Henry v. Masson

• Decision Date: 30 December 2010
• Docket Number: No. 01–07–00522–CV.,01–07–00522–CV.
• Citation: 333 S.W.3d 825
• Parties: Mark H. HENRY, M.D., Appellant,v.Marcos V. MASSON, M.D., Appellee.
• Court: Texas Court of Appeals

333 S.W.3d 825

Mark H. HENRY, M.D., Appellant,

v.Marcos

v. MASSON, M.D., Appellee.

No. 01–07–00522–CV.

Court of Appeals of Texas, Houston (1st Dist.).

Dec. 30, 2010.

Timothy A. Hootman, Houston, TX, for Appellant.Darryl W. Malone, George R. Gibson, Houston, TX, for Appellee.Panel consists of Justices KEYES, ALCALA, and WILSON.^*

OPINION

EVELYN V. KEYES, Justice.

In five issues, appellant Mark Henry, M.D., (“Henry”) challenges (1) the legal sufficiency of the evidence to support the jury's verdict that Henry first breached a material obligation of a Settlement Agreement between himself and appellee Marcos Masson, M.D. (“Masson”); (2) the legal sufficiency of the evidence to support the jury's verdict awarding Masson damages for loss of the benefit of the bargain and expenses; (3) and (4) the trial court's finding that he was not entitled to either an offset of $150,000 in the judgment or the return of real property (the “Hepburn Estates”) that was one of the subjects of the Settlement Agreement; and (5) the trial court's summary judgments in favor of Masson with respect to Henry's claims to the Hepburn Estates based on releases in the Settlement Agreement. In two issues on supplemental briefing, Henry also questions (6) the finality of the trial court's judgment and (7) our jurisdiction over this appeal.

We overrule Henry's first and second issues and hold that the evidence is legally sufficient to support the jury's finding that Henry materially breached the contract first and that Masson is entitled to recover $75,000 in benefit of the bargain damages from Henry. We sustain Henry's third, fourth, and fifth issues and hold that the trial court erred in granting Masson's motion for summary judgment on the ground that Henry executed valid releases of these claims pursuant to the Settlement Agreement and that Henry is therefore entitled to an offset in the judgment or a return of the real property. We overrule Henry's sixth and seventh issues and hold that the trial court's judgment is a final order and that we have jurisdiction over this appeal.

In four issues on cross-appeal, Masson complains that the trial court erred in (1) ordering Masson and Henry to make capital contributions to the Partnership, (2) rendering judgment in favor of entities that were not parties to the suit, (3) not granting Masson a jury trial or an evidentiary hearing prior to entering judgment incorporating the receiver's finding, and (4) not directing a verdict against Henry for money Masson alleges was improperly taken out of the Partnership. We overrule Masson's issues on appeal.

We affirm in part and reverse and remand in part.

BACKGROUND

This appeal is the culmination of years of bitter personal and business disputes between Henry and Masson. Henry and Masson were partners in an orthopedic surgery practice in Houston, Texas, forming a limited liability partnership, Houston Hand and Upper Extremity L.L.P. (the “Partnership” or “Houston Hand”), in January 2001 to conduct their medical practice. Less than three years later, on July 23, 2003, as the result of ongoing personal disputes between Henry and Masson and business disputes over the management and control of the Partnership, Masson filed this suit, as Masson v. Henry, No. 2003–40678, against Henry and a Partnership employee for various causes of action including breach of contract, business disparagement, defamation, breach of fiduciary duty, plus declaratory and injunctive relief. He also requested the appointment of a receiver for the Partnership and sought a judicial decree requiring the winding up of the partnership. Henry counterclaimed against Masson for breach of contract, conversion, fraud, and breach of fiduciary duty. During a hearing in December 2003, Henry and Masson agreed in principle to wind up Houston Hand and to sever all ties to each other.

On March 2, 2004, within one year of the filing of Masson v. Henry, Henry filed an additional lawsuit, Henry v. Masson, Hepburn Estates, L.P., and Hepburn Investments, L.L.C., No. 2004–11097 (“the Hepburn Lawsuit”), against Masson and entities in which they both had ownership interests. ¹ In that suit, Henry alleged that Masson committed fraud, violated the Texas Securities Act, and breached fiduciary duties owed to Henry when he unilaterally used Partnership funds to purchase the Hepburn Estates and failed to disclose the presence of contaminants on the property and other “critical information” about the property in an effort to secure Henry's investment in the Hepburn Entities.

In an attempt to resolve all of their differences, Henry and Masson were ordered to mediation on March 19, 2004. At the mediation, Masson and Henry executed a Settlement Agreement, attempting to buy final peace from each other in the plethora of lawsuits swirling around their relationship. There were three major parts to this Settlement Agreement.

First the parties agreed to wind up the Partnership and “physically separate their practices as soon as is reasonably practical.” The handwritten part of the Agreement provides that:

The parties agree to execute

• “windup steps” in the form of Ex B subject to updating dates & conforming it to comply w/ the terms of this settlement [agreement].

.... The parties agree to physically separate their practices as soon as is reasonably practical.

In accordance with this agreement, a critical part of winding up and separating the parties' practices was the preparation and execution of a document entitled “Houston Hand & Upper Extremity Center Windup Steps” (“Windup Steps”), a draft of which was attached to the Settlement Agreement as Exhibit B. This document was to set forth the timetable, sequence of events, details, and third parties to be involved for each step of the windup process. The Windup Steps were also to provide for an accounting firm, Frost & Company, P.C. (“Frost”), to serve as a neutral administrator to oversee and facilitate the wind up.

Second, the parties agreed that Henry would sell Masson his ownership interest in a disputed piece of property known as the Hepburn Estates, in exchange for Masson's paying Henry $150,000 in cash. The Settlement Agreement provided in pertinent part that:

Dr. Masson agrees to buy and Dr. Henry agrees to sell to Dr. Masson Dr. Henry's interest in Hepburn Estates for $150,000 cash, at the time of physical separation.

Third, Henry and Masson agreed to release all claims against each other, except for the agreements in the Settlement Agreement itself, to buy peace from this litigation. The Agreement stated:

Except for the agreements set forth herein, [footnote 1] the parties hereby agree to release, discharge, and forever hold the other harmless from any and all claims ... arising from or related to the events and transactions which are the subject matter of this cause.

A handwritten note in the margin stated, “Specifically carve out Lundy and Global.” A handwritten footnote one stated, “The parties agree that neither Masson nor Henry is releasing any claims they may have against Sean Lundy; Global Orthopedics.” Originally written into footnote one, but lined through, were the words “and/or Hepburn Estates/Hepburn Estates LLC or any Hepburn entity.” The Settlement Agreement was initialed on each page by both Henry and Masson.

The parties agreed that Henry's lawyers would deliver the first drafts of the revised Windup Steps and all other necessary documents to Masson, and that they would do so within fourteen days of the date that the parties signed the Settlement Agreement. These initial draft documents were to reflect Henry's understanding regarding the terms of the Agreement, and the parties were then to work from the documents to prepare final drafts to be executed. The Agreement provided in pertinent part:

Counsel for [Henry] shall deliver drafts of any further documents to be executed in connection with this settlement to counsel for the other parties hereto within 14 days from the date hereof. The parties and their counsel agree to cooperate with each other in the drafting and execution of such additional documents as are reasonably requested or required to implement the provisions and spirit of this Settlement Agreement, but notwithstanding such additional documents the parties confirm that this is a written settlement agreement as contemplated by Section 154.071 of the Texas Civil Practice and Remedies Code.

(Emphasis added).

The Agreement was executed on March 19, 2004. Over the next ten days, Masson failed to receive any drafts from Henry or Henry's attorney. On March 29—four days before the deadline for Henry and his lawyers to submit Henry's proposed drafts—Masson's lawyers circulated drafts of the documents they thought necessary to complete the settlement.

By the April 1, 2004 deadline, Henry still had not provided Masson with a draft of the revised Windup Steps or of any other documents. Instead, Henry asserted that Masson's circulated documents did not comport with the Agreement, and he therefore refused to initiate the windup of the Partnership, or even completion of the settlement, until the issues he raised regarding Masson's documents had been corrected. Henry also refused to give permission for the neutral administrator, Frost, to take any steps to initiate the windup or to complete the Agreement because Henry asserted that it did not make sense to proceed until his issues regarding the documents provided by Masson had been resolved. Although Henry took issue with the contents of the draft documents from Masson's lawyers, there is no evidence that Henry tendered to Masson any alternative draft documents to be considered prior to April 16, 2004. The settlement and windup were thus “stuck in neutral,” with Frost unable to proceed with the windup and separation until Henry gave his permission to do so and with Henry refusing to give permission because he disagreed with the contents of the documents submitted by Masson.

On April...