Rancho La Valencia, Inc. and Charles R. Randy Turner v. Aquaplex, Inc. and James Edward Jones, Jr.

NO. 07-06-0157-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL B

FEBRUARY 28, 2008
______________________________

RANCHO LA VALENCIA, INC. AND CHARLES R. “RANDY” TURNER, APPELLANTS

V.

AQUAPLEX, INC. AND JAMES EDWARD JONES, JR., APPELLEES
_________________________________

FROM THE 201ST DISTRICT COURT OF TRAVIS COUNTY;

NO. GN 03-004287; HONORABLE SUZANNE COVINGTON, JUDGE
_______________________________

Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.

ON MOTION FOR REHEARING

By an opinion dated November 2, 2007, this Court reversed the trial court’s

judgment and rendered judgment that appellees take nothing by their claims. Appellees

have filed a motion for rehearing contending that the one recovery rule does not preclude

this Court from awarding recovery based on breach of the joint venture agreement (JVA).

To the extent that appellees are referencing that portion of the trial court’s judgment

granting declaratory relief and a permanent injunction, they are correct that we should

address those issues. However, we disagree with appellees’ contention that we should
revisit the issue of damages for breach of the JVA after appellees made a clear and

unequivocal election to pursue damages based on fraud in connection with the

memorandum settlement agreement (MSA). See Birchfield v. Texarkana Mem’l Hosp.,

747 S.W.2d 361, 367 (Tex. 1987). Having elected a judgment for damages on the MSA

fraud allegations, appellees effectively waived the jury’s damage findings pursuant to the

JVA. Kish v. Van Note, 692 S.W.2d 463, 466-67 (Tex. 1985). Further, even were we able

to review appellees’ claims of damages related to appellants’ breach of the JVA, the

evidence of damages is the same that we previously held to be legally insufficient evidence

of damages based on appellees’ MSA fraud allegations.

Declaratory Relief

In addressing the issues of the declaratory relief, the first matter to be considered

is the basis for the relief requested. A review of appellees’ live pleadings reveals that the

declaratory relief request is grounded on the execution by appellant, Rancho La Valencia

(Rancho) of an assignment in favor of its lender, OmniBank. Appellees sought a

declaration that this assignment was a complete assignment that had matured and that

assigned all of Rancho’s interest in the joint venture. According to appellees, the jury’s

answer to question No. 15, finding that Rancho had assigned its interest in the joint venture

to OmniBank, requires this result. However, when, as in this case, there is no allegation

that the assignment is ambiguous, the construction of the language in the assignment is

a question of law. DeWitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999).

As a result, we are not bound by the jury’s finding and may disregard it as immaterial

because it purports to answer a question of law, the legal interpretation of the assignment,

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that is beyond the province of the jury. Spencer v. Eagle Star Ins. Co., 876 S.W.2d 154,

157 (Tex. 1994). Our de novo construction of the assignment is guided by the fact that the

construction of an assignment is governed by the same rules of construction as any

contract. Commercial Structures & Interiors, Inc. v. Liberty Educ. Ministries, Inc., 192

S.W.3d 827, 832 (Tex.App.–Fort Worth 2006, no pet.). The goal is to ascertain the intent

of the parties. Id. To harmonize a construction with the intent of the parties, we are

required to construe the assignment as a whole and to give effect to all provisions so that

none are rendered meaningless. Id. at 832-33.

A complete review of the assignment in question leads us to conclude that it was

intended to be a collateral assignment and that it would not require the lender to step into

the shoes of Rancho nor to undertake any of Rancho’s obligations pursuant to the JVA.

Upon default, the collateral assignment authorized the lender, at the lender’s option, to

receive future distributions that would otherwise go to Rancho. Appellants allege, even

were we to accept appellees’ legal interpretation of the assignment, there is legally

insufficient evidence to establish that Rancho’s actions effectuated an assignment of its

interest in the JVA.1 The express language of the assignment gave OmniBank the right

to take certain actions upon default. However, there was no evidence admitted to establish

that OmniBank elected to exercise any of the rights it obtained upon Rancho’s default. We

have reviewed the record and do not find testimony from any OmniBank representative

that, after default on the loan by Rancho, the bank took any of the steps allowed under the

1
We refer the parties to the original opinion for the standard of review for a
challenge to the legal sufficiency of the evidence to sustain a jury’s finding.

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assignment that would have finalized the assignment, as urged by appellees. Accordingly,

the evidence was legally insufficient to support a finding that Rancho had assigned its

interest in the joint venture by virtue of its collateral assignment to OmniBank. See City of

Keller v. Wilson, 168 S.W.3d 802, 808-09 (Tex. 2005). Therefore, based upon our

construction of the assignment contract and the record before us, we find that the

assignment from Rancho to OmniBank did not operate to assign Rancho’s rights under the

JVA to OmniBank.

The trial court further found that, as a result of execution of the MSA and the

operation of paragraphs 5.2(j) and 5.9 of the JVA, appellants had forfeited their rights to

any interest, legal or equitable, in the joint venture. The trial court’s entry of a judgment

declaring a forfeiture based upon its construction of a contractual provision, when there are

no allegations that the contract is ambiguous, is a question of law and will be reviewed de

novo. DeWitt County Elec. Coop., Inc., 1 S.W.3d at 100. A review of the documents

referenced by the trial court’s judgment, the MSA and JVA, fails to disclose any forfeiture

provisions. Specifically, neither paragraph 5.2(j) nor 5.9 of the JVA authorizes the

forfeiture of a joint venturer’s interest based on a breach of these provisions. Rather, the

contractual remedy provided for breach of the JVA is located in Article VII of the agreement

and allows for dissolution, liquidation, or termination of the joint venture. Nothing in the

record indicates that the relief granted by the judgment is predicated upon appellees’

election to proceed under this Article of the agreement nor does this Article authorize a

forfeiture of a joint venturer’s interest in the joint venture. Accordingly, it appears that the

trial court acted without authority or guiding principles and, therefore, abused its discretion.

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Mercedes-Benz Credit Corp. v. Rhyne, 925 S.W.2d 664, 666 (Tex. 1996). Therefore, we

reverse that portion of the trial court’s judgment declaring that appellants held no interest

in the joint venture.

Lis Pendens

The judgment of the trial court declares that the notice of lis pendens is cancelled,

declared void, and of no further force and effect. However, the record before us reveals

that the notice of lis pendens was filed in connection with the adversary proceeding in the

bankruptcy case. The record further reveals that the bankruptcy was dismissed by order

of the Bankruptcy Court and the matter was remanded to state court on October 17, 2005.

Inasmuch as the notice of lis pendens was filed in connection with an adversarial

proceeding in Bankruptcy Court, the order of dismissal of the bankruptcy proceeding

cancelled the notice. See Hexter v. Pratt, 283 S.W. 653, 656 (Tex.Civ.App.–Dallas 1926),

aff’d, 10 S.W.2d 692 (Tex. 1928). Therefore, the declaration of the trial court’s judgment

regarding the notice of lis pendens was moot and the relief requested was unnecessary.

Injunctive Relief

Finally, the judgment purports to grant injunctive relief based upon the fact that

appellees have prevailed on the merits. However, having rendered judgment that

appellees take nothing by their claim, the injunctive relief can no longer stand. To recover

an injunction, the proponent must show 1) the existence of a wrongful act; 2) the existence

of imminent harm; 3) the existence of irreparable injury; and 4) the absence of an adequate

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remedy at law. Priest v. Tex. Animal Health Comm’n, 780 S.W.2d 874, 875

(Tex.App.–Dallas 1989, no writ). The current status of the case precludes the trial court

from granting appellees injunctive relief by the very terms of the trial court’s judgment.

Accordingly, we reverse the trial court’s grant of injunctive relief.

Conclusion

The motion for rehearing filed by appellees is in all things denied.

Mackey K. Hancock
Justice

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