William C. Cocke v. E. Paul Schexnailder

                              NUMBER 13-02-589-CV

                         COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                         CORPUS CHRISTI - EDINBURG

WILLIAM C. COCKE, ET AL.,                                                       Appellants,

                                                             v.                               

E. PAUL SCHEXNAILDER, ET AL.,                                                Appellees.

       On appeal from the 28th District Court of Nueces County, Texas.

                               MEMORANDUM OPINION

                       Before Justices Hinojosa, Yañez, and Castillo

                            Memorandum Opinion by Justice Yañez

Appellant, William C. Cocke,^[1] challenges the trial court=s granting of summary judgment in favor of appellees, E. Paul Schexnailder,^[2] Chase Bank,^[3] Asset Development Corporation, and Seashore Properties, Inc.  Appellant also contends the trial court erred in denying his motion for new trial.  We affirm.

                                                                  Background

In the 1990's, appellant entered into a business agreement with Schexnailder and C. Bert Williams^[4] to form Seashore Properties, Inc., for the purpose of developing property on North Padre Island.  A dispute arose and in 1996, appellant brought a shareholder derivative suit^[5] (Athe underlying litigation@) against appellees.

After extensive litigation, the parties mediated their dispute and reached a settlement on February 4, 1998.  The written settlement agreement (Athe Agreement@)  provided for appellees to transfer to appellant, on or before March 6, 1998, $300,000.00, all outstanding shares of stock in Seashore Properties, Inc., and the deed to approximately 356 acres of the property, in exchange for the release of all pending claims and the existing lis pendens, and appellant=s promise to perform certain environmental mitigation work under a U.S. Army Corps of Engineers Permit. 

On March 13, 1998, appellant delivered a letter to appellees demanding their tender of performance under the Agreement.  On March 16, 1998, appellees filed with the Registry of the Court the $300,000.00, documents, and the deed called for in the Agreement.  Also on March 16, 1998, appellees filed a AMotion to Approve,^[6] Administer, and Enforce Settlement Agreement,@ which requested that the court maintain jurisdiction over the Agreement and supervise appellant=s performance of his mitigation duties under the Agreement.  Appellees also argued that pursuant to the Agreement, they had delivered drafts of additional settlement documents to appellant, but that appellant had refused to sign such documents.

On April 27, 1998, appellant filed a AThird Supplemental Petition@ and a AMotion  for Declaratory Judgment and Approval and Enforcement of Settlement Agreement,@ both of which requested Aspecific performance@ of the Agreement.  Appellant=s motion for declaratory judgment alleged that appellees had failed to comply with the Agreement in several respects, including (1) improperly tendering performance with the court rather than to appellant directly, and (2) adding Anew special and unagreed to conditions@ to the deed of the property to be transferred to appellant.  Appellant argues that by adding such conditions, appellees have attempted to transfer their mitigation duties on the remainder of appellees= property to appellant.  Appellant argues that under the Agreement, he is responsible only for mitigation of up to six acres of seagrass habitat, and that any other mitigation requirements set forth in the Army Corps of Engineers permit remain the responsibility of appellees.

In light of the parties= dispute regarding the terms of the Agreement, on May 1, 1998, the trial court referred the parties to a Special Master for interpretation of the Agreement.  The Special Master filed a report on June 16, 1998.  The Special Master found that the Agreement requires appellant to assume all obligations for environmental mitigation related to the property as set forth in the Army Corps of Engineers permit.^[7]  The report further states:

In the instant case, should the Court order [appellees] to tender performance before the [appellant] completes mitigation, the Court would indeed run the risk that [appellant] would refuse to perform.  In this connection, the evidence clearly indicates [appellant] does not consider himself responsible for doing the mitigation required by Permit 9009(10); however, he has Ano problem@ and is willing to do up to six acres of the mitigation or pay 25% of the cost.  Were it not for [appellant=s] efforts to avoid this mitigation obligation, I would be more compelled to order immediate transfer.  Under its inherent power, the Court may choose to supervise the terms of the settlement and require performance by [appellant] before requiring performance by [appellees] for this reason.  It is anticipated that I will have to supplement my report after final closing documents are presented to the Court for approval. 

The report also advised the court to approve the Agreement.   

On June 17, 1998, the trial court held a hearing concerning the Special Master=s report.  The court conditionally approved the settlement, ordered the transfer of the real property and stocks to be held in escrow, and ordered the $300,000 to be held in the court=s registry. The court ordered appellant to do the mitigation as required by the permit.  The court stated that after appellant completed the mitigation in accordance with the  specifications of the Corps of Engineers, the deeds would be transferred to appellant. At the hearing, appellees noted their concern that appellant may attempt to avoid his mitigation obligations under the settlement agreement.  Appellees asked the court to require appellant=s performance under the Agreement before requiring performance by appellees.  Appellant=s counsel expressed concern that appellant may be unable to perform the mitigation work without a Corps of Engineers permit in his own name.  

Following a second hearing on July 9, 1998, the parties reached agreement on an order conditionally approving the Agreement.^[8]   The order stated:

On June 18, 1998, came to be heard the Motion for Declaratory Judgment and Approval and Enforcement of Settlement Agreement filed by the Plaintiff, William C. Cocke, and the Motion to Approve, Administer and Enforce Settlement Agreement filed by the Defendants.  All parties appeared by and through their respective attorneys of record.

The Court, after considering the matters of record in this cause, the Report of Special Master Nebrat, including the findings contained therein, the argument of counsel and other pertinent matters, ACCEPTS the Report of Special Master Nebrat filed herein and FINDS that the Settlement Agreement dated February 4, 1998 and entered into by the parties, a copy of which is attached hereto as Exhibit 1 and the terms of which are incorporated into this Order by reference, is fair, adequate and reasonable, and in the best interests of Seashore Properties, Inc., and it is hereby APPROVED with the conditions set forth herein below. 

In accordance with Rule 42 of the Texas Rules of Civil Procedure and under applicable Texas law, the Court further FINDS that good cause exists to continue jurisdiction of this case.

The Court orders immediate transfer of real property and stocks to the Court and orders $300,000 to be placed in the registry of the Court.  Plaintiffs may petition for attorney fees and costs of mitigation. The Court will administer the settlement until complete.  The Court finds that Plaintiff is responsible for mitigation.  The Court will release deeds to Plaintiff upon completion of mitigation and approval of the U.S. Army Corps of Engineers under Permit 9009(10). Deeds are to be simple; transferring ownership to Plaintiff Cocke.

The parties are ordered to cooperate in the drafting and execution of final settlement documents accomplishing the terms of the agreement and this order.  The Court Master may assist the parties in this regard.       

At the conclusion of a hearing on July 15, 1998, appellees agreed to authorize the Asplitting@ of the permit with such authorization to be held in escrow by the trial court until such time that appellant has timely completed the mitigation work to the satisfaction of the Corps of Engineers.  Thereafter, the trial court released $150,000 of the $300,000 in the court=s registry for appellant=s use in performing the mitigation work.  Appellant hired a contractor and work began on the mitigation required under the permit. Following a subsequent hearing on September 2, 1998, the trial court released the remaining $150,000 for continuation of the mitigation work.^[9] 

On September 29, 1998, appellant notified the trial court that the mitigation work was complete and had been certified by Clem Williams (appellant=s engineer in charge of the mitigation) and submitted to the Corps of Engineers for approval.  In a letter to Schexnailder dated September 30, 1998, Schexnailder=s engineer advised that there were Afive substantial items of non-compliance@ regarding the mitigation work.  In early November, 1998, Schexnailder received a letter from Fred Anthamatten of the Corps of Engineers, which expressed several concerns, including  A that the seagrass area may be too deep for seagrass development and survival@ and Athat the pond is not deep enough to discourage the establishment of noxious vegetation.@  The letter further notes several Amodifications@ to the permit plans, which the Corps had approved based on the assumption that Schexnailder was aware of the requests.^[10] 

On November 18, 1998, appellant filed a Supplemental Status Report, which included a copy of a letter from Williams to the Corps in response to the comments regarding seagrass development and the pond.  The letter notes that (1) the seagrass elevations were selected on the basis of a nearby successful seagrass mitigation site and (2) the other items mentioned are not components of the success criteria for habitat development requirements under the permit.

On November 19, 1998, appellees filed a Joint Motion to Declare Default and Breach of the Settlement Agreement, in which they alleged that appellant breached the Agreement by failing to properly perform the habitat construction work.  In support of his argument that the construction was performed properly, appellant relies on a letter addressed to his counsel dated November 19, 1998, from Janet Thomas of the Corps of Engineers.  The letter states, in pertinent part:

In your letter [from appellant=s counsel dated November 16, 1998], you asked whether or not the Corps considered the constructed mitigation, as it stands to date, satisfactory.  As you know, we previously noted several discrepancies in the details of the habitat construction.  However, we are satisfied with the current construction effort and are ready to continue monitoring the success of the mitigation area.  We may need to make future changes to the site, as needed prior to making a final determination as to site success.

You also asked if the Corps was willing, at this time, to transfer portions of Department of the Army Permit 9009(10) from Mr. Paul Schexnailder to Mr. Bill Cocke.  As previously noted, the Corps initiates transfer of all, or portions of, a permit based on the request from the permittee. Therefore, for this action to occur the Corps only needs the permittee to request the transfer and the recipient to accept. 

On December 18, 1998, appellant filed a Motion for Final Closing, Release of Documents, and Final Adjudication, contending that the habitat construction had been completed to the satisfaction of the Corps.^[11]  The same day, December 18, 1998, appellees filed a Motion for Referral to the Special Master, contending that appellant had breached the Agreement by failing to perform the environmental mitigation required under the permit.  Following a hearing, the trial court signed an order dated January 13, 1998,^[12] appointing Special Master Nebrat to determine whether appellant had breached the Agreement.            

The Special Master held hearings on January 20, 1999, February 14, 1999, and July 27, 1999. The Special Master=s second report addressed the following questions:

(a) Did [appellant] breach the February 4, 1998 Settlement Agreement between the parties as interpreted and approved by the Court?

(b) Did [appellant] substantially perform^[13] his obligations under the February 4, 1998 Settlement Agreement as interpreted and approved by the Court?

The report stated, in pertinent part:

3.  Evidence

In determining the questions, I considered the testimony and documentary evidence attached hereto as PX Nos. 1-18 and DX Nos. 1-41.  The record is replete with evidence that is conflicting. Furthermore, the testimony by representatives of the Army Corps of Engineers created a great deal of confusion in their characterization of whether or not they approved Plaintiff=s mitigation work. ATerms of art@ well known to the Corps were not as familiar, if at all, to the parties and the Special Master.

The evidence is clear that the Corps could not Aapprove@ or make a final determination that the requirements of the Permit were completed on September 30, 1998, until the success criteria issues are resolved.  It is unclear if the parties or the Court were aware of this fact on July 9, 1998, at which time the Court entered its Order.  While a letter from the Corps indicates the habitat to be constructed under Permit No. 9009(10), except for sea grass, is Abeyond what is required by the Permit,@ the evidence is also clear that certain aspects of the Habitat Construction are in non-compliance.

Notwithstanding the foregoing evidence, the greater weight and preponderance of the evidence demonstrates that the Corps is Asatisfied@ with the Plaintiff=s efforts to date.  While such language falls short of Aapproval,@ and points out aspects of non-compliance, it still favors an overall Asatisfaction@ scenario.

4.  Findings

(a) I find that Plaintiff is in breach of the Settlement Agreement as interpreted and approved by the Court.

(b) I find that certain aspects of the mitigation which are in non-compliance are not so pervasive and material that they cannot be remedied.  Accordingly, I find that Plaintiff substantially performed his obligations under the Settlement Agreement as interpreted and approved by the Court.  The cost, if any, to remedy those aspects of non-compliance that require remedial measures to cure should remain the obligation of Plaintiff as part of his mitigation undertaking, without limitation.

On July 27, 1999, appellees filed a First Amended Counterclaim for Default and Breach of Settlement Agreement, alleging that appellant (1) breached the Agreement by failing to satisfactorily perform the habitat construction work and (2) engaged in fraudulent misrepresentations regarding the role of the Corps in the habitat construction work.  On August 2, 1999, appellant generally denied appellees= claims, pled substantial performance, and pled that appellees breached the Agreement by acting in bad faith and  interfering with appellant=s ability to complete the mitigation work.  On October 29, 1999, appellant filed a supplemental petition, alleging that appellees breached the Agreement and that appellees fraudulently induced him into the Agreement.  On December 17, 1999, appellees responded to appellant=s claims, asserting defenses and affirmative defenses, including ratification, waiver, estoppel and/or laches, and that appellant=s claims are barred by appellant=s own negligence and unreasonable conduct.  

On December 10, 1999, appellant filed a Motion for Disapproval of the Settlement Agreement, in which he (1) argues he cannot complete the mitigation work because appellees have withdrawn their authorization for him to communicate with the Corps and (2) urges the court to set aside the Agreement and set the case for trial. 

                                    Motions for Summary Judgment

Appellees filed five motions for summary judgment: three claiming entitlement to judgment on their own breach-of-contract claims and two addressing appellant=s fraudulent inducement and breach-of-contract claims.  We briefly describe each of appellees= motions.

                                             Appellees= Breach-of-Contract Claims

                                                                     Motion #1

On November 18, 1999, appellees filed a Motion for Partial Summary Judgment on their breach-of-contract claim against appellant.  Appellees attached as evidence various documents, including a June 4, 1999 letter from the Corps, which stated, in pertinent part:

As you know, we continue to evaluate the recently constructed mitigation site for the subject permit.  As previously stated, we are currently satisfied with the construction of the seagrass habitat associated with the mitigation site.  However, a full compliance determination can not be made until such time, as specified in the permit, the seagrass habitat has had an opportunity to vegetate.

In compliance with our recent request, Shiner, Mosely and Associates, Incorporated provided us with a post-construction survey of the mitigation site.  Based on our review of the survey, we find that the other aspects of the required mitigation site are not in compliance with the requirements of the subject permit.  We have identified significant differences between the required and constructed acreage for both the sand flat and upland habitats.  We have identified these habitats, in consultation with the U.S. Fish and Wildlife Service (FWS), as important resources for the Piping Plover, which is listed as a AThreatened@ species in this region.  As such, we find that these differences may constitute an adverse impact to this species. We expect to begin Informal Consultation Procedures with the FWS in the near future.

Based on the non-compliant status, we will coordinate a meeting with you and the FWS, in the near future, to determine the necessary measures needed to correct the issues. 

Appellees also attached a second letter from the Corps, dated September 27, 1999,  which stated, in pertinent part:

Based on our first assessment of the constructed mitigation area, we found that the acreage constructed for each habitat type was not in compliance with the permitted plans. Focusing on the basic premise of the mitigation area, our initial concern was the success of the seagrass habitat.  We had no information as to the potential impact the acreage differences might have on the piping plover.  Therefore, we found that the appropriate course of action, at that time, was to continue monitoring the seagrass and to reserve our approval until the appropriate time, as stipulated in the permit.

. . . .

Based on the information above, we have determined that the mitigation area is not in compliance with the permitted plans and that the area does not function to meet the basic premise.  Therefore, we are requiring you to redesign the mitigation area . . .

                                                         Motion #2

On December 30, 1999, appellees filed a Joint Supplemental Motion for Partial Summary Judgment on their breach-of-contract claim against appellant.  In the motion, appellees complained of appellant=s failure to release the lis pendens against the property in accordance with the Agreement. In the motion, appellees argue that appellant=s failure to release the lis pendens pursuant to the settlement of his underlying claims constitutes a breach of the Agreement.  A copy of the Notice of Lis Pendens was attached to appellees= motion.

                                                         Motion #3

On November 17, 2000, appellees filed a Second Supplemental Motion for Summary Judgment on their breach-of-contract claim against appellant.  In the motion, appellees argue that correspondence from the Corps establishes that appellant failed to satisfactorily perform the mitigation work required under the permit and therefore breached the Agreement.  In support, appellees attached various correspondence, including the following: 

(1) a January 26, 2000 letter from the Corps stating, Awe have determined that the mitigation area, approved under the subject permit, was not performed in compliance with the approved plans.@  The letter also notes that A[t]he pond, as constructed, is not in compliance with the original permit.@

(2) an April 27, 2000 letter from the Corps stating,

[s]ince we did not have any construction plans [from appellant], we could not have approved them. . . . We do not supervise construction, as this is the responsibility of the permittee to ensure compliance.  Of course, it is our responsibility to determine compliance. Finally, we did not, and still have not, approved work performed in the habitat area.

(3) a June 12, 2000 letter from the Corps, stating, A[a]s of now, nothing has really changed since our last correspondence with Mr. Schexnailder dated April 27, 2000, in which we stated that the mitigation work was not in compliance with the terms and conditions of the permit.@

(4) a September 8, 2000 letter to Schexnailder from the Corps, stating,

We had a meeting with [appellant] and his consultant the afternoon of July 21, 2000.  We advised both you and [appellant] separately, that the project was in violation of the Endangered Species Act, and we would require, in writing, that the project design be changed to resolve the violation. . . . We find that the mitigation directed under Department of the Army Permit 9009(10), was prematurely constructed without adequate review of the site=s existing land features, prior to construction, and that the site was constructed without the Corps= approval of the specific construction plans.  We believe that these actions directly led to the failure of the habitat to meet the overall premise of the permit requirements. . . . As such, we believe material changes are needed to develop a full redesign of the habitat area.

With regard to appellant=s claims that he was fraudulently induced into entering the Agreement and that appellees breached the Agreement, appellees filed two motions for summary judgment, described as follows.

                                        Appellant=s Fraudulent Inducement Claims

                                                                     Motion #4

On December 17, 1999, appellees filed a traditional and no-evidence motion for summary judgment on appellant=s claims.  In response to appellant=s claim that he was fraudulently induced into the Agreement without knowing the scope and nature of the requirements under the permit, appelles argue that appellant is Aestopped and precluded as a matter of law@ from claiming fraud because (1) the issues relating to the habitat mitigation were fully discussed at hearings before the Special Master, (2) the Special Master=s Report established appellant=s obligation to perform the mitigation work Ain the manner and within the time@ prescribed under the permit, (3) the court=s July 9, 1998 order accepted and incorporated the Special Master=s report, and (4) there were no objections to either the Special Master=s report of June 16, 1998 or the court=s order. Appellees argue that on September 2, 1998, appellant represented to the court that he was proceeding with the habitat mitigation construction work and on December 18, 1998, represented to the court that the work had been satisfactorily completed.  In the Ano-evidence@ section of the motion, appellees claim there is no evidence of various elements of appellant=s claims, including evidence that (1) Schexnailder is guilty of willful, malicious, and knowing fraud in the inducement of the Agreement, (2) Schexnailder made any material misrepresentations regarding the Agreement, (3) Schexnailder intended to and did interfere with the Corps= approval of the work, (4) appellant sustained damages, and (5) appellees have failed to comply with the terms of the Agreement.

                                                                     Motion #5

On November 17, 2000, appellees filed a supplemental motion for summary judgment on appellant=s fraudulent inducement and breach-of-contract claims.  In the motion, appellees assert that appellant=s claims are barred by waiver, estoppel, and ratification.  Attached to the motion are several documents, including (1) an excerpt from appellant=s position paper dated May 15, 1998, filed with the Special Master, in which appellant states that he was aware that Schexnailder re-negotiated the permit with the Corps, but the fact that appellant was aware of the new requirements should not be taken to mean that he was willing to take on the mitigation responsibilities of the entire permit; (2) an excerpt from appellant=s deposition, in which appellant concedes that at the time of the Agreement, he had not read the terms and conditions of the permit, but knew that the property he was to receive under the Agreement was encumbered by the requirements of the permit; (3) an excerpt from the deposition testimony of Clem Williams, appellant=s engineer, in which he conceded that appellant understood that it was his responsibility to  perform the requirements for habitat construction under the permit; and (4) an excerpt from the deposition testimony of W.T. Young, appellant=s contractor on the mitigation project, in which he describes the mitigation work he performed for appellant. 

Appellant=s Responses

                                                     January 14, 2000 Response

On January 14, 2000, appellant filed a response to appellees= motions for summary judgment #s 1, 2, and 4 (appellees= first two motions on their breach-of-contract claims and their first motion on appellant=s fraudulent inducement claims).  In the response, appellant argues that he was fraudulently induced into signing the Agreement because at the time of signing, appellees knew that there were Asubstantial@ changes in the requirements for the permit, and appellant=s characterization of the changes as minimal constituted material misrepresentations.  Appellant contends that appellees= engineer filed a report with the Corps which cast doubt as to the quality of the work completed by appellant.  Appellant attached various documents to the response, including (1) the Agreement, (2) the November 19, 1998 letter from the Corps stating Awe are satisfied with the current construction effort@ and Amay need to make future changes . . .  prior to making a final determination as to site success,@ (3) the second Special Master report, (4) Schexnailder=s deposition testimony, (5) the September 24, 1998 letter from appellant=s engineer reporting completion of the habitat work, and (6) appellant=s own affidavit, dated January 11, 2000 (Appellant=s First Affidavit),^[14] in which he states that Schexnailder made material representations which induced appellant into signing the Agreement, specifically, that Schexnailder knew at the time of the Agreement that there was a new habitat construction plan that enlarged the scope of the work.

                                                   November 30, 2000 Response

Appellant filed a second response to appellees= motions on November 30, 2000.   In the response, appellant objected to the court=s consideration of appellees= motions on grounds that discovery was not substantially complete; specifically, appellant complains he had unsuccessfully sought to take the deposition of Schexnailder=s engineer, Joe Mosely.  Attached to appellant=s response were (1) the affidavit of appellant, dated November 30, 2000 (Appellant=s second affidavit) and the affidavit of his attorney, David Crago, and (2) the depositions of W. T. Young (appellant=s contractor) and Clem Williams (his engineer).  Appellant=s affidavit disputes several of appellees= statements about appellant; the affidavit does not address any fraudulent conduct by Schexnailder. In the motion, appellant Acites the deposition of W. T. Young and Clem Williams in their entirety and under the totality of the circumstances to fully understand the evolution of the development plans, specification, construction plans, as built diagrams, and actual construction evolution as completed.@  Accordingly, appellant does not cite the depositions as evidence of any fraudulent conduct by Schexnailder.  

                                          Hearing on Summary Judgment Motions

On December 8, 2000, the trial court held a hearing on all of appellees= motions for summary judgment.  At the hearing, appellees argued that by failing to perform the mitigation work to the satisfaction of the Corps, appellant had materially breached the Agreement and because of appellant=s breach, appellees should be legally excused from further performance under the Agreement. Appellant argued that the result urged by appellees was inequitable and that the court should Ano longer approve@ the Agreement^[15] and should Agive [appellant his] lawsuit back.@  The court noted that it had spoken to the Corps regarding the mitigation.  The court stated

I=m looking at my notes and what I remember them telling me is that the mitigation that was done was not pursuant to the permit.  That it wasB it looked like that it was okay but then certain time passed.  They knew firsthand, and they knew just by the things that were happening to theB to some species or grass or something, that it had not been followed as the permit required. So, they felt that whoever had done the mitigation did not go by what was initially permitted for the mitigation part.  So, with that understanding, it seems that the mitigation was not done the way it should have been done.   

The trial court took the motions under advisement, and on February 15, 2001, issued an order granting all of appellees= motions.  The order stated, in pertinent part:

1. [Appellees=] objections to [appellant=s] summary judgment evidence are well taken and are hereby SUSTAINED.

2. [Appellant] materially breached the February 4, 1998, Settlement Agreement between the parties.

3. [Appellees] are legally excused from any further obligations to perform under the February 4, 1998, Settlement Agreement.

4. [Appellees=] Motions for Summary Judgment as to the breach of contract claim against [appellant] are GRANTED.

5. [Appellees=] Motions for Summary Judgment as to [appellant=s] claims of fraud, fraudulent inducement and breach of contract are GRANTED.

Appellant filed several motions for new trial and reconsideration, alleging, among other things, that newly-discovered evidence mandated the granting of a new trial.  On July 25, 2002, the trial court entered a judgment disposing of all claims.^[16]  The court ordered appellant=s original claims in his underlying lawsuit dismissed pursuant to the Agreement

and ordered that appellant take nothing pursuant to the court=s February 15, 2001 summary judgment order.^[17] 

In his first three issues, appellant contends the trial court erred in granting appellees= motions for summary judgment.  In his fourth issue, appellant complains that the trial court=s judgment is inequitable because it deprives appellant of both the benefits of the Agreement and his original lawsuit.  In his fifth issue, appellant contends the trial court erred in denying his motion for new trial. 

                                                            Standard of Review              

The standard of review for the grant of a motion for summary judgment is determined by whether the motion was brought on no‑evidence or traditional grounds.^[18]  We review de novo a trial court's grant or denial of a traditional motion for summary judgment.^[19]  The movant bears the burden of showing both no genuine issue of material fact and entitlement to judgment as a matter of law.^[20]  In deciding whether there is a genuine issue of material fact, we take evidence favorable to the non‑movant as true.^[21]  We make all reasonable inferences and resolve all doubts in favor of the non‑movant.^[22]

A no‑evidence summary judgment is equivalent to a pretrial directed verdict, and this Court applies the same legal sufficiency standard on review.^[23]  In an appeal of a no‑evidence summary judgment, this Court reviews the evidence in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences.^[24]  If the nonmovant produces evidence to raise a genuine issue of material fact, summary judgment is improper.^[25]  All that is required of the non‑movant is to produce a scintilla of probative evidence to raise a genuine issue of material fact.^[26]  "Less than a scintilla of evidence exists when the evidence is 'so weak as to do no more than create a mere surmise or suspicion of a fact.'"^[27]  Conversely, more than a scintilla exists when the evidence "rises to a level that would enable reasonable and fair‑minded people to differ in their conclusions."^[28]  The burden of producing evidence is entirely on the non‑movant; the movant has no burden to attach any evidence to the motion.^[29]

                                                                      Analysis

In his first two issues, appellant contends the trial court erred in granting summary judgment in appellees= favor on their breach-of-contract claim.  Appellant contends that there is a genuine issue of material fact as to whether he breached the Agreement.  In support, appellant points to (1) the September 24, 1998 letter from his engineer, Clem Williams,  reporting that the construction was complete under the terms of the permit, (2) Williams=s deposition testimony that he submitted an as-built drawing indicating that the construction was complete, (3) Young=s deposition testimony that he timely completed the construction work, and (4) the November 19, 1998 letter from the Corps, noting Aseveral discrepancies in the details of the habitat construction,@ but noting Awe are satisfied with the current construction effort.@  Appellant argues that whether he timely and satisfactorily performed the mitigation work should be measured at the deadline for completing the work, September 30, 1998.  Appellant contends that much of appellees= summary judgment evidence, dated much later than the date of compliance, cannot establish appellant=s non-compliance. Alternatively, appellant argues that the summary judgement evidence raises  a genuine issue of material fact as to whether he Asubstantially performed@ under the Agreement.  Appellant argues that his performance of the mitigation was a Arelatively minor@ portion of the consideration given by appellant under the Agreement.  Appellant also points to the Special Master=s findings that although appellant breached the Agreement, he Asubstantially performed@ his obligations under the Agreement.  We are unpersuaded by appellant=s arguments. 

We agree with appellees that appellant failed to produce any evidence that controverted the fact conclusively established by the Corps= correspondence that the habitat construction work was not properly performed.  Accordingly, we conclude that appellees conclusively established the absence of any genuine question of material fact and their entitlement to judgment as a matter of law.^[30]

The elements in a suit for breach of contract are (1) a valid contract, (2) the plaintiff performed or tendered performance, (3) the defendant breached the contract, and (4) the plaintiff was damaged as a result of the breach.^[31]  If a contract is unambiguous, the court must interpret the contract and determine whether a party has breached the contract as a matter of law.^[32] 

Appellant argues that the summary judgment standard of review requires that we  Agive deference to the Corps statements that it was satisfied with the construction in the letters of November 19, 1998 [from Janet Thomas] and June 4, 1999 [from Fred Anthamatten]" and de-emphasize later Corps correspondence less favorable to appellant=s position.  According to appellant, the November 19, 1998 letter is the A[m]ost significant of all the summary judgment evidence.@  Viewing the evidence, as we must, in the light most favorable to appellant,^[33] we conclude that even the letters of November 19, 1998 and June 4, 1999 establish that appellant had not completed the mitigation work to the satisfaction of the Corps by September 30, 1998 and had therefore breached the Agreement.  The November 19, 1998 letter refers to Aseveral discrepancies in the details of the habitat construction@ and notes Afuture changes@ that may be necessary Aprior to making a final determination of site success.@  The June 4, 1999 letter notes that although the Corps is Acurrently satisfied@ with the seagrass habitat, Aother aspects of the required mitigation site are not in compliance with the requirements of the subject permit.@  We conclude that the summary judgment evidence establishes that appellant breached the Agreement. 

Appellant also argues summary judgment was improper because there is a fact issue as to whether he substantially performed under the Agreement.  Appellant contends that his agreement to give up his lawsuit, in and of itself, is evidence of substantial performance of the Agreement and that his performance of the mitigation was Aa relatively minor portion of [his] consideration.@  We disagree.

If a party has committed a material breach of a contract, his performance cannot be substantial.^[34]  In determining substantial performance, there must be no wilful departure from the terms of the contract and no omission of essential points of the project.^[35]  The party seeking relief under the doctrine bears the burden of proving that he did substantially perform in accordance with the agreement.^[36]  One of the most obvious factors to be considered in determining substantial performance is the extent of the nonperformance.^[37] The deficiency will not be tolerated if it is so pervasive as to frustrate the purpose of the contract in any real or substantial sense.^[38]

Here, the evidence shows that appellant=s non-performance was so pervasive that it frustrated the purpose of the Agreement. The September 27, 1999 letter from the Corps advised Schexnailder that because Athe mitigation area is not in compliance with the permitted plans,@ it was requiring Aredesign [of] the mitigation area.@  We conclude that the summary judgment evidence did not raise a genuine issue of material fact that appellant substantially performed under the Agreement.  We overrule appellant=s first and second issues. 

In his third issue, appellant contends the trial court erred in granting summary judgment in appellees= favor on appellant=s claims for fraudulent inducement and breach of contract.  Appellant=s breach-of-contract claim is based on his contention that appellees breached the Agreement first by tendering performance to the trial court.  Appellant=s fraudulent inducement claim is based on his claim that at the time of the Agreement, Schexnailder knew there were substantial changes in the permit requirements, but misrepresented the changes as minimal.

Appellees argue that appellant=s express agreement to the trial court=s July 9, 1998, order, which required appellees to tender performance into the registry of the court, waived any claims that such tender of performance by appellees breached the Agreement.  We agree. Moreover, we conclude that in his responses to appellees= no-evidence motions, appellant offered no evidence to raise a genuine issue of material fact as to either his breach-of-contract claim or his fraudulent inducement claim.

As noted above, appellant=s evidence of fraudulent inducement consisted of his own affidavit (appellant=s First Affidavit) stating that Schexnailder induced him into signing the Agreement by misrepresenting the scope of the mitigation work.  Appellant=s affidavit states that Schexnailder made Amisrepresentations@ that were Afalse and fraudulent@ by stating that Athere were no changes in the current permit 9009(10) from permit 9009(09) except for placing the permit site for all the mitigation in the 358 acres in question and that there was no requirement of the immediate planting of sea grasses.@  Appellant states it was his Aclear understanding@ that Schexnailder had described all the changes between the two permits.  Appellant states that he later learned there were additional requirements.   

A summary judgment may be based on the uncontroverted testimonial evidence of an interested witness if the evidence is clear, positive, and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted.^[39] In addition, affidavits must set forth facts and cannot be conclusory.^[40]  ASubjective beliefs@ are not susceptible to being readily controverted and, therefore, are not competent summary judgment evidence.^[41]  Self‑serving statements of interested parties, testifying as to what they knew or intended, do not meet the standards of Texas courts for summary judgment.^[42]  Issues of intent and knowledge are not susceptible to being readily controverted and are inappropriate for summary judgment.^[43]

We conclude that appellant=s First Affidavit contains conclusory statements and statements as to what the parties knew or understood.  The trial court properly sustained appellees= objections to appellant=s affidavits. Accordingly, we conclude the trial court properly granted summary judgment in appellees= favor on appellant=s breach-of-contract and fraudulent inducement claims.  We overrule appellant=s third issue.

In his fourth issue, appellant contends the trial court erred in allowing appellees to terminate the Agreement and their obligations under it and still claim the benefits of the Agreement.  Appellant argues that because appellees elected to repudiate the Agreement due to his alleged breach, the Agreement must be considered rescinded as to both parties.  According to appellant, the trial court erred in allowing appellees to keep the deed while dismissing his underlying lawsuit with prejudice. 

It is a fundamental principle of contract law that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance.^[44]  The determination of whether a breach is a material breach of the contract must necessarily turn on the facts of each case, but the following circumstances influence that decision:

(a) The extent to which the injured party will obtain the substantial benefit which he could have reasonably anticipated;

(b) The extent to which the injured party may be adequately compensated in damages for lack of complete performance;

(c) The extent to which the party failing to perform has already partly performed or made preparations for performance;

(d) The greater or less hardship on the party failing to perform in terminating the contract;

(e) The wilful, negligent or innocent behavior of the party failing to perform;

(f) The greater or less uncertainty that the party failing to perform will perform the remainder of the contract.^[45]

Here, the evidence shows that appellees are unlikely to obtain the benefit they reasonably anticipated.  In the court=s words, Athe mitigation was not done the way it should have been done.@  The September 27, 1999 letter from the Corps advised Schexnailder that because Athe mitigation area is not in compliance with the permitted plans,@ it was requiring Aredesign [of] the mitigation area.@  We conclude that the trial court did not err in finding that appellant materially breached the Agreement and that appellees were legally excused from further performance under the Agreement.  We overrule appellant=s fourth issue.

In his fifth issue, appellant contends the trial court abused its discretion in denying his motion for new trial based on newly-discovered evidence.  Appellant points to the newly-discovered evidence of (1) the deposition testimony of Joe Moseley, Schexnailder=s engineer, and (2) the deposition testimony of Fred Anthamatten.  According to appellant, Moseley=s deposition testimony establishes that there was a civil conspiracy between Moseley and Schexnailder to manipulate or fabricate the Corps= disapproval of the mitigation construction.  Appellant also argues that because Anthamatten testified that the only approval the Corps can give on construction work is Afinal@ approval, his testimony establishes the impossibility of performance. 

We have already determined that the trial court did not err in refusing to consider Anthamatten=s deposition testimony from a separate federal proceeding.  With respect to the Anewly-discovered@ evidence of Moseley=s deposition testimony, appellant points to Moseley=s testimony that he may have asked the Corps to be strict in its interpretation of the permit requirements.  Appellant also notes a contact report from May 14, 1999, reflecting a phone conversation between Lynnda Kahn, Moseley=s employee, and Pat Clement with the Fish and Wildlife Service.  The report provides:

Purpose: To see where things stand w/ yall regarding the Commodores Cove [the property at issue] mitigation?  What if we were to send you a letter stating that the algal flats have now become mostly vegetated, and that there are very little unvegetated sandflats remaining as well If we ask for your input regarding impacts to threatened & endangered species specifically the piping plover, could you then get something to the USCE?

Response: Our hands are pretty much tied unless we get something in writing from the USCE requesting that we re-initiate consultation . . . If we were to receive a request from y=all we would respond in writing & at same time we could copy the USCE & state our concerns w/ possibility that we could even request informal if not formal consultation. 

A party seeking a new trial on the ground of newly-discovered evidence must satisfy the court that (1) the evidence came to his knowledge since the trial, (2) it was not because of lack of due diligence that it did not come sooner, (3) the new evidence is not cumulative, and (4) the new evidence is so material that it would probably produce a different result if a new trial was granted.^[46]  The trial court has wide discretion in ruling on a motion for new trial, and its action will not be disturbed on appeal absent a showing of an abuse of discretion.^[47]

Here, the Anewly-discovered@ evidence shows only that Schexnailder was in communication with the Corps with regard to the status of the mitigation work. We conclude that the evidence is not so material that it would probably produce a different result if a new trial was granted.^[48]  We overrule appellant=s fifth issue.

Having overruled all of appellant=s issues, we AFFIRM the trial court=s judgment.                                                                                      

_______________________

LINDA REYNA YAÑEZ,

Justice

Memorandum Opinion delivered and

filed this the 23rd day of March, 2006.      

---

^[1] Appellant is William C. Cocke, individually and in the right of Seashore Properties, Inc.

^[2] Individually and as officer and director of Seashore Properties, Inc.

^[3] Executor of the estate of C. Bert Williams.

^[4] Williams died in 1997.  Thereafter, his interest in the underlying litigation has been represented by the executor of his estate, Chase Bank. 

^[5] See Tex. Rev. Civ. Stat. Ann. art. 5.14 (Vernon 2003).

^[6] See id. art. 5.14(I) (providing that a derivative proceeding may not be discontinued or settled without approval of the court). Appellees= motion urged that the Agreement required court approval pursuant to former rule of civil procedure 42(a), which provided, in pertinent part, that a derivative suit shall not be dismissed or compromised without the approval of the court. In 2003, rule 42 was amended and the paragraph in subdivision (a) concerning derivative suits was deleted because it was redundant of article 5.14(I).  See Tex. R. Civ. P. 42  cmt.

^[7] Specifically, in his report, the Special Master found that paragraph 4 of Exhibit AA@ of the Agreement required appellant to

assume all liabilities and obligations connected or related to the real property described in Exhibit AB@ of the Settlement Agreement, and such obligations include, but are not limited to, environmental mitigation required in U.S. Army Corps of Engineers Permit 9009(10) and that such mitigation shall be in the manner and within the time prescribed by Permit 9009(10).

Paragraph 4 of Exhibit AA@ of the Agreement provides:

4. In consideration of the property and stock conveyed in Paragraph 1 and 2 above, William C. Cocke and Seashore Properties, Inc. agree to assume all liabilities and obligations connected or related to ownership of the real property thereof, including but not limited to Corp [sic] of Engineer permits, and Environmental Mitigation, as worded in Westinghouse transfer of this real property.

Exhibit AB,@ attached to the Settlement Agreement, is a map depicting a planned development.

In his April 27, 1998 motion, appellant argues that the Areal property thereof@ referenced in paragraph 4 of Exhibit AA@ is Aa portion of the property known as Commodore=s Cove and portions of Fairway Estates.@ Appellant argues that the only mitigation required prior to the development of  Commodore=s Cove is mitigation of Aup to six acres of seagrass habitat.@ In support, appellant points to a fifteen-page Corps of Engineers document dated November 2, 1994, outlining modifications to Permit No. 9009(09).

^[8] The only dispute between the parties regarding the language of the order was appellant=s desire to  include a sentence stating, A[i]f the mitigation is not done, the Court will not approve the settlement agreement and not release the documents and a trial will be set.@  Appellees opposed inclusion of the sentence on grounds that it suggests that there was no agreement.  The sentence was not included in the order.  In announcing the decision to omit the sentence, the trial court stated, AI think the remedies will be what the parties will have if there is a breach of the settlement agreement and that will be the remedies at law that each would be entitled to do, or have the right to do.@

^[9] At the September 2, 1998, hearing, appellant=s counsel and his contractor told the court that Mark King of the Corps of Engineers was monitoring the project Aon a daily basis.@ At a hearing on January 21, 2000, appellant admitted that he Anever saw the Corps on the job site ever@ and that the Corps Anever even checked the work while we were under construction, and for six months after the work was over with, they never even came out and looked at it because they relied on Mr. Williams.@

^[10] Schexnailder was not consulted regarding the modifications to the permit plans. 

^[11] In support of his assertion, appellant attached a copy of the November 19, 1998 letter from the Corps. 

^[12] Because the hearing took place on December 22, 1998, we assume the trial court=s order appointing the Special Master was issued January 13, 1999. 

^[13] At the July 13, 1999 status hearing, the Special Master announced that he intended, at the trial court=s direction, to address the issue of Asubstantial compliance.@ Appellees filed objections to the inclusion of Asubstantial compliance@ as an issue before the Special Master.

^[14] On December 6, 2000, appellees filed objections to appellant=s first and second affidavits.  Appellees objected to both affidavits on numerous grounds, including that (1) neither affidavit positively avers that the statements contained therein are true and correct; (2) the statements are unsubstantiated and unqualified legal opinions or conclusions; and (3) the statements are unsubstantiated factual opinions or conclusions.  The trial court=s order granting summary judgment in appellees= favor states that appellees= objections to appellant=s summary judgment evidence are Awell taken and are hereby SUSTAINED.@

^[15] At the conclusion of the hearing, the trial court denied appellant=s motion to set aside the Agreement.

^[16] After the order granting summary judgment, appellees= remaining claims were non-suited and claims asserted by Intervenor W. T. Young were severed. 

^[17] On August 23, 2002, appellant filed another Motion for New Trial, attaching the Anewly-discovered@ evidence of the deposition of Fred Anthamatten, a representative of the Corps, taken in a separate federal court proceeding to which appellee Chase Bank was not a party.  Appellees objected to the trial court=s consideration of the deposition.  The court sustained the objections and denied appellant=s motion for new trial.

^[18] See Tex. R. Civ. P. 166a(i), (c); see also Ortega v. City Nat'l Bank, 97 S.W.3d 765, 771 (Tex. App.BCorpus Christi 2003, no pet.) (op. on reh'g).

^[19] Ortega, 97 S.W.3d at 772.

^[20] See Tex. R. Civ. P.  166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985); see also Ortega, 97 S.W.3d at 771.

^[21] Ortega, 97 S.W.3d at 771.

^[22]  Id.

^[23] Id. at 772. 

^[24]  Id.

^[25] Tex. R. Civ. P. 166a(i).

^[26] Ortega, 97 S.W.3d at 772.

^[27] Id. (quoting Kindred v. Con/Chem Inc., 650 S.W.2d 61, 63 (Tex. 1983)).

^[28] Id. (citing Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994)).

^[29] Tex. R. Civ. P. 166a(i).

^[30] See Tex. R. Civ. P. 166a(c).

^[31] Keszler v. Mem=l Med. Ctr. of E. Tex., 105 S.W.3d 122, 128 (Tex. App.BCorpus Christi 2003, no pet.).

^[32] Meek v. Bishop Peterson & Sharp, P.C., 919 S.W.2d 805, 808 (Tex. App.BHouston [14th Dist.] 1996, writ denied).  

^[33] See Ortega, 97 S.W.3d at 772.

^[34] Patel v. Ambassador Drycleaning & Laundry Co., Inc., 86 S.W.3d 304, 309 (Tex. App.BEastland 2002, no pet.).

^[35] Smith v. Smith, 112 S.W.3d 275, 279 (Tex. App.BCorpus Christi 2003, no pet.).

^[36] Id.

^[37] O. W. Grun Roofing & Constr. Co. v. Cope, 529 S.W.2d 258, 261 (Tex. Civ. App.BSan Antonio  1975, no writ).

^[38] Id.

^[39] Tex. R. Civ. P. 166a(c); Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997).

^[40] Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996).

^[41] Tex. Div.‑Tranter, Inc. v. Carrozza, 876 S.W.2d 312, 314 (Tex. 1994); Allied Chem. v. DeHaven, 752 S.W.2d 155, 158 (Tex. App.BHouston [14th Dist.] 1988, writ denied).

^[42] See Allied Chem., 752 S.W.2d at 158.

^[43] Id.

^[44] Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004).

^[45] Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692-93 (Tex. 1994). 

^[46] Jackson v. Van Winkle, 660 S.W.2d 807, 809 (Tex. 1983); Lopez v. Lopez, 55 S.W.3d 194, 202 (Tex. App.BCorpus Christi 2001, no pet.).

^[47] In re Bayerische Motoren Werke, 8 S.W.3d 326, 327 (Tex. 2000); Lopez, 55 S.W.3d at 202.

^[48] See Lopez, 55 S.W.3d at 202.