Lane-Valente Industries (Nat'l), Inc v. J.P. Morgan Chase, N.A. and Bovis Lend Lease, Inc. ( 2015 )

Reversed and Remanded and Opinion filed June 2, 2015.
In The
Fourteenth Court of Appeals
NO. 14-14-00028-CV
LANE-VALENTE INDUSTRIES (NAT'L), INC, Appellant
V.
J.P. MORGAN CHASE, N.A. AND BOVIS LEND LEASE, INC., Appellees
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2012-36514
OPINION
Appellant Lane-Valente Industries (Nat’l), Inc. filed breach-of-contract and
declaratory judgment claims against appellees Bovis Lend Lease, Inc. and J.P.
Morgan Chase, N.A., seeking to enforce a settlement agreement under Texas Rule
of Civil Procedure 11. Both sides moved for summary judgment. The trial court
granted appellees’ motion and ordered the parties to execute releases with language
different from that contained in the Rule 11 agreement. In its first issue, Lane-
Valente argues it is entitled to summary judgment. In its second issue, Lane-
Valente contends the court erred in granting appellees’ motion for summary
judgment. Because we conclude the Rule 11 agreement is ambiguous, we hold the
trial court erred in granting appellees’ motion for summary judgment but properly
denied Lane-Valente’s motion for summary judgment. We also hold that Lane-
Valente’s appeal is not frivolous and deny appellees’ request for sanctions under
Rule 45 of the Texas Rules of Appellate Procedure. We reverse the judgment and
remand the case for further proceedings.
BACKGROUND
Lane-Valente agreed to provide services and materials to Bovis Lend Lease,
Inc. (“Lend Lease”) in connection with the renovation of several banking facilities
owned by J.P. Morgan Chase, N.A. (“Chase”). Although the price paid under the
agreement was supposed to include all taxes, Lane-Valente failed to pay sales taxes
owing to the Comptroller of Public Accounts of the State of Texas. Lend Lease
thus paid the Comptroller the amount due, which totaled $186,480.73, and filed
suit against Lane-Valente.1 Lane-Valente brought Chase into the lawsuit as a
third-party defendant.
The parties attended mediation and entered into a Rule 11 agreement. The
agreement provided that the parties would execute “full mutual releases in favor of
each other, including an agreement that this settles and resolves all claims/issues
by and between [the parties] that were raised or that could have been
raised/brought out of the incident(s) made the basis of this suit.” The parties were
subsequently unable to agree on the language to be included in the releases,
however. Lane-Valente filed a motion to enforce the Rule 11 agreement, but the
trial court denied the motion. Instead, the court signed an order directing Lane-
Valente, Lend Lease, and Chase to execute releases with language different from
1
That case is Cause No. 2010-62701.
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that contained in the Rule 11 agreement: “This settles and resolves all
claims/issues . . . that were raised or that could have been raised/brought out of the
incident(s) made the basis of this lawsuit.” Lane-Valente filed a motion to rescind
and replace the order and for sanctions, arguing that the agreement required
general, mutual releases of all claims between the parties, even those that do not
arise out of the incident made the basis of the lawsuit. At a hearing on the motion,
the trial court stated that it used different language because the language contained
in the Rule 11 agreement was “too broad.” The court said: “I tried to make [the
release] less broad. That’s what I was trying to do.” The trial court signed an
order denying the motion to rescind.
Lane-Valente then filed this lawsuit, asserting breach-of-contract and
declaratory judgment claims against Lend Lease and Chase. Lane-Valente sought
to have the court determine its rights, status, and legal obligations under the Rule
11 agreement and to obtain a ruling that the terms of the Rule 11 agreement were
enforceable.2 Lane-Valente also sought dismissal of the original suit among Lane-
Valente, Lend Lease, and Chase. Lend Lease and Chase (collectively “appellees”)
filed an answer. Lane-Valente filed a motion for final summary judgment, and
appellees filed a cross-motion for summary judgment. The trial court granted
appellees’ motion and denied Lane-Valente’s motion. The court determined that
appellees had proven as a matter of law that Lane-Valente breached the Rule 11
agreement, and it ordered the parties to execute a formal settlement agreement that
2
Lane-Valente filed a notice of appeal in the original suit and a petition for writ of
mandamus. The First Court of Appeals dismissed the appeal for lack of jurisdiction and denied
the mandamus petition without explaining its basis for doing so. See Lane-Valente Indus. (Nat’l)
Inc. v. Lend Lease (US) Constr., Inc., No. 01-12-00706-CV, 2013 WL 593701 (Tex. App.—
Houston [1st Dist.] Feb. 14, 2013, no pet.); In re Lane-Valente Indus. (Nat’l) Inc., No. 01-12-
00685-CV, 2012 WL 5192700 (Tex. App.—Houston [1st Dist.] Oct. 18, 2012, orig. proceeding).
No party has argued that the trial court’s decisions in the original suit have any preclusive effect
on the issues before us in this appeal.
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mirrored the more narrow language contained in its previous order. The trial court
further dismissed the original suit with prejudice and awarded appellees their costs
and reasonable attorney’s fees. This appeal followed.
ANALYSIS
In its first issue, Lane-Valente argues it is entitled to summary judgment. In
its second issue, Lane-Valente asserts the trial court erred in granting appellees’
motion for summary judgment. Because these issues are related, we address them
together.
I. Standard of review and applicable law
We review a trial court’s grant of summary judgment de novo. Exxon Corp.
v. Emerald Oil & Gas Co., 331 S.W.3d 419, 422 (Tex. 2010). A motion for
summary judgment is properly granted if the movant establishes that there is no
genuine issue of material fact and that he or she is entitled to judgment as a matter
of law. Tex. R. Civ. P. 166a(c); Gastar Exploration Ltd. v. U.S. Specialty Ins. Co.,
412 S.W.3d 577, 582 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). The
question on appeal is not whether the summary judgment proof raises a fact issue
with reference to the essential elements of the plaintiff’s cause of action, but
whether the summary judgment proof establishes that the movant is entitled to
summary judgment as a matter of law. Gonzalez v. Mission Am. Ins. Co., 795
S.W.2d 734, 736 (Tex. 1990). When both sides move for summary judgment and
the trial court grants one motion and denies the other, the reviewing court should
review both sides’ summary judgment evidence and determine all questions
presented. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.
2000).
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Rule 11 of the Texas Rules of Civil Procedure states that, “[u]nless
otherwise provided in these rules, no agreement between attorneys or parties
touching any suit pending will be enforced unless it be in writing, signed and filed
with the papers as part of the record, or unless it be made in open court and entered
of record.” Tex. R. Civ. P. 11. Once the parties enter into a valid settlement
agreement under Rule 11, the trial court may render an agreed judgment based on
the settlement agreement. Juarez v. Laredo Inv. Properties, Inc., 04-10-00821-CV,
2011 WL 4377999, at *3 (Tex. App.—San Antonio Sept. 21, 2011, no pet.) (citing
Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996); Padilla v.
LaFrance, 907 S.W.2d 454, 461–62 (Tex. 1995)). But, when a party withdraws its
consent to the agreement before judgment is rendered, as occurred here, the trial
court may not render an agreed judgment on the settlement agreement. Padilla,
907 S.W.2d at 461. Rather, the court must enforce the settlement agreement as a
written contract, but only after the party seeking enforcement pursues a breach-of-
contract claim, following the normal rules of pleading and proof. Mantas, 925
S.W.2d at 658. Otherwise, a party would be deprived of the right to be confronted
by appropriate pleadings, assert defenses, conduct discovery, and submit contested
fact issues to a judge or jury. See Cadle Co. v. Castle, 913 S.W.2d 627, 632 (Tex.
App.—Dallas 1995, writ denied).
The enforcement of a written settlement agreement is governed by principles
of contract law. Tex. Civ. Prac. & Rem. Code Ann. § 154.071(a) (West 2011);
Martin v. Black, 909 S.W.2d 192, 195 (Tex. App.—Houston [14th Dist.] 1995,
writ denied); W. Beach Marina, Ltd. v. Erdeljac, 94 S.W.3d 248, 255–56 (Tex.
App.—Austin 2002, no pet.). A release is a contract and therefore is subject to the
same rules of construction. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990).
When construing a written contract, our first priority is to give effect to the intent
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of the parties as expressed in the instrument. See J.M. Davisdon, Inc. v. Webster,
128 S.W.3d 223, 229 (Tex. 2003); Nat’l Union Fire Ins. Co. of Pittsburgh, PA v.
CBI Indus., 907 S.W.2d 517, 520 (Tex. 1995). We consider the entire writing in
an effort to harmonize and give effect to all provisions so that none will be
rendered meaningless. J.M. Davisdon, Inc., 128 S.W.3d at 229. Neither will any
single provision control our interpretation. Id. Instead, all provisions will be
considered in reference to the whole. Id.
II. Neither party was entitled to summary judgment because the Rule 11
agreement is ambiguous.
Summary judgment is inappropriate when a contract is ambiguous. Coker v.
Coker, 650 S.W.2d 391, 394 (Tex. 1983). A court may conclude that a contract is
ambiguous even though the parties did not plead ambiguity. Sage St. Assocs. v.
Northdale Constr. Co., 863 S.W.2d 438, 445 (Tex. 1993). A contract is ambiguous
if it is susceptible to more than one reasonable interpretation. See Nat’l Union
Fire, 907 S.W.2d at 520. A contract is unambiguous if it can be given one certain
or definite legal interpretation. Coker, 650 S.W.2d at 393. The existence of
ambiguity is a matter of law for the court to decide by examining the agreement as
a whole in light of the circumstances present when the contract was entered. Id. at
394. Thus, the parties’ disagreement about a contract’s meaning does not
necessarily show that it is ambiguous. Lopez v. Munoz, Hockema & Reed, L.L.P.,
22 S.W.3d 857, 861 (Tex. 2000).
The parties dispute the scope of the releases they agreed to execute. The
Rule 11 agreement provides: “All parties will execute a full mutual releases [sic]
in favor of each other, including an agreement that this settles and resolves all
claims/issues by and between [Lend Lease, Lane-Valente, and Chase] that were
raised or that could have been raised/brought out of the incident(s) made basis of
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this suit.” The trial court explicitly narrowed this language. In granting summary
judgment for appellees, the trial court ordered the parties to execute a formal
settlement agreement containing only the following language: “This settles and
resolves all claims/issues by (name of party) against (name of party) that were
raised or that could have been raised/brought out of the incident(s) made basis of
this lawsuit.”
Lane-Valente argues that the trial court’s order is erroneous because it
materially alters the Rule 11 agreement by omitting any reference to “full mutual
releases” and disregarding the parties’ use of the word “including” to introduce the
release language ordered by the court. In Lane-Valente’s view, the scope of the
agreed-upon releases is broader than those ordered by the court, and the
agreement’s language indicates that other claims—not solely those that could have
been raised or made the basis of the initial suit—were intended to be included in
the “full mutual releases.” Appellees counter that the parties intended to release
solely the claims made the basis of the original suit. They note the only claim in
the original suit was Lend Lease’s claim to recover the sum of $186,480.73 in
unpaid sales tax from Lane-Valente.
The agreement in this case requires the parties to execute “full mutual
releases in favor of each other.” But, in the agreement, the parties did not specify
which claims would be the subject of this “full release.” The parties did not
expressly agree to execute “general releases of all claims” or “full releases of all
claims among the parties.” In the absence of further explanation, the scope of “full
mutual releases in favor of each other” is not clear. Does this phrase encompass all
claims of any kind whatsoever among the parties, regardless of whether they relate
to this suit or could have been brought in this suit? Does it encompass only claims
of among the parties that were raised in this suit or that could have been raised
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based on the incident made the basis of this suit? Or does it have some other
scope?
This uncertainty is not dispelled by the clause that follows, in which the
parties agree that the releases “includ[e] an agreement that this settles and resolves
all claims/issues . . . that were raised or that could have been raised/brought out of
the incident(s) made the basis of this suit.” This language reasonably could be
construed to mean that the releases themselves would include but not be limited to
a release of these claims, and thus that the scope of the release would be broader
than these claims. Even under this construction, the contract language does not
address which claims beyond this scope would be included. On the other hand,
this language reasonably could be construed as limiting the scope of the release to
“all claims/issues . . . that were raised or that could have been raised/brought out of
the incident(s) made the basis of this suit.”
The meaning of the Rule 11 Agreement is reasonably susceptible to more
than one interpretation. See Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925
S.W.2d 565, 574–75 (Tex. 1996) (holding contract provision to be ambiguous);
Coker, 650 S.W.2d 393–94 (holding that contract language was
ambiguous); Gibson v. Bentley, 605 S.W.2d 337, 338–39 (Tex. Civ. App.—
Houston [14th Dist.] 1980, writ ref’d n.r.e.) (holding that language of settlement
agreement was reasonably susceptible of two interpretations and was ambiguous).
Therefore, we overrule Lane-Valente’s first issue and hold the trial court properly
denied its motion for summary judgment, and we sustain Lane-Valente’s second
issue and hold the trial court erred in granting appellees’ cross-motion for
summary judgment. See Coker, 650 S.W.2d at 394–95.
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III. Appellees have not established that they are entitled to an award of just
damages as sanctions.
Finally, we address appellees’ argument that they are entitled to damages
because Lane-Valente filed a frivolous appeal. Under Texas Rule of Appellate
Procedure 45, a court of appeals may—on motion of any party or on its own
initiative, after notice and a reasonable opportunity for response—award “just
damages” as a sanction if it determines that an appeal is frivolous. Tex. R. App. P.
45; Glassman v. Goodfriend, 347 S.W.3d 772, 781–82 (Tex. App.—Houston [14th
Dist.] 2011, pet. denied) (en banc).
When deciding whether an appeal is objectively frivolous, we review the
record from the viewpoint of the advocate and decide whether the advocate had a
reasonable basis to believe the case could be reversed on appeal. Glassman, 347
S.W.3d at 782. In addition, Rule 45 does not require that a court award sanctions
after every frivolous appeal; rather, the imposition of sanctions is a discretionary
decision exercised with prudence and caution and only after careful deliberation.
Id.
Although we overruled Lane-Valente’s first issue, we sustained its second
issue. See Keever v. Finlan, 988 S.W.2d 300, 315 (Tex. App.—Dallas 1999, pet.
dism’d) (holding that because it sustained one point of error, court could not
conclude that appellant had no reasonable grounds to believe that the judgment
should be reversed). Moreover, we note that in its overruled issue, Lane-Valente
raised substantive issues directed at the trial court’s judgment that were supported
by legal authority and citations to the record. See Tex. R. App. P. 38.1. Therefore,
we conclude that Lane-Valente’s appeal is not objectively frivolous, and that just
damages may not be imposed as sanctions under Rule 45. See Tex. R. App. P. 45;
see also Burnett v. Carnes Funeral Home, Inc., 14-12-01159-CV, 2014 WL
2601567, at *7 (Tex. App.—Houston [14th Dist.] June 10, 2014, no pet.).
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CONCLUSION
Having overruled Lane-Valente’s first issue and sustained its second issue,
we reverse the trial court’s judgment and remand the case for further proceedings
consistent with this opinion. We deny appellees’ request for sanctions.
/s/ J. Brett Busby
Justice
Panel consists of Chief Justice Frost and Justices Christopher and Busby.
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