Lee v. Wal-Mart Stores, Inc.

• Decision Date: 23 September 1994
• Docket Number: WAL-MART,No. 92-5046,92-5046
• Citation: 34 F.3d 285
• Parties: Mike D. LEE, d/b/a Mid-South Investment, Plaintiff-Appellant, v.STORES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 285

34 F.3d 285

Mike D. LEE, d/b/a Mid-South Investment, Plaintiff-Appellant, v. WAL-MART STORES, INC., Defendant-Appellee.

No. 92-5046.

United States Court of Appeals Fifth Circuit.

Sept. 23, 1994.

Marilyn J. Eickenhorst, Jesse R. Pierce, Clements, O'Neill & Pierce, Warren W. Harris, Porter & Hedges, Houston, TX, for appellant.

David R. McAtee, Pamela P. Keenan, Gibson, Dunn & Crutcher, Dallas, TX, for appellee.

Appeal from the United States District Court for the Eastern District of Texas.

Before REAVLEY and GARWOOD, Circuit Judges and LAKE, ^* District Judge.

GARWOOD, Circuit Judge:

This is a diversity action originally brought by plaintiff-appellant Mike D. Lee (Lee) against defendant-appellee Wal-Mart Stores, Inc. (Wal-Mart) for alleged damages that resulted from two Texas construction projects in the towns of Daingerfield and Paris. At trial, the jury found that Wal-Mart had breached its fiduciary duty to Lee and had committed economic duress and fraud, but that Lee was estopped to complain about Wal-Mart's acts. The district court entered a take nothing judgment in Wal-Mart's favor, which Lee appealed. We reversed and remanded the judgment concerning the Daingerfield transaction because we determined that Lee may have presented enough evidence to support a jury verdict for economic duress, and it was unclear, if this were so, whether the jury's estoppel finding precluded Lee's recovery. On remand, the district court granted Wal-Mart's summary judgment motion, ruling that Lee had failed to present any evidence of economic duress and in any event he was barred from recovery by the jury's estoppel finding. Lee now appeals the district court's grant of Wal-Mart's summary judgment motion. We affirm.

Facts and Proceedings Below

The background facts are described in Lee v. Wal-Mart Stores, Inc., 943 F.2d 554, 556-59 (5th Cir.1991), corrected, reh'g denied, 951 F.2d 54 (1992). Since 1975, Lee, an experienced real estate developer, has purchased and developed land sites for shopping centers which he has leased in part to Wal-Mart on a long-term basis. In September 1984, Wal-Mart's real estate manager for Texas, Bill Bothwell (Bothwell), expressed to Lee Wal-Mart's desire to have a store in Daingerfield, Texas. Bothwell told Lee that Wal-Mart was interested in operating a store on a site which was part of an 11.706 acre tract of land (the property) owned by others that was subject to an option to purchase held by two Daingerfield residents. ¹ Bothwell asked Lee to get involved in the project and he subsequently entered into a partnership with the two individuals holding the option. On December 17, 1984, the partnership purchased the property.

In January 1985, Lee sent to Wal-Mart his proposed terms for the Daingerfield project. On March 14, 1985, Bothwell sent Lee a letter stating in full:

"Re: Daingerfield, Texas

Dear Mike:

This is to confirm our telephone conversation concerning the subject town that Thomas P. Seay, Sr. Vice President, Real Estate and Construction has agreed to enter into a lease with you on your stie [sic] in Daingerfield for a 1987 opening.

I will prepare a lease, similar to Marshall with the following leasic [sic] items:

                1.  Size             50,966 square foot
                2.  Term             20 years plus 6--5's
                3.  Rent             $3.60 per square foot
                4.  C.A.M.           15 cents square foot max.
                5.  % Rent           1/2 of 1% of sales after
                                     7th year sales.
                

As soon as I get other immediate things taken care of such as Marshall and Sherman, I'll address my attention to Daingerfield."

On March 19, 1985, Lee received standard form leases for the Daingerfield store and two other stores. Lee was told by Bothwell to hold the Daingerfield lease because the final site plans had not been approved.

In November 1985, Wal-Mart's new real estate manager for Texas, Mike Nelson (Nelson), informed Lee that Wal-Mart had never approved a lease for the Daingerfield store. On February 3, 1986, Nelson sent Lee a new commitment letter for a smaller store at a lower base rental per square foot, which Lee agreed to. In July, Lee received a lease from Nelson which specified an even smaller store at a lower rental rate than stated in the February 3 letter. On August 1, 1986, Lee signed the lease. The lease specified that Lee was to begin construction of the store on September 1, 1986, but he was unable to do so because he could not secure financing for the project. On September 5, 1986, after his partners refused to contribute their share of capital for the construction project, Lee bought them out and became the sole owner of the property. Near the end of 1986, Lee advised Wal-Mart that he was having difficulty obtaining financing for the construction work, and on January 15, 1987, he proposed to sell the property to Wal-Mart. In response, Wal-Mart sent a letter cancelling the lease because of Lee's failure to commence construction by September 1, 1986. This letter included a lease termination agreement, which Lee signed.

Subsequently, Lee brought suit against Wal-Mart concerning the Daingerfield transaction and another transaction in Paris, Texas. The trial commenced on April 30, 1990. Lee testified that he signed the lease containing the reduced terms because he had purchased the property over a year prior to the lease, and the bank notes on it were coming due. When Lee was asked by his attorney why he did not sue Wal-Mart, he responded that he "was not a one-time developer with Wal-Mart," and he was hoping "that Wal-Mart would come back and ... make it right." Lee also testified that he still owned the property. ²

The jury found that as to the Daingerfield transaction, Wal-Mart had breached its fiduciary duty to Lee and had committed fraud and economic duress. However, the jury also found that Lee was estopped to complain about Wal-Mart's acts. The district court entered a take nothing judgment in Wal-Mart's favor, which Lee appealed. On appeal, this Court ruled that Wal-Mart did not owe a fiduciary duty to Lee. Lee, 943 F.2d at 557. We also concluded that Lee could not recover under any theory concerning the Paris transaction. Id. at 559. As to the Daingerfield transaction, we determined that the lack of a fiduciary duty precluded a finding of fraud, but the evidence presented at trial might still support a finding of economic duress. Id. at 560. Therefore, we reversed and remanded the judgment concerning the Daingerfield transaction because that part of the jury's verdict relating to economic duress may have afforded Lee a basis for recovery. Id. On remand, the district court granted Wal-Mart's summary judgment motion, ruling that Lee had failed to present any evidence on the elements of economic duress and in any event he was barred from recovery by the jury's estoppel finding. Lee now appeals the district court's grant of Wal-Mart's summary judgment motion. We affirm.

Discussion

Summary judgment is appropriate if the record discloses "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). This Court reviews the district court's grant of a summary judgment motion de novo. Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.1988). Summary judgment may be granted unless the nonmoving party on whom the burden of proof at trial rests shows that there exist "genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). See also Celotex Corp. v. Catrett, 477 U.S. 317, 321-25, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). On this second appeal, we first need to determine if Lee has placed in dispute any facts which could support a finding of economic duress, an issue on which he bears the burden of proof. Since we find he has not, we will not address the secondary issue of whether Lee is estopped from asserting economic duress.

This case was originally remanded partly because of this Court's uncertainty concerning whether Lee had satisfied all of the elements of economic duress. Lee, 943 F.2d at 560. This Court has held that under Texas law the tort of economic duress exists only if the following factors are shown: " '(1) there is a threat to do something which a party threatening has no legal right to do; (2) there is some illegal exaction or some fraud or deception; and (3) the restraint is imminent and such as to destroy free agency without present means of protection.' " Beijing Metal & Minerals v. American Business Ctr., 993 F.2d 1178, 1184-85 (5th Cir.1993) (quoting Deer Creek Ltd. v. North Am. Mortgage Co., 792 S.W.2d 198, 203 (Tex.App.--Dallas 1990, no writ)); see also Brown v. Cain Chemical, Inc., 837 S.W.2d 239, 244 (Tex.App.--Houston [1st Dist.] 1992, writ denied); Tower Contracting Co. v. Burden Bros., Inc., 482 S.W.2d 330, 335 (Tex.Civ.App.--Dallas 1972, writ ref'd n.r.e.). Furthermore, "the opposing party must be responsible for the financial distress." Beijing Metal at 1185; see also Brown, 837 S.W.2d at 244 (citing First Texas Sav. Ass'n of Dallas v. Dicker Center, 631 S.W.2d 179, 186 (Tex.App.--Tyler 1982, no writ)). ³

Lee argues that when Wal-Mart sent the March 14 commitment letter, it had entered into an enforceable agreement to execute a lease, and therefore its reneging on these proposed lease terms and eventually cancelling the lease altogether were actions that it had no legal right to take. Lee also contends that the economic coercion behind this threat was the fact that the bank notes that had financed the purchase of the property were coming due, so that he had no choice but to sign the less favorable lease. The district court concluded that Wal-Mart had a right to negotiate a lease that would be unfavorable to Lee, thereby finding by inference that the March 14...