Elia Cornejo Lopez and Leonel Lopez v. Norma Linda Castellano

Court of Appeals of Texas·Decided February 25, 2010·No. 13-08-00336-CV·Published

Opinion

NUMBER 13-08-00336-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG

ELIA CORNEJO LOPEZ AND LEONEL LOPEZ, Appellants, v.

NORMA LINDA CASTELLANO, Appellee.

On appeal from the 138th District Court of Cameron County, Texas.

MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Rodriguez and Garza Memorandum Opinion by Justice Rodriguez

Appellants Elia Cornejo Lopez and Leonel Lopez appeal a summary judgment granted in favor of appellee Norma Linda Castellano on the Lopezes' conversion and common-law fraud claims. By six issues, the Lopezes contend that the trial court erred in

granting summary judgment because material fact issues remain. We affirm in part and reverse and remand in part.

I. FACTUAL AND PROCEDURAL BACKGROUND 1 South Texas ACP Management, LLC (South Texas ACP) was created in 2006 as a limited liability company. Cesar Roel Perez is the sole manager of South Texas ACP, and Castellano, Perez's mother-in-law, is a member—allegedly its sole member.

The Lopezes assert in their petition that, in May 2007, they were beginning negotiations with Perez and South Texas ACP to buy an interest in South Texas ACP. According to the petition, they discussed the expansion of the Playground Fun Center a/k/a Playground Action Park in Brownsville, Texas, which was to include the building of a skating rink facility adjacent to the existing facility. As set out in their petition, as a sign of good faith, Elia Lopez deposited $100,000 into a Wells Fargo Bank account; the funds were to be held in escrow until the Lopezes completed a due diligence investigation of the business.

After the Lopezes discovered that Perez allegedly made misrepresentations regarding the financial condition of South Texas ACP, the ownership of South Texas ACP's assets, and the existence of liens against South Texas ACP's assets, they demanded the return of their money. According to allegations in the petition, Perez and South Texas ACP failed to return the money and failed to provide an accounting.2 On August 9, 2007, the

1 Castellano filed no appellee's brief to assist us in the resolution of this case. Accordingly, we decide this appeal based on the brief filed by the Lopezes and the record before us.

2 Although it is not clear from the record, it appears as if $50,000 of the $100,000 was placed in the registry of the trial court. The Lopezes have requested that the trial court release that m oney to them . The location or use of the rem aining $50,000 is disputed.

Lopezes sued South Texas ACP, Perez, and Castellano for common-law fraud and conversion. On December 10, 2007, the Lopezes filed a second amended petition which added factual allegations regarding the fraud and conversion claims.

On December 14, 2007, Castellano filed a hybrid no-evidence and traditional motion for summary judgment.3 The Lopezes responded, filing their response on February 5, 2008, and their supplemental response on February 11, 2008.4 Both responses were filed timely—more than seven days before the summary judgment hearing. See TEX . R. CIV. P. 166a(c) ("Except on leave of court, the adverse party, not later than seven days prior to the day of hearing may file and serve opposing affidavits or other written response."); Haynes v. City of Beaumont, 35 S.W.3d 166, 172-73 (Tex. App.–Texarkana 2000, no pet.).

On February 11, 2008, the Lopezes also filed a third amended petition. In this petition, they added allegations of statutory fraud in a real estate transaction, see TEX . BUS. & COM . CODE ANN . § 27.01 (Vernon 2009), negligence, and gross negligence.5 On February 13, 2008, Castellano filed objections to the Lopezes' summary judgment evidence, and in the alternative, a reply to the Lopezes' response and supplemental response. Relevant to this appeal, Castellano specifically objected to Elia

3 As evidence, Castellano attached her affidavit and the affidavit of Perez to her m otion. She also attached excerpts of the Lopezes' deposition testim ony and docum ents regarding South Texas ACP's form ation, filing, and regulations.

4 The Lopezes attached the following evidence to their response: (1) Elia Lopez's affidavit; (2) a 2006 Deed of Trust, Security Agreem ent, and Financing Statem ent (Deed of Trust); (3) one of South Texas ACP's interrogatory responses; (4) a copy of a check in the am ount of $100,000 m ade payable to Cesar Perez; (5) a docum ent titled "Roller Boogie"; and (6) a W ells Fargo Bank account transaction receipt and inquiry inform ation on what appears to be the sam e account. No evidence was attached to the Lopezes' supplem ental response.

5 The Lopezes claim to have added civil conspiracy as a new cause of action in their third am ended petition. However, only the title, "Civil Conspiracy," appears in this petition. It offers nothing m ore to advance this claim .

Lopez's affidavit, arguing that it contained hearsay.6 See TEX . R. EVID . 801. The Lopezes did not assert the application of any hearsay exception. See id. at R. 803. Nor did the Lopezes raise any objections to Castellano's evidence. In her reply, Castellano also objected to the filing of the Lopezes' third amended petition as untimely. No written rulings on Castellano's objections appear in the record.

The hearing on Castellano's motion, originally set for February 5, 2008, was rescheduled for February 11, 2008, and then again for February 20, 2008. At the February 20 hearing, counsel presented argument. Counsel for Castellano again objected to Elia Lopez's affidavit—specifically, to Lopez's statement that Perez told her that Castellano was in possession of the $100,000. At the end of the hearing, without expressly ruling on Castellano's objection, the trial court granted Castellano's motion for summary judgment.

On February 26, 2008, Castellano filed a motion to sever the claims against her from the claims alleged against Perez and South Texas ACP. The Lopezes filed a fourth amended petition on April 1, 2008, arguing that all causes of action were not addressed in the summary judgment motion. In this fourth amended petition, filed after the summary judgment hearing, the Lopezes added two new causes of action identified as civil conspiracy and malicious prosecution/intentional infliction of emotional distress. On that same day, the Lopezes responded to Castellano's motion to sever, again asserting that not all causes of action against her were addressed in the summary judgment motion.

6 In addition to the hearsay objection, Castellano objected to Elia Lopez's affidavit arguing that it contained legal conclusions and unsupported factual conclusions. She also objected to the Deed of Trust as unauthenticated and incom plete and to South Texas ACP's interrogatory response on the basis that the Lopezes represented that it was Castellano's response. Castellano filed no objections to the copy of the check, the "Roller Boogie" docum ent, or the W ells Fargo Bank receipt and inquiry inform ation.

On April 18, 2008, the trial court signed its judgment granting Castellano's motion for summary judgment and ordering that the Lopezes take nothing by their suit against Castellano. The judgment stated that the trial court: heard Castellano's no-evidence and traditional motion for summary judgment that was based on the second amended petition on file at the time the motion was filed; reviewed each motion, the timely-filed responses, and supporting summary judgment evidence; and concluded that there were sufficient grounds to find that no material issue of fact precluded the granting of the motion. It set out that the "judgment covers all of the relief" claimed by the Lopezes and that the judgment would "become a final judgment as to . . . Castellano upon the severance." After summary judgment was entered in favor of Castellano, the trial court severed the Lopezes' claims against Castellano from their claims against Perez and South Texas ACP; thus, Perez and South Texas ACP are not parties to this appeal.

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