National Property Holdings, L.P., Michael Plank, and Russell Plank v. Gordon Westergren ( 2013 )

Affirmed in Part, Reversed in Part, and Remanded, and Opinion and Dissenting
Opinion filed June 28, 2013.
In The
Fourteenth Court of Appeals
NO. 14-11-00058-CV
NO. 14-11-00229-CV
GORDON WESTERGREN, Appellant/Cross-Appellee
V.
NATIONAL PROPERTY HOLDINGS, L.P., MICHAEL PLANK, AND
RUSSELL PLANK, Appellees/Cross-Appellants
On Appeal from the 269th District Court
Harris County, Texas
Trial Court Cause No. 2008-36847
DISSENTING OPINION
Appellant Gordon Westergren signed a contract without reading it. The
contract—a release—was a short document but an important one. By its terms, the
two-page agreement was meant to resolve a high-dollar business dispute between
sophisticated parties. A lot of money was at stake. But, Westergren was in a
hurry. He did not have his reading glasses, and he chose not to get them. He had
his magnifier, but he chose not to use it. He had the option of having the document
read aloud, but he chose not to take it. Westergren’s choice was to sign the
document without reading it or having it read to him.
Litigation often follows on the heels of bad choices. And, bad choices
sometimes follow on the heels of litigation.
Today, the majority chooses not to apply longstanding Texas law that says
people are bound by the plain words in the contracts they sign. The majority
instead chooses to craft a fraudulent-nondisclosure theory under which one who
chooses not to use his vision enhancers when signing a contract is not bound by the
document’s plain words. The majority’s choice goes against the strong current of
accountability that runs through Texas law. And, it also goes against binding
precedent of the Supreme Court of Texas.
In choosing a partial-performance analysis to determine if an exception to
the statute of frauds applies, the majority goes against the weight of Texas
authority and creates a conflict with sister courts of appeals. The First Court of
Appeals, among others, has held that no fact issue exists despite some evidence
that conduct alleged to be partial performance could have been carried out for the
fulfillment of the oral agreement. The majority forges a different path and reaches
a different destination, an unfamiliar place where the majority applies the partial-
performance exception to the statute of frauds even though the alleged conduct was
not unequivocally referable to partial performance of the alleged oral agreement.
The issue at the center of today’s controversy is best answered by
concluding that the trial court did not err in disregarding the jury’s breach-of-
contract findings and in rendering judgment that Westergren take nothing as to his
2
breach-of-contract claim. This court should affirm the trial court’s judgment in
favor of appellees National Property Holdings, L.P., Michael Plank, and Russell
Plank (collectively, the “Plank Parties”). Because it does not, I respectfully dissent.
I. The trial court did not err in disregarding the jury findings regarding the
breach-of-contract claim.
In his first issue, Westergren asserts that the trial court erred in rendering
judgment notwithstanding the verdict as to his breach-of-contract claim and in
granting the Plank Parties’ motion to disregard jury findings regarding this claim.1
In support of this issue, Westergren asserts that the trial court was wrong to
disregard the jury’s finding in response to Question 3 that Russell partially
performed his oral agreement with Westergren. The jury found that Russell agreed
to pay Westergren $1 million and a 5% profit interest in the development of the
property in question (the “Agreement”). In response to Question 3, the jury found
that Russell partially performed the Agreement. Under the trial court’s charge, as
part of this finding, the jury found that Russell’s actions or conduct unequivocally
refer to the Agreement, corroborate the existence of the Agreement, and were
carried out with no other design than to fulfill the Agreement. Westergren asserts
that the payment of $500,000 to him in June 2006 was an act that could have been
done for no other reason than to satisfy Russell’s agreement to pay him $1 million
and a 5% profit interest in the development of the property in question
1
In this motion, the Plank Parties asked the trial court to disregard the jury’s findings regarding
the breach-of-contract claim based upon various grounds. The trial court granted the Plank
Parties’ motion to disregard the jury findings regarding the breach-of-contract claim, without
specifying the grounds upon which it relied. Therefore, on appeal, Westergren must show that
each independent ground asserted against the breach-of-contract claim does not provide a basis
for affirming the trial court’s judgment as to this claim. See Fort Bend County Drainage Dist. v.
Sbrusch, 818 S.W.2d 392, 394 (Tex. 1991). The Plank Parties assert that, in his appellate
briefing, Westergren has not mentioned or attacked the sixth ground they asserted in the motion
against the breach-of-contract claim. In this opinion, it is presumed for the sake of argument that
Westergren challenged each independent ground in his appellate briefing.
3
(“Property”).2 But, the uncontroverted evidence at trial showed that this payment
came from the bank account of National Property Holdings, L.P. (“National
Property”) and that Russell has no ownership interest in that entity.3 Even if this
payment were considered an act of Russell, this act would not be solely referable to
partial performance of the Agreement.
As shown by evidence at trial, the act of paying Westergren $500,000 also
could have been done to compensate Westergren for services he had provided in
connection with the Property, with an accompanying release by Westergren of
claims against various persons, including National Property and Michael and
arguably Russell.4 Moreover, under the unambiguous language of the two-page
“Agreement and Release” Westergren signed on June 30, 2006 (“Release
Agreement”), Westergren received the $500,000 as consideration for his releasing
various claims and interests, including (1) any right, title, or interest in or to the
Property, (2) any right, title, or interest in or to any entity owning or holding title to
the Property, including National Property, (3) any income, rents, profits, or other
proceeds relating to or derived from the Property, and (4) all claims against
National Property, Michael, and their respective agents and employees arising out
of or pertaining in any way to the Property. For Russell’s tender of the National
Property check to Westergren to constitute partial performance of the Agreement,
the nature of this act must be such that it could have been done for no other reason
2
The evidence at trial does not reflect any other action or conduct that arguably could have
constituted partial performance of the Agreement.
3
See Duncan v. F-Star Management, L.L.C., 281 S.W.3d 474, 481 (Tex. App.—El Paso 2008,
pet. denied) (concluding there was no fact issue as to whether checks showed partial
performance in part based on fact that check was drawn on account of entity that was not party to
the agreement sought to be enforced despite non-compliance with statute of frauds).
4
Under the unambiguous language of the Agreement and Release, Westergren released claims
against National Property and Michael. Though he was not specifically named in the Release,
Russell asserts that the Release also covers claims against him.
4
than to fulfill the Agreement.5 That conclusion cannot reasonably be drawn from
the evidence in our record.
Under the unambiguous terms of the Release Agreement, the $500,000
payment could have been made to obtain the releases contained in the Release
Agreement, which are incompatible with fulfillment of the Agreement. Under the
familiar legal-sufficiency standard of review, the evidence is legally insufficient to
support a jury finding that this payment unequivocally referred to the Agreement,
corroborated its existence, and was done with no other design than to fulfill the
Agreement.6 Thus, the evidence is legally insufficient to support the jury’s finding
in response to Question 3, and the trial court did not err in disregarding the breach-
of-contract findings and in rendering judgment that Westergren take nothing as to
his breach-of-contract claim. Accordingly, this court should overrule Westergren’s
5
See Resendez v. Maloney, No. 01-08-00954-CV, 2010 WL 5395674, at *7 (Tex. App.—
Houston [1st Dist.] Dec. 30, 2010, pet. denied) (mem. op.); Campbell v. Northwestern Resources
Co., No. 10-08-00283-CV, 2009 WL 3646085, at *2 (Tex. App.—Waco Nov. 4, 2009, no pet.)
(mem. op.); Barnett v. Legacy Bank of Texas, No. 11-02-00114-CV, 2003 WL 22358578, at *7
(Tex. App.—Eastland Oct. 16, 2003, pet. denied) (mem. op.); Exxon Corp. v. Breezevale Ltd., 82
S.W.3d 429, 439–40 (Tex. App.—Dallas 2002, pet. denied); CQ, Inc. v. TXU Mining Co., 565
F.3d 268, 276–77 (5th Cir. 2009) (applying Texas law).
6
See Resendez, 2010 WL 5395674, at *7 (holding there was no genuine fact issue as to partial
performance because the joint promotion of 23 events by Resendez and two companies was not
solely referable to the alleged agreement, given that the promotion could have been done under
another contractual arrangement); Duncan, 281 S.W.3d at 481–82 (concluding there was no fact
issue as to whether checks showed partial performance of alleged commission agreement when
there was evidence that the checks could have been for consulting services or for reimbursement
of expenses rather than for payment of commissions); Barnett, 2003 WL 22358578, at *7
(holding there was no fact issue regarding partial performance of alleged agreement because
claimant’s performance of construction could be referable to his obligations under a different
contract with a third party); Breezevale Ltd., 82 S.W.3d at 439–40 (holding evidence was legally
insufficient to support jury’s finding of partial performance of alleged agreement because the
conduct in question could have been related to services performed under another contract);
Rodriguez v. Klein, 960 S.W.2d 179, 186 (Tex. App.—Corpus Christi 1997, no pet.) (holding
there was no fact issue regarding partial performance of alleged agreement because claimant’s
performance could be referable to performance of other contracts); CQ, Inc., 565 F.3d at 276–77
(applying Texas law and holding there was no fact issue regarding partial performance of alleged
agreement because company’s work could be referable to performance of other contract).
5
first issue.
A. The majority’s low threshold for raising a fact issue as to whether conduct is
“unequivocally referable” to the Agreement creates a conflict with sister courts
of appeals.
Under the majority’s analysis, because there was some testimony indicating
that Russell’s tender of the $500,000 check represented a partial payment of the
amounts due under the Agreement, there is a fact issue regarding whether this
conduct constituted partial performance.7 Under this approach, if a plaintiff
testifies that certain conduct was partial performance of an oral agreement subject
to the statute of frauds and other evidence shows that this conduct could have been
done for a reason other than to fulfill the oral agreement, then there is a fact issue,
and the jury decides whether this exception to the statute of fraud applies. 8 But,
this analysis contradicts cases from sister courts of appeals—including the First
Court of Appeals—in which courts have held that no fact issue exists despite such
conflicting evidence.9
7
See ante at pp. 30–32.
8
See id.
9
See Resendez, 2010 WL 5395674, at *7 (holding there was no fact issue as to partial
performance despite plaintiff’s testimony that plaintiff and two companies jointly promoted 23
events pursuant to alleged partnership agreement, because these promotions could have been
done under another contractual arrangement); Barnett, 2003 WL 22358578, at *7 (holding there
was no fact issue regarding partial performance of alleged agreement despite claimant’s assertion
that he continued working on project based upon bank’s alleged promise to loan additional
funds, because claimant’s performance of construction could be referable to his obligations
under a different contract with a third party); Breezevale Ltd., 82 S.W.3d at 439–40 (holding
evidence was legally insufficient to support jury’s finding of partial performance of alleged
agreement because the conduct in question could have been related to services performed under
other contract).
6
B. The evidence is legally insufficient to show that Russell fraudulently induced
Westergren to enter into the Release Agreement by fraudulent
misrepresentations or by any alleged fraudulent failure to disclose that the
Release Agreement contains releases by Westergren.
The majority does not address the effect of the unambiguous terms of the
Release Agreement on the partial-performance analysis because the majority holds
the evidence is legally sufficient to support a jury finding that Russell fraudulently
induced Westergren to enter into the Release Agreement.10 Westergren met with
Russell on June 30, 2006, at which time Russell gave Westergren the check for
$500,000, and Westergren signed the two-page Release Agreement, which was
notarized in Westergren’s presence. The document’s title—“AGREEMENT
AND RELEASE”— is in extra-large, all-capital, bold letters, underlined. The
specific release language in the body of the document is likewise in bold, all-
capital letters. The fourth and final paragraph of the document contains a single
sentence: “THIS RELEASE IS EXECUTED AND DELIVERED effective 30th
[] day of June, 2006.” The conspicuous, bolded, all-capital letters are just
millimeters from Westergren’s signature.
Westergren testified at trial that he did not have his reading glasses with
him, but admitted that he did have a magnifying glass and that the purpose of this
vision enhancer was to help with reading. Westergren gave the following
testimony regarding the conduct that Westergren asserts fraudulently induced him
to sign the Release Agreement:
Just kind of waiting around and finally Russ calls and Traci took me
10
The majority concludes that the jury made such a finding in response to Question 14, which
submitted a fraudulent nondisclosure theory without any reference to the Release Agreement. In
this opinion, it is presumed for the sake of argument that the jury’s finding in response to this
question is sufficient to constitute a finding that Russell fraudulently induced Westergren to sign
the Release Agreement based upon the fraudulent nondisclosure found by the jury in response to
this question.
7
upstairs and I walked in and I was — high five. How are you doing,
Gordon. Yada, yada, yada. . . he says, I got your check here. I need
you to sign this. He goes — I go, What’s that? He said, Oh, it’s just a
receipt. It’s nothing. I said, Well, I’m not reading it ’cause I’m in a
hurry. I don’t have any glasses. He goes, oh, it’s nothing. It’s
nothing. I signed it, handed it back to him and got my check.
[Westergren snaps his fingers.] It was all that quick. And then [the
notary] notarized it and we shot the corn for a few minutes. He told
me, Hey, don’t spend all that money until we get another building
coming out of the ground. I’m not going to be able to give you the
other half. Man, I said, That’s fine. This is great. One of the best
days of my life. And I — I ran to the bank and turned it into a
cashier’s check and went home and had — had a party. Had a good
time.
When asked whether Russell told him that the document was a release of all
claims, Westergren answered, “No, he said it was a receipt. It’s nothing. You
don’t have to worry about it.” Westergren stated that he relied upon these oral
representations in signing the Release Agreement. At trial, Russell testified that he
did not make these statements. Traci Koenig, the National Property employee
Westergren mentioned in the above testimony, testified that in her presence
nobody told Westergren that the Release Agreement was a receipt. But, even if
Russell uttered those words, it would not provide a means for Westergren to avoid
enforcement of the written terms of the Release Agreement.
Westergren is not the first to sign a release without reading it and then try to
avoid enforcement of the release by claiming he relied upon an oral representation
that the release was a receipt.11 In Harvey v. Elder, a doctor performed an
operation on a patient at a hospital owned by the doctor.12 The doctor performed
two more surgeries seeking to address the patient’s abdominal pain.13 During a
11
See Harvey v. Elder, 191 S.W.2d 686, 688–89 (Tex. App.—San Antonio 1945, writ ref’d).
12
See id. at 687–88.
13
See id.
8
fourth surgery, a different doctor removed a two-foot-long sponge from the
patient’s abdomen and indicated in his report that the sponge had been left in the
patient’s abdomen during the first surgery.14 On the same day that the patient
showed the first doctor this report, the patient testified that the doctor called her
back to his office and told her that he was releasing the promissory notes and deed
of trust that she had given the doctor as payment for the second and third
surgeries.15 Without reading it, the patient signed a document in which she
released of all her claims against the doctor and the hospital employees regarding
the first surgery.16 According to the patient, the doctor told her that the release
document was “a receipt for me to sign,” and she thought the document was a
receipt for the notes that the doctor was giving back to her.17 The patient stated
that she did not intend to release any of her claims and that she would not have
signed the document if she knew that it contained a release of her claims regarding
the first surgery.18 According to the patient, she signed the release without reading
it in reliance on her doctor’s oral representation that the document was “just a
receipt.”19 The patient testified that she signed the release thinking it was a receipt,
without even knowing that she was entering into a written agreement with her
14
See id.
15
See id.
16
See id. at 688–89.
17
See id.
18
See id.
19
Id. at 688. The majority seeks to distinguish the Harvey case on the basis that the patient told
the notary that she understood the terms of the document she had not read. See ante at p. 24,
n.22. This fact does not materially distinguish the facts of Harvey from the facts of this case. A
notary’s office is not to determine whether signatories understand the documents they are
signing. Westergren, just like the patient, did not read the notarized document that he signed
allegedly in reliance upon another party’s representation that the document was a receipt and
upon that party’s failure to disclose that the document contained releases by the signatory.
9
doctor.20
In Harvey, the Supreme Court of Texas held that the evidence of the
doctor’s oral representations and his failure to disclose that the document contained
releases by the patient was no evidence that would support a conclusion that the
doctor fraudulently induced the patient to sign the release, given that the patient
could have read the document to discover its terms.21 The Harvey court enforced
the release as a matter of law.22 The majority does not cite cases in which courts
hold that there is a fact issue as to fraudulent inducement under circumstances like
those present in the today’s case. In a case presenting circumstances similar to
today’s case, the Supreme Court of Texas held there was no evidence of fraudulent
inducement.23 This court should follow the Harvey case and hold that the trial
court did not err in impliedly concluding that the trial evidence is legally
insufficient to support a jury finding that Russell fraudulently induced Westergren
to enter into the Release Agreement.24 This result is also consistent with opinions
20
See id. at 688–89. The majority also seeks to distinguish the Harvey case on the basis that the
patient was aware the doctor had prepared a release of the promissory notes she had given him in
payment for the second and third surgeries. See ante at p. 24, n.22. Significantly, the patient did
not say that the doctor told her about any release in which she was releasing claims, as opposed
to the doctor releasing his claims on the promissory notes. Harvey, 191 S.W.2d at 688–89. On
the contrary, the patient said she was unaware that the document she signed contained any
release by her. See id. The fact that the doctor was releasing claims on promissory notes as part
of the transaction is not a material distinction from the facts of this case.
21
See id. at 689. The Supreme Court of Texas refused the writ of error in Harvey. In cases
decided after June 14, 1927, the Supreme Court of Texas’s notation of “writ refused” or “petition
refused” denotes that the court of appeals’s opinion is the same as a precedent of the Supreme
Court of Texas. See Yancy v. United Surgical Partners Int’l, Inc., 236 S.W.3d 778, 786 n.6
(Tex. 2007); State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 707 (Tex. 1996) (referring
to a writ refused court of appeals opinion as an opinion of the Supreme Court of Texas).
22
See Harvey, 191 S.W.2d at 689.
23
See id. The Harvey court stated that the document the patient signed “was in the nature of a
receipt.” Id. In the Release Agreement, Westergren acknowledges receipt of $500,000.
24
See id. The Plank Parties raised this issue in their motion for judgment notwithstanding the
10
from various courts of appeals, including this court, in which the courts hold as a
matter of law that a contracting party cannot be defrauded into believing that a
written contract contains terms contrary to the unambiguous meaning of the terms
in the contract.25
The majority concludes the evidence is legally sufficient to support a finding
that Russell fraudulently failed to disclose to Westergren that the Release
Agreement Westergren was signing contained releases by Westergren. The
majority concludes that Russell had a duty to make this disclosure based upon
either Russell’s alleged oral representations on June 30, 2006 or upon his alleged
prior oral representations that he would pay Westergren $1 million and a 5% profit
interest in the sale of the Property.26 But, when fraudulent nondisclosure is based
upon a statement by the defendant, the statement must be actionable as fraud; a
non-actionable statement cannot be the basis of fraudulent nondisclosure.27
verdict. In this motion, they asserted that, as a matter of law, a plaintiff cannot assert fraudulent
inducement based upon a misrepresentation that conflicts with the express terms of a written
contract, even though the plaintiff failed to read the contract.
25
See DRC Parts v. VM Motori, S.p.A., 112 S.W.3d 854, 858 (Tex. App.—Houston [14th Dist.]
2003, pet. denied) (en banc); In re MHI P’ship, Ltd., No. 14-07-00851-CV, 2008 WL 2262157,
at *3–5 (Tex. App.—Houston [14th Dist.] May 29, 2008, orig. proceeding) (mem. op.); DeClaire
v. G&B McIntosh Family Ltd. P’ship, 260 S.W.3d 34, 46–47 (Tex. App.—Houston [1st Dist.]
2008, no pet.).
26
See ante at pp. 22–24; Bradford v. Vento, 48 S.W.3d 749, 755–56 (Tex. 2001) (stating that
whether a party has a duty to disclose is a question of law and that the Supreme Court of Texas
has not yet adopted Section 551 of the Restatement (Second) of Torts).
27
See Allen v. Devon Energy Holdings, L.L.C., 367 S.W.3d 355, 371 (Tex. App.—Houston [1st
Dist.] 2012, pet. granted, judgm’t vacated w.r.m.). The majority suggests that the Plank Parties
failed to preserve error as to whether Russell had a duty to disclose based upon his alleged
affirmative misrepresentations and that the Plank Parties only challenged Russell’s duty to
disclose to the extent he allegedly had one because he was a fiduciary. See ante at p. 22 & n.21.
The Plank Parties asserted in their motion for judgment notwithstanding the verdict that, as a
matter of law, a plaintiff cannot assert fraudulent inducement based upon a misrepresentation
that conflicts with the express terms of a written contract, even though the plaintiff failed to read
the contract. The Plank Parties also asserted that there was legally insufficient evidence to
support any jury finding of fraudulent misrepresentation or fraudulent nondisclosure. In
11
Russell’s alleged affirmative statements are contrary to the unambiguous language
of the Release Agreement and are not actionable fraud.28 Accordingly, these
statements cannot be the basis of an alleged fraudulent failure to disclose.29
For the foregoing reasons, the evidence is legally insufficient to show that
Russell fraudulently induced Westergren to enter into the Release Agreement by
fraudulent misrepresentations or by fraudulent failure to disclose that the Release
Agreement contains releases by Westergren.30
addition, the Plank Parties cited First City Mortgage Co v. Gillis, 694 S.W.2d 144, 146–47 (Tex.
App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.), in which this court held that even a party
owing a general fiduciary duty to another contracting party has no duty to disclose to the other
contracting party the presence or meaning of unambiguous terms in a proposed written contract.
Westergren asserted that Russell owed him a fiduciary duty, and the jury found that a partnership
existed between Russell and Westergren. In this context, the Plank Parties sufficiently raised the
issue of whether Russell owed Westergren a duty to disclose that the Release Agreement
contained releases by Westergren, whether this alleged duty is based upon Russell’s alleged
fiduciary duty or upon an argument under Section 551 of the Restatement (Second) of Torts.
28
See Harvey, 191 S.W.2d at 688–89; DRC Parts, 112 S.W.3d at 858; In re MHI P’ship, Ltd.,
2008 WL 2262157, at *3–5; DeClaire, 260 S.W.3d at 46–47. In addition, as to Russell’s alleged
oral representation that he would pay Westergren $1 million and a 5% profit interest in the sale
of the Property, the majority has not addressed all of the Plank Parties’ arguments as to why this
alleged representation is not actionable fraud.
29
See Allen, 367 S.W.3d at 369–76. Westergren focuses primarily on Russell’s alleged statement
that the document was “just a receipt.” But, to the extent Westergren bases his assertion of
fraudulent inducement to execute the Release Agreement on the alleged statements that the
document was “nothing” or “[y]ou don’t have to worry about it,” these statements also are too
vague to constitute an actionable fraudulent misrepresentation. See In re Media Arts Group, Inc.,
116 S.W.3d 900, 910 (Tex. App.—Houston [14th Dist.] 2003, orig. proceeding [mand. denied])
(holding as a matter of law that contracting party’s alleged statement to the other contracting
parties regarding a written agreement, “don’t worry about it,” was too vague to constitute an
actionable representation upon which a fraudulent-inducement theory may be based to avoid
enforcement of the written contract).
30
See Harvey, 191 S.W.2d at 688–89; Allen, 367 S.W.3d at 369–76; DRC Parts, 112 S.W.3d at
858; In re MHI P’ship, Ltd., 2008 WL 2262157, at *3–5; DeClaire, 260 S.W.3d at 46–47.
12
C. The evidence is legally insufficient to show that Russell engaged in a trick or
artifice which prevented Westergren from reading the Release Agreement or
having it read to him.
The majority also concludes that Westergren is excused from the normal
consequences of failing to read the Release Agreement before signing it because
Russell tricked Westergren into signing this document by failing to disclose that
the Release Agreement contained releases by Westergren.31 But, the rule in Texas
is that one who signs a release without reading it cannot rely on the “trick or
artifice” exception unless he shows that he was prevented by some fraudulent trick
or artifice from reading the release or having it read to him.32 The trial record
contains no evidence of any conduct by Russell that prevented Westergren from
reading the Release Agreement or having it read to him.
This court should be asking what, if anything, Russell did to block
Westergren from reading the document.33 The majority instead focuses on what
31
See ante at pp. 23–24, n.22.
32
See Harvey, 191 S.W.2d at 689 (holding that doctor’s oral representation that document was a
receipt and his failure to disclose that it contained releases of the patient’s claims, as a matter of
law, did not constitute a “trick or artifice” which prevented the patient from reading the release
before signing it); Indemnity Ins. Co. of No. Am. v. W.L. Macatee & Sons, 101 S.W.2d 553, 556–
57 (Tex. 1937) (holding that employer did not engage in a “trick or artifice” which prevented its
employees from reading an assignment document attached to the normal document signed by the
employees before being paid their wages, even though the employer did not disclose that this
assignment was part of the document signed by the employees, the assignment was on the first
page and the employees were presented with the document folded over to the page containing the
signature block, and one employee testified that he did not intend to assign any of his claims); In
re MHI P’ship, Ltd., 2008 WL 2262157, at *5 (holding that homebuilder did not engage in a
“trick or artifice” which prevented the homeowners from reading the contract they signed, even
though homeowners testified that homebuilder’s representatives told homeowners that there was
no time for the homeowners to read the contract and that it was not necessary for the
homeowners to read the contract); Brown v. Aztec Rig Equip., Inc., 921 S.W.2d 835, 846 (Tex.
App.—Houston [14th Dist.] 1997, writ denied) (holding there was no fact issue regarding “trick
or artifice” exception because there was no evidence raising a fact issue as to whether company
engaged in conduct which prevented the homeowners from reading the contract they signed).
33
See Harvey, 191 S.W.2d at 689; Indemnity Ins. Co. of No. Am., 101 S.W.2d at 556–57; In re
MHI P’ship, Ltd., 2008 WL 2262157, at *5; Aztec Rig Equip., Inc., 921 S.W.2d at 846.
13
Russell allegedly said that was inconsistent with the terms of the writing. Because
the majority asks the wrong question, it gets the wrong answer.
The key inquiry is whether Russell was afforded the opportunity to read (or
have read to him) the document he was signing, not whether Russell’s alleged
statements about the document’s contents were accurate.34 Westergren does not
allege, and the majority does not conclude, that he was in any way prevented from
reading the Release Agreement. He chose not to do so.
The majority suggests that Russell had a duty to give attorney Robert
Langston a copy of the Release Agreement and that Russell acted improperly in
communicating and dealing directly with Westergren regarding the Release
Agreement because Russell allegedly knew Langston was Westergren’s attorney
for matters relating to the Property.35 Langston represented Westergren in the
lawsuit regarding the Property, but that lawsuit settled in January 2006, when
Westergren and others signed the Mediation Settlement Agreement. Westergren
released his lis pendens on the Property and released all claims arising from or
relating to the events which were the subject matter of that lawsuit. The lawsuit
was dismissed in early 2006. Though Langston testified that his representation of
Westergren regarding this lawsuit had not terminated as of June 30, 2006 (the day
Westergren signed the Release Agreement), Langston also testified that he had not
performed any services for Westergren in this representation since the lawsuit was
dismissed in early 2006.
During trial Langston briefly testified that among “attorneys representing
people in litigation” the “custom and practice about how you go about
communicating with a party that you know to be represented by legal counsel” is
34
See Harvey, 191 S.W.2d at 689; Indemnity Ins. Co. of No. Am., 101 S.W.2d at 556–57; In re
MHI P’ship, Ltd., 2008 WL 2262157, at *5; Aztec Rig Equip., Inc., 921 S.W.2d at 846.
35
See ante at pp. 21–24.
14
that “lawyers cannot deal with the other guy’s client,” and “[y]ou have to deal
strictly with the lawyers for that client.” Langston did not testify as to any custom
and practice regarding represented clients communicating directly with one another
with no attorneys present. Langston did not testify that Russell had a duty to
communicate with Langston regarding the Release Agreement or to obtain
Langston’s consent before communicating with Westergren in this regard.
Langston did not testify that Russell had a duty to give Langston a copy of the
Release Agreement before presenting it to Westergren. And, Westergren did not
argue in the trial court that Russell had any of these duties or that it was legally
impermissible for Russell to communicate or deal directly with Westergren
regarding the Release Agreement. Westergren has not advanced any such
argument in this appeal, and the majority has not cited any authority in support of
its analysis in this regard. In any event, Russell’s failure to communicate with
Langston and his failure to give Langston a copy of the Release Agreement did not
prevent Westergren from reading the Release Agreement.
The two reasons Westergren cited for signing without reading — “I’m in a
hurry” and “I don’t have any glasses”— are tied to his own choices, not to any
conduct by Russell or the Plank Parties and certainly not to any trick or artifice.
No one prevented Westergren from reading the document or from getting his
eyeglasses or from using his magnifier or from having the two-page Release
Agreement read aloud to him. Westergren voluntarily forfeited these
opportunities. Consequently, there is no legal basis for the majority’s conclusion
that the “trickery or artifice” exception applies and provides a basis to conclude
that the evidence is legally sufficient to support a jury finding that Russell
fraudulently induced Westergren to enter into the Release Agreement.36
36
See Harvey, 191 S.W.2d at 689; Indemnity Ins. Co. of No. Am., 101 S.W.2d at 556–57; In re
15
D. The majority errs by concluding the evidence is legally sufficient to support a
finding that Westergren did not have an equal opportunity to discover whether
the Release Agreement contained releases by Westergren.
The majority concludes that the evidence is legally sufficient to support a
finding that Westergren did not have an equal opportunity to discover whether the
Release Agreement contained releases by Westergren based upon evidence that
Westergren did not have his reading glasses with him and that Westergren could
not read this document without assistance. The majority cites no case that supports
this notion, and it is contrary to the fact, reflected by the evidence at trial, that
Westergren, an experienced businessperson, had the same opportunity that any
other contracting party has to discover the terms of the document the party is
signing—by reading the document or having it read to him.37
The evidence shows that Westergren had the opportunity to read the Release
Agreement before signing it. He chose not to do so.38 Whether by using the
magnifying glass that he had with him or by retrieving his reading glasses, or by
having the document read aloud to him, as a matter of law, Westergren had an
equal opportunity to discover the terms of the Release Agreement before he signed
it. That Westergren could not read the document without a vision enhancer does
not differentiate his case from that of one who can read the document unaided yet
MHI P’ship, Ltd., 2008 WL 2262157, at *5; Aztec Rig Equip., Inc., 921 S.W.2d at 846.
37
See Harvey, 191 S.W.2d at 689; DeClaire, 260 S.W.3d at 46 (stating that “a party to an arm’s
length transaction must exercise ordinary care and reasonable diligence for the protection of his
own interests, and a failure to do so is not excused by mere confidence in the honesty and
integrity of the other party”).
38
The majority also concludes that Westergren did not have an equal opportunity to discover the
truth because Russell did not provide Westergren’s attorney with a copy of the Release
Agreement before presenting this document to Westergren. The majority cites no evidence or
legal authorities showing the Russell had a duty to send this document to Westergren’s attorney.
In any event, Westergren was free to seek advice of counsel regarding this document either
before or after reading the document. Instead, he chose not to read the document and not to seek
advice of counsel.
16
chooses not to do so. The majority’s reasoning conflicts with cases holding that an
alleged oral statement that a contract has terms different from its actual terms does
not provide a basis for a party to avoid the consequences of his failure to read the
contract at the time of execution.39
Westergren has no vision restrictions on his driver’s license and he drove
himself to the appointment with Russell. Westergren did not state that he needed
his glasses or that he could not read the Release Agreement. Nor did Westergren
request additional time so that he could take whatever steps may have been
necessary for him to read the document.40 Like any other contracting party,
Westergren had an equal opportunity to discover the terms of the Release
Agreement by reading it or having it read aloud to him. There is no evidence that
Russell pressured Westergren to sign the Release Agreement without reading it or
that Russell encouraged Westergren not to read the document. The majority makes
an unwarranted distinction between people who use vision enhancers and people
who do not. Under the majority’s analysis, those in the first group are not bound
by the unambiguous language of contracts they sign if they choose not to use their
vision enhancers or to have the document read aloud, whereas those in the second
group who do not need vision enhancers for reading are bound by the unambiguous
39
See Harvey, 191 S.W.2d at 689; In re Lyon Financial Servs., 257 S.W.3d 228, 230–32 (Tex.
2008) (concluding that contracting party was still bound by terms of written contract despite
false oral representation to the contracting party that the forum-selection clause did not apply)
(per curiam); In re MHI P’ship, Ltd., 2008 WL 2262157, at *3–5 (holding that homeowners were
still bound by terms of their written contract despite alleged false oral representations by the
homebuilder regarding the terms of the contract and despite alleged statements by the
homebuilder that there was no time for the homeowners to read the contract and that it was not
necessary for the homeowners to read the contract); DeClaire, 260 S.W.3d at 46–47 (holding
that alleged oral representation that written contract had terms different from the actual terms in
the document did not allow other party to avoid enforcement of the actual contract terms under
fraudulent-inducement theory).
40
See In re MHI P’ship, Ltd., 2008 WL 2262157, at *5 (noting that homeowners did not ask for
additional time to read the contract).
17
language in the contracts, even if they do not read the document or have it read
aloud to them.
The majority errs in concluding the evidence is legally sufficient to support a
finding that Russell fraudulently induced Westergren to sign the Release
Agreement because, among other things, the trial evidence is legally insufficient
to support a finding that Westergren did not have an equal opportunity to discover
whether the Release Agreement contained releases by Westergren or that Russell
knew that Westergren did not have an equal opportunity to discover this truth.41
For the reasons stated in Sections I.B., I.C., and I.D. of this opinion, the
evidence is legally insufficient to support a jury finding that Russell fraudulently
induced Westergren to enter into the Release Agreement. Therefore, this court
should address the effect of the unambiguous terms of the Release Agreement in
the partial-performance analysis. As shown in Section I.A. of this opinion, if the
Release Agreement is considered in this analysis, the evidence is legally
insufficient to support the jury’s finding in response to Question 3. Therefore, the
trial court did not err in disregarding the breach-of-contract findings and in
rendering judgment that Westergren take nothing as to his breach-of-contract
claim.
II. The trial court erred in rendering a take-nothing judgment as to the claims
for breach of partnership duties, common-law fraud, and statutory fraud.
In his second and third issues, Westergren asserts that the trial court erred in
rendering judgment notwithstanding the verdict as to Westergren’s claims for
breach of partnership duties, statutory fraud, and common-law fraud (collectively
41
See Bradford, 48 S.W.3d at 755–56.
18
the “Tort Claims”).42 In their motion, the Plank Parties asserted various grounds
regarding the Tort Claims, including the argument that these claims fail under the
statute of frauds because the jury’s damage findings are based upon a benefit-of-
the-bargain measure of damages. In their motion, the Plank Parties cited cases in
which the Supreme Court of Texas has held that, if the statute of frauds bars a
plaintiff from recovering under a breach-of-contract claim, then the statute of
frauds also bars the plaintiff from recovering benefit-of-the-bargain damages based
upon fraud claims.43 This rule has been applied generally to all tort claims.44
Under this authority, Westergren may not use any of the Tort Claims as a means to
recover benefit-of-the-bargain damages.
The jury’s damage findings regarding the Tort Claims were based upon the
same measure of damages used in the damage question for the breach-of-contract
claim. The jury’s damage findings regarding the Tort Claims were based upon the
following measure of damages: “[t]he difference, if any, between the amount
Westergren received from the [Plank Parties] and the amount he would have
received if the [Plank Parties] had paid him the agreed upon amount.” This is a
42
In response to Question 19, the jury declined to find any damages resulting from any fraud
committed by the Plank Parties. The trial court granted the Plank Parties’ motion to disregard
the fraud liability findings. But neither the Plank Parties nor Westergren asked the trial court to
set aside the jury’s finding in response to Question 19. Westergren did not move the trial court
to render judgment in his favor based upon the fraud claims. In this context, the trial court’s
judgment would appear to be a judgment on the jury’s verdict as to the fraud claims, rather than
a judgment notwithstanding the verdict. For the purposes of this analysis, it is presumed that the
jury’s finding in response to Question 19 and Westergren’s failure to challenge this finding in the
trial court do not preclude Westergren from successfully challenging the trial court’s judgment as
to the fraud claims.
43
See Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007) (per curiam); Haase v.
Glazner, 62 S.W.3d 795, 799 (Tex. 2001).
44
See Hugh Symons Group, PLC v. Motorola, Inc., 292 F.3d 466, 470 (5th Cir. 2002) (applying
Texas law); Lam v. Nguyen, 335 S.W.3d 786, 791–92 (Tex. App.—Dallas 2011, pet. denied);
Bank of Texas, N.A. v. Gaubert, 286 S.W.3d 546, 556–57 (Tex. App.—Dallas 2009, pet. dism’d
w.o.j.).
19
benefit-of-the-bargain measure of damages, and thus, the only damages that could
have been found by the jury as to the Tort Claims are benefit-of-the-bargain
damages.45 Because Westergren may not recover benefit-of-the-bargain damages,
the trial court did not err in rendering judgment that Westergren take nothing as to
the Tort Claims.46 For these reasons, this court should address and overrule
Westergren’s second and third issues.47
III. The trial court did not reversibly err in denying Westergren leave to
amend his pleadings.
In his fourth issue, Westergren asserts that the trial court abused its
discretion in denying him leave to amend his petition during trial to plead that the
January 2006 Mediation Settlement Agreement failed for lack of consideration.
Presuming, without deciding, that the trial court so erred, any such error did not
45
See Clear Lake City Water Auth. v. Friendswood Dev. Co., 344 S.W.3d 514, 523 (Tex. App.—
Houston [14th Dist.] 2011, pet. denied).
46
See Haase, 62 S.W.3d at 799; Sonnichsen, 221 S.W.2d at 636; Hugh Symons Group, PLC, 292
F.3d at 470; Lam, 335 S.W.3d at 791–92; Gaubert, 286 S.W.3d at 556–57. In his briefing,
Westergren states that, if this court were to affirm the trial court’s judgment as to the breach-of-
contract and breach-of-partnership-duties claims, a new trial might be necessary as to
Westergren’s fraud damages because Westergren would have filed a motion for new trial
complaining of the inadequate fraud damages found by the jury if the trial court had not
disregarded the fraud liability findings in rendering its judgment. Presuming for the sake of
argument that Westergren is seeking a new trial based upon an allegedly inadequate finding of
damages in response to Question 19, and presuming that Westergren was not required to assert
this argument in the trial court in a motion for new trial, it still would be inappropriate to grant
this relief because Westergren may not recover benefit-of-the-bargain damages. See Haase, 62
S.W.3d at 799; Sonnichsen, 221 S.W.2d at 636.
47
On appeal, Westergren does not argue that the trial court reversibly erred in denying
Westergren’s “Motion for Disgorgement of Profits from Breaching Fiduciary.” In his briefing,
Westergren discusses various issues regarding the disgorgment remedy that he sought in the trial
court. Westergren asserts that, if this court were to reverse the trial court’s judgment as to the
breach-of-partnership-duties claim or as to the fraud claims, and regardless of whether there will
be a new trial to determine fraud damages, this case should be remanded for “a determination of
whether the [Plank Parties] should be required to disgorge some or all of their ill-gotten gains.”
If this court were to overrule Westergren’s first three issues, it would not be reversing the trial
court’s judgment as to the breach-of-partnership-duties claim or as to the fraud claims; therefore,
the condition precedent to Westergren’s request would not have been triggered.
20
probably cause the rendition of an improper judgment or probably prevent
Westergren from properly presenting the case to this court.48 Accordingly, this
court should address and overrule Westergren’s fourth issue.
IV. Westergren failed to preserve error as to his contention that the trial court
erred in awarding costs.
In his fifth issue, Westergren asserts that the trial court should not have
awarded all of the court costs to the Plank Parties. Westergren failed to voice this
complaint in the trial court and therefore has not preserved error. 49 Accordingly,
this court should overrule Westergren’s fifth issue.
V. This court should overrule Westergren’s appellate issues and affirm the
trial court’s judgment.
As to the Plank Parties’ motion to disregard jury findings regarding the
breach-of-contract claim, the evidence is legally insufficient to support the jury’s
finding in response to Question 3. Accordingly, the trial court did not err in
disregarding the jury’s breach-of-contract findings and in rendering judgment that
Westergren take nothing as to his breach-of-contract claim.
Because the statute of frauds bars Westergren from recovering under his
breach-of-contract claim, the statute of frauds also bars Westergren from
recovering benefit-of-the-bargain damages based upon his Tort Claims. And,
because the only damages that could have been found by the jury as to the Tort
Claims are benefit-of-the-bargain damages, the trial court did not err in rendering
judgment that Westergren take nothing as to the Tort Claims. Even if the trial
court had erred in denying Westergren leave to amend his petition during trial, the
48
See Tex. R. App. P. 44.1(a); Merckling v. Curtis, 911 S.W.2d 759, 771 (Tex. App.—Houston
[1st Dist.] 1995, writ denied).
49
See Cobb v. Morace, No. 01-07-01036-CV, 2009 WL 2231909, at *8 (Tex. App.—Houston
[1st Dist.] Jul. 23, 2009, no pet.) (mem. op.); Weinberger v. Longer, 222 S.W.3d 557, 566–67
(Tex. App.—Houston [14th Dist.] 2007, pet. denied).
21
error would be harmless. Westergren failed to preserve error regarding his
complaint that the trial court erred in awarding court costs.
For these reasons, this court should overrule Westergren’s appellate issues
and affirm the trial court’s judgment.50
/s/ Kem Thompson Frost
Justice
Panel consists of Justices Frost, Christopher, and McCally. (Christopher, J.,
majority).
50
I agree with the majority’s analysis and disposition of the Plank Parties’ two cross-issues. The
Plank Parties assert a conditional cross-point in the event this court should reverse the trial
court’s judgment that Westergren take nothing as to his claims. If the court were to affirm this
judgment, it would not need to address this conditional cross-point.
22