Ebner v. First State Bank Smithville

• Decision Date: 31 August 2000
• Citation: 27 S.W.3d 287
• Parties: (Tex.App.-Austin 2000) Ruth Ebner, as Independent Executrix of the Estate of Emil Ebner; Howard Ebner; and Shirley Ebner, Appellants v. First State Bank of Smithville, Appellee NO. 03-98-00351-CV Filed:
• Court: Texas Court of Appeals

Page 287

27 S.W.3d 287 (Tex.App.-Austin 2000)

Ruth Ebner, as Independent Executrix of the Estate of Emil Ebner; Howard Ebner; and Shirley Ebner, Appellants v. First State Bank of Smithville, Appellee

NO. 03-98-00351-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

Filed: August 31, 2000

Rehearing Overruled October 12, 2000

FROM THE DISTRICT COURT OF BASTROP COUNTY, 335TH JUDICIAL DISTRICT NO. 22,325, HONORABLE H. R. TOWSLEE, JUDGE PRESIDING

[Copyrighted Material Omitted]

Before Justices Jones, B. A. Smith and Yeakel

Lee Yeakel, Justice

Appellee First State Bank of Smithville (the "Bank") brought suit for damages and injunctive relief against appellants Howard, Shirley, and Ruth Ebner (collectively, the "Ebners"),¹ for what the Bank characterizes as "the Ebners' illegal attempts to execute on a 1991 judgment in violation of a binding and enforceable Rule 11 settlement agreement." The district court granted summary judgment in favor of the Bank. The Ebners contend that (1) summary judgment was improper because fact issues exist on each of the Bank's grounds for summary judgment and the Bank failed to disprove the Ebners' affirmative defenses, (2) the district court abused his discretion in granting a permanent injunction, and (3) the court erred in denying Ruth Ebner's motion for summary judgment. Because we find that issues of material fact exist regarding whether Howard and Shirley Ebner breached the agreement and whether the estate of Emil Ebner is bound by the agreement, we will reverse the judgment in part and remand the case to the district court for further proceedings.

BACKGROUND

In 1989 Howard Ebner sued the Bank alleging violations of the Texas Deceptive Trade Practices Act,² usury, and "economic duress" arising out of transactions between the Bank, himself, and Emil Ebner (the "lender-liability suit").³ In 1991 a first amended petition was filed asserting an additional cause of action against the Bank--common law fraud--and adding Ruth Ebner as a plaintiff.⁴ Shirley Ebner was joined as a plaintiff in a second amended petition.⁵ A third amended petition alleged additional causes of action for "intentional or negligent infliction of emotional distress," "breach of obligation of good faith," "breach of special and/or fiduciary relationship," and wrongful sequestration. In that petition, the description of the plaintiffs was not changed. In August 1991 the case was tried to a jury that returned a verdict in favor of the Ebners. At a post-verdict hearing in November 1991, the attorneys for the parties submitted a proposed final judgment to the district court. In presenting the proposed judgment, the attorney for the Bank stated:

We are submitting it as a judgment that is supportable by the jury verdict and at the same time, contemporaneously with the Court's entry if the Court so determines of that judgment, there is an assign[ment] of claims from the [B]ank to the Ebners by which claims will be asserted for the insurance coverage. And just to make that abundantly clear, there is nothing below the table on this deal whatsoever. The [B]ank has paid two hundred thousand dollars ($200,000.00) to the Ebners. In return of -- as a part of that payment there is a covenant on behalf of the Ebners that they will not enforce or proceed with collection efforts to the [B]ank. . . . Except through the insurance claim, which is contemplated will be pursued.

Should there be recovery of the insurance the assignment and agreement further provides that any recovery will be shared fifty-fifty up until that point that the [B]ank recovers its two hundred thousand back.

The court inquired whether the agreement was in writing, was told that it was, but apparently declined to review it. The court then signed the proposed judgment. The judgment provides, inter alia:

[I]t is therefore ORDERED, ADJUDGED AND DECREED that Plaintiffs, HOWARD EBNER, SHIRLEY EBNER, and RUTH EBNER, as INDEPENDENT EXECUTRIX OF THE ESTATE OF EMIL EBNER, deceased do have and recover of and from Defendant FIRST STATE BANK OF SMITHVILLE the total sum of ($1,666,112.00) (One Million, Six Hundred Sixty Six Thousand, One Hundred Twelve and no/100s Dollars), plus interest thereon from date of entry hereof and that they have and recover their cost of court.⁶

The agreement referred to at the hearing is entitled "Assignment" and provides in pertinent part that: (1) the Bank assigns to the Ebners all causes of action it may have against its insurance carriers for failing to "defend or settle" the lender-liability suit, (2) the Ebners agree to take no action to collect or enforce their judgment against the Bank, and (3) the Bank pays the Ebners $200,000. The parties to the agreement are defined as the Bank, Howard Ebner, Shirley Ebner, and Ruth Ebner in her capacity as the executrix of Emil Ebner's estate. The Bank and Howard and Shirley Ebner, but not Ruth Ebner, signed the agreement.

The Ebners immediately filed suit against Ohio Casualty Insurance Company and West American Insurance Company, the Bank's insurance carriers (the "bad-faith suit").⁷ In 1993 the trial court granted summary judgment in favor of the insurers and ordered that the Ebners take nothing by the bad-faith suit. The summary judgment was affirmed on appeal.⁸

In November 1995 the insurers filed suit against Howard and Shirley Ebner, but not Ruth Ebner.⁹ Against Howard and Shirley Ebner, the insurers seek an undisclosed amount of damages for civil conspiracy, fraud, constructive fraud, malicious prosecution, and abuse of process, all arising out of the bad-faith suit, and for attorney's fees incurred in both the bad-faith suit and the suit by the insurance carriers.¹⁰ In 1997 while being deposed by the plaintiffs, one of the Ebners' attorneys noticed that Ruth Ebner had not signed the November 1991 agreement in the lender-liability suit. Subsequently, Ruth Ebner applied for and secured a writ of execution against the Bank based on the 1991 judgment in the lender-liability suit.

The Bank sued all of the Ebners for breach of contract, claiming that it was entitled to specific performance of the earlier agreement.¹¹ The Bank also sought attorney's fees and requested that the district court issue a temporary restraining order, a temporary injunction, and a permanent injunction, restraining the Ebners from taking any action to collect the lender-liability-suit judgment. The district court granted the Bank's requests for a temporary restraining order and temporary injunction.¹²

The Bank and Ruth Ebner both filed motions for summary judgment.¹³ The Bank asserted that it was entitled to summary judgment as a matter of law on its breach-of-contract claim because the summary-judgment evidence conclusively demonstrated that the November 18, 1991 Assignment is binding on Ruth Ebner pursuant to Rule 11 of the Texas Rules of Civil Procedure because (1) Howard Ebner and two attorneys purporting to act for Ruth Ebner had actual or apparent authority to enter into the agreement on behalf of Emil Ebner's estate, (2) the estate is therefore estopped to enforce the judgment in the lender-liability suit, and (3) Ruth Ebner's actions on behalf of the estate following the creation of the agreement are barred by the doctrines of ratification and waiver. The Bank further urged that there was no evidence to support any of the affirmative defenses raised by the Ebners. Ruth Ebner asserted in her motion that the summary-judgment evidence conclusively established all essential elements of her affirmative defenses and disproved at least one element of each of the Bank's causes of action, thus entitling her to a complete summary judgment. She also asked the district court to enjoin the Bank from preventing further attempts by the estate to collect the lender-liability-suit judgment.

The district court rendered judgment granting the Bank's motion for summary judgment and denying Ruth Ebner's motion. The court found the Ebners jointly and severally liable to pay the Bank's attorney's fees in an amount to "be determined by trial" and ordered that the Ebners be permanently enjoined from further action to collect the lender-liability-suit judgment. The court severed all the remaining claims brought by the Bank and the Ebners, resulting in a final appealable judgment.¹⁴

Before this Court, the Ebners challenge the court's decision to grant summary judgment, arguing that disputed fact issues exist on each ground presented by the Bank in support of summary judgment and that the Bank did not conclusively disprove the Ebners' affirmative defenses. They also contend that the court erred in granting the Bank a permanent injunction and in denying Ruth Ebner's motion for summary judgment.

DISCUSSION

Bank's Motion for Summary Judgment

By their first issue, the Ebners assert that "there exist numerous disputed fact issues" as to whether Emil Ebner's estate is contractually bound to the Bank "not to execute on her judgment" in the lender-liability suit and whether there is any evidence that Howard and Shirley Ebner have taken any action to collect the lender-liability-suit judgment.

The function of summary judgment is not the deprivation of a party's right to a full hearing on the merits of any real issue of fact but "is the 'elimination of patently unmeritorious claims or untenable defenses.'" Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex. 1972) (quoting Gulbenkian v. Penn, 252 S.W.2d 929, 931 (Tex. 1952)). To prevail on a traditional motion for summary judgment, a party must conclusively establish that there is no genuine issue of material fact and show that it is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). When reviewing whether there is a fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true, and every reasonable inference or any doubt must be indulged in favor of the nonmovant....