Gil Ramirez and Mariachi Bar & Grill LLC v. Coca-Cola Refreshments USA, Inc. Fka Coca-Cola Enterprises, Inc.

Opinion issued October 22, 2013.

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-13-00278-CV
———————————
GIL RAMIREZ AND MARIACHI BAR AND GRILL LLC, Appellants
V.
COCA-COLA REFRESHMENTS USA, I NC. FKA COCA-COLA
ENTERPRISES, INC. Appellee

On Appeal from the County Civil Court at Law No. 4
Harris County, Texas
Trial Court Cause No. 1017216

MEMORANDUM OPINION

In this suit on a sworn account, Coca-Cola Refreshments USA sought a

judgment for money owed for goods and services that it provided to a restaurant.

The trial court granted Coca-Cola’s motion for summary judgment and awarded
attorney’s fees. The restaurant debtors appeal, challenging the evidence supporting

summary judgment and the attorney’s fees. We hold that the trial court properly

granted summary judgment, but that an issue of material fact exists as to the

reasonableness of the fees awarded. Accordingly, we affirm in part, and reverse

and remand in part for trial of the attorney’s fees issue.

Background

Mariachi Bar & Grill, and Gil Ramirez as its guarantor, signed a credit

agreement with Coca-Cola Refreshments USA. The agreement facilitated

Mariachi’s purchase of Coca-Cola products on credit. Mariachi used the credit to

purchase $8,051.37 worth of goods. Mariachi later defaulted. After several

attempts to collect payment, Coca-Cola sued on its sworn account. With its

original petition, Coca-Cola included a business records affidavit, the credit

agreement, and the invoices for Mariachi’s purchases. Jennifer Burton, Coca-

Cola’s director of credit and collections and its custodian of records, supplied the

affidavit. Coca-Cola also directed several requests for admissions to Mariachi and

Ramirez.

In their original answer, Mariachi and Ramirez did not file a verified denial

of Coca-Cola’s claim on the account. Coca-Cola moved for summary judgment,

claiming that the answer was insufficient as a matter of law and that Mariachi had

conceded all material factual issues by not timely responding to Coca-Cola’s

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request for admissions. Mariachi then amended its answer to deny Coca-Cola’s

sworn account. Ramirez also averred that he did not sign the invoices or order the

goods described in the invoices and that he did not know who had signed the

invoices on Mariachi’s behalf.

Coca-Cola again moved for summary judgment, and it included a second

affidavit by Jennifer Burton. The trial court granted summary judgment and

awarded Coca-Cola its attorney’s fees.

Discussion

I. Sworn Account

Mariachi and Ramirez contend that Coca-Cola did not establish the amount

owed to Coca-Cola.

Standard of Review

We review de novo the trial court’s ruling on a motion for summary

judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d

844, 848 (Tex. 2009). In a traditional motion for summary judgment, like the one

filed in this case, the movant must establish that no genuine issue of material fact

exists and that the movant is thus entitled to judgment as a matter of law. TEX. R.

CIV. P. 166a(c). When reviewing a summary judgment, we take as true all

evidence favorable to the nonmovant and indulge every reasonable inference and

resolve any doubts in the nonmovant’s favor. Valence Operating Co. v. Dorsett,

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164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accid. Ins. Co. v. Knott, 128

S.W.3d 211, 215 (Tex. 2003).

Conclusory statements in an affidavit unsupported by facts are insufficient to

support or defeat summary judgment. Wadewitz v. Montgomery, 951 S.W.2d 464,

466 (Tex. 1997). A conclusory statement is one that does not provide the

underlying facts to support the conclusion and cannot be readily controverted.

Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991); Rizkallah v. Conner, 952

S.W.2d 580, 587 (Tex. App.—Houston [1st Dist.] 1997, no writ); see also Earle v.

Ratliff, 998 S.W.2d 882, 890 (Tex. 1999) (holding that witness’s affidavit is

conclusory if it fails to explain basis of witness’s statements to link his conclusions

to facts).

Analysis

In any action founded upon an open account or claim for goods, including a

claim for a liquidated money demand based upon written contract, the account is

prima facie evidence that a claim for the amount is owed if a systematic record has

been kept and the record is supported by an affidavit. TEX. R. CIV. P. 185. A

defendant must rebut a sworn account with a sworn denial. Id.; TEX. R. CIV. P.

93(10); Canter v. Easley, 787 S.W.2d 72, 73 (Tex. App.—Houston [1st Dist.]

1990, writ denied); see also Huddleston v. Case Power & Equip. Co., 748 S.W.2d

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102, 103-04 (Tex. App.—Dallas 1988, no writ) (holding that sworn general denial

is insufficient).

To prevail against a sworn denial, a plaintiff must show: (1) the sale and

delivery of merchandise; (2) the amount owed is just, that is, in accordance with an

agreement, or if there is no agreement, the prices are the usual, customary and

reasonable prices for that merchandise; and (3) the amount is unpaid. Worley v.

Butler, 809 S.W.2d 242, 245 (Tex. App.—Corpus Christi 1990, no writ).

Coca-Cola’s credit agreement shows that Ramirez signed both as the

representative of Mariachi and as a personal guarantor, agreeing to pay Coca-Cola

for all purchases. The agreement provides that the invoices “represent the billing

document[s]” and that no further bills would be sent. The invoices reflect that

Mariachi and Ramirez owe $8,051.37 for five purchases of soda syrups and other

fountain supplies, ordered over a three-month period in early 2011. The invoices

appear to have been signed upon delivery of the goods by truck to Paco Joe’s, at

9333 Bryant Street, the address listed for service of process for Ramirez.

Coca-Cola produced two affidavits by Jennifer Burton, recounting her

dealings with Mariachi. Burton personally handled Mariachi’s accounts and Coca-

Cola’s collection efforts. Mariachi bought the goods described in the invoices.

Mariachi’s representatives signed the invoices and took delivery of the items. The

balance owed was $8,051.37 (the amount awarded by the trial court in damages).

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Burton further avers that the prices on the invoices were agreed prices,

representing reasonable market values for the goods sold.

Mariachi and Ramirez contend on appeal their amended sworn denial in

response to the motion for summary judgment destroys the evidentiary effect of

Coca-Cola’s Rule 185 petition, forcing Coca-Cola to prove its claim. Williams v.

Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 234 (Tex. App.—

Houston [1st Dist.] 2008, no pet.). They fail to recognize, however, that Coca-

Cola adduced evidence of the substantive elements of its suit on a sworn account in

its motion for summary judgment. Wright v. Christian & Smith, 950 S.W.2d 411,

412 (Tex. App.—Houston [1st Dist.] 1997, no writ) (enumerating elements of both

sworn account and breach of contract).

Coca-Cola’s evidence satisfies its burden. Rhone-Poulenc, Inc. v. Steel, 997

S.W.2d 217, 222-23 (Tex. 1999); Hahn v. Love, 321 S.W.3d 517, 523 (Tex.

App.—Houston [1st Dist.] 2009, pet. denied). The invoices—and the affidavits

authenticating and corroborating them—prove a sale and delivery of goods and an

agreement as to price. United Bus. Machs. v. Entm’t Mktg, Inc., 792 S.W.2d 262,

264 (Tex. App.—Houston [1st Dist.] 1990, no writ) (holding that affidavit by

plaintiff’s employee, who was responsible for defendant’s account with plaintiff

and signed invoices showing defendant’s receipt of goods, sufficed to prove

delivery). Each invoice identifies the goods sold to Mariachi, the place and date of

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delivery, and that Mariachi’s representative signed each invoice to confirm receipt

of those goods. Burton’s affidavit confirms the reasonableness of the prices listed

on the invoices and that Mariachi agreed to pay those prices. See United Bus.

Machs., 792 S.W.2d at 264 (holding that signed invoices and affidavit by creditor’s

employee were sufficient to prove that prices were reasonable and that defendant

agreed to them). Finally, Burton’s affidavit shows that Mariachi’s account was

unpaid.

In the face of Coca-Cola’s evidence, Ramirez averred that he did not sign

the invoices, that he did not order the goods described in the invoices, and that he

did not know who signed the invoices. Under the guaranty agreement, however,

Ramirez was liable to Coca-Cola for any amount Mariachi failed to pay, regardless

of whether Ramirez personally knew of, or consented to, the specific purchases.

Ramirez does not deny signing the credit and guaranty agreement and does not

deny that a Mariachi representative purchased the goods and took delivery of them.

Mariachi also relies on its denials to Coca-Cola’s request for admissions. A

party cannot, however, rely on its own denials to requests for admissions for

summary judgment proof. Stauder v. Nichols, No. 01-08-00773-CV, 2010 WL

2306385, at *7 (Tex. App.—Houston [1st Dist.] June 10, 2010, no pet.) (mem.

op.); Jeffrey v. Larry Plotnick Co., Inc., 532 S.W.2d 99, 102 (Tex. Civ. App.—

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Dallas 1975, no writ). Mariachi’s responses thus do not raise a genuine issue of

material fact.

Finding no genuine issue of material fact, we hold that the sworn account

and the accompanying affidavits support the trial court’s summary judgment.

II. Attorney’s Fees

Mariachi contends that the trial court erred in awarding Coca-Cola its

requested attorney’s fees.

Standard of Review

Section 38.001(7) of the Texas Civil Practice and Remedies Code authorizes

the award of attorney’s fees in this case. That provision states, “[a] person may

recover reasonable attorney’s fees . . . if the claim is for . . . a sworn account . . .”

TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(7) (West 2008). Any fees must be

reasonable and necessary, which are questions of fact, as well as equitable and just,

which are questions of law. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998).

Although what constitutes reasonable attorney’s fees is a question of fact, clear,

direct, and uncontroverted evidence, even from an interested witness, will establish

that attorney’s fees sought are reasonable and necessary, where the opposing party

had means and opportunity to disprove the testimony, but it failed to do so. See

Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547 (Tex. 2009) (citing

Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990));

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Rosenblatt v. Freedom Life Ins. Co. of Am., 240 S.W.3d 315, 321 (Tex. App.—

Houston [1st Dist.] 2007, no pet.).

Analysis

The trial court awarded $3,320.00 in attorney’s fees. In a controverting

affidavit, Mariachi and Ramirez’s counsel observes that a contingent fee contract

does not provide a sufficient basis to establish that fees are reasonable, and the

affidavit filed by Coca-Cola’s attorney fails to address the Arthur Andersen

reasonableness factors. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d

812, 818 (Tex. 1997); see TEX. DISCIPLINARY RULES PROF’L CONDUCT R. 1.04(b),

reprinted in TEX. GOV’T CODE ANN., tit. 2, subtit. G., app. A (West 2013) (TEX.

STATE BAR R. art. X, § 9). In his affidavit, Mariachi’s attorney questions the

reasonableness of Coca-Cola’s attorney’s fees based on the case’s simplicity. He

notes that the parties engaged in no discovery beyond the exchange of forms, and

that there were no motions before the court apart from the summary judgment

motion. He disputes the reasonableness and necessity of the $3,320.00 award.

Coca-Cola responds by citing its expert witness designation for its attorney,

which noted an hourly rate and the number of hours the attorney expected to work

on the case, and the attorney’s affidavit. Only the affidavit constitutes summary

judgment evidence. In his affidavit, Coca-Cola’s attorney describes his experience

as an attorney, his familiarity with the fees customarily charged by attorneys in

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Harris County, and explains that he is handling the case on a contingent fee

arrangement. He describes generally his efforts on the case, which “include but are

not limited to investigating to determine Defendant’s circumstances, attempting to

secure collection of the indebtedness by amicable means, preparing and filing the

Petition in this cause, arranging for service of citation and preparing the Judgment

herein.” He concludes by averring that $3,320.00 is a “reasonable and customary”

attorney’s fee based upon the amount in controversy.

We hold that Mariachi and Ramirez raise an issue of fact; namely, whether

Coca-Cola conclusively proved the number of hours its attorney worked or the

hourly rate he charged, and whether the pre-trial proceedings were extensive

enough to justify the amount awarded. Coca-Cola cannot prevail because

Mariachi’s attorney proffered an affidavit contesting the reasonableness of the fees.

An affidavit need not recite the Arthur Andersen factors. Delcor USA, Inc. v.

Texas Indus. Specialties, Inc., No. 14–11–00048–CV, 2011 WL 6224466, at *5

(Tex. App.—Houston [14th Dist.] Dec. 13, 2011, no pet.) (mem. op.). Considering

the affidavit in light of those factors, however, it does not conclusively prove the

reasonableness of Coca-Cola’s attorney’s fees. The affidavit does not itemize the

hours worked or identify a billable rate. Nor does it address the proportion of the

time the case occupied or whether it prevented the attorney from taking other

cases. The relevant information supporting the fee award is that the fee was

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contingent, and that, in the attorney’s estimation, it was reasonable and customary.

Given Mariachi’s attorney’s counter-affidavit, evidence of a contingent fee

arrangement is not enough to support an award of attorney’s fees. Arthur

Andersen, 945 S.W.2d at 818–19.

Because Mariachi and Ramirez raise an issue of material fact, we hold that

the trial court erred in awarding attorney’s fees as a matter of law. Accordingly,

we reverse the trial court’s summary judgment on the attorney’s fees award and

remand that part of the case for further proceedings.

Conclusion

Coca-Cola met its summary judgment burden in its action on a sworn

account, but a fact issue exists with respect to its request for attorney’s fees. We

therefore affirm the summary judgment, but reverse and remand the request for

attorney’s fees to the trial court.

Jane Bland
Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.

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