Kalmus v. Oliver

• Court: Texas Court of Appeals
• Citation: Kalmus v. Oliver, 390 S.W.3d 586 (Tex. App. 2013)
• Decision Date: 29 January 2013
• Docket Number: No. 05–11–00486–CV.,05–11–00486–CV.
• Parties: Michael KALMUS, Appellant v. Ella OLIVER and Financial Necessities Network, Inc., Appellees.

390 S.W.3d 586

Michael KALMUS, Appellant

v.Ella OLIVER and Financial Necessities Network, Inc., Appellees.

No. 05–11–00486–CV.

Court of Appeals of Texas, Dallas.

Nov. 20, 2012.

Rehearing Overruled Jan. 29, 2013.

Steven Tinsley, Garland, TX, for appellant.

Cary Schulman, Dallas, TX, for appellees.

Before Justices MOSELEY, FILLMORE, and MYERS.

OPINION

Opinion By Justice MYERS.

Appellant Michael Kalmus appeals from a summary judgment granted in favor of appellees Ella Oliver and Financial Resources, Inc. In three issues, appellant contends (1) the statute of frauds does not apply to the oral employment agreement between appellant and appellees; (2) the trial court erred by granting summary judgment on appellant's claim that appellees wrongfully deducted $4,300.93 from appellant's last paycheck; and (3) the statute of frauds does not preclude appellant's other causes of action. We reverse and remand.

Discussion

In his first issue, appellant asks:

Does the oral employment contract whereby [appellees] agreed to pay [appellant] commissions on sales as long as the they remained on the books (residual or reoccurring commissions) and irrespective of whether or not [appellant] was employed with [appellees], violate the statute of frauds precluding enforcement of the oral contract and more specifically, can the alleged oral contract be performed within one year rendering the statute of frauds inapplicable?

We review de novo the trial court's summary judgment. Mid–Century Ins. Co. of Tex. v. Ademaj, 243 S.W.3d 618, 621 (Tex.2007); Beesley v. Hydrocarbon Separation, Inc., 358 S.W.3d 415, 418 (Tex.App.-Dallas 2012, no pet.). When reviewing a traditional summary judgment granted in favor of the defendant, we determine whether the defendant conclusively disproved at least one element of the plaintiff's claim or conclusively proved every element of an affirmative defense. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex.1997). A matter is conclusively established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence. Beesley, 358 S.W.3d at 418. The movant must show there was no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 800 (Tex.1994). In deciding whether a disputed material fact issue exists precluding summary judgment, we must take evidence favorable to the non-movant as true, and we must indulge every reasonable inference and resolve any doubts in favor of the non-movant. Sysco Food Servs., 890 S.W.2d at 800. When, as in this case, the court's order granting summary judgment does not specify the basis for the ruling, we will affirm the summary judgment if any of the theories presented to the trial court are meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex.2003).

“The statute of frauds exists to prevent fraud and perjury in certain kinds of transactions by requiring agreements to be set out in a writing signed by the parties.” Haase v. Glazner, 62 S.W.3d 795, 799 (Tex.2001). The statute of frauds is an affirmative defense in a breach of contract suit and renders a contract that falls within its purview unenforceable. SeeTex.R. Civ. P. 94; Tex. Bus. & Com.Code Ann. § 26.01(a); see also S & I Mgmt., Inc. v. Sungju Choi, 331 S.W.3d 849, 854 (Tex.App.-Dallas 2011, no pet.) (“Under the statute of frauds, certain contracts are not enforceable unless they are in writing and signed by the person against whom enforcement of the contract is sought”). Thus, appellees had the burden to show they were entitled to summary judgment by pleading and proving all elements of their affirmative defense—the statute of frauds. See Lathem v. Kruse, 290 S.W.3d 922, 924 (Tex.App.-Dallas 2009, no pet.); see also Dynegy, Inc. v. Yates, 345 S.W.3d 516, 522 (Tex.App.-San Antonio 2011, pet. reinstated) (party pleading statute of frauds bears initial burden of establishing its applicability). If appellees established their asserted affirmative defense of the statute of frauds, the burden shifted to appellant, as the non-movant plaintiff, to show why summary judgment should not be granted. Lathem, 290 S.W.3d at 924.

The statute of frauds encompasses agreements that are “not to be performed within one year from the date of making the agreement.” Tex. Bus. & Com.Code Ann. § 26.01(b)(6). When a promise or agreement, either by its terms or by the nature of the required acts, cannot be completed within one year, it falls within the statute of frauds and is unenforceable unless it is in writing and signed by the person to be charged. See id. § 26.01(a), (b)(6); Schroeder v. Tex. Iron Works, Inc., 813 S.W.2d 483, 489 (Tex.1991), overruled on other grounds by In re United Servs. Auto Ass'n, 307 S.W.3d 299 (Tex.2010); Niday v. Niday, 643 S.W.2d 919, 920 (Tex.1982) (per curiam); C.S.C.S., Inc. v. Carter, 129 S.W.3d 584, 590 (Tex.App.-Dallas 2003, no pet.). If the agreement is capable of being performed within one year, it is not within the statute of frauds. See Gerstacker v. Blum Consulting Eng'rs., Inc., 884 S.W.2d 845, 849 (Tex.App.-Dallas 1994, writ denied). The question of whether an agreement falls within the statute of frauds is one of law. Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796 (Tex.1961); Biko v. Siemens Corp., 246 S.W.3d 148, 159 (Tex.App.-Dallas 2007, pet. denied). But determining whether an exception to the statute of frauds applies is generally a question of fact. See Adams v. Petrade Int'l., Inc., 754 S.W.2d 696, 705 (Tex.App.-Houston [1st Dist.] 1988, writ denied).

In deciding whether an agreement is capable of being performed within one year, we compare the date of the agreement to the date when the performance under the agreement is to be completed. SeeTex. Bus. & Com.Code Ann. § 26.01(b)(6); Young v. Ward, 917 S.W.2d 506, 508 (Tex.App.-Waco 1996, no writ). If there is a year or more between those two reference points, a writing is required to render the agreement enforceable. Young, 917 S.W.2d at 508.

When the date performance will be completed cannot be readily ascertained, the law provides that if performance could conceivably be completed within one year of the agreement's making, a writing is not required to enforce it. See, e.g., Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 503 (Tex.1988); Miller v. Riata Cadillac Co., 517 S.W.2d 773, 775 (Tex.1974); Beverick v. Koch Power, Inc., 186 S.W.3d 145, 149 (Tex.App.-Houston [14th Dist.] 2005, pet. denied); Shaw v. Maddox Metal Works, Inc., 73 S.W.3d 472, 480 (Tex.App.-Dallas 2002, no pet.); Chacko v. Mathew, No. 14–07–00613–CV, 2008 WL 2390486, at *3 (Tex.App.-Houston [14th Dist.] June 12, 2008, pet. denied) (mem. op., not designated for publication). A contract that could possibly be performed within a year, however improbable performance within one year may be, does not fall within the statute of frauds. Beverick., 186 S.W.3d at 149 (emphasis in original) (citing Hall v. Hall, 158 Tex. 95, 308 S.W.2d 12, 15 (1957)). In Miller, for example, the court concluded that an indefinite term employment contract was performable within one year and, therefore, did not fall within the statute of frauds. Miller, 517 S.W.2d at 775.

On the other hand, promises of lifetime employment or employment until retirement age are usually the types of employment contracts that must be reduced to writing to be enforceable. See Reyna v. First Nat'l Bank, 55 S.W.3d 58, 71 (Tex.App.-Corpus Christi 2001, no pet.) (citing Schroeder, 813 S.W.2d at 489). This is because the contract's duration is for the employee's working life, not until his death, and the completion date may be ascertained by determining the employee's anticipated retirement date. Shaw., 73 S.W.3d at 480;see also Schroeder, 813 S.W.2d at 489 (oral employment agreement that appellant would be employed for another eight to ten years, until retirement, was not enforceable under statute of frauds). In Shaw, however, we distinguished cases involving promised lifetime annuities, noting the date of completion would be the individual's death, not his anticipated retirement. Shaw, 73 S.W.3d at 480. We cannot imply a duration for such contracts because, unlike an anticipated retirement date, there is no meaningful way to anticipate the date of someone's death. Id. Moreover, there is a distinction between termination of a contract and performance under the contract in that the death of an employee prior to retirement would terminate the lifetime employment agreement and result in nonperformance of the contemplated time frame of the agreement. Id.

Appellant's original petition alleged that, in August of 2004, he was approached by Walt Parker, president of Financial Necessities Network, Inc. (FINNI), d/b/a InsuranceMakesMeSick.com, about a position as an insurance salesman with FINNI. Appellant asserted that, in order to induce him to work for FINNI, Parker made certain promises. An oral employment agreement was reached between the parties that included, according to appellant, the following provisions:

1. Appellant would be employed by FNNI as a commissioned salesperson plus salary; 2. Appellant was guaranteed and promised a 25/70 percent commission rate with a $5000 salary to start;

3. After an initial period, salary would be reduced and commissions increased leading to 50/70 percent maximum commission and zero salary;

4. Appellant would receive “any and all commissions” concerning FINNI for “as long as they came in,” and “the commission would remain at the commission rate at the time of separation and would continue to pay as long as they came in,” regardless of whether appellant was still employed with the business.

After appellant's employment with FINNI was terminated, Parker told appellant he would only pay a 25/50 percent commission rate through 2012, then later said he would only pay appellant that promised commission rate through January...