Kenneth M. Hardin v. Joseph Lella

Opinion

ACCEPTED 03-14-00607-CV 4718189 THIRD COURT OF APPEALS AUSTIN, TEXAS 3/31/2015 5:00:08 PM JEFFREY D. KYLE CLERK No. 03-14-00607-cv

FILED IN 3rd COURT OF APPEALS IN THE COURT OF APPEALS FOR AUSTIN, TEXAS THE THIRD DISTRICT OF TEXAS AT AUSTIN 3/31/2015 5:00:08 PM JEFFREY D. KYLE Clerk

KENNETH M. HARDIN, Appellant

vs.

JOSEPH LELLA, Appellee

BRIEF OF APPELLANT KENNETH M. HARDIN

On appeal from the County Court at Law No. 2 of Travis County, Texas Cause No. C-1-CV-14-006415 Honorable Eric Shepperd, Judge Presiding

Mark L. Aschermann SBN 01368700 BARRON & NEWBURGER, PC 6300 West Loop South, Suite 341 Bellaire, Texas 77401 Telephone (713) 942-0808 Facsimile (713) 942-0449 maschermann@bn-lawyers.com

ATTORNEYS FOR APPELLANT

ORAL ARGUMENT REQUESTED IDENTITY OF PARTIES AND COUNSEL

The following is a complete list of all parties to the trial court’s final

judgment as well as the name and addresses of trial counsel and appellate counsel,

in accordance with Rule 38.1 of the Texas Rules of Appellate Procedure.

APPELLANT

Appellant Kenneth M. Hardin’s trial and appellate counsel is Mark L.

Aschermann, BARRON & NEWBURGER, PC, 6300 West Loop South, Suite 341,

Bellaire, Texas 77401. Telephone (713) 942-0808, Facsimile (713) 942-0449.

E-mail maschermann@bn-lawyers.com

APPELLEE

Appellee Joseph Lella’s trial and appellate counsel is William M. Nichols,

WILLIAM M. NICHOLS, P.C., 9601 McAllister Freeway, Suite 1250, San Antonio,

Texas 78216-5150. Telephone (210) 340-8880, Facsimile (210) 340-8885.

E-mail william@wmnlawsa.com

2 TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . 2 TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 I. STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 II. STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 III. STATEMENT REGARDING ORAL ARGUMENT. . . . . . . . . . . . . . . . . . 9 IV. ISSUES PRESENTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 V. SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 VI. ARGUMENT AND AUTHORITIES Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1. The trial court erred in granting the Motion for Summary Judgment because the Appellee Joseph Lella’s claims are barred by limitations . 16 2. The trial court erred in granting the Motion for Summary Judgment because a fact issue exists as to whether Joseph Lella unreasonably delayed in making demand for payment of the First Promissory Note . 16 3. The trial court erred in granting the Motion for Summary Judgment because the Second Promissory Note was a novation of the First Promissory Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4. The trial court erred in granting the Motion for Summary Judgment because the Second Promissory Note creates a fact issue on the novation element of consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5. The trial court erred in granting the Motion for Summary Judgment because the Trial Court abused its discretion by excluding Hardin’s evidence of the affirmative defenses of novation, modification and ratification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

3 6. The trial court erred in granting the Motion for Summary Judgment because the Appellee Joseph Lella’s claims for unjust enrichment and quantum meruit are barred by the existence of an express contract. . . . 31 7. The trial court erred in granting the Motion for Summary Judgment because the Appellee Joseph Lella’s claim for declaratory judgment is duplicative of the above issues and the trial court made no specific declaration in the Final Judgment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 VII. CONCLUSION AND REQUEST FOR RELIEF. . . . . . . . . . . . . . . . . . . . . 36 CERTIFICATE OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

4 INDEX OF AUTHORITIES

Cases 801 Nolana, Inc. v. RTC Mortgage Trust, 944 S.W.2d 751, 754 (Tex. App.— Corpus Christi 1997, writ denied) .........................................................................30 Allstate Ins. Co. v. Clarke, 471 S.W.2d 901, 907 (Tex. Civ. App.--Houston [1st Dist.] 1971, writ ref'd n.r.e.) ..................................................................................24 Aurora Petroleum, Inc. v. Newton, 287 S.W.3d 373, (Tex. App. Amarillo 2009)..33 Barnes v. LPP Mortg., Ltd., 358 S.W.3d 301, 303 (Tex. App. Dallas 2011)..........20 Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984) ......................................30 Chastain v. Cooper & Reed, 152 Tex. 322, 257 S.W.2d 422, 424 (1953) ..............24 Crego v. Lash, 2014 Tex. App. 3272 (Tex. App.—Corpus Christi, 2014, no pet.) 18 CTTI Priesmeyer v. K & O Ltd. Partnership, 164 S.W.3d 675, 680-681 (Tex. App.- -Austin 2005, no pet.)............................................................................... 23, 24, 25 Dunn v. Reliance Life and Accident Insurance Company of America, 405 S.W. 2d 389 (Tex.Civ. App.-Corpus Christi 1966, writ ref'd n.r.e.) ..................................19 Foreman v. Graham, 363 S.W.2d 371 (Tex.Civ.App.-Beaumont 1962, no writ)...19 Fortune Production Co. v. Conoco, Inc. 52 S.W. 3d 671, 683-685 (Tex. 2000) .. 13, 32 Fulcrum Central v. Autotester, Inc., 102 S.W.3d 274, 277 (Tex. App.--Dallas 2003, no pet.) ...................................................................................................................23 Gabriel v. Alhabbal, 618 S.W.2d 894, 896 (Tex. Civ. App.--Houston [1st Dist.] 1981, writ ref'd n.r.e.) ............................................................................................19 Goodyear Tire and Rubber Co., v. Mayes, 236 S.W.3d 754, 756-757 (Tex. 2007)16 Hartman v. Hartman, 135 Tex. 596, 599, 138 S.W.2d 802, 803 (1940).................19 Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173 (Tex. 1995) ......15 In re Laibe Corp., 307 S.W.3d 314 (Tex. 2010)......................................................18 Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex. App.--Houston [1st Dist.] 1985, writ ref'd n.r.e.) ............................................................................................19 Joiner v. Elrod, 716 S.W.2d 606, 609 (Tex. App.- Corpus Christi 1986, no pet.)..21

5 Lede v. Aycock, 630 S.W.2d 669, 673 (Tex. App.--Houston [14th Dist.] 1981, writ ref'd n.r.e.) .............................................................................................................35 Life Ins. Co. v. Gar-Dal, Inc., 570 S.W.2d 378, 381-82 (Tex. 1978)......................30 Martin v. Ford, 853 S.W.2d 680, 682 (Tex. App. Texarkana 1993) .......................20 Mercer v. Daoran Corp., 676 S.W.2d 580, 583 (Tex. 1984) ..................................31 Moreno v. Sterling Drug, 787 S.W.2d 348, 351 (Tex. 1990) ..................................18 Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990) .................18 National Family Care Life Ins. v. Fletcher, 57 SW3d 662, 668 (Tex. App. – Beaumont 2001, pet denied) .......................................................................... 27, 28 Nixon v. Mr. Property Management, 690 S.W.2d 546, 548 (Tex. 1985) ................15 Pace Corp. v. Jackson, 284 S.W.2d 340, 350 (1955) ..............................................35 Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76, 79-80 (Tex. 1989) .................15 Scalise v. McCallum, 700 S.W.2d 682, 684 (Tex. App.--Dallas 1985, writ ref'd n.r.e) ......................................................................................................................23 Vandeventer v. All American Life & Casualty Co., 101 S.W.3d 703, 712 (Tex. App.--Fort Worth 2003, no pet.) .................................................................... 23, 25 Vickery v. Vickery, 999 S.W.2d 342, 356, (Tex. 1999) ...........................................23 Wiman v. Tomaszewicz, 877 S.W.2d 1, 5 (Tex. App. Dallas 1994) ................. 18, 20 Woodward v Southwest States, Inc. 384 S.W. 2d 674, 675 (Tex. 1964) .......... 14, 32

Rules

Tex. R. CIV. P. 194.2(c) ..........................................................................................27

Statutes

Tex. Civ. Prac. Rem. Code §16.003 .........................................................................32 Tex. Civ. Prac. Rem. Code §16.004 .................................................................. 16, 18 Tex. Civ. Prac. Rem. Code §37.003(b) ....................................................................33 Tex. Civ. Prac. Rem. Code §37.006(a) ....................................................................34

6 I. STATEMENT OF FACTS

This is an appeal of a Summary Judgment granted by the trial court in favor

of the Appellee Joseph Lella, who filed suit to collect upon a Promissory Note

issued originally by Kenneth M. Hardin, together with his then business partner

Richard A. Crawford. He did not file suit against Crawford.

On September 5, 1996, Appellant Kenneth Hardin and his partner Richard

Crawford borrowed $30,000.00 at 10% per annum interest from Appellee Joseph

Lella. The transaction was documented with a Promissory Note. (C.R. 50). The

promissory note stated:

The initial loan shall be for a minimum period of six months, thereafter paymant [sic] of the entire balance plus any unpaid interest compounded monthly, is due upon demand in writing prior to the expected date of receipt thereof, to the undersigned at the address herein below.

On July 1, 2003, Hardin and Crawford signed a new Promissory Note payable to

Lella’s wife, Elizabeth Lella, at the reduced interest rate of 7% per annum. (C.R.

52-53) This Second Promissory Note appears to recognize the payment of the

interest to Elisabeth Lella since at least 1999. (C.R. 85) On July 20, 2006, Richard

Crawford, who had purchased Hardin’s interest in the Americus Diamonds

business, issued a Third Promissory Note to Elisabeth Lella and raised the interest

rate to 8% per annum. (C.R. 55) These are referred to as the First, Second, and

Third Promissory Notes.

7 Crawford sent a letter to Lella with the new Third Promissory Note

explaining that he had purchased Hardin’s interest in the business. (C.R. 54)

Hardin did not sign the Third Promissory Note. Crawford, through his business,

Americus Diamonds, paid the interest as obligated by the Third Promissory Note

(C.R. 130-136) and Elizabeth Lella accepted the payments. No payments were

attributed to principal reduction. Richard Crawford defaulted on the payment of

the Third Promissory Note to Elisabeth Lella as of January 1, 2012, leading to the

underlying lawsuit at hand. (C.R. 56-57) Joseph Lella has made no demand and

makes no claim for recovery under the Second Promissory Note or the Third

Promissory Note.

On May 9, 2013, Joseph Lella filed suit in the Travis County Court at Law

under cause number C-1-CV-13-04334 (“the Original Suit”), seeking enforcement

of the First Promissory Note. Kenneth M. Hardin, as Defendant, filed his Original

Answer and Third Party Complaint on September 13, 2013, naming Vivian

Crawford as Third Party Defendant and seeking indemnity from Vivian Crawford,

the wife of Richard A. Crawford, with regard to the Lella obligation. A Motion for

Summary Judgment was filed by Lella as Plaintiff, and was ultimately granted on

June 26, 2014 by the Honorable Eric Sheppard, awarding Lella $36,521.23 plus

attorneys’ fees and interest. Concurrently, the trial court severed the Lella matter

from the original cause, leaving Hardin’s Third Party Claims against the Crawfords

8 (Richard A. Crawford having been added in the interim as another Third Party

Defendant) in the original cause number, and assigning the Lella claims against

Hardin, including the Summary Judgment and a subsequent Motion for New Trial

filed by Hardin, to the new cause number C-1-CV-14-006415.

II. STATEMENT OF THE CASE

Appellee Joseph Lella (“Lella”) brought a suit on a Promissory Note against

maker Kenneth M. Hardin (“Hardin”). Lella filed a traditional summary judgment

and a no evidence summary judgment with causes of action for breach of contract,

unjust enrichment and a declaratory judgment. (C.R. 31) Hardin responded to the

Lella Motion for Summary Judgment with the affirmative defenses of the statute of

limitations, novation and ratification. (C.R. 114) The Trial Court granted Lella’s

summary judgment motion. (C.R. 153) Hardin appeals that summary judgment

decision.

On October 17, 2014, Hardin placed a cash deposit with the trial court in

lieu of a supersedeas bond. On October 24, 2014, the trial court granted an Order

suspending the enforcement of the Summary Judgment pending this appeal.

III. STATEMENT REGARDING ORAL ARGUMENT

Appellant Hardin requests oral argument. Oral argument will assist the

Court in considering the issues in this case.

9 IV. ISSUES PRESENTED

1. The trial court erred in granting the Motion for Summary Judgment because the

Appellee Joseph Lella’s claims are barred by limitations.

2. The trial court erred in granting the Motion for Summary Judgment because a

fact issue exists as to whether Joseph Lella unreasonably delayed in making

demand for payment of the First Promissory Note.

3. The trial court erred in granting the Motion for Summary Judgment because the

Second Promissory Note was a novation of the First Promissory Note.

4. The trial court erred in granting the Motion for Summary Judgment because the

Second Promissory Note creates a fact issue on the novation element of

consent.

5. The trial court erred in granting the Motion for Summary Judgment because the

Trial Court abused its discretion by excluding Hardin’s evidence of the

affirmative defenses of novation, modification and ratification.

6. The trial court erred in granting the Motion for Summary Judgment because the

Appellee Joseph Lella’s claims for unjust enrichment and quantum meruit are

barred by the existence of an express contract.

7. The trial court erred in granting the Motion for Summary Judgment because the

Appellee Joseph Lella’s claim for declaratory judgment is duplicative of the

10 above issues and the trial court made no specific declaration in the Final

Judgment.

V. SUMMARY OF THE ARGUMENT

Issues Number One and Two

1. The trial court erred in granting the Motion for Summary Judgment

because the Appellee Joseph Lella’s claims are barred by limitations.

2. The trial court erred in granting the Motion for Summary Judgment

because a fact issue exists as to whether Joseph Lella unreasonably delayed in

making demand for payment of the First Promissory Note.

Three Promissory Notes (C.R. 50-55) are at issue in this matter, each for the

principal amount of $30,000.00 plus interest. Each included the following

language: “The initial loan shall be for a minimum period of six months, thereafter

paymant [sic] of the entire balance plus any unpaid interest compounded monthly,

is due upon demand in writing, sixty days prior to expected date of receipt thereof,

to the undersigned at the address herein below.” The Appellee Lella argues that

his cause of action did not accrue and limitations did not begin to run until he made

demand for payment of the First Promissory Note in February 2013. (C.R. 56)

Appellant Hardin argues that no interest was paid to Lella after 2003, as all

interest was paid to his wife consistent with the Second and Third Promissory

Notes. Accordingly, the First Promissory Note was in default, the cause of action

11 accrued, and the statute of limitations began to run in 2003. Alternatively, a fact

issue precluding summary judgment exists as to the date of accrual of the cause of

action related to the unreasonable delay in making demand for payment.

Issues Number Three and Four

3. The trial court erred in granting the Motion for Summary Judgment

because the Second Promissory Note was a novation of the First Promissory

Note.

4. The trial court erred in granting the Motion for Summary Judgment

because the Second Promissory Note creates a fact issue on the novation

element of consent.

In 2003 the First Promissory Note was replaced by the Second Promissory

Note, which lowered the interest rate and changed the Payee to Elisabeth Lella,

Appellee’s wife. In 2006 Appellant Hardin sold his interest in the Americus

Diamonds partnership to his partner Richard Crawford, who assumed the Elisabeth

Lella obligation. Crawford created the Third Promissory Note, which raised the

interest rate but made Crawford the only maker to Elisabeth Lella. The facts and

circumstances of these transactions create a fact issue as to novation which

precludes summary judgment.

12 Issue Number Five

5. The trial court erred in granting the Motion for Summary Judgment

because the trial court abused its discretion by excluding Hardin’s evidence of

the affirmative defenses of novation, modification and ratification.

The Trial Court abused its discretion by improperly excluding Appellant’s

evidence on the novation and ratification defenses for a failure to adequately

update TRCP Rule 194 Disclosure Responses. The evidence on these defenses

was improperly excluded because there was no surprise or prejudice to the

Appellee Lella. In fact, Lella attempted to pre-empt these defenses by offering

rebuttal argument in his Motion for Summary Judgment. Additionally, Appellant

Hardin properly amended his Answer (C.R. 109) to assert these defenses. The

facts giving rise to the defenses were sufficiently alleged in other pleadings (C.R.

18) and discovery responses. (C.R. 63-88)

Issue Number Six

6. The trial court erred in granting the Motion for Summary Judgment

because the Appellee Joseph Lella’s claims for unjust enrichment and

quantum meruit are barred by the existence of an express contract.

If a valid express contract covering the subject matter exists, there generally can

be no recovery on a contract implied in law. In Fortune Production Co. v. Conoco,

Inc. 52 S.W. 3d 671, 683-685 (Tex. 2000), a cause of action for unjust

13 enrichment was not available to recover payments in addition to the contract price

agreed on by parties. The recovery on an express contract and on quantum meruit

are inconsistent with each other. Woodward v Southwest States, Inc. 384 S.W. 2d

674, 675 (Tex. 1964). The First Promissory Note is an express contract so no

recovery is available to Lella for unjust enrichment. Lella advanced the money in

1996 and received interest pursuant to the First Promissory Note through 2003.

Unjust enrichment claims are governed by the two-year statute of limitations in

section 16.003 of the Civil Practice and Remedies Code. Elledge v. Friberg-

Cooper Water Supply Corp., 240 S.W.3d 869, 871 (Tex. 2007). As noted in Issue

Number One, Lella’s cause of action accrued no later than January 2004. Thus, the

limitations period expired in January 2006, more than 7 years before he made this

claim. As a result, the trial court’s summary judgment on unjust enrichment must

be reversed.

Issue Number Seven

7. The trial court erred in granting the Motion for Summary Judgment

because the Appellee Joseph Lella’s claim for declaratory judgment is

duplicative of the above issues and the trial court made no specific declaration

in the Final Judgment.

The trial court made no finding or statement in the Final Judgment that could

be considered a basis for declaratory relief. Assuming the Court of Appeals 14 determines that the trial court granted declaratory relief, which is omitted from the

trial court’s judgment, the requested declaratory relief fails because the Court’s

order is not clear; the relief requested in the Motion for Summary Judgment

exceeds the pleading relief requested in the First Amended Petition; the Appellee

failed to bring all affected parties before the court, namely Elizabeth Lella; and

Joseph Lella failed to meet its burden of proof on his effort to declare any novation

as invalid.

VI. ARGUMENT AND AUTHORITIES

STANDARD OF REVIEW

If a judgment does not specify any particular grounds, the appellant must

challenge each ground alleged in the motion for summary judgment. Rogers v.

Ricane Enterprises, Inc., 772 S.W.2d 76, 79-80 (Tex. 1989) However, if the

judgment specifies a ground as its basis, the movant (as appellee) should present

by cross-point any other grounds set out in the motion for summary judgment.

Summary judgment is proper when the movant establishes that no genuine

issue of material fact exists, so that the movant is entitled to summary judgment as

a matter of law. Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173

(Tex. 1995); Nixon v. Mr. Property Management, 690 S.W.2d 546, 548 (Tex.

1985). The reviewing court must consider all the evidence in the light most

favorable to the nonmovant, indulging every reasonable inference in favor of the

15 nonmovant and resolving any doubts against the motion. However, the reviewing

court may not ignore undisputed evidence in the record that is favorable to the

movant. Goodyear Tire and Rubber Co., v. Mayes, 236 S.W.3d 754, 756-757 (Tex.

2007).

1. The trial court erred in granting the Motion for Summary Judgment

because the Appellee Joseph Lella’s claims are barred by limitations.

2. The trial court erred in granting the Motion for Summary Judgment

because a fact issue exists as to whether Joseph Lella unreasonably delayed in

Joseph Lella filed his Plaintiff’s Original Petition on May 9, 2013. (C.R. 8)

Thus, if Lella’s cause of action accrued on or before May 9, 2009, Lella’s claim is

barred by the statute of limitations. Tex. Civ. Prac. Rem. Code §16.004.

The statute of limitations bars recovery by Appellant Joseph Lella because

the First Promissory Note has been in default since 2003, when the interest

payments on the Second Promissory Note were sent to Elisabeth Lella at the lower

interest rate.

Lella complained about this in his demand letter saying:

Disregarding the unpaid interest accrued through December 31, 2003 by failure to compound monthly as required, for the sake of simplicity

16 only I calculate that, with accrued unpaid interest, compounded monthly at the rate of 10% per annum beginning January 1, 2004, the amount now owed on Exhibit “A” is $42,972.90. Lella Demand letter (C.R. 56).

As noted by Lella’s attorney, the interest paid to Elisabeth Lella is consistent with

the 7% interest rate on the Second Promissory Note (C.R. 53) and the 8% interest

rate on the Third Promissory Note (C.R. 55). Even if this money is considered to

have been paid to Joseph Lella, it would be a default of the 10% interest rate under

the First Promissory Note.

More importantly, NO payments have been made to Joseph Lella since

2003, and perhaps as long ago as 1999 (C.R. 85), as the interest payments were

made to his wife Elisabeth. (C.R. 53-56, 85, 130-136) Accordingly, the First

Promissory Note has been in default since the first interest installment to Elisabeth

Lella after July 1, 2004. This default triggers the cause of action, which starts the

beginning of the limitations period.

Appellant’s Answer properly raised the statute of limitations as a defense.

(C.R. 16, 109). In his Response to the Motion for Summary Judgment, Appellant

designated the date that the cause of action accrued as a disputed issue of fact

precluding summary judgment. (C.R. 116).

Lella argues that the First Promissory Note is a demand note for which no

cause of action accrues until demand is made, i.e. the demand letter. (C.R. 56-57)

17 However, this argument means that a contractual obligation with a demand feature

could survive decades or more in default, tolling the limitations period until a

demand is made. This position is in conflict with the principle that parties may not

sleep on their rights. In re Laibe Corp., 307 S.W.3d 314 (Tex. 2010).

The statute of limitations begins to run on a demand note on the date of its

making unless demand is a condition precedent to filing suit on the note. Crego v.

Lash, 2014 Tex. App. 3272 (Tex. App.—Corpus Christi, 2014, no pet.). The note

in this case provided that payment could be demanded at any time after six months

from execution. The First Note did not make demand a condition precedent for its

enforcement. Rather, the language with regard to the “expected date of receipt

thereof” indicates that demand was a mere courtesy so that the maker could plan

for when the payment would be due.

In Wiman v. Tomaszewicz, 877 S.W.2d 1, 5 (Tex. App. Dallas 1994) the

court stated:

Section 16.004(a)(3) of the Texas Civil Practices and Remedies Code provides that a person must bring suit on a debt, such as Wiman's suit against Tomaszewicz on the guaranty, no later than four years after the day the cause of action accrues. TEX. CIV. PRAC. & REM. CODE ANN. § 16.004 (a)(3) (Vernon 1986). The question of when a cause of action accrues is a question of law for the court to decide. Moreno v. Sterling Drug, 787 S.W.2d 348, 351 (Tex. 1990). A cause of action generally accrues at the time when facts come into existence which authorize a claimant to seek a judicial remedy. Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990); Hartman v.

18 Hartman, 135 Tex. 596, 599, 138 S.W.2d 802, 803 (1940). If demand is an integral part of a cause of action or a condition precedent to the right to sue, the statute of limitations does not begin to run until demand is made, unless the demand is waived or unreasonably delayed. Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex. App.- -Houston [1st Dist.] 1985, writ ref'd n.r.e.); Gabriel v. Alhabbal, 618 S.W.2d 894, 896 (Tex. Civ. App.--Houston [1st Dist.] 1981, writ ref'd n.r.e.). Wiman, supra, at 5. (emphasis added).

In Gabriel v. Alhabbal, 618 S.W.2d 894, 896-897 (Tex. Civ. App. Houston 1st

Dist. 1981, writ ref'd n.r.e.), the court ruled that):

In a case involving loans not evidenced by writings the court recognized the general rule that money payable upon demand is payable immediately and no demand is necessary to start the running of the Statute of Limitations. However, the court also recognized the general rule applicable where demand is an integral part of a cause [*897] of action, or a condition precedent to the right to sue. The court stated that parties to a contract should be permitted to make an agreement that the money loaned was not to become due until a demand was made, thereby making a demand a condition precedent to the accrual of the cause of action.

It held that the demand must be made within a reasonable time, which depends upon the circumstances of each case, and ordinarily is a question of fact for the jury. The court further stated that in the absence of mitigating circumstances, a time coincident with the running of the Statute will be deemed reasonable, and if the demand is not made within that period the action will be barred. Foreman v. Graham, 363 S.W.2d 371 (Tex.Civ.App.-Beaumont 1962, no writ); Dunn v. Reliance Life and Accident Insurance Company of America, 405 S.W. 2d 389 (Tex.Civ. App.-Corpus Christi 1966, writ ref'd n.r.e.).

19 Gabriel, supra, at 896-7 (emphasis added).

As noted above, even if a Note is payable on demand, the demand must be made in

a reasonable time, depending on the circumstances of each case. Absent

mitigating circumstances, demand is reasonable if made within the period of

limitations. Martin v. Ford, 853 S.W.2d 680, 682 (Tex. App. Texarkana 1993),

Barnes v. LPP Mortg., Ltd., 358 S.W.3d 301, 303 (Tex. App. Dallas 2011), Wiman

v. Tomaszewicz, 877 S.W.2d 1, 3 (Tex. App. Dallas 1994).

Joseph Lella loaned $30,000.00 to his nephew Richard Crawford and

Crawford’s partner Kenneth Hardin in 1996. As early as 1999, but no later than

2004, the Second Promissory Note to his wife effectively replaced the First

Promissory Note to Joseph Lella. The Crawford-Hardin partnership, and later

Richard Crawford as a sole proprietor, paid interest to Elisabeth Lella consistent

with the Second Promissory Note and later the Third Promissory Note. Joseph

Lella received no payment of any nature after 2003 yet did not make demand until

2013, a delay of ten years. That is an unreasonable delay in the making of the

demand as a matter of law.

Lella does not deny that the interest payments were made to his wife. In fact

he confirms it in his Reply to Defendant’s Response to Summary Judgment:

“Defendant’s position that this is a demand note, (that is, one that is due upon

demand) and that Plaintiff should have demanded it 11 years ago in 2003, when he

20 and his partners began making interest payment at a reduced level to Plaintiff’s

wife, thus barring this claim by limitations.” (C.R. 148) (emphasis added).

Lella defends his inaction by saying that “Plaintiff did not make formal

demand earlier “in an attempt to help (his) niece’s husband in his business.” (C.R.

148). Lella attempts to excuses this forbearance with the statement “A party can

waive contractual provisions for his own benefit. Joiner v. Elrod, 716 S.W.2d 606,

609 (Tex. App.- Corpus Christi 1986, no pet.).” In Joiner, the real estate buyer

Elrod, through a Trustee, offered to buy real estate owned by Joiner. A written

offer was sent to Joiner with a deadline by which the offer expired. Joiner

accepted the offer after the deadline and mailed the contract to Elrod but later that

day sent a telegram revoking that consent. Elrod sued for specific performance.

The above quote needs to be placed in context as a few lines later the Joiner

court said:

Moreover, a party can waive provisions for his benefit. As notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself. If the offeror intimates a particular mode of acceptance is sufficient to make the bargain binding, it is only necessary that the offeree follow the indicated method of acceptance. Joiner, supra, at 609.

Joiner can be distinguished from the instant case because Hardin and Crawford

acted in reliance on the Second and Third Promissory Notes, paying interest to

Elizabeth Lella, not Joseph Lella, and paying a lower rate of interest. Additionally,

21 the timing was a minor matter in the Joiner transaction for which agreement was

readily made. Lella attempts to waive 10 years of continued effort by Hardin and

then Crawford. Lella’s attempted waiver is not only for his own benefit and should

be disregarded.

In the alternative, if the claim on the First Promissory Note is not barred by

limitations as a matter of law, a fact issue precluding summary judgment exists as

to the day the cause of action accrued as Lella unreasonably delayed making

demand for payment of the First Promissory Note. When a cause of action accrues

is uniquely a fact issue. At a minimum, Appellant raised a fact issue as to whether

Lella’s cause of action accrued more than four years before the date of suit.

Issue Number Three

3. The trial court erred in granting the Motion for Summary Judgment

because the Second Promissory Note was a novation of the First Promissory

Appellant raised novation as a fact issue precluding summary judgment in

his Response to Motion for Summary Judgment. Appellant supported his

Response with competent summary judgment evidence establishing that the

Second Promissory Note and Third Promissory Note were given in replacement of

the First Promissory Note. As a result, there was a fact issue as to whether

novation applied and summary judgment was improper.

22 Novation is the creation of a new obligation in place of an old one. Under

the novation, the parties may agree that a new obligor is substituted to perform the

duties agreed on in the old contract and the original obligor is released from

performing those duties. Vandeventer v. All American Life & Casualty Co., 101

S.W.3d 703, 712 (Tex. App.--Fort Worth 2003, no pet.).

In CTTI Priesmeyer, Inc. v. K&O Ltd. Partnership, 164 S.W.3d 675, 680-

681 (Tex. App. Austin 2005, no pet.) this Court discussed novation of a

construction contract between the Contractor CTTI Priesmeyer and the Owner

K&O Ltd. Partnership. K&O complained of cracks in the slab of a commercial

building and through a Repair Agreement undertook the repair of a test area. The

full repairs were never completed and K&O sued CTTI. CTTI argued that the

Repair Agreement was a novation of the construction contract and the Court

analyzed the novation:

Thus, CTTI had the burden to prove (1) the validity of the previous obligation; (2) an agreement among all parties to accept a new contract; (3) the extinguishment of the previous obligation; and (4) the validity of the new agreement. Vickery v. Vickery, 999 S.W.2d 342, 356, (Tex. 1999); Fulcrum Central v. Autotester, Inc., 102 S.W.3d 274, 277 (Tex. App.--Dallas 2003, no pet.). A court may infer that a new agreement is a novation of an earlier agreement when the new agreement is so inconsistent with the earlier agreement that the two agreements cannot subsist together. Fulcrum Central, 102 S.W.3d at 277; Scalise v. McCallum, 700 S.W.2d 682, 684 (Tex. App.--Dallas 1985, writ ref'd n.r.e).

23 Where there are no inconsistent provisions, "a second contract will operate as a novation of a first contract only when the parties to both contracts intend and agree that the obligations of the second shall [**10] be substituted for, and operate as a discharge of, the obligations of the first." Chastain v. Cooper & Reed, 152 Tex. 322, 257 S.W.2d 422, 424 (1953). A new agreement can establish novation as a matter of law when the state of the evidence is such that reasonable minds cannot differ as to its effect. Id. Whether a later agreement works a novation of an earlier one is a question of intent. Allstate Ins. Co. v. Clarke, 471 S.W.2d 901, 907 (Tex. Civ. App.-- Houston [1st Dist.] 1971, writ ref'd n.r.e.). The intent must be clear; novation is never presumed. Id. CTTI, supra, at 680-681.

A jury found that CTTI and K&O did not intend that the Repair Agreement should

replace the Construction Contract so the Court determined that CTTI could not

prove novation as a matter of law. In contrast, the evidence in this case shows that

the Lellas did in fact intend to replace the First Promissory Note as shown by the

decade that Elizabeth Lella accepted payments without complaint from Joseph

Lella. Crawford and Hardin demonstrated their intent by making payments

according to the terms of the new instruments.

Issue Number Four

4. The trial court erred in granting the Motion for Summary Judgment

because the Second Promissory Note creates a fact issue on the novation

24 As noted above, the actions of the parties in exchanging and performing

upon the Three Promissory Notes creates a fact issue as to whether they intended

to substitute the Second Promissory Note for the First Promissory Note.

The consent to substitute a new obligor and release the original obligor may

be express or implied. Vandeventer v. All American Life & Cas. Co., 101 S.W.3d

703, 712-713 (Tex. App.--Fort Worth 2003, no pet.). In the absence of an express

agreement, whether a new contract operates as a novation of an earlier contract is

usually a question of fact. It becomes a question of law only if the evidence would

not cause reasonable minds to differ as to its effect. CTTI Priesmeyer v. K & O

Ltd. Partnership, 164 S.W.3d 675, 680-681 (Tex. App.--Austin 2005, no pet.).

The Three Promissory Notes and related correspondence (C.R. 50-55, 83)

show that Hardin and Lella intended for the Second Promissory Note to replace the

First Promissory Note. Hardin’s affidavit (C.R. 125) stated that Joseph Lella

agreed, and in fact asked, that his wife Elisabeth be the payee on the Second

Promissory Note(s) and that interest payments be directed to her. Even without

this testimony from Hardin, the actions (and lack of action) of the Lellas speak

loudly to this outcome.

Lella himself agreed that the earlier obligation be replaced by the later. The

language of the Second Promissory Note is identical to the First Promissory Note

with the only difference being the Payee is Elizabeth Lella, not Joseph Lella and

25 the interest rate is 7%, not 10%. The makers of the Second Promissory Note are

Kenneth Hardin and Richard Crawford, the same as the First Promissory Note and

the balance is the same. Thus, if the First Promissory Note is a valid obligation,

the Second Promissory Note is also a valid obligation.

The Appellee Joseph Lella argues that the Second Promissory Note and the

Third Promissory Note are ineffectual modifications of the First Promissory Note,

leaving Kenneth Hardin liable for Richard Crawford’s nonpayment of the

Promissory Note. Alternatively, the First Promissory Note was modified and/or

replaced by novation by the Second Promissory Note and later the Third

Joseph Lella was aware of the Second Promissory Note and accepted the

benefit of the changes, while failing to protest for over 10 years.

Issue Number Five

5. The trial court erred in granting the Motion for Summary Judgment

because the trial court abused its discretion by excluding Hardin’s evidence of

the affirmative defenses of novation, modification and ratification.

Lella objected to Hardin’s defenses of novation and ratification because they

were not specifically included in Disclosure Responses. The Trial court granted

26 Lella’s objection to the novation, modification and ratification defenses and ruled

that “So I don’t believe – I will not allow the evidence to be done with regard to

those. You (Hardin) can raise them as defenses but no evidence associated with

them because they failed to be disclosed. The whole thing with that has to do with

notice. You have to be able to know what it is you are supposed to be objecting

to.” (Record p. 9:21-10). This ruling is not clear as to whether it excluded

Hardin’s summary judgment evidence or ALL summary judgement evidence,

including the considerable evidence offered by Lella that supported the novation

defense. Given that Lella himself raised the issue, the ruling is an abuse of

discretion and should be reversed.

In National Family Care Life Ins. v. Fletcher, 57 SW3d 662, 668 (Tex. App.

– Beaumont 2001, pet denied) the appeals court overruled the trial court’s

exclusion of evidence based upon a supposedly incomplete Tex. R. CIV. P.

194.2(c) disclosure response:

We believe the trial court based its decision to restrict appellants' cross-examination on an overly restrictive interpretation of appellants' response to the request for disclosure. The governing rule, Tex. R. CIV. P. 194.2(c), provides that a party may request, among other things, "the legal theories and, in general, the factual bases of the responding party's claims or defenses (the responding party need not marshal all evidence that may be offered at trial)[.]" We do not view appellants' response -- which moves from their general denial of termination, to their defensive theory, to specific evidence pertaining to that theory -- as permitting the trial court to restrict cross-

27 examination to the incident with Ford and Fletcher's refusal to apologize to him.

The disclosure response encompassed more than the Ford incident, as is evidenced by the express references in appellants' response to two letters written by Sandra Erwin, the president and CEO of NFC, to Fletcher's supervisor and to Fletcher herself. Also included in appellants' response to the disclosure request was a list of persons with knowledge of relevant facts. Appellants named Ford as one of those persons and described his knowledge of relevant facts as follows: Mr. Ford is a customer of [NFC] who wrote a letter of complaint concerning several items, including Ms. Fletcher rewriting his policies and insulting the office staff at [NFC]. **** We conclude that appellants' response, when read in the context of the content of the letters referenced in the response, as well as appellants' description of the relevant facts known by Ford, was clearly adequate to put Fletcher on notice of appellants' legal theory, as well as the factual bases of that theory. To the extent that the trial court limited cross-examination because of appellants' response to the request for disclosure, the trial court erred. Appellants were not required to marshal all their evidence in responding to this discovery tool, whose purpose is to obtain early disclosure of basic information. National Family Care Life, supra at 668-669.

The Disclosure Response, while referring to additional pleadings and discovery,

gave sufficient notice to Lella of Hardin’s defenses. Lella was not surprised by the

defenses, and in fact, was well prepared for them.

Hardin properly disclosed his novation and ratification defense in his

Response to Request for Disclosure in that:

28 a. Hardin’s Response to Request for Disclosure stated:

Defendant would refer Plaintiff to its most recent pleadings on file herein, its responses to any and all discovery requests herein including, but not limited to, requests for disclosure, requests for production and inspection of documents and tangible things, requests and motions for entry upon and examination of real property, interrogatories to a party, requests for admission, oral or written depositions; and motions for mental or physical examinations, all of which are incorporated herein the same as if fully copied and set forth at length. The Plaintiff’s claims are barred by limitation, waiver and/or laches. (C.R. 71)

b. Hardin’s Original Answer and Third Party Complaint stated:

If valid, the Promissory Note claimed by Plaintiff was a debt assumed by Crawford pursuant to this provision. Crawford was to retire the Lella debt and/or replace the Lella note with a new note obligating only Crawford. It is not known whether Crawford did so. (C.R. 18)

c. Lella attached Exhibits that evidenced the amended Notes, the intent of the

parties, and the acquiescence to the amended terms by the Lellas; (C.R. 50-

55)

d. Lella was not surprised by the novation/reformation argument. To the

contrary, Lella’s Motion for Summary Judgment anticipated the affirmative

defense of novation and modification. (C.R. 37 paragraph 19)

e. Joseph Lella offered his affidavit to pre-emptively rebut the novation

defense:

29 There were no notes between Americus Diamond and Elisabeth Lella for Exhibit 6 to replace or invalidate. I never agreed to the amendments or modifications to Exhibit 1 as proposed in Exhibits 5 and 6, and no new or additional consideration for such amendments or modifications was ever tendered to me or accepted by me. I certainly did not agree to remove Defendant Hardin for his personal liability for Exhibit 1, nor for him to remove himself, nor to release him form any such liability. No new or additional consideration for doing so was ever tendered to me or accepted by me. (C.R. 47)

f. Richard Crawford introduced the June 30, 2006 Promissory Note (Exhibit

A-6 with a cover letter that stated: “I hope you are (ya’ll) both doing well.

This new note is showing that I bought my partner Kenny out (yea!!). Also

I’ve raised your interest to 8%.” (C.R. 54)

Thus, it was an abuse of discretion to exclude any evidence from Hardin on the

affirmative defenses of novation or ratification and the summary judgment must be

reversed.

The court erred by granting the motion for summary judgment because the

affidavits of Joseph and Elisabeth Lella stated a mere legal conclusion and did not

provide any summary-judgment evidence. Brownlee v. Brownlee, 665 S.W.2d 111,

112 (Tex. 1984); Life Ins. Co. v. Gar-Dal, Inc., 570 S.W.2d 378, 381-82 (Tex.

1978); 801 Nolana, Inc. v. RTC Mortgage Trust, 944 S.W.2d 751, 754 (Tex.

App.—Corpus Christi 1997, writ denied). Specifically, Lella offered his

affidavit, (C.R. 47) that he did not agree to any change to the First Promissory

30 Note. The actions of the parties, indeed even his own summary judgment

evidence, contradicts that statement and should be disregarded as a legal

conclusion.

The court erred by granting the summary judgment based on the affidavits of

Joseph and Elisabeth Lella because the affidavit is not the best evidence of the

contents of the Promissory Notes. (C.R. 50-55). Mercer v. Daoran Corp., 676

S.W.2d 580, 583 (Tex. 1984). The Promissory Notes speak for themselves, and the

silence of the Lellas in failing to complain about the Second Promissory Note and

Third Promissory Note speak more loudly than an affidavit with legal conclusions.

6. The trial court erred in granting the Motion for Summary Judgment

because the Appellee Joseph Lella’s claims for unjust enrichment and

quantum meruit are barred by the existence of an express contract.

Joseph Lella sought recovery on the First Promissory Note, a valid contract

as well as unjust enrichment, “Pleading in the alternative, Plaintiff would show that

he is entitled to recovery of all principal and unpaid interest under the theory of

unjust enrichment.” (C.R. 26) In his summary judgment motion, Lella stated:

“Defendant sought the money from Plaintiff. Defendant received the money from

Plaintiff. Defendant used and benefitted from that money. Unjust enrichment has

been established conclusively.” (C.R. 36).

31 If a valid express contract covering the subject matter exists, there generally

can be no recovery on a contract implied in law. In Fortune Production Co. v.

Conoco, Inc. 52 S.W. 3d 671, 683-685 (Tex. 2000), a cause of action for unjust

enrichment was not available to recover payments in addition to the contract price

agreed on by parties. The recovery on an express contract and on quantum meruit

are inconsistent with each other. Woodward v Southwest States, Inc. 384 S.W. 2d

674, 675 (Tex. 1964). The evidence shows that Lella advanced money

documented by the First Promissory Note. There was no other advance of money

by Lella, especially one not evidenced in writing as the First Promissory Note.

Lella advanced the money in 1996 and received interest pursuant to the First

Promissory Note through 2003. Unjust enrichment claims are governed by the

two-year statute of limitations in Tex. Civ. Prac. Rem. Code §16.003. Elledge v.

Friberg-Cooper Water Supply Corp., 240 S.W.3d 869, 871 (Tex. 2007). As noted

in Issue Number One, Lella’s cause of action accrued no later than January 2004.

Thus, the limitations period expired in January 2006, more than 7 years before he

made this claim. As a result, the trial court’s summary judgment on unjust

enrichment must be reversed.

7. The trial court erred in granting the Motion for Summary Judgment

because The Appellee Joseph Lella’s claim for Declaratory Judgment is

32 duplicative of the above issues and the Trial Court made no specific

declaration in the Final Judgment.

The declaration (of a declaratory judgment) may be either affirmative or

negative in form and effect, and the declaration has the force and effect of a final

judgment or decree. Tex. Civ. Prac. Rem. Code §37.003(b). The Lella trial court

made no declaratory finding in its Summary Judgment Order (C.R. 153), only

stating: “The Court, after considering the Motion, Defendant’s Response,

Plaintiffs’ Reply to Defendant’s Response and argument of counsel, find that such

Motion should be and hereby is GRANTED.”

In Aurora Petroleum, Inc. v. Newton, 287 S.W.3d 373, (Tex. App. Amarillo

2009) the trial court entered a take nothing judgment which did not mention the

declaratory judgment. The court found the omission of declaratory language

combined with the Take Nothing judgment to be a denial of the requested for a

declaratory judgment relief. The failure to make a declaration is a denial of Lella’s

requested relief. Without such an affirmative or negative declaration, there is no

declaratory judgment to appeal.

In his First Amended Petition (C.R. 26), Lella asked, alternative to his other

claims, for a Declaratory Judgment: “Plaintiff requests the Court to determine the

parties respective rights and liabilities under the terms of Exhibits [sic] 1.” Exhibit

33 1 was the First Promissory Note. Yet Lella exceeded that simple pleading in his

Motion for Summary Judgment:

Plaintiff seeks declarations that the terms of the Note as signed are enforceable against Defendant; that the several unilateral attempts by Defendant and Crawford to modify them were ineffectual and not supported by consideration; and that Plaintiff is entitled to payment from Defendant of the total amount of principal and unpaid interest. (Plaintiff only seeks interest at the rate of 10% per annum from January 1, 2012 until paid.) The Court has before it all that is needed to make those declarations of rights and liabilities. Lella Motion for Summary Judgment (C.R. 37) (emphasis added)

By asking the trial court to declare “that the several unilateral attempts by

Defendant and Crawford to modify them were ineffectual and not supported by

consideration,” Lella effectively asked the Court to declare the Second Promissory

Note and Third Promissory Note as invalid. This request is problematic for two

reasons:

a) In a declaratory judgment action, all persons who have or who

claim any interest that would be affected by the declaration sought

must be made parties. Tex. Civ. Prac. Rem. Code §37.006(a);

Lella’s wife Elizabeth Lella is the payee of the Second and Third

Promissory Notes so she had an interest in the proceeding that

would be affected by any declaration. Without Elizabeth as a

party the court had no jurisdiction;

34 b) The requested summary judgment relief, is an attempt to declare

that there was no novation of the First Promissory Note. The

burden of proof rests on the party who wants active relief from the

court, which is usually the party who commenced the action Pace

Corp. v. Jackson, 284 S.W.2d 340, 350 (1955); Lede v. Aycock,

630 S.W.2d 669, 673 (Tex. App.--Houston [14th Dist.] 1981, writ

ref'd n.r.e.).

c) The Declaratory Judgment is subject to the same limitations

period as the underlying facts, otherwise the cause of action would

be become the safe haven for all time barred claims.

Assuming the Court of Appeals determines that the trial court granted

declaratory relief, which is omitted from the trial court’s judgment, the requested

declaratory relief fails because the Court’s order is not clear; the relief requested

in the Motion for Summary Judgment exceeds the pleading relief requested in the

First Amended Petition; the Appellee failed to bring all affected parties before the

court, namely Elizabeth Lella; and Joseph Lella failed to meet its burden of proof

on his effort to declare any novation as invalid.

35 VII. CONCLUSION AND REQUEST FOR RELIEF

In 2003, if not earlier, Lella asked that interest on the First Promissory Note

be paid to his wife Elizabeth. Hardin and his partner Richard A. Crawford

accommodated this request by preparing, signing, and forwarding the Second

Promissory Note to Joseph and Elizabeth Lella and paying the required interest to

her. Joseph Lella did not object to this change until he made demand in 2013,

almost a decade later. Lella’s breach of contract claim on the First Promissory

Note is barred by the statute of limitations as he unreasonably delayed his demand

for payment.

The claim for relief under the theory of unjust enrichment is invalid because

the existence of the First Promissory Note, a valid existing contract, precludes

recovery on the theory of unjust enrichment and as with the claim for breach of

contract, is barred by limitations. Finally, the request for declaratory relief is not

supported by either pleadings or an order so that no relief should be granted.

For these reasons, Kenneth M. Hardin, Appellant, requests that this court

reverse and remand this matter to the trial court. Hardin also requests any other

relief to which he may be entitled.

36 Respectfully Submitted,

_/s/ Mark L. Aschermann______ Mark L. Aschermann SBN 01368700 BARRON & NEWBURGER, PC 6300 West Loop South, Suite 341 Bellaire, Texas 77401 Telephone (713) 942-0808 Facsimile (713) 942-0449 maschermann@bn-lawyers.com ATTORNEYS FOR APPELLANT

CERTIFICATE OF COMPLIANCE

I certify , according to the word count feature of the Word program used to create this Brief, this Brief contains a total of 7,070 words in pages numbered 5 through 35. _/s/ Mark L. Aschermann______ Mark L. Aschermann

CERTIFICATE OF SERVICE

This is to certify that on the 30th day of March, 2015, a true and correct copy of the foregoing document was served on the parties listed below at the address and in the manner indicated.

William M. Nichols _/s/ Mark L. Aschermann______ WILLIAM M. NICHOLS, P.C. Mark L. Aschermann 9601 McAllister Freeway, Suite 1250 San Antonio, Texas 78216-5150 Via Facsimile to (210) 340-8885

37 No. 03-14-00607-cv

IN THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS AT AUSTIN

KENNETH M. HARDIN, Appellant vs.

APPELLANT’S APPENDIX

NECESSARY DOCUMENTS 1. FINAL SUMMARY JUDGMENT signed June 26, 2014. . . . . . . . . . . . . . . . . . . . 2 Record, p. 153 2. FINDINGS OF FACT and VERDICT (none). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3. TEXAS RULES OF CIVIL PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Tex. R. CIV. P. 194.2 4. TEXAS CIVIL PRACTICE AND REMEDIES CODE. . . . . . . . . . . . . . . . . . . . . . 12 Tex. Civ. Prac. Rem. Code §16.003 Tex. Civ. Prac. Rem. Code §16.004

OPTIONAL CONTENTS 5. FIRST PROMISSORY NOTE dated September 5, 1996. . . . . . . . . . . . . . . . . . . . . 15 Record, p. 50 6. SECOND PROMISSORY NOTE dated July 1, 2003. . . . . . . . . . . . . . . . . . . . . . . . 17 Record, p. 53 7. THIRD PROMISSORY NOTE dated June 30, 2006. . . . . . . . . . . . . . . . . . . . . . . . 19 Record, p. 55

1 DOCUMENT 1

FINAL SUMMARY JUDGMENT signed June 26, 2014 Record, p. 153

2 3 4 5 6 DOCUMENT 2

FINDINGS OF FACT and VERDICT

7 There were no findings of facts or verdicts made by the trial court in this matter.

8 DOCUMENT 3

TEXAS RULES OF CIVIL PROCEDURE Tex. R. CIV. P. 194

9 Tex. R. Civ. P. 194 (2015)

Rule 194 Requests for Disclosure

194.1. Request. --A party may obtain disclosure from another party of the information or material listed in Rule 194.2 by serving the other party - no later than 30 days before the end of any applicable discovery period - the following request: "Pursuant to Rule 194, you are requested to disclose, within 30 days of service of this request, the information or material described in Rule [state rule, e.g., 194.2, or 194.2(a), (c), and (f), or 194.2(d) - (g)]."

194.2. Content. --A party may request disclosure of any or all of the following: (a) the correct names of the parties to the lawsuit; (b) the name, address, and telephone number of any potential parties; (c) the legal theories and, in general, the factual bases of the responding party's claims or defenses (the responding party need not marshal all evidence that may be offered at trial); (d) the amount and any method of calculating economic damages; (e) the name, address, and telephone number of persons having knowledge of relevant facts, and a brief statement of each identified person's connection with the case; (f) for any testifying expert: (1) the expert's name, address, and telephone number; (2) the subject matter on which the expert will testify; (3) the general substance of the expert's mental impressions and opinions and a brief summary of the basis for them, or if the expert is not retained by, employed by, or otherwise subject to the control of the responding party, documents reflecting such information; (4) if the expert is retained by, employed by, or otherwise subject to the control of the responding party: (A) all documents, tangible things, reports, models, or data compilations that have been provided to, reviewed by, or prepared by or for the expert in anticipation of the expert's testimony; and (B) the expert's current resume and bibliography; (g) any indemnity and insuring agreements described in Rule 192.3(f); (h) any settlement agreements described in Rule 192.3(g); (i) any witness statements described in Rule 192.3(h); (j) in a suit alleging physical or mental injury and damages from the occurrence that is the subject of the case, all medical records and bills that are reasonably

10 related to the injuries or damages asserted or, in lieu thereof, an authorization permitting the disclosure of such medical records and bills; (k) in a suit alleging physical or mental injury and damages from the occurrence that is the subject of the case, all medical records and bills obtained by the responding party by virtue of an authorization furnished by the requesting party; (l) the name, address, and telephone number of any person who may be designated as a responsible third party.

194.3. Response. --The responding party must serve a written response on the requesting party within 30 days after service of the request, except that: (a) a defendant served with a request before the defendant's answer is due need not respond until 50 days after service of the request, and (b) a response to a request under Rule 194.2(f) is governed by Rule 195.

194.4. Production. --Copies of documents and other tangible items ordinarily must be served with the response. But if the responsive documents are voluminous, the response must state a reasonable time and place for the production of documents. The responding party must produce the documents at the time and place stated, unless otherwise agreed by the parties or ordered by the court, and must provide the requesting party a reasonable opportunity to inspect them.

194.5. No Objection or Assertion of Work Product. --No objection or assertion of work product is permitted to a request under this rule.

194.6. Certain Responses Not Admissible. --A response to requests under Rule 194.2(c) and (d) that has been changed by an amended or supplemental response is not admissible and may not be used for impeachment.

11 DOCUMENT 4

TEXAS CIVIL PRACTICE AND REMEDIES CODE Tex. Civ. Prac. Rem. Code §16.003 Tex. Civ. Prac. Rem. Code §16.004

12 Texas Civil Practice and Remedies Code

Sec. 16.003. TWO-YEAR LIMITATIONS PERIOD. (a) Except as provided by Sections 16.010, 16.0031, and 16.0045, a person must bring suit for trespass for injury to the estate or to the property of another, conversion of personal property, taking or detaining the personal property of another, personal injury, forcible entry and detainer, and forcible detainer not later than two years after the day the cause of action accrues. (b) A person must bring suit not later than two years after the day the cause of action accrues in an action for injury resulting in death. The cause of action accrues on the death of the injured person.

Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985. Amended by Acts 1995, 74th Leg., ch. 739, Sec. 2, eff. June 15, 1995; Acts 1997, 75th Leg., ch. 26, Sec. 2, eff. May 1, 1997. Amended by: Acts 2005, 79th Leg., Ch. 97 (S.B. 15), Sec. 3, eff. September 1, 2005.

13 Texas Civil Practices and Remedies Code

Sec. 16.004. FOUR-YEAR LIMITATIONS PERIOD. (a) A person must bring suit on the following actions not later than four years after the day the cause of action accrues: (1) specific performance of a contract for the conveyance of real property; (2) penalty or damages on the penal clause of a bond to convey real property; (3) debt; (4) fraud; or (5) breach of fiduciary duty. (b) A person must bring suit on the bond of an executor, administrator, or guardian not later than four years after the day of the death, resignation, removal, or discharge of the executor, administrator, or guardian. (c) A person must bring suit against his partner for a settlement of partnership accounts, and must bring an action on an open or stated account, or on a mutual and current account concerning the trade of merchandise between merchants or their agents or factors, not later than four years after the day that the cause of action accrues. For purposes of this subsection, the cause of action accrues on the day that the dealings in which the parties were interested together cease.

Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985. Amended by Acts 1999, 76th Leg., ch. 950, Sec. 1, eff. Aug. 30, 1999.

14 DOCUMENT 5

FIRST PROMISSORY NOTE dated September 5, 1996 Record, p. 50

15 16 DOCUMENT 6

SECOND PROMISSORY NOTE dated July 1, 2003 Record, p. 53

17 18 DOCUMENT 7

THIRD PROMISSORY NOTE dated June 30, 2006 Record, p. 55

19 20