                        COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH


                              NO. 2-07-329-CV

FIELDTECH AVIONICS & INSTRUMENTS,                                APPELLANTS
INC., KEVIN NELMS, AND DAVID MILLS

                                       V.

COMPONENT CONTROL.COM, INC.,                                       APPELLEES
D/B/A COMPONENT CONTROL;
CITICAPITAL TECHNOLOGY FINANCE,
INC., D/B/A BANKERS LEASING; AND
CITICORP USA, INC., D/B/A CITICAPITAL,
CITICAPITAL TECHNOLOGY FINANCE,
INC., BANKERS LEASING, AND SOFTECH
FINANCIAL

                                   ------------

        FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY

                                   ------------

                                  OPINION

                                   ------------

      Appellants Fieldtech Avionics & Instruments, Inc., Kevin Nelms, and

David Mills appeal from the trial court’s grant of summary judgment in favor of

Appellees (1) Component Control.Com, Inc., d/b/a Component Control; and (2)

CitiCapital Technology Finance, Inc., d/b/a Bankers Leasing and Softech
Financial, and CitiCorp USA, Inc., d/b/a CitiCapital, CitiCaptial Finance, Inc.,

Bankers Leasing, and Softech Financial (collectively, CitiCapital). We reverse

in part and affirm in part.

                                  Background

      Fieldtech is an avionics parts supplier.       Component Control is a

commercial software company.        On August 24, 2001, Fieldtech signed a

proposal generated by Component Control to acquire “Quantum Control

Software 2K.4” (“the software”) from Component Control. Fieldtech financed

the transaction through a finance lease agreement with CitiCapital whereby

CitiCapital acquired the software from Component Control and leased it to

Fieldtech.     Nelms     and   Mills—Fieldtech’s   president   and   secretary,

respectively—personally guaranteed the lease. The transaction involved several

documents:     the proposal; a software maintenance agreement; the lease

agreement and an associated property schedule and certificate of acceptance;

and a “clickwrap agreement,” an electronic agreement provided by Component

Control that Fieldtech had to accept before it could download and install the




                                       2
software.1 We will examine the relevant documents and testimony concerning

their execution later in this opinion.

      Fieldtech allegedly learned that the software was incompatible with its

business operations when it sent two employees to Component Control for

software training in January 2002.        Fieldtech sued Component Control and

CitiCapital in October 2003. Fieldtech sued Component Control for breach of

contract, breach of warranty, and violations of the Deceptive Trade Practices

Act, alleging that Component Control had represented that the software would

meet Fieldtech’s business needs.         Fieldtech sued CitiCapital for breach of

contract and for a declaratory judgment, seeking a declaration of its rights

under its lease agreement with CitiCapital.       CitiCapital filed a counterclaim

against Fieldtech and third-party claims against Nelms and Mills, seeking to

enforce the lease and Nelms’s and Mills’s guarantees.




      1
       … A clickwrap agreement derives its name from the similarities between
such agreements and the licenses shrinkwrapped with many software
packages. Realpage, Inc. v. EPS, Inc., No. 4:06-CV-251, 2007 WL 2572255,
at *5 (E.D. Tex. Sept. 5, 2007). Clickwrap agreements allow users to manifest
assent to contractual terms presented to the user before installation of
computer software programs. Id. Generally, the user must indicate acceptance
of the clickwrap agreement to proceed with the installation. Id. Texas courts
recognize the validity of clickwrap agreements. Id.; see also Barnett v. Network
Solutions, Inc., 38 S.W.3d 200, 203–04 (Tex. App.—Eastland 2001, pet.
denied).

                                          3
      After nineteen months of discovery, CitiCapital filed no-evidence and

traditional motions for summary judgment, and Component Control filed a

combined no-evidence and traditional motion for summary judgment. Fieldtech

filed timely summary judgment responses. The trial court eventually granted

summary judgment in favor of Component Control and CitiCapital and awarded

CitiCapital $95,105.55 in damages and $28,205.83 in attorney’s fees.

Fieldtech, Nelms, and Mills filed this appeal.

                         Summary Judgment Evidence

      The parties presented the following relevant summary judgment evidence

to the trial court.

1.    Component Control’s proposal

      Component Control’s proposal is a one-page printed document listing the

software, software modules, installation, training, and maintenance to be

provided by Component Control and the price for each item, with a total quote

of $86,224.94. The area labeled “[p]lease sign to confirm your order” was

signed by David Mills on August 24, 2001, and a line labeled “check here for

third-party leasing” was checked.

2.    The clickwrap license agreement

      Lisa Wortman, Component Control’s director of contract administration,

averred that when a user attempts to install the software on a computer, a

                                       4
clickwrap license agreement appears on the computer screen, and the software

will not install unless the user signifies acceptance of the license agreement.

Wortman attached two versions of the license agreement to her affidavit. The

first version is printed on Component Control letterhead; the second version,

said Wortman, is the actual clickwrap agreement that would have appeared on

Fieldtech’s computer screen. The two versions are identical except that the

former contains headings in bold type and the latter does not. Both versions

contain the following warranty provisions:

      6.3 Limited Warranty Remedies: During a period of thirty (30) days
      after delivery of the Software to Licensee, if the Licensee claims
      that the software is defective, Licensor shall either (i) replace such
      Software, provided that upon inspection by Licensor, Licensor has
      found the Software to be defective, or (ii) refund the amount paid
      therefor, if the Licensee returns the defective software to the
      Licensor with a copy of proof that the warranty period has not
      expired, and Licensor has verified the defect. Licensee agrees that
      Licensee’s sole and exclusive remedy hereunder shall be limited to
      this corrective action.

      6.4 W arranty Disclaimer: The express warranties set forth in the
      Agreement are in lieu of all other warranties, express or implied,
      including, without limitation, any warranties of merchantability or
      fitness for a particular purpose.

      6.5 Limitation of remedies: Licensee agrees that its exclusive
      remedies, and Licensor’s entire liability with respect to the
      Software, shall be as set forth herein. Licensee further agrees that
      Licensor shall not be liable to Licensee for any damages, including
      any lost profits, lost savings, or other incidental or other
      consequential damages arising out of its use or inability to use the


                                        5
     Software or the breach of any express or implied warranty, even if
     Licensor has been advised of the possibility of those damages.

3.   Master Lease Agreement

     CitiCapital and Fieldtech executed a Master Lease Agreement setting out

the terms under which CitiCapital leased the software to Fieldtech. Fieldtech

agreed to make monthly lease payments of $3,528.85 for thirty months. The

lease agreement contains the following relevant language:

     1. LEASE. LESSOR hereby leases and/or grants to LESSEE the
     right to use, and LESSEE hereby leases from and/or agrees to
     accept the right to use, subject to the terms and conditions herein
     set forth, the item(s) of personal property including but not limited
     to the hardware and/or software herein referred to as “Property”
     . . . . Each Property Schedule entered into by the parties shall
     constitute a separate non-cancellable lease agreement . . . .

           ....

     4. DISCLAIMER OF WARRANTIES. (A) LESSEE ACKNOWLEDGES
     THAT LESSEE MADE THE SELECTION OF THE PROPERTY BASED
     ON ITS OW N JUDGMENT AND IS NOT RELYING ON LESSOR’S
     SKILL OR JUDGMENT TO SELECT OR FURNISH GOODS SUITABLE
     FOR ANY PARTICULAR PURPOSE. LESSEE ACKNOW LEDGES
     THAT LESSOR HAS NOT MADE AND DOES NOT MAKE ANY
     WARRANTIES, EXPRESS OR IMPLIED, DIRECTLY OR INDIRECTLY,
     INCLUDING, WITHOUT LIMITATION, THE WARRANTY OF
     MERCHANTABILITY AND OF FITNESS, CAPACITY OR DURABILITY
     FOR ANY PARTICULAR PURPOSE, AND WARRANTIES AS TO THE
     DESIGN OR CONDITION OF THE PROPERTY AND THE QUALITY
     OF THE MATERIAL OR WORKMANSHIP OF THE PROPERTY.
     LESSOR SHALL HAVE NO LIABILITY TO LESSEE FOR ANY CLAIM,
     LOSS OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER,
     INCLUDING ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL
     DAMAGES, TO ANY EXTENT WHATSOEVER, RELATING TO OR

                                      6
ARISING OUT OF THE SELECTION, QUALITY, CONDITION,
MERCHANTABILITY, SUITABILITY, FITNESS, OPERATION OR
PERFORMANCE OF THE PROPERTY.       NO DEFECT IN OR
UNFITNESS OF THE PROPERTY SHALL RELIEVE LESSEE OF ITS
OBLIGATIONS UNDER THE LEASE. . . .

       (B) For the term of the LEASE, or any extension thereof,
LESSOR hereby assigns to LESSEE and LESSEE may have the
benefit of any and all Vendor’s warranties . . . if any, with respect
to the Property to the extent assignable by LESSOR, provided,
however, that LESSEE’S sole remedy for the breach of any such
warranty . . . shall be against the Vendor and not against the
LESSOR, nor shall any such breach have any effect whatsoever on
the rights and obligations of either party with respect to the LEASE.

5.    STATUTORY FINANCE LEASE.                LESSEE agrees and
acknowledges that it is the intent of both parties to the LEASE that
it qualify as a statutory finance lease under Article 2A of the
Uniform Commercial Code. LESSEE acknowledges and agrees the
LESSEE has selected both: (1) the Property; and (2) the Vendor
from whom the property is to be acquired. LESSEE acknowledges
that LESSOR has not participated in any way in LESSEE’S selection
of the Property or of the Vendor, and LESSOR has not selected,
manufactured, or supplied the Property.

LESSEE IS ADVISED THAT IT MAY HAVE RIGHTS UNDER THE
CONTRACT EVIDENCING THE ACQUISITION OF THE PROPERTY
FROM THE VENDOR CHOSEN BY THE LESSEE AND THAT LESSEE
SHOULD CONTACT THE VENDOR OF THE PROPERTY FOR A
DESCRIPTION OF ANY SUCH RIGHTS.

      ....

18. DEFAULT. . . . If LESSEE fails to pay any rent or other
amounts required . . . LESSOR or its agents shall have the right . . .
to declare the entire amount of rent hereunder immediately due and
payable . . . .




                                  7
            To the extent permitted by applicable law, the LESSEE
     waives any and all rights and remedies conferred upon a LESSEE by
     UCC Sections 2A-508 through 2A-522, including (without
     limitation) the LESSEE’S rights to (a) cancel or repudiate the
     LEASE, (b) reject or revoke acceptance of the leased Property, (c)
     recover damages from LESSOR for breach of warranty or for any
     other reason . . . .
            ....

     22. NET LEASE. The LEASE is a net lease and LESSEE agrees that
     its obligation to pay all rent and other sums payable thereunder are
     absolute and unconditional and shall not be subject to any
     abatement, reduction, setoff, defense, counterclaim or recoupment
     for any reason whatsoever.

            ....

     27. ENTIRE AGREEMENT, WAIVER. This Instrument constitutes
     the entire agreement between the parties.

4.   Certificate of Acceptance

     Kevin Nelms, as Fieldtech’s president, executed a document provided by

CitiCapital and titled “Certificate of Acceptance” on October 19, 2001, which

provides,

     We certify that [the software] was delivered to and installed at
     [Fieldtech] in good order and condition and acceptable to us, is
     ready for its intended use as of the date hereof, and is acceptable
     for maintenance by the maintenance provider, and the quantity,
     description and serial numbers are correct.

5.   Kevin Nelm’s affidavit

     Nelms averred that Component Control contacted Fieldtech beginning in

2001 to sell software to Fieldtech. Nelms stated that Fieldtech communicated

                                      8
the nature of its business to Component Control, including its need for software

that would allow Fieldtech to quickly and easily provide quotes to customers

and access customers’ historical purchasing records for credit evaluations.

According to Nelms, Component Control represented that its software would

be useful to Fieldtech and would work in Fieldtech’s business environment.

Nelms averred that the only reason Fieldtech agreed to lease the software was

because Component Control represented that it would work for Fieldtech.2

      Nelms stated that when Fieldtech signed the proposal and software

maintenance agreement on August 24, 2001, it did not intend that the proposal

be a complete and exclusive expression of the agreement between the parties

but “merely a business confirmation from Component Control created for its

internal purposes and to confirm that an agreement had been reached.” Shortly

after Fieldtech signed the proposal, Component Control delivered the software,

but Nelms said that Fieldtech did not begin “any real use” of the software until

it completed CitiCapital’s financing documents six weeks later. Nelms signed

a Master Lease Agreement with CitiCapital on September 24, 2001.




      2
      … In deposition testimony, Nelms testified that Component Control had
demonstrated the software’s operation to Fieldtech telephonically and through
a webcast.

                                       9
      Nelms acknowledged that he signed a “Certificate of Acceptance” sent

to Fieldtech by CitiCapital and that the certificate indicated that the “software

was considered placed in service on October 19, 2001,” but he averred that

Fieldtech did not “use the software in any sense through the remainder of

2001” because Fieldtech was arranging software training with Component

Control.   Nelms said that he signed the certificate merely to acknowledge

receipt of the software and that he did not intend to acknowledge that the

software fully satisfied Component Control’s agreements and representations.

Nelms stated that he “felt assured” that CitiCapital’s intent was to finance

software that Fieldtech actually needed.      Nelms said that CitiCapital and

Component Control both assured him that Fieldtech would not be obligated for

the whole proposal amount unless and until the software was working for

Fieldtech and Component Control had provided the necessary services.

      Nelms averred that two Fieldtech employees attended a software training

class at Component Control in January 2002. He stated that after two days

of the five-day class, the employees realized that the software would not work

for Fieldtech because it would not allow Fieldtech to quickly quote prices to

potential customers. Nelms said that he communicated to Component Control

the fact that the software would not work for Fieldtech and that he considered




                                       10
such communication to be notice revoking any acceptance of the software that

Fieldtech had given.

      Nelms stated that he did not remember whether the clickwrap agreement

appeared when Fieldtech installed the software but that he had no specific

reason to believe that it did not appear.

6.    Affidavit of Carol Beckham

      Carol Beckham, Fieldtech’s accounts manager, averred that she was one

of the two Fieldtech employees who attended Component Control’s software

training class in January 2002. She stated that after two days of training, it

was apparent to her that the software would not work for Fieldtech. Beckham

said that she communicated to Component Control and CitiCapital that the

software would not work for Fieldtech and was not what Fieldtech needed. Her

affidavit lists by date and amount the nine payments Fieldtech made to

CitiCapital under the lease.

                               Standards of Review

      When a party moves for both a traditional summary judgment under

rules166a(c) and a no-evidence summary judgment under rule 166a(i), we first

review the trial court’s judgment under the standards of rule 166a(i). Ford

Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). If the nonmovant

failed to produce more than a scintilla of evidence under that burden, then there

                                       11
is no need to analyze whether appellee’s summary judgment proof satisfied the

less stringent rule 166a(c) burden. Id.

1.    No-evidence summary judgment

      After an adequate time for discovery, the party without the burden of

proof may, without presenting evidence, move for summary judgment on the

ground that there is no evidence to support an essential element of the

nonmovant’s claim or defense.       T EX. R. C IV. P. 166a(i).   The motion must

specifically state the elements for which there is no evidence. Id.; Johnson v.

Brewer & Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002). The trial court

must grant the motion unless the nonmovant produces summary judgment

evidence that raises a genuine issue of material fact. See T EX. R. C IV. P. 166a(i)

& cmt.; Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002).

      When reviewing a no-evidence 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. Sudan v. Sudan, 199

S.W.3d 291, 292 (Tex. 2006). If the nonmovant brings forward more than a

scintilla of probative evidence that raises a genuine issue of material fact, then

a no-evidence summary judgment is not proper. Moore v. K Mart Corp., 981

S.W.2d 266, 269 (Tex. App.—San Antonio 1998, pet. denied).




                                        12
2.     Traditional summary judgment

       A defendant who conclusively negates at least one essential element of

a cause of action is entitled to summary judgment on that claim. IHS Cedars

Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex.

2004); see T EX. R. C IV. P. 166a(b), (c). 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. IHS

Cedars Treatment Ctr., 143 S.W.3d at 798.

       A plaintiff or counterplaintiff is entitled to summary judgment on a cause

of action if it conclusively proves all essential elements of the claim. See T EX.

R. C IV. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986).

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. IHS Cedars Treatment Ctr., 143 S.W.3d at

798.

                                   Discussion

1.     Finance Lease Agreement

       Fieldtech and CitiCapital agree that the lease between them is a statutory

finance lease. A finance lease is a three-party transaction governed by article

2A of the Uniform Commercial Code, T EX . B US. & C OM. C ODE A NN. Ch. 2A

                                       13
(Vernon 1994 & Supp. 2008). The UCC defines a finance lease as “a lease

with respect to which . . . the lessor does not select, manufacture, or supply

the goods”; “the lessor acquires the goods or the right to possession and use

of the goods in connection with the lease”; and one of four other conditions is

met, i.e., (i) the lessee receives a copy of the contract by which the lessor

acquired the goods or the right to their use and possession; (ii) the lessee’s

approval of the contract by which the lessor acquired the goods or the right to

their use and possession is a condition to the effectiveness of the lease; (iii) the

lessee, before signing the lease contract, receives a statement designating the

promises and warranties and disclaimers provided to the lessor by the third-

party supplier; or (iv) if the lease is not a consumer lease, the lessor informs the

lessee in writing of (a) the identity of the supplier unless the lessee has selected

the supplier and directed the lessor to acquire the goods or the right to use and

possession, (b) the lessee’s entitlement to promises and warranties provided to

the lessor by the supplier, and (c) the lessee’s right to communicate with the

supplier and receive the warranties and disclaimers from it. Id. § 2A.103(7)

(Vernon Supp. 2008). The lease in this case meets the statutory requirements

for a finance lease, including the last of the enumerated conditions.

      In a finance lease, the UCC does not imply warranties of merchantability

and fitness running from the lessor to the lessee. Id. §§ 2A.212, 2A.213

                                        14
(Vernon 1994) (creating implied warranties of merchantability and fitness in

lease agreements “[e]xcept in a finance lease”). Instead, “[t]he benefit of a

supplier’s promises to the lessor under the supply contract and all warranties,

whether express or implied . . . extends to the lessee . . . but is subject to the

terms of the warranty and of the supply contract and all defenses or claims

arising therefrom.” Id. § 2A.209(a) (Vernon Supp. 2007). Thus, a finance

lessee’s remedies for defective or nonconforming goods or for breach of

warranty run against the supplier of the goods, not the lessor, and are governed

by UCC article 2. See id. & cmt.

2.    Component Control’s motion

      In its first issue, Fieldtech argues that the trial court erred by granting

summary judgment in favor of Component Control because Component

Control’s no-evidence motion was procedurally inadequate and because the

summary judgment evidence raises fact issues with regard to all of Fieldtech’s

causes of action.

      a.    Adequacy of no-evidence motion

      Fieldtech contends that the no-evidence portion of Component Control’s

summary judgment motion is procedurally inadequate because it fails to

distinguish between no-evidence and traditional summary judgment grounds and

because it fails to specifically identify the elements of Fieldtech’s causes of

                                       15
action for which Component Control claims there is no evidence. Fieldtech

raised these alleged procedural defects in special exceptions filed in the trial

court. 3

       A no-evidence motion must state the elements as to which there is no

evidence and must be specific in challenging the evidentiary support for a claim

or defense; rule 166a(i) does not authorize conclusory motions or general no-

evidence challenges to an opponent’s case.4 T EX. R. C IV. P. 166a(i) & cmt. A

no-evidence challenge that only generally challenges the sufficiency of the

nonmovant’s case and fails to state specific elements is fundamentally




       3
       … The record does not show that the trial court ruled on Fieldtech’s
special exceptions, but a trial court implicitly overrules special exceptions when
it grants summary judgment on the motion to which the special exceptions
pertain. Clement v. City of Plano, 26 S.W.3d 544, 550 n.5 (Tex. App.—Dallas
2000, no pet.), overruled on other grounds by Telthorster v. Tennell, 92
S.W.3d 457, 464 (Tex. 2002); Dagley v. Haag Eng'g Co., 18 S.W.3d 787, 795
n.9 (Tex. App.—Houston [14th Dist.] 2000, no pet.).
       4
       … Component Control argues that the no-evidence portion of its motion
obviously gave Fieldtech adequate notice as to what specific elements lacked
evidentiary support because Fieldtech filed two summary judgment responses
attempting to show evidentiary support for the challenged elements. Because
rule 166a(i) uses the unconditional term “must” in expressly directing
no-evidence summary judgment movants to state the elements as to which
there is no evidence, we decline to extend a “fair notice” exception to rule
166a(i)’s specific-elements requirement. See Mott v. Red’s Safe & Lock Servs.,
Inc., 249 S.W.3d 90, 98 (Tex. App.— Houston [1st Dist.] 2007, no pet.);
Callaghan Ranch, Ltd. v. Killam, 53 S.W.3d 1, 4 (Tex. App.—San Antonio
2000, pet. denied) (both rejecting similar “fair-notice” arguments).

                                       16
defective and insufficient to support summary judgment as a matter of law.

Mott, 249 S.W.3d at 98. But a specific attack on the evidentiary components

that might prove a certain element is unnecessary, as long as the element itself

is specifically challenged. See T IMOTHY P ATTON, S UMMARY J UDGMENT IN T EXAS,

P RACTICE, P ROCEDURE AND R EVIEW § 5.03[2][b] (3d ed. 2006).      A summary

judgment movant may combine no-evidence and traditional grounds in the same

motion. Binur v. Jacobo, 135 S.W.3d 646, 650–51 (Tex. 2004). A motion

that combines both bases for summary judgment is sufficient if it sets forth its

grounds clearly and otherwise complies with rule 166a. See id. at 651.

      With regard to Fieldtech’s breach of contract claim, Component Control

argued that “there is no evidence that Fieldtech did not receive the Software

it leased or that the Software did not perform.” With regard to alleged DTPA

violations, Component Control argued that “there is simply no evidence of any

misrepresentation or unconscionable act by Component Control.” We hold that

these no-evidence challenges are sufficiently specific to pass rule 166a(i)

muster. See T EX. R. C IV. P. 166a(i) & cmt.

      But with regard to breach of warranty, after lengthy arguments analyzing

the language of the relevant agreements, Component Control stated

conclusorily, “As a matter of law, therefore, Component Control did not breach

an express warranty and Fieldtech has no evidence to show that it did,” and

                                      17
“As a matter of law, therefore, Component Control did not breach an implied

warranty and Fieldtech has no evidence to show that it did.”        These two

statements do not challenge specific elements of Fieldtech’s breach of warranty

claim as required by rule 166a(i); rather, they are vague and general statements

tacked on to the end of the traditional summary judgment arguments. We

therefore hold that the no-evidence portion of Component Control’s summary

judgment motion dealing with breach of warranty did not comply with rule

166a(i)’s requirement for specificity, and we will review the summary judgment

relating to breach of warranty under the traditional summary judgment rules.

See T EX. R. C IV. P. 166a(c), (i).

      b.     Breach of contract

      Component Control argues that there is no evidence that it breached its

agreement with Fieldtech because Component Control agreed only to provide

and did provide the Quantum Control software to Fieldtech but did not agree

to provide software that would be “useful” to Fieldtech or perform the functions

Fieldtech allegedly requires, namely, the ability to look up customers’ order

histories and quickly generate quotes. Fieldtech contends that the proposal

was not a complete agreement and that Fieldtech may therefore rely on parol

evidence to explain the parties’ true agreement.




                                      18
      The elements of a breach of contract claim are (1) the existence of a valid

contract, (2) performance or tendered performance by the plaintiff, (3) breach

of the contract by the defendant, and (4) resulting damages to the plaintiff.

Harris v. Am. Prot. Ins. Co., 158 S.W.3d 614, 622–23 (Tex. App.—Fort Worth

2005, no pet.). Because Component Control’s no-evidence motion challenged

the third element, our analysis will focus primarily on whether Fieldtech

produced any evidence that Component Control breached its agreement. But

before we can determine whether Fieldtech presented any evidence of a breach

of the agreement, we must first examine the agreement itself and determine

whether Component Control promised that the software would provide the

functionality required by Fieldtech, namely, the ability to look up a customer’s

order history and quickly generate quotes.

      Because Fieldtech’s rights against Component Control are governed by

UCC article 2, we look to article 2 to guide our analysis. Under article 2, parol

evidence of a contemporaneous oral agreement may explain or supplement, but

not contradict, the terms of a written agreement between the contracting

parties unless the court finds that the parties intended the writing to be a

complete and exclusive statement of the terms of the agreement:

      Terms with respect to which the confirmatory memoranda of the
      parties agree or which are otherwise set forth in a writing intended
      by the parties as a final expression of their agreement with respect

                                       19
      to such terms as are included therein may not be contradicted by
      evidence of any prior agreement or of a contemporaneous oral
      agreement but may be explained or supplemented

      (1) by course of performance, course of dealing, or usage of trade
      (Section 1.303) and

      (2) by evidence of consistent additional terms unless the court finds
      the writing to have been intended also as a complete and exclusive
      statement of the terms of the agreement.

T EX. B US. & C OM. C ODE A NN. § 2.202 (Vernon Supp. 2008). 5

      We turn now to the writings at issue with regard to Component Control,

the proposal and the clickwrap agreement. The first question is whether the

writings were intended as a “complete and exclusive statement of the terms of

the agreement.”    T EX. B US. & C OM. C ODE A NN. § 2.202.      Neither writing

contains an express merger or integration clause or any language to show that

the parties intended either document to be a complete and exclusive statement


      5
       … Component Control argues that absent pleading and proof of
ambiguity, fraud, accident, or mistake, a written agreement presumes that all
prior agreements have merged into the agreement and its provisions cannot be
added to, varied, or contradicted by parol evidence. But one of the cases cited
by Component Control is a real property case, to which the UCC does not
apply. See Thompson v. Chrysler First Bus. Corp., 840 S.W.2d 25, 33 (Tex.
App.—Dallas 1992, no writ); T EX. B US. & C OM. C ODE A NN. § 2.102 (Vernon
1994). And while the other case cited by Component Control was apparently
within the scope of the UCC, it did not reference or discuss the UCC, and the
written agreement in that case—unlike the writings in this case—contained a
clear and unambiguous merger and integration clause. See i2 Techs., Inc. v.
DARC Corp., No. Civ. 3:02-CV-0327-H, 2003 WL 22205091, at *6 (N.D. Tex.
Sep. 23, 2003).

                                       20
of the terms of the agreement.      Indeed, the fact that Component Control

included the clickwrap agreement in the software indicates that it did not intend

the proposal to be a

 complete and exclusive statement of the agreement, and the clickwrap

agreement itself is not complete or exclusive because it omits crucial terms,

such as price. Nor do the writings suggest that the parties intended them to

be final expressions of their agreement. Therefore, Fieldtech may present parol

evidence of contemporaneous oral agreements that explain or supplement the

terms of the proposal and the clickwrap agreement. See id.

      The second question is whether Fieldtech presented summary judgment

evidence explaining or supplementing the terms of the writings. See id. W e

look first to the terms of the writings. Component Control’s proposal identifies

the software and included software modules by name and price, but it does not

identify or recite any particular features or functionality of the software. The

clickwrap agreement likewise identifies the software and included modules but

does not specify any functionality, uses, or benefits of the software.

      Next, we look to the parol evidence presented by Fieldtech to determine

whether it supplements or explains the terms of the writings. In his affidavit,

Nelms averred that




                                       21
      In response [to Nelms’s discussions with Component Control
      personnel about the nature of Fieldtech’s business], these
      Component Control personnel represented that the software it was
      trying to sell Fieldtech would be useful to Fieldtech and would
      [fulfill the needs Fieldtech expressed to Component Control].

            . . . The only reason the agreement was for “Quantum
      Control” software is that such software was what Component
      Control represented would work for Fieldtech. Fieldtech was not
      interested [in leasing], and did not agree to lease, the Quantum
      Control software no matter whether or not it was useful to
      Fieldtech. Rather, Fieldtech’s agreement with Component Control
      was simply to purchase software that was useful to Fieldtech and
      effectively met Fieldtech’s needs.

Nelms’s affidavit supplements, but does not contradict, the terms of the

proposal and the licensing agreement. The proposal states that Component

Control would provide the software; Nelms’s affidavit supplements the proposal

by explaining what the parties allegedly agreed the software would actually do.

Thus, Nelms’s affidavit creates a fact issue as to a contemporaneous oral

agreement that supplements the terms of the written agreements between

Fieldtech and Component Control. See id.

      Finally, we look to Fieldtech’s summary judgment evidence to determine

whether it raised a fact issue as to whether Component Control breached the

agreement as supplemented by Nelms’s affidavit.       Nelms averred that the

software “simply would not work for Fieldtech” because—among other

things— it requires a user to input “a myriad of information” regarding a


                                      22
potential customer before the user can generate a quote and does not allow a

user to access a customer’s historical information.       He stated that “the

software did not satisfy what Component Control agreed and represented it

would provide to Fieldtech, and it was not useable for the purposes for which

Fieldtech communicated to Component Control it needed the software.”

      Component Control argues that Nelms’s affidavit does not raise a fact

issue because he testified in his deposition that he merely had the “impression”

that the software would do everything Fieldtech wanted it to, Fieldtech could

present no documents containing the software specifications alleged by Nelms,

and Nelms’s affidavit is the self-serving testimony of an interested witness. We

will consider each of these three alleged defects in turn.      First, it is well

established that a deposition does not have controlling effect over an affidavit

when determining whether a motion for summary judgment should be granted.

Davis v. City of Grapevine, 188 S.W.3d 748, 755 (Tex. App.—Fort Worth

2006, pet. denied). When a deposition and an affidavit filed by the same party

in opposition to a motion for summary judgment conflict, a fact issue is

presented that will preclude summary judgment. Id. Thus, to the extent that

Component Control argues that Nelms’s affidavit conflicts with his earlier

deposition testimony, that conflict itself creates a fact issue. Second, UCC

section 2.201 specifically contemplates parol evidence of contemporaneous oral

                                      23
agreements to supplement or explain written agreements; thus, no documents

are required to create a fact issue. See T EX. B US. & C OM. C ODE A NN. § 2.201

(Vernon 1994). Third, while testimony from an interested witness cannot serve

as a basis for granting summary judgment in some instances, it is enough to

create a fact issue that justifies denying summary judgment. “Uncontroverted

evidence . . . from an interested witness does nothing more than raise a fact

issue unless it is clear, positive and direct, otherwise credible, and free from

contradictions and inconsistencies, and could have been readily controverted.”

Reynolds v. Murphy, 188 S.W.3d 252, 262 (Tex. App.—Fort Worth 2006, pet.

denied), cert. denied, 127 S. Ct. 1839. Because Fieldtech sought to create a

fact issue and defeat summary judgment rather than negate a fact issue and

obtain summary judgment, Nelms’s interested affidavit is competent summary

judgment evidence.

      Component Control argues that this case is like BubbaJunk.com, Inc. v.

Momentum Software, Inc., in which the Austin court held that a written but

unsigned “software requirements specification” did not impose additional

contractual obligations on a software developer. No. 03-03-00590-CV, 2004

WL 904081, at *4 (Tex. App.— Austin Apr. 29, 2004, pet. denied). In that

case, BubbaJunk and Momentum entered into a written consulting contract in

which Momentum promised to perform software- and Internet-development

                                      24
services described in two work authorizations attached to and incorporated into

the contract.   Id.   The contract required that changes to the scope of the

services be in writing and executed by both parties. Id. When BubbaJunk

failed to make payments under the contract, Momentum sued for breach of

contract and eventually moved for summary judgment on its claim. Id. at *3.

BubbaJunk asserted promissory estoppel as an affirmative defense, alleging that

Momentum made additional promises regarding the scope of its services in an

unsigned software requirements specification. Id. at *3, 4. The court held that

because the software requirements specification was not executed by both

parties, it was not a part of the contract and would not support BubbaJunk’s

promissory estoppel defense. Id. at *4.

      This case is distinguishable from BubbaJunk. The contract in BubbaJunk

was the complete, integrated agreement between the parties. Neither of the

writings in this case—the proposal and the clickwrap agreement—is a complete

expression of the parties’ agreement, and neither contains a merger or

integration clause. The clickwrap agreement includes a provision stating that

“[t]his Agreement shall be modified only by a written agreement duly executed

by   Licensor   and     Licensee,”   but    “this   Agreement”—the    clickwrap

agreement—says nothing about the software’s functionality; thus, Component

Control’s alleged oral promises about the software’s functionality do not modify

                                       25
the clickwrap agreement. For these reasons, Bubbajunk does not guide our

analysis.

      Nelms testified that Component Control promised that the software would

meet Fieldtech’s needs, and he testified that the software failed to meet

Fieldtech’s needs. We therefore hold that Fieldtech created a fact issue as to

whether Component Control breached its agreement with Fieldtech; thus, the

trial court erred by granting Component Control’s no-evidence summary

judgment motion on Fieldtech’s breach of contract claim. See T EX. R. C IV. P.

166a(i). For the same reasons, the trial court erred by granting Component

Control’s traditional motion for summary judgment, in which Component

Control sought to conclusively negate the “breach” element of Fieldtech’s

breach of contract claim. See T EX. R. C IV. P. 166a(c).

      Component Control also moved for summary judgment because Fieldtech

suffered no injury from Component Control’s purported breach of contract,

arguing cursorily that “[o]nce again, there is no performance issue. . . . There

is no injury because Fieldtech’s change of heart is not a breach by Component

Control.” Because we have already held that the summary judgment evidence

raises a fact question as to whether Component Control breached its agreement

with Fieldtech, we likewise hold that the trial court erred by granting summary

judgment on Component Control’s “no injury” argument. See id.

                                      26
      c.     Breach of warranty 6

      In its motion for summary judgment, Component Control argued that it

conclusively negated the existence of any express or implied warranties

because Component Control disclaimed all such warranties in the clickwrap

agreement.

             i.         Implied warranties

      Contracts for the sale of goods imply warranties of merchantability and

fitness for a particular purpose. T EX. B US. & C OM. C ODE A NN. § § 2.314, 2.315

(Vernon Supp. 1994). To exclude the implied warranty of merchantability, the

exclusionary language must mention “merchantability,” be in writing, and be

conspicuous. Id. § 2.316(b) (Vernon 1994). Likewise, to exclude an implied

warranty of fitness, the exclusionary language must be in writing and be

conspicuous.      Id.    Language is “conspicuous” in a disclaimer of an implied

warranty if it is in larger type or other contrasting font or color. Womco, Inc.

v. Navistar Int’l Corp., 84 S.W.3d 272, 279 (Tex. App.—Tyler 2002, no pet.);

T EX. B US. & C OM. C ODE A NN. § 1.201(10) (Vernon             1994) (defining

“conspicuous” as “so written . . . that a reasonable person against [whom] it




      6
      … As we noted above, we will analyze Component Control’s summary
judgment motion on Fieldtech’s breach of warranty claim under the rules
governing traditional motions for summary judgment.

                                             27
is to operate ought to have noticed it” and providing that language in the body

of a form is “conspicuous” if it is in larger or other contrasting type, font, or

color). Whether language is conspicuous is a question of law for the court to

resolve. Womco, Inc., 84 S.W.3d at 279.

      The warranty disclaimer Component Control relies on appears in the

clickwrap agreement and states that “Licensor shall not be liable to Licensee for

any damages . . . arising out of . . . the breach of any express or implied

warranty.” This language, which appears on the third page of the five-page

clickwrap agreement, is not in larger type or other contrasting font or color. We

therefore hold that it is not “conspicuous” as a matter of law and was

ineffective to disclaim the implied warranties of merchantability and fitness.

See T EX. B US. & C OM. C ODE A NN. § 2.316(b). Because the disclaimer was the

sole basis of Component Control’s motion for summary judgment with regard

to Fieldtech’s claim for breach of implied warranties, the trial court erred by

granting summary judgment on this claim. 7


      7
       … On appeal, Component Control argues that even if the disclaimer was
ineffective, the only evidence before the trial court “confirms” that Component
Control did not breach any warranties. But Component Control did not assert
this argument as a ground for summary judgment in the trial court, and
summary judgment cannot be granted except on the grounds expressly
presented in the motion. Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193,
204 (Tex. 2002); Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex.
1997). Therefore, we cannot affirm the summary judgment on this basis.

                                       28
            ii.   Express warranties

      Any affirmation of fact or promise made by the seller to the buyer that

relates to the goods and becomes a part of the basis of the bargain creates an

express warranty that the goods will conform to the affirmation or promise.

T EX. B US. & C OM. C ODE A NN. § 2.313(a)(1) (Vernon 1994).      Likewise, any

description of the goods that is made part of the basis of the bargain creates

an express warranty that the goods will conform to the description.        Id. §

2.313(a)(2). It is not necessary to the creation of an express warranty that the

lessor use formula words, such as “warrant” or “guarantee,” or that the lessor

have a specific intent to make a warranty. Id. § 2.313(b).

      Unlike disclaimers of implied warranties, the UCC does not require

conspicuous language for the disclaimer of express warranties.           See id.

§ 2.316(b). But a disclaimer of an express warranty must be communicated to

a buyer before the sale is consummated; otherwise, the disclaimer language is

inoperative. Mercedes-Benz of N. Am., Inc. v. Dickenson, 720 S.W.2d 844,

852 (Tex. App.—Fort Worth 1986, no writ) (holding automobile dealer’s

disclaimer of express warranties ineffective when buyer was uninformed of

disclaimer until he found it in the car’s glove box after consummating the sale);

see also Womco, Inc., 84 S.W.3d at 279.




                                       29
      In this case, Fieldtech signed Component Control’s proposal on August

24, 2001. Nothing in the record suggests—and Component Control does not

argue—that Fieldtech was made aware of the clickwrap agreement and its

warranty disclaimer until Fieldtech installed the software in October 2001, two

months after the parties had entered into a binding agreement for the lease of

the software. We therefore hold that the clickwrap agreement’s disclaimer of

express warranties was ineffective as a matter of law and that the trial court

erred by granting summary judgment with regard to Fieldtech’s claim for breach

of express warranty.

      d.    DTPA claims

      Component Control asserted that it was entitled to a no-evidence

summary judgment because there is no evidence of any misrepresentation or

unconscionable act by Component Control, and it asserted that it was entitled

to a traditional summary judgment because Fieldtech’s claim was barred by

limitations 8 and because Component Control had disclaimed all warranties.




      8
        … Component Control also moved for no-evidence summary judgment
on limitations but, as Fieldtech observes, it was not entitled to a no-evidence
summary judgment on limitations because limitations is an affirmative defense
on which Component Control would have the burden of proof at trial. See T EX.
R. C IV. P. 166a(i) (providing that a party may move for no-evidence summary
judgment on a claim or defense on which an adverse party would have the
burden of proof at trial).

                                      30
            i.    Evidence of misrepresentations

      The DTPA creates a cause of action for false, misleading, or deceptive

acts or practices, including misrepresentations that goods have characteristics,

uses, or benefits that they do not have.        T EX. B US. & C OM. C ODE A NN.

§ § 17.46(b)(7), 17.50(a) (Vernon 2008). We have already recounted the

evidence presented by Nelms’s affidavit regarding representations he alleges

Component Control made to Fieldtech about the suitability of the software to

Fieldtech’s needs and his averment that the software failed to meet those

needs.   Nelms’s affidavit is some evidence that Component Control made

misrepresentations about the characteristics, uses, or benefits of the software.

Thus, Component Control was not entitled to no-evidence summary judgment

on Fieldtech’s DTPA claims.

            ii.   Limitations

      A consumer must commence a DTPA action within two years of the date

on which the false, misleading, or deceptive act or practice occurred or within

two years after the consumer discovered or in the exercise of reasonable

diligence should have discovered the occurrence of the false, misleading, or

deceptive act or practice. Id. § 17.565 (Vernon 2002).

      Component Control argues that Fieldtech’s DTPA claims are barred by

limitations because Component Control would have made any alleged

                                      31
misrepresentations before Fieldtech signed the proposal in August 2001, but

Fieldtech did not file suit until October 16, 2003—more than two years later.

Fieldtech replies that it did not discover that the software was not as

Component Control represented until it sent two employees for software

training in January 2002.

      Nelms avers in his affidavit that Fieldtech installed the software on

October 19, 2001, but did not use it for the remainder of the year. He further

stated that it was not until Fieldtech employees attended training in January

2002 that Fieldtech discovered that the software would not suit Fieldtech’s

needs, contrary to Component Control’s alleged representations. We hold that

Nelms’s affidavit is some evidence that Fieldtech could not have discovered

Component Control’s alleged misrepresentations until January 2002, less than

two years before Fieldtech filed suit.      Thus, Component Control did not

conclusively establish the affirmative defense of limitations and was not entitled

to a traditional summary judgment on this basis.

            iii.   DTPA warranty claims

      The DTPA does not create any warranties, but it does create a cause of

action for breach of an express or implied warranty.          Id. § 17.50(a)(2).

Component Control argues that it is entitled to summary judgment because the

summary judgment evidence conclusively proves that it effectively disclaimed

                                       32
all express and implied warranties as a matter of law.        We have already

analyzed Component Control’s warranty-disclaimer argument in connection with

Fieldtech’s breach of warranty claims and determined that the disclaimer was

ineffective. For the same reasons, we hold that Component Control is not

entitled to summary judgment on Fieldtech’s DTPA warranty claims.

      e.    Conclusion

      Having determined that Component Control is not entitled to summary

judgment on Fieldtech’s breach of contract, breach of warranty, and DTPA

claims, we hold that the trial court erred by granting summary judgment in

Component Control’s favor, and we sustain Fieldtech’s first issue.

3.    CitiCapital’s motions

      Fieldtech sued CitiCapital for (1) breach of contract, alleging that

CitiCapital made improper and unauthorized charges and payments under the

lease; and (2) a declaratory judgment that the lease was unenforceable, alleging

a complete lack of consideration. CitiCapital filed a motion for no-evidence

summary judgment, asserting that there was no evidence that CitiCapital made

improper or unauthorized charges or payments under the lease and no evidence




                                      33
that CitiCapital had breached the lease. 9   CitiCapital also filed a traditional

motion for summary judgment, arguing that as a matter of law, failure of

consideration is not a defense to Fieldtech’s obligations under the lease, that

Fieldtech was in default, and that Nelms and Mills were liable on their

guarantees for all sums owing under the lease.        CitiCapital filed a further

traditional motion for partial summary judgment on the issue of attorney’s fees.

The trial court granted all three motions and awarded CitiCapital damages of

$95,105.55 and attorney’s fees of $28,205.83.

      a.    Enforceability of lease

      Fieldtech argues that the trial court erred by granting summary judgment

in favor of CitiCapital on Fieldtech’s causes of action because there is at least

a fact issue as to whether Fieldtech revoked its acceptance of the software,

thereby rendering the lease unenforceable. CitiCapital responds that Fieldtech

specifically waived its right to revoke acceptance of the software.




      9
       … As it did with Component Control’s no-evidence motion, Fieldtech
challenges the sufficiency of CitiCapital’s no-evidence motion. But unlike
Component Control’s motion, CitiCapital’s specifically identifies elements of
Fieldtech’s causes of action for which there is no evidence. Therefore, we
reject Fieldtech’s insufficiency argument with regard to CitiCapital’s no-
evidence motion. See T EX. R. C IV. P. 166a(i).

                                       34
            i.    Hell or high water clause

      The finance lease between Fieldtech and CitiCapital contains what is

commonly referred to as a “hell or high water” clause. A hell or high water

clause requires that the lessee, once it accepts the leased item, must pay its

rent in all events (i.e., come hell or high water) without regard for the proper

function of the item or the conduct of the lessor with respect to the subject or

any other transaction. Excel Auto & Truck Leasing, L.L.P. v. Alief ISD, 249

S.W.3d 46, 51 (Tex. App.—Houston [1st Dist.] 2007, pet. denied). The UCC

provides that hell or high water clauses are enforceable in finance leases:

      (a) In the case of a finance lease that is not a consumer lease, a
      term in the lease agreement that provides that the lessee’s
      promises under the lease contract become irrevocable and
      independent upon the lessee’s acceptance of the goods is
      enforceable.

      (b) A promise that has become irrevocable and independent under
      Subsection (a):

            (1) is effective and enforceable between the parties, and by
      or against third parties including assignees of the parties; and

            (2) is not subject to cancellation, termination, modification,
      repudiation, excuse, or substitution without the consent of the
      party to whom the promise runs.

T EX. B US. & C OM. C ODE A NN. § 2A.407 (Vernon Supp. 2008).

      The lease agreement between Fieldtech and CitiCapital states that it is

“non-cancellable,” that “no defect in or unfitness of the property shall relieve

                                      35
[Fieldtech] of its obligations under the lease,” that the breach of any warranty

by Component Control will not “have any effect whatsoever on the rights and

obligations of either party with respect to the lease,” and that Fieldtech’s

“obligation to pay all rent and other sums payable [under the lease is] absolute

and unconditional.” Thus, Fieldtech agreed to make payments under the lease

come “hell or high water,” that is, even if the software proved to be defective

or useless.

              ii.   Waiver of right to revoke acceptance

      Fieldtech points to the comment to section 2A.407, which states that a

hell or high water clause “remain[s] subject to . . . the lessee’s revocation of

acceptance (section 2A-517).” Id. cmt 1. Section 2A.517 provides that a

lessee in a finance lease may revoke acceptance of goods the nonconformity

of which substantially impairs their value to the lessee if the lessee has

accepted them without discovery of the nonconformity if the lessee’s

acceptance was reasonably induced by the lessor’s assurances.                Id.

§ 2A.517(a)(2) (Vernon 2002). Fieldtech argues that Nelms’s affidavit creates

a fact issue as to whether CitiCapital’s assurances reasonably induced Fieldtech

to accept the software and whether Fieldtech effectively revoked its

acceptance.




                                       36
      CitiCapital replies that Fieldtech specifically waived its right to revoke

acceptance in paragraph 18 of the lease agreement, which provides that

      [t]o the extent permitted by applicable law, the LESSEE waives any
      rights and remedies conferred upon a LESSEE by UCC Sections 2A-
      508 through 2A-522, including (without limitation) the LESSEE’S
      rights to . . . revoke acceptance of the leased Property . . . .

      UCC section 1.302(a) states that “[e]xcept as otherwise provided in

Subsection (b) or elsewhere in this title, the effect of provisions of this title may

be varied by agreement.” Id. § 1.302(a) (Vernon Supp. 2008). Thus, an

agreement can change the legal consequences that flow from the provisions of

the UCC. Id. § 1.302(a) cmt. 1. Subsection (b) provides that the obligations

of good faith, diligence, reasonableness, and care may not be disclaimed by

agreement. Id. § 1.302(b).

      Nothing in the UCC precludes an agreement between a finance-lease

lessor and lessee to restrict or waive a lessee’s right to revoke acceptance

under section 2A.517(a)(2). In this case, the waiver of Fieldtech’s right to

revoke acceptance is clear and unambiguous. Therefore, even if we assume

that Fieldtech attempted to revoke acceptance of the software when it learned

the software did not suit its needs, such revocation did not render the lease

unenforceable as a matter of law because Fieldtech had already waived its right

to revoke acceptance. We therefore hold that the trial court did not err by


                                         37
granting summary judgment in favor of CitiCapital on its counterclaim to

enforce the lease and on Fieldtech’s cause of action for a declaration that the

lease was unenforceable.

      b.      Unauthorized and improper charges

      Fieldtech argues that Carol Beckham’s affidavit created a fact issue as to

improper and unauthorized charges allegedly made by CitiCapital and, therefore,

created a fact issue as to whether CitiCapital breached the lease agreement.

In her affidavit, Beckham listed the nine payments Fieldtech had made to

CitiCapital by date, as follows:


               July 2002                $3,500.00

               August 2002              $3,500.00

               October 2002             $5,000.00

               December 2002            $5,000.00

               January 2003             $5,000.00

               February 2003            $5,000.00

               March 2003               $5,000.00

               April 2003               $1,199.80

               July 2003                $5,000.00

               Total                    $38,199.80 10




      10
           … Beckham averred that these payments added up to $43,199.80.

                                      38
Beckham averred that “it has been difficult to determine the amount Fieldtech

should actually owe under the lease” and that “CitiCapital could never explain

the calculation or the reason for the tax and insurance charges they were

making to Fieldtech.”    Based on Beckham’s affidavit, Fieldtech argues that

“there is at least a genuine fact issue regarding the issue of whether CitiCapital

correctly applied the payments made by Fieldtech and whether CitiCapital’s

charges under the lease are correct.”

      The lease agreement called for Fieldtech to make monthly payments of

$3,528.85 beginning 180 days after the first day of the calendar quarter after

Fieldtech installed the software, or June 30, 2002. The lease was a “net”

lease— that is, the basic lease payments were “net” of any other sums

due—and specifically required Fieldtech to pay for insurance and taxes in

addition to the monthly lease payments; the lease also gave CitiCapital the right

to obtain insurance and charge Fieldtech for the premiums if Fieldtech failed to

obtain the required coverage.    CitiCaptial attached to its motion for partial

summary judgment the affidavit of its employee Wendy Henderson, who

averred that as of April 5, 2005, Fieldtech owed CitiCapital $71,399.60 in past

due payments, $11,459.91 in late charges, and $12,264.04 in insurance

premiums and fees.




                                        39
      Beckham’s affidavit is no evidence of unauthorized or improper charges.

Beckham merely testified that “it has been difficult to determine the amount

Fieldtech should actually owe under the lease,” not that the amounts paid by

Fieldtech actually went to pay unauthorized or improper charges; at the very

most, Beckham only speculates that the payments might have gone towards

improper charges. Speculation is not evidence. Joe v. Two Thirty Nine Joint

Venture, 145 S.W.3d 150, 164 (Tex. 2004). Moreover, Beckham’s affidavit

shows that Fieldtech did not even make the explicitly authorized and agreed-to

net lease payments of $3,528.85 per month. Over the twelve months that

Fieldtech made lease payments, it should have paid $42,346.20; the payments

listed in Beckham’s affidavit total $38,199.80. Because the money Fieldtech

paid to CitiCapital did not cover the monthly lease payment, no money was left

over for CitiCapital to apply to allegedly improper or unauthorized charges.

      We therefore hold that Fieldtech failed to raise a fact issue on its

allegation   of improper and    unauthorized   charges   and   that CitiCapital

conclusively proved that Fieldtech was in default under the lease agreement and

owed CitiCapital the amounts recited in Henderson’s affidavit. Thus, the trial

court did not err by granting CitiCapital’s no-evidence motion for summary

judgment on Fieldtech’s breach of contract claim and its traditional motion on

CitiCapital’s counterclaim to enforce the lease.

                                      40
      c.    Liability of guarantors

      Nelms and Mills argue that because there are fact issues regarding the

enforceability of the lease, CitiCapital is not entitled to summary judgment on

Nelms’s and Mills’s guarantees because if an underlying debt is unenforceable

and the principal debtor has no liability, the guarantor likewise has no liability.

See Hercules Exploration, Inc. v. Halliburton Co., 658 S.W.2d 716, 724 (Tex.

App.—Corpus Christi 1983, writ ref’d n.r.e.) (“The guarantor’s liability is

measured by the principal’s liability.”).    Fieldtech offers no other argument

regarding the summary judgment against Nelms and Mills on their guarantees.

Because we have held that the lease was enforceable as a matter of law and

that the trial court did not err by granting summary judgment in favor of

CitiCapital against Fieldtech, we also hold that the trial court did not err by

granting summary judgment against Nelms and Mills on their guarantees.

      d.    Conclusion

      Having determined that the trial court did not err by granting CitiCapital’s

no-evidence and traditional motions for summary judgment, we overrule

Appellants’ second issue.

                                   Conclusion

      Having sustained Appellants’ first issue and overruled their second issue,

we affirm the trial court’s summary judgments in favor of CitiCapital, reverse

                                        41
its summary judgments in favor of Component Control, and remand Fieldtech’s

claims against Component Control for further proceedings.




                                         ANNE GARDNER
                                         JUSTICE

PANEL: DAUPHINOT, HOLMAN, and GARDNER, JJ.

DELIVERED: August 7, 2008




                                    42
