Tex-On Motor Center v. Trans South Financial Corporation, Roy D. Fitzpatrick and Marsha J. Fitzpatrick

Dismissed in Part and Reversed and Remanded in part and Memorandum Opinion filed March 16, 2006 Dismissed in Part and Reversed and Remanded in part and Memorandum Opinion filed March 16, 2006. In The Fourteenth Court of Appeals _______________ NO. 14-04-00366-CV _______________ TEX‑ON MOTOR CENTER, Appellant V. TRANSOUTH FINANCIAL CORPORATION, ROY D. FITZPATRICK AND MARSHA J. FITZPATRICK, Appellees _____________________________________________________ On Appeal from the Civil County Court No. 4 Harris County, Texas Trial Court Cause No. 793,269 _____________________________________________________ M E M O R A N D U M   O P I N I O N Tex-On Motor Center (ATex-On@) appeals from a temporary injunction and a final judgment in favor of Roy and Marsha Fitzpatrick (the AFitzpatricks@) and TranSouth Financial Corporation (ATranSouth@) in their suit for conversion damages. With respect to the temporary injunction, Tex-On contends the trial court erred by refusing to grant a new hearing. With respect to the final judgment, Tex-On contends there was (1) insufficient evidence to support the damage award, and that the trial court erred by (2) permitting TranSouth and the Fitzpatricks to receive a double recovery, (3) refusing to grant Tex-On=s plea in abatement and referral to arbitration, (4) erroneously admitting into evidence a copy of a contempt order with the amount of the fine redacted, (5) refusing to grant a new trial as to all issues, and (6) submitting a damage issue based on Aloss of use.@ We dismiss the complaint as to the temporary injunction, reverse the final judgment, and remand. I. Factual and Procedural Background In February 2003, the Fitzpatricks= vehicle was towed to Tex-On for repairs to the engine. The Fitzpatricks initially agreed to pay $3,100 for the repairs; however, the parties dispute whether Fitzpatrick later gave verbal consent to pay $4,960.78 for the repairs. In any event, after the work was performed, Tex-On demanded $4,960.78 for the repairs. The Fitzpatricks refused to pay the higher price, and the vehicle remained on Tex-On=s premises for an extended period of time. Tex-On sent a letter to the Fitzpatricks and TranSouth, the holder of a purchase money security interest in the vehicle, notifying both parties that Tex-On had a worker=s lien on the vehicle and intended to sell the vehicle if the repair costs were not paid. Upon receiving notice of Tex-On=s intent, TranSouth filed suit against Tex-On and the Fitzpatricks, seeking, in part, a declaratory judgment that TranSouth=s perfected security interest in the vehicle was valid and enforceable, and that TranSouth was entitled to immediate possession of the vehicle. Tex-On filed cross-claims against the Fitzpatricks for breach of contract, and the Fitzpatricks filed counter-claims against Tex-On for conversion of the vehicle. TranSouth obtained a temporary restraining order enjoining Tex-On from selling the vehicle. Later, the trial court issued a temporary injunction requiring Tex-On to immediately surrender possession of the vehicle to TranSouth. Tex-On was served with the temporary injunction, but before surrendering possession, it removed the engine from the vehicle, rendering the vehicle inoperable. TranSouth filed a motion for contempt against Tex-On, alleging that Tex-On failed to comply with the temporary injunction. Following a contempt hearing, the trial court found Tex-On in contempt and assessed a fine against Tex-On in the amount of $6,761. The fine represented the price Tex-On sought to charge the Fitzpatricks for repairing the vehicle plus attorney=s fees of $1,800. The trial court directed that the contempt fine be paid to TranSouth for the benefit of the Fitzpatricks= account.[1] Subsequently, a jury trial was held on all parties= claims. The jury found that Tex-On had converted the vehicle and awarded conversion damages to TranSouth and the Fitzpatricks in the respective amounts of $10,000 and $6,400. The jury also found against Tex-On on its cross-claim for breach of contract. The trial court entered judgment on the jury=s verdict. Tex-On filed a motion for new trial based on newly discovered evidence. The trial court granted Tex-On=s motion for new trial on its breach of contract claim against the Fitzpatricks, but denied the motion as to all other claims. The trial court signed a modified judgment severing Tex-On=s breach of contract claim against the Fitzpatricks, and judgment was entered as to all other claims. Tex-On filed this appeal from the modified judgment. II. Temporary Injunction In its first issue, Tex-On challenges the trial court=s order overruling the motion to vacate the temporary injunction and grant a Anew trial.@ However, we are without jurisdiction to review the order concerning the temporary injunction. In addition, the trial court=s final judgment rendered Tex-On=s complaint relating to the temporary injunction moot. In general, a judgment must be final in order for a party to pursue an appeal of the judgment. Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). However, an interlocutory appeal of an order denying a motion to dissolve a temporary injunction is statutorily authorized.[2] Tex. Civ. Prac. & Rem. Code Ann. ' 51.014(a)(4) (Vernon Supp. 2005). An interlocutory appeal is an accelerated appeal for which notice must be filed within twenty days after the order is signed. Tex. R. App. P. 26.1(b) & 28.1. Here, because Tex-On failed to timely perfect an interlocutory appeal of the trial court=s order, we now lack jurisdiction to address the complaint. See Bayoud v. Bayoud, 797 S.W.2d 304, 312 (Tex. App.CDallas 1990, writ denied); Cellular Mkt., Inc. v. Houston Cellular Tel. Co., 784 S.W.2d 734, 735 (Tex. App.CHouston [14th Dist.] 1990, no writ). Moreover, the trial court has already tried the cause on the merits and entered final judgment. A final judgment renders an appeal relating to a temporary injunction moot. See Isuani v. Manske-Sheffield Radiology Group, P.A., 802 S.W.2d 235, 236 (Tex. 1991) (per curiam). Accordingly, we dismiss the portion of Tex-On=s appeal concerning the temporary injunction as moot and for want of jurisdiction. II. Final Judgment In its remaining issues, Tex-On appeals from the final judgment awarding TranSouth and the Fitzpatricks the respective amounts of $10,000 and $6,400 for conversion damages. In its third and fifth issues, Tex-On contends that the trial court erred by refusing to grant its plea in abatement and motion for new trial. In its second, fourth, sixth, and seventh issues, Tex-On challenges the admission of evidence and the damages awarded for conversion. We will first address the plea in abatement issue as it is relevant to the entire judgment. We will next address the denial of the motion for new trial. Because we ultimately conclude the trial court abused its discretion by denying the motion for new trial, we do not reach Tex-On=s remaining issues challenging the admission of evidence and the damages award. A. Motion to Abate In its third issue, Tex-On contends that the trial court erred by refusing to grant its plea in abatement wherein Tex-On sought referral of the matter to arbitration. Tex-On argues that it was entitled to resolution of the dispute through binding arbitration because the repair contract signed by Fitzpatrick provided that disputes between the parties were to be resolved by arbitration. Pursuant to Texas Rule of Civil Procedure 175, a non-jurisdictional plea in abatement is waived if it is not urged before trial on the merits. See Tex. R. Civ. P. 175; Garcia v. Texas Employers= Ins. Ass=n, 622 S.W.2d 626, 630 n.3 (Tex. App.CAmarillo 1981, writ ref=d n.r.e.). Although Tex-On argues that Athe request to abate was timely,@ the appellate record fails to show that a motion to abate was filed in the trial court or that the motion was brought to the court=s attention prior to trial. Therefore, we conclude that Tex-On has failed to preserve this issue for review. Accordingly, we overrule Tex-On=s third issue. B. Motion for New Trial In its fifth issue, Tex-On contends that the trial court erred by refusing to grant a new trial as to all issues based on newly discovered evidence. At trial, Tex-On=s employee, Joe Caney, testified that he called Roy Fitzpatrick on March 7, 2003 and that Fitzpatrick agreed to pay $4,968.71 for the work to be performed by Tex-On. Tex-On also introduced a garage repair order which indicates that on March 7, 2003 at 8:40 a.m., Fiztpatrick agreed during a telephone conversation to pay $4,960.78 for the work. However, Fitzpatrick testified that he did not have a telephone conversation with representatives from Tex-On on March 7. At the hearing on the motion for new trial, Tex-On argued that newly discovered evidence proved that Fitzpatrick committed perjury during trial. Specifically, Tex-On argued that Fitzpatrick=s cellular phone records, which were obtained after trial, showed that contrary to his testimony, he received a four-minute phone call from Tex-On the day he allegedly agreed to the higher price for the repairs. We review a trial court=s ruling on a motion for new trial based on newly discovered evidence for an abuse of discretion. Jackson v. Van Winkle, 660 S.W.2d 807, 809 (Tex. 1983), overruled on other grounds by Moritz v. Preiss, 121 S.W.3d 715 (Tex. 2003). A trial court abuses its discretion when it acts in an arbitrary and unreasonable manner or without reference to any guiding principles. Cire v. Cummings, 134 S.W.3d 835, 838B39 (Tex. 2004). A party seeking a new trial based on newly discovered evidence must show that (1) the evidence has come to his knowledge since trial, (2) the failure to discover the evidence before trial was not due to lack of diligence, (3) the new evidence is not cumulative, and (4) the new evidence is so material that it would probably produce a different result if a new trial were granted. Jackson, 660 S.W.2d at 809. Here, the trial court found the first three criteria were satisfied, but that the new evidence was material only to Tex-On=s breach of contract claim against the Fitzpatricks. The trial court therefore granted Tex-On=s motion for a new trial as to the breach of contract claim, but denied the motion as to the conversion claims. The trial court then severed the breach of contract claim from the conversion claims, and entered final judgment on the conversion claims. Although we question the trial court=s determination that the cell phone records satisfied the first three criteria for granting a new trial based on newly discovered evidence, TranSouth and the Fitzpatricks do not appeal the trial court=s order granting a new trial on the breach of contract claim. The trial court specifically based its ruling on the fourth criteria.[3] Tex-On contends that the trial court abused its discretion with respect to the fourth criteria by arbitrarily finding the evidence material to Tex-On=s breach of contract claim but immaterial to TranSouth=s and the Fitzpatricks= conversion claims against Tex-On. We agree. At trial and at the hearing on the motion for a new trial, counsel for TranSouth and the Fitzpatricks argued that the jury could find conversion based solely on Tex-On=s removal of the engine in violation of the temporary injunction order.[4] In denying Tex-On=s motion for a new trial with respect to conversion, the judge found that the jury=s verdict was based on Tex-On=s removal of the engine, and concluded that the new evidence concerning repair authorization made Ano difference whatsoever@ with respect to the conversion claims. This finding was based on an incorrect characterization of the law. The purpose of a temporary injunction is to Apreserve the status quo of the litigation=s subject matter pending a trial on the merits.@ Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). The customary proceeding for the violation of an order granting injunctive relief is a contempt proceeding. Credit Bureau of Laredo, Inc. v. State, 515 S.W.2d 706, 710B11 (Tex. Civ. App.CSan Antonio 1974), aff=d, 530 S.W.2d 288 (Tex. 1975). In contrast, an act of conversion gives rise to a cause of action for damages and is defined as Athe wrongful exercise of dominion and control over another=s property in denial of or inconsistent with his rights.@ Green Intern, Inc. v. Solis, 951 S.W.2d 384, 391(Tex. 1997). Here, TranSouth obtained a temporary injunction requiring Tex-On to surrender possession of the vehicle.[5] The merits of the underlying conversion claims were not, however, decided by issuance of the order. Therefore, a violation of the order did not render Tex-On automatically liable for conversion damages. Instead, any liability for conversion was based on TranSouth=s and the Fitzpatricks= underlying conversion causes of action. TranSouth alleged in its pleadings that Tex-On converted its security interest by acting inconsistently with TranSouth=s rights as the holder of a first-priority security interest. The Fitzpatricks also alleged conversion against Tex-On, claiming that they were entitled to possession of the vehicle. Tex-On=s defense to the conversion claims was that it held a priority worker=s lien entitling it to possession of the vehicle.[6] Section 70.001(a)(1) of the Texas Property Code provides in relevant part that a worker who repairs a vehicle may retain possession until the amount due under the contract for the repairs is paid. Tex. Prop. Code Ann. ' 70.001(a)(1) (Vernon Supp. 2005). Therefore, the new evidence regarding authorization for increased repair costs was relevant to whether Tex-On had a right to retain possession of the vehicle. In light of the new evidence, if a jury found that the Fitzpatricks authorized the additional cost of the repairs and subsequently breached the contract by refusing to pay for the repairs, Tex-On would have established that it had a valid lien on the vehicle. See id; Drake Ins. Co. v. King, 606 S.W.2d 812, 818 (Tex. 1980) (only work authorized by owner gives rise to possessory lien). If Tex-On had a valid lien, then it had a right to retain possession of the vehicle and did not wrongfully exercise control of the vehicle in a manner inconsistent with the rights of TranSouth or the Fitzpatricks. See Tex. Bus. & Com. Code Ann. ' 9.333(b) (Vernon 2002) (providing in relevant part that A[a] possessory lien on goods has priority over a security interest in the goods@); Tex. Prop. Code Ann. ' 70.001 (granting a possessory worker=s lien on a vehicle until the amount due under the contract for repairs is paid); Solis, 951 S.W.2d at 391 (defining conversion as the wrongful exercise of control over another=s property that is inconsistent with the property owner=s rights). A finding that the Fitzpatricks authorized the repairs and Tex-On held a valid worker=s lien on the vehicle would thus negate TranSouth=s and the Fitzpatricks= conversion claims. Therefore, the evidence regarding authorization for increased repair costs cannot be material to Tex-On=s breach of contract claim without also being material to TranSouth=s and the Fitzpatricks= conversion claims. The trial court acted arbitrarily and without reference to guiding principles by finding that evidence material to the breach of contract claim was not also material to the conversion claims. Accordingly, the trial court abused its discretion by denying the motion for new trial with respect to the conversion claims. We sustain Tex-On=s fifth issue. We reverse the trial court=s judgment and remand the case for further proceedings consistent with this opinion. /s/ Charles W. Seymore Justice Judgment rendered and Memorandum Opinion filed March 16, 2006. Panel consists of Justices Edelman, Seymore, and Guzman. [1] We note that a private party cannot recover damages in a contempt proceeding. Galtex Prop. Investors, Inc., v. City of Galveston, 113 S.W.3d 922, 928 (Tex. App.CHouston [14th Dist.] 2003, no pet.). In addition, the maximum penalty a district court can assess under its criminal contempt power is a fine of $500 or six months confinement in the county jail. Tex. Gov=t Code Ann. ' 21.002(b) (Vernon 2004). However, Tex-On did not seek mandamus relief from the trial court=s contempt order, and the validity of a contempt order may not be reviewed on direct appeal. See Rosser v. Squier, 902 S.W.2d 962, 962 (Tex. 1995); Galtex, 113 S.W.3d at 927. [2] Although Tex-On=s motion was entitled ADefendant=s Motion for a New Trial,@ Tex-On requested that the trial court vacate the order granting temporary injunctive relief and grant a rehearing. Accordingly, we will treat Tex-On=s motion as a motion to dissolve the temporary injunction. See Cellular Mkt. Inc. v. Houston Cellular Tel. Co., 784 S.W.2d 734, 735 (Tex. App.CHouston [14th Dist.] 1990, no writ) (holding that a Amotion to set aside was essentially a motion to dissolve the temporary injunction@). [3] Because the trial court specifically based its ruling on the fourth criteria, we do not address the other three criteria. [4] Tex-On was held in contempt for removing the engine of the vehicle in violation of the order granting temporary injunctive relief. The contempt order was then introduced as evidence at trial for the conversion claims, and both TranSouth and the Fitzpatricks argued at closing that because Tex-On was held in contempt, the removal of the engine was an act of conversion. [5] An applicant for a temporary injunction must plead and prove the following: (1) a cause of action; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). [6] Although TranSouth, the Fitzpatricks, and Tex-On all claimed that they were entitled to possession, the jury was not instructed to determine their respective rights in the vehicle. In consequence, the jury assessed conversion damages based on the retail value of the car to both TranSouth and the Fitzpatricks. Additionally, the trial court had previously held Tex-On in contempt and ordered it to pay damages to TranSouth for the benefit of the Fitzpatricks= account in an amount reflecting the cost of the engine and attorney=s fees. It is not clear from the record which party now has possession of the car. If the Fitzpatricks also received the car with the repaired engine, they obtained a quadruple recovery. In its second issue, Tex-On contends the final damages awarded for conversion constituted a double recovery in light of the prior contempt award. However, because we conclude that the trial court abused its discretion in granting a new trial as to the breach of contract claim but not the conversion claims, we do not reach Tex-On=s second issue.