Advantage Physical Therapy, Inc. v. Cruse

• Citation: 165 S.W.3d 21
• Decision Date: 22 March 2005
• Docket Number: No. 14-04-00131-CV.,14-04-00131-CV.
• Parties: ADVANTAGE PHYSICAL THERAPY, INC., Appellant, v. Leonard CRUSE, Individually and d/b/a Cruse and Associates, Appellee.
• Court: Texas Supreme Court

Page 21

165 S.W.3d 21

ADVANTAGE PHYSICAL THERAPY, INC., Appellant, v. Leonard CRUSE, Individually and d/b/a Cruse and Associates, Appellee.

No. 14-04-00131-CV.

Court of Appeals of Texas, Fourteenth District, Houston.

March 22, 2005.

Kenneth C. Kaye, League City, Walter J. Kronzer, III, Houston, for appellant.

Otto D. Hewitt, III, Alvin, for appellee.

Panel consists of Justices YATES, ANDERSON, and HUDSON.

OPINION

JOHN S. ANDERSON, Justice.

Appellant appeals the trial court's take nothing judgment in favor of appellee. Appellant raises the following three issues on appeal: (1) whether a letter of protection can ever be a contract; (2) whether the letter of protection in this case is a contract; and (3) whether the trial court committed reversible error in holding the letter of protection in this case is not an enforceable contract. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Appellant, Advantage Physical Therapy, Inc. ("APT"), provided physical therapy services to Diana Kinnebrew for injuries she sustained in an automobile accident. Kinnebrew later retained appellee, Leonard Cruse, to represent her in a suit to recover damages arising from the automobile accident. During the pendency of Kinnebrew's suit, Cruse sent an unsolicited letter of protection to APT. The letter of protection, dated June 25, 1998, states, "This is to advise that the balance of $2,328 due you from my client [Kinnebrew] in respect to medical treatment provided to her in respect to injuries that she sustained in a car wreck on [January 17, 1997] will be protected out of any recovery made against the responsible party and/or her liability insurance carrier."

In 2000, Kinnebrew's case was tried to a jury, and Kinnebrew recovered $3,506.00 in damages. Cruse used the proceeds of the judgment to satisfy Kinnebrew's outstanding debt to him, $2,730.41 in out-of-pocket expenses Cruse incurred in prosecuting Kinnebrew's case and $1,402.40 in legal fees. Cruse's expenses and fees exceeded the total amount of the judgment.

APT attempted to contact Cruse on several occasions in 2000 to determine the status of Kinnebrew's case. In late January 2001, APT learned from Cruse that Kinnebrew had recovered approximately $3,000 in her suit.

In February 2001, APT's attorney sent Cruse a letter seeking payment of the $2,328.00 amount due APT based upon Cruse's June 25, 1998 letter of protection. Cruse responded with a letter explaining there were no funds to distribute to APT because Kinnebrew's case expenses and his attorney's fees had produced a negative net recovery. APT's attorney sent a second letter to Cruse in July 2001, again demanding payment of the $2,328.00 amount allegedly owed to APT.

In September 2001, APT filed suit against Cruse, individually and d/b/a Cruse and Associates, alleging Cruse promised to pay APT the sum of $2,328.00 upon the receipt of funds from the Kinnebrew lawsuit but instead kept the funds for himself. After a two-day bench trial, the trial court signed a take nothing judgment in favor of Cruse. The trial court issued findings of fact and conclusions of law.¹

On appeal, APT challenges the trial court's findings of fact and conclusions of law concerning Cruse's letter of protection. Specifically, APT challenges finding of fact number four which states, "The Letter of Protection was (a) not a contract between [APT] and [Cruse], and (b) was not enforceable as a contract against [Cruse]." APT also challenges conclusion of law number three which states, "The Letter of Protection was neither a contract and [sic] nor enforceable as a contract against [Cruse]." Additionally, APT argues the trial court committed reversible error in not addressing the question of whether Cruse breached the letter of protection and asserts there is sufficient evidence to show a breach of contract occurred.

DISCUSSION

A. Findings of Fact and Conclusions of Law

1. Findings of Fact

Findings of fact in a bench trial have the same force and dignity as a jury's verdict upon jury questions. City of Clute v. City of Lake Jackson, 559 S.W.2d 391, 395 (Tex.Civ.App.-Houston [14th Dist.] 1977, writ ref'd n.r.e.). When challenged on appeal, the findings are not conclusive if there is a complete reporter's record, as there is here. In re K.R.P., 80 S.W.3d 669, 673 (Tex.App.-Houston [1st Dist.] 2002, pet. denied). The trial court is the sole judge of the credibility of the witnesses and the weight to be given their testimony. Barrientos v. Nava, 94 S.W.3d 270, 288 (Tex.App.-Houston [14th Dist.] 2002, no pet.). The trial court's findings will not be disturbed if there is evidence of probative force to support them. Id. A trial court's findings are reviewable for legal and factual sufficiency of the evidence by the same standards that are applied in reviewing evidence supporting a jury's answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994).

2. Conclusions of Law

We review the trial court's conclusions of law de novo. Smith v. Smith, 22 S.W.3d 140, 143-44 (Tex.App.-Houston [14th Dist.] 2000, no pet.). Under de novo review, the reviewing court exercises its own judgment and redetermines each legal issue. Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex.1998). We will uphold conclusions of law on appeal if the judgment can be sustained on any legal theory the evidence supports. Waggoner v. Morrow, 932 S.W.2d 627, 631 (Tex.App.-Houston [14th Dist.] 1996, no writ). Incorrect conclusions of law do not require reversal if the controlling findings of fact support the judgment under a correct legal theory. Id.

B. The Trial Court's Findings and Conclusions Regarding the Letter of Protection

APT contends no evidence supports the trial court's finding that no enforceable agreement existed. APT asserts Cruse's testimony at trial that he thought the amount of recovery in the Kinnebrew suit too small to justify paying APT anything conclusively establishes an agreement existed. APT also argues the letter of protection guaranteed Cruse's payment of the $2,328.00 owed to APT and meets all of the requirements of a contract. APT further contends the trial court committed reversible error by not addressing the question of whether Cruse breached the letter of protection. In response, Cruse asserts the letter of protection is not an enforceable contract because there was no acceptance, delivery, consideration, or execution of the letter of protection. Cruse further contends the trial court implicitly found and concluded there was no breach by Cruse.

To prove an action for breach of contract, a plaintiff must establish the existence of an enforceable contract. See Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex.App.-Houston [1st Dist.] 1997, no writ) (listing elements of breach of contract action and including "the existence of a valid contract" as one of the necessary elements). The elements of the an enforceable contract are: (1) an offer; (2) an acceptance in strict compliance with terms of offer; (3) a meeting of the minds; (4) a communication that each party consented to the terms of the contract; (5) execution and delivery of the contract with an intent it become mutual and binding on both parties; and (5) consideration. Angelou v. African Overseas Union, 33 S.W.3d 269, 278 (Tex.App.-Houston [14th Dist.] 2000, no pet.). Whether the parties reached an agreement is a question of fact. Beal Bank, S.S.B., v. Schleider, 124 S.W.3d 640, 653 n. 8 (Tex.App.-Houston [14th Dist.] 2003, pet. denied). Whether an agreement is legally enforceable is a question of law. Id; see also Gaede v. SK Investments, Inc., 38 S.W.3d 753, 757-58 (Tex.App.-Houston [14th Dist.] 2001, pet. denied) ("Whether an agreement constitutes a valid contract is generally a legal determination for the court. However, whether parties intended to make a contractual agreement is usually a fact issue for the jury." (internal citations omitted)).

"Letters of protection" are sometimes used by attorneys in personal injury litigation to guarantee payment to healthcare providers from the proceeds of any future recovery. See, e.g., Sealift v. Satterly, No. 14-03-00051-CV, 2003 WL 21664672, at *3 n.2 (Tex.App.-Houston [14th Dist.] July 17, 2003, no pet.) (mem.opinion); Brown v. Comm'n for Lawyer Discipline, 980 S.W.2d 675, 678 (Tex.App.-San Antonio 1998, no pet.); Belt v. Comm'n for Lawyer Discipline, 970 S.W.2d 571, 573 (Tex.App.-Dallas 1997, no pet.). In Sealift, this court analyzed whether an unsolicited letter of protection was an enforceable contract and concluded as follows:

First, there are a multitude of reasons why this letter of protection does not constitute a contract. Foremost is the fact that Satterly never accepted an offer by Fairbanks' lawyers. Sealift's lawyers acknowledged in the trial court that Satterly did not solicit the letter. Further, no evidence exists showing he responded to the correspondence in any way. The only action Sealift points to is Satterly's listing of Fairbanks' law firm as an additional insurer of medical bills on claim forms filed with his insurance company. This does not constitute acceptance.

2003 WL 21664672, at *3 (footnote omitted). Sealift involved an interlocutory appeal challenging the grant of a special appearance, and the issue was whether a letter of protection between a Missouri resident and a Texas law firm was sufficient to establish jurisdiction in Texas. The court ultimately concluded the letter of protection, even if it was an enforceable contract, did not establish jurisdiction. Id. at *3.

Cruse compares the facts of this case to Sealift and argues the unsolicited letter of protection here is not an enforceable contract because APT did not accept the letter of protection. APT counters that it accepted the letter of protection by conduct.

During trial, defense counsel asked APT's president, Becky Gregory, "When you got [the June 25, 1998 letter of protection], did you write Mr. Cruse back and say, `This is fine,' or `This is okay with us,...