N.Y. Party Shuttle, LLC v. Bilello

• Decision Date: 01 April 2013
• Docket Number: No. 01–11–01034–CV.,01–11–01034–CV.
• Citation: 414 S.W.3d 206
• Parties: NEW YORK PARTY SHUTTLE, LLC, Appellant v. John BILELLO, Appellee.
• Court: Texas Court of Appeals

414 S.W.3d 206

NEW YORK PARTY SHUTTLE, LLC, Appellant

v.John BILELLO, Appellee.

No. 01–11–01034–CV.

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

Feb. 21, 2013.

Rehearing Overruled April 1, 2013.

Charles Thomas Schmidt, Schmidt Law Firm, PLLC, Houston, TX, for Appellant.

William M. Thursland, Houston, TX, for Appellee.

Panel consists of Justices KEYES, SHARP, and HUDDLE.

OPINION

REBECA HUDDLE, Justice.

Appellant New York Party Shuttle, LLC (N.Y.PS) appeals a judgment entered against it in favor of appellee John Bilello. Bilello sued NYPS for breaching their October 2006 settlement agreement. After a bench trial, the trial court found that NYPS breached the settlement agreement and awarded Bilello $39,900.04, plus prejudgment interest. In four points of error, NYPS contends that the judgment should be reversed because (1) it conclusively established the affirmative defenses of mutual mistake, novation, and repudiation, and (2) the trial court erred in denying NYPS's motion for a continuance. Bilello raises one cross-point in which he contends the trial court erred in denying his request for attorney's fees. Finding no reversible error, we affirm.

Background

In 2004, Bilello and Thomas Schmidt started Jersey Shuttle, LLC. The business plan for the company was to carry passengers from Manhattan to Atlantic City. Shortly thereafter, Bilello and Schmidt formed a new company, NYPS, which provided sightseeing tours in New York City. In August 2005, NYPS and Bilello entered into a separation agreement and Bilello left NYPS to set up a similar business in San Francisco. After the parties entered into the separation agreement, NYPS sued Bilello in Harris County, alleging, among other things, that Bilello misrepresented the financial condition of NYPS while negotiating the separation agreement. Bilello then sued Schmidt individually, Schmidt's law firm, NYPS, and other entities, in New Jersey for, among other things, breach of fiduciary duty and legal malpractice. The parties attended mediation and ultimately entered into a settlement agreement and release of all claims on October 26, 2006. This settlement agreement settled and released all claims between Bilello, San Francisco Comprehensive Tours, LLC, and the Tour Guide Training Center (Bilello parties) and NYPS, Jersey Shuttle, LLC, C. Thomas Schmidt, Schmidt & Hoffer, LLP, Creativerse Internet Systems, LLC, and Washington DC Party Shuttle, LLC (N.Y.PS parties).

Pursuant to the terms of the settlement agreement, Bilello was to receive $350,000 from NYPS over a three year period “on behalf of the NYPS Parties ... in full satisfaction of all claims against the NYPS Parties.” The parties also agreed to mutually release all claims or causes of action against the other side. Under the settlement agreement, Bilello also forfeited his 1,650–unit membership interests in NYPS and his 650–unit membership interest in Jersey Shuttle, LLC, as well as all warrants, bonuses, and other undetermined benefits. The settlement agreement contained mutual noncompete provisions and stated that it could not be modified or amended except by written instrument signed by all of the parties thereto.

NYPS made timely payments to Bilello under the terms of the settlement agreement until August 2008. That month, NYPS was scheduled to make a $20,000 payment. However, NYPS only made a $7,500 payment and failed to pay the remaining $12,500. Bilello sent a default notice to NYPS regarding the overdue $12,500. Bilello stated that, in accordance with the terms of the settlement agreement, he was entitled to pursue remedies and start competing businesses in the restricted areas, but that he would prefer to receive the payment due. NYPS responded that it would be able to pay the $12,500, but it wanted Bilello to confirm that there would be no material breach and that all other provisions of the settlement agreement remain intact if the payment were made on or before October 13, 2008. NYPS did not receive a response to this communication, so it sent Bilello another email stating NYPS was prepared to wire the $12,500 and to continue paying the balance of the amounts agreed to in the settlement agreement “immediately upon written agreement that there was no material breach of our agreement and that all of the provisions of that agreement remain in effect.” In response, Bilello stated that he had no position on NYPS's inquiry as to whether there was a material breach, and he suggested that NYPS make all the required payments. NYPS never paid the $12,500 and failed to make the majority of the remaining payments due under the settlement agreement.

In the next several weeks, NYPS and Bilello discussed amending the terms of the settlement agreement. The two main purposes of the contemplated amendment were to set forth new terms governing the payment of the remaining balance owed to Bilello under the settlement agreement and to extend the noncompete agreement until 2012. The other terms of the settlement agreement were to remain the same. While the parties seemingly reached agreement on the amendment in principle, their email communications reflect that they intended the amendment to become effective upon the execution of a new written agreement reflecting the new terms. However, neither party ever executed a writing modifying the terms of the settlement agreement.

Bilello ultimately sued NYPS for breach of contract based on NYPS's failure to make the required payments under the settlement agreement. It was undisputed that, at the time Bilello's lawsuit was filed, NYPS had failed to pay $39,900.04 due under the settlement agreement. NYPS answered and raised several affirmative defenses, including mutual mistake, novation, and repudiation.

Following a one-day bench trial, the trial court rejected NYPS's affirmative defenses, and found that NYPS breached the settlement agreement. It awarded Bilello damages in the amount of $39,900.04 plus prejudgment interest. NYPS appeals.

Discussion

A. NYPS's Affirmative Defenses

In its first three issues, NYPS argues that it conclusively proved its affirmative defenses of mutual mistake, novation, and repudiation. We construe these issues as challenges to the legal sufficiency of the evidence to support the trial court's adverse findings on those affirmative defenses.

In an appeal from a bench trial, the trial court's findings of fact have the same weight as a jury verdict. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994); Nguyen v. Yovan, 317 S.W.3d 261, 269–70 (Tex.App.-Houston [1st Dist.] 2009, pet. denied). We review a trial court's findings of fact under the same legal sufficiency of the evidence standards used when determining whether sufficient evidence exists to support an answer to a jury question. Catalina, 881 S.W.2d at 297;Nguyen, 317 S.W.3d at 270.

“A party challenging the legal sufficiency of an adverse finding on an issue on which that party had the burden of proof at trial must demonstrate on appeal that the evidence conclusively established, as a matter of law, all vital facts in support of the issue.” RM Crowe Prop. Servs. Co., L.P. v. Strategic Energy, L.L.C., 348 S.W.3d 444, 448 (Tex.App.-Dallas 2011, no pet.). We consider the legal sufficiency of the evidence in the light most favorable to the prevailing party, according every reasonable inference in that party's favor and disregarding contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005); Tricon Tool & Supply, Inc. v. Thumann, 226 S.W.3d 494, 500–01 (Tex.App.-Houston [1st Dist.] 2006, pet. denied). “If there is any evidence of probative force to support the finding, i.e., more than a mere scintilla, we will overrule the issue.” City of Houston v. Hildebrandt, 265 S.W.3d 22, 27 (Tex.App.-Houston [1st Dist.] 2008, pet. denied) (citing Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386, 388 (Tex.2005)). If no evidence supports the adverse finding, we examine the entire record to determine if the contrary position is established as a matter of law. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex.2001). The issue will be sustained only if the contrary proposition is conclusively established. Id.

1. Mutual Mistake

In its first point of error, NYPS argues that the evidence at trial conclusively established that it agreed to pay Bilello $350,000 under the settlement agreement based on the parties' mutually mistaken belief that $350,000 was the reasonable value of Bilello's shares in NYPS. According to NYPS, because of later-discovered errors made in the computation of workers' compensation costs, payroll and local taxes, and maintenance costs, the value of the company—and thus, the value of Bilello's interest in it—was significantly less than the parties thought at the time they entered into the settlement agreement.

In response, Bilello argues that NYPS failed to show that the parties' true agreement was incorrectly reflected in the settlement agreement or that they shared the same mistaken belief as to a material fact. Bilello contends that, at best, the evidence demonstrated that NYPS failed to accurately appraise its financial condition at the time the parties entered into the settlement agreement.

The elements of mutual mistake are: (1) a mistake of fact; (2) held mutually by the parties; (3) which materially affects the agreed-on exchange. City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 735 (Tex.App.-Fort Worth 2008, pet. dism'd). A mutual mistake of fact occurs when the parties to an agreement have a common intention, but the written agreement does not accurately reflect that intention due to a mutual mistake. See Smith–Gilbard v. Perry, 332 S.W.3d 709, 713 (Tex.App.-Dallas 2011, no pet.); City of The Colony, 272 S.W.3d at 735. When mutual mistake is alleged, the party seeking relief must show what the parties' true agreement was and that the instrument incorrectly reflects that agreement because of a mutual...