Opinion
Civil No. 3:99-CV-1449-H
August 24, 2000
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Pricer Aktiebolag's Renewed Motion for Partial Summary Judgment, filed July 14, 2000; Plaintiffs' Response, filed August 4, 2000; and Pricer's Reply, filed August 14, 2000. Also before the Court is Defendant Erik Danielsson's Renewed Motion for Partial Summary Judgment, filed July 25, 2000, which adopts the position stated by Pricer Aktiebolag ("Pricer") in its Motion; Plaintiffs' Response, filed August 15, 2000, which adopts its Response to Pricer's Motion as its Response to Danielsson; and Danielsson' s Reply, filed August 22, 2000.
The Court, in its September 21, 1999, Order, specifically reserved ruling on Pricer's Motion for Partial Summary Judgment against Plaintiff Dale Byrne, finding that further discovery would be appropriate on whether the Release signed by Byrne precludes his claims against the Defendants. Defendants Pricer and Danielsson have timely renewed their Motions, and the Court feels the matter is ripe for adjudication. After considering the pleadings, briefs and relevant authorities, the Court concludes that the Motions should be, and hereby are, GRANTED-IN-PART and DENIED-IN-PART.
I. Background
In its September 1999, Order, the Court set forth the relevant facts of this case, and will not reiterate them here. The focus of the Motions presently before the Court is whether a Release, signed by Plaintiff Byrne when he willingly left the employ of Intactix in June, 1998, precludes his claims in this case. For the following reasons the Court concludes that it does as to Defendants Pricer and Danielsson. The Court also concludes that genuine issues of material fact remain as to the Release's applicability to Byrne's claims against Defendant Broadview.
II. Summary Judgment Standard
Summary judgment is appropriate where the facts and law as represented in the pleadings, affidavits and other summary judgment evidence show that no reasonable trier of fact could possibly find for the nonmoving party as to any material fact. FED.R.CIV.P. 56; Lujan V. National Wildlife Federation, 497 U.S. 871, 888 (1990); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Innovative Database Systs. v. Morales, 990 F.2d 217 (5th Cir. 1993). "The moving party bears the initial burden of identifying those portions of the pleadings and discovery in the record that it believes demonstrate the absence of a genuine issue of material fact, but is not required to negate elements of the nonmoving party's case." Lynch Properties, Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th Cir. 1998) (citing Celotex, 477 U.S. at 322-25). If the movant fails to meet its initial burden, the motion must be denied, regardless of the nonmovant's response. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
If the movant does meet its burden, the nonmovant must go beyond the pleadings and designate specific facts showing that a genuine issue of material fact exists for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Edwards v. Your Credit, Inc., 148 F.3d 427, 431 (5th Cir. 1998). A party opposing summary judgment may not rest on mere conclusory allegations or denials in its pleadings unsupported by specific facts presented in affidavits opposing the motion for summary judgment. FED. R. CIV. P. 56(e); Lujan, 497 u.s. at 888; Hightower v. Texas Hosp. Assn., 65 F.3d 443, 447 (5th Cir. 1995).
In determining whether genuine issues of fact exist, "[f]actual controversies are construed in the light most favorable to the nonmovant, but only if both parties have introduced evidence showing that a controversy exists." Lynch, 140 F.3d at 625; see also Eastman Kodak v. Image Technical Services, 504 U.S. 451 (1992). However, in the absence of any proof, the Court will not assume that the nonmoving party could or would prove the necessary facts. Lynch, 140 F.3d at 625. A party must do more than simply show some "metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. "If the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Friou v. Phillips Petroleum Co., 948 F.2d 972, 974 (5th Cir. 1991).
III. Analysis
Plaintiff Byrne, upon termination of his employment with Intactix, signed a Release stating, in part:
5(a). In consideration for the payment and benefits provided to Byrne as described in this Agreement, Byrne releases and forever discharges Intactix, Pricer AB, their respective subsidiaries and affihates, and all of their directors, officers, employees, agents, successors, and assigns (collectively referred to as the "Intactix Releasees") from any and all obligations, liabilities, damages, costs, claims, complaints, charges, or causes of action in law or equity (collectively "Claims") that Byrne or his heirs, administrators, successors or assigns may now have or may ever have had against any Intactix Releasee, whether accrued, absolute, contingent, liquidated, unliquidated or otherwise, and whether known or unknown on the date hereof, foreseen or unforeseen, and which have or may have arisen out of any action, inaction, statement, transaction or state of facts existing prior to the date of this Agreement, including, but not limited to, Claims in any way related to Byrne's employment with Intactix or the termination of that employment and Claims based on federal, state, or local law or regulation or the common law[.]
The interpretation of a contract is a matter of law, not of fact. Hidden Oaks Limited v. City of Austin, 138 F.3d 1036, 1048 (5th Cir. 1998). In its September 21, 1999, Order the Court stated:
The language of the Release clearly encompasses the claims at issue in this action. Incorporated phrases such as "from any and all... claims... which have or may have arisen out of any action, inaction, statement, transaction or state of facts. including, but not limited to, Claims in any way related to Byrne's employment.. (emphasis applied by the Court) make it difficult to imagine how a sophisticated corporate director would think otherwise. Byrne's subsequent statement, in paragraph 6 of the Release, that "he has not filed, nor does he intend to file, any Claims against Intactix or Pricer AB arising from his shareholdings in Pricer AB" merely iterates his state of mind at that time, and in no way negates the encompassing language in paragraph 5(a).
The Court found then, and finds now, that the language of the provision is clear and unambiguous, viz, that the plain language of the Release encompasses Byrne's claims relating to his status as a shareholder. Byrne's argument otherwise simply ignores the phrases "from any and all" and "including, but not limited to." Accordingly, he must show that other considerations, i.e., fraud, mutual mistake, or lack of consideration, allow him to avoid the plain terms of the agreement itself.
Byrne argues that the inclusion of a statement in the Release that he had not filed, and did not intend to file, any shareholder claims against Intactix or Pricer contradicted the otherwise plain and all-inclusive language of the Release, thereby making it ambiguous. That claim reflects the same argument considered, and rejected, by the Court in its September 21, 1999, Order.
"Fraud, mutual mistake, or lack of consideration are all affirmative defenses for the enforceability of a release." Sweeney v. Taco Bell, Inc., 824 S.W.2d 289, 291 (Tex.App.-Fort Worth 1992, writ denied).
A. Fraud
Byrne claims that he was fraudulently induced into signing the Release, because he was allegedly told by counsel for Intactix, as well as other members of Intactix management, that the Release did not include any shareholder claims he might have.
A written contract "vitiates any reliance the [Plaintiff] may have placed in sweeping, off-hand statements made by the other party as a matter of law." San Antonio Garment Finishers, Inc. v. Levi Strauss Co., 18 F. Supp.2d 669, 674 (W.D. Tex. 1998)( aff'd 174 F.3d 198 (5th Cir. 1999)). However, "Texas law has long imposed a duty to abstain from inducing another to enter into a contract through the use of fraudulent misrepresentations. . . . [I]t is well established that the legal duty not to fraudulently procure a contract is separate and independent from the duties established by the contract itself." Formosa Plastics Corporation USA v. Presidio Engineers and Contractors, Inc., 960 S.W.2d 41, 46 (Tex. 1997)( reh'g overruled 1998). Proving fraudulent inducement requires "a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon, and which caused injury." Formosa Plastics, 960 S.W.2d at 47 (quoting Sears, Roebuck Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 1994)).
Under Texas law, a Release is construed as a contract between the Parties. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990).
Even if his allegations are true, misrepresentations involving the legal effect of a document, particularly where the parties have equal access to legal advice, will not generally support an action for fraud. Fina Supply, Inc. v. Abilene National Bank, 726 S.W.2d 537, 540 (Tex. 1987). Furthermore, in Texas one must justifiably rely upon alleged misrepresentations to establish a claim of fraud. See, e.g., In re Absolute Resource Corp., 76 F. Supp.2d 723, 731 (N.D. Tex. 1999); and Pacific Mutual Life Insurance Co. v. Ernst Young Co., 10 S.W.3d 798, 807 (Tex.App.-Dallas 2000, rule 53.7(f) motion filed). To determine whether an individual justifiably relied on alleged misrepresentations, the Court considers the particular plaintiff's characteristics, abilities, and appreciation of the facts and circumstances surrounding the representations. Pacific Mutual, 10 S.W.3d at 807.
Here, the summary judgment evidence shows Byrne was a corporate officer of Intactix, knew he wanted to protect any claims he might have from his Intactix shareholder status, and signed the Release which specifically stated "Byrne acknowledges and agrees that he freely and voluntarily entered into this Agreement, that he has been encouraged to consult an attorney before signing this Agreement, that he has had an opportunity to review this Agreement with an attorney of choice, and has had sufficient time to do so. Byrne fully understands the terms of this Agreement." Furthermore, the terms of the Agreement gave him 7 days to rescind it after he signed it, during which time he could review the terms himself, or with an attorney of choice.
The express terms of the Agreement gave Byrne the opportunity, indeed urged Byrne, to consult with his own attorney to ensure that its provisions protected his interests. The summary judgment evidence adduced makes it clear he did consult with outside counsel in both California and Texas regarding the Agreement. Clearly Byrne had equal access to legal advice. Indeed, Byrne acknowledges that consultation, but asserts that he relied instead on the representations of counsel for Intactix and other employees of Intactix that the Agreement did not release his shareholder claims. Bryne acknowledges that he was aware that those making that claim represented Intactix, not him.
The summary judgment evidence discloses Byrne knew of the possible existence of his claims as a shareholder, extensively negotiated the Agreement, and had sufficient time available for him to review the Agreement with his attorney both before and after he had signed it. Accordingly, the Court finds he had equal access to legal advice on the legal effect of the document's language, and that his asserted reliance only upon the representations of those acting on behalf of Intactix was unjustified. Therefore, the Court finds no genuine issue of material fact exists on his claim of fraudulent inducement or equitable estoppel, and those defenses fail as a matter of law.
B. Mutual Mistake
The doctrine of mutual mistake goes to those circumstances where the parties reach an agreement while suffering from a mutual misconception or ignorance of a material fact. Williams, 789 S.W.2d at 264. Generally, recission of a contract is not available for a mistake of law. See, e.g., Ussery v. Hollebeke, 391 S.W.2d 497, (Tex.Civ.App.-El Paso 1965, writ ref'd n.r.e.). Where a mistake pertains to an antecedent personal legal right, and not general law, it may be construed as mistake of fact. 1st Coppell Bank v. Smith, 742 S.W.2d 454, 462-63 (Tex.App.-Dallas 1987, no writ). "The deciding factor in Texas cases, in distinguishing between antecedent legal rights and general law, appears to be whether the party seeking rescission complains of the legal effect of the document he seeks to rescind, or of his belief as to the state of the law which caused him to execute the agreement." Id. Only the latter is construed as analogous to a mistake of fact.
Here, Byrne complains not of any mistaken belief in his legal status when he signed the Release, rather he complains of a mistaken understanding of the legal effect of the document he seeks to rescind. Accordingly, his is not a mistake or misconception of fact allowing for rescission of the Release. See also Sweeney, 824 S.W.2d at 292 (finding that when both parties know all the circumstances surrounding the severance of employment, the consideration paid exceeds, if only minimally, the consideration due the employee anyway, and the release has been extensively negotiated, the doctrine of mutual mistake is unavailable to avoid the results of an unhappy bargain created by the language of a release).
The Court finds that the summary judgment evidence discloses no genuine issue of material fact concerning his claim of mutual mistake, or misconception, of fact, and that defense fails as a matter of law.
C. Lack of Consideration
According to Byrne, all compensation paid him when he voluntarily severed his employment with Intactix was due him anyway, under the terms of his employment agreement, and he received nothing additional for agreeing to forego future claims. In its original Motion for Partial Summary Judgment, Pricer submitted as evidence the signed Employment Agreement between Byrne and Pricer, dated June 25, 1997, which governed the circumstances of Byrne's June, 1998, departure. Section 6 of that Agreement states the terms and conditions under which it may be terminated, and Section 6(f) covers termination by mutual agreement, which applies here. Contrary to Byrne's claim, it makes no provision whatsoever for any severance benefits. Section 6(d), which only pertains to termination without cause or to constructive termination, grants Byrne the severance benefits he claims were owed him, but that provision expressly begins, "If the Executive's employment is terminated pursuant to Section 6(d)...." Section 6(d) benefits clearly do not apply to Section 6(f), under which the Agreement was actually terminated.
The summary judgment evidence shows that Byrne negotiated a voluntary termination of his employment at Intactix in exchange for numerous benefits, none of which were owed him otherwise, and all of which constituted consideration for the Agreement and Release he signed June 30, 1998. His claim now that he received no consideration for the Release is clearly contradicted by the summary judgment evidence, and raises no genuine issue of material fact.
D. The Release's Applicability to Defendant Broadview
Byrne claims that, even if the Release is deemed valid, it does not apply to Broadview, since Broadview's relationship was with the Intactix that existed prior to the merger with Pricer ("Old Intactix"), and which ceased to exist afterwards, when he signed the Release. According to Byrne, the Intactix that resulted from the merger was a new and different corporate entity ("New Intactix"); therefore, Broadview was not a "Releasee" of the Intactix with which Byrne signed his Agreement and Release.
The Release applied to "Intactix, Pricer AB, their respective subsidiaries and affiliates, arid all of their directors, officers, employees, agents, successors, and assigns (collectively referred to as the "Intactix Releasees").
The summary judgment evidence adduced shows Defendant Broadview was retained by Old Intactix. In its engagement agreement with Old Intactix, Broadview included an indemnity provision stating:
[i]n connection with the engagement of Broadview Associates L.L.C. ("Broadview") by Intactix International, Inc. (the "Company"), to render a Fairness Opinion. . . the Company agrees to indemnify and hold harmless Broadview and its affiliates. This indemnity shall apply to Broadview and the respective members, directors, officers, agents, employees and legal representatives of Broadview and its affiliates, and each person, if any, controlling Broadview or any of its affiliates.... The Company shall hold each Indemnified Person harmless from and against any and all losses, claims, damages, and liabilities, joint and several (and all actions, claims, proceedings and investigations in respect thereof), caused by related to or arising out of, directly or indirectly, the engagement referred to in the Retention Letter, whether under any statute, under common law, or otherwise.
The provision further stated "Neither termination nor completion of the engagement of Broadview referred to in the Retention Letter shall affect the provisions of this agreement which shall remain operative and in full force and effect."
Pricer and Danielsson claim that the indemnification provision continues to apply since the indemnification obligation transferred, under the Delaware laws of merger, to New Intactix when Pricer purchased Old Intactix. According to Pricer and Danielsson, since Broadview was an agent of Old Intactix, the Release therefore also precludes Byrne's claims against Broadview. The Court can only infer that Pricer and Danielsson claim since New Intactix maintains an obligation under the indemnification provision, either Broadview retains its status as an Intactix agent, or New Intactix's indemnification of a former Old Intactix agent results in Broadview's classification as a agent under the Release signed by Byrne. Nothing in the summary judgment evidence adduced would lead the Court to either conclusion, nor does Pricer and Danielsson cite to any authority substantiating their argument. Clearly there remains a genuine issue of material fact pertaining to Broadview's status as an agent under the Release, and summary judgment is inappropriate. IV. Conclusion
Both Old and New Intactix were formed under the laws of Delaware.
Byrne, citing Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 420 (Tex. 1984), also asserts that Danielsson is not subject to the Release since he was not described with sufficient particularity so that a stranger could identify him. Duncan merely requires that a releasee be listed "by name or with such descriptive particularity... that his identity is not in serious doubt." Id. Defendant Danielsson was Pricer's President and Chief Executive Officer. The Court has no trouble identifying Danielsson as an "officer" of Intactix. Byrne's claim as to Danielsson fails to raise a genuine issue of material fact, and fails as a matter of law.
For the reasons set forth, the Court finds that no genuine issues of material fact exist pertaining to the language of the Release signed by Plaintiff Byrne, or its applicability to Defendants Pricer and Danielsson. Their Motions as to Byrne's claims against them are GRANTED, and all of Byrne's claims against Defendants Pricer and Danielsson are DISMISSED WITH PREJUDICE. The Court finds that genuine issues of material fact remain as to Defendant Broadview' s status as an Intactix agent under the Release, and as to those claims Defendants' Motions are DENIED.
SO ORDERED.