Sutton Levetz, Brenda Gail v. Sutton, Thomas Michael

Reverse and Rendered and Opinion Filed June 3, 2013
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-11-00737-CV
BRENDA GAIL SUTTON LEVETZ, Appellant
v.
THOMAS MICHAEL SUTTON, Appellee
On Appeal from the 401st Judicial District Court
Collin County, Texas
Trial Court Cause No. 401-03472-2009
OPINION
Before Justices O’Neill, FitzGerald, and Lang-Miers
Opinion by Justice FitzGerald
This dispute between siblings Thomas Sutton and Brenda Levetz arises out of a mediated
settlement agreement (“MSA”) in this action and a corollary will contest pending in another
county. Following a determination that Levetz had capacity to enter the MSA, the trial court
signed a final judgment severing Sutton’s breach of contract claim and transferring it to the
county in which the will contest is pending. The court also adopted the MSA as the judgment of
the court and ordered the disbursement of funds as provided in the agreement. In five issues on
appeal, Levetz contends the trial court erred (1) in granting Sutton’s motion to enforce the MSA,
(2) in granting Sutton declaratory relief, (3) in allowing unqualified and unreliable expert
testimony on the issue of capacity, (4) in excluding Levetz’s testimony and the testimony of her
expert, and (5) in severing and transferring the breach of contract claim. We conclude the trial
court erred in granting the motion to enforce the MSA because the only element of the breach of
contract claim tried and considered by the court concerned Levetz’s capacity to enter into the
MSA. Because the issue of capacity is inextricably intertwined with the breach of contract claim,
the trial court erred in severing the claim and transferring it to another county. Accordingly, we
reverse the trial court’s judgment and remand for further proceedings consistent with this
opinion.
BACKGROUND
The death of Sutton and Levetz’s father was the genesis of this contentious dispute
between brother and sister. After his father’s death, Sutton initiated this action complaining that
his father’s December 18, 2008 will left a disproportionate share of the estate to his sister, and
asserted claims of tortious interference, fraud, and breach of fiduciary duty. Levetz answered and
moved to transfer venue of the suit to Bowie County “for convenience and in the interest of
justice,” because the application to probate the will and Sutton’s will contest are pending in
Bowie County.1
The trial court ordered the parties to mediation. The parties engaged in mediation on
February 26, 2010, and ultimately reached a settlement. The settlement was memorialized in the
MSA, which was signed by the parties, approved by their attorneys as to form, and filed with the
court in accordance with Rule 11 of the rules of civil procedure.
Almost four months after the mediation, Levetz filed a motion to set aside the MSA,
alleging her fibromyalgia triggered cognitive problems on the day of the mediation, which,
coupled with sleep deprivation and her medications, resulted in a lack of capacity to enter into a
binding agreement. Sutton moved to compel a mental examination of Levetz. Levetz argued that
the examination should be conducted by a rheumatologist with expertise in fibromyalgia, but the
trial court overruled her objection and ordered Levetz to submit to a psychiatric exam by
1
Sutton’s will contest challenges the will on the grounds of lack of capacity and undue influence.
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Mitchell Dunn, M.D., a forensic psychiatrist. After evaluating Levetz, Dr. Dunn prepared a
report concluding Levetz had the mental capacity to enter into binding contractual relationships
on the day the MSA was signed.
Sutton amended his petition to include a claim for breach of contract and promissory
estoppel, and prayed for damages, or alternatively, “such orders as necessary to compel Levetz to
comply with the terms of [the MSA]”. Sutton also filed a motion to enforce the MSA. The
motion requested the court enter judgment that the MSA “is valid, in force and of full effect.”
Sutton’s motion to enforce the MSA and Levetz’s motion to set aside the MSA were tried
to the bench. During the hearing, both parties focused exclusively on the issue of Levetz’s
capacity to agree to the MSA. Dr. Dunn testified as to his conclusion that Levetz had the
capacity to enter into the MSA. The trial judge refused to allow the mediator to testify about
Levitz’s demeanor and state of mind on the day the MSA was signed, and also excluded the
testimony of Levitz’s expert as not timely disclosed. When the hearing concluded, the court
found Levetz had the mental capacity to agree to the MSA, denied her motion to set it aside, and
granted Sutton’s motion for enforcement.
Sutton then filed a motion to sever, transfer, and enter judgment, and asked the court to
sever his breach of contract claim and transfer it to Bowie County. Sutton’s proposed final
judgment was signed by the trial court.
Levetz filed a motion for reconsideration, or alternatively, for new trial. Levetz argued
that the court’s judgment provided “inconsistent, irreconcilable” relief in that the court purported
to transfer the breach of contract claim it had already ruled upon. Levetz further argued the
evidence was legally insufficient to support Sutton’s breach of contract claim because Sutton
presented no evidence of the essential elements of a breach of contract claim. Finally, Levetz
complained that Dr. Dunn’s testimony had been erroneously admitted into evidence and her
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testimony and that of her expert had been erroneously excluded. In response, Sutton argued that
Levetz mischaracterized the court’s ruling because “the Court was only deciding the
enforceability of the [MSA]. The Court did not take up, and was not asked to take up, Sutton’s
claim for breach of contract and the resulting damages and attorney’s fees.”
Sutton then filed a motion to modify the final judgment. The motion recited that it was
for the purpose of addressing issues raised by Levetz in her motion for reconsideration, and to
“clarify the procedural aspects of [the] court’s resolution of this matter.” Sutton described the
requested modifications to the court’s judgment as follows:
 A specific statement by the Court that it was considering the
parties’ competing requests for declaratory judgment with regard
to the enforceability of the [MSA];
 A specific statement by the court that it was considering only the
parties’ competing request[s] for declaratory judgment;
 Orders by the Court denying [Levitz’s] request for declaratory
judgment; and
 [An] order by the court that all claims that were the subject of the
[MSA] are dismissed in accordance with the [MSA].2
The trial court denied Levetz’s request for reconsideration and a new trial, granted
Sutton’s motion to modify the judgment, and signed a new final judgment. The final judgment
grants Sutton’s “request for declaratory judgment,” adopts the MSA as part of the judgment,
severs Sutton’s breach of contract claim, and transfers the breach of contract claim to Bowie
County. The judgment also orders that interpleaded funds in the registry of the court be disbursed
to Sutton. Upon receipt of both parties’ requests and proposed findings, the trial court made
findings of fact and conclusions of law. This appeal followed.
ANALYSIS
2
Neither party requested declaratory relief in either their pleadings or in their motions. The first mention of declaratory relief appears in
Sutton’s motion to modify the judgment where Sutton urges the court to treat the parties’ respective motions as requests for declaratory relief.
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Severance and Venue
In her fifth issue, Levetz asserts the trial court erred in severing the breach of contract
claim and transferring it to Bowie County. Sutton responds that severance was proper because
the MSA recites that it is performable in Bowie County and Levetz initially agreed to adjudicate
the matter in Bowie County when she filed a motion to transfer venue.3 We begin with the fifth
issue because in the absence of severance there would be no final appealable order subject to our
review. See, e.g., Schieffer v. Patterson, 433 S.W.2d 418, 419 (Tex. 1968).
Rule 41 of the Texas Rules of Civil Procedure states that “[a]ny claim against a party
may be severed and proceeded with separately.” TEX. R. CIV. P. 41. The effect of a severance is
to divide a lawsuit into two or more independent suits that will be adjudicated by distinct and
separate judgments. See Van Dyke v. Boswell, O'Toole, Davis & Pickering, 697 S.W.2d 381, 383
(Tex.1985); see also Beckham Grp., P.C. v. Snyder, 315 S.W.3d 244, 245 (Tex. App. —Dallas
2010, no pet.). The controlling reasons for a severance are to effect justice, avoid prejudice, and
for convenience. See F.F.P. Oper. Partners v. Duenez, 237 S.W.3d 680, 693 (Tex. 2007);
Guaranty Fed. Savs. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex. 1990).
In their administration of Rule 41, trial courts have broad authority and their decisions to
grant or deny a severance will not be reversed on appeal absent an abuse of discretion. Liberty
Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996). The discretion vested in trial
courts is not, however, without limits. Theirs is “a sound and legal discretion within limits
created by the circumstances of the particular case.” Womack v. Berry, 156 Tex. 44, 291 S.W.2d
677, 683 (1956). Such discretion may not be exercised contrary to legal rules and principles
applicable in the particular case. See Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998); Del
Valle Indep. Sch. Dist. v. Lopez, 863 S.W.2d 507, 513 (Tex. App.—Austin 1993, writ denied).
3
Levetz subsequently withdrew her motion to transfer venue.
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Here, the trial court’s severance necessarily implies a conclusion that Levetz’s capacity to
agree to the MSA and Sutton’s claim that Levetz breached the MSA can properly be determined
in independent lawsuits culminating in distinct and separate judgments. We disagree.
The capacity to agree to the MSA and the alleged breach of the MSA are so interwoven
that they involve the same facts and issues. To recover on his breach of contract claim against
Levetz, Sutton had to establish that (1) a valid contract existed; (2) he performed or tendered
performance; (3) Levetz breached the contract; and (4) Sutton was damaged as a result of
Levetz’s breach. See Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202
(Tex. App.—Houston [1st Dist.] 2007, no pet.). The elements required for the formation of a
valid contract are: (1) an offer, (2) acceptance in strict compliance with the terms of the offer, (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. Cessna Aircraft Co. v. Aircraft
Network, L.L.C., 213 S.W.3d 455, 465 (Tex. App.—Dallas 2006, pet. denied). Levetz’s claim
that she lacked the mental capacity to assent is a defense to the formation of the contract. See In
re Morgan Stanley & Co., Inc., 293 S.W.3d 182, 186 (Tex. 2009).
The trial court’s severance did not avoid prejudice or further convenience. Instead, it
separated interwoven issues that share facts and issues that should be tried together. See Fuentes
v. McFadden, 825 S.W.2d 772, 779–80 (Tex. App.—El Paso 1992, no writ) (reversing severance
and concluding severed claim interwoven with remaining action where same grounds asserted in
severed claim were asserted as legal excuse to contract claim in remaining action); Bentley Vill.,
Ltd. v. Nasits Bldg. Co., 736 S.W.2d 919, 922–23 (Tex. App.—Tyler 1987, no writ) (concluding
trial court abused discretion in severing clam arising out of same contract that was subject of
unsevered claims); McWilliams v. Gilbert, 715 S.W.2d 761, 764 (Tex. App.—Houston [14th
Dist.] 1986, no writ) (reversing severance where unsevered claim sought equitable reformation
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of part’s obligation which would affect party’s liability under the severed contract claim).
Therefore, we conclude the trial court abused its discretion in severing the breach of contract
claim.
Based on our review of the record, the transfer of the contract claim to Bowie County
appears to be predicated solely on its severance from the instant case. Because we have
concluded the severance was in error, the transfer of the claim as a result of the severance was
also in error. Levetz’s fifth issue is sustained.
Our determination that the severance order was erroneous does not deprive us with
jurisdiction over the appeal. “‘[A] judgment which possesses all of the attributes of finality can
[not] be regarded as interlocutory merely because the court may have erred in ordering a
severance which it had the power to grant.”’ Bird v. Lubricants, USA, No. 2-06-061-CV, 2007
WL 2460352, at *3, (Tex. App.—Fort Worth Aug. 31, 2007, pet. denied) (mem. op.) (quoting
Pierce v. Reynolds, 329 S.W.2d 76, 79, n.1 ( Tex. 1959)); see also Rucker v. Bank One Tex.,
N.A., 36 S.W.3d 649, 652 (Tex. App.—Waco 2000, pet. denied) (holding determination of error
in severance does not preclude consideration of remaining issues on appeal). Therefore, having
concluded the severance and transfer constituted an abuse of discretion, we now turn to the
remaining issues.
Enforcement of the MSA
In her first two issues, with multiple subparts, Levetz argues the trial court erred in
granting relief on Sutton’s motion to enforce the MSA. Levitz first argues there is insufficient
evidence to support a breach of contract or the award of specific performance. Levetz also
complains that the judgment does not conform to the pleadings and there is no evidence to
support declaratory relief. Finally, Levetz asserts Sutton waived breach of contract as a ground to
support the trial court’s order because the trial court made no findings on the breach of contract
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claim. We begin our inquiry by examining the sufficiency of the evidence to support breach of
contract and specific performance.
In an appeal of a judgment rendered after a nonjury trial, a trial court’s findings of fact
have the same weight as a jury’s verdict, and we review the legal and factual sufficiency of the
evidence used to support them just as we would review a jury’s findings. Catalina v. Blasdel,
881 S.W.2d 295, 297 (Tex. 1994). In conducting a legal sufficiency review of the evidence, we
must consider all of the evidence in the light most favorable to the verdict and indulge every
reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex.
2005). In determining whether legally sufficient evidence supports the finding under review, we
must consider evidence favorable to the finding, if a reasonable fact finder could consider it, and
disregard evidence contrary to the finding, unless a reasonable fact finder could not disregard it.
Id. at 827. When a party attacks the legal sufficiency of an adverse finding on which it did not
have the burden of proof, it must demonstrate that there is no evidence to support the adverse
finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Bellino v. Comm’n for Lawyer
Discipline, 124 S.W.3d 380, 385 (Tex. App.—Dallas 2003, pet. denied). We will sustain a legal
sufficiency or “no evidence” challenge if the record shows one of the following: (1) a complete
absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight
to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is
no more than a scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact.
City of Keller, 168 S.W.3d at 810.
We review a trial court’s conclusions of law de novo, and we will uphold the conclusions
if the judgment can be sustained on any legal theory supported by the evidence. BMC Software
Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Although a trial court’s
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conclusions of law may not be challenged for factual sufficiency, we may review the legal
conclusions drawn from the facts to determine whether the conclusions are correct. Id.
The MSA provides for both parties’ removal of personal property from the family home,
the appointment of a mutually agreeable executor, dismissal of this case and the will contest, and
the sale and division of real and personal property. The MSA further provides for the
disbursement of certain insurance funds interpleaded into the registry of the court. The trial
court’s judgment adopts the MSA in its entirety, dismisses all claims other than the breach of
contract claim and “request for declaratory judgment,” and specifically orders that the $19,500 in
the registry of the court be disbursed to Sutton. In essence, the trial court’s judgment orders
specific performance. See, e.g., Gunter v. Empire Pipeline Corp., 310 S.W.3d 19, 22 (Tex.
App.—Dallas, 2009 pet. denied) (concluding judgment essentially ordered specific performance
of settlement agreement without proper proceedings, pleadings, and proof).
Specific performance is the remedy of requiring exact performance of a contract in the
specific form in which it was made. BLACK’S LAW DICTIONARY 1138 (6th ed. 1990). The
equitable remedy of specific performance may be awarded upon a showing of breach of contract.
Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.—Dallas 2007, pet.
denied). Specific performance is an alternative remedy to damages. See Paciwest, Inc. v. Warner
Alan Props., L.L.C., 266 S.W.3d 559, 575 (Tex. App. — Fort Worth 2008, pet. denied). A party
seeking specific performance must plead and prove (1) compliance with the contract including
tender of performance unless excused by the defendant’s breach or repudiation and (2) the
readiness, willingness, and ability to perform at relevant times. DiGiuseppe v. Lawler, 269
S.W.3d 588, 593–94, 601 (Tex. 2008); see also 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d
252, 258 (Tex. App.—Dallas 2002, pet. denied). Therefore, our analysis turns on whether the
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evidence establishes a breach of contract or other conditions upon which an award for specific
performance might be properly predicated.
The difficulties in this case stem from the trial judge’s use of a summary proceeding to
enforce the MSA. It is well established that when consent to a written settlement agreement has
been withdrawn, a court may not render an agreed judgment on the settlement agreement, but
rather may enforce it only as a written contract. Mantas v. Fifth Court of Appeals, 925 S.W.2d
656, 658 (Tex. 1996). Significantly, “the law does not recognize the existence of any special
summary proceeding for the enforcement of a written agreement, even one negotiated in the
context of a mediation.” Gunter, 310 S.W.3d at 22 (citing Cadle Co. v. Castle, 913 S.W.l2d 627,
631 (Tex. App.—Dallas 1995, writ denied)); see also Martin v. Black, 909 S.W.2d 192, 195
(Tex. App.—Houston [14th Dist.] 1995, writ denied) (“When the legislature enacted the ADR
statute, it did not order the courts to follow a special procedure applicable only to mediated
settlement agreements”). Thus, the party seeking enforcement of an agreement for which consent
has been withdrawn must bring an action for breach of contract. See Cadle, 913 S.W.2d at 630.
Like any other breach of contract claim, a claim for breach of settlement agreement is subject to
the established procedures of pleading and proof. Ford Motor Co. v. Castillo, 279 S.W.3d 656,
663 (Tex. 2009). A party against whom a claim for breach of contract has been asserted is
entitled to be confronted by appropriate pleadings, assert defenses, conduct discovery, and
submit factual disputes to a fact finder. See Staley v. Herblin, 188 S.W.3d 334, 336 (Tex. App.—
Dallas 2006, pet. denied).
As previously noted, recovery on a breach of contract claim requires proof of a valid
contract, performance or tendered performance, breach, and damages. See Winchek, 232 S.W.3d
at 202. Although Sutton amended his petition to include a breach of contract claim, the summary
proceeding did not address all elements requisite to recovery for breach of contract. Instead, the
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hearing focused exclusively on whether Levetz had the capacity to agree to the MSA. Sutton did
not argue or offer evidence that he performed the MSA, tendered performance, or was ready,
willing, and able to perform. There was also no evidence that Levetz breached a material term of
the MSA, or that Sutton suffered any damages. In short, there is no evidence in the record that
Levetz breached the MSA or that Sutton was otherwise entitled to specific performance.
Significantly, the trial court’s recitations in the final judgment describe the limited scope
of the proceeding as involving ‘[a]ll matters in controversy concerning [Levetz’s] capacity to
enter into the [MSA].” The court concluded that “after hearing evidence and arguments of
counsel . . . [Levetz] failed to demonstrate that she lacked capacity to enter into the [MSA].” In
its findings of fact and conclusions of law, the court found, inter alia, the MSA is an enforceable
contract under Texas law and as between the parties, the MSA was formed by a meeting of the
minds and supported by consideration, and Levetz failed to establish she lacked the mental
capacity to enter the agreement. These findings, and the evidence in the record, support only the
first element of a breach of contract claim — the existence of a valid contract. See Cessna
Aircraft, 213 S.W.3d at 465.
The fact that the trial court severed and transferred the breach of contract claim is further
indication that there was no adjudication of breach. Yet, despite the recitations concerning the
narrow scope of the hearing, and the severance and transfer of the breach of contract claim, the
relief afforded in the judgment goes beyond the trial court’s limited determination that the MSA
is a valid and enforceable contract. Indeed, after concluding that the MSA is an enforceable
contract, and expressly reserving the question of breach, the judgment then awards a remedy for
breach in the form of specific performance. It is axiomatic, however, that a determination that an
agreement is enforceable — i.e. capable of being enforced — does not equate to a determination
that a party is entitled to specific performance. On this record, in the absence of evidence to
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establish tendered performance, breach, or repudiation, there is insufficient evidence to support
the award of specific performance. See Pena v. Smith, 321 S.W.3d 755, 758 (Tex. App.—Fort
Worth 2010, no pet.) (concluding evidence legally insufficient to support action to enforce
settlement agreement). Therefore, the trial court’s judgment is in error. The challenges to the
sufficiency of the evidence to support breach of contract and specific performance set forth in
Levetz’s first issue are sustained. We remand the case to the trial court to determine whether the
entire case should be transferred to Bowie County or, if the court determines that the case should
not be transferred to Bowie County, for a determination on the merits of the breach of contract
claim. Because we have concluded the trial court erred in awarding specific performance, we
need not consider Levetz’s remaining issues. See TEX. R. APP. P. 47.1.
CONCLUSION
We reverse the trial court’s judgment and remand the case to the trial court for further
proceedings consistent with this opinion.
/Kerry P. FitzGerald/
KERRY P. FITZGERALD
110737F.P05 JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
On Appeal from the 401st Judicial District
Court, Collin County, Texas
No. 05-11-00737-CV V. Trial Court Cause No. 401-03472-2009.
Opinion delivered by Justice FitzGerald.
SUTTON, THOMAS MICHAEL, Appellee Justices O'Neill and Lang-Miers
participating.
In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and judgment is RENDERED that:
It is ORDERED that appellant SUTTON LEVETZ, BRENDA GAIL recover their costs
of this appeal from appellee SUTTON, THOMAS MICHAEL.
Judgment entered June 3, 2013
/Kerry P. FitzGerald/
KERRY P. FITZGERALD
JUSTICE
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