Lynn Nations v. Mickelsen & Bass, Inc. ( 1999 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

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NO. 03-97-00764-CV

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Lynn Nations, Appellant



v.



Mickelsen & Bass, Inc., Appellee

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FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT NO. 97-03466, HONORABLE W. JEANNE MEURER, JUDGE PRESIDING

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Lynn Nations appeals the trial court's summary judgment that she is jointly and severally obligated to pay appellee Mickelsen & Bass, Inc. ("M&B") damages of $13,866, plus interest, costs, and attorney's fees. We will reverse the trial court's judgment and remand the cause.

Nations is the former president and sole shareholder of Advanced Home Loan, Inc., d/b/a Advanced Mortgage. On October 15, 1996, Nations sold her shares in Advanced Mortgage to Joe Shaffer. Shaffer also succeeded Nations as president of Advanced Mortgage. M&B alleged that, while Nations was president, it provided services on an open account to Advanced Mortgage. These services consisted of real estate appraisals which, M&B claimed, came to a total of $13,866.

M&B sued Advanced Mortgage and Nations on a sworn account and for breach of contract, seeking to recover $13,866 for the services it had rendered. Advanced Mortgage answered and admitted M&B's allegations. Nations specifically denied the sworn account and her liability to M&B. M&B then moved for summary judgment on the grounds that it had established its sworn account against Advanced Mortgage and that Nations had agreed to indemnify Advanced Mortgage for any claim that existed against it as of October 15, 1996. The trial court granted the motion and rendered judgment against Advanced Mortgage and Nations jointly and severally for $13,866 in damages, $3500 in attorney's fees, interest, and costs. Only Nations appeals.

In her sole issue on appeal, Nations contends that the trial court erred in rendering summary judgment against her. To prevail on its summary-judgment motion, M&B was required to prove that no genuine issue of material fact existed and that it was entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). In reviewing the summary judgment, we must accept as true the evidence in Nations' favor, indulging every reasonable inference and resolving all doubts in her favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985).

M&B sought summary judgment against Nations on the basis that she had agreed to indemnify Advanced Mortgage for the claim M&B asserted against it. M&B asserted that Nations was the party ultimately liable for any judgment against Advanced Mortgage, and it attached to its motion the affidavit of Joe Shaffer, in which he assigns to M&B all his rights in the indemnity agreement. Also attached to M&B's motion is the indemnity agreement on which it relies. The agreement first defines the terms used within it; these include the terms "Closing Date," which means October 15, 1996, "Seller," meaning Lynn Nations, "Buyer," meaning Joe Shaffer, and "the Business," meaning Advanced Home Loan, Inc. The indemnity agreement then provides:

1. SELLER'S Agreement to Indemnify. SELLER covenants and agrees that SELLER will indemnify and hold harmless BUYER from and after the closing against:

a. Any federal, state or local tax liability (offset by any tax benefit) with respect to the Business ended on or before the Closing Date.

b. Any other liability of or claim against SELLER whether accrued, absolute, contingent or otherwise, existing on or before Closing Date.

M&B asserted that all the charges at issue accrued before the closing date.

A summary judgment may properly be based on an unambiguous contract. R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex. 1980). In interpreting a contract, the primary concern of the court is to ascertain and give effect to the intentions of the parties as expressed in the instrument. Id. at 518. To achieve this end, the court will examine and consider the entire instrument so that none of the provisions will be rendered meaningless. Id. at 519. If a written instrument is so worded that a court may properly give it a certain or definite legal meaning, it is not ambiguous. Id.

By the plain language of the agreement, Nations promised to indemnify Shaffer himself and to hold him harmless from any claim against Nations herself. The parties were explicit in defining "Buyer" and "Seller" separately from "the Business," the latter referring to a corporation and the former two referring solely to individuals. The corporation has a separate legal existence from its officers and shareholders, and M&B alleges no basis on which Nations, or in turn Shaffer, as president and sole shareholder of Advanced Mortgage, should be held liable for the debts of Advanced Mortgage. See Tex. Bus. Corp. Act Ann. art. 2.21 (West Supp. 1999) & art. 2.42 (West 1980 & Supp. 1999); see also Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex. 1986). Further, in clause 1(a), Nations agreed to indemnify Shaffer against any tax liability "with respect to the Business." If the parties had meant for Nations to indemnify Shaffer against any other liability or claim incurred by Advanced Mortgage, they could easily have done so.

Although the indemnity agreement may have been one of several documents by which Nations concluded the sale of stock in Advanced Mortgage to Shaffer, the summary-judgment record does not include the remainder of these documents. We thus cannot interpret the indemnity agreement in light of any contemporaneously executed agreements. We cannot conclude that Nations unambiguously agreed to indemnify Shaffer for claims against his corporation. ⁽¹⁾ Because the claims M&B asserted against Nations arose from debts incurred by Advanced Mortgage, the trial court erred in rendering judgment against Nations based on the indemnity agreement. We therefore sustain Nation's issue.

We reverse the trial court's judgment and remand the cause for further proceedings.

Marilyn Aboussie, Chief Justice

Before Chief Justice Aboussie, Justices Jones and Yeakel

Reversed and Remanded

Filed: May 20, 1999

Do Not Publish

1. In its reply to Nations' response to its summary-judgment motion, M&B asserted that Nations admitted owing $5200 of the claim to M&B. M&B argued that Nations had taken inconsistent positions on her obligation to pay M&B. We view this argument, not as a separate ground for summary judgment, but as a reason to hold Nations liable under the indemnity agreement. Because summary judgment is proper only if Nations unambiguously agreed to accept liability, we do not consider evidence extraneous to the contract.

the basis that she had agreed to indemnify Advanced Mortgage for the claim M&B asserted against it. M&B asserted that Nations was the party ultimately liable for any judgment against Advanced Mortgage, and it attached to its motion the affidavit of Joe Shaffer, in which he assigns to M&B all his rights in the indemnity agreement. Also attached to M&B's motion is the indemnity agreement on which it relies. The agreement first defines the terms used within it; these include the terms "Closing Date," which means October 15, 1996, "Seller," meaning Lynn Nations, "Buyer," meaning Joe Shaffer, and "the Business," meaning Advanced Home Loan, Inc. The indemnity agreement then provides:

1. SELLER'S Agreement to Indemnify. SELLER covenants and agrees that SELLER will indemnify and hold harmless BUYER from and after the closing against:

a. Any federal, state or local tax liability (offset by any tax benefit) with respect to the Business ended on or before the Closing Date.

b. Any other liability of or claim against SELLER whether accrued, absolute, contingent or otherwise, existing on or before Closing Date.

M&amp