Priem v. Shires, s. 14402

• Citation: 697 S.W.2d 860
• Decision Date: 02 October 1985
• Docket Number: Nos. 14402,14436,s. 14402
• Parties: Marion PRIEM, et ux., Appellants, v. Paul L. SHIRES, Individually and d/b/a Shires and Hope Custom Builders, Appellee. Paul L. SHIRES, Individually and d/b/a Shires and Hope Custom Builders, Appellant, v. Marion PRIEM, et ux., Appellees.
• Court: Court of Appeals of Texas

Page 860

697 S.W.2d 860

Marion PRIEM, et ux., Appellants, v. Paul L. SHIRES, Individually and d/b/a Shires and Hope

Custom Builders, Appellee.

Paul L. SHIRES, Individually and d/b/a Shires and Hope

Custom Builders, Appellant, v. Marion PRIEM, et ux., Appellees.

Nos. 14402, 14436.

Court of Appeals of Texas,

Austin.

Oct. 2, 1985.

Jeff Blackwelder, McMurtry, Ewald & Blackwelder, Austin, for Priem.

Mark S. Levbarg, Levbarg & McGowan, Austin, for Shires.

Before POWERS, EARL W. SMITH and BRADY, JJ.

POWERS, Justice.

Marion Priem, joined by his wife, sued Paul L. Shires for money damages. Shires, in turn, sued the Priems by way of counterclaim. After a jury trial, the trial court disregarded the jury's answers to special issues and rendered judgment that the parties take nothing by their respective suits. We will affirm the trial-court judgment. We will refer to the Priems as "Priem" and to Shires by name.

Priem alleged that Shires had failed to complete in a good and workmanlike manner his construction of Priem's residence. Contending that such failure amounted to the "breach of an ... implied warranty," Priem prayed for recovery on the statutory cause of action authorized by § 17.50(a)(2) of Tex.Bus. & Com.Code Ann. (Supp.1985), a section of the Deceptive Trade Practices--Consumer Protection Act. In the course of the suit, the parties composed their differences in a contract dated July 1, 1983, entitled "Mutual Release of All Claims." The contract contemplated remedial work on the Priem residence. The work was not done and Priem pressed anew his statutory cause of action. Shires counterclaimed, alleging the statutory cause of action (for court costs and attorney's fees) authorized by § 17.50(c) for consumer actions brought in bad faith or for the purpose of harassment. From the trial court's take-nothing judgment, both parties appeal, contending they were entitled to judgment on the jury's answers to special issues. ¹

The determinative issue is whether the parties' contract of July, 1983 constituted a novation, with the legal effect of extinguishing or discharging their respective statutory causes of action under § 17.50. We believe it had such effect with respect to any past or future statutory causes of action arising out of the construction controversy.

There is no jury finding or conclusion of law that would deprive the contract of legal effect; indeed, the contract has never been assailed as to its validity, whether in the trial court or on appeal, and each party urges its validity as a defense or ground of recovery. The material parts of the contract are set out in a footnote. ²

Whether their contract be one of settlement and compromise or one of accord and satisfaction, disputing parties may in lieu of performance itself agree that a promise of performance shall constitute satisfaction of an original claim or right of action. ³ That is to say, their contract may evidence an intention to relinquish and extinguish pre-existing claims and rights of action, and effect a novation, even though some of the promises contained in their contract be executory. In such cases, they must recover on or for breach of the promises contained in the contract of novation. They may not recover on their pre-existing claims and rights of action, if there was, indeed, a novation. What then was the intention of the parties in the present case?

First, we think it beyond controversy that the contract was one of settlement and compromise of disputed claims. It may not be reasonably contended otherwise in light of the parties' express acknowledgment, in the instrument, that their claims against each other were unliquidated and disputed, that they made mutual concessions to avoid litigation about their respective claims, and that the contract was made for the very purpose of compromising doubtful and disputed claims so as to avoid litigation and buy peace without admitting liability. We think it also unquestionable that the agreement was one of accord and satisfaction as well, in that each party expressly agreed therein to perform something distinctly different from what might have been legally enforced against him in vindication of the right of action originally claimed by the other.

Thus, there arises the second issue: Did the parties intend by their contract of accord and satisfaction to extinguish any pre-existing rights of action and relinquish any pre-existing claims they may have had by reason of the underlying controversy about the construction work? In other words, did they intend that their contract would effect a novation of those antecedent claims and rights?

Priem contends that his obligation to present the agreed order only after completion of the work implies that he was empowered to accept, or not, the remedial work. And under the general rule applicable to contracts of accord and satisfaction, a novation arises only on the claimant's satisfaction--his acceptance of the performance promised in the accord. But this general rule may, of course, be varied by the particular terms upon which the parties agree in their contract of accord and satisfaction. They may, for example, agree that mutual promises shall constitute a release of all antecedent rights of action and in such cases the general rule does not apply--there is a novation resulting from agreement of the parties, even though their contract is one of accord and satisfaction, as pointed out in a footnote.

We concede that Priem's obligation to present the agreed order only after completion of the work implies that he was empowered to accept, or not, the remedial work. But this does not preclude the possibility that the parties also intended a novation. We believe the contract, considered as a whole, clearly evidences an intention to accept mutual promises in satisfaction and discharge of any antecedent rights of action and claims. The parties could not, therefore, revive and press them anew, even in the statutory causes of action authorized by § 17.50 of the Act, unless they invalidated on some basis their contract of accord and satisfaction. This they did not attempt to do. They may therefore recover, one against the other, only on or for breach of their contract of accord and satisfaction.

We infer the parties' intention from the basic provisions of the contract and the language used by them: (1) the parties expressly acknowledged in the contract instrument that it is a "release of all claims" held by one against the other; (2) there is no language that suggests a future release and by definition the word "release" implies the receipt of satisfaction, which in the present case could only be obtained from a contract promise; (3) the contract instrument provides, moreover, that each party "releases, acquits, and forever discharges the other" for a "consideration" specifically described as "the mutual promises and covenants " expressed in the contract (emphasis added); and (4) there is in the contract instrument no expression to the effect that a party's future acceptance of the other's performance is necessary to his "satisfaction," nor is the effect of any release and discharge made contingent on any other matter whatsoever.

We reject for several reasons the interpretation advanced by Priem. First, it would distort the meaning of the contract as a whole as that meaning is expressed in the basic provisions described in the preceding paragraph, for these would be contradicted if Priem had the power to press anew his original claims and rights of action. It would create ambiguities and give controlling effect to a single provision when that provision does not even mention the basic matter of claims and rights of action. For example, Shires' agreement to guarantee the foundation and structural integrity of the residence, for a period of six months following completion of the remedial work, is necessarily executory and was obviously intended by the parties to remain so even after completion of the work, that is to say, after the time when Priem was obligated to present the agreed order of dismissal if he were satisfied with such work. More importantly, Priem's interpretation would leave open to controversy the sufficiency of the original work, a hypothesis that totally contradicts and renders meaningless the parties' expressed intention to put to rest, for a single unitary consideration (mutual releases and discharges), all antecedent matters of controversy between them. We may not interpret the single provision in question to so distort and contradict the other express provisions and the whole tenor and effect of the parties' contract. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983).

We believe it far more reasonable to give effect to the plain words of the contract and the meaning those words imply so naturally in the clearest terms: by their contract the parties extinguished and relinquished all antecedent claims and rights of action while preserving in Priem the right to reject the sufficiency of the remedial work only, and sue on or for breach of the contract of accord and satisfaction if that work be unsatisfactory, amending his pleadings accordingly.

In summary then, we hold the trial court correctly rendered its judgment, the parties having agreed as a matter of law and contract construction to substitute the rights and obligations of the contract of July, 1983 for any original rights and obligations growing out of the construction work, discharging and extinguishing the latter. They could therefore recover solely on or for breach of the contract of July 1983, that contract not having been invalidated for any reason. The answers of the jury to special issues would not support a judgment based on that contract. ⁴ We therefore affirm the judgment below.

1 The effect of the jury's verdict was as follows:

1. None of three statements made by Shires constituted a false, misleading, or deceptive act or practice that was a producing...