Horizon 2003, LLC and Midtown Park Development Ltd. v. JKC & Associates, Inc.

Reversed and Remanded and Memorandum Opinion filed May 5, 2011. In The Fourteenth Court of Appeals ___________________ NO. 14-08-00691-CV ___________________ Horizon 2003, LLC and Midtown Park Development, Ltd., Appellants V. JKC & Associates, Inc., Appellee On Appeal from the 412th District Court Brazoria County, Texas Trial Court Cause Nos. 40973 & 40886 MEMORANDUM OPINION Appellants challenge the trial court’s ruling granting summary judgment in two suits on a sworn account. We reverse and remand because the summary judgment evidence does not establish the elements of a sworn account as a matter of law. BACKGROUND JKC & Associates, Inc. (“JKC”) operates a civil engineering firm in Dickinson, Texas. In 2005, JKC contracted with Paul Tim Young, signing on behalf of Midtown Park Development, Ltd. (“Midtown”), to perform a number of services on Midtown’s 178-lot residential subdivision project. In 2006, JKC negotiated a separate contract with Young, this time signing on behalf of Horizon 2003, LLC (“Horizon”), to perform similar services on Horizon’s 59-lot subdivision. JKC sued Young in two separate actions to collect payment for the engineering and surveying services it provided in the Horizon and Midtown projects. JKC later amended its petitions to dismiss Young from suit in his individual capacity. Horizon and Midtown answered the allegations with sworn denials, each supported by affidavit. They also asserted a number of affirmative defenses, including estoppel, failure of consideration, prior breach of contract, failure to satisfy a condition, release, and waiver. JKC subsequently filed two traditional motions for summary judgment and two no-evidence motions drafted in response to the affirmative defenses. After consolidating the causes of action into a single case, the trial court granted JKC’s traditional motions for summary judgment and denied its no-evidence motions. Horizon and Midtown raise five issues on appeal. In their first issue, they contend that JKC failed to establish that it was entitled to judgment as a matter of law in its suits on a sworn account. Because this issue is dispositive, we do not consider the remaining four. STANDARD OF REVIEW We review a trial court’s summary judgment de novo. Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009) (per curiam) (citing Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007)). In a traditional motion for summary judgment, the movant bears the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We consider the summary judgment record in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the movant. See City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005). We must affirm the summary judgment if any of the movant’s theories presented to the trial court and preserved for appellate review are meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). ANALYSIS Under Rule 185, a suit on a sworn account must contain a systematic record of the goods sold or services rendered and be supported by an affidavit stating that the “claim is, within the knowledge of affiant, just and true, that it is due, and that all just and lawful offsets, payments and credits have been allowed.” Tex. R. Civ. P. 185. A petition that complies with the Rule establishes a prima facie case entitling the plaintiff to summary judgment. See Whiteside v. Ford Motor Credit Co., 220 S.W.3d 191, 194 (Tex. App.—Dallas 2007, no pet.); Powers v. Adams, 2 S.W.3d 496, 498 (Tex. App.—Houston [14th Dist.] 1999, no pet.). If the sworn petition contains any deficiency, however, the account will not constitute prima facie evidence of the debt. Panditi v. Apostle, 180 S.W.3d 924, 927 (Tex. App.—Dallas 2006, no pet.). A party resisting a claim on a sworn account must submit a sworn denial supported by affidavit. Tex. R. Civ. P. 93(10). The filing of a sworn denial destroys the evidentiary effect of the itemized account, requiring the plaintiff to produce proof of the claim. Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979); Thorp v. Adair & Myers, 809 S.W.2d 306, 307 (Tex. App.—Houston [14th Dist.] 1991, no writ). In its original and amended petitions, JKC purported to attach “Exhibit A,” which was described as a statement of the accounts. The record does not reflect that the exhibit was ever included. Attached at the end of the pleadings was a “Verification for Suit on Sworn Account,” which also referenced “Exhibit A.” In the “Verification,” the president of JKC averred that the account was just and true, that it was due, and that all lawful offsets, payments, and credits had been allowed. Because Horizon and Midtown filed sworn denials, any evidentiary effect that JKC’s petitions may have had was lost. See Tex. R. Civ. P. 93(10). We therefore consider whether JKC submitted competent summary judgment evidence to substantiate its claims. To support its motion for summary judgment, JKC attached copies of (1) Horizon’s articles of organization and Midtown’s certificate of limited partnership; (2) the engineering and surveying contracts with Horizon and Midtown; (3) the invoices and demand letters submitted to Horizon and Midtown; (4) excerpts from Young’s deposition; (5) Young’s answer to JKC’s request for admissions; and (6) an affidavit for attorney’s fees. Based on the excerpts provided, Young’s deposition testimony establishes only that he was aware of the invoices and had yet to pay them. Young insisted that the accounts were not yet due because, as he claimed, the parties had a preexisting oral agreement that the accounts would only become payable when Young’s lender disbursed the funds. In the request for admissions, Young specifically denied that the accounts were due and that all just and lawful offsets to the account had been applied. Altogether, the evidence merely establishes that amounts were charged to Horizon and Midtown. The evidence does not include systematic, itemized records of the accounts, nor does it contain competent testimony that the accounts were just and that all credits had been afforded. The only “evidence” of these essential elements was contained in the “Verification” of JKC’s petitions, where the president of JKC recited his averments. However, the pleadings do not constitute competent evidence, even if sworn or verified. See Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904 S.W.2d 656, 660 (Tex. 1995); Quanaim v. Frasco Rest. & Catering, 17 S.W.3d 30, 42 (Tex. App.—Houston [14th Dist.] 2000, pet. denied). As the movant below, JKC carried the burden of showing that all elements of a sworn account had been met. Without competent evidence, we conclude that JKC was not entitled to summary judgment as a matter of law. We therefore reverse the trial court’s judgment and remand for additional proceedings. /s/ Tracy Christopher Justice Panel consists of Chief Justice Hedges and Justices Frost and Christopher.