Pro Health, LLC v. Elite Jet Solutions, LLC ( 2024 )


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  •              In the
    Court of Appeals
    Second Appellate District of Texas
    at Fort Worth
    ___________________________
    No. 02-23-00111-CV
    ___________________________
    PRO HEALTH, LLC, Appellant
    V.
    ELITE JET SOLUTIONS, LLC, Appellee
    On Appeal from the 48th District Court
    Tarrant County, Texas
    Trial Court No. 048-316499-20
    Before Sudderth, C.J.; Bassel and Womack, JJ.
    Memorandum Opinion by Chief Justice Sudderth
    MEMORANDUM OPINION
    The parties dispute whether their brokerage agreement (Agreement) requires
    Appellant Pro Health, LLC to pay a commission to Appellee Elite Jet Solutions, LLC.
    Elite claims that it does, so it sued Pro Health for breach of contract, and the parties
    filed competing motions for summary judgment that turned on the Agreement’s
    interpretation. The trial court concluded that a specific provision of the Agreement—
    a provision requiring payment of a commission for sales to certain buyers that occur
    within 90 days after the Agreement’s termination—unambiguously requires Pro
    Health to pay a commission, and in the court’s letter ruling, it detailed its
    interpretation of the 90-day provision.
    Pro Health challenges that interpretation in its sole issue on appeal, highlighting
    the ways in which it is inconsistent with the remainder of the Agreement and pointing
    out that the trial court’s written explanation conspicuously adds commas that
    materially affect the 90-day provision’s meaning.
    The trial court’s addition of dispositive commas was indeed erroneous. The
    temptation to commit such an error is understandable, though, given the incoherence
    of the 90-day provision. Because the provision lacks a clear and definite meaning, its
    ambiguity precluded summary judgment. We will reverse and remand.
    I. Background
    The parties’ Agreement gives Elite the exclusive right to sell an aircraft owned
    by Pro Health, while Pro Health agrees to pay Elite a specified commission if one of
    2
    several triggering events occurs. Most of the triggering events are limited to the
    duration of the Agreement, with one exception for sales to certain buyers that occur
    within 90 days after the Agreement’s termination.
    Specifically, the 90-day provision requires “Owner [to] pay Broker
    the . . . commission in the event of . . . any sale of the Aircraft within ninety (90) days
    after termination of this Agreement to anyone with whom Broker or his agent or
    representative of the undersigned have negotiated with during the period of this
    Agreement.” “Owner” is defined as Pro Health and “Broker” as Elite.
    These defined labels are used to reference the parties not only in the 90-day
    provision but also throughout the remainder of the Agreement.              Even when a
    provision references both entities, the Agreement generally lists them separately by
    their defined labels—“Owner and Broker” or “Owner or Broker”—with only a
    handful of references to “[e]ither party” or “the parties.” Meanwhile, the term
    “undersigned”—though used in the 90-day provision—is not defined or used
    anywhere else in the Agreement. Nor does anything else in the Agreement refer to an
    “agent” or “representative” of one of the parties.1
    After signing this Agreement, several months passed without a sale, until Pro
    Health terminated the Agreement. Then, just days after termination, Pro Health sold
    1
    The only reference to an “agent” is in the Agreement’s statement that Pro
    Health is appointing Elite “as its sole agent to sell the aircraft.” Nothing in the
    Agreement references Pro Health’s agents or representatives acting on its behalf or
    Elite’s agents or representatives acting on its behalf.
    3
    the aircraft to a third party with whom Pro Health had begun talking while the
    Agreement was still in effect. Elite had not been involved in those discussions.
    Elite claimed that it was entitled to a commission for the sale, so it sued Pro
    Health for breach of contract, among other claims.2           Both parties moved for
    traditional summary judgment on Elite’s contract claim, each arguing that the
    Agreement unambiguously required judgment in its favor. The trial court granted
    summary judgment for Elite, and in its letter ruling explained:
    [S]ubsection (c) [i.e., the 90-day provision] . . . mandates payment if the
    “Broker[,]        or    his   agent[,]   or     representative   of     the
    undersigned . . . negotiated” with the purchaser during the period of the
    Agreement (emphasis and punctuation added). The above sentence
    identifies the Broker, follows that up with the term “his,” obviously
    referring to the Broker, and then uses the term “undersigned.” The use
    of the term “undersigned” in the same sentence that twice identifies the
    Broker suggests that the term either refers to the Owner or both parties
    that have signed the Agreement.3
    Elite also sued Pro Health’s owner, but it later nonsuited its claims against
    2
    him.
    3
    Elite did not argue the interpretation or theory of liability adopted by the trial
    court. Rather, it moved for traditional summary judgment based on its allegations
    that (1) Pro Health had anticipatorily breached by intentionally delaying the
    finalization of its sale until the Agreement was no longer in effect; and (2) Pro Health
    sold the aircraft within 90 days after termination to a party represented by a broker
    that Elite had engaged in discussions with during the term of the Agreement.
    Even after the trial court expressly stated the legal theory on which it was
    granting summary judgment, Elite did not deviate. When Pro Health moved for
    reconsideration of the summary judgment (and argued, among other things, that Elite
    had not moved for summary judgment on the theory sustained by the trial court),
    Elite responded by “incorporat[ing] its Motion for Partial Summary Judgment.”
    4
    Because Pro Health was included in this interpretation of the term
    “undersigned,” and because it had begun talking with the buyer while the Agreement
    was still in effect, the trial court concluded that the 90-day provision required Pro
    Health to pay Elite a commission for the sale.        It subsequently entered a final
    judgment that incorporated its summary judgment, and it awarded Elite attorney’s
    fees and costs.
    Pro Health appeals, challenging the trial court’s interpretation of the 90-day
    provision and the summary judgment premised upon that interpretation.
    II. Standard of Review and Governing Law
    We review a summary judgment de novo. Rosetta Res. Operating, LP v. Martin,
    
    645 S.W.3d 212
    , 218 (Tex. 2022); Parker Cnty. Appraisal Dist. v. Bosque Disposal Sys.,
    LLC, 
    506 S.W.3d 665
    , 667 (Tex. App.—Fort Worth 2016), aff’d, 
    555 S.W.3d 92
     (Tex.
    2018). Because the trial court granted summary judgment on specific grounds, we
    focus our review on those grounds.4 See Cincinnati Life Ins. Co., 927 S.W.2d at 626;
    Parker Cnty. Appraisal Dist., 506 S.W.3d at 668.
    On appeal, Elite continues to advance its summary judgment arguments—the
    arguments not ruled upon by the trial court—as the primary bases allegedly entitling it
    to the commission.
    Regardless, Pro Health does not raise this issue on appeal.
    While we must review the specific grounds that the trial court ruled upon, we
    4
    may also, in the interest of judicial economy, consider other summary judgment
    5
    Here, the grounds ruled upon turn on the language of the Agreement, which
    the parties agree is unambiguous.           Even when parties consider a contract
    unambiguous, though, the presence of ambiguity and the interpretation of a contract
    are questions of law, which we review de novo. Devon Energy Prod. Co., L.P. v.
    Sheppard, 
    668 S.W.3d 332
    , 343 (Tex. 2023); URI, Inc. v. Kleberg Cnty., 
    543 S.W.3d 755
    ,
    763 (Tex. 2018) (noting that “[a] contract . . . may be ambiguous even though the
    parties agree it is not”); Nat’l Union Fire Ins. Co. of Pittsburgh v. CBI Indus., Inc., 
    907 S.W.2d 517
    , 520 (Tex. 1995) (“Whether a contract is ambiguous is a question of law
    for the court to decide.”).
    When interpreting a contract, our “primary objective . . . is to ascertain and give
    effect to the parties’ intent as expressed in the instrument.” U.S. Polyco, Inc. v. Tex.
    grounds preserved for review. See Cincinnati Life Ins. Co. v. Cates, 
    927 S.W.2d 623
    , 625–
    26 (Tex. 1996).
    To preserve for appellate review summary judgment grounds that the trial
    court did not rule upon, “the party must raise them in the summary judgment
    proceeding and present them in an issue or cross-point on appeal.” Parker Cnty.
    Appraisal Dist., 506 S.W.3d at 668. Pro Health’s brief does not analyze the grounds on
    which it unsuccessfully moved for summary judgment. And although Elite’s brief
    addresses alternate summary judgment grounds that the trial court did not rule upon,
    it does not present these grounds as cross points.
    Regardless, even if Elite had presented its alternate grounds as cross points, we
    would exercise our discretion not to address them because we lack the benefit of the
    trial court’s decision or of full briefing on the issues. See Cincinnati Life Ins. Co., 927
    S.W.2d at 626 (holding that appellate court “may” consider alternate grounds but
    declining to do so without “the benefit of the court of appeals’ decision on the merits
    of the . . . alternate grounds or full briefing from the parties”).
    6
    Cent. Bus. Lines Corp., 
    681 S.W.3d 383
    , 387 (Tex. 2023) (internal quotation marks
    omitted) (quoting URI, 543 S.W.3d at 763). We “‘presume parties intend what the
    words of their contract say’ and interpret contract language according to its ‘plain,
    ordinary, and generally accepted meaning.’” URI, 543 S.W.3d at 764 (first quoting
    Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 
    327 S.W.3d 118
    , 126 (Tex.
    2010); and then quoting Heritage Res., Inc. v. NationsBank, 
    939 S.W.2d 118
    , 121 (Tex.
    1996)); see Rosetta Res. Operating, 645 S.W.3d at 219 (similar). We seek to harmonize
    the entire contract, avoiding constructions that would render any words or provisions
    meaningless. See Rosetta Res. Operating, 645 S.W.3d at 219; Gilbert Tex. Constr., 327
    S.W.3d at 126.
    If a contract “can be given a definite or certain legal meaning,” then it is
    unambiguous and must be enforced as written. URI, 543 S.W.3d at 765; see Gilbert
    Tex. Constr., 327 S.W.3d at 133; Heritage Res., Inc., 939 S.W.2d at 121. But if a contract
    “is susceptible to more than one reasonable interpretation . . . , an ambiguity exists,”
    and “the granting of a motion for summary judgment is improper because the
    interpretation of the instrument becomes a fact issue.” Rosetta Res. Operating, 645
    S.W.3d at 219 (quoting Coker v. Coker, 
    650 S.W.2d 391
    , 394 (Tex. 1983)); URI, 543
    S.W.3d at 765.
    III. 90-Day Provision
    The 90-day provision is a grammatical headache. It states:
    7
    Owner will pay Broker the aforementioned commission in the event
    of . . . any sale of the Aircraft within ninety (90) days after termination of
    this Agreement to anyone with whom Broker or his agent or
    representative of the undersigned have negotiated with during the period
    of this Agreement.
    There is no dispute that there was a “sale of the Aircraft within ninety (90) days
    after termination of th[e] Agreement.” That much is simple. The difficulty comes in
    deciphering who qualifies as a commission-triggering buyer: “anyone with whom
    Broker or his agent or representative of the undersigned have negotiated with during
    the period of this Agreement.”
    We must give effect to all words in this provision so that no word is rendered
    meaningless. RSUI Indem. Co. v. The Lynd Co., 
    466 S.W.3d 113
    , 118 (Tex. 2015) (“We
    strive to give effect to all of the words and provisions so that none is rendered
    meaningless.”). And to do so, we presume that the different terms used in the
    provision—“Owner,” “Broker,” “agent,” “representative,” and “undersigned”—were
    intended to have different meanings.5 See Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co.,
    
    141 S.W.3d 198
    , 203 (Tex. 2004) (construing insurance policy, commenting that “the
    different wording in the[ relevant] exclusions [wa]s significant,” and concluding that
    because “policy used different wording—‘arising out of’ versus ‘due to’ in parallel
    exclusions— . . . the phrases should have different meanings”); Mr. W Fireworks, Inc. v.
    5
    This is not to say that two words can never have the same meaning. Cf. 1701
    Com. Acquisition, LLC v. Macquarie US Trading, LLC, No. 02-21-00333-CV, 
    2022 WL 3904976
    , at *20 (Tex. App.—Fort Worth Aug. 31, 2022, no pet.) (mem. op.) (noting
    that “different words can carry the same meaning”).
    8
    Ozuna, No. 04-08-00820-CV, 
    2009 WL 3464856
    , at *7 (Tex. App.—San Antonio Oct.
    28, 2009, pet. denied) (mem. op. on reh’g) (construing leases and “assum[ing] that
    because the parties used the word ‘terminate’ three other times in the leases, but
    instead chose to use the word ‘void’ when discussing the illegalization of the sale of
    fireworks, the parties meant ‘void’ to mean something different from ‘terminate’”).
    The meanings of “Owner” and “Broker” are, of course, defined (and used plentifully)
    in the Agreement. The meaning of “his agent or representative of the undersigned,”
    though, is fuzzy.
    For starters, what is to be made of the word “his”? Although its placement
    implies that it refers to “Broker,” “Broker” is defined as Elite, which is an entity—an
    “it.” There are no human males mentioned earlier in the 90-day provision to which
    “his” could refer back.
    Even if we assume that “his” attempts to refer to “Broker,” the scope of what
    it modifies is unclear. Does the word modify both “agent” and “representative,” or
    just “agent”? And for that matter, does the phrase “of the undersigned” modify both
    “agent” and “representative” or just “representative”? Cf. Sullivan v. Abraham, 
    488 S.W.3d 294
    , 296–98 (Tex. 2016) (interpreting statute authorizing award of “court
    costs, reasonable attorney’s fees, and other expenses . . . as justice and equity may
    require,” and noting that series-qualifier canon of construction6 would apply justice-
    6
    The series-qualifier canon provides that “[w]hen there is a straightforward,
    parallel construction that involves all nouns or verbs in a series, a prepositive or
    9
    and-equity modifier to court costs and attorney’s fees but last-antecedent canon7
    would not).
    As Pro Health highlights, the trial court attempted to make sense of these
    modifiers by adding commas, converting the relevant phrase to “Broker[,] or his
    agent[,] or representative of the undersigned.”            [Emphasis removed.]         But
    “[p]unctuation is a[n] . . . indicator of meaning.” 
    Id.
     (quoting Scalia & Garner, supra, at
    161); see Criswell v. Eur. Crossroads Shopping Ctr., Ltd., 
    792 S.W.2d 945
    , 948 (Tex. 1990)
    (op. on reh’g) (“Punctuation aids in construing the words used in the instrument.”).
    Although punctuation does not always alter a sentence’s construction,8 a comma’s
    placement can, in certain circumstances, determine the reach of a modifying term or
    phrase.   Sullivan, 488 S.W.3d at 297–98 (noting that a comma’s placement can
    postpositive modifier normally applies to the entire series.” Sullivan, 488 S.W.3d at
    297 (quoting Antonin Scalia & Bryan A. Garner, Reading Law: the Interpretation of
    Legal Texts 147 (2012)).
    7
    The last-antecedent canon provides that a qualifying phrase “must be confined
    to the words and phrases immediately preceding it to which it may, without impairing
    the meaning of the sentence, be applied.” Id. (quoting Spradlin v. Jim Walter Homes,
    Inc., 
    34 S.W.3d 578
    , 580 (Tex. 2000)).
    8
    Compare Anderson & Kerr Drilling Co. v. Bruhlmeyer, 
    136 S.W.2d 800
    , 803–04
    (Tex. [Comm’n Op.] 1940) (stating rule that “[t]he words, not the punctuation, are the
    controlling guide in construing a contract” and that a court “may insert [a] comma, in
    order to ascertain from the words used the intention of the parties”), with Criswell, 792
    S.W.2d at 948 (noting that, while “it is well settled that the words contained in the
    instrument, and not the punctuation, should be the controlling guide in construing the
    instrument, there is no rule which requires courts to disregard all punctuation and
    look solely to the language of the instrument” and discussing significance of
    semicolon in contract).
    10
    “determine whether a modifying phrase or clause applies to all that preceded it or only
    to a part” (quoting Scalia & Garner, supra, at 161)); see U.S. Polyco, 681 S.W.3d at 388
    (noting that “comma’s absence” was “instructive” in contract interpretation). And the
    90-day provision is a prime example of this, as the trial court’s placement of commas
    was the determinative factor that elected between competing reasonable
    interpretations.
    Adding Oxford commas in the trial court’s chosen locations—“Broker[,] or his
    agent[,] or representative of the undersigned”—limited the modifier “his” to “agent,”
    and in doing so, implicitly disconnected the “representative of the undersigned” from
    the “Broker.”      With this in mind, the trial court concluded that the term
    “undersigned” refers to either “the Owner or both parties that ha[d] signed the
    Agreement,” so Pro Health owed a commission for selling to a buyer that it had
    negotiated with during the term of the Agreement.
    Placing the commas elsewhere would have changed this result entirely, though.
    For example, had the trial court placed commas after “Broker” and
    “representative”—such that the 90-day provision applied to buyers “with whom
    Broker[,] or his agent or representative[,] of the undersigned have negotiated”—then
    “his” would have modified both “agent” and “representative,” and “the undersigned”
    would have clearly referred to Pro Health, for which Elite served as “Broker.” With
    this comma placement, the universe of commission-triggering buyers would have
    been unambiguously limited to those with whom Broker (or his agent or
    11
    representative) had negotiated, meaning that Pro Health’s negotiations with the
    eventual buyer did not trigger a commission.9
    The material effect of the trial court’s comma placement is precisely why it
    could not add such punctuation to the contract. See Sundown Energy LP v. HJSA No. 3,
    Ltd. P’ship, 
    622 S.W.3d 884
    , 889 (Tex. 2021) (“As we have said time and again, courts
    may not rewrite a contract under the guise of interpretation.”). The absence of
    commas in the 90-day provision leaves both of these reasonable interpretations (and
    more) open as possibilities.    The trial court could not select among reasonable
    interpretations by adding commas in its preferred locations.
    Yet, even adding commas would not—and did not—entirely solve the
    problem. Because “undersigned” is undefined, we presume that the parties intended
    its ordinary meaning:    “one whose name is signed at the end of a document.”
    Undersigned,                Merriam-Webster,                   https://www.merriam-
    webster.com/dictionary/undersigned (last visited April 15, 2024); see Undersigned,
    Webster’s Third New International Dictionary 2490 (reprt. 2021) (1961) (defining
    undersigned as “one who signs his name at the end of a document”); cf. RSUI Indem.
    Co., 466 S.W.3d at 118 (noting that, unless the contract dictates otherwise, “we give
    Further reshuffling the commas could change the meaning again. Had the 90-
    9
    day provision been modified to apply to a buyer “with whom Broker[,] or his agent or
    representative of the undersigned[,] have negotiated,” then “representative of the
    undersigned” would have been implicitly connected to “Broker.” Whatever the
    meaning of “representative of the undersigned” in this context, its linkage to “Broker”
    would exclude Pro Health from its scope.
    12
    words and phrases their ordinary and generally accepted meaning, reading them in
    context and in light of the rules of grammar and common usage”). Pro Health and
    Elite are the entities who “signed at the end of [the] document.”               Undersigned,
    Merriam-Webster, https://www.merriam-webster.com/dictionary/undersigned (last
    visited April 15, 2024). But those entities have defined labels—labels employed
    throughout the remainder of the Agreement—and the defined labels are not used in
    the portion of the 90-day provision that we must construe here. Generally, we
    presume that “using different language in different parts of a contract means the
    parties intended different things.” Sundown Energy, 622 S.W.3d at 888; see PopCap
    Games, Inc. v. MumboJumbo, LLC, 
    350 S.W.3d 699
    , 708 (Tex. App.—Dallas 2011, pet.
    denied) (similar); Mr. W Fireworks, 
    2009 WL 3464856
    , at *7 (applying rule).
    The references to an “agent” and a “representative” are also puzzling. Elite
    and Pro Health are both entities and can only act through agents or representatives.
    See Ex parte Chambers, 
    898 S.W.2d 257
    , 260 (Tex. 1995) (orig. proceeding) (“Although
    a corporation is a legally distinct and cognizable entity, it is only able to act through its
    agents.”); see also 19 C.J.S. Corporations § 547 (2024) (“A corporation is an entity which
    can only act through it[s] agents.”). The Agreement generally takes this as a given;
    outside of the 90-day provision, it consistently refers to the “Owner” (Pro Health) or
    the “Broker” (Elite) acting, without mentioning that such actions are necessarily taken
    by the entities’ agents or representatives. It is unclear why the 90-day provision
    distinguishes between entities and their “agent[s]” or “representative[s],”or why it
    13
    distinguishes between “agents” and “representatives” when nothing else in the
    Agreement does so.10
    The 90-day provision’s wording thus presents a quandary. The trial court’s
    temptation to materially alter the provision’s language is certainly understandable, but
    it was beyond its authority—and it is beyond ours—to take such action. The 90-day
    provision simply does not make sense in the context of the Agreement as a whole; it
    lacks a clear or definite meaning.11 See Gilbert Tex. Constr., 327 S.W.3d at 133 (“If a
    contract as written can be given a clear and definite legal meaning, then it is not
    ambiguous as a matter of law.”). And because the provision is patently ambiguous on
    its face,12 summary judgment was precluded. See Rosetta Res. Operating, 645 S.W.3d at
    225 (holding that mineral lease was ambiguous, so summary judgment on contract
    10
    Furthermore, if “undersigned” were construed to encompass Pro Health,
    then the 90-day provision would require payment of a commission if a “representative
    of [Pro Health]” had negotiated with the buyer, but not if Pro Health itself had
    negotiated with the buyer. This is not only an absurd result but also an absurd
    distinction, given that Pro Health can only act through its representatives or agents.
    See Rosetta Res. Operating, 645 S.W.3d at 219 (“We also avoid constructions of contract
    language that would lead to absurd results.”).
    11
    Although the parties’ filings indicate that, at least at one time, they had a
    shared understanding of the 90-day provision’s meaning, “[o]bjective manifestations
    of intent control[—]not ‘what one side or the other alleges they intended to say but
    did not.’” URI, 543 S.W.3d at 763–64 (quoting Gilbert Tex. Constr., 327 S.W.3d at
    127).
    12
    “A patent ambiguity is evident on the face of the contract” and is contrasted
    with a latent ambiguity, which “arises when a contract which is unambiguous on its
    face is applied to the subject matter with which it deals and an ambiguity appears by
    reason of some collateral matter.” Nat’l Union Fire Ins. Co., 907 S.W.2d at 520.
    14
    claim was improper); Hoyt v. Harbor Lakes Homeowners Ass’n, No. 02-20-00061-CV,
    
    2021 WL 2966133
    , at *7 (Tex. App.—Fort Worth July 15, 2021, no pet.) (mem. op.)
    (“For a court to be able to construe a contract as a matter of law, the contract must be
    unambiguous.”).
    We sustain Pro Health’s sole appellate issue.
    IV. Conclusion
    The 90-day provision is ambiguous. The trial court erred by adding dispositive
    commas to it and by granting Elite’s motion for traditional summary judgment based
    upon it.   We reverse the summary judgment and remand the case for further
    proceedings consistent with this opinion. Tex. R. App. P. 43.2(d).
    /s/ Bonnie Sudderth
    Bonnie Sudderth
    Chief Justice
    Delivered: April 18, 2024
    15
    

Document Info

Docket Number: 02-23-00111-CV

Filed Date: 4/18/2024

Precedential Status: Precedential

Modified Date: 4/22/2024