Lewis Haag v. AOT Energy America LLC

NUMBER 13-20-00351-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
LEWIS HAAG, Appellant,
v.
AOT ENERGY AMERICA LLC, Appellee.
On appeal from the 55th District Court
of Harris County, Texas.
MEMORANDUM OPINION
Before Justices Hinojosa, Tijerina, and Silva
Memorandum Opinion by Justice Tijerina
By one issue, appellant Lewis Haag appeals the trial court’s grant of appellee AOT
Energy America LLC’s (AOT) motion for summary judgment and its denial of his cross
motion for summary judgment. We affirm.1
1 This appeal was transferred from the Fourteenth Court of Appeals in Houston, Texas pursuant to
I. PERTINENT FACTS
Haag originally worked for Astra Oil Company LLC as a trader. Subsequently, AOT
purchased Astra and offered Haag employment in a letter (the Offer Letter) stating, in
pertinent part, the following:
On behalf of [AOT], we are pleased to offer you full-time
employment . . . subject to the terms and conditions of this letter.
This offer is contingent upon your resignation from Astra Oil Company LLC,
effective as of July 31, 2016, at 5:00 p.m. A draft resignation letter is
enclosed with this offer letter. If you do not resign from your position with
Astra Oil Company by 5:00 p.m. on July 31, 2016, this offer will expire at
that time. Your Start Date with [AOT] will be August 1, 2016.
Position. Your position with [AOT] will be Distillates Trader. Your title is
subject to change at [AOT’s] discretion.
Salary. You will receive a monthly base salary of $16,666.67 (which equals
$200,000 annually) paid in accordance with [AOT’s] regular payroll
practices. Your salary, as well as any other compensation from [AOT], will
be subject to applicable payroll withholding and deductions. You will be
employed in a salaried, exempt position. This means that you will be paid
your salary regardless of the number of hours worked in a workweek,
subject to certain limitations.
Performance Bonus. You will be eligible to receive an annual discretionary
bonus for any full year of service. For calendar year 2016, your bonus will
be calculated based on the time you spent in 2016 working for Astra Oil
Company LLC, as well as for [AOT]. [AOT], in its sole discretion, will
determine the actual amount of any bonus earned, based on your
performance and contributions, [AOT’s] overall business and financial
performance, as well as [AOT’s] Trader Bonus Rules applicable at the time.
No performance bonus is guaranteed, and performance bonus criteria are
subject to change at [AOT’s] discretion. You must be employed on the day
bonuses are paid to receive a performance bonus.
....
Miscellaneous. Like all [AOT] employees, you will be required, as a
a docket-equalization order issued by the Texas Supreme Court. See TEX. GOV’T CODE ANN. § 73.001.
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condition to your employment, to sign and abide by [AOT’s] other policies,
including the Code of Conduct and Employee Handbook. You also will be
required to comply with all other [AOT] policies and procedures that may be
in effect from time to time. This letter sets forth all of the terms relating to
your employment by [AOT] and supersedes all other discussions,
agreements or representations, whether written or oral, about that topic,
except as provided herein.
If this offer is acceptable, please indicate so by signing below.
If you have any questions or if there is any way we can help you further,
please do not hesitate to call. We look forward to having you as part of
[AOT].
Haag signed the letter on August 1, 2016 and began working as a trader for AOT.
According to Haag, in 2017, he was entitled to a bonus payment of $1.1 million.
Haag claims that AOT only paid 75% of this amount. Haag demanded payment of the
remainder of his 2017 bonus; however, AOT did not pay him. Haag filed suit for breach
of contract seeking $266,458, interest, and attorney’s fees. In his petition, Haag claimed
that AOT told him “in writing and verbally that it would pay the remainder [of the bonus]
as soon as it had resolved certain business issues.” Haag did not identify the contract in
his petition; however, in his motion for summary judgment, Haag clarified that AOT
breached a document entitled “Group Bonus Rules for Traders” (Bonus Rules) explaining
the procedures that AOT applied in calculating and awarding the bonuses to its traders in
2017. The Bonus Rules are part of the summary judgment evidence.
AOT filed a traditional motion for summary judgment arguing that as a matter of
law, the Offer Letter
clearly states that any bonus payment would be at the “sole discretion” of
AOT and that “[n]o performance bonus is guaranteed.” And AOT’s bonus
guidelines, to the extent they constitute a promise, are not supported by
valid consideration. Finally, even if Haag was contractually entitled to a
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bonus payment, he was not employed by AOT on the day bonuses were
paid, which Haag’s employment offer letter makes clear is a condition
precedent to any bonus payment.
Haag filed a competing traditional motion for summary judgment contending that
the Bonus Rules negated AOT’s claim that payment of the bonus was discretionary. Haag
argued, “When an employer promises to pay a bonus according to a formula, once the
employee performs the work, he has earned the bonus. An employer cannot avoid the
obligation by using the label ‘discretionary.’” Haag filed a response to AOT’s motion for
summary judgment arguing,
AOT’s calculation and payment of 75% of Haag’s 2017 bonus using a
formula in a written contract, its admission that it owed Haag $1.18 Million
per the formula, and its promise to pay the remaining 25% pursuant to that
formula contradicts its belated claim that it had no contract, and that Haag’s
bonus was discretionary.
Haag further argued that the Offer Letter was relevant only to the extent that it
stated that AOT could “establish new bonus criteria,” and “[i]n 2017 AOT established new
bonus criteria by enacting detailed rules and a specific formula for how Haag’s 2017
bonus would be calculated and paid.” Haag asserted that the Bonus Rules were not
discretionary stating:
AOT amended the terms of the offer letter in 2017 when it promised Haag
to pay him a bonus according to a formula in the Bonus Rules. The 2017
Bonus Rules contained a specific formula and said that bonuses “will be
paid.” It did not say, bonuses “might be paid,” or that AOT “had discretion”
whether to use the formula. AOT confirmed this promise in the subsequent
communications to another trader and when it took the $7.8 Million in profits
Haag generated, and then paid 75% of his bonus per the formula in the
bonus contract. Having already performed 75% of the contract, AOT should
not be allowed to change its mind and claim it was not bound by its promises
in the 2017 Bonus Rules.
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Haag claimed that the Bonus Rules became an enforceable unilateral contract when he
performed, he was employed when the bonus was due to be paid, and he was not
required to continue his employment indefinitely or after AOT committed the breach.
AOT responded to Haag’s motion for summary judgment arguing that Haag’s
contention that the Bonus Rules constitute a separate and enforceable contract entitling
him to an additional bonus payment “completely ignores the written terms of his
employment as described in” the Offer Letter, which “makes clear that payment of any
bonus is at the sole discretion of AOT . . . .” Moreover, AOT claimed that the Bonus Rules
could not be construed as a contract because Haag offered no consideration. In the
alternative, AOT stated that even assuming the Bonus Rules constituted a contract, Haag
failed to qualify for an additional bonus payment under the Bonus Rules because “[t]he
evidence shows that Haag’s 2018 bonus base was negative $2.8 million.”
The trial court denied Haag’s motion for summary judgment and granted AOT’s
motion for summary judgment. This appeal ensued.
II. STANDARD OF REVIEW AND APPLICABLE LAW
In a traditional motion for summary judgment, the movant has the burden of
showing that no genuine issue of material fact exists and that it is entitled to judgment as
a matter of law. TEX. R. CIV. P. 166a; Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548
(Tex. 1985). If the movant’s motion and summary judgment proof facially establish a right
to judgment as a matter of law, the burden shifts to the nonmovant to raise a material fact
issue sufficient to defeat summary judgment. Centeq Realty, Inc. v. Siegler, 899 S.W.2d
195, 197 (Tex. 1995). A defendant seeking a traditional motion for summary judgment
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must either conclusively disprove at least one element of each of the plaintiff’s causes of
action or plead and conclusively establish each essential element of an affirmative
defense. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995) (per curiam). We review a
summary judgment de novo to determine whether a party’s right to prevail is established
as a matter of law. Dickey v. Club Corp. of Am., 12 S.W.3d 172, 175 (Tex. App.—Dallas
2000, pet. denied). When both parties file competing motions for summary judgment, after
reviewing the evidence presented by both sides, we “render the judgment the trial court
should have rendered.” SeaBright Ins. Co. v. Lopez, 465 S.W.3d 637, 641–42 (Tex. 2015)
(citing Comm’rs Ct. of Titus Cnty. v. Agan, 940 S.W.2d 77, 81 (Tex. 1997)).
In our de novo review of a trial court’s summary judgment, we consider all the
evidence in the light most favorable to party against whom the summary judgment was
rendered, crediting evidence favorable to the nonmovant if reasonable jurors could and
disregarding contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v.
Tamez, 206 S.W.3d 572, 582 (Tex. 2006). The evidence raises a genuine issue of fact if
reasonable and fair-minded jurors could differ in their conclusions considering the
summary-judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754,
755 (Tex. 2007) (per curiam).
“The elements of a breach of contract claim are (1) the existence of a valid contract
between plaintiff and defendant, (2) the plaintiff’s performance or tender of performance,
(3) the defendant’s breach of the contract, and (4) the plaintiff’s damage [from] the
breach.” Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—
Houston [1st Dist.] 2002, pet. denied). We construe an unambiguous contract under a de
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novo standard of review. Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011). Ordinarily,
we enforce an unambiguous contract as written because we presume that the contract
reflects the intent of the contracting parties. Venture Cotton Co-op. v. Freeman, 435
S.W.3d 222, 228 (Tex. 2014); see Royston, Rayzor, Vickery, & Williams, LLP v. Lopez,
467 S.W.3d 494, 501 (Tex. 2015) (explaining that we presume that parties to a written
agreement have knowledge of and understand its contents). We are primarily concerned
with ascertaining the true intent of the parties as expressed in the instrument. Wood Care
Ctrs., Inc. v. Evangel Temple Assembly of God of Wichita Falls, Tex., 307 S.W.3d 816,
820 (Tex. App.—Fort Worth 2010, pet. denied). We determine the parties’ intent of an
unambiguous contract’s meaning from the four corners of the document without the aid
of extrinsic evidence. Mikob Props., Inc. v. Joachim, 468 S.W.3d 587, 595 (Tex. App.—
Dallas 2015, pet. denied). “Contract terms are given their plain, ordinary, and generally
accepted meanings unless the contract itself shows them to be used in a technical or
different sense.” Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005).
III. DISCUSSION
The summary judgment evidence undisputedly shows that Haag accepted AOT’s
Offer Letter when he signed it and began working under its terms. See Rachal v. Reitz,
403 S.W.3d 840, 845 (Tex. 2013) (“Typically, a party manifests its assent by signing an
agreement.”). The Offer Letter states that it “sets forth all of the terms relating to [Haag’s]
employment by [AOT] and supersedes all other discussions, agreements or
representations, whether written or oral, about that topic, except as provided herein.”2
2This is a merger clause, which “is ‘[a] provision in a contract to the effect that the written terms
may not be varied by prior or oral agreements because all such agreements have been merged into the
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The Bonus Rules on the other hand do not contain any language setting forth the terms
of Haag’s employment or the criteria for determining how the trader earns the bonus. The
Bonus Rules merely set out the formula for calculating the amount of the bonus to be
awarded. In addition, unlike the Offer Letter, neither party signed the Bonus Rules, and
there is no promissory language or consideration mentioned in the Bonus Rules.
The elements of a valid contract are (1) an offer, (2) acceptance, (3) a meeting of
the minds, (4) each party’s consent to the terms, and (5) execution and delivery of the
contract with the intent that it be mutual and binding. Prime Prods., Inc., 97 S.W.3d at
636. The Offer Letter contains each element of a valid contract concerning the terms of
Haag’s employment, while the Bonus Rules in isolation contain none of the elements.
Moreover, the Offer Letter clearly states that AOT would determine the amount of
Haag’s bonus based on, among other things, the Bonus Rules applicable at the time.
“Documents incorporated into a contract by reference become part of that contract.” In re
24R, Inc., 324 S.W.3d 564, 567 (Tex. 2010) (original proceeding) (per curiam).
“Documents ‘pertaining to the same transaction may be read together,’ even if they are
executed at different times and do not reference each other, and ‘courts may construe all
the documents as if they were part of a single, unified instrument.’” In re Laibe Corp., 307
S.W.3d 314, 317 (Tex. 2010) (original proceeding) (per curiam). Thus, because the Offer
Letter incorporated the Bonus Rules applicable at the time, we conclude that “both
instruments [the Offer Letter and the Bonus Rules applicable at the time] must be read
written document.’” IKON Office Sols., Inc. v. Eifert, 125 S.W.3d 113, 126 n.6 (Tex. App.—Houston [14th
Dist.] 2003, pet. denied).
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and construed together.” In re C & H News Co., 133 S.W.3d 642, 645–46 (Tex. App.—
Corpus Christi–Edinburg 2003, no pet.).
The Offer Letter specifies that AOT and Haag agreed that he would “be eligible to
receive an annual discretionary bonus for any full year of service,” that for the 2016
calendar year, Haag’s bonus would be calculated based on the time he spent working for
Astra as well as AOT, and that “in its sole discretion” AOT would “determine” the amount
of Haag’s bonus, “based” on (1) his “performance and contributions, [(2) AOT’s] overall
business and financial performance, as well as [(3) AOT’s] Trader Bonus Rules applicable
at the time.” (Emphasis added). Thus, according to the Offer Letter, Haag was eligible for
an annual “discretionary bonus” for any full year of service.
The use of the terms eligible and discretionary in the contract conveys that AOT
was not promising that Haag would absolutely receive an annual bonus but simply that
AOT may have chosen to award a bonus to Haag in its discretion. See Eligible, MERRIAM-
WEBSTER.COM DICTIONARY, https://www.merriam-webster.com/dictionary/eligible (last
visited Jan. 11, 2022) (defining eligible as “qualified to participate or be chosen”);
Discretionary, MERRIAM-WEBSTER.COM DICTIONARY https://www.merriam-
webster.com/dictionary/discretionary (last visited Jan. 11, 2022) (defining “discretionary”
as “left to individual choice or judgment: exercised at one’s own discretion”); see also
Lewis v. Vitol, S.A., No. 01-05-00367-CV, 2006 WL 1767138, at *4–5 (Tex. App.—
Houston [1st Dist.] June 29, 2006, no pet.) (mem. op.) (concluding that the contract’s use
of the term “‘eligible’ is a limitation that is not present in any of the other compensation
provisions, thereby indicating that [the employee] is not guaranteed a bonus, but is
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qualified, or eligible, to be considered for a bonus,” and the phrase “[t]he bonus is at the
sole discretion of the management” did not “contractually entitle[]” an employee to a
bonus).
The Offer Letter stated: “No performance bonus is guaranteed, and performance
bonus criteria are subject to change at [AOT’s] discretion.” Thus, by signing the Offer
Letter, Haag agreed that AOT had discretion to change the performance bonus criteria,
which included the Bonus Rules applicable at the time and that an annual bonus was not
guaranteed. Accordingly, we conclude that AOT met its burden of showing that as a
matter of law, it had discretion to change the Bonus Rules at any time and Haag did not
raise an issue of material fact negating the grant of AOT’s motion for summary judgment.
See TEX. R. CIV. P. 166a; Nixon, 690 S.W.2d at 548. Thus, the trial court properly granted
AOT’s motion for summary judgment and denied Haag’s motion for summary judgment.
We overrule Haag’s sole issue.
IV. CONCLUSION
We affirm the trial court’s judgment.
JAIME TIJERINA
Justice
Delivered and filed on the
27th day of January, 2022.
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