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Saad v. Valdez

Court of Appeals of Texas, Fourteenth District

March 30, 2017

RICHARD SAAD, JR., Appellant
v.
VRISELDA VALDEZ, KENNETH VALDEZ, AND MOBILITY HEADQUARTERS, INC., Appellees

         On Appeal from 234th District Court Harris County, Texas Trial Court Cause No. 2011-17650

          Panel consists of Justices Boyce, Christopher and Jamison.

          MEMORANDUM OPINION

          William J. Boyce Justice.

         Richard 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.

         Saad 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.

         Saad 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 promissory note.

         Finally, 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.

         Factual and Procedural Background

         I. The Underlying Transaction

         Mobility Headquarters, Inc. sold mobility equipment and retrofitted vehicles for disabled drivers. Vriselda Valdez was the company's president; Kenneth Valdez was an agent and employee.

         Saad 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 note.

         The 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.

         The 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.

         After 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.

         II. The Parties Sue

         Saad 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.

         III. Summary Judgments

         On July 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 contract.[1]

         With 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 fact."

         Mobility 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."

         Saad 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").[2]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."

         Saad 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.

         Together 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."

         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."

         The 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.

         The 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.

         IV. Bench Trial

         A bench 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.

         Mobility 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 attorney's fees.

         The 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."

         Saad 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, 2015.

         Standards of Review

         Saad's 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.

         Saad 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 promissory note.

         Saad 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 evidence.

         I. Traditional and No-Evidence Summary Judgment

         We 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).

         A 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.

         The 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).

         II. Legal and Factual Sufficiency

         When, 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).

         When 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 827.

         For 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 at 819.

         III. Admission of Evidence

         We 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).

         Analysis

         We 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.

         We 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 summary judgment).

         The 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.

         We now 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.

         I. Summary Judgment

         Saad 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 misrepresentation."

         A. Fraud and Fraudulent Inducement

         Saad 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."[3]

         Before 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.

         The 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).

         Fraudulent 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.

         With 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." Id.

         Saad 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.

         Saad's 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.

         Further, the record contains no evidence raising a fact issue that any alleged written representation[4] 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 as follows:

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 as represented.

         This 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.

         This 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.

         We 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."

         B. Negligent Misrepresentation

         We now 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 negligent misrepresentation."

         "The 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).

         On appeal, Saad's argument consists of the following statements:

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.

         Saad's 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.

         Accordingly, we overrule Saad's second issue. And in light of our disposition of Saad's second issue, we need not address his first issue.

         II. Bench Trial

         We now 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.

         A. Illegality

         Saad 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).

         Saad's 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 business.

         Saad 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 business."

         Denson 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 855.

         In 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.

         Within 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 ...


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