Arthur J. Gallagher & Co. v. Dieterich

• Decision Date: 27 October 2008
• Docket Number: No. 05-07-00239-CV.,05-07-00239-CV.
• Citation: 270 S.W.3d 695
• Parties: ARTHUR J. GALLAGHER & CO., Appellant, v. Tracy L. DIETERICH, Appellee.
• Court: Texas Court of Appeals

270 S.W.3d 695

ARTHUR J. GALLAGHER & CO., Appellant, v. Tracy L. DIETERICH, Appellee.

No. 05-07-00239-CV.

Court of Appeals of Texas, Dallas.

October 27, 2008.

Rehearing Overruled December 16, 2008.

Deanne C. Ayers and Julie B. Tebbets, Ayers & Ayers, Colleyville, for Appellant.

D. Todd Smith, Austin, for Appellee.

Before Justices MOSELEY, BRIDGES, and LANG-MIERS.

OPINION ON REHEARING

Opinion by Justice LANG-MIERS.

We deny appellant's motion for rehearing. On our own motion, we withdraw our opinion of July 29, 2008, and vacate our judgment of that date. This is now the opinion of the court.

This is a breach of contract case filed by a former employee, Tracy L. Dieterich, against his former employer, Arthur J. Gallagher & Co. (the Company). The Company appeals the trial court's judgment following a jury trial in which the jury found that the Company breached its contract with Dieterich and awarded him back pay, vacation pay, automobile reimbursement, interest, attorney fees, and costs. We affirm.

FACTUAL & PROCEDURAL BACKGROUND

The Company is in the business of brokering insurance and benefit plans to employers. It hired Dieterich as a producer, or broker, in October 2001. The Company and Dieterich signed an Executive Agreement (the Agreement) in which the Company agreed to employ Dieterich for an initial term of six months. The Agreement provided for automatic six-month renewals unless either party gave notice within thirty days of the end of the six-month term that it wished to terminate the employment relationship at the end of the six-month term.¹ In November 2002, the Company notified Dieterich that it intended to terminate the Agreement at the end of the six-month term.² After it sent that notice, it also reduced Dieterich's salary. Dieterich complained about the salary reduction, but continued to work at the Company until the end of the six-month term.

Dieterich sued the Company for breach of contract, contending that the Agreement prohibited the Company from reducing his salary during the notice period, and sought damages for back pay, vacation pay, and automobile reimbursement.³ The Company contended that the Agreement specifically allowed it to modify Dieterich's entitlements at any time, but, even if it did not, Dieterich agreed to modify the Agreement by continuing to work at the reduced salary. The trial court submitted the issue to the jury, which found in favor of Dieterich. The jury awarded Dieterich $14,581 in back pay, $3,125 in vacation pay, and $447 in automobile reimbursement. It also awarded him attorney fees in the amounts of $20,273 for trial, $4,500 for an appeal to the court of appeals, and $3,650 for an appeal to the Texas Supreme Court. The trial court rendered final judgment in accordance with the jury verdict.

The Company raises eleven issues on appeal, primarily arguing that the trial court erred by submitting the matter to the jury because the Agreement allowed it to reduce Dieterich's salary; it proved that the Agreement was modified as a matter of law; the evidence is legally and factually insufficient to support the jury's findings; the evidence is legally and factually insufficient to support the damages award; the trial court erred by (a) awarding attorney fees; (b) awarding pre-and post-judgment interest and court costs; and (c) allowing the attorney fees expert to refresh his recollection with a document excluded from evidence; Dieterich made improper and incurable jury arguments; and the reporter's and clerk's records are incomplete and inaccurate.

RECORD ON APPEAL

We address the Company's eleventh issue first. It complains that the trial court did not provide a complete record of the trial proceedings because several pleadings were requested but not included in the record on appeal. This argument is moot because we ordered the district clerk to file a supplemental record containing those pleadings and the record is now complete.

The Company also argues that the record is inaccurate. It contends that the court reporter improperly attached a complete copy of a transcript of a video deposition, part of which was played to the jury, instead of transcribing only the portions of the deposition actually introduced. However, when the Company offered the video deposition into evidence, counsel for the Company "waive[d] the reporting of the deposition testimony" and marked a copy of the entire deposition for record purposes only. As a result, this issue presents nothing for our review. TEX.R.APP. P. 33.1(a).

We resolve appellant's eleventh issue against it.

BREACH OF CONTRACT

On original submission, both parties argued that the Agreement unambiguously supports their respective positions. In subparts of its first and second issues and in its third and fourth issues, the Company argued that the evidence was legally and factually insufficient to support the jury's answers to questions one and two because the plain language of paragraph two of the Agreement allowed it to reduce Dieterich's salary at any time, even during the notice period:

The Company agrees that the Executive shall be entitled to the semi-monthly payment of compensation.... It is understood and agreed that the Company may from time to time modify the specific terms and conditions of these entitlements.

It contended that the trial court erred by submitting questions one and two⁴ to the jury because the trial court should have interpreted the Agreement as a matter of law. Conversely, Dieterich contended that paragraph seven of the Agreement prohibits the Company from changing his compensation during the notice period:

The Company agrees to continue in effect during the Notice Period the compensation and benefits to which the Executive may be entitled under Paragraph Two of this Agreement.

In additional subparts of its first and second issues and in its fifth issue, the Company also argued that, as a matter of law, the parties agreed to modify the Agreement when Dieterich continued to work at the reduced salary, and the trial court erred by submitting question three to the jury.⁵

Consequently, both parties argued that their interpretations of the contract language were correct as a matter of law. And we could not properly consider the Company's position that it could modify Dieterich's salary at any time without first construing the Agreement to determine whether the Company's interpretation was correct as a matter of law. However, in its motion for rehearing, the Company now expressly states:

Appellant has never taken the position that the contract is unambiguous. The issue raised on appeal was not that the Executive Agreement was unambiguous, as stated in the Court's decision, but rather that the Appellee accepted the modification in his agreement by continuing to work at the reduced salary through the end of his employment.... Appellant is not asking the court to interpret the Employment Agreement.... Appellant's point at the trial court and on appeal was that the Appellant is not liable as a matter of law based on the Appellee's acceptance of the modification of the contract.⁶

Because the Company has now expressly stated it is not asking us to construe the Agreement, we will not consider whether the Agreement allowed the Company to reduce Dieterich's salary during the notice period, as a matter of law, or whether the Company breached the agreement by doing so. See Thomas v. Wheeler, No. 06-07-00117-CV, 2008 WL 2884933, at *3 (Tex.App.-Texarkana July 29, 2008, no pet.) (mem.op.) ("When a party tells a court that the party does not make argument X, but instead is arguing Y, that utterance waives argument X.") (citing Cont'l Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393, 402 (Tex. 2000)). Instead, we consider the Company's argument that question three should not have been submitted to the jury because the Agreement was modified as a matter of law when Dieterich continued to work at the reduced salary.

A. Contract modification

Contract modification is an affirmative defense. See Intec Sys., Inc. v. Lowrey, 230 S.W.3d 913, 918 (Tex.App.-Dallas 2007, no pet.); Barrand, Inc. v. Whataburger, Inc., 214 S.W.3d 122, 145 (Tex.App.-Corpus Christi 2006, pet. denied). Whether a contract is modified depends on the parties' intentions and is a question of fact. Red Roof Inns, Inc. v. Murat Holdings, L.L.C., 223 S.W.3d 676, 682 (Tex.App.-Dallas 2007, pet. denied); Williams v. Colthurst, 253 S.W.3d 353, 359 (Tex. App-Eastland 2008, no pet.). The burden of proving modification rests on the party asserting the modification. Colthurst, 253 S.W.3d at 359. A contract modification must satisfy the traditional requirements of a contract — there must be a meeting of the minds supported by consideration. Barrand, 214 S.W.3d at 145; Boondoggles Corp. v. Yancey, No. 01-05-00185-CV, 2006 WL 2192708, at *6 (Tex. App.-Houston 2006, no pet.) (mem.op.). In determining whether the parties had a meeting of the minds concerning a modification of a contract, the focus is on what the parties did and said, not their subjective states of mind. Komet v. Graves, 40 S.W.3d 596, 601 (Tex.App.-San Antonio 2001, no pet.).

Consideration is a bargained-for present exchange in return for a promise. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex.1991); Cherokee Commc'ns, Inc. v. Skinny's, Inc., 893 S.W.2d 313, 316 (Tex.App.-Eastland 1994, writ denied). It may consist of a benefit that accrues to one party or a detriment incurred by the other party. See Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 315 (Tex.App.-Houston (14th Dist.) 2003, pet. denied) (citing Roark, 813 S.W.2d at 496). When a party agrees to do no more than that which he is already bound to do under an existing contract, the consideration is not sufficient to support a modification. See Boondoggles, 2006 WL 2192708, at *6 (to be effective, modification must be supported by additional consideration).

B. Was the Agreement...