Patel v. Ambassador Drycleaning Co., Inc.

• Decision Date: 15 August 2002
• Docket Number: No. 11-01-00175-CV.,11-01-00175-CV.
• Parties: Manu PATEL d/b/a Nu-Tone Cleaners of Abilene, Appellant, v. AMBASSADOR DRYCLEANING & LAUNDRY CO., INC., et al, Appellees.
• Court: Texas Court of Appeals

Page 304

86 S.W.3d 304

Manu PATEL d/b/a Nu-Tone Cleaners of Abilene, Appellant, v. AMBASSADOR DRYCLEANING & LAUNDRY CO., INC., et al, Appellees.

No. 11-01-00175-CV.

Court of Appeals of Texas, Eastland.

August 15, 2002.

Jack Yates, Abilene, Stuart Evan Glass, Weiner, Glass & Reed, P.C., Dallas, for appellant.

Stephen H. Suttle, McMahon, Surovik, Suttle, Buhrmann, Hicks & Gill, Abilene, for appellee.

Panel consists of ARNOT, C.J., and WRIGHT and McCALL, JJ.

Opinion

JIM R. WRIGHT, Justice.

This case involves a settlement agreement and the issues of whether appellees are entitled to enforce the agreement, whether appellees breached the agreement, and whether appellees fraudulently induced appellant to enter into the agreement. Because it found that appellees had not breached the agreement, that appellees had substantially performed under the agreement, and that there had been no fraud in connection with the agreement, the trial court entered a take-nothing judgment against appellant and dismissed appellant's lawsuit. We affirm in part and reverse and remand in part.

Appellant is in the dry-cleaning business. In 1996, he purchased a Technodry dry-cleaning machine. Appellees were involved in various capacities in providing appellant with the machine. Appellant experienced problems with the machine, and he rejected it. When appellees did not remove the machine and return his money, appellant placed the machine in storage and filed suit against appellees. The parties mediated their claims and entered into a settlement agreement, followed by a letter clarifying the settlement agreement.

Appellant filed a second amended original petition alleging that appellees had breached the settlement agreement and that they had fraudulently induced him to enter into the settlement agreement. Appellees filed a counterclaim in which they sought to enforce the settlement agreement and to have the original cause of action dismissed because they had substantially performed under the settlement agreement. It is not the sale that is involved in this appeal, it is the settlement agreement. Following a bench trial, the trial court concluded that the settlement agreement was valid and binding, that appellees substantially complied with all material terms under the settlement agreement, that appellees committed no breach of the settlement agreement, that appellees had not committed fraud, that appellees made no misrepresentations in connection with the execution of the settlement agreement, and that appellant's claims should be denied and his lawsuit dismissed.

Appellant brings three points of error. In his first point, appellant argues that the trial court erred in finding that appellees substantially complied with the settlement agreement because: the doctrine of substantial performance cannot be applied where there is a breach of an essential part of a contract; the doctrine of substantial performance cannot be applied in this instance because the trial court found that appellees had not breached the agreement; the doctrine of substantial performance cannot be applied to settlement agreements as a matter of law; and there was insufficient evidence of substantial performance. In his second point, appellant maintains that the evidence was insufficient to support the trial court's finding that appellees did not breach the settlement agreement. In his third point, appellant argues that the trial court's failure to find in his favor on the fraudulent inducement issue was so against the great weight and preponderance of the evidence as to be manifestly unjust.

We will first discuss that portion of his first point in which appellant maintains that the doctrine of substantial performance does not apply to settlement agreements as a matter of law. Settlement agreements are enforceable in the same manner as other contracts. TEX. CIV. PRAC. & REM. CODE ANN. § 154.071(a) (Vernon 1997); see also Stevens v. Snyder, 874 S.W.2d 241, 244 (Tex. App.-Dallas 1994, writ den'd). The doctrine of substantial performance is a contract law concept which is applicable to many different types of contracts. See, e.g., Geotech Energy Corporation v. Gulf States Telecommunications and Information Systems, Inc., 788 S.W.2d 386, 390 (Tex.App.-Houston [14th Dist.] 1990, no writ). The strict rule formerly was that one who is in default cannot maintain a suit for its breach. Dobbins v. Redden. 785 S.W.2d 377, 378 (Tex.1990); Gulf Pipe Line Co. v. Nearen, 135 Tex. 50, 138 S.W.2d 1065, 1068 (1940). This rule was later relaxed by the doctrine of substantial performance. The rule of substantial performance allows one to go forward with a contract action even though he has breached nonmaterial terms of the contract but has substantially performed it. Dobbins v. Redden, supra; Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480 (Tex.1984); Atkinson v. Jackson Bros., 270 S.W. 848, 850 (Tex. Comm'n App.1925, holding approved). We see no reason why settlement agreements should be treated differently from other contracts to which the doctrine applies. We hold that the doctrine of substantial performance is applicable to settlement agreements. That portion of appellant's first point in which he argues to the contrary is overruled.

Appellant also argues in his first point that the doctrine of substantial performance applies only where there is a breach of the underlying agreement. He reasons that, because the trial court found that appellees did not breach the agreement, it could not also find that they have substantially performed the agreement. While we agree with appellant that, by its very definition, the doctrine of substantial performance assumes an immaterial breach by the one seeking to recover under the doctrine, in view of our disposition of other points on appeal, we need not discuss this portion of appellant's first point. See Ambassador Development Corporation v. Valdez, 791 S.W.2d 612 (Tex.App.-Fort Worth 1990, no writ).

We next discuss that portion of his first point in which appellant maintains that the trial court erred in finding that appellees substantially performed under the agreement because there is insufficient evidence to support such a finding.

"Substantial performance" means:

[T]hat there has been no willful departure from the terms of the agreement and no omission in essential points and that the agreement has been honestly and faithfully performed in its material and substantial particulars and the only variance from the strict and literal performance consists of technical or unimportant omissions or details.

Balcones Corporation v. Sutherland, 318 S.W.2d 691, 694 (Tex.Civ.App.-San Antonio 1958, writ ref'd n.r.e.).

The settlement agreement set forth the obligations of all three appellees to be: to deliver a new dry-cleaning machine and spill tank to appellant by a certain date; to install that machine; to deliver a written warranty covering all parts for one year; to deliver an owner's operating manual in English with the delivery of the machine; to deliver a list of parts and suppliers of parts for the machines in the English language within 60 days after the delivery of the machine; to provide telephone numbers where parts for the machine can be ordered for delivery by Federal Express or UPS; to provide 3 continuous days of training in the operation of the machine after installation; and to pay to appellant the sum of $14,000 within 10 days from the date of the settlement agreement.

The settlement agreement and clarification letter also set forth appellant's obligations: to obtain delivery of 80 gallons of new solvent upon installation of the new machine; to attend the training sessions to be given by appellees; to furnish an unobstructed location upon which to install the new machine; to remove the old machine from storage; to drain the solvent from the old machine; and to keep the settlement agreement confidential.

Appellant did not have the burden of proof upon the issue of substantial performance. In a contract action based upon substantial performance, the party seeking relief under the doctrine bears the burden of proving that he did substantially perform in accordance with the agreement. Vance v. My Apartment Steak House of San Antonio, Inc., supra. Therefore, appellees bore the burden of proving that they substantially performed under the settlement agreement. In reviewing this issue, we must examine all of the evidence and make a determination as to whether the evidence in support of the finding is so weak as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). We review the trial court's findings of fact following a bench trial using the same standards we use to review the factual sufficiency of the evidence supporting a jury's verdict. Hitzelberger v. Samedan Oil Corporation, 948 S.W.2d 497, 503 (Tex. App.-Waco 1997, writ den'd). Regardless of the label, conclusions which are actually findings will be treated as findings. Ray v. Farmers' State Bank of Hart, 576 S.W.2d 607 (Tex.1979). As the trier of fact in a bench trial, it is the province of the trial court to determine the credibility of the witnesses and the weight to be given their testimony, to believe or disbelieve all or any part of the testimony, and to resolve any inconsistencies in the testimony. Robbins v. Roberts, 833 S.W.2d 619, 624 (Tex.App.-Amarillo 1992, no writ). When there is conflicting evidence, the appellate court usually regards the finding of the trier of fact as conclusive. See Jauregui v. Jones, 695 S.W.2d 258, 263 (Tex.App.-San Antonio 1985, writ ref'd n.r.e.). We are not to reweigh the evidence and set aside the finding merely because we are of the opinion that a different result is more reasonable. Pool v. Ford Motor Company, 715 S.W.2d 629 (Tex.1986).

We have examined all of the evidence in this record. The following facts are...