Fort Worth Neuropsychiatric Hospital, Inc. v. Bee Jay Corp.

• Decision Date: 21 May 1980
• Docket Number: No. B-8979,B-8979
• Citation: Fort Worth Neuropsychiatric Hospital, Inc. v. Bee Jay Corp., 600 S.W.2d 763 (Tex. 1980)
• Parties: FORT WORTH NEUROPSYCHIATRIC HOSPITAL, INC., Petitioner, v. BEE JAY CORPORATION, Respondent.
• Court: Texas Supreme Court

Page 763

600 S.W.2d 763

FORT WORTH NEUROPSYCHIATRIC HOSPITAL, INC., Petitioner, v. BEE JAY CORPORATION, Respondent.

No. B-8979.

Supreme Court of Texas.

May 21, 1980.

Rehearing Denied July 9, 1980.

Meyers, Miller, Middleton & Weiner, John R. Henderson, Dallas, for petitioner.

Staples & Foster, Ross T. Foster, Hurst, for respondent.

GREENHILL, Chief Justice.

Bee Jay Corporation brought suit against Fort Worth Neuropsychiatric Hospital, Inc., seeking to recover damages for breach of an oral contract occasioned by Fort Worth Neuropsychiatric's eviction of Dr. Bernard J. Dolenz from his hospital offices. The trial court rendered judgment that Bee Jay recover $122,700.00 from Fort Worth Neuropsychiatric, and the court of civil appeals affirmed. 587 S.W.2d 746. For the reasons hereinafter stated, we reverse the judgments of the lower courts, and render judgment that Bee Jay Corporation take nothing by its suit against Fort Worth Neuropsychiatric Hospital.

The relevant facts are as follows. In 1965, Dr. Dolenz incorporated both Bee Jay and Fort worth Neuropsychiatric. Dr. Dolenz's purpose in incorporating these two entities was to acquire land for the construction of a private psychiatric hospital, with an additional acquisition of the necessary clinic facilities. Until 1971, Dr. Dolenz owned substantially all of the stock in both corporations. He also served as president of both corporations; his wife served as secretary of both corporations.

After incorporating the two entities, Dr. Dolenz, acting in his capacity as an individual, acquired the property on which the private hospital was subsequently constructed. Dr. Dolenz, acting in his capacity as President of Bee Jay Corporation, acquired two other buildings in the immediate vicinity for use as clinic space in conjunction with the hospital. One of the clinic buildings was located adjacent to the land on which the hospital was later built. The other clinic was located across the street from the hospital. Due to the close proximity of the buildings, the hospital and the two clinics used the same general mailing address: 1066 West Magnolia Avenue.

After the acquisition of land was completed, Dr. and Mrs. Dolenz, signing in their capacity as individuals, borrowed the money necessary for the construction of the hospital. The hospital was constructed, and Dr. Dolenz began using office space in the hospital.

In 1969, acting on his accountant's advice, Dr. Dolenz entered into a written lease agreement with Bee Jay Corporation, whereby Dr. Dolenz agreed to pay $18,000.00 a year to lease office space from Bee Jay Corporation. The lease provided for a five-year term, with an option afforded to Dr. Dolenz to extend the lease for an additional five-year period. In attempting to describe the leased premises, the lease recited a lot and block number which, unfortunately, failed to describe any of Bee Jay's property. Instead, the lot and block number mistakenly referred to a mortuary, located two blocks away from the hospital. Immediately following this misdescription, the lease further described the leased premises as being "also known as 1066 West Magnolia Ave." As mentioned previously, there were three different buildings that used this general mailing address, and were known as being at that address. ¹

In the latter part of 1970, Dr. Dolenz was approached concerning a possible merger of the psychiatric hospital with a Delaware corporation, Comprehensive Care Corporation. In order to accomplish this transaction, Dr. Dolenz and Bee Jay Corporation conveyed their respective interests in the 1066 West Magnolia complex, the hospital and clinics, to Fort Worth Neuropsychiatric Hospital. In return, Fort Worth Neuropsychiatric conveyed a stock portfolio to Bee Jay. Additionally, Fort Worth Neuropsychiatric orally agreed with Bee Jay to continue its 1969 lease with Dr. Dolenz, whereby Dr. Dolenz was to lease office space from Bee Jay. Fort Worth Neuropsychiatric also orally agreed to allow Bee Jay to continue receiving the $18,000.00 annual rent paid by Dr. Dolenz. ²

Subsequently, Dr. Dolenz transferred all of his shares of stock in Fort Worth Neuropsychiatric to Comprehensive Care, in exchange for 80,000 shares in Comprehensive Care, and an option to purchase an additional 20,000 shares.

After the merger, Dr. Dolenz became embroiled in a proxy fight for control of the management in Comprehensive Care. After failing in his bid to gain control, Dr. Dolenz was notified to vacate the office space that he had maintained in the hospital. He refused to leave, and was eventually removed in a forcible entry and detainer suit.

After being ousted from his office space in the hospital, ³ Dr. Dolenz quit paying rent to Bee Jay under the 1969 lease, maintaining that he was no longer afforded the office space to which he was entitled under that lease. Bee Jay, in turn, sued Fort Worth Neuropsychiatric (now merged with Comprehensive Care) for the damages caused by the alleged breach of the oral agreement to continue the terms of the 1969 lease between Bee Jay and Dr. Dolenz. The trial court entered judgment for Bee Jay, and the court of civil appeals affirmed. We reverse.

Fort Worth Neuropsychiatric makes three arguments in seeking to reverse the lower courts' judgments: (1) since there was no evidence that Bee Jay's lease with Dr. Dolenz covered the hospital office space, his ouster caused no breach of the oral agreement between Bee Jay and Fort Worth Neuropsychiatric to continue that lease; (2) the oral agreement between Bee Jay Corporation and Fort Worth Neuropsychiatric could not be performed within one year of its making, and thus is unenforceable as being contrary to the Statute of Frauds; and (3) any evidence of such an oral agreement was inadmissible under the Parol Evidence Rule, since the transfer between Bee Jay and Fort Worth Neuropsychiatric was evidenced by a final writing, into which all understandings were merged, as a matter of law. In light of our agreement with Fort Worth Neuropsychiatric's first point of error, we find it unnecessary to pass upon the other issues raised. Our silence on these issues should not be interpreted as an implicit approval of the lower court's discussion of these matters.

The evidence introduced at trial established the following. Prior to 1971, Dr. Dolenz owned, in his individual capacity, the land on which the hospital was subsequently built. Dr. Dolenz and his wife, in their individual capacities,...