Lee v. Wal-Mart Stores, Inc.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________

No. 92-5046
__________________

MIKE D. LEE, d/b/a
MID-SOUTH INVESTMENT,

Plaintiff-Appellant,

versus

WAL-MART STORES, INC.,

Defendant-Appellee.

______________________________________________

Appeal from the United States District Court for the
Eastern District of Texas
______________________________________________
(September 23, 1994)

Before REAVLEY and GARWOOD, Circuit Judges and LAKE,* District
Judge.

GARWOOD, Circuit Judge:

This is a diversity action originally brought by plaintiff-

appellant Mike D. Lee (Lee) against defendant-appellee Wal-Mart

Stores, Inc. (Wal-Mart) for alleged damages that resulted from two

Texas construction projects in the towns of Daingerfield and Paris.

At trial, the jury found that Wal-Mart had breached its fiduciary

duty to Lee and had committed economic duress and fraud, but that

*
District Judge of the Southern District of Texas, sitting by
designation.
Lee was estopped to complain about Wal-Mart's acts. The district

court entered a take nothing judgment in Wal-Mart's favor, which

Lee appealed. We reversed and remanded the judgment concerning the

Daingerfield transaction because we determined that Lee may have

presented enough evidence to support a jury verdict for economic

duress, and it was unclear, if this were so, whether the jury's

estoppel finding precluded Lee's recovery. On remand, the district

court granted Wal-Mart's summary judgment motion, ruling that Lee

had failed to present any evidence of economic duress and in any

event he was barred from recovery by the jury's estoppel finding.

Lee now appeals the district court's grant of Wal-Mart's summary

judgment motion. We affirm.

Facts and Proceedings Below

The background facts are described in Lee v. Wal-Mart Stores,

Inc., 943 F.2d 554, 556-59 (5th Cir. 1991), corrected, reh'g

denied, 951 F.2d 54 (1992). Since 1975, Lee, an experienced real

estate developer, has purchased and developed land sites for

shopping centers which he has leased in part to Wal-Mart on a long-

term basis. In September 1984, Wal-Mart's real estate manager for

Texas, Bill Bothwell (Bothwell), expressed to Lee Wal-Mart's desire

to have a store in Daingerfield, Texas. Bothwell told Lee that

Wal-Mart was interested in operating a store on a site which was

part of an 11.706 acre tract of land (the property) owned by others

that was subject to an option to purchase held by two Daingerfield

residents.1 Bothwell asked Lee to get involved in the project and

1
Lee testified at trial that Wal-Mart initially "anticipated
that their building would take up 6.38 acres of the total 11 acre

2
he subsequently entered into a partnership with the two individuals

holding the option. On December 17, 1984, the partnership

purchased the property.

In January 1985, Lee sent to Wal-Mart his proposed terms for

the Daingerfield project. On March 14, 1985, Bothwell sent Lee a

letter stating in full:

"Re: Daingerfield, Texas

Dear Mike:

This is to confirm our telephone conversation
concerning the subject town that Thomas P. Seay, Sr. Vice
President, Real Estate and Construction has agreed to
enter into a lease with you on your stie [sic] in
Daingerfield for a 1987 opening.

I will prepare a lease, similar to Marshall with the
following leasic [sic] items:

1. Size 50,966 square foot.
2. Term 20 years plus 6 - 5's.
3. Rent $3.60 per square foot.
4. C.A.M. 15¢ square foot max.
5. % Rent 1/2 of 1% of sales after
7th year sales.

As soon as I get other immediate things taken care
of such as Marshall and Sherman, I'll address my
attention to Daingerfield."

On March 19, 1985, Lee received standard form leases for the

Daingerfield store and two other stores. Lee was told by Bothwell

to hold the Daingerfield lease because the final site plans had not

been approved.

In November 1985, Wal-Mart's new real estate manager for

Texas, Mike Nelson (Nelson), informed Lee that Wal-Mart had never

approved a lease for the Daingerfield store. On February 3, 1986,

tract." Lee explained that he anticipated constructing a
shopping center on the other five acres.

3
Nelson sent Lee a new commitment letter for a smaller store at a

lower base rental per square foot, which Lee agreed to. In July,

Lee received a lease from Nelson which specified an even smaller

store at a lower rental rate than stated in the February 3 letter.

On August 1, 1986, Lee signed the lease. The lease specified that

Lee was to begin construction of the store on September 1, 1986,

but he was unable to do so because he could not secure financing

for the project. On September 5, 1986, after his partners refused

to contribute their share of capital for the construction project,

Lee bought them out and became the sole owner of the property.

Near the end of 1986, Lee advised Wal-Mart that he was having

difficulty obtaining financing for the construction work, and on

January 15, 1987, he proposed to sell the property to Wal-Mart. In

response, Wal-Mart sent a letter cancelling the lease because of

Lee's failure to commence construction by September 1, 1986. This

letter included a lease termination agreement, which Lee signed.

Subsequently, Lee brought suit against Wal-Mart concerning the

Daingerfield transaction and another transaction in Paris, Texas.

The trial commenced on April 30, 1990. Lee testified that he

signed the lease containing the reduced terms because he had

purchased the property over a year prior to the lease, and the bank

notes on it were coming due. When Lee was asked by his attorney

why he did not sue Wal-Mart, he responded that he "was not a one-

time developer with Wal-Mart," and he was hoping "that Wal-Mart

would come back and . . . make it right." Lee also testified that

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he still owned the property.2

The jury found that as to the Daingerfield transaction, Wal-

Mart had breached its fiduciary duty to Lee and had committed fraud

and economic duress. However, the jury also found that Lee was

estopped to complain about Wal-Mart's acts. The district court

entered a take nothing judgment in Wal-Mart's favor, which Lee

appealed. On appeal, this Court ruled that Wal-Mart did not owe a

fiduciary duty to Lee. Lee, 943 F.2d at 557. We also concluded

that Lee could not recover under any theory concerning the Paris

transaction. Id. at 559. As to the Daingerfield transaction, we

determined that the lack of a fiduciary duty precluded a finding of

fraud, but the evidence presented at trial might still support a

finding of economic duress. Id. at 560. Therefore, we reversed

and remanded the judgment concerning the Daingerfield transaction

because that part of the jury's verdict relating to economic duress

may have afforded Lee a basis for recovery. Id. On remand, the

district court granted Wal-Mart's summary judgment motion, ruling

that Lee had failed to present any evidence on the elements of

economic duress and in any event he was barred from recovery by the

jury's estoppel finding. Lee now appeals the district court's

grant of Wal-Mart's summary judgment motion. We affirm.

Discussion

Summary judgment is appropriate if the record discloses "that

2
Lee testified that he paid approximately $380,000 for the
property. He also introduced into evidence an exhibit showing
that he was current on his interest payments to the banks which
held the notes on the property, and that he had paid all the
taxes assessed against it.

5
there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law." FED.

R. CIV. P. 56(c). This Court reviews the district court's grant of

a summary judgment motion de novo. Walker v. Sears, Roebuck & Co.,

853 F.2d 355, 358 (5th Cir. 1988). Summary judgment may be granted

unless the nonmoving party on whom the burden of proof at trial

rests shows that there exist "genuine factual issues that properly

can be resolved only by a finder of fact because they may

reasonably be resolved in favor of either party." Anderson v.

Liberty Lobby, Inc., 106 S.Ct. 2505, 2511 (1986). See also Celotex

Corp. v. Catrett, 106 S.Ct. 2548, 2552-53 (1986). On this second

appeal, we first need to determine if Lee has placed in dispute any

facts which could support a finding of economic duress, an issue on

which he bears the burden of proof. Since we find he has not, we

will not address the secondary issue of whether Lee is estopped

from asserting economic duress.

This case was originally remanded partly because of this

Court's uncertainty concerning whether Lee had satisfied all of the

elements of economic duress. Lee, 943 F.2d at 560. This Court has

held that under Texas law the tort of economic duress exists only

if the following factors are shown: "'(1) there is a threat to do

something which a party threatening has no legal right to do; (2)

there is some illegal exaction or some fraud or deception; and (3)

the restraint is imminent and such as to destroy free agency

without present means of protection.'" Beijing Metal & Minerals v.

American Business Ctr., 993 F.2d 1178, 1184-85 (5th Cir. 1993)

(quoting Deer Creek Ltd. v. North Am. Mortgage Co., 792 S.W.2d 198,

6
203 (Tex. App.SQDallas 1990, no writ)); see also Brown v. Cain

Chemical, Inc., 837 S.W.2d 239, 244 (Tex. App.SQ Houston [1st

Dist.] 1992, writ denied); Tower Contracting Co. v. Burden Bros.,

Inc., 482 S.W.2d 330, 335 (Tex. Civ. App.SQDallas 1972, writ ref'd

n.r.e.). Furthermore, "the opposing party must be responsible for

the financial distress." Beijing Metal at 1185; see also Brown,

837 S.W.2d at 244 (citing First Texas Sav. Ass'n of Dallas v.

Dicker Center, 631 S.W.2d 179, 186 (Tex. App.SQ Tyler 1982, no

writ)).3

Lee argues that when Wal-Mart sent the March 14 commitment

letter, it had entered into an enforceable agreement to execute a

lease, and therefore its reneging on these proposed lease terms and

eventually cancelling the lease altogether were actions that it had

no legal right to take. Lee also contends that the economic

3
Lee contends that the first elementSQthreatening to do that
which a party does not have the legal right to doSQhas been
modified by State Nat'l Bank v. Farah Mfg. Co., 678 S.W.2d 661,
(Tex. App.SQEl Paso 1984, writ dism. by agr.). That case could
be read as broadening the first element to include not just
threatening to do that which a party did not have a legal right
to do, but also threatening to do that which is wrongful or in
bad faith. Id. at 685. However, in that case the parties owed
each other a statutory duty of good faith. Id. at 681. Such is
not the case here (moreover, our prior opinion held there was no
fiduciary duty). Furthermore, "We are bound by this Court's
prior decisions on what is the law of a state in a diversity
case, just as we are bound by prior decisions of this Court on
what is federal law." Newell v. Harold Shaffer Leasing Co., 489
F.2d 103, 107 (5th Cir. 1974). Here, Beijing Metals defines the
Texas tort of economic duress. We note that even though the
decision does not consider Farah, this circumstance does not
change the conclusion that we are bound by our prior decision.
See Broussard v. Southern Pac. Transp. Co., 665 F.2d 1387 (5th
Cir. 1982) (en banc) (holding that "the failure of a prior panel
to consider an apparent change in state law of which it was aware
. . . does not open the door for a subsequent panel to reconsider
the prior panel's decision").

7
coercion behind this threat was the fact that the bank notes that

had financed the purchase of the property were coming due, so that

he had no choice but to sign the less favorable lease. The

district court concluded that Wal-Mart had a right to negotiate a

lease that would be unfavorable to Lee, thereby finding by

inference that the March 14 letter was not a binding agreement to

execute a lease. Wal-Mart argues that the March 14 letter is not

an enforceable contract for a lease because it does not provide,

among other things, a specific description of the property which is

required under the statute of frauds. We agree.

As Lee recognizes, a contract for a lease of real property for

more than a year must comply with the statute of frauds. Tex. Bus.

& Com. Code § 26.01(b)(4) & (5); Tex. Prop. Code § 5.021; Duke v.

Joseph, 213 S.W.2d 535 (Tex. Civ. App.SQAustin, 1948, writ ref'd);

"Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934

(Tex. 1972); Kmiec v. Reagan, 556 S.W.2d 567, 569 (Tex. 1977).

"Insofar as the description of the property to be conveyed is

concerned, the writing must furnish within itself the means or data

by which that particular land may be identified with reasonable

certainty." Kmiec at 569. Lee argues that the March 14 letter

identifies the property with reasonable certainty because he owned

only one piece of property in Daingerfield. Certainly, "When the

grantor is stated to be the owner of the property to be conveyed

and it is proved that the grantor owns only a single tract

answering the description, the land is identified with reasonable

certainty." Id.; see also Ellett v. McMahan, 187 S.W.2d 253, 254

(Tex. Civ. App.SQTexarkana 1945, no writ) (holding description to

8
be sufficient where contract related to the only tract of land

owned by vendor). However, in this case, Lee was not leasing his

entire eleven-acre tract to Wal-Mart. The letter stated that the

Wal-Mart store would occupy only 50,966 square feet, and Lee

himself testified that the Wal-Mart "building would take up 6.38

acres of the total 11 acre tract." A conveyance of real property

is not identified with reasonable certainty if it merely describes

the land conveyed as an unlocated partial portion out of a larger

tract. See, e.g., Matney v. Odom, 210 S.W.2d 980, 982 (Tex. 1948)

(holding that the language in a lease that states "Landlord . . .

does hereby lease, to tenant, four (4) acres out of the East end of

a ten-acre block" did not satisfy the statute of frauds because it

failed to describe the property with reasonable certainty); Ball v.

Parks, 313 S.W.2d 134, 140 (Tex. Civ. App.SQFort Worth 1958, writ

ref'd n.r.e.) (holding that "Block 78 Hill County School Land" did

not meet test of statue of frauds with reference to contract to

convey portion of acreage thereof); MacLane v. Smith, 198 S.W.2d

493 (Tex. Civ. App. SQFort Worth 1946, writ ref'd n.r.e.) (holding

that the description "1st Tract: 58 acres more or less out of the

G. Moseley Survey, Abstract No. 1338" was insufficient to satisfy

the statute of frauds). Here, the March 14 letter failed to

satisfy the statute of frauds because it did not describe with

reasonable certainty the location of the Wal-Mart site within the

property owned by Lee.4

4
Lee also contends that the March 14 letter created a
contract for a lease because Wal-Mart is estopped from asserting
the statute of frauds as a defense. Lee relies on "Moore"
Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934 (Tex.

9
 Since Wal-Mart had not entered into an enforceable contract

for a lease, Wal-Mart was "free to pursue its own interests in

negotiating leases, even if the negotiations result is a perceived

bad deal for the other party." Lee, 943 F.2d at 558 (citing by

analogy Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp.,

823 S.W.2d 591 (Tex. 1991)).5 Therefore, it could not have

illegally extracted from Lee his acceptance of the lease or his

later cancellation of that lease. Since Wal-Mart never entered

into a lease or enforceable contract to lease with Lee, and it owed

1972), which held that a written contract to enter into a lease
which complied with the statute of frauds was enforceable, even
though one of the parties had not signed the contract, and had
merely made an oral promise to sign it. Id. at 938. Although
the promise to sign the agreement did not comply with the statute
of frauds, the court held that the doctrine of promissory
estoppel prevented the defendants from asserting the statute of
frauds as a defense. Id. However, the Texas Supreme Court has
limited the promissory estoppel exception to cases where the
promise was "'to sign a written agreement which itself complies
with the Statute of Frauds.'" Nagle v. Nagle, 633 S.W.2d 796,
800 (Tex. 1982) (quoting "Moore" Burger, 492 S.W.2d at 940; see
also Southmark Corp. v. Life Investors, Inc., 851 F.2d 763, 769
(5th Cir. 1988) (holding that "[i]n "Moore" Burger the
determinative promise was a promise to sign a written agreement
that had already been prepared and that did in fact comply with
the statute of frauds"). Here, since the written agreementSQthe
March 14 letterSQdoes not comply with the statute of frauds, the
"Moore" Burger exception is inapplicable.
5
Lee argues that Wal-Mart owed him a duty of good faith and
that this duty precluded it from threatening Lee into signing the
inferior lease. Lee apparently bases this duty to act in good
faith on the past business conduct of the two parties. However,
"Texas recognizes a duty of good faith and fair dealing where a
special relationship exists and is governed or created by a
contract." State Farm Mut. Auto. Ins. Co. v. Zubiate, 808 S.W.2d
590, 597 (Tex. App.SQEl Paso 1991, writ denied) (italics added).
Lee has wholly failed to show how past business dealings
constitute such a "special relationship" outside the existence of
a fiduciary duty. Cf., Consolidated Gas & Equip. Co. v.
Thompson, 405 S.W.2d 333, 336 (Tex. 1966) ("The fact that people
have had prior dealings with each other . . . does not establish
a confidential relationship.").

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no particular duty to Lee, Wal-Mart could not have committed the

tort of economic duress by "[t]hreatening to do that which [it] has

a legal right to do." Sanders v. Republic Nat'l Bank, 389 S.W.2d

551, 554 (Tex. Civ. App. SQTyler 1965, no writ). Lee has failed to

place any facts in dispute on this issue. On this basis alone the

district court's judgment must be affirmed.

Moreover, even assuming that Wal-Mart somehow did not have a

legal right to pressure Lee into signing the inferior lease, Lee

has also fatally failed to show that there existed an imminent

restraint such as to destroy free agency without present means of

protection. Beijing Metals at 1185. Lee argues that the loans

used to purchase the property were coming due, so that he had no

alternative but to sign the inferior lease. Lee did testify that

he had no alternative, but such a conclusion is insufficient

without supporting evidence. See Bridgen v. Scott, 456 F.Supp.

1048, 1063 (S.D. Tex. 1978) (holding that "[v]ague, self-serving

speculative testimony concerning what a party would have done under

different circumstances is generally not admissible").

It is axiomatic that economic coercion exists only if the

target of such coercion has no alternative but to submit to it.

See Tower Contracting, 482 S.W.2d at 336 (holding that because the

plaintiff had several days notice of the defendant's allegedly

illegal threat, the plaintiff had time to exercise other

alternatives). Here, Lee, a sophisticated and successful

businessman, has produced no evidence that he had no other options

besides entering into the less favorable lease. He could have sued

Wal-Mart, and pursued his legal remedies in the courts. His excuse

11
for not filing suit was that Wal-Mart would "make good" later and

he did not want to jeopardize his long-term relationship with the

company.6 In other words, Lee thought it would be profitable to

allow Wal-Mart to receive a favorable deal now because he expected

to receive a favorable deal in the future. Far from showing

economic duress with no escape, this evidence tends to show that

Lee was a willing participant who was hoping for future favorable

treatment. See Irby v. Andrews, 211 S.W. 290, 292 (Tex. Civ.

App.SQDallas 1919, no writ) (holding that evidence sustained

finding that judgment creditor was not induced by duress to satisfy

judgment, where the creditor exercised her judgment in the matter).

Furthermore, there is no evidence that he could not have walked

away from the unfavorable lease. Although the bank notes were

coming due, there is no evidence that he lacked the financial

resources to hold onto the property. Nor is there any evidence

that the banks refused any request of his to refinance or extend

the loan on the land. Perhaps his partners did not have the

6
Lee did not assert that he failed to pursue his legal
remedies because of financial difficulties. This Court has held
that such an unexplained failure, absent evidence of real
financial constraints, establishes that the plaintiff has not
made a showing sufficient to sustain a finding that he was under
imminent restraint such as to destroy his free agency. In
Beijing Metals, we held that "[a]side from a general reference to
'cash flow problems,' and a reference to the difficulty and
expense of cover, there [was] no evidence in the summary judgment
record to indicate that [the plaintiff] could not pursue its
legal remedies. The above conclusory statements are insufficient
to establish a material fact issue." Id. at 1185; see also
Hartsville Oil Mill v. United States, 46 S.Ct. 389, 391 (1926)
(holding that the plaintiff had failed to prove its duress claim
based on a breach of contract because, in part, it had presented
no evidence "that the legal damages for such breach of contract
would not have been adequate to compensate for its loss").

12
financial wherewithal to construct the shopping center, but Lee had

bought them out, and he presented no evidence concerning his own

financial condition. At trial, some five and a half years after

the purchase of the property, Lee still possessed the property and

was making payments on the notes. Lee has not presented evidence

which would sustain a finding that he was subject to a restraint

which was imminent and such as to destroy free agency without

present means of protection.

Since Lee failed to present any evidence that Wal-Mart had

illegally threatened him, and in any event has failed to show that

he was under an imminent restraint and had no protection against

it, the district court did not err in granting summary judgment in

favor of Wal-Mart.

Conclusion

For the foregoing reasons, the district court's judgment is

AFFIRMED.

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