Superior Court of New Jersey,

Appellate Division.

STANDARD FUNDING CORP., Plaintiff-Respondent,

v.

UNIVERSAL ROADMASTER, INC., John Catania, Global Underwriters Agency, Inc.,

Defendants,

and

Lancer Insurance Company, Defendant-Appellant.

Argued Sept. 13, 2005.

Decided Oct. 12, 2005.

PER CURIAM.

 

Defendant, Lancer Insurance Company (Lancer), appeals from a judgment in the amount of $100,270.08 in favor of plaintiff, Standard Funding Corp. (Standard), entered after a bench trial. Standard’s claim against Lancer was for a return of unearned insurance premium that Standard had paid on behalf of its borrower, the insured, Universal Roadmaster Inc. (Universal), which owned a fleet of trucks used in interstate commerce. As part of its loan arrangement with Universal, Standard retained a security interest in any return on unearned premiums up to the amount of the unpaid balance on the loan. The premium paid to secure the policy was $171,494.00, and the policy period was from November 12, 2000 to November 12, 2001. The policy was cancelled effective April 9, 2001. Therefore, the policy was in effect for 149 days. Thus, on a prorated basis the return premium would be $101,486.86. As a result of an adjustment to reflect credit for a sum collected by Standard from a settling party, the judgment was entered for a slightly different amount, $100,270.08.

At trial, Lancer attempted to establish that Universal had misrepresented the number of vehicles in its fleet and that Lancer was entitled to recalculate the premium. By its methodology, Lancer asserted that the premium should have been $459,658.00, resulting in a net prorated return of premium owed to Standard of only $6,290.58. Judge D’Italia rejected Lancer’s contentions in this regard based upon the terms of the insurance contract and because Lancer failed to adduce competent evidence to establish the identity, dates of acquisition, and other required information regarding vehicles owned by Universal during the policy period.

When the two-day bench trial on July 14 and 15, 2003 concluded, the judge reserved decision. Before he issued his decision, Lancer filed a motion to “supplement the record” on September 24, 2003, seeking to furnish additional information regarding vehicles purportedly owned by Universal during the policy period. On October 25, 2003, Judge D’Italia heard argument and denied Standard’s motion. On January 27, 2004, the judge issued a written opinion. Final judgment in favor of Standard against Lancer for $100,270.08 was ordered on February 24, 2004. This appeal followed.

On appeal, Lancer argues:

POINT ONE

LANCER ACCEPTED THE RISK OF UNIVERSAL ROADMASTER’S UNDISCLOSED VEHICLES BECAUSE IT WAS REQUIRED TO PROVIDE COVERAGE FOR THOSE VEHICLES IN ORDER TO MEET THE MINIMUM FINANCIAL RESPONSIBILITY OBLIGATIONS UNDER THE FEDERAL MOTOR CARRIER ACT.

POINT II

THE LETTERS FAXED TO LANCER IN FEBRUARY 2001 ARE ADMISSIBLE AS EVIDENCE BECAUSE THEY FALL UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE.

POINT III

LANCER IS ENTITLED TO THE AMOUNT OF THE INCREASED PREMIUM BECAUSE THE RIGHT OF REIMBURSEMENT CREATED IN THE MCS-90 IS A NON-EXCLUSIVE REMEDY.

POINT IV

LANCER IS ENTITLED TO SUPPLEMENT THE RECORD BECAUSE THE TRIAL COURT RECORD MAY BE SUPPLEMENTED PURSUANT TO NEW JERSEY COURT RULES 1:7-4 AND 2:5-5.

We reject these arguments and affirm substantially for the reasons expressed by Judge D’Italia in his comprehensive and well-reasoned written decision of January 27, 2004.

In need of insurance coverage for its fleet of vehicles, Roadmaster contacted its retail insurance broker, Global Underwriters, which in turn contacted a wholesale insurance broker, New Century Global, in an effort to place coverage. In a September 18, 2000 letter, New Century wrote to the D.C. White Agency, the underwriting arm of Lancer that focuses on trucking policies, soliciting a quote for a truckers’ liability policy for Roadmaster. The letter noted that Roadmaster’s current policy was issued on a gross receipts basis and that Roadmaster would prefer to remain on a gross receipts basis if possible. With a gross receipts policy, the premium is based upon the gross revenue of the insured during the policy period. The premium paid at the inception of the policy is an estimated amount, and at the end of the policy period an audit determines the actual premium with an appropriate adjustment.

Although the application requested issuance of a policy on a gross receipts basis, the policy was issued on the basis of scheduled vehicles. The policy specifically enumerated thirty-four vehicles with a premium ascribed to each. The total premium was $171,494.00. Standard advanced that sum and paid it in full to Lancer. Standard notified Lancer of its premium finance agreement, resulting in Standard’s security interest in any return of premiums. The finance agreement also afforded Standard the right to cancel the policy if Universal defaulted in its loan payment obligations to Standard.

In January 2001, Lancer began receiving claims for accidents involving Universal’s vehicles, some of which pertained to vehicles that were not scheduled on the policy. Because of Universal’s alleged misrepresentation in its application for insurance in failing to identify all of its owned vehicles, Lancer cancelled the policy effective April 9, 2001. Simultaneously and independently, Standard exercised its right at about the same time to cancel the policy because of Universal’s default in payments to it. Standard’s cancellation date was April 20, 2001. Thus, the earlier cancellation date, April 9, 2001, controls, and the parties do not dispute that the policy was therefore in effect for 149 days.

Based upon his analysis of the policy language and his consideration of the testimony presented, including expert testimony presented by Standard, Judge D’Italia concluded that the policy was indeed issued on a scheduled vehicles basis, not a gross receipts basis. That finding is well supported by the evidence in the record, and we have no occasion to interfere with it. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).

Lancer attempted to establish Universal’s ownership during the policy period of vehicles other than those listed in its application and scheduled on the policy. It proffered two exhibits, D-6 and D-7, which were faxes from New Century to D.C. White dated February 6, 2001 and February 27, 2001, respectively. Each contained a list of vehicles purportedly owned by Universal. The only witness called by Lancer at trial was the President of D.C. White. He was neither the author nor the recipient of the letters and he had no knowledge of the business practices and records of Universal. Lancer urged the admissibility of the documents under the Business Records Exception to the Hearsay Rule, N.J.R.E. 803(c)(6). Judge D’Italia rejected the proffer and excluded the documents as inadmissible hearsay. He wrote:

D6 and D7 are inadmissible hearsay. Defendant’s contention that they are admissible under Rule 803(c)6 is unavailing. That Rule provides that a statement contained in a writing made at or near the time of observation by a person with actual knowledge or from information supplied by such a person is admissible if the writing was made in the regular course of business and it was the regular practice of that business to make it unless the sources of the information or the method, purpose or circumstances of preparation indicate that it is not trustworthy.

D6 is a fax from New Century enclosing a fax from Global which contains VIN numbers. The New Century fax is, at best, a business record of both New Century and D.C. White. The Global fax is an included hearsay document. The substantive information sought to be conveyed is that the numbers listed on the Global fax are VIN numbers for trailers owned by Universal. The Global fax indicates that it is from “Audra Severiani x38”. No foundation has been laid with respect to whether Audra Severiani had any actual knowledge or had been supplied information by a person with actual knowledge of the trailers owned by Universal or their VIN numbers. There was no foundational testimony that it is the regular practice of insurance underwriters to accept a fax from a subagent of an insurance agent as the basis for accepting a risk.

The same analysis hold for D7. In this case, the fax comes directly from Universal’s agent but the document attached has no form of identification. There is no independent evidence that Global’s statement was made with actual knowledge or from information supplied by a person with actual knowledge or that the underlying list was made in the regular course of business.

We agree with the judge’s analysis and find no error or mistaken exercise of discretion in his exclusion of this evidence. Thus, Lancer failed to provide competent evidence establishing ownership by Universal during the policy period of additional vehicles.

Lancer also argued before the trial court, and it continues to argue before us, that it was entitled to assess additional premiums because it was required by federal law to provide coverage for all vehicles owned by Universal. Because of its interstate trucking activities, Universal was subject to the Federal Motor Carrier Act, 49 U.S.C.A. § 13501. Any vehicle operated by an interstate motor carrier must maintain at least $750,000 of insurance coverage. 49 U.S.C.A. § 31139. To comply with the minimum financial responsibility requirements of the Act, motor carriers must file with the Department of Transportation an insurance policy with the minimum required coverage limits. 49 U.S.C.A. § 13906. The Secretary of Transportation has promulgated regulations requiring that insurance policies covering motor carriers subject to the Act must include in their policy an endorsement, known as Form MCS-90, which states in pertinent part:

In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere. Such insurance as is afforded, for public liability, does not apply to injury to or death of the insured’s employees while engaged in the course of their employment, or property transported by the insured, designated as cargo. It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured. However, all terms, conditions, and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement.

[49 C.F.R. § 387.15 (2005).]

Lancer argues that because this legally-required endorsement obligated it to provide coverage for all of Universal’s vehicles, it was entitled to recalculate the premium charged to Universal to include all vehicles Universal owned. Judge D’Italia rejected that argument. He stated:

This endorsement requires the insurance company to cover all claims, even for vehicles not listed on the insurance policy, and gives the insurance company a right of reimbursement from the insured for claims paid on unscheduled vehicles. The purpose of the regulation is to insure that a financially responsible party will be available to compensate third parties injured in a collision with an ICC carrier. The endorsement attaches to all policies issued to interstate carriers regardless of whether it is physically appended to the policy and regardless of whether the insurer has charged a premium commensurate with the risk of covering all of the carrier’s vehicles and not just those listed on a specified vehicle policy. The mandated endorsement does not authorize the insurer to recalculate its premium in the event that the insurer fails to take its requirements into account. The insurer’s remedy is to seek reimbursement from its insured for any claims paid and is in the nature of indemnification. This remedy is clearly more favorable to the insurer than merely adjusting the premium to reflect an undisclosed vehicle. Where the insured fails to disclose and cover all of the vehicles in its fleet, it makes far more sense to require the insured to indemnify the insurer than to seek an after-accident adjustment of the premium.

We agree with the judge’s analysis. In any event, as we have stated, Lancer failed to prove by competent evidence the ownership by Universal of additional vehicles during the policy period.

Finally, we address the denial of Lancer’s post-trial motion to “supplement the record.” Standard correctly points out that the rules relied upon by Lancer as authority for its motion are inapplicable. Rule 1:7-4(b) authorizes a motion to amend findings, amend a final order or judgment, or grant a rehearing after a final order or judgment has been entered following a bench trial. When Lancer filed its motion, no final decision had been made and no final judgment had been entered. Rule 2:5-5 is likewise inapplicable; that rule authorizes supplementation of a record on appeal.

Judge D’Italia correctly characterized Lancer’s motion as one to reopen the case and, in effect, resume the trial by introducing additional evidence. The judge noted that the proffered evidence was plainly available to Lancer and could have been produced during the trial. The judge stated:

So what this amounts to is after a party has rested, and after in effect closing arguments have been made, the party is saying I think I detect in the judge’s reaction some slight deficiency, at least potentially, in my case and I would like to shore it up by introducing additional evidence. In my view that’s not a practice to be countenanced. I do not ascribe any bad motives to counsel in this case. This was not a case where evidence was held back intentionally and as a tactical matter, and now counsel has second thoughts about it. It’s– it’s just some additional evidence that was always available that counsel in retrospect decides that he wished he would have presented at an earlier time in the case.

You know, rules of court merely provide for only one bite at the apple, that we follow an orderly procedure with the plaintiff’s case, defendant’s case, rebuttal and sur-rebuttal, make your closing arguments, the case is over. It might be a rare circumstance where evidence comes to light which was not previously discoverable which might warrant opening of the record, but this is not such a case. Moreover, it’s not clear that this evidence is dispositive or that it is so self-evident that it doesn’t require additional clarification by testimony or that the plaintiff should not then be entitled itself to adduce additional evidence. For all those reasons I will exercise my discretion under KEEVIT VS. LOYAL PROTECTIVE (phonetic), 64 Super. 537, and MASSACHUSETTS MUTUAL VS. MANSO, 234 N.J.Super. at 266, to exclude this evidence. So the motion is denied.

The judge did not abuse his discretion by refusing to reopen the case and, in effect, resume the trial.

Affirmed.

MEMORANDUM OPINION

Court of Appeals of Texas,

San Antonio.

CELADON TRUCKING SERVICES, INC., Appellant

v.

LUGO’S SECURITY AGENCY, d/b/a County Wide Security, Appellee.

Sept. 28, 2005.

MEMORANDUM OPINION

Opinion by SANDEE BRYAN MARION, Justice.

In the underlying litigation, Celadon Trucking Services, Inc. sued Lugo’s Security Agency d/b/a County Wide Security for damages resulting from the theft of a trailer loaded with computers. Celadon asserted claims for breach of contract, negligence, and breach of express warranties. Lugo’s counter-claimed for breach of contract. Lugo’s filed a no-evidence motion for summary judgment on all of Celadon’s claims, which the trial court granted without stating its grounds. The trial court severed Celadon’s claims from Lugo’s counter-claim, and this appeal by Celadon ensued. We reverse the trial court’s judgment in favor of Lugo’s on Celadon’s breach of contract and negligence claims, and affirm trial court’s judgment in favor of Lugo’s on Celadon’s breach of express warranty claim.

FACTUAL BACKGROUND

Celadon operates a trucking company with a terminal in Laredo, Texas. Lugo’s operates a security service in Laredo. There is no dispute that the parties entered into a written contract under which Lugo’s agreed to provide security services to Celadon. There is also no dispute that the agreement commenced on August 31, 1998 and expired on August 30, 1999. On November 22, 2000, a trailer loaded with computer parts was stolen from Celadon’s Laredo terminal. An investigation into the theft revealed that a gate pass, which allowed the trailer to leave Celadon’s terminal, contained the purported signature of Celadon dispatcher Michael Villareal. However, Villareal was not on duty when the trailer left the yard. Celadon alleged it provided to Lugo’s a list of signature exemplars and the signature on the gate pass did not match Villareal’s exemplar. Lugo’s security guard on duty on November 22nd admitted he did not compare the signature on the gate pass with Villareal’s exemplar. Although the trailer was later found, the cargo was not recovered.

STANDARD OF REVIEW

We review a no-evidence summary judgment de novo by construing the record in the light most favorable to the non-movant and disregarding all contrary evidence and inferences. Reynosa v. Huff, 21 S.W.3d 510, 512 (Tex.App.-San Antonio 2000, no pet.). A party may move for a no-evidence summary judgment on the ground that there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial. Tex.R. Civ. P. 166a(i). A no-evidence summary judgment motion is improperly granted when the non-movant brings forth more than a scintilla of probative evidence that raises a genuine issue of material fact. Id.; Gomez v. Tri City Cmty. Hosp., Ltd., 4 S .W.3d 281, 283 (Tex.App.-San Antonio 1999, no pet.). More than a scintilla of evidence exists if the evidence would allow reasonable and fair-minded people to differ in their conclusions. Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex.2003). Less than a scintilla of evidence exists if the evidence is so weak as to do no more than create a mere surmise or suspicion of a fact. Id.

BREACH OF CONTRACT

Lugo’s moved for summary judgment on Celadon’s breach of contract claim, asserting there was no evidence of the existence of a valid, enforceable written or oral contract; no evidence that Lugo’s breached any contract; and no evidence that any breach caused Celadon’s damages.

A. Existence of contract

Celadon asserted its contractual relationship with Lugo’s continued past August 30, 1999 because the parties continued to act as if the agreement was still in effect.

A contract provision for an exact date of performance can be waived by the parties. Sieber & Calicutt, Inc. v. La Gloria Oil & Gas Co., 66 S.W.3d 340, 347 (Tex.App.-Tyler 2001, pet. denied) (Sieber continued to perform maintenance services at a refinery owned by La Gloria well after the contract had expired by its own terms, and La Gloria continued to pay the invoices for those services). An extension of time for performance can be either implied or express. Id.

An implied contract arises when circumstances disclose that, according to the parties’ course of conduct and common understanding, there was a mutual intent to contract. See Double Diamond, Inc. v. Hilco Elec. Coop., Inc., 127 S.W.3d 260, 267 (Tex.App.-Waco 2003, no pet.); City of Houston v. First City, 827 S.W.2d 462, 473 (Tex.App.-Houston [1st Dist.] 1992, writ denied). Whether mutual assent to contract exists is a question of fact. City of Houston, 827 S.W.2d at 473. When the evidence consists of the conduct of the parties and their course of dealing with one another, then mutual agreement may be inferred from the circumstances, in which event the contract is said to be “implied” as opposed to being an “express” contract. Double Diamond, 127 S.W.3d at 267. The existence of an implied contract, involving as it does an inference from circumstantial evidence, is a question of fact. Id.

Celadon presented summary judgment evidence that Lugo’s continued to provide services to Celadon until January 2001, and that Lugo’s invoiced Celadon for its security services. Lugo’s does not dispute that its employee, Rene Estrada, was on duty as a security guard on the night of the theft, November 22, 2000. We conclude Celadon’s summary judgment evidence is more than a scintilla of probative evidence sufficient to raise a genuine issue of material fact on the issue of whether a contractual relationship between Celadon and Lugo’s was in existence on the date of the theft.

B. Breach of Contract

Alternatively, Lugo’s argued that Celadon’s breach of contract sounded in tort, and not in contract, and it was therefore entitled to summary judgment as a matter of law, an argument we review under the standard applicable to traditional motions for summary judgment. See Casso v. Brand, 776 S.W.2d 551, 556 (Tex.1989); Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985). The parties’ contractual relationship may create duties under both contract and tort law. Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986). We look to the substance of the cause of action, and not the manner in which it is pleaded, to determine the type of action brought. Id. at 617-18.

The nature of the injury suffered usually determines which duty or duties are breached. Id. at 618. Tort obligations are generally “obligations that are imposed by law–apart from and independent of promises made and therefore apart from the manifested intention of the parties–to avoid injury to others.” Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex .1991) (citation omitted). We conclude Lugo’s conduct could give rise to liability under either an express or implied contract; therefore, the trial court erred in granting summary judgment on the grounds that Celadon’s claim sounded only in tort.

In response to Lugo’s motion for summary judgment, Celadon asserted Lugo’s breached its duty to ensure that only authorized individuals took trailers from the yard, and breached its duty to guard the property against theft. Lugo’s contends Celadon has not determined whether the theft was committed by a person who was not authorized to enter and leave the premises, and there is no evidence Lugo’s employees were obligated to prohibit unauthorized persons from leaving the premises. According to Lugo’s, Celadon can show, at most, only that the authorized or unauthorized person acted outside their authority in taking possession of the trailer. Lugo’s also asserts it had no duty to prevent all theft, and it did no more than agree to guard the property. Lugo’s argues that Celadon’s interpretation of the contract would make it the de facto insurer of Celadon’s entire facility and all property that passed through Celadon’s shipping operation. Finally, Lugo’s contends any duty to verify signatures may not have been instituted until six days after the theft, sometime around November 28th.

Celadon presented summary judgment evidence that Lugo’s security personnel performed general duties, as required under the contract, as well as additional duties agreed to by Celadon and Lugo’s. Among the general duties was the agreement that Lugo’s would “[p]ermit only duly authorized persons to enter the premises.” Celadon presented no evidence that any person who was not “duly authorized” entered the premises.

Additional duties took the form of “post orders.” Celadon alleged one of the post orders required the guard to compare the signature on the gate pass with the exemplars. A Lugo’s representative testified in deposition that the exemplars were not given to Lugo’s until after the theft of the truck. Estrada testified he did not ensure that the signature on the gate pass matched the exemplar “because we didn’t have the signatures.” However, Celadon’s representative, Jose Benavides, testified that Lugo’s was given a list of currently employed dispatchers and exemplars of their signatures. Benavides said a post order was in effect in November 2000 that required the security guards to verify the dispatcher’s signature on the gate pass with the exemplars of their signatures. Benavides said the order was created after a load of tires was stolen in the summer of 2000, and the post order was communicated to Lugo’s. Although Benavides could not say he saw Villareal’s signature on a list on November 22nd because he was on vacation on the day of the theft, when challenged about how he could remember whether the post order was in place on November 22nd, he explained:

FN3. In its reply to Celadon’s response, Lugo’s objected to the testimony of Benavides as incompetent. On appeal, Lugo’s contends Benavides was not competent to testify because he did not have personal knowledge with regard to whether certain security procedures were in effect at the time of the theft. Lugo’s did not obtain a written ruling on its objection. Lugo’s admits it did not obtain a ruling but asserts the trial court granted its motion for summary judgment. We construe this as an argument that the court’s granting of the summary judgment resulted in an implicit ruling sustaining its objection, an argument this court has expressly rejected. See Well Solutions, Inc. v. Stafford, 32 S.W.3d 313, 316-17 (Tex.App.-San Antonio 2000, no pet.). However, objections to a substantive defect in an affidavit may be raised for the first time on appeal. Id. at 317. Therefore, if Benavides’ affidavit was substantively defective, then his affidavit was not entitled to evidentiary consideration despite Lugo’s failure to obtain a ruling. On the other hand, if Benavides’ affidavit was defective in form, then his affidavit remains part of the summary judgment record. The failure to object to the form of an affidavit on the ground that it does not show personal knowledge results in waiver of the complaint. See Grand Prairie Indep. Sch. Dist. v. Vaughan, 792 S.W.2d 944, 945 (Tex.1990); Garcia v. John Hancock Variable Life Ins., 859 S.W.2d 427, 433 (Tex.App.-San Antonio 1993, writ denied). Because Lugo’s did not obtain a ruling on its objection and there is no ruling in the summary judgment order, Lugo’s objection is waived for purposes of this appeal, and Benavides’ affidavit remains part of the summary judgment record for our consideration.

I can tell you I know that there was something in place there because we put it in place after we had the incident with the first trailer, to verify signatures. Because at that time, this company just went in there, a duck [sic] company, and just took it out and nobody questioned it. And there was also a piece of paper, I believe, for it, if I’m not mistaken.

Benavides testified that, sometime between November 28th and November 30th as part of the investigation into the theft, the exemplar list was taken from the security station in order to make a copy of the signatures. At this time, he saw Villareal’s signature on the list.

We conclude Celadon’s summary judgment evidence is more than a scintilla of probative evidence sufficient to raise a genuine issue of material fact on the issue of whether Lugo’s breached the contract by failing to compare the gate pass signature with an exemplar.

C. Causation

Celadon asserted the theft would not have occurred had Lugo’s guarded against theft because the driver would not have been able to leave the yard with the trailer but for Lugo’s breach of the contract. When asked whether the procedures that were in place in November 2000 would have prevented the theft if followed, Benavides responded:

No, they [the theft] wouldn’t never occurred.

…

Very simple. That security guard that was in place there, because he had been there such a long time, it should’ve been obvious. Here’s a trucking company and it’s out of the norm and they’re pulling out a northbound trailer, that was one, and the signature for Mike. He worked there every day, he was already used to seeing Mike’s signature. If he would’ve paid attention to the pass and the little signature that was there, that wasn’t Mike’s signature. So if he would’ve caught that and questioned it, he would’ve probably prevented the trailer from leaving the facility.

Lugo’s asserts it is responsible for only those damages that result from a breach of the contract if the theft was a natural, probable, and foreseeable consequence of Lugo’s failure to perform its contractual duties. According to Lugo’s, Benavides’ testimony suggests only the “possibility,” and not a “probability,” that adherence to the terms of the contract would have prevented the trailer from leaving the premises.

In an action for a breach of contract, actual damages may be recovered when the loss is the natural, probable, and foreseeable consequence of the defendant’s conduct. Mead v. Johnson Group, Inc., 615 S.W.2d 685, 687 (Tex.1981). Here, there is more than a scintilla of evidence in the summary judgment record to indicate that damages of this nature were contemplated or foreseeable as a consequence of Lugo’s actions. First, Celadon presented more than a scintilla of evidence that one of the additional duties agreed to by Celadon and Lugo’s was that Lugo’s security guards would verify the signature on the gate pass against the exemplars provided to Lugo’s. Second, Celadon presented more than a scintilla of evidence that Lugo’s was provided with an exemplar of Villareal’s signature on or before the date of the theft. Finally, Estrada admitted he did not ensure that the signature on the gate pass matched Villareal’s exemplar. Celadon’s alleged damages, i.e., the theft of a trailer allowed to leave the Celadon yard because a security guard failed to verify the gate pass signature, was a foreseeable consequence of Lugo’s purported breach of the security agreement.

We conclude Celadon’s summary judgment evidence is more than a scintilla of probative evidence sufficient to raise a genuine issue of material fact on the issue of whether Celadon’s loss was the natural, probable, and foreseeable consequence of Lugo’s conduct.

NEGLIGENCE

Lugo’s moved for summary judgment on Celadon’s negligence claim, asserting there was no evidence that it breached a duty owed to Lugo’s or that any breach caused Celadon’s damages.

A. Breach of Duty

Contrary to Lugo’s assertion on appeal, it did not specifically challenge the existence of a duty owed by it to Celadon. Although Lugo’s motion for summary judgment listed the essential elements of a negligence claim, including the existence of a duty, the motion alleged only that there was no evidence to support the breach and causation elements. A no-evidence motion for summary judgment “must state the elements as to which there is no evidence.” See Tex.R. Civ. P. 166a(i). The comments to rule 166a(i), which are “intended to inform the construction and application of the rule,” state: “The motion must be specific in challenging the evidentiary support for an element of a claim or defense; paragraph (i) does not authorize conclusory motions or general no-evidence challenges to an opponent’s case.” See Tex.R. Civ. P. 166a(i) cmt. A no-evidence motion for summary judgment is legally insufficient as a matter of law if it is not specific in challenging a particular element or is conclusory. Callaghan Ranch, Ltd. v. Killam, 53 S.W.3d 1, 3 (Tex.App.- San Antonio 2000, pet. denied). Lugo’s assertion in its motion for summary judgment that “there is no evidence to support the essential elements of Plaintiff’s negligence claims,” is conclusory and legally insufficient.

Celadon alleged Lugo’s security guards allowed a trailer to be taken from its yard by a driver lacking authority from the on-duty dispatcher. Celadon alleged the failure to utilize signature exemplars caused Lugo’s security guard to accept as valid a gate pass bearing the signature of a dispatcher who was not on-duty.

Benavides testified that only Celadon tractors were allowed to take north-bound trailers that were loaded with cargo. According to Benavides, north-bound Mexican carriers were allowed to pull out only empty trailers. However, he said this policy was verbal and he could not remember when the policy was created or implemented. Later in his deposition, when Benavides was asked if he was “absolutely positive” that a policy had been implemented prior to November 2000 that prohibited north-bound Mexican carriers to leave with a loaded trailer, he responded, “Yes. But I would need to go back through files and documentation.” He also stated the policy was communicated to Lugo’s and to Celadon dispatchers. Benavides later appeared to contradict his earlier testimony when he said there was a list of authorized Mexican carriers that could leave the premises with a north-bound trailer, and he could not remember if the procedures were reduced to writing in November 2000.

We conclude Benavides’ testimony is more than a scintilla of probative evidence sufficient to raise a genuine issue of material fact on the issue of whether Lugo’s breached a duty to prevent an unauthorized north-bound Mexican carrier from leaving with a loaded trailer. For the reasons stated above, we also conclude Celadon’s summary judgment evidence is more than a scintilla of probative evidence sufficient to raise a genuine issue of material fact on the issue of whether Lugo’s breached a duty to compare the gate pass signature with an exemplar.

B. Causation

Celadon’s and Lugo’s arguments here are the same as their respective arguments under the causation element of a breach of contract claim. To prevail on a negligence cause of action, a plaintiff must establish the existence of a duty, a breach of that duty, and damages proximately caused by the breach. Doe v. Boys Clubs of Greater Dallas, Inc. 907 S.W.2d 472, 477 (Tex.1995). Proximate cause comprises two elements: cause in fact and foreseeability. Id. These elements cannot be supported by “mere conjecture, guess, or speculation,” id., but may be based on either direct or circumstantial evidence. Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 459 (Tex.1992). Foreseeability means that a person of ordinary intelligence would have anticipated the danger his or her negligence creates. El Chico Corp. v. Poole, 732 S.W.2d 306, 313 (Tex.1987). The test for cause in fact, or “but for cause,” is whether “the act or omission was a substantial factor in causing the injury” without which the harm would not have occurred. Boys Clubs, 907 S.W.2d at 477 (citation omitted).

Celadon’s alleged damages, i.e., the theft of a trailer allowed to leave the Celadon yard because a security guard failed to verify the gate pass signature, was a foreseeable consequence of Lugo’s purported breach of the security agreement. Also, although Benavides articulated his determination that the security guard’s failure to verify the gate pass signature in terms such as “he would’ve caught that” and “he would’ve probably prevented the trailer from leaving the facility,” we conclude that Benavides’ testimony is more than a scintilla of probative evidence sufficient to raise a genuine issue of material fact on the issue of whether Celadon’s damages were proximately caused by Lugo’s conduct.

BREACH OF EXPRESS WARRANTIES

Lugo’s moved for summary judgment on Celadon’s breach of express warranties claim, asserting there was no evidence that any representation made by Lugo’s became part of the basis of the bargain between the parties; no evidence that Lugo’s breached any warranty; and no evidence that Celadon suffered any injury as a result of a breach of warranty.

In its petition, Celadon relied on the following language in the contract: (1) a header that states: “Crime Prevention Is Our Business,” and (2) a paragraph that states: “This agency maintains a security service and has the means, equipment and employees for the surveillance and protection of property against theft, burglary, fire, pilferage, malicious injury or destruction against property.” Celadon alleged Lugo’s breached an express warranty by failing to utilize or by not having the means, equipment, and/or employees for the surveillance and protection of its property, and by failing to utilize or have expertise in crime prevention. We will assume for the purpose of this appeal that the language relied upon by Celadon constituted a warranty that became part of the basis of the bargain between the parties. Therefore, we next consider whether Celadon adduced more than a scintilla of evidence to raise a genuine issue of material fact on the issue of whether Lugo’s breached this warranty.

In support of its argument that Lugo’s breached an express warranty, Celadon relies on its assertion that Lugo’s failed to guard its property and permitted unauthorized persons to enter and exit its yard. We have already determined that Celadon presented no evidence that any person not authorized to enter the yard did so. Assuming that Celadon’s evidence supports a finding that Lugo’s failed to “guard” its property, there is no evidence in the record that Lugo’s did not actually have “the means, equipment and employees for the surveillance and protection of property against theft, burglary, fire, pilferage, malicious injury or destruction against property.” Therefore, we conclude Celadon failed to bring forth more than a scintilla of probative evidence to raise a genuine issue of material fact on one of the elements of its breach of warranty claim.

CONCLUSION

We reverse the trial court’s judgment in favor of Lugo’s on Celadon’s breach of contract and negligence claims and we remand those claims to the trial court for further proceedings. We affirm the trial court’s judgment in all other respects.