Andy's Sunmart #352, Inc. v. Reliant Energy Retail Services
(Tex.App.- Houston [1st Dist.] Nov. 5, 2009)(Jennings)
(sworn account judgment reversed, reasonableness of charges not established)
Mena simply stated that the invoices accurately reflected Reliant’s charges and that
all lawful credits were made. Mena did not provide testimony establishing, as a matter
of law, that Reliant may recover through its quantum meruit claim the amounts set
forth in the outstanding invoices. ... Accordingly, we hold that the trial court erred in
granting summary judgment in favor of Reliant on either its sworn account or quantum
meruit claims.
REVERSE TC JUDGMENT AND REMAND CASE TO TC FOR FURTHER PROCEEDINGS:
Opinion by Justice Jennings
Before Justices Jennings, Higley and Sharp
01-08-00890-CV Andy's Sunmart #352, Inc., Holcombe Sunmart Inc., aka Sunmart #139 and Adnan A. Najm,
Individually v. Reliant Energy Retail Services
Appeal from County Civil Court at Law No 4 of Harris County
Trial Court Judge: Hon. Roberta A. Lloyd
MEMORANDUM OPINION
Appellants, Andy’s Sunmart # 352, Inc. (“Sunmart # 352”), Holcombe Sunmart, Inc., a/k/a Sunmart # 139
(“Sunmart # 139”), and Adnan A. Najm (collectively referred to herein as the “Sunmarts”), challenge the trial
court’s summary judgment rendered in favor of appellee, Reliant Energy Retail Services, L.L.C. (“Reliant”), in
Reliant’s suit on a sworn account against the Sunmarts. See Tex. R. Civ. P. 185. In four issues, the Sunmarts
contend that the trial court erred in granting Reliant summary judgment because Reliant’s summary judgment
evidence “failed to overcome” the Sunmarts’ affirmative defenses of statute of frauds and limitations and did
not establish that there was a written contract between the parties, the price charged was an agreed price or
the usual, customary, and reasonable price, or that electricity was, in fact, delivered to or accepted by the
Sunmarts.
We reverse and remand.
Background
In its petition, Reliant asserted a claim for a suit on sworn accounts and alleged that it had provided
electrical services to Sunmart # 352 and Sunmart # 139, both of which Najm owned, and that the Sunmarts
accepted the services and were bound to pay the outstanding amounts, which Reliant contended were
“reasonable and customary.” Reliant asserted that Sunmart # 352 owed it $15,689.65 for electrical services
that it had provided and that Sunmart # 139 owed it $3,352.31 for electrical services that it had provided.
Reliant attached to its petition invoices, which it contended set forth the dates and prices of these services.
Reliant also stated a claim for quantum meruit, alleging that the Sunmarts had received benefits without
paying for them. Reliant further alleged that Najm was individually liable because the Sunmarts had forfeited
their corporate rights to conduct business in Texas during Reliant’s provision of the electrical services. In
sum, Reliant sought as its damages $19,041.96 for its electrical services. Reliant attached to its petition a
final invoice dated February 5, 2003 for Sunmart # 352 showing an amount due of $15,689.65 and a final
invoice dated October 14, 2003 for Sunmart # 139 showing an amount due of $3,352.31.
The Sunmarts filed verified answers, denying Reliant’s allegations, asserting that there was a “defect of the
parties,” and denying the accounts set forth by Reliant. The Sunmarts also asserted in their answers the
affirmative defenses of limitations, statute of frauds, and laches. The Sunmarts attached to their answers
affidavits by Najm, in which he testified that the accounts were “not just and true, or that all just and lawful
offsets, payments, or credits have not been allowed.”
In its second summary judgment motion, Reliant restated that the Sunmarts collectively owed Reliant
$19,041.96 for electrical services. Reliant attached to its motion the affidavit of Eda Carol Mena, a Reliant
supervisor for credit and collection and a custodian of records, who testified that the invoices attached to her
affidavit established Reliant’s claims that Sunmart # 352 and Najm owed $15,689.65 and that Sunmart # 139
and Najm owed $3,352.31 for electrical services that Reliant had provided. Mena further testified that Reliant
had performed all conditions precedent, all lawful offsets and credits had been applied, and the Sunmarts
“were in default under the terms of the sworn accounts by failing to make one or more payments as required
thereunder.” In addition to the specific invoices substantiating the outstanding amounts, Mena attached two
account summaries reflecting the accounts’ histories, the dates of the debits and credits to the accounts, and
the periodic balances of the accounts.
Also within its motion, Reliant argued that Najm, as the sole officer and director of the Sunmarts, was
individually liable for the amounts due because the Sunmarts had forfeited their right to do business in
Texas. Reliant asserted that Sunmart # 352 “forfeited on March 22, 2002” and Sunmart # 139 “forfeited on
August 30, 2002 to March 19, 2003.” Reliant also asserted that the electrical services for which it had not
been paid “occurred after the dates of forfeiture of the corporations” and that Najm, as the sole officer and
director of the Sunmarts, was liable. In support of its claim that Najm was individually liable, Reliant attached
as exhibits to its summary judgment motion copies of “notices of forfeiture” bearing the letterhead from the
Texas Secretary of State. The notice pertaining to Sunmart # 352 reflects a tax forfeiture date of March 22,
2002, which precedes the date upon which Reliant made a demand for any of the outstanding amounts for
electrical services provided by Reliant. The notice pertaining to Sunmart # 139 reflects a tax forfeiture on
August 30, 2002, a reinstatement date of March 19, 2003, and a subsequent tax forfeiture date of July 7,
2006. Reliant also attached as exhibits to its motion documents bearing the Texas Secretary of State’s
letterhead identifying Najm as the President, Secretary, Treasurer, and Director of Sunmart # 139 and
Sunmart # 352. In their response to Reliant’s summary judgment motion, the Sunmarts contended that
“[a]n invoice is not proof of delivery of goods or services” and argued that the affidavit, invoices, and account
statements were not “competent summary judgment evidence to establish a debt because this evidence only
establishes what Reliant estimates the charges to be.” The Sunmarts also argued that Reliant was not
entitled to summary judgment on its quantum meruit claim because they had “raised a fact issue with regard
to whether or not these services were actually rendered.” The Sunmarts asserted that Reliant’s motion did
“not overcome [their] verified original answers” that there was a defect in the parties, the Sunmarts had
denied the accounts, and the Sunmarts were not doing business under the names as alleged in the petition.
The Sunmarts also asserted that Reliant provided no summary judgment evidence to “overcome” the
affirmative defenses of limitations, statute of frauds, and laches, or their assertion that any and all charges
by Reliant were the responsibility of third party tenants or that corporate reinstatement precluded Najm’s
individual liability. The Sunmarts attached to their summary judgment response the affidavits of Najm, which
had been attached to their verified answers. In these affidavits, Najm, on behalf of all the Sunmarts, testified
that the amounts demanded by Reliant were not “just and true” and that Reliant had not made all “just and
lawful offsets, payment or credits.”
In a “final judgment,” the trial court granted Reliant’s summary judgment motion and ordered that Reliant
recover $15,689.65 from Sunmart # 352 and Najm and recover $3,352.31 from Sunmart # 139 and Najm.
Standard of Review
To prevail on a summary judgment motion, a movant has the burden of proving that it is entitled to judgment
as a matter of law and that there is no genuine issue of material fact. Tex. R. Civ. P. 166a(c); Cathey v.
Booth, 900 S.W.2d 339, 341 (Tex. 1995). A plaintiff moving for summary judgment on its claim must establish
its right to summary judgment by conclusively proving all the elements of its cause of action as a matter of
law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); Anglo-Dutch Petroleum Int’l, Inc. v.
Haskell, 193 S.W.3d 87, 95 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). If the party opposing a
summary judgment relies on an affirmative defense, he must come forward with summary judgment evidence
sufficient to raise an issue of fact on each element of the defense to avoid summary judgment. Brownlee v.
Brownlee, 665 S.W.2d 111, 112 (Tex. 1984); see also Anglo-Dutch Petroleum Intern., Inc., 193 S.W.3d at 95
(“If a defendant wishes to assert an affirmative defense to the summary judgment motion, it must urge the
defense in its response and provide enough summary judgment evidence to create a fact issue on each
element of the defense.”).
Sworn Account
In their third issue, the Sunmarts argue that the trial court erred in granting summary judgment in favor of
Reliant on either its sworn account or quantum meruit claim because Reliant’s summary judgment evidence
did not “affirmatively evidence the delivery of electricity to any of [the Sunmarts] or the acceptance of
electricity by any of [the Sunmarts]” or “an agreement regarding the price charged or that the price was
usual, customary and reasonable.”
“A defendant’s verified denial of the correctness of a plaintiff’s sworn account, in the form required by Rule
185, destroys the evidentiary effect of the itemized account and forces the plaintiff to put on proof of its
claim.” Site Work Group, Inc. v. Chem. Lime Ltd., 171 S.W.3d 512, 513 (Tex. App.—Waco 2005, no pet.)
(citing Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979)). However, even when a
defendant verifies its sworn denial to a suit on a sworn account, a plaintiff may properly obtain a summary
judgment on its sworn account claim by filing “legal and competent summary judgment evidence establishing
the validity of its claim as a matter of law.” PennWell Corp. v. Ken Assocs., Inc., 123 S.W.3d 756, 765 (Tex.
App.—Houston [14th Dist.] 2003, pet. denied) (citing United Bus. Machs. v. Entm’t Mktg., Inc., 792 S.W.2d
262, 264 (Tex. App.—Houston [1st Dist.] 1990, no writ)). The elements of a cause of action on a sworn
account are (1) a sale and delivery of the goods; (2) that the amount of the account is just, that is, that the
prices are charged in accordance with an agreement or, in the absence of an agreement, they are the usual
customary and reasonable prices for those goods; and (3) that the amount is unpaid. See Site Work Group,
Inc., 171 S.W.3d at 513–14; PennWell Corp., 123 S.W.3d at 766.
Reliant primarily relies upon Mena’s affidavit in arguing that it established its sworn account claim as a
matter of law. In her affidavit, Mena testified that Reliant provided the Sunmarts with electrical services and
that the Sunmarts have outstanding balances for these electrical services. Mena stated that the attached
invoices accurately set forth the services, dates, quantities, and prices and that the outstanding amounts
were calculated after applying “all just and lawful offsets and credits.” Mena testified that Reliant had
performed all conditions precedent and was “entitled to collect the indebtedness arising thereunder.” Mena
also testified that the Sunmarts “were in default under the terms” of their accounts. The attached account
summaries and invoices contained information reflecting the current and past balances, the amount of
electrical usage, and the applicable rates.
However, as the Sunmarts emphasize, Mena did not provide any testimony that the amounts charged and
the outstanding account were just, i.e., that the actual prices charged by Reliant for the electrical services
were in accordance with an agreement or, in the absence of an agreement, were the usual, customary, and
reasonable prices for those services. See PennWell Corp., 123 S.W.3d at 766 (reciting testimony that rates
charged were in accordance with rates previously charged and were usual, customary, and reasonable);
Livingston Ford Mercury, Inc. v. Haley, 997 S.W.2d 425, 430 (Tex. App.—Beaumont 1999, no pet.) (reciting
testimony that “account is just and true,” but reversing and remanding case for material fact issue presented
by conflicting summary judgment evidence). Texas courts that have reviewed and affirmed the granting of a
summary judgment on a sworn account claim have noted that the movant in those cases provided clear,
undisputed testimony as to the justness of the outstanding accounts. See, e.g., Site Work Group, Inc., 171 S.
W.3d at 514 (stating that affidavit provided evidence “that the sales prices of the materials were reasonable,
and the usual and customary prices for such materials”); United Bus. Machs., 792 S.W.2d at 264 (“The
reasonableness of the prices charged, and the fact that appellant agreed to pay the prices charged, was
proven by affidavit.”). Here, Mena did not testify in her affidavit that the rates for the electrical services were
charged in accordance with an agreement or were usual, reasonable, or customary.
Addressing this point, Reliant, in its briefing, concedes that it did not present in the summary judgment
record an actual agreement, which could have conclusively established the justness of the account. Instead,
Reliant contends that there is at least some evidence in the record that would sustain a finding by the trial
court that the parties had an ongoing business relationship and, thus, a further implied finding that either the
prices charged were usual, customary, and reasonable or there was some sort of ongoing business
agreement regarding the prices charged. Specifically, Reliant states in its briefing that previous payments
made by the Sunmarts “would reflect that there was evidence before the trial [court] to sustain its finding that
there was an agreement related to the price of the electrical services charged.”
The invoices and summaries attached to Mena’s affidavit reflect that Sunmart # 139 had paid Reliant for
electrical services based upon terms and prices that, in some cases, were very similar to, or even more
favorable than, the terms and prices applying to the outstanding amounts on which the Sunmarts defaulted.
However, other fluctuations in the terms of the invoices defeat Reliant’s claim that these documents
established, as a matter of law, the justness of the account, that there was some sort of implicit agreement to
pay all the charges, or that the prices were reasonable, usual, or customary. In regard to Sunmart # 352,
there is no evidence showing that the Sunmarts ever made payments on this account. Footnote Additionally,
one of the invoices for this account also included charges for multiple-usage periods, and Reliant does not
provide any evidence or explanation that such charges were in accordance with an agreement or were
customary or usual. Footnote We conclude that Reliant failed to conclusively establish that the amounts of
the outstanding accounts were just, and, thus, that Reliant failed to establish its sworn account claim as a
matter of law. Footnote
In regard to Reliant’s quantum meruit claim, Reliant, in its briefing, repeats its suggestion that the evidence
before the trial court allowed the court to make certain “reasonable inferences” as a basis for granting the
summary judgment. If the trial court had entered its final judgment following a brief bench trial, Reliant’s
arguments would be more relevant. However, to obtain a summary judgment on its quantum meruit claim,
Reliant was required to conclusively prove, as a matter of law, that (1) valuable services were rendered or
materials furnished; (2) for the person sought to be charged; (3) which services and materials 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 was expecting to be
paid by the person sought to be charged. Speck v. First Evangelical Lutheran Church of Houston, 235 S.W.
3d 811, 815 (Tex. App.—Houston [1st Dist.] 2007, no pet.). The measure of damages for a quantum meruit
claim is the reasonable value of the work performed. Johnston v. Kruse, 261 S.W.3d 895, 902 (Tex. App.—
Dallas 2008, no pet.) (setting forth affidavit testimony regarding “reasonable pay” for services).
Reasonable value may be established through lay testimony. See id. However, as noted above, Mena, in her
affidavit, did not testify that the invoices and account records presented by Reliant contain reasonable and
customary charges for Reliant’s electrical services. Rather, Mena simply stated that the invoices accurately
reflected Reliant’s charges and that all lawful credits were made. Mena did not provide testimony
establishing, as a matter of law, that Reliant may recover through its quantum meruit claim the amounts set
forth in the outstanding invoices. Footnote
Accordingly, we hold that the trial court erred in granting summary judgment in favor of Reliant on either its
sworn account or quantum meruit claims.
We sustain the Sunmarts’ third issue. Footnote
Conclusion
We reverse the judgment of the trial court and remand for further proceedings consistent with our opinion.
Terry Jennings
Justice
Panel consists of Justices Jennings, Higley, and Sharp.