Orix Capital Markets v. Washington Mut. Bk.

• Decision Date: 21 July 2008
• Docket Number: No. 05-07-00860-CV.,05-07-00860-CV.
• Citation: 260 S.W.3d 620
• Parties: ORIX CAPITAL MARKETS, L.L.C. and Orix USA Corporation, Appellants, v. WASHINGTON MUTUAL BANK, f/k/a Washington Mutual Bank, F.A., Appellee.
• Court: Texas Court of Appeals

260 S.W.3d 620

ORIX CAPITAL MARKETS, L.L.C. and Orix USA Corporation, Appellants, v. WASHINGTON MUTUAL BANK, f/k/a Washington Mutual Bank, F.A., Appellee.

No. 05-07-00860-CV.

Court of Appeals of Texas, Dallas.

July 21, 2008.

Rehearing Overruled August 27, 2008.

Gregory D. May, Amy N. Howell, Dallas, TX, for Appellant.

Cheryl E. Diaz, Debora McWilliams Alsup, Thompson & Knight, L.L.P., Austin, TX, for Appellee.

Before Justices WHITTINGTON, RICHTER, and MAZZANT.

OPINION

Opinion by Justice WHITTINGTON.

In this breach of contract case, each party moved for summary judgment. The trial judge granted the motion of appellee Washington Mutual Bank, f/k/a Washington Mutual Bank, F.A., and denied the motion of appellants Orix Capital Markets, L.L.C. and Orix USA Corporation (Orix). In two issues, Orix contends the trial judge erred in denying its motion for summary judgment and granting Washington Mutual's motion. Because Orix established there is no genuine issue of material fact and it is entitled to judgment as a matter of law on its claims, we reverse the trial court's judgment.

Background

On June 28, 2004, the parties entered into an agreement under which Orix would maintain money market deposit accounts at Washington Mutual, and Washington Mutual would pay a monthly incentive fee based on the balances in the accounts. Under their agreement, "the Bank will pay to ORIX a fee based on the average daily ... [b]alances ... for the preceding month maintained by ORIX at the Bank." The parties amended their agreement on June 8, 2005, and continued to operate under it without issue until December, 2005. The only dispute between the parties arises out of the fee Orix contends is due for a portion of December, 2005. Washington Mutual contends it has no contractual duty to pay the disputed fees because on December 8, 2005, Orix sold the deposit balances to a third party. After Washington Mutual refused to pay the disputed fees, Orix sued for breach of contract. Each party moved for summary judgment. After hearing, the trial judge entered judgment for Washington Mutual, ruling that Orix should take nothing on its claims.

Standard of Review

When both parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 (Tex.2000). When the trial court grants one party's motion for summary judgment and denies the other party's motion, we review both parties' summary judgment evidence, determine all questions presented, and render the judgment the trial court should have rendered. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.2000).

Discussion

The interpretation of an unambiguous contract is a question of law. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650-51 (Tex. 1999). When interpreting written contracts, our primary concern is to determine the mutual intent of the parties as manifested in the contract itself. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). The parties' intent must be taken from the agreement itself and the agreement must be enforced as written. Wells Fargo Bank, Minnesota, N.A. v. North Cent. Plaza I, L.L.P., 194 S.W.3d 723, 726 (Tex. App.-Dallas 2006, pet. denied). A court must favor an interpretation that affords some consequence to each part of the agreement so that none of the provisions will be rendered meaningless. Coker, 650 S.W.2d at 394. No single provision taken alone will be given controlling effect. Coker, 650 S.W.2d at 393. All provisions of a contract must be considered with reference to the entire instrument. Coker, 650 S.W.2d at 393. We give terms their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used them in a technical or different sense. Heritage Res., Inc. v. Nations-Bank, 939 S.W.2d 118, 121 (Tex.1996).

The dispute between the parties is centered on a single phrase of their agreement, "maintained by Orix." Washington Mutual contends that a third party, Key-Corp. Real Estate Capital Markets, Inc., maintained the balances after December 8, 2005, while Orix contends it continued to maintain the balances during the relevant period. Orix focuses on the meaning of "maintained," while Washington Mutual focuses on the meaning of "by Orix."

Washington Mutual moved for summary judgment on the ground that the undisputed evidence showed it did not breach the deposit agreement, so Orix could not prove an essential element of its claim. It argued the evidence conclusively showed Orix did not "maintain" the deposit balances after it sold its servicing business to KeyCorp., so Washington Mutual did not breach the agreement by failing to pay the disputed fee. Orix's cross-motion for summary judgment alleged Washington Mutual breached the contract as a matter of law.

A successful breach of contract claim requires proof of the following elements: (1) a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of that breach. Petras v. Criswell, 248 S.W.3d 471, 477 (Tex.App.-Dallas 2008, no pet.). A breach of contract occurs when a party fails or refuses to perform an act that it expressly promised to do. Methodist Hosps. of Dallas v. Corporate Communicators, Inc., 806 S.W.2d 879, 882 (Tex.App.-Dallas 1991, writ denied). Whether a party has breached a contract is a question of law for the judge, not a question of fact for the jury. ITT Commercial Fin. Corp. v. Riehn, 796 S.W.2d 248, 253 n. 3 (Tex.App.-Dallas 1990, no writ). The judge determines what conduct is required of the parties and, insofar as a dispute exists concerning the failure of a party to perform the contract, the judge submits the disputed fact questions to the jury. ITT Commercial Fin. Corp., 796 S.W.2d at 253 n. 3. Where the evidence is undisputed regarding a party's conduct under a contract, the judge alone must determine whether it shows performance or breach of its contract obligation. Lafarge Corp. v. Wolff, Inc., 977 S.W.2d 181, 186 (Tex.App.-Austin 1998, pet. denied).

The issues before us are whether Orix performed the contract after December 8, 2005 by maintaining the balances in the accounts, and whether Washington Mutual breached the contract when it failed to pay the contractual fee on the balances in the accounts after December 8, 2005. Certain facts are undisputed. The parties agree Washington Mutual agreed to pay Orix a monthly fee based on balances maintained by Orix in the bank. Orix admits, "[O]n November 14, 2005, ORIX and KeyCorp executed an Asset Purchase Agreement for ORIX's commercial mortgage master servicing business." The Orix/Washington Mutual agreement required Washington Mutual's written consent to assignment. Orix did not obtain Washington Mutual's consent to an assignment, and the contract was not assigned to KeyCorp. After December 8, 2005, Orix provided transition services to KeyCorp. on a contractual basis. The accounts in question remained at Washington Mutual during the relevant time period. The balances in the accounts for the relevant time period and the fee that would be due assuming the contractual formula was applied are not disputed. Washington Mutual did not pay the contractual fee for the balances in the accounts after December 8, 2005.

The only dispute between the parties is the effect of the sale to KeyCorp. on the parties' obligations under their agreement. Washington Mutual contends Orix transferred ownership and control of the accounts and deposits to KeyCorp., and so did not "maintain" the balances after December 8, 2005. Orix contends that as between it and Washington Mutual, Orix continued to own and control the accounts during the relevant time period, and, in any event, ownership and control is not required in order to "maintain" the accounts under the contract.

Washington Mutual argues the phrase "maintained by Orix" means that only Orix could have "ownership and control" of the funds in the accounts. Washington Mutual further argues we must look to the terms of the agreements between KeyCorp. and Orix, which show KeyCorp. had ownership and control of the funds, not Orix. Orix contends it never had "ownership and control" of the accounts either before or after the sale to KeyCorp., because, as clearly understood by both parties at the outset, Orix always held the funds as custodian for...