Ray Fischer and Corporate Tax Management, Inc. N/K/A RY Fischer & Associates, Inc. v. Mark Boozer, Jerrod Raymond, and CTMI, LLC ( 2021 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-19-00320-CV
___________________________
RAY FISCHER AND CORPORATE TAX MANAGEMENT, INC. N/K/A RY
FISCHER & ASSOCIATES, INC., Appellants
V.
MARK BOOZER, JERROD RAYMOND, AND CTMI, LLC, Appellees
On Appeal from the 48th District Court
Tarrant County, Texas
Trial Court No. 048-284212-16
Before Sudderth, C.J.; Kerr and Womack, JJ.
Memorandum Opinion on Rehearing by Justice Womack
MEMORANDUM OPINION ON REHEARING
On October 7, 2021, we issued a memorandum opinion and judgment
reversing the trial court’s final judgment in favor of Appellees Mark Boozer, Jerrod
Raymond, and CTMI, LLC (the CTMI Parties), and we rendered judgment in favor of
Appellants Ray Fischer and Corporate Tax Management, Inc. n/k/a RY Fischer &
Associates, Inc. (the Fischer Parties). The Fischer Parties filed a motion for rehearing
asking that we revise our judgment to award them pre- and post-judgment interest.
After reviewing the motion for rehearing, the response, and the reply, we grant the
motion for rehearing in part, withdraw our October 7, 2021 memorandum opinion
and judgment, and substitute the following.
I. INTRODUCTION
In a prior lawsuit, the Fischer Parties entered into a settlement agreement (the
Settlement Agreement) in open court with the CTMI Parties. As part of the
Settlement Agreement, the parties agreed that one of the claims in the lawsuit would
proceed to trial and that CTMI would place certain funds relating to that claim in an
account controlled by T. Wesley Holmes, attorney for two of the CTMI Parties,
pending resolution of the case. The parties further agreed that if Fischer was
ultimately successful on the claim, he would receive payment of the funds. While the
Fischer Parties ultimately prevailed on the claim, Fischer did not receive payment
because Holmes absconded with the money that CTMI had placed in the account.
2
In this lawsuit, the CTMI Parties sought a declaration that they had fulfilled
their obligations under the Settlement Agreement and owed no further liability to the
Fischer Parties under the Settlement Agreement, and the Fischer Parties brought a
breach-of-contract claim against the CTMI Parties for breach of the Settlement
Agreement. The Fischer Parties filed a motion to transfer venue, which was denied
by the trial court. The parties also filed dueling motions for summary judgment, and
the trial court ultimately ruled in the CTMI Parties’ favor. In their first issue, the
Fischer Parties argue that the trial court abused its discretion by denying the motion
to transfer venue, and in their second issue, the Fischer Parties contend that the trial
court erred by entering final judgment in the CTMI Parties’ favor. We will sustain the
Fischer Parties’ second issue and reverse and render in part and remand in part.
II. BACKGROUND
A. Fischer Sells His Business, a Lawsuit Arises from the Sale, and the Parties
Enter into the Settlement Agreement.
In 2007, Fischer owned Corporate Tax Management, Inc.,1 a tax-consulting
business.2 Sometime that year, Fischer began negotiations to sell the assets of the
business to Boozer and Raymond. Boozer and Raymond created a business, CTMI,
LLC, to receive the assets and operate the business, and in 2007, the parties executed
1
Corporate Tax Management, Inc. (an appellant in this case) should not be
confused with CTMI, LLC (an appellee in this case).
2
Many of the facts relating to this case are set out in Fischer v. CTMI, L.L.C.,
479 S.W.3d 231 (Tex. 2016), a case we will reference later in our opinion.
3
a written asset-purchase agreement by which CTMI purchased the business from
Fischer.
In 2008, a dispute arose between the Fischer Parties and the CTMI Parties
regarding payments made under the asset-purchase agreement, and the parties filed
claims against each other in the 192nd District Court of Dallas County. At the 2011
trial of that case, the parties entered into the Settlement Agreement in open court.
Through the Settlement Agreement, the parties agreed to a judgment awarding
Fischer $1.7 million; the settlement, however, specifically excluded one of CTMI’s
claims relating to a prior agreement between the parties that we will refer to as the
“2010 Adjustment.”3 The parties agreed to sever CTMI’s claim that the 2010
Adjustment was unenforceable, agreed that CTMI would place funds relating to the
2010 Adjustment in a CTMI account controlled by Holmes while the parties litigated
CTMI’s claim regarding the 2010 Adjustment, and agreed that Fischer would receive
those funds if he was ultimately successful in the litigation.
Because it is key to our analysis, we will set forth pertinent portions of the
Settlement Agreement concerning CTMI’s obligation to pay the 2010 Adjustment.
Those portions read:
The 2010 Adjustment involved an agreement that CTMI would pay Fischer an
3
adjusted “earn out payment” from revenues received in 2011 on projects for which
Fischer had performed work in 2010. CTMI maintained that the 2010 Adjustment
constituted an unenforceable agreement to agree.
4
[Mr. Cunningham4]: All right. Upon – thereafter, upon receipt of
the revenue [relating to the 2010 Adjustment], 15 percent of all that
revenue received on those projects listed will, upon receipt, be paid into
an interest bearing escrow account.
[Mr. Shamoun]: Either, either in Mr. Holmes’ escrow account or
my escrow account, depending on what Mr. Holmes and I agree in that
regard.
Is that fair, Mr. Holmes?
[Mr. Holmes]: That is correct.
[Mr. Shamoun]: Okay.
[Mr. Holmes]: And I just want to say it would probably be a new
account that we would have control of so it wouldn’t be comingled with
other client trust funds.
[Mr. Shamoun]: Well, I think it has to be a separate account,
because I’m not going to be paying income tax on the interest that
accrues on it.
[Mr. Holmes]: I agree.
[Mr. Shamoun]: And so it won’t be under my tax ID number.
[Court]: All right. Let’s move on.
[Mr. Shamoun]: Well, I need to know whose tax ID number it
needs to be opened under, because then that’s going to be the reporting
requirement for the IRS.
Who would you recommend?
4
During the 2011 trial, the Fischer Parties were represented by Jonathan
Cunningham and Gregory Shamoun, CTMI was represented by Andrew Turner, and
Boozer and Raymond were represented by Holmes.
5
[Mr. Holmes]: Your Honor, I don’t know exactly how to handle
that.
[Court]: Whoever’s going to be benefitting from the numbers. I
would assume ya’ll [sic] will be.
[Mr. Holmes]: Correct. Probably what we’ll do is have it be a
CTMI account, but have it be controlled by me.
[Mr. Shamoun]: That’s fair. I agree with that.
[Mr. Holmes]: Then they will pay the taxes on it, but I’m on the
hook.
[Mr. Shamoun]: I agree with that. Okay.
[Mr. Turner]: I think [I] like that one too because I wasn’t on the
hook.
[Mr. Shamoun]: But I want to make absolutely sure, guys, that we
understand how when that money comes in, 15 percent of the gross
receipts is put into that account.
Right Mr. Holmes?
[Mr. Holmes]: Correct.
[Mr. Shamoun]: And that money is not going to be used to pay
Mr. Fischer, if [the revenue relating to the 2010 Adjustment] comes in, I
don’t want to use that 15 percent. That comes off the top, irrespective
of anything do you . . . understand?
[Mr. Holmes]: That’s correct.
[Mr. Shamoun]: Is that what we agreed to?
[Mr. Holmes]: That’s correct.
[Mr. Shamoun]: Thank you. Go ahead.
6
[Mr. Cunningham]: Then upon the exhaustion of all appellate
rights by any party that relate to an appeal of the declar[a]tory judgment,
which will be severed from the causes of action in this suit – in other
words, separate from the agreed judgment the Court will sever the
declaratory judgment action the defendants have asked for regarding the
issue of agreement to agree, and the Judge will issue a separate
declar[a]tory judgment on that. Okay?
Which will also award fees regarding that declar[a]tory judgment,
which will incur trial fees and appellate fees.
So then, upon the exhaustion of all appellate rights relating to that
declar[a]tory judgment, if the declar[a]tory judgment of the trial Court is
upheld, then Ray Fischer will receive payment of the 15 percent gross
revenue that is being held in escrow. And 15 per – I mean, he will
receive – he will be distributed that 15 percent of the gross revenue that
was being held in escrow, okay. 100 percent of that.
....
[Mr. Shamoun]: That concludes our settlement. I [w]ould like
to – I would like to call my client.
[Mr. Cunningham]: Let me be sure and be clear on the record that
what is – it’s agreed by the parties that what is being entered onto the
record in this Rule 11 setting, does not contemplate the parties sitting
down and executing any further settlement agreement to be written or
agreed upon.
This is to be used as the settlement agreement, this transcript.
[Mr. Shamoun]: Is that correct?
[Mr. Cunningham]: For all purposes.
[Mr. Holmes]: Yes.
[Mr. Turner]: Yes.
[Mr. Shamoun]: Is that correct, Mr. Turner?
7
[Mr. Turner]: Agreed.5
B. The 192nd District Court Enters a Judgment Relating to the 2010
Adjustment, the Dallas Court of Appeals Reverses, and the Texas
Supreme Court Reverses.
In June 2011, the 192nd District Court of Dallas County entered judgment in
the Fischer Parties’ favor regarding the 2010 Adjustment, declaring that the 2010
Adjustment was not an unenforceable agreement to agree as CTMI had claimed.
CTMI appealed that judgment to the Dallas Court of Appeals, and in August 2013,
the Dallas Court of Appeals reversed the 192nd District Court, holding that “the 2010
Adjustment was . . . an unenforceable agreement to agree.” CTMI, LLC v. Fischer,
479 S.W.3d 279, 283 (Tex. App.—Dallas 2013), rev’d, 479 S.W.3d 231 (Tex. 2016). In
January 2016, the Texas Supreme Court reversed the Dallas Court of Appeals, holding
that “the 2010 [A]djustment [was] not an unenforceable agreement to agree.” Fischer,
479 S.W.3d at 244. The Texas Supreme Court’s mandate issued on February 19,
2016.
C. Holmes Sets Up a CTMI Bank Account, CTMI Deposits Funds into that
Account, and Holmes Absconds with the Funds.
In October 2011—while the 192nd District Court’s final judgment was being
appealed to the Dallas Court of Appeals—Holmes opened a Regions Bank account.
Fischer then testified that he approved of the Settlement Agreement on behalf
5
of himself and Corporate Tax Management, Inc. Raymond likewise testified that he
approved of the Settlement Agreement, and Boozer testified that he approved of the
Settlement Agreement on behalf of himself and CTMI.
8
CTMI was listed as the owner of the account, although the address listed for CTMI
was the address of Holmes’s law firm. According to a declaration made by Raymond,
one of CTMI’s owners, “[n]either CTMI nor any of its principals, agents or employees
had any control” over the bank account, and Holmes was the “sole authorized
signatory” on the account. Bank statements relating to the account were sent to
“Thomas Wesley Holmes FBO CTMI LLC” at the address of Holmes’s law firm, and
Regions Bank likewise issued 1099-INT forms to “Thomas Wesley Holmes FBO
CTMI LLC” at the address of Holmes’s law firm.
Between October 2011 and December 2012—while the appeal was still
pending in the Dallas Court of Appeals—CTMI deposited funds totaling $990,175.66
into the Regions Bank account. Between June 2014 and December 2015—while the
case was still pending before the Texas Supreme Court—Holmes absconded with the
funds.
D. The CTMI Parties File the Present Lawsuit, the Trial Court Denies the
Fischer Parties’ Motion to Transfer Venue, the Fischer Parties File a
Counterclaim for Breach of Contract, and the Trial Court Enters a Final
Judgment in the CTMI Parties’ Favor.
According to Raymond, the CTMI Parties discovered that Holmes had
absconded with the funds sometime in early March 2016. A few days later, the CTMI
Parties filed the present lawsuit in the 48th District Court of Tarrant County. The
CTMI Parties sought a declaration that they had fulfilled their obligations under the
Settlement Agreement and owed no further liability to the Fischer Parties under the
9
Settlement Agreement.6 The Fischer Parties filed a motion to transfer venue to Dallas
County, and the trial court denied the motion. The Fischer Parties also filed a
counterclaim against the CTMI Parties for, among other things, breach of the
Settlement Agreement.
The Fischer Parties sought summary judgment on their breach-of-contract
counterclaim, arguing that they had not received the funds due to them under the
Settlement Agreement and had been damaged in the amount of $990,175.66. The
trial court denied the Fischer Parties’ motion for summary judgment.
The CTMI Parties filed three motions for summary judgment. In their first
motion, they contended that they had fulfilled all their obligations under the
Settlement Agreement and owed no further liability to the Fischer Parties. The trial
court granted the CTMI Parties’ first motion for summary judgment in part, finding
that they had accurately calculated the amounts due under the 2010 Adjustment and
had timely deposited payments totaling $990,175.66 into the Regions Bank account.
The CTMI Parties later filed their second motion for summary judgment, arguing that
because the Regions Bank account constituted an “escrow account,” they were
entitled to summary judgment on the Fischer Parties’ breach-of-contract counterclaim
and entitled to summary judgment on certain affirmative defenses raised by the
The CTMI Parties (and later the Fischer Parties) also brought claims against
6
Holmes and the law firm that had represented CTMI in the 192nd District Court.
Those claims were later severed into a new case.
10
Fischer Parties. The trial court granted the CTMI Parties’ second motion for
summary judgment, finding, among other things, that the Settlement Agreement
“created an escrow account.” The CTMI Parties later filed their third motion for
summary judgment, contending that in light of the trial court’s previous summary-
judgment rulings, they were entitled to a declaration that they had fulfilled their
obligations under the Settlement Agreement and owed no further liability to the
Fischer Parties under the Settlement Agreement. The trial court granted the CTMI
Parties’ third motion for summary judgment.
The trial court later incorporated its summary-judgment rulings into a final
judgment. In the final judgment, the trial court declared that “[t]he Settlement
Agreement created an escrow account” and that “the CTMI Parties have no further
liability to the Fischer Parties . . . as it relates to any legally enforceable obligations
imposed upon the CTMI Parties by [the] Settlement Agreement, the CTMI Parties
having performed and met all of their obligations under the Settlement Agreement.”
The trial court also awarded attorney’s fees in accordance with a Rule 11 agreement
made by the parties. This appeal ensued.
III. DISCUSSION
A. We Will Address the Fischer Parties’ Second Issue First Because It
Provides the Greatest Relief.
In their first issue, the Fischer Parties argue that the trial court erred by denying
their motion to transfer venue. As to that issue, the Fischer Parties ask that we
11
reverse and remand the case with instructions to transfer it to Dallas County. In their
second issue, the Fischer Parties argue that the trial court erred by granting summary
judgment in the CTMI Parties’ favor. As to that issue, the Fischer Parties ask that we
reverse and render judgment in their favor.
When a party presents multiple grounds for reversal of a judgment on appeal,
the appellate court should first address those grounds that would afford the party the
greatest relief. CMH Homes, Inc. v. Daenen, 15 S.W.3d 97, 99 (Tex. 2000); Bradleys’ Elec.,
Inc. v. Cigna Lloyds Ins. Co., 995 S.W.2d 675, 677 (Tex. 1999). Therefore, we will
address the Fischer Parties’ second issue first. See CMH Homes, 15 S.W.3d at 99
(declining to “reach the venue question, which if sustained would only result in a
remand,” when a different issue entitled the appellant to rendition of judgment in its
favor); Bradleys’ Elec., 995 S.W.2d at 677 (holding that court of appeals erred by
remanding case on venue grounds when the appellant had also raised an issue upon
which the court of appeals could have rendered judgment).
B. Standard of Review
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,
315 S.W.3d 860, 862 (Tex. 2010). When both parties move for summary judgment
and the trial court grants one motion and denies the other, the reviewing court should
review both parties’ summary-judgment evidence and determine all questions
presented. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex. 2009). We should then render the judgment that the trial court should have
12
rendered. See Myrad Props., Inc. v. LaSalle Bank Nat’l Ass’n, 300 S.W.3d 746, 753 (Tex.
2009); Mann Frankfort, 289 S.W.3d at 848.
C. Did the Settlement Agreement Create an Escrow Agreement?
Through this appeal, we must construe whether the Settlement Agreement
created an escrow agreement. The CTMI Parties argued at the trial level and now
argue on appeal that the Settlement Agreement created a “valid [e]scrow [a]greement.”
According to the CTMI Parties, because the Settlement Agreement created an escrow
agreement, their obligations and liability under the Settlement Agreement ceased when
they deposited the $990,175.66 into the Regions Bank account. See Norman v. Wilson,
41 S.W.2d 331, 332 (Tex. App.—Austin 1931, writ ref’d) (“When the bank accepted
by written indorsement thereon the escrow agreement deposited with it, and which
charged it with certain duties, it became the depository and trustee to carry out its
terms, and if it improperly did so, would be liable to those injured thereby.”). In
contrast, the Fischer Parties argued at the trial level and now argue on appeal that the
Settlement Agreement did not create an escrow agreement. According to the Fischer
Parties, because the Settlement Agreement did not create an escrow agreement, the
CTMI Parties were not relieved of their obligations under the Settlement Agreement
by merely depositing the $990,175.66 in the Regions Bank account, and as the Fischer
Parties did not receive the $990,175.66, the CTMI Parties breached the Settlement
Agreement.
13
1. The Law
All parties agree that the Settlement Agreement was a Rule 11 agreement. See
Tex. R. Civ. P. 11. As such, it was enforceable as a contract. Lane–Valente Indus.
(Nat’l), Inc. v. J.P. Morgan Chase, N.A., 468 S.W.3d 200, 204 (Tex. App.—Houston
[14th Dist.] 2015, no pet.).
“We construe contracts ‘from a utilitarian standpoint bearing in mind the
particular business activity sought to be served’ and ‘will avoid when possible and
proper a construction which is unreasonable, inequitable, and oppressive.’” Frost Nat’l
Bank v. L & F Dist., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting Reilly v. Rangers
Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)). When construing a contract, our
primary concern is to ascertain the true intent of the parties as expressed in their
contract. Chrysler Ins. Co. v. Greenspoint Dodge of Hous., Inc., 297 S.W.3d 248, 252 (Tex.
2009); NP Anderson Cotton Exch., L.P. v. Potter, 230 S.W.3d 457, 463 (Tex. App.—Fort
Worth 2007, no pet.). We must examine and consider the entire contract to
harmonize and give effect to all provisions so that none are rendered meaningless.
MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 652 (Tex. 1999); NP
Anderson, 230 S.W.3d at 463. We presume that parties to a contract intend every
clause to have some effect, and we give terms used in a contract their plain, ordinary,
and generally accepted meaning unless the contract shows that the parties used them
in a technical or different sense. FWT, Inc. v. Haskin Wallace Mason Prop. Mgmt.,
14
L.L.P., 301 S.W.3d 787, 794 (Tex. App.—Fort Worth 2009, pet. denied) (op. on
reh’g).
Under Texas law, an escrow agreement is
a written instrument which by its terms imports a legal obligation, and
which is deposited by the grantor, promisor, or obligor, or his agent,
with a stranger or third party, to be kept by the depositary until the
performance of a condition or the happening of a certain event, and
then to be delivered over to the grantee, promisee, or obligee.
Campbell v. Barber, 272 S.W.2d 750, 753 (Tex. App.—Fort Worth 1954, writ ref’d
n.r.e.); see Escrow, Black’s Law Dictionary (11th ed. 2019) (defining “escrow” as a
“legal document or property delivered by a promisor to a third party to be held by the
third party for a given amount of time or until the occurrence of a condition, at which
time the third party is to hand over the document or property to the promisee”).
Cases defining escrow agreements highlight that escrow involves deposits with
neutral third parties who are strangers to the contract. See, e.g., Williams v. Land Title
Co. of Dall., No. 05-96-00039-CV, 1997 WL 196345, at *5 (Tex. App.—Dallas Apr. 23,
1997, no pet.) (not designated for publication) (“To create an escrow, the parties to an
underlying transaction must deposit instruments or funds with a neutral third party.”);
Bell v. Safeco Title Ins. Co., 830 S.W.2d 157, 160 (Tex. App.—Dallas 1992, writ denied)
(explaining that for escrow agreements, “the grantor deposits the funds or property
with a neutral third party”); Campbell, 272 S.W.2d at 753 (stating that escrow is a
written instrument deposited with “a stranger or third party”). Indeed, an escrow
cannot typically be deposited with one of the parties to the escrow agreement, nor
15
with the agent or attorney of one of the parties to the agreement. See Bradley v. Howell,
126 S.W.2d 547, 564 (Tex. App.—Fort Worth 1939, writ dism’d judgm’t cor.) (“An
escrow deposit cannot be made with one of the parties to the instrument, or his
agent.”); Smith v. Daniel, 288 S.W. 528, 531 (Tex. App.—Beaumont 1926, writ dism’d
w.o.j.) (“A deed is not in escrow while deposited with one of the parties, nor with his
agent or attorney.”); see also Johnson v. Freytag, 338 S.W.2d 257, 262 (Tex. App.—
Beaumont 1960, writ ref’d n.r.e.) (stating that “[a]n escrow depositary should be a
stranger or third party” but recognizing that there may be circumstances where an
agent of or party to an instrument may be a depositary).
“The purpose of requiring a promisor to place [an item] in escrow is to protect
the promisee by having a neutral third party hold the item until the happening of a
contingency or performance of a condition, and then deliver that item to the
promisee.” Vector Indus., Inc. v. Dupre, 793 S.W.2d 97, 101 (Tex. App.—Dallas 1990,
no writ). An escrow agent owes fiduciary duties to the parties of the escrow
agreement, including the duty of loyalty, the duty to make full disclosure, and the duty
to exercise a high degree of care to conserve the money placed in escrow and pay it
only to those persons entitled to receive it. Trahan v. Lone Star Title Co. of El Paso,
247 S.W.3d 269, 287 (Tex. App.—El Paso 2007, pet. denied); Williams, 1997 WL
196345, at *5.
16
2. Application of the Law to the Facts
We begin our analysis by examining whether Holmes was a neutral third party
who was a stranger to the Settlement Agreement. See Williams, 1997 WL 196345, at
*5; Bell, 830 S.W.2d at 160; Campbell, 272 S.W.2d at 753. The summary-judgment
record reflects that Holmes was an attorney representing Boozer and Raymond at trial
in the 192nd District Court, that the Settlement Agreement was entered at trial, that
Boozer and Raymond were parties to the Settlement Agreement, that Holmes spoke
on behalf of Boozer and Raymond when the parties entered the Settlement
Agreement, and that Holmes represented Boozer and Raymond in the appeal before
the Dallas Court of Appeals where the parties were substantively arguing over who
was entitled to the funds placed in the Regions Bank account. See CTMI, 479 S.W.3d
at 280. Based on that record, we cannot say that Holmes was a neutral third party
who was a stranger to the Settlement Agreement.7 See Williams, 1997 WL 196345, at
*5; Bell, 830 S.W.2d at 160; Campbell, 272 S.W.2d at 753.
The CTMI Parties argue that even if Holmes was not a neutral third party who
was a stranger to the Settlement Agreement, that did not necessarily prevent him from
7
In their brief, the CTMI Parties place a great deal of emphasis on the fact that
Holmes represented Boozer and Raymond and not CTMI. While that fact may be
true, it does not transform Holmes into a neutral third party who was a stranger to the
Settlement Agreement. As stated above, Boozer and Raymond were parties to the
Settlement Agreement, and Holmes represented them at trial in the 192nd District
Court, represented them while the Settlement Agreement was being entered, and
represented them on appeal before the Dallas Court of Appeals.
17
serving as an escrow agent, particularly where the escrow agreement was made in
open court. But just because parties may agree that a party or agent of a party may be
a depositary to an escrow agreement does not necessarily mean that the Settlement
Agreement was an escrow agreement. See Johnson, 338 S.W.2d at 262 (“We do not
mean to say that under no circumstances may an agent of or party to an instrument be
a depositary, but in the absence of a clearly expressed mutual agreement of both
parties to the instrument to that effect it will not be implied . . . .”).
And, here, if we are to harmonize and give effect to all provisions of the
Settlement Agreement so that none are rendered meaningless, we must construe the
Settlement Agreement to be something other than an escrow agreement. First, the
Settlement Agreement establishes that the contemplated bank account was to be a
CTMI account—not Holmes’s account—and the summary-judgment evidence
reflects that the Regions Bank account was indeed a CTMI account. Second, the
Settlement Agreement establishes that CTMI was to pay taxes on the account, and the
summary-judgment evidence reflects that Regions Bank issued 1099-INT forms to
“Thomas Wesley Holmes FBO CTMI LLC.”8 Third, and perhaps most critically, the
Settlement Agreement states in two places that Fischer “will receive” payment of the
deposited funds. If we are to construe the Settlement Agreement as an escrow
8
In their brief, the CTMI Parties emphasize that the Settlement Agreement
stated that Holmes would be “on the hook.” But just because Holmes stated that he
would be “on the hook,” does not mean that CTMI would be “off the hook” if
Fischer did not receive the payments contemplated under the Settlement Agreement.
18
agreement, then those provisions have no meaning because Fischer did not receive
payment of the deposited funds.9
Based on our review of the summary-judgment record, we hold that the unique
Settlement Agreement before us was not an escrow agreement but was simply a
Rule 11 agreement—a contract—entered between the parties. Accordingly, we hold
that the trial court erred by declaring that the Settlement Agreement was an escrow
agreement and erred by declaring that the CTMI Parties had fulfilled their obligations
under the Settlement Agreement and owed no further liability to the Fischer Parties
under the Settlement Agreement. We further hold that the summary-judgment
evidence establishes that the CTMI Parties breached the Settlement Agreement by
failing to pay Fischer the amounts due under it.10 See Rice v. Metro. Life Ins. Co.,
324 S.W.3d 660, 666 (Tex. App.—Fort Worth 2010, no pet.) (setting forth elements
of a breach-of-contract claim). Accordingly, we sustain the Fischer Parties’ second
9
While the term “escrow” was used five times in the Settlement Agreement, a
party’s mere use of the term “escrow” does not transform an agreement into an
escrow agreement. Cf. Chapman Children’s Trust v. Porter & Hedges, L.L.P., 32 S.W.3d
429, 439 n.7 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (“In this case, the
Trusts point to a letter from one of Atkins’s attorneys which purports to characterize
Porter & Hedges as a ‘stakeholder’ of the settlement funds. This type of unilateral
characterization, alone, is not sufficient to create a fiduciary duty.”).
10
As noted by the Fischer Parties in their reply brief, “Fischer never contested
whether [the CTMI Parties] had properly determined the amount owed under the
Settlement Agreement; rather, Fischer’s only dispute with [the CTMI Parties] was
whether Fischer actually received those amounts, as required by the Settlement
Agreement.”
19
issue, reverse the trial court’s final judgment, and render judgment ordering the CTMI
Parties to pay Fischer $990,175.66.11
3. Award of Attorney’s Fees
Prior to the trial court’s entering its final judgment, the parties entered a
Rule 11 agreement concerning attorney’s fees. Pursuant to that agreement, the parties
agreed that if the Fischer Parties ultimately prevailed in the lawsuit, they were to
recover from the CTMI Parties $450,000 as their reasonable and necessary attorney’s
fees for work done at the trial level, an additional $60,000 if they were successful
following an appeal to the court of appeals, an additional $10,000 if they were
successful on appeal following a petition of review to the Texas Supreme Court, and
an additional $30,000 if they were successful on appeal following a grant of a petition
of review by the Texas Supreme Court. The Rule 11 agreement provided that in the
event the CTMI Parties ultimately prevailed, they would be entitled to recover their
reasonable and necessary attorney’s fees for identical amounts as those to be awarded
to the Fischer Parties if they prevailed.
In the trial court’s final judgment, the trial court awarded the CTMI Parties
their attorney’s fees in accordance with the Rule 11 agreement. Because the Fischer
Parties have ultimately prevailed on this appeal, we reverse the trial court’s award of
Because we have sustained the Fischer Parties’ second issue, we need not
11
decide their first issue challenging the trial court’s denial of their motion to transfer
venue. See Tex. R. App. P. 47.1.
20
attorney’s fees to the CTMI Parties, and we order that the Fischer Parties recover
from the CTMI Parties $450,000 for the Fischer Parties’ reasonable and necessary
attorney’s fees for work done at the trial court level, and we further order that the
Fischer Parties recover from the CTMI Parties $60,000 for the Fischer Parties’
reasonable and necessary attorney’s fees for work done at the court of appeals level.
We further order that if the Fischer Parties prevail in an appeal of this court’s
judgment to the Texas Supreme Court, the Fischer Parties will additionally recover
from the CTMI Parties $10,000 for the Fischer Parties’ reasonable and necessary
attorney’s fees if the case is resolved on a petition for review. And in the event the
petition for review is granted by the Texas Supreme Court and the Fischer Parties
ultimately prevail, the Fischer Parties will recover from the CTMI Parties both the
$10,000 and an additional $30,000 for the Fischer Parties’ reasonable and necessary
attorney’s fees.
4. Pre- and Post-Judgment Interest
In their motion for rehearing, the Fischer Parties have requested that we award
them pre- and post-judgment interest.12 The two sources of authority for an award of
12
The CTMI Parties argue that the Fischer Parties have waived any entitlement
to pre- and post-judgment interest by not raising a complaint regarding pre- and post-
judgment interest in their appellate brief. We disagree. The Fischer Parties requested
in both their live counterclaim and in their motion for summary judgment that the
trial court award them pre- and post-judgment interest. And in their appellate brief,
the Fischer Parties requested that we reverse the trial court’s judgment and render an
award in their favor. We do not think that the Fischer Parties were required to
complain about pre- and post-judgment interest in their appellate brief when the trial
21
pre-judgment interest are: (1) an enabling statute and (2) legal principles of equity.
Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 528 (Tex. 1998);
Asta Partners, LLC v. Palaniswamy, No. 02-20-00371-CV, 2021 WL 5133888, at *13
(Tex. App.—Fort Worth Nov. 4, 2021, no pet. h.) (mem. op.); Citizens Nat’l Bank v.
Allen Rae Invs., Inc., 142 S.W.3d 459, 486–87 (Tex. App.—Fort Worth 2004, no pet.)
(op. on reh’g). The enabling statute, Section 304.104 of the Finance Code, only
applies to wrongful-death, personal-injury, and property-damage cases. Asta Partners,
2021 WL 5133888, at *13; Siam v. Mountain Vista Builders, 544 S.W.3d 504, 513 (Tex.
App.—El Paso 2018, no pet.); see Tex. Fin. Code Ann. § 304.101 (stating that the
subchapter dealing with pre-judgment interest “applies only to a wrongful[-]death,
personal[-]injury, or property[-]damage case”).
court had not awarded them any amount by which interest could accrue, and we thus
hold that the Fischer Parties have not waived their entitlement to pre- and post-
judgment interest. See Tex. R. App. P. 38.1(f) (“The statement of an issue or point
will be treated as covering every subsidiary question that is fairly included.”); DeGroot
v. DeGroot, 369 S.W.3d 918, 926–27 (Tex. App.—Dallas 2012, no pet.) (“Post-
judgment interest is recoverable even if it is not specifically awarded in [a trial court’s]
judgment.”); Lee v. Lee, 47 S.W.3d 767, 799 (Tex. App.—Houston [14th Dist.] 2001,
pet. denied) (“An award of prejudgment interest . . . is an automatic legal consequence
since appellants pled for prejudgment interest. Neither the award of prejudgment
interest, nor the accrual date of this interest, required a point of error for
preservation.”); see also Hernandez v. LaBella, No. 14-08-00327-CV, 2010 WL 431253, at
*5 (Tex. App.—Houston [14th Dist.] Feb. 9, 2010, no pet.) (mem. op.) (reversing
judgment of trial court and rendering judgment that appellees breached a settlement
agreement and that appellant recover $100,000, but remanding to trial court for
further proceedings to determine appellant’s entitlement to pre-judgment interest).
22
In this breach-of-contract case, no enabling statute controls, and, thus, the only
potential source for an award of pre-judgment interest is “general principles of
equity.” Asta Partners, 2021 WL 5133888, at *13. Where, as here, no enabling statute
controls, the decision to award pre-judgment interest is left to the sound discretion of
the trial court, which should rely upon equitable principles and public policy in
making its decision. Id.; Whitlock v. CSI Risk Mgmt., LLC, No. 05-19-01297-CV, 2021
WL 1712215, at *15 (Tex. App.—Dallas Apr. 30, 2021, pet. denied) (mem. op.); Henry
v. Masson, 453 S.W.3d 43, 49 (Tex. App.—Houston [1st Dist.] 2014, no pet.).
Because the trial court, rather than this court, has the ultimate discretion to
award pre-judgment interest, we decline the Fischer Parties’ invitation to award them
pre-judgment interest outright, and we instead remand the case to the trial court to
determine the Fischer Parties’ entitlement to pre-judgment interest and to calculate
the amount of pre-judgment interest to be awarded, if any.13 See Hernandez, 2010 WL
431253, at *5. We likewise remand the case to the trial court for determination of
post-judgment interest.14 See Tex. Fin. Code Ann. § 304.003 (providing post-
judgment interest rate).
13
Because we remand this determination to the trial court, we are only granting
the Fischer Parties’ motion for rehearing in part.
We note that “[p]ost-judgment interest is mandated by section 304.001 of the
14
Texas Finance Code, and is recoverable whether or not specifically awarded in the
judgment.” SAP Trading Inc. v. Sohani, No. 14-06-00641-CV, 2007 WL 1599719, at *2
(Tex. App.—Houston [14th Dist.] June 5, 2007, no pet.) (mem. op.).
23
IV. CONCLUSION
Having sustained the Fischer Parties’ second issue and needing not decide the
Fischer Parties’ first issue, we reverse the trial court’s final judgment and render
judgment awarding Fischer $990,175.66 on his breach-of-contract claim and awarding
attorney’s fees as set forth above. We remand the case to the trial court for further
proceedings to determine the Fischer Parties’ entitlement to pre-judgment interest and
to calculate the amount of pre-judgment interest to be awarded, if any, and for
determination of post-judgment interest. See id.; Hernandez, 2010 WL 431253, at *5.
/s/ Dana Womack
Dana Womack
Justice
Delivered: December 16, 2021
24