Leighton, Paul Michael v. Rebeles, Elizabeth , 2013 Tex. App. LEXIS 5358 ( 2013 )

Affirm in part; Reverse and Render in part; Opinion Filed April 30, 2013.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-11-01519-CV
PAUL MICHAEL LEIGHTON, Appellant
V.
ELIZABETH REBELES, Appellee
On Appeal from the 14th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 08-11357-A
OPINION
Before Justices Francis, Lang, and Evans
Opinion by Justice Evans
Paul Michael Leighton appeals the trial court’s judgment declaring that he and Elizabeth
Rebeles formed a general partnership and dividing the partnership assets between them.
Specifically, Leighton challenges the jury’s finding that Rebeles did not release her claim to the
partnership assets at issue. Leighton further challenges the trial court’s entry of judgment
notwithstanding the verdict on his claim against Rebeles for breach of an oral contract. After
examining the record on appeal, we conclude there was sufficient evidence to support the jury’s
finding that Rebeles did not release her claim to the assets. We further conclude the trial court
erred in rendering judgment in favor of Rebeles on Leighton’s breach of contract claim.
Accordingly, we reverse the portion of the trial court’s judgment ordering that Leighton take
nothing by his breach of contract claim and render judgment that he recover $31,000 in damages
along with postjudgment interest. We further render judgment that Leighton recover his
attorney’s fees as stipulated in the court below. In all other respects, the trial court’s judgment is
affirmed.
BACKGROUND
Paul Michael Leighton and Elizabeth Rebeles met in Reno, Nevada and began a
relationship. In 1984, Leighton moved to Dallas and Rebeles followed several months later.
Once they were in Dallas, the two began living together, filing joint tax returns, and purchasing
property as husband and wife. Rebeles believed they had entered into a common law marriage.
Shortly after Rebeles moved to Dallas, she and Leighton began operating a sand and
gravel business together. Leighton handled the operations and finances, while Rebeles managed
the administrative and customer relations aspects of the business. Together, Rebeles and
Leighton purchased two properties that they operated as Paul’s Pit Sand and Gravel and Hutchins
Sand & Gravel. Both parties signed as debtors for loans and credit sales made to the businesses.
The proceeds from the operations were deposited into joint checking accounts that served as both
their business and personal bank accounts. Neither Rebeles nor Leighton drew a salary, but
instead paid for their personal matters from the joint accounts.
In 2006, Rebeles filed for a divorce from Leighton. Leighton filed a counter-petition
asserting that there was no marriage but, in the alternative, asked the court to partition the
property he and Rebeles had acquired during the time they lived together. In August 2006,
Rebeles discovered there was no record of her divorce from Paul Rebeles, the man to whom she
had been married before her alleged common law marriage to Leighton. Because Rebeles could
not prove that she had divorced her previous husband, she and Leighton decided to non-suit their
divorce case.
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To facilitate their separation, Leighton and Rebeles signed an agreement dated August
26, 2006. 1 The agreement stated,
Let it be known that for $150,000.00 Elizabeth Rebeles Leighton . . . agrees to
relinquish all past, present, and future interest in Paul’s Pit Sand and Gravel, and
in Hutchins Sand & Gravel and any dealings by Paul M. Leighton.
Rebeles testified at trial that the money was intended to allow her to run her own business and
she would “bow out” of Leighton’s operation of Paul’s Pit Sand and Gravel and Hutchins Sand
& Gravel. Leighton testified that the $150,000 was part of a “severance package” to allow
Rebeles to go out on her own. Leighton acknowledged at trial that the agreement did not
partition the two properties he and Rebeles owned jointly and on which he mined and sold
material for Paul’s Pit and Hutchins Sand & Gravel. Accordingly, he and Rebeles met with an
attorney who drew up documents by which Rebeles would transfer her interest in one of the
properties to Leighton and Leighton would transfer his interest in the other property to her. After
the documents were created, however, Leighton refused to sign them.
Shortly after signing the August 26 contract, Leighton and Rebeles entered into an oral
agreement whereby Leighton would sell sand, gravel, and other materials from properties he
leased mixed with materials from one of the properties he owned with Rebeles. Rebeles agreed
to perform the billing and clerical work through her separate company, American Materials, in
exchange for one-third of the profits from the sales. Eventually, a dispute arose between the two
about the amount of money Rebeles owed Leighton as his share of the profits.
Rebeles brought this suit alleging, among other things, that she and Leighton had formed
a partnership during the time they lived together and requested the trial court to supervise a
winding up of the partnership business including a division of the partnership assets. Leighton
responded to the suit asserting affirmative defenses including the defense of release. In addition,
1
The notarization indicates that the agreement was not signed by the parties until September 5, 2006.
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Leighton counterclaimed for the money he alleged was owed to him under his oral contract with
Rebeles to sell sand and gravel through American Materials.
The case was tried to a jury. The jury found that Leighton and Rebeles formed a
partnership in 1984 and that an event requiring a winding up of the partnership occurred in
August or September of 2006. The jury further found that Rebeles did not withdraw from the
partnership, nor did she release her claim in the partnership assets. Finally, the jury found that
Rebeles breached her oral contract with Leighton and that Leighton was entitled to $31,000 in
damages.
Both Leighton and Rebeles filed motions challenging the jury’s findings. Leighton asked
the court to disregard the jury’s findings on the partnership issues because, among other things,
he argued the August 26 contract constituted a release of Rebeles’s claims to the partnership
assets. Rebeles asked the trial court to hold that Leighton take nothing by his breach of contract
claim because she argued that claim was “subsumed” in the jury’s partnership findings. Rebeles
contended that the subject matter of the contract was part of the partnership business and had to
be treated as such. The trial court determined, in accordance with the jury’s findings, that
Rebeles and Leighton had formed a general partnership. Then, in protracted post-verdict
proceedings punctuated by four interlocutory orders, some of which were appealed, 2 the court
wound-up the partnership and divided the partnership assets between them. The trial court
concluded the case by incorporating its rulings on the verdict and post-verdict winding-up of the
partnership in a final judgment, including disregarding the jury’s finding on Leighton’s breach of
contract claim and ordering that he take nothing by his counterclaim. Leighton brings this
appeal.
2
See Leighton v. Rebeles, 343 S.W.3d 270 (Tex. App.—Dallas 2011, no pet.); Leighton v. Rebeles, 05-11-00717-CV, 2012 WL 438914
(Tex. App.—Dallas Feb. 10, 2012, no pet.)
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ANALYSIS
I. Effect of the August 26 Contract
In his first point of error, Leighton contends that Rebeles released any claim she had to
the alleged partnership assets by the agreement she signed dated August 26, 2006. Leighton
does not challenge the jury’s finding that a partnership existed. He argues only that the August
26 contract is unambiguous and, by its terms, Rebeles released all interest she held in the
partnership as a matter of law. Alternatively, Leighton argues there is legally and factually
insufficient evidence to support the jury’s adverse verdict that the agreement did not constitute a
release of Rebeles’s partnership interest. Rebeles responds that nothing in the language of the
contract demonstrates her intent to relinquish her claim to her share of the partnership assets and
there was legally and factually sufficient evidence for the jury to conclude that she had not
released her claim.
A release is a contract governed by the rules of contract construction. See Williams v.
Glash, 789 S.W.2d 261, 264 (Tex. 1990). In construing a written contract, our primary concern
is to ascertain the true intentions of the parties as expressed in the language of the agreement.
See Stroop v. Northern Cnty. Mut. Ins. Co., 133 S.W.3d 844, 851 (Tex. App.—Dallas 2004, pet.
denied). Language should be given its plain grammatical meaning unless it definitely appears
that the intention of the parties would thereby be defeated. See Reilly v. Rangers Mgmt., Inc.,
727 S.W.2d 527, 529 (Tex. 1987). A court should construe a contract from a utilitarian
standpoint, bearing in mind the particular business activity sought to be served. Id. at 530. We
need not embrace strained rules of construction that would avoid ambiguity at all costs. Id.. We
must avoid, when possible and proper, construing a contract in such a way that it is
unreasonable, inequitable, and oppressive. Id. We will not declare a forfeiture unless the
language of the contract compels that result because it cannot be construed any other way. Id
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If a contract can be given a certain or definite legal meaning, it is not ambiguous and
should be construed as a matter of law. See El Paso Field Services, L.P. v. MasTec N. Am., Inc.,
389 S.W.3d 802, 806 (Tex. 2012). A contract is ambiguous if it is susceptible to more than one
reasonable interpretation. Id. If a contract is ambiguous, a fact issue is created on the parties’
intent. Id.
The contract at issue is a single sentence stating that, in exchange for $150,000, Rebeles
agrees to “relinquish all past, present, and future interest” in the two businesses that were
operated by the partnership. Leighton contends that, as a matter of law, the August 26 contract
released all of Rebeles’s claims to the partnership assets. However, the agreement only names
the businesses being operated by the partnership and makes no reference to the partnership itself.
Leighton has conceded, and the evidence shows, that neither he nor Rebeles believed the contract
had any effect on Rebeles’s interest in the land they owned jointly and on which they operated
the partnership businesses named in the release. As the businesses were mining operations, the
land constituted a substantial portion of the partnership’s assets. Both parties presented parol
evidence at trial as to their intent and the meaning of the language in the contract, thereby
essentially treating the contract as ambiguous. Because the language of the contract does not
identify the partnership or the partnership’s relationship to the businesses named, and neither
party understood the contract to resolve ownership of at least some of the partnership’s
significant assets, we conclude the contract is ambiguous and does not clearly evidence an intent
that Rebeles surrender her interest in the partnership itself or all of the partnership’s assets.
Having concluded the contract is ambiguous, we must now determine whether there is
legally and factually sufficient evidence to support the jury’s finding that the contract was not
intended as a release of Rebeles’s claim. In determining whether the evidence is legally
sufficient, we consider whether the evidence at trial would enable reasonable and fair-minded
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people to reach the verdict under review crediting favorable evidence to the verdict if reasonable
jurors could, and disregarding contrary evidence unless reasonable jurors could not. City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). Anything more than a scintilla of evidence
is legally sufficient to support a challenged finding. Catalina v. Blasdel, 881 S.W.2d 295, 297
(Tex.1994). In reviewing the factual sufficiency of evidence, we review all the evidence in
support of and against the trial court's finding and will set aside the finding only if the evidence
is so weak or if the finding is so against the great weight and preponderance of the evidence that
it is clearly wrong and unjust. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001).
For both analyses, we bear in mind that, “[j]urors are the sole judges of the credibility of the
witnesses and the weight to give their testimony.” Thota v. Young, 366 S.W.3d 678, 695 (Tex.
2012) (quoting City of Keller, 168 S.W.3d at 819).
The evidence before the jury included testimony that Leighton and Rebeles intended the
contract as a means of distancing themselves in their business activities after the deterioration of
their personal relationship. Rebeles testified that, at the time she signed the contract, she
understood it would provide her with money to operate American Materials in exchange for
relinquishing her involvement in Paul’s Pit and Hutchins Sand & Gravel. She also understood
that she would have a separate bank account for American Materials and would no longer
receive income from the businesses operated by Leighton. Rebeles stated that the $150,000
represented only a portion of her and Leighton’s attempt to separate their business activities and
that she requested some of the other partnership assets, such as heavy equipment and a deed to
one of the properties, to allow her to operate independently.
Leighton also testified that the $150,000 was intended to allow Rebeles to start her own
business. He viewed the $150,000 as a “severance package” that terminated her employment
with Paul’s Pit and Hutchins Sand & Gravel. As noted above, neither party believed the contract
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had any effect on their joint ownership of the land and minerals that formed the basis of the
partnership businesses. Leighton acknowledged that he refused to sign the paperwork that would
have separated their interests in those properties.
Based on the testimony of the parties, we conclude there is legally and factually sufficient
evidence for the jury to find that the August 26 contract was not intended as a release of
Rebeles’s claim to the partnership assets. The jury could have reasonably interpreted the
contract as merely the first step in the attempted separation of the partners’ business dealings as
Rebeles testified. We resolve Leighton’s first issue against him.
II. Trial Court’s Disregard of Jury Finding
In his second issue, Leighton contends the trial court erred in disregarding the jury’s
finding in his favor on his breach of contract claim. Rebeles moved the court to disregard the
finding on the ground that it was “subsumed” by, and irreconcilable with, the jury’s partnership
finding. In essence, Rebeles contends that the jury’s partnership finding necessarily
encompassed her and Leighton’s continued business relations after the August 26 contract
including the oral agreement for mining one of the properties billed through American Materials,
Rebeles’s separately managed business. Because such activity was part of the partnership’s
business, Rebeles reasons, it could not constitute a separate contract subject to breach. Leighton
argues the breach of contract finding is easily reconcilable with the partnership finding in that the
jury could have concluded that the agreement was made outside the partnership. We agree.
A trial court has the duty to harmonize the jury’s findings whenever possible, and it may
not strike answers because of an alleged conflict if there is any reasonable basis on which they
can be reconciled. See Beltran v. Brookshire Grocery Co., 358 S.W.3d 263, 268 (Tex. App.—
Dallas 2011, pet. denied). Every finding is of equal importance and one finding cannot be varied
by the interpretation of another finding of equal dignity. See Hancock v. Sammons, 267 S.W.2d
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252, 257 (Tex. App.—Fort Worth 1954, writ ref’d n.r.e.). A jury finding may not be disregarded
unless it is unsupported by the evidence or the issue is immaterial. See Spencer v. Eagle Star
Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994).
Here, Rebeles does not contend, and the record does not show, that the jury’s finding in
favor of Leighton on his breach of contract claim was either unsupported by the evidence or
immaterial. Furthermore, the finding that Rebeles breached the oral agreement does not conflict
with the finding that Rebeles and Leighton formed a partnership. The jury could have concluded
that Leighton and Rebeles were not acting as agents of the partnership when they entered into the
agreement, but were instead representing their own independent interests. Because the findings
can be reconciled, the trial court erred in failing to grant judgment in favor of Leighton on his
breach of contract claim in accordance with the jury’s verdict. We resolve Leighton’s second
issue in his favor.
Based on the foregoing, we reverse the portion of the trial court’s judgment ordering that
Leighton take nothing on his claim for breach of contract. We render judgment that Leighton
recover $31,000 from Rebeles, as awarded by the jury, along with postjudgment interest at a rate
of 5% per annum from and after October 31, 2011. See TEX. FIN. CODE ANN. § 304.003 (West
2006). In addition, we render judgment awarding Leighton attorney’s fees, as stipulated by the
parties, in the amount of $20,000 at the trial court level, $10,000 for the appeal to this Court, and
an additional $10,000 in the event of an appeal to the Texas Supreme Court. In all other
respects, the trial court’s judgment is affirmed.
111519F.P05 /David W. Evans/
DAVID W. EVANS
JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PAUL MICHAEL LEIGHTON, Appellant On Appeal from the 14th Judicial District
Court, Dallas County, Texas
No. 05-11-01519-CV V. Trial Court Cause No. 08-11357-A.
Opinion delivered by Justice Evans.
ELIZABETH REBELES, Appellee Justices Francis and Lang participating.
In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED IN PART and judgment is RENDERED that Paul Michael Leighton recover
$31,000 in accordance with the jury’s verdict along with postjudgment interest at a rate of 5%
per annum from and after October 31, 2011. In addition, judgment is RENDERED that Paul
Michael Leighton recover from Elizabeth Rebeles attorney’s fees as stipulated by the parties in
the amount $20,000 at the trial court level, $10,000 for the appeal to this Court, and an additional
$10,000 in the event of an appeal to the Texas Supreme Court. In all other respects, the
judgment of the trial court is AFFIRMED.
Judgment entered this 30th day of April, 2013.
/David W. Evans/
DAVID W. EVANS
JUSTICE
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