William Edward Baty and Melody Prather v. Morequity, Inc.

• Court: Court of Appeals of Texas
• Decided: November 29, 2012
• Docket: 01-11-00887-CV
• Status: Published

Opinion

Opinion issued November 29, 2012

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-11-00887-CV ——————————— WILLIAM EDWARD BATY AND MELODY PRATHER, Appellants V. MOREQUITY, INC., Appellee

On Appeal from the County Civil Court at Law Number Four Harris County, Texas Trial Court Case No. 995238

MEMORANDUM OPINION

Following a nonjudicial foreclosure sale, Appellee MorEquity, Inc. brought

a forcible detainer action in justice court seeking possession of property located at

26318 Watercypress Court, Cypress, Texas 77433. The justice court entered a judgment in favor of MorEquity and against the property’s occupants, appellants

William Edward Baty and Melody Prather. On de novo review, the County Civil

Court of Law Number Four awarded MorEquity a writ of possession.

Appellants William Edward Baty and Melody Prather appeal the county

court’s judgment, contending that (1) they were entitled to, but did not receive, 30

days’ written notice to vacate; (2) the trial court erred in admitting Plaintiff’s

Exhibit 3, comprised of a business records affidavit, the notice to vacate, and

certified mail receipt, over their hearsay objection; and (3) the trial court erred in

excluding appellant Baty’s testimony about whether appellants received notice to

vacate.

MorEquity counters that (1) appellants were entitled to 3 days’ notice, not 30

days; (2) MorEquity’s Exhibit 3 was properly admitted as a business record; and

(3) the trial court did not abuse its discretion in refusing to hear Baty’s testimony

about notice. We affirm.

BACKGROUND

On December 9, 2005, appellants signed a deed of trust granting Mortgage

Electronic Registration Systems, Inc. a first lien security interest in the property

located at 26318 Watercypress Court, Cypress, Texas 77433. Section 22 of the

deed of trust provided that in the event of a foreclosure sale, the borrowers would

surrender possession of the property:

2 If the Property is sold pursuant to this Section 22, Borrower or any person holding possession of the Property through Borrower shall immediately surrender possession of the Property to the purchaser at that sale. If possession is not surrendered, Borrower or such person shall be a tenant at sufferance and may be removed by writ of possession or other court proceeding.

Appellants defaulted on the note and the property was sold to MorEquity

through a non-judicial foreclosure sale. Because appellants did not immediately

surrender the property, they became tenants at sufferance under the terms of the

deed.

On April 18, 2011, MorEquity, through its attorneys, sent appellants a

written notice to vacate. MorEquity filed a forcible detainer action against

appellants in justice court, and, on June 14, 2011, the justice court entered a

judgment of possession for MorEquity. Appellants appealed to the County Court

at Law Number Four. During the bench trial, the court admitted three documents

in evidence: (1) a copy of the notarized Substitute Trustee’s Deed, (2) a certified

copy of the Deed of Trust, and (3) a business records affidavit authenticating the

April 18, 2011 notice to vacate and a photocopy of the certified mail receipt. The

business records affidavit was signed by Karl Terwilliger, Operations Manager and

custodian of records at the law firm representing MorEquity in the case, McCarthy,

Holthus & Ackerman, LLP (hereinafter “MHA”). At the conclusion of the trial,

the county court entered judgment for MorEquity.

3 Lack of Notice

In Appellants’ first issue, they contend that section 24.005 of the Texas

Property Code entitles them to 30 days’ written notice to vacate prior to the filing

of a forcible detainer action and that MorEquity failed to provide them with that

required 30 days’ notice. Appellee MorEquity argues section 24.005 only entitles

appellants to 3 days’ notice.

A. Standard of Review

Statutory construction is a legal question that appellate courts review de

novo. City of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008). The

reviewing court will try to determine and give effect to the Legislature’s intent.

State v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002). In so doing, we look first to

the “plain and common meaning” of the statute’s words, and if the statute is

unambiguous, we will adopt the interpretation supported by the plain meaning of

the statutory language. Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996

S.W.2d 864, 865 (Tex. 1999). We determine the meaning of the statute from its

whole, not from isolated portions. Harris Cnty. Hosp. Dist. v. Tomball Reg’l

Hosp., 283 S.W.3d 838, 842 (Tex. 2009).

B. Analysis

Section 24.005(b) provides in part:

If the occupant is a tenant at will or by sufferance, the landlord must give the tenant at least three days’ written notice to vacate before the 4 landlord files a forcible detainer suit unless the parties have contracted for a shorter or longer notice period in a written lease or agreement. If a building is purchased at a tax foreclosure sale or a trustee’s foreclosure sale under a lien superior to the tenant’s lease and the tenant timely pays rent and is not otherwise in default under the tenant’s lease after foreclosure, the purchaser must give a residential tenant of the building at least 30 days’ written notice to vacate if the purchaser chooses not to continue the lease.

TEX. PROP. CODE ANN. § 24.005(b) (Vernon 2000). Appellants argue that this

section entitles them to 30 days’ notice because of their uncontested status as

tenants at sufferance. However, the first sentence of section 24.005(b), which

requires 3 days’ notice, is the one applicable to appellants as tenants at sufferance.

Weatherbee v. GMAC Mortg., LLC, No. 01–11–00546–CV, 2012 WL 1454494, at

*2 (Tex. App.—Houston [1st Dist.] Apr. 26, 2012, pet. filed) (mem. op.) (“Under

Texas Property Code section 24.005, the landlord must give a tenant at sufferance

at least three days’ written notice to vacate before the landlord files a forcible

detainer action.”). The second sentence of section 24.005(b) does not apply to

appellants, but guarantees 30 days’ notice to vacate to tenants under a lease

following foreclosure of the leased property, as long as the tenants are not in

default on their lease. See Russell v. Am. Real Estate Corp., 89 S.W.3d 204, 208

(Tex. App.—Corpus Christi 2002, no pet.). Appellants were not tenants under a

lease. Accordingly, appellants were only entitled to 3 days’ notice to vacate. We

thus overrule Appellants’ first issue.

5 Admission of Business Records Affidavit

Appellants contend in their second issue that the trial court abused its

discretion in admitting Plaintiff’s Exhibit 3, which consists of a business records

affidavit made by the custodian of records at MHA, the notice to vacate, and the

certified mail receipt. Specifically, appellants argue that a business records

affidavit itself is inadmissible hearsay, that the affidavit does not fully comply with

Texas Rule of Evidence 902(10)(b) because the affidavit does not state that the

affiant is “of sound mind,” and that the affiant as an employee of MHA cannot

attest to records that were kept by MorEquity or to certified mail receipts created

by the United States Postal Service.

We review a trial court’s decision to admit or exclude evidence for an abuse

of discretion. In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005). A trial court abuses

its discretion when it acts without reference to any guiding rules and principles.

Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex. 1999). We must uphold the trial

court’s evidentiary ruling if there is any legitimate basis for the ruling. Owens–

Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998); Oyster Creek

Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307, 317 (Tex. App.—Houston

[1st Dist.] 2004, pet. denied).

6 B. Business Records

“‘Hearsay’ is a statement, other than one made by the declarant while

testifying at the trial or hearing, offered in evidence to prove the truth of the matter

asserted.” TEX. R. EVID. 801(d). Rule 803(6) provides an exception from the rule

excluding hearsay for business records

made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or by affidavit that complies with Rule 902(10), unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.

TEX. R. EVID. 803(6). The witness does not need to have personal knowledge of

the facts contained within the business records; the witness need only have

personal knowledge of how the records were prepared, in order to be able to attest

to the conditions laid out in Rule 803(6). See TEX. R. EVID. 902(10)(a); In re

E.A.K., 192 S.W.3d 133, 142 (Tex. App—Hous. [14th Dist.] 2006, pet. denied).

C. Analysis

It is well established that business records affidavits may be admitted along

with the records themselves, as long as the requirements of Rules 803(6) and

902(10) are satisfied. See, e.g., Simien v. Unifund CCR Partners, 321 S.W.3d 235,

240, 245 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (finding affidavit properly

admitted along with business records); Fullick v. City of Baytown, 820 S.W.2d 943,

7 944 (Tex. App.—Houston [1st Dist.] 1991, no writ). Appellant cannot contest the

admission of the affidavit as inadmissible hearsay without some evidence that the

affidavit is not in compliance with rules 803(6) and 902(10).

1. Requirements of Rule 902(10)

Rule 902(10) provides a form for the affidavit, which includes the following

language: “My name is ___, I am of sound mind, capable of making this affidavit,

and personally acquainted with the facts herein stated.” TEX. R. EVID. 902(10)(b).

Rule 902(10) also states “this form shall not be exclusive, and an affidavit which

substantially complies with the provisions of this rule shall suffice.” Id.; see also

Simien, 321 S.W.3d at 240. A business records affidavit need not recite the exact

words of Rule 902(10)(b). Kyle v. Countrywide Home Loans, Inc., 232 S.W.3d

355, 360–61 (Tex. App.—Dallas 2007, pet. denied).

The equivalent portion of the affidavit in the instant case reads: “My name is

Karl Terwilliger, I am over the age of eighteen (18) years, have never been

convicted of a felony, and have personal knowledge of the facts contained in this

Affidavit and that they are true and correct.” This language substantially complies

both in substance and in form with Rule 902(10). Because there is no requirement

that an affidavit track the exact language in Rule 902(10)(b), the affidavit is not

inadmissible for failure to include the specific words “of sound mind.”

8 2. Business Records of a Third Party

“A document authored or created by a third party may be admissible as

business records of a different business if: (a) the document is incorporated and

kept in the course of the testifying witness’s business; (b) that business typically

relies upon the accuracy of the contents of the document; and (c) the circumstances

otherwise indicate the trustworthiness of the document.” Simien, 321 S.W.3d at

240–41 (citing Bell v. State, 176 S.W.3d 90, 92 (Tex. App.—Houston [1st Dist.]

2004, pet. ref’d)).

Terwilliger testified that the records were kept by MHA in the file according

to MHA’s regular course of business. In Rodriguez v. Citimortgage, Inc., the court

held that an employee of Citimortgage’s law firm who had custody of all records

related to the suit, including documents obtained from and kept by Citimortgage in

its regular course of business, could properly attest to the documents obtained from

Citimortgage, as well as the certified mail receipt, as business records. No. 03–10–

00093–CV, 2011 WL 182122, at *5 (Tex. App.—Austin Jan 6, 2011, no pet.)

(mem. op.) (citing Simien, 321 S.W.3d at 240–45). The trial court did not err in

finding case files kept by a law firm to be records kept in the regular course of

business.

Terwilliger’s affidavit states that he has custody and control of all records in

Appellant’s file, and further states that he has personal knowledge of the facts

9 contained in the affidavit, including the procedure by which an employee or

representative of MHA “with knowledge of the act, event, condition, opinion, or

diagnosis recorded [made] the record or [transmitted] information thereof to be

included in such record” and that the record was made “at or near the time or

reasonably soon thereafter.” The affidavit further states that the records attached

are “the originals or exact duplicates of the original.” Id. Thus, as in Simien, even

though MHA did not itself create part of the records, the trial court could have

concluded that appellee reasonably relied on the accuracy of the records in the

ordinary course of its business. See Simien, 321 S.W.3d at 243 (finding reasonable

reliance on accuracy of third-party documents when affiant had reviewed file, was

designated agent for file, had personal knowledge of documents, and maintained

control and supervision of files).

Finally, the trial judge did not abuse her discretion in finding the

circumstances indicated that the documents were trustworthy. See Fleming v.

Fannie Mae, No. 02–09–00445–CV, 2010 WL 4812983, at *3–4 (Tex. App.—Fort

Worth Nov. 4, 2010, no pet.) (mem. op.) (holding circumstances adequately

showed trustworthiness of notice to vacate and accompanying business records

affidavit, when affidavit was made by paralegal employed by plaintiff’s law firm

and included substantially same language as affidavit in instant case); Harris v.

State, 846 S.W.2d 960, 964 (Tex. App.—Houston [1st Dist.] 1993, writ ref’d)

10 (finding manufacturer’s certificate of origin admissible as business record attested

to by dealership employee); Rodriguez, 2011 WL 182122, at *5 (holding certified

mail return receipts and notice to vacate admissible in forcible detainer action as

business records kept by law firm). Appellants brought forward no reason to

question the trustworthiness or authenticity of Plantiff’s Exhibit 3. The trial court

did not abuse its discretion by admitting Plaintiff’s Exhibit 3 into evidence. We

overrule Appellants’ second issue.

Exclusion of Evidence

Appellants, in their third issue, argue that the trial court improperly excluded

testimony from appellant Baty concerning whether appellants received the notice

to vacate, and that the exclusion of this evidence caused harm to appellants.

A. Harmless Error Doctrine

“To establish that the trial court’s ruling on the admission or exclusion of

evidence constitutes reversible error, the party complaining of the ruling must

show (1) that the trial court committed error and (2) that the error was reasonably

calculated to cause and probably did cause the rendition of an improper judgment.”

Tex. Dept. of Transp. v. Able, 981 S.W.2d 765, 770 (Tex. App.—Houston [1st

Dist.] 1998), aff’d, 35 S.W.3d 608 (Tex. 2000); TEX. R. APP. P. 44.1(a)(1). If the

substance of excluded evidence was placed before the finder of fact in other

evidence, no reversible error will exist. Tex. Dept. of Transp., 981 S.W.2d at 770.

11 Because the exclusion of evidence is committed to the trial court’s sound

discretion, a successful challenge to a ruling excluding evidence usually requires

the complaining party to show that the judgment turns on the evidence excluded.

G4 Trading, Inc. v. NationsBank of Tex., N.A., 937 S.W.2d 137, 141 (Tex. App.—

Houston [1st Dist.] 1996, no writ). We review the entire record to determine

whether the evidence excluded was controlling to the judgment. Gee v. Liberty

Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex. 1989).

Appellants contend that the trial court abused its discretion in excluding

testimony in response to the questions from appellants’ attorney, “Have you ever

received a 30-day notice letter?” and “Have you received any of the notice—any

notices whatsoever?” asked of Baty. However, the trial court allowed Baty to

answer the question “Did you receive the letter attached as Exhibit 3?” —i.e. the

notice to vacate—to which Baty answered “I’m not sure if I did or not. I’m not

aware.” The court further allowed testimony from Baty that though there was a

copy of a card showing that appellants had received Exhibit No. 3, there was no

card with Baty’s signature on it. Therefore, the court heard and considered

appellants’ evidence on whether notice to vacate was received by appellants.

Baty’s answers to the questions to which objections were sustained would have

been cumulative evidence.

12 Because Appellants cannot show harm from any error in the exclusion of

evidence, we overrule Appellants’ third issue.

CONCLUSION

We affirm the trial court’s judgment.

Sherry Radack Chief Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.