Ajas, Inc. v. Idaho Pacific Lumber Company, Inc.

Court of Appeals of Texas, Corpus Christi-Edinburg.

AJAS, INC., Appellant,

v.

IDAHO PACIFIC LUMBER COMPANY, INC., Appellee.

NUMBER 13–12–00763–CV

|

Delivered and filed May 14, 2015

On appeal from the 267th District Court of Jackson County, Texas. Joseph P. Kelly, Judge

Attorneys & Firms

Paul R. Lawrence, Attorney at Law, Houston, TX, for Appellant.

Gary A. Calabrese, Attorney at Law, Austin, TX, Christopher S. Gareri, Attorney at Law, Houston, TX, for Appellee.

Before Chief Justice Rodriguez and Wittig

MEMORANDUM OPINION

Memorandum Opinion by Justice Wittig

*1 Ajas, Inc. (“Ajas”), appellant, asks us to reverse the summary judgment, lien foreclosure, and award of attorney’s fees rendered against it by the trial court. We reverse and remand.

I. BACKGROUND¹

Idaho Pacific Lumber Company, Inc. (“Idaho”), appellee, brought suit against DaRam Companies (“DaRam”) and its guarantor Kirk Countryman based upon a credit contract between Idaho and DaRam. Idaho delivered materials to DaRam on a construction project. Idaho was granted a summary judgment against DaRam, Countryman, and Ajas based upon the contract plus attorney’s fees, and foreclosure of various materialman’s liens. No responses were filed to the summary judgment motion, and the trial court granted the motion in its entirety. Only Ajas appealed.

In three issues, Ajas argues that there was no pleading or evidence that it owed any duty to Idaho, there were no pleading or evidence of a contract, there was no basis to allow foreclosure of a mechanic’s lien, and that the trial court erred in awarding attorney’s fees.

II. STANDARD OF REVIEW

The standard for reviewing a traditional summary judgment is well-established. Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex.1993).

Because a summary judgment is a summary trial of a claim, our rules and law require that a party may secure a summary judgment only on those grounds specifically named and discussed in the motion. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342 (Tex.1993)). This is a notice requirement, intended to notify the claimant and the trial court of those claims or elements of claims the opponent is attacking. See id. A trial court can enter a summary judgment only against those claims attacked in a motion for summary judgment. See id.

III. THE SUMMARY JUDGMENT

*2 Ajas argues there was no or insufficient evidence to show it owed a duty to pay Idaho and that no pleading or evidence showed any contract between the parties. Idaho’s petition at its core claimed a contract with DaRam and that the contract was personally guaranteed by Countryman. The only stated claim against Ajas is for the foreclosure of a materialman’s lien. While Idaho describes Ajas as a property owner where the materials were alleged to have been used, there is no proof of this allegation. However, as Idaho points out, Ajas seems to admit at least ownership of the property in its brief at page 11.² Ajas cites City of Houston, 589 S.W.2d at 678).

While Ajas asked for a continuance for improper notice, it did not otherwise respond. As Ajas points out, however, neither in Idaho’s petition nor its motion for summary judgment did it specify a basis for legal responsibility for the debt as to Ajas. Ajas further argues that in addition to an absence of a theory of liability, no evidence to support liability was presented. At best, Ajas argues, Idaho is a subcontractor and derivative claimant who must rely upon statutory lien remedies. “Because a subcontractor is a derivative claimant and, unlike a general contractor, has no constitutional, common law, or contractual lien on the property of the owner, a subcontractor’s lien rights are totally dependent on compliance with the statutes authorizing the lien.” First Nat’l Bank in Graham v. Sledge, 653 S.W.2d 283, 285 (Tex.1983). We agree. We find no pleading or proof for a direct action against Ajas based upon debt.

Idaho seeks to refute Ajas’s arguments by saying it waived all complaints. In particular, under TEX. R. CIV. P. 93. While we generally agree with this proposition, this does not address Ajas’s legal sufficiency argument.

Idaho argues that the failure of a motion for summary judgment to specify grounds is a defect of form that is waived unless excepted to prior to rendition of judgment, citing Id. at 772.

The supreme court has addressed this issue on multiple occasions. See McConnell, 858 S.W.2d at 341.

*3 In TEX. R. CIV. P. 45(b) (requiring a party’s pleadings to give “fair notice” to the opponent); Id. at 47(a) (requiring a plaintiff’s pleadings to give “fair notice of the claim involved”).

In both Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 204 (Tex.1997), the high court held that it is well settled that a trial court cannot grant a summary judgment motion on grounds not presented in the motion. There, it was held that when the motion for summary judgment clearly presents certain grounds but not others, a non-movant is not required to except.

This distinction was recognized and correctly resolved in Roberts v. Southwest Texas Methodist Hospital, when the court held: When a motion for summary judgment asserts grounds A and B, it cannot be upheld on grounds C and D, which were not asserted, even if the summary judgment proof supports them and the responding party did not except to the motion. 811 S.W.2d at 141, 146 (Tex.App.–San Antonio, 1991, pet. denied). Why should a non-movant be required to except to a motion expressly presenting certain grounds and not others? The only effect of such a rule would be to alert the movant to additional unasserted grounds for summary judgment. Consequently, we conclude that Rule 166a(c) does not require a nonmovant to except in this situation.

Id. Such is the case here where Idaho pursued summary judgment against DaRam and Countryman on breach of contract and a personal guarantee while making no specific allegations against Ajas other than the general claim for foreclosure of the materialman’s lien.

We conclude Ajas did not waive this issue by failing to except where neither Idaho’s petition nor its motion for summary contained fair notice of a non-derivative claim for debt. See id.

Idaho cites Id. at 402. “There is no question in the present case that the State failed to meet the explicit requirements of the statute. The State did not commence proceedings against the property seized within thirty days of the date of its seizure.” Id.

Idaho cites Scott v. Galusha, 890 S.W.2d 945, 949 (Tex.App.–Fort Worth, 1995, writ denied) (“While the nonmovant need not file an answer or response to the summary judgment motion, on appeal he may only contend that the movant’s motion was insufficient as a matter of law.”)

*4 Finally, Idaho cites Id. at 857. The trial court ordered the case set for trial to determine only the amount of damages, if any, Smith was entitled to recover. Id. The sufficiency finding was specifically limited, and the trial to the court was held to determine the damages under the lien and retained funds liability already established. Thus, this holding is inapplicable in our summary judgment context. See Id. Even assuming evidence of damages, we find no pleading or evidence to support a direct action against Ajas.

IV. LIEN FORECLOSURE

In its second issue, Ajas argues the trial court erred in granting Idaho’s foreclosure on its alleged mechanic’s lien(s). According to Ajas, a derivative claimant such as Idaho can only have protection of a mechanic’s lien if it follows the statutory scheme, citing Sledge, 653 S.W.2d at 285 (also holding substantial compliance may suffice.)⁴

Still, Ajas maintains that Idaho failed to allege or offer any proof of statutory compliance. The amounts claimed are not ascertainable. There is no pleading or proof of any contract amount, what trapped funds, if any, were paid to the general contractor, or any fact giving rise to the proper lien amount or the right to foreclose. Ajas also argues lack of required statutory notices to the owner. We examine these matters.

The affidavit of Eric Grandeen in support of Idaho’s summary judgment motion addresses the credit agreement between it and DaRam, that materials were sold for construction of the undescribed “subject property” owned by Ajas, and that the amounts owed at the time of filing the lien affidavits were $11,877.93, $4,059.38, $33,354.45 and $1,783.68 totaling $51,075.44. The lien affidavits were filed March 14, April 15, May 12, and June 14, 2011, respectively. Grandeen’s affidavit states DaRam agreed to pay but these amounts were not paid. Countryman signed a personal guarantee to the credit agreement. The affidavits for mechanic’s and materialman’s lien indicate the material was furnished to improve the Ganado Hotel on West York Street in Ganado, Texas and the materials were furnished to DaRam of Houston, Texas. The only other proof provided was an affidavit which offered some proof of attorney’s fees and copies of demand letters. Other than the credit agreement, the summary judgment proof does not contain any terms or amounts of any other contracts between either Idaho and DaRam or DaRam and Ajas.

*5 With regard to the Trapping Statute, when an owner receives proper notice that the original contractor has failed to pay funds owed on work done on the property, the owner may withhold payments to the contractor in an amount sufficient to cover the claim for which he received notice. See Sledge, 653 S.W.2d at 286. There is no proof Ajas paid any such funds to DaRam.

To perfect this lien, “a person must comply with this subchapter.” Sledge, 653 S.W.2d at 287 (holding that a lien was not perfected where invoices were not attached and notices did not contain statutory notice that “he might be held personally liable and his property subjected to a lien.”). There is no pleading or evidence that these statutory requirements were met. Thus, this lien foreclosure action fails for lack of legal sufficiency.

It should also be noted that the owner is not liable for any amount paid to the original contractor before the owner is authorized to withhold funds under this subchapter. TEX. PROP. CODE ANN. § 53.084. Here, there is no proof of the amount of any contract to supply labor or materials, no invoices are attached, and there is no evidence of any amounts retained, owed, or paid by Ajas.⁵

Second, the Retainage Statute provides protection that is in some ways broader in application, but also potentially more limited in monetary terms than the Trapping Statute. TEX. PROP. CODE ANN. § 53.101(a). A claimant may then secure a lien on the retained funds if he provides the owner with proper notice under the statute and files an affidavit claiming a lien no later than the 30th day after the work was completed. Id. § 53.103.

Ajas points out that Idaho may have waived any retainage because in its credit contract with DaRam it specifically states: “[u]nder no circumstances does Seller accept retainages to be held on materials supplied.” In any event, section 53.105 limits the owner’s liability to the amount that the owner failed to retain:

OWNER’S LIABILITY FOR FAILURE TO RETAIN.

(a) If the owner fails or refuses to comply with this subchapter, the claimants complying with Subchapter C or this subchapter have a lien, at least to the extent of the amount that should have been retained from the original contract under which they are claiming, against the house, building, structure, fixture, or improvement and all of its properties and against the lot or lots of land necessarily connected.

*6 (b) The claimants share the lien proportionately in accordance with the preference provided by Section 53.104.

Id.§ 53.105. Neither Idaho’s petition nor summary judgment proof provide any basis for determining the amount of this lien, the amount required to be retained, whether there was any retainage, whether Ajas failed or refused to comply, and the amount of Idaho’s proportional share, if any. Nor is there any evidence of an original contract between Ajas and Idaho which serves as the basis for determining the amount, if any, of any such retainage or lien. See id.

Idaho argues Ajas filed only a general denial and failed to file any verified special denials, affirmative defenses or special exceptions. It cites Ewing Const. Co. v. Amerisure Ins. Co., 420 S.W.3d 30, 37 (Tex.2014) (stating that “interpretations of contracts as a whole are favored so that none of the language in them is rendered surplusage”). This is reinforced by the fact that it is in paragraph VI, not paragraph IV, that Idaho addresses its request to foreclose its liens.

Similarly, Idaho argues under Rule 54 provides that in pleading the performance or occurrence of conditions precedent, it shall be sufficient to aver generally that all conditions precedent have been performed or have occurred. “Trane states that ‘[t]his is a suit to foreclose on a Bond to Indemnify Against Lien and a suit on sworn account. All conditions precedent have been performed or have occurred.’ ” Id. “This language sufficiently placed Consolidated on notice of Trane’s suit and of Trane’s performance or occurrence of all conditions precedent.” Id.

Again, Idaho lacked such a pleading and failed to give Ajas fair notice that it claimed all conditions precedent had occurred In order to foreclose the lien. See Low v. Henry, 221 S.W.3d 609, 612 (Tex.2007) (stating that Texas follows a “fair notice” standard for pleading, in which courts assess the sufficiency of pleadings by determining whether an opposing party can ascertain from the pleading the nature, basic issues, and the type of evidence that might be relevant to the controversy).

Idaho also argues that the materialman’s lien statute is liberally construed for the purpose of protecting laborers and materialmen. Raymond v. Rahme, 78 S.W.3d 552, 560 (Tex.App.–Austin, 2002, no pet.) (stating that if the subcontractor does not give the owner timely notice containing the statutory warning, the lien is invalid). We find that Idaho failed to substantially comply with the statutory and fair notice requirements and did not supply legally sufficient evidence to support these lien claims in the summary judgment context.

V. CONCLUSION

*7 We sustain Ajas’s first two issues. We need not address the issue of attorney’s fees, there being no basis for such a recovery. We reverse and remand.