Summary
holding rule 11 agreement not binding because acceptance was not in strict compliance with terms of offer, which "were clear and unambiguous"
Summary of this case from MRC Permian Co. v. Three Rivers Operating Co.Opinion
No. 01-09-00331-CV
Opinion issued June 17, 2010.
On Appeal from the 60th District Court, Jefferson County, Texas, Trial Court Case No. B-177,392-A.
The Texas Supreme Court transferred this appeal from the Court of Appeals for the Ninth District of Texas. Misc. Docket No. 09-9049 (Tex. 2009); see TEX. GOV'T CODE ANN. § 73.001 (Vernon 2005) (authorizing transfer of cases).
Panel consists of Chief Justice RADACK and Justices BLAND and SHARP.
MEMORANDUM OPINION
Appellant, Robert Conrad, appeals from a judgment rendered upon cross-motions for summary judgment. We determine whether the trial court erred in implicitly determining as a matter of law that no enforceable settlement agreement existed between Conrad and appellees, Horace and Billie Hebert. We affirm.
BACKGROUND
In August 2005, Conrad was driving the car of his parents, Eric and Tammy Hanusch, when he collided with the car driven by the Heberts. The Heberts were injured in the accident. The Hanusches' car involved in the accident was insured by Farmer's Insurance Group ("Farmers").
On June 5, 2006, the Heberts each sent a letter to April Bossley, Farmers's adjuster, offering to settle their claims. The pertinent portions of the offer letters read as follows:
I offer to settle the claims I have for the injuries I received resulting from the collision in exchange for payment to me of Robert Conrad's policy limits. Payment must be made to me on or before 5:00 p.m., July 5, 2006. In exchange for payment of policy limits, I will execute a full and complete release in favor of Robert Conrad for all claims I have arising out of the collision. I will also pay all subrogation amounts I may owe with the proceeds. There are no hospital liens. You can make the check payable to Trailblazer Health Enterprises, LLC, and me if you choose.
If payment is not made on or before that date and time, this offer will expire and no further offer will be forthcoming. . . .
Bossley responded to each of the Heberts by separate letters dated June 14, 2006. Those letters, in pertinent part provided:
I am extending an offer of $25,000.00, which is our policy limits, to settle your bodily injury claim in exchange for a full and final release.
Please find the enclosed release form for your injury claim. The amount on the release is the total amount of the claim. Upon receipt of this form, we can issue your settlement check. . . .
Please sign and mail the form back to me in the enclosed return envelope. Please make sure your spouse also signs the release, before mailing it back to me. . . .
The release forms attached to Bossley's letters provided in relevant part that FOR AND IN CONSIDERATION OF THE SUM OF TWENTY FIVE THOUSAND DOLLARS AND NO CENTS ($25,000), receipt of which is acknowledged, I release and forever discharge the insurer[,] Eric Hanusch, Tammy Hanusch, and Robert Conrad, their principals, agents and representatives from any and all rights, claims, demands and damages of any kind, known or unknown, existing or arising in the future, resulting from or related to injuries and property damage arising from an accident that occurred on August 20, 2005. . . .
. . .
Further, I agree to reimburse and indemnify all released parties for any amounts which any insurance carriers, government entities, hospitals or other persons . . . or organizations may recover from them in reimbursement for amounts paid to me or on my behalf as a result of this accident by way of contribution, subrogation, indemnity, or otherwise. . . .
It is undisputed that the Heberts did not sign the releases, did not respond to Bossley's June 14 letters, and did not return her calls to discuss her letters. It is also undisputed that neither Farmers nor Conrad paid the Heberts anything by the July 5, 2006 deadline.
After the deadline had passed, the Heberts sued Conrad. Their "live" pleading asserted claims for negligence. In his answer, Conrad pleaded that the Heberts' suit was barred because the parties had settled these claims. Conrad also filed a counterclaim, in which he sought enforcement of the alleged settlement agreement.
Conrad moved for traditional summary judgment on his defensive and affirmative pleadings based on the alleged settlement agreement. The Heberts moved for partial, traditional summary judgment on Conrad's counterclaim and his defense based on the alleged settlement agreement, contending that (1) Conrad failed to accept the offers because he failed to pay the policy proceeds before the offers' stated deadline and (2) Bossley's June 14 letters constituted counteroffers, and thus rejections of the settlement offers, because the release contained material terms that differed from those in the settlement offers. They also objected to portions of Conrad's summary-judgment evidence. Conrad file a supplemental summary-judgment motion, raising similar grounds to those raised in his opening motion and contending that the releases' terms were not requirements or conditions; he also asserted various objections to the Heberts' summary-judgment evidence.
The trial court granted all objections to both parties' summary-judgment evidence, granted the Heberts' motions for summary judgment, and denied Conrad's summary-judgment motions. The trial court then severed the claims and defenses that were the subject of summary judgment from the Heberts' negligence claims. Conrad appeals.
SETTLEMENT
In issues one and two, Conrad argues that the trial court erred in denying its summary-judgment motions, and in granting those of the Heberts, because (1) Bossley's June 14 letters were valid acceptances and thus created enforceable settlement agreements and (2) the Heberts breached those settlement agreements by wrongful conduct that prevented Farmers from funding the settlement before the deadline expired.
A. Standard of Review
We review a trial court's decision to grant or to deny a motion for summary judgment de novo. See Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex., 253 S.W.3d 184, 192 (Tex. 2007) (citing rule for review of grant of summary judgment and reviewing denied cross-motion for summary judgment under same standard). Although a denial of summary judgment is not normally reviewable, we may review such a denial when both parties move for summary judgment and the trial court grants one motion and denies the other. Id. In our review of such cross-motions, we review the summary judgment evidence presented by each party, determine all questions presented, and render the judgment that the trial court should have rendered. Id. (citing Comm'r Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997)).
Under the traditional summary-judgment standard, the movant has the burden to show that no genuine issues of material fact exist and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., Inc., 690 S.W.2d 546, 548 (Tex. 1985). In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true, and every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor. Nixon, 690 S.W.2d at 548-49. A defendant moving for summary judgment must conclusively negate at least one essential element of each of the plaintiff's causes of action or conclusively establish each element of its cross-claim or affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). When, as here, the order granting summary judgment does not specify the grounds upon which judgment was rendered, we must affirm the summary judgment if any of the grounds in the summary judgment motion is meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).
B. Discussion
Texas Rule of Civil Procedure 11 requires that settlement agreements be in writing, a requirement similar to that under the statute of frauds. Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995); see TEX. R. CIV. P. 11. Accordingly, "'there must be a written memorandum which is complete within itself in every material detail, and which contains all of the essential elements of the agreement, so that the contract can be ascertained from the writings without resorting to oral testimony.'" Id. (quoting Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978)).
"The law of contracts applies to Rule 11 settlement agreements." Ronin v. Lerner, 7 S.W.3d 883, 886 (Tex. App.-Houston 1999, no pet.). "Parties form a binding contract when the following elements are present: (1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding." Williams v. Unifund CCR Partners Assignee Of Citibank, 264 S.W.3d 231, 236 (Tex. App.-Houston 2008, no pet.) (emphasis added). Because of the second element, "[w]here an offer prescribes the time and manner of acceptance, those terms must ordinarily be complied with to create a contract." Padilla, 907 S.W.2d at 460 (citing Town of Lindsay v. Cooke County Elec. Coop. Ass'n, 502 S.W.2d 117, 118 (Tex. 1973)).
The Heberts' June 5 offer letters prescribed the precise manner and time of acceptance: "I offer to settle the claims I have . . . in exchange for payment to me of . . . policy limits. Payment must be made to me on or before 5:00 p.m., July 5, 2006. In exchange for payment of policy limits, I will execute a full and complete release . . . If payment is not made on or before that date and time, this offer will expire and no further offer will be forthcoming." (Emphasis added.) This is like the initial settlement offer in Padilla, which the supreme court indicated would have required acceptance by payment by the specified date and time if the plaintiffs had not agreed to modify the acceptance terms by later correspondence. See Padilla, 907 S.W.2d at 460 ("Steidley's initial letter to Chandler offered to settle the case for the $40,000 policy limits, making clear that the offer could only be accepted by payment of the money by a specific deadline."). The acceptance term of the Heberts' offers were clear and unambiguous: it required payment in a specified manner by a specified time, or the offer would expire. Nothing in the remainder of the letter rendered this requirement ambiguous.
That initial offer letter provided: "[W]e make demand for policy limits of $40,000.00 for full and final settlement of this case against the insured that you represent. Payment of this sum should be made on or before Tuesday, April 23, 1991 at 5:00 p.m., by delivery of checks in the appropriate amount to the offices of the undersigned made payable in the following amounts and to the following payees:. . . . [N]o oral discussion that we may have will serve to alter the time limits expressed in the correspondence. I look forward to receipt of the checks on or before date specified, failing which this offer to settle will be withdrawn and my clients will proceed to perfect their rights under Texas law. . . ." Padilla v. LaFrance, 907 S.W.2d 454, 456 (Tex. 1995) (emphasis in original).
It is undisputed that Bossley failed to pay the policy limits by the July 5 deadline. What Bossley did before July 5 was to extend an offer to pay policy limits to each plaintiff in exchange for a prior full and final release of all claims. This did not constitute an acceptance because it did not strictly comply with the offer's acceptance method. See Williams, 264 S.W.3d at 236 (providing that one element of enforceable contract is that acceptance be in strict compliance with offer). Although "a different method of acceptance may be effectual where the 'original offeror thereafter manifests his assent to the other party,'" Padilla 907 S.W.2d at 460 (quoting Town of Lindsay, 502 S.W.2d at 118), that did not happen here: it is undisputed that the Heberts did not respond to Bossley's June 14 letter.
Conrad nonetheless contends that he could accept the offers by offering to pay, rather than by actual payment, for three reasons. First, he contends that the July 5 deadline "was [only] a funding deadline, not an acceptance deadline." Specifically, Conrad argues that the Heberts' letters "did not restrict the method of acceptance" to actual payment because they did not contain qualifying language such as "in order for a contract to be formed, payment must be made by [date]"; "in order to accept this demand, payment must be made by [date]"; or "you may accept this offer only by making payment by [date]." Such language was not required, however: the Heberts' intent to limit acceptance to payment by July 5 was clear because they specified that if "payment" were not made to them before the referenced date and time, "this offer will expire. . . ." (Emphasis added.) This parallels the language in the initial offer letter, quoted above, that the Padilla court indicated required acceptance by payment by a date certain. See Padilla, 907 S.W.2d at 456, 460.
Second, Conrad argues that "the letters invited acceptance either by payment or promise to pay." Specifically, he contends that offers "can be accepted either by performance or by promise of performance, where the offeror does not explicitly limit the method of acceptance." (Emphasis in original.) However, the offer letters do explicitly limit the method of acceptance by requiring actual payment by the specified deadline. See id.
Third, Conrad argues that the Heberts "did not clearly indicate that time was of the essence." The authority cited by Conrad in support concerned whether time was of the essence in an already extant contract, so that failure to meet a contractual deadline was a breach of that contract or precluded its enforcement. See Argos Res., Inc. v. May Petroleum, Inc., 693 S.W.2d 663, 664, 665 (Tex. App.-Dallas 1985, writ ref'd n.r.e.); Laredo Hides Co. v. H H Meat Prods. Co., 513 S.W.2d 210, 218 (Tex. Civ. App.-Corpus Christi 1974, writ ref'd n.r.e.) (op. on reh'g). The case before us does not concern that issue, but instead concerns whether Conrad accepted the offer in compliance with its terms. See Williams, 264 S.W.3d at 236. Those clear terms allowed acceptance only by payment of policy limits by the date and time specified.
We distinguish the primary cases on which Conrad relies because, in them, (1) the offeror agreed to a modification of the means of acceptance originally required or (2) the issue was whether a settlement agreement that did not specify a time for, or order of, performance was unenforceable for those reasons.
See Padilla, 907 S.W.2d at 460.
See CherCo Props., Inc. v. Law, Snakard Gambill, P.C., 985 S.W.2d 262, 266 (Tex. App.-Fort Worth 1999, no pet.) (considering enforceability of signed contract that specified who would pay certain amounts and who would sign releases, but not specifying order or time of performance).
We hold that the trial court did not err in granting the Heberts' summary-judgment motions, and in denying Conrad's summary-judgment motions, on the basis that no contract was formed because Conrad failed to accept the offers in strict compliance with their terms. Having concluded that one summary-judgment ground will support the judgment rendered, we need not discuss the remaining bases for summary judgment. Accordingly, we overrule issues one and two.
Neither need we reach Conrad's issues three and four, which concern the propriety of the court's having sustained objections to certain of his summary-judgment evidence. To the extent that the struck evidence concerned anything other than the method of acceptance specified in the offers ( e.g., whether the June 14 letters constituted counteroffers, why Bossley included what she did in the releases, or why the Heberts did not respond to Bossley's calls), it is irrelevant to our holding. To the extent that it concerned Bossley's subjective beliefs about whether she was accepting the offers by doing something other than tendering payment, the evidence is irrelevant to our holding, which was based on the offers' plain language. See Owens v. Upper Neches River Mun. Water Auth., 514 S.W.2d 58, 62 (Tex. Civ. App.-Tyler 1974, writ ref'd n.r.e.) (holding that no fact issue was raised by plaintiffs' understanding that they had accepted an offer that gave them unconditional right to repurchase because the conditional nature of the offer was unambiguous on its face, rendering the purported "acceptance" invalid).
CONCLUSION
We affirm the judgment of the trial court.