Opinion issued April 3, 2014
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-12-00509-CV ——————————— JULIAN CAO D/B/A JAYCEE IMPORTS, Appellant V. GLOBAL MOTORCARS OF HOUSTON, LLC AND JOHN LEONTARITIS, Appellees
On Appeal from the County Civil Court at Law No. 4 Harris County, Texas Trial Court Case No. 972148
MEMORANDUM OPINION
Julian Cao d/b/a Jaycee Imports sued Global Motorcars of Houston, LLC
and its sole owner, John Leontaritis, for breach of implied contract and conversion
of a check. In addition to actual damages, Cao sought attorney’s fees on his
contract claim and exemplary damages on his conversion claim. Before trial, the court granted a take-nothing partial summary judgment with respect to the contract
claim and the request for attorney’s fees. Finding no evidence to support the
imposition of exemplary damages, the trial court granted a motion for directed
verdict as to exemplary damages. A jury found in favor of Cao on his conversion
claim and found $39,052 in damages, which was the amount of the check that Cao
alleged was converted. After trial, the court granted a take-nothing judgment n.o.v.,
ruling that Leontaritis was not liable for conversion as a matter of law and that Cao
lacked standing to pursue the claim.
Cao appealed. He raises five issues, contending that the trial court erred by:
(1) granting the defendants’ motion for j.n.o.v. on the standing ground; (2) granting
partial summary judgment as to the breach of implied contract claim; (3) granting
partial summary judgment as to attorney’s fees; (4) refusing to submit a jury
question on exemplary damages; and (5) granting the motion for j.n.o.v. as to the
conversion claim against Leontaritis.
Finding no error, we affirm.
Background
Thinh Tieu was an automobile dealer who owned a business called Allstate
Motorcars. For approximately 20 years, he did business with appellant Julian Cao,
who ran a small automobile dealership called Jaycee Imports to supplement the
salary he earned as an engineer. Appellee John Leontaritis is also in the car sales
2 business, and he is the sole owner of Global Motorcars of Houston, which he
founded in 2004.
Leontaritis met Tieu as he was entering the automobile business, and Tieu
became a mentor to him. Leontaritis became successful, and he loaned money to
Tieu on many occasions. But after Tieu gave him rubber checks, Leontaritis would
no longer accept a check directly from him for repayment.
In 2010, an Allstate Motorcars employee negotiated the sale of a 2007
Mercedes-Benz S550. For reasons not completely explained by the record, the
salesman prepared a purchase order showing that the sale was between Jaycee
Imports, as seller, and Hien V. Ha, as purchaser. However, at the time neither
Jaycee Imports nor Cao owned the specified car. Cao had never met or spoken with
Ha.
Cao testified that this was not an unusual transaction; he understood that
Tieu wanted to run the sale through his dealership in exchange for a $500
commission. To that end, Tieu gave Cao a check for $43,255 from Chartway
Credit Union, which ostensibly had provided the financing to Ha.
According to Cao, Tieu told him to “deduct the amount of tax, title and
license, which [amounted] to about $4,200” and to deduct $500 for his fee. Cao
testified that Tieu told him to write a check to Global Motorcars, which Cao
understood to have been the dealership which held the title to the car. Cao gave
3 Tieu a check to Global Motorcars for $39,052. On the memo line, Cao wrote
“07S550” and the vehicle identification number of the car described in the
purchase order. He did not give Tieu any instructions pertaining to the check to
Global Motorcars except to tell him to get the title. He did not tell Tieu to hold the
check until he got the title or to require Global Motorcars to segregate the funds
into a separate account. At the time he wrote the check, Cao had no contact with
Global Motorcars or Leontaritis about the transaction. At trial, it was undisputed
that Global Motorcars had not offered to sell the specific car to anyone. Relying on
Tieu’s representations, Cao did no research and did not determine who owned the
car he was purporting to sell.
Neither Global Motorcars nor Leontaritis ever owned or possessed the 2007
Mercedes-Benz S550 referenced on Cao’s check. Rather, Tieu said he had
purchased the car from a dealership in Dallas, and he had physical possession of it
at the time Cao wrote the check to Global Motorcars.
Tieu testified by deposition that before selling the car to Ha, he sold the
same car to another purchaser. He said he gave the other purchaser the title before
he received a check for the car. The other purchaser obtained financing from
Premier Financial, spent the money elsewhere, and never returned the title to Tieu
or repaid Premier Financial. Tieu said he forgot that he had given the other
purchaser the title and decided to sell the car again.
4 Tieu characterized the transaction with Cao as a simple exchange of funds:
Cao received a check for $43,252 and gave Tieu a check for $39,052. Tieu testified
that Leontaritis had agreed to cash the check from Jaycee Imports. He also testified
that Cao did not give him any instructions about segregating the check or the
proceeds thereof. Contrary to Cao’s contentions, Tieu said that he did not tell Cao
that Global Motorcars had the title. According to Tieu, Cao could not have
expected Global Motorcars to give him a title to the car because he had not
contacted Global Motorcars.
Tieu took the check to Leontaritis, who testified that he accepted the check
as partial repayment of a loan he had made to Tieu. (Tieu testified that Leontaritis
gave him cash in exchange for the check, and he used the money to purchase a
Bentley.) Leontaritis gave the check to his comptroller, who deposited it into the
company account in late March 2010. Leontaritis did not put any of the money in
his personal account. He did not ask about the notes on the memo line of the check,
nor did he otherwise contact Cao about it. Tieu did not give Leontaritis any
instructions regarding the check. Leontaritis testified that Tieu did not tell him that
he had to provide a title in exchange for the check, and he said, “Actually, if I
thought that, I would not have taken it.” With respect to his willingness to accept
the Jaycee Imports check, Leontaritis said that Tieu’s checks from Allstate had
5 been bouncing, and he said, “As long as it wasn’t from Allstate, I didn’t care. It
was to pay me the money that he owed me.”
When Cao did not receive the title to the car, he asked Tieu why there was a
delay. Cao testified that Tieu told him that Global Motorcars could not find the title
and needed to get a duplicate. Cao said, “I just believed that the title was lost and I
was waiting to get the duplicate title to be brought back to me.” He also contacted
the credit union and alerted it that there was an issue with the title to the car. But he
did not contact Global Motorcars.
In May, Cao saw the car on Tieu’s lot, and Tieu told him that he got the car
back because there was a problem with the title. A few days later, the car was
repossessed by Premier Financing, the lien holder on the car. Tieu testified that he
told Cao to call Premier Financing to obtain the title to the car.
After the car was repossessed, Cao became concerned that he owed
Chartway Credit Union a refund of the original check. Although he acknowledged
that he was not an employee, officer, or director of Chartway, he explained: “My
concern was to try to get back the money so I can return that money to [the] credit
union.” He also said:
My whole intention to file this lawsuit is to make sure that the money returned to the right owner; and in this case the right owner is the credit union who paid $43,000 for a car that does not have title. And my whole intention is [to] try to get the money back so I can return that money to [the] credit union because I know now that the title cannot be produced.
6 He stated that he owed Chartway approximately $43,000, and he planned to return
the money. He testified that the $39,052 check given to Jaycee Imports represented
Chartway’s money, saying: “I never said it was my money.” However, he did not
repay any of Chartway’s money, including the $4,200 that he had retained for tax,
title, and license.
In August 2010, Cao sent a demand letter to Global Motorcars for $39,052,
alleging that the check was transmitted to be exchanged for the title to the
referenced vehicle and that Global Motorcars deposited the check but failed to
provide the title to the car. This was Cao’s first personal contact with Global
Motorcars about the transaction. Global Motorcars responded that it had never
owned the referenced vehicle, and it demanded that Cao identify the salesperson
with whom he spoke and the date of the negotiation of the alleged purchase. In
addition, the letter acknowledged receipt and deposit of the check, but it stated that
Tieu had represented that the check was for the purpose of partially repaying a
personal loan. The letter also stated, “Importantly, neither your client nor Mr. Tieu
informed Global that the check [was] intended to be payment for a vehicle that was
not in Global’s possession. Thus, it appears that your client should seek any
recovery, if any is allowed, from Mr. Tieu.”
Cao sued Global Motorcars and Leontaritis for breach of an implied contract
and conversion. He also sought recovery of attorney’s fees. Global Motorcars and
7 Leontaritis moved for partial summary judgment arguing that Cao could not
establish breach of an implied contract and that he had conceded that his claim for
attorney’s fees was meritless in response to special exceptions. As summary-
judgment evidence, the defendants attached the second amended petition, response
to special exceptions, and an affidavit from Leontaritis.
In response Cao argued that the $39,052 check with the VIN number noted
on the memo line was an offer to purchase that vehicle and that the offer was
accepted when Global Motorcars deposited the check. As for attorney’s fees, Cao
argued that attorney’s fees are recoverable for conversion when founded upon a
written contract.
The trial court granted the motion for partial summary judgment, dismissing
with prejudice the claims for breach of an implied contract and recovery of
attorney’s fees. The case went to trial on Cao’s theory of conversion. At the time of
trial, Chartway had not sued Cao or Jaycee Imports in connection with this
transaction. There is no evidence in the record that Chartway had even made a
demand on Cao or Jaycee Imports. Likewise, there is no indication that Ha had
made any demand or filed any lawsuit against Cao or Jaycee Motors. Neither
Chartway nor Ha were parties to this case. Furthermore, Cao conceded he had not
lost any money on account of this transaction.
8 The jury found: (1) the check was personal property as defined by the
charge, (2) both Global Motorcars and Leontaritis were liable for conversion of the
check, (3) neither Global Motorcars nor Leontaritis was a holder in due course, and
(4) the parties’ responsibility for the conversion was assigned as 10% to Tieu, 40%
to Gobal Motorcars, and 60% to Leontaritis.
The defendants filed a motion for judgment notwithstanding the verdict,
challenging Cao’s standing and arguing that there was no evidence to support the
conversion claim. The court granted the motion for j.n.o.v. on both grounds. Cao
filed a motion for new trial challenging the j.n.o.v., the trial court denied the
motion. Cao appealed.
Analysis
I. Implied contract
In his second issue, Cao argues that the trial court erred in granting summary
judgment on his breach of implied contract claim.
We review de novo the trial court’s ruling on a motion for summary
judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d
844, 848 (Tex. 2009). The party moving for traditional summary judgment bears
the burden of showing that no genuine issue of material fact exists and that it is
entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); see also Provident
Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215–16 (Tex. 2003). A
9 defendant moving for summary judgment must conclusively negate at least one
essential element of each of the plaintiff’s causes of action or conclusively
establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez,
941 S.W.2d 910, 911 (Tex. 1997).
“The elements of a contract, express or implied, are identical.” Plotkin v.
Joekel, 304 S.W.3d 455, 476 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).
These elements are an offer, an acceptance, a meeting of the minds, each party’s
consent to the terms, and execution and delivery of the contract with the intent that
it be mutually binding. Id. While an express contract arises when contractual terms
are stated by the parties, an implied-in-fact contract arises from the acts and
conduct of the parties. Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros.
Welding Co., 480 S.W.2d 607, 609 (Tex. 1972). When a party sues on an implied
contract, the element of mutual assent is a question of fact to be determined by the
fact finder. Id. at 609–10. While mutual assent can be shown from the conduct of
the parties, the conduct must be intentional and the actor must know or have reason
to know that the other party will infer his assent from his conduct. Id. at 609.
The defendants filed a traditional motion for summary judgment, arguing
that the factual allegations in Cao’s pleading negated elements of his breach of
implied contract cause of action. Specifically, the defendants relied on the
following allegations:
10 JAYCEE is a car dealer in Houston, Texas. Tim Tieu (“TIEU”) of Allstate Motorcars, also a car dealer in Houston, requested that JAYCEE assist him in facilitating a sales transaction of a 2007 Mercedes Model S550 . . . (“the vehicle”) that he had sold . . . .
....
JAYCEE specifically wrote the check for the vehicle because he was told GLOBAL had possession of the title and subsequently he discovered that GLOBAL never had title. GLOBAL has admitted that it accepted the check as payment for a personal debt between TIEU and GLOBAL and/or LEONTARITIS.
The defendants argued that Cao could not prove offer and acceptance, which are
elements of an implied contract, because his petition alleged that the agreement
was between Jaycee Imports and Tieu, and thus did not involve either defendant.
They also argue that the petition negates the “mutual intent to contract” element of
an implied contract because it alleges that Global Motorcars accepted the check as
payment for a personal debt. That is, although there is evidence that Global
Motorcars accepted the check, such action does not satisfy the element of mutual
assent to contract.
The defendants attached Cao’s second amended petition, his response to the
defendants’ special exceptions and motion to dismiss, and an affidavit from
Leontaritis. In the affidavit, Leontaritis averred that he never owned the 2007
Mercedes-Benz S550 and that the check he received from Tieu was solely for
repayment of a personal debt. He also averred, “I have not routinely done business
with Jaycee Imports in the past and did not intend to do business with Mr. Cao or
11 Jaycee Imports when accepting the check from Tim Tieu.” Because Leontaritis’s
affidavit conclusively negated the element of assent, the burden shifted to Cao to
produce some evidence that Leontaritis or Global Motorcars assented to the alleged
implied contract.
In response to the motion for summary judgment, Cao provided an affidavit,
in which he averred that he made an offer to purchase the car by tendering a check
to Leontaritis and Global Motorcars with the vehicle notation on the front:
I made an offer on March 22, 2010 to Defendants for the purchase of a 2007 Mercedes S550 . . . (“the vehicle”) when my check was tendered for payment of the same. The check, with the vehicle notation on the front, is the way I have conducted business for twenty (20) years as attached as Exhibit A. I expected a title in return for my check.
He further averred that Leontaritis and Global Motorcars deposited the check on
March 24, 2010 without delivering title. However, nowhere in his affidavit did Cao
aver that it was a customary practice in the automobile business for a purchaser to
offer to buy a vehicle solely by tendering a check bearing a vehicle identification
number and without any other communication. Nor did he aver that it was equally
customary in the automobile business for the acceptance of such a check to
constitute acceptance of an offer to purchase a vehicle identified by such a
notation.
Nevertheless, in his response to the motion for partial summary judgment,
Cao argued that “Defendants accepted their offer by their deposit of the check.” He
12 also argued that the practice of noting the vehicle model and identification number
on the front of the check was “the customary business practice of Plaintiff and
industry standard.” It is well-settled that a pleading, including a response to a
motion for summary judgment, is not evidence that a court may consider in ruling
on a motion for summary judgment. Thus Cao’s arguments are not summary-
judgment evidence. See Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904
S.W.2d 656, 660–61 (Tex. 1995); Adams v. Downey, 124 S.W.3d 769, 773 (Tex.
App.—Houston [1st Dist.] 2003, no pet.) (citing Madeksho v. Abraham, Watkins,
Nichols & Friend, 57 S.W.3d 448, 455 (Tex. App.—Houston [14th Dist.] 2001,
pet. denied)).
The defendants conclusively negated the element of mutual assent to
contract, and Cao’s summary-judgment evidence failed to raise a fact question as
to whether Leontaritis and Cao intended to enter into a contract for the sale of the
subject vehicle. Because Cao failed to raise a genuine issue of material fact as to
the negated issue, we conclude that the defendants were entitled to summary
judgment, and we hold that the trial court correctly granted summary judgment and
dismissed the breach of implied contract claim. See TEX. R. CIV. P. 166a(c); Sci.
Spectrum, Inc., 941 S.W.2d at 911. We overrule Cao’s second issue.
13 II. Attorney’s fees
The defendants’ motion for summary judgment also argued that Cao had no
basis in law for his claim of entitlement to attorney’s fees. The defendants filed a
special exception to the petition, and Cao responded by amending his petition to
omit references to Civil Practice and Remedies Code section 38.001. However,
Cao continued to assert a claim for attorney’s fees under the causes of action as
pleaded.
Texas follows the American Rule, which provides that there can be no
recovery of attorney’s fees unless authorized by contract or statute. In re Nalle
Plastics Family Ltd. P’ship, 406 S.W.3d 168, 172 (Tex. 2013) (citing Tony Gullo
Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex. 2006)). As a general rule,
attorney’s fees are not recoverable in a conversion case, however an exception
exists and such fees may be recoverable when a conversion case is founded on a
contract. F.D.I.C. v. Golden Imports, Inc., 859 S.W.2d 635, 646–47 (Tex. App.—
Houston [1st Dist.] 1993, no writ). In addition, section 38.001 of the Texas Civil
Practice and Remedies Code provides for the recovery of “reasonable attorney’s
fees . . . if the claim is for . . . an oral or written contract.” TEX. CIV. PRAC. & REM.
CODE ANN. § 38.001 (West 2008). Cao’s live pleading omitted any reference to
section 38.001, and he does not rely on this statute on appeal.
14 Cao argues that attorney’s fees are recoverable because his conversion claim
is founded upon a contract. However, there is neither allegation nor proof of a
written contract in this case, and we have held that the trial court correctly granted
the motion for summary judgment because the defendants negated the existence of
an implied-in-fact contract. Accordingly, we conclude that there was no legal basis
for an award of attorney’s fees in this case, and we hold that the trial court
correctly granted the motion for summary judgment by dismissing Cao’s claim for
attorney’s fees.
III. Standing
In his first issue, Cao argues that the trial court erred by granting judgment
notwithstanding the verdict on the ground that he lacked standing to pursue a cause
of action for conversion.
We review a trial court’s judgment notwithstanding the verdict under a no-
evidence standard, and we will uphold the jury’s finding if more than a scintilla of
competent evidence supports it. Tanner v. Nationwide Mut. Fire Ins. Co., 289
S.W.3d 828, 830 (Tex. 2009); City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex.
2005). To merit the trial court’s j.n.o.v., the defendants were required to
demonstrate that the evidence conclusively showed that Cao lacked standing. In a
case such as this one, in which the question of standing was raised after trial, we
construe the petition in the plaintiff’s favor, and we may review the entire record to
15 determine if any evidence supports standing. Tex. Ass’n of Bus. v. Tex. Air Control
Bd., 852 S.W.2d 440, 446 (Tex. 1993).
Standing requires that the parties have a real controversy which can actually
be determined by the relief sought. Id. If a party lacks standing, a trial court lacks
subject-matter jurisdiction to hear the case. Austin Nursing Ctr., Inc. v. Lovato, 171
S.W.3d 845, 849 (Tex. 2005). A person has standing to appeal when he is
personally aggrieved by the alleged wrong. Nootsie, Ltd. v. Williamson Cnty.
Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996). To demonstrate standing, a
“plaintiff must affirmatively show, through pleadings and other evidence pertinent
to the jurisdictional inquiry, a distinct interest in the asserted conflict, such that the
defendant’s actions have caused the plaintiff some particular injury.” Alpert v.
Riley, 274 S.W.3d 277, 291 (Tex. App.—Houston [1st Dist.] 2008, pet. denied)
(citing Hunt v. Bass, 664 S.W.2d 323, 324 (Tex. 1984)). In addition, the
complained-of injury “must be concrete and particularized, actual or imminent, not
hypothetical.” DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304–05 (Tex.
2008) (footnotes omitted).
Closely related to standing, and also implicating a court’s subject matter
jurisdiction, is the concept of ripeness. Ramon v. Teacher Retirement Sys. of Tex.,
No. 01-09-00684-CV, 2010 WL 1241293, at *4 (Tex. App.—Houston [1st Dist.]
2010, pet. denied) (mem. op.) (citing Patterson v. Planned Parenthood of Houston,
16 971 S.W.2d 439, 442 (Tex. 1998). A claim is ripe when the complained-of injury
has occurred or is likely to occur. Id. “If the injury is only likely to occur, the
plaintiff must demonstrate that the injury is imminent, direct, and immediate, and
not merely remote, conjectural, or hypothetical.” Id. (citing Waco Indep. Sch. Dist.
v. Gibson, 22 S.W.3d 849, 852 (Tex. 2000)). “A case is not ripe when determining
whether the plaintiff has a concrete injury depends on contingent or hypothetical
facts, or upon events that have not yet come to pass.” Gibson, 22 S.W.3d at 852.
On appeal, Global Motorcars and Leontaritis argue that there was no
evidence that Cao suffered a distinct injury because of any action taken by them.
They argue that Cao was suing in an attempt to recover Chartway’s money, and
they point out that Chartway had not sued Cao. In his petition, Cao alleged that
Global Motorcars and Leontaritis converted the check by depositing it in a Global
Motorcars account and by refusing to return it when demanded. He alleged that the
money was accepted as repayment of a debt Tieu owed to Leontaritis and Global
Motorcars.
Cao argues that he has standing to pursue these claims because he delivered
a check to Global Motorcars and received nothing in return. He argues that the sale
of the car is void because he cannot transfer title to Chartway. He further argues
that he has suffered an injury, that money damages would make him whole and
enable him to refund Chartway’s money, and that the two-year difference in the
17 statutes of limitation for conversion (2 years) and breach of contract (4 years)
weighs in favor of finding that he has standing.
At trial Cao conceded that, aside from his legal fees, he had lost no money
due to this transaction, and he had $4,200 more in his bank account because he had
retained the money set aside for tax, title, license, and commission. As to the
$39,000 that Tieu delivered to Global Motorcars, Cao conceded it was Chartway’s
money, not his own, saying, “I never said it was my money.” Cao testified that he
was suing on behalf of Chartway, although he had no legal right to do so.
Cao testified that he had no contact or communication with Leontaritis or
Global Motorcars before writing the check or entrusting it to Tieu for delivery. He
testified that the only person who ever offered to sell him the vehicle was Tieu,
upon whom he relied when making the check payable to Global Motorcars. Cao
testified that Tieu betrayed his trust and defrauded him by failing to bring him title
to the car. Although Cao argues that he had a transaction with Global Motorcars
that went awry, the record shows that his transaction and agreement were with
Tieu.
Cao also testified that Chartway had not sued him regarding the car or the
check. He described a conversation he had with a Chartway loan officer who
instructed him to “keep working on the title,” and to inform her when he had
18 obtained it. However, the court sustained an objection to this testimony and
instructed the jury to disregard it.
Neither Cao’s pleadings nor the evidence adduced at trial show that he
suffered a distinct injury as a result of the defendants’ actions. He lost no money
and in fact had gained $4,200 as a result of the transaction. He conceded that the
money did not belong to him; rather, it belonged to Chartway. But Cao has no
standing to sue for money that belongs to another party. See Shipley, 331 S.W.3d at
30. In addition, to the extent that it was Tieu, not the defendants, who had
defrauded Cao, no real controversy exists between Cao and the defendants that can
actually be determined by the relief sought. See Tex. Ass’n of Bus., 852 S.W.2d at
446.
Cao also argued that, based on the two-year difference between the statutes
of limitation for conversion and breach of contract, he anticipated that Chartway
might sue him to recover on the check. That hypothetical circumstance, were it to
occur, would not change our analysis that Cao lacks standing to assert a conversion
claim on behalf of Chartway. Moreover, there is no evidence in the record
demonstrating that Cao’s professed concerns are likely to be realized. Cao testified
that Chartway had not sued him. And aside from his stricken testimony that the
loan officer instructed him to continue trying to obtain the title to the car, the
record is bereft of evidence as to whether Chartway will take action against Cao to
19 recover the money that was initially loaned to Ha. The record in this case does not
show that any action by Chartway has occurred or is likely to occur; there is no
evidence that such an injury was “imminent, direct, and immediate, and not merely
remote, conjectural, or hypothetical.” See Ramon, 2010 WL 1241293, at *4.
Because Cao has not alleged or demonstrated a concrete, particularized
injury caused by the defendants’ conduct, we hold that Cao lacks standing to sue
them for conversion. Accordingly, the trial court properly granted the motion for
j.n.o.v. We overrule Cao’s first issue, and in light of this disposition, we need not
address Cao’s fourth and fifth issues.
Conclusion
We affirm the trial court’s judgment.
Michael Massengale Justice
Panel consists of Chief Justice Radack and Justices Sharp and Massengale.
Justice Sharp, concurring without opinion.