Anheuser-Busch Companies, Inc. v. Summit Coffee Co.

• Court: Texas Court of Appeals
• Writing for the Court: BARBER
• Citation: Anheuser-Busch Companies, Inc. v. Summit Coffee Co., 858 S.W.2d 928 (Tex. App. 1993)
• Decision Date: 09 June 1993
• Docket Number: No. 05-92-00389-CV,ANHEUSER-BUSCH,05-92-00389-CV
• Parties: COMPANIES, INC. and Campbell Taggart, Inc., Appellants, v. SUMMIT COFFEE COMPANY and the Dunnam-Snyder Company, Appellees.

Page 928

858 S.W.2d 928

ANHEUSER-BUSCH COMPANIES, INC. and Campbell Taggart, Inc., Appellants, v. SUMMIT COFFEE COMPANY and the Dunnam-Snyder Company, Appellees.

No. 05-92-00389-CV.

Court of Appeals of Texas Dallas.

June 9, 1993.

Cynthia Hollingsworth, Joe B. Harrison, William G. Whitehill, Gardere & Wynne, Dallas, and Lois G. Williams, Howrey & Simon, Washington, DC, for appellants.

Doug K. Butler and Michael G. Brown, Figari & Davenport, L.L.P., Dallas, for appellees.

Before BAKER, CHAPMAN and BARBER, JJ.

OPINION

BARBER, Justice.

This case involves disputes arising out of Campbell Taggart, Inc.'s sale of the stock of Herby's Foods, Inc. to Summit Coffee Company. Campbell Taggart and its parent, Anheuser-Busch Companies, Inc., sued Summit and its parent, The Dunnam-Snyder Company. Campbell Taggart and Anheuser-Busch sought damages for breach of obligations under a covenant not to compete and for monies expended by Anheuser-Busch to process and pay insurance claims against Herby's. Summit and Dunnam-Snyder asserted various counterclaims, including federal and state securities law violations, statutory and common law fraud, and negligent misrepresentation. The trial court rendered judgment in favor of Summit and Dunnam-Snyder, and Campbell Taggart and Anheuser-Busch appeal, asserting eighteen points of error. Summit and Dunnam-Snyder assert three cross-points of error. We reverse in part, affirm in part, render in part, modify, and remand for further proceedings.

SUMMARY OF FACTS

A. The Agreements

On October 26, 1987, Summit and Campbell Taggart entered into a stock purchase agreement by which Summit bought Herby's from Campbell Taggart for $5,500,000. The agreement provided for a purchase price adjustment three months after the sale, and it contemplated that the parties would execute mutual releases in connection with the adjustment of the price on the adjustment closing date. If the parties could not agree on the adjusted price, they had the right to pursue their full legal remedies. The parties were to have full access to the books and records of Herby's prior to the adjustment. The agreement provided for either reductions or increases of the initial purchase price. The final adjusted purchase price was to be reduced by the amount of any undisclosed liabilities of Herby's, except that the purchase price would be reduced by truck lease liabilities only to the extent that those liabilities exceeded $600,000.

Also on October 26, 1987, Summit, Campbell Taggart, and Anheuser-Busch entered into a covenant not to compete. Campbell Taggart and Anheuser-Busch agreed not to compete against Herby's, and Summit agreed to cause Herby's to pay $500,000 to Campbell Taggart and Anheuser-Busch, payable in five annual installments of $100,000 each. The stock purchase agreement provided that Summit should cause Dunnam-Snyder to guarantee all of the obligations of Herby's and Summit contained in both the agreement not to compete and the purchase agreement.

Because of the large deductibles applicable to some insurance claims outstanding against Herby's, Summit and Dunnam-Snyder expressed some concern about the potential uninsured exposure. As a result of these reservations, the parties entered into a side letter agreement capping Summit's liability for each insurance claim at $100,000. Campbell Taggart agreed to pay all amounts in excess of $100,000 per claim. To handle post-closing processing of the insurance claims, the parties entered into a reimbursement agreement. The agreement provided that Anheuser-Busch would continue to advance the processing costs and that Summit and Dunnam-Snyder would reimburse Anheuser-Busch for those expenses up to the agreed-upon $100,000 cap.

As the date for the final purchase price adjustment approached, the parties had disagreements about the amount of the price adjustment and representations concerning Herby's inventory. On February 1, 1988, Campbell Taggart, Summit, and Dunnam- Snyder entered into a compromise settlement agreement and mutual release regarding their disputes. Under the agreement, Campbell Taggart paid $435,135.03 to Summit and Dunnam-Snyder. All parties agreed to release each other "from any and all causes of action of any nature whatsoever, at common law, statutory or otherwise, ... known or unknown," directly or indirectly attributable to the "above-recited disputes or controversies" and all past, present, and future obligations of Campbell Taggart in connection with sections 2, 3, and 8.4(c) of the stock purchase agreement. ¹

B. The Litigation

In 1988, Campbell Taggart and Anheuser-Busch sued Summit and Dunnam-Snyder to recover the remaining payments due under the covenant not to compete. Only the first installment of $100,000 had been paid. They also sought the expenses that Anheuser-Busch had paid for processing insurance claims to the extent that they were within the $100,000 per claim cap. ² Those expenses were stipulated to be $486,472.85.

Summit and Dunnam-Snyder counterclaimed, alleging that Campbell Taggart and Anheuser-Busch had misrepresented the extent of Herby's liabilities by failing to disclose some outstanding insurance claims and the terms of a Ryder truck lease. Summit and Dunnam-Snyder asserted claims of state and federal securities law violations, statutory and common law fraud, and negligent misrepresentation. It is undisputed that Campbell Taggart and Anheuser-Busch failed to disclose twenty-one insurance claims. There was conflicting evidence about the disclosures regarding the truck lease.

The jury made findings indicating that Campbell Taggart and Anheuser-Busch had violated state and federal securities law and had made material misrepresentations about Herby's liabilities. The jury found that Summit and Dunnam-Snyder had agreed to reimburse Anheuser-Busch for the insurance claim processing costs and had been unjustly enriched because of their failure to reimburse. However, the jury also found estoppel because Campbell Taggart and Anheuser-Busch had made material misrepresentations. The jury further found that Summit could not restore the status quo and that it suffered no damages as a result of the misrepresentations. The jury awarded actual and punitive damages to Dunnam-Snyder for negligent misrepresentation.

The trial court awarded rescission of the purchase price to Summit under the securities laws. The court also awarded to Dunnam-Snyder actual and punitive damages for negligent misrepresentation as found by the jury. Summit was awarded attorney fees, and both Summit and Dunnam-Snyder were awarded pre- and postjudgment interest. The court denied any relief to Campbell Taggart and Anheuser-Busch.

RELEASE AGREEMENT

In their first point of error, Campbell Taggart and Anheuser-Busch contend that the trial court erred as a matter of law in rendering judgment for Summit and Dunnam-Snyder because their claims are barred by the release agreement. They argue that the release covers undisclosed liabilities like the ones at issue in this case. Summit and Dunnam-Snyder claim that the release is narrow and does not encompass the claims at issue. They also argue that the release is invalid under state and federal securities laws and that the defense of release was waived by failure to obtain jury findings on the issue.

A. Scope of Release

1. Applicable Law

A release that is valid on its face and has not been set aside is a complete bar to any later action based on matters covered by the release. Deer Creek Ltd. v. North Am. Mortgage Co., 792 S.W.2d 198, 201 (Tex.App.--Dallas 1990, no writ); DeLuca v. Munzel, 673 S.W.2d 373, 375 (Tex.App.--Houston [1st Dist.] 1984, writ ref'd n.r.e.); see Hart v. Traders & Gen. Ins. Co., 144 Tex. 146, 149, 189 S.W.2d 493, 494 (1945). In construing a release, as with other contracts, the primary effort is to ascertain and give effect to the intention of the parties to the release, considering the instrument as a whole. Crawford v. Kelly Field Nat'l Bank, 733 S.W.2d 624, 627 (Tex.App.--San Antonio 1987, no writ); Johnson v. J.M. Huber Corp., 699 S.W.2d 879, 882 (Tex.App.--Amarillo 1985, writ ref'd n.r.e.); Texas City Ref., Inc. v. Universal Oil Prods. Co., 681 S.W.2d 303, 305 (Tex.App.--Houston [14th Dist.] 1984, no writ); Berry v. Guyer, 482 S.W.2d 719, 720 (Tex.Civ.App.--Houston [14th Dist.] 1972, writ ref'd n.r.e.); Mutual Fire & Auto Ins. Co. v. Green, 235 S.W.2d 739, 742 (Tex.Civ.App.--Fort Worth 1950, no writ). When a release refers to a related document, the other document should be taken into consideration. See Green, 235 S.W.2d at 742.

General categorical release clauses must be narrowly construed. Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 938 (Tex.1991); Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 422 (Tex.1984). Generally, a release covers only existing claims or claims being urged when the release was delivered. Berry, 482 S.W.2d at 720. A valid release may encompass unknown damages, results, or claims that may develop in the future. Williams v. Glash, 789 S.W.2d 261, 264-65 (Tex.1990); Quebe v. Gulf, C. & S.F. Ry., 98 Tex. 6, 13-14, 81 S.W. 20, 21-22 (1904); Texas City Ref., 681 S.W.2d at 305; White v. Grinfas, 809 F.2d 1157, 1160 (5th Cir.1987) (applying Texas law). Any claims not clearly within the subject matter of the release are not discharged, even if they existed when the release was executed. Brady, 811 S.W.2d at 938; Vela v. Pennzoil Producing Co., 723 S.W.2d 199, 204 (Tex.App.--San Antonio 1986, writ ref'd n.r.e.). The release must "mention" the claim to be released. Brady, 811 S.W.2d at 938.

2. Application of Law

We determine, based on the language of the release, that the parties intended the release to encompass the claims raised by Summit and Dunnam-Snyder. The release states that the parties had disagreements about the final adjusted purchase price of Herby's, referring specifically to sections 2 and 3 of the stock purchase agreement. Section 2 provides that...