Mary Baer Watkins v. Hammerman & Gainer

IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN

NO. 3-90-195-CV

MARY BAER WATKINS,

APPELLANT

vs.

HAMMERMAN & GAINER,

APPELLEE

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT

NO. 461,539-A, HONORABLE HUME COFER, JUDGE PRESIDING

Appellant, Mary Baer Watkins, was allegedly injured in

the course and scope of her employment with Armstrong Moving and

Storage of El Paso. She filed a worker's compensation claim

against Armstrong, which had worker's compensation coverage through

Transit Casualty Company. On October 1, 1986, Watkins settled her

claim through a Compromise Settlement Agreement ("CSA") with

Transit which provided for Transit to pay a cash settlement, and

Watkins' injury-related medical expenses for three years. Watkins

sued appellee, Hammerman & Gainer ("H & G"), the State Board of

Insurance, Transit Casualty Company in Receivership, and

Constitution State Service Company, alleging that her medical bills

were not paid and that she was denied necessary surgery. Watkins

alleged that H & G, in its capacity as claims adjuster, violated

the Texas Deceptive Trade Practice--Consumer Protection Act

("DTPA") and Texas Insurance Code by representing that the

insurance carrier would pay for three additional years' of medical

expenses. See Tex. Bus. & Com. Code Ann. § 17.41 et seq. (1987 &

Supp. 1991); Tex. Ins. Code Ann. art. 21.21 § 16 (a) (Supp. 1991).

The trial court granted H & G's summary judgment motion and severed

the action against H & G from the action against the other

defendants. Watkins appeals the summary judgment. We will reverse

the judgment and remand the cause to the trial court.

The crux of Watkins' cause of action against H & G is

that, in the negotiations leading up to the CSA, H & G represented

that the insurance carrier would pay for the three additional years

of medical expenses. Watkins pleaded that H & G's representations

violated the DTPA by:

Causing confusion or misunderstanding as to the source,

sponsorship, approval or certification of services;

Representing that services had sponsorship, approval,

characteristics, uses or benefits which they did not

have;

Representing that the agreement conferred or involved

rights, remedies or obligations which it did not have or

involve;

Failing to disclose information concerning coverage which

was known at the time of the transaction when the failure

to disclose was intended to induce Plaintiff into a

transaction she would not have entered into had the

information been disclosed.

See DTPA § 17.46 (b)(2),(5),(12),(23). These alleged violations of

§ 17.46 of the DTPA are also the basis for Watkins' cause of action

under the Tex. Ins. Code Ann. art. 21.21, § 16(a) (Supp. 1991).

In order to recover on the merits, Watkins must establish

each element of her causes of action. To affirm appellee's summary

judgment, the summary judgment proof in the record must establish

as a matter of law that there was no genuine issue of a material

fact as to at least one essential element of each cause of action.

Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex. 1970);

Manoogian v. Lake Forest Corp. 652 S.W.2d 816, 818 (Tex. App. 1983,

writ ref'd n.r.e.). On review of a summary judgment, this Court

will determine whether the movant has shown that there is no

genuine issue of material fact and that it was entitled to judgment

as a matter of law. Nixon v. Mr. Property Management, Co., 690

S.W.2d 546, 548 (Tex. 1985). We must take as true all evidence

favoring the non-movant and indulge every reasonable inference and

resolve every doubt in her favor. Nixon , 690 S.W.2d at 548-49 .

H & G asserted three independent bases for its motion for

summary judgment: (1)

(A) H & G acted solely as Transit's agent during the

negotiation of the CSA.

(B) H & G is not connected to any alleged breaches of

the CSA following its execution.

(C) Watkins' claim is barred by the doctrine of merger.

Because the summary judgment order in the present cause

does not state the specific grounds on which it was granted,

Watkins must defeat each of the independent arguments alleged in

the motion. See Hittner & Liberato, Summary Judgments in Texas , 20

St. Mary's L.J. 243 , 282 (1989). On appeal, Watkins contends that

the trial court erred in granting a take-nothing summary judgment

because H & G raised defenses that would apply in a contract suit

but not in a DTPA action for misrepresentation. Specifically, she

argues that (1) a finding that H & G acted solely as an agent for

its principal would not preclude its own individual liability under

the DTPA, see Weitzel v. Barnes, 691 S.W.2d 598, 601 (Tex. 1985);

and (2) a finding that H & G was not connected to the breach of the

CSA would not dispose of Watkins' DTPA claims because the DTPA does

not require a breach of contract to establish liability. See DTPA

§ 17.46(b).

We will not address the merits of these arguments,

however, because H & G's summary judgment proof failed to establish

conclusive facts from which we can determine, as a matter of law,

either that H & G was acting solely as an agent or that H & G was

not connected in any way to the breach of the CSA. H & G's only

summary judgment proof in support of its motion consisted of the

affidavit of Tony Cordova, its employee who executed the CSA.

Cordova asserted that: (1) H & G acted solely as an agent for

Trans-Protection Service Company in negotiating the CSA; (2) H & G

has not been involved in any way in decisions regarding the payment

of medical bills under the agreement; and (3) H & G was not

responsible for the payment of Watkins' medical bills.

As the employee who allegedly made the misrepresentations

leading to this attempt to impose liability on his employer, H & G,

Cordova is clearly an interested witness. A summary judgment may

rest solely on the testimonial evidence of an interested witness if

that evidence is uncontroverted, clear, positive, credible, free

from contradictions and inconsistencies, and could have been

readily controverted. Tex. R. Civ. P. Ann. 166a (c) (Supp. 1991).

In the present cause, Cordova's testimony regarding agency and H &

G's connection with any breach of the CSA failed to meet several

requirements for competent summary judgment proof. Rule 166a

requires that "affidavits shall be made on personal knowledge,

shall set forth such facts as would be admissible in evidence, and

shall show affirmatively that the affiant is competent to testify

to the matters stated therein." Tex. R. Civ. P. Ann. 166a (f)

(Supp. 1991). Cordova's affidavit identifies him as a claims

representative. He fails to explain how he obtained the knowledge

on which he based his conclusions and there is no proof that he is

competent to make the conclusions he did.

An affidavit must set forth facts, not legal conclusions.

Beta Supply, Inc. v. G.E.A. Power Cooling Sys., Inc., 748 S.W.2d

541, 542 (Tex. App. 1988, writ denied); Hittner & Liberato, supra

at 261. See also Schultz v. General Motors Acceptance Corp., 704

S.W.2d 797, 798 (Tex. App. 1985, no writ) (affidavit reciting that

collateral was disposed of "at public sale in conformity with

reasonable commercial practices . . . in a commercially reasonable

manner," in the absence of facts concerning the sale, recited only

legal conclusion, precluding summary judgment). Cordova's

affidavit contains several legal conclusions: "H & G acted as the

agent of Trans-Protection Service Company"; "H & G undertook no

obligations under this contract; it acted solely as representative

of Trans-Protection Service Company, the party in privity."

Similarly, the Cordova affidavit fails to establish that

H & G was not connected in any way with the breach of the CSA.

Although he asserts that H & G was not involved, he does not

explain how he acquired that knowledge or upon what facts he based

his conclusion. He concludes that Trans-Protection Service Company

is the party in privity with Watkins, but that company is not named

as a responsible party in the CSA.

Watkins' summary judgment proof raises issues of fact as

to H & G's involvement, which H & G failed to disprove. The

uncontroverted summary judgment proof showed that Tony Cordova of

H & G executed the CSA on behalf of Transit Casualty Insurance

Company, Allied Van Lines, and James T. Odiorne, Ancillary

Receiver. The record contains evidence that H & G forwarded

Watkins' medical bills to Trans-Protection Service Company but no

evidence that it forwarded the bills to any party identified in the

CSA. There is also no evidence that H & G informed any health care

provider that H & G was not the right party to bill or that they

ever notified any health care provider of who was responsible for

paying the bills. Thus, Cordova's affidavit fails to establish, as

a matter of law, that H & G had no connection to the asserted

breach of contract.

H & G also moved for summary judgment on the basis that

the doctrine of merger barred Watkins' claim; merger is

inapplicable to the present cause. The doctrine provides that, in

all contracts, any prior stipulation between the parties is merged

into the final and formal contract they execute. Baker v. Baker,

207 S.W.2d 244, 249 (Tex. Civ. App. 1947, writ ref'd n.r.e.). In

general, however, common law defenses cannot defeat a DTPA claim.

Smith v. Baldwin, 611 S.W.2d 611, 616 (Tex. 1980) (DTPA does not

represent a codification of the common law; its primary purpose is

to provide consumers a cause of action for deceptive trade

practices without the numerous defenses available in a common law

fraud or breach of warranty suit). See also Alvarado v. Bolton,

749 S.W.2d 47, 48 (Tex. 1988) (doctrine of merger may not be

applied to defeat a cause of action under the DTPA for breach of an

express warranty made in an earnest money contract and breached by

deed).

In any event, the merger argument is inapposite in this

cause because Watkins complains of oral representations that were

incorporated into the CSA. Merger may apply when oral

representations are at variance with written agreements, but the

oral representations in the present cause do not vary the terms of

the written agreement. Thus, the doctrine of merger does not

dispose of Watkins' contentions that the oral representations made

by H & G were false.

H & G failed to establish as a matter of law its

entitlement to summary judgment by conclusively negating one or

more of the elements of Watkins' causes of action under either the

DTPA or the Insurance Code. See Clear Creek Basin Auth. , 589

S.W.2d at 678; State v. American Legion Post No. 58, 611 S.W.2d

720, 723 (Tex. App. 1981, no writ). Thus, the summary judgment was

improper.

We reverse the judgment of the trial court and remand the

cause for trial.

Marilyn Aboussie, Justice

[Before Justices Powers, Aboussie and Kidd; Justice Powers

not participating]

Reversed and Remanded

Filed: August 28, 1991

[Publish] [Do Not Publish]

1. H & G argued in its trial and appellate briefs that

additional grounds entitled it to summary judgment, but failed to

raise the other grounds in its motion for summary judgment. The

judgment must stand or fall on the grounds expressly alleged in the

motion. Tex. R. Civ. P. Ann. 166a (c) (Supp. 1991). See also City

of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 675 (Tex.

1979); Dhillon v. General Acc. Ins. Co., 789 S.W.2d 293, 295 (Tex.

App. 1990, no writ).