SOUTHERN MANAGEMENT SERVICES, INC., Appellant v. SM ENERGY COMPANY, Appellee.
No. 14-12-00377-CV.
Court of Appeals of Texas, Houston (14th Dist.).
March 5, 2013.
394 S.W.3d 350
The trial court‘s findings in its order denying the motion for new trial make clear that it did not credit Fears‘s affidavit and credited Corley‘s affidavit. However, disbelieving evidence is not the same as proof of the contrary: “Even if the trial judge disbelieved Mathis‘s testimony, that would not provide affirmative evidence that service occurred.” Mathis, 166 S.W.3d at 745 (citing Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 512, 104 S.Ct. 1949, 80 L.Ed. 2d 502 (1984) (“When the testimony of a witness is not believed, the trier of fact may simply disregard it. Normally the disсredited testimony is not considered a sufficient basis for drawing a contrary conclusion.“)). And if the trial court could resolve the conflicting affidavits and accept Corley‘s affidavit over appellants’ affidavits, it would be an abuse of discretion to find that Corley gave them notice of the October 25, 2010 trial setting when his affidavit states the trial setting was August 25, 2010.
CONCLUSION
The appellants’ motion for new trial and affidavits assert facts indicating they did not receive nоtice of the trial setting. Searock attempted to controvert some of those facts, but failed to request an evidentiary hearing to resolve the conflicting affidavits. We conclude the trial court abused its discretion by denying the motion for new trial. Accordingly, we sustain appellants’ first issue.12
We reverse the trial court‘s judgment against Tactical and Fears and remand that portion of the case for further proceedings. In all othеr respects, we affirm the trial court‘s judgment.
See Pollack, 858 S.W.2d at 392; Averitt, 773 S.W.2d at 576; Healy, 560 S.W.2d at 721.
Jeremy Richard Stone, Eric Michael Adams, Houston, TX, for Appellee.
Panel consists of Chief Justice HEDGES and Justices BOYCE and DONOVAN.
OPINION
ADELE HEDGES, Chief Justice.
Southern Management Services, Inc. (“Southern“) appeals a summary judgment granted in favor of SM Energy Company (“SM“). Southern argues that the judgment is improper because SM did not conclusively establish the elements of its claims on sworn account and for breach of contract. Southern also argues that the judgment erroneously disposes of third-party defendants. We affirm in part, and reverse and remand in part.
BACKGROUND
This dispute focuses on costs allegedly owed for operating certain oil and gas leases in Nacogdoches County. In 2005, EnCana Oil & Gas (USA) Inc. (“EnCana“) and Goodrich Petroleum Corporation (“Goodrich“) executed a Joint Operating Agreement (“JOA“) to explore and develop the leases at issue. In 2008, EnCana and Goodrich amended the JOA and designated SM‘s predecessor-in-interest as operator. EnCana subsequently assigned its interests under the JOA to Southern, making Southern a thirty-percent working interest owner in the leases.
In 2010, SM delivered Southern a series of letters, offering Southern its proportionate share in the renewal of leases covered by the JOA. Cost sheets were attached to the letters explaining Southern‘s share. Southern signed and returned eаch letter, electing to participate in each of the renewals. Despite these elections, Southern
In April 2011, SM sued to recover on a sworn account and for breach of contract. The sworn account was supported by the affidavit of David Dubiel, SM‘s regional land manager, and by an itemized record of invoices, charges, and offsets. In his affidavit, Dubiel attested that the total amount due and owing from Southern was $536,690.35, not including intеrest and attorney‘s fees. Southern answered with an unsworn general denial.
SM moved for summary judgment in September 2011. Apparently realizing the procedural consequences of its original pleading, Southern filed an amended answer and verified denial of SM‘s claimed account. Southern also filed a response to SM‘s motion, contesting summary judgment for several reasons. Southern argued, for instance, that SM had not proved its breach of cоntract claim because, having failed to attach the JOA to any of its pleadings, SM had not established the existence of a valid contract. Southern also argued that SM could not recover on a sworn account because the claimed expenses were neither goods nor services. To assert a fact issue, Southern also attached an affidavit from David Disiere, its corporate secretary, denying the corrеctness of SM‘s account. Finally, in October 2011, Southern filed a third-party petition against EnCana and Goodrich, claiming that those parties might be liable for part of the amounts sought by SM.
SM filed an amended petition in December 2011, which updated many aspects of the sworn account and included the JOA as an exhibit. The amended account was supported by the affidavit of a different representative, Greg Little, who attested that Southern owed SM $486,747.23. The smaller balance was attributable in part to seven months of new revenue, which SM had withheld pursuant to a lien. The accounting also reflected other changes, including the addition of more than a dozen unpaid invoices issued since the date of the original petition, and the revision of charges for at least two invoices listed under the first accounting.
SM filed an amended motion for summary judgment on the same day as its amended petition. In its amended summary judgment response, Southern argued that SM‘s claim for breach of contract still failed because SM could not show a valid, enforceable contract in which Southern and SM were signatories. Southern also asserted that there was a genuine fact issue regarding its proportionate share of the leases. Southern repeated its argument regarding the sworn account, contending that judgment could not be granted where an account was not based on the provision of goods or services. Southern also challenged the sufficiency of the accounting, arguing that SM had not attached a systematic record of the transactions consistent with the rules of civil procedure.
The trial court granted judgment in favor of SM. The judgment was denominated as final and expressly disposed of “all parties.” From this judgment, Southern now appeals.
ANALYSIS
The parties have organized their briefs around a discussion of SM‘s two “claims:” sworn account and breach of contract. As an initial matter, we note that a suit on a sworn account is not an independent cause of action. See Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex.1979). It is based instead on
SM argues that it is entitled to judgment as a matter of law because Southern did not file a sworn denial of its amended account. Southern counters that the amended account is fundamentally flawed. Citing other procedural reasons, Southern also argues that the absence of a second sworn denial is not dispositive. In resolving these disputes, we begin our analysis with an examination of SM‘s stated account. We consider such issues as whether the account is based on the provision of goods or services, whether such provision is supported by еvidence of a contract, and whether the account sufficiently states a systematic record of the transactions. We then examine the impact of Southern‘s responses to determine whether SM was entitled to judgment on its sworn account.
Our review of the trial court‘s summary judgment is de novo. Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex.2009) (per curiam); Tex. Mun. Power Agency v. Pub. Util. Comm‘n of Tex., 253 S.W.3d 184, 192 (Tex.2007). With a traditional motion for summary judgment, the movant bears the burden of showing that there is no genuine issue of material fact and that she is entitled to judgment as а matter of law.
A. The account is based on a contract for services.
According to Little‘s affidavit, SM sought recovery against Southern for Southern‘s “proportionate share in the leases and its proportionate share in development and operating costs.” Southern argues that SM is not entitled to this recovery because there is no evidence of a contract making Southern liable for such costs. In support of this argument, Southern relies on the fact that it is not a signatory to the JOA and SM is not a signatory to the assignment. Southern also complains that, to whatevеr extent the lease renewals evidence a contract, these renewals are deficient because they do not define Southern‘s “proportionate share,” how much that share costs, or the terms of payment.
Southern next argues that SM cannot recover on the sworn account because the account is not for the provision of goods or services. See
As previously mentioned, SM alleged that the account represented Southern‘s “proportionate share in the leases and its proportionate share in development and operating costs” (emphasis аdded). The supreme court has held that a sworn account may be based on the costs for developing and operating oil and gas interests. See Vance v. Holloway, 689 S.W.2d 403, 403-04 (Tex.1985) (per curiam) (holding that operator was entitled to recover operating expenses on sworn account where interest holder failed to file a sworn denial). Accordingly, the costs alleged by SM are costs for services recoverable under
B. The account is sufficiently stated.
Attached to Little‘s affidavit is a lengthy accounting of SM‘s transactions with Southern. The accounting lists each invoice issued to Southern by its identifying number. It also lists the dates of the invoices, the amounts charged, and other payment information. Southern argues that this accounting is deficient for two reasons: it contains no statement of exactly what services were provided, and the accounting denotes “Source” information with unexplained abbreviations. Southern contends that because the account contains no “specifics or details” as to how the amounts alleged were calculated, SM failed to strictly comply with
Southern relies mostly on older authority which required that an account state each item with reasonable particularity. In 1983, however,
Southern specially excepted on the basis that SM‘s “claim is not one for the provision of goods or personal services.” It did not except further for lack of specificity. SM did not attach copies of the invoices to the sworn account, but Southern could have demanded them had it so desired. In the absence of a special exception, we hold that the account was not deficient for purposes of
C. SM is entitled to judgment as a matter of law.
A plaintiff who complies with the requirements of
Under
The First Court of Appeals reached the same conclusion in another case involving a sworn account. In Fortinberry v. Freeway Lumber Co., a merchant sued two patrons for the unpaid costs of furnishing building materials. 453 S.W.2d 849, 850 (Tex. Civ.App.-Houston [1st Dist.] 1970, no writ). After the patrons filed a sworn denial of the account, the merchant amended its pleadings to name the patrons’ legal partnership as a party defendant. The amended account was also revised to include an additional invoice. The account balance remained unchanged, however, apparently because the earlier invoice had been paid. The patrons did not file a second sworn denial, and thе trial court granted judgment in favor of the merchant.
On appeal, the primary question was whether the sworn denial of the original account had any effect on the amended account. The court of appeals held that the sworn denial was effective to preclude summary disposition of the case because, although amended in name, the account remained unchanged. The court reasoned further, “It is our belief that if the account in the plaintiff‘s amended petition had substantially differed from that made a part of its original petition, [the patrons‘] denial of the original account, even though complying with the requirements of Rule 185, would not have been sufficient to destroy the probative force of the amended account.” Id. at 852. Accordingly, when an amended account substantially differs from the original account, the party resisting the account must file another sworn denial. See id.; cf. Moriarty v. Williams, 752 S.W.2d 610, 612 (Tex.App.-El Paso 1988, writ denied) (holding that motion to transfer venue should not have been granted where nonmovant amended pleadings to allege new causes of action and movant failed to specifically deny new venue facts).
In this case, SM‘s amended account was substantially different from its original account.
Southern raises a procedural challenge to the summary judgment, focusing on the theories expressly alleged in SM‘s amended motion for summary judgment. Because the amended motion was filed on the same day as the amended petition, SM had no basis for arguing that judgment should be granted for lack of a second sworn denial. At that time, such an allegation would have been premature. SM did not raise the fact of the absent sworn denial until its reply to Southern‘s amended summary judgment response. On appeal, Southern argues that summary judgment was inappropriate because judgment mаy not be granted on an argument raised in a reply.
We conclude that there is no error. Under
Finally, we note that the outcome of this case would have been the same even if the probative force of SM‘s account had somehow been countered. A movant can still recover a debt by offering proof of the claim. See Rizk, 584 S.W.2d at 862. In this case, SM attached Little‘s affidavit and all of the exhibits supporting the sworn account to its amended motion for summary judgment. Because SM‘s summary judgment evidence established proof of the debt, it was incumbent upon Southern to raise some issue of material fact. Southern failed to meet its burden. The only evidence attached to Southern‘s amended summary judgment response is the affidavit from David Disiere, which predated the amended petition by nearly three months. This evidence only contested the correctness of the original account, not the amended account. The original account was no longer an issue, however, because SM sought judgment on the amended account instead. Therefore, even if SM could not recover under the procedures of
D. The judgment erroneously disposes of third-party defendants.
SM moved for judgment exclusively on its claims against Southern; its motion did not address Southern‘s third-party claims against EnCana and Goodrich. By the time the motion had been set for hearing, the trial court had granted Southern leave to add EnCana and Goodrich as third-party defendants. Prior to the hearing, EnCana and Goodrich had been served with process, but the returns of service were not on file with the court. Also, neither third-party defendant had filed an original answer. Yet when the trial court granted SM‘s summary judgment,
Unless otherwise authorized, an appeal may be taken only from a final judgment or order. See
The claims against EnCana and Goodrich were not addressed in SM‘s mоtion for summary judgment. Yet the trial court‘s judgment contains clear language of finality. Disposition of the third-party claims was error. See Ritzell v. Espeche, 87 S.W.3d 536, 538 (Tex.2002) (per curiam); Lehmann, 39 S.W.3d at 206. Accordingly, we sustain Southern‘s last issue and reverse the trial court‘s judgment for an adjudication of its third-party claims.
CONCLUSION
The trial court‘s judgment is affirmed to the extent it grants SM recovery on the sworn account and breach of contract. Because the judgment erroneously disposed of other claims that have not been adjudicated, the trial court‘s judgment is reversed and those claims are remanded for additional proceedings consistent with this opinion.