Opinion issued February 27, 2014
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-13-00155-CV ——————————— AIMS ATM, LLC, Appellant V. SANIP ENTERPRISES, INC., Appellee
On Appeal from the 190th District Court Harris County, Texas Trial Court Case No. 2011-60777
MEMORANDUM OPINION
Appellant, AIMS ATM, LLC (“AIMS”), challenges the trial court’s
judgment entered in favor of appellee, Sanip Enterprises, Inc., (“Sanip”) on their
claims against each other for breach of contract. In three issues, AIMS contends
that the evidence is legally and factually insufficient to support the trial court’s judgment and the trial court erred in not enforcing the parties’ contract and
awarding damages to Sanip, rather than providing Sanip with a credit or offset
from AIM’s damages.
We affirm.
Background
In 2008, AIMS and Sanip entered into a Merchant Processing Agreement
(the “Agreement”), which obligated AIMS to process transactions and maintain
Sanip’s Automated Teller Machine (“ATM”) at a convenience store located in
Dallas, Texas. The Agreement required AIMS to pay Sanip a commission for each
ATM transaction, “on or before the end of each calendar month following the
calendar month in which the transactions occurred.” AIMS’s check to Sanip for
payment for November 2009 ATM transactions, due by December 31, 2009, was
returned for “insufficient funds,” and AIMS did not provide a replacement check
until January 5, 2010.
Several months later, Sanip contacted AIMS when Sanip did not receive
payment for the March 2010 ATM transactions. Despite repeated promises from
an AIMS representative that the check was “in the mail,” Sanip did not receive
payment. Consequently, in May 2010, Sanip’s president, Nandi Bhattarai, spoke
with Mohen Chan of AIMS about AIMS’s default under the Agreement for
nonpayment of the ATM transaction commissions. On May 10, 2010, Sanip sent
2 AIMS a forty-five day notice of breach and termination of the Agreement. Shortly
thereafter, Sanip received the March 2010 commission payment with a check dated
May 11, 2010.
Bhattarai testified that Sanip also never received a payment of $1,936 from
AIMS for the ATM transactions occurring during the twenty-two days in July 2010
while the Agreement was still in force. Bhattarai further noted that, despite filling
out the paperwork to receive it, AIMS did not provide a “W-9” tax form to Sanip
to demonstrate that the income was received from the ATM transactions. And
AIMS had not properly serviced the ATM the two times Sanip informed AIMS
about maintenance problems.
AIMS sued Sanip for breach of the Agreement, and Sanip counter-claimed
for breach of the Agreement. After a bench trial, the trial court entered judgment
for Sanip, awarding it $1,936 in damages for breach of contract and $7,235 for
attorneys’ fees. It further ordered that AIMS take nothing on its breach-of-contract
claim.
Standard of Review
After a bench trial, when no findings of fact and conclusions of law are filed,
the trial court’s judgment implies all necessary findings of fact to support it.1
1 Although AIMS refers to a letter ruling by the trial court in which it stated that certain paragraphs of the Agreement were “unreasonable, unconscionable, and unenforceable,” the letter is not included in the appellate record. Nor does the 3 Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex. 1989); Baytown State Bank v.
Nimmons, 904 S.W.2d 902, 904 (Tex. App.—Houston [1st Dist.] 1995, writ
denied). When the implied findings of fact are supported by evidence, it is our
duty to uphold judgment on any theory of law applicable to the case. Point
Lookout W., Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987); Weng Enters., v.
Embassy World Travel, Inc., 837 S.W.2d 217, 223 (Tex. App.—Houston [1st
Dist.] 1992, no writ). Implied findings may be challenged by legal- and factual-
sufficiency points. Roberson, 768 S.W.2d at 281; Giangrosso v. Crosley, 840
S.W.2d 765, 769 (Tex. App.—Houston [1st Dist.] 1992, no writ).
The test for legal sufficiency is “whether the evidence at trial would enable
reasonable and fair-minded people to reach the verdict under review.” City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); see Tiller v. McLure, 121
S.W.3d 709, 713 (Tex. 2003) (holding that, in reviewing “no evidence” point,
court views evidence in light that tends to support finding of disputed fact and
record reflect that AIMS requested post-judgment findings or conclusions, and the trial court did not file them. See TEX. R. CIV. P. 296–299a. In any event, such a letter ruling by the trial court does not constitute findings of facts or conclusions of law as contemplated by Texas Rules of Civil Procedure 296–299a. See Cherokee Water Co. v. Gregg Cnty. Appraisal Dist., 801 S.W.2d 872, 878 (Tex. 1990) (stating that pre-judgment letter to the parties “was not competent evidence of the trial court’s basis for judgment” and did not constitute findings of fact). Explanatory letters from the trial court preceding a judgment do not impact the standard or scope of our appellate review. See Texas Bd. of Chiropractic Exam’rs v. Texas Med. Ass’n, 375 S.W.3d 464, 482 n. 24 (Tex. App.—Austin 2012, pet. denied); Summers v. Fort Crockett Hotel, Ltd., 902 S.W.2d 20, 25 (Tex. App.— Houston [1st Dist.] 1995, writ denied) (refusing to consider trial court’s letter explaining reasons why judge would grant summary judgment). 4 disregards all evidence and inferences to contrary). In making this determination,
we credit favorable evidence, if a reasonable factfinder could, and disregard
contrary evidence, unless a reasonable factfinder could not. City of Keller, 168
S.W.3d at 827. So long as the evidence falls within the zone of reasonable
disagreement, we may not substitute our judgment for that of the factfinder. Id. at
827–28. The factfinder is the sole judge of the credibility of the witnesses and the
weight to give their testimony. See id. at 819. Although we consider the evidence
in the light most favorable to the challenged findings, indulging every reasonable
inference that supports them, we may not disregard evidence that allows only one
logical inference. Id. at 822. If there is more than a scintilla of evidence
supporting a finding of fact, we will overrule a legal-sufficiency challenge. CA
Partners v. Spears, 274 S.W.3d 51, 69 (Tex. App.—Houston [14th Dist.] 2008,
pet. denied.).
In reviewing a challenge to the factual sufficiency of the evidence, we “must
consider and weigh all the evidence and should set aside the judgment only if it is
so contrary to the overwhelming weight of the evidence as to be clearly wrong and
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Opinion issued February 27, 2014
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-13-00155-CV ——————————— AIMS ATM, LLC, Appellant V. SANIP ENTERPRISES, INC., Appellee
On Appeal from the 190th District Court Harris County, Texas Trial Court Case No. 2011-60777
MEMORANDUM OPINION
Appellant, AIMS ATM, LLC (“AIMS”), challenges the trial court’s
judgment entered in favor of appellee, Sanip Enterprises, Inc., (“Sanip”) on their
claims against each other for breach of contract. In three issues, AIMS contends
that the evidence is legally and factually insufficient to support the trial court’s judgment and the trial court erred in not enforcing the parties’ contract and
awarding damages to Sanip, rather than providing Sanip with a credit or offset
from AIM’s damages.
We affirm.
Background
In 2008, AIMS and Sanip entered into a Merchant Processing Agreement
(the “Agreement”), which obligated AIMS to process transactions and maintain
Sanip’s Automated Teller Machine (“ATM”) at a convenience store located in
Dallas, Texas. The Agreement required AIMS to pay Sanip a commission for each
ATM transaction, “on or before the end of each calendar month following the
calendar month in which the transactions occurred.” AIMS’s check to Sanip for
payment for November 2009 ATM transactions, due by December 31, 2009, was
returned for “insufficient funds,” and AIMS did not provide a replacement check
until January 5, 2010.
Several months later, Sanip contacted AIMS when Sanip did not receive
payment for the March 2010 ATM transactions. Despite repeated promises from
an AIMS representative that the check was “in the mail,” Sanip did not receive
payment. Consequently, in May 2010, Sanip’s president, Nandi Bhattarai, spoke
with Mohen Chan of AIMS about AIMS’s default under the Agreement for
nonpayment of the ATM transaction commissions. On May 10, 2010, Sanip sent
2 AIMS a forty-five day notice of breach and termination of the Agreement. Shortly
thereafter, Sanip received the March 2010 commission payment with a check dated
May 11, 2010.
Bhattarai testified that Sanip also never received a payment of $1,936 from
AIMS for the ATM transactions occurring during the twenty-two days in July 2010
while the Agreement was still in force. Bhattarai further noted that, despite filling
out the paperwork to receive it, AIMS did not provide a “W-9” tax form to Sanip
to demonstrate that the income was received from the ATM transactions. And
AIMS had not properly serviced the ATM the two times Sanip informed AIMS
about maintenance problems.
AIMS sued Sanip for breach of the Agreement, and Sanip counter-claimed
for breach of the Agreement. After a bench trial, the trial court entered judgment
for Sanip, awarding it $1,936 in damages for breach of contract and $7,235 for
attorneys’ fees. It further ordered that AIMS take nothing on its breach-of-contract
claim.
Standard of Review
After a bench trial, when no findings of fact and conclusions of law are filed,
the trial court’s judgment implies all necessary findings of fact to support it.1
1 Although AIMS refers to a letter ruling by the trial court in which it stated that certain paragraphs of the Agreement were “unreasonable, unconscionable, and unenforceable,” the letter is not included in the appellate record. Nor does the 3 Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex. 1989); Baytown State Bank v.
Nimmons, 904 S.W.2d 902, 904 (Tex. App.—Houston [1st Dist.] 1995, writ
denied). When the implied findings of fact are supported by evidence, it is our
duty to uphold judgment on any theory of law applicable to the case. Point
Lookout W., Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987); Weng Enters., v.
Embassy World Travel, Inc., 837 S.W.2d 217, 223 (Tex. App.—Houston [1st
Dist.] 1992, no writ). Implied findings may be challenged by legal- and factual-
sufficiency points. Roberson, 768 S.W.2d at 281; Giangrosso v. Crosley, 840
S.W.2d 765, 769 (Tex. App.—Houston [1st Dist.] 1992, no writ).
The test for legal sufficiency is “whether the evidence at trial would enable
reasonable and fair-minded people to reach the verdict under review.” City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); see Tiller v. McLure, 121
S.W.3d 709, 713 (Tex. 2003) (holding that, in reviewing “no evidence” point,
court views evidence in light that tends to support finding of disputed fact and
record reflect that AIMS requested post-judgment findings or conclusions, and the trial court did not file them. See TEX. R. CIV. P. 296–299a. In any event, such a letter ruling by the trial court does not constitute findings of facts or conclusions of law as contemplated by Texas Rules of Civil Procedure 296–299a. See Cherokee Water Co. v. Gregg Cnty. Appraisal Dist., 801 S.W.2d 872, 878 (Tex. 1990) (stating that pre-judgment letter to the parties “was not competent evidence of the trial court’s basis for judgment” and did not constitute findings of fact). Explanatory letters from the trial court preceding a judgment do not impact the standard or scope of our appellate review. See Texas Bd. of Chiropractic Exam’rs v. Texas Med. Ass’n, 375 S.W.3d 464, 482 n. 24 (Tex. App.—Austin 2012, pet. denied); Summers v. Fort Crockett Hotel, Ltd., 902 S.W.2d 20, 25 (Tex. App.— Houston [1st Dist.] 1995, writ denied) (refusing to consider trial court’s letter explaining reasons why judge would grant summary judgment). 4 disregards all evidence and inferences to contrary). In making this determination,
we credit favorable evidence, if a reasonable factfinder could, and disregard
contrary evidence, unless a reasonable factfinder could not. City of Keller, 168
S.W.3d at 827. So long as the evidence falls within the zone of reasonable
disagreement, we may not substitute our judgment for that of the factfinder. Id. at
827–28. The factfinder is the sole judge of the credibility of the witnesses and the
weight to give their testimony. See id. at 819. Although we consider the evidence
in the light most favorable to the challenged findings, indulging every reasonable
inference that supports them, we may not disregard evidence that allows only one
logical inference. Id. at 822. If there is more than a scintilla of evidence
supporting a finding of fact, we will overrule a legal-sufficiency challenge. CA
Partners v. Spears, 274 S.W.3d 51, 69 (Tex. App.—Houston [14th Dist.] 2008,
pet. denied.).
In reviewing a challenge to the factual sufficiency of the evidence, we “must
consider and weigh all the evidence and should set aside the judgment only if it is
so contrary to the overwhelming weight of the evidence as to be clearly wrong and
unjust.” Arias v. Brookstone, L.P., 265 S.W.3d 459, 468 (Tex. App.—Houston
[1st Dist.] 2007, pet. denied) (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex.
1986)). The factfinder is the sole judge of witnesses’ credibility; it may choose to
believe one witness over another, and a reviewing court may not impose its own
5 opinion to the contrary. City of Keller, 168 S.W.3d at 819; Arias, 265 S.W.3d at
468. Because it is the factfinder’s province to resolve conflicting evidence, we
must assume that it resolved all conflicts in accordance with the verdict if
reasonable persons could do so. City of Keller, 168 S.W.3d at 819; Arias, 265
S.W.3d at 468. When an appellant attacks the factual sufficiency of an adverse
finding on an issue on which it did not have the burden of proof, the appellant must
demonstrate that the finding is so contrary to the overwhelming weight of the
evidence as to be clearly wrong and manifestly unjust. See Cain, 709 S.W.2d at
176.
Enforcement of the Agreement
In its first issue, AIMS argues that the trial court erred in not enforcing the
Agreement because when both parties asserted causes of action for breach of
contract, “both parties conceded its validity and enforceability,” and there is a
“complete absence of any pleading or argument to support the judgment entered
against [it].” AIMS also argues that because Texas public policy encourages
“freedom of contract,” there is “no justification for the trial court’s failure to
enforce the contract.” Sanip asserts that it properly pleaded a cause of action for
breach of contract and the affirmative defense of discharge of its obligations under
the Agreement due to AIMS’s material breach.
6 To prevail on a breach-of-contract claim, a plaintiff must prove: (1) the
existence of a valid contract; (2) the plaintiff’s performance or tender of
performance; (3) the defendant’s breach of contract; and (4) the plaintiff’s damages
as a result of the breach. Prime Prods. Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631,
636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).
The record contains sufficient evidence that AIMS did not perform its
obligation under the Agreement to pay the ATM commission fees to Sanip by the
contractually-required due dates. First, AIMS’s commission payment for
November 2009 was returned for “insufficient funds” and not replaced until
January 5, 2010. Second, AIMS did not make the commission payment due by the
last day of April 2010 to Sanip for the March 2010 ATM transactions until May
11, 2010, after Sanip had already provided written notice of breach and termination
of the Agreement. Finally, AIMS never made the commission payment for the
July 2010 ATM transactions in the amount of $1,936. “A breach of contract
occurs when a party fails to perform an act that it has expressly or impliedly
promised to perform.” Case Corp. v. Hi–Class Bus. Sys. of Am., Inc., 184 S.W.3d
760, 769–70 (Tex. App.—Dallas 2005, pet. denied). When one party commits a
material breach of contract, the other party is discharged or excused from further
performance. Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196
(Tex. 2004). The materiality of a breach—the question of whether a party’s breach
7 of a contract will render the contract unenforceable—generally presents a dispute
for resolution by the trier of fact. See Cont’l Dredging, Inc. v. De–Kaizered, Inc.,
120 S.W.3d 380, 394–95 (Tex. App.—Texarkana 2003, pet. denied) (citing
Hudson v. Wakefield, 645 S.W.2d 427, 430 (Tex. 1983)). The evidence presented
at trial established that AIMS’s breach was material and Sanip was discharged
from its duties under the Agreement based on that breach, including the liquidated-
damages provision.
We overrule AIMS’s first issue.
Legal and Factual Sufficiency of the Evidence
In its second issue, AIMS argues that the evidence is legally and factually
insufficient to support the trial court’s judgment, which “fails to award [it]
liquidated damages” against Sanip, because AIMS provided the “only evidence
proffered for the trial court’s consideration” with respect to its claim for economic
damages and “no evidence was submitted to the trial court to contradict such facts
or support any judgment failing to enforce all the provisions” of the Agreement.
The trial court granted judgment for Sanip on its breach-of-contract claim
against AIMS and against AIMS on its breach-of-contract claim against Sanip.
The evidence supports an implied finding that AIMS materially breached the
Agreement with Sanip by failing to make the ATM commission payments by the
contractually-required due dates for November 2009 and March 2010. The
8 evidence also supports an implied finding that AIMS failed to make the ATM
commission payment of $1,936 due to Sanip for the July 2010 ATM transactions.
The evidence further shows that Sanip incurred attorneys’ fees in the amount of
$7,235, and the Agreement provided that the non-prevailing party in any suit to
enforce or interpret the Agreement pay “costs and expenses,” including attorneys’
fees. Accordingly, we hold that the evidence is legally and factually sufficient to
support the trial court’s implied findings that AIMS breached the Agreement,
Sanip sustained damages in the amount of $1,936 for unpaid ATM commissions,
and Sanip incurred attorneys’ fees in the amount of $7,235.
We overrule AIMS’s second issue.
Credit or Offset
In its third issue, AIMS argues that the trial court erred in awarding
damages and attorneys’ fees to Sanip “rather than providing [Sanip] with a credit
and/or offset to the damages sustained by [AIMS]” because Sanip’s “claim for
damages under the [Agreement] under which [AIMS’s] claim for damages is based
constitutes a defense of offset” and the award of damages “only entitles [Sanip] to
offset any recovery by [AIMS].”
As discussed above, Sanip filed a counter-claim for breach of contract
against AIMS and affirmatively pleaded for damages for the unpaid ATM
commission fees and for attorneys’ fees. The pleadings support the trial court’s
9 implied finding that AIMS materially breached the Agreement, discharging Sanip
from future performance under the Agreement. Having also concluded that the
evidence is legally and factually sufficient to support the trial court’s implied
findings, there is no basis for an offset.
We overrule AIMS’s third issue.
Conclusion
We affirm the judgment of the trial court.
Terry Jennings Justice
Panel consists of Justices Jennings, Sharp, and Brown.