Affirmed in part, Reversed in part, and Remanded, and Opinion and
Dissenting Opinion filed June 28, 2013.
In the
Fourteenth Court of Appeals
NO. 14-11-00058-CV
NO. 14-11-00229-CV
GORDON WESTERGREN, Appellant/Cross-Appellee
V.
NATIONAL PROPERTY HOLDINGS, L.P., MICHAEL PLANK, AND
RUSSELL PLANK, Appellees/Cross-Appellants
On Appeal from the 269th District Court
Harris County, Texas
Trial Court Cause No. 2008-36847
OPINION
Gordon Westergren sued two individuals and a limited partnership, alleging
breach of contract with regard to an oral agreement, breach of partnership duties,
statutory fraud, and common-law fraud. Defendants National Property Holdings,
L.P., Michael Plank, and Russell Plank (collectively, the “Plank Parties”)
counterclaimed, alleging breach of contract with regard to a settlement agreement
and a release. The jury rendered findings favorable to Westergren and adverse to
the Plank Parties. The trial court rendered judgment that the parties take nothing
on their respective claims. On appeal, Westergren asserts that the trial court erred
in rendering judgment he take nothing, in denying him leave to amend his petition
during trial, and in awarding court costs to the Plank Parties. On cross-appeal, the
Plank Parties argue that the trial court erred in rendering judgment they take
nothing. We affirm in part, reverse in part, and remand for limited proceedings.
I. FACTUAL AND PROCEDURAL BACKGROUND
Appellant Gordon Westergren, a lifelong resident of LaPorte, Texas, wanted
to purchase and develop certain real property in LaPorte, specifically, 190 acres on
the east side of Powell Road. These 190 acres are situated along a rail line
between two shipping terminals. Westergren entered into a purchase option
contract with the owners of the 190 acres. The owners later entered into two
additional purchase option contracts on the same 190 acres. In July 2004,
Westergren filed suit (“the 190-acres litigation”) against the owners and the two
other parties who claimed an option to purchase the 190 acres, asserting that he
possessed the superior right to purchase. Westergren also filed a lis pendens on the
property, which effectively prevented the sale and development of the 190 acres.
While the 190-acres litigation was pending, Westergren met the Planks.
Specifically, Walter Johnson, then CEO of Amegy Bank, had participated in
several “handshake” transactions with Westergren in which Johnson served as the
financial partner while Westergren “found and sourced” property deals in the
LaPorte area. Although Johnson was not interested in purchasing and developing
the 190 acres, Johnson introduced Westergren to two brothers, Michael Plank and
Russell Plank, who were clients of the bank. Michael Plank is the President of the
corporate general partner of National Property Holdings, L.P. (“NPH”), a Texas
2
limited partnership involved in real estate development. Russell Plank performs
consulting services for various companies, including NPH. Several developers,
including NPH, were interested in purchasing and developing the 190 acres.
In January 2005, after Westergren met the Planks, Russell Plank contacted
Robert Langston, the attorney representing Westergren in the 190-acres litigation.
Russell Plank called Langston about paying Westergren’s attorney’s fees.
Langston asked Russell Plank why he would do that for Westergren; Russell Plank
responded “[b]ecause we’re going to be partners.” Langston then received a $5000
check from NPH1 and a $5000 check “personally” from Russell Plank.2
Although the Plank Parties were not parties to the 190-acres litigation,
Russell Plank, sent by Michael Plank on behalf of NPH, attended a mediation
involving the litigation parties in August 2005. Westergren and Langston attended
the mediation. At this mediation, NPH agreed to pay out cash settlements to all the
litigants, except Westergren, for their claims on the 190 acres. At the mediation,
according to Westergren and Langston, Russell Plank promised that, in exchange
for Westergren’s release of his lis pendens and the settlement of the 190-acres
litigation, Westergren would become a partner of the Plank Parties and would
receive $1 million cash and an interest in profits (the exact percentage to be
negotiated) from the purchase and development of the 190 acres. Westergren
testified that at the mediation Russell Plank said, “Don’t worry about it, Gordon.
Let’s get these guys out of the way, and we’ll get it handled.”
Langston repeatedly requested of both Russell Plank and Westergren that the
parties reduce their partnership deal to writing. In October 2005, Russell Plank
1
This check was co-signed by Russell Plank, and the check’s reference was to “LaPorte
Property.”
2
This check’s memo was for “Legal Fees—GW.”
3
presented Westergren with a profits interest agreement drafted by appellees’
attorneys. This draft agreement stated that Westergren was to provide consulting
services in exchange for a 5% profit interest in funds distributed by NPH. Russell
Plank then crossed out the 5% term and hand-wrote 10%, then 20%. This
agreement was not signed.
In January 2006, NPH and the parties to the 190-acres litigation entered into
a Mediation Settlement Agreement (“MSA”). NPH was a signatory party to the
MSA. Neither Michael Plank nor Russell Plank individually was a signatory to the
MSA. In the MSA, NPH agreed to purchase the 190 acres in dispute; Westergren
and the other parties to the litigation agreed to release any lis pendens, and to
release and dismiss all claims regarding the 190 acres.
According to Westergren, at the time that he agreed to sign the MSA, he did
so in reliance upon the oral partnership deal with NPH, Michael Plank, and Russell
Plank:
[The Plank Parties] were going to pay me a cool million bucks for
signing off, letting them have control of the property, and give me a 5
percent interest in the 190 acres. That’s what caused me to give them
control of the property.
Westergren further testified that the “final” deal at the time he agreed to “sign
away” his lis pendens was “a million in cash and a 5 percent[]—a 5 percent profits
participation.”3 According to Westergren, under this 5% profits participation, the
Plank Parties would pay Westergren 5% of the profits, if any, that they realized
upon selling or “flipping” the 190 acres to a third party.
3
According to Westergren, at some point after Russell Plank presented Westergren with
the profits interest agreement where Russell Plank hand-wrote in the 20% profit interest term,
Russell Plank presented to Westergren another draft agreement that included the terms of the
“cool million bucks and a 5 percent participation.”
4
After the mediation, because 190 acres was more land than the Plank Parties
were comfortable purchasing and developing, the Plank Parties held meetings with
various companies to serve as potential partners, including ML Realty Partners, a
Chicago-based investment and development company interested in long-term real
estate holdings. In January 2006, NPH entered into a contribution agreement with
ML Realty Partners. Under this agreement, upon NPH’s acquisition of the entire
190 acres, ML Realty Partners would distribute $6 million to NPH.
On February 14, 2006, Westergren released his lis pendens and dismissed
his claim in the 190-acres litigation with prejudice. Two days later, NPH
purchased 20 of the 190 acres, and Port Crossing Land, L.P., a limited partnership
in which the limited partners were an NPH-affiliated entity4 and ML Realty
Partners, purchased the remaining 170 acres. The purchase price of the 190 acres
was approximately $.75 per square foot. ML Realty Partners distributed $6 million
to NPH. In June 2006, NPH sold the 20-acre parcel to Del Piso Investments, an
Arizona limited partnership, for $1.742 million, or a purchase price of
approximately $2 per square foot.5
At this time, Westergren still had not received any payment from the Plank
Parties, and started calling them. According to Westergren, Russell Plank finally
told him, “Look, we can’t give you the whole million right now but we’re going to
give you a half a million bucks.” Both Michael Plank and Russell Plank testified
that they agreed to pay Westergren $500,000. Westergren met with Russell Plank
at the NPH office on June 30, 2006, at which time Russell Plank gave Westergren
a check for $500,000.6 Without reading it, Westergren also signed a two-page
4
This entity was NPH LaPorte Realty, L.P.
5
In December 2005, Arizona Tile, L.L.C. had entered into an earnest money contract for
the purchase of this 20 acres from NPH.
6
This $500,000 NPH check was co-signed by Russell Plank. In NPH’s accounting
5
document entitled “Agreement and Release” (“Release”), which was notarized in
Westergren’s presence. The Release was drafted by the Plank Parties’ attorneys,
and the Plank Parties did not send the Release to or discuss it with Langston. The
Release stated that in exchange for “receipt” of the $500,000, Westergren released
and relinquished any rights and interests in the 190 acres, and released all claims
regarding the 190 acres against Michael Plank, NPH, and their agents. Westergren
testified that he did not read the document because he did not have his reading
glasses7 with him and was “in a hurry.” Westergren admitted he was wearing a
watch with a built-in magnifying glass that he sometimes used to help him read.
According to Westergren, after he asked what the document was, Russell Plank
described it as “just a receipt” and “nothing,” and told Westergren “you don’t have
to worry about it.” Russell Plank did not tell Westergren that the document was a
release. Westergren testified he relied on Russell Plank’s “representation” that the
document was “just a receipt” in signing the Release.
In February 2007, Westergren sent a letter to Michael Plank to request the
other $500,000 and his “5% interest.” Westergren and Michael Plank then met for
lunch. Westergren testified that, during lunch, he found out about the Release and
Michael Plank told Westergren “you need to read what you sign.” The Plank
Parties refused to pay Westergren any additional compensation. Westergren filed
suit against the Plank Parties, asserting various claims, including breach of
contract, breach of partnership duties, common-law fraud, and statutory fraud. The
Plank Parties filed a counterclaim asserting that Westergren breached the MSA and
the Release by filing suit.
records, this payment was approved by “R.D.P.” and initially described as for “Land-Fixed
Asset.” Several months later, the description was changed to “Consulting Fees.”
7
Westergren had undergone ocular lens replacement due to leukemia and could not read
documents without eyeglasses.
6
After a trial, the jury found the following:
Russell Plank agreed to pay Westergren $1 million and a 5% profit
interest in the development of the 190 acres in exchange for
Westergren’s releasing his lis pendens and giving up his contractual
right to the 190 acres.8
Russell Plank failed to comply with this agreement.
NPH, Michael Plank, and Russell Plank each partially performed the
agreement to pay Westergren $1 million and a 5% profit interest in the
development of the 190 acres.
Russell Plank’s failure to comply with his agreement was not
excused.9
The sum of $500,000, if paid now in cash, fairly and reasonably
would compensate Westergren for his damages that resulted from
Russell Plank’s failure to comply with his agreement, based upon the
difference between the amount Westergren received from the Plank
Parties and the amount Westergren would have received if the Plank
Parties had paid him the agreed-upon amount.
Each of the Plank Parties formed a partnership with Westergren.
Each of the Plank Parties failed to comply with its respective duty of
loyalty to Westergren and with its respective duty of care to
Westergren.10
These failures were not excused by Westergren’s later taking an
inconsistent position to the disadvantage of the Plank Parties.
The sum of $177,608, if paid now in cash, fairly and reasonably
8
The trial court granted partial directed verdict in favor of the Plank Parties, ruling that
any allegation of fraud against NPH prior to the execution of the MSA was barred by the MSA’s
disclaimer of reliance. Westergren does not appeal this ruling. As a result of this ruling, the
parties agreed that NPH would not be submitted as part of the breach-of-contract claim. The jury
did not find that Michael Plank individually entered into the oral agreement, and Westergren
does not appeal this finding.
9
The jury was instructed on the Plank Parties’ affirmative defenses of prior material
breach, waiver, and quasi-estoppel.
10
The jury found that NPH was 50% responsible, Michael Plank was 25% responsible,
and Russell Plank was 25% responsible for causing Westergren harm due to breach of
partnership duties.
7
would compensate Westergren for his damages that were proximately
caused by those breaches of partnership duties, based upon the
difference between the amount Westergren received from the Plank
Parties and the amount Westergren would have received if the Plank
Parties had paid him the agreed-upon amount.
NPH’s profit in the acquisition of the 190 acres was $3,552,174.
Each of the Plank Parties committed common-law fraud by
misrepresentation, common-law fraud by omission, and statutory
fraud against Westergren.11
The fraud by misrepresentation and statutory fraud were not excused
by Westergren’s later taking an inconsistent position to the
disadvantage of the Plank Parties.
Zero dollars, if paid now in cash, fairly and reasonably would
compensate Westergren for his damages, if any, that resulted from
such fraud, based upon the difference between the amount Westergren
received from the Plank Parties and the amount Westergren would
have received if the Plank Parties had paid him the agreed-upon
amount.
The amount of $200,000 would be a reasonable fee for the necessary
services of Westergren’s attorney for preparation and trial; $25,000,
for an appeal to the court of appeals; and $20,000, for a petition for
review to the Texas Supreme Court.
Westergren did not fail to comply with the MSA or the Release.
The Plank Parties filed a motion to disregard all the jury findings adverse to
them and requested a take-nothing judgment as to all of Westergren’s claims and
judgment in favor of the Plank Parties on their counterclaims. 12 Westergren filed a
motion for judgment on the jury’s verdict and a motion for disgorgement of profits.
The trial court denied the Plank Parties’ their motion as to their counterclaims but
11
The jury found that NPH was 30% responsible, Michael Plank was 20% responsible,
and Russell Plank was 50% responsible for causing Westergren harm due to common-law fraud
by misrepresentation and statutory fraud.
12
This filing was styled as a motion to disregard the jury’s findings and for judgment
notwithstanding the verdict.
8
granted it as to Westergren’s claims against the Plank Parties. The trial court
denied Westergren’s motion for disgorgement of profits, granted Westergren’s
motion for judgment as to the Plank Parties’ counterclaims, and denied
Westergren’s motion for judgment as to Westergren’s claims against the Plank
Parties. The trial court rendered judgment that Westergren take nothing on his
claims and that the Plank Parties take nothing on their claims, and charged
Westergren with paying the Plank Parties’ costs of court.
II. ISSUES PRESENTED
On appeal, Westergren presents five issues. First, Westergren argues that
the trial court erred in granting judgment notwithstanding the verdict (JNOV) on
his breach-of-contract claim. Second, Westergren contends that the trial court
erred in granting JNOV on his partnership claims. Third, Westergren argues that
the trial court similarly erred with regard to his fraud claims. Fourth, Westergren
complains about the trial court’s denial of his request to amend his petition to add a
new defense. Finally, Westergren argues that the trial court erred in awarding
court costs to the Plank Parties.
On cross-appeal, the Plank Parties present two issues. First, the Plank
Parties argue that they conclusively proved (a) that Westergren breached the MSA
and the Release by filing the underlying suit and (b) the amount of their resulting
damages, such that the trial court should have rendered judgment in their favor on
their counterclaims. Second, the Plank Parties contend the jury’s finding that
Westergren did not breach the MSA and the Release was against the great weight
and preponderance of the evidence such that the trial court should have granted the
Plank Parties a new trial on their counterclaims. In a conditional cross-issue, the
Plank Parties also assert that any recovery by Westergren must be capped at
$200,000.
9
III. STANDARDS OF REVIEW
Judgment against a jury verdict is proper only when the law does not permit
reasonable jurors to decide otherwise. City of Keller v. Wilson, 168 S.W.3d 802,
823 (Tex. 2005). We therefore review JNOVs for legal sufficiency of the evidence
supporting the verdict, bearing in mind that it is the jury’s sole province to evaluate
witness credibility and determine the weight to attach to testimony. Envtl.
Procedures, Inc. v. Guidry, 282 S.W.3d 602, 626 (Tex. App.—Houston [14th
Dist.] 2009, pet. denied) (citing City of Keller, 168 S.W.3d at 819). We consider
the evidence in the light most favorable to the verdict and indulge every reasonable
inference that would support the challenged finding, crediting favorable evidence if
a reasonable fact finder could and disregarding contrary evidence unless a
reasonable fact finder could not. See City of Keller, 168 S.W.3d at 823, 827. We
cannot substitute our judgment for that of the trier of fact if the evidence falls
within this zone of reasonable disagreement. Id. at 822. If the evidence viewed in
this light would enable reasonable and fair-minded people to find the challenged
fact, then JNOV is improper. See id. at 823, 827. “We will uphold the jury’s
finding if more than a scintilla of competent evidence supports it.” Tanner v.
Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009).
In reviewing factual sufficiency, we must consider and weigh all the
evidence. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761–62 (Tex.
2003). We can set aside a verdict only if the evidence is so weak or if the finding
is so against the great weight and preponderance of the evidence that it is clearly
wrong and manifestly unjust. Id. at 761. The jury as trier of fact is the sole judge
of the credibility of the witnesses and the weight to be given to their testimony.
GTE Mobilnet of S. Tex.Ltd. P’ship v. Pascouet, 61 S.W.3d 599, 615–16 (Tex.
App.—Houston [14th Dist.] 2001, pet. denied). Thus, we may not substitute our
10
own judgment for that of the fact finder, even if we would reach a different answer
on the evidence. Id. at 616. The amount of evidence necessary to affirm the fact
finder’s judgment is far less than that necessary to reverse its judgment. See id.
IV. ANALYSIS
A. Whether the trial court erred in disregarding the jury’s breach-of-
contract findings
In his first issue, Westergren argues that the trial court erred in rendering
JNOV as to Westergren’s breach-of-contract claim. In their motion, the Plank
Parties asked the trial court to disregard the jury’s findings regarding the breach-
of-contract claim based upon the following grounds: (1) Russell Plank cannot be
held liable for breach of contract as a matter of law because the evidence
conclusively proves he was acting as an agent of NPH and did not assume any
personal liability; (2) any breach-of-contract claim was released under the MSA
and the Release; (3) the alleged contract is unenforceable for lack of consideration;
(4) any agreement reached before the MSA merged into and was superseded by the
MSA; (5) the alleged contract is unenforceable because it is subject to the statute
of frauds and the evidence is legally insufficient to support the jury’s finding of the
partial-performance exception to the statute of frauds; (6) because there is no
legally sufficient evidence to support the jury’s partial-performance finding and
because the jury’s damages findings are based upon a benefit-of-the-bargain
measure of damages, all of the damages findings fail under the statute of frauds;
(7) the evidence conclusively establishes the affirmative defenses of waiver, prior
material breach, and quasi-estoppel; and (8) the evidence is legally insufficient to
support the jury’s findings that Russell Plank entered into the alleged oral
agreement with Westergren, that Russell Plank failed to comply with this
agreement, and as to Westergren’s damages resulting from that failure to comply.
11
The trial court granted the Plank Parties’ motion to disregard the jury
findings regarding the breach-of-contract claim without specifying the grounds
upon which it relied. Therefore, on appeal, Westergren must show that each
independent ground fairly asserted against the breach-of-contract claim does not
provide a basis for affirming the trial court’s judgment as to this claim. See Fort
Bend Cty. Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex. 1991).
1. Westergren addressed all the JNOV breach-of-contract bases
fairly presented by the Plank Parties.
As an initial matter, the Plank Parties assert that we can affirm JNOV on
Westergren’s breach-of-contract claim due to Westergren’s alleged failure to
address one of the Plank Parties’ alleged JNOV grounds. We disagree. In their
JNOV motion, instead of arguing that partial performance is an equitable doctrine
under which a party only may recover reliance damages for breach of contract, as
they do in their appellate brief, the Plank Parties merely coupled the lack of legally
sufficient evidence of partial performance with the lack of a damages question
based on reliance damages to argue that all of Westergren’s damages findings fail
(ground 6 above). The Plank Parties did not directly attack the jury’s finding on
breach-of-contract damages. In addition, in their JNOV motion, the Plank Parties
only cited cases dealing with non-contract causes of action.13
While the Plank Parties cited Exxon Corp. v. Breezevale Ltd. in the brief in
support of their motion for JNOV, they cited it for the propositions that the partial-
performance exception to the statute of frauds was inapplicable and that, because
the statute of frauds rendered the alleged oral partnership agreement unenforceable,
the Plank Parties could not be liable for any damages resulting from breach of
13
See, e.g., Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007); Haase v.
Glazner, 62 S.W.3d 795, 799 (Tex. 2001).
12
partnership duties. See 82 S.W.3d 429, 439–40, 443 (Tex. App.—Dallas 2002, pet.
denied). The Plank Parties first cited Exxon for the proposition that even when the
partial-performance exception applies, benefit-of-the-bargain damages are not
recoverable at all in a letter written to the trial court, filed the day after the trial
court entered its final judgment. See id. at 441. Although the Plank Parties may
have presented this argument orally at the JNOV hearing, the transcript, if any,
from the hearing is not in the record. In any event, we should consider only
grounds stated in writing to support the motion. See TEX. R. CIV. P. 301 (“[U]pon
motion and reasonable notice the court may render judgment non obstante
veredicto if a directed verdict would have been proper . . . .”); Olin Corp. v. Cargo
Carriers, Inc., 673 S.W.2d 211, 213–14 (Tex. App.—Houston [14th Dist.] 1984,
no writ) (concluding that trial court had no power to enter JNOV absent a proper
motion to do so). Thus, we conclude that Westergren addressed all the JNOV
grounds fairly presented to the trial court on his breach-of-contract claim, and we
proceed to the appeal’s merits. See Garza v. Cantu, —S.W.3d—, No. 14-11-
00724-CV, 2013 WL 1460521, at *3 (Tex. App.—Houston [14th Dist.] June 13,
2013, no pet. h.) (op. on reh’g) (overruling appellee’s contention that JNOV be
confirmed due to appellant’s alleged failure to attack one JNOV basis).
2. The evidence is legally sufficient to support Russell Plank’s
individual liability on the contract.
The Plank Parties did not plead agency14 as an affirmative defense to
Westergren’s breach-of-contract claim. However, in their JNOV motion, the Plank
Parties argued Westergren failed to establish that his breach-of-contract claim
arose against Russell Plank in his individual capacity because the evidence
14
To avoid individual liability under the agency defense, a party must prove that he
disclosed his agency capacity to the other contracting party and that he identified the true
principal for which he was acting. Gordon v. Leasman, 365 S.W.3d 109, 114–15 (Tex. App.—
Houston [1st Dist.] 2011, no pet.).
13
conclusively establishes Russell Plank acted solely as an agent for NPH.15 Thus, to
merit the trial court’s JNOV, the Plank Parties were required to show the evidence
conclusively proves that Russell Plank did not enter into the oral agreement with
Westergren in Russell Plank’s individual capacity and that no reasonable jury was
free to think otherwise. See Tanner, 289 S.W.3d at 830.
Westergren argues that even if Russell Plank did act at times as an agent for
NPH, this does not mean Russell Plank was acting solely as an agent and never at
all in his individual capacity when he made promises to Westergren. Westergren
contends that the trial record shows Russell Plank wore “multiple hats,” including
one as Russell Plank, individual. We agree. Russell Plank admitted that at times
he dealt with Westergren as an independent consultant:
Q. When you dealt with Mr. Westergren, were you dealing with him
as an independent consultant, or were you dealing with him as a
representative of National Property Holdings, or were you dealing
with him as a representative of the Plank Companies, Inc.?
A. All of the above. I’m a consultant that works for all of those
entities.
Russell Plank testified that he was strictly an independent consultant for, and was
not a partner and did not have any ownership interests in, Michael Plank’s
companies. Russell Plank denied that he had any authority to act on behalf of
NPH—“Mike makes all decisions” with regard to NPH. Russell Plank only was
authorized to act on behalf of NPH by Michael Plank on “some specific issues.”
Michael Plank confirmed that Russell Plank was a consultant for NPH and
15
In support, the Plank Parties relied on Walker Insurance Services v. Bottle Rock Power
Corp., 108 S.W.3d 538, 554 (Tex. App.—Houston [14th Dist.] 2003, no pet.). But Walker has
limited, if any, applicability because the issue was the sufficiency of the evidence to support the
trial court’s implied finding regarding agency on a special appearance. This court specifically
indicated “when determining whether an agency relationship existed . . . , we must be mindful
that the issue of ultimate liability is separate from the issue of jurisdiction.” Id. at 549.
14
Westergren was told that. Westergren testified that he dealt extensively with and
had been in constant contact by cell phone with Russell Plank; Russell Plank
agreed that he spoke to Westergren “much more” than Michael Plank did.
Westergren and Langston both testified that their discussions regarding the $1
million and profits-interest “deal” were with Russell Plank. Russell Plank called
Langston regarding paying Westergren’s attorney’s fees in the 190-acres litigation
because they were going to be “partners.” And Russell Plank admitted that he
“personally” wrote a $5000 check to Langston. Westergren further testified it was
Russell Plank who called to tell him that it was time to release the lis pendens.
Although Russell Plank at times may have acted as NPH’s agent, an agent is
not precluded from binding himself on a contract where he has pledged his own
personal responsibility in addition to that of his principal. See Nagle v. Duncan,
570 S.W.2d 116, 117 (Tex. Civ. App.—Houston [1st Dist.] 1978, writ dism’d).
And while the Plank Parties emphasize the fact that the $500,000 check paid to
Westergren in June 2006 was issued by NPH, circumstances post contract
formation do not relieve an agent from a finding of personal contract liability. See
Gordon v. Leasman, 365 S.W.3d 109, 115 (Tex. App.—Houston [1st Dist.] 2011,
no pet.) (concluding such in case involving oral agreement for carpentry services
where invoices were addressed to and checks issued by principal).
Based on all the circumstances surrounding the formation of the contract,
there is more than a scintilla of probative evidence that Russell Plank acted in his
individual capacity with regard to the oral agreement with Westergren. See
Tanner, 289 S.W.3d at 830. Viewing the evidence in the light most favorable to
the jury’s finding, Westergren clearly established a fact issue as to whether Russell
Plank was bound on the oral agreement with Westergren in Russell Plank’s
individual capacity. Because reasonable and fair-minded people could find the
15
challenged fact, if the trial court granted JNOV based on this ground, it was
improper. See City of Keller, 168 S.W.3d at 823, 827. Thus, this ground does not
provide a basis for affirming the trial court’s judgment on breach of contract. See
Sbrusch, 818 S.W.2d at 394.
3. The evidence is legally sufficient to support that Westergren did
not release his breach-of-contract claim under the MSA and the
Release.
In their motion for JNOV, the Plank Parties argued that any breach-of-
contract claim was released under both the terms of the MSA and the Release. The
jury found that Russell Plank’s failure to comply with his oral agreement with
Westergren was not excused by any waiver by Westergren. In addition, the jury
found that each of the Plank Parties committed fraud by omission. Finally, the jury
found no breach of contract by Westergren with regard to either the MSA or the
Release.
a. The January 2006 MSA
First, we will consider whether the MSA applies to bar Westergren’s breach-
of-contract claim. The Plank Parties argued that the evidence conclusively showed
that Westergren’s contract claim fell within the MSA’s broad language and thus
was barred as a matter of law. The Plank Parties further asserted that Russell
Plank was covered by the MSA because at all times he acted as an agent on behalf
of NPH.
On appeal, Westergren contends that the MSA did not release any claims
against Russell Plank because the MSA fails to refer to Russell Plank with any
“descriptive particularity or otherwise,” and thus the Plank Parties’ argument could
not have formed the basis for the trial court’s JNOV.
The MSA included the following language:
16
[A]ll parties to this Agreement agree to release, discharge any and all
claims, demands or suits, known or unknown, fixed or contingent,
liquidated or unliquidated, whether or not asserted in the above case,
as of this date, arising from, or related to, the events and transactions
which are the subject matter of this case.
While “all parties” to the MSA agreed to release and discharge “any and all
claims” related to the “subject matter” of the 190-acres litigation, and NPH was a
signatory party to the MSA, there is no dispute that Russell Plank individually did
not sign and was not a party to the MSA. Nor does the MSA specifically refer in
any way to the parties’ agents; certainly, nothing expressly indicates that the
parties to the MSA intended to release Russell Plank from any and all claims.
Moreover, even assuming solely for purposes of our analysis that the MSA
would cover claims against agents of signatory parties, we already have concluded
more than a scintilla of evidence would support a reasonable jury’s finding that
Russell Plank acted in his individual capacity, not solely as an agent for NPH, to be
bound personally on the oral agreement with Westergren. See supra Section
IV.A.2. Thus, the Plank Parties’ reliance on cases in which releases were found to
reach a company’s employees or agents who were clearly acting in the scope of
their employment or agency is misplaced.16 We therefore conclude that, viewing it
in the light most favorable to the verdict, the evidence raised a fact issue as to
whether the MSA even was valid as to Russell Plank. A reasonable and fair-
minded jury was permitted to conclude that Westergren did not release his contract
16
Vera v. N. Star Dodge Sales, Inc., 989 S.W.2d 13, 18 (Tex. App.—San Antonio 1998,
no pet.) (concluding release reached car dealership employees where plaintiffs did not allege any
individual cause of action against employees and there was no question that employees were
associated with dealership’s sale of car at issue); Winkler v. Kirkwood Atrium Office Park, 816
S.W.2d 111, 113–14 (Tex. App.—Houston [14th Dist.] 1991, writ denied) (concluding
individuals associated with and “involved in the operation, maintenance, and administration of
[fitness] center” were included in release that released “the Club” from liability for injuries
suffered during participation in fitness programs).
17
claim against Russell Plank in the MSA. See City of Keller, 168 S.W.3d at 823,
827. Thus, this subground does not provide a basis for affirming the trial court’s
judgment on breach of contract. See Sbrusch, 818 S.W.2d at 394.
b. The June 2006 Release
The Plank Parties also argued that Westergren released his breach-of-
contract claim under the Release. The Plank Parties complained that Westergren
failed to present any evidence of fraud by omission, and therefore, Westergren’s
fraudulent-inducement defense to the Release fails as a matter of law. Specifically,
the Plank Parties argued that Westergren failed to obtain a relevant jury finding
because the only basis presented for his fraudulent-inducement defense was not
fraud by omission, but rather fraud by misrepresentation. Further, even if
Westergren had obtained a relevant jury finding as to fraud by misrepresentation,
the Plank Parties argued that Westergren justifiably could not rely on the Plank
Parties’ alleged misrepresentation that the release was a “receipt.” Finally, the
Plank Parties asserted that the plain language of the Release bars Westergren’s
contract claim because it covers agents of Michael Plank and NPH, and at all times
Russell Plank was acting in such an agency capacity.
On appeal, Westergren argues the evidence shows that Westergren’s
signature on the Release was procured by fraud and the jury’s findings are
consistent with and support Westergren’s fraudulent-inducement defense.
Specifically, the evidence shows Russell Plank did not disclose that the document
was actually a release; Russell Plank knew that Westergren was ignorant of that
fact and did not have an equal opportunity to discover it because he did not have
his glasses; Russell Plank induced him into signing the Release by failing to reveal
its true nature; and Westergren suffered injury as a result when the Release was
later used as the reason to avoid additional payment. Westergren further argues
18
that the Release does not cover Russell Plank; he is not specifically mentioned in
the Release and, at trial, Russell Plank testified that he was “not a party
individually” to the Release.
Here, the trial court submitted various fraud questions17 to the jury with the
following understanding: “that plaintiff is seeking damages for material
misrepresentation and is alleging fraud by omission as the theory for its
fraudulent[-]inducement defense to the enforcement of the June 2006 release.”18
Westergren offered no objection to this characterization of his case to be presented
in the charge. Thus, question 14 on fraud by omission was submitted as the
question pertinent to whether the Release was “subject to avoidance” on the
ground of fraudulent inducement. See Williams v. Glash, 789 S.W.2d 261, 264
(Tex. 1990) (“Under Texas law, a release is a contract and is subject to avoidance,
on grounds such as fraud or mistake, just like any other contract.”); see also
Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 435 (Tex. 1986) (explaining that
silence is equivalent to false representation where circumstances impose duty to
speak and one deliberately remains silent); Solutioneers Consulting, Ltd. v. Gulf
Greyhound Partners, Ltd., 237 S.W.3d 379, 385 (Tex. App.—Houston [14th Dist.]
2007, no pet.) (“Fraud by omission is a subcategory of fraud because an omission
or non-disclosure may be as misleading as a positive misrepresentation of fact
when a party has a duty to disclose.”). Question 14 provided:
Did any of the parties listed below commit fraud against Gordon
Westergren?
17
Question 13 covered fraud by affirmative misrepresentation, question 14 covered fraud
by omission, and question 15 covered statutory fraud involving real estate. Question 19, the
damages question associated with the fraud claims, was predicated on an affirmative answer to
question 13 or 15.
18
The trial court previously had denied the Plank Parties’ motion for summary judgment
based on the Release.
19
Fraud occurs when:
a) a party fails to disclose a material fact within the
knowledge of the party,
b) the party knows that the other party is ignorant of the
fact and does not have an equal opportunity to
discover the truth,
c) the party intends to induce the other party to take
some action by failing to disclose the fact, and
d) the other party suffers injury as a result of acting
without knowledge of the undisclosed fact.
On question 14, the jury answered “yes” with respect to each of NPH,
Michael Plank, and Russell Plank. We disagree that Westergren failed to present
any evidence of fraud by omission. Russell Plank testified that the Release was
drafted by the Plank Parties’ attorneys, not by Westergren, and Russell Plank read
and approved it before having Westergren sign it. Westergren testified that Russell
Plank called him and told him that he should come to the NPH office to pick up the
first half of the million dollars. Russell Plank was aware that Westergren had
“eyesight problems.” Westergren testified that he did not take his reading glasses
when he went to pick up his check, that Westergren could not read the document
Russell Plank “needed” him to sign, but after Westergren asked Russell Plank
“[w]hat’s that?”, Russell Plank told Westergren he was signing “nothing,” “just a
receipt,” and he did not “have to worry about it.” Westergren testified what
Russell Plank did not tell him was that the document was a “release of all claims.”
Westergren testified he “absolutely” relied on the fact that Russell Plank told
Westergren the document was “just a receipt” without telling him it was a release
in executing and signing the Release. Russell Plank testified, “We put things in
[the Release] because we—we just didn’t—we didn’t—Gordon was a loose
cannon. We had no idea what he was capable of.” Westergren testified that as he
left this meeting, Russell Plank told Westergren he would receive “the other half”
20
when “we get another building coming out of the ground.” Westergren did not
know that what he signed was a release until he met with Michael Plank who told
him “you need to read what you sign” and that he would not pay Westergren “an
f’ing dime” more. Westergren never received the other $500,000 and 5% profit
interest.
In addition, Russell Plank, after working directly with the Plank Parties’
attorneys on drafting the Release, never provided Westergren’s attorney Langston
with a copy of the Release before asking Westergren to sign it. This is despite the
facts that Russell Plank knew Langston represented Westergren in legal matters
related to the 190 acres, Russell Plank personally had written a $5000 check to pay
Westergren’s attorney’s fees in connection with the 190 acres, and Langston had
“many thousand[s]” of discussions with Russell Plank about putting the oral
agreement with Westergren related to the 190 acres—the very reason why
Westergren signed the MSA and released his lis pendens—in writing. This is also
despite the facts that the document Russell Plank conditioned receiving the
$500,000 check on was a “professional” attorney-drafted agreement regarding and
release of Westergren’s legal claims related to the 190 acres; Russell Plank had his
attorneys “put things” in the Release because he “had no idea what [Westergren]
was capable of”; and that the custom and practice of communications among
attorneys is to deal strictly with the attorney representing “the other guy’s client,”
which includes providing that attorney with copies of documents. Langston
testified that he was unable to advise Westergren about his legal rights under the
document because he did not receive a copy of it until almost a year after
Westergren signed it, and that the first thing Langston said when he read the
Release was “[s]omething like, Oh my god.” Although Westergren generally was
a “handshake” deal man, Russell Plank certainly knew Westergren had retained
21
counsel for matters related to the 190 acres. Russell Plank’s actions in connection
with the Release thus provide ample circumstantial evidence of his intent to
defraud Westergren. See Anderson, Greenwood & Co. v. Martin, 44 S.W.3d 200,
215 (Tex. App.—Houston [14th Dist.] 2001, pet. denied).
In their JNOV motion, the Plank Parties cited First City Mortgage Co v.
Gillis, for the proposition that Russell Plank had no duty as a fiduciary to disclose
the Release’s unambiguous terms and Westergren was obligated as a principal to
read the Release before he signed it. See 694 S.W.2d 144, 146–47 (Tex. App.—
Houston [14th Dist.] 1985, writ ref’d n.r.e.).19 However, in First City Mortgage,
we expressly recognized fraud as a possible basis to excuse a party’s obligation to
read a document prior to signing. Id. at 147 (“If no fraud is involved, one who
signs an agreement without knowledge of its contents is presumed to have
consented to its terms and is charged with knowledge of the agreement's legal
effect.”).20 Moreover, there need not be a fiduciary relationship between the
parties to support fraud by omission.21 See Solutioneers Consulting, 237 S.W.3d at
19
First City Mortgage involved a broker-principal fiduciary relationship in the context of
an attempt to secure financing.
20
In their appellate brief, the Plank Parties also rely on Bradford v. Vento, where the
Texas Supreme Court concluded that the plaintiff’s fraud-by-omission claim failed because there
was no evidence that the defendant “knew that [the plaintiff] lacked information and did not have
‘an equal opportunity to discover the truth.’” 48 S.W.3d 749, 756 (Tex. 2001). Bradford is
distinguishable because, here, after coming in to purportedly receive the first half of the million
dollars, Westergren expressly asked Russell Plank what Westergren was signing, and there was
evidence that Westergren had not brought his reading glasses and that Russell Plank knew
Westergren needed glasses to read documents. Further, the fact that Russell Plank proceeded to
joke about Westergren’s not spending all of the $500,000 check quickly just in case Russell
Plank would not be able to give Westergren his other half—after Westergren already had signed
the Release—constitutes evidence that Russell Plank knew Westergren was ignorant of and
lacked information about the Release’s terms. And the fact that, after consulting with the Plank
Parties’ own attorneys on the Release, Russell Plank did not provide Westergren’s attorney with
a copy of the Release reasonably supports an inference that Russell Plank knew Westergren did
not have an “equal opportunity to discover the truth” of the Release’s terms.
21
In their JNOV motion, the Plank Parties did not argue that Westergren failed to show
22
385 (explaining that duty to disclose also may arise “when one party voluntarily
discloses information, which gives rise to the duty to disclose the whole truth,”
“when one party makes a representation, which gives rise to the duty to disclose
new information that the party is aware makes the earlier representation misleading
or untrue,” or “when one party makes a partial disclosure and conveys a false
impression, which gives rise to the duty to speak”). Where Russell Plank,
individually, and Westergren had entered into an alleged oral agreement; where
Russell Plank had made representations that he would pay Westergren $1 million
and a 5% profit interest in the sale of the 190 acres; where Russell Plank knew that
Westergren was represented by counsel in matters related to the 190 acres; where
Russell Plank had directly worked with his attorneys to draft a document that
would release all of Westergren’s claims in the 190 acres; where Russell Plank did
not provide a copy of the Release to Langston; and where Russell Plank answered
Westergren’s direct question as to what he was signing with it was a “just a
receipt” for the $500,000 and did not tell him it actually included a release of all
claims, Russell Plank had a duty to disclose that he would pay only $500,000 for
Westergren’s releasing all his claims as the whole truth, because he was aware this
new information made his earlier representations misleading or untrue, and to
avoid conveying a false impression See id.
Here, the evidence indicates that Russell Plank called Westergren in to
receive the first half of his “cool million”; presented Westergren with a document
“drawn by professionals” and that Russell Plank had approved without first
sending a copy to Westergren’s attorney for his review; told Westergren that he
“needed” to sign it; after being expressly asked by Westergren what he was
signing, told him it was “just a receipt” and did not disclose that it was an agreement
any other basis for Russell Plank’s duty to disclose.
23
and included a release of all claims; and continued to refer to the existence of the
oral agreement he had with Westergren even after the Release was signed. From
Russell Plank’s actions, a reasonable jury was free to infer he knew and had
concealed or failed to disclose the material fact that the document was a release of
Westergren’s claims; he knew Westergren did not know that the document was a
release and did not have an equal opportunity to discover the truth; he intended to
induce Westergren to sign the Release by deliberately failing to disclose that fact;
and Westergren was injured by signing the document without knowing it was a
release. In other words, that Russell Plank induced Westergren into signing the
Release by committing fraud by omission or nondisclosure. Therefore, based on
our review of the evidence in the light most favorable to, and indulging every
reasonable inference that would support, the jury’s affirmative finding, we
conclude there is more than a scintilla of evidence upon which a reasonable and
fair-minded jury could conclude Westergren had proven each of the elements of
fraud by omission as to Russell Plank. See City of Keller, 168 S.W.3d at 823,
827.22 Because we conclude that there is legally sufficient evidence to support
22
Because we conclude that there is legally sufficient evidence to support the jury’s
affirmative finding on fraud by omission with regard to Russell Plank and this jury finding
serves in support of Westergren’s defense to the Release, to finally dispose of this appeal, we
need not address the Plank Parties’ contention on JNOV that even if the jury’s findings on fraud
by misrepresentation within another fraud question could support Westergren’s fraudulent-
inducement defense, Westergren justifiably could not rely on the alleged “receipt”
misrepresentation as a matter of law because he failed to read the Release. See TEX. R. APP. P.
47.1. In any event, this situation is distinguishable from that addressed by the en banc court in
DRC Parts & Accessories, L.L.C. v. VM Motori, S.p.A., because there the plaintiff alleged the
defendant breached the written contract at issue and, in the alternative, alleged that the defendant
fraudulently induced it to enter into that contract through affirmative misrepresentation. 112
S.W.3d 856, 856 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). There was no dispute
that the parties “agreed to continue the relationship” in the form of a written agreement. Id.
Harvey v. Elder, cited by the dissent but not the Plank Parties, also does not control in these
circumstances because there the patient who signed the release of claims at issue testified she
was aware “that [the doctor] had prepared a release” of her payment note and that the notary
asked her before she signed if she understood the document, and she replied she did. 191
S.W.2d 686, 689 (Tex. Civ. App.—San Antonio 1945, writ ref’d). Moreover, there is no
24
Westergren’s defense of fraudulent inducement to the Release, this subground also
does not provide a basis for affirming the trial court’s judgment on breach of
contract. See Sbrusch, 818 S.W.2d at 394.
indication the patient required glasses to read what she signed, that the patient expressly asked
the doctor what she was signing, or that the doctor described the document as “just a receipt” and
“nothing.” Nor was the patient already represented by counsel in matters connected to the claims
she released. In contrast, Westergren’s position—as his defense to the Release—is that he did
not even know he was entering into any written agreement, much less a release of his claims
related to the 190 acres, due to Russell Plank’s fraud. A party is not charged as a matter of law
with knowledge of a document’s unread provisions where “he can demonstrate that he was
tricked into its execution.” See DeClaire v. G & B McIntosh Family Ltd. P’ship, 260 S.W.3d 34,
47 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (citing Town North Nat’l Bank v. Broaddus,
569 S.W.2d 489, 492 (Tex. 1978)). Moreover, justifiable reliance generally is a question of fact.
See 1001 McKinney Ltd. v. Credit Suisse First Boston Mortg. Capital, 192 S.W.3d 20, 30 (Tex.
App.—Houston [14th Dist.] 2005, pet. denied). Here, Westergren testified, and the jury
reasonably could have concluded, that Westergren justifiably relied on Russell Plank’s “trickery”
in failing to disclose that what Westergren was signing included a release of all claims, and was
not “just a receipt,” after Westergren expressly asked Russell Plank what he was signing, when it
answered “yes” to question 14. And one need not show that he was prevented from reading or
physically forced to sign a contract to successfully assert fraudulent inducement. See Amouri v.
Sw. Toyota, Inc., 20 S.W.3d 165, 170 (Tex. App.—Texarkana 2000, pet. denied) (plaintiff did
not read but signed lease thinking he bought vehicle). The Plank Parties’ other cited cases are
likewise distinguishable. See In re Lyon Fin. Servs., 257 S.W.3d 228, 232 (Tex. 2008) (plaintiff
admitted awareness of the forum-selection clause but claimed relator had represented it only
applied to portion of agreement not sued upon); In re MHI P’ship, Ltd., No. 14-07-00851-CV,
2008 WL 2262157, at *3, 5 (Tex. App.—Houston [14th Dist.] May 29, 2008, orig. proceeding,
no pet.) (mem. op.) (homeowners admitted awareness of arbitration provisions in earnest money
contracts; also noting “strongly favored status” of arbitration). Further, the written agreement in
Lyon Financial, unlike the Release, “clearly set[] out that there were no representations between
the parties not set out in the agreement.” See 257 S.W.3d at 232.
Similarly, in concluding that legally sufficient evidence exists to support Westergren’s
fraudulent-inducement defense, we presumed the Release to be valid and thus need not address
the Plank Parties’ contention on JNOV that the Release covered Russell Plank as a matter of law
to finally dispose of this appeal. See TEX. R. APP. P. 47.1. In any event, while Michael Plank
and NPH and their agents are specifically mentioned in the Release, Russell Plank is not.
Further, Russell Plank admitted that he was “not a party individually” to the Release, and that
while the Release mentioned “entities that I work with . . . and represent, . . . I’m not written on
here. I’m not personally drawn.” Viewing the evidence in the light most favorable to the jury’s
finding that Russell Plank acted and was bound in his individual capacity on the oral agreement,
and where the evidence indicates Russell Plank continued to wear his “individual” hat in his
dealings with Westergren, we cannot agree with the Plank Parties that the Release covered
Russell Plank as a matter of law to preclude Westergren’s fraudulent-inducement defense and
void the jury’s affirmative finding.
25
4. The evidence is legally sufficient to support that consideration
existed for Russell Plank’s contract with Westergren.
In their motion for JNOV, the Plank Parties argued any alleged oral
agreement reached after the execution of the MSA fails for lack of consideration.23
On appeal, Westergren contends that the evidence does not show the oral
agreement with Russell Plank was reached after the MSA, but rather the agreement
predated the MSA and was Westergren’s only incentive to agree to the MSA.
Generally, a contract must be supported by consideration to be enforceable.
McLernon v. Dynegy, Inc., 347 S.W.3d 315, 335 (Tex. App.—Houston [14th Dist.]
2011, no pet.) (citing Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d
644, 659 (Tex. 2006)). Consideration consists of either a benefit to the promisor or
a detriment to the promisee. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d
492, 496 (Tex. 1991). It is a present exchange bargained for in return for a
promise. Id. It may consist of some right, interest, or profit, or benefit that accrues
to one party, or, alternatively, of some forbearance, loss or responsibility that is
undertaken or incurred by the other party. Angelou v. African Overseas Union, 33
S.W.3d 269, 280 (Tex. App.—Houston [14th Dist.] 2000, no pet.).
Here, Westergren testified that Russell Plank promised to make Westergren
his partner and pay Westergren $1 million and a 5% profit interest in the sale of the
190 acres in exchange for Westergren’s promise to release his lis pendens and
contractual rights to the 190 acres. Westergren presented evidence that Russell
Plank’s promises induced Westergren, to his detriment, to agree in the MSA to
23
In their appellate brief, the Plank Parties apparently recognize that their JNOV
argument and cited cases do not apply because Westergren “conceded” that the alleged promise
by Russell Plank predated the MSA. However, because in their motion for JNOV, the Plank
Parties asserted that the contract claim fails “because any contract was unenforceable for lack of
consideration” and because the trial court did not specify upon what ground it decided to grant
JNOV, we consider whether any oral agreement predating the MSA is supported by
consideration.
26
release his lis pendens and his contractual rights to the 190 acres and then to
actually release the lis pendens and dismiss the 190-acres litigation with prejudice.
According to Westergren, Russell Plank’s promises “caused [Westergren] to give
them control of the property” and induced him to “walk away” from the mediation
“without getting anything”—“[W]e had a partnership, a deal to march on down.
That’s why I took zero.” Langston testified that both Westergren and Russell
Plank provided “identical” details regarding their agreement and exchange of
promises.
The jury found that Russell Plank agreed to pay Westergren $1 million and a
5% profit interest in the 190 acres in exchange for Westergren’s releasing his lis
pendens and giving up his contractual right to the property. Based on our review
of the evidence in the light most favorable to this finding, we conclude the
evidence at least raised a fact issue as to the existence of consideration, which
would allow a reasonable and fair-minded jury to find that a contract existed. See
City of Keller, 168 S.W.3d at 823, 827. Thus, this ground does not provide a basis
for affirming the trial court’s judgment on breach of contract. See Sbrusch, 818
S.W.2d at 394.
5. The evidence is legally sufficient to support that the oral
agreement entered into by Westergren and Russell Plank did not
merge into the MSA.
In their motion for JNOV, the Plank Parties argued that Westergren’s
contract claim fails as a matter of law because any agreement reached prior to the
MSA merged into and was superseded by the MSA. Westergren argues on appeal
that the merger doctrine does not apply because Russell Plank individually was not
a party to the MSA.
A “merger clause” is a contractual provision mandating that the written
27
terms of the contract may not be varied by prior agreements because all such
agreements have been merged into the new document. IKON Office Solutions, Inc.
v. Eifert, 125 S.W.3d 113, 125 & n.6 (Tex. App.—Houston [14th Dist.] 2003, pet.
denied) (concluding statements that document “constitutes the entire agreement
concerning the subject matter hereof” and “supercedes prior . . . agreements” were
merger clauses). “A merger occurs when the same parties to an earlier agreement
later enter into a written integrated agreement covering the same subject matter.”
Superior Laminate & Supply, Inc. v. Formica Corp., 93 S.W.3d 445, 448–49 (Tex.
App.—Houston [14th Dist.] 2002, pet. denied) (citing Fish v. Tandy Corp., 948
S.W.2d 886, 898 (Tex. App.—Fort Worth 1997, writ denied)).
Here, the MSA contains a merger clause: “this Agreement constitutes the
entire agreement between and among [the parties], and supersedes any prior or
contemporaneous representations, statements, understandings or agreements
concerning the subject matter of this Agreement.” However, no merger occurred
because the parties to the MSA are not the same as those to the oral agreement.
While Westergren was a signatory party to the MSA, there is no dispute that
Russell Plank individually did not sign and was not a party to the MSA. And we
already have determined there is legally sufficient evidence to support that the oral
agreement at issue was entered into between Russell Plank, individually, and
Westergren. Thus, as a matter of law, the oral agreement and the MSA “cannot
merge because the two agreements are between different parties.” See Fish, 948
S.W.2d at 899.24 None of the cases cited by the Plank Parties indicates otherwise;
indeed, all the agreements at issue involved the same exact parties.25
24
In Fish, the earlier letter agreement at issue was between a corporation and an
individual, while the later distribution agreement was between two corporations. 948 S.W.2d at
899.
25
Bandera Drilling Co. v. Sledge Drilling Corp., 293 S.W.3d 867 (Tex. App.—Eastland
28
Viewing the evidence in the light most favorable to the jury’s verdict, we
therefore conclude that a reasonable and fair-minded jury was free to conclude that
any contract between Westergren and Russell Plank, individually, survived in spite
of the MSA. See City of Keller, 168 S.W.3d at 823, 827. Thus, this ground does
not provide a basis for affirming the trial court’s judgment on breach of contract.
See Sbrusch, 818 S.W.2d at 394.
6. The evidence is legally sufficient to support the jury’s finding of
partial performance.
The Plank Parties asserted in their motion for JNOV that any alleged oral
agreement is unenforceable under the statute of frauds because Westergren did not
meet his burden to establish the partial-performance exception to the statute of
frauds. Specifically, the Plank Parties argued that the evidence conclusively shows
Westergren had another reason to release his interest in the 190 acres and the Plank
Parties had another reason to pay Westergren, such that there was no evidence their
conduct was “unequivocally referable” to the alleged oral agreement. The Plank
Parties further argued there was no evidence that enforcement of the statute of
frauds would amount to a “virtual fraud.”
On appeal, Westergren emphasizes that partial performance is a fact
question to be determined by the jury.26 Westergren argues the evidence shows
that he received nothing in the MSA and had no incentive to release his interest
other than Russell Plank’s oral promises. Further, Westergren contends that the
2009, no pet.); Yasuda Fire & Marine Ins. Co. v. Sompo Japan Ins. Co., 225 S.W.3d 894 (Tex.
App.—Houston [14th Dist.] 2007, no pet.); Fisher Controls Int’l, Inc. v. Gibbons, 911 S.W.2d
135 (Tex. App.—Houston [1st Dist.] 1995, writ denied).
26
On appeal, Westergren does not argue that the oral agreement is not subject to the
statute of frauds at all, but rather that the partial-performance exception applies. Thus, for
purposes of our analysis, we presume, without deciding, that the oral agreement would be subject
to the statute of frauds, barring any exception.
29
circumstances surrounding the $500,000 payment, including that the check initially
was described for “Land-Fixed Asset,” are unequivocally referable to Russell
Plank’s oral agreement to pay Westergren $1 million plus 5% profit interest.
Partial performance is an exception to the statute of frauds. Exxon, 82
S.W.3d at 439. Under the partial-performance exception, an agreement that does
not satisfy the statute of frauds but that has been partially performed may be
enforced if denying enforcement would itself amount to a virtual fraud. Id.
Virtual fraud here would mean that because of his reliance on the contract,
Westergren has suffered a substantial detriment for which he has no adequate
remedy, and the Plank Parties would reap an unearned benefit if permitted to
invoke the statute of frauds. See id. However, the acts constituting partial
performance must be “unequivocally referable to the agreement and corroborative
of the fact that a contract actually was made.” Id. “Actions relied on to establish
the partial-performance exception to the statute of frauds must be such as could
have been done with no other design than to fulfill the particular agreement sought
to be enforced; otherwise, they do not tend to prove the existence of the parol
agreement relied on by the plaintiff.” Bookout v. Bookout, 165 S.W.3d 904, 907–
08 (Tex. App.—Texarkana 2005, no pet.) (citing Exxon, 82 S.W.3d at 439). The
party claiming a partial-performance exception to the statute of frauds generally
must secure a jury finding. Id. at 908 (citing Barbouti v. Munden, 866 S.W.2d 288,
295 (Tex. App.—Houston [14th Dist.] 1993, writ denied)). Whether the
performance that has occurred is sufficient to establish the exception is a question
of fact. Id. at 910.
The jury found that Russell Plank agreed to pay Westergren $1 million and a
5% profit interest in the development of the 190 acres. The jury further found
Russell Plank partially performed that agreement.
30
Here, Westergren testified that the only reason he agreed to “walk away”
from the mediation for “nothing” and sign the MSA was because Russell Plank had
promised to make him a partner and pay him $1 million and a 5% profit interest for
releasing his lis pendens and claim to the 190 acres. Russell Plank told Westergren
“not to worry,” that they just needed to “get these guys out of the way” by way of
the mediation and the MSA. Westergren “absolutely” relied on Russell Plank’s
promises in agreeing to and later signing away his lis pendens. Langston
confirmed, “That’s what [Westergren] did in reliance on the representations that
had been made to him,” and that Russell Plank shared these same representations
with Langston. As a result of Westergren’s signing away his lis pendens, the Plank
Parties “got full control” of the 190 acres. NPH (on its own and through a
partnership) was able to purchase the 190 acres, received a $6 million distribution
from ML Realty Partners, and resold 20 acres at a higher price for square foot. If
Westergren successfully had pursued his claim to the 190 acres, he would have
“the right to go out and buy the 190 acres.” After Westergren released his lis
pendens and dismissed his claim, he requested payment on the agreement. Russell
Plank told Westergren to come pick up the first half of his $1 million, a “partial
payment.” Russell Plank did not tell Westergren that he was signing a release
when he received a check for $500,000 but instead told him it was “just a receipt.”
At the time of payment, the check was described in NPH’s accounting as for
“Land-Fixed Asset”; over five months later, this description was changed to
“Consulting Fees.” When Westergren left with the check, Russell Plank joked
with Westergren that he should not spend all the money too quickly just in case
Russell Plank was not “able to give [Westergren] the other half.” Russell Plank
testified that it was he who convinced Michael Plank to pay the $500,000 to
Westergren: “I talked Mike into paying Gordon a half a million dollars.” Michael
Plank in “no way” wanted to pay any money to Westergren because Westergren
31
did not do “any work” or “anything” to merit being paid. Johnson testified that
neither of the Planks ever told him that Westergren was a “consultant,” and ML
Realty Partners’ CEO did not include Westergren on the list of individuals
involved “on the NPH side.”
a. Whether Russell Plank’s actions are “unequivocally referable” to
his contract with Westergren
Considering the evidence in the light most favorable to the jury’s partial-
performance finding, we conclude that Westergren raised a fact issue on whether
Russell Plank’s actions were unequivocally referable to their oral agreement. The
fact that the $500,000 check was drawn on NPH’s bank account is not dispositive
because there was clear evidence it was Russell Plank who “pushed” his brother to
“try to get [Westergren] paid.” See Bookout, 165 S.W.3d at 911 (concluding
sufficient evidence supported partial performance despite source of check
payments at issue).27 Russell Plank succeeded in his efforts; Michael Plank finally
agreed to pay Westergren.
In addition, that NPH’s accounting notation on the check later was changed
from “Land-Fixed Asset” to “Consulting Fees” does not necessarily mean Russell
Plank’s conduct in connection with the payment is equally referable to some other
contractual arrangement with Westergren. See id. (explaining that jury was free to
conclude that check payments at issue were evidence of partial performance on
contract to purchase chiropractic clinic “notwithstanding the way in which they
were marked”). Instead, the evidence indicates NPH did not believe it had any
agreement to pay anything to Westergren, for consulting or his “time and effort
27
Duncan v. F-Star Management, L.L.C., relied on by the dissent, is distinguishable.
There, neither the sender nor the recipient of the checks at issue was a party to the alleged
commission agreements. 281 S.W.3d 474, 482 (Tex. App.—El Paso 2008, pet. denied). Here,
Westergren was the check recipient and a party to the alleged oral agreement with Russell Plank.
In addition, Russell Plank both approved the payment to Westergren and co-signed the check.
32
related to the [190 acres].” The October 2005 draft profits interest agreement,
presented to Westergren by Russell Plank, that mentioned Westergren’s providing
consulting services for NPH was never signed. Nor did NPH consider Westergren
its consultant. Russell Plank indicated Michael Plank was “adamant” Westergren
not be paid because “[h]e didn’t understand why we had to pay Gordon anything.”
And Michael Plank specifically admitted “we never had a contract with
[Westergren] for anything.”28
Nor can we view the $500,000 check in isolation. Westergren testified that
Russell Plank told him this payment represented only the first half of the “cool
million” and joked that Westergren should not spend it all at once in case Russell
Plank was unable to “give [him] the other half.” And we already have concluded
that Westergren presented more than a scintilla of evidence to support his
fraudulent-inducement defense to the Release with regard to Russell Plank. Thus,
we reject the argument that the $500,000 payment was equally referable to the
Release or to any alleged arrangement with NPH.
b. Whether Westergren’s actions are “unequivocally referable” to
his contract with Russell Plank
To the extent the Plank Parties also argued that Westergren’s actions were
not “unequivocally referable” to his contract with Russell Plank, we also conclude
Westergren raised a fact issue as to whether his own actions were unequivocally
referable to their oral agreement. There is direct testimony from Westergren and
28
Thus, Resendez v. Maloney, relied on by the Plank Parties, is distinguishable. No. 01-
08-00954-CV, 2010 WL 5395674 (Tex. App.—Houston [1st Dist.] Dec. 30, 2010, pet. denied)
(mem. op.). There, the two companies with which the plaintiff alleged he had a ten-year contract
admitted that they worked with the plaintiff on an event-by-event basis; thus, the parties’ actions
were “equally referable” to such arrangement. Id. at *8. Likewise, that Michael Plank and NPH
disclaimed any contractual arrangement with Westergren and that Westergren never admitted
performing any consulting services for the Plank Parties distinguishes the additional cases
discussed by the dissent.
33
Langston that Russell Plank’s representations induced Westergren to sign the
MSA. While the MSA contained a merger clause, we already have determined that
no merger occurred as to Russell Plank individually. And the MSA’s reliance
disclaimer would not apply to any representations by Russell Plank individually. 29
The evidence thus raised a fact issue as to whether Westergren fully performed on
his promise to Russell Plank individually by releasing his lis pendens and claim to
the 190 acres.
c. Whether permitting Russell Plank to escape liability would amount
to a “virtual fraud”
We also conclude that Westergren raised a fact issue on whether the failure
to enforce the oral agreement would result in a “virtual fraud.” Westergren and his
attorney both testified that Westergren acted in reliance on the contract with
Russell Plank to his substantial detriment, giving up his right to otherwise purchase
and develop the 190 acres, a site that had attracted several real estate developers.
There is also evidence that Russell Plank would reap an unearned benefit if
permitted to plead the statute of frauds. Essentially, NPH was able to purchase the
entire 190 acres—receiving a $6 million distribution from ML Realty Partners, and
selling a 20-acre parcel for over two and half times its purchase price. As paid
consultant for NPH, Russell Plank clearly stood to benefit from this “massive”
project.
d. Here, the jury was free to determine whether the partial-
performance exception applied.
Based on our review of the evidence in the light most favorable to the jury’s
findings, we conclude more than a scintilla of evidence exists to support that the
parties’ performance here sufficiently established the partial-performance
29
“No representations warranties or inducements have been made to any party by any
other party concerning this Agreement . . . .” (Emphasis added).
34
exception to the statute of frauds. See Tanner, 289 S.W.3d at 830. Therefore, a
reasonable and fair-minded jury was free to answer “yes” with regard to Russell
Plank on the partial-performance question. See City of Keller, 168 S.W.3d at 823,
827. Thus, this ground does not provide a basis for affirming the trial court’s
granting JNOV on breach of contract. See Sbrusch, 818 S.W.2d at 394.
7. The evidence is legally sufficient to support the jury’s damages
finding on breach of contract.
As discussed supra in Section IV.A.1, the Plank Parties urged in their JNOV
motion that because there is no legally sufficient evidence of partial performance,
all of the jury’s damages findings fail. The Plank Parties did not argue
specifically, until after the trial court entered its judgment, that even if the partial-
performance exception applied, Westergren would not be entitled to any damages
based on a benefit-of-the-bargain measure. Therefore, we concluded that
Westergren did not waive his JNOV complaint by failing to address this particular
issue on appeal.
Even assuming the Plank Parties fairly had presented this issue, we conclude
that the jury properly could award Westergren damages on his breach-of-contract
claim. True, in Exxon, the court concluded in dicta that even if successful in
removing the oral agreement at issue from the statute of frauds because of partial
performance, the plaintiff only would be entitled to reliance damages. 82 S.W.3d
at 441. But this conclusion is suspect because the Exxon court simply extended,
without any analysis, the rule that a party may only recover reliance damages in
cases involving application of the promissory-estoppel exception to the statute of
frauds. See id.30 Moreover, Exxon is not on point because there was no evidence
30
Wheeler v. White, 398 S.W.2d 93 (Tex. 1966), relied on by the Plank Parties in their
appellate brief, directly involved a promissory-estoppel claim.
35
of full performance by the party seeking to enforce the agreement.
Here, not only did Russell Plank partially perform, but also Westergren fully
performed. When there is full performance by one party and partial performance
by the other party, the contract no longer falls under the statute of frauds and may
be enforced in law (and not simply as a matter of equity). Thus, Westergren can
obtain his benefit-of-the-bargain damages. See Davis v. Insurtek, Inc., No. 05-09-
01029-CV, 2010 WL 5395668, at *4 n.3 (Tex. App.—Dallas Dec. 30, 2010, no
pet.) (mem. op.) (noting fundamental difference between principles of full and part
performance, and that full performance by one party takes case out of statute of
frauds entirely). When one party fully performs a contract, the statute-of-frauds
defense is unavailable to the second party if he knowingly accepts the benefits and
partially performs. Sheffield v. Gibson, 14-06-00483-CV, 2008 WL 190049, at *2
(Tex. App.—Houston [14th Dist.] Jan. 22, 2008, no pet.) (mem. op); Parks v.
Landfill Mktg. Consultants, Inc., No. 14-02-01243-CV, 2004 WL 1351545, at *5
(Tex. App.—Houston [14th Dist.] June 17, 2004, pet. denied) (mem. op.); see also
Machann v Machann, 269 S.W.2d 826, 828 (Tex. Civ. App.—Waco 1954, writ
ref’d n.r.e.) (“Where a contract is executed on one side and nothing remains but the
payment of the consideration, this may be recovered notwithstanding the Statute of
Frauds.”). Because Westergren fully performed, the only thing left was for him to
be paid the agreed-upon consideration—in other words, for him to receive the
remainder of his benefit of the bargain, just as Russell Plank already had.31
31
Many of our treatises on contracts and the statute of frauds note this essential
distinction. See, e.g., RESTATEMENT (FIRST) OF CONTRACTS § 219 (1932) (full performance has
the same effect as if statute of frauds had been satisfied); 37 C.J.S. Statute of Frauds § 190
(2010) (party who has completely performed can sue under law for benefit of the bargain); 41
TEX. JUR. 3D Statute of Frauds § 115 (2012) (part performance is ordinarily regarded as a strictly
equitable doctrine, available in equity courts only, whereas complete performance by one party is
frequently regarded as taking the contract out of the statute, even in an action at law); 41 TEX.
JUR. 3D Statute of Frauds § 117 (2012) (when one party has fully performed and other party
36
The jury found damages in favor of Westergren on his breach-of-contract
claim against Russell Plank in the amount of $500,000—“[t]he difference, if any,
between the amount Gordon Westergren received from the Defendants and the
amount he would have received if the Defendants had paid him the agreed[-]upon
amount.” We already have concluded there is legally sufficient evidence from
which a reasonable jury could have found that Russell Plank partially and
Westergren fully performed their respective ends of the agreement. Russell
Plank’s partial performance related to paying the first half of the $1 million due
Westergren, and Westergren testified that he was still owed the other $500,000, as
well as a 5% profit interest in the development of the 190 acres. Viewing the
evidence in the light most favorable to the jury’s damages finding, we thus
conclude that more than a scintilla of evidence exists to support a reasonable and
fair-minded jury’s award of $500,000 in contract damages. See Tanner, 289
S.W.3d at 830; City of Keller, 168 S.W.3d at 823, 827. Thus, even if fairly
presented, this ground does not provide a basis for affirming the trial court’s
granting JNOV on breach of contract. See Sbrusch, 818 S.W.2d at 394.
8. The evidence does not conclusively establish the Plank Parties’
affirmative defenses to Westergren’s contract claim.
When a movant for JNOV challenges an adverse finding on an affirmative
defense, it must conclusively establish all vital facts in support of that defense.
Mosqueda v. G & H Diversified Mfg., Inc., 223 S.W.3d 571, 576 (Tex. App.—
Houston [14th Dist.] 2007, pet. denied) (citing Dow Chem. Co. v. Francis, 46
S.W.3d 237, 241 (Tex. 2001)). The Plank Parties argued in their motion for JNOV
the trial court should disregard the jury’s finding that Russell Plank’s failure to
comply was not excused “because the evidence conclusively established the
partially has performed, the fully performing party is entitled to full consideration under
contract).
37
affirmative defenses of waiver, prior material breach, and quasi-estoppel.” On
appeal, Westergren complains that the Plank Parties did not support this issue with
any record or case citations, and thus did not meet their burden of proof.
The jury found that Russell Plank’s failure to comply was not excused by
waiver, prior material breach, or quasi-estoppel. With regard to waiver, we already
have concluded that the evidence presents at least a fact issue as to whether
Westergren released any claims against Russell Plank in the MSA and the Release.
See supra Section IV.A.3. Thus, even if the Plank Parties had pointed to specific
evidence in support, it would not conclusively establish all vital facts for this
defense. See Dow Chem., 46 S.W.3d at 241–42. With regard to prior material
breach, the only arguable bases for any such breach by Westergren would be the
MSA and the Release, so again the Plank Parties could not have met their burden.
And finally, the only arguable bases for a quasi-estoppel defense also relate to
Westergren’s position taken in the MSA or the Release. Therefore, because the
Plank Parties have the burden of proof on their affirmative defenses, and because
they failed to prove they were entitled to them as a matter of law, we conclude that
we cannot sustain JNOV on this ground. See Sbrusch, 818 S.W.2d at 394.
9. The evidence is legally sufficient to support the existence of an
agreement between Westergren and Russell Plank, that Russell
Plank failed to comply with that agreement, and that Westergren
suffered damages of $500,000 as a result.
We already have addressed most aspects of this ground elsewhere. In sum,
Westergren and Langston both testified regarding Russell Plank’s promise to pay
Westergren $1 million and a profit interest (ultimately set at 5%) in the
development of the 190 acres. There is no dispute that Westergren only received a
check in the amount of $500,000, and Russell Plank did not pay Westergren
anything beyond the $500,000. Thus, viewing the evidence in the light most
38
favorable to the jury’s findings, and indulging every reasonable inference to
support them, we conclude that more than a scintilla of evidence exists to support
the findings that an agreement existed, that Russell Plank breached it, and that
Westergren suffered damages of $500,000. See Tanner, 289 S.W.3d at 830; City
of Keller, 168 S.W.3d at 823, 827. Having concluded that we cannot uphold the
trial court’s judgment on any of the grounds asserted in the Plank Parties’ motion
for JNOV with regard to breach of contract, we conclude that Westergren has met
his burden to show error and we sustain his first issue. See Sbrusch, 818 S.W.2d at
394. Thus, we reverse the trial court’s judgment as it pertains to—and we
reinstate—the jury’s findings related to Westergren’s breach-of-contract claim on
questions 1, 2, 4, and 5, and partially reinstate the jury’s findings on questions 3
and 14 only with regard to Russell Plank.
10.We must remand for a new trial on Westergren’s attorney’s fees.
Having concluded that Westergren is entitled to reversal and reinstatement
of the jury’s findings related to his contract claim, we consider whether we also
can reinstate the jury’s award of $200,000 for attorney’s fees for trial, and
contingent fees of $25,000 for this appeal and $20,000 for a petition of review to
the Texas Supreme Court.32 The Plank Parties in their motion for JNOV argued
that the jury’s attorney’s fee award was improper because no evidence supported
the specific amount awarded and because Westergren’s counsel admitted that he
did not segregate fees among contract and tort claims. On appeal, Westergren
contends that the amount awarded is within the range supported by the evidence
and that segregation is not required where services are rendered in connection with
claims arising out of the same transaction and are so interrelated that prosecuting
and defending them entail the same facts. Setting aside the propriety of the
32
See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001 (West 2011).
39
specific amount awarded, we conclude Westergren has not met his burden to
demonstrate that fee segregation is not required.
Generally, a party seeking attorney’s fees must segregate fees incurred in
connection with a claim that allows their recovery from fees incurred in connection
with claims for which no such recovery is allowed. CA Partners v. Spears, 274
S.W.3d 51, 81 (Tex. App.—Houston [14th Dist.] 2008, pet. denied). Texas courts
recognize an exception to this general rule. Id. (citing Tony Gullo Motors I, L.P. v.
Chapa, 212 S.W.3d 299, 311 (Tex. 2006)). When discrete legal services advance
both recoverable and unrecoverable claims, attorneys are not required to segregate
fees to recover the total amount covering all claims. Id. (citing Chapa, 212 S.W.3d
at 313). In this situation, the claims are said to be “intertwined,” and the mere fact
that attorney’s fees are incurred in advancing both recoverable and unrecoverable
claims does not render those fees unrecoverable. Id. (citing Chapa, 212 S.W.3d at
313–14). But if any attorney’s fees relate solely to a claim for which fees are
unrecoverable, a claimant must segregate recoverable from unrecoverable fees. Id.
at 82 (citing Chapa, 212 S.W.3d at 313). “[T]he evidence of the amount of
recoverable attorney’s fees is sufficiently segregated if, for example, the attorney
testifies that a given percentage of the drafting time would have been necessary
even if the claim for which attorney’s fees are not recoverable had not been
asserted.” Id. (citation omitted). The party seeking to recover attorney’s fees
carries the burden of demonstrating that fee segregation is not required. Id.
The only testimony provided by Westergren’s attorney was that he had not
segregated any fees among claims for which fees are recoverable versus
unrecoverable because he did not think it was “necessary.” Notwithstanding
Westergren’s argument that the facts are interrelated, the Texas Supreme Court
expressly has held “[i]ntertwined facts do not make tort fees recoverable.” Id. at
40
83 (quoting Chapa, 212 S.W.3d at 313). Instead, the focus is whether the legal
work performed pertains solely to claims for which attorney’s fees are
unrecoverable. Id. (citing 7979 Airport Garage, L.L.C. v. Dollar Rent A Car Sys.,
Inc., 245 S.W.3d 488, 509 (Tex. App.—Houston [14th Dist.] 2007, pet. denied)).
This does not mean examining the work product as a whole, but rather parsing it
into component tasks. Id. (citing 7979 Airport Garage, 245 S.W.3d at 509).
While Westergren’s contract and tort claims may have involved developing
some of the same facts and presenting some of the same evidence, Westergren has
failed to present evidence that his partnership and fraud claims did not require any
solely separate drafting, legal research, or discovery. See id. at 84. Therefore,
Westergren has failed to demonstrate that segregation of fees is not required.
However, Westergren did not forfeit his right to recover attorney’s fees by failing
to segregate them, and “[t]he evidence he presented regarding the total amount of
attorney’s fees he incurred is some evidence of what the segregated amount should
be.” See id. Therefore, we reverse that portion of the trial court’s judgment
disregarding the jury’s finding on Westergren’s attorney’s fees, and remand for a
new trial on attorney’s fees. See id. at 81, 84 (citing A.G. Edwards & Sons, Inc. v.
Beyer, 235 S.W.3d 704, 710 (Tex. 2007)).
B. Whether the trial court erred in disregarding the jury’s partnership
and fraud findings
In issues two and three, Westergren argues that the trial court erred in
disregarding the jury’s findings in his favor on his partnership and affirmative
fraud claims. With regard to Westergren’s partnership claims, the jury awarded
him $177,608, or “[t]he difference, if any, between the amount Gordon Westergren
received from the Defendants and the amount he would have received if the
Defendants had paid him the agreed[-]upon amount.” With regard to Westergren’s
41
fraud-by-misrepresentation and statutory fraud claims, the jury awarded him zero
dollars, or “[t]he difference, if any, between the amount Gordon Westergren
received from the Defendants and the amount he would have received if the
Defendants had paid him the agreed[-]upon amount.” In the contract damages
question, the jury awarded Westergren $500,000 as “[t]he difference, if any,
between the amount Gordon Westergren received from the Defendants and the
amount he would have received if the Defendants had paid him the agreed[-]upon
amount.” Thus, for each of his theories of liability, Westergren alleged, and the
jury was asked the same measure of damages for, a single financial injury—the
remaining benefit of the bargain due to him.
Under the one-satisfaction rule, a claimant is entitled to only one recovery
for any damages suffered. Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390
(Tex. 2000) (citing Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex.
1991)). The rule applies when different parties commit the same act or when
different acts cause the same injury. Id. “‘There can be but one recovery for one
injury, and the fact that . . . there may be more than one theory of liability[ ] does
not modify this rule.’” Chapa, 212 S.W.3d at 303 (quoting Stewart Title Guar.
Co., 822 S.W.2d at 8)). When a party tries a case on alternative theories of
recovery and a jury returns favorable findings on two or more theories, we should
render judgment on the finding affording the greatest recovery. Birchfield v.
Texarkana Mem’l Hosp., 747 S.W.2d 361, 367 (Tex. 1987); Murphy v. Seabarge,
Ltd., 868 S.W.2d 929, 938 (Tex. App.—Houston [14th Dist.] 1994, writ denied).
This rule applies in the context of submission of overlapping contract and tort
claims. Cottman Transmission Sys., L.L.C. v. FVLR Enters., L.L.C., 295 S.W.3d
372, 379 (Tex. App.—Dallas 2009, pet. denied).
In this case, the jury was asked the same measure of damages on each of
42
Westergren’s theories of liability and awarded him the greatest recovery for his
contract cause of action.33 Because we reverse and reinstate the jury’s findings
regarding the contract claim, we need not address Westergren’s issues regarding
the tort claims. See id. (applying one-satisfaction rule where plaintiff was awarded
actual damages on contract claim, and same damages for fraud, negligent-
misrepresentation, and promissory-estoppel claims).
C. Whether the trial court abused its discretion in denying Westergren
leave to amend his petition
In his fourth issue, Westergren asserts that the trial court abused its
discretion in denying him leave to amend his petition during trial to plead lack of
consideration as an affirmative defense to the MSA. Because we already have
sustained Westergren’s first issue to reinstate the jury’s findings in his favor
regarding his contract claim, we need not address this issue to finally dispose of
this appeal. See TEX. R. APP. P. 47.1.
D. Whether the trial court abused its discretion in its award of costs
Both Westergren and the Plank Parties requested court costs in the trial
court. In its final judgment, the trial court awarded court costs to the Plank Parties.
Rule 131 of the Texas Rules of Civil Procedure provides “[t]he successful
party to a suit shall recover of his adversary all costs incurred therein, except
where otherwise provided.” TEX. R. CIV. P. 131 (emphasis added). A “successful
party” under the rules is one that obtains a judgment vindicating a civil right.
Perez v. Baker Packers, 694 S.W.2d 138, 143 (Tex. App.—Houston [14th Dist.]
33
The trial court refused Westergren’s request to award profits disgorgement. However,
whether in equity to award, and the amount of any, profits disgorgement is within the trial
court’s discretion. See Burrow v. Arce, 997 S.W.2d 229, 237 (Tex. 1999). Thus, Westergren
does not argue that the trial court was required to order disgorgement.
43
1985, writ ref’d n.r.e.). We review a trial court’s allocation of costs for abuse of
discretion. Univ. of Houston–Clear Lake v. Marsh, 981 S.W.2d 912, 914 (Tex.
App.—Houston [1st Dist.] 1998, no pet.).
Because the trial court’s award of court costs to the Plank Parties was likely
predicated on its erroneous granting of JNOV in their favor, and in view of our
rulings,34 because the only proper successful party is Westergren, we conclude that
the trial court abused its discretion in its allocation of costs. Thus, we reverse the
portion of the trial court’s judgment awarding the Plank Parties their court costs
and remand to the trial court to impose costs consistent with this opinion. 35 See
Jordan v. Bustamante, 158 S.W.3d 29, 43-44 (Tex. App.—Houston [14th Dist.]
2005, pet. denied) (reversing and remanding to trial court for reallocation of costs
where party was successful on appeal).
E. Whether the evidence is legally and factually sufficient to support the
jury’s failure to find that Westergren breached the MSA or the
Release
In the two issues presented in their cross-appeal, the Plank Parties assert that
the evidence is legally insufficient or, in the alternative, factually insufficient to
support the jury’s failure to find that Westergren breached the MSA or the Release.
The Plank Parties argue the evidence conclusively establishes that Westergren
breached each of these contracts by filing this lawsuit against the Plank Parties,
resulting in $729,487.54 in damages ($704,961.10 in reasonable attorney’s fees
and $24,526.44 in costs and expenses incurred by the Plank Parties in defending
this lawsuit). For the purposes of our analysis, we presume, without deciding, that
at least one claim asserted by Westergren in this lawsuit is within the scope of the
MSA and the Release. Notwithstanding our conclusion that the evidence is legally
34
See supra Section IV.A and infra Section IV.E.
35
Westergren submitted to the trial court a bill of costs in the amount of $12,284.78.
44
sufficient to support the jury’s finding that Russell Plank’s failure to comply with
the oral agreement was not excused, and the jury’s finding that Russell Plank
committed fraud by omission to support Westergren’s fraudulent-inducement
defense to the Release, we also presume, solely for purposes of our analysis, that
the MSA and the Release are each binding and enforceable against Westergren.
The analysis of these cross-issues requires us to interpret the MSA and the
Release to determine if either contract imposes an obligation on Westergren not to
file suit on any of the claims released by Westergren. Both the MSA and the
Release contain release provisions. Releases are subject to the usual rules of
contract construction. Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 848 (Tex.
App.—Houston [14th Dist.] 2001, pet. denied) (op. on reh’g). In construing
contracts, our primary concern is to ascertain and give effect to the intentions of
the parties as expressed in the contract. Nat’l Union Fire Ins. Co. of Pittsburgh,
Pa. v. Ins. Co. of N. Am., 955 S.W.2d 120, 127 (Tex. App.—Houston [14th Dist.]
1997), aff’d sub nom., Keck, Mahin & Cate v. Nat’l Union Fire Ins. Co. of
Pittsburgh, Pa., 20 S.W.3d 692 (Tex. 2000). To ascertain the parties’ true
intentions, we examine the entire agreement in an effort to harmonize and give
effect to all provisions of the contract so that none will be rendered meaningless.
MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 652 (Tex. 1999).
Whether a contract is ambiguous is a question of law for the court. Heritage Res.,
Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). When a written contract is
worded so that it can be given a certain or definite legal meaning or interpretation,
it is unambiguous, and the court construes it as a matter of law. Nat’l Union Fire
Ins. Co., 955 S.W.2d at 128. We cannot rewrite the contract or add to its language
under the guise of interpretation. See Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124
S.W.3d 154, 162 (Tex. 2003).
45
Under the MSA, Westergren agrees to “release” and “discharge” the claims
in question and to release any notice of lis pendens that he has filed against the 190
acres. Under the Release, Westergren “does hereby fully and unconditionally
release and forever relinquish” various rights, titles, and interests, and Westergren
also “does hereby fully and unconditionally remise, release and forever discharge”
various claims. Neither of these contracts contains any language in which
Westergren indemnifies, holds harmless, protects, or defends any of the Plank
Parties. These contracts do not contain any language in which the parties agree
that any of the released parties may recover their attorney’s fees and defense costs
against Westergren if he files suit based upon any of the released claims. Nor do
these contracts contain any language in which Westergren expressly agrees,
promises, or covenants that he will not file suit based upon any of the released
claims. See Watson v. Houston Indep. Sch. Dist., No. 14-03-01202-CV, 2005 WL
1869064, at *4 (Tex. App.—Houston [14th Dist.] Aug. 9, 2005, no pet.) (mem.
op.) (concluding that “nothing in the contract represents a clear, express waiver of
[plaintiff’s] right to sue [defendant] for alleged violations of the law”).
The Plank Parties do not assert that either contract contains such language.
Instead, the Plank Parties argue that a release constitutes a promise not to bring a
lawsuit based upon the released claims. The Plank Parties essentially argue that,
by agreeing to release and discharge certain claims, a party necessarily and
implicitly agrees that he will not file suit based upon any of the released claims.
Under this proffered construction, the plain meaning of the release language in the
MSA and the Release would include a promise not to file suit based upon any of
the released claims. We conclude that this construction is not a valid one.
A release of claims operates to discharge the released parties from these
claims and to extinguish these claims against the released parties as effectively as
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would a prior judgment between the parties. See El Paso Natural Gas Co. v.
Minco Oil & Gas, Inc., 8 S.W.3d 309, 314 n.15 (Tex. 1999); Dresser Indus. v.
Page Petroleum, 853 S.W.2d 505, 508 (Tex. 1993); Lehmann v. Har-Con Corp.,
76 S.W.3d 555, 565 (Tex. App.—Houston [14th Dist.] 2002, no pet.). Therefore, a
release of a claim is an absolute bar to any right of action by the releasing party on
the claim, and a release is an affirmative defense in a lawsuit in which the releasing
party asserts a released claim. See Dresser Indus., 853 S.W.2d at 508; Lehmann,
76 S.W.3d at 565. On the other hand, an indemnity is a promise to safeguard or
hold harmless the indemnitee against either existing or future liability. See Dresser
Indus., 853 S.W.2d at 508; Lehmann, 76 S.W.3d at 565. Unlike a release, which
discharges a released claim, an indemnity creates a potential cause of action in the
indemnitee against the indemnitor. See Dresser Indus., 853 S.W.2d at 508;
Lehmann, 76 S.W.3d at 565.
Thus, the release language contained in the MSA and the Release provides
the released parties with an affirmative defense that bars any claims by the
releasing parties on these claims, but this language does not give the released
parties a breach-of-contract claim for damages resulting from a releasing party’s
suit against the released parties on these claims. See Dresser Indus., 853 S.W.2d at
508; Lehmann, 76 S.W.3d at 565.36 The released parties only would have such a
claim if the contract in question also contained language in which the releasing
parties agreed not to file suit based upon any of the released claims. See, e.g.,
Coterill-Jenkins v. Tex. Med. Ass’n Health Care Liab. Claim Trust, 383 S.W.3d
36
See also McMahan v. Toto, 256 F.3d 1120, 1124–25 & n.3 (11th Cir. 2001) (noting
prior holding of New York intermediate court of appeals that release language in contract did not
constitute a promise by the releasing party not to file suit based upon any of the released claims);
McMahan & Co. v. Bass, 673 N.Y.S.2d 19, 20–21 (N.Y. App. Div. 1998) (concluding release
language in contract did not constitute a promise by the releasing party not to file suit based upon
any of the released claims and that such a promise would not exist absent express language in
contract establishing such a promise).
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581, 590 n.5 (Tex. App.—Houston [14th Dist.] 2012, pet. denied) (involving exit
letter where both parties agreed to “release” claims and “covenant to not sue the
other” on such released claims); Thompson v. Kerr, No. 14-08-00978-CV, 2010
WL 2361636, at *2–3 (Tex. App.—Houston [14th Dist.] June 15, 2010, no pet.)
(mem. op.) (involving settlement agreement in which releasing parties also
promised not to file suit against released parties based upon any released claim).
But, as noted, neither the MSA nor the Release contains such language.
The Plank Parties rely upon Ganske v. WRS Group, Inc. See No. 10-06-
00050-CV, 2007 WL 1147357, at *2–4 (Tex. App.—Waco Apr. 18, 2007, no pet.)
(mem. op.). Though the Ganske court reversed a summary judgment dismissing a
claim for breach of a settlement agreement against a releasing party who filed suit
on released claims, the court did not analyze or discuss the language of the
settlement agreement giving rise to the releasing party’s obligation not to file suit
on these claims. See id. Ganske thus does not support the proposition that release
language in a settlement agreement includes a promise not to file suit based upon
any of the released claims. See id.
The Plank Parties also rely upon P&S Corp. v. Park. See No. 14-05-00115-
CV, 2006 WL 1168804, at *7 (Tex. App.—Houston [14th Dist.] May 4, 2006, no
pet.) (mem. op.). In this case, we did not address whether any release language in
a settlement agreement includes a promise not to file suit based upon any of the
released claims. See id. In addition, the settlement agreement in that case did not
contain release language, but instead contained an express promise not to sue. See
id. at *3. P&S Corp. is thus not on point.
We conclude that, as to the issue of whether Westergren promised not to file
suit based upon any of the released claims, the MSA and Release are unambiguous.
Under the plain meaning of these contracts, Westergren released certain claims but
48
did not promise to refrain from filing suit based upon any of the released claims.
See Dresser Indus., 853 S.W.2d at 508; Lehmann, 76 S.W.3d at 565. Considering
the evidence in the light most favorable to the challenged findings, indulging every
reasonable inference that would support them, crediting favorable evidence if
reasonable jurors could, and disregarding contrary evidence unless reasonable
jurors could not, the evidence would enable a reasonable and fair-minded jury to
conclude that Westergren did not breach the MSA or the Release. See City of
Keller, 168 S.W.3d at 823, 827; Yeh v. David J. MacDougall, D.O., P.A., No. 01-
06-00509-CV, 2008 WL 183712, at *3–4 (Tex. App.—Houston [1st Dist.] Jan. 17,
2008, no pet.) (mem. op.) (concluding evidence was legally sufficient to support
jury’s failure to find contract breach). Therefore, the evidence is legally sufficient
to support the jury’s failure to find that Westergren breached either contract.
In addition, the evidence is factually sufficient. Examining the entire record,
considering both the evidence in favor of, and contrary to, the challenged finding,
and considering and weighing all the evidence, we conclude the jury’s finding that
Westergren did not breach the MSA or the Release was not so contrary to the
overwhelming weight of the evidence as to be clearly wrong and manifestly unjust.
See Jackson, 116 S.W.3d at 761; Yeh, 2008 WL 183712, at *5 (concluding
evidence was factually sufficient to support jury’s failure to find contract breach).
Accordingly, we overrule the Plank Parties’ first and second cross-issues.
In a conditional cross-issue, the Plank Parties assert that if this court reverses
the JNOV and enters judgment for Westergren, any recovery must be limited to
$200,000 pursuant to the “Agreement to Limit Third-Party Defendants Indemnity
Exposure,” entered into by Westergren and various other parties (the “Frontier
Parties”). However, the Plank Parties concede that this cap only applies if the
Frontier Parties are required to indemnify the Plank Parties for Westergren’s
49
claims in this case pursuant to a settlement agreement and release, entered into
between the Plank Parties and the Frontier Parties. In a separate appeal, this court
has concluded that, as a matter of law, Westergren’s claims do not fall within the
scope of the settlement agreement and release. Frontier Logistics, L.P. v. Nat’l
Prop. Holdings, L.P., —S.W.3d—, No. 14-11-00357-CV, 2013 WL 1683603, at
*6 (Tex. App.—Houston [14th Dist.] Apr. 18, 2013, no pet. h.). Thus, we also
overrule the Plank Parties’ conditional cross-issue.
V. CONCLUSION
As to the Plank Parties’ motion to disregard jury findings regarding the
breach-of-contract claim, Westergren has shown that each independent ground of
the motion fails to provide a basis for affirming the trial court’s judgment. Thus,
we reverse the trial court’s judgment with regard to, and reinstate in their entirety,
the jury’s findings on questions 1, 2, 4, and 5, and partially reinstate the jury’s
findings on questions 3 and 14 only with regard to Russell Plank. As a result, we
also reverse the trial court’s judgment disregarding the jury’s finding on question
26 as to Westergren’s attorney’s fees; however, because we conclude that
Westergren failed to demonstrate that segregation of his awarded attorney’s fees
was not required, we remand for a new trial on Westergren’s attorney’s fees.
Because Westergren is the only successful party, we also reverse the trial court’s
judgment with regard to its allocation of court costs and remand for reallocation.
Finally, because Westergren achieved the greatest recovery for his contract claim,
we otherwise affirm the trial court’s judgment with regard to Westergren’s
partnership and fraud claims.
Under the plain meaning of the language in the MSA and the Release,
Westergren did not promise to refrain from filing suit based on any of the allegedly
released claims. Therefore, the record evidence is legally and factually sufficient
50
to support the jury’s findings that Westergren did not breach any contract, and we
affirm that portion of the trial court’s judgment that the Plank Parties take nothing
on their counterclaims. Accordingly, the trial court’s judgment is affirmed in part
and reversed in part, and we remand for limited proceedings consistent with this
opinion.
/s/ Tracy Christopher
Justice
Panel consists of Justices Frost, Christopher, and McCally. (Frost, J., dissenting).
51