Danny Vines and Nancy Vines v. Ray Durrett ( 2015 )

NO. 12-14-00258-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
DANNY VINES AND NANCY VINES, § APPEAL FROM THE 217TH
APPELLANTS
V. § JUDICIAL DISTRICT COURT
RAY DURRETT,
APPELLEE § ANGELINA COUNTY, TEXAS
MEMORANDUM OPINION
Danny and Nancy Vines appeal a judgment awarding $300,000.00 and attorney’s fees to
Ray Durrett, who sued Appellants for breach of contract and fraud.1 In nine issues, Appellants
contend that the trial court erred in rendering judgment on the jury’s verdict in favor of Durrett.
We affirm.
BACKGROUND
Vines built a biomass plant in Lufkin, Texas, which was designed to use wood chips to
generate electric power for sale commercially. Durrett’s company supplied concrete for the
construction of the plant. During their business interactions, Durrett and Vines discussed the
possibility of Durrett’s investing in a biomass plant.
Vines told Durrett that he was converting an existing plant in Greenville, Texas, to serve
as a biomass plant to generate electricity for sale commercially. Vines offered Durrett an
opportunity to invest in Greenville Energy, L.L.C., the company developing the Greenville
biomass plant. As a result of their discussions, the parties signed the following letter agreement
prepared by Vines’s attorney.
1
Although Nancy Vines signed the contract at the heart of this dispute, all dealings leading to this lawsuit
were between Danny Vines and Ray Durrett. All references to “Vines” in this opinion will be to “Danny Vines”
unless otherwise specified.
LETTER AGREEMENT
THE STATE OF TEXAS §
§
COUNTY OF ANGELINA §
This letter agreement is entered into the 9 day of February, 2010 by and between
DANNY VINES and RAY DURRETT.
DANNY VINES currently serves as President of GREENVILLE ENERGY, L.L.C. The
GREENVILLE ENERGY, L.L.C., project will ultimately result in the construction and operation
of a biomass fueled electric generation plant within approximately eighteen (18) months from
today.
DANNY VINES owns twenty seven (27%) percentage points in the ownership of the
GREENVILLE ENERGY, L.L.C. project.
DANNY VINES has agreed to sell and RAY DURRETT has agreed to purchase three
(3%) percentage points from DANNY VINES for a total sales price of Three Hundred Thousand
and no/100 ($300,000.00) dollars.
Both parties acknowledge that DANNY VINES has been paid the full amount of Three
Hundred Thousand and no/100 ($300,000.00) dollars. In consideration of this payment by RAY
DURRETT, DANNY VINES agrees to pay RAY DURRETT any and all income received for or
because of the three (3%) percentage points hereby sold to RAY DURRETT. The three (3%)
percentage point interest in the GREENVILLE ENERGY, L.L.C. project hereby purchased by
RAY DURRETT shall remain in the name of DANNY VINES and all aspects of this agreement
shall remain confidential. NANCY VINES, as wife of DANNY VINES joins this agreement as a
signatory to acknowledge and ratify the transfer of her community interest in the sale of the three
percentage points in the GREENVILLE [ENERGY], L.L.C. project.
Venue for any dispute as to the terms of this agreement shall be the District Court of
Angelina County, Texas.
Executed in multiple originals this the 9 day of February, 2010.
/s/ Danny Vines
DANNY VINES, SELLER
/s/Nancy Vines
NANCY VINES, SELLER
/s/ Ray Durrett
RAY DURRETT, PURCHASER
Thereafter, natural gas prices declined, making the conversion of the plant economically
unfeasible. As a result, Greenville Energy, L.L.C. never converted the Greenville plant into a
biomass facility capable of generating electricity for commercial sale.
2
Durrett later learned about the existence of a company agreement governing Greenville
Energy, L.L.C. That agreement was in effect at the time he signed the letter agreement by
which, he believed, he had purchased a three percent ownership interest in Greenville Energy,
L.L.C. Under the terms of the company agreement, Vines could not transfer an ownership
interest in Greenville Energy, L.L.C. without prior approval of its manager. Vines had not
obtained the required approval.
Durrett sued Appellants for breach of contract and fraud. Appellants filed a motion to
have Durrett’s suit referred to arbitration based upon an arbitration clause in the Greenville
Energy, L.L.C. agreement. The trial court denied the motion to arbitrate, and the case went to
trial.
Following a jury trial, the trial court rendered judgment against Appellants for
$300,000.00 with interest based on both the breach of contract and fraud causes of action. The
judgment also awards $35,000.00 to Durrett for attorney’s fees. This appeal followed.
ARBITRATION
In their first issue, A,2 Appellants contend that the trial court erred when it failed to grant
their motion to refer the case to arbitration. They argue that the company agreement signed by
Danny Vines and his four management partners in Greenville Energy, L.L.C. contained an
arbitration clause that required Durrett’s claims to be determined by an arbitrator rather than a
court of law. They assert that, even though Durrett was not a signatory to the company
agreement for Greenville Energy, L.L.C., Durrett’s fraud claim referenced the agreement and
therefore the arbitration clause applies.
Applicable Law
Under “direct benefits estoppel,” a nonsignatory plaintiff seeking the benefits of a
contract is estopped from simultaneously attempting to avoid the contract’s burdens, such as the
obligation to arbitrate disputes. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex.
2005) (orig. proceeding). The doctrine recognizes that a party may be estopped from asserting
that the lack of his signature precludes enforcement of the contract’s arbitration clause when he
2 In their brief, Appellants set out a list of nine issues presented, designated by capital letters A through I.
In the body of the brief, topics have been designated by capital letters A through L. The content of these paragraphs
does not, in every instance, correspond with the letters of the topics set out in the list. For clarity, we will refer to
the issues by the number that corresponds with the letter in the issue list.
3
has consistently maintained that other provisions of the same contract should be enforced to
benefit him. Id. A claim seeks a direct benefit from a contract, and arbitration can be
compelled, if liability under the claim “arises solely from the contract or must be determined by
reference to it.” In re Weekley Homes, L.P., 180 S.W.3d 127, 131-32 (Tex. 2005) (orig.
proceeding). By contrast, a claim does not seek a direct benefit from a contract, and arbitration
cannot be compelled, if liability under the claim “arises from general obligations imposed by
state law, including statutes, torts and other common law duties, or federal law.” In re Morgan
Stanley & Co., Inc., 293 S.W.3d 182, 184 n.2 (Tex. 2009) (orig. proceeding).
Discussion
Appellants contend that it was necessary for Durrett to use the company agreement as
evidence to prove his fraud theory. Therefore, they argue, Durrett’s suit touched upon the
company agreement and the court was required to send the case to arbitration pursuant to that
agreement’s broad arbitration provision. We disagree.
In this suit, three sets of duties were implicated. First is the breach of legal duty under
common law fraud as alleged by Durrett. The second flowed from the February 9 letter
agreement between Durrett and Appellants. The third set of duties are those imposed by the
Greenville Energy, L.L.C. company agreement.
At common law, fraud refers to an act, omission, or concealment in breach of a legal
duty, trust, or confidence justly imposed, when the breach causes injury to another or the taking
of an unfair and unconscionable advantage. Jones v. Tex. Dep’t of Protective & Regulatory
Servs., 85 S.W.3d 483, 491 (Tex. App.—Austin 2002, pet. denied). Durrett’s claim that Vines
defrauded him alleged the breach of a common law duty, not a duty arising under Greenville
Energy, L.L.C.’s company agreement. Durrett’s suit does not rely on any terms of the company
agreement, hinge on any rights arising from the company agreement, or seek to enforce any duty
created by the agreement. Durrett sought the remedy of common law fraud allowed under Texas
law. Because Durrett never sought to enforce any provisions of the company agreement, direct
benefits estoppel does not apply to his suit against Appellants. In re Weekley Homes, L.P., 180
S.W.3d at 132. Accordingly, the trial court did not err in refusing to send the case to arbitration.
We overrule Appellants’ first issue.
4
BREACH OF CONTRACT
In section H of their brief, Appellants assert that “this Court should construe the Letter
Agreement de novo.” There is no corresponding issue in the list of issues presented.
Ambiguity in Letter Agreement
In section H, Appellants contend that the February 9, 2010 letter agreement was an
unambiguous contract. They argue that the only construction possible is that Durrett purchased a
three percent net profits interest in Greenville Energy, L.L.C. Thus, they further contend that
Durrett received an interest only in the income received by Vines. In section H, Appellants do
not identify or argue about any error made by the trial court. We will construe section H as an
argument that, because they believe the contract to be unambiguous, the trial court erred in
submitting the breach of contract issue to the jury.
Applicable Law
Whether a contract is ambiguous is a question of law that must be decided by examining
the contract as a whole in light of the circumstances present when the contract was entered.
Enterprise Leasing Co. of Houston v. Barrios, 156 S.W.3d 547, 549 (Tex. 2004) (per curiam).
If the written instrument is so worded that it can be given a certain or definite legal meaning or
interpretation, it is not ambiguous and the court will construe the contract as a matter of law. Id.
On the other hand, if the contract is subject to two or more reasonable interpretations after
applying the pertinent rules of construction, the contract is ambiguous, creating a fact issue on
the parties’ intent. J. M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). We must
decide whether there is more than one reasonable interpretation of this contract such that a fact
issue was created concerning the parties’ intent. See Columbia Gas Transmission Corp. v. New
Ulm Gas, LTD., 940 S.W.2d 587, 589 (Tex. 1996).
A patent ambiguity is evident on the face of the contract. In re Sterling Chems., Inc.,
261 S.W.3d 805, 809 (Tex. App.—Houston [14th Dist.] 2008, orig. proceeding). Only after a
contract is found to be ambiguous may parol evidence be admitted for the purpose of
ascertaining the true intentions of the parties expressed in the contract. Friendswood Dev. Co. v.
McDade + Co., 926 S.W.2d 280, 283 (Tex. 1996) (per curiam). The trier of fact must resolve
the ambiguity by determining the true intent of the parties. Coker v. Coker, 650 S.W.2d 391,
394-95 (Tex. 1983).
5
Discussion
In Appellants’ live pleading at the time of trial, they contended that the contract was
ambiguous and that its meaning must be resolved by the finder of fact. According to the letter
agreement quoted above, Vines owned twenty-seven percent of Greenville Energy, L.L.C. The
next sentence states that he was selling three percentage points to Durrett for $300,000.00.
These two sentences appear to indicate that Vines was selling an ownership interest in Greenville
Energy, L.L.C. to Durrett.
However, two later sentences state that in consideration of Durrett’s payment, Vines was
agreeing to pay him any and all income received for or because of the three percentage points
sold to Durrett. The next sentence states that the three percentage points interest would remain
in the name of Vines and would remain confidential. This indicates that perhaps Vines was
conveying a net profits interest, rather than an ownership interest, to Durrett. This is a patent
ambiguity because it is evident on the face of the contract. See In re Sterling Chems., Inc., 261
S.W.3d at 809. Based upon this patent ambiguity, the trial court implicitly determined, as a
question of law, that the letter agreement was ambiguous and therefore should be interpreted by
the admission of parol evidence.
Both Vines’s accountant, Melvin Todd, and his attorney, Jimmy Cassels, testified they
initially believed the contract was for a three percent ownership interest. But they also testified
that, upon further reflection, they believed the contract was unclear and the issue should be
submitted to the jury for a fact determination. Durrett strongly maintained that he was buying a
three percent ownership interest. Vines consistently asserted that he was selling Durrett only a
three percent net profits interest. We hold that the trial court properly submitted the breach of
contract issue to the jury for determination. See Webster, 128 S.W.3d at 229. Assuming this is
the complaint presented by section H, we overrule section H.
Vines’s Income
In their seventh issue, G on the list, argued in section J, Appellants contend that there
could have been no breach of contract because the agreement included a condition precedent that
there be a profit, and that condition was never met. In their eighth issue, H on the list, argued in
section K, they contend that there was a complete absence of evidence of a breach of contract
because there is no evidence that Vines received any income from the project. Because these
two issues are intertwined, we will consider them together.
6
Standard of Review
When an appellant attacks the legal sufficiency of an adverse finding on an issue on
which he did not have the burden of proof, the appellant must demonstrate on appeal that there is
no evidence to support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.
1983). In determining whether there is no evidence of probative force to support a jury’s
finding, all the record evidence must be considered in the light most favorable to the party in
whose favor the verdict has been rendered, and every reasonable inference deducible from the
evidence is to be indulged in that party’s favor. Merrell Dow Pharms., Inc. v. Havner, 953
S.W.2d 706, 711 (Tex. 1997). A no evidence point will be sustained when (a) there is a
complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence
from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to
prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the
opposite of the vital fact. Id. In a legal sufficiency or no evidence review, we determine
whether the evidence would enable reasonable and fair-minded people to reach the verdict under
review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).
Applicable Law
The elements of a breach of contract claim are (1) the existence of a valid contract
between plaintiff and defendant; (2) the plaintiff’s performance or tender of performance; (3) the
defendant’s breach of the contract; and (4) the plaintiff’s damage as a result of the breach.
Gaspar v. Lawnpro, Inc., 372 S.W.3d 754, 757 (Tex. App.—Dallas 2012, no pet.). A breach of
contract occurs when a party fails to perform an act it has explicitly or impliedly promised to
perform. Id. A breach is determined by comparing the terms of a contract with the actions of
the alleged breaching party. Enron Oil & Gas Co. v. Joffrion, 116 S.W.3d 215, 221 (Tex.
App.—Tyler 2003, no pet.). Conditions precedent to an obligation to perform are those acts or
events, which occurred subsequently to the making of a contract, that must occur before there is
a right to immediate performance and before there is a breach of contractual duty. Hohenberg
Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex. 1976).
Discussion
Appellants contend that, pursuant to the letter agreement, Durrett purchased a three
percent interest in profits. Accordingly, the argument continues, there could have been no
breach of contract because they never realized a profit on the Greenville biomass property.
7
Durrett contends that the terms of the contract were breached when Vines refused to convey a
three percent interest in Greenville Energy, L.L.C. to him.
Knowing that the Greenville plant never opened and never generated income, the jury
determined that Vines failed to comply with the agreement. Accordingly, the jury rejected
Vines’s contention that he was selling only a three percent net profits interest. Therefore, receipt
of a profit by Vines is not a condition precedent to his performance under the contract.
The jury interpreted the agreement as a sale of a three percent ownership interest. Thus,
the fact that there is no evidence that Vines received any income from the project is irrelevant.
The ownership interest would have allowed Durrett to own assets that the company had. Further,
he would have been entitled, when and if the company ever began to operate, to benefit from any
future growth of the company. Additionally, as a part owner of the company, he would be
entitled to share in the government subsidies and tax breaks that Vines had discussed. It is
undisputed that Vines did not convey an interest in Greenville Energy, L.L.C. to Durrett.
Instead, he conveyed his interest in the company to a third party sometime after signing the
agreement with Durrett. Vines’s failure to convey to Durrett that which the jury determined
Durrett was entitled to under the terms of the contract, a three percent ownership interest,
constituted a breach of the contract. The evidence is legally sufficient to show a breach of
contract. See Gaspar, 372 S.W.3d at 757. Accordingly, the trial court did not err in rendering
judgment based on Vines’s breaching the terms of the contract. See Havner, 953 S.W.2d at 711.
Appellants’ seventh and eighth issues are overruled.
Eighteen Month Provision
In their sixth issue, F on the issue list, argued in section I, Appellants assert that the trial
court erred by treating a recital and an operative clause equally. They argue that the statement in
the letter agreement that the plant would open within eighteen months of signing that agreement
is a recital, not an enforceable, operative clause. Due to our disposition of issues seven and
eight, the question of whether the eighteen month provision is an operative clause is moot. We
need not reach issue six. See TEX. R. APP. P. 47.1.
ATTORNEY’S FEES
In their ninth issue, I on the issue list, and argued in section L, Appellants contend that
the trial court improperly awarded attorney’s fees because Durrett did not segregate his
8
attorney’s fees between his breach of contract and fraud claims. Durrett contends that
Appellants waived this issue because they failed to object to Durrett’s attorney’s testimony of his
unsegregated attorney’s fees. We agree with Durrett.
When a lawsuit involves multiple claims, the proponent of attorney’s fees must segregate
recoverable fees from those incurred on claims for which fees are not recoverable. Tony Gullo
Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006). Or, the party seeking to recover
attorney’s fees bears the burden of demonstrating that segregation is not required. Id. However,
a party waives any error arising from possibly awarding nonrecoverable fees when the
complaining party does not object to failure to segregate between legal services for which fees
are properly recoverable and those for which no recovery of fees is authorized. Green Int’l, Inc.
v. Solis, 951 S.W.2d 384, 389 (Tex. 1997).
Here, Appellants not only failed to object to the testimony of unsegregated attorney’s
fees, but also failed to object to the attorney’s fees question in the jury charge. Id. Accordingly,
Appellants waived this issue. We overrule Appellants’ ninth issue.
DISPOSITION
Because we have upheld the trial court’s judgment based on Durrett’s breach of contract
cause of action, we need not address issues two, three, four, and five, which concern Durrett’s
fraud cause of action. TEX. R. APP. P. 47.1.
We affirm the judgment of the trial court.
JAMES T. WORTHEN
Chief Justice
Opinion delivered December 30, 2015.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
(PUBLISH)
9
COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
DECEMBER 30, 2015
NO. 12-14-00258-CV
DANNY VINES AND NANCY VINES,
Appellants
V.
RAY DURRETT,
Appellee
Appeal from the 217th District Court
of Angelina County, Texas (Tr.Ct.No. CV-01674-12-08)
THIS CAUSE came to be heard on the oral arguments, appellate record
and briefs filed herein, and the same being considered, it is the opinion of this court that there
was no error in the judgment.
It is therefore ORDERED, ADJUDGED and DECREED that the judgment
of the court below be in all things affirmed, and that all costs of this appeal are hereby adjudged
against the Appellants, DANNY VINES AND NANCY VINES, for which execution may issue,
and that this decision be certified to the court below for observance.
James T. Worthen, Chief Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.