Lead Opinion
OPINION
Thе trial court granted summary judgment in favor of landlord Tenet HealthSys-tem Hospitals Dallas, Inc., holding Michael Foster Neel, M.D., Leslie Skinner Wel-borne, M.D., and Live Oak OB/GYN, P.A. jointly and severally indebted to Tenet under a “Physician Office Space Lease.”
BACKGROUND
Live Oak is a Texas professional association, and Neel and Welborne are its sole members and officers. Live Oak entered into a five-year lease to rent medical office space from Tenet in Dallas, Texas. The lease identifies Live Oak as the tenant. Both Welborne and Neel signed the lease оn lines designated for their signatures, as follows:
Tenant
Leslie P. Skinner, MD
Michael F. Neel, MD
The lease expired by its terms on June 30, 2006. According to Live Oak and Wel-borne, Tenet encouraged them during the term of the lease to relocate to new office space in Frisco, Texas, and promised to assist in finding a subtenant for the Dallas space. They also assert that Tenet promised to offer recruiting agreements to two new doctors to join Live Oak at the Frisco location. Neel does not join in these claims.
Live Oak relocated to Frisco and vacated the Dallas premises in July 2004. It stopped making lease payments on the Dallas lease after December 31 of that year.
Almost a year after Live Oak stopped making lease payments, Tenet wrote to Live Oak, Welborne, and Neel stating its intent to terminate the Dallas lease due to abandonment, effective midnight November 23, 2005. Two and a half years lаter, on May 22, 2008, Tenet again wrote to Live Oak, Welborne, and Neel claiming it had mitigated its damages by re-letting the premises for a period beginning February 20, 2006, and demanded payment of $87,329.30 for unpaid rent. That amount reflected a deduction of $26,602.07 for the rental period February 20 through June 30, 2006.
Each and every person, firm, corporation, partnership and association comprising Tenant (other than an officer signing on behalf of any corporation) shall be jointly and severally liable hereunder for the full and faithful performance of all conditions and covenants binding upon Tenant.
Two weeks after its written demand, Tenet sued Live Oak, Welborne, and Neel for рast due rent, prejudgment interest, and attorney’s fees. It alleged Welborne and Neel, as members of Live Oak at the beginning of and during the lease period, were persons “comprising” Live Oak and thus individually liable for past due rent under article 14.12.
After answering and filing verified denials that they were individually liable under the lease, Welborne and Neel filed motions for summary judgment on the issue of their liability. The trial court denied those motions. When Tenet later filed its own
Neel raises one issue on appeal, asserting summary judgment was improper because the lease was between Tenet and Live Oak. He argues Live Oak as a professional association is treated legally the same as a corporation, no valid contract exists between Tenet and him individually, he did not personally guarantee the lease, and Tenet did not seek to pierce Live Oak’s corporate veil. Welborne and Live Oak filed a separate appeal and raise four issues. Their first two issues are based on arguments that Welborne was not a party to the lease. In their second two issues, they claim they created fact issues on their mitigation and estoppel defenses and the trial court erred in sustaining objections to Welborne’s affidavit.
DISCUSSION
Standard of Review
The parties filed traditional motions for summary judgment, which we review under established standards. See Tex.R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co.,
When, as here, both parties move for summary judgment on the same issues and the trial court grants one motion and denies the other, we consider the summary judgment evidence presented by both sides and determine all questions presented. Valence Operating Co. v. Dorsett,
In our appellate review, we may not consider grounds for reversal not presented to the trial court by written summary-judgment motion, answer, or other response. Tex.R. Civ. P. 166a(c). Similarly, a trial court cannot grant summary judgment оn grounds not presented. Johnson v. Brewer & Pritchard, P.C.,
Individual Liability
We first address whether the trial court properly granted summary judgment against Neel and Welborne individually. All parties claim the lease is unambiguous, and we agree. We therefore construe the lease as a matter of law. See Coker v. Coker,
Both appellants and Tenet claim the other is raising arguments for the first time on appeal regarding individual liability, thus precluding appellate review. Before applying the above principles of contract construction to the lease, we therefore review the parties’ presentations to the trial court in the context of their appellate issues.
Appellants argue on appeal the lease was between Tenet and Live Oak only. Welborne argues Tenet cannot claim personal liability against the individuals because there is no privity of contract. Both Neel and Welborne argue additionally that they signed the lease as officers of Live Oak, they did not personally guarantee the lease, and Tenet did not seek to pierce Live Oak’s corporate veil. Tenet responds that appellants raise contract privity for the first time on appeal; nevertheless, it argues, the summary-judgment evidence proves as a matter of law that Neel and Welborne signed the lease in their representative capacity on behalf of Live Oak and in their individual capacities. Appellants reply that Tenet never claimed in the trial court that Neel and Welborne had signed the lease individually and may not present that argument for the first time on appeal.
Neel sought summary judgment in his original summary-judgment motion and in his cross-motion based on a claim he and Welborne signed the lease in their capacities as “licensed medical doctors and officers on behalf of Live Oak and not in their individual capacity.” He asserted Tenet was attempting to treat him as a personal guarantor and argued that he did not sign a guaranty, case law applicable to guaranties shows he was not hable as a guarantor, and article 14.14 of the lease relating to guarantors (as opposed to article 14.12 relating to joint and several liability) would be rendered meaningless if he were held responsible for the debt under article 14.12.
Welborne raised the same points as Neel in her original motion and in her cross-motion for summary judgment. In addition to arguing she did not sign a guaranty of the lease covenants, Welborne added that she did not “otherwise acknowledge] in writing her intent to be bound for the Lease obligations of Live Oak.” Both Neel and Welborne relied solely on copies of the lease and a Texas Secretary of State filing identifying Live Oak as a professional association and showing Neel and Welborne as the sole officers and members of the association.
Tenet sought summary judgment after the trial court denied Neel’s and Wel-borne’s motions. In addition to its summary judgment record for unpaid rent, Tenet relied on its joint response to Neel’s and Welborne’s summary-judgment motions, the lease and Texas Secretary of State filing, and its specific argument that article 14.12 provided joint and several liability of thosе “comprising” the tenant, Live Oak. Responding to Neel’s and Wel-borne’s motions, Tenet not only asserted that it was not seeking to hold them individually liable as guarantors under article 14.14, but argued as follows regarding execution of the lease:
Furthermore, having chosen to analyze ¶ 14.12 as a guaranty, Dr. Neel and Dr. Welborne cannot then assume their conclusion that they did not agree[ ] to be*603 secondarily obligated under the Lease. By signing the Lease (in whatever capacity), Dr. Neel and Dr. Welborne were executing the Lease and giving effect to all of its provisions, including ¶ 14.12. See Wee Tots Pediatrics, P.A. v. Morohunfola,268 S.W.3d 784 , 791 (Tex.App.-Fort Worth Sept. 18, 2008, no pet. h.) (“ ‘[A] person who signs a contract must be held to have known what words were used in the contract and to have known their meaning, and must be held to have known and fully comprehended the legal effect of the contract.’ ” (quoting Tamez v. Sw. Motor Transp., Inc.,155 S.W.3d 564 , 570 (Tex.App.-San Antonio 2004, no pet.)). They thus knew and agreed that they, as persоns comprising Live Oak, would be jointly and severally obligated to answer for Live Oak’s obligations under the Lease.
(Emphasis added).
Neel and Welborne repeatedly asked the trial court to rule on the legal effect of their signatures on the lease. Tenet took the position, as quoted, that the doctors signed the lease containing article 14.12 and, regardless of the capacity in which they signed, they were “executing” the lease and giving effect to all of its provisions.
When, as here, the parties move for summary judgment on the same issues and the trial court grants one motion and denies the other, the reviewing court considers the summary judgment evidence presented by both sides and determines all questions presented. Valence Operating Co.,
To analyze the lease, we first look to the preamble, which also requires us to consider the execution pages. The preamble identifies the parties to the lease — the landlord is Tenet and the tenant is “named on the execution page attached hereto as Exhibit ‘A’.” “Exhibit ‘A’” is two pages long. The first page contains the statement: “The Tenant name is: Live Oak OB/GYN, PA.” The second page contains signature lines and signatures. As quoted above, two signature lines appear under the title “Tenant” with the names “Leslie P. Skinner, MD” printed under thе first line and “Michael F. Neel, MD” under the second. Neel and Welborne do not dis
In construing this lease, we are to consider the entire document and attempt to harmonize and give effect to all provisions. See Coker,
Both Neel and Welborne argue they are not parties to the lease and cannot be held contractually liable because (1) they signed the lease only as officers of Live Oak, (2) corporation law provides that when an officer of a corporation signs a contract on behalf of the corporation, the officer is not individually liable, (3) professional associations are treated as corporations and enjoy the powers, privileges, restrictions, and liabilities of corporations, and (4) Tenet has done nothing to pierce the “corporate veil.” Tenet responds that appellants have not shown they are entitled to the corporate shield.
The general rule is that a corporate officer’s signature on a contract, with or without a designation as to representative capacity, does not render the officer personally liable. See Ward v. Prop. Tax Valuation, Inc.,
We need not determine whether Live Oak, as a professional association, and Neel and Welborne as its officers and members, have shоwn they are entitled to the general corporation law protections. Construing the entire lease contract here negates the legal conclusion Neel and Wel-borne were signing solely as agents of the association and were not agreeing to be bound by the terms of that document as expressed in article 14.12.
When we construe a contract to determine the intent of the parties, it is the objective intent that controls. City of Pinehurst,
We conclude the trial court did not err in rendering summary judgment for Tenet and against appellants as to the individual liability of Neel and Welborne and therefore overrule Neel’s sole issue and Live Oak and Welborne’s first two issues. By reaching this conclusion, we emphasize that this decision is limited to the record in this case. We do not suggest that Neel and Welborne were legally binding any persons or entities to the obligations under the lease other than Live Oak as the tenant and themselves as expressed in article 14.12 by executing that document.
Mitigation and Estoppel Defenses
In their third and fourth issues, Live Oak and Welborne contend they raised fact issues on their mitigation and estoppel defenses. They claimed in their summary-judgment response that Tenet’s mitigation efforts were insufficient and “too little, too late.” Relying on Welborne’s affidavit, they argued Tenet failed “to make any attempt” to find a “sublessor” as promised as part of the incentive to convince Live Oak and Welborne to move to the new Frisco location. According to Welborne’s affidavit, “Tenet had at least one ready and willing tenant (Lorrinda Torres, M.D.) to take over the leased premises, but purposefully waited until the Lease term had expired (allowing unpaid rental to unnecessarily accrue) to allow that new tenant to take over the leased premises.” As to their estoppel defense, they asserted pursuant to Welborne’s affidavit that Tenet representatives had made “various promises and representations to Live Oak and Welborne” to induce them to move to Frisco, “including that Tenet would assist Live Oak in procuring a sublessor and that it would bring [her] current partner, Melissa Bailey, and her husband, John Bailey, into the new practice under a Recruitment Agreement so that the income level of the new practice could support the rent payments under the Lease until Tenet released the leased premises.” Welborne concluded her affidavit with the statement, “Tenet completely failed to make any attempt to procure a sublessor [sic] as promised or to offer a Recruitment Agreement to Melissa Bailey and John Bailey, as represented and the financial representations did not materialize.”
Live Oak and Welborne were non-mov-ants on their defenses of mitigation and estoppel. They therefore had the burden to produce sufficient summary judgment evidence to raise a fact issue as to each element of those defenses. Wiggins v. Overstreet,
Texas law requires that a tenant asserting a mitigation defense must prove both the landlord’s failure to mitigate and “the amount by which the landlord reduced or could have reduced its damages.” Cole Chem. & Distrib., Inc. v. Gowing, 228
Live Oak and Welborne appeal the trial court’s ruling on Tenet’s objections and further argue they presented sufficient evidence to support their mitigation defense. They cite Hygeia Dairy Co. v. Gonzalez,
Hygeia was a negligence case involving the sale of diseased cattle. The court in Hygeia determined the trial court had erred by not submitting defendant’s mitigation defense to the jury. The defendant argued that when plaintiff began to lose cattle, he should have tested the dead and dying animals to determine the cause of their deaths and should have taken prudent actions to mitigate the losses. Rejecting plaintiff’s argument that an instruction was not merited because defendant could not prove “the exact amount of damages” attributable to plaintiff’s negligence, the appellate court concluded sufficient evidence existed from which the jury could have derived a “reasoned calculation about the failure to mitigate.” Id. at 226. The court also addressed what would be insufficient to merit a mitigation instruction, stating “[t]his does not mean a defendant can get a mitigation instruction merely by asserting that a plaintiff failed to mitigate damages.” Id. at 225. The court added specifically that “[ejvidence must be developed which clearly shows a plaintiffs failure to mitigate caused further damages, and the evidence must be sufficient to guide the jury in determining which damages were attributable to a plaintiffs failure to mitigate.” Id. Live Oak and Wel-borne presented no summary-judgment evidence from which any calculation of damages could be reasoned.
In response to Tenet’s claim they failed to produce any evidence on the essential element of damages, Live Oak and Wel-borne suggest Cole and Austin Hill Country were not summary-judgment cases and neither stated the “burden of proof’ at the summary-judgment stage. They do not explain their reasoning or cite to any authority that would alter an element of proof for a defense such as mitigation. As explained above, they rely on Hygeia, another jury trial involving a mitigation defense, to support their own assertion they met their burden.
Even if Live Oak and Welborne were not required to present any evidence from which damages could be calculated in support of their mitigation defense, Tenet contends Welborne’s statements are con-clusory and incompetent summary-judgment evidence. It likewise contends Wel-borne’s statements supporting the estoppel defense are legally insufficient to raise a fact issue. We agree.
Conclusions in an affidavit are insufficient either to support summary judgment or to raise a fact issue in response to a summary-judgment motion. See Mercer v. Daoran Corp.,
Affidavits not based on personal knowledge also are not competent evidence; the affidavit must affirmatively show a basis for such knowledge. See Southtex 66 Pipeline Co. v. Spoor,
Welborne contends the basis for her personal knowledge of the facts alleged is through her position as “an officеr of [Live Oak],” citing Jackson T. Fulgham Co. v. Stewart Title Guaranty Co.,
Welborne’s position as an officer of Live Oak may have established sufficient personal knowledge for her to testify as to Live Oak’s business. But the averment material to Welborne’s mitigation defense that Tenet contends is an unsupported conclusion is her statement “Tenet had at least one ready and willing tenant, Lorrin-da Torres, M.D. to take over the leased premises, but purposefully waited until the Lease term had expired allowing unpaid rental to unnecessarily accrue.” Welborne discloses no facts supporting her conclusion Tenet had a ready and willing tenant or that Tenet purposefully waited until the lease term had expired to lease the premisеs. The undisputed testimony actually shows Tenet gave appellants a $26,607.07 credit for unpaid rental because it had re-let the premises. Importantly, Welborne states no fact showing how she learned about Tenet’s efforts to re-let or its purported decision to wait to lease the premises until after expiration of the lease. Wel-borne argues generally in her appellate brief that paragraph three of her affidavit provides that basis. Yet paragraph three contains only additional conclusory statements that “Tenet representatives made various promises and representations” that Tenet would assist in procuring a subtenant and would bring Melissa and John Bailey into the new practice in Frisco. Welborne fails to demonstrate how this reference provides the necessary factual basis for her personal knowledge to testify about Tenet’s effоrts or decisions. Nor does Welborne’s recitation of “personal knowledge” transform her conclusions into admissible evidence. Stone,
Live Oak and Welborne also claim they met their burden of raising a fact issue as to each element of their estoppel defense, citing Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc.,
CONCLUSION
Neel and Welborne are bound to what they agreed by signing a contract that provided expressly for their joint and several liability as persons comprising Live Oak, where they did not designate they were signing only as agents of Live Oak or otherwise indicate they were not agreeing to be bound by those terms. The trial court did not err in granting summary judgment against them individually. Wel-borne’s affidavit in response to Tenet’s summary-judgment motion contained eon-clusory statements insufficient to raise issues of fact on her and Live Oak’s mitigation and estoppel defenses. The trial court therefore did not err in sustaining Tenet’s objections to the affidavit and granting summary judgment in its favor. Additionally, Welborne failed to address an essential element — damages—of the mitigation defense. We overrule appellants’ issues and affirm the trial court’s judgment.
Notes
. Appellants Live Oak and Welborne argue in their brief that Tenet did not re-let the premises until after expiration of the Dallas lease. They do not dispute the $26,602.07 deduction, however, and their argument does not affect our analysis.
. In dieir reply brief, they argue for the first time that article 14.12 applies when there is more than one tenant. They do not address, however, how that interpretation applies to this lease in which there is only one identified tenant.
. The dissent argues article 14.12 is ambiguous. An agreement is ambiguous — thus creating a fact question of the parties' intent — only if it is susceptible to more than one reasonable interpretation. Milner v. Milner,
. Welborne does not address the basis on which she can claim a mitigation defense on behalf of the tenant, Live Oak. We assume for purposes of our analysis she is entitled to the defense.
. Welborne and Live Oak argue in their reply brief that Tenet’s failure to produce documents should lead to an inference that Tenet did not act to mitigate its damages or to fulfill its representations to Welborne and Live Oak. They cite no authority and have presented nothing for us to review. See Tex.R.App. P. 38.l(i) (failing to brief); Dallas Cnty. v. Gonzales,
Dissenting Opinion
Dissenting Opinion by
On cross-motions .for summary judgment, the trial court granted summary judgment in favor of appellee Tenet HealthSystem Hospitals Dallas, Inc. (Landlord) finding that appellants Michael Foster Neel, M.D. and Leslie Skinner Wel-borne, M.D. are jointly and severally indebted to appellee on a lease for office space. I would conclude that appellee did not show it was entitled to judgment as a matter of law and would reverse the summary judgment and remand for further proceedings. Because the majority does not, I respectfully dissent.
Landlord sued Live Oak OB/GYN, PA, Neel, and Welborne for past due rent alleging that Neel and Welborne were jointly and severally liable on the office lease between Landlord and Live Oak. Neel and Welborne moved for summary judgment
Landlord agrees that Live Oak was the tenant and that Neel and Welborne signed the lease on behalf of Live Oak. Landlord explained in its motion for summary judgment that it “joined Drs. Wellborne [sic] and Neel [as defendants] because [of] Article 14.12 of the Lease.” Article 14.12 of the lease provides:
Each and every person, firm, corporation, partnership and association comprising Tenant (other than an officer signing on behalf of any corporation) shall be jointly and severally liable hereunder for the full and faithful performance of all the conditiоns and covenants binding upon Tenant.
Landlord argued that Neel and Welborne were persons comprising Live Oak and were jointly and severally liable on the lease. Landlord argues on appeal that it proved “as a matter of law, that the doctors executed both in a representative and in an individual capacity.” It argues that the language of article 14.12 is unambiguous and that, by signing the lease containing that language, Neel and Welborne agreed to be jointly and severally liable and, “as a matter of law, signed in their individual capacity.”
Neel and Welborne argue that they are not liable individually because they signed the lease only as representatives of the tenant, Live Oak. They also argued in opposition to Landlord’s motion for summary judgment that even under Landlord’s interpretation of article 14.12, they could not be held liable individually because they signed as officers on behalf of Live Oak, and article 14.12 excludes from liability “officer[s] signing on behalf of any corporation.”
We construe the lease as a question of law without regard to the parties’ subjective interpretations or whether they agree that the provision is unambiguous. See Coker v. Coker,
To succeed on summary judgment, Landlord had to satisfy its burden to establish that Neel and Welborne agreed to be liable individually under the lease as a matter of law. See Nixon v. Mr. Prop. Mgmt. Co.,
The lease states that it is between Landlord “and the Tenant, (‘Tenant’) named on the execution page attached hereto.... ” The exeсution page names Live Oak OB/ GYN, PA as the Tenant. The lease, which appears to be a form contract, refers to “Tenant” throughout and does not refer to Live Oak OB/GYN, PA by name except on the execution page. The lease also states, “By their signature[s] ... [Landlord] and Tenant covenant and agree as follows[J” On the signature page, Neel and Skinner (now Welborne) signed on separate lines below the word “Tenant” without stating their official capacity in “Tenant.” That is the only place where they signed the lease and nothing indicates they were also signing in their individual capacity. The parties agree that Neel and Welborne signed as representatives of Live Oak and that Live Oak is obligated under the Lease. Nevertheless, Landlord contends that these signatures not only bind Live Oak but also bind Neel and Welborne individually as a matter of law.
The lease is ambiguous
Landlord argues that article 14.12 is not ambiguous аnd is capable of only one interpretation. The majority agrees that the language is not ambiguous and states, “the only meaning article 14.12 can have is as expressed — each and every person comprising Live Oak is jointly and severally liable for performance of all conditions and covenants binding on Live Oak.”
Applying that interpretation literally means that article 14.12 binds personally and individually all those persons and entities “comprising Tenant,” even if those persons and entities did not sign the lease at all, did not sign the lease in an individual capacity, did not agree to be bound by the lease in their individual capacity, or did not even exist when the lease was signed.
Landlord argues that it is not trying to bind any entity or person that might be included within the meaning of article 14.12 that did not also sign the lease. Consequently, Landlord asks us to construe article 14.12 against appellants as a matter of law, but not exactly as written. But by accepting Landlord’s argument, we alter the meaning of article 14.12 from imposing individual liability on “[e]ach and every person ... comprising Tenant” to imposing individual liability on “each and every person ... comprising Tenant who signed the Lease.” Because Landlord argues that the clause does not mean exactly what it says, I would conclude that it is ambiguous and that summary judgment should have been denied.
Landlord did not establish personal liability as a matter of law
Landlord also argues that this situation is like cases where the person signing on behalf of an entity also personally obligated himself. But in those cases the language in the documents stated that by signing the document in a representative capacity the person signing was also making himself individually liable. See, e.g., Material P’ships, Inc. v. Ventura,
The language in this lease is different. It does not state that Neel and Welborne, by signing as representatives of Live Oak, were agreeing to be personally liable. It was Landlord’s burden to establish that there is no other interpretation possible, as a matter of law. Here, it is equally reasonable that Neel and Welborne signed only as representatives of Live Oak because they signed under “Tenant,” Landlord agrees that they signed as representatives of Live Oak, and there is no line for Neel and Welborne to sign the lease in their individual capacity.
And Landlord’s interpretation is contrary to established law that a person does not become personally liable by signing an agreement in a representative capacity. See Latch v. Gratty, Inc.,
When the meaning of language in a contract is uncertain or reasonably susceptible to more than one interpretation, it is ambiguous. Exxon Corp.,
. The majority also states that Welborne and Live Oak "admit ‘it is clear what [Landlord] was intending to accomplish by including Article 14.12/ ... [and that] Neel offers no alternative meaning for article 14.12[.]”