Kenneth M. Hardin v. Joseph Lella
03-14-00607-CV
| Tex. App. | Mar 31, 2015Background
- In 1996 Kenneth Hardin and Richard Crawford borrowed $30,000 from Joseph Lella under a promissory note (First Note) bearing 10% interest.
- In 2003 Hardin and Crawford executed a Second Note naming Elizabeth (Lella’s wife) as payee at 7% interest; in 2006 Crawford (having bought out Hardin) executed a Third Note to Elizabeth at 8% interest. Interest payments thereafter were made to Elizabeth, not Joseph.
- Joseph Lella sued Hardin in 2013 on the First Note; Hardin asserted limitations, novation, ratification and related defenses. Lella moved for summary judgment on breach of contract, unjust enrichment and declaratory relief.
- The trial court granted Lella’s summary judgment in June 2014 and awarded damages; Hardin appealed, arguing (among other things) that the claim is time-barred, that novation and consent issues create fact questions, that evidence of those defenses was wrongly excluded under Rule 194, and that unjust-enrichment/declaratory claims fail.
- Procedural note: Hardin deposited cash for supersedeas; enforcement of the judgment was stayed pending appeal.
Issues
| Issue | Plaintiff's Argument (Lella) | Defendant's Argument (Hardin) | Held (trial court) |
|---|---|---|---|
| Statute of limitations on First Note (debt) | Note is a demand note; limitations did not run until Plaintiff made demand in 2013 | Cause of action accrued when payments shifted to Elizabeth (no payments to Joseph after ~2003); ten-year delay to demand is unreasonable and bars suit under §16.004 | Summary judgment in favor of Lella (motion granted) |
| Whether demand was a condition precedent / unreasonable delay | Demand was required and was made in 2013, so claim timely | Even if demand is required, lack of timely demand (≈2003–2013) is unreasonable; creates fact issue | Summary judgment for Lella |
| Novation / substitution by Second/Third Notes (release or modification of First Note) | Second/Third instruments were ineffectual modifications; First Note remains enforceable against Hardin | Second Note (payable to Elizabeth) and subsequent conduct (payments to Elizabeth, Third Note) evidence novation or implied consent — fact question | Summary judgment for Lella |
| Exclusion of defense evidence under Rule 194 (disclosure) | Opposed admission as not sufficiently disclosed | Disclosure and related pleadings provided adequate notice; exclusion of Hardin’s evidence was an abuse of discretion and prejudiced his defense | Trial court excluded some evidence and proceeded to grant summary judgment |
| Unjust enrichment / quantum meruit & Declaratory judgment | Pleaded alternatively; seeks recovery and declarations that attempted modifications were ineffectual | An express written contract (First Note) bars unjust-enrichment recovery; unjust-enrichment and declaratory claims are time-barred or duplicative; declaratory relief improperly sought without all affected parties (Elizabeth) | Summary judgment awarded to Lella (court did not make explicit declaratory findings in judgment) |
Key Cases Cited
- Fortune Production Co. v. Conoco, 52 S.W.3d 671 (Tex. 2000) (unjust-enrichment recovery unavailable where an express contract governs the subject matter)
- Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754 (Tex. 2007) (appellate standard for considering evidence on summary judgment — view evidence favorably to nonmovant but consider undisputed favorable evidence)
- CTTI Priesmeyer, Inc. v. K & O Ltd. Partnership, 164 S.W.3d 675 (Tex. App.—Austin 2005, no pet.) (elements and intent requirements for novation; novation not presumed)
- Vandeventer v. All American Life & Cas. Co., 101 S.W.3d 703 (Tex. App.—Fort Worth 2003, no pet.) (consent to substitute obligor may be express or implied; novation usually a fact question)