Scott A. Shultz v. Jerry R. Vaught--Appeal from 392nd District Court of Henderson County

NO. 12-03-00204-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

SCOTT A. SHULTZ, APPEAL FROM THE 392ND

APPELLANT

V. JUDICIAL DISTRICT COURT OF

JERRY R. VAUGHT,

APPELLEE HENDERSON COUNTY, TEXAS

MEMORANDUM OPINION

This is an appeal by Appellant Scott A. Shultz ( Schultz ) from a summary judgment granted in favor of Appellee Jerry R. Vaught ( Vaught ). In two issues, Schultz contends the trial court erred in granting summary judgment. We affirm.

Background

During the summer of 1997, Shultz discovered that the thirty-three-acre Hamil tract was for sale. Because of its proximity to Athens, Shultz believed it was an ideal site for the production of manufactured homes, a business he hoped to start. Shultz did not have the money at that time to purchase the property but realized that it would soon be sold to someone else. He approached Vaught with the proposal that Vaught buy the thirty-three acres, but grant Shultz a 120-day option to buy the property for $15,000 more than Vaught had paid the Hamil Estate. After some initial reluctance, Vaught agreed to Shultz s proposal. On August 12, 1997, they signed an agreement granting Schultz the option of purchasing the tract for $164,990 within 120 days from the date of the closing of the transaction between the Vaughts and the Hamil Estate. In the event Shultz could not pay for the property during the term of the option, Shultz was to receive $2,000 as a finder s fee. Vaught acquired the property by deed dated September 11, 1997.

At the time they made the agreement, Shultz owed Vaught $7,000 on a prior loan. Although apparently unable at that time to pay off this loan, he asked Vaught to renew the loan and to lend him another $7,000 for operating expenses in his business. Vaught agreed to extend the payment of the $7,000 already due upon Shultz s agreement to pay him $8,000 by October 12, 1997. Vaught also agreed to lend Shultz $7,000 more upon Shultz s agreement to pay Vaught $8,000 on or before September 12, 1997. The agreement evidencing the indebtedness, signed on the same date as the option agreement, further specified that if Shultz did not pay on or before the dates provided, Shultz would forfeit the option to purchase the thirty-three-acre Hamil tract.

Shultz had often borrowed money from Vaught in the past. Although he had always repaid the loans, Shultz was frequently late in doing so. According to Shultz s deposition testimony, however, Vaught reminded him on at least two occasions before September 12, 1997 that he would forfeit his option if he did not pay on or before the dates agreed upon.

On the night of September 12, 1997, in payment of the loan due on that date, Shultz presented Vaught a check drawn on the account of the Faith Tabernacle Church, payable to Shultz and endorsed by him. The next day the check was dishonored, but the check was paid when Vaught presented it a second time.

On Sunday night, October 12, 1997, the due date of the other loan, Shultz was traveling with his wife. Late that night, Shultz s father took two checks to Vaught to pay the loan. One was drawn on the account of the Faith Tabernacle Church, whose other check had been dishonored once. Vaught refused to accept the checks. Shultz called Vaught and offered to pay him with a check drawn by his wife on her account. Vaught s wife told Shultz they would not accept a check, but wanted cash. With only minutes remaining before midnight, it was impossible for Shultz to obtain cash or its equivalent before the due date passed. Shultz paid the loan the next week. Vaught, however, considered Shultz s option to purchase the thirty-three acres forfeited because of Shultz s failure to timely pay the indebtedness due on October 12, 1997.

Shultz sued Vaught claiming that Vaught had willfully refused to honor the option agreement and that he refused to accept the proffered payment on October 12 to justify his resulting breach of the option agreement. He further alleged that the oral and written representations of [Vaught] have been, from the outset of this transaction, false, misleading and untrue. His petition further asserted that he was coerced into the option agreement by Vaught s false statements and that Vaught s conduct constituted actionable fraud.

Vaught filed a motion for summary judgment, which included both a traditional summary judgment motion and a no-evidence motion for summary judgment. See Tex. R. Civ. P. 166a(c), (i). The court granted Vaught s motion. In his motion, Vaught asserted that there was no evidence that he had made a false representation, that Schultz had relied on such a representation, or that Schultz had suffered injury because of any representation made by him by Vaught.

Standard of Review

A trial court should grant a defendant s motion for summary judgment if the defendant disproves at least one essential element of the plaintiff s cause of action or if the defendant establishes all the elements of an affirmative defense as a matter of law. D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991). A review of a traditional summary judgment is conducted in accord with the following standards:

1. The movant has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.

2. In determining if there is a disputed material fact issue, evidence favorable to the non-movant will be taken as true.

3. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor.

See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985).

A no-evidence motion for summary judgment is utilized to challenge the absence of evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial. Tex. R. Civ. P. 166a(i). The motion must specifically set forth the elements of the adverse party s claim or defense for which there is no evidence. Id. The burden then shifts to the non-movant who must produce more than a scintilla of evidence to raise a genuine issue of material fact. Haas v. George, 71 S.W.3d 904, 911 (Tex. App. Texarkana 2002, no pet.). When a motion for summary judgment is based on several grounds and the order granting the motion is silent as to the reason the motion was granted, the summary judgment must be affirmed if any of the theories are meritorious. Star Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).

Applicable Law

The elements that must be proven in order to establish an actionable misrepresentation are as follows:

1. A material representation was made;

2. The representation was false;

3. The representation was false when it was made, and the speaker knew it was false or made the statement recklessly without any knowledge of its truth and as a positive assertion;

4. The speaker made the representation with the intent that it should be acted upon by the other party;

5. The other party acted in reliance upon the representation; and

6. The other party suffered injury as a result of acting upon the representation.

See Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex. 1977); see also DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990).

Analysis

Shultz insists that Vaught made a false representation to him knowing it was false and intending that Shultz act upon it. However, in his response to Vaught s summary judgment motion, he does not identify the material misrepresentation. There is absolutely no evidence that any of the representations made by Vaught to Shultz were false. In our view, Shultz s summary judgment proof establishes that no false representation was made.

Shultz s own deposition testimony shows that he proposed the option agreement to Vaught. There is nothing in the record to show that the option contract they signed on August 12 did not fully and accurately reflect their agreement.

In order to extend the time to pay $7,000 already due Vaught and to secure $7,000 more in operating capital, he signed an agreement on the same date setting out the terms for the repayment of the indebtedness, and further providing that he would forfeit his option to buy the Hamil tract if he did not pay on or before the dates specified. Shultz apparently claims that because Vaught had continued to lend him money in the past despite late payments, he was justified in believing that he could continue in that habit without suffering the forfeiture spelled out in the agreement.

In his deposition, Vaught testified that Shultz generally paid cash and paid late. But Shultz admitted that he asked for no grace period in the contract. He acknowledged that on at least two occasions before the September 12, 1997 due date, Vaught warned him that he expected to be paid on or before the due dates exactly as specified in their agreement. Despite the warnings, Shultz waited until the night the September 12 payment was due and paid with a check made payable to him by Faith Tabernacle Church, which was dishonored when Vaught initially presented it, but later paid by the bank. Next, Shultz waited until the night of the next due date to send his father to Vaught to pay with two checks payable to and endorsed by him, one of them from the Faith Tabernacle Church. Understandably, Vaught refused to accept the checks. There is no evidence that Vaught made a false material representation.

Injury

Shultz also failed to produce evidence of any injury as a result of any representation made by Vaught. In his deposition testimony, he conceded that he never obtained the financing that would have enabled him to buy the thirty-three acres. As Vaught argues, the only injury he complains of is that by losing the opportunity to buy the tract, he was forced to forego, or at least postpone, his dream of operating a facility producing manufactured homes. He had incurred no expense attributable to the commencement of such an operation, and there is a total lack of evidence that the business would have been profitable. In his testimony, he said that he might also have resold the property at a profit, but there is a similar lack of evidence that he could have made a profit on the resale or what that profit would have been. Shultz failed to present any evidence of injury.

Conclusion

Shultz s response to Vaught s no-evidence motion for summary judgment failed to present more than a scintilla of evidence that Vaught made a material representation knowing it was false or that Vaught s actions caused him any legal injury. In the absence of evidence raising a genuine issue of material fact as to at least two of the elements Shultz was required to establish in order to recover, the trial court properly granted summary judgment in favor of Vaught.

Disposition

The judgment of the trial court is affirmed. All pending motions are overruled as moot.

BILL BASS

Justice

Opinion delivered August 4, 2004.

Panel consisted of Worthen, C.J., DeVasto, J., and Bass, Retired Justice, Twelfth Court of Appeals, Tyler, sitting by assignment.

(PUBLISH)