Medal, L.P. v. Kvaerner Process Systems US, Inc.

• Court: Court of Appeals of Texas
• Decided: June 1, 2004
• Docket: 14-03-01334-CV
• Status: Published

Opinion

Affirmed and Memorandum Opinion filed June 1, 2004

Affirmed and Memorandum Opinion filed June 1, 2004.

In The

Fourteenth Court of Appeals

_______________

NO. 14-03-01334-CV

MEDAL, L.P., Appellant

V.

KVAERNER PROCESS SYSTEMS US, INC., Appellee

_________________________________________________________________

On Appeal from the 189th District Court

Harris County, Texas

Trial Court Cause No. 02‑19192

_________________________________________________________________

M E M O R A N D U M   O P I N I O N

In this breach of contract action, appellant Medal, L.P. contends summary judgment was improperly granted in favor of appellee.  Because all dispositive issues are clearly settled in law, we issue this memorandum opinion and affirm.  See Tex. R. App. P. 47.4.

Background

Appellee, Kvaerner Process Systems US, Inc. (KPS), purchased membrane modules from appellant, Medal, L.P. (Medal).  Medal sent three invoices to KPS, requiring total payments of $720,000 by September 30, 1997.  On November 3, 1997, KPS paid Medal $429,000.  On April 26, 2001, KPS sent the following letter to Medal concerning the remaining $291,000:

Our lawyers have researched into the $720,000 . . . . We confirm that $291,000 USD was deducted from these invoices following discussions between Medal . . . and KPS . . . . Our lawyers have not yet reached a conclusion as to whether this amount is legally due to Medal.     

. . . .

KPS undertakes to pay the $291,000 USD to Medal if this amount is due at law to Medal.  If Medal and KPS are unable to agree whether KPS is legally obligated to pay the $291,000 USD, we suggest that the matter be submitted to informal arbitration . . . . KPS will be bound by the ruling of such lawyer or judge. 

Medal filed suit against KPS for breach of contract on December 19, 2001, seeking the unpaid balance.  KPS filed a motion for summary judgment on the ground that Medal=s claim was barred by the statute of limitations.  The trial court granted KPS=s motion.

Standard of Review

We review a traditional summary judgment to determine whether the record establishes there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law on a ground set forth in the motion.  Tex. R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985).  In deciding whether the summary judgment record establishes the absence of a genuine issue of material fact, we view as true all evidence favorable to the non‑movant and indulge every reasonable inference, and resolve all doubts, in its favor.  Nixon, 690 S.W.2d at 548B49.

When a defendant moves for summary judgment on the basis of an affirmative defense such as limitations, it has the burden to conclusively prove all the elements of the affirmative defense as a matter of law.  KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999).  If the movant establishes that the statute of limitations bars the action, the nonmovant must then adduce summary judgment proof raising a fact issue to avoid the statute of limitations.  Id.

Discussion

In one issue, Medal contends its claim is not barred by the statute of limitations.  The statute of limitations for claims involving a debt is four years.  Tex. Civ. Prac. & Rem. Code Ann. ' 16.004 (Vernon 2002).  However, the statute of limitations may be avoided if the party to be charged acknowledges the debt in writing.  Tex. Civ. Prac. & Rem. Code Ann. ' 16.065 (Vernon 1997).  An acknowledgment of a debt must (1) be in writing and signed by the party to be charged; (2) contain an unequivocal acknowledgment of the justness or the existence of the particular obligation; and (3) refer to the obligation and express a willingness to honor that obligation.  Stine v. Stewart, 80 S.W.3d 586, 591 (Tex. 2002).  An acknowledgment of an existing debt creates a new obligation.  Id.  Whether a writing sufficiently acknowledges a debt is a question of law.  Bright & Co. v. Holbein Family Mineral Trust, 995 S.W.2d 742, 745 (Tex. App.CSan Antonio 1999, pet. denied).  Medal concedes it filed suit more than four years after the due date of the invoices but claims KPS=s April 26 letter sufficiently acknowledged the debt creating a new obligation.

In its motion for summary judgment, KPS argued the letter was not an acknowledgment of the debt because it did not contain an unequivocal acknowledgment of the existence of the obligation.  See id.  In the letter KPS stated, AOur lawyers have not yet reached a conclusion as to whether this amount is legally due to Medal,@ and that it would pay the amount Aif this amount is due at law to Medal.@  KPS also agreed to submit the matter to arbitration if the parties could not agree whether it was obligated to pay the amount to Medal.  KPS never admitted that a debt to Medal did in fact exist.  KPS specifically stated its representatives had not yet determined whether the disputed amount was due.  We do not find KPS=s acknowledgment of the existence of a disputed claim to be an unequivocal acknowledgment of the existence of a particular obligation.  See Mandela v. Oggero, 508 S.W.2d 861, 863 (Tex. Civ. App.CHouston [14th Dist.] 1974, no writ) (holding debtor=s statement that debtor Ahad or may have had certain liabilities or obligations@ was equivocal and did not constitute an acknowledgment of the debt); cf Stine, 80 S.W.3d at 592 (holding agreement referring to the creditor and the amount of the unpaid principal and expressly providing how and when the debtor would pay was an acknowledgment that the debt existed); Andrews v. Cohen, 664 S.W.2d 826, 828B29 (Tex. App.CTyler 1984, writ ref=d n.r.e.) (noting debtor=s statement Awe will agree that the total indebtedness . . . is $90,000@ was an acknowledgment of indebtedness).

Appellant claims that a letter held to be an acknowledgment of a debt in Bright & Co., 995 S.W.2d 742, is similar to the letter at issue here.  The debtor in Bright stated in a letter he was in the process of investigating why the creditor had not been paid, and he had not yet found a possible explanation.  Id. at 745B46.  He also sent a fax stating $22,268.20 was the Anet due [the creditor].@  Id. at 746.  In contrast to KPS, he did not make any explicit statements that he had not yet determined whether he was obligated to pay, and he expressly acknowledged a sum was due.  See id. at 745B46.  Additionally, Bright was decided before the Texas Supreme Court articulated the requirement that a writing must contain an unequivocal acknowledgment of an obligation.  See Stine, 80 S.W.3d at 591.  The court in Bright determined only that the writing acknowledged a debt; it did not analyze whether that acknowledgment was unequivocal.  Bright, 995 S.W.2d at 745B46.  Accordingly, the acknowledgment in Bright is distinguishable from the letter here.

Medal also claims we should liberally construe the letter because Medal received it before the statute of limitations had run.  See Standard Sur. & Cas. Co. v. Wynn, 172 S.W.2d 789, 793 (Tex. Civ. App.CAmarillo 1943, no writ) (noting it takes Aless evidence@ to extend the statute of limitations on a debt if the new promise is made before the statute has run); Caterpillar Tractor Co. v. Churchill, 40 S.W.2d 971, 972 (Tex. Civ. App.CTexarkana 1931, writ ref=d).  However, courts have more recently held that the statute of limitations should be construed liberally in favor of debtors.  California Chem. Co. v. Sasser, 423 S.W.2d 347, 350 (Tex. App.CCorpus Christi 1967, no writ) (citing Miller v. Thomas, 226 S.W.2d 149 (Tex. Civ. App.CAmarillo 1949, writ ref=d)).   A[T]he tendency of modern decisions has been . . . not to torture vague expressions into acknowledgments or promises, when the language does not clearly impart such construction.@  Sheffield Capital Corp. v. Konen, No. A14-94-00157-CV, 1995 WL 128250, at *4 (Tex. App.CHouston [14th Dist.] Mar. 23, 1995, no writ) (not designated for publication) (citing Howard v. Windom, 86 Tex. 560, 26 S.W. 483, 485 (1894); Metro. Cas. Ins. Co. of New York v. Davis, 174 S.W.2d 84, 87 (Tex. Civ. App.CWaco 1943, writ dism=d by agr.)).  Accordingly, KPS=s expression that a disputed claim exists does not amount to an unequivocal acknowledgment of the obligation.

Conclusion

We hold KPS=s letter does not constitute acknowledgment of a debt which created a new obligation.^[1]  Accordingly, the trial court properly granted KPS=s motion for summary judgment on the ground that Medal=s claim was barred by the statute of limitations.  The judgment of the trial court is affirmed.

/s/        Charles W. Seymore

Justice

Judgment rendered and Memorandum Opinion filed June 1, 2004.

Panel consists of Justices Fowler, Edelman and Seymore.

---

^[1]  Because we have determined KPS did not unequivocally acknowledge existence of the obligation, we need not consider whether KPS expressed a willingness to honor the obligation.