No. 05-11-00934-CV ACCEPTED 225EFJ016760221 FIFTH COURT OF APPEALS DALLAS, TEXAS 12 March 5 P12:50 Lisa Matz CLERK IN THE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS AT DALLAS R.J. SUAREZ ENTERPRISES, INC. Appellant / Cross-Appellee v. PNYX, L.P., GAMR, LTD., and MICHAEL MANTAS Appellees / Cross-Appellants SAM KIM Appellee On Appeal from the 193rd District Court of Dallas County Carl Ginsberg, Judge Presiding REPLY BRIEF OF CROSS-APPELLANTS PNYX, L.P., GAMR, LTD., and MICHAEL MANTAS Chad M. Ruback State Bar No. 90001244 THE RUBACK LAW FIRM 8117 Preston Road Suite 300 Dallas, Texas 75225 (214) 522-4243 (214) 522-2191 fax
TABLE OF CONTENTS TABLE OF CONTENTS... i INDEX OF AUTHORITIES...ii BACKGROUND...1 SUMMARY OF THE ARGUMENT....4 ARGUMENT...5 I. The property owners cross-issue was not defective................. 5 II. III. Suarez does not dispute (1) that Suarez occupied the premises past the expiration of the lease or (2) that Suarez failed to pay rent for that time period...7 Suarez admitted in the trial court that it was the proper party, but now claims on appeal that it was not the proper party........................... 7 1. Suarez s claim is inconsistent with Suarez s own pleadings, including a pleading sworn by Suarez s corporate representative........... 8 2. Suarez s claim is inconsistent with a sworn affidavit of Suarez s director of operations...9 3. While the property owners filed a breach of lease counterclaim against Suarez, Suarez never filed a verified denial asserting that Suarez was not the proper party...9 PRAYER...1 0 CERTIFICATE OF SERVICE....1 1 Appendix A: TEX. R. CIV. P. 93...Tab A i
INDEX OF AUTHORITIES Rule TEX. R. CIV. P. 93....1 0 Cases Anderson v. Gilbert, 897 S.W.2d 783 (Tex. 1995)...5, 6 Beacon Nat l Ins. Co. v. Reynolds, 799 S.W.2d 390 (Tex. App. Fort Worth 1990, writ denied)................ 1 0 C&E Partners v. Sun Exploration & Prod. Co., 783 S.W.2d 707 (Tex. App. Dallas 1989, writ denied).................... 1 0 CHCA E. Houston, L.P. v. Henderson, 99 S.W.3d 630 (Tex. App. Houston [14th Dist.] 2003, no pet.)............. 1 0 Dow Chem. Co. v. Francis, 46 S.W.3d 237 (Tex. 2001)... 7 Landry s Seafood House-Addison, Inc. v. Snadon, 233 S.W.3d 430 (Tex. App. Dallas 2007, pet. denied).................... 1 0 Tittizer v. Union Gas Corp., 171 S.W.3d 857 (Tex. 2005)...6 Union Nat l Bank v. Moriary, 746 S.W.2d 249 (Tex. App. Texarkana 1987, writ denied)................. 1 0 ii
BACKGROUND This is a case in which some interesting arguments have been made. First, Suarez argues that a Coke dispenser, an ice machine, a walk-in refrigerator, and a freezer all constitute furniture and/or office equipment. [Cross-Appellee s Brief pp. 3, 8] Second, Suarez suggests that fixtures must always remain the property of a tenant... irrespective of the parties contractual agreement to the contrary. [Cross-Appellee s Brief pp. 3, 8] Third, Suarez argues that, because Suarez s agreement with Subway purportedly prohibits Suarez from using used equipment in Suarez s restaurants, replacement value not fair market value must be used to award damages to Suarez. [Cross-Appellee s Brief pp. 11-12, 18-19, 21] This argument is particularly interesting in light of the fact that Suarez did not prevail on a breach of contract cause of action or a tortious interference cause of action, but rather prevailed only on a conversion cause of action... and has presented no case law in which a court has ever awarded replacement value in a conversion cause of action based on the fact that the plaintiff has an agreement with a third-party purportedly requiring the plaintiff to use only brand-new equipment. Similarly, Suarez argues that a plaintiff s testimony as to the cost of purchasing property brand-new automatically constitutes testimony of used property s fair market value... as long the plaintiff has an agreement with a third-party purportedly requiring the plaintiff to use only brand-new equipment. [Cross-Appellee s Brief pp. 19, 21] This argument is 1
particularly interesting in light of the fact that Suarez has presented no case law in which a court has ever held that a plaintiff s testimony of the cost of purchasing property brand-new automatically constitutes testimony of used property s fair market value based on the fact that the plaintiff has an agreement with a third-party purportedly requiring the plaintiff to use only brand-new equipment. Fourth, Suarez argues that it should get to elect any remedy it chooses, but then argues that it never made an election of remedies in the trial court. [Cross-Appellee s Brief pp. 11-12] Suarez argues that it would have made its election of remedies in closing arguments, so the trial court was wrong to have declined to hear closing arguments in this bench trial. [Cross-Appellee s Brief p. 16] This argument is particularly interesting in light of the fact that Suarez has presented no case law in which a court has been required to hear closing arguments in a bench trial. Fifth, Suarez argues that testimony that Suarez lost $4,000 per month in revenue does not contradict testimony that Suarez lost $4,000 per month in profit. [Cross-Appellee s Brief p. 17] Suarez suggests that otherwise inconsistent testimony is not inconsistent as long as it is labeled as a clarification. [Cross-Appellee s Brief p. 17] Sixth, Suarez argues that the Texas Penal Code means of valuing stolen property should be used in the context of a civil cause of action for conversion. [Cross-Appellee s Brief p. 18] This argument is particularly interesting in light of the fact that Suarez has presented no case law in which a court has used the Texas Penal Code means of valuing stolen property in the context of a civil cause of action for conversion. 2
Seventh, Suarez argues that TerrAgora, a 2009 court of appeals opinion with similar facts to those at issue here, should be disregarded because that opinion is an unpublished decision. [Cross-Appellee s Brief pp. 21-22] This argument is particularly interesting in light of the fact that there have been no unpublished appellate opinions in Texas civil cases since January 1, 2003. Suarez s argument is also interesting in light of the fact that Suarez makes no attempt to distinguish the 2009 case... and also in light of the fact that Suarez does not cite to any other case with similar facts to those at issue here. Eighth, Suarez argues that it did not waive its claim to attorneys fees by not requesting additional findings of fact... after the trial court s findings of fact were silent as to attorneys fees. [Cross-Appellee s Brief p. 23] This is particularly interesting in light of the fact that Suarez cites no legal authority for its argument... and makes no attempt to distinguish Buckeye, this Court s 2007 opinion cited for waiver of the attorneys fees claim. Ninth, Suarez argues that it should be awarded attorneys fees for successfully defending a breach of contract cause of action. [Cross-Appellee s Brief p. 23] This is particularly interesting in light of the fact that Suarez does not address MBM, a 2009 Texas Supreme Court case cited for the proposition that a party cannot be awarded attorneys fees under section 38.001(8) unless that party was awarded damages. While ignoring MBM, Suarez relies on Fitzgerald and Silver Lion. In those cases, a court of appeals held that a party who had successfully defended a breach of contract cause of action was entitled to recover attorneys fees... based on the fact that the contract between the parties provided 3
that the prevailing party shall recover attorneys fees. The lease agreement at issue in this case, of course, has no such provision. SUMMARY OF THE ARGUMENT The property owners cross-issue was not defective. An appellate issue is sufficient if it challenges the portion of the judgment (as opposed to findings of fact and conclusions of law supporting the judgment) which the complaining party seeks to have reversed on appeal. While Suarez points to evidence that the property owners agreed to permit Suarez s holdover into the month of June, this does not constitute evidence that the property owners agreed to waive payment for the holdover. And Suarez does not dispute (1) that Suarez occupied the premises past the expiration of the lease or (2) that Suarez failed to pay rent for that time period. Suarez admitted in the trial court that it was the proper party, but now claims on appeal that it was not the proper party. Morever, while the property owners filed a breach of contract cause of action against Suarez based on Suarez having entered into the lease, Suarez never filed a verified denial asserting that Suarez was not the proper party. 4
ARGUMENT The property owners presented one cross-issue in their cross-appeal. [Cross- Appellants Brief p. vii] Suarez makes three arguments (each under a separate heading) in response to the cross-issue. [Cross-Appellee s Brief pp. 24-29] The property owners will respond to the three arguments in the order that Suarez presented them. I. The property owners cross-issue was not defective. Brief: The property owners presented the following cross-issue in their Cross-Appellants The trial court erred in awarding no damages to PNYX for Suarez s breach of the lease agreement, as PNYX established as a matter of law that Suarez was a holdover tenant and that Suarez did not pay PNYX the rent required by the lease agreement for a holdover tenancy. [Cross-Appellants Brief p. 20] Suarez claims that this cross-issue is defective. [Cross-Appellee s Brief p. 24] Specifically, Suarez faults the property owners for not having challenged in the cross-issue itself the trial court s findings of fact and conclusions of law as to liability. [Cross- Appellee s Brief p. 25] An appellate issue is sufficient if it challenges the portion of the judgment (as opposed to findings of fact and conclusions of law supporting the judgment) which the complaining party seeks to have reversed on appeal. See Anderson v. Gilbert, 897 S.W.2d 783, 784-85 (Tex. 1995). In this case, the judgment does not address liability at all, but rather states that the parties shall take nothing. [CR 360] The property owners correctly phrased their cross- 5
issue to complain that the trial court erred in rendering a take-nothing judgment, as the correct judgment should have awarded damages to the property owners. [Cross-Appellants Brief p. 20] It is not necessary that findings of fact and conclusions of law supporting the judgment be challenged in the appellate issue itself. See id. To the contrary, it is sufficient to challenge the findings of fact and conclusions of law in the argument section presented under the appellate issue. See id.; see also Tittizer v. Union Gas Corp., 171 S.W.3d 857, 863 (Tex. 2005). And, in the argument section presented under their cross-issue, the property owners did expressly challenge the relevant findings of fact and conclusions of law. [Cross- Appellants Brief p. 21 n.13] Moreover, although not necessarily required to do so, the property owners cross-issue states the reason that trial court should have awarded damages for Suarez s breach of the lease agreement. [Cross-Appellants Brief p. 20] It is puzzling how Suarez can suggest that this language is somehow not sufficient to permit the Court to consider whether Suarez should be liable for breach of the lease agreement. [Cross-Appellee s Brief p. 25] This is especially true in light of the Texas Supreme Court holdings (1) that appellate issues should be liberally construed and (2) that appellate courts should avoid being overly technical in construing appellate issues. Tittizer, 171 S.W.3d at 863. 6
II. Suarez does not dispute (1) that Suarez occupied the premises past the expiration of the lease or (2) that Suarez failed to pay rent for that time period. In their Cross-Appellants Brief, the property owners argued that they had established as a matter of law (1) that Suarez occupied the premises past the expiration of the lease and (2) that Suarez failed to pay rent for that time period. [Cross-Appellants Brief p. 20] In its Cross-Appellee s Brief, Suarez does not dispute either of these points. [Cross-Appellee s Brief pp. 25-28] Rather, Suarez argues that there is evidence in the record that the property owners allowed [Suarez] to hold over after the expiration of the lease. [Cross-Appellee s Brief p. 26] This is true, but evidence that the property owners agreed to permit the holdover into the month of June does not constitute evidence that the property owners agreed to waive payment for the holdover. In fact, Suarez s representative admitted that Suarez had agreed to pay rent for the holdover. [RR vol. 2 p. 60] Yet, Suarez s representative admitted that Suarez did not pay any rent for the holdover. [RR vol. 2 p. 116] Consequently, as a matter of law, PNYX has proven its cause of action for breach of the lease agreement. And that is sufficient to sustain the property owners cross-issue. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). PNYX is, thus, entitled to damages for breach of the lease agreement. III. Suarez admitted in the trial court that it was the proper party, but now claims on appeal that it was not the proper party. Robert Suarez is the president of Suarez Enterprises (the corporation which is a party to this case). [RR vol. 2 pp. 14, 16, 40, 68] In his capacity as president of the corporation, he acts on behalf of the corporation with regard to the corporation s leases. [RR vol. 2 p. 40] 7
Suarez (the corporation) argues that Suarez (the corporation s president) signed the lease in his individual capacity rather than on behalf of the corporation and, consequently, the corporation cannot be liable for breaching the lease. [Cross-Appellee s Brief p. 28] Suarez s claim that it cannot be held liable for breach of the lease has three problems. 1. Suarez s claim is inconsistent with Suarez s own pleadings, including a pleading sworn by Suarez s corporate representative. Suarez s claim that the contract is with its president in his individual capacity rather than with Suarez is inconsistent with Suarez s own pleadings. Specifically, Suarez s pleadings admit:! For several years Suarez Enterprises occupied the leased premises as a tenant [CR 23] (sworn as true in a verification signed by Suarez s corporate representative) [CR 26];! Plaintiff, Suarez Enterprises, entered into a Lease Agreement to lease space located at 1745 Mockingbird Lane, Suite 100, Dallas, Texas 75247 ; [CR 118] and! Suarez Enterprises is the owner and operator of a Subway franchise that was leasing a space from Defendants in a shopping center owned by Defendants and located at 1475 Mockingbird Lane, Suite 100, Dallas, Texas 75247. [CR 118] These admissions and particularly the admission sworn as true in the verification signed by Suarez s corporate representative would be sufficient to support the trial court s finding of fact that Plaintiff entered into a triple net Lease Agreement to Lease space located at 1475 W. Mockingbird Lane, Suite 100, Dallas, Texas 75247 [CR 410 1] and the trial court s conclusion of law that The lease for the space located at 1475 W. Mockingbird 8
Lane, Suite 100, Dallas, Texas 75247 is a valid, enforceable contract between the Plaintiff and Defendant. [CR 413] 2. Suarez s claim is inconsistent with a sworn affidavit of Suarez s director of operations. Suarez s claim that the contract is with its president in his individual capacity rather than with Suarez is inconsistent with a sworn affidavit of Suarez s director of operations. Specifically, in his sworn affidavit, Suarez s director of operations admitted that:! On or about June 15, 1992, Plaintiff Suarez Enterprises, entered into a Lease Agreement to let space located at 1475 W. Mockingbird Lane, Suite 100, Dallas, Texas 75247 for the purpose of installing an opening a Subway Franchise. [CR 28] This admission in a sworn affidavit would be sufficient to support the trial court s finding of fact that Plaintiff entered into a triple net Lease Agreement to Lease space located at 1475 W. Mockingbird Lane, Suite 100, Dallas, Texas 75247 [CR 410 1] and the trial court s conclusion of law that The lease for the space located at 1475 W. Mockingbird Lane, Suite 100, Dallas, Texas 75247 is a valid, enforceable contract between the Plaintiff and Defendant. [CR 413] 3. While the property owners filed a breach of lease counterclaim against Suarez, Suarez never filed a verified denial asserting that Suarez was not the proper party. The property owners filed a breach of lease counterclaim against Suarez based on Suarez having entered into a lease agreement for the space located at 1475 W. Mockingbird Lane, Suite 100, Dallas, Texas 75247. [CR 131] But Suarez never filed a verified denial asserting that Suarez was not the proper party. [RR vol. 3 p. 70] As a general rule, a 9
defendant sued for breach of contract is not required to file a verified pleading that the defendant is not a party to the contract. See C&E Partners v. Sun Exploration & Prod. Co., 783 S.W.2d 707, 722 (Tex. App. Dallas 1989, writ denied). However, when the defendant sued for breach of contract is closely related to the person whom the defendant alleges was the party to the contract, courts have held the defendant is required to file a verified denial. See CHCA E. Houston, L.P. v. Henderson, 99 S.W.3d 630, 633 (Tex. App. Houston [14th Dist.] 2003, no pet.) (citing TEX. R. CIV. P. 93(2) and 93(4)); Beacon Nat l Ins. Co. v. Reynolds, 799 S.W.2d 390, 395 (Tex. App. Fort Worth 1990, writ denied) (citing TEX. R. CIV. P. 93(2)); Union Nat l Bank v. Moriary, 746 S.W.2d 249, 255 (Tex. App. Texarkana 1987, writ denied) (citing TEX. R. CIV. P. 93(7)); see also Landry s Seafood House-Addison, Inc. v. Snadon, 233 S.W.3d 430, 433-34 (Tex. App. Dallas 2007, pet. denied) (citing TEX. R. CIV. P. 93(2)). Because the individual who signed the lease is Suarez s president (and also the person who acts on behalf of Suarez with regard to Suarez s leases), the individual and the corporation were closely related, requiring Suarez to have filed a verified denial. PRAYER The property owners respectfully pray that this Court reverse the trial court s judgment awarding no damages to PNYX for Suarez s breach of the lease agreement (as PNYX established as a matter of law that Suarez was a holdover tenant and that Suarez did not pay PNYX the rent required by the lease agreement for a holdover tenancy) and render judgment for PNYX in the amount of $2,475 plus $27,500 in attorneys fees. The property owners pray that this Court affirm the trial court s judgment in all other regards. The 10
property owners further pray for their costs and for all other relief to which they may be entitled. Respectfully submitted, /s/ Chad M. Ruback Chad M. Ruback State Bar No. 90001244 THE RUBACK LAW FIRM 8117 Preston Road Suite 300 Dallas, Texas 75225 (214) 522-4243 (214) 522-2191 fax CERTIFICATE OF SERVICE I hereby certify that, on March 5, 2012, I served a copy of the foregoing brief to the following: Jennifer S. Stoddard (counsel for Appellant / Cross-Appellee R.J. Suarez Enterprises, Inc.) Stoddard & Welsh, PLLC 8150 N. Central Expressway Suite 1150 Dallas, Texas 75206 Sam Kim (pro se appellee) d/b/a Super Sub & Smoothie + 1475 W. Mockingbird Lane Suite 100 Dallas, Texas 75247 /s/ Chad M. Ruback Chad M. Ruback 11
Appendix A TEX. R. CIV. P. 93
TX Rules of Civil Procedure, Rule 93 Page 1 Vernon's Texas Rules Annotated Currentness Texas Rules of Civil Procedure Part II. Rules of Practice in District and County Courts Section 4. Pleading C. Pleadings of Defendant Rule 93. Certain Pleas to be Verified A pleading setting up any of the following matters, unless the truth of such matters appear of record, shall be verified by affidavit. 1. That the plaintiff has not legal capacity to sue or that the defendant has not legal capacity to be sued. 2. That the plaintiff is not entitled to recover in the capacity in which he sues, or that the defendant is not liable in the capacity in which he is sued. 3. That there is another suit pending in this State between the same parties involving the same claim. 4. That there is a defect of parties, plaintiff or defendant. 5. A denial of partnership as alleged in any pleading as to any party to the suit. 6. That any party alleged in any pleading to be a corporation is not incorporated as alleged. 7. Denial of the execution by himself or by his authority of any instrument in writing, upon which any pleading is founded, in whole or in part and charged to have been executed by him or by his authority, and not alleged to be lost or destroyed. Where such instrument in writing is charged to have been executed by a person then deceased, the affidavit shall be sufficient if it states that the affiant has reason to believe and does believe that such instrument was not executed by the decedent or by his authority. In the absence of such a sworn plea, the instrument shall be received in evidence as fully proved. 8. A denial of the genuineness of the indorsement or assignment of a written instrument upon which suit is brought by an indorsee or assignee and in the absence of such a sworn plea, the indorsement or assignment thereof shall be held as fully proved. The denial required by this subdivision of the rule may be made upon information and belief. 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
TX Rules of Civil Procedure, Rule 93 Page 2 9. That a written instrument upon which a pleading is founded is without consideration, or that the consideration of the same has failed in whole or in part. 10. A denial of an account which is the foundation of the plaintiff's action, and supported by affidavit. 11. That a contract sued upon is usurious. Unless such plea is filed, no evidence of usurious interest as a defense shall be received. 12. That notice and proof of loss or claim for damage has not been given as alleged. Unless such plea is filed such notice and proof shall be presumed and no evidence to the contrary shall be admitted. A denial of such notice or such proof shall be made specifically and with particularity. 13. In the trial of any case appealed to the court from the Industrial Accident Board [FN1] the following, if pleaded, shall be presumed to be true as pleaded and have been done and filed in legal time and manner, unless denied by verified pleadings: (a) Notice of injury. (b) Claim for compensation. (c) Award of the Board. (d) Notice of intention not to abide by the award of the Board. (e) Filing of suit to set aside the award. (f) That the insurance company alleged to have been the carrier of the workers' compensation insurance at the time of the alleged injury was in fact the carrier thereof. (g) That there was good cause for not filing claim with the Industrial Accident Board [FN1] within the one year period provided by statute. (h) Wage rate. A denial of any of the matters set forth in subdivisions (a) or (g) of paragraph 13 may be made on information and belief. Any such denial may be made in original or amended pleadings; but if in amended pleadings the same must be 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
TX Rules of Civil Procedure, Rule 93 Page 3 filed not less than seven days before the case proceeds to trial. In case of such denial the things so denied shall not be presumed to be true, and if essential to the case of the party alleging them, must be proved. 14. That a party plaintiff or defendant is not doing business under an assumed name or trade name as alleged. 15. In the trial of any case brought against an automobile insurance company by an insured under the provisions of an insurance policy in force providing protection against uninsured motorists, an allegation that the insured has complied with all the terms of the policy as a condition precedent to bringing the suit shall be presumed to be true unless denied by verified pleadings which may be upon information and belief. 16. Any other matter required by statute to be pleaded under oath. CREDIT(S) Oct. 29, 1940, eff. Sept. 1, 1941. Amended by orders of March 31, 1941, eff. Sept. 1, 1941; Sept. 20, 1941, eff. Dec. 31, 1941; June 16, 1943, eff. Dec. 31, 1943; Oct. 12, 1949, eff. March 1, 1950; July 21, 1970, eff. Jan. 1, 1971; July 22, 1975, eff. Jan. 1, 1976; June 15, 1983, eff. Sept. 1, 1983; Dec. 5, 1983, eff. April 1, 1984. [FN1] The name of the Industrial Accident Board was changed to the Texas Workers' Compensation Commission pursuant to Acts 1989, 71st Leg., 2nd C.S., ch. 1, 17.01. The Texas Workers' Compensation Commission was abolished and the Workers' Compensation Division of the Texas Department of Insurance was established pursuant to Acts 2005, 79th Leg., ch. 265, 1.003. Current with amendments received through August 1, 2011 (c) 2011 Thomson Reuters. No claim to Orig. U.S. Govt. Works. END OF DOCUMENT 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.