NUMBER 13-11-00480-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
ELDA GARZA, Appellant,
v.
LONE STAR NATIONAL BANK, Appellee.
On appeal from the 206th District Court of Hidalgo County, Texas.
MEMORANDUM OPINION Before Justices Rodriguez, Vela, and Perkes Memorandum Opinion by Justice Perkes Elda Garza, appellant, sued Lone Star National Bank (“LSNB” or “the Bank”),
appellee, alleging that the Bank breached a settlement agreement reached between the
parties in a prior lawsuit. She appeals the trial court’s order which granted a final summary
judgment in favor of the Bank. By two issues, Garza argues that because she submitted
sufficient evidence to create fact issues, (1) a no-evidence summary judgment was
improper; and (2) a traditional summary judgment was improper. We affirm because the record shows that Garza did not produce any evidence of the damages element of her
breach-of-contract claim.
I. FACTUAL AND PROCEDURAL BACKGROUND1
Over the course of several years, Garza borrowed money from the Bank for various
business expenses. Each of the loans was secured by a certificate of deposit that Garza
had previously delivered to the Bank. In addition, Garza and a business partner, Beatriz
Garza, executed personal guaranties on various loans. In December 2000, the Bank
loaned $173,000 to Garza, individually, which she used to pay off existing loans. The
“payoff loan” and all renewals thereof were executed solely by Garza and secured by a
pledge of her certificate of deposit.
A dispute arose between Garza and the Bank concerning the outstanding balance of
the payoff loan. Garza filed suit against the Bank, and the parties subsequently resolved
the lawsuit by settlement.2 Pursuant to the terms of the settlement agreement, the Bank
received the full amount of the certificate of deposit, but forwent receipt of the remaining loan
balance of $5,600.48.
Paragraph six of the settlement agreement includes the language at issue in this
case. That paragraph, as shown with its single strike through, highlighted language, and all
of its interlineations (italicized herein), reads as follows:
The Parties to this Agreement acknowledge that as of the date that the settlement agreement was dictated in open court and approved by Judge
1 Because this is a memorandum opinion and the parties are familiar with the facts, we will not recite them here except as necessary to advise the parties of the Court's decision and the basic reasons for it. See TEX. R. APP. P. 47.4. 2 See Elda Garza v. Lone Star National Bank and Mary V. Garcia, cause number C–2068–02–D in the 206th Judicial District Court of Hidalgo County, Texas.
2 Rose Guerra Reyna, Plaintiff Garza had an outstanding balance, including principal and interest, of $183,664.33; moreover she had a certificate of deposit in the total amount of $178,015.85 pledged to secure said obligation. Plaintiff agrees that Lone Star National Bank may take proceeds of the certificate of deposit to pay and otherwise satisfy purchase the note and obligation with Defendant LSNB. The Defendant LSNB agrees to waive or forego receipt of the balance of $5,600.48 which balance is owed by Plaintiff Garza after payment by the proceeds of the Plaintiff Garza’s certificate of deposit. LSNB agrees to assign the notes and rights if any and guarantees to Plaintiff. (executed by Plaintiff and Beatriz Garza)
Garza filed the present lawsuit against the Bank alleging that the Bank breached the
settlement agreement by failing to assign “and turn over physical possession of the original
notes, guaranties and other security (excluding the Plaintiff’s certificate of deposit)
evidencing the original debts against Plaintiff and a third party [Beatriz Garza].” Garza
alleged that the Bank’s failure “resulted in the loss of the ability of Plaintiff to proceed in a
lawsuit against the third party [Beatriz Garza] for the amount due on the note. The notes in
question are the original notes for which Plaintiff pledged her certificate of deposit.” Garza
sought to recover “for breach of contract in the sum of $178,015.85,” which was the dollar
amount of the certificate of deposit that the Bank received pursuant to the settlement
agreement. Aside from seeking attorney’s fees and prejudgment interest, she did not
assert any other grounds or claims for damages or equitable relief.
In its answer, the Bank specifically denied it had any rights in a note or guaranty that
it could assign under the settlement agreement. The Bank also pleaded a defense of
recoupment or set off, asking that if the trial court awarded Garza a rescission of the
settlement agreement by ordering the Bank to refund to Garza the $178,015.85, the Bank
would be entitled to a set off to cover the principal and any accrued interest on the $173,000
loan it made to Garza.
3 After sufficient time for discovery passed, the Bank filed a no-evidence and traditional
motion for summary judgment. By its no-evidence motion for summary judgment, the Bank
asserted that Garza did not have any evidence that would show that the Bank breached the
settlement agreement, and that Garza did not have any evidence that would show “how she
sustained any damages.” As to the damages element, the Bank added that Garza had no
evidence which would show: (1) that but for the Bank’s alleged failure to assign the notes
and guarantees, she would have been successful in a lawsuit against a third party; and
(2) that she would have been able to collect on the judgment against the third party. 3
The trial court granted summary judgment in favor of the Bank without specifying
whether it was granting relief under the no-evidence or traditional motion and without
specifying the grounds for summary judgment. This appeal followed.
II. STANDARD OF REVIEW
When an order granting summary judgment does not specify the grounds on which
summary judgment was granted, a court may uphold it on any meritorious ground presented
in the motion. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).
When a party moves for a traditional summary judgment and a no-evidence summary
judgment, we will first review the trial court’s judgment under the no-evidence standard.
Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). If the appellant fails to
produce more than a scintilla of evidence under that burden, then there is no need to
3 In its traditional motion for summary judgment, the Bank contended that under the doctrine of equitable subrogation, Garza “had subrogated to the [Bank’s] rights” in the two notes and personal co-guarantees (loans made to Garza and Beatriz Garza as business partners and as personal co-guarantors of the loans) in December 2000 when Garza paid off the two notes with her own promissory note “after the subject notes matured and became delinquent.” The Bank asserted that, as a result, at the time of the settlement agreement and thereafter, the Bank did not have any rights in the notes and guarantees it allegedly failed to assign to Garza. 4 analyze whether appellee’s summary judgment evidence satisfies the traditional rule
166a(c) burden. Id. (citing TEX. R. CIV. P. 166a(c)).
In reviewing a no-evidence summary judgment, we ascertain whether the nonmovant
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NUMBER 13-11-00480-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
ELDA GARZA, Appellant,
v.
LONE STAR NATIONAL BANK, Appellee.
On appeal from the 206th District Court of Hidalgo County, Texas.
MEMORANDUM OPINION Before Justices Rodriguez, Vela, and Perkes Memorandum Opinion by Justice Perkes Elda Garza, appellant, sued Lone Star National Bank (“LSNB” or “the Bank”),
appellee, alleging that the Bank breached a settlement agreement reached between the
parties in a prior lawsuit. She appeals the trial court’s order which granted a final summary
judgment in favor of the Bank. By two issues, Garza argues that because she submitted
sufficient evidence to create fact issues, (1) a no-evidence summary judgment was
improper; and (2) a traditional summary judgment was improper. We affirm because the record shows that Garza did not produce any evidence of the damages element of her
breach-of-contract claim.
I. FACTUAL AND PROCEDURAL BACKGROUND1
Over the course of several years, Garza borrowed money from the Bank for various
business expenses. Each of the loans was secured by a certificate of deposit that Garza
had previously delivered to the Bank. In addition, Garza and a business partner, Beatriz
Garza, executed personal guaranties on various loans. In December 2000, the Bank
loaned $173,000 to Garza, individually, which she used to pay off existing loans. The
“payoff loan” and all renewals thereof were executed solely by Garza and secured by a
pledge of her certificate of deposit.
A dispute arose between Garza and the Bank concerning the outstanding balance of
the payoff loan. Garza filed suit against the Bank, and the parties subsequently resolved
the lawsuit by settlement.2 Pursuant to the terms of the settlement agreement, the Bank
received the full amount of the certificate of deposit, but forwent receipt of the remaining loan
balance of $5,600.48.
Paragraph six of the settlement agreement includes the language at issue in this
case. That paragraph, as shown with its single strike through, highlighted language, and all
of its interlineations (italicized herein), reads as follows:
The Parties to this Agreement acknowledge that as of the date that the settlement agreement was dictated in open court and approved by Judge
1 Because this is a memorandum opinion and the parties are familiar with the facts, we will not recite them here except as necessary to advise the parties of the Court's decision and the basic reasons for it. See TEX. R. APP. P. 47.4. 2 See Elda Garza v. Lone Star National Bank and Mary V. Garcia, cause number C–2068–02–D in the 206th Judicial District Court of Hidalgo County, Texas.
2 Rose Guerra Reyna, Plaintiff Garza had an outstanding balance, including principal and interest, of $183,664.33; moreover she had a certificate of deposit in the total amount of $178,015.85 pledged to secure said obligation. Plaintiff agrees that Lone Star National Bank may take proceeds of the certificate of deposit to pay and otherwise satisfy purchase the note and obligation with Defendant LSNB. The Defendant LSNB agrees to waive or forego receipt of the balance of $5,600.48 which balance is owed by Plaintiff Garza after payment by the proceeds of the Plaintiff Garza’s certificate of deposit. LSNB agrees to assign the notes and rights if any and guarantees to Plaintiff. (executed by Plaintiff and Beatriz Garza)
Garza filed the present lawsuit against the Bank alleging that the Bank breached the
settlement agreement by failing to assign “and turn over physical possession of the original
notes, guaranties and other security (excluding the Plaintiff’s certificate of deposit)
evidencing the original debts against Plaintiff and a third party [Beatriz Garza].” Garza
alleged that the Bank’s failure “resulted in the loss of the ability of Plaintiff to proceed in a
lawsuit against the third party [Beatriz Garza] for the amount due on the note. The notes in
question are the original notes for which Plaintiff pledged her certificate of deposit.” Garza
sought to recover “for breach of contract in the sum of $178,015.85,” which was the dollar
amount of the certificate of deposit that the Bank received pursuant to the settlement
agreement. Aside from seeking attorney’s fees and prejudgment interest, she did not
assert any other grounds or claims for damages or equitable relief.
In its answer, the Bank specifically denied it had any rights in a note or guaranty that
it could assign under the settlement agreement. The Bank also pleaded a defense of
recoupment or set off, asking that if the trial court awarded Garza a rescission of the
settlement agreement by ordering the Bank to refund to Garza the $178,015.85, the Bank
would be entitled to a set off to cover the principal and any accrued interest on the $173,000
loan it made to Garza.
3 After sufficient time for discovery passed, the Bank filed a no-evidence and traditional
motion for summary judgment. By its no-evidence motion for summary judgment, the Bank
asserted that Garza did not have any evidence that would show that the Bank breached the
settlement agreement, and that Garza did not have any evidence that would show “how she
sustained any damages.” As to the damages element, the Bank added that Garza had no
evidence which would show: (1) that but for the Bank’s alleged failure to assign the notes
and guarantees, she would have been successful in a lawsuit against a third party; and
(2) that she would have been able to collect on the judgment against the third party. 3
The trial court granted summary judgment in favor of the Bank without specifying
whether it was granting relief under the no-evidence or traditional motion and without
specifying the grounds for summary judgment. This appeal followed.
II. STANDARD OF REVIEW
When an order granting summary judgment does not specify the grounds on which
summary judgment was granted, a court may uphold it on any meritorious ground presented
in the motion. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).
When a party moves for a traditional summary judgment and a no-evidence summary
judgment, we will first review the trial court’s judgment under the no-evidence standard.
Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). If the appellant fails to
produce more than a scintilla of evidence under that burden, then there is no need to
3 In its traditional motion for summary judgment, the Bank contended that under the doctrine of equitable subrogation, Garza “had subrogated to the [Bank’s] rights” in the two notes and personal co-guarantees (loans made to Garza and Beatriz Garza as business partners and as personal co-guarantors of the loans) in December 2000 when Garza paid off the two notes with her own promissory note “after the subject notes matured and became delinquent.” The Bank asserted that, as a result, at the time of the settlement agreement and thereafter, the Bank did not have any rights in the notes and guarantees it allegedly failed to assign to Garza. 4 analyze whether appellee’s summary judgment evidence satisfies the traditional rule
166a(c) burden. Id. (citing TEX. R. CIV. P. 166a(c)).
In reviewing a no-evidence summary judgment, we ascertain whether the nonmovant
pointed out summary judgment evidence raising a genuine issue of fact as to the essential
elements attacked in the no-evidence motion. Johnson v. Brewer & Pritchard, P.C., 73
S.W.3d 193, 206–08 (Tex. 2002). In our de novo review of a trial court's summary
judgment, we consider all of the evidence in the light most favorable to the nonmovant,
crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding
contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez, 206
S.W.3d 572, 582 (Tex. 2006). The evidence raises a genuine issue of fact if reasonable
and fair-minded jurors could differ in their conclusions in light of all of the summary judgment
evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).
A settlement agreement is a contract between parties, a breach of which gives rise to
a cause of action for breach of contract. See Padilla v. LaFrance, 907 S.W.2d 461–62
(Tex. 1995); see also Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 888 (Tex.
App.—Dallas 2004, pet. denied) (analyzing claim for breach of settlement agreement as a
breach of contract). A claim for breach of contract includes the following essential
elements: (1) the existence of a valid contract; (2) performance or tendered performance
by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained as a
result of the breach. See Scott v. Sebree, 986 S.W.2d 364, 372–73 (Tex. App.—Austin
1999, pet. denied); Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex. App.—Houston
[1st Dist.] 1997, no writ).
5 Damages to the claimant resulting from the alleged breach is one of the essential
elements of a breach-of-contract claim. See WTG Gas Processing, L.P. v. ConocoPhillips
Co., 309 S.W.3d 635, 643 (Tex. App.—Houston [14th Dist.] 2010, pet. denied); see also
B.Z.B., Inc. v. Clark, No. 14-11-00056-CV, 2012 WL 353783, at *2 (Tex. App.—Houston
[14th Dist.] Feb. 2, 2012, no pet.) (mem. op.). “The universal rule for measuring damages
for the breach of a contract is just compensation for the loss or damage actually sustained.”
Qaddura, 141 S.W.3d at 888 (citing Stewart v. Basey, 150 Tex. 666, 670; 245 S.W.2d 484,
486 (1952)). The most common interest protected in breach of contract cases is the
expectation, or benefit-of-the-bargain, interest. Id. at 888–89.
In contrast to a legal remedy for breach of contract, the equitable remedy of
rescission allows a non-breaching party to avoid the contract and obtain the return of any
consideration paid if the non-breaching party pleads and proves, among other things, that it
has no adequate remedy at law for damages. See Ferguson v. DRG/Colony N., Ltd., 764
S.W.2d 874, 886 (Tex. App.—Austin 1989, writ denied) (holding that the evidence showed
lack of adequate legal remedy); see also Costley v. State Farm Fire & Cas. Co., 894 S.W.2d
380, 386 (Tex. App.—Amarillo 1994, writ denied) (holding that the evidence showed lack of
adequate legal remedy); Ryan v. Collins, 496 S.W.2d 205, 209–10 (Tex. Civ. App.—Tyler
1973, writ ref’d n.r.e.) (discussing elements of rescission); Chenault v. County of Shelby,
320 S.W.2d 431, 433–35 (Tex. Civ. App.—Austin 1959, writ ref’d n.r.e.) (same).
III. DISCUSSION AND ANALYSIS
In her first issue, Garza argues that the no-evidence summary judgment on damages
was improper because the Bank accepted the value of the certificate of deposit,
$178,015.85, but did not fulfill its obligation to assign the notes and guarantees. Garza 6 argues that she presented evidence of her damages by showing that the Bank accepted the
value of the certificate of deposit.
The parties do not dispute the terms of the settlement agreement, and that in
accordance with the settlement agreement, the Bank obtained the value of the certificate of
deposit. The Bank does contend, however, that Garza presented no summary judgment
evidence showing: (1) her inability to bring suit against a third party “for the amount due on
the note” resulted from the Bank’s alleged failure to assign the notes and guarantees; or
(2) the value of her suit against the third party. See Qaddura, 141 S.W.3d at 888–89
(discussing expectation damages that resulted from a breach of a settlement agreement);
see also B.Z.B., Inc., 2012 WL 353783, at *2–3 (explaining why summary judgment
evidence was insufficient to raise a fact issue on damages and affirming a no-evidence
summary judgment for breach of a settlement agreement).
In response to the Bank’s no-evidence motion for summary judgment, Garza filed the
affidavit of her trial counsel.4 Even considering, for the sake of argument only, that trial
counsel’s affidavit is competent summary judgment evidence,5 it provides no evidence of
damages resulting from the alleged breach. The affidavit does not raise a fact issue on
whether Garza’s alleged inability to proceed in a lawsuit against the third party resulted from
the Bank’s alleged failure to assign the notes and guarantees. The affidavit is also
conclusory because it simply rehashes the legal argument that because the Bank obtained 4 Garza’s response also includes copies of: (1) a transcript of the 2006 hearing in the earlier lawsuit during which the settlement agreement was read into the record; (2) the settlement agreement; (3) the joint motion to dismiss the earlier proceeding; and (4) the agreed order of dismissal of the earlier proceeding. 5 See TEX. DISCIPLINARY R. PROF'L CONDUCT 3.08(a), reprinted in TEX. GOV'T CODE, tit. 2, subtit. G, app. A (West 2005) (generally prohibiting a lawyer from accepting or continuing employment as an advocate before a tribunal in a contemplated or pending adjudicatory proceeding if the lawyer knows or believes that the lawyer is or may be a necessary witness to his client’s case).
7 the value of the certificate of deposit, but did not assign any notes or guarantees to Garza,
Garza should receive a refund of the value of the certificate of deposit. The affidavit does
not present a scintilla of evidence showing how Garza was damaged by the Bank’s failure to
assign the notes or guarantees or what amount of damages may have been obtained
against the third party. As such, there is no evidence of damages for any alleged breach of
the settlement agreement.
Garza’s argument overlooks the undisputed fact that Garza received the benefit of
her bargain under the settlement agreement by the Bank releasing her from liability on the
payoff loan, by forgiving her of the remaining balance of the payoff loan, and by obtaining
dismissal of the lawsuit between them. In addition, Garza did not plead a cause of action
for rescission. Even if she had, however, her evidence would be insufficient to withstand
the Bank’s no-evidence motion for summary judgment on damages because she presented
no evidence that she lacks an adequate remedy at law for damages. See Ferguson, 764
S.W.2d at 886 (holding trial testimony presented more than a scintilla of evidence that the
party lacked an adequate remedy at law to support an award of rescission damages); see
also Costley, 894 S.W.2d at 386 (discussing how evidence showed lack of an adequate
legal remedy and thus supported rescission of insurance contract).
Under the applicable standard of review, the summary-judgment evidence does not
raise a genuine issue of material fact regarding whether Garza sustained damages as a
result of the alleged breach of contract. The trial court did not err in granting the Bank’s
no-evidence summary judgment motion. Accordingly, we overrule Garza’s first issue on
appeal. In light of our disposition of this issue, we need not reach Garza’s second issue
8 concerning the Bank’s traditional motion for summary judgment. See TEX. R. APP. P. 47.1;
see also Ridgway, 135 S.W.3d at 600.
III. CONCLUSION
We affirm the trial court’s judgment.
Gregory T. Perkes Justice
Delivered and filed the 15th day of November, 2012.