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Consolidated Healthcare Services, LLC v. Mainland Shopping Center, Ltd.

Court of Appeals of Texas, Fourteenth District

December 19, 2019

CONSOLIDATED HEALTHCARE SERVICES, LLC D/B/A A1 IMAGING CENTERS, Appellant
v.
MAINLAND SHOPPING CENTER, LTD., Appellee

          On Appeal from the 151st District Court Harris County, Texas Trial Court Cause No. 2016-66745

          Panel consists of Justices Wise, Zimmerer, and Spain

          MAJORITY OPINION

          Jerry Zimmerer Justice

         Appellant Consolidated Healthcare Services, LLC, d/b/a A1 Imaging Centers (Consolidated), appeals the final summary judgment granted in favor of appellee, Mainland Shopping Centers, Ltd. (Mainland), on its breach of contract cause of action. In addition to arguing that the trial court did not err when it granted its motion for summary judgment, Mainland asserts that this court does not have jurisdiction over this appeal because Consolidated filed its notice of appeal too late. We conclude that we have jurisdiction to consider Consolidated's appeal. We also hold that the trial court did not err when it granted Mainland's motions for summary judgment. We therefore affirm the trial court's final judgment.

         Background

         Consolidated's predecessor-in-interest leased a space in a shopping center managed by Mainland's predecessor-in-interest. Eventually, Consolidated fell behind in its rent payments. To resolve the delinquent rent issue, the parties entered into the "Agreement of Termination and Mutual Release of Lease" (Agreement).

         In the Agreement, in exchange for the termination of the lease, Consolidated agreed to pay Mainland $37, 375 divided into six equal payments, with a final balloon payment due on April 30, 2016. The parties also agreed that Consolidated had until that same day to sell and remove an MRI scanner located inside the leased space. The Agreement additionally provided that "the net proceeds of sale of the MRI Scanner in the Leased Premises (net of all costs of sale including but not limited to construction costs to remove the MRI Scanner and repair/rebuild the Leased Premises) shall be applied to offset the Settlement Payment." The Agreement also stated that if the MRI was not removed by the April 30 deadline, Mainland could "sell or discard the MRI Scanner as [Mainland deemed] fit." It further provided that Mainland was "entitled to reimbursement from [Consolidated] for any costs incurred in the removal of the MRI Scanner from the Leased Premises (including costs to repair/rebuild the Leased Premises)." Consolidated also agreed that it would indemnify Mainland "for any costs resulting from removal of the MRI Scanner." Finally, the Agreement gave Mainland "sole discretion to consent to or deny any proposed sale of the MRI Scanner," but Mainland could not unreasonably withhold that consent.

         Consolidated made only the first two payments called for by the Agreement. In addition, Consolidated was unable to find a purchaser for the MRI by the April 30 deadline. Mainland filed suit alleging that Consolidated had breached the Agreement. Mainland alleged that it had incurred damages totaling at least $31, 125 as a result of Consolidated's breach. Mainland also sought attorney's fees. During discovery, Mainland designated a construction expert and disclosed that the expert would testify that it would cost about $60, 000 to remove the MRI from the leased space and then rebuild the exterior wall that would have to be demolished to accomplish the removal.[1]

         Mainland eventually filed a traditional motion for summary judgment on its breach of contract cause of action. In the motion Mainland asserted it had established as a matter of law that Consolidated had breached the Agreement, and also that Mainland had suffered $91, 097.67 as a result of the breach.[2]Consolidated simultaneously filed an amended answer and a response to Mainland's motion for summary judgment. In the amended answer Consolidated added the affirmative defense of failure to mitigate damages and also alleged that it was entitled to an offset based on the value of the MRI in Mainland's possession. Consolidated argued in its summary judgment response that Mainland's evidence was insufficient to establish it breached the contract as a matter of law because Mainland's affidavits were self-serving and not easily controverted. Consolidated also included a reference to its newly-added affirmative defense of failure to mitigate damages. Consolidated did not, however, attach any evidence to its summary judgment response.

         The trial court signed an interlocutory summary judgment order granting Mainland's motion on the question of liability and damages. It awarded Mainland the entire amount of damages that it sought, $91, 097, 67, as well as attorney's fees in the amount of $11, 640. The trial court then stated "that the only outstanding issue for the Court to decide is what credit or offset, if any, [Consolidated] may be entitled to regarding the sale of the MRI machine by [Mainland]. All other issues pled by either party are resolved by this ORDER."

         Mainland then filed a second motion for summary judgment asserting both traditional and no-evidence grounds on Consolidated's failure to mitigate affirmative defense and assertion that it was entitled to an offset or credit. Mainland argued that Consolidated was not entitled to an offset or credit against the unpaid $31, 125 balance because Mainland had no duty under the Agreement to sell the MRI, or to even look for a buyer. In addition, Mainland pointed out that if Consolidated had not found a buyer by the April 30 deadline, Mainland had the authority under the Agreement to simply discard the MRI. Mainland then argued Consolidated had no evidence that Mainland (1) had not exercised reasonable care to minimize damages, or (2) did anything that caused further damages. Finally, Mainland argued Consolidated had no evidence of any amount of damages that could have been avoided through the exercise of reasonable care.

         Consolidated filed a response to Mainland's motion in which it asserted entitlement to a $15, 000 credit or offset because Mainland had denied Consolidated the opportunity to sell the MRI because Mainland "had not seen documents from the buyer of the machine prior to sale." Consolidated attached 24 pages of emails discussing the past-due payments called for by the Agreement, abandoned patient files inside the leased space, as well as the removal of the MRI from the leased space. Consolidated did not attach any affidavits to the response authenticating the emails. The emails were between several people including Ronald Hock, Consolidated's general counsel, Jeremy Roberts, counsel for Mainland, Linda Clayton, Mainland's property manager, Rick Miller with "makhealthcare," and Satheesh also with "makhealthcare." There is no evidence explaining who Rick Miller or Satheesh are, or how they are connected to the matters at issue in this appeal.

         In addition, the only discussion regarding the sale of the MRI was Consolidated's belief, in early March 2016, that it had a "possible sale," with an undisclosed potential buyer, in the works where the gross proceeds could be $15, 000. Hock mentioned this possible deal in an email to Roberts in which he also put forward renegotiating the Agreement to rework the payment schedule from a three-month time period to "a more reasonable repayment schedule" of 24 months. When Roberts responded that Mainland was interested but it needed to review the sale and construction proposal documents, Hock admitted that "none of those documents exist at present." Roberts then told Hock "that's fine." Roberts explained that Mainland needed "a chance to look at and approve everything before things actually get moving."

         There is then a gap from the middle of March until an email sent on May 14, 2016. In that email, Roberts wrote to "Ron/Satheesh" that he was "proposing a conference call on Monday to discuss potential removal of the [MRI]. I need to be clear that removal is not currently approved and no construction whatsoever can happen at the property at this time. Please let me know if you are available at 10am cst on Monday to discuss." Satheesh responded the next day: "Thanks Jeremy [Roberts] for the call and we were able to stop my team from going to Texas. As I had mentioned, we are only directed by [Consolidated] to coordinate the removal. Financial terms [are] between you and [Consolidated] and if we are removing next week, my team [has] to start on Monday. If not[, ] it will have to be moved after 4 weeks. I am available for the call anytime tomorrow morning." This was followed by an email from Hock to Roberts on May 16 in which he asked for "Satheesh and Rick [to] work together with Linda on the premises related details, as we discussed previously. We do not want any window of opportunity to close again." Roberts responded the same day telling Hock

Ron, all we were told is that the buyer would submit the items we needed for review in advance to us. This was never done. After speaking with Satheesh a couple days ago, we learned for the first time that the prospective buyer is not responsible for paying to restore my client's walls, proceeds from sale are not going to us, proceeds to Consolidated (that are presumably fbo landlord) are potentially lower than the cost to restore our walls, we will not have opportunity to review bill of sale or construction plans. . . As matters stand, this is not going to work. I am proposing a call to discuss this fully and ensure we are not missing any information, but for the time being this cannot proceed.

         There were also emails from later in May and early June, 2016, regarding a meeting at the shopping center on June 6 to allow a contractor to examine the leased space so he could prepare a written quote for the removal of the MRI and subsequent rebuild of the exterior wall. Consolidated offered no other evidence regarding the possible sale of the MRI, the cost of removing the MRI from the leased space, or why the possible sale of the MRI did not proceed past these discussions regarding a meeting at the leased space.[3]

         The trial court granted Mainland's second motion for summary judgment and signed an amended final judgment awarding Mainland damages totaling $91, 097.67, attorney's fees of $11, 640, prejudgment and post-judgment interest, and taxable costs. This appeal followed.[4]

         Analysis

         I. We have jurisdiction over Consolidated's appeal.

         We turn first to Mainland's motion to dismiss. Mainland argues in the motion that this court does not have jurisdiction because Consolidated's notice of appeal was untimely.

         This court has jurisdiction to determine our own jurisdiction. See Gilchrist Cmty. Ass'n v. Cty. of Galveston, No. 14-17-00681-CV, 2018 WL 6722343, at *2 (Tex. App.-Houston [14th Dist.] Dec. 21, 2018, no pet.) (mem. op.) (citing State v. Naylor, 466 S.W.3d 783, 787 (Tex. 2015)). Issues involving questions of jurisdiction are treated as questions of law. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).

         The amended final judgment in this case was signed on November 27, 2017. Consolidated filed a motion for reconsideration on December 21, 2017. In that motion, Consolidated re-urged the evidentiary objections it had made in response to Mainland's motion for summary judgment and it asked the trial court for an "express ruling" on them. On March 9, 2018, Consolidated simultaneously filed an Amended Motion for Extension of Time to File Notice of Appeal and a Notice of Appeal. Mainland argues that Consolidated's notice of appeal was untimely because the motion for reconsideration asking for evidentiary rulings did not extend the timetable for filing a notice of appeal because it did not seek a substantive change in the final judgment. In making this argument, Mainland primarily relies on the Dallas Court of Appeals' opinion Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 294 (Tex. App.-Dallas 2009, no pet.). In that case, the court, in dicta, described post-judgment orders striking summary judgment evidence as collateral to the judgment and stated that they could not be "properly characterized as vacating, modifying, correcting, or reforming the judgment under Rule 329b." Id.

         The Rules of Appellate Procedure, however, are to be construed reasonably, yet liberally. Verburgt v. Dorner, 959 S.W.2d 615, 616 (Tex. 1997). An appeal should not be dismissed "whenever any arguable interpretation of the Rules of Appellate Procedure would preserve the appeal." Id. A timely-filed post-judgment motion that seeks a substantive change in an existing judgment qualifies as a motion to modify under Rule 329b(g) and thus extends the trial court's plenary power as well as the amount of time a party has to perfect their appeal. Lane Bank Equip. Co. v. Smith S. Equip., Inc., 10 S.W.3d 308, 314 (Tex. 2000); see Crotts v. Cole, 480 S.W.3d 99, 102-03 (Tex. App.-Houston [14th Dist.] 2015, no pet.) ...


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