Opinion
NO. 14-20-00395-CV
01-20-2022
M.A. MILLS, P.C., Appellant v. John P. KOTTS and Boumatic, LLC, Appellees
Collin Joe Cox, Grant Martinez, Shane Pennington, Vidal Martinez, Houston, for Appellee. Kenna M. Seiler, Steven John Mitby, The Woodlands, for Appellant.
Collin Joe Cox, Grant Martinez, Shane Pennington, Vidal Martinez, Houston, for Appellee.
Kenna M. Seiler, Steven John Mitby, The Woodlands, for Appellant.
Panel consists of Chief Justice Christopher and Justices Zimmerer and Wilson.
Tracy Christopher, Chief Justice
A lawyer entered into an oral agreement with a client to provide business-management services in exchange for a monthly salary and an annual incentive bonus based on the business's performance. After the client paid one bonus, but none thereafter, the lawyer sued the client for breach of the oral agreement. The client moved to dismiss the suit under the Texas Citizens Participation Act ("TCPA"), arguing that the suit was related to the client's exercise of the right of association. The client further argued that even if the lawyer could establish a prima facie case with clear and specific evidence, the suit should still be dismissed because the client could prove the following two defenses: (1) the oral agreement is illegal and void as against public policy because it contravenes a disciplinary rule applicable to lawyers, and (2) the oral agreement is unenforceable because it violates the statute of frauds. The trial court granted the client's motion to dismiss. Although we agree that the client established that the TCPA applies to the suit, we conclude that the trial court's ruling is erroneous because the lawyer established a prima facie case for his claim and because the client proved neither of his two defenses.
BACKGROUND
The parties dispute some of the facts, but in keeping with our standard of review, we present the following in the light most favorable to the nonmovant.
The lawyer in this case is Mickey Mills, who owns and manages the professional corporation M.A. Mills, P.C. (collectively, "Mills"). Beginning in 2004, Mills served as the general counsel of Boumatic, LLC, a global manufacturer of dairy equipment.
Boumatic had previously been acquired by John Kotts, an experienced investor who has bought and sold companies worth hundreds of millions of dollars. In 2014, after several managers had left Boumatic, Kotts recruited Mills to take over the business, which for many years had been losing money, was in default of its loan covenants, and was at risk of financial collapse. On behalf of himself and Boumatic, Kotts orally promised that he would pay Mills $100,000 per month and an annual incentive bonus equal to 10% of Boumatic's adjusted net operating profit.
Mills accepted the terms of this oral agreement, and in 2015, after a year of managing Boumatic, he made the business profitable again. However, Kotts declined to pay Mills the bonus that had been promised—at least initially. Kotts claimed that Boumatic was not actually profitable, but Mills determined that this pretense was false. Mills found that Kotts had been manipulating Boumatic's balance sheet to categorize certain personal expenses as corporate charges, which made Boumatic appear as though it were operating at a loss. When Mills confronted Kotts about this accounting scheme, he threatened to quit if Kotts did not honor their oral agreement. Kotts relented and paid Mills a bonus of approximately $1.5 million.
In 2016 and 2017, Boumatic grew in market share, revenue, and profitability, but Kotts again declined to pay Mills his annual bonuses. Kotts explained that he was experiencing a cash shortage because of another company he owned. To encourage Mills to continue managing Boumatic, Kotts assured Mills that the bonuses would be paid, but they never were.
In 2018, Boumatic was profitable again, and had even received two purchase offers by national investors for $90 million and $120 million. Kotts declined both offers. He also declined to pay Mills his annual bonus.
Mills resigned in 2019 and then filed this suit against Kotts and Boumatic (collectively, "Kotts"), alleging a cause of action for breach of contract. Kotts moved to dismiss the suit under the TCPA. Mills filed a response, and Kotts filed a reply. The trial court granted the motion to dismiss, and this appeal followed. ANALYSIS
The TCPA was amended in 2019, but the prior version continues to govern cases, including this one, that were filed before the amendments’ effective date. See Act effective Sept. 1, 2019, 86th Leg., R.S., ch. 378, §§ 11–12, 2019 Tex. Gen. Laws 684, 687. Accordingly, in this opinion, all citations to the TCPA refer to the pre-amendment version that was in effect when Mills filed his suit.
I. TCPA Burdens
Before a legal action may be dismissed under the TCPA, the movant must satisfy his initial burden of demonstrating by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the movant's exercise of the right of free speech, the right to petition, or the right of association. See Tex. Civ. Prac. & Rem. Code § 27.005(b). If the movant satisfies this initial burden, then the burden shifts to the nonmovant to establish by clear and specific evidence a prima facie case for each essential element of the claim in question. See Tex. Civ. Prac. & Rem. Code § 27.005(c). If the nonmovant satisfies that burden, then the burden shifts back to the movant to establish by a preponderance of the evidence each essential element of a valid defense. See Tex. Civ. Prac. & Rem. Code § 27.005(d). Whether the parties have met these respective burdens is a question of law that we review de novo. See Dallas Morning News, Inc. v. Hall , 579 S.W.3d 370, 377 (Tex. 2019).
II. The Exercise of The Right of Association
Kotts argued in his motion to dismiss that Mills's legal action related to the exercise of the right of association and the right of free speech. We limit our discussion to just the exercise of the right of association, which the TCPA defines as "a communication between individuals who join together to collectively express, promote, pursue, or defend common interests." See Tex. Civ. Prac. & Rem. Code § 27.001(2) ; see also Adams v. Starside Custom Builders, LLC , 547 S.W.3d 890, 892 (Tex. 2018) (indicating that the TCPA's statutory definitions of protected rights are "not fully coextensive" with the constitutional rights protected by the First Amendment).
To prove that such a communication occurred here, Kotts referred to Mills's pleadings, which may be taken as evidence in the TCPA context. See Tex. Civ. Prac. & Rem. Code § 27.006(a). Those pleadings established that Kotts had "recruited" Mills to solve a crisis at Boumatic, which had been losing money, qualified employees, and market share. The pleadings further established that:
As part of an oral agreement negotiated at the end of 2014, Kotts promised on behalf of himself and Boumatic that he would pay Plaintiff $100,000 per month and 10% of the adjusted net operating profit of Boumatic as an annual incentive bonus for Mills’ services. Kotts promised this compensation to incentivize Plaintiff to devote full time and resources to turning Boumatic into a profitable business.
This evidence proved that Kotts and Mills had communicated with each other about pursuing common business interests, and under this court's precedent, such communications demonstrate an exercise of the right of association. See Abatecola v. 2 Savages Concrete Pumping, LLC , No. 14-17-00678-CV, 2018 WL 3118601, at *7–8 (Tex. App.—Houston [14th Dist.] June 26, 2018, pet. denied) (mem. op.) (concluding that there was an exercise of the right of association where an employer hired an employee and made communications that "created an employment relationship for the common pursuit of engaging in the same business").
Because these communications form the basis of the oral agreement that was allegedly breached, they also relate to Mills's legal action. We therefore conclude that Kotts satisfied his initial burden of showing by a preponderance of the evidence that the legal action is related to an exercise of the right of association.
Mills believes that we should reach the opposite conclusion because, in his view, his legal action is based on conduct (i.e., the refusal to pay a bonus), rather than on communications. This argument is unpersuasive. The standard under the TCPA is whether the legal action "is based on, relates to, or is in response to" an exercise of a protected right. See Tex. Civ. Prac. & Rem. Code § 27.005(b). And the phrase "relates to" has a broad meaning. Cf. AutoNation USA Corp. v. Leroy , 105 S.W.3d 190, 195–96 (Tex. App.—Houston [14th Dist.] 2003, no pet.) (recognizing the breadth of claims covered by an arbitration clause containing the phrase "arising out of or relating to"). Even though Mills may characterize his breach of contract claim as being based on the refusal to pay a bonus, which may or may not have involved a communication, his claim still broadly "relates to" the prior oral agreement he made with Kotts, and that oral agreement was necessarily a communication. See Tex. Civ. Prac. & Rem. Code § 27.001(1) (defining "communication" as including "the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic").
Because Kotts established that Mills's legal action is related to the exercise of the right of association, we conclude that Kotts satisfied his initial burden under the TCPA, and there is no need for this court to consider whether Mills's legal action is also based on, relates to, or is in response to an exercise of the right of free speech. The burden accordingly shifted to Mills to establish with clear and specific evidence a prima facie case for each essential element of his breach of contract claim.
III. Prima Facie Case
There are four essential elements to a breach of contract claim: (1) a valid contract exists, (2) the plaintiff performed or tendered performance as contractually required, (3) the defendant breached the contract by failing to perform or tender performance as contractually required, and (4) the plaintiff sustained damages due to the breach. See Pathfinder Oil & Gas, Inc. v. Great Western Drilling, Ltd. , 574 S.W.3d 882, 890 (Tex. 2019). For elements two through four, the parties stipulated in a Rule 11 agreement that Mills's original petition was sufficient by itself to satisfy Mills's burden under the TCPA. Even though this stipulation addressed the breach of an agreement, the parties did not stipulate that a valid agreement also existed. We now consider whether Mills satisfied his burden with respect to that last remaining element.
To establish a prima facie case under the TCPA for the existence of a valid contract, Mills was required to show with clear and specific evidence that there was (1) an offer, (2) acceptance, (3) a meeting of the minds, (4) consent to the terms by both parties, (5) execution with an intent that the contract become mutual and binding, and (6) consideration. See Angelou v. African Overseas Union , 33 S.W.3d 269, 278 (Tex. App.—Houston [14th Dist.] 2000, no pet.). The TCPA does not define "prima facie case," but in the absence of a statutory definition, we apply its traditional legal meaning, which is the "minimum quantum of evidence necessary to support a rational inference that the allegation of fact is true." See In re Lipsky , 460 S.W.3d 579, 590 (Tex. 2015). The TCPA does not define the "clear and specific" standard either, but "clear" means "unambiguous, sure, or free from doubt," and "specific" means "explicit or relating to a particular named thing." Id. When deciding whether these standards were satisfied, we view the evidence in the light most favorable to Mills, because he is the nonmovant. See Hieber v. Percheron Holdings, LLC , 591 S.W.3d 208, 211 (Tex. App.—Houston [14th Dist.] 2019, pet. denied).
Mills sought to satisfy his evidentiary burden with a declaration attached to his TCPA response. In that declaration, he made the following averments:
In December 2014, Kotts offered me the role as Boumatic's global CEO for a flat monthly rate. After my concerns about the time and travel commitments discussed above, I rejected that initial offer and countered with an offer to manage Boumatic full-time in exchange for a flat monthly rate of $100,000 plus bonuses to be calculated at 10% of the adjusted net operating profit of Boumatic, all payable to my professional corporation, M.A. Mills, P.C. In discussing this offer, I specifically explained to Kotts that he could probably find less-experienced executives who were willing to accept the position for less money but that I had no interest unless my compensation would include 10% of the adjusted net operating profit. I explained to Kotts how the bonuses would be calculated and that my total compensation would increase along with profitability. This discussion took place between me and Kotts in Houston, Texas.
In a call a few days after I presented Kotts with the above counteroffer and explanation, Kotts contacted me again. Kotts told me directly that he accepted my offer, verbally confirming to me his agreement that I would work as Boumatic's CEO in exchange for a flat monthly rate of $100,000 plus bonuses to be calculated at 10% of the adjusted net operating profit of Boumatic, all payable to M.A. Mills, P.C.
In another portion of the declaration, Mills averred that Kotts had paid him his bonus in 2015, and that the bonus was in accordance with the terms of the parties’ oral agreement.
Altogether, this evidence was clear and specific. It was also sufficient to establish a prima facie case that a contract was formed and that the parties had mutually agreed to be bound by its terms. See Porter-Garcia v. Travis Law Firm, P.C. , 564 S.W.3d 75, 87 (Tex. App.—Houston [1st Dist.] 2018, pet. denied) (holding that the nonmovant had satisfied its burden under the TCPA of establishing a prima facie case for the existence of a valid oral agreement).
Kotts has two responses to this evidence. First, he argues that the evidence is too vague to demonstrate acceptance because the evidence does not clearly and specifically identify all of the parties to the alleged contract. Kotts questions whether Mills, the individual, is a direct party to the agreement, or only a third-party beneficiary. Kotts likewise questions whether Mills's counteroffer was accepted by Kotts, the individual, or by Kotts and Boumatic collectively.
We do not agree that the evidence is vague. The declaration plainly sets forth that Mills individually negotiated the terms of the agreement, and that one of its terms was that payment would be made to his professional corporation. The pleadings likewise established that Kotts entered into the agreement on behalf of himself and Boumatic. This evidence was clear and specific.
In his second response, Kotts argues that a presumption of invalidity attaches to contracts such as this one between a lawyer and his client, citing Keck, Mahin & Cate v. National Union Fire Ins. Co. of Pittsburgh, Pa. , 20 S.W.3d 692, 699 (Tex. 2000). Kotts continues that Mills did not overcome this presumption because he produced no evidence that the terms of the oral agreement were fair and reasonable, and because Mills did not clearly and specifically establish all material facts relating to the agreement, in particular how Boumatic's adjusted net operating profit would be calculated.
This response does not address an essential element that Mills was required to prove. But even if we were to assume, without deciding, that the Keck presumption applied and that Mills had the burden of overcoming it during this stage of the TCPA framework, we conclude that Mills satisfied his burden. In his declaration, Mills established that his bonus was fair and reasonable because it depended on his performance in making an unprofitable company profitable once again. Mills also established that Kotts accepted the counteroffer after a contemplation of a few days, in which Kotts had an opportunity to seek independent counsel from two separate law firms he already had on retainer. Mills averred:
I considered this compensation agreement fair and reasonable. Under this agreement, I would only receive a bonus if I produced profitability for Boumatic. In addition, Kotts had an opportunity to consult independent counsel regarding my compensation. At the time, Kotts had Baker Botts and Axley Brynelson on retainer, including for employment matters. Given Kotts’ sophistication as an investor and access to qualified legal representation, I felt that I had no advantage in the negotiation.
This evidence demonstrated that Mills did not exert any undue influence over Kotts, and that Kotts, as a sophisticated investor, agreed that the oral agreement was fair and reasonable. Cf. Lisa Blue/Baron & Blue v. Hill , No. 3:10-CV-02269-O-BK, 2011 WL 13244525, at *5 (N.D. Tex. June 15, 2011) (declining to void an agreement between a lawyer and a client, despite a minor violation of a disciplinary rule, in part because of the client's "level of sophistication as a consumer of legal services").
As for whether all material facts relating to the contract were set forth, there was evidence attached to Kotts's reply that showed in detail how Mills was calculating Boumatic's adjusted net operating profit. Even though these same details were not set forth in Mills's response, Mills still established in his declaration that he "explained to Kotts how the bonuses would be calculated." And viewing the evidence in the light most favorable to Mills, we can infer that Kotts understood the details of that calculation because Mills averred that Kotts actually paid the first annual bonus.
We conclude that Mills satisfied his burden as the nonmovant. The burden accordingly shifted back to Kotts to prove a defense.
IV. Defenses
Kotts asserted two defenses in his motion to dismiss. The first defense was that the oral agreement was illegal, void, and unenforceable as against public policy because it contravened Rule 1.08(a) of the Texas Disciplinary Rules of Professional Conduct. The second defense was that the oral agreement was unenforceable because it violated the statute of frauds. We examine each of these defenses in turn. A. Disciplinary Rule 1.08(a)
Rule 1.08(a) provides that a lawyer shall not enter into a business transaction with a client unless the following criteria are met:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed in a manner which can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek advice of independent counsel in the transaction; and
(3) the client consents in writing thereto.
See Tex. Disciplinary R. Prof'l Conduct 1.08(a), reprinted in Tex. Gov't Code, tit. 2, subt. G, app. A (Tex. State Bar R. art. X, § 9).
Kotts made three points regarding this rule. The first point was that Mills was bound to follow this rule in his business dealings with Kotts because the parties had a preexisting lawyer-client relationship. The second point was that the rule applied to the parties’ oral agreement because the agreement amounted to a business transaction. And the third point was that Mills violated Rule 1.08(a) —in particular subsection (3)—because Mills did not obtain Kotts's written consent to the agreement. For the sake of argument, we can assume that all three of these points are true.
Kotts then reasoned that because the oral agreement contravened Rule 1.08(a), the agreement must also be illegal, void, and unenforceable as against public policy. This reasoning is not supported by our jurisprudence.
Courts have held that a contract is void and unenforceable as against public policy if performance under the contract cannot be achieved without a violation of the law. See Lewis v. Davis , 145 Tex. 468, 199 S.W.2d 146, 148–49 (1947). Kotts addressed this principle in his motion to dismiss, but it has no bearing here because the issue in this case does not concern the legality of a party's performance. Instead, the issue is whether a contract is illegal, void, and unenforceable as against public policy because the contract was formed in a manner that contravened Rule 1.08(a).
To our knowledge, no Texas court has directly spoken on this issue, although our court has made broader statements about the disciplinary rules more generally. We previously opined that courts "may deem these rules to be an expression of public policy, so that a contract violating them is unenforceable as against public policy," but we also said that courts "are not required to do so." See Dardas v. Fleming, Hovenkamp & Grayson, P.C. , 194 S.W.3d 603, 613 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) ; see also Wright v. Sydow , 173 S.W.3d 534, 549 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (holding that a settlement agreement would be enforced even if it were executed in violation of Rule 1.08(g), and stating that a violation of the disciplinary rules does not necessarily void a contract).
Kotts refers us to decisions from courts in other jurisdictions, which have analyzed disciplinary rules that are similar to Rule 1.08(a). These jurisdictions have taken a variety of approaches. See, e.g., Calvert v. Mayberry , 440 P.3d 424, 429 (Colo. 2019) (an agreement that contravenes a similar rule is presumptively void, but the attorney may rebut the presumption by showing that, under the circumstances, the agreement does not contravene the public policy underlying the rule); Law Offices of Peter H. Priest, PLLC v. Coch , 244 N.C.App. 53, 780 S.E.2d 163, 172 (2015) (an attorney's failure to comply with a similar rule could be used defensively against the attorney in a case for breach of contract); DiLuglio v. Providence Auto Body, Inc. , 755 A.2d 757, 770–71 (R.I. 2000) (an agreement that contravenes a similar rule is voidable at the client's election, even if the agreement is economically fair to all concerned, unless the client fails to act promptly or ratifies the transaction after discovering material facts). We are not bound by any of these decisions, and we need not consider whether they are persuasive either, because other principles in Texas law point us to the conclusion that an agreement is not illegal, void, or unenforceable as against public policy when the agreement contravenes Rule 1.08(a).
We begin with the principle that "courts must exercise judicial restraint in deciding whether to hold arm's-length contracts void on public policy grounds." See Royston, Rayzor, Vickery, & Williams, LLP v. Lopez , 467 S.W.3d 494, 504 (Tex. 2015) (concluding that a contract between a law firm and its client was not unenforceable as against public policy even though the contract may not have complied with a disciplinary rule requiring that attorneys explain arbitration provisions to prospective clients, either orally or in writing).
Next, we refer to the preamble to the disciplinary rules, which provides as follows:
These rules do not undertake to define standards of civil liability of lawyers for professional conduct. Violation of a rule does not give rise to a private cause of action nor does it create any presumption that a legal duty to a client has been breached. Likewise, these rules are not designed to be standards for procedural decisions. Furthermore, the purpose of these rules can be abused when they are invoked by opposing parties as procedural weapons.
Tex. Disciplinary R. Prof'l Conduct Preamble ¶ 15, reprinted in Tex. Gov't Code, tit. 2, subt. G, app. A (Tex. State Bar R. art. X, § 9). This language, which specifically warns against the abuse of the rules as "procedural weapons," lends support to the notion that a minor violation should not void an entire agreement.
Finally, we refer to American National Insurance Co. v. Tabor , 111 Tex. 155, 230 S.W. 397 (1921), which established an analogous rule for when a contract contravenes a statute (which, like a disciplinary rule, may also express a public policy). In Tabor , the Supreme Court held that, unless the contract is declared by law to be void or unenforceable, a court should not refuse to enforce the contract simply because it is in contravention of a statute. Id. at 160, 230 S.W. at 399. The Court explained that if the legislature has expressly provided that other consequences may arise from violation of the statute, a reviewing court should reasonably infer that those consequences were adjudged to be adequate to secure the statute's observance, and that only those remedies should be applied. Id. at 160, 230 S.W. at 399.
Applying Tabor in the current context, we note that there is no statute or disciplinary rule declaring a contract void or unenforceable because the contract fails to adhere to the requirements of Rule 1.08(a). But this does not mean that there is no framework at all for ensuring that Rule 1.08(a) is respected. An attorney's failure to comply with Rule 1.08(a) can result in disciplinary action, including disbarment. See Tex. R. Disciplinary P. 15.04(D) (providing guidelines for sanctioning a lawyer who fails to avoid conflicts of interest), reprinted in Tex. Gov't Code, tit. 2, subt. G, app. B, part XV; e.g., Rosas v. Comm'n for Lawyer Discipline , 335 S.W.3d 311, 315–16 (Tex. App.—San Antonio 2010, no pet.) (an attorney violated Rule 1.08(a), and was ultimately disbarred, when he entered into a written contract with a client without properly admonishing the client, who was unskilled, about their business transaction). Because that consequence is available, public policy does not demand the invalidation of the parties’ oral agreement, especially where that agreement has been shown to be fair and reasonable to both sides.
The correctness of this approach is further supported by Section 82.065 of the Texas Government Code, which expressly provides that a contract for legal services is voidable by the client if the contract results from a violation of Rule 7.03 of the Texas Disciplinary Rules of Professional Conduct. We are not aware of any other statute that expressly provides that a contract is voidable (or void) when the contract results from the violation of a disciplinary rule. The legislature could have enacted a comparable statute addressing violations of Rule 1.08(a), but because it has not done so, we can presume that the omission was deliberate. Cf. Int'l Risk Control, LLC v. Seascape Owners Ass'n, Inc. , 395 S.W.3d 821, 825 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (declining to hold that a contract was unenforceable, even though there was a failure to comply with a regulation, because other remedies were available to enforce the regulation and because the legislature had already determined that avoidance was suitable for a different type of noncompliance).
For the foregoing reasons, we conclude that the oral agreement between Mills and Kotts was not illegal, void, and unenforceable because it contravened Rule 1.08(a). Kotts accordingly failed to prove his first defense.
B. The Statute of Frauds
Kotts also argued in his motion to dismiss that his oral agreement with Mills was unenforceable under the statute of frauds because the agreement could not be performed within one year from the date of making the agreement. See Tex. Bus. & Com. Code § 26.01(b)(6). As Kotts asserted in his motion, an agreement to pay an annual bonus based on the profits of a full calendar year "necessarily reflects an intent that Defendants would perform their payment obligations more than a full year after the agreement was entered."
Mills filed a response in which he argued that the oral agreement did not fall within the purview of the statute of frauds. In support of that argument, Mills cited to Miller v. Riata Cadillac Co. , 517 S.W.2d 773 (Tex. 1974), a factually similar case that also involved an oral agreement to pay an annual bonus based on a business's profits. Id. at 774. The Supreme Court ruled that the oral agreement did not fall within the statute of frauds because the agreement did not fix a time for performance and because performance was still possible within one year. Id. at 775–76. The Court also stated: "Moreover, the general rule is that the fact a bonus cannot be ascertained and paid until after the year in which services were rendered does not bring the contract within the Statute of Frauds." Id. at 776.
Mills produced evidence that the oral agreement had no fixed duration, which meant that it was considered performable within one year. See Montgomery Cnty. Hosp. Dist. v. Brown , 965 S.W.2d 501, 503 (Tex. 1998) ("An employment contract for an indefinite term is considered performable within one year."). Mills also argued that there was nothing in the oral agreement that precluded him from receiving a bonus at the twelve-month mark. Under such circumstances, Mills asserted that the statute of frauds was no defense.
Kotts filed a reply, but he did not address Miller or Mills's arguments regarding the statute of frauds. Kotts's brief on appeal is similarly silent on this issue.
We conclude that Mills's argument is correct and that Kotts failed to prove his second defense. Because Kotts did not establish either of his two defenses, this conclusion also means that the trial court erred by granting Kotts's motion to dismiss. In light of that conclusion, we need not consider Mills's additional arguments, which concern his motion to reconsider and his amended petition.
CONCLUSION
The trial court's judgment is reversed and the case is remanded to that court for additional proceedings consistent with this opinion.