Filed: Aug. 08, 2006
Latest Update: Feb. 21, 2020
Summary: United States Court of Appeals Fifth Circuit F I L E D UNITED STATES COURT OF APPEALS FIFTH CIRCUIT August 8, 2006 Charles R. Fulbruge III Clerk No. 04-40638 PORT ELEVATOR BROWNSVILLE, L.C.; SOUTHWEST GRAIN CO., INC., Plaintiffs-Counter Defendants-Appellees, versus BERSAIN GUTIERREZ; Et Al., Defendants, IVONNE SOTO VEGA, Defendant-Counter Claimant-Third Party Plaintiff-Appellant, versus CRAIG ELKINS, Individually and dba Port Elevator-Brownsville L.C. and Southwest Grain Co., Inc., Third Party D
Summary: United States Court of Appeals Fifth Circuit F I L E D UNITED STATES COURT OF APPEALS FIFTH CIRCUIT August 8, 2006 Charles R. Fulbruge III Clerk No. 04-40638 PORT ELEVATOR BROWNSVILLE, L.C.; SOUTHWEST GRAIN CO., INC., Plaintiffs-Counter Defendants-Appellees, versus BERSAIN GUTIERREZ; Et Al., Defendants, IVONNE SOTO VEGA, Defendant-Counter Claimant-Third Party Plaintiff-Appellant, versus CRAIG ELKINS, Individually and dba Port Elevator-Brownsville L.C. and Southwest Grain Co., Inc., Third Party De..
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United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT August 8, 2006
Charles R. Fulbruge III
Clerk
No. 04-40638
PORT ELEVATOR BROWNSVILLE, L.C.; SOUTHWEST GRAIN CO., INC.,
Plaintiffs-Counter Defendants-Appellees,
versus
BERSAIN GUTIERREZ; Et Al.,
Defendants,
IVONNE SOTO VEGA,
Defendant-Counter Claimant-Third Party Plaintiff-Appellant,
versus
CRAIG ELKINS, Individually and dba Port Elevator-Brownsville L.C.
and Southwest Grain Co., Inc.,
Third Party Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Texas
(1:98-CV-23)
Before BARKSDALE, STEWART, and CLEMENT, Circuit Judges.
PER CURIAM:*
Ivonne Soto Vega appeals the summary judgment awarded Port
Elevator Brownsville, L.C.; Craig Elkins; and Southwest Grain Co.,
Inc., as well as the concomitant denial of her summary–judgment
motion, holding she take nothing on her state-law claims. This
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
extremely protracted litigation arises from Vega’s purchase of corn
and Port Elevator’s handling and disposition of it. VACATED IN
PART; AFFIRMED IN PART; AND REMANDED.
I.
In 1996, Vega, a Mexican citizen, bought approximately 5,000
metric tons of corn from AGI/Akron Group, Inc. (AGI), for $837,000
and directed it be sent to Port Elevator, a grain elevator in
Brownsville, Texas. Vega’s appellate brief asserts she told Bersain
Gutierrez “to see that the corn arrived at Port
Elevator–Brownsville, L.C.”. (As discussed infra, however, it is
unclear whether Vega made any such statement.)
On 31 October 1996, Port Elevator signed a rate and service
contract with Gutierrez of Sysco de Baja S.A. de C.V. and Walter
Puffelis of AGI for unloading corn from rail cars and for its
handling and storage. The contract required a minimum of one
million bushels of corn (25,401 metric tons) be deposited with Port
Elevator; and, in consideration for storing that amount, Port
Elevator offered a reduced storage rate. Under that contract, Port
Elevator could release the corn only upon Gutierrez’ written
instructions.
Three shipments of corn, in excess of 5,000 metric tons, were
delivered by Gutierrez/Sysco and Puffelis/AGI to Port Elevator in
1996; the contractually-required amount of one million bushels was
never delivered. Elevator manager Craig Elkins took delivery for
2
Port Elevator. It subsequently released more than 3,000 metric tons
of corn for Gutierrez, pursuant to his written instructions (as
required by the contract), although he failed to pay the amount owed
under the contract.
Based on the summary-judgment record, it does not appear that
Vega participated in the transactions by which Port Elevator
released corn for Gutierrez. In October 1997, Vega went to Port
Elevator to claim the corn, asserting she had found a buyer. Port
Elevator contested Vega’s ownership, and therefore, refused to
release corn to her.
Instead, in February 1998, for determining the corn’s
ownership, Port Elevator filed a complaint in interpleader against
Vega and Gutierrez, asserting diversity jurisdiction and invoking
Federal Rule of Civil Procedure 22 (allowing joinder of defendants
having claims against plaintiff so plaintiff can avoid double
liability). In conjunction with that complaint, Port Elevator sold
the contested corn, depositing the proceeds in the court’s registry.
In March 1999, Vega moved to dismiss, pursuant to Federal Rule
of Civil Procedure 12(b)(1)-(6), claiming, inter alia: diversity
jurisdiction did not exist because all defendants were citizens and
residents of Mexico; and the court lacked personal jurisdiction over
Vega. This motion was granted that October.
Port Elevator filed an amended interpleader complaint that
November (1999), asserting diversity jurisdiction and adding Sysco
3
as a defendant. In January 2001, Port Elevator filed its second
amended complaint, adding Southwest Grain as a plaintiff and
seeking: (1) “a declaration of the rights, duties, legal relations
and obligations of any interested party arising out of the
[applicable] contract”; (2) breach-of-contract damages of
$81,438.04, plus interest, based on the defendants’ failure to
deposit one million bushels of corn with Port Elevator; and (3)
attorney’s fees.
That same month, Vega answered and counterclaimed for
negligence, conversion, fraud, and violations of the Texas Deceptive
Trade Practices Act (DTPA), alleging Port Elevator and Southwest
Grain were jointly liable for her losses. That February, Vega filed
a third–party complaint against Elkins (the earlier-mentioned
elevator manager), claiming he was liable for the improper
disposition of her corn.
In March 2002, Port Elevator and Vega moved for summary
judgment. Port Elevator claimed Vega was liable for contractual
damages and attorney’s fees; it sought a declaration of the parties’
rights and liabilities, asserting Vega had produced no evidence
supporting her various claims. Vega sought to hold Port Elevator
liable for releasing her corn.
On 30 July 2002, the district court: awarded Port Elevator
summary judgment; and denied it for Vega, ordering she take nothing
on her claims. (Because neither Sysco nor Gutierrez appeared,
default judgment was entered against them in that order.) The court
4
also awarded Port Elevator attorney’s fees, to be later determined,
including under 28 U.S.C. § 1927 and pursuant to Texas law, as
discussed below.
In August 2002, Vega moved for new trial; that same month, she
filed a supplemental new-trial motion. On 14 March 2003, those
motions were denied because they were filed before entry of a final
judgment. In February 2004, Vega filed a motion to reconsider that
denial, which was also denied.
Final judgment was not entered until 30 March 2004. That same
day, an order was entered setting Port Elevator’s awarded attorney’s
fees at $58,200.
II.
Vega claims the district court erred in granting summary
judgment for Port Elevator and denying it for her. She maintains
the court erred by: (1) holding her liable for breach of contract
regarding the corn storage; (2) awarding Port Elevator $81,438.04
in damages; (3) denying her summary judgment and ordering she take
nothing on her state-law claims; and (4) awarding attorney’s fees,
including under § 1927 (attorney who unreasonably multiplies
proceedings liable for the cost and attorney’s fees his conduct
causes) and pursuant to Texas law. The parties agree Texas law
applies in this diversity action.
We review de novo a summary judgment under Federal Rule of
Civil Procedure 56, using the same standard as the district court.
5
E.g., U.E. Tex. One-Barrington, Ltd. v. Gen. Star Indem. Co., 332
F.3d 274, 276 (5th Cir. 2003). Such judgment is proper if “the
pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law”. FED. R. CIV. P.
56(c). The evidence must be construed in the light most favorable
to the non-movant. E.g., Kee v. City of Rowlett,
247 F.3d 206, 210
(5th Cir.), cert. denied,
534 U.S. 892 (2001). A party opposing
summary judgment may not rest on the pleadings; instead, it must,
inter alia, provide specific facts showing the existence of a
genuine issue for trial. E.g., Ragas v. Tenn. Gas Pipeline Co.,
136
F.3d 455, 458 (5th Cir. 1998).
A.
The district court held Vega liable as an undisclosed principal
for the corn-storage and handling contract signed by Gutierrez and
Elkins, ruling that Gutierrez signed in his capacity as Vega’s
agent. Vega contends the court improperly granted Port Elevator
summary judgment on its breach-of-contract claim because the
existence and scope of an agency relationship are questions of fact
for the jury; and that the summary-judgment evidence shows she did
not enter an agency relationship with Gutierrez. In addition, she
claims that, even if summary judgment was proper, the district court
erred in awarding the requested damages and attorney’s fees.
6
1.
Agency is the consensual relationship between parties where the
agent acts on the principal’s behalf and is subject to the
principal’s control. Edwards v. State, 97 S.W.3d 279, 289 (Tex.
App. 2003). Moreover,
[f]or an agency relationship to exist there
must be a meeting of the minds between the
parties to establish the relationship, and
there must be some act constituting the
appointment of one as the agent. The consent
may be express or implied; the intention of the
parties may be ascertained by their conduct.
Lone Star Partners v. Nationsbank Corp., 893 S.W.2d 593, 599-600
(Tex. App. 1994) (internal citation omitted).
Under our precedent, the existence of an agency relationship
in Texas is a mixed question of law and fact. Am. Int’l Trading
Corp. v. Petroleos Mexicanos, 835 F.2d 536, 539 (5th Cir. 1987).
The factfinder determines the parties’ factual relationship; the
court determines whether, under the established facts, an agency
relationship exists as a matter of law.
Id. On the other hand, it
appears Texas cases differ on whether the existence of such a
relationship is a factual or legal question. Some treat it as a
factual question. E.g., Jorgensen v. Stuart Place Water Supply
Corp.,
676 S.W.2d 191, 194 (Tex. App. 1984). Others allow the court
to make that determination. E.g., Mercedes-Benz of N. Am., Inc. v.
Dickenson,
720 S.W.2d 844, 858 (Tex. App. 1986). In any event, it
is undisputed that, if the facts are not at issue, the court may
7
make an agency determination. See Norton v. Martin, 703 S.W.2d 267,
272 (Tex. App. 1985). This, of course, is consistent with Rule 56,
allowing summary judgment when there are no genuine issues of
material fact and the movant is entitled to a judgment as a matter
of law.
Evidence of an agency relationship may be direct or
circumstantial. Id. The principal in an undisclosed agency
relationship is liable for a contract signed by the agent in the
agent’s name if the agent was acting within the scope of his
authority. See Latch v. Gratty, Inc.,
107 S.W.3d 543, 546 (Tex.
2003). Generally, a principal is not liable for a contract when an
agent, who has authority to execute a contract on a principal’s
behalf, exceeds that authority. Cecil v. Zivley,
683 S.W.2d 853,
856 (Tex. App. 1984). Pursuant to Texas law, an agent’s actions
“are not presumed to be within the scope of his authority”. Charles
E. Beard, Inc. v. Cameronics Tech. Corp.,
729 F. Supp. 528, 531
(E.D. Tex. 1989), aff’d,
939 F.2d 280 (5th Cir. 1991).
As noted, the district court held Vega liable as an undisclosed
principal for the contract signed by Gutierrez on the ground that
he signed it in his capacity as Vega’s agent. In her January 2001
Original Answer and Counterclaim, Vega alleged she had “instructed
BERSAIN GUTIERREZ to travel to Brownsville, Texas to oversee the
transfer of [Vega’s] corn to PORT ELEVATOR for storage”. (Emphasis
in original.)
8
Based largely on that allegation, the district court ruled
Gutierrez was Vega’s agent. The court erred by considering that
pleading allegation as summary–judgment evidence, especially in the
light of her below-discussed 25 May 2002 declaration. Cf. Geiserman
v. MacDonald, 893 F.2d 787, 793 (5th Cir. 1990) (stating pleadings
cannot be used to create issue of material fact). In any event,
that statement does not demonstrate, for summary-judgment purposes,
that Gutierrez had authority to execute the contract as Vega’s
agent.
In opposition to Port Elevator’s summary-judgment motion, Vega
submitted her above-referenced declaration (pursuant to 28 U.S.C.
§ 1746) “under penalty of perjury”, stating she never authorized
Gutierrez to act as her agent regarding the corn. See DIRECTV, Inc.
v. Budden, 420 F.3d 521, 530-31 (5th Cir. 2005) (stating 28 U.S.C.
§ 1746 creates exception to the rule that unsworn affidavits may not
be used to create a genuine issue of material fact precluding
summary judgment). In that declaration, Vega stated she instructed
AGI to send the corn to Port Elevator, but insisted she never
authorized an agent to enter into any agreement with Port Elevator.
The record does contain some evidence establishing some form
of relationship between Vega and Gutierrez; for example, Gutierrez
signed the “RECEIVED BY” line on invoices for some of the corn Vega
purchased. Viewing the evidence in the requisite light most
favorable to Vega, however, it does not establish, for summary-
9
judgment purposes, that she authorized Gutierrez to enter into the
contract. (In addition, other genuine issues of material fact
exist, including whether Vega’s name appeared on the corn contract
when it was signed and notarized.) Therefore, the summary judgment
regarding Vega’s liability on the contract was improper.
2.
Because we vacate the summary judgment awarded Port Elevator,
we do not reach whether the district court erred in awarding it
approximately $81,000 and attorney’s fees, including as awarded
under § 1927 and pursuant to Texas Civil Practice & Remedies Code
Annotated § 38.001. On remand, the district court should reconsider
the § 1927 award, including the limited persons to whom § 1927 may
be applied. It should also consider whether all the conditions for
awarding fees pursuant to § 38.001(8), including presentment of the
claim to the opposing party, were satisfied. See TEX. CIV. PRAC. &
REM. CODE § 38.002(1) (requiring claimant to present claim to
opposing party before recovering attorney’s fees); see also Jim Howe
Homes, Inc. v. Rogers, 818 S.W.2d 901, 904 (Tex. App. 1991) (holding
allegations in pleading do not constitute presentment).
B.
Vega also contends the district court erred in denying her
summary judgment and holding she take nothing on her negligence,
conversion, fraud, and DTPA claims. Summary judgment against those
claims was proper. (Port Elevator’s brief, also filed on behalf of
10
Elkins and Southwest Grain, contends there is no evidence either
that Elkins acted in his individual capacity or that Southwest Grain
controlled Port Elevator. This issue is minimally briefed. In any
event, because we affirm the dismissal of Vega’s claims, we need not
address this issue.)
1.
Under Texas law, a negligence claim has three elements: (1)
the defendant owed the plaintiff a duty; (2) the defendant breached
that duty; and (3) damages were proximately caused by that breach.
D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). Whether
a duty exists under a given set of facts is a threshold question of
law in any negligence action. Mission Petroleum Carriers, Inc. v.
Solomon,
106 S.W.3d 705, 710 (Tex. 2003). In determining whether
a duty exists, courts “consider various factors, including the risk,
foreseeability, and likelihood of injury weighed against the social
utility of the actor's conduct, the magnitude of the burden of
guarding against the injury, and the consequences of placing the
burden on the defendant”.
Id. (internal quotation omitted).
Although she denies having the above-discussed written
contract with Port Elevator, Vega claims Port Elevator, as a
warehouseman, owed her a duty to safeguard her corn and not release
it without her authorization. Essentially, she claims Port Elevator
breached a bailment agreement. Such an agreement requires either
an express or implied contract. Sisters of Charity of the Incarnate
11
Word v. Meaux, 122 S.W.3d 428, 431 (Tex. App. 2003). Vega
repeatedly denies, however, being a party to any contract with Port
Elevator. Because Vega does not assert the existence of a contract,
her negligence claim fails. (Vega also raises two statutory
provisions to suggest Port Elevator was negligent. She raised
neither in her summary-judgment motion. We will not consider them
for the first time on appeal.)
2.
To prove conversion under Texas law, a plaintiff must
establish: (1) she owned, possessed, or had the right to immediate
possession of the personal property at issue; (2) the defendant
wrongfully exercised dominion or control over the property; and (3)
the defendant refused the plaintiff’s request to return the
property. Apple Imps. v. Koole, 945 S.W.2d 895, 899 (Tex. App.
1997). Further, to recover for conversion, the plaintiff must have
suffered damages. United Mobile Networks, L.P. v. Deaton,
939
S.W.2d 146, 147 (Tex. 1997). Refusal for a reasonable amount of
time to return property is not conversion if, in good faith, the
party holding the property is unsure who the rightful owner is.
Stein v. Mauricio,
580 S.W.2d 82, 83 (Tex. Civ. App. 1979).
As discussed, Vega claims she shipped the corn to be stored at
Port Elevator, but that she never signed a contract regarding that
storage. The undisputed evidence demonstrates the corn was stored
by Port Elevator, pursuant to the contract signed by Gutierrez.
12
Although Vega claims she never authorized Gutierrez to sign that
contract, she still maintains she had the corn sent to be stored at
Port Elevator. The undisputed evidence demonstrates Port Elevator
legally possessed it.
Therefore, to prove conversion, Vega must establish a wrongful
and unreasonable refusal to return the corn after she demanded its
return. She fails to do so. When Port Elevator was presented with
Vega’s claimed ownership and was unable to determine the rightful
owner, it filed this interpleader action, bringing in as claimants
Vega and Gutierrez. Needless to say, in the light of the summary-
judgment record, this was a reasonable step to establish the
rightful owner. Therefore, Port Elevator is not liable for
conversion. Id.; see also Smith v. Texas & N.O.R. Co., 127 S.W.
866, 868-69 (Tex. Civ. App. 1910) (stating that filing interpleader
action to determine rights was reasonable and relieved bailee of any
liability for conversion).
3.
The following elements are required to establish common-law
fraud pursuant to Texas law:
(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
13
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.
In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001).
Vega claims Port Elevator falsely represents itself to the
public as a public warehouse that stores corn or grain and only
releases those commodities with the express consent of the owner.
This claim certainly does not rise to the level of fraud — Vega does
not even claim Port Elevator made any statement to her, let alone
a material representation. Therefore, Vega cannot establish Port
Elevator made a statement “with the intent that [she] act upon it”.
Id.
4.
Vega claims Port Elevator violated § 17.46(a) and (b)(5) of the
DTPA, resulting in damages. Relevant to this appeal, a consumer may
recover for violations of the DTPA when a defendant engages in
(1) ... a false, misleading, or deceptive act
or practice that is:
(A) specifically enumerated in a subdivision
of Subsection (b) of Section 17.46 of this
subchapter; and
(B) relied on by a consumer to the consumer's
detriment[.]
TEX. BUS. & COM. CODE ANN. § 17.50(a). The above-referenced § 17.46
provides, inter alia:
(a) False, misleading, or deceptive acts or
practices in the conduct of any trade or
commerce are hereby declared unlawful and are
14
subject to action by the consumer protection
division under Sections 17.47, 17.58, 17.60,
and 17.61 of this code.
(b) Except as provided in Subsection (d) of
this section, the term "false, misleading, or
deceptive acts or practices" includes, but is
not limited to, the following acts:
....
(5) representing that goods or services have
sponsorship, approval, characteristics,
ingredients, uses, benefits, or quantities
which they do not have or that a person has a
sponsorship, approval, status, affiliation, or
connection which he does not[.]
Id. § 17.46(a), (b)(5).
As noted, Vega claims Port Elevator held itself out as a public
warehouse that would not release a stored commodity without the
commodity owner’s express consent. Port Elevator asserts Vega does
not qualify as a consumer for DTPA purposes because, as a stranger
to the corn-storage contract, she never purchased goods or services
from Port Elevator. (This, of course, is contrary to its claim that
it did have that contract with Vega through her agent.)
In any event, even if Vega qualifies as a consumer for DTPA
purposes, she provides no evidence establishing a DTPA violation.
Vega contends Port Elevator misrepresented the nature of its
business; but, as with her fraud claim, she points to no specific
misrepresentations. In fact, as discussed earlier, Vega fails to
demonstrate Port Elevator made any representations. Her unsupported
15
allegation is insufficient to withstand summary judgment. May v.
Dep’t of Air Force, 777 F.2d 1012, 1016 (5th Cir. 1985).
C.
Finally, Vega challenges the default judgment against Gutierrez
and Sysco de Baja. Neither appeared in district court nor appeals.
Vega cannot appeal on their behalf.
III.
For the foregoing reasons, the judgment is VACATED IN PART and
AFFIRMED IN PART and this matter is REMANDED for further proceedings
consistent with this opinion.
VACATED IN PART; AFFIRMED IN PART; AND REMANDED
16
