Onwuteaka, Joseph v. Universal Surety of America--Appeal from Co Civil Ct at Law No 4 of Harris County

Affirmed and Opinion filed September 12, 2002

Affirmed and Opinion filed September 12, 2002.

In The

Fourteenth Court of Appeals

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NO. 14-00-01203-CV

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JOSEPH ONWUTEAKA, Appellant

V.

UNIVERSAL SURETY OF AMERICA, Appellee

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On Appeal from the County Civil Court at Law No. 4

Harris County, Texas

Trial Court Cause No. 689,329

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O P I N I O N

In this contract dispute, Joseph Onwuteaka appeals a judgment in favor of Universal Surety of America (AUniversal@) on the grounds that the indemnity agreement (the Aagreement@) for which he was found liable was not enforceable; the evidence was not sufficient to support the award of attorney=s fees; and the trial court erred in admitting Universal=s 24 exhibits. We affirm.

Background

Onwuteaka was the majority stockholder in a corporation (the Acorporation@) which owned an apartment complex (the Acomplex@). In order to commence electricity and water service for the complex without making a cash deposit, Onwuteaka contracted individually with Universal to issue two surety bonds (the Abonds@) to the utility companies. Following a default on utility bills for the complex, Universal made payment to the utility companies and later filed suit against Onwuteaka for indemnification. After a bench trial, the trial court awarded Universal indemnity and attorney=s fees and entered findings of fact (the Afindings@) and conclusions of law (the Aconclusions@).

Illegibility

Onwuteaka=s first, second, and eighth issues contend that the trial court erred in holding him liable for indemnity because, in the version of the agreement he received by fax, signed, and transmitted back, the indemnity provision was not legible. Therefore, Onwuteaka argues that there was no indemnity obligation in the agreement he signed.[1] Because the version of the agreement that Onwuteaka received was not in evidence at trial, we review the sufficiency of the evidence to support the trial court=s implied finding that that version of the agreement was legible, such that the indemnity provision was part of the contract to which Onwuteaka agreed.

Findings of fact in a case tried to the court have the same force and dignity as a jury verdict and are reviewed for legal and factual sufficiency of the evidence by the same standards as for a jury finding. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). In reviewing legal sufficiency, we view the evidence in a light that supports the disputed fact and disregard all evidence and inferences to the contrary. Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex. 2001). If more than a scintilla of evidence exists, it is legally sufficient. Id. More than a scintilla of evidence exists if the evidence furnishes a reasonable basis for differing conclusions by reasonable minds about a vital fact=s existence. Id.

When reviewing factual sufficiency, we weigh all of the evidence and set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998). Because a court of appeals is not a fact finder, we may not pass upon witnesses= credibility or substitute our judgment for that of the fact finder, even if the evidence would clearly support a different result. Id. at 407.

For purposes of this discussion, we will distinguish between three versions of the agreement at issue: (1) that which Onwuteaka=s insurance broker transmitted to him by fax; (2) that which Onwuteaka received by fax, signed, and re-transmitted back to the broker; and (3) that which the broker received back by fax from Onwuteaka. As to these three versions, the evidence is uncontroverted that: (1) the one the broker transmitted was legible; (2) the one the broker received back by fax from Onwuteaka, which is the only version in the record containing his signature, was largely illegible, including the indemnity provision; and (3) Onwuteaka nevertheless paid the premium for the bonds. In addition, Onwuteaka testified that the fax he received was illegible, but the evidence is uncontroverted that Onwuteaka never so notified the broker or Universal until after the lawsuit was filed.[2]

Because the indemnity provision in the version of the agreement the broker transmitted was in small print, no inference can be drawn from the fact that it was faxed whether the provision was legible when it was received by Onwuteaka. However, because a reasonably prudent person (and particularly a lawyer, such as Onwuteaka), would not ordinarily be expected to: (1) sign an agreement he could not read; (2) return such a signed, illegible agreement to the sender without notifying him of its illegibility; or (3) thereby allow the sender to rely to his detriment on the implication that the receiving party could read it and had agreed to its terms, an inference could reasonably be drawn in this case from the foregoing facts that the version of the agreement Onwuteaka received by fax had been legible. Therefore, there was legally sufficient evidence that the indemnity provision was part of the agreement that Onwuteaka signed. With regard to factual sufficiency, although Onwuteaka testified to the contrary, it was within the province of the trial court, as fact finder, to disbelieve that testimony if it did not find it credible or found the controverting inference more credible. Based on this record, we cannot say that the trial court=s implied finding (that the version of the agreement Onwuteaka received by fax and signed was legible) was so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Accordingly, we overrule issues one, two, and eight.

Expiration / Cancellation

Onwuteaka=s third issue contends that the trial court erred in finding him liable for indemnity because the bonds expired and were canceled by Universal before it incurred any liability on them, and Universal produced no document at trial evidencing reinstatement of the bonds or payment of a premium for their renewal. Onwuteakathus argues that the expiration and cancellation of the bonds also terminated any indemnity obligation in the agreement. Onwuteaka=s fourth issue similarly argues that the trial court erred in failing to find that Universal was estopped from claiming indemnity based on its cancellation notices.[3]

It is uncontroverted that both of the bonds are dated September 24, 1994 and that, unless renewed, the bond for electricity service was to expire in two years and the bond for water service was to expire in three years. The defaulted utility bills that Universal paid were for billing periods both during and after those initial periods. The evidence reflects that, following the initial time periods of the bonds, some confusion existed whether the utility companies required them to be kept in effect, whether Universal cancelled them, and if so, at whose behest. There is also evidence, albeit controverted, that it was eventually determined that the bonds were still needed, that Onwuteaka requested that they be renewed, that his broker arranged with Universal for their renewal, and that Universal ultimately effected a continuation of the bonds without a lapse in coverage. Although there is no evidence that Onwuteaka signed any further documents or made any further payments for renewal, the agreement he initially signed provides that Universal was authorized, without notice to Onwuteaka, to make any change in the bonds or issue any substitutes for any renewal and that the agreement, i.e., including the indemnity provision, applies to any such substitution, changed bonds, or renewal. This evidence is legally sufficient to support the challenged findings and non-finding, and those findings are not so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Accordingly, issues three and four are overruled.

Consideration

Onwuteaka=s fifth issue contends that the trial court erred in finding that the renewal of the bonds was supported by consideration because there is no evidence that a premium was paid to Universal to renew the bonds.[4]

A benefit to a promisor is consideration for a valid contract, as is a detriment to a promisee. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 841 (Tex. 2000). As noted in the preceding section, the agreement Onwuteaka signed provided that it would apply to a renewal of the bonds. At a minimum, therefore, the renewal was supported by consideration in the exchange of Universal=s continuation of the bonds for Onwuteaka=s obligation to indemnify Universal with respect to the continuation. Accordingly, the trial court did not err in finding that the renewal was supported by consideration, and Onwuteaka=s fifth issue is overruled.

Negligence

Onwuteaka=s sixth issue argues that the trial court erred in holding him liable because Universal=s loss was caused by its own negligence and the indemnity provision does not indemnify Universal for the consequences of its own negligence. Onwuteaka contends that Universal was negligent in renewing the bonds without receiving a premium payment, accepting an illegible agreement from him, and failing to cancel the bonds after it was notified of the corporation=s bankruptcy.[5]

However, Onwuteaka fails to show how Universal=s failure to collect a renewal premium, if true, could have caused its loss or, conversely, how collecting such a premium could have prevented the loss, in that Universal=s protection against such a loss, both before and after the renewal, was instead Onwuteaka=s indemnity obligation. Nor is it apparent how the illegibility of the agreement could have caused the loss, or a more legible agreement could have prevented it. Lastly, Onwuteaka cites no evidence that any of the utility charges paid by Universal were incurred after Onwuteaka advised Universal of the corporation=s bankruptcy, such that any loss can be attributed to a delay in canceling the bonds. Accordingly, Onwuteaka=s sixth issue is overruled.

Statute of Frauds

Onwuteaka=s seventh issue argues that the trial court erred in failing to find that the indemnity claim was barred by the statute of frauds because there was no written agreement for renewal of the bonds. However, to support this contention, Onwuteaka specifically cites the following portions of section 26.01 of the Texas Business and Commerce Code:

(a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement . . . is

(1) in writing; and

(2) signed by the person to be charged with the promise . . . .

(b) Subsection (a) of this section applies to:

* * *

(2) a promise by one person to answer for the debt, default, or miscarriage of another person.

Tex. Bus. & Com. Code Ann. ' 26.01(a), (b)(2) (Vernon 1987) (emphasis added).

In this case, the only promise to answer for the default of another was made by Universal, not Onwuteaka. Because Onwuteaka has not demonstrated that any promise he made was required to be in writing to be enforceable against him, his seventh issue affords no basis for relief and is overruled.

 Attorney=s Fees

Onwuteaka=s ninth issue contends that the evidence was legally and factually insufficient to support the trial court=s award of attorney=s fees for the years 1999 and 2000 because the trial court erroneously permitted the supporting testimony over his objection that Universal had failed to supplement its discovery with the records pertaining to those fees.[6]

An award of attorney=s fees must generally be supported by evidence. Torrington Co. v. Stutzman, 46 S.W.3d 829, 852 (Tex. 2000). However, in a proceeding before the court, a trial court may take judicial notice of usual and customary attorney=s fees and of the contents of the case file without receiving further evidence. Tex. Civ. Prac. & Rem. Code Ann. ' 38.004(1) (Vernon 1997). In that event, the record of the trial court proceedings, reflecting the complexity of the case, together with the court=s authority to take judicial notice of usual and customary fees, constitutes some evidence to support an award of attorney=s fees, even in the absence of other evidence. See Gill Sav. Ass=n v. Chair King, Inc., 797 S.W.2d 31, 32 (Tex. 1990).

In this case, even if the challenged testimony was erroneously admitted, which we do not decide, evidence to support the attorney=s fee award exists from the record of the trial court=s proceedings and its authority to take judicial notice of usual and customary fees. See id. Therefore, Onwuteaka=s ninth issue does not demonstrate the legal or factual insufficiency of the evidence to support the award and is overruled.

Exhibits

Onwuteaka=s tenth issue argues that the trial court erroneously admitted Universal=s 24 exhibits because: he objected to the exhibits on hearsay grounds; some of the exhibits lacked a predicate or authentication; and Onwuteaka made a motion for the exclusion of exhibit 5, but the trial court overruled it.

However, during trial, Onwuteaka agreed to the admission of several of these exhibits. In addition, his brief contains neither an explanation of how or why any of the exhibits are hearsay nor any references to portions of the record at which he objected to any of the exhibits for lack of predicate or authentication. Lastly, his objection to exhibit 5 at trial was not based on any of the grounds asserted in his tenth issue. Accordingly, issue 10 presents nothing for our review and is overruled, and the judgment of the trial court is affirmed.

/s/ Richard H. Edelman

Justice

Judgment rendered and Opinion filed September 12, 2002.

Panel consists of Justices Hudson, Fowler, and Edelman.

Do Not Publish C Tex. R. App. P. 47.3(b).

[1] We interpret Onwuteaka=s first, second, and eighth issues to challenge the sufficiency of the evidence to support the trial court=s finding number 7 that ABy the express terms of the contract, [Onwuteaka] agreed to indemnify [Universal] for any and all losses or damages incurred by [Universal] as a result of [Universal=s] issuance of the Bonds pursuant to the Contract.@

[2] Although there was evidence that the broker was supposed to bring Onwuteaka an original of the agreement to sign, the only reason provided for this in the evidence was that Universal wanted an original signature from Onwuteaka, not that he ever notified the broker or Universal that his version of the agreement was illegible.

[3] We interpret Onwuteaka=s third and fourth issues to challenge the sufficiency of the evidence to support findings 9, 10, and 11, which provide, respectively, that: A[The corporation] failed to pay the Utilities when the Bonds and the [agreement] were in effect@; AAlthough [Onwuteaka] requested an interruption in coverage of the Bonds, [he] requested the Bonds be renewed and they were renewed retroactively avoiding any lapse in coverage@; and AThe Bonds and the [agreement] were therefore continuously in force and effect from their issuance in September, 1994 up to and including the dates [the corporation] failed to pay the Utility Companies.@

[4] We interpret this issue to challenge the trial court=s second conclusion of law, which provides: A[t]he [agreement] is valid, binding and supported by consideration.@ Although there is circumstantial evidence that Onwuteaka=s broker paid Universal a premium to renew the bonds, there is no evidence that Onwuteaka made any payment for the renewal.

[5] We interpret this issue to challenge the trial court=s conclusion that, AAs a result of [Onwuteaka=s] breach of the Contract, [Universal] was damaged in the principal sum of $35,566.00.@

[6] See Tex. R. Civ. P. 193.6(a) (Aa party who fails to . . . supplement a discovery response in a timely manner may not introduce in evidence the material or information that was not timely disclosed . . . unless the court finds that: (1) there was good cause for the failure to timely . . . supplement the discovery responses; or (2) the failure to timely . . . supplement the discovery will not unfairly surprise or unfairly prejudice the other parties.@). Presumably, Onwuteaka is arguing that if the trial court had not admitted this testimony, the evidence would have been legally or factually insufficient to support this portion of the award.