Oliver v. Rogers

• Decision Date: 28 May 1998
• Docket Number: No. 01-90-01124-CV,01-90-01124-CV
• Citation: 976 S.W.2d 792
• Parties: N.J. OLIVER, R.B. Parker, and Texas State Optical of Meyerland, Appellants, v. S.J. ROGERS and N. Jay Rogers, Individually and d/b/a Texas State Optical; Pearle, Inc.; and Pearle Vision, Inc., Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 792

976 S.W.2d 792

N.J. OLIVER, R.B. Parker, and Texas State Optical of Meyerland, Appellants, v. S.J. ROGERS and N. Jay Rogers, Individually and d/b/a Texas State Optical; Pearle, Inc.; and Pearle Vision Inc., Appellees.

No. 01-90-01124-CV.

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

May 28, 1998.

Rehearing Overruled July 9, 1998.

Ernest R. Higginbotham, Dallas, Jay N. Gross, Louis Paine, Houston, for appellants.

Dennis Herlong, Houston, for appellees.

Before SCHNEIDER, C.J., and MIRABAL and PRICE, ^* JJ.

OPINION

SCHNEIDER, Chief Justice.

Appellees, S.J. Rogers and N. Jay Rogers, individually and doing business as Texas State Optical have requested the Court to rehear this appeal. We overrule their motion for rehearing, but withdraw our former opinion and substitute this one in its place. Appellants, N.J. Oliver, R.B. Parker, and Texas State Optical of Meyerland (collectively "Oliver and Parker") were plaintiffs below. In three points of error, they appeal the trial court's take-nothing summary judgment on their claims of breach of contract, breach of implied contract, fraud, and breach of a duty of good faith and fair dealing, arising from their purchase of a Texas State Optical (TSO) office and the subsequent opening of another TSO office in a location they contend was contractually prohibited. Appellees are the defendants below: S.J. Rogers and N. Jay Rogers, individually and doing business as Texas State Optical (collectively "Rogers") and Pearle, Inc. and Pearle Vision, Inc. (collectively "Pearle").

I. Factual and Procedural Background

A. The Meyerland Contract

On May 28, 1968, the Rogers, themselves optometrists and founders of TSO, agreed to sell the TSO Meyerland office to Oliver and Parker. A provision of the contract ¹ called for them to pay the Rogers 10 percent of the monthly net cash of the office ² during a "payment period" from January 1, 1978 ³ to December 31, 1985, which was later amended to run from February 1, 1973 to December 31, 1985. The following two provisions were contained in the contract:

9. First Parties [Rogers] agree that for so long as Second Parties [Oliver and Parker] are not in default as to the covenants and conditions of this contract, First Parties will not open a like or similar optometric business or optical dispensary for the practice of optometry nor grant any Third Party the right to open a like or similar optometric business or optical dispensary under the name T.S.O. (as defined) for the practice of optometry within that certain area described in Exhibit A attached hereto and hereinafter described as the "excluded area"....

10. First Parties agree that for so long as Second Parties are not in default ... their Ownership of the office shall include the right to use the tradename Texas State Optical (as defined) within and only within the excluded area. It is acknowledged, however, that there may exist from time to time, sales contracts for other offices within close proximity to the boundaries of the "excluded area" and that the protected area of such offices may coincide with part of the protected area of the Meyerland office....

Exhibit A defined the "excluded area" as being within a three-mile radius of the TSO Meyerland office at its location on the date of the contract execution. It excepted from that area any TSO office in operation at the date of the signing of the contract. On the contract execution date, there were no other TSO offices within a three-mile radius.

The contract contained other provisions extending beyond the payment period into the future. For example, it included a provision in paragraph six that Oliver and Parker would operate the office in accordance with the Rogers' general policies and business practices, "as long as the name T.S.O. is used...." Similarly, paragraph 15 provided that during the payment period, "and thereafter, for so long as the trade name T.S.O ... is used in [Oliver's and Parker's'] operation," the TSO Meyerland office would pay a pro rata share of the costs of TSO advertising in the Houston market.

The contract also contained clauses providing that if a third party offered to buy Oliver and/or Parker's interest in the office, they would first give the Rogers the right to buy the interest on the same terms.

B. The Village Office

A month before the execution of the Meyerland contract, the Rogers had entered into a similar arrangement, the Village agreement, with another optometrist, Aron Seibel, for an office with a 2 1/2-mile excluded area that overlapped a portion of the excluded area of the TSO Meyerland office.

C. Modification of Meyerland Contract

In 1974, a TSO associate office owner in Dallas sued the Rogers, alleging their contract with him violated the State's antitrust statutes. N. Jay Rogers, by letter dated August 23, 1976, informed Oliver and Parker of potential antitrust violations in the Meyerland contract and tendered a new one eliminating several alleged anti-competitive provisions, including the portion of paragraph nine providing for the "excluded area." The Rogers assert this effort to reform the contract arose from the Dallas lawsuit and was an attempt to delete illegal provisions.

As of the date of N. Jay Rogers's letter, Oliver and Parker had made 42 payments, totaling approximately $230,000, for the purchase of the TSO Meyerland office. Oliver and Parker agreed to most of the modifications proposed by the Rogers, including deletion of the portion of paragraph 10 relative to the possible overlapping of the Meyerland excluded area by protected areas of neighboring offices. However, regarding the "excluded area" portion of paragraph nine, Parker wrote N. Jay Rogers on August 24, 1977, that he and Oliver needed it in the modified version of the contract. In accordance with the contract, Oliver and Parker continued to make the monthly payments.

In a second letter, in 1978, the Rogers unilaterally deleted from the Meyerland contract several provisions, including paragraph nine. By letter dated March 20, 1978, Oliver and Parker advised the Rogers that they did not agree to deleting paragraph nine from the contract. Oliver and Parker continued to make the payments. In all, they paid the Rogers over one million dollars for the purchase of the TSO Meyerland office.

D. Rogers's Sale of Business

On October 22, 1979, the Rogers, by an asset acquisition agreement, sold to Pearle the TSO trade names and trademarks, except for the Rogers's use of them for advertising purposes for those offices for which they would have a continuing advertising responsibility, such as the TSO Meyerland office. Language in the agreement provided that the TSO Meyerland office was not one acquired under the agreement and that Pearle would not assume or in any way become liable for liabilities or obligations of the Rogers. Later, TSO, Inc. acquired all the assets, rights, and obligations acquired by Pearle under the asset acquisition agreement. ⁴

E. Relocation of the Village Office

In July 1986, Dr. Burt Denton, who had bought the Village office from Seibel, moved it from its former location to Stella Link and Holcombe, less than three miles from the TSO Meyerland office.

At a deposition of N. Jay Rogers on September 9, 1986, Rogers produced a May 28, 1976 contract conveying to Seibel the Rogers's remaining ownership interest in the TSO Village office. The 1976 contract gave Seibel the right to use the trade name TSO in one office within a given license area. That license area included part of the TSO Meyerland area. Neither of the Rogers ever told Oliver or Parker about the 1976 agreement with Seibel.

When Oliver and Parker learned TSO Village office was planning to open an office within their excluded area, they phoned a representative of TSO, Inc. and informed him it would be a violation of the Meyerland contract. Counsel for Oliver and Parker subsequently sent a written request to TSO, Inc., as successors to the Rogers under the contract, to take the necessary action to honor the contract and prevent TSO Village office from relocating. Pearle responded with a statement of its position for denying Oliver's and Parker's request.

Even after the TSO Meyerland office had been paid for in full, Oliver and Parker continued and continue to be assessed various advertising charges, according to the provisions of the contract, and for the years 1986 to 1989, alone, they paid in excess of $200,000 in such assessments.

F. Oliver's and Parker's Suit

Oliver and Parker filed their original petition against the Rogers and Pearle on August 5, 1986. In 1990, they filed their fifth amended original petition. Against the Rogers, Oliver and Parker pled causes of action for breach of contract, fraud or material misrepresentation, and breach of a duty of good faith and fair dealing. They pled they did not discover the Rogers's wrongdoing until the September 9, 1986 N. Jay Rogers deposition. They pled a cause of action against Pearle for breach of the Meyerland contract on the theory that Pearle succeeded to the Rogers's rights and obligations under that contract by virtue of (1) the language in the asset acquisition agreement whereby it obtained ownership of the names "Texas State Optical" and "T.S.O.," or, alternatively, (2) by an implied contract between TSO, Inc. and Pearle on the one hand and the Rogers on the other hand. Oliver and Parker pled the implied contract was based on Pearle's assumption of the right to conduct on-site audits of the associate offices as part of their quality review program and its attorney's statement setting forth Pearle's position for denying Oliver's and Parker's request for action to be taken to stop the relocation of the TSO Village office into their excluded area.

G. Defendants' Answer and Motion for Summary Judgment

The Rogers answered with a general denial and a counterclaim for a declaratory judgment that Oliver and Parker had no cause of action against them. Pearle...