AKIB Construction, Inc. v. Neff Rental, Inc. (Tex.App.- Houston [14th Dist.] Apr. 3,
2008)(Hedges) (sworn account, breach of contract, quantum meruit)
REVERSED AND REMANDED: Opinion by
Chief Justice Hedges
14-07-00063-CV AKIB Construction, Inc. v. Neff Rental, Inc.
Appeal from County Civil Court at Law No 3 of Harris County
Trial Court Judge:  Ed Landry

AKIB CONSTRUCTION, INC., Appellant,
v.
NEFF RENTAL, INC., Appellee.

No. 14-07-00063-CV.
Court of Appeals of Texas, Fourteenth District, Houston.
Opinion filed April 3, 2008.
Panel consists of Chief Justice HEDGES and Justices ANDERSON and BROWN.

MEMORANDUM OPINION

ADELE HEDGES, Chief Justice.

Appellant, AKIB Construction, Inc., appeals from a summary judgment favoring appellee, Neff Rental,
Inc. Neff sued AKIB over the use of construction equipment owned and leased out by Neff. Neff
pleaded causes of action for suit on a sworn account, breach of contract, and quantum meruit. Neff
further filed a motion seeking summary judgment on each of these theories of recovery. The trial court
granted the motion without specifying the grounds therefor. In a single issue, AKIB contends that the
trial court erred in granting summary judgment. Specifically, AKIB asserts that judgment was legally
improper if based on a theory of suit on a sworn account and that material issues of fact preclude
summary judgment on the breach of contract and quantum meruit theories. We reverse and remand.

I. Background

Manzoor A. Memom, president of AKIB Construction, signed an application for credit to open an
account with Neff Rental. Subsequently, Neff delivered construction equipment to a construction site,
where invoices were apparently signed by representatives or employees of Bean Excavation Co., a
subcontractor to AKIB. The invoices state that the listed equipment is being rented to AKIB. AKIB
(according to Memom) then paid approximately $14,000 for the rentals but at some point stopped
paying bills sent by Neff.[1] Neff subsequently sued, alleging that AKIB owed an additional $14,507.03
for the rentals. Neff's petition raised causes of action for suit on a sworn account, breach of contract,
and quantum meruit.

In a Second Amended Motion for Final Summary Judgment, Neff argued that it was entitled to
judgment as a matter of law because AKIB had agreed to pay the invoices and failed to do so. In the
motion, Neff primarily relied upon the credit application, the invoices, and Memom's deposition
testimony. In his deposition, Memom admitted that he signed the credit application, knew that the
equipment was being rented under his account, and paid certain of the invoices. He further
acknowledged that he never notified Neff that Bean personnel were not permitted to order equipment
under the account. He insisted, however, that although he was responsible for rental payments up to
$14,000 (pursuant to his contract with Bean), the rental agreement was between Bean and Neff.

In an affidavit attached to the motion, Todd Dubeau stated that he was the authorized representative
of Neff. He further averred that (1) Neff "has provided goods and/or services to [AKIB] on an ongoing
account," (2) AKIB owes Neff "for unpaid goods and/or services rendered in the total amount of
$14,507.03," and (3) "[t]here are no offsets currently pending." Attached to the affidavit were AKIB's
credit application and a number of invoices.

In its response to the motion, AKIB argued generally that Neff had failed to prove as a matter of law all
elements of its causes of action and that there was a genuine issue of material fact on each cause of
action precluding summary judgment.[2] AKIB further asserted that it never contracted with Neff;
instead, the only contract for rentals was between Neff and Bean. AKIB additionally argued that Neff's
billing failed to account for adjustments for periods when the equipment could not be used due to
inclement weather and equipment failures. In the response, AKIB stated that the promise of
adjustments was made by Bean; however, in his deposition (attached to Neff's motion), Memom
suggested that Bean in turn received those promises from Neff.

In an affidavit attached to the response, Memom averred that representatives of Bean ordered the
equipment from Neff. He said that pursuant to the agreement between Bean and AKIB, a "total
allowance of $14,000 was authorized for the equipment rental." He also reiterates an entitlement to
adjustments for days when the equipment could not be used and asserts that Neff has denied such
credit. Lastly, Memom averred that "[t]he equipment was rented to a plumbing contractor, friend of
[the] owner of the Bean Excavation Co. without informing [AKIB]." The record does not reflect that Neff
objected to any statements in Memom's affidavit or other summary judgment evidence.

The trial court granted summary judgment favoring Neff, awarding it $14,507.03 in actual damages
plus prejudgment interest and attorney's fees. The trial court did not specify the basis for its ruling.

II. Analysis

We review a grant of summary judgment under a de novo standard. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005). When, as here, the trial court grants summary judgment without
specifying the grounds on which it bases its decision, we must affirm the judgment if any of the
grounds presented by the movant are meritorious. FM Props. Operating Co. v. City of Austin, 22
S.W.3d 868, 872-73 (Tex. 2000). When reviewing a grant of summary judgment, we take as true all
evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts
in the nonmovant's favor. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004). In a
traditional motion for summary judgment under Texas Rule of Civil Procedure 166a(c), such as was
filed by Neff, the movant has the burden of demonstrating that there is no genuine issue of material
fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Am. Tobacco Co. v.
Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

A. Suit on a Sworn Account

We begin by considering Neff's suit on a sworn account claim. When a party has pleaded an action
founded upon an open account on which a systematic record has been kept, Rule 185 of the Texas
Rules of Civil Procedure authorizes that party, under certain circumstances, to establish a prima facie
case by filing an affidavit that the claim is just and true, due, and that all just and lawful offsets,
payments, and credits have been allowed. TEX. R. CIV. P. 185. Although Neff contends that it fulfilled
the requirements of Rule 185 in the present action, several courts of appeals, including the
Fourteenth, have held that suit on a sworn account is inapplicable when the underlying agreement
resulting in the alleged debt was a lease agreement. See, e.g., Schorer v. Box Serv. Co., 927 S.W.2d
132, 134-35 (Tex. App.-Houston [1st Dist.] 1996, writ denied); Murphy v. Cintas Corp., 923 S.W.2d
663, 665 (Tex. App.-Tyler 1996, writ denied); Great-Ness Prof. Servs., Inc. v. First Nat'l Bank, 704
S.W.2d 916, 917 (Tex. App.-Houston [14th Dist.] 1986, no writ).[3] Neff does not dispute that its suit on
a sworn account theory of recovery is based on an alleged lease agreement.

Neff contends that AKIB's failure to argue improper use of sworn account in the trial court resulted in
waiver of this argument on appeal, citing Clifton v. American Express Centurian Bank, No.
09-06-00283-CV, 2007 WL 2493517 (Tex. App.-Beaumont 2007, no pet.). The Clifton court indeed
held that the appellant in that case could not raise a similar issue (the impropriety of suit on a sworn
account based on a credit agreement) on appeal because he had not raised it in the trial court. Id. at
*1. However, Clifton was not an appeal from a summary judgment. Id. In the summary judgment
context, such as we encounter here, an appellant may attack the legal sufficiency of the grounds on
which judgment was based even if it did not do so in the trial court. E.g., McConnell v. Southside I.S.D.,
858 S.W.2d 337, 343 (Tex. 1993); Tello v. Bank One, N.A., 218 S.W.3d 109, 118-19 (Tex.
App.-Houston [14th Dist.] 2007, no pet.).

Neff additionally argues that the courts of appeals addressing the sworn account/lease agreement
issue simply got it wrong, citing Schorer, 927 S.W.2d at 135 (Mirabal, J., concurring). We decline to
adopt the position set forth in the Schorer concurring opinion, which disagrees with the longstanding
principle that Rule 185 does not apply to lease agreements. Neff also cites Tenneco Oil Co. v. Padre
Drilling Co., 453 S.W.2d 814 (Tex. 1970), a case involving recovery of attorney's fees, in an attempt to
persuade us to change the applicability of the sworn account remedy. The analogy is too remote to be
compelling.

We find no merit in Neff's contention that a suit on a sworn account can be based on a lease
agreement. Because Neff's sworn account was based on a lease agreement, the trial court erred if it
based the summary judgment on this theory of recovery.

B. Breach of Contract

We next turn to the breach of contract theory of recovery. To be entitled to summary judgment on a
breach of contract claim, a plaintiff must conclusively demonstrate (1) the existence of a valid contract;
(2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant;
and (4) damages sustained as a result of the breach. E.g., Winchek v. Am. Express Travel Related
Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-Houston [1st Dist.] 2007, no pet.). A valid and
enforceable contract is formed by an offer, an acceptance, a meeting of the minds, and an expression
of the terms with sufficient certainty so that there is no doubt regarding the parties' intentions. MG
Bldg. Materials, Ltd. v. Moses Lopez Custom Homes, Inc., 179 S.W.3d 51, 61 (Tex. App.-San Antonio
2005, pet. denied). While Texas courts favor validating transactions rather than voiding them, the
courts may not create a contract where none exists. Kelly v. Rio Grande Computerland Group, 128
S.W.3d 759, 766 (Tex. App.-El Paso 2004, no pet.). See generally Angelou v. African Overseas Union,
33 S.W.3d 269, 278-80 (Tex. App.-Houston [14th Dist.] 2000, no pet.) (discussing at length the
requirements for contract formation).

As proof of contract formation, Neff points to AKIB's signing of the credit application as well as the
signature of Bean representatives on the invoices listing AKIB as renter. On its face, however, the
credit application does not set any terms regarding the equipment rentals but merely seeks the
extension of credit. Indeed, the document does not even contain a promise by AKIB to pay or any
promises whatsoever by Neff.[4] It is merely an application to open a credit account. Although there is
some suggestion in the evidence that Bean may have been acting in a representative capacity for
AKIB in signing the invoices, such evidence is inferential only and does not establish agency as a
matter of law.[5]

Furthermore, in both his deposition testimony attached to Neff's motion and his affidavit attached to
AKIB's response, Memom asserted that the contract for equipment rental was between Bean and Neff.
He insists that AKIB did not enter such a contract and did not order any equipment; rather, AKIB
agreed (with Bean) only to make payments for the rentals up to $14,000. Consequently,
a fact issue
exists as to whether a contract was ever formed between AKIB and Neff obligating AKIB to pay for all
rentals requested. The trial court therefore erred if it based the summary judgment on Neff's breach of
contract theory of recovery.

C. Quantum Meruit

Lastly, we look at Neff's quantum meruit cause of action. Quantum meruit is an equitable remedy which
does not arise out of a contract but is independent of it. Vortt Exploration Co. v. Chevron USA, Inc.,
787 S.W.2d 942, 944 (Tex. 1990). In fact, a party may generally recover on quantum meruit only when
no express contract covers the services or goods at issue. Id. The quantum meruit remedy is based
upon the promise implied by law to pay reasonable value for beneficial services knowingly accepted.
See id. To recover under quantum meruit, a claimant must prove that: (1) valuable services were
rendered or goods provided; (2) for the person sought to be charged; (3) which services or goods
were accepted by the person sought to be charged, used and enjoyed by him; (4) under such
circumstances as reasonably notified the person sought to be charged that the plaintiff in performing
such services or providing such goods was expecting to be paid by the person sought to be charged.
See id. Additionally, the claimant must establish the reasonable value for the services that were
rendered or materials provided. Hudson v. Cooper, 162 S.W.3d 685, 688 (Tex. App.-Houston [14th
Dist.] 2005, no pet.). If the claimant does not establish reasonable value as a matter of law, the issue
is one for a finder of fact to determine. See id.

In its Second Amended Motion for Final Summary Judgment, Neff devotes scant attention to its
quantum meruit cause of action. At no point in the motion does Neff cite to any evidence that AKIB
accepted any services or materials or used and enjoyed them. Instead, Neff's allegations focus on
AKIB's supposed agreement to pay for the leased equipment.

Additionally, Neff's motion cites to no evidence of the value of the services rendered. Although various
invoices are attached to the motion, there is no claim (in the motion or in any attached affidavit) that
the charges reflected on the invoices constituted reasonable value for services rendered.
Consequently, Neff has failed to conclusively establish its right to recovery under its quantum meruit
cause of action. See id. The trial court therefore erred if it based its judgment on this theory of
recovery. Because we find that the trial court's grant of summary judgment is not supported by any of
the grounds raised in Neff's motion, we sustain AKIB's sole issue.

We reverse the trial court's judgment and remand for further proceedings in accordance with this
opinion.

[1] There is some discrepancy in the record regarding exactly how much AKIB paid Neff, but it is undisputed that AKIB
did make payments to Neff.

[2] In its brief, Neff suggests that we should not consider AKIB's response to the motion for summary judgment
because it was filed prior to Neff's filing its Second Amended Motion, which the trial court granted. In its Amended
Motion (filed prior to the Second Amended Motion), Neff sought judgment only on its suit on a sworn account cause of
action; in the Second Amended Motion, Neff sought judgment on all three of its causes of action. Although filed prior to
the filing of Neff's Second Amended Motion, AKIB's response indeed addresses the possibility of summary judgment
on all three causes of action. We will not ignore AKIB's arguments on breach of contract and quantum meruit simply
because AKIB filed the response before Neff filed its last amended motion. Both documents (the Second Amended
Motion and AKIB's earlier response) were before the trial court when it granted judgment. The important questions
here are whether Neff has proven any of its causes of action as a matter of law and whether AKIB has raised any
issues that would prevent summary judgment on those claims, not the chronological order of the motions and the
response.

[3] Although the Great-Ness case was decided under a prior version of Rule 185, as the Schorer court explained, the
amendment did not change the substantive application of the Rule. Schorer, 927 S.W.2d at 134-35.

[4] The document does contain a personal guarantee signed by Memom for debts incurred by AKIB; however, Memom
is not a defendant in the present action.

[5] Specifically, AKIB's payment of invoices signed by Bean but listing AKIB as renter suggests the possibility that Bean
may have been acting as AKIB's agent. However, Memom refutes this in his deposition and affidavit.

We further note that at no point (in the court below or on appeal) does Neff expressly argue that it conclusively
established the existence of an
implied contract by conduct. See generally Preston Farm & Ranch Supply, Inc. v.
Bio-Zyme Enters., 625 S.W.2d 295, 298 (Tex. 1981) (discussing implied contracts by conduct); Live Oak Ins. Agency v.
Shoemake, 115 S.W.3d 215, 218-19 (Tex. App.-Corpus Christi 2003, no pet.) (same). Accordingly, we do not address
that theory of recovery.