Gaede v. SK Investments Inc.

• Decision Date: 25 January 2001
• Citation: 38 S.W.3d 753
• Parties: <!--38 S.W.3d 753 (Tex.App.-Houston 2001) TOM GAEDE, Appellant v. SK INVESTMENTS, INC. D/B/A HELIKON FURNITURE COMPANY, Appellee NO. 14-99-00003-CV Court of Appeals of Texas, Houston (14th Dist.)
• Court: Texas Court of Appeals

Page 753

38 S.W.3d 753 (Tex.App.-Houston [14th Dist.] 2001)

TOM GAEDE, Appellant v SK INVESTMENTS, INC. D/B/A HELIKON FURNITURE COMPANY, Appellee

NO. 14-99-00003-CV

Court of Appeals of Texas, Houston (14th Dist.).

January 25, 2001.

On Appeal from the 333rd District Court Harris County, Texas Trial Court Cause No. 97-50342

[Copyrighted Material Omitted] Panel consists of Justices Anderson, Frost, and Evans.^*

MAJORITY OPINION

Evans, Senior Justice (Assigned).

This is an appeal from a take-nothing summary judgment in favor of appellee. Appellee brought suit against appellant. Appellant cross-claimed alleging breach of a one-year sales agency agreement. The trial court granted summary judgment in favor of appellee on the cross-claim. Appellant then perfected this appeal. We reverse the summary judgment and remand the cause for trial on the merits.

The Issue

The central issue on appeal is whether appellee, as movant for summary judgment, demonstrated, as a matter of law, that appellant did not have an enforceable one-year sales agency contract. In deciding this issue, we must examine the summary judgment evidence to determine whether there is a genuine issue of material fact regarding the parties' intent to enter into a one-year agency agreement.

Background

In 1995, appellee's predecessor, Helikon Furniture Company, appointed appellant as its "independent sales agent" for the sale of its furniture products in Texas.¹ This agency relationship was evidenced by a written contract dated September 15, 1995, which provided that appellant would serve as the company's "sole" and "exclusive" sales agent in the designated territory and would refrain from representing any competing companies. It specified: (1) the commissions appellant would receive on his sales; (2) that appellant would function as an "independent entity" and not as an "employee"; and (3) that appellant would generally be responsibile for his own expenses and for filing his own tax returns. The contract further provided it could be terminated by either party on 30 days written notice, but that if the company should be sold to a new entity, or if there was a substantial and fundamental change in ownership structure, the parties' contractual agreement would be transferred to the new entity and would not be subject to termination for a period of one year thereafter. In the event of termination, appellant was entitled to his full commissions on registered business quotations for a period of one year after notice of termination.

Pursuant to the terms of this agreement, appellant represented Helikon Furniture Company as its "exclusive sales agent" for about a year and received commissions on his sales. In October 1996, appellee acquired Helikon's business, assets, and name, and elected to continue to do business under the name of its predecessor "Helikon Furniture Company."

According to the summary judgment record, appellee did not assume Helikon's contractual obligations in the course of the acquisition. However, appellee's management allowed appellant to continue to perform his duties as the company's sales agent in the same territory and for the same commissions as under the pre-existing agency agreement. The record further establishes that after the acquisition, appellee and appellant had a number of oral discussions regarding appellant's continuing sales agency relationship.

During the course of these discussions, which extended over a period of some seven months, appellee sent three letters to appellant. Appellant contends these letters constitute written proof of appellee's commitment to extend his sales agency contract for a one-year period. We briefly review the relevant portions of these letters below.

The October 29, 1996 Letter

On October 29, 1996, appellee sent a letter to all its sales representatives, including appellant, advising them of certain changes it had made "to rationalize" the new company's sales organizations. In this letter, appellee announced it had terminated four of its nine sales representatives and had taken that action "quickly" so its remaining sales representatives could "aggressively" pursue more sales for appellee. Appellee advised: "Well, this has now been done and we expect to continue with the current rep network for at least the next year."

The December 13, 1997 Letter

On December 13, 1997, appellee sent a second letter to appellant, which stated:

Dear Tom,

As we discussed, I am sending you this letter to set forth the terms of your appointment as an independent representative for the Helikon division of the ICF Group. You will be representing Helikon in the territory as defined by the greater Houston, San Antonio and Austin areas (South Texas).

For any sale where you act solely as a rep, you will be paid a 10% commission of the net sales to Helikon. The commission will be paid within 30 days after shipment of the order.

For any sale where you act as the "installing dealer", you will be paid a commission of 25% on sales where the net prices to Helikon is 50% of the quoted list price. All list prices are to be quoted by Helikon personnel. Under this arrangement, two commission payments will be made; 33% of the commission will be due upon shipment of the order and the balance within thirty days.

If you have any questions, please feel free to call me. I look forward to working with you.

The May 27, 1997 Letter

In its third and final letter dated May 27, 1997, sometimes called the "termination letter," appellee advised appellant:

Dear Tom:

After considerable discussion among our management team members, we have made a strategic decision regarding the continuing representation of Helikon, i.e. we will consolidate all ICF Group sales within one sales force.

After explaining its rationale for this move and stating that the change would be effective June 1, 1997, appellee continued:

In recognition of your loyalty to Helikon over some difficult years and to fulfill a commitment made to you in September, 1996 to make no changes for one year, we will grant to you the following: i) a 10% commission on all Helikon sales booked in your territory (South Texas) prior to September 1, 1997 and ii) a 5% commission on all Helikon sales booked in your territory from October 1, 1997 to December 31, 1997.

(emphasis added).

The letter went on to explain how appellant's future commissions would be paid, adding:

In any event no commission shall be due you for orders booked subsequent to December 31, 1997 or for orders shipped subsequent to June 30, 1998, notwithstanding the fact such shipments may have been made in respect of bookings which occurred prior to December 31, 1997. This arrangement, which we believe to be exceedingly fair, is in lieu of our normal practice of paying commissions only on those projects registered as at the dates when representation of (appellee) concluded.

The letter then stated:

In addition to the foregoing, effective immediately, we hereby terminate the "installing dealer" program we have had with you.

This "termination letter" triggered the events leading to the instant litigation. Soon after appellant received the termination letter, he registered appellee's group name as his own Internet domain name. Upon learning of this action, appellee's group initiated a suit for conversion, to which appellant responded by cross-action asserting that appellee had breached his one-year sales agency contract. Appellee then moved for summary judgment, urging, as a matter of law, that appellant had no enforceable one-year contract and suggesting that its May 27 termination letter was merely a "goodwill gesture" designed to give appellant the commissions on any business booked before the end of the year.

The trial court granted appellee's motion for summary judgment, awarding the Internet domain name to appellee and ordering that appellant take nothing on his breach of contract claim. Appellant seeks this court's review only with respect to the take-nothing portion of the judgment.

Standard of Review

In reviewing a summary judgment, we must determine whether the movant met its burden of establishing, as a matter of law, that no genuine issue of material fact exists as to one or more essential elements of the non-movant's cause of action and that the summary judgment record conclusively demonstrates the invalidity of the non-movant's claim. See Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). In deciding whether there is a disputed material fact issue precluding summary judgment, we must take as true all evidence favorable to the non-movant, indulge every reasonable inference in favor of the non-movant, and resolve all doubts and uncertainties regarding the evidence in his favor. Id.

The Applicable Law

Absent a specific agreement or special circumstances reflecting a contrary intent, either party to an agency relationship can ordinarily terminate the relationship at any time. Cates v. Cincinnati Life Ins. Co., 947 S.W.2d 608, 613 (Tex. App.--Texarkana 1997, no writ). Unless the parties have agreed upon the duration of the agency, the agency relationship is usually considered to be "at-will," subject to cancellation by either party, with or without cause, at any time before full performance. Federal Express Corp. v. Dutschmann, 846 S.W.2d 282, 283 (Tex. 1993) (per curiam); East Line & R.R.R. Co. v. Scott, 72 Tex. 70, 10 S.W. 99, 102 (1888). The issue here, therefore, is whether the summary judgment proof conclusively shows appellee did not intend to enter into a one-year sales agency agreement.

Whether an agreement constitutes a valid contract is generally a legal determination for the court. Chapman v. Mitsui Eng'g. & Shipbldg. Co., 781 S.W.2d 312, 316 (Tex. App.--Houston [1st Dist.] 1989, writ denied). However, whether parties intended to make a contractual agreement is usually a fact issue for...