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holding that plaintiff failed to satisfy partial performance as exception to statute of frauds bar against alleged ten-year partnership agreement because evidence of companies working together on twenty-three prior events was equally consistent with companies merely working together without partnership agreement
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No. 01-08-00954-CV
Opinion issued December 30, 2010.
On Appeal from the 133rd District Court, Harris County, Texas, Trial Court Case No. 2006-44980.
Panel consists of Chief Justice RADACK and Justices HIGLEY and MASSENGALE.
MEMORANDUM OPINION
This is an appeal in a legal malpractice case. The malpractice claim arose from a suit filed by appellants Raul Resendez and Resendez Associates (collectively, Resendez) against Pace Concerts, Inc., SFX Entertainment, and Pace Concerts, Ltd. for fraudulent inducement to contract. In that case, Resendez did not carry his burden at trial or on appeal to show that the doctrine of partial performance excepted his alleged contract from the statute of frauds. See Resendez v. Pace Concerts, No. 07-02-0168-CV, 2003 WL 22207641, at *2 (Tex. App.-Amarillo Sept. 24, 2003, pet. denied). After his motion for rehearing and petition for discretionary review to the Texas Supreme Court were denied, Resendez sued his attorneys, alleging that they committed legal malpractice by not properly presenting his appellate arguments.
In the legal malpractice case, the trial court rendered summary judgment in favor of the appellees, Resendez's former attorneys. The trial court held that the summary-judgment evidence established as a matter of law that (1) Resendez's claims in the underlying litigation were barred by the statute of frauds, (2) there was insufficient evidence to raise a fact question as to partial performance or as to whether the various writings between the parties constituted a valid and enforceable contract, and (3) Resendez would not have been entitled to benefit-of-the-bargain damages even if his partial performance argument were meritorious.
On appeal, Resendez contends that trial court erred in granting summary judgment because none of the stated bases could be sustained. We affirm. I. Background A. Former business relationship
Resendez and Pace Concerts were both in the business of producing and promoting live music entertainment events. Resendez specialized in concerts and events involving Latin and Hispanic entertainers. In the 1990s, Resendez worked with Pace Concerts (and later its successor in interest, SFX Entertainment) to promote Latin music events jointly. Resendez exchanged letters and memoranda with Pace Concerts and SFX Entertainment. In these writings, the parties negotiated terms of a potential partnership and repeatedly stated or alluded to the fact that no partnership agreement had yet been finalized. None of these writings was signed by a representative of Pace Concerts or SFX Entertainment. Only one letter was signed by Resendez. In it, Resendez recounted the parties' prior negotiations and attempted to persuade Pace Concerts of his unique and valuable attributes as a potential partner in promoting Latin and Hispanic entertainment.
From April 1997 through August 1999, Resendez and Pace Concerts jointly promoted 23 events. In January 1998, SFX Entertainment purchased Pace Concerts and continued to operate both under its own name and in the name of Pace Concerts. Both Pace Concerts and SFX Entertainment sent numerous letters and press releases generally describing Resendez as a business partner, mentioning Resendez's participation in promotion of particular events, or referring to "PACE/Resendez."
In early 1999, Resendez told SFX Entertainment that a Mexican company was interested in acquiring smaller companies that promoted Latin and Hispanic entertainers. SFX Entertainment was informed that Resendez Associates and Cardenas/Fernandez Associates, Inc. were both possible targets for acquisition. SFX Entertainment began negotiating with Cardenas/Fernandez Associates, Inc. Meanwhile, Resendez proposed a significant expansion of SFX Entertainment's Latin/Hispanic business. SFX Entertainment ultimately declined the Resendez proposal, noting its interest in a continued relationship "on an event-by-event basis." Shortly thereafter, Pace Concerts sent Resendez a proposal to jointly promote an event. Around the same time, Pace Concerts sent letters to third parties representing that it "partnered all" and "always co-promotes" its Latin shows with Resendez.
SFX Entertainment sent Resendez two letters stating its legal conclusion that no contractual relationship or partnership existed between the parties and emphasizing that future joint projects would continue to be on an event-by-event basis. Two days after SFX Entertainment informed Resendez of its decision not to enter into a partnership, SFX Entertainment announced that it had entered into a strategic alliance with Cardenas/Fernandez Associates to promote sports and entertainment events of particular interest to the Hispanic market.
B. Litigation over alleged partnership
Resendez sued Pace Concerts and SFX Entertainment in Bexar County for breach of fiduciary duty and other causes of action arising from their business relationship. In response, Pace Concerts and SFX Entertainment pleaded the statute of frauds. Approximately one week later, Pace Concerts and SFX Entertainment filed suit in Harris County, seeking a declaratory judgment that they had no partnership agreement or relationship with Resendez.
Rodney Eckerman testified in a deposition that he had been the president of Pace Concerts and that he became the executive vice-president and chief operating officer of SFX Entertainment. He testified that Pace Concerts never intended to enter into a long-term relationship with Resendez. Pace Concerts and SFX Entertainment filed a motion for summary judgment, and the trial court held a hearing. Before the trial court ruled on the motion for summary judgment, Resendez nonsuited his Bexar County lawsuit and filed a counterclaim for fraudulent inducement to contract in the Harris County case.
The Harris County trial court granted summary judgment in favor of Pace Concerts and SFX Entertainment, concluding that the enforcement of any alleged partnership agreement was barred by the statute of frauds, that the statute of frauds also precluded recovery for fraudulent inducement to contract, and that benefit-of-the-bargain damages could not be awarded on a theory of fraud or fraudulent inducement in the absence of an enforceable contract. Resendez appealed, and his appeal was transferred to the Amarillo Court of Appeals. He argued on appeal that the trial court erred in concluding as a matter of law that benefit-of-the-bargain damages were unrecoverable on the causes of action he alleged. He also argued that the statute of frauds "cannot be used as an engine of fraud." The court of appeals held that "Resendez cannot assert fraud in the inducement to recover damages measured by the benefit of the bargain when the contract manifesting the bargain is unenforceable due to the Statute of Frauds." Resendez, 2003 WL 22207641, at *1. The court discerned two possible interpretations of Resendez's argument that the statute of frauds cannot be used an "engine of fraud": (1) that the statute of frauds did not apply when a party asserted a cause of action sounding in fraud and (2) that the doctrine of partial performance applied as an exception to the statute of frauds. Id. at *2. The court observed that the Texas Supreme Court has previously held that the statute of frauds applies in situations in which a party seeks damages for a purported fraud. Id. The court of appeals concluded that Resendez's partial performance argument was inadequately briefed, id., and affirmed the trial court's judgment. Id. at *4. Resendez's motion for rehearing was overruled, and the Texas Supreme Court denied his petition for discretionary review and motion for rehearing.
C. Malpractice litigation
Resendez sued Pat Maloney, Jr., James E. Willingham, Jr., and their respective law firms based on their representation in the litigation against Pace Concerts and SFX Entertainment. In the malpractice suit, Resendez alleged that his attorneys "cast [his claim] in the form of a fraudulent inducement to enter into a contract claim while continuing to seek benefit-of-the-bargain damages." Resendez alleged that Maloney and Willingham were negligent in representing him both at trial and on appeal.
Maloney and Willingham filed motions for summary judgment as to causation. Maloney argued that the claims against Pace Concerts and SFX Entertainment were barred by the statute of frauds and, as a matter of law, Resendez was not entitled to benefit-of-the-bargain damages on a partial performance theory. Maloney also argued that there was no evidence of a contract that complied with the statute of frauds or of acts of partial performance sufficient to prove an exception to the statute of frauds. Willingham also argued that benefit-of-the-bargain damages are not available in a contract case under a partial performance theory and that there was no evidence of multiple writings and documents that satisfied the statute of frauds.
Resendez responded to the motions for summary judgment by filing affidavits from two attorneys who opined that Maloney and Willingham committed malpractice at both the trial and appellate levels, specifically by failing to raise and argue the partial performance exception to the statute of frauds. Maloney objected to the affidavits because they stated legal conclusions and were "impermissible arrogations of the judicial function."
The trial court overruled the objections to the affidavits, granted Maloney's and Willingham's motions for summary judgment, and entered a final judgment that Resendez take nothing by his malpractice lawsuit. Resendez appealed.
II. Standards of review
A. Summary judgment
We review de novo the trial court's ruling on a motion for summary judgment. Mann Frankfort Stein Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We review the evidence presented in the motion and response in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. Id.; see City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Johnson v. Brewer Pritchard, P.C., 73 S.W.3d 193, 208 (Tex. 2002). We must review all of the summary-judgment grounds on which the trial court ruled that are dispositive of the appeal, and we may consider any other grounds on which the trial court did not rule. See Baker Hughes, Inc. v. Keco R. D., Inc., 12 S.W.3d 1, 5 (Tex. 1999) (citing Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 624 (Tex. 1996)). However, issues not expressly presented to the trial court by written motion, answer, or other response shall not be considered as grounds for reversal. TEX. R. CIV. P. 166a(c); see Via Net v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex. 2006).
The party moving for traditional summary judgment bears the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); see also Provident Life Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003). A defendant must disprove at least one of the essential elements of the plaintiff's causes of action to prevail on summary judgment. Elliott-Williams Co., Inc. v. Diaz, 9 S.W.3d 801, 803 (Tex. 1999); see Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Alternatively, a defendant may obtain summary judgment based on an affirmative defense by proving all the essential elements of the affirmative defense as a matter of law. See KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999); Leach v. Conoco, Inc., 892 S.W.2d 954, 959 (Tex. App.-Houston [1st] 1995, writ dism'd w.o.j.). "The nonmovant has no burden to respond to a summary judgment motion unless the movant conclusively establishes its cause of action or defense." M.D. Anderson Hosp. Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000). However, once the defendant produces sufficient evidence conclusively establishing his right to summary judgment, the burden of proof shifts to the plaintiff to present evidence sufficient to raise a fact issue. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995) (citing "Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936-37 (Tex. 1972)).
A no-evidence motion for summary judgment is in essence a directed verdict granted before trial, to which we apply a legal-sufficiency standard of review. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003). A no-evidence summary judgment motion must be granted if, after an adequate time for discovery, (1) the moving party asserts that there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial and (2) the non-movant fails to produce more than a scintilla of summary judgment evidence raising a genuine issue of material fact on those elements. TEX. R. CIV. P. 166a(i). A party moving for no-evidence summary judgment must specifically state the element or elements of a claim for which there is no evidence. Id.; Green v. Indus. Specialty Contractors, Inc., 1 S.W.3d 126, 130 (Tex. App.-Houston [1st] 1999, no pet.). A no-evidence summary judgment will be sustained when (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at 751. We view the evidence in the light most favorable to the non-movant, disregarding all contrary evidence and inferences. See Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997).
B. Legal malpractice
To prevail on a legal malpractice claim, a plaintiff must prove that (1) the attorney owed a duty to the plaintiff; (2) the attorney breached that duty; (3) the breach proximately caused the plaintiff's injury; and (4) the plaintiff suffered damages. See Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989). An attorney owes to his client a duty to act with ordinary care, that is, in a manner consistent with the standard of care that would be expected to be exercised by a reasonably prudent attorney. See id. at 664. The "standard is an objective exercise of professional judgment, not the subjective belief that [the attorney's] acts are in good faith." Id. at 665. "[A] lawyer can commit professional negligence by giving an erroneous legal opinion or erroneous advice, by delaying or failing to handle a matter entrusted to the lawyer's care, or by not using a lawyer's ordinary care in preparing, managing, and prosecuting a case." Murphy v. Gruber, 241 S.W.3d 689, 693 (Tex. App.-Dallas 2007, pet. denied); see Alexander v. Turtur Assocs., Inc., 146 S.W.3d 113, 119 (Tex. 2004).
The plaintiff must demonstrate that any alleged damages, including attorney's fees, were proximately caused by the breach of a duty by the defendant. See Cosgrove, 774 S.W.2d at 665; Judwin Props., Inc. v. Griggs Harrison, 911 S.W.2d 498, 507 (Tex. App.-Houston [1st] 1995, no writ). "When a legal malpractice claim arises from prior litigation, the plaintiff has the burden to prove that `but for' the attorney's breach of duty, he or she would have prevailed on the underlying cause of action and would have been entitled to judgment." Greathouse v. McConnell, 982 S.W.2d 165, 172 (Tex. App.-Houston [1st] 1998, pet. denied) (articulating "suit within a suit" requirement); see also Alexander, 146 S.W.3d at 117; Duerr v. Brown, 262 S.W.3d 63, 76 (Tex. App.-Houston [14th] 2008, no pet.).
Ordinarily, causation is a question of fact. See Grider v. Mike O'Brien, P.C., 260 S.W.3d 49, 55 (Tex. App.-Houston [1st] 2008, pet. denied). In a legal malpractice suit arising from a prior litigation, causation generally must be proved by expert testimony. Alexander, 146 S.W.3d at 119. This is so because "the wisdom and consequences of . . . tactical choices made during litigation are generally matters beyond the ken of most jurors. And when the causal link is beyond the jury's common understanding, expert testimony is necessary." Id. at 119-20. However, when causation is a question of law, expert testimony is not required. See Zenith Star Ins. Co. v. Wilkerson, 150 S.W.3d 525, 531-32 (Tex. App.-Austin 2004, no pet.). Causation is a question of law when the plaintiff alleges that his attorney committed malpractice by failing to raise a certain defense and the question before the court is whether the defense was legally valid. Id. at 531. Causation is also a question of law when a plaintiff alleges appellate legal malpractice because "the question of whether an appeal would have been successful depends on an analysis of the law and the procedural rules." Grider, 260 S.W.3d at 55.
III. Statute of frauds
As pertinent to Resendez's original claims against Pace Concerts and SFX Entertainment, the statute of frauds provides that an agreement that is not to be fully performed within one year is not enforceable unless it is in writing and signed by the party to be charged with it. See TEX. BUS. COM. CODE ANN. § 26.01(a), (b)(6) (Vernon 2009). "If a contract explicitly calls for performance over a period longer than one year, the mere theoretical possibility of termination of the contract within one year because of death or another fortuitous event does not take the contract out of the statute of frauds." Welch v. Coca-Cola Enter., Inc., 36 S.W.3d 532, 538 (Tex. App.-Tyler 2000, pet. withdrawn) (citing Chevalier v. Lane's Inc., 147 Tex. 106, 213 S.W.2d 530, 532 (1948)). Whether a contract falls within the statute of frauds is a question of law to be decided by the court, Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 436 (Tex. App.-Dallas 2002, pet. denied), but whether an exception to the statute of frauds applies is generally question of fact. Adams v. Petrade, Int'l, Inc., 754 S.W.2d 696, 705 (Tex. App.-Houston [1st] 1988, writ denied).
"The writings relied on to satisfy the statute of frauds must be complete within themselves in every material detail, and must contain all the essentials of a contract so that the agreement may be ascertained from the writings without resort to parol testimony." Welch, 36 S.W.3d at 538 (citing Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978)). To satisfy the statute of frauds, a memorandum of an agreement must be signed by the party to be charged with the agreement. Crowder v. Tri-C Res., Inc., 821 S.W.2d 393, 396 (Tex. App.-Houston [1st] 1991, no writ) (citing Cohen, 565 S.W.2d at 232). In addition, "[i]f the memorandum consists of two documents, the second document must refer to the first one." Id. Finally, "[u]nder Texas law, a writing that contemplates a contract or promise to be made in the future does not satisfy the requirements of the statute of frauds." Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 778 (Tex. App.-Houston [1st] 2009, pet. denied). "Writings that contain `futuristic' language are insufficient to confirm that a contract or promise is already in existence." Id.
Resendez alleged the existence of a ten-year agreement to promote entertainment events with Pace Concerts. Because this alleged agreement contemplated performance over a period longer than one year, the alleged agreement falls within the ambit of the statute of frauds. See TEX. BUS. COMMERCE CODE ANN. § 26.01(a), (b)(6).
Resendez does not argue that a single signed document evidences this agreement. Rather, he relies on Central Power Light Co. v. Del Mar Conservation Dist., 594 S.W.2d 782, 789 (Tex. Civ. App.-San Antonio, writ ref'd n.r.e.), for the proposition that the requirement of a signed writing may be satisfied by a series of writings, and he argues that the multiple letters and memoranda exchanged between the parties are some evidence that he could satisfy the statute of frauds.
The letters and memoranda exchanged by the parties demonstrate their attempt to negotiate a partnership agreement. For example, Pace Concerts sent Resendez an unsigned memorandum that stated, "The information contained in this outline should not be construed as a firm offer, but rather as a starting point to determine if all of the related parties are in agreement to move this potential partnership forward." Resendez later wrote to Pace Concerts and explained his disappointment about the relationship as it had evolved between the parties. He implicitly acknowledged that the parties did not have a written contract when he expressed his reservations about "going further without a written and specific plan of participation," and he reiterated what terms of partnership would be acceptable to him. These documents that suggest the parties might enter into a partnership at some time in the future are insufficient to satisfy the writing requirement of the statute of frauds. See Hartford Fire, 287 S.W.3d at 778. In addition, none of the documents exchanged between the parties and submitted as summary judgment proof were signed by a representative of Pace Concerts or SFX Entertainment. The lack of a signature by a person authorized to bind Pace Concerts or SFX Entertainment renders the remaining documents insufficient to satisfy the statute of frauds. See Crowder, 821 S.W.2d at 396.
In Central Power Light, the San Antonio Court of Appeals held that a series of letters was sufficient to satisfy the statute of frauds because they were signed by the party to be charged and because, taken together, the signed letters contained all the relevant terms of the parties' agreement. Cent. Power Light, 594 S.W.2d at 788-90. Here, the summary-judgment proof includes some letters to third parties signed by representatives of Pace Concerts or SFX Entertainment that refer to Resendez as a partner or imply a partnership. But none of these signed letters or documents specifically suggests a partnership in the legal sense of that term or describes the terms of the agreement that Resendez alleges he had with Pace Concerts and SFX Entertainment. Therefore, these documents are insufficient to satisfy the statute of frauds.
IV. Partial performance
Partial performance of a contract is an equitable exception to the statute of frauds. See Exxon Corp., 82 S.W.3d at 439. "Under the partial performance exception to the statute of frauds, contracts that have been partly performed, but do not meet the requirements of the statute of frauds, may be enforced in equity if denial of enforcement would amount to a virtual fraud." Id. Virtual fraud means that because of his reliance on the contract, a party has suffered a substantial detriment for which he has no adequate remedy, and the other party would reap an unearned benefit if permitted to invoke the statute of frauds. See id. However, the acts constituting partial performance must be unequivocally referable to the agreement and corroborative of the fact that a contract actually was made. Id. They must be such as could have been done for no other reason than to fulfill the particular agreement sought to be enforced; otherwise, they do not tend to prove the existence of the otherwise unenforceable agreement relied upon by the plaintiff. Id. at 439-40.
We have conducted a de novo review of the summary-judgment proof attached to the two expert affidavits that Resendez filed in response to the motions for summary judgment. The summary-judgment evidence shows that while Resendez was negotiating a potential partnership with Pace Concerts and SFX Entertainment, he jointly promoted 23 events with them. Three officers of Pace Concerts and SFX Entertainment testified by deposition that they had no partnership agreement with Resendez and that they worked with him on an event-by-event basis. Resendez testified by deposition that he and Pace Concerts agreed to partnership terms on March 18, 1997, and that they jointly produced 20 to 25 events under those terms. However, nothing about the fact of their joint promotion or production of these events is solely referable to the alleged ten-year contract; rather, these actions are equally referable to either an event-by-event joint promotion arrangement or some other contractual arrangement. See id. Therefore, Resendez has no evidence of at least one element of partial performance.
Resendez argues that his two expert affidavits are some evidence of partial performance because each opined that Resendez would have prevailed in his underlying suit if his attorneys had properly raised partial performance at trial and on appeal. But in this case, causation was a question of law because it turned on the availability of a defense and alleged appellate malpractice. See Zenith Star Ins. Co., 150 S.W.3d at 531-32; see also Grider, 260 S.W.3d at 55. Because we review legal questions de novo, the proffered legal opinions are irrelevant to the issue of partial performance.
* * *
We hold that the trial court did not err in granting final, summary judgment because, as a matter of law, Resendez's case was barred by the statute of frauds and there was no evidence as to at least one element of partial performance. We overrule Resendez's sole issue. Because of this disposition, we need not address Resendez's argument regarding the availability of benefit-of-the-bargain damages. Likewise, we do not reach Maloney's cross-point regarding his objections to the expert affidavits.
CONCLUSION
We affirm the judgment of the trial court.