Gonzalez v. Denning

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
December 20, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk

No. 04-50360
Summary Calendar

OSCAR C. GONZALEZ,

Plaintiff-Appellant,

versus

LEON DENNING,
SHARON DENNING,
and JOHN J. MULDOON, III,

Defendants-Appellees.

______________________

Appeal from the United States District Court
for the Western District of Texas
______________________

Before JOLLY, HIGGINBOTHAM, and BARKSDALE, Circuit Judges.

PER CURIAM:

I.

Sometime before 2002, Leon and Sharon Denning deposited just

over $3.4 million with Euro Bank Corporation in the Cayman Islands.

Sometime thereafter, the government of the Cayman Islands froze the

Dennings’ bank account based on the belief that certain accounts at

Euro Bank contained proceeds of criminal conduct. The Dennings

promptly hired the Walkers Law Firm in the Cayman Islands to

represent them and their company, Behest Corporation, in their

attempt to recover the frozen funds.
 Walkers filed a proof of debt which was rejected, and

initiated an appeal in June, 2002. Walkers was then informed that

criminal proceedings had been filed against the officers of Euro

Bank, and that these proceedings could delay the return of the

Dennings’ money by up to two years.

While these proceedings were underway, the Dennings filed suit

against John Mathewson, the president of Euro Bank, alleging fraud,

breach of contract, and breach of fiduciary duty. Believing the

suit to be frivolous, Mathewson filed a motion to dismiss the suit

and a motion for sanctions. During depositions, Mathewson’s

lawyer, Oscar Gonzalez, proposed to the Dennings’ lawyer, John

Muldoon, a settlement whereby the parties would drop their claims

against each other, and Mathewson would use his “significant”

contacts in the Cayman Islands to secure the release of the

Dennings’ money.

During the discovery process, Leon Denning pleaded guilty to

tax evasion, and was advised to make full restitution of back

taxes, interest, and penalties in order to avoid incarceration. In

order to make these payments, Denning needed access to his frozen

funds. In an effort to expedite the return of this money, the

Dennings and Muldoon entered into a “Consultation and Fee

Agreement” with Gonzalez providing that he would “attempt to obtain

whatever monies Leon and/or Sharon Denning are entitled to

receive,” and that in exchange he would “receive Fourteen Percent

(14%) of any monies recovered.” Gonzalez stated his opinion that

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recovery efforts would take roughly sixty days to complete.

Following the execution of this agreement on September 24,

2002, Gonzalez began writing letters to the Euro Bank receivers and

various government officials in the Cayman Islands, only to be told

that no disbursements would be made until legal proceedings were

complete. While Gonzalez was engaged in these efforts, Walkers

continued pursuing the proof of debt action on appeal. In early

2003, the criminal charges against the Euro Bank officials were

unexpectedly dismissed. When it became apparent that their funds

would be released by summer 2003, the Dennings wrote to Gonzalez on

March 23, 2003, stating that “the deadline for our agreement has

come and gone without the return of any funds.” The Dennings

informed Gonzalez that if they did not receive the total funds

deposited with Euro Bank by March 31, 2003, their agreement with

Gonzalez would terminate. Gonzalez failed to obtain the funds by

this date; however, the Dennings’ have since recovered their funds

through the judicial process initiated by Walkers.

Gonzalez filed his original petition in the 224th District

Court of Bexar County, Texas, alleging that he had fully performed

his obligations under the contract and asserting a claim for

damages against the Dennings and Muldoon for breach of contract and

anticipatory breach of contract. The defendants removed the case

to Federal District Court for the Western District of Texas. After

denying Gonzalez’s motion for summary judgment, the court entered

summary judgment in favor of the Dennings on grounds that (1)

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Gonzalez could not establish damages because he had failed to

recover the Dennings’ money, and (2) Gonzalez failed to recover the

Dennings’ money within a reasonable time. The Gonzalez now brings

this appeal from the district court’s judgment.

II.

“We review legal determinations in a district court’s decision

to grant summary judgment de novo, applying the same legal

standards as the district court to determine whether summary

judgment was appropriate.”1 The district court properly grants a

motion for summary judgment when, “viewing the evidence in the

light most favorable to the nonmoving party, the record indicates

that there is ‘no genuine issue of material fact and that the

moving party is entitled to judgment as a matter of law.’”2

Contract interpretation is a purely legal issue; accordingly,

we review the district court’s interpretation of a contract de

novo.3 As this is a diversity case, we interpret the contract at

issue under Texas law. “In the context of contract interpretation,

only when there is a choice of reasonable interpretations of the

contract is there a material fact issue concerning the parties’

1
See Foster Wheeler Energy Corp. v. An Ning Jiang MV, 383 F.3d 349, 354
(5th Cir. 2004); Travelers Ins. Co. v. Liljeberg Enters., 7 F.3d 1203, 1206 (5th
Cir. 1993).
2
Am. Int’l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 260
(5th Cir. 2003) (quoting FED. R. CIV. P. 56(c)).
3
Empire Fire & Marine Ins. Co. v. Brantley Trucking, Inc., 220 F.3d 679,
681 (5th Cir. 2000).

4
intent that would preclude summary judgment.”4

Under Texas law, the interpretation of an unambiguous contract

is a question of law for the court to decide by “looking at the

contract as a whole in light of the circumstances present when the

contract was entered.”5 “If a written contract is so worded that

it can be given a definite or certain legal meaning, then it is not

ambiguous.”6 If, however, the language of the contract is subject

to two or more reasonable interpretations or meanings, it is

ambiguous.7 “A contract is not ambiguous merely because the

parties to an agreement proffer conflicting interpretations of a

term.”8

Under Texas law, “[t]he primary concern of a court construing

a written contract is to ascertain the true intent of the parties

4
Amoco Prod. Co. v. Texas Meridian Res. Exploration, Inc., 180 F.3d 664,
669 (5th Cir. 1999).
5
Philadelphia Am. Life Ins. Co. v. Turner, 131 S.W.3d 576, 587 (Tex.
App.–Fort Worth 2004, no pet.)(quoting Coker v. Coker, 650 S.W.2d 391, 394 (Tex.
1983)); see Heritage Res. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)
(holding that unambiguous contracts are enforced as written).
6
Nat. Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907
S.W.2d 517, 520 (Tex. 1995).
7
Frost Nat. Bank, 122 S.W.2d at 930 (“[A] contract is ambiguous only when
application of the pertinent rules of interpretation to the face of the
instrument leaves it genuinely uncertain which of two or more meanings is the
proper meaning.”) (citing Universal CIT Credit Corp. v. Daniel, 243 S.W.2d 154,
157 (1951)).
8
Int’l Turbine Servs., Inc. v. VASP Brazilian Airlines, 278 F.3d 494, 497
(5th Cir. 2002) (citing DeWitt County Elec. Co-op, Inc. v. Parks, 1 S.W.3d 96,
100 (Tex. 1999).

5
as expressed in the instrument.”9 “In construing a contract under

Texas law, courts must examine and consider the entire writing and

give effect to all provisions such that none are rendered

meaningless.”10 “The terms used in the [contract] are given their

plain, ordinary meaning unless the [contract] itself shows that the

parties intended the terms to have a different, technical

meaning.”11

In the present case, the agreement between Gonzalez and the

defendants states that Gonzalez would “attempt to obtain whatever

monies Leon Denning and/or Sharon Denning are entitled to receive”

from their Cayman Islands accounts, and that in return, Gonzalez

would receive “[f]ourteen Percent (14%) of any monies recovered.”

Gonzalez argues that this language creates a “best efforts”

contract, entitling him to compensation in return for his use of

best efforts in seeking the return of the Dennings’ money. Under

this interpretation, Gonzalez is entitled to compensation for all

monies recovered, regardless of whether their recovery is linked in

9
Nat. Union Fire Ins. Co. of Pittsburgh, Pa., 907 S.W.2d at 520; see also
Resolution Trust Corp. v. Cramer, 6 F.3d 1102, 1106 (5th Cir. 1993) (In the
interpretation of a contract, “our ultimate goal is to determine the intent of
the parties.”).
10
Int’l Turbine Servs., Inc., 278 F.3d at 497 (citing Coker, 650 S.W.2d at
393); see Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994) (“When
construing a contract, the court’s primary concern is to give effect to the
written expression of the parties’ intent. This court is bound to read all parts
of a contract together to ascertain the agreement of the parties. The contract
must be considered as a whole. Moreover, each part of the contract should be
given effect.”).
11
Am. Nat. Gen. Ins. Co. v. Ryan, 274 F.3d 319, 323 (5th Cir. 2001) (citing
Pucket v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex. 1984)).

6
any way to his efforts, so long as he faithfully used best efforts

in seeking their recovery.

Gonzalez’s proffered interpretation of the agreement as a

“best efforts” contract is incorrect. The words “best efforts”

appear nowhere in the agreement, and the words “will attempt to

obtain” are more indicative of a contingent fee arrangement than a

contract requiring only the use of best efforts.12 In addition, the

agreement set forth no standard or guideline by which Gonzalez’s

performance was to be measured;13 rather, in the fashion of most

contingent fee agreements, his compensation was tied directly to

the amount of money he recovered.14

The classification of the agreement as a contingent fee

contract is further supported by reading the contract as a whole,

12
The cases cited by Gonzalez do not support his interpretation of the
agreement as a best efforts contract. In American Satellite Co. v. United
States, 998 F.2d 950 (Fed. Cir. 1993), the Federal Circuit discusses a contract
under the assumption that it requires best efforts without offering any analysis
as to the characteristics of a best efforts contract. In Sunniland Fruit, Inc.
v. Verni, 284 Cal. Rptr. 824 (Cal. Ct. App. 1991), the California Court of Appeal
interpreted a contract requiring Sunniland to use best efforts to market grapes,
and to obtain the “best” market prices available. Unlike the agreement in
Sunniland, the agreement in this case does not use the word “best” or any other
comparable term.
13
CKB & Associates, Inc. v. Moore McCormack Petroleum, Inc., 809 S.W.2d
577, 581-82 (Tex. App.–Dallas 1991, writ denied) (“Contracting parties ordinarily
use best efforts language when they are uncertain about what can be achieved,
given their limited resources. Nonetheless, to be enforceable, a best efforts
contract must set some kind of goal or guideline against which best efforts may
be measured.”).
14
See TEX. DISCIPLINARY R. PROF’L CONDUCT 1.04(d), reprinted in TEX. GOV’T CODE
ANN., tit. 2, subtit. G, app. A (Vernon 1998) (“A fee may be contingent on the
outcome of the matter for which the service is rendered, except in a matter in
which a contingent fee is prohibited by paragraph (e) or other law. A contingent
fee agreement shall be in writing and shall state the method by which the fee is
to be determined.”).

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giving meaning to each provision in context. The agreement grants

Gonzalez a limited power of attorney to act on the Dennings’ behalf

in recovering their monies. This limited power of attorney

authorizes Gonzalez to deposit all monies received in a bank

account at Frost National Bank in San Antonio in the name of Oscar

Gonzalez and John Muldoon. Significantly, the agreement provides

that “[d]istributions and payments will be made from this account

to [Gonzalez] for the agreed fee . . . .”; the agreement later

states that Gonzalez’s compensation “will be due and payable upon

the deposit of the funds in the bank account at Frost National

Bank.” These provisions clearly indicate that Gonzalez was to

place all monies that he recovered in the stated account, and was

to draw his fourteen percent fee from the monies that he recovered

that were placed in this account.

The agreement also states that Gonzalez “cannot warrant or

guarantee the outcome” of his recovery efforts. Gonzalez argues

that this language supports his position that his compensation was

not made contingent upon the success of his recovery efforts, but

rather upon his use of best efforts in seeking recovery. This

language is equally supportive of a contingent fee arrangement, and

provides no support for Gonzalez’s position.

The circumstances surrounding the consummation of the

agreement also support its classification as a contingent fee

arrangement. The Dennings turned to Gonzalez only after legal

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proceedings in the Cayman Islands had stalled, and Leon Denning’s

imminent sentencing made rapid recovery of the frozen funds

necessary. Gonzalez represented that he could recover the frozen

funds in sixty to ninety days using Mathewson’s “significant

contacts” in the Cayman Islands.15 The Dennings did not grant

Gonzalez an exclusive right to represent them, and chose to retain

Walkers to prosecute the ultimately successful proof of debt

appeal. Finally, the Dennings informed Gonzalez that they did not

want “duplication of services.” Taken together, these

circumstances support the proposition that the Dennings retained

Gonzalez in an effort to explore extra-judicial options for

recovering their funds, and that he would be compensated if he made

good on his promises.

Because the language of the agreement unambiguously indicates

that Gonzalez’s compensation was intended to be contingent upon his

successful efforts to recover the Dennings’ monies, he cannot

recover on his claim for anticipatory breach of contract. “An

‘anticipatory breach’ of a contract is one committed before the

time when there is a present duty of performance and results from

words or conduct indicating an intention to refuse performance in

15
Although Gonzalez contends that he was retained to employ both judicial
and extra-judicial means to recover the frozen funds, the agreement contemplates
the use of extra-judicial methods when it states that “Gonzalez will comply with
all laws and /or Bank Regulations of the Cayman Islands and the United States in
recovering these funds.”

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the future.”16 The “doctrine of anticipatory breach has generally

been considered not applicable where the contract is fully

performed by one of the parties and nothing further remains to be

done . . . .”17 Texas, however, subscribes to the “minority view

to the effect that the doctrine is not restricted to those cases

where the contract is still fully executory on both sides.”18

In Texas, in order to prevail on a claim for anticipatory

breach, a plaintiff must establish each of the following elements:

(1) an absolute repudiation of the obligation; (2) a lack of a just

excuse for the repudiation; and (3) damage to the non-repudiating

party.19 “[W]hen one party to an agreement has repudiated it, the

other party may then accept the agreement as being terminated or

consider the repudiation as a breach of contract and bring suit for

damages.”20 However, a defendant’s duty to pay damages is

“discharged if it appears after the breach that there would have

been a total failure by the injured party to perform his return

16
23 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE ON THE LAW OF CONTRACTS § 63:29,
at 539 (4th ed. 2002).
17
Id. § 63:60, at 689.
18
Placid Oil Co. v. Humphrey, 244 F.2d 184, 187 (5th Cir. 1957) (citations
omitted).
19
Taylor Pub. Co. v. Sys. Mktg. Co., 686 S.W.2d 213, 217 (Tex. App.–Dallas
1984, writ ref’d n.r.e.); see Universal Life & Accident Ins. Co. v. Sanders, 102
S.W.2d 405 (Tex Comm’n App. 1937, judgm’t adopted)).
20
Hauglum v. Durst, 769 S.W.2d 646, 651 (Tex. App.–Corpus Christi 1989, no
writ) (citing Universal Life & Accident Ins. Co. et al, 102 S.W.2d at 406).

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promise.”21

In the present case, even if the Dennings’ termination of

their agreement with Gonzalez constitutes a repudiation and breach,

Gonzalez is not entitled to recover damages because the funds were

recovered by Walkers via the proof of debt suit. Because Walkers

succeeded in recovering the funds shortly after the repudiation,

Gonzalez’s efforts would have totally failed to obtain their

objective.

In addition to his failure to show damages, Gonzalez cannot

establish that the Dennings lacked a valid excuse for terminating

the agreement. Although the agreement did not contain a specific

expiration date, Texas law implies a duty to perform a contract

within a reasonable time.22 The Dennings contend that six months

constituted a reasonable time for performance of the agreement.

Gonzalez rejects this argument, contending that the agreement is

silent as to any time limitations upon its effectiveness. The

district court rejected both of these arguments, finding that,

based upon the circumstances present when the agreement was

consummated, the parties intended the agreement to terminate at

such time as the frozen funds were recovered by Walkers.

21
RESTATEMENT (SECOND) OF CONTRACTS § 254 (1981).
22
See Koch Indus., Inc. v. Sun Co., Inc., 918 F.2d 1203, 1209 n.3 (5th Cir.
1990) (“If a contract does not set a time for performance, the law will imply a
duty to perform within a reasonable time; what is reasonable is a question for
the finder of fact.”) (citing M.J. Sheridan & Son Co. v. Seminole Pipeline Co.,
731 S.W.2d 620, 622 (Tex. App.–Houston [1st] 1987, no writ), and Heritage Res.,
Inc. v. Anschutz Corp., 689 S.W.2d 952, 955 (Tex. App.–El Paso 1985, writ ref’d
n.r.e.)).

11
 Determination of a reasonable time during which a contract

must be performed is a fact question that is not appropriate for

determination on summary judgment. However, determination of the

intent of the parties to a contract based upon the unambiguous

language of a contract and the circumstances surrounding its

formation are appropriate matters for summary judgment. Here, the

unambiguous language of the agreement coupled with the

circumstances present when the agreement was formed clearly

indicate that the parties did not intend for the agreement to

continue past the point at which the funds were recovered. Because

Walker’s efforts at recovering the funds was certain to succeed at

the time the agreement was terminated, Gonzalez has failed to show

that the Dennings terminated their agreement without just cause.

The district court did not err in holding that no genuine fact

issues existed with respect to the interpretation of the agreement

between Gonzalez and Denning. In addition, the district court

correctly found that no reasonable fact finder could have found for

Gonzalez.

The judgment of the district court is AFFIRMED.

12