Appeal from 234th District Court Harris County, Texas Trial
Court Cause No. 2011-17650
consists of Justices Boyce, Christopher and Jamison.
William J. Boyce Justice.
Saad, Jr. purchased the business assets of Mobility
Headquarters, Inc. but made only one payment on the
promissory note he signed in connection with the asset
purchase. Saad sued Vriselda and Kenneth Valdez and Mobility
Headquarters, claiming the Valdezes misrepresented to him
that no licensing was required to operate a business as an
independent mobility motor vehicle dealer; he also sued for
breach of a non-compete agreement. Mobility Headquarters
counter-sued Saad for breach of the promissory note. The
trial court ruled in favor of Mobility Headquarters on its
claim and ruled against Saad on his claims.
challenges the trial court's summary ruling on his claims
for fraud, fraudulent concealment, and negligent
misrepresentation. Because there is no evidence that the
Valdezes' alleged misrepresentation was material with
regard to his fraud and fraudulent inducement claims, and
because Saad waived his complaint regarding his negligent
misrepresentation claim, we affirm the trial court's
judgment with respect to Saad's claims.
also challenges the trial court's ruling on the claim for
breach of promissory note. We affirm the trial court's
ruling because the promissory note was neither illegal nor
void; there is no evidence Kenneth breached the non-compete
agreement so as to excuse Saad's performance; there is
evidence that Mobility Headquarters introduced the original
promissory note at the bench trial; and there is sufficient
evidence to support the trial court's award on the
Saad challenges the trial court's (1) admission of
testimony about Mobility Headquarters's billing records
that were not produced in response to Saad's discovery
request; and (2) award for trial and appellate attorney's
fees on sufficiency grounds. We affirm the trial court's
judgment with respect to the appellate attorney's fees
award because the trial court acted within its discretion in
determining that Saad was not unfairly surprised by the
admission of any billing records evidence, and because there
was sufficient evidence to support the trial court's
award of appellate attorney's fees. However, because the
evidence is insufficient to support the trial court's
award for trial attorney's fees, we reverse the trial
attorney's fees award and remand this case for a
redetermination of trial attorney's fees consistent with
this court's opinion.
and Procedural Background
The Underlying Transaction
Headquarters, Inc. sold mobility equipment and retrofitted
vehicles for disabled drivers. Vriselda Valdez was the
company's president; Kenneth Valdez was an agent and
purchased the business assets of Mobility Headquarters on
January 14, 2011; Saad did not purchase the corporation. The
"Bill Of Sale" provides that Saad purchased
"the following described personal property" from
Mobility Headquarters: "Business, Business Name,
Furniture, Fixtures, Equipment, Leasehold Improvements,
Customer List, Business Telephone and Facsimile Number(s),
Lease Rights, Contract Rights, Goodwill and Inventory of the
business known as MOBILITY HEADQUARTERS." Saad paid
$176, 626.31 in cash and executed a $330, 000 promissory
Valdezes provided a "Business Disclosure Statement"
in anticipation of selling these business assets. Vriselda
first signed this document in 2008 and then initialed it on
January 13, 2011. The document contains a section entitled
"Required Licenses, Permits, And/Or Certificates"
and asks that all required licenses, permits, and
certificates be listed. Vriselda listed various certificates
Mobility Headquarters had but left the space for required
licenses and permits blank. The Valdezes also provided Saad
with a document entitled "Tier 2 Business Brokers;"
this document was signed by Kenneth on January 10, 2010. The
document's section for "Licenses & Permits
Required To Operate The Business" listed "Sales
Tax, Texas Registered Creditors Permit, CCR." Under a
section entitled "List any other licenses required,
" the notation "N/A" was written.
Valdezes and Mobility Headquarters executed covenants not to
compete with Saad in Texas for five years. The covenants
prohibited the Valdezes and Mobility Headquarters from
engaging in business "generally described as the
manufacture of wheelchair accessible vans and durable medical
equipment business together with any and all related services
and products." The parties also executed a security
agreement and a bill of sale.
the asset purchase, Saad began operating a new entity called
Mobility Headquarters of Texas, L.L.C. He made one payment
under the promissory note on February 14, 2011. Vriselda
demanded that Saad pay the outstanding balance on the
promissory note on March 16, 2011, after Saad failed to make
the March payment as required. Saad made no further payments.
The Parties Sue
sued the Valdezes and Mobility Headquarters on March 22,
2011, and amended his petition several times during the
course of litigation. Saad's live pleading alleged claims
for fraud, fraud in the inducement, negligent
misrepresentation, and breach of the non-compete covenants.
He alleged that the Valdezes negligently or fraudulently made
misrepresentations "orally" and "in
writing" on a document entitled "Business
Disclosure Statement." The Valdezes allegedly
misrepresented that no "special licensing to operate his
new Company" was required even though Saad needed
licenses to "operate the fabrication portion of the
business." He also alleged that the Valdezes "were
continuing to engage in the sale of mobility vehicles in
violation of the 'Covenant Not to Compete.'" The
Valdezes and Mobility Headquarters filed an answer. In
addition to their answer, the Valdezes and Mobility
Headquarters filed counterclaims for breach of contract,
quantum meruit, conversion, and fraud. Saad alleged the
following affirmative defenses in response to the
counterclaims: fraudulent inducement, negligent inducement,
"illegal and/or criminal activities, " anticipatory
repudiation, lack of consideration, negligence, contributory
negligence, fraud, doctrine of laches, and illegality.
7, 2014, the Valdezes and Mobility Headquarters filed a
traditional summary judgment motion on Saad's claims for
fraud and fraudulent inducement; they combined the
traditional motion with a no-evidence summary judgment motion
on Saad's claims for fraud, fraudulent inducement,
negligent misrepresentation, and breach of
regard to their traditional summary judgment motion, the
Valdezes and Mobility Headquarters argued that they are
entitled to judgment as a matter of law on Saad's fraud
and fraudulent inducement claims because "the
representations which [Saad] alleges were made to him by the
Defendants are statements of legal opinion and not
Headquarters moved for partial traditional summary judgment
on its counterclaim for breach of the promissory note because
Saad "judicially admit[ted] in his pleadings that he
discontinued making payments" on the promissory note.
Mobility Headquarters asked the trial court to grant partial
summary judgment "on the issue of [Saad's] liability
under the promissory note made the basis of its breach of
contract claim, and set a writ of inquiry hearing on the
damages and attorney's fees which [it] is entitled to
recover against [Saad] as the result of his breach."
filed a response to the Valdezes' and Mobility
Headquarters's traditional and no-evidence summary
judgment motion and to Mobility Headquarters's partial
traditional summary judgment motion on July 21, 2014. Saad
contended that the Valdezes falsely represented to him that
no license was required to legally operate as a mobility
motor vehicle dealer in Texas, which was evidenced by their
completed "Business Disclosure Statement" and their
failed attempts to obtain a General Distinguishing Number
dealer license ("GDN").Saad argued regarding his
negligent misrepresentation claim that the Valdezes made
false representations in their "Business Disclosure
Statement" and "Tier 2 Business Brokers
Document" that there were no "licenses or
certifications necessary to legally operate the business as a
mobility vehicle dealer."
further argued the Valdezes and Mobility Headquarters
breached the non-compete covenants because Kenneth admitted
buying a vehicle in Austin, Texas approximately 30 days after
the parties signed the covenant not to compete. And Saad
argued that Mobility Headquarters is not entitled to partial
summary judgment on its counterclaim for breach of the
promissory note because he was "lured . . . into the
transaction by fraudulent means, " excusing any
obligation he had to perform under the note.
with his response, Saad also filed a traditional summary
judgment motion on his claims. He argued that
"Defendants were in the business of dealing motor
vehicles for people with handicaps and other disabilities. As
such, they were required by the State of Texas to obtain one
or more licenses to legally operate their business.
Specifically, Defendants were required to have a GDN license,
which they failed to obtain after several attempts." He
also argued that, "as evidenced in the Tier 2 Business
Brokers Document(s), there is no question that Defendants
represented themselves as a mobility dealer to Saad."
argued that he is entitled to summary judgment on his claims
for fraud, fraud in the inducement, and negligent
misrepresentation because he proved as a matter of law that
"Defendants were required to obtain a GDN license to
operate their business. Defendants intentionally made several
false misrepresentations to Saad regarding their status as a
mobility dealer in the State of Texas" to "entice
him into signing the agreement." With regard to his
breach of contract claim, Saad argued he was entitled to
summary judgment because "Defendants have not denied
breaching the Covenant Not to Compete" and Vriselda
testified in her deposition that "she bought and sold
vehicles in the State of Texas within the period restricted
by the covenant."
Valdezes and Mobility Headquarters filed a
"Defendants' Response to Plaintiff's Motion for
Summary Judgment; and Reply to Plaintiff's Response to
Defendants' and Counter-Plaintiff's Motion for
Summary Judgment" on July 25, 2014. Saad filed a
"Sur-Reply to Defendants' Motion for Summary
Judgment, Counter-Defendant's Response to
Counter-Plaintiffs' Motion for Partial Summary Judgment
and Plaintiff's Traditional Motion for Summary
Judgment" on July 28, 2014.
trial court signed an order denying Saad's motion for
traditional summary judgment on January 21, 2015. On the same
day, the trial court signed an order granting the
Valdezes' and Mobility Headquarters's traditional and
no-evidence summary judgment motion; it also signed an order
granting Mobility Headquarters's partial traditional
summary judgment "as to the issue of [Saad's]
liability on the promissory note made the basis of this
suit" and stating that a "hearing on damages and
attorney's fees shall be scheduled." The trial court
subsequently denied Saad's motion for reconsideration of
its summary judgment orders.
trial was held on April 14, 2015. At trial, the court
recalled that it had signed interlocutory summary judgments
"on many claims in this case" and questioned the
parties regarding what remained to be litigated at the bench
trial. Mobility Headquarters's counsel stated that (1)
the only remaining claims were Mobility Headquarters's
claim for breach of the promissory note and attorney's
fees; (2) the Valdezes "are no longer in the suit;"
and (3) the Valdezes and Mobility Headquarters nonsuited all
other claims. Although the trial court recalled that it had
"enter[ed] summary judgment that the promissory note was
breached, " the parties nonetheless agreed that
"breach, damages, and attorney's fees" remained
as issues for the bench trial.
Headquarters presented evidence to support its argument that
Saad breached the promissory note and that it incurred
damages and attorney's fees. Saad presented evidence in
support of his argument that any breach of the promissory
note was excused because the Valdezes (1) misrepresented to
Saad that no licenses were required to operate the business;
and (2) breached the covenant not to compete. Mobility
Headquarters's counsel, Hugh Plummer, Jr., testified
regarding the reasonableness, necessity, and amount of
trial court signed a final judgment on June 2, 2015,
incorporating the previously signed interlocutory summary
judgment orders and ordering that (1) Saad take nothing
against the Valdezes and Mobility Headquarters; (2) Mobility
Headquarters recover from Saad "the amount of $712,
740.42 (representing principal and interest on the note of
$550, 041.42, and $162, 699.00, in reasonable and necessary
attorney's fees in the trial of this cause) plus
interest" of 18 percent annually; and (3) Saad pay
appellate attorney's fees "in the event [Saad]
unsuccessfully appeals this judgment."
filed a motion for new trial on August 6, 2015, which was
overruled by operation of law. See Tex. R. Civ. P.
329b(c). Saad filed a timely notice of appeal on October 1,
appeal challenges the trial court's grant of no-evidence
and traditional summary judgment in favor of the Valdezes and
Mobility Headquarters on his claims for fraud, fraudulent
concealment, and negligent misrepresentation. He argues that
the Valdezes misrepresented to him that no licensing was
required to operate his business when in fact a GDN dealer
license was required.
challenges the trial court's ruling in favor of Mobility
Headquarters's breach of promissory note claim, arguing
that (1) the note was illegal and void against public policy;
(2) his performance under the promissory note was excused by
Kenneth Valdez's breach of the non-compete agreement; (3)
there is no evidence that Mobility Headquarters presented the
original promissory note or a certified copy of the note at
the bench trial; and (4) there is legally and factually
insufficient evidence to support a $550, 041.42 award on the
also challenges the trial court's admission of testimony
about Mobility Headquarters's billing records during the
bench trial that were not produced in response to Saad's
discovery request. He argues that "good cause and a lack
of surprise or prejudice were not shown to allow this
evidence" as required by Texas Rule of Civil Procedure
193.6. Finally, Saad attacks the trial court's award for
trial and appellate attorney's fees, arguing that the
award is not supported by legally and factually sufficient
Traditional and No-Evidence Summary Judgment
review the trial court's grant of summary judgment de
novo. Valence Operating Co. v. Dorsett, 164
S.W.3d 656, 661 (Tex. 2005). In reviewing either a
no-evidence or traditional summary judgment motion, we must
take as true all evidence favorable to the nonmovant and draw
every reasonable inference and resolve all doubts in favor of
the nonmovant. M.D. Anderson Hosp. & Tumor Inst. v.
Willrich, 28 S.W.3d 22, 23-24 (Tex. 2000) (per curiam);
Mendoza v. Fiesta Mart, Inc., 276 S.W.3d 653, 655
(Tex. App.-Houston [14th Dist.] 2008, pet. denied).
no-evidence motion for summary judgment is essentially a
motion for a pretrial directed verdict. Timpte Indus.,
Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009);
see Tex. R. Civ. P. 166a(i). After an adequate time
for discovery, a party without the burden of proof may,
without presenting evidence, seek summary judgment on the
ground that there is no evidence to support one or more
essential elements of the nonmovant's claim or defense.
Tex.R.Civ.P. 166a(i). The nonmovant is required to present
evidence raising a genuine issue of material fact supporting
each element contested in the motion. Id.;
Timpte Indus., 286 S.W.3d at 310.
party moving for a traditional summary judgment must show
that no material fact issue exists and that it is entitled to
summary judgment as a matter of law. Tex.R.Civ.P. 166a(c);
Willrich, 28 S.W.3d at 23. 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. Am. Tobacco Co.
v. Grinnell, 951 S.W.2d 420, 425 (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 produces
sufficient evidence to establish the right to summary
judgment, the burden shifts to the plaintiff to come forward
with competent controverting evidence raising a genuine issue
of material fact. Centeq Realty, Inc. v. Siegler,
899 S.W.2d 195, 197 (Tex. 1995).
Legal and Factual Sufficiency
as here, no findings of fact or conclusions of law are filed
or properly requested in a bench trial, it is implied that
the trial court made all necessary findings to support its
judgment. Holt Atherton Indus., Inc. v. Heine, 835
S.W.2d 80, 83 (Tex. 1992); see Neal v. Neal, No.
14-10-01081-CV, 2011 WL 4554376, at *2 (Tex. App.-Houston
[14th Dist.] Oct. 4, 2011, no pet.) (mem. op.); Hicks v.
Hicks, 348 S.W.3d 281, 284 (Tex. App.-Houston [14th
Dist.] 2011, no pet.). We must affirm the trial court's
judgment on any legal theory that finds support in the
evidence. Neal, 2011 WL 4554376, at *2;
Hicks, 348 S.W.3d at 284. A party's failure to
request findings of fact or conclusions of law does not waive
his right to challenge the legal and factual sufficiency of
the evidence on appeal. Neal, 2011 WL 4554376, at
*2. When, as here, a record is brought forward on appeal, the
trial court's implied findings may be challenged for
legal and factual sufficiency. Willmore v. Quigley,
No. 14-12-00060-CV, 2013 WL 2296187, at *3 (Tex. App.-
Houston [14th Dist.] May 23, 2013, no pet.) (mem. op.);
see Heine, 835 S.W.2d at 84. The same sufficiency
standard of review applies to findings by a trial court as to
findings by a jury. See Ortiz v. Jones, 917 S.W.2d
770, 772 (Tex. 1996) (per curiam); Catalina v.
Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).
reviewing the legal sufficiency of the evidence, we review
the evidence in the light most favorable to the fact findings
and assume that the court resolved all conflicts in
accordance with its judgment. See City of Keller,
168 S.W.3d at 820. We credit evidence favorable to the
findings if reasonable factfinders could do so, and we
disregard contrary evidence unless reasonable factfinders
could not do so. See id. at 827. Evidence is legally
insufficient if: (1) there is a complete absence of evidence
of a vital fact; (2) the court is barred by rules of law or
evidence from giving weight to the only evidence offered to
prove a vital fact; (3) the evidence offered to prove a vital
fact is no more than a mere scintilla; or (4) the evidence
establishes conclusively the opposite of the vital fact.
Id. at 810. The ultimate test is whether the
evidence at trial would enable reasonable and fair-minded
people to reach the finding under review. Id. at
factual sufficiency review, we must consider and weigh all
the evidence, and should set aside the judgment only if it is
so contrary to the overwhelming weight of the evidence as to
be clearly wrong and unjust. Willmore, 2013 WL
2296187, at *3; see Golden Eagle Archery, Inc. v.
Jackson, 116 S.W.3d 757, 761 (Tex. 2003). Under both
standards of review, the trial court as the factfinder is the
sole judge of the credibility of the witnesses and the weight
to be given their testimony, and we will not disturb the
court's resolution of evidentiary conflicts that turn on
credibility determinations or the weight of the evidence.
Murray v. Grayum, No. 03-10-00165-CV, 2011
WL 2533796, at *2 (Tex. App.-Austin June 24, 2011, pet.
denied) (mem. op.); see City of Keller, 168 S.W.3d
Admission of Evidence
review a trial court's decision to admit or exclude
evidence for abuse of discretion. In re J.P.B., 180
S.W.3d 570, 575 (Tex. 2005). A trial court abuses its
discretion in admitting or excluding evidence if it acts
without reference to any guiding rules and principles, or if
the act complained of is arbitrary and unreasonable.
Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d
682, 687 (Tex. 2002); Van Heerden v. Van Heerden,
321 S.W.3d 869, 875 (Tex. App.- Houston [14th Dist.] 2010, no
pet.). We must uphold a trial court's evidentiary ruling
if there is any legitimate basis in the record to support it.
Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d
35, 43 (Tex. 1998). We will not reverse a trial court for an
erroneous evidentiary ruling unless the error probably caused
the rendition of an improper judgment. Interstate
Northborough P'ship v. State, 66 S.W.3d 213, 220
(Tex. 2001); see Tex. R. App. P. 44.1. A successful
challenge to evidentiary rulings usually requires the
complaining party to show that the judgment turns on the
particular evidence excluded or admitted. Tex. Dep't
of Transp. v. Able, 35 S.W.3d 608, 617 (Tex. 2000).
pause at this juncture to discuss more fully the appropriate
scope of review. This discussion is prompted by Saad's
practice of citing evidence largely without regard to whether
the evidence properly can be considered on appeal or whether
it pertains to the specific trial court decision being
challenged. For example, Saad cites to evidence adduced
during the subsequent bench trial to support arguments
challenging the trial court's prior grant of no-evidence
and traditional summary judgment in favor of the Valdezes and
Mobility Headquarters. Saad also cites to evidence that was
not attached to and presented with the particular summary
judgment motions and responses being challenged.
consider only evidence that was before the trial court at the
time it ruled on the particular summary judgment motions
being challenged. See Nguyen v. Citibank N.A., 403
S.W.3d 927, 932 (Tex. App.-Houston [14th Dist.] 2013, pet.
denied) (court of appeals did not consider evidence that was
not attached to summary judgment response); Blankinship
v. Brown, 399 S.W.3d 303, 309 (Tex. App.-Dallas 2013,
pet. denied) (court of appeals considered only evidence that
was before the trial court at the time it ruled on summary
judgment motion, stating "this evidence was not before
the trial court at the time it considered summary judgment.
Accordingly, we may not consider the trial testimony in our
summary judgment analysis"); Neely v. Comm'n for
Lawyer Discipline, 302 S.W.3d 331, 347 n.16 (Tex.
App.-Houston [14th Dist.] 2009, pet. denied) (court of
appeals cited Rule 166a(d) and explained that it cannot
consider summary judgment evidence that was not before the
trial court); McMahan v. Greenwood, 108 S.W.3d 467,
482 (Tex. App.-Houston [14th Dist.] 2003, pet. denied) (court
of appeals did not consider evidence attached to a motion for
new trial that was not before the trial court when it granted
record here is somewhat muddled because evidence arguably
pertaining to some of the claims decided by summary judgment
also was referenced during the bench trial. However, summary
judgment was granted and never "ungranted." Thus,
we do not consider additional evidence adduced at the bench
trial in our review and analysis of Saad's issues
challenging the trial court's grant of summary judgment.
We consider evidence presented at the bench trial only in
addressing Saad's appellate arguments challenging the
trial court's judgment with regard to the specific issues
litigated and decided at the bench trial.
turn to the seven issues Saad raises in his appellate
briefing. We first address Saad's first and second issues
by which he challenges the trial court's grant of summary
judgment in favor of the Valdezes and Mobility Headquarters
on his claims for fraud, fraudulent inducement, and negligent
representation. We then address Saad's third through
seventh issues by which he attacks the trial court's
judgment following a bench trial awarding damages to Mobility
Headquarters on its claim for breach of the promissory note
and attorney's fees.
argues in his first issue that Mobility Headquarters operated
as an independent mobility vehicle dealer and thus needed a
GDN dealer license to operate legally in Texas. See
Tex. Transp. Code Ann. § 503.021 (Vernon 2013); Tex.
Transp. Code Ann. § 503.029(a)(6) (Vernon Supp. 2016).
According to Saad, "[t]he resolution of the GDN issue is
important in analyzing the Trial Court's errors in
granting Appellees' summary judgment motions."
Alternatively, Saad argues that a fact issue exists with
regard to the necessity of a GDN license. Saad argues in his
second issue that the trial court erroneously granted summary
judgment in favor of the Valdezes and Mobility Headquarters
because he "submitted uncontested proof of each one of
the elements of his causes of action for fraud and fraudulent
inducement" and "presented uncontroverted evidence
establishing each element of negligent
Fraud and Fraudulent Inducement
contends that he conclusively established fraud and
fraudulent inducement with "uncontested proof" that
(1) Mobility Headquarters operated as an independent mobility
motor vehicle dealer which necessitated a GDN dealer license
to operate legally in Texas; (2) the Valdezes "knew of
the GDN requirement based on their previous unsuccessful
attempts to obtain one, and, despite this knowledge, the
Valdezes represented to Saad both orally and in writing [on
their Business Disclosure Statement or the Tier 2 Business
Brokers Document] that no licenses (such as a GDN) were
necessary;" and (3) "Saad relied on these
representations to his detriment."
we address Saad's contentions, we note the difference
between the purchase of a corporation and the purchase of its
assets. "The purchaser of stock in a corporation does
not purchase any portion of the corporation's assets, nor
is a sale of all the stock of a corporation a sale of the
physical properties of the corporation." See Tenneco
Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 645 (Tex.
1996). As we discuss further below, this distinction is
germane to the fraud and materiality analysis because this
transaction was structured as a sale of assets rather than a
sale of the corporation itself.
elements of common law fraud are: "(1) that a material
representation was made; (2) the representation was false;
(3) when the representation was made, the speaker knew it was
false or made it recklessly without any knowledge of the
truth and as a positive assertion; (4) the speaker made the
representation with the intent that the other party should
act upon it; (5) the party acted in reliance on the
representation; and (6) the party thereby suffered
injury." Italian Cowboy Partners, Ltd. v. Prudential
Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011).
inducement is "a particular species of fraud that arises
only in the context of a contract and requires the existence
of a contract as part of its proof." Haase v.
Glazner, 62 S.W.3d 795, 798 (Tex. 2001); see also
Nat'l Prop. Holdings, L.P. v. Westergren,
453 S.W.3d 419, 423 (Tex. 2015) (per curiam). Otherwise, a
fraudulent inducement claim requires proof of the same
elements as a fraud claim. See Westergren, 453
S.W.3d at 423; Haase, 62 S.W.3d at 798-99.
regard to the element of materiality, "[m]aterial means
a reasonable person would attach importance to and would be
induced to act on the information in determining his choice
of actions in the transaction in question." Italian
Cowboy Partners, Ltd., 341 S.W.3d at 337; Reservoir
Sys., Inc. v. TGS-NOPEC Geophysical Co., 335 S.W.3d 297,
305 (Tex. App.-Houston [14th Dist.] 2010, pet. denied). In
the context of fraudulent inducement, a representation is
material if it induces a party to enter a contract.
Reservoir Sys., Inc., 335 S.W.3d at 305.
"Even if a misrepresentation is not a party's sole
inducement for entering into the contract, it may still be
material so long as the party relied on it."
contends that he "conclusively established each element
of fraud and fraudulent inducement with competent
proof." Beginning with the element of materiality,
Saad's argument on appeal consists of the following:
A representation is "material" if it is important
to the party to whom it is made in making a decision
regarding the particular transaction or a reasonable person
would attach importance to it and would be induced to act on
the information in determining his/her choice of actions in
the transaction in question. Smith v. KNC Optical,
Inc., 296 S.W.3d 807, 812 (Tex. App.-Dallas 2009, no
pet.); Burleson State Bank v. Plunkett, 27 S.W.3d
605, 613 (Tex. App.- Waco 2000, pet. denied). In other words,
a "representation is material if it induces a party to
enter a contract." Reservoir Sys., Inc., v.
TGS-NOPEC Geophysical Co., L.P., 335 S.W.3d 297, 305
(Tex. App.- Houston [14th Dist.] 2010, pet. [denied]).
Requisite licensing is uncontestably important in the sale of
a business. In this case, licensing was the determining
factor in the transaction. Despite the importance of
licensing, and on the heels of the Valdezes withdrawing
MHI's application to obtain a GDN, Appellees admit
telling Saad that no licenses were required to operate MHI
and the Disclosure Statements do not reflect any licensing
requirements for MHI. Consequently, the statements by the
Valdezes to Saad are material representations conclusively
establishing the first element.
Additionally, "even if a misrepresentation is not a
party's sole inducement for entering into the contract,
it may still be material so long as the party relied on
it." Reservoir Sys., 335 S.W.3d at 305. Saad
relied on the Valdezes['] misrepresentations concerning
the GDN need to legally operate MHI.
statements quoted above do not comply with Texas Rule of
Appellate Procedure 38.1(i), requiring that an
appellant's "brief must contain a clear and concise
argument for the contentions made with appropriate citations
to authorities and to the record." See Tex. R.
App. P. 38.1(i). Saad fails to cite to any evidence that was
before the trial court on summary judgment in support of his
contention that he conclusively established the element of
materiality for his fraud and fraudulent inducement claims.
Saad's complaint is waived. See id.
the record contains no evidence raising a fact issue that any
alleged written representation by the Valdezes made on the
Business Disclosure Statement or the Tier 2 Business Brokers
Document, even if false or contrary to Texas law, was a
material representation. Saad proffered an affidavit stating
My name is Richard Saad, Jr. I am over 18 years of age, of
sound mind, and capable of making this affidavit. The facts
stated in this affidavit are within my personal knowledge and
are true and correct.
I would not have purchased Mobility Headquarters, Inc. had
Defendants disclosed the licensing, governmental contracts
and related regulations applicable to the business.
I had no personal knowledge of the licensing, governmental
contracts and related regulations applicable to the business
affidavit is no evidence that any representation by the
Valdezes regarding licensing requirements was material
because it constitutes no evidence that Saad was induced to
enter into the contract to purchase the assets of Mobility
Headquarters. Instead, the affidavit states that Saad would
not have purchased Mobility Headquarters, Inc. had licensing
requirements been disclosed. There is a difference between
the purchase of a corporation and the purchase of a
corporation's assets. See Tenneco Inc., 925
S.W.2d at 645. Saad did not purchase Mobility Headquarters,
Inc.; he purchased its assets.
affidavit is no evidence that Saad was induced to purchase
the assets of Mobility Headquarters. Accordingly, there is no
evidence in the record before us raising a fact issue as to
the materiality of any alleged representation the Valdezes
made with respect to the necessity of a GDN or other license.
overrule Saad's second issue regarding his contention
that the trial court erroneously granted summary judgment in
favor of the Valdezes and Mobility Headquarters on his fraud
and fraudulent inducement claims because the "evidence
Saad submitted is sufficient to conclusively establish each
element of fraud and fraudulent inducement or at least to
create an issue of fact."
turn to Saad's argument that the trial court erred by
granting no-evidence summary judgment in favor of the
Valdezes and Mobility Headquarters on his negligent
misrepresentation claim because he "presented
uncontroverted evidence establishing each element of
elements of a claim for negligent misrepresentation are as
follows: (1) the representation is made by a defendant in the
course of his business, or in a transaction in which it has a
pecuniary interest; (2) the defendant supplies false
information for the guidance of others in their business; (3)
the defendant did not exercise reasonable care or competence
in obtaining or communicating the information; and (4) the
plaintiff suffers pecuniary loss by justifiably relying on
the representation." Roof Sys., Inc. v. Johns
Manville Corp., 130 S.W.3d 430, 438 (Tex. App.-Houston
[14th Dist.] 2004, no pet.); see Fed. Land Bank Ass'n
v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991).
appeal, Saad's argument consists of the following
Saad produced more than sufficient evidence demonstrating the
Valdezes made false representations concerning licensing that
Saad justifiably relied upon. Saad also presented
uncontroverted evidence establishing each element of
negligent misrepresentation. The Valdezes admit to telling
Saad no licenses were required to operate [Mobility
Headquarters] despite the Texas requirements that businesses
such as [Mobility Headquarters] must have a GDN. These
representations were made despite the fact that [Mobility
Headquarters] had attempted to and could never obtain a GDN.
Saad relied on these statements in purchasing the company.
Appellees had a pecuniary interest in this transaction, and
the false information supplied was intended for the guidance
of Saad. None of the evidence Saad submitted was ever
controverted by Appellees. As a matter of law, summary
judgment should have been granted to Saad on this issue.
argument does not comply with Texas Rule of Appellate
Procedure 38.1(i), which requires that an appellant's
brief must contain a clear and concise argument for the
contentions made with appropriate citations to the record.
See Tex. R. App. P. 38.1(i). Saad fails to cite to
any evidence that was before the trial court on summary
judgment in support of these contentions on appeal.
Saad's complaint is waived. See id. We overrule
Saad's second issue regarding his contention that the
trial court erroneously granted no-evidence summary judgment
in favor of the Valdezes and Mobility Headquarters on his
negligent misrepresentation claim.
we overrule Saad's second issue. And in light of our
disposition of Saad's second issue, we need not address
his first issue.
turn to Saad's third through seventh issues by which he
attacks the trial court's judgment following the bench
trial on Mobility Headquarters's breach of promissory
note claim and attorney's fees request.
argues in his third issue that the trial court erred by
signing a judgment against him on the promissory note. He
says the sales agreement and promissory note are illegal,
unenforceable, and "void against public policy because
[Mobility Headquarters] did not have the required GDN."
Saad argues that the promissory note is an unenforceable and
void contract because "[a] contract to do an act that
cannot be performed without violation of the law" is
void and Mobility Headquarters did not have the GDN dealer
license as required by law. See Tex. Transp. Code
Ann. § 503.021 (Vernon 2013), § 503.029(a)(6)
(Vernon Supp. 2016).
argument is without merit. Saad entered into a contract to
purchase the assets of Mobility Headquarters. Whether
Mobility Headquarters had a GDN dealer license at the time it
operated its business does not affect the legality of the
sale of its assets. Nothing about the sale of Mobility
Headquarters's assets to Saad is illegal or violates a
law. Saad provides no authority for his argument that the
promissory note is illegal, unenforceable, and void against
public policy; nor does Saad explain how a contract for an
asset sale is illegal or void and also renders the
accompanying promissory note illegal and void even if the
company did not have a required license when it operated its
also states that "[i]ndividuals cannot indirectly profit
from a business they are directly prohibited from engaging in
unless properly licensed by statute." For support, he
cites Denson v. Dallas County Credit Union, 262
S.W.3d 846, 854-56 (Tex. App.-Dallas 2008, no pet.). Saad
provides no argument or explanation for his isolated
statement, and we fail to see how the statement has any
relevance in this case. Saad acknowledges buying Mobility
Headquarters's assets; nothing about the transaction
between Saad and Mobility Headquarters to purchase assets
involves "individuals indirectly profit[ing] from a
is not applicable in this case. There, Denson and his car
dealership, which was not licensed to sell cars in Dallas
County, entered into an agreement with Dallas County Credit
Union through its agent Chapman. Id. at 848. Under
the agreement, Denson and his dealership located cars for
Credit Union's customers, Credit Union financed the
loans, and the profits from the car sales were split.
Id. Denson and his dealership sued Chapman and
Credit Union for breach of contract and other torts claiming
that on many loans Chapman told Denson the cars sold for a
lower amount when the Credit Union actually financed a higher
amount, resulting in Denson and his dealership making less
profit. Id. at 849. Denson conceded he and his
dealership "had no legal ability to transact business as
an automobile dealer from any location in Dallas County, yet
they knowingly and willingly engaged Chapman as their sales
agent for the express purpose of selling vehicles at the
Credit Union in Dallas County." Id. at 853. The
court stated that "the transaction of selling the cars
was illegal because on the day of the transactions, [Denson
and his dealership] did not have the statutory required
license. Thus, we conclude [their] breach of contract claim
is barred by the illegality defense." Id. at
contrast to the facts in Denson, Saad and Mobility
Headquarters were not engaged in any business together for
which a GDN or any other license was required. Instead, they
entered into an asset sale agreement. They had no other
common business purpose or dealings.
his third issue, Saad also contends that, because he has
conclusively proved his claims for fraud and fraudulent
inducement in his second issue and "raised" fraud
and fraudulent inducement as affirmative defenses to Mobility
Headquarters's claims, this court should reverse the