Opinion
NUMBER 13-19-00199-CV
08-27-2020
RON YOUNG BY AND THROUGH PAUL ALTHEIDE, INDEPENDENT EXECUTOR, Appellant, v. KENNETH TALLEY, Appellee.
On appeal from the 94th District Court of Nueces County, Texas.
MEMORANDUM OPINION
Before Chief Justice Contreras and Justices Benavides and Longoria
Memorandum Opinion by Justice Benavides
Appellant Ron Young, by and through his independent executor, Paul Altheide (Young), challenges the summary judgment granted in favor of appellee Kenneth Talley in this declaratory judgment action seeking interpretation of a settlement agreement between these parties from a previous suit.
During the pendency of this case in the trial court, Ron Young died, and Paul Altheide as the independent executor of Young's estate was substituted as a plaintiff in the suit.
By eleven issues, Young argues that the trial court abused its discretion by (1-6) granting Talley's motion for summary judgment and denying Young's motion for summary judgment; (7-8) by considering a late filed attorney's fees affidavit; (9-10) modifying the judgment to award appellate attorney's fees to Talley; and (11) granting unconditional appellate attorney's fees. We affirm as modified.
I. BACKGROUND
In 2008, Young and Talley purchased Victoria Propane Company, Inc. d/b/a AAA Butane Gas Company (AAA Butane). Young provided most of the capital and Talley was in charge of operating the business. They each owned equal shares of the company.
In 2012, Young sued Talley accusing him of stealing money from the corporation (first suit). They settled the first suit in 2015 and entered into a mediated settlement agreement (the Agreement) in which Talley agreed to pay Young $275,000, comprising a $95,000 up-front payment and monthly installments to pay the balance of $180,000. In exchange, as long as Talley performed under the agreement, Young agreed to place his shares in trust while Talley ran the business without Young's participation. Under the Agreement, once Talley "timely and completely perform[ed] all obligations, . . . including the timely and complete payment of the Promissory Note . . . , Young shall tender all of such stock to Talley." The Agreement further included a mutual release of all claims existing between them at the time of the settlement.
Talley made fifteen of the forty-eight installment payments and then stopped. Talley also notified Young that he closed the business and was selling the fixtures. In September 2016, Young sued to enforce the Agreement and obtained a judgment against Talley (second suit). Talley paid the judgment in full over a year later, but not before Young filed a declaratory judgment action in December 2017 (third suit). The third suit, which forms the basis of this appeal, asked the trial court to find that Talley's failure to perform under the Agreement resulted in both parties retaining fifty percent ownership of AAA Butane.
In later filings in the case, Young agreed that Talley paid the judgment from the second suit in full.
Talley filed a general denial and asserted in his prayer that Young should be required to tender his shares. The parties filed competing motions for summary judgment seeking interpretation of the Agreement provisions in dispute. Both claim the Agreement is unambiguous and can be determined as a matter of law. The trial court granted Talley's motion for summary judgment, awarded him trial attorney's fees, and denied Young's motion for partial summary judgment. The trial court later rendered a modified judgment awarding appellate attorney's fees to Talley. This appeal followed.
II. SUMMARY JUDGMENT
By his first six issues, Young complains that the trial court erred by denying his motion for partial summary judgment and granting Talley's motion for summary judgment.
A. Standard of Review
We review a summary judgment de novo. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). 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. 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). The party moving for traditional summary judgment bears the burden of showing no genuine issue of material fact exists and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); see also Knott, 128 S.W.3d at 216. When both sides move for summary judgment and the trial court grants one motion and denies the other, we review the summary judgment evidence presented by both sides and determine all questions presented. Mann Frankfort Stein & Lipp Advisors, Inc., 289 S.W.3d at 848; Comm'rs Court of Titus Cty v. Agan, 940 S.W.2d 77, 81 (Tex. 1997). In such a situation, we render the judgment the trial court should have rendered. Comm'rs Court of Titus Cty, 940 S.W.2d at 81.
The parties differ on the meaning of portions of the Agreement, although they agree the contract is not ambiguous. The construction of an unambiguous contract is a question of law for the court, which we review de novo. Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011); see Chrysler Ins. Co. v. Greenspoint Dodge of Hous., Inc., 297 S.W.3d 248, 252 (Tex. 2009); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). When discerning the contracting parties' intent, courts must examine the entire agreement and give effect to each provision so that none is rendered meaningless. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006). "No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument." Coker, 650 S.W.2d at 393. We afford contract language its plain, ordinary meaning, unless the instrument indicates terms have been used in a technical or specialized sense. Exxon Mobil Corp. v. Ins. Co. of State of Pa., 568 S.W.3d 650, 657 (Tex. 2019).
B. Competing Motions for Summary Judgment
Talley's motion for summary judgment argued that the Agreement was "intended to be a conveyance of Young's ownership interest in AAA Butane, that the [Agreement] has been satisfied and the Release of Judgment establishes that the [Agreement] has been satisfied, [and] the stock needs to be transferred to [Talley]". The motion sought dismissal of Young's suit, as well as attorney's fees and costs. The motion was supported by Talley's affidavit, the Agreement, a copy of the unsecured note from Talley to Young, copies of two cashier's checks made out to Young in the amounts of $95,000 and $157,174.17 to satisfy the debt owed from the judgment, and a copy of a Release of Judgment stating that the debt had been paid. A hearing was set for March 25, 2019 on Talley's motion for summary judgment.
No reporter's record from this hearing was submitted to this Court.
Young objected to Talley's statement in his affidavit that Talley was the owner of AAA Butane as conclusory and the subject of the pending litigation. Young responded with the affidavit of Robert Johnson, Young's attorney, to which were attached various pleadings and discovery from the litigation between the parties to provide context for the Agreement. Young requested the trial court take judicial notice of the files in the prior litigation of the parties. According to Young, the Agreement was not a sale of his interest, but an option to sell to Talley if Talley timely and completely performed the terms of the Agreement, which Young asserts Talley did not.
Young filed his own motion for partial summary judgment alleging that the Agreement does not vest Talley with any stock ownership and that Young and Talley remain equal shareholders in AAA Butane. Young also sought attorney's fees and costs. Young supported his motion with Johnson's affidavit and exhibits.
Talley objected to portions of Johnson's affidavit and filed a response to Young's motion for summary judgment. Talley argued in his response that the Release of Judgment and full payment of the note, albeit in response to a judgment, entitles him to Young's shares in AAA Butane. Talley argues that, although he first breached the Agreement by failing to make installment payments on the note when due, once Young sued to enforce the note, Young did not have an excuse for failing to tender his shares to Talley upon Talley's payment.
C. Applicable Law
The essential elements of a breach of contract claim are (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained as a result of the breach. B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied); C.W. 100 Louis Henna, Ltd. v. El Chico Rest., L.P., 295 S.W.3d 748, 752 (Tex. App.—Austin 2009, no pet.). A material breach by one party to a contract can excuse the other party from any obligation to perform. Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) ("It is a fundamental principle of contract law that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance."); see Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994); Henry v. Masson, 333 S.W.3d 825, 835 (Tex. App.—Houston [1st Dist.] 2010, no pet.). By contrast, a non-material breach does not excuse further performance but gives rise to a claim for damages for breach of contract. Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432, 436 (Tex. 2017).
When one party to a contract materially breaches, the non-breaching party must elect to either terminate the contract or treat it as continuing and continue its own performance. See Hanks v. GAB Bus. Servs., Inc., 644 S.W.2d 707, 708 (Tex. 1982); C&C Rd. Constr., Inc. v. SAAB Site Contractors, L.P., 574 S.W.3d 576, 585 (Tex. App.—El Paso 2019, no pet.); MKM Eng'rs, Inc. v. Guzder, 476 S.W.3d 770, 783 (Tex. App.—Houston [14th Dist.] 2015, no pet.). A party who elects to treat a contract as continuing deprives itself of any excuse for ceasing performance on its own part. Long Trs. v. Griffin, 222 S.W.3d 412, 415-16 (Tex. 2006) (per curiam).
D. Discussion
Young sued to enforce the promissory note and Agreement in the second suit. Young obtained judgment for the amount due on the promissory note and released the judgment when Talley paid that amount in December 2017, a year after final judgment in Young's favor. In the second suit, Young asserted that the parties remained equal shareholders, but the judgment did not resolve that issue.
The Agreement stated in pertinent part:
3. The terms of this settlement are in part as follows:
A. Payment by Talley to Young in the total amount of $275,000.00, payable as follows: $95,000.00 in cash or certified funds on or before
(emphasis added).May 1, 2015, and Talley's execution, delivery and payment of his Promissory Note to Young in the amount of $180,000.00 in the form substantially identical to Exhibit A attached to this Agreement.
B. All stock owned by Young in [AAA Butane], shall be held trust by Young. Upon complete and timely performance of all obligations of this [Agreement] and its Exhibits, including the timely and complete payment of the Promissory Note referenced as Exhibit A, Young shall tender all of such stock to Talley. While such stock is held in trust, (1) Talley shall have sole operational control of AAA Butane, (2) Young will not participate as an officer, director or shareholder in any aspect in the operation or management of AAA Butane, and will refrain from voting on any matters involving stockholder votes, and (3) Talley will manage and operate AAA Butane in a prudent manner and will refrain from taking any action which would cause any stock ownership to be devalued. The trust envisioned by this paragraph shall terminate upon Talley's complete and timely performance of all obligations, or upon Talley's default in any of his obligations, whichever shall occur first.
Here, Talley breached the Agreement when he stopped making the installment payments on the note. He further breached the Agreement by closing the business which devalued the stock. In support of his position that the Agreement constituted only an option for Talley to purchase Young's interest in AAA Butane, Young points to the requirement that Talley's performance be both timely and complete before Young was required to tender his stock. Although Talley's performance of payment was completed, Young had to obtain a judgment and then wait another year before the judgment was paid in 2017 to collect the balance due on the note. The note, however, was not due in full until May 2019; thus, full payment was received before the maturity date.
Ordinarily, time is not of the essence in the performance of contracts unless specified and a date stated for performance does not mean time is of the essence. Kennedy Ship & Repair, L.P. v. Pham, 210 S.W.3d 11, 19 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (citing Mun. Admin. Servs., Inc. v. City of Beaumont, 969 S.W.2d 31, 36 (Tex. App.—Texarkana 1998, no pet.)). "Instead, the contract must expressly make time of the essence or there must be something in the nature or purpose of the contract and the circumstances surrounding it making it apparent that the parties intended that time be of the essence." Id.
However, a time of the essence provision may be waived. Id. at 20. The acceptance of late performance may indicate that the contract did not intend that time be of the essence. Id. "A waiver of time of performance of a contract will result from any act that induces the opposite party to believe that exact performance within the time designated in the contract will not be insisted upon." Laredo Hines Co. v. H & H Meat Prods. Co., 513 S.W.2d 210, 218 (Tex. App.—Corpus Christi-Edinburg 1974, writ ref'd n.r.e.).
Here, it is undisputed that Talley failed to timely make the payments as required by the Agreement and that were the subject of the second suit. However, the unsecured note had a maturity date of May 2019. Although Young did get a judgment against Talley for the amount owed and accelerated the note, Talley paid the judgment in full and secured a release of judgment in 2017, prior to the actual maturity date of the unsecured note.
Even though the Agreement stated that Talley must "timely perform," there is no language that made it "apparent that the parties intended time to be of the essence," and even if there was such language, Young's acceptance of late payments and an "untimely" payment of the judgment indicated that the parties did not intend for time to be of the essence. Pham, 210 S.W.3d at 19; see Laredo Hines, 513 S.W.2d at 218.
Based upon the language of the Agreement, the pattern of accepted late payments, and Talley's eventual completion of performance, we conclude the trial court properly found that Young was required to tender his shares to Talley under the Agreement. See Long Trs., 222 S.W.3d at 415-16. There was no indication presented in the evidence that time was an essential part of the Agreement and therefore, time is not a factor in determining whether Talley complied. Cf. Pham, 210 S.W.3d at 19 (holding that time was of the essence in a contract for a shrimping boat as shrimping season approached). The trial court did not err when it granted Talley's motion for summary judgment and rejected Young's motion for partial summary judgment. See id. We overrule Young's first through sixth issues.
III. ATTORNEY'S FEES
A. Late Filed Affidavit
By Young's seventh and eighth issues, he argues that the trial court erred by awarding attorney's fees to Talley. This depends on whether the trial court erred by considering Talley's late-filed affidavit on attorney's fees.
Texas Rule of Civil Procedure 166a(c) states that: "The motion for summary judgment shall state the specific grounds therefor. Except on leave of court, with notice to opposing counsel, the motion and any supporting affidavits shall be filed and served at least twenty-one days before the time specified for hearing." TEX. R. CIV. P. 166a(c); Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex. 1996) (concluding that "summary judgment evidence may be filed late, but only with leave of court"). As the moving party, Talley was required to file and serve his evidence at least twenty-one days before the hearing unless the trial court granted leave for late filing. See TEX. R. CIV. P. 166a(c); Benchmark Bank, 919 S.W.2d at 663.
Talley pleaded for attorney's fees pursuant to § 37.009 and requested them in his motion for summary judgment. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (providing for the award of attorney's fees in a declaratory action suit). On March 25, 2019—the day of the summary judgment hearing—Talley filed an affidavit from his trial attorney that requested $8,791.31 in incurred fees and an estimated $3,500 in additional trial court fees through the summary judgment and collection. In addition, the affidavit sought $5,000 for an appeal to the court of appeals, $2,000 for a petition for review in the Texas Supreme Court, and $8,000 if the supreme court petition was granted. Trial counsel attached itemized redacted billing records in support of his affidavit for fees already incurred. See Melton v. CU Members Mortg., 586 S.W.3d 26, 37 (Tex. App.—Austin 2019, pet. ref'd) (stating an attorney's affidavit can sufficiently establish reasonable attorney's fees on a motion for summary judgment).
On March 27, 2019, Young filed a supplemental letter brief to the trial court which did not include an objection to the trial court's consideration of the attorney's fees affidavit. See id. On March 29, 2019, the trial court granted Talley's motion and awarded attorney's fees in the amount of $10,791.31
The trial court's order stated it granted the motion "after hearing the arguments of counsel and considering the responses filed [with] the Court." "[W]here nothing appears of record to indicate that late filing of a summary judgment response was with leave of court, it is presumed that [the] trial court did not consider the response." B.C. v. Steak N Shake Operations, Inc., 598 S.W.3d 256, 259 (Tex. 2020) (per curiam) (quoting Benchmark Bank, 919 S.W.2d at 663). A court of appeals, in considering whether a trial court granted leave, examines the record for an "affirmative indication that the trial court permitted the late filing." Id. (quoting Pipkin v. Kroger Tex., L.P., 383 S.W.3d 655, 663 (Tex. App.—Houston [14th Dist.] 2012, pet. denied)). A "silent record" on appeal supports the presumption "that the trial court did not grant leave," and appellate courts should examine whether the record "affirmatively indicates" if the late-filed response was "accepted or considered." Id. at 260 (quoting Stephens v. Dolcefino, 126 S.W.3d 120, 133 (Tex. App.—Houston [1st Dist.], pet. denied.). Here, the trial court had the original attorney's fees affidavit, as well as the subsequently filed one. In any event, even if consideration of Talley's second attorney fees affidavit was improper, the trial court's award of fees could have been based on his first attorney fees affidavit, which was timely filed and properly before the trial court at the time of the summary judgment hearing. We overrule Young's seventh and eighth issues.
IV. MODIFICATION OF JUDGMENT
By issues nine and ten, Young challenges the trial court's modification of the judgment awarding Talley additional attorney's fees for appeal. After the judgment was signed, Young timely appealed on April 24, 2019. On April 29, 2019, Talley timely filed a motion to modify the judgment on the grounds that the trial court did not award appellate attorney's fees. The motion was not supported by a affidavit when it was filed, but, the day before the hearing, Talley's trial counsel filed an supplemental affidavit that set forth estimated appellate fees based upon the hiring of appellate counsel to handle the appeal, asking for $10,000 to appeal to the court of appeals, $7,500 to file a petition for review with the Texas Supreme Court, and $10,000 for "briefing on the merits and subsequent work."
We review an award of attorney's fees for abuse of discretion. Russell v. Russell, 478 S.W.3d 36, 47 (Tex. App.—Houston [14th Dist.] 2015, no pet.); see also Garza v. Pruneda Law Firm, PLLC, No. 13-18-00222-CV, 2019 WL 2384155, at *3 (Tex. App.—Corpus Christi-Edinburg June 6, 2019, pet. denied) (mem. op.).
During a hearing on Talley's motion to modify, Young objected to the request for appellate attorney's fees on the ground that Talley had not designated trial counsel as an expert witness, and he offered Talley's response to requests for disclosure in support. Talley argued that the objection was untimely because the trial court had previously considered an affidavit by trial counsel and awarded attorney's fees. The trial court did not explicitly rule on the objection but granted the motion to modify and awarded appellate attorney's fees in the amount of $17,000. Because Young did not object to the previously considered evidence, Young's objection that Talley had not properly designated an expert on attorney's fees was untimely and he has not preserved that issue on appeal. See TEX. R. APP. P. 33.1(a). The trial court did not abuse its discretion by overruling Young's objection. We overrule Young's ninth and tenth issues.
V. UNCONDITIONAL APPELLATE ATTORNEY'S FEES
By his eleventh issue, Young complains that the trial court's award of attorney's fees should have been made contingent on Talley's success on appeal. A trial court may not grant a party an unconditional award of appellate attorney's fees because to do so could penalize a party for taking a meritorious appeal. In re Ford Motor Co., 988 S.W.2d 714, 721 (Tex. 1998) (orig. proceeding); Messier v. Messier, 458 S.W.3d 155, 170 (Tex. App.—Houston [14th Dist.] 2015, no pet.). Talley agrees that the award should be made contingent on his success in any appeal. We may modify a trial court's judgment to make the award of appellate attorney's fees contingent upon the receiving party's success on appeal. Messier, 458 S.W.3d at 170; Keith v. Keith, 221 S.W.3d 156, 171 (Tex. App.—Houston [1st Dist.] 2006, no pet.).
We sustain Young's eleventh issue.
VI. CONCLUSION
We modify the trial court's judgment to provide that the award of appellate attorney's fees is contingent on Talley's success on appeal, and we affirm the trial court's judgment as modified. See TEX. R. APP. P. 43.2(b).
GINA M. BENAVIDES
Justice Delivered and filed the 27th day of August, 2020.