Santander Consumer USA, Inc. v. Palisades Collection, LLC

Reverse and Remand in part; Reverse and Render in part; Affirmed in part and Opinion
Filed October 30, 2014

S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-13-01459-CV

SANTANDER CONSUMER USA, INC., Appellant
V.
PALISADES COLLECTION, LLC, Appellee

On Appeal from the 134th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-11-14916

OPINION
Before Justices Bridges, Lang, and Evans
Opinion by Justice Bridges
Santander Consumer USA, Inc. appeals the trial court’s order granting Palisades

Collection, LLC’s motions for summary judgment. In three issues, Santander argues the trial

court erred because (1) Palisades failed to plead and prove a breach of contract claim as a matter

of law; (2) Santander presented uncontroverted summary judgment evidence that its statute of

limitations affirmative defense applied; and (3) Palisades’ corporate representative presented

conflicting testimony, which created a genuine issue of material fact as to Palisades’ breach of

contract counterclaim. We affirm in part, reverse and remand in part, and reverse and render in

part.
 Background

Santander is in the business of originating, owning, and servicing consumer loans, which

typically involve automobile loans. Palisades is in the business of purchasing delinquent loan

accounts at a discount and attempting to collect on them. Palisades and Santander entered into

two agreements whereby Santander sold Palisades delinquent accounts.

On or about June 28, 2007, Santander sold certain charge off accounts arising from

automobile retail installment contracts to Palisades. This first agreement between the parties was

referred to as the “debt portfolio purchase and sales agreement.” The second agreement, referred

to as the “forward flow debt purchase and sale agreement,” controlled the terms of future sales of

delinquent accounts.

Under the debt portfolio agreement, Santander was required to provide all of the

“Account Documents” related to the “Purchased Accounts” within ten business days of the

“Effective Date” of the agreement. The forward flow agreement included a similar requirement,

but instead of ten days, Santander was required to provide the account documents within two

days after the “Initial Sales Date and any Future Sale Date(s).” “Account Documents” was

defined in both agreements as follows:

any application, agreement, billing statement, notice, retail
installment sale contract, certificate of title, certificate of lien,
manufacturer’s statement of origin, sale notices, repossession
letters, correspondence or other information in SELLER’s
possession or that Seller has the right to obtain and that relates to a
Purchased Account.

Palisades purchased various delinquent accounts from Santander from June 28, 2007

through May 21, 2008. According to Santander, it agreed to repurchase any accounts Palisades

determined to be “ineligible accounts” pursuant to the terms of the agreements within 180 days

of purchase.

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 Palisades later alleged Santander failed to provide all necessary documents, and a large

number of the accounts were invalid, unenforceable, and/or subject to certain offsets or defenses

due to the fact that they were missing notices of sale or notices of deficiency. Palisades made

numerous requests for Santander to repurchase the accounts in question, but Santander only

honored some of the requests. Palisades continued to argue that Santander was obligated to

repurchase all of the accounts in question per the agreements.

The underlying litigation began when Palisades filed a petition for order authorizing

deposition on oral examination against Santander. See TEX. R. CIV. P. 202. Palisades sought to

depose Santander regarding certain accounts purchased under the agreements. Santander

responded by filing suit requesting declaratory judgment that it did not breach any agreements

entered into by the parties. Palisades filed a counterclaim asserting breach of contract and fraud.

Santander then filed a supplemental petition alleging breach of contract and filed its original

answer to Palisades’ counterclaims asserting sixteen affirmative defenses, including statute of

limitations. Both parties filed numerous traditional and no-evidence motions for summary

judgment.

On September 20, 2013, the trial court entered an order granting Palisades motion

regarding the 33,794 accounts referenced in its first amended motion for summary judgment on

its claims for relief “as having no deficiency balance letter” and granted Palisades’ motion

“relating to [Santander’s] claims and defenses, including, but not limited to, Palisades’ No

Evidence Motion for Summary Judgment on [Santander’s] Affirmative Defenses.” The trial

court further awarded $3,613,821.36 in damages. Santander timely filed its notice of appeal.

Standard of Review

We review a trial court’s granting of a traditional summary judgment de novo. Provident

Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When reviewing a

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summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge

every reasonable inference and resolve any doubts in the nonmovant’s favor. Id. Under rule

166a(c), the party moving for summary judgment bears the burden that no genuine issue of

material fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166c(a);

see id. at 216.

A plaintiff moving for summary judgment must prove that it is entitled to summary

judgment as a matter of law on each element of its cause of action. Frank’s Int’l, Inc. v. Smith

Int’l, Inc., 249 S.W.3d 557, 562 (Tex. App.—Houston [1st Dist.] 2008, no pet.). A defendant

moving for summary judgment must either (1) disprove at least one element of the plaintiff’s

cause of action or (2) plead and conclusively establish each element of an affirmative defense to

rebut the plaintiff’s cause. Id.

When, as here, both parties move for summary judgment and the trial court grants one

motion and denies the other, we review the summary judgment proof presented by both sides and

determine all questions presents.1 The reviewing court should render the judgment the trial court

should have rendered. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).

Palisades’ Breach of Contract Counterclaim

In its first amended motion for summary judgment on its own claims for relief, Palisades

argued it was entitled to judgment as a matter of law because there was no issue of material fact

as to any element of its breach of contract counterclaim against Santander. Palisades relied on

paragraph 8(d) of the agreements to support its breach of contract counterclaim, which states the

following:

1
We acknowledge that the trial court’s order specifically grants Palisades’ summary judgment motion as to its breach of contract
counterclaim against Santander, and the record does not have an order denying Santander’s motion for summary judgment on Palisades’ breach
of contract claim. However, in some cases a trial court’s ruling can be implied and this is such a case. The parties’ motions involved the same
subject matter, a breach of contract, and the order awarded damages in favor of Palisades. It further stated it disposed of “all issues, all claims,
counter-claims, defenses and pleas of avoidance of all parties and is final and appealable.” Such rulings in favor of Palisades necessarily denied
Santander’s motion for summary judgment. See Frank’s Int’l, 249 S.W.3d at 559 n.2; see also Chu v. Chew, No. 05-00-02107-CV, 2002 WL
59269, at *2 n.4 (Tex. App.—Dallas Jan. 17, 2002, pet. denied).

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 The Purchased Accounts were purchased, serviced, and originated
in accordance with all applicable laws, and as of the Effective Date
represent valid, binding and legally enforceable obligations of the
Customers regarding such Purchased Accounts, enforceable for the
full Unpaid Principal Balance in accordance with their terms and
not subject to any offsets or defenses.

Palisades argued in its motion that it had discovered a large number of the accounts in question

were (1) not valid, binding, and legally enforceable obligations of customers regarding such

purchased accounts; (2) not enforceable for the full unpaid principal balance in accordance with

their terms; and (3) subject to offsets or defenses because documents were not furnished and/or

were not available to support collection of the accounts including, but not limited to, notices of

sale and/or notices of deficiency. Palisades further argued paragraph 10(b) obligated Santander

to repurchase accounts in the event of any breach of a representation or warranty as set forth in

paragraph 8(d).

Santander subsequently filed a traditional and no-evidence motion for summary judgment

on Palisades’ breach of contract counterclaims. It argued certain claims were barred as a matter

of law by the statute of limitations. It further asserted Palisades failed to prove a breach of

contract as a matter of law, and there was no evidence to support its claims.

Santander later filed a response to Palisades’ motion in which it presented evidence and

argued it had not breached the agreements and contended a genuine issue of material fact existed

regarding whether it had in fact provided Palisades with deficiency notices.

Because Santander’s statute of limitations defense, as presented in its traditional motion

for summary judgment, defeats some of Palisades’ contract counterclaims as a matter of law, we

address it first. As a general rule, the statute of limitations for a breach of contract action is four

years from the day the cause of action accrued. TEX. CIV. PRAC. & REM. CODE ANN. § 16.004(a)

(West 2002); Via Net v. TIG Ins. Co., 211 S.W.3d 310, 315 (Tex. 2006). A breach of contract

claim accrues when the contract is breached. Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002).
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A breach occurs when a party fails or refuses to do something it has promised to do. Capstone

Healthcare Equip. Servs., Inc. v. Quality Home Health Care, Inc., 295 S.W.3d 696, 699 (Tex.

App.—Dallas 2009, pet. denied).

Here, the evidence shows the parties entered into the two agreements on June 28, 2007.

Under the debt portfolio agreement, Santander was required to provide all account documents

related to the purchased accounts within ten business days of June 28, 2007. Thus, Santander

had until July 13, 2007 to comply.

As stated above, Palisades’ breach of contract counterclaim was based on Santander’s

failure to provide certain required “account documents” under paragraph 8(d) within ten business

days of the “effective date,” which allegedly breached the “representations and warranties

regarding purchased accounts” under paragraph 10(b). Paragraph 8(d) provided that the

purchased accounts were valid and enforceable “as of the Effective Date,” which was June 28,

2007. Accordingly, Palisades was required to file suit as to a breach of the debt portfolio

agreement no later than July 13, 2011, four years after the tenth day after the “effective date.”

Palisades did not file its counterclaim for breach of contract until January 3, 2012, and Palisades

has not brought forth any evidence asserting that the statute of limitations for its breach of

contract counterclaim began to run on any date other than ten days after the “effective date.”

Further, Palisades has not argued the application of any legal theory for deferring this date.

Therefore, Santander conclusively established as a matter of law that all of Palisades’ claims

under the debt portfolio agreement are barred under the statute of limitations. To the extent the

trial court granted Palisades’ traditional motion for summary judgment for accounts under the

debt portfolio agreement “having no deficiency balance letter” and denied Santander’s traditional

motion, we reverse and render in favor of Santander. See Valence Operating Co., 164 S.W.3d at

661 (explaining when both parties move for summary judgment, the reviewing court considers

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all evidence presented and renders judgment the trial court should have rendered); see also

Burney v. Citigroup Global Mkts. Realty Corp., 244 S.W.3d 900, 904 (Tex. App.—Dallas 2008,

no pet.) (reversing and rendering judgment after determining claims were barred by statute of

limitations).

We now address the forward flow agreement, which the parties also entered into on June

28, 2007. It required delivery of account documents within two days after the initial sale date

and any future sale dates. The sale dates and document delivery dates governed by this

agreement were as follows:

a. July 23, 2007 (delivery date July 25, 2007)

b. July 26, 2007 (delivery date July 28, 2007

c. August 29, 2007 (delivery date August 31, 2007)

d. September 25, 2007 (delivery date September 27, 2007)

e. September 26, 2007 (delivery date September 28, 2007)

f. October 29, 2007 (delivery date October 31, 2007)

g. November 27, 2007 (delivery date November 29, 2007)

h. December 21, 2007 (delivery date December 23, 2007)

i. January 22, 2008 (delivery date January 24, 2008)

j. February 21, 2008 (delivery date February 23, 2008)

k. April 1, 2008 (delivery date April 3, 2008)

l. April 29, 2008 (delivery date May 1, 2008)

m. May 21, 2008 (delivery date May 23, 2008)

Again, Palisades filed its counterclaims on January 3, 2012. Applying the four-year statute of

limitations to the above dates of transferred accounts, any claims by Palisades to accounts

transferred before January 3, 2008 are time-barred. The trial court’s conclusion to the contrary

was in error.

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 In reaching this conclusion, we reject Palisades’ argument that its counterclaims survive

under Texas Civil Practice and Remedies Code section 16.069. See TEX. CIV. PRAC. & REM.

CODE ANN. § 16.069 (West 2008) (stating that if a counterclaim arises out of the same

transaction or occurrence that is the basis of an action, a party to the action may file the

counterclaim even though as a separate action it would be barred by limitations on the date the

party’s answer is required). Palisades failed to affirmatively plead this theory of avoidance as to

the application of the statute of limitations below. See TEX. R. CIV. P. 94; see also Cole v.

McWillie, No. 11-12-00265-CV, 2014 WL 4347844, at *6 (Tex. App.—Eastland Aug. 29, 2014,

no pet.) (mem. op.) (concluding summary judgment could not be affirmed based on section

16.069 when party failed to raise argument to trial court). Therefore, Palisades has failed to

preserve its argument. Cole, 2014 WL 4347844, at *6.

In conclusion, we sustain Santander’s second issue to the extent the trial court granted

Palisades’ traditional motion for summary judgment, and denied Santander’s traditional motion

for summary judgment, as to those accounts under the debt portfolio agreement “having no

deficiency balance letter.” We likewise sustain Santander’s second issue to the extent the trial

court granted Palisades’ traditional motion for summary judgment, and denied Santander’s

traditional motion for summary judgment, as to those accounts under the forward flow agreement

transferred before January 3, 2008 “having no deficiency balance letter.” As such, we reverse

and render as to these accounts. See Valence Operating Co., 164 S.W.3d at 661.

We must now determine whether Palisades proved its counterclaim for breach of contract

as a matter of law as to those accounts Palisades purchased under the forward flow agreement

after January 3, 2008. Santander argues in its third issue that Palisades own summary judgment

evidence creates a fact issue defeating its motion as a matter of law, or alternatively, Santander

presented evidence to create a fact issue defeating summary judgment.

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 In support of its traditional motion for summary judgment, Palisades attached the

affidavit of Steve Braun, the assistant vice-president of operations and director of litigation for

Palisades. Braun stated he was “familiar with the problems encountered by Palisades with

collection of certain of the accounts purchased pursuant to the Agreements and the efforts of

Palisades to persuade Santander to repurchase those accounts.” Braun described a CD that

contained spreadsheets detailing whether Palisades had collected on certain accounts. Attached

to Braun’s affidavit were three exhibits, which he referred to as “exemplars” of the larger

spreadsheets. He described the modified spreadsheets as follows:

These spreadsheets are identical to the spreadsheets by the same
name previously provided to Santander but excluding the accounts
on which any sum of money was collected. Palisades has collected
no sum of money on any of the accounts included in the no
payments spreadsheets. . . . The no payments spreadsheets
accurately reflect the accounts for which Palisades seeks
compensation in this suit and the reasons why Santander should
have repurchased these accounts.

He further explained that one modified spreadsheet established the no payment of 33,794

accounts, in which Palisades paid $3,613,821.36, and no deficiency balance letter was provided

for any of the accounts. He stated he personally confirmed that no deficiency balance letters

were provided for any of the accounts by conducting a random sampling of more than one

hundred of the accounts (out of the 33,794 accounts).

Two months earlier, however, Braun testified at his deposition that he did not know if

Palisades was successful in any of its attempts to collect on the debt for the accounts it wanted

Santander to repurchase. When asked if he was aware of any document in Palisades’ possession

that would reflect the successfulness or unsuccessfulness of any attempts to collect on those

accounts, Braun said, “I don’t know of any such document.” Palisades failed to explain how

Braun, who previously stated he had no knowledge of collection efforts or any such related

documents, could attest to such information in a later affidavit. This conflict in evidence
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between Braun’s earlier deposition testimony and his subsequent affidavit testimony creates

conflicting inferences about his knowledge to testify regarding Palisades’ attempts to collect on

certain accounts. Therefore, Braun’s testimony failed to establish as a matter of law that there is

no genuine issue of material fact as to Palisades’ breach of contract counterclaim. See TEX. R.

CIV. P. 166a(c) (stating summary judgment may be founded upon the testimony of an interested

witness if the testimony is clear, direct, positive, credible, free from contradiction or

inconsistency and readily controvertible); see also Kirkwood v. Primacare, Inc., No. 05–97–

01934–CV, 2000 WL 124675, at *2 (Tex. App.—Dallas Feb.3, 2000, no pet.) (“If conflicting

inferences may be drawn from a deposition and an affidavit filed by the same party in opposition

to a motion for summary judgment, a fact issue is presented.”) (citing Randall v. Dallas Power &

Light Co., 752 S.W.2d 4, 5 (Tex. 1988)); Green v. Unauthorized Practice of Law Comm., 883

S.W.2d 293, 297 (Tex. App.—Dallas 1994, no writ). In reaching this conclusion, we disagree

with Palisades’ assertion that Santander failed to raise this issue to the trial court. In its response,

Santander alleged, among other things, that Braun claimed to have no knowledge of whether

Palisades was successful in any of its attempts to collect on the debt for the accounts in question

and cited to his deposition. Thus, the issue was before the trial court.

Moreover, even if we agreed with Palisades’ argument that Braun’s testimony did not

create a conflict and the “only issue . . . preserved by Santander was whether or not the summary

judgment evidence showed that Santander did, in fact, provide Palisades with the deficiency

notices in question,” the record supports Santander’s argument that it raised a fact issue

precluding summary judgment. Santander attached the affidavit of Brandon Dry to its response.

Dry, as the prior assistant vice-president of loss mitigation for Santander, oversaw and monitored

past due accounts. He testified Santander had an automated process for sending notice of

deficiency letters and the process had been in place since 2003. He stated the review of several

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accounts sold to Palisades and the collection activity notes stated a deficiency notice was sent to

the customers, and such information was provided to Palisades. Thus, Dry’s affidavit created a

fact issue in regards to Braun’s testimony that Palisades did not receive notices of deficiency.

See, e.g., Chancey v. Herkimer, No. 05-97-01923-CV, 2000 WL 872496, at *2 (Tex. App.—

Dallas June 30, 2000, pet. denied) (noting the summary judgment rule does not provide for trial

by deposition or affidavit). Accordingly, the trial court erred by granting Palisades’ traditional

motion for summary judgment on its breach of contract counterclaim as to those accounts under

the forward flow agreement that are not barred by the statute of limitations. We sustain

Santander’s third issue. Having sustained, in part, Santander’s second and third issues, we need

not address its first issue . TEX. R. APP. P. 47.1.

Palisades No Evidence Motion for Summary Judgment on Santander’s Affirmative
Defenses

Although not specifically raised in its “Issues Presented,” Santander argues, “When this

Court reverses the trial court’s ruling granting Palisades’ summary judgment on its breach of

contract claim, it should also vacate the trial court’s ruling dismissing the affirmative defenses”

as presented in Palisades’ no evidence motion for summary judgment on Santander’s affirmative

defenses. We agree with Santander’s argument in part.

In Santander’s first supplemental petition and original answer to Palisades’ breach of

contract counterclaim, Santander raised sixteen affirmative defenses.2 Palisades subsequently

filed a no evidence motion for summary judgment on affirmative defenses, which the trial court

granted.

Trial courts may not grant a summary judgment on grounds not presented. Johnson v.

Brewer & Pritchard, P.C., 73 S.W.3d 193, 204 (Tex. 2002); Plunkett v. Conn. Gen. Life Ins. Co.,

2
Santander later voluntarily withdrew seven of its affirmative defenses, leaving nine affirmative defenses before the trial court when the
summary judgment order was entered.

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285 S.W.3d 106, 122 (Tex. App.—Dallas 2009, pet. denied). Further, we may not affirm a

summary judgment on grounds not expressly set out in the motion or response. Plunkett, 285

S.W.3d at 122. Therefore, if a summary judgment grants more relief than requested, it should be

reversed and remanded. Id.

Here, Despite Palisades’ arguments to the contrary, it failed to challenge three of

Santander’s affirmative defenses: disclaimer of warranty, breach of contract, and discharge.3

Because the trial court’s order granted Palisades’ no evidence motion for summary judgment on

affirmative defenses in its entirety, it improperly granted judgment on grounds not presented in

Palisades’ motion and granted more relief than requested. Accordingly, we reverse the trial

court’s order granting summary judgment on Santander’s affirmative defenses of disclaimer of

warranty, breach of contract, and discharge, and remand for further proceedings.

Santander also argues the trial court erred by granting Palisades’ no evidence motion for

summary judgment as to its remaining five affirmative defenses: statute of limitations,

unconscionability, contractual limitation of liability, repudiation, and wavier. Having concluded

Santander established its statute of limitations defense as a matter of law, its argument as to this

affirmative defense is moot. TEX. R. APP. P. 47.1; see Shia v. Tamisiea, 306 S.W.3d 939, 945 n.8

(Tex. App.—Dallas 2010, no pet.) (noting that when an appellate court concludes it is required to

affirm the trial court’s ruling on traditional summary judgment grounds, it need not address the

no evidence grounds).

However, we disagree with Santander’s contention that we must vacate the trial court’s

order as to its remaining four affirmative defenses. Santander argues it “briefed the issues

extensively below,” but it failed to brief its arguments on appeal. To raise an issue on appeal, a

3
Santander contends Palisades also failed to challenge its affirmative defense of ratification, but a review of Palisades’ no evidence motion
for summary judgment belies its argument.

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party must provide clear and concise arguments for the contentions made. TEX. R. APP. P. 38.1.

Mere reference to its summary judgment response is not an appropriate way to make arguments

on appeal. See Redmon v. Griffith, 202 S.W.3d 225, 241 (Tex. App.—Tyler 2006, pet. denied);

see also Yazdchi v. Chesney, No. 14-05-00817-CV, 2007 WL 237697, at *2 (Tex. App.—

Houston [14th Dist.] Jan. 30, 2007, no pet.) (mem. op.). Accordingly, we conclude Santander

has waived its arguments as to its remaining affirmative defenses. The trial court’s order

granting Palisades’ no evidence motion for summary judgment on Santander’s affirmative

defenses is affirmed as to the affirmative defenses of unconscionability, contractual limitation of

liability, repudiation, and waiver.

Conclusion

We reverse the trial court’s judgment to the extent it granted Palisades’ traditional motion

for summary judgment for accounts under the debt portfolio agreement and for accounts under

the forward flow agreement sued upon before January 3, 2008. We render judgment in favor of

Santander on these claims.

We reverse and remand for further proceedings as to those accounts in the forward flow

agreement sued upon after January 3, 2008.

As to the trial court’s judgment granting Palisades’ no evidence motion for summary

judgment on Santander’s affirmative defenses, we reverse and remand for further proceedings as

to the affirmative defenses of disclaimer of warranty, breach of contract, and discharge. In all

other respects, the judgment of the trial court is affirmed.

131459F.P05 /David L. Bridges/
DAVID L. BRIDGES
JUSTICE

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 S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT

SANTANDER CONSUMER USA, INC., On Appeal from the 134th Judicial District
Appellant Court, Dallas County, Texas
Trial Court Cause No. DC-11-14916.
No. 05-13-01459-CV V. Opinion delivered by Justice Bridges.
Justices Lang and Evans participating.
PALISADES COLLECTION LLC,
Appellee

In accordance with this Court’s opinion of this date, we REVERSE the trial court’s

judgment to the extent it granted Palisades’ traditional motion for summary judgment for

accounts under the debt portfolio agreement and for accounts under the forward flow agreement

sued upon before January 3, 2008. We RENDER judgment in favor of Santander on these

claims.

We REVERSE and REMAND for further proceedings as to those accounts in the

forward flow agreement sued upon after January 3, 2008.

As to the trial court’s judgment granting Palisades’ no evidence motion for summary

judgment on Santander’s affirmative defenses, we REVERSE and REMAND for further

proceedings as to the affirmative defenses of disclaimer of warranty, breach of contract, and

discharge. In all other respects, the judgment of the trial court is AFFIRMED.

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 The Court orders that each party bear its own cost of this appeal.

Judgment entered October 30, 2014.

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