Patti Hildreth v. Merle Norman Cosmetics, Inc.

Criminal Case Template COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS PATTI HILDRETH, Appellant, v. MERLE NORMAN COSMETICS, INC., Appellee. § § § § § No. 08-02-00402-CV Appeal from the 143rd District Court of Ward County, Texas (TC# 00-05-19734-CVW) M E M O R A N D U M O P I N I O N This is an appeal from a granting of a summary judgment. For the reasons stated, we affirm the judgment of the trial court. I. SUMMARY OF THE EVIDENCE Appellant, Patti Hildreth, entered into a "studio agreement" with Appellee, Merle Norman Cosmetics, Inc., which gave her the right to sell and distribute Merle Norman products at a studio located at S. Main Avenue, Monahans, Texas. She also opened a second studio in Alpine, Texas. Appellant successfully operated her Monahans studio for four and one half years. In January 1998, Appellant was notified by her landlord that the building which housed her studio had been sold and that she needed to vacate the premises within ten days. Appellant agreed to close her business at that location and move out by February 16, 1998. Prior to February, 1998, Appellant contacted Jane Birkholz, a Merle Norman representative, and told her she needed to relocate her studio. Appellant found a building but was told she needed to "clear her account" prior to moving. She sent a check to Merle Norman for $1,548 on January 24, 1998. When Merle Norman claimed the check was not received, she mailed a second check in the amount of $1,681 on February 2, 1998. Merle Norman again claimed it did not receive the checks, so Appellant overnighted a check in the amount of $2,029.48 on February 12, 1998. Appellant never received written approval to relocate her business from Merle Norman and was forced to close her business. Thereafter, Appellant filed suit against Merle Norman for breach of contract and breach of good faith and fair dealing. (1) Merle Norman filed a no-evidence motion for summary judgment. Appellant filed her response alleging the motion was improper because she presented enough evidence to raise a genuine issue of material fact. The lower court granted Appellee's motion for summary judgment, and Appellant filed notice of appeal on September 18, 2002. This appeal follows. (2) II. DISCUSSION Appellant brings two issues on appeal challenging the granting of a no evidence summary judgment. Appellant argues the lower court erred in granting the Appellee's summary judgment because there were genuine issues of material fact concerning Appellee's breach of contract and Appellee's breach of good faith and fair dealing. A. No-Evidence Summary Judgment Standard of Review Under the "no-evidence summary judgment" rule, the movant may move for summary judgment if, after adequate time for discovery, there is no evidence of one or more essential elements of a claim or defense on which the nonmovant would have the burden of proof at trial. Tex. R. Civ. P. 166a(i) (Vernon Supp. 1998). "The motion must state the elements as to which there is no evidence." Id. The reviewing court must grant the motion unless the nonmovant produces summary judgment evidence raising a genuine issue of material fact. Id. Under the no evidence summary judgment standard, the party with the burden of proof at trial will have the same burden of proof in a summary judgment proceeding. See, e.g., Esco Oil & Gas, Inc. v. Sooner Pipe & Supply Corp., 962 S.W.2d 193, 197 n.3 (Tex. App.--Houston [1st Dist.] 1998, pet. denied) (commenting that under Rule 166a(i) "the plaintiff as the nonmovant [has] the burden to raise a triable issue on each element essential to the plaintiff's case against each defendant."). The San Antonio Court of Appeals states the applicable standard of review for no-evidence summary judgments as follows: "'A no-evidence summary judgment is essentially a pretrial directed verdict,' and we apply the same legal sufficiency standard in reviewing a no-evidence summary judgment as we apply in reviewing a directed verdict." Moore v. K Mart Corp., 981 S.W.2d 266, 269 (Tex. App.--San Antonio 1998, pet. denied)); see also Hon. David Hittner & Lynne Liberato, Summary Judgments in Texas, 34 Hous. L. Rev. 1303, 1356 (1998) (no evidence summary judgment is essentially pretrial directed verdict). A no-evidence summary judgment is properly granted if the nonmovant fails to bring forth more than a scintilla of probative evidence to raise a genuine issue of material fact as to an essential element of the nonmovant's claim on which the nonmovant would have the burden of proof at trial. See Tex. R. Civ. P. 166a(i); Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997), cert. denied, 523 U.S. 1119, 118 S.Ct. 1799, 140 L.Ed.2d 939 (1998). If the evidence supporting a finding rises to a level that would enable reasonable, fair-minded persons to differ in their conclusions, then more than a scintilla of evidence exists. See Havner, 953 S.W.2d at 711. Less than a scintilla of evidence exists when the evidence is "so weak as to do no more than create a mere surmise or suspicion" of a fact, and the legal effect is that there is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). B. Breach of Contract In Appellant's Issue No. One, she argues there was sufficient evidence to raise a genuine issue of material fact as to Appellee's breach of contract. The elements of a breach of contract are: 1) the existence of a valid contract, 2) performance or tendered performance by the Plaintiff, 3) breach of the contract by Defendant, and 4) damages to the Plaintiff resulting from the breach. Prudential Sec., Inc. v. Haugland, 973 S.W.2d 394, 396 (Tex. App.--El Paso 1998, writ den'd). Appellee's motion for no evidence summary judgment stated Appellant failed to provide evidence for: 1) performance, 2) breach of the contract by the Defendant, and 3) damages to the Plaintiff as a result from the breach. Since Appellee's motion stated the elements as to which there is no evidence, Appellant must produce summary judgment evidence raising a genuine issue of material fact to overturn Appellant's motion. Tex. R. Civ. P. 166a(i) (Vernon Supp. 1998). 1. Performance Appellee asserts there is no evidence Appellant performed under the studio agreement because she did not operate the studio in a "business like . . . , keeping the Studio open at all hours regularly kept by other retail establishments in your neighborhood or area." Appellee claims Appellant did not perform under the agreement because she only operated her store one day per week rather than five days a week. Furthermore, Appellee asserts Appellant did not perform under the agreement because Appellant relocated her business without written approval by the company. In order to determine whether Appellant performed under the contract, this Court must give effect to the parties intentions as expressed in the contract. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex. 1968) (citing Woods v. Sims, 273 S.W.2d 617, 620 (Tex. 1954)). If a written instrument is so worded that it can be given a certain or definite legal meaning then it is not ambiguous. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). The parties unambiguously defined performance in the contract as follows: IV. Your Obligations in Operating Your Studio You are expected to manage and operate your Studio in a businesslike manner, including the maintaining of the Studio in a clean and sanitary condition and attractive appearance, keeping the Studio open at all hours regularly kept by other retail establishments in your neighborhood or area and causing all beauty advisors and sales personnel to be fully trained. Appellant maintains she performed under the contract because she operated her business since 1993 and continued to operate the business until she was "forced out of the premises" in 1998. Appellant's affidavit and deposition provided evidence that her business was operational between these years. However, mere operation of the business was not sufficient evidence to prove performance under the terms of the contract. The language of the contract specifically stated Appellant was obligated to operate her studio in a "businesslike manner" as well as "[keep] the Studio open at all hours regularly kept by other retail establishments." The evidence produced for summary judgment indicates Appellant admitted that she had failed to keep regular business hours. Appellant's deposition testimony stated:Q: From June - the middle of June of '96 to February the 16th of '98 the store in Monahans would be open just one day a week? A: Definitely one day a week. Other times, if I was there on the weekend, I'd open up on Saturdays, sometimes on Sundays. Q: Didn't your agreement with Merle Norman provide the store should remain open five days a week? A: I believe that was in our studio contract, yes. Q: And you were keeping it open one day a week most of the time? A: Yes. Furthermore, Appellant contends Appellee could have objected to the number of hours Appellant operated her business, but it chose not do so. In failing to object, Appellant asserts Appellee was aware of and consented to her hours because Appellant had another Merle Norman studio in Alpine, Texas. Appellant's argument is based upon course of performance which is a contract rule of construction. The rule course of performance states: Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement. Southwest Indus. Imp. & Exp., Inc. v. Borneo Sumatra Trading, 666 S.W.2d 625, 629 (Tex. App.--Houston [1st Dist.] 1984, writ ref'd n.r.e.); Tex. Bus. & Com. Code Ann. § 2.208 (a) (Vernon 1994). However, if the contract is unambiguous then the conduct of the parties is immaterial to determine its meaning. E. Montgomery County Mun. Util. Dist. No. 1 v. Roman Forest, 620 S.W.2d 110, 112 (Tex. 1981). Thus, Appellant's assertion that Appellee consented to her irregular business hours by failing to object is irrelevant because the contract is unambiguous. Additionally, Appellee asserts Appellant failed to perform under the contract because she "attempted to relocate" her studio without prior written approval by Merle Norman. The contract specifically states, "Before you relocate or transfer the ownership of your Studio, you must have written Home Office approval". Both parties agree Appellant notified Merle Norman in January 1998 seeking relocation approval for her business. However, she never received written approval. Appellant acknowledges she never received written approval to relocate her business, but she maintains verbal approval was given and that written approval would be received upon settling her debt. Appellant's affidavit stated she was informed by Merle Norman representatives Kathy Escarrega, Jane Birkholz, and Robin Wilson that "all departments" had verbally approved her relocation but she needed to "clear her account with Merle Norman Cosmetics" in order to receive written approval. Thereafter, Appellant attempted to clear her account by sending a $1,548 check, but according to Merle Norman records the check was not received. Appellant then mailed two more checks in an effort to pay off her credit. Merle Norman records show they were on notice that Appellant was sending payment to clear up her account, but indicated they never received the checks. Appellant asserts Appellee's refusal to acknowledge receipt of the checks allowed it to "[manufacture] a reason for refusing to allow [Appellant] to relocate her business". In support of this assertion, Appellant produced a deposition from Merle Norman representative, Jane Birkholz, in which she stated written approval for Appellant's business relocation was denied on the basis of her credit. Although Appellant asserts she made attempts to clear her account in order to obtain written approval, the express language of the contract is clear and unambiguous. If the contract is so worded that it can be given a certain interpretation, then it is not ambiguous and can be construed as a matter of law. Lenape Res. Corp. v. Tennessee Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex. 1996) (citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). The language specially states "written home office approval" must be obtained before Appellant relocates her business. Appellant has acknowledged the fact she never obtained written approval to relocate her business, thus Appellant admits she did not comply with the terms of the contract. Furthermore, Appellant's assertion that written approval would be granted upon the clearing of her account is not supported by more than a scintilla of evidence. First, Appellant only provides the deposition of Jane Birkholz as evidence in support of her cause of action. Jane Birkholz' deposition, however, is contrary to Appellant's account. Birkholz' testimony never mentions giving Appellant verbal approval for relocation nor did it indicate that written approval would be granted upon the clearing of her account. Secondly, Appellant has failed to provide depositions of Kathy Escarrega or Robin Wilson indicating verbal approval was granted or that written approval would be given if she cleared her account. Based upon the evidence presented, Appellant has done no more than "create a mere surmise or suspicion" that she would have been granted written approval upon clearing her account. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). Therefore, the legal effect is that there is no evidence, and this portion of Appellant's first issue is overruled. Id. 2. Breach by Appellee Appellee asserts Appellant failed to produce evidence showing Appellee breached the studio agreement. Appellee argues Appellant's failure to operate her business during regular business hours and her relocation without written approval provided them with "sufficient business or legal cause" to deny Appellant's request for relocation and discontinue selling its products to her. In order to determine if Appellee breached the studio agreement, this Court must give effect to the parties intentions as expressed in the contract. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex. 1968) (citing Woods v. Sims, 154 Tex. 59, 273 S.W.2d 617, 620 (1954)). The agreement stated the following: V. Your Obligations on Terminating Your Studio The Company will sell its products to you for as long as you make timely payments for your purchases, and observe the other requirements of this Studio Agreement. In the event that the Company believes that you have failed to observe these requirements, you will be given at least (30) days' notice (or such greater notice as required by applicable law), and an opportunity to comply with them. The contract plainly states notice will be given in "the event that the Company believes [Appellant] failed to observe [the contract] requirements". Here, the language of the contract is unambiguous because it is not susceptible to more than one reasonable interpretation. Med. Towers, Ltd. v. St. Luke's Episcopal Hosp., 750 S.W.2d 820, 822 (Tex. App.--Houston [14th Dist.] 1988, writ denied) (citing Maxwell v. Lake, 674 S.W.2d 795, 802 (Tex. App.--Dallas 1984, writ ref'd n.r.e.); Summit Ins. Co. v. Cent. Nat'l Bank of Houston, 624 S.W.2d 222, 226 (Tex. App.--Houston [1st Dist.] 1981, writ ref'd n.r.e.)). Since the contract is unambiguous, this Court can construe the contract as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Appellant maintains Appellee breached the contract because Merle Norman failed to provide her with notice to cure any contract violations as specified by the agreement. As previously determined, this Court found Appellant failed to perform under the contract because she only operated her business one day per week. Under the contract terms, Appellee is required to give notice when it "believes" there has been non-compliance with the contract terms. Here, Appellant presented evidence proving she breached the contract requirements, but she failed to provide evidence showing Appellee knew of her breach. Appellant's only evidence showing Merle Norman knew Appellant operated one day per week was Appellant's own testimony. Since there is no summary judgment evidence showing Merle Norman "believed" Appellant was in breach of the contract, Appellant failed to provide evidence that invoked the notice requirement. Therefore, Appellant has failed to provide more than a scintilla of evidence showing Appellee breached the contract, and this portion of Appellant's first issue is overruled. 3. Damages Since there was no performance by Appellant and no breach by Appellee, we hold Appellant could not have suffered damages. We therefore find Appellant failed to provide sufficient summary judgment evidence proving she suffered damages, and this portion of Appellant's first issue is overruled. Because Appellant has failed to provide proper summary judgment evidence proving 1) she performed under the contract, 2) Appellee breached the contract, and 3) she suffered damages, we overrule Appellant's Issue No. One in its entirety. C. Good Faith and Fair Dealing In Appellant's Issue No. Two, she argues Appellee breached its duty of good faith and fair dealing because it failed to provide her with written approval for relocation. Under every contract, there is a duty of good faith and fair dealing in the performance of the contract. Tex. Bus. & Com. Code Ann § 1.203 (Vernon 1994). This section of the UCC does not support an independent cause of action for failure to perform or enforce in good faith. Instead failure to perform constitutes a breach of contract or makes unavailable a remedial right or power. N. Nat'l Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 606-607 (Tex. 1998). In order to be actionable as a breach of contract under 1.203 of the UCC, the bad faith conduct must relate to some aspect of performance under the terms of the contract. Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477, 482 (Tex. App.--Corpus Christi 1989, writ denied). Because we have found Appellant failed to provide more than a scintilla of evidence showing Appellee breached the contract, Appellant cannot show Appellee acted in bad faith. We therefore overrule Appellant's Point of Error No. Two in its entirety. Having overruled each of Appellant's issues on review, we affirm the judgment of the trial court. April 6, 2004 _______________________________________ RICHARD BARAJAS, Chief Justice Before Panel No. 3 Barajas, C.J., Larsen, and Chew, JJ. 1. Appellant also sued Merle Norman for conspiring and tortiously interfering with her franchise agreement. Appellee filed a supplemental motion for summary judgment claiming Appellant did not produce sufficient evidence to raise a material fact on the issue of conspiracy. Appellant's motion for summary judgment was granted. Appellant does not challenge the trial court's granting of summary judgment on the issue of conspiracy. 2. This case was previously before the Court. Hildreth v. Merle Norman Cosmetics, Inc., No. 08-00-00278-CV (Tex. App.--El Paso Dec. 21, 2001, no pet.) (not designated for publication), 2001 WL1640689.