Elda Garza v. Lone Star National Bank

NUMBER 13-11-00480-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

ELDA GARZA, Appellant,

v.

LONE STAR NATIONAL BANK, Appellee.

On appeal from the 206th District Court
of Hidalgo County, Texas.

MEMORANDUM OPINION
Before Justices Rodriguez, Vela, and Perkes
Memorandum Opinion by Justice Perkes
Elda Garza, appellant, sued Lone Star National Bank (“LSNB” or “the Bank”),

appellee, alleging that the Bank breached a settlement agreement reached between the

parties in a prior lawsuit. She appeals the trial court’s order which granted a final summary

judgment in favor of the Bank. By two issues, Garza argues that because she submitted

sufficient evidence to create fact issues, (1) a no-evidence summary judgment was

improper; and (2) a traditional summary judgment was improper. We affirm because the
record shows that Garza did not produce any evidence of the damages element of her

breach-of-contract claim.

I. FACTUAL AND PROCEDURAL BACKGROUND1

Over the course of several years, Garza borrowed money from the Bank for various

business expenses. Each of the loans was secured by a certificate of deposit that Garza

had previously delivered to the Bank. In addition, Garza and a business partner, Beatriz

Garza, executed personal guaranties on various loans. In December 2000, the Bank

loaned $173,000 to Garza, individually, which she used to pay off existing loans. The

“payoff loan” and all renewals thereof were executed solely by Garza and secured by a

pledge of her certificate of deposit.

A dispute arose between Garza and the Bank concerning the outstanding balance of

the payoff loan. Garza filed suit against the Bank, and the parties subsequently resolved

the lawsuit by settlement.2 Pursuant to the terms of the settlement agreement, the Bank

received the full amount of the certificate of deposit, but forwent receipt of the remaining loan

balance of $5,600.48.

Paragraph six of the settlement agreement includes the language at issue in this

case. That paragraph, as shown with its single strike through, highlighted language, and all

of its interlineations (italicized herein), reads as follows:

The Parties to this Agreement acknowledge that as of the date that the
settlement agreement was dictated in open court and approved by Judge

1
Because this is a memorandum opinion and the parties are familiar with the facts, we will not recite
them here except as necessary to advise the parties of the Court's decision and the basic reasons for it. See
TEX. R. APP. P. 47.4.
2
See Elda Garza v. Lone Star National Bank and Mary V. Garcia, cause number C–2068–02–D in
the 206th Judicial District Court of Hidalgo County, Texas.

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 Rose Guerra Reyna, Plaintiff Garza had an outstanding balance, including
principal and interest, of $183,664.33; moreover she had a certificate of
deposit in the total amount of $178,015.85 pledged to secure said obligation.
Plaintiff agrees that Lone Star National Bank may take proceeds of the
certificate of deposit to pay and otherwise satisfy purchase the note and
obligation with Defendant LSNB. The Defendant LSNB agrees to waive or
forego receipt of the balance of $5,600.48 which balance is owed by Plaintiff
Garza after payment by the proceeds of the Plaintiff Garza’s certificate of
deposit. LSNB agrees to assign the notes and rights if any and guarantees to
Plaintiff. (executed by Plaintiff and Beatriz Garza)

Garza filed the present lawsuit against the Bank alleging that the Bank breached the

settlement agreement by failing to assign “and turn over physical possession of the original

notes, guaranties and other security (excluding the Plaintiff’s certificate of deposit)

evidencing the original debts against Plaintiff and a third party [Beatriz Garza].” Garza

alleged that the Bank’s failure “resulted in the loss of the ability of Plaintiff to proceed in a

lawsuit against the third party [Beatriz Garza] for the amount due on the note. The notes in

question are the original notes for which Plaintiff pledged her certificate of deposit.” Garza

sought to recover “for breach of contract in the sum of $178,015.85,” which was the dollar

amount of the certificate of deposit that the Bank received pursuant to the settlement

agreement. Aside from seeking attorney’s fees and prejudgment interest, she did not

assert any other grounds or claims for damages or equitable relief.

In its answer, the Bank specifically denied it had any rights in a note or guaranty that

it could assign under the settlement agreement. The Bank also pleaded a defense of

recoupment or set off, asking that if the trial court awarded Garza a rescission of the

settlement agreement by ordering the Bank to refund to Garza the $178,015.85, the Bank

would be entitled to a set off to cover the principal and any accrued interest on the $173,000

loan it made to Garza.

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 After sufficient time for discovery passed, the Bank filed a no-evidence and traditional

motion for summary judgment. By its no-evidence motion for summary judgment, the Bank

asserted that Garza did not have any evidence that would show that the Bank breached the

settlement agreement, and that Garza did not have any evidence that would show “how she

sustained any damages.” As to the damages element, the Bank added that Garza had no

evidence which would show: (1) that but for the Bank’s alleged failure to assign the notes

and guarantees, she would have been successful in a lawsuit against a third party; and

(2) that she would have been able to collect on the judgment against the third party. 3

The trial court granted summary judgment in favor of the Bank without specifying

whether it was granting relief under the no-evidence or traditional motion and without

specifying the grounds for summary judgment. This appeal followed.

II. STANDARD OF REVIEW

When an order granting summary judgment does not specify the grounds on which

summary judgment was granted, a court may uphold it on any meritorious ground presented

in the motion. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).

When a party moves for a traditional summary judgment and a no-evidence summary

judgment, we will first review the trial court’s judgment under the no-evidence standard.

Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). If the appellant fails to

produce more than a scintilla of evidence under that burden, then there is no need to

3
In its traditional motion for summary judgment, the Bank contended that under the doctrine of
equitable subrogation, Garza “had subrogated to the [Bank’s] rights” in the two notes and personal
co-guarantees (loans made to Garza and Beatriz Garza as business partners and as personal co-guarantors of
the loans) in December 2000 when Garza paid off the two notes with her own promissory note “after the subject
notes matured and became delinquent.” The Bank asserted that, as a result, at the time of the settlement
agreement and thereafter, the Bank did not have any rights in the notes and guarantees it allegedly failed to
assign to Garza.
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analyze whether appellee’s summary judgment evidence satisfies the traditional rule

166a(c) burden. Id. (citing TEX. R. CIV. P. 166a(c)).

In reviewing a no-evidence summary judgment, we ascertain whether the nonmovant

pointed out summary judgment evidence raising a genuine issue of fact as to the essential

elements attacked in the no-evidence motion. Johnson v. Brewer & Pritchard, P.C., 73

S.W.3d 193, 206–08 (Tex. 2002). In our de novo review of a trial court's summary

judgment, we consider all of the evidence in the light most favorable to the nonmovant,

crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding

contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez, 206

S.W.3d 572, 582 (Tex. 2006). The evidence raises a genuine issue of fact if reasonable

and fair-minded jurors could differ in their conclusions in light of all of the summary judgment

evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).

A settlement agreement is a contract between parties, a breach of which gives rise to

a cause of action for breach of contract. See Padilla v. LaFrance, 907 S.W.2d 461–62

(Tex. 1995); see also Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 888 (Tex.

App.—Dallas 2004, pet. denied) (analyzing claim for breach of settlement agreement as a

breach of contract). A claim for breach of contract includes the following essential

elements: (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. See Scott v. Sebree, 986 S.W.2d 364, 372–73 (Tex. App.—Austin

1999, pet. denied); Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex. App.—Houston

[1st Dist.] 1997, no writ).

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 Damages to the claimant resulting from the alleged breach is one of the essential

elements of a breach-of-contract claim. See WTG Gas Processing, L.P. v. ConocoPhillips

Co., 309 S.W.3d 635, 643 (Tex. App.—Houston [14th Dist.] 2010, pet. denied); see also

B.Z.B., Inc. v. Clark, No. 14-11-00056-CV, 2012 WL 353783, at *2 (Tex. App.—Houston

[14th Dist.] Feb. 2, 2012, no pet.) (mem. op.). “The universal rule for measuring damages

for the breach of a contract is just compensation for the loss or damage actually sustained.”

Qaddura, 141 S.W.3d at 888 (citing Stewart v. Basey, 150 Tex. 666, 670; 245 S.W.2d 484,

486 (1952)). The most common interest protected in breach of contract cases is the

expectation, or benefit-of-the-bargain, interest. Id. at 888–89.

In contrast to a legal remedy for breach of contract, the equitable remedy of

rescission allows a non-breaching party to avoid the contract and obtain the return of any

consideration paid if the non-breaching party pleads and proves, among other things, that it

has no adequate remedy at law for damages. See Ferguson v. DRG/Colony N., Ltd., 764

S.W.2d 874, 886 (Tex. App.—Austin 1989, writ denied) (holding that the evidence showed

lack of adequate legal remedy); see also Costley v. State Farm Fire & Cas. Co., 894 S.W.2d

380, 386 (Tex. App.—Amarillo 1994, writ denied) (holding that the evidence showed lack of

adequate legal remedy); Ryan v. Collins, 496 S.W.2d 205, 209–10 (Tex. Civ. App.—Tyler

1973, writ ref’d n.r.e.) (discussing elements of rescission); Chenault v. County of Shelby,

320 S.W.2d 431, 433–35 (Tex. Civ. App.—Austin 1959, writ ref’d n.r.e.) (same).

III. DISCUSSION AND ANALYSIS

In her first issue, Garza argues that the no-evidence summary judgment on damages

was improper because the Bank accepted the value of the certificate of deposit,

$178,015.85, but did not fulfill its obligation to assign the notes and guarantees. Garza
6
argues that she presented evidence of her damages by showing that the Bank accepted the

value of the certificate of deposit.

The parties do not dispute the terms of the settlement agreement, and that in

accordance with the settlement agreement, the Bank obtained the value of the certificate of

deposit. The Bank does contend, however, that Garza presented no summary judgment

evidence showing: (1) her inability to bring suit against a third party “for the amount due on

the note” resulted from the Bank’s alleged failure to assign the notes and guarantees; or

(2) the value of her suit against the third party. See Qaddura, 141 S.W.3d at 888–89

(discussing expectation damages that resulted from a breach of a settlement agreement);

see also B.Z.B., Inc., 2012 WL 353783, at *2–3 (explaining why summary judgment

evidence was insufficient to raise a fact issue on damages and affirming a no-evidence

summary judgment for breach of a settlement agreement).

In response to the Bank’s no-evidence motion for summary judgment, Garza filed the

affidavit of her trial counsel.4 Even considering, for the sake of argument only, that trial

counsel’s affidavit is competent summary judgment evidence,5 it provides no evidence of

damages resulting from the alleged breach. The affidavit does not raise a fact issue on

whether Garza’s alleged inability to proceed in a lawsuit against the third party resulted from

the Bank’s alleged failure to assign the notes and guarantees. The affidavit is also

conclusory because it simply rehashes the legal argument that because the Bank obtained
4
Garza’s response also includes copies of: (1) a transcript of the 2006 hearing in the earlier lawsuit
during which the settlement agreement was read into the record; (2) the settlement agreement; (3) the joint
motion to dismiss the earlier proceeding; and (4) the agreed order of dismissal of the earlier proceeding.
5
See TEX. DISCIPLINARY R. PROF'L CONDUCT 3.08(a), reprinted in TEX. GOV'T CODE, tit. 2, subtit. G,
app. A (West 2005) (generally prohibiting a lawyer from accepting or continuing employment as an advocate
before a tribunal in a contemplated or pending adjudicatory proceeding if the lawyer knows or believes that the
lawyer is or may be a necessary witness to his client’s case).

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the value of the certificate of deposit, but did not assign any notes or guarantees to Garza,

Garza should receive a refund of the value of the certificate of deposit. The affidavit does

not present a scintilla of evidence showing how Garza was damaged by the Bank’s failure to

assign the notes or guarantees or what amount of damages may have been obtained

against the third party. As such, there is no evidence of damages for any alleged breach of

the settlement agreement.

Garza’s argument overlooks the undisputed fact that Garza received the benefit of

her bargain under the settlement agreement by the Bank releasing her from liability on the

payoff loan, by forgiving her of the remaining balance of the payoff loan, and by obtaining

dismissal of the lawsuit between them. In addition, Garza did not plead a cause of action

for rescission. Even if she had, however, her evidence would be insufficient to withstand

the Bank’s no-evidence motion for summary judgment on damages because she presented

no evidence that she lacks an adequate remedy at law for damages. See Ferguson, 764

S.W.2d at 886 (holding trial testimony presented more than a scintilla of evidence that the

party lacked an adequate remedy at law to support an award of rescission damages); see

also Costley, 894 S.W.2d at 386 (discussing how evidence showed lack of an adequate

legal remedy and thus supported rescission of insurance contract).

Under the applicable standard of review, the summary-judgment evidence does not

raise a genuine issue of material fact regarding whether Garza sustained damages as a

result of the alleged breach of contract. The trial court did not err in granting the Bank’s

no-evidence summary judgment motion. Accordingly, we overrule Garza’s first issue on

appeal. In light of our disposition of this issue, we need not reach Garza’s second issue

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concerning the Bank’s traditional motion for summary judgment. See TEX. R. APP. P. 47.1;

see also Ridgway, 135 S.W.3d at 600.

III. CONCLUSION

We affirm the trial court’s judgment.

Gregory T. Perkes
Justice

Delivered and filed the
15th day of November, 2012.

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