Donzis v. McLaughlin

• Decision Date: 15 July 1998
• Docket Number: No. 04-97-00489-CV,04-97-00489-CV
• Citation: 981 S.W.2d 58
• Parties: Byron A. DONZIS and Carmel Research, Inc., Appellants, v. Mark McLAUGHLIN and Tom McCarvill, Appellees.
• Court: Texas Court of Appeals

Page 58

981 S.W.2d 58

Byron A. DONZIS and Carmel Research, Inc., Appellants, v. Mark McLAUGHLIN and Tom McCarvill, Appellees.

No. 04-97-00489-CV.

Court of Appeals of Texas San Antonio.

July 15, 1998.

Michael B. Lee, Greenberg, Peden, Siegmyer & Oshman, P.C., Erik B. Walker, McCalanahan & Clearman, L.L.P., Houston, for appellant.

R. Laurence Macon, Katherine Compton, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio, for appellee.

Before HARDBERGER, C.J., and LOPEZ and ANGELINI, JJ.

HARDBERGER, Chief Justice.

Appellants, Byron A. Donzis ("Donzis") and Carmel Research, Inc. ("Carmel"), appeal a summary judgment order incorporating the terms of a draft settlement agreement. Donzis and Carmel filed separate briefs contending the trial court erred in granting the summary judgment because: (1) a material issue of fact exists as to whether the terms of the settlement agreement are more expansive than the terms of the Rule 11 Agreement; (2) the affidavit of Laurence Macon, an interested party, was not competent summary judgment evidence; (3) the summary judgment order should have incorporated the literal terms of the Rule 11 Agreement; (4) the Rule 11 Agreement was ambiguous, thereby raising a fact issue; and (5) a material issue of fact exists as to whether Donzis breached the Rule 11 Agreement. We reverse the summary judgment and remand the cause to the trial court for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL HISTORY

Appellees, Mark McLaughlin ("McLaughlin") and Tom McCarvill ("McCarvill"), sued Donzis, Carmel, Immudyne, Inc. ("Immudyne") and James D. Wood ("Wood") for various claims, and Donzis, Carmel, Immudyne and Wood responded with various counterclaims. On October 26, 1996, the parties entered into a Rule 11 Agreement, settling all their disputes, and the trial court approved the Rule 11 Agreement on December 13, 1996. A Settlement Agreement purporting to incorporate the terms of the Rule 11 Agreement was subsequently prepared by counsel for McLaughlin and McCarvill and circulated for signature. Donzis and Carmel refused to sign the Settlement Agreement.

On January 17, 1997, McLaughlin and McCarvill filed a motion for summary judgment. The trial court granted the motion and entered an order incorporating the terms of the Settlement Agreement.

MOTION TO DISMISS

McLaughlin and McCarvill assert in their brief, as well as in their pending motions to dismiss, that this appeal should be dismissed because Donzis and Carmel have accepted the benefits of the judgment, thereby estopping them from attacking the judgment by appeal. McLaughlin and McCarvill contend that Donzis accepted the benefits of the judgment by offering his services to promote Immudyne products. McLaughlin and McCarvill further contend that Carmel accepted benefits by turning over the stock it owned in Immudyne in exchange for a $240,000.00 promissory note and by seeking royalties on certain products under the definition of Licensed Technology contained in the summary judgment order.

In general, a party may not voluntarily accept the benefits of a judgment and attack it on appeal at the same time. Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002, 1004 (1950); Aycock v. Pannill, 853 S.W.2d 161, 163 (Tex.App.--Eastland 1993, writ denied). The general rule is based on estoppel, but it is not without exception. Carle, 234 S.W.2d at 1004; Aycock, 853 S.W.2d at 164. If the reversal of the judgment on appeal cannot possibly affect the appellant's right to the benefit accepted, then the appellant may proceed with the appeal. Carle, 234 S.W.2d at 1004; Aycock, 853 S.W.2d at 164. A two-part test is applied to determine whether the exception is applicable: (1) could a reversal of the judgment possibly affect appellant's right to the benefits accepted; and (2) would the appellee be compelled to concede upon another trial that appellant has the right to retain those benefits regardless of the outcome of the litigation. Carle, 234 S.W.2d at 1004.

With regard to Donzis, he is not complaining of the portion of the summary judgment order that requires him to use his best efforts to make Immudyne a profitable venture and maximize sales. The summary judgment order incorporates the literal language of the Rule 11 Agreement with respect to this requirement. Even if this court determines that certain provisions of the summary judgment order were more expansive than the Rule 11 Agreement, the provision requiring Donzis to use his best efforts would not be affected, and Donzis would be required to comply with that term regardless of the outcome of the litigation. It is questionable whether Donzis's offer to provide services is the acceptance of a benefit, rather than the compliance with an obligation.

Carmel is also not complaining of the portion of the Rule 11 Agreement that requires Carmel to re-transfer its stock in Immudyne or that requires Immudyne to deliver a promissory note to Carmel. The summary judgment order incorporates the literal language of the Rule 11 Agreement in this respect, and the parties would be required to comply with that term regardless of the outcome of the litigation. With regard to the letter concerning the dispute over whether royalties are due on additional products based on the "expansive language of the Summary Judgment Order," a benefit may have been demanded in an effort to resolve the dispute, but there is no evidence that a benefit has been paid and accepted.

STANDARD OF REVIEW

The general standard for reviewing a motion for summary judgment has been clearly established. The movant for summary judgment is first required to disprove at least one of the essential elements of each of the plaintiff's causes of action in order to prevail on summary judgment. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991). This initial burden requires the movant to show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). In determining whether a material fact issue exists to preclude summary judgment, evidence favoring the non-movant is taken as true, and all reasonable inferences are indulged in favor of the non-movant. Id. Any doubt is resolved in favor of the non-movant. Id.

AMBIGUITY

In Donzis's fourth point of error, Donzis contends that the Rule 11 Agreement is ambiguous; therefore, its meaning is a question of fact. McLaughlin and McCarvill counter that the Rule 11 Agreement is not ambiguous but is worded so that it can be given a definite legal meaning.

A settlement agreement is a contract, and its construction is governed by legal principles applicable to contracts generally. Nuno v. Pulido, 946 S.W.2d 448, 451 (Tex.App.--Corpus Christi 1997, no writ); Old Republic Ins. Co. v. Fuller, 919 S.W.2d 726, 728 (Tex.App.--Texarkana 1996, writ denied). An unambiguous contract is to be construed by a court as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393-94 (Tex.1983); Ortega-Carter v. American Intern. Adjustment Co., 834 S.W.2d 439, 442 (Tex.App.--Dallas 1992, writ denied). A contract is ambiguous if its meaning is uncertain or doubtful or it is reasonably susceptible to more than one meaning. Coker, 650 S.W.2d at 393-94. Whether a contract is ambiguous is a question of law to be decided by a court by looking at the contract in its entirety in light of the circumstances present when the contract was entered. Id. Only where a contract is first determined to be ambiguous may the court consider the parties' interpretation and admit extraneous evidence to determine the true meaning of the instrument. National Union Fire Ins. Co. v. CBI Industries, Inc., 907 S.W.2d 517, 520 (Tex.1995); see also Nguyen Ngoc Giao v. Smith & Lamm, P.C., 714 S.W.2d 144, 147-48 (Tex.App.--Houston [1st Dist.] 1986, no writ)(affidavit regarding intent of parties to an agreement inadmissible if agreement determined to be unambiguous).

The parties' dispute is centered on the use of the phrase "related technology" in section B of the Rule 11 Agreement. ¹ Donzis and Carmel contend that the phrase is limited to the technology referenced in the existing license agreements, while McLaughlin and McCarvill read the phrase more expansively. A disagreement over the interpretation of a contract clause does not render the clause ambiguous. Pitman v. Lightfoot, 937 S.W.2d 496, 517 (Tex.App.--San Antonio 1996, writ denied). When the parties disagree over the meaning of an unambiguous contract, the court must determine the parties' intent from the agreement itself, not from the parties' present interpretation. Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 731-32 (Tex.1981). A contract is ambiguous only when, after the application of the proper rules of construction to the face of the instrument, it remains reasonably susceptible to more than one meaning. Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 157 (1951); Preston Ridge Financial Services Corp. v. Tyler, 796 S.W.2d 772, 776 (Tex.App.--Dallas 1990, writ denied).

The Rule 11 Agreement refers to the existing license agreements with regard to the patents and related technology. Subparagraphs 3 and 4 of section B refer to the patents and related technology currently licensed to Immudyne and Carmel, respectively, and relate back to the license agreements. By referring to the related technology currently licensed to Immudyne and Carmel, the Rule 11 Agreement unambiguously restricts the reaffirmations and representations to the patents and related technology that are contemplated by the license agreements. We hold the Rule 11 Agreement is unambiguous and overrule Donzis's fourth point of error. Since the Rule 11 Agreement is not ambiguous, extraneous evidence was inadmissible to determine the meaning of the instrument. National Union Fire Ins. Co. v. CBI Industries, Inc., 907 S.W.2d at 520; see also Nguyen Ngoc Giao...