that First Service retained any
economic benefits from the retention of his cash for three
business days.
Chehab responded, asserting that all of his claims stemmed from “Defendant’s
failure to provide Plaintiff with the amount of his withdrawal request of $80,000 on
the date desired[.]” As damages Chehab asserted lost income and profits that would
have been derived if he could have invested in a used car dealership. Chehab further
asserted that Texas recognizes nominal damages for breach of contract, and used car
lots located in Houston are inherently profitable. Chehab attached to his response (1)
two articles from Wired.com and The Detroit News about the number of cars lost
during Hurricane Harvey and its after-effects; (2) Saman’s affidavit; and (3) the
affidavit of Luis Esparza, another used car dealership owner, in which Esparza
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averred that his dealerships did not flood after Hurricane Harvey and he was able to
sustain substantial sales.
On October 12, 2018, the trial court granted First Service’s motion for
summary judgment and dismissed all of Chehab’s claims. First Service nonsuited all
its claims under chapter 10 of the Texas Civil Practice and Remedies Code and Rule
13 of the Rules of Civil Procedure, and the trial court signed a November 22, 2018
order acknowledging the nonsuit, rendering a final judgment. See Park Place Hosp.
v. Estate of Milo, 909 S.W.2d 508, 510 (Tex. 1995). Chehab timely appealed the trial
court’s final summary judgment.
ANALYSIS
In two issues Chehab challenges the trial court’s ruling on First Service’s
motion for summary judgment.
I. Standard of review and applicable law
We review a no-evidence summary judgment under a legal sufficiency
standard. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750–51 (Tex. 2003) (“A
no-evidence summary judgment is essentially a pretrial directed verdict, and we
apply the same legal sufficiency standard in reviewing a no-evidence summary
judgment as we apply in reviewing a directed verdict.”). A no-evidence summary
judgment will be sustained when: “(a) there is a complete absence of evidence of a
vital fact; (b) the court is barred by rules of law or of evidence from giving weight
to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a
vital fact is no more than a mere scintilla; or (d) the evidence establishes conclusively
the opposite of a vital fact.” Id. at 751 (citing Merrell Dow Pharms. v. Havner, 953
S.W.2d 706, 711 (Tex. 1997)).
We review a trial court’s order granting a motion for a traditional summary
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judgment de novo. Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618, 621 (Tex.
2007). In reviewing a grant of a summary-judgment motion, we consider all of the
evidence in the light most favorable to the nonmovant. Goodyear Tire & Rubber Co.
v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007). To prevail on a traditional motion for
summary judgment, a movant must prove entitlement to judgment as a matter of law
on the issues pleaded and set out in the motion for summary judgment. Tex. R. Civ.
P. 166a(c); Masterson v. Diocese of Nw. Texas, 422 S.W.3d 594, 607 (Tex. 2013).
If the trial court renders summary judgment without specifying the grounds,
we affirm the judgment if any of the grounds presented are meritorious. Dow Chem.
Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (per curiam). We first review the
trial court’s no-evidence summary judgment under the standards of Rule 166a(i).
See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). The nonmovant,
here Chehab, must produce summary judgment evidence raising a genuine issue of
material fact to defeat the summary judgment under that provision. Tex. R. Civ. P.
166a(i). If Chehab failed to produce more than a scintilla of evidence under that
burden, then there is no need to analyze whether the Bank’s proof satisfied the Rule
166a(c) burden. See Ford Motor, 135 S.W.3d at 600; Walker v. Holmes, Diggs,
Eames & Sadler, No. 14-19-00234-CV, 2020 WL 2120295, at *3 (Tex. App.—
Houston [14th Dist.] May 5, 2020, no pet.) (mem. op.).
II. The trial court’s orders on summary judgment merged into a final
judgment for review by this court.
The trial court signed a partial summary judgment on August 14, 2018.
Because Chehab amended his petition after First Service filed its first motion for
summary judgment, the August 14 order was not a final order. See Espeche v. Ritzell,
123 S.W.3d 657, 663 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (citing
Chessher v. Sw. Bell Tel. Co., 658 S.W.2d 563, 564 (Tex. 1983)) (“A party may not
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be granted judgment as a matter of law on a cause of action not addressed in a
summary judgment proceeding.”). The October 12, 2018 order granting the motion
for summary judgment was made final by the trial court’s order on First Service’s
nonsuit of its claim for sanctions under Chapter 10 of the Texas Civil Practice and
Remedies Code and Rule 13 of the Texas Rules of Civil Procedure. We therefore
address Chehab’s challenge to the trial court’s August 14, 2018 and October 12,
2018 summary judgment orders.
III. Chehab produced no evidence of damages in response to First Service’s
no-evidence motion for summary judgment.
Chehab asserted causes of action for breach of contract, breach of fiduciary
duty, and violations of the DTPA. In the no-evidence portion of First Service’s
motion for summary judgment, it asserted, inter alia, that Chehab had produced no
evidence that First Service’s action in not fulfilling Chehab’s withdrawal request
immediately in $100 bills caused him damages. Damages is a required element of
each of Chehab’s claims. See Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817,
824 (Tex. 2012) (no claim under the DTPA can be maintained absent proof that
defendant’s act was a producing cause of plaintiff’s damages); Tony Gullo Motors
I, L.P. v. Chapa, 212 S.W.3d 299, 304 (Tex. 2006) (for breach of contract, a plaintiff
may recover economic damages and attorney’s fees, but not mental anguish or
exemplary damages); Tex. Instruments, Inc. v. Teletron Energy Management, Inc.,
877 S.W.2d 276, 279 (Tex. 1994) (lost profits are recoverable for a breach of
fiduciary duty when it is shown that the loss is the natural and probable consequence
of the complained of act).
Chehab responded to First Service’s motion by attaching two articles about
the number of cars lost during Hurricane Harvey and its after-effects, and two
affidavits of used car dealership owners in which they averred that used car
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dealerships were likely to be profitable following a major hurricane. On appeal
Chehab argues that nominal damages are recoverable in breach of contract claims,
and that he raised a fact issue on lost profits.
A. Nominal Damages
Chehab first argues that Texas law recognizes nominal damages for breach of
contract, presumably alleviating a requirement that Chehab produce evidence of
damages. Chehab, however, did not plead for nominal damages. In Chehab’s live
pleading, he alleged that First Service’s breach of contract caused him damages “in
the form of lost opportunity, lost income and profits from a used car business
startup[.]” By pleading for monetary damages, Chehab is not entitled to recover
nominal damages.
Nominal damages are available for breach of contract. MBM Fin. Corp. v.
Woodlands Operating Co., L.P., 292 S.W.3d 660, 664 (Tex. 2009). However,
nominal damages are not for compensation; they are for cases in which there are no
damages, or none that could ever be proved. Id. The rule in Texas is that nominal
damages are not available when the harm is entirely economic and subject to proof,
as opposed to non-economic harm to civil or property rights. Id. (citing Gulf Coast
Inv. Corp. v. Rothman, 506 S.W.2d 856, 858 (Tex.1974) (rejecting claim for nominal
damages when evidence showed plaintiff suffered no economic damage)).
Here, Chehab has not pleaded for nominal damages for non-economic harm,
such as harm to civil or property rights. Therefore, the fact that nominal damages
can generally be recovered in a breach-of-contract action does not create a fact issue
as to whether Chehab produced evidence of actual damages. See Tex. R. Civ. P.
166a.
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B. Evidence of Lost Profits
Chehab next asserts that he produced enough evidence to create a fact issue
on lost profits damages. “Lost profits are damages for the loss of net income to a
business measured by reasonable certainty.” Miga v. Jensen, 96 S.W.3d 207, 213
(Tex. 2002). Recovery of lost profits does not require that the loss be susceptible to
exact calculation. Tex. Instruments, Inc., 877 S.W.2d at 279. The loss, however, must
not be speculative. The general rule is that recovery of lost profits as damages is
allowed “where it is shown that a loss of profits is the natural and probable
consequence of the act or omission complained of, and their amount is shown with
sufficient certainty.” Tex. Instruments, Inc., 877 S.W.2d at 279 (quoting Sw. Battery
Corp. v. Owen, 115 S.W.2d 1097, 1098 (Tex. 1938)). “[A]nticipated profits cannot
be recovered where they are dependent upon uncertain and changing conditions,
such as market fluctuations, or the chances of business, or where there is no evidence
from which they may be intelligently estimated.” Id. (quoting Owen, 115 S.W.2d at
1098). Indeed, “[t]he law is wisely skeptical of claims of lost profits from untested
ventures or in unpredictable circumstances, which in reality are little more than
wishful thinking.” Phillips v. Carlton Energy Grp., LLC, 475 S.W.3d 265, 280 (Tex.
2015). When the evidence supporting a claim for lost profits damages is largely
speculative or a mere hope for success, lost profits have not been shown with
reasonable certainty. Tex. Instruments, 877 S.W.2d at 279.
Whether a new business entity seeking entry into an existing market may
recover lost profits depends on the experience of the persons involved in the
enterprise, the nature of the business activity and the relevant market, and whether
the profits the business might have made are “susceptible of being established by
proof to that degree of certainty which the law demands.” Id. at 280 (quoting Owen,
115 S.W.2d at 1099). To avoid summary judgment when presented with a no-
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evidence motion, an injured party “must do more than show that [he] suffered some
lost profits.” Total Clean, LLC v. Cox Smith Matthews Inc., 330 S.W.3d 657, 663
(Tex. App.—San Antonio 2010, pet. denied) (citing Szczepanik v. First S. Trust Co.,
883 S.W.2d 648, 649 (Tex. 1994)). He must show the amount of the loss by
competent evidence with reasonable certainty. Id. “At a minimum, opinions or
estimates of lost profits must be based on objective facts, figures, or data from which
the amount of lost profits may be ascertained.” Szczepanik, 883 S.W.2d at 649; Holt
Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992). Lost profits are
damages for the loss of net income to a business and, broadly speaking, reflect
income from lost-business activity, less expenses that would have been attributable
to that activity. Miga, 96 S.W.3d at 213.
In response to First Service’s no-evidence motion for summary judgment the
only evidence Chehab presented that was arguably related to lost profits were the
affidavits of Saman and Esparza. Saman averred that his used car business in New
Orleans surged following Hurricane Katrina. Saman averred that his business surged
in volume from approximately 40 cars per month to 100 cars per month for several
months following the disaster. Saman further averred that his retail profits surged
from approximately $750 per car to $3,000 per car. Saman stated that he planned to
supply 35 to 40 cars to Chehab but did not do so because Chehab did not “hold his
end of the deal.” Chehab also attached the affidavit of Luis Esparza who averred that
his two used car dealerships experienced a 28 to 30 percent increase in sales in a
four-month period following Hurricane Harvey.
Neither affidavit addressed an amount of profits that Chehab would have
made if First Service had given Chehab cash on the day he requested it. Chehab did
not produce evidence of the loss of net income that was the “natural and probable
consequence” of First Service’s failure to give Chehab cash on the day he made the
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request. See Tex. Instruments, Inc., 877 S.W.2d at 279. Chehab did not provide an
opinion or estimate of the amount of lost profits, if any, or any evidence as to why
First Service’s offer of a wire transfer or cashier’s check caused him to fail to “hold
his end of the deal.” Saman and Esparza’s affidavits recounted their experiences with
selling used cars following a major hurricane. The affidavits were not evidence of
opinions or estimates based on objective facts, figures, or data from which the
amount of lost profits may be ascertained. The distinguishing feature between Texas
cases permitting and denying recovery for lost profits is reliance upon routinely kept
business records produced in court to show an evaluation of the business’s decreased
profitability based upon objective facts, figures, and data. Holland v. Hayden, 901
S.W.2d 763, 766 (Tex. App.—Houston [14th Dist.] 1995, writ denied). Here, there
is no summary-judgment evidence that Chehab suffered any reasonably certain
business losses resulting from First Services three-day delay in honoring Chehab’s
request for a large amount of cash.
Under the applicable standard of review, the summary-judgment evidence
filed by Chehab in response to First Service’s no-evidence motion regarding each of
Chehab’s claims did not raise a genuine issue of fact as to whether Chehab suffered
any lost profits damages resulting from First Service’s alleged breach of contract,
breach of fiduciary duty, or violation of the DTPA. See Szczepanik, 883 S.W.2d at
649–50; Holt Atherton Indus., Inc., 835 S.W.2d at 83–86.
IV. Chehab has not challenged any other grounds on which the motion for
no-evidence summary judgment could have been granted.
In First Service’s motion for summary judgment, in addition to asserting that
Chehab produced no evidence of damages, First Service asserted that Chehab
produced no evidence (1) that First Service violated the DTPA by not immediately
providing Chehab cash on demand; (2) that First Service made any
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misrepresentations; (3) that First Service failed to disclose any information material
to Chehab’s decision to enter into the contract; (4) that there was a fiduciary
relationship between Chehab and First Service; and (5) that First Service retained
any economic benefits from the retention of the cash for three days.
Chehab did not produce a scintilla of evidence of the above issues to the trial
court, nor does he argue on appeal that he produced evidence of any
misrepresentations by First Service or a fiduciary duty between him and First
Service. Chehab has not challenged all independent bases or grounds that could, if
meritorious, support the summary judgment dismissing his claims. We therefore
must uphold the summary judgment on those issues. See Durham v. Accardi, 587
S.W.3d 179, 183 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (if an appellant
does not challenge every possible ground for summary judgment, we will uphold the
summary judgment on any of the unchallenged grounds).
Moreover, damages is a required element of each of Chehab’s claims. See
Cruz, 364 S.W.3d at 824 (no claim under the DTPA can be maintained absent proof
that defendant’s act was a producing cause of plaintiff’s damages); Tony Gullo
Motors, 212 S.W.3d at 304 (for breach of contract, a plaintiff may recover economic
damages and attorney’s fees, but not mental anguish or exemplary damages); Tex.
Instruments, 877 S.W.2d at 279 (lost profits are recoverable for a breach of fiduciary
duty when it is shown that the loss is the natural and probable consequence of the
complained of act); West v. Triple B. Servs., LLP, 264 S.W.3d 440, 446 (Tex. App.—
Houston [14th Dist.] 2008, no pet.) (to recover on a breach of contract cause of
action, plaintiff must have sustained damages as a result of the defendant’s breach).
Because Chehab produced no evidence of damages and did not address the
remaining grounds for summary judgment, we overrule Chehab’s issues on appeal.
Having determined that Chehab produced no evidence in response to First Service’s
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no-evidence motion for summary judgment we need not, and do not, address First
Service’s motion for traditional summary judgment. See Ford Motor, 135 S.W.3d at
600.
CONCLUSION
Having overruled appellant’s issues on appeal we affirm the trial court’s
judgment.
/s/ Jerry Zimmerer
Justice
Panel consists of Justices Zimmerer, Spain, and Hassan.
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