Koepke, Inc. v. Steve Lewis, LLC D/B/A Lewis Mechanical Sales

NUMBER 13-24-00331-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

KOEPKE, INC., Appellant,

v.

STEVE LEWIS, LLC,
D/B/A LEWIS MECHANICAL SALES, Appellee.

ON APPEAL FROM THE 476TH DISTRICT COURT
OF HIDALGO COUNTY, TEXAS

MEMORANDUM OPINION

Before Justices Silva, Peña, and Cron
Memorandum Opinion by Justice Cron

The trial court granted appellee Steve Lewis, LLC d/b/a Lewis Mechanical Sales

(Lewis LLC) summary judgment on its claim against appellant Koepke, Inc. for recovery

on a promissory note. By a single issue, Koepke argues summary judgment was improper

because “there was no consideration for the note made the basis of this lawsuit.” We
affirm.

I. BACKGROUND

The material facts in this case are undisputed.

A. The Settlement Agreement

Koepke was hired as a subcontractor to provide labor and materials for the

construction of a surgical center. Koepke in turn contracted with AAON, Inc. to furnish

certain materials for the project. AAON had its own agreement with Lewis Mechanical

Sales, Inc. (Lewis Inc.), the predecessor to Lewis LLC, which sold equipment to AAON

on a commission basis. AAON eventually filed a $72,000 lien against the project for

money owed to it by Koepke. At that time, AAON owed Lewis Inc. $55,000 in

commissions. Thus, Koepke owed AAON $72,000, and AAON owed Lewis Inc. $55,000.

To settle these debts, Koepke, AAON, and Lewis Inc. entered into a mediated

settlement agreement with clear and definite terms. As relevant here, the settlement

agreement required Koepke to execute a promissory note in favor of Lewis Inc. in the

principal amount of $72,000. In exchange, Lewis Inc. agreed to accept payments under

the note in satisfaction of AAON’s $55,000 debt. For its part, AAON agreed that, once

Koepke paid the note “in full,” AAON would release any claims it may have against

Koepke, release its lien against the project, and assign its claims against the project to

Koepke. The settlement agreement also provided that, “This Agreement and all the

covenants, promises and agreements contained herein shall be binding upon and inure

to the benefit of the respective legal representatives, personal representatives, heirs,

devises, successors and assigns of the Parties.” (Emphasis added).

2
B. The Note and Procedural History

Per the settlement agreement, Koepke executed a promissory note in favor of

Lewis Inc. However, shortly thereafter, at the request of Steve Lewis, the owner of Lewis

Inc., Koepke executed a second promissory note with identical terms, except the second

note changed the lender to “Steve Lewis, LLC d/b/a Lewis Mechanical Sales (Successor

to Lewis Mechanical Sales, Inc.)” and provided a different address for payment. Steve

later explained by affidavit that he asked Kopeke to execute the second note due to the

pending dissolution of Lewis Inc. Thomas Koepke, the president and namesake of the

company, later testified by deposition that his then-attorney advised him to sign the

second note “for the mediation, to get it all cleared up and settled.”

Like the original note, the second note consisted of a principal amount of seventy-

two thousand dollars with an annual interest rate of two percent per annum, subject to the

following terms:

Principal and interest are due and payable in equal monthly installments of
One Thousand Five Hundred Sixty-Two and No/100ths Dollars ($1,562.00),
on the 1st day of each month, beginning February 1, 2018[,] and continuing
monthly until January 1, 2022, when all remaining principal and accrued
interest shall be due and paid in full.

After executing the second note, Koepke made two payments by check to “Lewis

Mechanical Sales” at the new address and then ceased making payments. During his

deposition, Thomas agreed that his company only stopped making payments under the

second note because it “was unable to afford the monthly payments” at that time.

Lewis LLC sued Koepke to recover the balance on the second note. Koepke

answered by generally denying the note’s validity and by filing several counterclaims,

3
including a request for a declaratory judgment that the note was unenforceable for lack

of consideration. After the trial court granted Lewis LLC summary judgment on its claim,

Koepke non-suited its counterclaims, and this appeal followed.

II. GOVERNING LAW

A. Standard of Review

Whether a party was entitled to summary judgment is a question of law we review

de novo. Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). To prevail on a traditional

motion for summary judgment, the movant must show that no genuine issue of material

fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c).

For a plaintiff, this means proving each element of its claim. See id. Once a plaintiff

establishes its right to summary judgment, the burden shifts to the defendant to present

evidence raising a genuine issue of material fact precluding summary judgment. See

Lujan, 555 S.W.3d at 84. This shifting burden includes the defendant’s obligation to raise

a genuine issue of material fact on each element of any affirmative defense that might

have prevented the trial court from rendering judgment on the plaintiff’s claim. Baptist

Mem’l Hosp. Sys. v. Sampson, 969 S.W.2d 945, 947 (Tex. 1998); Leonard v. Knight, 551

S.W.3d 905, 909–10 (Tex. App.—Houston [14th Dist.] 2018, no pet.).

In reviewing summary judgments, we view the evidence in the light most favorable

to the nonmovant, crediting favorable evidence if reasonable jurors could do so and

disregarding contrary evidence unless reasonable jurors could not. Merriman v. XTO

Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). Our review is confined to “the issues

expressly set out in the motion or in an answer or any other response.” TEX. R. CIV. P.

4
166a(c).

B. Recovery on a Promissory Note

A party bringing a claim for default on a promissory note must prove the following

elements: (1) the existence of the note at issue; (2) that the defendant executed the note;

(3) that the plaintiff is the owner or legal holder of the note; and (4) the balance due and

owing on the note. Tex. Champps Americana, Inc. v. Comerica Bank, 643 S.W.3d 738,

745 (Tex. App.—Dallas 2022, pet. denied). A plaintiff may satisfy its burden by submitting

an authenticated photocopy of the promissory note with an affidavit in which the affiant

swears to facts supporting each element. López v. Rocky Creek Partners, 623 S.W.3d

510, 516 (Tex. App.—San Antonio 2021, no pet.). Under the common law, lack of

consideration is an affirmative defense to a claim for breach of a promissory note. 1

McLernon v. Dynegy, Inc., 347 S.W.3d 315, 335 (Tex. App.—Houston [14th Dist.] 2011,

no pet.); see also Kroesche v. Wassar Logistics Holdings, LLC, No. 01-20-00047-CV,

2023 WL 1112002, at *11 (Tex. App.—Houston [1st Dist.] Jan. 31, 2023, pet. denied).

C. Affirmative Defenses

A party “shall set forth affirmatively” in its responsive pleading any affirmative

defense or avoidance to a cause of action. Godoy v. Wells Fargo Bank, N.A., 575 S.W.3d

1 The parties do not contend that the promissory note is a negotiable instrument under the Uniform

Commercial Code, and thus, we express no opinion on the matter. See Great N. Energy, Inc. v. Circle
Ridge Prod., Inc., 528 S.W.3d 644, 661 (Tex. App.—Texarkana 2017, pet. denied) (“While promissory notes
can be and are often referred to as negotiable instruments, they can only be negotiable instruments under
Chapter 3 if they constitute ‘an unconditional promise or order to pay a fixed amount of money’” (quoting
TEX. BUS. & COM. CODE ANN. § 3.104(a)(3))). We note, however, that if the promissory note is a negotiable
instrument, lack of consideration is also an affirmative defense under the Uniform Commercial Code. TEX.
BUS. & COM. CODE ANN. § 3.303(b) (“The drawer or maker of an instrument has a defense if the instrument
is issued without consideration,” which is defined, in part, as “any consideration sufficient to support a
simple contract.”).

5
531, 536 (Tex. 2019) (quoting TEX. R. CIV. P. 94); see also TEX. R. CIV. P. 93(9) (requiring

a responsive pleading that alleges “[t]hat a written instrument upon which a pleading is

founded is without consideration” to be verified by affidavit). An affirmative defense is one

that does not controvert the facts asserted by the plaintiff, but rather “seeks to establish

an independent reason why the plaintiff should not recover.” Godoy, 575 S.W.3d at 536

(quoting Gorman v. Life Ins. Co. of N. Am., 811 S.W.2d 542, 546 (Tex. 1991)). The

purpose of Rule 94’s pleading requirement “is to give the opposing party notice of the

defensive issue to be tried.” MAN Engines & Components, Inc. v. Shows, 434 S.W.3d

132, 136 (Tex. 2014). “It is a rule of fairness that requires the defendant to identify

affirmative defenses, involving facts distinct from the elements of the plaintiff’s claim, so

that the plaintiff may reasonably prepare to rebut or explain them.” Id. For these reasons,

a party that fails to expressly plead an affirmative defense generally forfeits that defense

as a bar to liability. Zorrilla v. Aypco Const. II, LLC, 469 S.W.3d 143, 155 (Tex. 2015).

However, Rule 94’s requirements are not absolute. “Whenever possible, we reject

form-over-substance requirements that favor procedural machinations over reaching the

merits of a case.” Godoy, 575 S.W.3d at 536 (quoting Dudley Constr., Ltd. v. Act Pipe &

Supply, Inc., 545 S.W.3d 532, 538 (Tex. 2018)). For instance, when one party raises an

affirmative defense for the first time in summary judgment briefing (either in support of or

in opposition to a motion for summary judgment), Rule 94 does not automatically bar the

trial court’s consideration of the affirmative defense; instead, the other party must animate

Rule 94 by objecting to the pleading defect before the trial court renders judgment on the

motion. See id. at 537(in opposition to summary judgment); Roark v. Stallworth Oil & Gas,

6
Inc., 813 S.W.2d 492, 494 (Tex. 1991) (in support of summary judgment). Complaining

for the first time in a motion for new trial or on appeal is “too late.” Godoy, 575 S.W.3d at

537. This preservation requirement prevents parties from laying behind the log and

complaining after the fact about a pleading defect that was easily correctable.

D. Contract Construction

This appeal requires us to construe the settlement agreement. In construing a

written contract, our primary concern is to ascertain the parties’ intentions as expressed

in the instrument. Sundown Energy LP v. HJSA No. 3, Ltd. P’ship, 622 S.W.3d 884, 888

(Tex. 2021). A contract term is given its plain and ordinary meaning unless the instrument

indicates that the parties intended a different meaning. Dynegy Midstream Servs., Ltd.

P’ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009). The construction of an

unambiguous contract is a question of law that we review de novo. Tawes v. Barnes, 340

S.W.3d 419, 425 (Tex. 2011).

III. ANALYSIS

Koepke does not dispute that Lewis LLC met its summary judgment burden of

proof. Rather, Koepke argues that summary judgment was improper because Koepke

raised a genuine issue of material fact about whether the second note is unenforceable

for lack of consideration. Lewis LLC responds that we should not consider this issue

because Koepke failed to plead lack of consideration as an affirmative defense, and

therefore, it should prevail on appeal by default. For different reasons, we agree with

Lewis LLC that the trial court did not err in granting summary judgment.

As a preliminary matter, we conclude that Lewis LLC forfeited any complaint about

7
Koepke’s alleged pleading defect. As previously noted, Koepke filed a combined answer

and counter petition that did not plead lack of consideration as an affirmative defense but

instead sought a declaratory judgment that the second note was unenforceable for lack

of consideration. A defendant cannot recast an affirmative defense as a claim for

affirmative relief through artful pleading. Headington Royalty, Inc. v. Finley Res., Inc., 623

S.W.3d 480, 499 (Tex. App.—Dallas 2021), aff’d, 672 S.W.3d 332 (Tex. 2023). This is

especially true when the only apparent reason for bringing such a claim is “to pave an

avenue to attorney fees” under the Declaratory Judgment Act. Id. at 499 n.23 (quoting

John Chezik Buick Co. v. Friendly Chevrolet Co., 749 S.W.2d 591, 594–95 (Tex. App.—

Dallas 1988, writ denied)).

Nevertheless, in response to Lewis LLC’s motion for summary judgment, Koepke

filed a written response arguing, in part, that the trial court should deny summary judgment

because the second note “is not enforceable due to a lack of consideration.” Koepke

elaborated that, unlike the original note executed in favor of Lewis Inc., Lewis LLC “paid

nothing and gave no consideration” for the second note. Lewis LLC did not object to

Koepke’s response under Rule 94. Thus, despite any technical defects that may exist in

Koepke’s pleadings, the issue was expressly presented to the trial court and is properly

before us. See TEX. R. CIV. P. 166a(c); Godoy, 575 S.W.3d at 537.

“Consideration is a bargained for exchange of promises.” Ulico Cas. Co. v. Allied

Pilots Ass’n, 262 S.W.3d 773, 790 (Tex. 2008) (quoting Fed. Sign v. Tex. S. Univ., 951

S.W.2d 401, 408 (Tex. 1997)). It is undisputed that, other than the promises exchanged

in the settlement agreement, Koepke did not receive any additional consideration for

8
making the second promissory note. Thus, our analysis turns on the terms of the

settlement agreement.

Koepke argues that it received no consideration for executing the second note in

favor of Lewis LLC because, under “the express terms of the [s]ettlement [a]greement,”

AAON released its claims against Koepke when Koepke executed the original note in

favor of Lewis Inc. According to Koepke, there could be no consideration when it executed

the second note because “there was no longer any liability owed under the settlement

agreement.” We disagree.

Under the plain language of the settlement agreement, each promise AAON made

to Kopeke was “conditioned upon” Koepke paying off the note. Stated differently, AAON

only agreed to release its claims against Koepke, release its lien against the project, and

assign its claims against the project to Koepke if Kopeke followed through on its promise

to pay the note “in full.” It is undisputed that Koepke never made a payment to Lewis Inc.

under the first note. Thus, contrary to its suggestion, Koepke had not already performed

its obligations under the settlement agreement when it executed the second note.

The settlement agreement also provides that “all the covenants, promises and

agreements contained herein shall be binding upon and inure to the benefit of

the . . . successors and assigns of the Parties.” In this context, “successor” means “[a]

corporation that, through amalgamation, consolidation, or other assumption of interests,

is vested with the rights and duties of an earlier corporation.” Successor, Black’s Law

Dictionary (12th ed. 2024). Therefore, when Koepke executed the second note in favor

of “Steve Lewis, LLC d/b/a Lewis Mechanical Sales (Successor to Lewis Mechanical

9
Sales, Inc.)” with identical payment terms, it was simply effectuating one of its promises

under the settlement agreement. See Ulico Cas. Co., 262 S.W.3d at 790.

Moreover, just as Koepke is bound by the settlement agreement to pay the

settlement amount to Lewis LLC as Lewis Inc.’s successor, Lewis LLC is bound to credit

those payments against the commissions owed by AAON, and upon satisfaction of that

debt, AAON is bound to release and assign its claims to Lewis LLC. See ABB Kraftwerke

Aktiengesellschaft v. Brownsville Barge & Crane, Inc., 115 S.W.3d 287, 293 (Tex. App.—

Corpus Christi–Edinburg 2003, pet. denied) (explaining that the essence of consideration

is “mutuality of obligation”). To be sure, Lewis LLC has never claimed that it holds two

notes, referring to the second note in its summary judgment motion as a “Corrected

Promissory Note” that “amended” the original note to reflect that payments should be

made to Lewis LLC instead of Lewis Inc. This characterization is consistent with both the

inure-to-the-benefit provision of the settlement agreement and Thomas Koepke’s

testimony that his then-attorney advised him to sign the second note “for the mediation,

to get it all cleared up and settled.” See URI, Inc. v. Kleberg County, 543 S.W.3d 755,

765 (Tex. 2018) (“The parol evidence rule does not, however, prohibit courts from

considering extrinsic evidence of the facts and circumstances surrounding the contract’s

execution as an aid in the construction of the contract’s language, but the evidence may

only give the words of a contract a meaning consistent with that to which they are

reasonably susceptible, i.e., to interpret contractual terms.” (internal quotation marks and

citations omitted)).

We conclude that Koepke failed to raise a genuine issue of material fact on its

10
affirmative defense. Its sole issue is overruled.

IV. CONCLUSION

We affirm the trial court’s judgment.

JENNY CRON
Justice

Delivered and filed on the
7th day of August, 2025.

11