Amedisys, Inc. v. Kingwood Home Health Care, LLC

• Decision Date: 22 August 2014
• Docket Number: No. 12–0839.,12–0839.
• Citation: 437 S.W.3d 507,57 Tex. Sup. Ct. J. 547
• Parties: AMEDISYS, INC. d/b/a Amedisys Texas, Ltd., Petitioner, v. KINGWOOD HOME HEALTH CARE, LLC d/b/a Health Solutions Home Health, Respondent.
• Court: Texas Supreme Court

437 S.W.3d 507

57 Tex. Sup. Ct. J. 547

AMEDISYS, INC. d/b/a Amedisys Texas, Ltd., Petitioner,

v.KINGWOOD HOME HEALTH CARE, LLC d/b/a Health Solutions Home Health, Respondent.

No. 12–0839.

Supreme Court of Texas.

May 9, 2014.

Rehearing Denied Aug. 22, 2014.

Alexander Burch, Michelle Pector, Rachel Michelle Smith, S. Shawn Stephens, Baker & Hostetler LLC, Houston, TX, for Petitioner.

Andrew N. Bernell, Steve Martin Williard, The Williard Law Firm, L.P., Houston, TX, for Respondent.

Justice BOYD delivered the opinion of the Court.

The parties in this case dispute the validity of the plaintiff's attempt to accept the defendant's settlement offer under chapter 42 of the Civil Practice & Remedies Code and rule 167 of the Texas Rules of Civil Procedure. We hold that the plaintiff presented uncontroverted evidence that it accepted the material terms of the defendant's offer. We therefore reverse the court of appeals' judgment and remand for that court to consider the defendant's remaining challenges to the trial court's summary judgment in favor of the plaintiff.

I.Background

Amedisys, Inc. and Kingwood Home Health Care, L.L.C. are competitors. After two Amedisys employees left to work for Kingwood and allegedly began soliciting business from Amedysis clients, Amedisys sued Kingwood for tortious interference with Amedisys's non-solicitation agreements with the employees. ¹ Kingwood alleges that in subsequent settlement discussions Amedysis repeatedly stated that it would not accept anything less than a “six-figure” offer. Believing that amount was significantly more than Amedisys could recover at trial, Kingwood invoked rule 167, which authorizes a party to recover certain litigation costs if the party made, and the party's opponent rejected, a settlement offer that was significantly more favorable than the judgment obtained at trial. SeeTex.R. Civ. P. 167.2(a), 167.4(a). Kingwood then delivered a written offer, “in accordance with” rule 167 and chapter 42 of the Civil Practice & Remedies Code, to pay Amedisys $90,000 within fifteen days after Amedisys's acceptance of the offer. Consistent with rule 167.2(b)(5), Kingwood gave Amedisys fourteen days to accept the offer or it would be “deemed rejected and can serve as the basis for litigation costs under Texas Civil Practice & Remedies Code Chapter 42 and Texas Rule of Civil Procedure 167.”

Five days after receiving the settlement offer, Amedisys filed its designation of expert witnesses. After another five days, Kingwood filed its own expert designations and moved to strike Amedisys's designations on the ground that, because Amedisys was the party seeking affirmative relief, its deadline to designate experts had passed nearly a month earlier. Four days later, apparently to Kingwood's surprise, Amedisys sent a letter, by facsimile and as an email attachment, “accepting” Kingwood's $90,000 offer. As it turns out, Kingwood did not want Amedisys to accept the offer and made it only because Amedisys said it would not accept an offer under six figures. Instead, Kingwood made the offer merely to trigger a right to recover its litigation costs under rule 167.

During the next two weeks, Amedisys's attorney emailed Kingwood's attorney twice, suggesting they “discuss the terms of the settlement agreement.” Kingwood did not respond to the first email but did respond to the second, stating that it would send “a letter shortly explaining [Kingwood's] position on why the consideration fails for the offer that was previously extended to [Amedisys].” When no such letter arrived and the deadline for payment under the settlement had passed, Amedisys demanded payment and threatened to file an emergency motion to enforce the settlement agreement. Kingwood responded that the agreement “failed for consideration” because Amedisys had missed its expert designation deadline, and asserted that Amedisys had “fraudulently induced” Kingwood's settlement offer by repeatedly stating “that it would ‘never settle’ for less than six figures.”

A few days later, Kingwood attended the previously scheduled hearing on its motion to strike Amedisys's expert designations. Believing that the settlement mooted that motion, Amedisys did not file a response or attend the hearing. When it learned that Kingwood had appeared at the hearing and the trial court had granted Kingwood's motion to strike, Amedisys filed an emergency motion asking the court to enforce the settlement agreement, reconsider the order striking its expert designations, and stay the case until the settlement dispute was resolved. In response, Kingwood argued that the agreement was unenforceable because it lacked consideration and was fraudulently induced. Kingwood later filed a “Notice of Withdraw[al] of Consent to Alleged Settlement Agreement,” and on the same day, Amedisys filed a “Notice of Rule 11 Agreement.”

Amedisys amended its pleadings to assert a breach of contract claim based on the alleged settlement agreement and moved for summary judgment on that claim. In support of its motion, Amedisys submitted copies of the offer and acceptance letters and argued that the settlement agreement was binding on Kingwood as a settlement offer under rule 167, as a contract under general contract law, and as an agreement between attorneys under rule 11 of the Texas Rules of Civil Procedure. In its response, Kingwood agreed that general contract law applies but asserted that the agreement failed for lack of consideration because Amedisys failed to timely designate experts and that Amedisys fraudulently induced the offer by stating that it would not accept an offer less than six figures. Kingwood also argued that the settlement was unenforceable because it had withdrawn its consent. In reply, Amedisys asserted that Kingwood's fraud and failure of consideration defenses were legally inapplicable, that Kingwood had waived them by not pleading them, and that Kingwood had failed to support them with any competent summary judgment evidence.² Amedisys disputed Kingwood's contention that withdrawal of consent relieved Kingwood of its contractual obligations.

The trial court granted Amedisys's summary judgment motion without stating its grounds for doing so. Kingwood appealed, arguing that it had created fact issues regarding its affirmative defenses of fraudulent inducement and failure of consideration.³ Addressing this argument in its appellate brief, Kingwood included a paragraphin which it contended no agreement existed because “an acceptance that does not mirror the terms of the offer is both a rejection of the original offer and a counteroffer.” Kingwood pointed out that it had offered in its letter “to pay a total sum of $90,000 to settle all claims asserted or which could have been asserted by Amedisys,” while Amedisys's letter had accepted Kingwood's “offer to settle all monetary claims asserted against [Kingwood] for the total sum of $90,000.” Because Amedisys's acceptance letter “omitted the idea that a settlement would not only resolve all claims asserted but also all claims not asserted,” Kingwood argued that the letter “constituted a rejection of Kingwood's offer.” In its brief, Amedisys argued that Kingwood had not challenged the validity or effectiveness of the acceptance letter in the trial court and could not do so for the first time on appeal.

A majority of the court of appeals agreed with Kingwood and reversed the trial court's judgment, concluding that no settlement agreement existed because Amedisys had not accepted all of the offer's material terms. 375 S.W.3d 397, 400–01. The court observed in a footnote that, even though Kingwood had not raised that argument in the trial court, it could “challenge for the first time on appeal the legal sufficiency of the evidence supporting Amedisys's motion, including the evidence supporting the existence of a contract.” Id. at 400 n. 3. Having found that Amedisys failed to prove that it accepted the settlement offer, the majority did not address whether Kingwood had created a fact issue on its fraudulent inducement, failure of consideration, and withdrawal defenses. The dissenting justice concluded that Amedisys's acceptance letter and the email to which it was attached formed an enforceable agreement because they “indicate[d] a clear intention” to accept Kingwood's offer without challenging any of its terms. Id. at 402–03 (Jamison, J., dissenting). The dissent would thus have “proceed[ed] to address [Kingwood's] remaining issues and grounds for reversal.” Id. at 403. We granted Amedisys's petition for review.

II.Burdens of Proof and Preservation of Error

We begin by addressing whether Kingwood failed to preserve its argument that Amedisys did not accept all of the material terms of Kingwood's offer by failing to make that argument in the trial court. As the party moving for traditional summary judgment, Amedisys had the burden to submit sufficient evidence that established on its face that “there is no genuine issue as to any material fact” and that it is “entitled to judgment as a matter of law.” Tex.R. Civ. P. 166a(c). See Broussard v. Moon, 431 S.W.2d 534, 536–37 (Tex.1968). When a movant meets that burden of establishing each element of the claim or defense on which it seeks summary judgment, the burden then shifts to the non-movant to disprove or raise an issue of fact as to at least one of those elements. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678–79 (Tex.1979) (discussing evolution and purpose of shifting burdens in summary judgment practice). But if the movant does not satisfy its initial burden, the burden does not shift and the non-movant need not respond or present any evidence. See id.; State v. Ninety Thousand Two Hundred Thirty–Five Dollars and No Cents in U.S. Currency ($90,235), 390 S.W.3d 289, 292 (Tex.2013). This is because “summary judgments must stand or fall on their own merits, and the non-movant's failure to answer or respond cannot...