Annelle R. Johnson, M.D. v. Sherman MD Provider, Inc. ( 2020 )

AFFIRMED and Opinion Filed December 2, 2020
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-19-01150-CV
ANNELLE R. JOHNSON, M.D., Appellant
V.
SHERMAN MD PROVIDER, INC., Appellee
On Appeal from the 59th Judicial District Court
Grayson County, Texas
Trial Court Cause No. CV-17-1541
MEMORANDUM OPINION
Before Chief Justice Burns, Justice Carlyle, and Justice Browning
Opinion by Justice Browning
Annelle R. Johnson, M.D., appeals the trial court’s judgment in favor of
Sherman MD Provider, Inc. on Sherman’s breach of contract claim. In five issues,
Johnson argues that Sherman’s cause of action is barred by the Covenants Not to
Compete Act, that the contractual agreement alleged by Sherman was not supported
by valid consideration, that Sherman failed to prove the elements of offer and
acceptance, that Johnson has been harmed by the trial court’s failure to file findings
of fact and conclusions of law, and that the trial court should not have rendered
judgment against Johnson for appellate attorney’s fees. We affirm the trial court’s
judgment.
In September 2017, Sherman filed its original petition alleging the following
facts: Sherman and Johnson entered into a physician employment agreement in
January 2015, under which Johnson would provide professional medical and
administrative services for Sherman. Section 8.2 of the employment agreement
contained a covenant not to compete. Section 8.3.2 provided the following buy-out
provision:
8.3.2 Buy-Out Option. Provider may be released from the
noncompetition provisions contained in Section 8.2 upon payment to
Company of the Buy-Out Price prior to a breach by Provider. If
Provider wishes to exercise the Buy-Out Option, Provider shall provide
Company with a written notice of intent to exercise the Buy-Out
Option. As consideration for the Company’s agreement to release
Provider from the non-competition provisions of Section 8.2, Provider
shall pay Company an amount equal to the Provider’s gross
compensation from Company (as determined by W-2) for the twelve
month period immediately preceding the last date of employment or, if
Provider is employed with Company for less than twelve (12) months,
an amount equal to Provider’s average monthly compensation times
twelve (12). Such amount shall be paid by Provider to Company in full
no later than five (5) business days following the date Provider gives
notice of intent to exercise the Buy-Out Option. Provider hereby agrees
and acknowledges that the Buy-Out Price is a fair and reasonable
method for Company’s agreement to release Provider from the non-
competition provision of this Agreement and it is intended to fairly
compensate Company for lost revenues and other damages to
Company’s business that would occur if Provider were allowed to
compete with Company in the Prohibited Territory.
In early 2017, Sherman was negotiating an asset purchase and sale agreement under
which Baylor Scott & White Health Texas Provider Network (Baylor) would
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purchase Johnson’s family practice group from Sherman. On February 14, 2017,
Johnson gave Sherman notice that she intended to terminate the employment
agreement, effective June 15, 2017. Because Johnson was entering into an
employment relationship with Baylor, she wanted to extend the term of the
employment agreement and exercise her right under the buy-out option. As a result,
on June 2, 2017, Sherman and Johnson entered into a second amendment to the
employment agreement under which Johnson exercised the buy-out option, with full
payment of $104,650 due the earlier of September 15, 2017, or the date of the closing
of the Baylor transaction. Sherman’s petition alleged Johnson breached the second
amendment by failing to pay the $104, 650.
At a bench trial in May 2019, Johnson testified she signed the second
amendment and read and understood it before she signed it. Johnson testified she
understood that the second amendment deleted the termination without cause
provision contained in her original contract. Johnson agreed that the second
amendment constituted written notice of her exercise of the buyout provision under
section 8.3.2 of her employment agreement. Johnson also testified she understood
the buy-out provision required her to give written notice and pay the buy-out price
within five days of giving notice, but that the second amendment provided her
“approximately or close to 90 days of time to pay the buyout.” Johnson further
testified she signed the second amendment “a couple of weeks after” she signed her
contract with Baylor. Under her contract with Baylor, Johnson would have received
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a $50,000 salary advance and a $30,000 signing bonus when she began her
employment with Baylor on September 18. The evidence further indicated that, on
September 12, Johnson told a Sherman representative that she “was not going to go
forward with entering into practice with Baylor.” One or two days later, the Sherman
representative asked Johnson to pay the buy-out, but Johnson refused.
On August 2, 2019, the trial court entered judgment awarding Sherman
attorney’s fees and $104,650 in actual damages. This appeal followed.
In her first issue, Johnson argues “Sherman’s cause of action is barred by the
Covenants Not to Compete Act, which preempts all remedies not included in the Act
for actions to enforce covenants not to compete.” In making this argument, Johnson
characterizes Sherman’s cause of action as “an action to enforce a covenant not to
compete.”
Our review of the record shows the underlying case was based on Sherman’s
breach of contract claims and was not an action to enforce a covenant not to compete.
Sherman’s claims against Johnson focused on Johnson’s breach of the second
amendment to the employment contract. There is no evidence in the record that
Johnson attempted to compete with Sherman or that Sherman sought to prevent
Johnson from competing. Under these circumstances, we conclude Johnson’s first
issue lacks merit.
In her second issue, Johnson argues the second amendment was not supported
by consideration. A modification to a contract must itself be supported by
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consideration to be valid. Dupree v. Boniuk Interests, Ltd., 472 S.W.3d 355, 367–
68 (Tex. App.—Houston [1st Dist.] 2015, no pet.); see Hathaway v. Gen. Mills, Inc.,
711 S.W.2d 227, 228 (Tex. 1986) (“Parties have the power to modify their contracts.
A modification must satisfy the elements of a contract: a meeting of the minds
supported by consideration.”). Consideration may consist of a benefit that accrues
to one party, or, alternatively, a detriment incurred by the other party. Walden v.
Affiliated Computer Servs., Inc., 97 S.W.3d 303, 315 (Tex. App.—Houston [14th
Dist.] 2003, pet. denied); see Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492,
496 (Tex. 1991) (“Consideration is a present exchange bargained for in return for a
promise. It consists of either a benefit to the promisor or a detriment to the promisee.
The detriment must induce the making of the promise, and the promise must induce
the incurring of the detriment.”). A promise to fulfill a pre-existing obligation cannot
serve as new consideration for an amendment to a contract. Walden, 97 S.W.3d at
319.
Johnson argues that, because the second amendment imposed no new
obligations regarding release of the covenant not to compete, “such a commitment
falls squarely within the preexisting duty rule.” Johnson also argues Sherman failed
to prove that the covenant not to compete was enforceable and, therefore, Sherman
did not “show that it relinquished the right to enforce the covenant.” Finally,
Johnson argues there was no “extension of an ‘employment agreement’” because, in
order for this Court to find that Johnson agreed to pay $104,650 in exchange for the
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extension of the employment agreement, we would have to find that Johnson agreed
to pay back the $31,835.30 that Sherman paid her during the extended term of
employment plus an additional $72,814.70. Johnson argues the second amendment
limits the applicability of the $104,650 to the provisions of the covenant not to
compete and does not associate that payment with the extension of the employment
agreement.
Sherman agrees that, if the buy-out provision was by itself, it would need
separate consideration. However, Sherman points out that, under the second
amendment, the term of the employment agreement was extended until the later of
September 15, 2017 or the date of the closing of the Baylor transaction, and this was
not a pre-existing obligation. Moreover, under the terms of the second amendment,
Sherman gave up its right to terminate Johnson’s employment without cause.
Sherman characterizes the second amendment as “analogous to a settlement
agreement”: rather than disputing the enforceability of the non-compete, the
applicability of the non-compete to the work Johnson intended to perform for
Baylor, or the buy-out price after the termination of the employment agreement,
Johnson and Sherman agreed that Johnson would exercise the buy-out option and
pay a buy-out price of $104,650.
The record shows Johnson had already signed her contract with Baylor “a
couple of weeks” before the second amendment. The second amendment eliminated
Sherman’s right to terminate Johnson’s employment without cause and effectively
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extended Johnson’s employment until the date of the closing of the Baylor
transaction. At trial, Johnson agreed that the second amendment constituted written
notice of her exercise of the buyout provision under section 8.3.2 of her employment
agreement. Johnson testified she understood the buy-out provision required her to
give written notice and pay the buy-out price within five days of giving notice, but
the second amendment provided her “approximately or close to 90 days of time to
pay the buyout.” Under these circumstances, we conclude the trial court properly
determined that the second amendment was supported by consideration. See
Hathaway, 711 S.W.2d at 228; Dupree, 472 S.W.3d at 367–68. We overrule
Johnson’s second issue.
In her third issue, Johnson argues that Sherman failed to prove the elements
of offer and acceptance and therefore did not prove the existence of a contract that
obligated Johnson to pay $104,650. Specifically, Johnson argues the employment
agreement “unambiguously calls for a unilateral contract,” the second amendment
“merely modified the underlying contract,” and there was no “meeting of the minds”
between all parties on the terms of the modification.
To prove contract formation, a party must prove, among other elements, an
offer and acceptance and a meeting of the minds on all essential elements. Lanier v.
E. Foundations, Inc., 401 S.W.3d 445, 459 (Tex. App.—Dallas 2013, no pet.). For
there to be an offer which may ripen into a contract by simple acceptance, the offer
must be reasonably definite in its terms and must sufficiently cover the essentials of
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the proposed transaction so that, with an expression of assent, there will be a
complete and definite agreement on all essential details. Id. The term “meeting of
the minds” refers to the parties’ mutual understanding and assent to the expression
of their agreement. Id. To create an enforceable contract, the minds of the parties
must meet with respect to the subject matter of the agreement and all its essential
terms. Id. The parties must agree to the same thing, in the same sense, at the same
time. Id.Here, Johnson testified she signed the second amendment and read and
understood it before she signed it. As already discussed, Johnson had already signed
a contract with Baylor when she signed the second amendment, and the second
amendment deferred payment of the buy-out price until the deal with Baylor closed.
Further, we have already determined the second amendment was supported by
consideration. Based on our review of the record, we conclude Sherman established
the elements of offer and acceptance. See id. We overrule Johnson’s third issue.
In her fourth issue, Johnson argues she has been harmed by the trial court’s
failure to file findings of fact and conclusions of law. When properly requested, the
trial court has a mandatory duty to file findings of fact. TEX. R. CIV. P. 296, 297;
Landerman v. State Bar of Texas, 247 S.W.3d 426, 430–31 (Tex. App.—Dallas
2008). The purpose of rule 296 is to give a party the right to findings of fact and
conclusions of law following a conventional bench trial on the merits. Willms v.
Ams. Tire Co., 190 S.W.3d 796, 801 (Tex. App.—Dallas 2006, pet. denied). If the
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trial court fails to file findings of fact and conclusions of law after a proper request,
the failure is presumed harmful unless the record affirmatively shows the
complaining party suffered no injury. Cherne Indus., Inc. v. Magallanes, 763
S.W.2d 768, 772 (Tex. 1989); Willms, 190 S.W.3d at 801.
Generally, an appellant is presumed harmed if, under the circumstances of the
case, he has to guess at the reason the trial court ruled against him. Willms, 190
S.W.3d at 801–02. However, “fact findings are not necessary when the matters in
question are not disputed.” Barker v. Eckman, 213 S.W.3d 306, 310 (Tex. 2006).
Accordingly, “where the facts are undisputed and the only matters presented on
appeal are legal issues to be reviewed de novo, the failure to file findings of fact and
conclusions of law is harmless error.” Rollins v. Am. Exp. Travel Related Servs. Co.,
219 S.W.3d 1, 5–6 (Tex. App.—Houston [1st Dist.] 2006, no pet.).
Here, Sherman alleged only a cause of action for breach of contract, and the
trial court’s judgment awarded Sherman $104,650 on its claim of breach of contract.
The judgment also indicated it ruled against Johnson because she “failed to introduce
any evidence or sufficient evidence supporting the required elements of her
affirmative defenses.” Under these circumstances, we conclude Johnson was not
left to guess at the reason the trial court ruled against her, and she was not harmed
by the failure of the trial court to file findings of fact and conclusions of law. See
Eckman, 213 S.W.3d at 310; Willms, 190 S.W.3d at 801–02. We overrule Johnson’s
fourth issue.
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In her fifth issue, Johnson argues the trial court should not have rendered
judgment against her for appellate attorney’s fees. The reasons Johnson gives for
error in the award of attorney’s fees all depend on her success on appeal in showing:
(1) this case comes within the purview of the Covenants Not to Compete Act, which
preempts an award of attorney’s fees and (2) there is no valid contract to support the
award. Because we have determined this case does not involve a covenant not to
compete, and that a valid contract existed between the parties, we conclude
Johnson’s fifth issue presents no basis for reversing the award of attorney’s fees.
Accordingly, we overrule Johnson’s fifth issue.
We affirm the trial court’s judgment.
/John G. Browning/
JOHN G. BROWNING
JUSTICE
191150F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
ANNELLE R. JOHNSON, M.D., On Appeal from the 59th Judicial
Appellant District Court, Grayson County,
Texas
No. 05-19-01150-CV V. Trial Court Cause No. CV-17-1541.
Opinion delivered by Justice
SHERMAN MD PROVIDER, INC., Browning. Chief Justice Burns and
Appellee Justice Carlyle participating.
In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED.
It is ORDERED that appellee SHERMAN MD PROVIDER, INC. recover
its costs of this appeal from appellant ANNELLE R. JOHNSON, M.D..
Judgment entered December 2, 2020
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