                    In The
              Court of Appeals
Sixth Appellate District of Texas at Texarkana


                  No. 06-14-00027-CV



APM ENTERPRISES, LLC, AND AVTAR GREWAL, Appellant

                            V.

 NATIONAL LOAN ACQUISITIONS COMPANY, Appellee



         On Appeal from the 62nd District Court
                Lamar County, Texas
                Trial Court No. 79950




       Before Morriss, C.J., Carter and Moseley, JJ.
         Memorandum Opinion by Justice Carter
                                MEMORANDUM OPINION
       To recover past due, accelerated sums under a promissory note, National Loan

Acquisitions Company (National) sued the note’s maker, APM Enterprises, LLC, and APM’s

managing member and guarantor, Avtar Grewal. APM and Grewal appeal the trial court’s final

judgment ordering them to pay (1) the note’s principal balance, (2) accrued interest, and

(3) National’s attorney fees and court costs. On appeal, APM and Grewal argue that the trial

court erred in admitting into evidence a business records affidavit and the documents attached to

that affidavit, which were necessary to support National’s recovery under the promissory note.

Because they contend that the documents needed to support the judgment on the note were

improperly admitted, APM and Grewal argue that there is no evidence to support the judgment

on the promissory note. They also argue that National lacked standing to assert a common-law

fraud cause of action against Grewal for material misrepresentations Grewal allegedly made in

connection with obtaining the loan.

       We find (1) that the trial court did not abuse its discretion in admitting the affidavit and

the attached documents and (2) that the admitted documents supported the trial court’s judgment

providing for National’s recovery under the promissory note. We also find that National lacked

standing to assert a common law fraud cause of action against Grewal. However, the claim of

fraud was made in the alternative to recovery on note, and the trial court’s superfluous finding of

fraud, while in error, does not constitute reversible error since it did not affect the judgment. See

TEX. R. APP. P. 44.1(a). Consequently, we affirm the trial court’s judgment.




                                                 2
I.      Factual and Procedural History

        On May 23, 2006, APM executed an unsecured $200,000.00 promissory note in favor of

GT’s Investments, LLC, (GT’s) that matured on May 23, 2009. The promissory note was signed

by Grewal as managing member of APM. Payment on the promissory note was guaranteed by

Grewal, individually, and by Grewal Hotels, Inc., (the Hotel) via Grewal’s signature in his

capacity as vice president of the Hotel. GT was owned by three members—David Glass,

National, and Northwest Hospitality, LLC. Glass was present when the promissory note and

guaranty were signed by Grewal. According to Glass, Grewal affirmatively represented that he

was authorized to execute documents on the Hotel’s behalf.

        The promissory note required monthly interest and principal payments beginning on

June 23, 2006. An event of default occurred under the terms of the promissory note if the

required payment was not made within ten days of the due date. In the event of a default, the

promissory note provided that the unpaid principal and interest would become immediately due

and collectible at the option of the note’s holder. On June 7, 2006, GT’s assigned the promissory

note to its member, National. An allonge demonstrating that the note was sold and assigned to

National by GT’s was made a permanent part of the promissory note. 1

        The promissory note’s date of maturity passed. On June 16, 2009, National entered into a

letter agreement with Grewal, individually and as a member of APM, to modify the terms of the

promissory note, which had a principal balance of $196,158.62 on that date. The modification


1
 In their answers to National’s first amended petition, APM and Grewal admitted that National was “the owner and
holder of the note and the guaranty and all right, title and interest thereto, such rights having been assigned to
Plaintiff by GT’s Investments, LLC.”
                                                        3
extended the maturity date of the promissory note from May 23, 2009, to May 23, 2014, and

provided for a new payment schedule with a fixed ten-percent interest rate.

       APM defaulted on the promissory note.               Thereafter, National accelerated the

indebtedness and sued APM and guarantors Grewal and the Hotel. After learning from the

Hotel’s president that Grewal had no authority to sign the original promissory note on the

Hotel’s behalf, National (1) asserted—in the alternative to recovering on the note—a common-

law fraud cause of action against Grewal for his misrepresentation to GT’s that he had authority

to bind the Hotel as a guarantor on the note, and (2) nonsuited the Hotel.

       National filed a motion for entry of summary judgment on the promissory note. The

motion was supported by the affidavit of National’s custodian of records, Paul W. Peerboom,

who averred that the promissory note was in default and was matured by acceleration. See APM

Enters., LLC v. Nat’l Loan Acquisitions Co., 357 S.W.3d 405, 406 (Tex. App.—Texarkana 2012,

no pet.). The trial court granted National’s summary judgment motion, and APM and Grewal

appealed that decision to this Court. Id. In that appeal, APM and Grewal maintained that they

had received neither notice of National’s intent to accelerate nor notice of acceleration relating to

either the original or the modified notes. Id. Although National had sent several letters and

emails to APM and Grewal informing them of past due loan payments and late charges and

threatening to refer the account to counsel for legal action, we determined (1) that acceleration

under the loan requires clear notice of intent to exercise acceleration rights followed by a clear

notice of actual acceleration, (2) that National’s letters and e-mails did not satisfy these notice




                                                 4
requirements, and therefore, (3) that National was not entitled to summary judgment on the

accelerated loan amount. Id. at 408–09.

       After our previous opinion issued, National, on January 16, 2012, sent the following

letter to APM and Grewal:

                As you know, APM Enterprises LLC has failed to pay certain installments
       of the indebtedness evidenced by the note. As a result, you are in default under
       the terms of the note. This letter is [National’s] demand on you for payment of all
       sums (unpaid past due principal and unpaid accrued interest) now owing on the
       note . . . .

              If payment is not received from you on all sums now due and owing on
       the note on or before February 17, 2012, [National] will exercise its right to
       accelerate the entire unpaid balance of the note, whereupon all sums (outstanding
       principal, unpaid interest accrued on such outstanding principal, and other
       amounts including attorney fees) will be fully and immediately due and payable
       and [National] will proceed to exercise and pursue its various rights and remedies.

              This letter is also notice to Avtar S. Grewal . . . as guarantor[] of the note
       of [National’s] demand set forth above. Demand is also made on each guarantor
       individually for payment in full of all sums now due on the note in accordance
       with the terms and provision[s] of that certain Guaranty also dated May 23, 2006.

This notice of intent to accelerate was sent by Federal Express overnight delivery, and proof of

delivery demonstrated that the letters were delivered on January 17, 2012. On February 20,

2012, National sent this notice of acceleration to APM and Grewal:

               Pursuant to the aforesaid letter of January 16, 2012, the payments due and
       owing under the terms of the promissory note were to be made to [National] on or
       before February 17, 2012. You have failed to make these payments within the
       time required and this letter is to notify you that [National], the owner and holder
       of the note, has accelerated the outstanding principal balance of the note and all
       sums, including outstanding principal, unpaid interest accrued on such
       outstanding principal and all other amounts, including, without limitation,
       attorneys’ fees owing on and under the note are fully and immediately due and
       payable . . . .

                                                5
               This letter is also notice to Atvar [sic] S. Grewal . . . as guarantor[] of the
       notice of [National’s] acceleration as set forth above.

The notice of acceleration was sent certified mail, return receipt. To establish APM’s receipt of

the letter, National filed the return receipt confirming delivery to APM’s address on February 25,

2012, which was signed by Justin Heroux. Although a copy of the letter was also mailed to

Grewal, it was returned unclaimed.

       On October 25, 2012, National filed Peerboom’s business records affidavit with the trial

court. The affidavit set forth the proper predicate required by Rule 803(6) of the Texas Rules of

Evidence and attached the following documents: (1) the June 16, 2009, letter modification to the

promissory note; (2) the allonge to the promissory note evidencing the note’s assignment to

National; (3) the January 16, 2012, notice of intent to accelerate the debt; (4) the Federal Express

tracking and delivery confirmation of the January 16 letter; (5) the February 20, 2012, notice of

acceleration; (6) the return receipt signed by Heroux on February 25, 2012; (7) the returned,

unclaimed envelopes addressed to Grewal demonstrating that the February 20 letter was not

delivered to him; and (8) a spreadsheet showing the payment history and remaining balances for

the note.

       During a February 13, 2014, bench trial, the court considered Peerboom’s affidavit and

the records attached thereto over Grewal’s objection. At trial, the Hotel’s president, Iquval

Grewal, confirmed that Grewal had no authority to sign the guaranty on the Hotel’s behalf.

Glass testified that he relied on Grewal’s representations that he could bind the Hotel when GT’s

agreed to service the loan. Glass, who was familiar with the loan history, testified that the

principal balance on the loan was $190,730.08 and that the accrued interest was $80,477.49. As
                                                 6
additional exhibits, National introduced the May 23, 2006, promissory note, the guaranty, the

allonge, and the June 7, 2006, letter informing APM of the assignment of the loan to National.

Grewal did not testify.

            Based on the evidence presented, the trial court entered judgment on the note against

APM and Grewal, jointly and severally, for $190,730.08 in principal, $80,447.49 in accrued

interest, and $10,000.00 in attorney fees and court costs.                         The trial court also stated that,

“liability [im]posed on Avtar Grewal is both based on his liability as a guarantor on the note and

[National]’s common law fraud claim.” APM and Grewal appeal from this judgment.

II.         No Abuse of Discretion in Admitting Peerboom’s Affidavit and Attached Records

            At trial, National asked the court to take “judicial notice” of the existence of Peerboom’s

affidavit and the records attached to that affidavit. 2 On appeal, APM and Grewal argue (1) that,

because the phrase “judicial notice” was used, the trial court improperly took judicial notice of

the adjudicative facts contained within Peerboom’s affidavit and the records attached thereto

and, thus, (2) that there is no evidence to support the trial court’s finding that “[National] gave

APM and Grewal notice of intent to accelerate and notice of acceleration with respect to the

note.” 3 First, APM and Grewal did not make this specific objection at trial. Second, the trial

court never stated that it took judicial notice of the affidavit and its attached documentation;

rather, the court merely overruled APM and Grewal’s authentication objection and admitted the

documents into evidence.
2
    As explained below, the trial court did not take judicial notice of any facts in this case.
3
 A trial court’s decision to admit or exclude evidence is reviewed for abuse of discretion. Good v. Baker, 339
S.W.3d 260, 270 (Tex. App.—Texarkana 2011, pet. denied) (citing Interstate Northborough P’ship v. State, 66
S.W.3d 213, 220 (Tex. 2001)).
                                                               7
       Peerboom’s affidavit and the attached records were admitted into evidence in accordance

with Rule 902(10) of the Texas Rules of Evidence, which provides,

       Any record or set of records or photographically reproduced copies of such
       records, which would be admissible [as a business record] under Rule 803(6) . . .
       shall be admissible in evidence in any court in this state upon the affidavit of the
       person who would otherwise provide the prerequisites of Rule 803(6) . . . , that
       such records attached to such affidavit were in fact so kept as required by Rule
       803(6) . . . , provided further, that such record or records along with such affidavit
       are filed with the clerk of the court for inclusion with the papers in the cause in
       which the record or records are sought to be used as evidence at least fourteen
       days prior to the day upon which trial of said cause commences, and provided the
       other parties to said cause are given prompt notice by the party filing same of the
       filing of such record or records and affidavit, which notice shall identify the name
       and employer, if any, of the person making the affidavit and such records shall be
       made available to the counsel for other parties to the action or litigation for
       inspection and copying.

TEX. R. EVID. 902(10). Pursuant to a standing order issued by the district courts and county

court at law of Lamar County, Texas, “[A]ll business and medical records attached to affidavits

or notices in accordance with Rule 902(10) Texas Rules of Evidence shall be filed with the

District Clerk as an exhibit and not as a portion of the permanent file.”

       Pursuant to Rule 902(10) and the standing order referenced above, National asked the

trial court to consider Peerboom’s affidavit and attachments, which it had filed months before

trial, as trial exhibits. In the letter asking the district clerk to file Peerboom’s affidavit and

attachments, National informed the clerk that a copy of all of the documents, including the notice

of intent to accelerate and notice of acceleration, had been served on APM and Grewal’s counsel,

Jesse Nickerson, on October 24, 2012.




                                                 8
         At trial, APM and Grewal complained that Peerboom’s affidavit and attachments were

not properly authenticated under Rule 902(10) of the Texas Rules of Evidence. Specifically,

they argued,

         Now, what I got was a copy of a letter simply to Ms. Patterson saying here are
         some records to file in the Court papers and that’s it. So, even if this letter was to
         be considered a notice, it doesn’t comply with the requirements of 903.10 in that
         it does not state -- identify the name and employer, if any, of the person making
         the affidavit. 4

    National responded,

         [Counsel for APM and Grewal] acknowledges that he received it, and that is
         notice. The name of the person giving notice was the cover letter, me. The --
         also, the name and the employment of the person making the affidavit is in the
         affidavit itself. And the rule does not state exactly how the notice is to be given.
         It doesn’t give any kind of special or magic formula as to how it’s to be done, just
         that it’s to be done. I’m not aware of any case law that says that there’s some
         kind of special compliance that has to be followed.

          On appeal, APM and Grewal do not argue that the trial court erred in admitting the

affidavit and attachments under Rule 902(10). They have abandoned that argument, raised at

trial, in favor of a new argument complaining that the trial court took judicial notice of the truth

of the facts contained within the admitted records. 5 We find that the trial court (1) merely

overruled APM and Grewal’s objection to the introduction of Peerboom’s affidavit and the

attached records, (2) determined that the filing was made in accordance with Rule 902(10),


4
 When National asked the trial court “to take judicial notice of the business records affidavit that was filed by
[National] on October 25 of 2012,” APM and Grewal stated, “Our objection to that, Your Honor, would be that it
does not comply with 902.10, which is the provision of the Evidence Code that he’s talking about.”
5
 “‘It is well-settled that an objection at trial that does not comport with the complaint raised on appeal preserves
nothing for appellate review.’” In re S.A.G., 403 S.W.3d 907, 913 (Tex. App.—Texarkana 2013, pet. filed) (quoting
Martin v. Parris, No. 06–10–00037–CV, 2011 WL 766653, at *7 (Tex. App.—Texarkana Mar. 4, 2011, no. pet.)
(mem. op.)).
                                                         9
thereby obviating the need to re-authenticate the affidavit and attachments at trial and the need to

duplicate them in the reporter’s record when they were already included in the clerk’s record,

and (3) properly admitted this evidence under its local standing order and Rule 902(10). See

TEX. R. EVID. 902(10). Further, we find that APM and Grewal’s new argument suggesting that

the trial court took judicial notice of the facts contained within the admitted records is meritless.

Finally, we find that the authentication argument made by APM and Grewal at trial was

abandoned on appeal and that the trial court did not abuse its discretion in admitting the

evidence. Therefore, we overrule APM and Grewal’s first point of error.

       Next, APM and Grewal’s argument related to the legal sufficiency of the evidence to

support the trial court’s judgment is as follows:

       Business records in this case are crucial to Appellee because it is through that
       portal that Appellee seeks to prove it gave “notice of intent to accelerate” . . . and
       “notice of acceleration” . . . . If business records were admitted in error, the
       Appellee has no evidence that “notice of intent to accelerate” or “notice of
       acceleration” was given.

Because we have determined that no error in admission of the required notices was shown, we

overrule APM and Grewal’s second point of error.

III.   Trial Court’s Implied Finding that National Had Standing to Sue Grewal on GT’s
       Behalf for Common-Law Fraud was Harmless

       The trial court issued the following findings of fact:

       In connection with the signing of the note and the guaranty, Grewal represented to
       [National] and to GT’s Investments, LLC[,] that he was Vice President of Grewal
       Hotels, Inc.[,] and that he had authority to sign the guaranty on behalf of Grewal
       Hotels, Inc.

       The representation . . . was: material, false and made by Grewal knowing that it
       was false. Grewal intended that [National] and GT’s Investments, LLC[,] rely on
                                                    10
         such representation and act on it. [National] and GT’s Investments, LLC[,]
         reasonably relied on such representation.

    GT’s was not a party to this lawsuit. A plaintiff has standing to sue when it is personally

aggrieved by the alleged wrong. Nootsie, Ltd. v. Williamson Cnty. Appraisal Dist., 925 S.W.2d

659, 661 (Tex. 1996). APM and Grewal argue that National lacked standing to assert common-

law fraud because the misrepresentations were made to GT’s, GT’s was the only aggrieved party,

and National was not a party to the promissory note at the time Grewal’s misrepresentations

were made. 6 Standing is a component of subject-matter jurisdiction. Tex. Ass’n of Bus. v. Tex.

Air Control Bd., 852 S.W.2d 440, 445–46 (Tex. 1993). “A court has no jurisdiction over a claim

made by a plaintiff who lacks standing to assert it.” Heckman v. Williamson Cnty., 369 S.W.3d

137, 150 (Tex. 2012).

         Whether a party has standing to pursue a cause of action is a question of law subject to

de novo review. Id. at 150–51. “The assignability of a cause of action is generally freely

permitted.” Sw. Bell Telephone Co. v. Marketing on Hold, Inc., 308 S.W.3d 909, 916 (Tex.

2010). To recover on an assigned cause of action, the party claiming the assigned rights must

prove (1) that a cause of action existed that was assignable and (2) that the cause was in fact

assigned to the party seeking recovery. Magill v. Watson, 409 S.W.3d 673, 678 (Tex. App.—

Houston [1st Dist.] 2013, no pet.).




6
 The court’s finding is based solely on the representations made by Grewal when he signed the original guaranty on
the Hotel’s behalf. We note that National’s June 16, 2009, loan modification was addressed only to APM and was
acknowledged and agreed to only by APM and Grewal in his individual capacity. Our appellate record in this cause
indicates that the Hotel was not a party to the loan modification. We also note that the notices of intent to accelerate
and of acceleration were addressed to Grewal, Inc., and not to the Hotel.
                                                          11
         APM and Grewal acknowledge that GT’s could have asserted a claim for common-law

fraud. A plaintiff has standing by assignment of a cause of action unless the assignment is

invalid as against public policy. See State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696,

706–07 (Tex. 1996). Texas courts recognize five instances in which the assignment of a cause of

action is invalid as against public policy, including: (1) the assignment of an interest in an estate

if used to contest a will, (2) the assignment of a plaintiff’s claim to a tortfeasor in settlement

when that tortfeasor asserts the plaintiff’s cause of action against another joint tortfeasor,

(3) “Mary Carter” agreements, (4) the assignment of a client’s legal malpractice claim arising out

of litigation, and (5) under certain circumstances, the assignment of a defendant’s claims against

his insurer to the plaintiff. Magill, 409 S.W.3d at 677–78 (citing Gandy, 925 S.W.2d at 705);

Trevino v. Turcotte, 564 S.W.2d 682, 690 (Tex. 1978); Int’l Proteins Corp. v. Ralston–Purina

Co., 744 S.W.2d 932, 934 (Tex. 1988); Elbaor v. Smith, 845 S.W.2d 240, 250 (Tex. 1992);

Zuniga v. Groce, Locke, & Hebdon, 878 S.W.2d 313, 318 (Tex. App.—San Antonio 1994, writ

ref’d)). APM and Grewal do not contend that the assignment in this case falls within one of

these prohibited categories. Thus, the cause of action was assignable. 7

         However, because the appellate record does not contain the language of GT’s assignment

to National, nothing demonstrates that GT’s common-law fraud cause of action was in fact

assigned to National. National argues that it had standing to assert fraud on GT’s behalf because

it was a member of GT’s at the time Grewal’s misrepresentations were made. We disagree. “A
7
 With respect to enforcing a promissory note, “[a]n assignee of a promissory note stands in the shoes of the assignor
and obtains the rights, title, and interest that the assignor had at the time of the assignment.” Lavender v. Bush, 216
S.W.3d 548, 552 (Tex. App.—Texarkana 2007, no pet.) (citing Thweatt v. Jackson, 838 S.W.2d 725, 727 (Tex.
App.—Austin 1992), aff’d, 883 S.W.2d 171 (Tex. 1994)).

                                                         12
member of a limited liability company lacks standing to assert claims individually where the

cause of action belongs to the company.” Barrera v. Cherer, No. 04-13-00612-CV, 2014 WL

1713522, at *2 (Tex. App.—San Antonio Apr. 30, 2014, no pet.) (mem. op.) (citing Nauslar v.

Coors Brewing Co., 170 S.W.3d 242, 250–51 (Tex. App.—Dallas 2005, no pet.); Wingate v.

Hajdik, 795 S.W.2d 717, 719 (Tex. 1990) (“A corporate stockholder cannot recover damages

personally for a wrong done solely to the corporation, even though he may be injured by that

wrong.”)); see Haut v. Green Cafe Mgmt., Inc., 376 S.W.3d 171, 177 (Tex. App.—Houston

[14th Dist.] 2012, no pet.) (“It is the nature of the wrong, whether directed against the [company]

only or against the [member] personally, not the existence of injury, which determines who may

sue.”).

          There is no evidence that GT’s assigned its rights to assert common-law fraud causes of

action to National. Thus, National did not have standing to assert the fraud claim against

Grewal. Nevertheless, Rule 44.1(a)(1) of the Texas Rules of Appellate Procedure states, “No

judgment may be reversed on appeal on the ground that the trial court made an error of law

unless the court of appeals concludes that the error complained of: (1) probably caused the

rendition of an improper judgment. . . .” TEX. R. APP. P. 44.1(a)(1). The fraud cause of action

was pled in the alternative to recovery on the note. Grewal, as a guarantor on the note, and APM

were jointly and severally liable for nonpayment of the note. The proper judgment and the

amount of damages awarded on the promissory note are unaffected by the trial court’s

superfluous findings on the fraud claim. Therefore, the trial court’s implied finding that National




                                                13
had standing to assert GT’s fraud claim was harmless as it did not cause the rendition of an

improper judgment.

IV.    Conclusion

       We affirm the trial court’s judgment.



                                               Jack Carter
                                               Justice

Date Submitted:       September 3, 2014
Date Decided:         October 17, 2014




                                                 14
