      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                        NO. 03-07-00571-CV



            Restaurant Enterprises, L.P. d/b/a or f/d/b/a Austin’s Pizza, Appellant

                                                   v.

                                Travelers Indemnity Co., Appellee


              FROM COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY
       NO. C-1-CV-04-279012, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING



                             MEMORANDUM OPINION


                Appellant, Restaurant Enterprises, L.P. d/b/a or f/d/b/a Austin’s Pizza (“Restaurant”),

appeals from a summary judgment granted in favor of appellee, Travelers Indemnity Co.

(“Travelers”), in a suit on a sworn account. The suit arose from a dispute over the number of

“Austin’s Pizza” stores that were insured by Travelers. Restaurant claimed that it owed Travelers

insurance premiums for only four stores, while Travelers claimed that Restaurant owed premiums

for several additional stores. On appeal, Restaurant contends that Travelers failed to prove as a

matter of law that: (1) it was entitled to premiums for the additional stores; (2) it was entitled to the

specific amount of damages alleged; (3) it conclusively negated Restaurant’s counterclaims; and (4)

it was entitled to attorney’s fees. Because we conclude that Travelers failed to prove that there are

no issues of material fact and that it was entitled to summary judgment as a matter of law, we reverse
the trial court’s summary judgment and remand this case for further proceedings consistent

with this opinion.


                                         BACKGROUND

               In October 1999, Restaurant opened its first “Austin’s Pizza” store. Shortly before

opening the store, Restaurant’s operations manager, Timothy McLaughlin, contacted an insurance

agency to obtain insurance for the store. McLaughlin spoke with an agent named John Bustamante,

who sold him an insurance policy provided by Travelers. McLaughlin testified in his deposition that

Bustamante informed him more than once that Travelers would insure Restaurant for only up to

four stores and that McLaughlin would have to seek different insurance if Restaurant expanded

beyond four stores. Restaurant opened its fourth store in January 2002 and its fifth store the

following June. Shortly after opening its fifth store, Restaurant began looking for a different

insurance provider for additional stores it planned to open. McLaughlin testified that Restaurant

eventually obtained insurance from insurance providers other than Travelers for the additional stores.

               Restaurant continued to expand the number of its stores, so much so that by the time

of McLaughlin’s deposition in June 2005, Restaurant had opened fourteen “Austin’s Pizza” stores

and four barbecue stores. Earlier, during Restaurant’s continued expansion, Travelers conducted an

audit of Restaurant’s operations, and based on the number of stores existing at the time, assessed

premiums for seven stores in the total amount of $64,806.90. A dispute arose over whether

Restaurant owed premiums for more than the initial four stores, and in June 2004, Travelers filed

a suit on a sworn account to recover the money. Restaurant filed a counter-suit against Travelers,

alleging claims for breach of contract, common-law fraud, negligent misrepresentations, and

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DTPA violations. Travelers filed a motion for summary judgment, which was granted by the trial

court. The trial court awarded damages and attorney’s fees. This appeal followed.


                                     STANDARD OF REVIEW

                We review the trial court’s summary judgment de novo. Valence Operating Co.

v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When reviewing a summary judgment, we take as true

all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any

doubts in the nonmovant’s favor. Id. A movant is entitled to summary judgment if it demonstrates

that there are no genuine issues of material fact and establishes all the elements of its claim as a

matter of law. See Tex. R. Civ. P. 166a(c); Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211,

215 (Tex. 2002).


                                             DISCUSSION

                In its first issue, Restaurant contends that Travelers failed to prove that there are no

issues of material fact and that Travelers was entitled to summary judgment as a matter of law on

its claim on a sworn account. A suit on a sworn account is an “action or defense . . . founded upon

an open account or other claim for goods, wares and merchandise, including any claim for a

liquidated money demand based upon written contract or founded on business dealings between the

parties . . . .” See Tex. R. Civ. P. 185. To prevail in such a suit, a plaintiff must prove that: (1) there

was a sale and delivery of merchandise or performance of services; (2) the amount of the account

is “just”; and (3) the outstanding amounts remain unpaid. See Powers v. Adams, 2 S.W.3d 496, 499

(Tex. App.—Houston [14th Dist.] 1999, no pet.).



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               In challenging Travelers’ summary-judgment evidence, Restaurant focuses only on

the first element of Travelers’ claim: that Travelers performed services for Restaurant, or more

specifically in this case, that Travelers and Restaurant entered into an agreement in which Travelers

agreed to provide insurance coverage for all of Restaurant’s stores—whether the stores were then

existing or would be opened in the future—and in return, Restaurant agreed to pay premiums for all

existing and future stores. See Tex. R. Civ. P. 185 (suit on sworn account includes claim for money

demand based upon written contract or founded on business dealings between parties).

               As evidence that Restaurant agreed to pay Travelers premiums on all of

Restaurant’s locations, Travelers submitted the affidavit of Michael Kronander, the director of

Travelers’ accounting department. In the affidavit, Kronander stated that he had personal knowledge

of Travelers’ account with Restaurant “for premiums due on various policies” and that “[e]ach of

the policies covered the entire business of [Restaurant], and none were [sic] limited to any particular

location.” Kronander also stated that:


               [u]nder the terms of the policies in question, [Travelers] was liable
               for claims made under the policies arising out of operations at any
               and all locations of [Restaurant], unless other insurance coverage
               existed, and, accordingly, [Restaurant] [sic] is entitled, as is standard
               custom in the insurance industry, to charge premiums based upon the
               entire operations of [Restaurant], including all locations.


               Restaurant contends that summary judgment was improper because an issue of

material fact exists regarding whether Restaurant had other insurance coverage during the time

period for which Travelers seeks premiums. Kronander’s affidavit states that under the terms of the

relevant insurance policies, Travelers was liable for claims made at all of Restaurant’s locations and

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could charge premiums for all of Restaurant’s locations “unless other insurance coverage existed.”

The statement of account attached to Kronander’s affidavit describes the policies Travelers claims

to have issued to Restaurant. Based on the statement of account, the period of time covered by the

policies spans from November 12, 1999 to April 13, 2003.

               Restaurant contends that exhibits attached to the affidavit and deposition of Timothy

McLaughlin, Restaurant’s operations manager, raise an issue of material fact as to whether

Restaurant had insurance coverage other than that provided by Travelers during the relevant time

period. For example, one exhibit shows payments made by Restaurant to an insurance company

named Zurich on March 1, 2003, and April 1, 2003, both dates within the relevant time period.

Another exhibit shows a payment made by Restaurant to an insurance company called American

International Group (“AIG”) on March 14, 2003. Other exhibits further support the existence of a

policy with AIG, including: (1) a letter from Restaurant to its insurance agent in which Restaurant

refers to the cancellation of an existing worker’s-compensation policy and the issuance of a new

policy with AIG effective January 13, 2003; and (2) a worker’s-compensation incident report

completed by Restaurant on January 17, 2003, identifying AIG as the worker’s-compensation carrier

and listing January 13, 2003, as the effective date of the policy. Because the exhibits reference

policies and payments falling within the relevant time period, we conclude that the exhibits raise an

issue of material fact as to whether Restaurant owed Travelers premiums on all of its locations.

Accordingly, summary judgment was improper. See Tex. R. Civ. P. 166a(c); Southwestern Elec.,

73 S.W.3d at 215.

               We also agree with Restaurant’s assertion that Kronander’s affidavit is insufficient

to support summary judgment because the statements regarding the insurance policies are

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“conclusory”—i.e., they state conclusions without providing the underlying facts on which the

conclusions are based—and Kronander did not submit copies of the policies as factual support for

his statements. Affidavits must contain specific factual bases that would be admissible in evidence

and upon which any conclusions are drawn. See Southtex 66 Pipeline Co. v. Spoor, 238 S.W.3d 538,

542 (Tex. App.—Houston [14th Dist.] 2007, pet. denied); Nichols v. Lightle, 153 S.W.3d 563, 570

(Tex. App.—Amarillo 2004, pet. denied); see also Paragon Gen. Contractors, Inc. v. Larco Constr.,

Inc., 227 S.W.3d 876, 883 (Tex. App.—Dallas 2007, no pet.) (statement is “conclusory” if it does

not provide underlying facts to support conclusion). Similarly, when an affidavit in a summary-

judgment proceeding refers to other documents, the affiant must attach sworn or certified copies of

those documents to the affidavit. See Tex. R. Civ. P. 166a(f); Paragon, 227 S.W.3d at 884. The

failure to attach the referenced documents can leave an affidavit devoid of factual support for

conclusions made regarding the documents, which in turn renders the affidavit substantively

defective.1 See Brown v. Brown, 145 S.W.3d 745, 752 (Tex. App.—Dallas 2004, pet. denied).

               In this case, Kronander refers to certain insurance policies and the terms of the

policies in concluding that the policies covered all of Restaurant’s existing and future stores, but he

did not attach the policies to the affidavit. Without copies of the policies, Kronander fails to

provide a factual basis for his conclusions. See Paragon, 227 S.W.3d at 883-84; Brown, 145 S.W.3d

at 752-53. His statements are therefore incompetent summary-judgment evidence. See City of

San Angelo Fire Dep’t v. Hudson, 179 S.W.3d 695, 701 n.6 (Tex. App.—Austin 2005, no pet.)


       1
          Defects in the substance of an affidavit may be raised for the first time on appeal. See
Brown v. Brown, 145 S.W.3d 745, 751 (Tex. App.—Dallas 2004, pet. denied);
McMahan v. Greenwood, 108 S.W.3d 467, 498 (Tex. App.—Houston [14th Dist.] 2003,
pet. denied).

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(statement in affidavit was incompetent summary-judgment evidence because affidavit did not

provide underlying facts to support conclusion); Brown, 145 S.W.3d at 753 (affidavit that referred

to other documents but did not attach them was incompetent summary-judgment evidence). Because

Kronander’s affidavit was the only evidence offered to prove that there was an agreement between

the parties requiring Restaurant to pay premiums on all of its locations, summary judgment was

improper. Thus, we not only reverse the trial court’s summary judgment based on Travelers’ failure

to prove that there are no issues of material fact, but we also do so based on Travelers’ failure to

prove its entitlement to summary judgment as a matter of law.

               Given our reversal of the trial court’s summary judgment, we need not address

Restaurant’s second and fourth issues regarding the damages and attorney’s-fees awarded to

Travelers because both awards must also necessarily be reversed. See Powers, 2 S.W.3d at 500;

Friedman v. Atlantic Funding Corp., 936 S.W.2d 38, 42 (Tex. App.—San Antonio 1996, no writ).

               Turning to Restaurant’s remaining issue regarding its counterclaims, the record shows

that the trial court erred in granting summary judgment on the claims. Although the trial court’s

judgment stated that it “finally dispose[d] of all parties and all claims and [was] appealable,”the

judgment did not in fact dispose of all of the claims in this case. The record shows that Travelers’

motion for summary judgment addressed only its own claim on a sworn account2 and that Restaurant


       2
           The only portion of Travelers’ summary-judgment motion that could be interpreted as
referring to at least some of Restaurant’s counterclaims was Travelers’ assertion that Kronander’s
affidavit established that “any person or persons who potentially might have made representations
to [Restaurant] concerning the locations covered by the policies are not or were not agents or
employees of [Travelers].” However, this statement was made under a heading titled “[Travelers’]
Case-in-Chief,” and in the conclusion section of the motion, Travelers stated that the evidence
attached to its motion established as a matter of law that it was entitled to judgment “on its principal
claim.” At no point in the motion did Travelers mention Restaurant’s counterclaims or state that it
was entitled to judgment on the claims.

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did not file a summary-judgment motion on its counterclaims. There is also no indication in the

record that the counterclaims were dismissed from the suit. Thus, the trial court was correct in

stating that its judgment was appealable but erred in claiming that the judgment disposed of all

claims in the case. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 206 (Tex. 2001) (concluding

that judgment containing clear and unequivocal statement that it finally disposes of all claims when

record shows otherwise must be appealed and reversed). Accordingly, in addition to reversing the

trial court’s summary judgment based on Travelers’ failure to prove that there are no issues of

material fact and that it was entitled to summary judgment as a matter of law, we also reverse the

judgment on the ground that it did not dispose of Restaurant’s counterclaims. See id.


                                          CONCLUSION

               Because we conclude that the trial court erred in granting summary judgment in favor

of Travelers, and because the trial court did not dispose of all claims between the parties, we reverse

the trial court’s summary judgment and remand this case to the trial court for further proceedings

consistent with this opinion.



                                               ___________________________________________

                                               David Puryear, Justice

Before Chief Justice Law, Justices Puryear and Pemberton
  Chief Justice Law Not Participating

Reversed and Remanded

Filed: January 15, 2009



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