Robert Moe and Cynthia Moe v. Option One Mortgage Corporation

Affirmed and Memorandum Opinion filed January 20, 2009 Affirmed and Memorandum Opinion filed January 20, 2009. In The Fourteenth Court of Appeals _______________ NO. 14-07-00550-CV _______________ ROBERT MOE AND CYNTHIA MOE, Appellants V. OPTION ONE MORTGAGE CORPORATION, Appellee On Appeal from the 55th District Court Harris County, Texas Trial Court Cause No. 2006-35223 M E M O R A N D U M    O P I N I O N Robert and Cynthia Moe appeal the summary judgment granted in favor of the holder of their home mortgage note on their claims for breach of contract, fraud, fraudulent inducement, and negligent misrepresentation. Because the Moes produced less than a scintilla of evidence in support of their claims, we affirm. I. Factual and Procedural Background In 1997, Robert and Cynthia Moe obtained a thirty-year mortgage from Option One Mortgage Corporation (AOption One@) in the amount of $40,300.00, to be repaid in monthly installments of $467.96. The Moes also were required to pay property taxes and maintain hazard insurance. In August 2001, Robert Moe moved to California, and his family followed in January 2002. The house was left vacant, and the Moes eventually stopped paying property taxes and hazard insurance premiums. In 2004, the Moes defaulted on the loan, but pursuant to a forbearance agreement, Option One agreed to allow the Moes to cure the default. Under the terms of the Repayment Plan, the Moes were required to make an immediate payment of $5,742.57 and six monthly payments of $1,463.57. The last payment to cure the default under the Repayment Plan was due on January 20, 2005, and the Moes were to resume their usual scheduled payments on February 1, 2005. The Moes failed to make the February 1, 2005 payment, and by February 15, 2005, the Moes= delinquent property taxes totaled $6,084.12. Cynthia Moe testified that she called Option One on February 15, 2005 about making the payment due that month and was told that the loan was in default. Option One also incorrectly informed her that it had not received the January payment. According to Cynthia, an Option One employee told her that the company would straighten out the accounting problem and call her back in a day or two; however, Cynthia stated that the employee never called her again. She telephoned Option One again at the end of February to discuss the mortgage payments, and again was told that the loan was in foreclosure. The Moes made no further payments, and on May 10, 2005, Option One paid the $731.71 premium for hazard insurance on the property. Robert Moe testified that he visited the house in August 2005 to clean and repair it before listing it for sale. During that visit, Robert discovered Scott McDonald on the property. McDonald had entered the house and removed cleaning supplies and Robert=s tools before breaking the keys off in the house=s locks to prevent entry. During this process, McDonald had locked himself out of the house and broken a window to reenter; after exiting the building, he nailed boards over the broken window. Robert testified that when he confronted McDonald, McDonald returned Robert=s tools and identified himself as an employee of Texas Home Solutions. McDonald explained that he was on the premises to secure the property. Robert testified that he telephoned Option One and spoke to a representative who apologized and stated that Option One would send another company to the house to fix the locks. According to Robert, the Option One employee stated that he would tell the next company to contact Robert to arrange a meeting. A few weeks later, Robert received a phone call from a former neighbor who stated that Atwo guys from some company@ had entered into the Moes= house and were loading a truck with items from inside the house. Robert testified that he spoke with one of the men on the telephone, and the unidentified man asked, AWhere are you? You are supposed to be meeting us here.@ Robert explained that he was in California and would not be in Houston for another week. He then telephoned Option One, and according to Robert, A[t]hey told me that they couldn=t believe that the company would show up like that that [sic] they authorized to come out there. . . . He told me they weren=t supposed to be there until they had made an appointment with me.@ Robert further stated that the Option One representative Agave me the impression that he was going to take care of everything.@ According to Robert, he spoke to another Option One representative in September 2005 and was told that the house was in foreclosure, which could be prevented only by payment of the balance on the loan. In April 2006, Option One began foreclosure proceedings. Although Option One scheduled a foreclosure sale for June 6, 2006, the Moes obtained a restraining order on June 5, 2006 to prevent the sale. The next day, the house was destroyed by fire. The Moes sued Option One for breach of contract, fraud, fraudulent inducement, negligent misrepresentation, conversion, and theft. Option One moved separately for traditional and no-evidence summary judgment. Although it was titled differently, the motion for traditional summary judgment included many of the same arguments presented in the motion for no-evidence summary judgment. The trial court granted both motions, and this appeal ensued. II. Issues Presented In four issues, the Moes argue that the trial court erred in granting Option One=s motion for no-evidence summary judgment, because the Moes presented more than a scintilla of summary-judgment evidence to support their claims for breach of contract, fraud, fraudulent inducement, negligent misrepresentation, conversion, and theft. We disagree. III. Standard of Review We review summary judgments de novo, Valence Operating Co. v. Dorsett,[1] and where the trial court grants the judgment without specifying the grounds, we affirm the summary judgment if any of the grounds presented are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872B73 (Tex. 2000). We consider all grounds the appellant preserves for review that are necessary for final disposition of the appeal. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex. 1996). Here, the appellees moved for summary judgment on both traditional and no‑evidence grounds; thus, we apply the familiar standard of review appropriate for each type of summary judgment, taking as true all evidence favorable to the nonmovant, and indulging every reasonable inference and resolving any doubts in the nonmovant=s favor. See Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004) (traditional summary judgment); King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (no‑evidence summary judgment). In a traditional motion for summary judgment, the movant bears the burden to show that there is no genuine issue of material fact and 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). To be entitled to traditional summary judgment, a defendant must conclusively negate at least one essential element of each of the plaintiff=s causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Evidence is conclusive only if reasonable people could not differ in their conclusions. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005). Once the defendant establishes its right to summary judgment as a matter of law, the burden shifts to the plaintiff to present evidence raising a genuine issue of material fact. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678B79 (Tex. 1979). In a motion for no‑evidence summary judgment, the movant represents that there is no evidence of one or more essential elements of the claims for which the non‑movant bears the burden of proof at trial. Tex. R. Civ. P. 166a(i); Dias v. Goodman Mfg. Co., L.P., 214 S.W.3d 672, 675B76 (Tex. App.CHouston [14th Dist.] 2007, pet. denied). We sustain a no‑evidence summary judgment when (a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). ALess 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.@ King Ranch, Inc., 118 S.W.3d at 751 (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). IV. Analysis A. Breach-of-Contract Claim The essential elements of a breach-of-contract claim are (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. Winchek v. Am. Express Travel Related Servs. Co., Inc., 232 S.W.3d 197, 202 (Tex. App.CHouston [1st Dist.] 2007, no pet.). In their first issue, the Moes contend that they presented more than a scintilla of evidence on each element of their breach-of-contract claim to defeat Option One=s motion for no-evidence summary judgment. Specifically, they argue that they performed, tendered performance, or were excused from performing their contractual obligations. They also contend that Option One breached the contract, and that they were damaged by such breach. The evidence is uncontroverted, however, that the Moes (1) failed to make the mortgage payment that was due on February 1, 2005; (2) failed to make any payment thereafter; (3) failed to maintain hazard insurance; and (4) failed to pay property taxes. Thus, the Moes did not perform or tender performance, but instead breached the contract. We therefore overrule the Moes= first issue without reaching their remaining contentions. B. Claim for Tortious Misrepresentation The Moes argue in their second issue that Option One=s misrepresentations concerning the crediting of the final payment under the Repayment Plan constitute an actionable tort independent from Option One=s alleged breach of the Plan=s terms. We disagree. See JCW Elecs., Inc. v. Garza, 257 S.W.3d 701, 705 (Tex. 2008) (AThe precise nature of the claim is ordinarily identified by examining the damages alleged: when the damages are purely economic, the claim sounds in contract . . . .@ (citing Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 495 (Tex. 1991)); Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986) (AWhen the injury is only the economic loss to the subject of a contract itself the action sounds in contract alone.@).[2] Moreover, the Moes allege that the misrepresentation occurred in mid-February 2005, but by that time, the Moes had defaulted on the Repayment Plan. Further, the Moes identify no damages associated with the alleged misrepresentation. We therefore overrule the Moes= second issue. C. Fraud, Fraudulent Inducement, and Negligent Misrepresentation Claims The Moes next contend that they presented more than a scintilla of evidence on each element of their claims of fraud, fraudulent inducement, and negligent misrepresentation. Specifically, the Moes assert they presented evidence that (1) Option One made a representation; (2) the representation was material; (3) the representation was false; (4) Option One knew the representation was false, made the representation recklessly, or made the representation negligently; (5) Option One made the representation with the intent that the Moes act on it; (6) the Moes justifiably relied on the representation; (7) the Moes entered a binding agreement in reliance on the representation; and (8) the representation caused the Moes to suffer damages. These arguments are based on multiple alleged misrepresentations. First, the Moes argue that Option One misrepresented that if they successfully completed payments under the Repayment Plan, they would be able to return to their regularly-scheduled installments; however, the Moes produced less than a scintilla of evidence that this statement is false or that it injured the Moes. Cf. Atl. Lloyds Ins. Co. v. Butler, 137 S.W.3d 199, 215 (Tex. App.CHouston [1st Dist.] 2004, pet. denied) (stating that causes of action for fraud and negligent misrepresentation require proof that a material statement was false); In re Media Arts Group, Inc., 116 S.W.3d 900, 910 (Tex. App.CHouston [14th Dist.] 2003, orig. proceeding [mand. denied]) (stating that the most basic requirement for a fraudulent-inducement claim is a material false representation). The Moes next contend that Option One made misrepresentations about the timeliness of its receipt of the Moes= last payment under the Repayment Plan. However, they produced no evidence of reliance on this statement; to the contrary, the Moes have always disputed it. Cf. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001) (stating that reliance is an essential element of fraud); Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 179B81 (Tex. 1997) (stating that reliance is essential to a claim of fraudulent inducement); Butler, 137 S.W.3d at 215 (stating that reliance is an essential element of negligent misrepresentation). In addition, they produced no evidence that they entered into a binding agreement based on this representation or that they were damaged by the statement. Cf. Haase v. Glazner, 62 S.W.3d 795, 797B97 (Tex. 2001) (stating that a claim for fraudulent inducement presupposes inducement into a binding contract). Third, the Moes assert that Option One instructed them to refrain from sending in their February mortgage payment until Option One called them back. The summary-judgment evidence, however, establishes that the Moes were already in default when the statement was allegedly made in mid-February. By that time, the Moes had already missed the February 1, 2005 mortgage payment and failed to pay property taxes on the premises, and the Moes presented less than a scintilla of evidence that the injuries they allege were caused by Option One=s verbal instructions to them in mid-February rather than by their own failure to honor the terms of the written contract. Cf. Reardon v. LightPath Techs., Inc., 183 S.W.3d 429, 442 (Tex. App.CHouston [14th Dist.] 2005, pet. denied) (stating that damages are an essential element of claims for fraud and negligent misrepresentation). Finally, the Moes contend that Option One made misrepresentations to a realtor about the foreclosure status of the property. Because the trial court sustained Option One=s hearsay objection regarding this testimony, and the Moes do not argue on appeal that this ruling was erroneous, this argument is waived. See Tex. R. App. P. 38.1(h). We overrule the Moes= third issue. D. Claims Relying on Agency In their fourth issue, the Moes argue that the trial court erred in dismissing their conversion and theft claims because there is a genuine issue of material fact regarding whether Texas Home Solutions acted as Option One=s agent. Building on that premise, the Moes contend in their fifth issue that they presented more than a scintilla of evidence that (1) Option One exercised dominion and control over their personal property, or appropriated, secured, or took the Moes= personal property; (2) they owned, possessed, or had the right to immediate possession of that personal property; (3) Option One=s exercise of dominion and control was wrongful or unlawful; (4) Option One took the property with the intent to deprive the Moes of the property; and (5) Option One=s conversion or theft caused the Moes to suffer damages. Because agency is not presumed, the party alleging agency has the burden of proving it. IRS Res., Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007) (per curiam). Essential to the agency relationship is the principal=s right to control the means and details of the process by which the agent is to accomplish the assigned task. Coleman v. Klöckner & Co. AG, 180 S.W.3d 577, 588 (Tex. App.CHouston [14th Dist.] 2005, no pet.). A person may act for and on behalf of another, but if he is not subject to the principal=s control, an agency relationship does not exist. Laredo Med. Group v. Lightner, 153 S.W.3d 70, 72 (Tex. App.CSan Antonio 2004, pet. denied) (en banc). Absent proof of the right to control the means and details of the work performed, only an independent contractor relationship is established. Coleman, 180 S.W.3d at 588. Here, the summary-judgment record contains less than a scintilla of evidence that Texas Home Solutions or its employees acted as Option One=s agents. The Moes rely on Robert Moe=s testimony that after he discovered McDonald at the house, he called Option One and Option One promised to reimburse the Moes; however, the Moes cite no authority supporting their argument that such a statement is evidence that Option One retained the right to control the means and details of work performed on its behalf by Texas Home Solutions or its employees. The Moes further assert that Option One=s consolidated log notes Areveal[] that Option One emailed Texas Home Solutions to rekey the locks and give a set of keys to the Moes.@ Referring to the page of the record cited by the Moes, only one log entry refers to an email, and it contains no mention of keys or locks.[3] Elsewhere in the record, we find two entries mentioning keys and locks, but neither mentions email. These entries are as follows: 8/30/2005 12:55:08 PM CT: JASON SYKES,[[4]] OOMC-UM PROPERTY PRESS. - *****RUSH***** PLEASE HAVE CONTACTOR [sic] CALL MR MOE [phone number] TO GIVE ACCESS TO PROPERTY AND TO REKEY LOCKS. PLEASE HAVE CONTRACTOR ADVISE IF THERE ARE KEYS BROKEN OFF INTO THE LOCKS, IF THE LOCKS HAVE BROKEN KEYS REPLACED [sic]. GIVE A SET OF KEYS TO BORROWER. PHOTOS JS WORKORDER 15117115 HAS BEEN PROCESSED. A later entry states: 9/23/2005 4:43:55 PM CT: JASON SYKES, OOMC-UM PROPERTY PRESS. - ORDERED: 08/30/05 COMPLETED: 09/01/05 U/D: 09/04/05 W/O # 15117115 PER CONTRACTOR KEYS ARE BROKEN OFF IN ALL LOCKS - CONTRACTOR REPLACED 1 LOCK AS INSTRUCTED. CONTACTED MR. MOE WHO BECAME VERY IRATE AND TOLD OUR CONTRACTOR TO GET OFF OF OUR PROPERTY. NO PHOTOS WERE TAKEN. Thus, the log notes indicate that Option One acted through a contractor. Moreover, the company whose alleged employees entered the Moe house in September 2005 is not identified in the summary-judgment record. We therefore overrule the Moes= fourth and fifth issues. V. Conclusion The evidence is uncontroverted that the Moes (a) failed to make the mortgage payment that was due on February 1, 2005; (b) failed to make any payment thereafter; (c) failed to maintain hazard insurance; and (d) failed to pay property taxes. Moreover, there is less than a scintilla of evidence that Texas Home Solutions acted as Option One=s agent rather than as an independent contractor. We therefore overrule the Moes= issues presented on appeal and affirm the judgment of the trial court. /s/ Eva M. Guzman Justice Panel consists of Chief Justice Hedges and Justices Yates and Guzman. [1] 164 S.W.3d 656, 661 (Tex. 2005). [2] AWe must look to the substance of the cause of action and not necessarily the manner in which it was pleaded.@ Jim Walter Homes, Inc., 711 S.W.2d at 617B18. [3] That entry, dated November 28, 2005, reports: AEMAIL TO PHILIP GIOELI THAT FC HAS BEEN ON HOLD SINCE 7/30/05 FOR REPYMT PLAN THAT HAS NOT MATERIALIZED AND LOAN IS CODED ADISATER@ [sic] ASKED HIM TO LOOK AT IT AND LET ME KNOW IF HOLD SHOULD BE REMOVED AND CODE CHANGED.@ [4] The Moes point to no evidence identifying Jason Sykes, and do not explain whether this note records information to or from him.