Berg v. Wilson

• Decision Date: 02 November 2011
• Docket Number: No. 06–10–00091–CV.,06–10–00091–CV.
• Citation: 353 S.W.3d 166
• Parties: Robert P. BERG, Appellant, v. Kristi WILSON, Appellee.
• Court: Texas Court of Appeals

353 S.W.3d 166

Robert P. BERG, Appellant,

v.Kristi WILSON, Appellee.

No. 06–10–00091–CV.

Court of Appeals of Texas, Texarkana.

Submitted: Sept. 28, 2011.Decided: Nov. 2, 2011.

G. Kevin Buchanan, Melissa J. Bellan, Buchanan & Bellan, LLP, Dallas, for appellant.

James R. Rodgers, Judy Hodgkiss, The Moore Law Firm, LLP, Paris, for appellee.

Before MORRISS, C.J., CARTER and MOSELEY, JJ.

OPINION

Opinion by Chief Justice MORRISS.

On May 19, 2008, by entering into a Rule 11 ¹ settlement agreement, Robert P. Berg and Kristi Wilson “buried the hatchet” of a pending business-separation lawsuit. A central question for this appeal is whether the handle was left sticking out, in other words, whether Berg's underlying claims, predating the settlement, should have been part of the subsequent jury trial between Berg and Wilson.

Berg, a prominent designer of western jewelry, had met Wilson at the National Rodeo Finals in Las Vegas in 2005. Wilson, a mortician, desired a change of career—she intended to pursue her interest in all things western, having grown up raising horses and being involved in the rodeo business. Berg and Wilson began a relationship and also began working together in Berg's jewelry business, which was in somewhat of a financial strait. Wilson used her contacts in the industry to help rebuild the business, located in Yukon, Oklahoma. The business began to gain ground; in 2007, Wilson and Berg moved to Hopkins County and into a newly purchased house on eighty-seven acres. ² Wilson and Berg lived together and successfully operated the business of Bob Berg Designs, Inc., from that house.

Then, in March 2008, Berg and Wilson had a heated personal confrontation, which resulted in Wilson leaving the house. When Wilson returned a few days later, she discovered that Berg had moved the business inventory and financial records to the home of Martha Hayward, their only employee. As a result, the business was left in disarray. The following month, Wilson sued Berg for breach of fiduciary duty, seeking an accounting of partnership property and requesting a temporary restraining order to enjoin Berg from removing, encumbering, or transferring inventory of Bob Berg Designs, among other things. The trial court issued a temporary restraining order in April 2008. The following month, Wilson and Berg entered into the Rule 11 agreement, ostensibly resolving all disputes between them.³ The agreement provided a number of obligations, including one for Wilson to pay Berg the sum of $25,000.00, either within thirty days of the agreement, or as soon as a contemplated real estate loan was closed with a bank. The real estate loan was finalized August 20, 2008. Wilson, through counsel, tendered the $25,000.00 to Berg September 10, 2008. Berg refused to accept the tender of funds, claiming Wilson was in breach of the agreement. He filed an amended answer and counterclaim in the underlying lawsuit, alleging Wilson breached the Rule 11 agreement in failing to pay the $25,000.00 in a timely fashion, in failing to return business inventory, and in using copyrighted material in violation of the agreement.⁴

Wilson filed a motion to strike Berg's amended pleadings, a motion to enforce the Rule 11 agreement, and a second amended original petition alleging Berg's breach of the Rule 11 agreement.⁵ Next, Wilson filed a motion for summary judgment, alleging that the causes of action set forth in Berg's amended answer and counterclaim were released by the Rule 11 agreement and moving for judgment on the affirmative defenses of accord and satisfaction and estoppel. Berg responded, alleging that there were genuine issues of material fact regarding Wilson's alleged breach of the agreement, thereby excusing Berg's performance.

The trial court granted partial summary judgment, finding the Rule 11 agreement was “valid, legal and binding,” but reserving for trial the issues involving the parties' compliance or failure to comply with the Rule 11 agreement.

After a four-day trial on the issue of whether either or both parties breached the Rule 11 agreement, the jury determined that Berg breached the agreement and Wilson did not. The jury assessed attorneys' fees to Wilson.⁶ The final judgment ordered that Berg take nothing on his counterclaim and awarded attorneys' fees to Wilson in accordance with the jury verdict.⁷

We affirm the judgment of the trial court because (1) addressing the breach-of-settlement-agreement claims separately from the underlying claims was within the trial court's discretion, (2) Berg's affirmative defenses were fairly covered by the jury issues submitted, (3) declaring the lis pendens void was not error, and (4) awarding Wilson attorneys' fees was not error.

(1) Addressing the Breach–of–Settlement–Agreement Claims Separately from the Underlying Claims Was Within the Trial Court's Discretion

In multifarious sub-points all basically complaining of the perceived loss of his counterclaim, Berg alleges trial court error. At its core, Berg's complaint is that, because Berg claimed that Wilson repudiated or breached the settlement agreement, Berg was entitled to elect his remedy—to either proceed on the underlying cause of action or claim damages for breach of the settlement agreement. Berg contends the partial summary judgment prevented him from presenting his counterclaims—those matters purportedly resolved by the settlement agreement—to the jury.⁸

Initially, Berg phrases the issue as an election of remedies, relying on well established Texas law that, when a claim is released for a promised consideration that is not given, the claimant may either pursue rights under the release, or treat the release as rescinded and recover on the underlying claim.⁹ Murray v. Crest Constr., 900 S.W.2d 342, 344 (Tex.1995); see also Hernandez v. LaBella, No. 14–08–00327–CV, 2010 WL 431253 (Tex.App.-Houston [14th Dist.] Feb. 9, 2010, no pet.) (mem. op.) (repudiation or anticipatory breach of settlement agreement permits nonbreaching party to elect not to proceed with settlement agreement); BACM 2001–1 San Felipe Rd. Ltd. P'ship v. Trafalgar Holdings I, Ltd., 218 S.W.3d 137, 146 (Tex.App.-Houston [14th Dist.] 2007, pet. denied) (on failure of debtor to perform under executory accord, creditor may treat accord as repudiated and may choose to claim rights under the original cause of action or the accord); Shaw v. Kennedy, Ltd., 879 S.W.2d 240, 247 (Tex.App.-Amarillo 1994, no pet.) (if settlement agreement breached, nonbreaching party may treat agreement as repudiated and claim rights either under the agreement or the underlying cause of action).

The hurdle Berg attempts to bypass is an actual finding of breach by Wilson. Here, both Berg and Wilson alleged the other breached the settlement agreement. Berg contends he should nevertheless have been permitted, on the mere allegation of breach, to try to the jury the underlying claims ostensibly resolved by the settlement agreement. Berg relies on the aforementioned cases in support of his contention that he was entitled to proceed to trial on the underlying claims, without a judicial determination of whether Wilson breached the settlement agreement.¹⁰

In Murray, the primary case on which Berg relies, Murray and Crest settled a job dispute by Murray executing a waiver of lien in exchange for a promissory note from Crest. Murray, 900 S.W.2d at 344. Subsequently, Crest informed Murray that it would not pay the full amount of the promissory note when it came due, claiming it was entitled to offset certain completion costs against the note. After receiving the claim for offset, Murray filed a lien against property in which Crest had an interest. Crest sued Murray, alleging tortious interference with Crest's contract with its general contractor. Murray counterclaimed for breach of contract. In affirming the trial court's judgment in Murray's favor, the high court determined that, once Crest repudiated the settlement agreement, Murray was under no obligation to honor the waiver of lien. Id. Crest's breach gave Murray an election to pursue a claim on the promissory note or to reassert its original claim on the construction job. Id.

While Murray is instructive on the issue of repudiation, it does not prescribe a procedure to determine the issue of breach in a circumstance where, as here, repudiation is not the issue.¹¹ Here, the primary issue was whether one or both parties breached the Rule 11 settlement agreement. The decision on whether Berg would be entitled to try his counterclaims could not be made until such time as the issue of breach of the settlement agreement was resolved. This was acknowledged in the trial court.¹²

Whether a party has breached a contract is a question of fact to be determined by the trier of fact. Allied Capital Partners, L.P. v. PTRI, 313 S.W.3d 460 (Tex.App.-Dallas 2010, no pet.). Here, the jury determined that Berg, not Wilson, breached the agreement. This determination foreclosed Berg's option to try his counterclaims. Berg maintains, however, that, even if it was appropriate to try the settlement agreement issues, his counterclaims should have been tried in the same trial.

Wilson contends the trial court was within its discretion to initially try the contract claims, in reliance on the reasoning employed in Zars v. Esquivel, No. 04–04–00892–CV, 2005 WL 3115763 (Tex.App.-San Antonio Nov. 23, 2005, no pet.) (mem. op.). In that case, the parties entered into a settlement agreement, which was allegedly breached. The trial court granted summary judgment on the breach of contract claim and thereafter severed the original, underlying action. On appeal, Zars claimed the trial court erred in severing the underlying claims. In finding no error, the court recognized that the claimed breach of contract was a separate cause of action from the underlying claims intended to be resolved by the settlement agreement. The contract action involved different issues and facts than the...