Kasey Holdridge Robert A. Lyons, P.A. Robert A. Lyons, M.D. And Clearview Surgery Center, Inc. v. Wallace Ryne, O.D., P.C. And Wallace "Wally" Ryne ( 2024 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-23-00420-CV
___________________________
KASEY HOLDRIDGE; ROBERT A. LYONS, P.A.; ROBERT A. LYONS, M.D.;
AND CLEARVIEW SURGERY CENTER, INC., Appellants
V.
WALLACE RYNE, O.D., P.C.; AND WALLACE “WALLY” RYNE, Appellees
On Appeal from the 67th District Court
Tarrant County, Texas
Trial Court No. 067-333004-22
Before Sudderth, C.J.; Womack and Walker, JJ.
Memorandum Opinion by Chief Justice Sudderth
MEMORANDUM OPINION
Appellant Robert A. Lyons and Appellee Wallace “Wally” Ryne (each acting
through his respective professional entity1) co-own an Eyecare Partnership where
Appellant Kasey Holdridge works. Lyons also owns a related Surgical Center2 that—
pursuant to a longstanding oral agreement (the Sharing Agreement) between him and
Ryne—works hand-in-hand with the Eyecare Partnership, transfers its income to that
Partnership, and relies on it for administrative functions.
In 2016, as Ryne’s retirement neared, he, Lyons, and Holdridge entered into a
contract—the Holdridge Agreement—which provided for Lyons’s purchase of Ryne’s
50% interest in the Eyecare Partnership for “the Partnership Fair Market Value” and
for Lyons’s subsequent sale of half of that interest to Holdridge. But the parties later
disputed the meaning of “the Partnership Fair Market Value,” and things deteriorated
from there.
1
The parties’ presentations of evidence largely glossed over the distinctions
between the doctors and their respective professional entities, and the trial court’s final
judgment could only have relied on Lyons’s actions as an individual to hold Lyons’s
professional entity liable for breaches of contract and fiduciary duty. Because the
corporate distinctions are not dispositive, we treat the doctors as one with their
respective professional entities, but solely for purposes of this appeal.
2
Although the Surgical Center—Clearview Surgery Center, Inc.—was listed in
the style of the trial court’s case and joined in the notice of appeal, the parties’ live
pleadings did not include any claims brought by or against that entity and the final
judgment did not grant any relief for or against it.
2
Following a bench trial, the trial court declared that “the Partnership Fair Market
Value” had its ordinary meaning (Ryne’s proposed interpretation), and the court found
that (1) Lyons had breached his fiduciary duties to Ryne by threatening to deviate from
the Sharing Agreement and by actually deviating from that Agreement; (2) Lyons had
breached the Partnership Agreement so as to undermine Ryne’s sale of his interest to a
third party; and (3) Holdridge had tortiously interfered with the same third-party sale
and with the Partnership Agreement. Going further, the trial court dissolved the
Eyecare Partnership due to Lyons’s actions, which Ryne characterized as having created
a “toxic,” “poisonous” workplace.
Lyons and Holdridge now appeal, raising sixteen issues. Their challenges include
questioning the trial court’s interpretation of “the Partnership Fair Market Value,”
disputing the sufficiency of the evidence of their alleged breaches and tortious acts, and
protesting the dissolution of the Eyecare Partnership. Not only do many of these issues
have merit, but many also raise significant concerns.
Although the trial court appropriately interpreted the phrase “the Partnership
Fair Market Value,” we agree with Lyons and Holdridge that there was no evidence of
their alleged breaches or tortious interference. And, more importantly, dissolution of
the Eyecare Partnership was not warranted. The public policy of this state has long
respected the sanctity of contracts and encouraged trade and economic development.
A disagreeable workplace—even a “toxic” workplace—is not among the narrow
statutory grounds that authorize the judiciary to intervene and shut down a profitable
3
private company that all partners agree is fulfilling its purposes. Therefore, we affirm
in part and reverse and render in part.
I. Background
Ryne—an optometrist—and Lyons—an ophthalmologist—became equal
partners in the Eyecare Partnership when Lyons purchased his predecessor’s 50%
interest in late 2010. 3 The Eyecare Partnership’s practice did not materially change
during this transition, but Ryne and Lyons nonetheless signed a new Partnership
Agreement.
A. Partnership and Sharing Agreements
In the 2010 Partnership Agreement, Ryne and Lyons agreed that the Eyecare
Partnership would provide “laser vision correction and other procedures to treat
myopia, hyperopia, astigmatism, and other vision disorders.” The Partnership
Agreement further stated that if either partner received a “bona fide offer” from a third
party to purchase his interest, then the nonselling partner would be entitled to receive
notice of the offer, and he would have 30 days from the notice to exercise his right of
first refusal to purchase the selling partner’s interest on the same terms.
When Lyons bought into the Eyecare Partnership, he also purchased his
predecessor’s interest in a related ophthalmology-specific business: the Surgical Center.
3
Lyons’s predecessor was an ophthalmologist who had formed the Eyecare
Partnership with Ryne in 1999.
4
Under Lyons’s predecessor, the Surgical Center had worked hand-in-hand with the
Eyecare Partnership; the two businesses had operated out of the same building and had
shared employees and “back office” operations. In fact, the Surgical Center had been
formed with such hand-in-hand coordination in mind. 4 And as part of this informal
arrangement, Lyons’s predecessor had shared the Surgical Center’s income with the
Eyecare Partnership, while the Eyecare Partnership had handled the Surgical Center’s
administrative functions.
Given this precedent, when Lyons took over the Surgical Center and bought into
the Eyecare Partnership, he and Ryne orally agreed to continue the coordination
between the two entities.
B. Holdridge Agreement
Years passed, and Ryne and Lyons continued to focus their individual practices
on vision correction procedures. Ryne screened surgical patients, Lyons performed the
surgeries, and both provided pre- and post-operative care. Meanwhile, they relied on
Holdridge5 and another optometrist to provide the Eyecare Partnership’s primary
eyecare services. But, eventually, Ryne began contemplating retirement.
Lyons’s predecessor had formed the Surgical Center in 2005 when the Eyecare
4
Partnership moved into a larger facility that had enough room to house not only the
Eyecare Partnership but also an ambulatory surgical facility.
5
Holdridge had interned at the Eyecare Partnership, and she joined the Eyecare
Partnership as an employee in 2004, just before the Eyecare Partnership transitioned to
a larger facility. As part of this transition, the Eyecare Partnership expanded its practice
5
Since hiring Holdridge in 2004, Ryne had indicated to her that he intended to sell
her his 50% interest in the Eyecare Partnership when he retired. 6 But as it turned out,
when Lyons bought into the Eyecare Partnership, he did so with the intent to exercise
his right of first refusal to purchase Ryne’s interest upon Ryne’s retirement. After this
conflict came to light in 2015, Ryne, Lyons, and Holdridge entered into a short
contract—the Holdridge Agreement—that provided that Lyons would purchase Ryne’s
50% interest for “the Partnership Fair Market Value” and that Lyons would then
immediately offer to sell Holdridge a 25% interest. The sale to Lyons was to occur “no
later than March 31, 2025.”
C. Deteriorating Relationships
Lyons and Holdridge later testified that when they signed the Holdridge
Agreement, they believed that Ryne was planning to retire by age 65, i.e., by 2018. But
Ryne did not retire when they expected; he continued to work.
Finally, in 2021, Ryne offered to sell his 50% interest to Lyons for what he
considered to be fair market value: $5.5 million.7 Lyons balked at the offer and sought
a third-party appraisal of the Eyecare Partnership, which appraisal excluded the Surgical
to include primary eyecare services, and Holdridge was hired to spearhead the provision
of those services.
6
Ryne had indicated this to Holdridge as early as 2004.
7
Ryne later explained that this figure was based on an appraisal that included the
Surgical Center’s revenue in its analysis.
6
Center’s revenue from its analysis and valued the Eyecare Partnership at $3.1 million.
At that point, Ryne’s relationships with Lyons and Holdridge became “dicey.”
Holdridge later explained that, from her perspective, the relationship had soured
because Ryne had reneged on his commitment to sell her his full 50% interest, which
was a key component of what had led her to join the Eyecare Partnership. Feeling
“wronged,” she questioned whom she could trust, and she began recording her
conversations with Ryne and with some of the other staff members. At the same time,
the number of disagreements between Lyons and Ryne grew. The two butted heads
regarding various business matters, such as whether to increase the number of surgery
days, whether to hire an additional surgeon, and whether to allow other professionals
to use the Eyecare Partnership’s facilities. According to Ryne, the staff took Lyons’s
and Holdridge’s sides in these spats and gossiped about Ryne, calling him unflattering
names behind his back and causing him to feel increasingly isolated.
D. Newberry Offer
In 2021, Ryne—having been unable to agree with Lyons on a price for Ryne’s
share of the Eyecare Partnership—met with his friend and fellow optometrist Eric
Newberry to solicit an offer for the purchase of his Partnership interest. Newberry
soon hired Ryne’s attorney to prepare a letter offering to buy half of Ryne’s 50% interest
for $2.5 million (the Newberry Offer). In compliance with the Partnership Agreement
giving Lyons a right to notice and a 30-day option period to intervene, Ryne’s counsel
provided Lyons with a copy of the Newberry Offer on September 23, 2021. Around
7
the same time, Ryne’s counsel sent Lyons a “term sheet” that proposed separating the
“revenue, expenses, employees, etc.” of the Eyecare Partnership and the Surgical
Center.
Lyons’s counsel responded to both communications in a single letter dated
October 4, 2021. The response questioned the basis for Dr. Newberry’s $2.5 million
valuation, and it disagreed with some of the details of the term sheet’s proposed
separation of the Eyecare Partnership and the Surgical Center, stating that the “sharing
of revenue by [the Surgical Center] . . . was not consistent with [Lyons’s] documented
purchase of all of [the Surgical Center],” and that the Surgical Center’s “overpayment”
to the Eyecare Partnership would need to be evaluated, but that Lyons “ha[d] no
problem with evaluating and allocating all expenses in a fair manner.”8 Then, in another
letter on October 15, 2021, Lyons’s counsel reiterated his skepticism regarding the basis
for Newberry’s $2.5 million valuation, observing that it appeared Newberry “may [have
been] relying on revenue that should not be included in [the Eyecare Partnership].”
Ryne later testified that he construed these letters—particularly the October 4 letter—
as threatening to thwart the Newberry Offer by changing the Sharing Agreement and
that when Ryne notified Newberry of the threat, it “killed the deal.”
8
The October 4, 2021 letter also sought clarification of a “claim” that Ryne was
asserting under the Partnership Agreement. It is unclear what the referenced “claim”
was.
8
Later, on October 23, 2021, Lyons’s 30-day option period expired without his
having acted on the Newberry Offer—without him having exercised his right to
purchase Ryne’s interest or having given Ryne written notice that he would not be
exercising this right—in part because Lyons had concluded that the Newberry Offer
was not a “bona fide offer” as that term was used in the Partnership Agreement.
Regardless, Ryne claimed that Lyons’s failure to give written notice that he would not
be exercising his option was another cause of the Newberry Offer’s demise. And
according to Ryne, Holdridge was “in cahoots” with Lyons throughout this time,
undermining the Newberry Offer by gossiping, taking photographs of Ryne’s
workstation, and recording conversations between her and Ryne.
E. Bench Trial and Judgment
The current litigation ensued, and after a bench trial, the trial court rendered
judgment for Ryne on numerous claims. 9 It issued a declaratory judgment that the term
“the Partnership Fair Market Value” in the Holdridge Agreement had its ordinary
meaning, and it found that
9
After all parties had rested and closed, the trial court recalled two witnesses,
Lyons and Holdridge, pointedly questioning them, and effectively admitting an exhibit
that had not been introduced into evidence during the parties’ trial presentations. But
because Lyons and Holdridge do not complain about this conduct on appeal, we do
not address the propriety of such behavior.
9
• Lyons (or, rather, his professional entity)10 had breached the Partnership
Agreement by failing to give notice that he would not exercise the right of first
refusal, causing damages of $2.5 million (the amount of the Newberry Offer);
• Lyons (i.e., his professional entity) had breached his fiduciary duty to Ryne (i.e.,
Ryne’s professional entity) by threatening to deviate from the Sharing
Agreement, resulting in $2.5 million in damages and warranting $1.16 million in
exemplary damages;
• Lyons (i.e., his professional entity) had breached his fiduciary duty to Ryne (again,
Ryne’s professional entity) by paying a $6,891.11 legal bill with Surgical Center
funds that would otherwise have been deposited with the Eyecare Partnership,
resulting in damages equal to Ryne’s half of the amount of the attorney bill; and
• Holdridge had tortiously interfered with the Newberry Offer and the Partnership
Agreement, resulting in $2.5 million in damages and warranting $500,000 in
exemplary damages.
Finally, the trial court entered “a decree of dissolution of the [Eyecare
Partnership],” finding that Lyons’s conduct required the remedy because it frustrated
the Eyecare Partnership’s economic purpose and made it not reasonably practicable to
carry on business with Lyons or in conformity with the Partnership Agreement.
10
As previously noted, the trial court’s final judgment necessarily relied on
Lyons’s actions as an individual to hold Lyons’s professional entity liable for breaches
of contract and fiduciary duty. Lyons complains of this on appeal, but he does so in a
single sentence with no record or legal citations and without designating his complaint
as a separate issue presented. Regardless, because we reverse the breach of contract
and breach of fiduciary duty judgments on other grounds, the corporate distinctions are
not dispositive, and we need not address them. See Tex. R. App. P. 47.1.
10
II. Discussion
Lyons and Holdridge’s sixteen appellate issues boil down to five questions: 11
(1) whether the trial court correctly interpreted the phrase “the Partnership Fair Market
Value” in the Holdridge Agreement; (2) whether the evidence was sufficient to establish
that Lyons breached any fiduciary duty; (3) whether the evidence was sufficient to
establish that Lyons breached the Partnership Agreement; (4) whether the evidence was
sufficient to show that Holdridge tortiously interfered with the Newberry Offer and
Partnership Agreement; and (5) whether the evidence was sufficient to support
dissolution of the Eyecare Partnership.
A. Interpretation of the Holdridge Agreement
Lyons and Holdridge’s first four arguments relate to the trial court’s construction
of the phrase “the Partnership Fair Market Value” in the Holdridge Agreement, along
with the various findings that followed from that construction.
11
In single-sentence assertions scattered throughout their joint brief, Lyons and
Holdridge lodge additional complaints, such as (previously noted) that Lyons’s
professional entity cannot be held to have breached its fiduciary duty based on Lyons’s
individual actions and that tort damages are not available for contract-related breaches
of fiduciary duty. Many of these assertions lack record or legal citations, none are
assigned separate issues, and none are accompanied by legal analysis. To the extent that
Lyons and Holdridge intended to raise these single-sentence assertions as separate
issues for our review, they do not reflect substantial compliance with the briefing rules
and have been inadequately briefed. See Tex. R. App. P. 38.1(f), (i), 38.9; Perkins v. Hicks,
No. 02-19-00207-CV, 2020 WL 7393334, at *1 (Tex. App.—Fort Worth Dec. 17, 2020,
no pet.) (per curiam) (mem. op.) (holding appellant inadequately briefed complaints
when she provided “only a few scant citations to the record, no citations to legal
argument, and no legal argument presenting her issues”).
11
1. Law: Contract Construction
We construe unambiguous contracts as a matter of law, giving effect to the
parties’ intent as that intent is expressed in the written agreement. See Mosaic Baybrook
One, L.P. v. Simien, 674 S.W.3d 234, 257 (Tex. 2023); Dynegy Midstream Servs., Ltd. P’ship
v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009). “[A]ll the usual ‘rules of construction’
apply,” including “the familiar presumptions favoring consistent usage, disfavoring
surplusage, . . . using the plain meaning of undefined terms” unless the instrument
indicates that the parties intended otherwise, and construing the contract as a whole.
Mosaic Baybrook One, 674 S.W.3d at 257 (quoting Perthuis v. Baylor Miraca Genetics Labs.,
LLC, 645 S.W.3d 228, 236 (Tex. 2022)); see Dynegy Midstream Servs., 294 S.W.3d at 168.
Determining what the “whole” is—what is and is not considered part of the
contract—is another component of contract construction and one particularly relevant
here. See ExxonMobil Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 672 S.W.3d 415,
418–19 (Tex. 2023); Owen v. Hendricks, 433 S.W.2d 164, 166 (Tex. 1968). We begin with
the four corners of the contract. ExxonMobil, 672 S.W.3d at 418–19; In re Deepwater
Horizon, 470 S.W.3d 452, 459–60 (Tex. 2015). However, the parties may incorporate a
separate document so as to make it part of the terms of the agreement if the contract
“clearly manifest[s]” an intent to do so. ExxonMobil Corp., 672 S.W.3d at 417; Deepwater
Horizon, 470 S.W.3d at 460. Such a demonstration “requires more than merely
mentioning the document”; it requires “plainly refer[ring]” to the other document. In
re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004) (orig. proceeding) (quoting
12
Owen, 433 S.W.2d at 166); Gross v. WB Tex. Resort Cmtys., L.P., No. 02-12-00411-CV,
2014 WL 7334950, at *3 (Tex. App.—Fort Worth Dec. 23, 2014, no pet.) (mem. op.)
(quoting Bob Montgomery Chevrolet, Inc. v. Dent Zone Cos., 409 S.W.3d 181, 189 (Tex.
App.—Dallas 2013, no pet.)).
2. Application: “The Partnership Fair Market Value”
The trial court construed the Holdridge Agreement’s phrase “the Partnership
Fair Market Value” based on that phrase’s plain and ordinary meaning, but Lyons and
Holdridge assert that it was a defined term that was given a specialized meaning in the
Partnership Agreement. They argue that the Partnership Agreement was incorporated
into the Holdridge Agreement, that the two must be construed together, and that the
Holdridge Agreement’s capitalization of “Partnership Fair Market Value” and use of
the accompanying definite article “the” invoked the Partnership Agreement’s definition
of “Fair Market Value.”
We disagree with Lyons and Holdridge’s foundational premise that the
Holdridge Agreement incorporates the Partnership Agreement.12 The Holdridge
12
Even if the Holdridge Agreement had incorporated the Partnership Agreement,
the term used in the former—“Partnership Fair Market Value”—is not the same as the
term defined in the latter—“Fair Market Value.” And in the Partnership Agreement,
the applicability of the defined term “Fair Market Value” is expressly limited to two
types of transfers: those that occur “under the provisions of Sections 7.4 and 7.5,” i.e.,
upon the “divorce or death of [a partner’s] spouse” or upon a party’s “acqui[sition of]
a Partnership Interest . . . as the result of an order of a court,” a “lawful ‘charging
order,’” or an “unauthorized transfer or assignment.” [Capitalization altered.]
13
Agreement does not contain an express statement of incorporation, it does not include
the Partnership Agreement as an attachment or exhibit, and it does not commit the
Holdridge Agreement signatories to fulfilling any of the terms set forth in the
Partnership Agreement. See Gross, 2014 WL 7334950, at *3 (holding that contract’s
mention of buyer’s receiving property report did not incorporate property report by
reference because “there [wa]s no language in the contract that indicate[d] any intent to
incorporate it”). Nothing in the Holdridge Agreement’s language “obligate[s]” or
“requires” us to “venture beyond the four corners” of that document. ExxonMobil
Corp., 672 S.W.3d at 418–19 (noting that courts “refer to extrinsic documents only if
th[e contract] clearly requires doing so” and “only to the extent of the incorporation
and no further”); Deepwater Horizon, 470 S.W.3d at 460 (noting that court would not
consider insurance coverage limitations in other documents “[u]nless obligated to do
so by the terms of the policy”). At best, the Holdridge Agreement references the
Partnership Agreement for informational purposes, much like the contract construed
by our sister court in Bob Montgomery Chevrolet. 409 S.W.3d at 184–93.
In that case, an automobile dealership applied to become a certified repair center
for Dent Zone, and the application form stated that the dealership would work “within
the [relevant] Service Program” and that “[a]dditional benefits, qualifications[,] and
details of the [relevant] Service Program [we]re available for [the dealership’s] review at
[Dent Zone’s] website,” with a link to an internet document. Id. at 184–86. The internet
document contained a forum-selection provision, and when disputes between the
14
parties later arose, the applicability of that forum-selection provision became a key issue.
Id. at 188–89. But the Dallas Court of Appeals concluded that the application form’s
language did not incorporate the internet document by reference such that the
dealership had agreed to the forum-selection provision. Id. at 188–93. It explained that
the application had “indicate[d] that the internet document contained informative
material only”—the application did not expressly incorporate the internet document, it
did not “plainly refer to additional terms and conditions in the internet document as
becoming part of the parties’ agreement,” and it did not “otherwise suggest that the
parties intended for the internet document to become part of their agreement.” Id. at
190.
We apply the same reasoning to the Holdridge Agreement. The Holdridge
Agreement states that “once [Holdridge] buys [25% of Ryne’s interest from Lyons] and
signs the Partnership Agreement[,] . . . [she] will be a Partner in [the Eyecare
Partnership].” Apart from this statement, no other reference is made to the Partnership
Agreement.13 The Holdridge Agreement does not expressly include or adopt the
Partnership Agreement’s terms, and the signatories do not agree to be bound by the
Partnership Agreement’s provisions. But cf. In re Prudential, 148 S.W.3d at 135 (holding
Lyons and Holdridge construe the Holdridge Agreement’s references to “the
13
partners,” “the Partnership,” and Holdridge’s “future rights” in the business as
additional references to the Partnership Agreement. But these phrases merely reference
the parties and entity involved, as opposed to the Partnership Agreement document
itself.
15
that guaranty incorporated lease’s jury waiver when guaranty contained a promise “to
‘faithfully perform and fulfill all of [the] terms . . . ’ of the lease in the event
of . . . default”). To the contrary, the Holdridge Agreement contemplates that for
Holdridge to become a partner in the future, she must at that time sign the Partnership
Agreement and commit to its terms. As in Bob Montgomery Chevrolet, the Holdridge
Agreement’s language “indicates [that] the [Partnership Agreement] contained
informative but noncontractual material.” 14 409 S.W.3d at 193.
Construing the Holdridge Agreement based on the four corners of the
document, then—with no other documents incorporated by reference—the term “the
Partnership Fair Market Value” has no specialized meaning. Although the term is
capitalized and accompanied by the definite article “the,”15 neither characteristic is
determinative—particularly when, as here, the capitalized term is not defined anywhere
in the document. Cf. Jefferson Cnty. v. Jefferson Cnty. Constables Ass’n, 546 S.W.3d 661, 670
(Tex. 2018) (noting that “[t]he word ‘the’ can certainly be used as a definite article, but
Lyons and Holdridge make much of the fact that, unlike the internet document
14
in Bob Montgomery Chevrolet, the Partnership Agreement was signed. But the Partnership
Agreement was signed by only a subset of the parties to the Holdridge Agreement, and
Lyons and Holdridge have not cited any case law to support distinguishing the case on
that basis.
15
Cf. TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694, 709
(Tex. 2023) (interpreting arbitration rules and noting that “the use of the definite article
‘the’ with the singular noun ‘power’ indicates exclusivity”); Concierge Nursing Centers, Inc.
v. Antex Roofing, Inc., 433 S.W.3d 37, 48 n.5 (Tex. App.—Houston [1st Dist.] 2013, pet.
denied) (noting that contracts at issue “use[d] capitalizations to define the words”).
16
it is not necessarily so limiting”); Henry F. Coffeen III Mgmt., Inc. v. Musgrave, No. 02-16-
00070-CV, 2016 WL 6277375, at *3 n.4 (Tex. App.—Fort Worth Oct. 27, 2016, no
pet.) (mem. op.) (construing contract provision and noting that “[d]espite being
capitalized, the ‘Term’ of the Non-Compete Agreement [wa]s not defined”); Brookshire
v. Longhorn Chevrolet Co., 788 S.W.2d 209, 211 (Tex. App.—Fort Worth 1990, no writ)
(rejecting argument premised on capitalization and noting that “the contracts in
question are void of any provision which states that the term ‘Unpaid Balance’ when
capitalized has a different meaning than when such term is not capitalized”). And
“[w]ithout any textually expressed bespoke meaning, . . . courts will adopt the ordinary
usage as a matter of law.” Perthuis, 645 S.W.3d at 236.
The ordinary, unambiguous meaning of “Fair Market Value” is “a price at which
buyers and sellers with a reasonable knowledge of pertinent facts and not acting under
any compulsion are willing to do business.” Fair Market Value, Merriam-Webster,
https://www.merriam-webster.com/dictionary/fair%20market%20value (last visited
July 15, 2024); see Fair Market Value, Webster’s Third New International Dictionary 86a
(reprt. 2021) (1961) (defining fair market value as “a price at which both buyer and seller
are willing to do business”). This is precisely the definition declared by the trial court
in its judgment.
The trial court thus did not err by issuing declarations that the Holdridge
Agreement did not “incorporate any terms from the [Partnership] Agreement,” that
“the definition of ‘Fair Market Value’ set forth in . . . the [Partnership]
17
Agreement . . . ha[d] no application to the Holdridge Agreement,” and that “the phrase
‘Partnership Fair Market Value’ as used in the Holdridge Agreement has its plain and
customary meaning.” We overrule Lyons and Holdridge’s four issues challenging these
declarations.16
This holding also renders harmless Lyons and Holdridge’s fifth issue—their
allegation that the trial court improperly admitted parol evidence—so we need not
address it. See Tex. R. App. P. 47.1.
B. Evidentiary Sufficiency of Breach of Fiduciary Duty Findings
Lyons next raises three issues challenging the legal sufficiency of the evidence to
show that he twice breached his fiduciary duty.
1. Law: Sufficiency and Fiduciary Duty
Generally, to sustain a claim for breach of fiduciary duty, there must be evidence
of (1) the existence of a fiduciary duty, (2) breach of the duty, (3) causation, and
16
In their reply brief, Lyons and Holdridge ask this court to determine whether
the Holdridge Agreement amended the sale-related provisions of the Partnership
Agreement such that “Ryne is obligated to sell his full partnership interest to Lyons”
and no one else, and they assert that this “argument is independent of whether ‘the
Partnership Fair Market Value’ . . . has its plain and ordinary meaning.” But in their
opening brief, Lyons and Holdridge discuss the issue only as a means of supporting
their contention that the Holdridge Agreement incorporated the Partnership
Agreement and therefore “the Partnership Fair Market Value” should be given the
Partnership Agreement’s defined meaning. A party may not use its reply brief to raise
new issues. See Tex. R. App. P. 38.3; Perkins, 2020 WL 7393334, at *1 (holding appellant
waived issues when reply brief addressed complaints that were merely “bald assertion
of facts” in opening brief).
18
(4) damages. First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 220
(Tex. 2017). We will reverse a judgment for breach of fiduciary duty if it is supported
by legally insufficient evidence, meaning that there is no more than a mere scintilla of
evidence.17 Gunn v. McCoy, 554 S.W.3d 645, 658 (Tex. 2018); see McAllen Hosps., L.P. v.
Lopez, 576 S.W.3d 389, 397 (Tex. 2019) (clarifying that evidence is insufficient if it is so
weak that it does no more than create a surmise or suspicion). When evaluating legal
sufficiency, we view the evidence in a light most favorable to the judgment, indulging
every reasonable inference in its favor. See Gunn, 554 S.W.3d at 658 (quoting Bustamante
v. Ponte, 529 S.W.3d 447, 456 (Tex. 2017)); City of Keller v. Wilson, 168 S.W.3d 802, 827
(Tex. 2005).
2. Application: No Evidence of Breach
According to Ryne, Lyons twice breached his fiduciary duty by deviating from
or threatening to deviate from the Sharing Agreement. Ryne contends that Lyons first
breached by “threatening to break his promise to share [the Surgical Center’s] revenues
with the [Eyecare] Partnership” in his October letters,18 and, second, he breached by
17
Because the trial court did not file findings of fact or conclusions of law, the
final judgment implies all necessary findings. Shields Ltd. P’ship v. Bradberry, 526 S.W.3d
471, 480 (Tex. 2017). But a reporter’s record has been filed, so the trial court’s implied
findings can be challenged on sufficiency grounds. Id.On appeal, Ryne also points to Lyons’s “disrupt[ion]” of the Sharing
18
Agreement in January 2022 as evidence of Lyons’s breach. But Ryne himself testified
that the alleged disruption of funds occurred after Newberry had retracted his offer,
19
using Surgical Center funds to pay a legal bill rather than forwarding those funds to the
Eyecare Partnership as the Sharing Agreement required. Lyons disputes numerous
aspects of these allegations, including whether his October letters threatened to deviate
from the Sharing Agreement and whether he owed a fiduciary duty to continue the
Sharing Agreement at all. But even if we assume that Lyons had a fiduciary duty to
continue the Sharing Agreement, the parameters of that alleged duty were too ill-
defined to show any breach of it.
Both Ryne and Lyons testified that their Sharing Agreement required the Surgical
Center to share its income with the Eyecare Partnership, but it was unclear what income
was required to be shared and when. Ryne confirmed that the Surgical Center “sen[t]
money over to the [Eyecare P]artnership,” and he characterized the businesses as
“integrated” and “seamless,” but he did not explain what money was or was not
required to be “sent . . . over.”
The clearest description of the Sharing Agreement’s terms came from Lyons,
who testified that the Surgical Center had generally shared “money minus expenses.”
But even if we assume that this general practice was in lockstep with the contractual
terms of the Sharing Agreement, “money minus expenses” leaves a lot of open
questions.
and Ryne’s breach of fiduciary duty claim was based on the theory that Lyons’s actions
undermined the Newberry Offer.
20
For example, Ryne testified that Lyons had been “holding . . . money back” such
that the Surgical Center was “sitting with about $350,000 in its bank account right now,”
but he did not elaborate on what the Surgical Center’s average balance was, why a
$350,000 balance equated to “holding . . . money back,” or what specific terms of the
Sharing Agreement required that these funds be handled differently. Lyons explained
that the Surgical Center “incur[red] a lot of bills” that it needed funds to cover, including
“large credit card bills that [it] pa[id] on a regular basis.” But there was no evidence of
whether the Surgical Center’s retention of funds to pay such credit card bills was
consistent with or violative of the Sharing Agreement. Adding further complexity,
Ryne’s counsel elicited testimony from Lyons that the Eyecare Partnership paid the
Surgical Center money to cover certain supply costs, and logic would dictate that these
payments would increase the balance in the Surgical Center’s bank account, albeit
temporarily. 19 Even Ryne seemingly acknowledged that the Surgical Center’s account
balance did not necessarily reflect a violation of the (unexplained) terms of the Sharing
Agreement; he conceded that “technically, . . . [Lyons was] within the guidelines” in his
handling of the $350,000 bank account balance but insisted that “practically, he[ was]
holding th[e] money back.”
19
Lyons testified that there had been an “accounting issue” related to the Surgical
Center’s purchase of premium lenses because the revenue needed to cover the cost of
those lenses was being deposited directly into the Eyecare Partnership. Lyons explained
that in late 2021, the Eyecare Partnership began paying the Surgical Center for the lenses
to allow the latter to pay its bills.
21
The Surgical Center’s payroll was another area of ambiguity. Lyons testified that
beginning in 2022, the Surgical Center paid “a monthly payroll on a month-on-month
basis” for Surgical Center employees and for employees that it shared with the Eyecare
Partnership. But, later, Lyons clarified that the Surgical Center did not issue any W-2
forms and instead used the “online payroll system through [the Eyecare Partnership],
and then the [Surgical Center] reimburse[d the Eyecare Partnership] dollar for dollar
for those employees on a month-to-month basis.” The ins-and-outs of this
arrangement were never explored, and neither Lyons nor Ryne explained what the
payroll arrangements had been prior to 2022, what they had been under the original
Sharing Agreement, or what the Sharing Agreement had required when the Newberry
Offer was in play—and thus when Lyons had allegedly breached his fiduciary duty—in
late 2021.
Even Ryne seemed unclear regarding how the Sharing Agreement required the
Surgical Center’s money to be handled. On direct examination, he testified that the
Surgical Center’s “money flows” were included in the Eyecare Partnership’s profit-and-
loss statements, but on cross-examination he testified that the profit-and-loss
statements from the Eyecare Partnership “were kept separate from” those of the
Surgical Center.
22
These areas of fuzziness were merely the tip of the iceberg,20 and we need not
detail them all. Suffice it to say that the terms of the Sharing Agreement were murky at
best. And without knowing what the Sharing Agreement did or did not allow Lyons to
pay, retain, or deduct from the Surgical Center’s revenue before he forwarded the
remainder (or some unidentified subset of that remainder) to the Eyecare Partnership,
a reasonable factfinder could not have concluded that Lyons’s October letters contained
a veiled threat to pay, retain, deduct, or forward a different amount. Even assuming
that Lyons had a fiduciary duty to continue the Sharing Agreement, then, there was
insufficient evidence that his October letters threatened to breach that duty.21
The same is true of Lyons’s alleged breach of his fiduciary duty by using Surgical
Center funds to pay a legal bill. Again, Ryne confirmed that the $13,782.23 in Surgical
Center funds that had been used to pay Lyons’s counsel would “historically . . . have
20
For example, the agreed-to frequency of the Surgical Center’s money transfers
was unclear. Ryne testified that, in the past, the money from the Surgical Center had
flowed into the Eyecare Partnership at the end of each month, but Lyons testified that
the Surgical Center had deposited money with the Eyecare Partnership “occasionally
throughout the year” and that it had “never [been] a month to month” arrangement.
Neither described what transfer frequency the oral Sharing Agreement actually required.
21
For that matter, it is unclear when the Newberry Offer was retracted. Ryne’s
primary breach of fiduciary duty claim was premised on the idea that Lyons’s two
October letters killed the deal, but his breach of contract claim alleged that Lyons killed
the deal by failing to give written notice that he would not be exercising his option to
purchase, which notice was due in mid-October. Inferring all fact-findings necessary
to support the judgment, as we must, id., we presume that the trial court implicitly found
that the Newberry Offer was withdrawn in mid-October and was caused not only by
Lyons’s October letters but also by his failure to give written notice.
23
flowed into [the Eyecare Partnership],” but he did not clarify whether this practice was
required by the terms of the Sharing Agreement or how the Sharing Agreement
contemplated the handling of legal expenses. 22
Because there was legally insufficient evidence of what payments the Sharing
Agreement required or permitted and when, no reasonable factfinder could have
concluded that Lyons’s actions deviated or threatened to deviate from the terms of that
amorphous Agreement. We therefore sustain Lyons’s challenges to the breach of
fiduciary duty judgments. We reverse those judgments, including the awards of $2.5
million and $6,891.11 in compensatory damages and the award of $1.16 million in
exemplary damages.
C. Interpretation of Partnership Agreement
Lyons’s next appellate issue relates to his alleged breach of the Partnership
Agreement—an alternative basis for the $2.5 million in compensatory damages that
were awarded against him for his letter-related breach of fiduciary duty. 23 Lyons
22
On appeal, Ryne notes Lyons’s testimony that the Surgical Center’s bylaws
allowed him to pay the legal bill, and he responds to this testimony on its merits, arguing
that the bylaws did not permit the payment. But even if we assume that payment of
the legal bill breached the Surgical Center’s bylaws, Ryne’s cause of action was not based
on a violation of the Surgical Center’s bylaws. Rather, he alleged—and the trial court
found—that Lyons had breached his fiduciary duty to the Eyecare Partnership by
deviating from the Sharing Agreement. The scope of pre-transfer expenses permitted
by the Sharing Agreement may not have been the same as the scope of expenses
permitted by the Surgical Center’s bylaws.
23
Because the $2.5 million in damages attributed to Lyons’s breach of contract
duplicated those awarded for Lyons’s alleged fiduciary duty breach, Ryne elected to
24
contends that, contrary to Ryne’s assertions, the Partnership Agreement did not require
him to give written notice that he would not be exercising his option to purchase Ryne’s
interest, so his failure to give such written notice was not a breach.
1. Law: Contract Construction
When construing the Partnership Agreement, we seek to give effect to the
parties’ intent—just as we did with the Holdridge Agreement. See Mosaic Baybrook One,
674 S.W.3d at 257; Perthuis, 645 S.W.3d at 236. And once again, we rely on the familiar
rules of contract construction: we construe the Partnership Agreement as a whole,
disfavor interpretations that would render any provision meaningless, and give
undefined terms their ordinary meanings. See Mosaic Baybrook One, 674 S.W.3d at 257–
58; Perthuis, 645 S.W.3d at 236; Dynegy Midstream Servs., 294 S.W.3d at 168.
2. Application: No Damage-Causing Breach
Ryne’s breach of contract allegation centered on the right-of-first-refusal
provisions in the Partnership Agreement. Those provisions begin by clarifying that
when one partner receives a “bona fide offer” for his interest, the nonselling partner
has the right to receive notice of the offer. “Upon receipt of [such] notice,” the
nonselling partner has “the exclusive option and right of first refusal, exercisable at
anytime during a [30] day period from the date of said notice, to purchase [the selling
recover damages for the latter, and no damages were assigned to the contract claim.
But Ryne argues that, if we reverse the fiduciary duty claim—which we now have—we
can nonetheless uphold the $2.5 million award based on his alternative contract theory.
25
partner’s] proportionate part of the interest in the Partnership.” The Partnership
Agreement then goes on to set forth the procedure for a nonselling partner to exercise
his option or for the selling partner to proceed with the sale to a third party:
If the non-selling Partners decide to exercise the option provided herein,
they shall give written notification to this effect to the Partner desiring to
sell, and the sale and purchase shall be closed within thirty days thereafter.
If such other Partners elect not to exercise the option, the selling Partner shall be so
notified in writing and shall be free to sell the interest in the Partnership covered by the
offer set forth in the required notice upon such terms and conditions and to the persons
name therein, provided, that as a condition precedent to such sale the buyer
shall execute a counterpart of this Agreement thereby expressly
succeeding to all rights, obligations, duties and liabilities of the selling
Partner and expressly agreeing to be bound by the terms of this
Agreement. The selling Partner shall not effect a sale upon any changed
terms or conditions or to any different person without first complying
with the requirements of this Article with respect to such different sale.
[Emphasis added.] Ryne alleged—and the trial court found—that Lyons breached this
provision because when Lyons “elect[ed] not to exercise [his] option,” the Partnership
Agreement required that “the selling Partner . . . be so notified in writing,” and he did
not “so notif[y]” Ryne in writing. 24 According to Ryne, he was prevented from
proceeding with his $2.5 million sale to Newberry absent Lyons’s written notification.
Whether or not Lyons was contractually obligated to notify Ryne in writing is
immaterial, though, because—under the plain language of the Partnership
24
Although Ryne’s counsel argued at trial that Lyons’s failure to provide notice
undermined the Newberry Offer, Ryne did not testify to that. Rather, Ryne testified
that the “threats” in Lyons’s October letters were what prevented him from completing
his deal with Newberry.
26
Agreement—the lack of notice did not prevent Ryne from moving forward with the
Newberry Offer.
The Partnership Agreement unambiguously states that the nonselling partner has
“a thirty day period from the date of [the] notice” to exercise his option. If the
nonselling partner remains silent and fails to exercise his option within this thirty-day
period, the option expires, and his election is established—whether by default,
conscious choice, or otherwise. The nonselling partner’s silence cannot extend his
option period or prevent the third-party sale.
Put differently, nothing in the Partnership Agreement conditions the selling
partner’s “free[dom]” to proceed with his third-party sale on the receipt of written
notice. The right-of-first refusal provisions expressly identify other conditions that
must be satisfied for the third-party sale to proceed—e.g., that “the buyer shall execute
a counterpart of [the Partnership] Agreement” and that the “selling Partner shall not
effect a sale upon any changed terms or conditions or to any different person”—but
the receipt of “notif[ication] in writing” is not one of them. Instead, the “free[dom] to
sell” is conditioned on the “other Partners elect[ing] not to exercise the option,” which
again, occurs by default if the option has not been exercised within “a thirty day period
from the date of [the] notice.” Although the selling partner is entitled to receive
“notif[ication] in writing” regarding the nonselling partner’s election, once the 30-day
option period has passed, the choice is known, and the selling partner has actual notice.
27
Lyons’s failure to exercise his option within the 30-day option period was thus
implicit actual notice that he would not be doing so, and under the plain language of
the Partnership Agreement, Ryne was free to proceed with the Newberry Offer—
whether or not Lyons provided written notice. Ryne’s theory of recovery for breach of
contract thus contradicts the plain language of the Partnership Agreement and cannot
support the trial court’s $2.5 million award of compensatory damages.
We sustain Lyons’s challenge to the breach of contract judgment.
D. Evidentiary Sufficiency of Tortious Interference Finding25
Next, we turn to Holdridge’s contention that there was no evidence that she
tortiously interfered with the Newberry Offer and Partnership Agreement.
1. Law: Sufficiency and Tortious Interference
The elements for interference with a prospective contract (the Newberry Offer)
differ slightly from the elements of interference with an existing contract (the
Partnership Agreement).
To prevail on a claim for interference with a prospective contract, the plaintiff
must establish that
25
In a footnote, Ryne contends that the trial court implicitly granted judgment on
his conspiracy claim, and he urges us to affirm the compensatory and exemplary
damages rendered against Holdridge on conspiracy grounds. But at trial, when the trial
court asked the parties to clarify their live claims, Ryne did not mention his conspiracy
claim. And likely for the same reason, the trial court’s judgment makes no mention of
it. Plus, the final judgment contains a clause denying “[a]ll other relief not expressly
granted herein,” and Ryne did not file a notice of appeal. See Tex. R. App. P. 25.1(c).
28
(1) there was a reasonable probability that the plaintiff would have entered
into a business relationship with a third party;
(2) the defendant either acted with a conscious desire to prevent the
relationship from occurring or knew the interference was certain or
substantially certain to occur as a result of the conduct;
(3) the defendant’s conduct was independently tortious or unlawful;[26]
(4) the interference proximately caused the plaintiff injury; and
(5) the plaintiff suffered actual damage or loss as a result.
Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013)
(indentation altered). For tortious interference with an existing contract, the first three
elements are replaced with two others; the plaintiff must instead prove (1) the existence
of a valid contract and (2) that the defendant willfully and intentionally interfered with
the contract. See Cmty. Health Sys. Prof’l Servs. Corp. v. Hansen, 525 S.W.3d 671, 689 (Tex.
2017).
For Ryne’s claims against Holdridge to survive her legal sufficiency challenge,
there must be more than a scintilla of evidence to support each challenged element. See
Gunn, 554 S.W.3d at 658. As with our sufficiency review of Lyons’s alleged breaches,
we view the evidence in the light most favorable to the judgment. See id.
“By ‘independently tortious’ we mean conduct that would violate some other
26
recognized tort duty.” Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 713 (Tex. 2001).
29
2. Application: No Evidence of Tortious Interference
Holdridge alleges that there was no evidence of her alleged tortious interference
with the Newberry Offer and thus no evidence of her alleged interference with the
Partnership Agreement. Ryne claimed, and the trial court implicitly found, that
Holdridge had prevented the Newberry Offer from proceeding and that, by doing so,
she had prevented Ryne from exercising his right to sell his interest under the terms of
the Partnership Agreement. But—as Holdridge points out—Ryne was fuzzy on what
Holdridge actually did to impede the Newberry Offer.
At trial, Ryne was repeatedly asked to explain what Holdridge had done to
tortiously interfere with the Newberry Offer or Partnership Agreement. He
consistently stated that, “[a]t that point in time, [Holdridge] and Dr. Lyons were
working in cahoots together”; that they were exchanging text messages regarding Ryne;
and that “[t]heir attorneys were working together, so it effectively killed the deal.”
Asked the same question again later, Ryne again stated that Holdridge had interfered
because she had “been in cahoots with Lyons and, you know, she’[d] hired an attorney
and . . . those things . . . kept Newberry from wanting to pursue.” He repeated this
answer on three more occasions, pointing to Holdridge’s “[h]iring an attorney, working
30
in cahoots with Lyons, [and] creating a workplace that’s not normal” as her acts of
interference.27
Hiring an attorney is not an independently tortious activity. Cf. Wal-Mart Stores,
52 S.W.3d at 726 (holding “that to recover for tortious interference with a prospective
business relation a plaintiff must prove that the defendant’s conduct was independently
tortious or wrongful”). And apart from this repeatedly mentioned action, it is unclear
what “cahoots” Ryne considered Holdridge to have engaged in that interfered with the
Newberry Offer.
On appeal, Ryne points to Holdridge’s having recorded her conversations with
him and having taken photographs of his workstation, characterizing such actions as
evidence that she “facilitate[ed] and incentiviz[ed] Lyons’[s] efforts to defeat the
Newberry Offer.”28 But while there was evidence that Holdridge had recorded her
conversations with Ryne and that she had taken photographs of his workstation, there
was no evidence that such recordings or photographs even related to the Newberry
Offer—much less that they interfered with it. Ryne testified that he had listened to all
Ryne confirmed that his claim for interference with the Partnership Agreement
27
was based on the “same reasons” as his claim for interference with the Newberry Offer:
Holdridge’s “not letting [him] . . . pursue a third-party offer.”
Ryne emphasizes Holdridge’s alleged motivation to kill the Newberry Offer,
28
noting that the Newberry Offer “would [have] jeopardize[d] her ability to become an
owner” and that she had “admitted to a ‘side deal’ with Lyons” in which she would pay
for 25% of the Eyecare Partnership based on the price Lyons paid to Ryne even if she
were not contractually obligated to do so.
31
of the recorded conversations produced in discovery and that only one percent involved
patient care with the remaining “99 percent [involving] personal” matters. He made no
mention of any conversations related to the Newberry Offer or his sale of his interest
in the Eyecare Partnership.
And as for Holdridge’s photographs, while Ryne testified that they included his
“personal financial information,” he did not explain how or if such information related
to the Newberry Offer. Ryne did not connect the dots. The same was true of Ryne’s
testimony that Holdridge had photographed notes “that [involved] issues that [he was]
discussing with [his] lawyers.”29 He failed to explain how or if these photographed
notes related to the Newberry Offer, and both he and his counsel confirmed that the
objectionable photographs had not been admitted into evidence. Without any
additional information about the timing or relevance of the objected-to photographs or
recordings, then, the factfinder had no way to determine whether they amounted to
“cahoots” that could have interfered with the Newberry Offer.
While secretly recording conversations and taking photographs of another’s
workstation may be frowned upon in modern American workplaces, there was no
evidence that such actions rose to the level of independently tortious activity, as was
required to prove interference with a prospective contract. Cf. id.
29
On cross-examination, Ryne conceded that he had no evidence that Holdridge
or Lyons ever accessed his email or photographed his communications with his
attorneys.
32
And while Holdridge’s alleged interference with the Partnership Agreement was
not required to be independently tortious, that claim is on even shakier ground. Even
if we assume that Ryne can bootstrap his claim for interference with the Newberry
Offer into a second claim for interference with the Partnership Agreement, it is
nonetheless unclear how Ryne’s theory of interference holds together. We have already
concluded that there was no evidence of Holdridge’s interference with the Newberry
Offer, and there was no evidence that Holdridge’s actions prevented Ryne from
exercising his rights under the Partnership Agreement. While Ryne argues on appeal
that Holdridge’s actions “facilitat[ed] and incentiviz[ed] Lyons’[s] efforts” to defeat the
Newberry Offer, Lyons allegedly killed the Newberry Offer by threatening to deviate
from the Sharing Agreement and by failing to give written notice that he would not be
exercising his right of first refusal, and there is no evidence that Holdridge discussed
those actions with Lyons or had any involvement in them while the Newberry Offer
was in play. Plus, we have already held that there was no evidence to support Lyons’s
liability under those theories anyway.
In short, the evidence is legally insufficient to support the tortious interference
judgments entered against Holdridge. We sustain Holdridge’s challenge to those
judgments, including the $2.5 million in compensatory damages and $500,000 in
exemplary damages awarded against her based on her alleged interference.
33
E. Evidentiary Sufficiency of Dissolution
Lyons and Holdridge next challenge the sufficiency of the evidence to support
the trial court’s dissolution of the Eyecare Partnership.
1. Law: Sufficiency and Dissolution
By statute, a trial court “has jurisdiction” to order the dissolution, i.e., winding
up and termination, 30 of a Texas partnership if the court determines that (1) “the
economic purpose of the entity is likely to be unreasonably frustrated,” (2) “another
owner has engaged in conduct relating to the entity’s business that makes it not
reasonably practicable to carry on the business with that owner,” or (3) “it is not
reasonably practicable to carry on the entity’s business in conformity with its governing
documents.” Tex. Bus. Orgs. Code Ann. § 11.314; see Rev. Unif. P’ship Act § 801(5)
(2023) (listing substantially similar grounds for judicial order dissolving or winding up
partnership).
30
When the Legislature passed the Texas Revised Partnership Act, it largely
removed the term “dissolution” and replaced it with references to “winding up” and
“termination” of the entity. See 13 Elizabeth S. Miller & Robert A. Ragazzo, 13 Texas
Practice Series: Texas Methods of Practice § 38:3 n.1 (2024); see also Tex. Bus. Orgs. Code
Ann. §§ 11.051 (listing events that require “[w]inding up,” including “a decree by a court
requiring the winding up, dissolution, or termination” of the entity), 11.314 (providing
for involuntary “winding up and termination of [a] domestic partnership”); see also Rev.
Unif. P’ship Act § 801 cmt. 1 (2023) (distinguishing between Uniform Partnership Act’s
use of “dissolution” to “describe[] the change in the relationship among partners” and
Revised Uniform Partnership Act’s use of the term “to describe the point at which the
partnership as an entity begins the winding up phase”). However, the trial court and
parties used the term “dissolution.”
34
But while a trial court “has [the] jurisdiction” to issue such an order, see Tex. Bus.
Orgs. Code Ann. § 11.314, “[d]issolution is a drastic remedy that the courts invoke with
extreme caution.” 19 C.J.S. Corporations § 913 (2024); cf. Ritchie v. Rupe, 443 S.W.3d 856,
867 (Tex. 2014) (recognizing that corporate receivership is “a ‘harsh’ remedy that is not
readily available” and is reserved for “exigent circumstances”). The Texas Supreme
Court has long cautioned that “liquidation of solvent[,] going corporations [or
partnerships] should be the extreme or ultimate remedy.” Patton v. Nicholas, 279 S.W.2d
848, 856–57 (Tex. 1955) (holding that Texas courts have general equity powers to
decree liquidation in “extreme cases” and noting that “the practically unanimous judicial
opinion” reserves such remedy for extreme cases); see Nerium SkinCare, Inc. v. Nerium
Int’l, LLC, No. 3:16-CV-1217-B, 2018 WL 2323243, at *7 (N.D. Tex. Mar. 26, 2018)
(report and rec.) (“Given its extreme nature, judicial dissolution is a limited remedy that
[courts] grant [ ] sparingly.”), report and rec. adopted, No. 3:16-CV-1217-B, 2018 WL
2323471 (N.D. Tex. May 2, 2018); cf. Mueller v. Beamalloy, Inc., 994 S.W.2d 855, 859 (Tex.
App.—Houston [1st Dist.] 1999, no pet.) (discussing corporate liquidation provision in
predecessor statute and commenting that narrow statutory “‘instances’ for liquidation
are consistent with granting liquidating receivership ‘only as a last resort’ for a troubled
corporation, when the less harsh remedies of appointment of a receiver for specific
assets or a rehabilitative receiver are inadequate”).
Such caution is consistent with the state’s strong public policies favoring the
freedom of contract and promoting trade and economic development. See Tex. Const.
35
art. I, § 16 (prohibiting “any law impairing the obligation of contracts”); Marsh USA Inc.
v. Cook, 354 S.W.3d 764, 768–69 (Tex. 2011) (discussing noncompete provisions and
recognizing statutorily declared public policy “to maintain and promote economic
competition in trade and commerce”); Fairfield Ins. v. Stephens Martin Paving, LP, 246
S.W.3d 653, 663 (Tex. 2008) (noting “Texas’ general policy favoring freedom of
contract”); Wood Motor Co. v. Nebel, 238 S.W.2d 181, 185 (Tex. 1951) (“[I]f there is one
thing which more than another public policy requires it is that men of full age and
competent understanding shall have the utmost liberty of contracting, and that their
contracts when entered into freely and voluntarily shall be held sacred and shall be
enforced by Courts of justice.” (quoting Printing & Numerical Registering Co. v. Sampson
[1875] 19 LR Eq. 462, 465)); cf. Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948
S.W.2d 293, 298–99 (Tex. 1997) (explaining policy support for duty to mitigate damages
and noting that “the public policy of the state of Texas calls for productive use of
property as opposed to avoidable economic waste”).
“Dissolution proceedings are equitable in nature and contested facts concerning
a basis for dissolution are for the [fact-finder].” CBIF Ltd. P’ship v. TGI Friday’s Inc.,
No. 05-15-00157-CV, 2017 WL 1455407, at *9 (Tex. App.—Dallas Apr. 21, 2017, pets.
denied) (mem. op.). We review the record in the light most favorable to the judgment,
and we will sustain the trial court’s dissolution order if there is more than a scintilla of
evidence to support it. See Dunnagan v. Watson, 204 S.W.3d 30, 42 (Tex. App.—Fort
Worth 2006, pet. denied); see also CBIF Ltd., 2017 WL 1455407, at *9.
36
2. Application: No Evidence to Support Dissolution
The trial court found that “Lyons and Lyons, P.A. ha[d] engaged in conduct
relating to the [Eyecare Partnership’s] business” that resulted in all three statutory
grounds for dissolution—they (1) “ma[de] the economic purpose of the [Eyecare
Partnership] likely to be, and in fact ha[d] already caused the economic purpose to be,
frustrated”; (2)“ma[de] it not reasonably practicable to carry on the entity’s business in
conformity with its governing documents”; and (3) “ma[de] it not reasonably
practicable to carry on the business with Lyons and Lyons, P.A.” Ryne all but abandons
the first ground on appeal, citing no evidence to defend the finding and conceding that
“the [Eyecare] Partnership remains profitable.” Indeed, both Ryne and Lyons testified
that the Eyecare Partnership was profitable at the time of trial, and Lyons described the
Partnership’s “financial performance” as continuing “on an upward trajectory”—a fact
Ryne concedes on appeal.
But Ryne claims that there was evidence to support the latter two dissolution
grounds: that Lyons’s business-related conduct “ma[de] it not reasonably practicable
to carry on the entity’s business in conformity with its governing documents” or “to
carry on the business with Lyons.” See Tex. Bus. Orgs. Code Ann. § 11.314(2), (3). He
contends that other jurisdictions have considered “serious and protracted misconduct
that seriously fractures the relationship between the partners” to be legally sufficient to
37
support dissolution, 31 and he argues that Lyons engaged in such misconduct by
“sow[ing] division within the office”; “denigrat[ing] his partner beyond repair”; creating
a “toxic” office environment for Ryne; “fostering an office environment tolerant of
spying, secret recording, and name-calling of the founding partner”; and exhibiting
general “hostility and animosity” towards Ryne.
Assuming without deciding that Lyons’s gossiping and name-calling constitute
“conduct relating to the [Eyecare Partnership’s] business”—a rather significant
assumption—there is no evidence that this conduct prevented the Eyecare Partnership
from fulfilling the purposes stated in the Partnership Agreement and no evidence that
the conduct made it infeasible to continue fulfilling the Eyecare Partnership’s purposes
with Lyons. See id.The Partnership Agreement lists three purposes for the business:
(a) engag[ing] in the business of developing, marketing, providing
services to, and managing facilities for laser vision correction and other
31
Ryne cites a list of nonbinding cases from jurisdictions across the country as
support for this purported rule, but several of those cases involved dissociation of a
partner rather than dissolution of the partnership. See Giles v. Giles Land Co., 279 P.3d
139, 141–51 (Kan. Ct. App. 2012) (holding that partner’s conduct—which included
threatening the lives of other partners and which led to an “impasse regarding important
business”—supported dissociation of partner under Kansas statute because it was not
reasonably practicable to carry on business with partner); Brennan v. Brennan Assocs., 977
A.2d 107, 115–22 (Conn. 2009) (affirming order dissociating partner when trial court
found that partner had been convicted of fraud, exhibited continuing dishonesty
regarding criminal wrongdoing, lodged baseless allegations that others committed
fraud, and held veto power resulting in impasse). While still drastic, this is a materially
different remedy.
38
procedures to treat myopia, hyperopia, astigmatism, and other vision
disorders (the “Partnership Business”),
(b) incur[ring] and refinanc[ing] indebtedness related to the
Partnership Business, and
(c) engag[ing] in or perform[ing] any and all [lawful] acts or activities
that are related or incident to the foregoing.
At their core, these three purposes center on the Eyecare Partnership’s treatment of
vision disorders through laser and similar procedures. And although there was evidence
that Lyons and Ryne did not get along and that Lyons had gossiped about Ryne, there
was no evidence that Lyons jeopardized patients or impaired the Eyecare Partnership’s
vision treatment services. See id.Ryne argues that the “unprofessional[]” and “toxic” workplace created by Lyons
undermined collaborative care at the office, but Ryne’s own testimony showed that he
and Lyons continued to collaborate in their treatment of patients. He told the trial
court that he stood “shoulder to shoulder with Dr. Lyons every week doing LASIK
[and] assisting him with LASIK,” though he bemoaned the fact that, during such
procedures, he and Lyons “d[id]n’t talk about anything except that patient at hand.”
Standing shoulder to shoulder with another medical professional, assisting him with a
surgical procedure, and discussing the patient at hand are all forms of collaboration. See
Collaborate, Merriam-Webster, https://www.merriam-
webster.com/dictionary/%20collaborate (last visited July 15, 2024) (defining
collaborate as, among other things, “to work jointly with others or together especially
39
in an intellectual endeavor”). If other forms of collaboration are vital to the treatment
of these surgical patients, Ryne did not identify them.
The only example that Ryne points to on appeal to show the alleged absence of
collaborative care is his own failure to collaborate with Holdridge. 32 But while Ryne
testified that he and Holdridge had collaborated in the past, he did not claim that
effective patient care required collaborating with Holdridge in particular, as opposed to
collaborating with another doctor. More to the point, the trial court’s dissolution
findings relied on Lyons’s actions rather than on those of Holdridge. And such reliance
was logical not only because one of the statutory dissolution grounds is expressly limited
to the conduct of “another owner,” Tex. Bus. Orgs. Code Ann. § 11.314(2), but also
because Holdridge was an employee under Ryne’s authority. Ryne confirmed that he
was one of Holdridge’s bosses, and while he stated that he was “not intimately involved
in” the hiring decisions, there was no evidence that he lacked the authority to fire an
employee if he believed that the employee’s behavior was jeopardizing patient care or
the Eyecare Partnership as a whole.
Similarly, while Ryne broadly insists that Lyons’s and Holdridge’s
“unprofessionalism raises legitimate patient safety concerns,” neither he nor any other
witness testified to any subpar patient care. To the contrary, Ryne and Lyons both
32
At trial, Lyons confirmed that “[t]he only collaborative care that [wa]s not
taking place at th[at] point [wa]s between Dr. Ryne and Dr. Holdridge.”
40
confirmed that, despite the ongoing litigation and soured relationships, there had been
no adverse patient outcomes.33 See Shannon Med. Ctr. v. Triad Holdings III, L.L.C., 601
S.W.3d 904, 917 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (noting that “a
partnership can carry on its business in accordance with its governing documents
despite litigation between partners” and emphasizing that “the [p]artnership [in that
case] ha[d] done so”).
Ryne also claims that Lyons engaged in “unilateral decision-making” by, for
example, implementing an objectionable office policy regarding the acceptance of new
patients. But he offered no evidence that such administrative disagreements led to a
deadlock or prevented the continuation of the Eyecare Partnership.34 Cf. id. at 916–17
(holding evidence of alleged voting deadlock did not conclusively establish reasonable
impracticability of carrying on business in conformity with governing documents when
partnership agreement provided method for breaking deadlock). In fact, Ryne’s
testimony indicated to the contrary: he admitted at trial that nothing was preventing
33
Ryne initially testified that patient care had suffered due to the disputes at the
practice because there was “no collaborative care anymore,” but he later reversed course
and insisted that he “didn’t say patient[] outcomes [we]re less desirable.” He confirmed
that there had been no negative patient outcomes to date but opined that the Eyecare
Partnership was “set[ting] [it]self up for bad things that happen when the doctors don’t
communicate.”
34
Ryne did not seek resolution of the administrative disagreements as part of the
underlying litigation, so it is unclear if such disputes remain live.
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the Eyecare Partnership from continuing to operate and that the business was
profitable.
This case thus stands in stark contrast to the “extreme” instances in which
judicial dissolution has been affirmed. See Patton, 279 S.W.2d at 856–57. In Dunnagan
v. Watson, for example, the limited partnership at issue was formed to manage and
operate a horse racing facility, and two of the partners—Lawley and Watson—decided
to open a restaurant and provide certain “backside” racetrack services on the premises
while the facility was awaiting its racing license. 204 S.W.3d at 35–36. But, ultimately,
the facility’s racing license was denied, and a jury found that it was impracticable for the
partnership to continue. Id. at 36–37, 42–44. We affirmed, noting that the third
partner—Dunnagan—had refused to make any more contributions to the partnership,
that he had opposed the restaurant and backside operations from the start, and that
“the ends of the limited partnership ha[d] been frustrated not only by the failure of the
limited partnership to obtain a racing license and operate a horse racing track, which
was the ‘purpose’ of the limited partnership, but by the seemingly endless disagreements
and discontent.” Id. at 42–44 (applying similar provision in predecessor statute).
Ryne analogizes this case to Dunnagan, but the comparison does not help him.
Unlike in Dunnagan, nothing prevents the Eyecare Partnership from continuing to fulfill
its purposes. There is no evidence that the Eyecare Partnership lacks the governmental
licenses required for the provision of vision treatment services, and there is no evidence
that Lyons has refused to make necessary contributions to the practice. “Toxic”
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workplaces are no doubt unpleasant, but they do not warrant the extraordinarily harsh
remedy of judicial dissolution. See Nerium SkinCare, 2018 WL 2323243, at *7
(recognizing that “[S]ection 11.314 requires more than just a disagreement between
owners” and holding “strained relationship” did not conclusively establish grounds for
dissolution when owners disagreed regarding scope of products sold by company).
Given Texas’s longstanding commitment to the promotion of economic
development and the freedom of contract, courts are loath to shut down profitable,
contract-governed businesses by judicial fiat. The Legislature has provided limited
grounds on which such involuntary dissolution is permitted, and here, there is no
evidence to satisfy any of the grounds relied upon. See Tex. Bus. Orgs. Code Ann.
§ 11.314. The evidence was legally insufficient to support the trial court’s dissolution
of the Eyecare Partnership; we therefore sustain Lyons and Holdridge’s challenge to
the dissolution order.
F. Remaining Issues
We need not address Lyons and Holdridge’s remaining issues. See Tex. R. App.
P. 47.1. Although they assert that the Newberry Offer was a sham, because we disposed
of Ryne’s breach of fiduciary duty, breach of contract, and tortious interference claims
on sufficiency grounds, the “bona fide” nature of the Newberry Offer is moot. The
same is true of their two challenges to the fraud and malice findings underlying the trial
court’s awards of exemplary damages. The exemplary damage awards were premised
43
on Ryne’s fiduciary duty and tortious interference claims, so our reversal of those claims
undermines the exemplary damages as well.
In their final appellate issue, Lyons and Holdridge contend that the trial court
erred by awarding Ryne conditional appellate fees rather than awarding such fees to
whichever party prevailed on appeal. But the attorney’s fees were awarded for Ryne’s
declaratory judgment causes of action, and we have overruled Lyons and Holdridge’s
challenges to those causes of action. Their challenge to the fee award is thus moot
because Ryne has prevailed on the relevant claim on appeal.
III. Conclusion
The trial court properly construed the Holdridge Agreement by giving the phrase
“the Partnership Fair Market Value” its ordinary meaning, but there was insufficient
evidence to support its judgment on the breach of fiduciary duty, breach of contract,
and tortious interference causes of action. Moreover, the dissolution order cannot
stand. We therefore
• affirm the declaratory judgments interpreting the Holdridge Agreement;
• reverse the breach of fiduciary duty judgments and corresponding awards of
compensatory and exemplary damages entered against Robert A. Lyons, P.A.
and render judgment that Wallace Ryne, O.D., P.C. take nothing on those claims;
• reverse the breach of contract judgment entered against Robert A. Lyons, P.A.
and render judgment that Wallace Ryne, O.D., P.C. take nothing on that claim;
• reverse the tortious interference judgments and corresponding awards of
compensatory and exemplary damages entered against Kasey Holdridge and
render judgment that Wallace Ryne, O.D., P.C. take nothing on those claims;
44
• reverse the trial court’s order of dissolution; and
• affirm the trial court’s award of attorney’s fees.
/s/ Bonnie Sudderth
Bonnie Sudderth
Chief Justice
Delivered: July 18, 2024
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