George Biggs v. ABCO Properties, Inc., Trustee, John Able and David Monroe

                             NUMBER 13-03-00398-CV

                         COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                         CORPUS CHRISTI B EDINBURG

GEORGE BIGGS, EASTERN BLOC ENTERTAINMENT,

LTD., ALTAR BOYS MANAGEMENT COMPANY, L.L.C.,

ROBERT W. THOMAS, AND JOHN S. WOODS,                           Appellants,

                                                             v.

ABCO PROPERTIES, INC.,                                                               Appellee.

     On appeal from the 157th District Court of Harris County, Texas.

                       MEMORANDUM OPINION

                  Before Justices Hinojosa, Yañez, and Garza

                         Memorandum Opinion by Justice Hinojosa

This is an appeal from a summary judgment.  In five issues, appellants, Eastern Bloc Entertainment, Ltd. (the APartnership@), Altar Boys Management Company, L.L.C., Robert W. Thomas and John S. Woods (collectively AEastern Bloc@) appeal the denial of their motion for partial summary judgment and the granting of the motion for summary judgment of appellee, ABCO Properties, Inc.  In a single issue, appellant, George Biggs, complains of the trial court=s calculation of the damages assessed against him.  We modify the judgment, and as modified, affirm.

                                                   A.  Factual Background

On March 24, May 15, and July 1, 1999, the parties executed three agreements whereby ABCO transferred to the Partnership $235,000, $140,000, and $20,000, respectively. Altar Boys Management, and Thomas and Woods in their individual capacities, executed guaranties in conjunction with all three transfers.  Biggs executed guaranties in conjunction with the second and third transfers only, totaling $160,000.  Also in conjunction with the transfers, the Partnership granted ABCO security interests in a lease and all personal property held by the Partnership.  The parties executed a fourth agreement on September 7, 1999, amending their business relationship, and a fifth agreement on May 1, 2000, after the Partnership had defaulted on repayment of the previous transfers.  The May 2000 agreement restructured the repayment of the original transfers and settled various disputes that had arisen among the parties.  The Partnership subsequently defaulted on the May 2000 agreement, and ABCO brought suit to recover under the agreement and to collect on the guaranties and security interests.

                                                     B.  Standard of Review

The standard of review for the granting of a traditional motion for summary judgment is well settled. See Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985);  Alejandro v. Bell, 84 S.W.3d 383, 390 (Tex. App.BCorpus Christi 2002, no pet.).  When both parties move for summary judgment and one motion is granted and the other is denied, we must rule on all questions presented by the motions and render such judgment as the trial court should have rendered.  Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988); Lorenz v. Janssen, 116 S.W.3d 421, 424 (Tex. App.BCorpus Christi 2003, no pet.).          

The issues presented by this case primarily involve interpretation of the various agreements executed between the parties throughout their business relationship.  A[I]f a written contract is so worded that it can be given a certain or definite legal meaning or interpretation, it is not ambiguous@ and will be enforced as written.  Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex. 1951) (quoting Lewis v. East Tex. Fin. Co., 146 S.W.2d 977, 980 (Tex. 1941)).  AAn ambiguity does not arise simply because the parties advance conflicting interpretations of the contract.@  Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996).  None of the contracts at issue in this case are ambiguous, therefore we are Aobligated to interpret [them] as a matter of law.@  Dewitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999); see also Columbia Gas, 940 S.W.2d at 589 (AWhether a contract is ambiguous is a question of law for the court.@). When interpreting the language of a contract, our primary concern is Ato ascertain and to give effect to the true intention of the parties.@  Daniel, 243 S.W.2d at 158.  To achieve this end, we examine and consider the entire writing, seeking as best we can Ato harmonize and to give effect to all the provisions of the contract so that none will be rendered meaningless.@  Id.

                                                                     C.  Usury

In their first issue, the Eastern Bloc appellants complain that the trial court erred in granting ABCO=s motion for summary judgment because they established as an affirmative defense that the original notes underlying the May 2000 agreement were usurious.^[1]  In their second issue, the Eastern Bloc appellants contend the trial court erred in denying their partial motion for summary judgment for the same reason.

ABCO asserts that any claims of usury with regard to the prior notes are waived.  We agree. 

The May 2000 agreement was executed as a settlement between the parties.  When Eastern Bloc defaulted on their repayment obligations under the original notes, ABCO brought suit against them to enforce the notes.  In response to that lawsuit, the parties negotiated the May 2000 agreement which altered the terms of the repayment, including the amount of interest, thus removing any usury that may have been present in the original notes.  In addition, the May 2000 agreement contained a release clause which stated:

It is agreed by all parties that no claim of usury shall be made against ABCO . . . with respect to the transactions reflected in this agreement and in the ABCO investment documents, and any such claims are hereby waived for all time and for all purposes. . . .  It is the express intent of this agreement that no party hereto shall ever raise or claim that the payments to ABCO set forth herein are usurious or constitute interest. 

The May 2000 agreement further stated that in exchange for the release and execution of the new agreement, ABCO agreed to dismiss the pending litigation.  We find this writing to be sufficient to constitute an effective release by the Eastern Bloc appellants of any usury claims they may have had with regard to the underlying transactions.  Although no money was exchanged for the release, the settlement of contested litigation is sufficient consideration to support a contract or a compromise settlement agreement.  See Schuh v. Schuh, 453 S.W.2d 203, 204 (Tex. Civ. App.BDallas 1970, no writ).  Such a release constitutes a complete bar to any later action upon the matters contained therein.  Schmaltz v. Walder, 566 S.W.2d 81, 83 (Tex. Civ. App.BCorpus Christi 1978, writ ref=d n.r.e.) (citing Hart v. Traders & Gen. Ins. Co., 189 S.W.2d 493, 494 (Tex. 1945)); see also Finn v. Alexander, 163 S.W.2d 714, 716 (Tex. 1942) (AIt is also settled that an accrued cause of action for the collection of usurious interest paid may be compromised and released by the payer.  The compromise, however, must be made in good faith and the instruments evidencing same must not be executed to cloak the real transaction.@); Monsanto Co. v. Davis, 97 S.W.3d 642, 646 (Tex. App.BWaco 2002, pet. denied) (noting that a global release clause executed as part of a settlement could preclude a claim of usury); Lesbrookton, Inc., v. Jackson, 796 S.W.2d 276, 283 (Tex. App.BAmarillo 1990, writ denied) (holding that usury claim was foreclosed under the plain language of the release).  Eastern Bloc=s first and second issues are overruled. 

                                    D.  Guaranties and Security Interests

In their third and fourth issues, the Eastern Bloc appellants complain that the trial court erred in granting ABCO a judgment on the guaranties and security interests because they had been released by the parties= agreement of September 7, 1999.  In construing the language of a release, we apply the same rules of construction used to construe all other contracts.  See Boales v. Brighton Builders, Inc., 29 S.W.3d 159, 167 (Tex. App.BHouston [14th Dist.] 2000, pet. denied) (citing Williams v. Glash, 789 S.W.2d 261 (Tex. 1990)). 

Eastern Bloc argues that the language of the September 7, 1999 agreement stating that the parties release each other from Aall claims . . . arising out of or in any manner relating to any of the commercial agreements and/or relationships existing among or between any of them@ includes releasing the parties of their obligations under the guaranties and security interests.  However, the release clause further states that it is understood by the parties that the release covers Aall unknown and unanticipated injuries, claims and damages of the parties against each other which have or may have arisen in connection with the above-described matters.@ Taking the language of the release in its entirety, we conclude that the term Aclaims@ refers to potential causes of action between the parties, not all previous obligations between or among the parties.

Furthermore, Ageneral categorical release clauses are narrowly construed.@  Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 938 (Tex. 1991) (citing Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 422 (Tex. 1984)); Boales, 29 S.W.3d at 167.  AIn order to effectively release a claim, the releasing instrument must >mention= the claim to be released.@  Brady, 811 S.W.2d at 938.  AAny claims not clearly within the subject matter of a release are not discharged,@ even if the claims existed at the time the release was executed.  Id.

The release clause at issue does not mention, either directly or indirectly, the guaranties or the security interests.  Therefore, we conclude they were not discharged by this general release. Eastern Bloc=s third and fourth issues are overruled. 

                                              E.  Joint and Several Liability

In their fifth issue, the Eastern Bloc appellants contend the trial court erred in applying joint and several liability, thus allowing ABCO to recover more than that to which it is entitled.

In the May 2000 agreement, the parties agreed that the Partnership owed ABCO the principal amount of $490,440 (the AInvestment@), which would accrue non-compounding interest at the rate of sixteen percent per annum (the APreferred Return@).  In the May 2000 agreement, Thomas, Woods, and Biggs also acknowledged that the guaranties previously executed remained in full force and effect.

ABCO=s summary judgment evidence showed that the remaining Investment plus Preferred Return totaled $541,421.36 plus daily interest of $212.84.  However, the judgment signed by the trial court awarded ABCO (1) $541,421.36 plus daily interest of $212.84, jointly and severally, from the Partnership, Altar Boys Management, Thomas, and Woods, and (2) $167,605.12 plus daily interest of $73.47 from Biggs, under his guaranty.  By separating Biggs=s obligation in this way, the trial court allowed ABCO to recover $709,026.48 plus daily interest in the amount of $286.31.  We conclude that the trial court erred in its application of joint and several liability.  Eastern Bloc=s fifth issue is sustained.

                                     F.  Application of Previous Payments

In his sole issue, Biggs contends the trial court erred in its interpretation of the May 2000 agreement.  Specifically, he asserts the trial court did not properly credit payments made to ABCO by the Partnership to reduce the amount guarantied by Biggs.  

Under paragraph 12 of the May 2000 agreement, Awhen the first $172,500 of the ABCO Investment has been repaid to ABCO, George Biggs shall be released in full from said guaranty.@ Biggs asserts that payments made by the Partnership in the amount of $161,691.50 should be applied in their entirety to the Investment amount, thereby reducing his remaining liability to $10,808.50. However, paragraph 4(d) of the May 2000 agreement specifically says that all payments made to ABCO by the Partnership Awill be applied first to the ABCO Preferred Return and the remainder to the reduction of the ABCO Investment.@ Accordingly, we conclude the previous payments made by the Partnership were properly credited first to the Preferred Return before reducing the amount of the Investment.  Biggs=s sole issue is overruled. 

We modify the trial court=s judgment to reflect that Eastern Bloc Entertainment, Ltd., Altar Boys Management Company, L.L.C., Robert W. Thomas, John S. Woods, and George Biggs are jointly and severally liable to ABCO Properties, Inc. in the amount of $167,605.12, plus interest in the amount of $73.47 per day from January 20, 2003 through March 17, 2003.  We further modify the judgment to reflect that Eastern Bloc Entertainment, Ltd., Altar Boys Management Company, L.L.C., Robert W. Thomas, and John S. Woods are jointly and severally liable to ABCO Properties Inc. in the amount of $373,816.24, plus interest in the amount of $139.37 per day from January 20, 2003 through March 17, 2003.  As modified, the trial court=s judgment is affirmed. 

FEDERICO G. HINOJOSA

Justice

Memorandum Opinion delivered and filed this

the 23rd day of February, 2006.

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^[1] Also in their first issue, the Eastern Bloc appellants assert that ABCO failed to show how it was entitled to the amount awarded by the trial court and failed to prove the amount of attorney fees.  However, aside from these general statements, the Eastern Bloc appellants offer no further argument, no citations to the record, and no reference to any legal authority.  Because these issues are inadequately briefed, we will not address them. See Tex. R. App. P. 38.1(h).