Elness Swenson Graham Architects, Inc.// RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC v. RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC// Elness Swenson Graham Architects, Inc. ( 2015 )

ACCEPTED
03-14-00738-CV
6105954
THIRD COURT OF APPEALS
AUSTIN, TEXAS
7/16/2015 5:20:51 PM
JEFFREY D. KYLE
CLERK
Oral Argument Requested
No. 03-14-00738-CV FILED IN
3rd COURT OF APPEALS
AUSTIN, TEXAS
In The Court of Appeals 7/16/2015 5:20:51 PM
For The Third District of Texas JEFFREY D. KYLE
at Austin Clerk
Elness, Swenson, Graham § From the 200th District Court
Architects, Inc., §
Appellant and Cross-Appellee, §
§
v. §
§
RLJ II-C Austin Air, LP, §
RLJ II-C Austin Air Lessee, LP §
and RJL Lodging Fund II §
Acquisitions, LLC, §
Appellees and Cross-Appellants. § Of Travis County, Texas
CROSS-APPELLANTS’ REPLY BRIEF
MUNSCH, HARDT, KOPF
& HARR, P.C.
Michael W. Huddleston Benton T. Wheatley
State Bar No: 10148415 State Bar No. 24015171
J. Stephen Gibson Tracy McCreight
State Bar No: 07866000 State Bar No. 24037064
3800 Ross Tower 401 Congress Avenue
500 North Akard Street Suite 3050
Dallas, Texas 75201 Austin, TX 78701
214-855-7500 telephone 512-391-6100 telephone
214-855-7584 facsimile 512-391-6149 facsimile
ATTORNEYS FOR APPELLEES,
CROSS-APPELLANTS
IDENTITY OF PARTIES AND COUNSEL
The undersigned counsel of record, pursuant to Texas Rule of Appellate
Procedure 38.2, certifies that the following persons have an interest in the outcome
of this case:
Appellant, Cross-Appellee: Elness, Swenson, Graham Architects, Inc.
Appellant’s, Cross-Appellee’s Weston M. Davis
Counsel on Appeal: Gregory N. Ziegler
Steven R. Baggett
Macdonald Devin, P.C.
1201 Elm Street
3800 Renaissance Tower
Dallas, TX 75270
Appellant’s, Cross-Appellee’s Weston M. Davis
Counsel at Trial: Gregory N. Ziegler
Matthew Mumm
Macdonald Devin, P.C.
1201 Elm Street
3800 Renaissance Tower
Dallas, TX 75270
Appellees, Cross-Appellants: RLJ II-C Austin Air, LP
RLJ II-C Austin Air Lessee, LP
RLJ Lodging Fund II Acquisitions, LLC
Appellees’, Cross-Appellants’ Michael W. Huddleston
Counsel on Appeal: J. Stephen Gibson
Munsch Hardt Kopf & Harr, P.C.
3800 Ross Tower
500 North Akard Street
Dallas, Texas 75201
ii
Appellees’, Cross-Appellants’ Benton T. Wheatley
Counsel at Trial: Tracy McCreight
Munsch Hardt Kopf & Harr, P.C.
401 Congress Avenue
Suite 3050
Austin, TX 78701
By: /s/ Michael W. Huddleston
Attorney for Appellees, Cross-
Appellants
iii
STATEMENT CONCERNING ORAL ARGUMENT
Appellees and Cross-Appellants respectfully request oral argument in this
case. Appellees and Cross-Appellants respectfully submit that oral argument will
assist the Court in resolving the issues necessary to decide this appeal.
iv
TABLE OF CONTENTS
Identity of Parties and Counsel ................................................................................. ii
Statement Concerning Oral Argument .....................................................................iv
Table of Contents .......................................................................................................v
Index of Authorities ............................................................................................... viii
I. Joint and Several Liability Is Necessary For
“One Satisfaction” Settlement Credit. ............................................................. 1
A. All Courts That Have Actually Considered Whether
Joint and Several Liability Is Necessary Have Ruled That It Is. ......... 1
B. The Joint and Several Liability Requirement Is Not Satisfied
When There Is No Potential Joint and Several Liability. ..................... 4
1. Joint Contractual Liability Was Not Admitted
In RLJ’s Pleading. ....................................................................... 4
a. Request to Impose Joint and Several Liability Included
Request for Joint or Several Liability. .............................. 5
1) RLJ Was Seeking the Broadest Relief Possible,
Not to Narrow the Relief Available. ...................... 5
2) The Architect Ignores RLJ’s Intent Manifest in the
Rest of the Prayer. .................................................. 5
2. The Request for Relief Did Not Clearly, Deliberately and
Unequivocally Allege Joint Contractual Liability. ..................... 6
a. Then-Pending Tort Claims Supported Request for
Imposition of Joint and Several Liability. ........................ 7
b. Specific Allegations Negated Joint or Common
Contractual Duty. .............................................................. 7
c. Joint and Several Liability Request Asserted a Legal
Conclusion And Is Not a “Fact” That Can Be
Judicially Admitted........................................................... 8
3. The Architect Waived the Effect of Any Admission On
Introduction of Evidence Showing No Joint Duty. .................... 9
C. Potential Joint Contractual Liability Not Presumed From
Any Failure to Allocate Damages. ......................................................10
D. RLJ Had No Notice The Architect Would Claim Under the
One Satisfaction Rule Credit for Contractual Liability Settlements... 11
v
1. The Architect Only Pleaded Chapter 33 Tort Contribution,
Not “One Satisfaction” Settlement Contribution ......................11
2. Limiting Its Contribution Claim to Chapter 33 Only
Prevents the Architect from Relying on Bases for
Claiming Contribution. .............................................................12
3. Liberal Construction Is Not a License to
Infer Claims Not Alleged. .........................................................12
4. There Was No Opportunity And No Need to Allocate............. 13
E. Indivisible Injury Alone Does Not Establish Joint and Several
Contractual Liability or the “One Satisfaction” Settlement Credit. .... 15
II. “One Satisfaction” Settlement Credit Does Not Apply to
Any Contractual Liability. .............................................................................18
A. Beware the Multiple Uses of “One Satisfaction.”...............................18
1. There Was No “One Satisfaction” Settlement Credit
Until After Article 2212 Was Enacted. .....................................20
2. The Cases Cited By The Architect Did Not Involve
Settlement Credits. ....................................................................20
3. Utts Does Not Suggest That the “One Satisfaction”
Settlement Credit Existed at Common Law
Before Article 2212...................................................................21
B. This and Other Texas Courts Have Refused to Apply “One
Satisfaction” Settlement Credits to Contractual Liability. .................. 22
C. CTTI Is Still Valid. ..............................................................................25
1. No Later Decision Expressly Limits or Overturns CTTI. ......... 25
2. Stare Decisis and En Banc Standards Make Sub
SilentioOverruling of CTTI Both Unthinkable and Unlikely. .. 26
3. Pool May Potentially Conflict with CTTI, But Does Not
Overrule It. ................................................................................27
4. Conflicts With Other Cases. .....................................................29
D. Extension of “One Satisfaction” Settlement Credit to
Contractual Liability Prohibited by
Texas Constitution Article I, Section 16. ............................................30
III. Conclusion .....................................................................................................31
Certificate of Compliance ........................................................................................33
vi
Certificate of Service ...............................................................................................33
vii
INDEX OF AUTHORITIES
Page(s)
CASES
Aerospatiale Helicopter Corp. v. Universal Health Servs., Inc.,
778 S.W.2d 492 (Tex. App.—Dallas 1989, writ denied) ..................................... 5
Alvord v. Waggoner,
88 Tex. 615, 32 S.W. 872 (1895) .......................................................................21
AMX Enters., Inc. v. Bank One, N.A.,
196 S.W.3d 202 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) ...............26
Andrews v. Harvey,
39 Tex. 123 (1873)..............................................................................................21
Austin Home Ctr. Associates v. State,
794 S.W.2d 593 (Tex. App.—Austin 1990, no writ) .........................................27
Barstow v. State,
742 S.W.2d 495 (Tex. App.—Austin 1987, writ denied)..................................... 7
Bartley v. Guillot,
990 S.W.2d 481 (Tex. App.—Houston [1st Dist.] 1999, pet. denied) ......... 24-25
Bd. of Ins. Comm’rs of Tex. v. Guardian Life Ins. Co. of Tex.,
142 Tex. 630, 180 S.W.2d 906 (1944) ................................................................. 5
Bentley v. Bunton,
94 S.W.3d 561 (Tex. 2002)...................................................................................8
Boulet v. State,
189 S.W.3d 833 (Tex. App.—Houston [1st Dist.] 2006, no pet.) ..................9, 15
BP Am. Prod. Co. v. Marshall,
288 S.W.3d 430 (Tex. App.—San Antonio 2008),
rev’d on other grounds, 342 S.W.3d 59 (Tex. 2011) .....................................2, 24
Broughton Assoc. Joint Venture v. Boudreaux,
709 S.W.3d 324 (Tex. App.—Waco 2002, no pet.) ...........................................13
viii
Burke v. Union Pac. Res. Co.,
138 S.W.3d 46 (Tex. App.—Texarkana 2004, pet. denied) ...............................29
CBI NA-CON, Inc. v. UOP, Inc.,
961 S.W.2d 336 (Tex. App.—Houston [1st Dist.] 1997, pet. denied) ............... 24
Crown Life Ins. Co. v. Casteel,
22 S.W.3d 378 (Tex. 2000)..........................................................................passim
CTTI Priesmeyer, Inc. v. K&O Limited Partnership,
164 S.W.3d 675 (Tex. App.—Austin 2005, no pet.) ...................................passim
Cunningham v. Haroona,
382 S.W.3d 492 (Tex. App.—Fort Worth 2012, pet. denied) ............................30
El Paso Nat. Gas v. Berryman,
858 S.W.2d 362 (Tex. 1993) .................................................................. 19, 29-30
Elliott v. Newsom,
No. 01-07-00692-CV, 2009 WL 214551
(Tex. App.—Houston [1st Dist.] Jan. 29, 2009, no pet.)(mem. op.) .................... 9
Emerson Elec. Co. v. Am. Permanent Ware Co.,
201 S.W.3d 301 (Tex. App.—Dallas 2006, no pet.) ..........................................30
Fairfield Ins. Co. v. Stephens Martin Paving LP,
246 S.W.3d 653 (Tex. 2004) ..............................................................................31
Fina Supply, Inc. v. Abilene Nat’l Bank,
726 S.W.2d 537 (Tex. 1987) ..............................................................................19
First Title Co. of Waco v. Garrett,
860 S.W.2d 74 (Tex. 1993)..........................................................................passim
Flowers v. Flowers,
407 S.W.3d 452 (Tex. App.—Houston [14th Dist.] 2013, no pet.) ................... 12
Galle, Inc. v. Pool,
262 S.W.3d 564 (Tex. App.—Austin 2008, pet. denied) ............................passim
GE Capital Commercial Inc. v. Worthington Nat’l Bank,
754 F.3d 297 (5th Cir. 2014) ............................................................................2, 9
ix
Goggin v. Grimes,
969 S.W.2d 135 (Tex. App.—Houston [14th Dist.] 1998, no pet.) ................... 16
Griffin v. Superior Ins. Co.,
161 Tex. 195, 338 S.W.2d 415 (1960) ................................................................. 7
Gym-N-I Playgrounds, Inc. v. Snider,
220 S.W.3d 905 (Tex. 2007) ..............................................................................30
Hennigan v. I.P. Petroleum Co.,
858 S.W.2d 371 (Tex. 1993) ................................................................................ 7
Heritage Gulf Coast Properties, Ltd. v. Sandalwood Apartments, Inc.,
416 S.W.3d 642 (Tex. App.—Houston [14th Dist.] 2013, no pet.) ................... 12
Highlands Ins. Co. v. Currey,
773 S.W.2d 750 (Tex. App.—Houston [14th Dist.] 1989, writ denied) .............. 6
Horizon Offshore Contractors, Inc. v. Aon Risk Servs. of Tex., Inc.,
283 S.W.3d 53 (Tex. App.—Houston [14th Dist.] 2009, pet. denied) ............... 19
Horizon/CMS Healthcare Corp. v. Auld,
34 S.W.3d 887 (Tex. 2000)...................................................................................6
Houston First Am. Sav. v. Musick,
650 S.W.2d 764 (Tex. 1983) ............................................................................6, 9
Hunt v. Ellisor & Tanner,
739 S.W.2d 933 (Tex. App.—Dallas 1987, writ denied) ......................... 2, 22-23
Ilami v. Rowinska,
No. 05-07-00893-CV, 2008 WL 3522242
(Tex. App.—Dallas Aug. 14, 2008, no pet.) ........................................................ 8
In re Prudential Ins. Co. of Am.,
148 S.W.3d 124 (Tex. 2004) ..............................................................................30
In re Velazquez,
660 F.3d 893 (5th Cir. 2011) ................................................................................ 5
Kizer v. Meyer, Lytton, Allen & Whitaker, Inc.,
228 S.W.3d 384 (Tex. App.—Austin 2007, no pet.) ..............................19, 25, 27
x
Landers v. East Texas Salt Water Disposal Co.,
151 Tex. 251, 248 S.W.2d 731, 734 (1952) ...................................................3, 15
Lentz Eng’g, L.C. v. Brown,
No. 14-10-00610-CV, 2011 WL 4449655
(Tex. App.—Houston [14th Dist.] Sept. 27, 2011, no pet.)(mem. op.)................ 6
Lewis v. Taylor,
17 Tex. 57 (1856)................................................................................................21
LJ Charter, LLC v. Air America Jet Charter, Inc.,
No. 14-08-00534-CV, 2009 WL 4794242 (Tex. App.—Houston [14th
Dist.] Dec. 15, 2009, pet. denied) ......................................................................... 2
Madison v. Williamson,
241 S.W.3d 145 (Tex. App.—Houston [1st Dist.] 2007, no pet.) ................19, 26
Matthew v. Sohn,
13-12-00302-CV, 2013 WL 2949562
(Tex. App.—Corpus Christi 2013, no pet.)(mem. op.) ......................................30
Mays v. Pierce,
203 S.W.3d 564 (Tex. App.—Houston [14th Dist.] 2006, pet. denied)............. 16
Mendoza v. Fid. & Guar. Ins. Underwriters, Inc.,
606 S.W.2d 692 (Tex. 1980) ................................................................................ 6
Metal Bldg. Components, LP v. Raley,
No. 03-05-00823, 2007 WL 74316
(Tex. App.—Austin Jan. 10, 2007, no pet.)............................................ 25, 27-28
Molberg v. State,
No. 03-13-00330-CV, 2014 WL 904286
(Tex. App.—Austin 2014, no pet.) ....................................................................... 6
Monsanto Co. v. Milam,
494 S.W.2d 534 (Tex. 1973) ..........................................................................7, 12
O’Connor v. First Court of Appeals,
837 S.W.2d 94 (Tex. 1992).................................................................................27
Osborne v. Jauregui, Inc.,
252 S.W.3d 70 (Tex. App.—Austin 2008, pet. denied) ..............................passim
xi
Oyster Creek Fin. Corp. v. Richwood Investments II, Inc.,
176 S.W.3d 307 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) ......... 29-30
Paschall v. Peevey,
813 S.W.2d 710 (Tex. App. – Austin 1991, writ denied)..................................... 2
Regions Bank v. Bay,
No. 05–12–00531–CV, 2013 WL 5299174
(Tex. App.—Dallas Sept. 18, 2010, no pet.)(mem. op.).....................................30
Seureau v. ExxonMobil Corp.,
274 S.W.3d 206 (Tex. App.—Houston [14th Dist.] 2008, no pet.) ................... 16
Smith v. Deneve,
285 S.W.2d 904 (Tex. App.—Dallas 2009, no pet.) ..........................................12
SmithKline Beecham Corp. v. Doe,
903 S.W.2d 347 (Tex. 1995) ..............................................................................12
Stewart Title Guar. Co. v. Sterling,
822 S.W.2d 1 (Tex. 1992)............................................................................passim
Storrie v. Cortes,
90 Tex. 283, 38 S.W. 154 (1896) .......................................................................31
Sun Oil Co. v. Robicheaux,
23 S.W.2d 713 (Tex. Comm. App. 1930)...........................................................17
Utts v. Short,
81 S.W.3d 822 (Tex. 2002)........................................................................... 21-22
Walker v. Packer,
827 S.W.2d 833 (Tex. 1992) ................................................................................ 1
Warren v. La Salle Co.,
262 S.W. 527 (Tex. Civ. App.—Austin 1924, writ dismissed w.o.j.).................. 5
Whitley v. King,
227 S.W.2d 241 (Tex. Civ. App.—Waco 1950, no writ) ..................................... 8
OTHER AUTHORITIES
Tex. R. App. P. 41.2(c) ............................................................................................27
xii
I. JOINT AND SEVERAL LIABILITY IS NECESSARY FOR
“ONE SATISFACTION” SETTLEMENT CREDIT. 1
The settlement credit issue is whether the Architect was entitled to any
settlement credit at all, not the amount. Contrary to the Architect’s suggestion
(Cross-Appellee’s 5), applicability of the settlement credit is a legal question
reviewed de novo, Galle, Inc. v. Pool, 262 S.W.3d 564, 570 n.3 (Tex. App.—
Austin 2008, pet. denied). No discretion is allowed in deciding the law or applying
it to the facts. Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992).
The Architect insists, without authority, that “Texas law does not require
joint and several liability for application of the one satisfaction rule” concerning
settlement credits. (Cross-Appellee’s 6). It also alleges that RLJ “seeks to …
introduc[e] a new requirement – joint and several liability,” as if that requirement
were previously unknown. (Cross-Appellee’s 7). Apparently, it maintains that
“indivisible injury” alone is enough. (Cross-Appellee’s 14-17).
A. All Courts That Have Actually Considered Whether Joint and
Several Liability Is Necessary Have Ruled That It Is.
The Texas Supreme Court, this Court (twice), the Fifth Circuit, and other
Texas appellate courts recognize that “one satisfaction” settlement credits only
1
The Architect fails to distinguish between the multiple differing circumstances in which
the phrase “one satisfaction” is used. To avoid confusion, RLJ refers to the issue in this
case as involving the “‘one satisfaction’ settlement credit” to distinguish it from other
doctrines under the broader “one satisfaction” heading. See II.A., infra.
1
apply to joint liability. GE Capital Commercial Inc. v. Worthington Nat’l Bank,
754 F.3d 297, 306 (5th Cir. 2014); Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378,
390 (Tex.2000); First Title Co. of Waco v. Garrett, 860 S.W.2d 74, 78 (Tex.1993);
Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 8 (Tex.1992); LJ Charter, LLC
v. Air America Jet Charter, Inc., No. 14-08-00534-CV, 2009 WL 4794242 at *9
(Tex. App.—Houston [14th Dist.] Dec. 15, 2009, pet. denied); BP Am. Prod. Co. v.
Marshall, 288 S.W.3d 430, 456 (Tex. App.—San Antonio 2008), rev’d on other
grounds, 342 S.W.3d 59 (Tex.2011); CTTI Priesmeyer, Inc. v. K&O Limited
Partnership, 164 S.W.3d 675, 684 (Tex. App.—Austin 2005, no pet.); Paschall v.
Peevey, 813 S.W.2d 710, 712 (Tex. App. – Austin 1991, writ denied). CTTI
specifically ruled:
Because tortfeasors cannot be jointly and severally liable for contract
damages, and other contract defendants are only jointly and severally
liable for breaches of contracts to which they are a party or that
promise the same performance, we … affirm the trial court’s decision
to deny any settlement credits.
164 S.W.3d at 685 (emphasis added).
After calling the requirement a “straw man” (Cross-Appellee’s 7), the
Architect later recognizes the need for joint and several liability. It argues GE
Capital “holds only that the one-satisfaction rule requires an allegation of joint and
several liability between the defendants.” (Cross-Appellee’s 10). The Architect
also attempts to distinguish Hunt v. Ellisor & Tanner, 739 S.W.2d 933, 938 (Tex.
2
App.—Dallas 1987, writ denied), because “it did not involve any allegations of
joint liability….” (Cross-Appellee’s 18). As the Architect itself recognizes, joint
and several liability is prerequisite for a “one satisfaction” settlement credit.
Allowing this credit in non-tort cases based on indivisible injury alone
ignores Texas joint and several tort liability law. After Landers v. East Texas Salt
Water Disposal Co., joint and several tort liability is based solely on indivisible
injury. 151 Tex. 251, 248 S.W.2d 731, 734 (1952), Thus, some post-Landers tort
cases discuss indivisible injury requirement without mentioning joint and several
liability because, post-Landers, in tort cases the former automatically satisfies the
latter. The Texas Supreme Court made abundantly clear that joint and several
liability is essential to receiving a “one satisfaction” settlement credit. Casteel, 22
S.W.3d at 390; Garrett, 860 S.W.2d at 78; Sterling, 822 S.W.2d at 8. There was no
potential joint and several contractual liability here, 2 so there could be no “one
satisfaction” settlement credit. 3 (Cross-Appellants’ 23-29, 34-39).
2
The Architect does not question that joint contractual liability requires promising the
same performance. The Architect only argues that the joint liability requirement was
satisfied by taking three words in the relief RLJ requested out of context while ignoring
detailed allegations that the Architect and Settling Defendants breached distinct
contractual duties. (Cross-Appellee’s 9). Why this argument is meritless is explained in
I.B., infra.
3
Demonstrating the dearth of supporting authority, the Architect resorts to arguing
whether such credits are available in breach of contract cases. (Cross-Appellee’s 7-9). To
uphold the settlement credit in this case, the Architect must prevail on both the joint-and-
several and the contractual liability issues.
3
B. The Joint and Several Liability Requirement Is Not Satisfied
When There Is No Potential Joint and Several Liability.
The specific factual allegations about the Defendants’ respective contractual
duties showed that there was no common undertaking. (Cross-Appellants’ 25-31,
34-39). The Architect attempts, however, to create the appearance of potential joint
and several liability by arguing “RLJ pled that [the Architect and the Settling
Defendants] were jointly and severally liable for RLJ’s breach of contract claims.”
(Cross-Appellee’s 9; emphasis added). Nothing in RLJ’s request specifically
refers to “breach of contract claims” 4 as the Architect says. (CR202; Id.). Nowhere
does RLJ “admit” Defendants’ contractual liability was joint.
1. Joint Contractual Liability Was Not Admitted In RLJ’s
Pleading.
The Architect’s categorical and incorrect assertion is based exclusively on
three words – “jointly and severally” – in RLJ’s request for relief. (CR202). RLJ
pleaded tort claims against all Defendants for which joint and several liability
would have been appropriate. (CR197-200). Many pages of RLJ’s petition and
supporting documentation detail facts showing that each Defendant’s contractual
duties were dissimilar and distinct. (CR192-93, 197-98, 200-01, 209-12).
4
The prayer requests “judgment against the Defendants, jointly and severally, for [RLJ’s]
damages, interest, attorneys' fees, costs, and any other relief to which [it] may be
entitled.” (CR202; emphasis added).
4
Nevertheless, the Architect argues as if the general request for relief overrides
more specific allegations and alone admits joint and several liability.
a. Request to Impose Joint and Several Liability
Included Request for Joint or Several Liability.
The Architect is wrong. Pleadings must be interpreted reasonably by
construing words in context and allowing substance to control form. See Warren v.
La Salle Co., 262 S.W. 527, 531 (Tex. Civ. App.—Austin 1924, writ dismissed
w.o.j.).
1) RLJ Was Seeking the Broadest Relief
Possible, Not to Narrow the Relief Available.
The request for judgment against all “Defendants, jointly and severally” is
included in a prayer seeking that and “any other relief.” (CR202). In context, it
cannot be reasonably interpreted to seek only joint liability. “And” refers to “either
or both” when manifest intent and context requires. In re Velazquez, 660 F.3d 893,
898 (5th Cir. 2011); see Bd. of Ins. Comm’rs of Tex. v. Guardian Life Ins. Co. of
Tex., 142 Tex. 630, 180 S.W.2d 906, 908 (1944); Aerospatiale Helicopter Corp. v.
Universal Health Servs., Inc., 778 S.W.2d 492, 502 (Tex. App.—Dallas 1989, writ
denied). “Jointly and severally,” in context, also requested joint or several liability.
2) The Architect Ignores RLJ’s Intent Manifest
in the Rest of the Prayer.
Even if “and” were only conjunctive, the Architect’s interpretation ignores
RLJ’s manifest intent. Seeking the maximum relief available, RLJ requested “any
5
other relief to which [it] may be entitled.” Read reasonably and in that context, the
prayer did not only seek to hold the defendants jointly liable. It also included an
assertion of several liability. Therefore, the request that the Defendants be “jointly
and severally” liable was pleaded alternatively, not unequivocally, that the
Defendants’ contractual liability was only joint.
To be judicially admitted, a fact allegedly must be alleged deliberately,
clearly and unequivocally. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d
887, 905 (Tex.2000); Mendoza v. Fid. & Guar. Ins. Underwriters, Inc., 606
S.W.2d 692, 694 (Tex.1980). Only “‘[a]ssertions of fact, not pled in the
alternative, in [a party’s] live pleadings’” may be judicial admissions. Molberg v.
State, No. 03-13-00330-CV, 2014 WL 904286 at *2 (Tex. App.—Austin 2014, no
pet.)(quoting Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767 (Tex.1983);
emphasis added). RLJ’s request for relief was, at most, equivocal and could not
judicially admit joint liability.
2. The Request for Relief Did Not Clearly, Deliberately and
Unequivocally Allege Joint Contractual Liability.
This is especially true when the entire pleading is considered, as it must be
when deciding whether it is sufficiently clear, deliberate, and unequivocal to
judicially admit a fact. Lentz Eng’g, L.C. v. Brown, No. 14-10-00610-CV, 2011
WL 4449655, at *1 (Tex. App.—Houston [14th Dist.] Sept. 27, 2011, no
pet.)(mem. op.); see, e.g., Highlands Ins. Co. v. Currey, 773 S.W.2d 750, 755
6
(Tex. App.—Houston [14th Dist.] 1989, writ denied)(no admission in motion when
party specifically denied the same fact in its answer); Barstow v. State, 742 S.W.2d
495, 509 (Tex. App.—Austin 1987, writ denied)(no admission when motion
contained conflicting statements). “[M]ere mistake or slip of the tongue must be
eliminated” before a statement may be treated as a judicial admission. Hennigan v.
I.P. Petroleum Co., 858 S.W.2d 371, 372 (Tex.1993)(quoting Griffin v. Superior
Ins. Co., 161 Tex. 195, 338 S.W.2d 415, 419 (1960)).
a. Then-Pending Tort Claims Supported Request for
Imposition of Joint and Several Liability.
RLJ alleged pending tort claims so that including a request for joint and
several liability was appropriate for those claims. It does not necessarily or even
reasonably follow that such request must have also included contractual liability.
b. Specific Allegations Negated Joint or Common
Contractual Duty.
This is further illustrated because the specific facts alleged contradict any
inference that RLJ admitted joint liability. Reasonable interpretation means
specific allegations control more general averments. Monsanto Co. v. Milam, 494
S.W.2d 534, 536 (Tex.1973). RLJ alleged breaches of distinct contractual
obligations by the Soils Engineer (CR192, 211-212), General Contractor (CR192),
and the Architect. (CR192, 205-07). These factual averments eliminated as a
matter of law any potential joint contractual liability. (Cross-Appellants’ 25-28,
7
35-39). Even the Architect agreed that its responsibilities were different.
According to its closing argument, “An architect is not an engineer [or] … a
general contractor.” (10RR33). “Architects do not … and cannot second-guess
engineers.” (10RR34). The specific factual allegations, therefore, control the
general relief requested over whether the contractual liability alleged was joint.
c. Joint and Several Liability Request Asserted a
Legal Conclusion And Is Not a “Fact” That Can
Be Judicially Admitted.
Whether liability is joint and several is a legal conclusion, not a factual
assertion. See Bentley v. Bunton, 94 S.W.3d 561, 619 (Tex.2002)(conspiracy
finding “requires the legal conclusion to impose joint and several liability”); Ilami
v. Rowinska, No. 05-07-00893-CV, 2008 WL 3522242, at *2 (Tex. App.—Dallas
Aug. 14, 2008, no pet.)(“defendants are jointly and severally liable” is a “legal
conclusion”). “The mere fact that plaintiffs incidentally inserted in their petition
the legal conclusion that ‘[the defendant], under the facts alleged, is further liable
to plaintiffs, jointly and severally, in his individual capacity’ did not in any respect
change or alter the nature and character of the cause of action otherwise asserted
….” Whitley v. King, 227 S.W.2d 241, 244 (Tex. Civ. App.—Waco 1950, no
writ)(emphasis added).
Even if the request had “admitted” potential joint contractual liability, it
would not have been binding because it concerned a question of law, not fact.
8
Boulet v. State, 189 S.W.3d 833, 838 (Tex. App.—Houston [1st Dist.] 2006, no
pet.). Admission of a legal conclusion has no legal effect. Elliott v. Newsom, No.
01-07-00692-CV, 2009 WL 214551, at *2 (Tex. App.—Houston [1st Dist.] Jan.
29, 2009, no pet.)(mem. op.).
3. The Architect Waived the Effect of Any Admission On
Introduction of Evidence Showing No Joint Duty.
Further, the Architect waived reliance on any such admission by permitting
the introduction of contradictory evidence without objecting that the matter had
been conclusively established. “The party relying on his opponent’s pleadings as
judicial admissions of fact, however, must protect his record by objecting to the
introduction of evidence contrary to that admission….” Musick, 650 S.W.2d at
769.
When RLJ introduced evidence precluding any joint contractual liability, the
Architect never asserted it was barred by judicial admission. (Cross-Appellants’ 7-
11, 34-38). For this additional reason, there is no judicial admission of joint
contractual liability. Without allegation of or evidence showing a joint contractual
liability, there is no distinction between this case and GE Capital.5 Neither
involved pleadings for potential joint contractual liability.
5
The Architect asserts that RLJ argues the “one satisfaction” settlement credit “only
applies if there is a finding of joint and several liability between the defendants.” (Cross-
Appellee’s 10). RLJ made no such argument. When Chapter 33 does not apply, there is
no mechanism for obtaining any liability finding about a settling party’s liability. RLJ
9
C. Potential Joint Contractual Liability Not Presumed From Any
Failure to Allocate Damages.
Without potential joint contractual liability in this case, no duty to allocate
ever arose. The Architect acknowledges (Cross-Appellee’s 11) there must first be
“some damages for which there could be joint and several liability.” CTTI, 164
S.W.3d at 685, n.3. Nevertheless, it dismisses CTTI as merely “explain[ing] the
burden[-]shifting procedure” for “one satisfaction” settlement credits. (Cross-
Appellee’s 12). The Architect ignores that the CTTI footnote it cites concludes:
[t]his burden shifting applies only where there are at least some
damages for which there could be joint and several liability. Because
… there can be no damages for which CTTI is jointly liable with other
settling parties, K & O had no burden to allocate….
Id. (emphasis added). CTTI rejected the Architect’s suggestion (Cross-Appellee’s
11-13) that the duty to allocate arises regardless of whether the potential liability
would be joint. Failure to allocate does not otherwise make “joint” a separate
settled liability. There must be a potential joint liability before allocation is
necessary. According to the Architect, it had no common contractual duty with any
Settling Defendant. (10RR33-39).
does not quarrel whether the joint and several liability requirement is satisfied by
allegation or introduction of evidence supporting such liability. It need not do so. Neither
happened in this case. Rather, the pleading and the evidence showed that there was no
possibility, as the Architect itself argued to the jury (Cross-Appellants’ 38-39), that the
Architect’s and the Settling Defendants’ liability could have arisen from any common
contractual duty. (Cross-Appellants’ 34-38).
10
D. RLJ Had No Notice The Architect Would Claim Under the
One Satisfaction Rule Credit for Contractual Liability
Settlements.
Further, RLJ had no notice of any need to allocate because the Architect
never pleaded for any “one satisfaction” settlement credit. The Architect asserts
that its answer, “construed liberally … did provide notice of ESG’s intent to reduce
any damage award based on sums received [from] other settling parties” (Cross-
Appellee’s 28), and that RLJ was at fault for not “request[ing] … an ‘opportunity’
to … apportion[] its damages.” (Cross-Appellee’s 3, 26). (Id.).
1. The Architect Only Pleaded Chapter 33 Tort
Contribution, Not “One Satisfaction” Settlement
Contribution
The Architect’s selective quote from its answer 6 omits its explicit limitation
to a Chapter 33 settlement credit. The Architect pleaded:
Alternatively, if the economic loss rule does not completely bar all of
Plaintiffs’ tort claims, then, pursuant to Chapter 33 of the Texas Civil
Practice and Remedies Code, Defendants are entitled to a credit for
any settlement Plaintiffs receive from any other person or entity. If
Plaintiffs settle with any other person or entity, then Defendants
6
Attempting to create the appearance of pleading for a “one satisfaction” settlement
credit implicitly acknowledges the Texas Rule of Civil Procedure 94 obligation to plead
for it affirmatively. Under 2212, it was unnecessary to affirmatively plead for the “one
satisfaction” settlement credit because no fact issue was potentially presented. The credit
was fixed by statute on a per capita basis. (Cross-Appellants’ 22). Under modern
practice, a “one satisfaction” settlement credit is not fixed and must be pleaded as an
affirmative defense under Rule 94. (Cross-Appellants’ 57-59). Cases stating generally
that it is unnecessary to plead the “one satisfaction” settlement credit appear to have
uncritically adopted language from cases decided when the credit amount was fixed by
article 2212.
11
reserve the right to make a written election of credit for settlement
under §33.014 of the Texas Civil Practice and Remedies Code.[ 7]
(CR47; emphasis added).
2. Limiting Its Contribution Claim to Chapter 33 Only
Prevents the Architect from Relying on Bases for
Claiming Contribution.
Specific allegations control general assertions. Monsanto Co., 494 S.W.2d at
536. Pleading a particular ground precludes reliance on others not alleged.
Heritage Gulf Coast Properties, Ltd. v. Sandalwood Apartments, Inc., 416 S.W.3d
642, 660 (Tex. App.—Houston [14th Dist.] 2013, no pet.); Smith v. Deneve, 285
S.W.2d 904, 916 (Tex. App.—Dallas 2009, no pet.). The Architect’s pleading
cannot be reasonably read to request a “one satisfaction” settlement credit.
3. Liberal Construction Is Not a License to Infer Claims
Not Alleged.
Liberal construction is not a “license to read into [a pleading] a claim that it
does not contain.” Flowers v. Flowers, 407 S.W.3d 452, 458 (Tex. App.—Houston
[14th Dist.] 2013, no pet.). It only allows that which may be “reasonably inferred
from what is specifically stated.” SmithKline Beecham Corp. v. Doe, 903 S.W.2d
347, 354 (Tex.1995). Allegation of a “one satisfaction” settlement credit against
contractual liability cannot be inferred from the Architect’s pleading for Chapter
33 tort contribution.
7
This section was repealed September 1, 2003, nine years before the Architect’s Second
Amended Answer. (CR46).
12
This is especially true because, when the Architect asserted Chapter 33
contribution, RLJ’s tort claims were still pending. (CR197-200). The trial court
only later rendered a take-nothing summary judgment on those claims. (CR1710).
After the trial court disposed of the tort claims, RLJ settled with the Settling
Defendants. (Cross Appellants’ 11). The Architect never pleaded or otherwise gave
RLJ any notice it would seek a “one satisfaction” settlement credit. 8
4. There Was No Opportunity And No Need to Allocate.
The Architect further asserts that RLJ now attempts to “show allocation of
damages on appeal despite the fact that [it] presented no such evidence to the trial
court.” (Cross-Appellee’s 2). This is incorrect for several reasons. “A party cannot
waive a right before [it] is in a position to assert it.” Broughton Assoc. Joint
Venture v. Boudreaux, 709 S.W.3d 324, 328 (Tex. App.—Waco 2002, no pet.).
Without notice the Architect was claiming a “one satisfaction” settlement credit for
contractual liability, RLJ can hardly be faulted for not allocating. 9
8
Because the Architect failed to plead the “one satisfaction” settlement credit, its
arguments concerning laches (Cross-Appellee’s 29) are founded on an incorrect premise
and need not be considered further.
9
If allocation was necessary, the Architect’s delay until after trial in raising the “one
satisfaction” settlement credit issue deprived RLJ of its right to have the jury resolve all
fact issues. This delay alone foreclosed the application of the one satisfaction rule due to
laches. (Cross-Appellants’ 58-59). The Architect’s contention that laches as an avoidance
was waived by not being pleaded is baseless because the Architect never pleaded for any
contractual liability contribution defense. RLJ specifically asserted laches when the issue
arose post-trial. (CR1817). The Architect never objected this avoidance was untimely.
(CR1633-39).
13
The lynchpin of the Architect’s allocation argument was that RLJ’s petition
asserted potential joint and several contractual liability. As shown here and
previously (Cross-Appellants’ 34-39), it did no such thing. The Architect never
satisfied its “initial burden to show that there are ‘at least some damages for which
there could be joint and several liability.’” (Cross-Appellee’s 12; see also Cross-
Appellee’s 27). The need to allocate never arose.
The Architect further misapprehends what must be allocated. It argues
incorrectly RLJ had “to show allocation of damages applicable only to ESG.”
(Cross-Appellee’s 12; emphasis added; see also Cross-Appellee’s 27). Actually,
allocation is only required for settlement proceeds, not the non-settling defendant’s
damages. CTTI, 164 S.W.3d at 675, n.3.
Even if it were necessary to allocate to specifically identify those damages
for which the Architect was liable, the jury’s verdict did that. (Cross-Appellants’
40-47). The charge only asked about the damages from the Architect’s failure to
comply with its own contractual obligations, not for all damages resulting from all
Defendants’ alleged breaches. (CR1127; App.B). According to this Court and the
Texas Supreme Court, the “one satisfaction” settlement credit would not apply for
this reason alone.
The [“one satisfaction” settlement credit] rule guards against a
plaintiff receiving a windfall “by recovering an amount in court that
covers the plaintiff’s entire damages, but to which a settling defendant
has already partially contributed. The plaintiff would otherwise be
14
recovering an amount greater than the trier of fact has determined
would fully compensate for the injury.”
Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75 (Tex. App.—Austin 2008, pet.
denied)(quoting First Title Co. v. Garrett, 860 S.W.2d 74, 78 (Tex.1993)).
RLJ questions whether the “one satisfaction” settlement credit applies at all.
It does not question whether, if the Architect was entitled to such a credit, the trial
court correctly calculated the amount. The Architect’s discussion of allocation is
ultimately an immaterial diversion.
E. Indivisible Injury Alone Does Not Establish Joint and Several
Contractual Liability or the “One Satisfaction” Settlement
Credit.
The Architect’s confusion continues into its indivisible injury argument.
There, the Architect again asserts judicial admission as substitute for a non-existent
fact. It urges RLJ judicially admitted the injury in this case was indivisible. (Cross-
Appellee’s 14). An injury is “indivisible” when, by its very nature, it cannot be
apportioned with reasonable certainty to the individual wrongdoers. Landers v. 248
S.W.2d at 734. Whether an injury is indivisible is a question of law that cannot be
established by admission. Boulet, 189 S.W.3d at 838.
Legal injury cannot be conflated with damages. They are separate and
distinct. A legal injury consists of the invasion to a claimant’s legally protected
rights. Seureau v. ExxonMobil Corp., 274 S.W.3d 206, 226-227 (Tex. App.—
Houston [14th Dist.] 2008, no pet.); Goggin v. Grimes, 969 S.W.2d 135, 137 (Tex.
15
App.—Houston [14th Dist.] 1998, no pet.). For contract breaches, the legal injury
is failing or refusing to do something a party promised. Mays v. Pierce, 203
S.W.3d 564, 575 (Tex. App.—Houston [14th Dist.] 2006, pet. denied). By
definition, the “injury” in a contract case in which there is no joint or common
contractual duty and no joint liability is not “indivisible” as it is in tort cases.
However, even assuming arguendo that the “injury” here could be treated as
“indivisible” sans a common contractual duty, that alone is not enough to establish
entitlement to a “one satisfaction” settlement credit. The settlement must have also
been for the same damages assessed against the non-settling defendant. Casteel, 22
S.W.3d at 391; CTTI, 164 S.W.3d at 675, n.3. The jury was not asked the amount
of damages resulting from breaches by all defendants – only those of the Architect.
(CR1127; App.B). The Architect points to the general release of all past and future
claims arising out of the Project to suggest overlapping damages (Cross-Appellee’s
3-4) even though the damages question was limited to those caused by the
Architect. (CR1127; App.B). As the Architect itself previously urged, joint liability
is based on the liability alleged, not the liability released. (Cross-Appellee’s 10-
13). Further, every prudent litigant will obtain a release of all claims that were or
could have been asserted. The scope of the release will always be broader than the
settlor’s alleged liability.
16
The Architect’s allocation argument is but an attempt to bolster its complaint
that the damages evidence was legally insufficient. (Appellant’s 36-57). The
Architect maintains the jury could not “allocate” damages unless a witness
particularly attributed to it a specific sum of damages it alone caused. (Cross-
Appellee’s 15). Among the reasons this argument is meritless (Appellees’
Amended 61-62), is that it requires a return to the now-rejected rule of Sun Oil Co.
v. Robicheaux, 23 S.W.2d 713, 715 (Tex. Comm. App. 1930)(judgment adopted),
barring recovery if the claimant failed to establish the damage caused by each
defendant. Ironically, the “one satisfaction” settlement credit the Architect sought
was created in response to the statute rectifying the very same “intolerable
burden.” (Cross-Appellants’ 21).
If the Architect wanted a jury determination of an amount of damages that
included those caused by the Settling Defendants, it was obliged to properly
preserve that complaint. Any necessity for allocation of damages was not related to
the elements of RLJ’s recovery as the Architect suggests (Cross-Appellee’s 26),
but to the Architect’s post-verdict claim for a “one satisfaction” settlement credit.
The Architect did not assert that issue by affirmative pleading as required. (See n.
6, supra.; Cross-Appellants’ 57-58).
It did not preserve for complaint any failure of the charge to obtain a finding
about whether damages overlapped. (Cross-Appellants’ 56-57). Such a finding was
17
necessary to trigger any alleged duty to allocate. CTTI, 164 S.W.3d at 675, n.3. In
addition to having no joint contractual liability with any Settling Defendant, the
Architect failed to show that any settlement proceeds were for the injury or the
same damages as those assessed against the Architect. The Architect was,
therefore, not entitled to a “one satisfaction” settlement credit for these reasons.
II. “ONE SATISFACTION” SETTLEMENT CREDIT DOES NOT
APPLY TO ANY CONTRACTUAL LIABILITY.
The Architect also deserved no “one satisfaction” settlement credit because
it is not available for contractual liabilities. The credit is limited to cases of joint
tort liability. (Cross-Appellants’ 19-25). Yet, the Architect contends that there is an
overarching common law “one satisfaction” settlement credit available beyond that
created in response to article 2212. Actually, the common law generally allowed
neither joint and several liability nor claims for contribution. (Cross-Appellants’
20-21). Nevertheless, the Architect infers from pre-article 2212 cases containing
the phrase “one satisfaction” a pre-existing common law “one satisfaction”
settlement credit. (Cross-Appellee’s 6 n.2).
A. Beware the Multiple Uses of “One Satisfaction.”
Texas cases have used the phrase “one satisfaction” for at least three distinct
purposes: 1) limiting recovery to the judgment amount in later enforcement suits,
e.g., El Paso Nat. Gas v. Berryman, 858 S.W.2d 362, 364 (Tex.1993)(alleged alter
ego had no derivative liability if judgment against alleged principle fully paid);
18
2) describing the election of remedies necessary for formulating the judgment
when damages for indivisible injury are awarded or recovered under multiple
recovery theories, Madison v. Williamson, 241 S.W.3d 145, 159 (Tex. App.—
Houston [1st Dist.] 2007, no pet.); and 3) describing the settlement credit created
in response to article 2212 to limit the amount of recoverable damages recoverable
when a potentially liable defendant settles its tort liability before judgment. Stewart
Title Guar. Co. v. Sterling, 822 S.W.2d 1, 5 (Tex.1991).
The election-of-remedies “one satisfaction” bars recovery if plaintiff elects
to recover or has obtained judgment under a different theory of liability for the
same wrong, regardless of whether it would exceed the loss. See Fina Supply, Inc.
v. Abilene Nat’l Bank, 726 S.W.2d 537, 541 (Tex.1987); Horizon Offshore
Contractors, Inc. v. Aon Risk Servs. of Tex., Inc., 283 S.W.3d 53, 60 (Tex. App.—
Houston [14th Dist.] 2009, pet. denied); e.g., Kizer v. Meyer, Lytton, Allen &
Whitaker, Inc., 228 S.W.3d 384, 392, n.3 (Tex. App.—Austin 2007, no
pet.)(second action’s judgment might be barred by recovery in previous judgment).
The “one satisfaction” judgment rule does not concern the amount of damages that
can be awarded by a forthcoming judgment, only the amount recoverable from a
judgment debtor or those in privity under an existing judgment.
This case involves neither of those rules. Instead, it involves the “one
satisfaction” settlement credit created in response to legislation overturning the
19
common-law rule prohibiting contribution among tortfeasors. As the Texas
Supreme Court explained in Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 5
(Tex.1991),
[The judgment debtor] alleges that it is entitled to an off-set from the
settlement under the one satisfaction rule. This doctrine developed at
common law from the interpretation and application of [article 2212,]
the original contribution statute. This common law development was
necessary, because the statute did not address the implications of a
partial settlement on contribution.
(Emphasis added); see also Cross-Appellants’ 20-22.
1. There Was No “One Satisfaction” Settlement Credit
Until After Article 2212 Was Enacted.
Without acknowledging the different purposes for which courts use “one
satisfaction,” the Architect infers from pre-article 2212 cases containing that
expression that a common law settlement credit previously existed even if recovery
was for a non-tort liability. The Architect declares, “The Texas Supreme Court
began enforcing the one-satisfaction rule as early as 1856.” (Cross-Appellee’s 6).
While that is true for the “one satisfaction” of judgment rule and election-of-
remedies rule, it is untrue for the “one satisfaction settlement credit.”
2. The Cases Cited By The Architect Did Not Involve
Settlement Credits.
None of the three cases the Architect cites involved settlement, a settling
party, or reduction of a damage award. Lewis v. Taylor, 17 Tex. 57, 59 (1856)
involved the “one satisfaction” of judgment rule, holding that a judgment creditor
20
was not entitled to recover more than the judgment amount in a suit against the
debtor’s bond surety. Alvord v. Waggoner, 88 Tex. 615, 32 S.W. 872, 873 (1895),
concerned the “one satisfaction” election of remedies when it observed that a
grantee could sue each of his successors in title for breach of the general warranty
deed, but “could have but one satisfaction of his damages.” The opinion in
Andrews v. Harvey, 39 Tex. 123 (1873), contains no reference whatever to any
“one satisfaction” rule. “One satisfaction” appears only in the summary of the
losing party’s argument, which preceded opinions in Texas Reports. See 1 Tex.
Preface. And that reference appears to be to the election-of-remedies “one
satisfaction.” None of these cases show a “one satisfaction” settlement credit
existed before article 2212.
3. Utts Does Not Suggest That the “One Satisfaction”
Settlement Credit Existed at Common Law Before
Article 2212.
From the fallacious premise that settlement contributions under the one-
satisfaction rule antedated article 2212, the Architect urges that in Utts v. Short, 81
S.W.3d 822, 831-32 (Tex.2002), “[t]he [Texas] Supreme Court explained that
Texas’ statutory contribution scheme upholds the broader one-satisfaction rule
rather than supersedes the common law one-satisfaction rule.” There are numerous
erroneous assumptions underlying this suggestion.
21
Creating a specific settlement credit in response to article 2212 would have
been unnecessary if a common-law “one satisfaction” settlement credit already
existed. Further, the cited passage from Utts was only the opinion of Justice Baker,
not a majority of the court. Id. at 824. Finally, Utts involved a tort claim governed
by the Chapter 33 contribution statute. It presented no question whether Chapter 33
supplanted a pre-existing common-law settlement credit other than the “one
satisfaction” settlement credit created in response to article 2212, which only
applied to tort cases. Id. at 825.
B. This and Other Texas Courts Have Refused to Apply “One
Satisfaction” Settlement Credits to Contractual Liability.
To bolster its contention that “one satisfaction” settlement credits apply to
contractual liabilities, the Architect sweepingly but incorrectly declares “neither
this Court nor any other appellate jurisdiction in Texas holds that the one-
satisfaction rule is limited by the particular cause of action asserted.” (Cross-
Appellee’s 7).
In CTTI Priesmeyer, Inc. v. K & O Ltd. Partnership, 164 S.W.3d 675, 683-
84 (Tex. App.—Austin 2005, no pet.), this Court noted that the Dallas appellate
court in Hunt v. Ellisor & Tanner, 739 S.W.2d 933, 938 (Tex. App.—Dallas 1987,
writ denied), ruled a breach of contract claim does not support comparative
causation. The Architect attempts to distinguish Hunt by urging “that it did not
involve any allegations of joint liability and indivisible damages….” (Cross-
22
Appellees’ 18). If Hunt meant the one satisfaction rule applies to contractual
liabilities, then it nevertheless requires joint and several liability. Either way, Hunt
supports RLJ’s contention that the trial court erroneously gave the Architect credit
for the sums paid by the Settling Defendants either because the “one satisfaction”
settlement credit does not apply to contractual liability at all or does not apply if
the potential contractual liability is not joint.
Even more to the point, CTTI discussed Stewart Title Guar. Co. v. Sterling,
822 S.W.2d 1 (Tex.1991), First Title Co. of Waco v. Garrett, 860 S.W.2d 74
(Tex.1993), and Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex.2000) – the
post-Hunt Texas Supreme Court cases analyzing the availability of settlement
credits under the one satisfaction rule. CTTI observed that in each of those cases
the liable and settling defendants were joint tortfeasors. It pointed out that the
Texas Supreme Court had observed in Casteel:
Under the one satisfaction rule, the nonsettling defendant may only
claim a credit based on the damages for which all tortfeasors are
jointly liable.... [T]he nonsettling defendant is entitled to offset any
liability for joint and several damages by the amount of common
damages paid by the settling defendant, but not for any amount of
separate or punitive damages paid by the settling defendant.
CTTI, 164 S.W.3d at 684 (quoting Casteel, 22 S.W.3d at 391-92; emphasis added).
Without explanation, the Architect nevertheless declares CTTI’s “holding
itself acknowledges and allows for the application [of one satisfaction settlement
credits] to breach of contract claims.” (Cross-Appellee’s 12, n. 4). In reality, CTTI
23
“conclude[d] that the one satisfaction rule applies only to tort claims, not to breach
of contract claims.” Id. (emphasis added). This Court could not have been more
clear.
CTTI is not an isolated example. CBI NA-CON, Inc. v. UOP, Inc., 961
S.W.2d 336, 339 (Tex. App.—Houston [1st Dist.] 1997, pet. denied), also
categorically ruled “[c]ontribution is allowed in Texas only among joint
tortfeasors.” Id. at 33910; accord, Marshall, 288 S.W.3d at 456 (“A nonsettling
defendant may only successfully urge the one satisfaction rule when there are joint
tortfeasors”). CBI explained “the only way [C]hapter 33 could apply is if [the
plaintiff] had a negligence claim, breach of warranty claim … or a strict products
liability claim” because “[a] breach of contract claim is not a basis for contribution
under Chapter 33.” Id. at 339, 341. Bartley v. Guillot, 990 S.W.2d 481, 484 (Tex.
App.—Houston [1st Dist.] 1999, pet. denied), also disallowed a “one satisfaction”
settlement credit because “any set-off [the liable defendant] may be entitled to
receive must come from another tortfeasor, not … a party merely involved by
contract.” Id. These decisions further illustrate that “one satisfaction” settlement
credits apply only to joint tort, not contractual, liabilities.
10
Despite the assertion of a general right of contribution for all the claims asserted
against UOP, the court deemed it necessary only to consider Chapter 33. It could not
have based its disposition on Chapter 33 alone if there were a common-law contribution
right. Thus, CBI also rebuts the Architect’s contentions that joint and several liability is
not required and that there is an overarching common-law contribution right beyond
Chapters 32 and 33.
24
C. CTTI Is Still Valid.
Without acknowledging or considering origin or purpose of the “one
satisfaction” settlement credit, the Architect assails generally the notion it only
applies to tort liability and attacks in particular the continuing vitality of CTTI
based on four later decisions by this Court. (Cross-Appellee’s 12, n.4).
1. No Later Decision Expressly Limits or Overturns CTTI.
Two of these opinions make no mention of CTTI whatever. Kizer v. Meyer,
Lytton, Alen & Whitaker, Inc., 228 S.W.3d 384, 392 n.3 (Tex. App. – Austin 2007,
no pet.); Metal Bldg. Components, LP v. Raley, No. 03-05-00823, 2007 WL 74316
(Tex. App.—Austin Jan. 10, 2007, no pet.). Galle, Inc. v. Pool, 262 S.W.3d 564,
573-74 (Tex. App.—Austin 2008, pet. denied), and Osborne v. Jauregui, Inc., 252
S.W.3d 70, 75 (Tex. App.—Austin 2008, pet. denied)(en banc), cite CTTI, but not
concerning whether the “one satisfaction” settlement credit applies to contractual
liability. Neither Pool nor Osborne discuss CTTI’s explanation why the “one
satisfaction” settlement credit was created or analyzes why that reason and the
Texas Supreme Court authorities on which CTTI relied meant the credit was
limited to joint tort liability.
Using the identical language, Pool and Osborne cite general boilerplate
originating in election-of-remedies cases, Madison, 241 S.W.3d at 159, that the
“one satisfaction” rule applies regardless of theory of recovery when multiple
25
defendants commit the same or “technically” different acts resulting in the same
injury. Pool, 262 S.W.3d at 573; Osborne, 252 S.W.3d at 75. Both Pool and
Osborne cite Stewart, Sterling, Garrett, and Casteel – tort cases that had no reason
to address non-tort liability. Nothing in Pool or Osborne reflects an actual
awareness that CTTI disallowed “one satisfaction” settlement credits for
contractual liabilities. Neither opinion suggests conscious or overt rejection of
CTTI’s holding.
Pool and Osborne relied on AMX Enters., Inc. v. Bank One, N.A., 196
S.W.3d 202, 206 (Tex. App.—Houston [1st Dist.] 2006, pet. denied), for the
proposition that “[t]he application of the rule is not limited to tort claims and …
depends not on the cause of action asserted but rather the injury sustained.” AMX
relied on Sterling as support:
There can be but one recovery for one injury, and the fact that more
than one defendant may have caused the injury or that there may be
more than one theory of liability, does not modify this rule.
822 S.W.2d at 8. AMX ignored that Sterling was a tort case applying article 2212,
the original contribution statute, id. at 5, and involved no potential contractual
liability.
2. Stare Decisis and En Banc Standards Make Sub Silentio
Overruling of CTTI Both Unthinkable and Unlikely.
Conscious, but surreptitious, overruling of CTTI would have been
irreconcilable with respect for stare decisis, see Austin Home Ctr. Associates v.
26
State, 794 S.W.2d 593, 595 (Tex. App.—Austin 1990, no writ), and the established
practice of explicit, en banc resolution of conflicting opinions. O’Connor v. First
Court of Appeals, 837 S.W.2d 94, 96 (Tex.1992); see also Tex. R. App. P. 41.2(c).
It is inconceivable this Court would treat CTTI in the cavalier manner the Architect
suggests had it been concerned in Pool or Osborne about conflict with CTTI. It
would not have left its resolution to the soothsaying of litigants.
3. Pool May Potentially Conflict with CTTI, But Does Not
Overrule It.
No later decisions suggests this Court overruled CTTI. Kizer, 228 S.W.3d at
392 n.3, involved successive suits against a single defendant, not a “one
satisfaction” settlement credit. Without mentioning CTTI, the Court observed
hypothetically that “potential recovery on [a later] breach of contract claim …
might well be barred by [a previous recovery under] the one satisfaction rule which
prohibits more than one recovery for a given harm.” Id. Kizer did not address
whether a “one satisfaction” settlement credit applied to contractual liability.
In Raley, the plaintiff sued in tort to enforce a previous judgment imposing a
contract against alleged alter egos of, and recipients of alleged fraudulent property
transfers from, the original judgment debtor. 2007 WL 74316 at *3, 13. In response
to the plaintiff’s misunderstanding about the nature of the liability in the
enforcement suit, Id. at *18, Justice Patterson stated in dicta that credit under
“[t]he one satisfaction rule is consistent with principles of contract law, which
27
preclude a non-breaching party from recovering damages … that would put [it] in a
better position than it would have been had the contract been fully performed.” Id.
at 19, n. 22. The court did not and could not rule the liable defendant was entitled
to a “one satisfaction” settlement credit for contract liability because the liability in
the case before the court was based on a tort.
As already discussed, Osborne simply recited the standard “boilerplate”
from cases that imported the election-of-remedies “one satisfaction” rule, see
II.C.1, supra., and mingled it with the observation in tort cases that the “one
satisfaction” settlement credit was available because of the nature of the injury, not
the cause of action. It neither expressly nor implicitly overruled CTTI.
Pool, on the other hand, at least superficially conflicts with CTTI because it
applied the “one satisfaction” settlement credit to dispose of an alternative
contractual liability theory. 262 S.W.3d at 574. Regardless of whether doing so
was necessary, the Pool opinion did not overtly consider 1) the original need for
the “one satisfaction” settlement credit; 2) the “rule” about application regardless
of theory of recovery is properly limited to election-of-remedy, not settlement
credit, cases; or 3) the first case expanding “one satisfaction” settlement credits
beyond tort cases relied on Berryman – an election-of-remedies case. (Cross-
Appellants’ 49-50).
28
Even if a conflict existed between CTTI and Pool, CTTI controls. CTTI
expressly considered and independently analyzed whether the “one satisfaction”
settlement credit applied in contract cases. The opinion in Pool did not.
Presumably, the parties in Pool did not alert the court that cases holding the “one
satisfaction” rule applied regardless of liability theory were election-of-remedies,
not settlement credit, cases.
4. Conflicts With Other Cases.
RLJ acknowledged that there are cases saying the “one satisfaction”
settlement credit applies to more than tort cases. (Cross-Appellants’ 48). Two such
cases cited by the Architect – Oyster Creek Fin. Corp. v. Richwood Investments II,
Inc., 176 S.W.3d 307, 328 (Tex. App.—Houston [1st Dist.] 2004, pet. denied), and
Burke v. Union Pac. Res. Co., 138 S.W.3d 46, 70, (Tex. App.—Texarkana 2004,
pet. denied) – this Court expressly declined to follow because they “have not
discussed the requirement of joint liability.” CTTI, 164 S.W.3d at 685. The
Architect’s cited decisions (Cross-Appellee’s 7-8, 22) make no attempt to reconcile
observations about allowing credits for a non-tort liability with the reasons why the
“one satisfaction” settlement credit was created 11 – reasons that only existed in tort
cases. 12
11
Cunningham v. Haroona, 382 S.W.3d 492 (Tex. App.—Fort Worth 2012, pet. denied),
involved a medical malpractice wrongful death claim, so there was no reason to consider
whether the “one satisfaction” settlement credit applied to breach-of-contract liability.
29
D. Extension of “One Satisfaction” Settlement Credit to
Contractual Liability Prohibited by Texas Constitution
Article I, Section 16.
Texas strongly favors parties’ freedom of contract. Gym-N-I Playgrounds,
Inc. v. Snider, 220 S.W.3d 905, 912 (Tex.2007). Generally, parties are entitled to
consensually allocate risks and rewards by contract as they wish so long as there is
no public policy violation. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 129
& n. 11 (Tex.2004). It is difficult to imagine a greater infringement than
involuntarily transferring a party’s contract rights to benefit a wrongdoer who was
not a party to that agreement. Yet, the Architect argues Texas’s constitutionally
guaranteed contractual freedom only applies to statutory restrictions. The Texas
Supreme Court perceived no such limitation when it considered this right
paramount to a court-recognized public policy against insuring exemplary
AMX, like Berryman, involved no “settlement” but was a case about what derivative
liability remained when a jointly liable party paid part of the alleged debt. In Regions
Bank v. Bay, No. 05–12–00531–CV, 2013 WL 5299174 at *4 (Tex. App.—Dallas Sept.
18, 2010, no pet.)(mem. op.), the plaintiff conceded the settlement was for the same loss
and the opinion did not discuss applicability to contract liability. Emerson Elec. Co. v.
Am. Permanent Ware Co., 201 S.W.3d 301, 314 (Tex. App.—Dallas 2006, no pet.),
involved an uncritical application of misguided language from Oyster Creek to support
application of the “one satisfaction” settlement credit to a breach of contract case.
12
Matthew v. Sohn, 13-12-00302-CV, 2013 WL 2949562 (Tex. App.—Corpus Christi
2013, no pet.)(mem. op.), involved whether the non-settling defendant was entitled to a
credit against DTPA liability from a settlement with a defendant sued for alleged tort
liability. The court ruled it was solely because of an indivisible injury. Id. at *5. It did not
consider application to contract liability.
30
damages. Fairfield Ins. Co. v. Stephens Martin Paving LP, 246 S.W.3d 653, 664
(Tex.2004).
Restricting the guarantee to statutes is based on the federal parallel, Storrie
v. Cortes, 90 Tex. 283, 287, 38 S.W. 154, 156 (1896), because, being located in
Article I, it only limited legislative power. The Texas freedom-of-contract
provision is contained in the Bill of Rights and limits the power of state
government generally. “No … law impairing the obligations of contract shall be
made” by any branch, not just the Legislature. Tex. Const. art. I, §16.
The Architect also argues that art. I, §16 does not apply because a “one
satisfaction” settlement credit is not a retroactive law. It reasons “the rule was in
existence long before any contract at issue.” (Cross-Appellee’s 25). This argument
begs the question this case presents: does any such rule apply to breach of contract
claims? In light of the cases holding it does not, see II.B., supra., it can hardly be
deemed an “undisputed” rule whose existence was certain. It cannot be deemed
part of the settling parties’ agreement. If it were, it would operate retroactively and
unconstitutionally.
III. CONCLUSION
For the foregoing reasons and those stated in RLJ’s previously-filed briefs,
the court should grant the relief RLJ has requested therein and all other relief to
which RLJ may be justly entitled.
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Respectfully submitted,
MUNSCH HARDT KOPF & HARR PC
/s/Michael W. Huddleston
Michael W. Huddleston
State Bar No. 10148415
J. Stephen Gibson
State Bar No. 07866000
3800 Ross Tower
500 North Akard Street
Dallas, TX 75201
(214) 855-7500 Main Tel.
(214) 855-7584 Main Fax
mhuddleston@munsch.com
sgibson@munsch.com
Benton T. Wheatley
State Bar No. 24015171
Tracy McCreight
State Bar No. 24037064
Munsch Hardt Kopf & Harr, P.C.
401 Congress Avenue, Suite 3050
Austin, TX 78701
(512) 391-6100 Main Tel.
(512) 391-6149 Main Fax
bwheatley@munsch.com
tmccreight@munsch.com
Attorneys For Appellees and
Cross-Appellants.
32
CERTIFICATE OF COMPLIANCE
I hereby certify that this Appellees’ Brief was prepared using Microsoft
Word 2010, which indicated that the total word count (exclusive of those items
listed in Tex. R. App. P. 9.4(i)(1)) is 7479 words.
/s/ Michael W. Huddleston
Michael W. Huddleston
CERTIFICATE OF SERVICE
I certify that I served a true and correct copy of the foregoing document
upon counsel listed below on this 16th day of July, 2015 by e-file:
Weston M. Davis
Gregory N. Ziegler
Steven R. Baggett
Macdonald Devin, P.C.
1201 Elm Street
3800 Renaissance Tower
Dallas, TX 75270
/s/ Michael W. Huddleston
Michael W. Huddleston
33