Rebecca Pena v. Je Matadi Dress Company, Inc. and Sean Mehta--Appeal from 151st District Court of Harris County

Opinion issued January 31, 2008

In The

Court of Appeals

For The

First District of Texas

NO. 01-06-00632-CV

REBECCA PENA, Appellant

V.

JE MATADI DRESS COMPANY, INC. AND SEAN MEHTA, Appellees

On Appeal from the 151st District Court

Harris County, Texas

Trial Court Cause No. 2004-57614

MEMORANDUM OPINION

Appellant, Rebecca Pena, appeals the judgment of the trial court that granted summary judgment in favor of appellees, Je Matadi Dress Company, Inc. ("Matadi") and Sean Mehta. In four issues on appeal, Pena argues that the trial court erred in granting summary judgment on (1) her fraud claim; (2) her duress claim; (3) Matadi's affirmative defense of release of claims; and (4) Matadi's motion for summary judgment because it did not address Pena's breach of contract claims against Mehta and thus the final judgment did not dispose of those claims.

We affirm.

In May 2003, Pena and Matadi entered into an agreement (the "Patent Assignment") regarding the marketing of a patented hair dryer stand known as the "Hair Made." At the time of the agreement, Pena was employed by Matadi. The Patent Assignment required Pena to assign her patent for the Hair Made to Matadi in exchange for $20,000 and royalties from future sales of the Hair Made.

In her original petition, Pena alleged that Matadi and Mehta (1) obtained the Patent Assignment through duress and fraud and that the contract was unconscionable. Pena alleged causes of action for common law fraud, breach of contract, contract of adhesion, agency, and respondeat superior. Pena sued to recover actual damages, damages for mental anguish, exemplary damages, attorney's fees, and a declaratory judgment that the agreement between the parties is null and void. Appellees filed a counterclaim alleging a frivolous lawsuit, malicious prosecution, breach of contract, and money had and received. Appellees then moved for a traditional summary judgment and a no-evidence summary judgment.

The trial court granted summary judgment in favor of appellees. Appellees then filed a notice of non-suit for their counterclaims, which the trial court signed, thus making the judgment final. Pena appeals from the trial court's order that granted summary judgment in favor of appellees.

Standard of Review

The propriety of summary judgment is a question of law, and we thus review the trial court's ruling de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). In reviewing a summary judgment, evidence favorable to the non-movant is taken as true, and all reasonable inferences are indulged in the non-movant's favor. Johnson County Sheriff's Posse v. Endsley, 926 S.W.2d 284, 285 (Tex. 1996). When a summary-judgment order does not state the grounds upon which it was granted, as here, the summary judgment may be affirmed on any of the movant's theories that has merit. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 627 (Tex. 1996). Appellate courts should consider all grounds for summary judgment that the movant presented to the trial court when they are properly preserved for appeal. Id. at 625. Thus, the party appealing from such a judgment must show that each of the independent arguments alleged in the motion is insufficient to support the order. Tilotta v. Goodall, 752 S.W.2d 160, 161 (Tex. App.--Houston [1st Dist.] 1988, writ denied); McCrea v. Cubilla Condo. Corp., 685 S.W.2d 755, 757 (Tex. App.--Houston [1st Dist.] 1985, writ ref'd n.r.e.).

The movant for traditional summary judgment has the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Park Place Hosp. v. Estate of Milo, 909 S.W.2d 508, 510 (Tex. 1995); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). A defendant moving for traditional summary judgment must either disprove at least one element of each of the plaintiff's causes of action or conclusively establish each essential element of its affirmative defense, thereby rebutting the plaintiff's causes of action. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995).

A no-evidence motion for summary judgment is essentially a directed verdict granted before trial, to which we apply a legal-sufficiency standard of review. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003). In general, a party seeking a no-evidence summary judgment must assert that no evidence exists as to one or more of the essential elements of the non-movant's claims on which the non-movant would have the burden of proof at trial. Flameout Design & Fabrication, Inc. v. Pennzoil Caspian Corp., 994 S.W.2d 830, 834 (Tex. App.--Houston [1st Dist.] 1999, no pet.). Once the movant specifies the elements on which there is no evidence, the burden shifts to the non-movant to raise a fact issue on the challenged elements. Tex. R. Civ. P. 166a(i). A no-evidence summary judgment will be sustained on appeal when (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered by the non-movant to prove a vital fact, (3) the evidence offered by the non-movant to prove a vital fact is no more than a scintilla, or (4) the non-movant's evidence conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at 751.

Fraud

In her first issue, Pena argues that the trial court erred in granting summary judgment on her claim for fraud. Specifically, she asserts that statements within the Patent Assignment were false.

The elements of fraud are: (1) the speaker made a material representation that was false when made; (2) when the representation was made, the speaker knew it was false or made it recklessly as a positive assertion without any knowledge of its truth; (3) the speaker made the representation with the intent that the other party should act upon it; (4) the party actually and justifiably relied on the representation; and (5) the party thereby suffered injury. Ernst Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001). "For a promise of future performance to be the basis of actionable fraud, it must have been false at the time it was made." Schindler v. Austwell Farmers Coop., 841 S.W.2d 853, 854 (Tex. 1992).

In its no-evidence motion for summary judgment, appellees argued that there was no evidence that they had made a false representation to Pena. Appellees pled that

There is no evidence that the Defendants have ever lied to the Plaintiff about accounting figures related to the sales or profitability of the Hair Made. There is no evidence that any of the accounting figures that the Defendants have ever provided to the Plaintiff regarding the sales and/or profitability of the Hair Made are inaccurate. The Plaintiff's unsupported allegations contained within her deposition do not constitute evidence in which to support the Plaintiff's false fraud claims against the Defendants.

In her response to appellees' motion for summary judgment, Pena stated

The Plaintiff was clear in her deposition that all of the elements of fraud are present. In her deposition testimony, she identifies a material misstatement of fact, asserts that it was consistent and intentional, discusses her reliance on the fraudulent statements, and confirms her very obvious harm as a result of the fraud.

Ms. Pena's accusations are not the only evidence of fraud. There is also the impressive quality of advertising for the Hair Made Product. Such advertising, we can presume, would not be conducted (and paid for) without concomitant sales and profits. Additionally, there is also the obvious effort to hide, from the plaintiff, any and all sales and cost data. The details would be before the Court now, if the Defendants would go beyond their four pieces of paper and comply with their discovery obligations. (2)

On appeal, Pena now asserts that statements within section 3.1.2 (3) of the Patent Assignment were fraudulent. Pena argues that

Paragraph 3.1.2 of the Assignment of Patent reflects a representation that the Appellant might expect to receive up to $1,980,000.00 in royalty payments from the Appellees within five years after executing the Assignment of Patent. That representation was material because it induced the Plaintiff to enter into the agreement. Yet, within that very same paragraph, the Appellees also state that, 'Assignee shall not pay Assignor any payments based on commercialization of items sold in conjunction with Patented Products.' Further, when this paragraph is combined with paragraph 3.2, it is clear that the Appellees not only intended to deprive the Appellant of consideration, but, the contract itself could not be terminated by the contemplated failure to pay consideration, or provide future performance. That constitutes a one-sided agreement which reflects an intent on the face of the contract to defraud the Appellant in the future.

Pena's arguments are raised for the first time on appeal. Because Pena did not raise these arguments with the trial court, her arguments have been waived. See Tex. R. App. P. 33.1; Tex. R. Civ. P. 166a(c) ("Issues not expressly presented to the trial court by written motion, answer[,] or other response shall not be considered on appeal as grounds for reversal."); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex. 1979) ("[T]he non-movant may not urge on appeal as reason for reversal of the summary judgment any and every new ground that he can think of, nor can he resurrect grounds that he abandoned at the hearing.").

We overrule Pena's first issue.

Duress

In her second issue, Pena argues that the trial court erred in granting summary judgment on her claim for duress.

The elements of economic duress are: (1) a threat to do something that a party has no legal right to do; (2) illegal exaction or some fraud or deception; and (3) imminent restraint such as to destroy free agency without present means of protection. King v. Bishop, 879 S.W.2d 222, 223 (Tex. App.--Houston [14th Dist.] 1994, no writ); Simpson v. MBank Dallas, N.A., 724 S.W.2d 102, 109 (Tex. App.--Dallas 1987, writ ref'd n.r.e.).

In their no-evidence motion for summary judgment, appellees argued that because they had the legal right to terminate Pena's employment for any reason without cause, Pena did not have a successful duress claim as a matter of law.

In response, Pena did not disagree that Matadi had the legal right to terminate her employment. Rather, Pena stated that "the Defendants freely acknowledge that the Plaintiff alleges that the Defendants made 'thinly veiled threats concerning her termination.'" She further asserted,

[T]he Defendants argue that they are nonetheless entitled to Summary Judgment because both Defendants 'deny that they ever threatened . . . the Plaintiff that she would lose her job." Of course they do. But, their denial is only further support for the existence of a material issue of fact. The denial, however, does not a lack of evidence make."

On appeal, Pena argues that while the parties were negotiating the Patent Assignment, Pena was a high school graduate, an employee of Matadi, and she never took any business courses in college. She asserts,

The evidence produced by the Appellees during summary judgment clearly reflects that the Appellant was in imminent fear of her employment being terminated if she did not agree to sign the Assignment of Patent in the one-sided form reflected by the document itself. That evidence (the Appellant's deposition) constitutes more than a scintilla of evidence of economic duress . . . . By threatening the Appellant (who was merely a high school graduate, with no experience in matters of business) with termination of her employment (which in turn threatens the ability of the Appellant to provide the necessities of life for her family), the Appellees gained an unfair bargaining position over a mere high school graduate, which they intentionally used to the detriment of the Appellant.

Pena's appellate arguments are raised for the first time on appeal. Because Pena did not raise her appellate arguments with the trial court, her arguments on appeal have been waived. See Tex. R. App. P. 33.1; Tex. R. Civ. P. 166a(c) ("Issues not expressly presented to the trial court by written motion, answer[,] or other response shall not be considered on appeal as grounds for reversal."); Clear Creek Basin Auth., 589 S.W.2d at 677 ("[T]he non-movant may not urge on appeal as reason for reversal of the summary judgment any and every [n]ew ground that he can think of, nor can he resurrect grounds that he abandoned at the hearing.").

Moreover, Pena's brief addresses only the no-evidence portion of the appellees' motion for summary judgment. Pena's brief does not appear to address the traditional summary judgment portion of the appellees' summary judgment motion. Pena has set forth no issue, argument, or discussion challenging the traditional portion of the summary judgment motion; thus, she has not met her appellate burden to establish that the trial court's judgment was erroneous. Because summary judgment may have been granted on the unchallenged traditional portion of appellees' motion, we must affirm the trial court's judgment on this ground. See Holloway v. Starnes, 840 S.W.2d 14, 23 (Tex. App.--Dallas 1992, writ denied); King v. Tex. Employers' Ins. Ass'n, 716 S.W.2d 181, 182-83 (Tex. App.--Fort Worth 1986, no writ); Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970).

We overrule Pena's second issue.

Affirmative Defenses

In her third issue, Pena argues that the trial court erred in granting summary judgment on Matadi's affirmative defenses of release of claims, "inasmuch as the parties can not contract [to] actually release claims for future and/or illegal conduct." On their affirmative defense of release, appellees asserted,

[A]s a matter of law, [Pena] is barred from successfully asserting that the Defendants engaged in fraud or that the Patent Assignment was obtained by duress or is unconscionable as a result of any alleged pre-execution conduct on the part [of] the Defendants. Even if the Court were to take all of the Plaintiff's allegations as true, the summary judgment record conclusively establishes that the Plaintiff has released the Defendants from all such claims and causes of action and the Defendants are therefore entitled to summary judgment as a matter of law in accordance with Tex. R. Civ. P. 166a(c).

Pena did not address appellees' affirmative defense argument in her response to appellees' motion for summary judgment.

On appeal, Pena argues that the trial court erred in granting summary judgment on the appellees' affirmative defenses. Because she raises these arguments for the first time on appeal, Pena's arguments have been waived. See Tex. R. App. P. 33.1; Tex. R. Civ. P. 166a(c).

We overrule Pena's third issue.

Additional Claims

In her fourth issue, Pena argues that the trial court erred in granting summary judgment on her breach of contract claim against Sean Mehta because that issue was not addressed in appellees' motion for summary judgment. Thus, Pena argues that the "claim was neither addressed, nor disposed of by the trial court, and granting final summary judgment on a claim not disposed of is clear error on the part of the trial court."

The purpose of requiring that a motion for summary judgment state its specific grounds is to give fair notice to the opponent and define the issues, and, for that reason, a defendant-movant is not entitled to summary judgment on a ground not asserted in his motion, even though the summary judgment proof conclusively establishes his right to judgment on that ground. See Tex. R. Civ. P. 166a(c); Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563, 564 (Tex. 1983). A defendant-movant is not entitled to summary judgment on the entirety of a nonmovant plaintiff's case unless the motion addresses each cause of action asserted by the nonmovant. Id.

We disagree with Pena's contention that Mehta failed to raise his breach of contract claim in appellees' motion for summary judgment. Appellees' summary judgment motion informed the trial court and Pena that the Patent Assignment was between Pena and Matadi. Specifically, the motion stated in a footnote, "The Court should note that the Patent Assignment is a contract between the Plaintiff and Defendant Je Matadi only. Defendant Sean Mehta is not a party to the agreement." Appellees referenced the Patent Assignment that was attached to their summary judgment motion. In addition, in the conclusion of their motion for summary judgment, appellees stated, "[T]here is no evidence to support Plaintiff's fraud and breach of contract claims against the Defendants . . . ." In their reply to Pena's response to the summary judgment motion, appellees asserted, "[T]he Plaintiff has failed to establish that she ever had a contract with Defendant Sean Mehta, individually."

Pena presented no evidence in response to Mehta's statement that he was not a party to the Patent Assignment, and the record explicitly demonstrates that the Patent Assignment was between Pena and Matadi and signed by Mehta only in his capacity as president and CEO. See City of Pasadena v. Gennedy, 125 S.W.3d 687, 702 n.12 (Tex. App.--Houston [1st Dist.] 2003, pet. denied) (concluding that party signed in corporate capacity). We conclude that the summary judgment motion adequately informed Pena that appellees were seeking summary judgment on Pena's breach of contract claim against Mehta.

We overrule Pena's fourth issue.

We affirm the judgment of the trial court.

Evelyn V. Keyes

Justice

Panel consists of Justices Nuchia, Jennings, and Keyes.

1. Sean Mehta is the president of Matadi Dress company.

2. A portion of Pena's response to the summary judgment addressed appellees' discovery violations. The trial court granted Pena additional time to conduct more discovery and appellees apparently gave Pena more discovery. Pena did not, however, amend her response to appellees' motion for summary judgment in light of the additional discovery.

3. Paragraph 3.1.2 provides,

For a period of 5 years from the Effective Date, but only during the life of the '805 patent, and only if Net Profits occur, 3% of Net Profits (defined as revenues of sales, within the US and for end use within the US, by Assignee of Patented Products, less Deductible expenses listed in Attachment A, which is incorporated herein by reference) ("Future Payments"), but only until the total payments made to Assignor according to this provision equal $1,980,000.00.