Opinion issued May 15, 2014




                                     In The

                              Court of Appeals
                                     For The

                          First District of Texas
                            ————————————
                              NO. 01-13-00210-CV
                           ———————————
             COLONY FLOORING & DESIGN, INC., Appellant
                                        V.
                          REGIONS BANK, Appellee


                   On Appeal from the 270th District Court
                            Harris County, Texas
                      Trial Court Case No. 2011-42183


                         MEMORANDUM OPINION

      Appellant Colony Flooring & Design, Inc. appeals the trial court’s summary

judgment in favor of appellee’s Regions Bank on its suit to collect a debt. Because

we conclude that Colony Flooring raised a fact issue about the amount owed, we

reverse and remand.
                                 BACKGROUND

A.    The Contract between Colony Flooring and Stone Pavilion

      Nonparty Stone Pavilion imported and sold natural stone products (such as

granite and marble) and related items for use in residential and commercial

construction projects. Stone Pavilion operated with a business line of credit from

appellee Regions Bank.

      On June 17, 2009, Stone Pavilion executed a Promissory Note in the amount

of $ 2,450,000 pursuant to an asset-based Business Loan Agreement, which was

executed the same day. This note was, in turn, secured by a Commercial Security

Agreement, executed by Stone Pavilion in favor of Regions, in which Regions took

a security interest in Stone Pavilion’s inventory and accounts receivable, as well as

proceeds thereof.     Regions’s security interest was perfected by filing the

appropriate UCC statements with the Office of the Secretary of the State.

      Around February 9, 2010, Stone Pavilion defaulted, and Regions served on

Stone Pavilions a notice of default, intent to accelerate, and a reservation of rights.

On May 7, 2010, Stone Pavilion abandoned its business premises and surrendered

to Regions certain collateral, including its accounts receivables, in partial

satisfaction of its more than $2,300,000 owed to Regions.

      The Commercial Security Agreement permits Regions to undertake certain

collection actions in Stone Pavilion’s name or in its own name.


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      [Regions] may collect the payments, rents, income and revenues from
      the collateral . . . , receive the payments, rents, income, and revenues
      therefrom and hold the same as security for the indebtedness or apply
      it to payment of the indebtedness in such order of preference as
      [Regions] may determine. Insofar as the collateral consists of
      accounts, general intangibles, insurance policies, instruments, chattel
      paper, choses in action, or similar property, [Regions] may demand,
      collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
      realize on the collateral as [Regions] may determine, whether or not
      indebtedness or collateral is then due.

B.    Regions’s lawsuit against Colony Flooring

      Appellant Colony Flooring was one of Stone Pavilion’s customers. On June

23, 2010, Regions’s counsel sent a letter to Colony Flooring to notify it about

Regions first priority security interest in Stone Pavilion’s receivable and requesting

payment of $16,124.73 in outstanding invoices. Colony Flooring did not respond.

      Regions sued, seeking payment of $23,084.64 in unpaid invoices that

Colony Flooring owed to Stone Pavilion, as well as attorneys’ fees under Chapter

38 of the Texas Civil Practice & Remedies Code.

      Colony Flooring’s answer, among other things, denied that Regions has

standing and argued that Stone Pavilion was a necessary party to the suit. Colony

Flooring also attached a sworn verification by its President averring, “Plaintiff’s

alleged account, if any, and each and every item thereof, are not just or true; and all

just and lawful offsets, adjustments, payments and credits have not been allowed.”




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      1.     The Summary Judgment proceedings

      Regions filed a motion for summary judgment, contending that, as a matter

of law, it has “contractual and statutory rights to collect Stone Pavilion’s

receivables.” It cited the Commercial Security Agreement’s provisions allowing it

to collect debts owed to Stone Pavilion, as well as section 9.607 of the Texas

Business & Commercial Code, which authorizes a secured party to “enforce the

obligations of an account debtor or other person obligated on collateral and

exercise the rights of the debtor with respect to the obligation of the account debtor

or other person obligated on collateral to make payment or otherwise render

performance to the debtor, and with respect to any property that secures the

obligations of the account debtor or other person obligated on the collateral.”

      As summary-judgment evidence, it attached (1) the Note, (2) Commercial

Loan Agreement, (3) Commercial Security Agreement, (4) UCC Statement filings,

(5) 145 pages of sales and outstanding receivable documentation (i.e., purchase

orders, invoices, sales orders and purchase orders), (6) Regions’s demand letter to

Colony Flooring, and (7) an attorneys’ fee affidavit. Regions contended that the

evidence proved its entitlement to judgment as a matter of law on two theories:

Stated Account and Open Account.

      Colony Flooring responded, arguing that Regions “did not satisfy its burden

under Texas Rule of Civil Procedure 166a(c).” Specifically, Colony Flooring


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argues Regions did not conclusively prove that “there is a just debt owed on the

account.” Colony Flooring’s response did not dispute the accuracy of the invoices

relied upon by Regions; nor did it dispute that it has not paid the amounts reflected

by those invoices. Rather, it argued that two affidavits attached to its summary

judgment response “clearly show there is a dispute as to whether there is indeed a

debt at all.”

       The first affidavit is by Hassan Kaivani, Colony Flooring’s President. It

avers that Kaivani was “responsible for the account with Stone Pavilion” and that

“Francois Ahmadi was the person I worked with.” The remainder of the affidavit,

in its entirety, states:

       [Ahmadi] has presented me with a letter acknowledging credits for
       our account. In addition, we dispute the accounts presented to use by
       Regions Bank. They failed to give credit and offsets for the materials
       that were defective or returned. Based upon my calculations, Stone
       Pavilion owes my company $29,166.95.”

       Neither the summary judgment response, nor this attached affidavit,

provides details identifying “the materials that were defective or returned” or

explaining Kaivani’s calculations.

       The second affidavit is by Francois Ahmadi. It states, in its entirety,

       I am the Agent for Stone Pavilion that handled the accounts for
       Colony Flooring & Design. On May 2, 2012, I signed a document
       acknowledging an agreement with Colony Flooring & Design, LLC,
       which represents reimbursements owed to Colony due to defects and
       other problems we resolved as a result products we delivered to them
       (See Exhibit “A” attached). Each of the invoices referenced in that

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      letter are true and correct. Based upon my representation to these
      parties, they were under no further obligation for the amounts stated in
      this document in the amount of $29,166.96.

      The referenced May 2, 2012 letter, attached as Exhibit A is on Colony

Flooring and Design letterhead, is addressed to Ahmadi from Kaivani, but Ahmadi

also signed the letter at the bottom. The letter states:

            I am writing this letter to remind you of our agreements about
      Stone Pavilion’s claimed invoices being null, due to the following
      reasons:

             1) We Purchased 18x18 Travertine From Stone Pavilion and
      Installed in Mrs. Sangeeta Khorana’s House. Material was defected
      [sic] and you visited the job site and Agree[d] to replace the
      Travertine and pay for all the Labor & Material cost as 1600 sft 18 x
      18 travertine plus,

             * Labor to Move all Furniture, Drapes appliance     $600.00
             * Remove & Haul off Travertine                     $3200.00
             * Labor to Install Travertine                      $4800.00
             * Seal the New Travertine                            $800.00
             * Material as your Invoice # 22677                 $5136.98
                                        Total Claim            $13736.98
             2) Stone Pavilion invoice #33743, 2126.25 sft [o]f marble with
      a total amount of $10629.97 which we already discussed about. The
      marble was not right on calibration; we sent it to the job site and then
      returned to Stone Pavilion. We paid $1800.00.

             3) We returned few slabs to Stone Pavilion because of bows
      and cracks and being off standard, and were supposed to receive a
      credit of approximately $3000.00.




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                            STANDARD OF REVIEW
      We review the trial court’s grant of summary judgment de novo. Provident

Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Under Texas

law, the party moving for a traditional summary judgment carries the burden of

establishing that no material fact issue exists and that it is entitled to judgment as a

matter of law. TEX. R. CIV. P. 166a(c); M.D. Anderson Hosp. & Tumor Inst. v.

Willrich, 28 S.W.3d 22, 23 (Tex. 2000). The nonmovant has no burden to respond

to a summary judgment motion unless the movant conclusively establishes its

cause of action or defense. M.D. Anderson Hosp. & Tumor Inst., 28 S.W.3d at 23.

      Once the movant produces sufficient evidence conclusively establishing his

right to summary judgment, the burden of proof shifts to the nonmovant to present

evidence sufficient to raise a fact issue. See Centeq Realty, Inc. v. Siegler, 899

S.W.2d 195, 197 (Tex.1995). In reviewing a traditional summary judgment, we

examine the entire record in the light most favorable to the nonmovant, indulging

every reasonable inference and resolving any doubts against the motion. Yancy v.

United Surgical Partners Int’l, Inc., 236 S.W.3d 778, 782 (Tex. 2007).

      Conclusory statements in an affidavit unsupported by facts are insufficient to

support or defeat summary judgment. See Wadewitz v. Montgomery, 951 S.W.2d

464, 466 (Tex. 1997). A conclusory statement is one that does not provide the

underlying facts to support the conclusion and cannot be readily controverted.


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Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991); Rizkallah v. Conner, 952

S.W.2d 580, 587 (Tex. App.—Houston [1st Dist.] 1997, no writ); see also Earle v.

Ratliff, 998 S.W.2d 882, 890 (Tex. 1999) (holding that witness’s affidavit is

conclusory if it fails to explain basis of witness’s statements to link his conclusions

to facts).

                               APPLICABLE LAW

       “A party is entitled to relief under a claim for account stated when (1)

transactions between the parties give rise to indebtedness of one to the other; (2) an

agreement, express or implied, between the parties fixes an amount due; and (3)

the one to be charged makes a promise, express or implied, to pay the

indebtedness.” Schwartzott v. Maravilla Owners Ass’n, Inc., 390 S.W3d 15, 19

(Tex. App.—Houston [14th Dist.] 2012, pet. denied). “The elements of an open

account are: (1) transactions between the parties, (2) creating a creditor-debtor

relationship through the general course of dealing, (3) with the account still being

open, and (4) with the expectation of further dealing.” Capital One Bank (USA),

N.A. v. Conti, 345 S.W.3d 490, 491 (Tex. App.—San Antonio 2011, no pet.).

                                    ANALYSIS

       The only aspect of Regions’s claims Colony Flooring challenges is the

amount due. Specifically, Colony Flooring contends that its summary-judgment

response and attached evidence calls into question whether all appropriate credits


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and offsets have been applied to its account in calculating the amount due.

Regions disagrees, arguing that Colony Flooring failed to meet its burden to raise a

fact issue by competent summary judgment evidence.           Specifically, Regions

contends that (1) Kaivani’s affidavit is impermissibly conclusory and omits

requisite supporting factual allegations, (2) Ahmadi’s affidavit is incompetent and

conclusory because it did not establish that Ahmadi was an authorized agent of

Stone Pavilions, and because it did not provide sufficient detail about the alleged

credits/offsets, and (3) the May 2, 2012 letter is incompetent because it is dated

after the lawsuit and no evidence supports Ahmadi’s authority to bind Stone

Pavilion. Because we agree with Colony Flooring that its evidence raised a fact

issue in response to Regions’s motion for summary judgment, we reverse the trial

court’s summary judgment.

      Regions acknowledges that Colony Floor proffered summary-judgment

evidence in support of its argument that Regions’s claim did not take into account

credits and offsets, but urges us to disregard that evidence. First it challenges

Ahmadi’s statement that he is “the Agent for Stone Pavilion that handled the

accounts for Colony Flooring & Design.” Regions argues that “[a]gency is never

presumed; it must be shown affirmatively, and the party who asserts the existence

of an agency relationship bears the burden of proving it.” Because there is “no

description of Ahmadi’s job title or duties” or “evidence or description of


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purported authority” Regions argues that the legal conclusion that Ahmadi was an

“agent” is not competent summary judgment evidence.

      Although Ahmadi’s affidavit states he was Stone Pavilion’s “agent”,

whether Colony Flooring raised a fact issue as to credits or offsets does not depend

upon a particular agency designation.      His affidavit goes on to state that he

“handled the accounts for Colony Flooring & Design.”            Kaivani’s affidavit

likewise represents that Ahmadi was the person at Stone Pavilion he worked with

on Colony Flooring accounts, and many of the Stone Pavilion/Colony Flooring

invoices Regions proffered as summary-judgment evidence list Ahmadi as the

representative. While the word “agent” in isolation may be conclusory, all of this

evidence, taken together, establishes a basis for his personal knowledge and his

position as one of the Stone Pavilion sales representatives working on Colony

Flooring account, as well as his personal knowledge of the allegedly unaccounted

for offsets and credits. Valenzuela v. State & County Mut. Fire Ins. Co, 317

S.W.3d 550, 553 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (“An affiant’s

position or job responsibilities can qualify him to have personal knowledge of facts

and establish how he learned of the facts.”).

       Similarly, Regions complains about Ahmadi’s statement that “based on my

representations to these parties, they were under no further obligation for the

amounts stated in this document in the amount of $29,166.95.” Regions argues


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that “no obligation” amounts to a legal conclusion, rendering Ahmadi’s affidavit

incompetent summary-judgment evidence. But, again, the rest of the affidavit and

the attached exhibit contain factual representations in support. Ahmadi’s affidavit

states that the attached exhibits “represent[] reimbursements owned to Colony due

to defects and other problems we resolved as a result of products we delivered to

them.” The attached letter identifies a specific job site and the specific invoices

that were the subject of returns and agreements for credits, as well as specific

amounts and details supporting the alleged credits due.              Whether these are

legitimate returns, credits, and offsets remains to be proven, but the evidence is

specific enough to survive a challenge that the evidence is impermissibly

conclusory.1

      Regions relies primarily on Keenan v. Gibraltar Savings Association, 754

S.W.2d 392 (Tex. App.—Houston [14th Dist.] 1988, no writ) and Stucki v Noble,

963 S.W.2d 776 (Tex. App.—San Antonio 1998, pet. denied) in support of its

argument that Colony Flooring’s evidence is insufficient to raise a fact issue.

These two cases are distinguishable, however, because Colony Flooring’s evidence

is more detailed and specific than was presented in those cases.


1
      Relatedly, Regions argues that Ahmadi’s affidavit did not establish his ability to
      bind Stone Pavilion when he signed the May 2, 2012 letter. But the letter does not
      purport to grant new offsets and credits; rather, its stated purpose is to memorialize
      prior agreements from the time period he worked as a representative for Stone
      Pavilion.
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      In Keenan, in response to a bank’s motion for summary judgment to collect

on a guarantor agreement, the defendant responded with the allegation that the

bank “had failed to allow ‘all just and lawful offsets, payments, and credits.’” 754

S.W.2d at 393. The court held this allegation would not defeat summary judgment

because “a party who opposes a summary judgment by asserting an affirmative

defense of offset, payment, or credit, must offer competent summary judgment

proof to support its allegations.” Id. Because the defendant in that case “offered

no supporting factual allegations concerning specific offset amounts, specific

credits, or specific instances of payment,” the court concluded that it “raised only

legal conclusions, which do not constitute competent summary judgment proof.”

Id. at 394 (citing Life Ins. Co. of Virginia v. Gar–Dal, Inc., 570 S.W.2d 378, 381–

82 (Tex. 1978)).

      In Stucki, in response to a landlord’s motion for summary judgment to

collect under a commercial lease and promissory note, the lessee argued he was

entitled to credit for payments made and provided copies of checks purportedly

authenticated by his lawyer. 963 S.W.2d at 781. Because the lawyer’s affidavit

did not establish personal knowledge, and because the summary-judgment

evidence did not establish that the checks to the landlord were negotiated or that

they were in satisfaction of the debt sued upon, the court held that the lessee did

not raise a fact issue on the amount due. Id. at 781–82.


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      The evidence provided by Colony Flooring in this case is more specific than

that found insufficient in Keenan and Stucki. Colony Flooring’s evidence, taken as

a whole, raises a fact issue about the amount due to Regions by providing specific

factual details about credits and offsets allegedly due.

                                  CONCLUSION

      Because Colony Flooring raised a fact issue in its summary-judgment

response, we reverse the trial court’s summary judgment and remand for further

proceedings.




                                               Sherry Radack
                                               Chief Justice

Panel consists of Chief Justice Radack and Justices Massengale and Huddle.




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