Jules H. Bohn M.D. v. Kerry Carl Hagan and Kerry Carl Hagan, P.C ( 2012 )

Affirmed in Part and Reversed and Rendered in Part and Opinion filed May 1,
2012.
In The
Fourteenth Court of Appeals
NO. 14-10-00905-CV
NO. 14-10-00940-CV
JAMES PITTMAN MCGEHEE AND JULES H. BOHNN, M.D., Appellants
V.
KERRY CARL HAGAN AND KERRY CARL HAGAN, P.C., Appellees
On Appeal from the 113th District Court
Harris County, Texas
Trial Court Cause No. 2008-24180
OPINION
Kerry Carl Hagan and Kerry Carl Hagan, P.C. (“Hagan P.C.”) sued James Pittman
McGehee and Jules H. Bohnn, M.D. for damages allegedly caused by McGehee’s
repudiation of an office lease. The trial court rendered judgment in favor of Hagan and
Hagan P.C. In several issues, McGehee and Bohnn challenge certain portions of the trial
court’s judgment. We reverse and render a take-nothing judgment in favor of McGehee
and Bohnn.
I. BACKGROUND
Bohnn owned a building named “Broadacres Center.” McGehee is an Episcopal
priest and therapist who began leasing office space at Broadacres Center in 1993.
McGehee and Bohnn entered into a lease agreement which included a provision for
automatic renewal of the lease every year unless a party provided written notice of
termination. The litigants dispute whether this lease remained in effect at the time of
appellants’ alleged wrongful acts.
During the early 1990s, when he was a law student in Houston, Hagan met
McGehee, who was serving as dean of Christ Church Cathedral. After practicing law for
several years, Hagan decided to become a therapist and earned degrees in theology and
psychology. McGehee then invited Hagan to practice at Broadacres Center. In
September 1999, Hagan began his therapy practice and operated Hagan P.C. at
Broadacres Center. Neither Hagan nor Hagan P.C. ever entered into a written lease with
Bohnn or McGehee.
During spring 2006, Hagan and McGehee decided to leave Broadacres Center.
They discussed leasing office space with John Hansen Investment Builders (“Hansen”).
On April 5, 2006, Hagan P.C. and McGehee, as co-lessees, entered into a commercial
lease (the “2006 Joint Lease”) with 4119 Montrose Limited (“Lessor”).1 Under the 2006
Joint Lease, Hagan P.C. and McGehee agreed to occupy an office in the Montrose area of
Houston (“Montrose Office Space”) for $2,450 per month. Hagan P.C. and McGehee
each provided Lessor with a security deposit. The parties contemplated that the leased
space would be ready for occupancy by January 1, 2007.
During summer 2006, Hagan was recovering from surgery. Bohnn spoke with
Hagan about sharing his office space at Broadacres Center with another therapist. Hagan
1
Hagan individually was not a party to the 2006 Joint Lease; John Hansen signed the 2006 Joint
Lease on behalf of Lessor.
2
declined and decided to vacate Broadacres Center before the Montrose Office Space was
completed. McGehee remained at Broadacres Center.
In April 2007, the Montrose Office Space was still not ready for occupancy. At
that time, McGehee informed Bohnn of McGehee’s intent to leave Broadacres Center and
move to less expensive office space. Bohnn responded that he wanted McGehee to stay,
and McGehee agreed to meet with Bohnn’s financial advisor. McGehee informed Hagan
about this meeting and requested a copy of the 2006 Joint Lease. According to Hagan,
McGehee explained he remained committed to the 2006 Joint Lease but wanted to use the
lease as a negotiation tool with Bohnn. Ultimately, McGehee decided to remain at
Broadacres Center after Bohnn substantially lowered McGehee’s rent.
McGehee informed Hagan regarding his decision to remain at Broadacres Center.
Hagan testified that McGehee stated, “I can walk the lease and Hansen’s not going to sue
me.” McGehee also said he would inform Hansen he was “backing out” because “the
delay in construction has caused me to make another choice.” According to Hagan, he
“never consented to [McGehee’s] breach [and] never consented to Bohnn’s
communications with [McGehee].”
McGehee told Hansen that he planned to remain at Broadacres Center and was
“very frustrated” by Hansen’s delay in completing the Montrose Office Space. At
McGehee’s request, Hansen returned McGehee’s security deposit. McGehee testified he
does not possess documentation establishing that Hansen released McGehee from
liability on the 2006 Joint Lease. According to Hagan, McGehee informed Hagan,
“Hansen did not void the contract . . . , but [I don’t] believe that they w[ill] sue [me]. . . .
I think it will just die down and fade away.” Thereafter, Hagan P.C. entered into a new
lease with the Lessor (the “2007 Hagan P.C. Lease”). Hagan testified he has not received
any demands for past-due rent under the 2006 Joint Lease.
Hagan and Hagan P.C. sued McGehee and Bohnn.2 Hagan P.C. asserted a breach-
2
We discuss only those claims and parties relevant to this appeal.
3
of-contract claim against McGehee and a tortious-interference claim against Bohnn.
Hagan P.C. sought (1) benefit-of-the-bargain damages for the difference in value between
the office leased under the 2007 Hagan P.C. Lease and the office leased under the 2006
Joint Lease and (2) damages Hagan P.C. would sustain if Lessor demands past-due rent
from Hagan P.C. under the unreleased 2006 Joint Lease.
Following a bench trial, the trial court found in favor of Hagan P.C. on its breach-
of-contract and tortious-interference claims. In its judgment, the trial court ordered
McGehee and Bohnn are jointly and severally liable for $158,128.23 in damages.3
McGehee and Bohnn filed separate appeals, which we consolidated.
II. MCGEHEE’S APPEAL
We begin by considering the issues raised by McGehee. In his first issue,
McGehee contends the trial court erred by determining he breached the 2006 Joint Lease.
Among other contentions, McGehee argues the evidence is legally insufficient to support
the trial court’s finding that McGehee owed a contractual duty to Hagan P.C. To prove
breach of contract, the plaintiff must establish that the defendant owed a contractual duty
to the plaintiff. See Expro Americas, LLC v. Sanguine Gas Exploration, LLC, 351
S.W.3d 915, 920 (Tex. App.—Houston [14th Dist.] 2011, pet. filed).
When examining a legal sufficiency challenge, we review evidence in the light
most favorable to the challenged finding and indulge every reasonable inference that
would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We credit
favorable evidence if a reasonable fact finder could and disregard contrary evidence
unless a reasonable fact finder could not. Id. at 827. The evidence is legally sufficient if
it would enable a reasonable and fair-minded person to reach the verdict under review.
Id. There is “no evidence” or legally insufficient evidence when (a) there is a complete
absence of evidence of a vital fact, (b) the court is barred by rules of law or evidence
3
Specifically, the trial court found that appellants owed Hagan P.C. $11,102.23 in benefit-of-the
bargain damages, $136,793.00 in damages for unreleased obligations under the 2006 Joint Lease, and
$10,233.00 in pre-judgment interest.
4
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. at 810. The fact finder is the
sole judge of witness credibility and the weight to give testimony. Id. at 819.
In its live petition, Hagan P.C. pleaded that McGehee owed a contractual duty to
Hagan P.C. under the 2006 Joint Lease; Hagan P.C. neither alleged nor presented
evidence supporting a finding that McGehee breached any other agreement. The parties
agree that under the 2006 Joint Lease, McGehee and Hagan P.C. were co-lessees who
owed contractual duties to Lessor. McGehee and Hagan P.C. bore a joint obligation to
pay Lessor $2,450.00 per month in rent, meaning McGehee and Hagan P.C. were each
individually liable to Lessor for the full amount of rent each month.4 There is no
language in the lease providing that McGehee and Hagan P.C. owed each other any
contractual duties. Nevertheless, Hagan P.C. argues that McGehee owed contractual
duties to Hagan P.C. simply because they were co-lessees. McGehee contends co-lessees
do not inherently owe each other contractual duties.
In support of his argument, McGehee cites Charles v. Charles, 478 S.W.2d 133
(Tex. Civ. App.—Dallas 1972, writ ref’d n.r.e.). In Charles, Maurice and Billie Ruth
were co-obligors on a promissory note for $3,500. Id. at 135. After she paid the note in
full, Billie Ruth sued Maurice, seeking repayment for his portion of the debt. Id.5 The
trial court rendered judgment in favor of Billie Ruth. Id.
The court of appeals considered whether Billie Ruth’s claim was subject to a two
or four-year statute of limitations. During its analysis, the court explained,
4
See Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 891 (Tex. App.—Dallas 2004,
pet. denied) (“If a contract imposes joint liability on several parties then all joint obligors are bound for
the whole performance of the contract.”); Baum v. McAfee, 125 S.W. 984, 987 (Dallas 1910, no writ)
(“Where two or more make a joint promise, each is liable to the promisee for the whole debt or
liability.”).
5
On the reverse side of the note there was a separate agreement between Maurice and Billie Ruth,
indicating that Maurice was responsible for “1550.00” of the note. Charles, 478 S.W.2d at 135.
However, the court of appeals concluded this agreement was unenforceable. Id. at 135–36.
5
[Maurice] was of course liable to the bank for the full amount of the $3,500
note, but his obligation to [Billie Ruth] is not founded upon that note
because when [Billie Ruth] paid it the note was discharged. [Billie Ruth’s]
right of action is founded, not upon the note, but upon [Maurice’s] implied
promise to reimburse her for his share of their joint and several liability to
the bank. This right of action arises out of the relationship of the parties
rather than the written contract and is barred by the two year statute.
Id. at 135–36; see also, e.g., Siegler v. Ginther, 680 S.W.2d 886, 890 (Tex. App.—
Houston [1st Dist.] 1984, no writ) (applying Charles); Miller v. Miles, 400 S.W.2d 4, 7
(Tex. Civ. App.—Tyler 1966, writ ref’d n.r.e.) (recognizing contribution stems from an
implied promise, not the underlying debt).
We acknowledge that these cases are not perfectly analogous to our situation.
However, to the extent Charles and similar cases support the proposition that co-obligors
to a note do not inherently owe each other duties arising from the note, we agree similar
reasoning should apply in the present case. Under the 2006 Joint Lease, McGehee and
Hagan P.C. made promises to Lessor, not each other.6 Under the 2006 Joint Lease,
McGehee did not promise Hagan P.C. that he would refrain from repudiating the lease.7
We conclude the evidence is legally insufficient to support the trial court’s finding that
McGehee owed a contractual duty to Hagan P.C. under the 2006 Joint Lease.
Consequently, the trial court erred by awarding Hagan P.C. benefit-of-the-bargain
damages8 and damages for unreleased obligations under the 2006 Joint Lease against
6
The authorities cited by Hagan P.C. do not support a conclusion that co-obligors inherently owe
contractual duties to each other under the contract. See Stark v. Benckenstein, 156 S.W.3d 112, 117 (Tex.
App.—Beaumont 2004, pet. denied) (expressing generally, “In a contractual relationship, any party may
breach the contract, and, thus, any party may sue for the breach and seek a judicial determination of
contractual rights,” but not considering whether co-obligors owe contractual duties to each other);
Zimmerman v. First Am. Title Ins. Co., 790 S.W.2d 690, 694–95 (Tex. App.—Tyler 1990, writ denied)
(holding title company which agreed to close sale on several lots owed tort duty to agent who, as agreed
in the real estate contract, was to receive one of the lots as his commission).
7
Although McGehee and Hagan P.C. both agreed to bear individual responsibility to Lessor for
the full amount of rent, there were countless ways they could have agreed to apportion rent between
themselves. However, Hagan P.C. did not allege McGehee breached, or Bohnn tortiously interfered with,
a separate agreement, oral or written, between McGehee and Hagan P.C.
8
Hagan argues that the 2006 Joint Lease became prohibitively expensive for Hagan P.C. after
McGehee repudiated, necessitating Hagan P.C. to locate and lease less attractive office space. However,
6
McGehee. We sustain McGehee’s first issue.
The parties agree that Hagan P.C. did not request equitable contribution from
McGehee for unreleased obligations under the 2006 Joint Lease. However, even
assuming the trial court’s award of damages for unreleased lease obligations was based
on a theory of equitable contribution instead of on breach of express contract, we
conclude Hagan P.C. was not entitled to such award.
Under the equitable theory of contribution, when two or more co-obligors share a
common obligation, a co-obligor who makes compulsory payment of more than its fair
share of the common obligation may seek contribution from the other co-obligors. See
Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 772 (Tex. 2007)
(explaining equitable contribution in the insurance context); Lavender v. Bunch, 216
S.W.3d 548, 553 (Tex. App.—Texarkana 2007, no pet.). As part of his second issue,
McGehee argues that Hagan P.C. did not establish entitlement to contribution because it
is undisputed Hagan P.C. has never made any rental payment to, or received any
demands for payment from, Lessor under the 2006 Joint Lease. Again, we agree.
“[T]he general rule is that there can be no recovery of contribution until after
payment by the party seeking contribution.” Patterson v. Fuller, 110 S.W.2d 1230,
1232 (Tex. Civ. App.—Eastland 1937, writ dism’d); see also Stephenson v. Luttrell, 107
Tex. 320, 324, 179 S.W. 260, 262 (1915) (“[I]t is equitable that [tenant] incurring the
expense [for improvement of property] shall have contribution from his cotenant . . . ; but
there is no principle of equity that will permit him to speculate on the transaction, and
require his cotenant to return to him any greater sum than his proportion of the money
actually expended.” (emphasis added)); Nelms v. Chazanow, 404 S.W.2d 359, 362 (Tex.
the purpose of benefit-of-the-bargain damages is restoration of the injured party to the economic position
it would have achieved had the contract been fully performed. Clear Lake City Water Auth. v.
Friendswood Dev. Co., Ltd., 344 S.W.3d 514, 522 (Tex. App.—Houston [14th Dist.] 2011, pet. denied).
Because McGehee and Hagan P.C. were both fully responsible for paying rent under the 2006 Joint
Lease, McGehee’s alleged repudiation did not prevent Hagan P.C. from enjoying the benefit of its bargain
under the 2006 Joint Lease, i.e., Hagan P.C. agreed to pay Lessor the full amount of rent in exchange for
the use of certain office space, and this bargain remained unaffected by McGehee’s repudiation.
7
Civ. App.—Houston [1st Dist] 1966, no writ) (“The law is well settled in this State that
each joint obligor in a contract is liable to the other for contribution to indemnify him for
any payments made in excess of his prorata share.”). Thus, even if we assume McGehee
and Hagan P.C. remain liable for unpaid rent under the 2006 Joint Lease, Hagan P.C. has
not asserted a claim for contribution or established that it is entitled to contribution from
McGehee. We sustain McGehee’s second issue and next address the issues raised by
Bohnn.
III. BOHNN’S APPEAL
In his third issue, Bohnn contends the evidence is legally insufficient to support
the trial court’s finding that Bohnn tortiously interfered with the 2006 Joint Lease.
The elements of tortious interference with a contract are (1) an existing contract
subject to interference, (2) a willful and intentional act of interference with the contract,
(3) that proximately caused the plaintiff’s injury, and (4) caused actual damages or loss.
Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). To
prevail on a tortious-interference claim, a plaintiff must present evidence that the
defendant interfered with a specific contract. See Finlan v. Dallas Indep. Sch. Dist., 90
S.W.3d 395, 412 (Tex. App.—Eastland 2002, pet. denied).
Bohnn argues, inter alia, no evidence supports a finding that he tortiously
interfered with Hagan P.C.’s rights under the 2006 Joint Lease because there is no
evidence McGehee and Hagan P.C. owed each other any contractual duties under the
lease. Bohnn notes that, under the 2006 Joint Lease, McGehee and Hagan P.C. owed
duties to—and were owed duties by—Lessor, but there was no provision indicating
McGehee owed money or any other type of performance to Hagan P.C. We construe
Bohnn’s contention to include an argument that he did not tortiously interfere with Hagan
P.C.’s ability to perform under the 2006 Joint Lease by inducing McGehee to repudiate
the lease because McGehee’s repudiation affected only rights owed to Lessor, not rights
owed to Hagan P.C.
8
Regardless of whether McGehee performed under the 2006 Joint Lease, Hagan
P.C. was responsible for paying Lessor the entire amount of rent each month. Thus, even
if Bohnn induced McGehee to breach the 2006 Joint Lease, such act did not interfere with
Hagan P.C.’s rights and obligations under the 2006 Joint Lease. See Associated Indem.
Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 288 (Tex. 1998) (concluding defendant
did not commit tortious interference because there was no evidence defendant interfered
with plaintiff’s ability to enforce its rights under the contract). We hold that the evidence
is legally insufficient to support a tortious-interference finding under the theory pleaded
in this case. Accordingly, the trial court erred by concluding Bohnn committed tortious
interference and awarding Hagan P.C. damages against Bohnn. We sustain Bohnn’s third
issue.
IV. CONCLUSION
We reverse that portion of the trial court’s judgment awarding Hagan P.C.
$158,128.23 in damages against McGehee and Bohnn, jointly and severally, and render
judgment that Hagan P.C. take nothing on its claims for breach of contract and tortious
interference. We affirm the remainder of the judgment.
/s/ Charles W. Seymore
Justice
Panel consists of Justices Frost, Seymore, and Jamison.
9