O'Shea v. Coronado Transmission Co.

• Decision Date: 23 June 1983
• Docket Number: No. 13-82-101-CV,13-82-101-CV
• Citation: 656 S.W.2d 557
• Parties: Jack O'SHEA, Appellant, v. CORONADO TRANSMISSION COMPANY, et al., Appellees.
• Court: Texas Court of Appeals

Page 557

656 S.W.2d 557

Jack O'SHEA, Appellant, v. CORONADO TRANSMISSION COMPANY, et al., Appellees.

No. 13-82-101-CV.

Court of Appeals of Texas Corpus Christi.

June 23, 1983.

Rehearing Denied Sept. 8, 1983.

J. Norman Thomas, Harris, Cook & Browning, Corpus Christi, for appellant.

Charles R. Porter, Jr., Porter, Gonzalez & Rogers, Corpus Christi, Cecil E. Munn, Cantey, Hanger, Gooch, Munn & Collins, Fort Worth, for appellees.

Before NYE, C.J., and UTTER and GONZALEZ, JJ.

OPINION

GONZALEZ, Justice.

Jack O'Shea appeals from an order granting summary judgment in favor of Coronado Transmission Company which had brought suit for declaratory judgment against O'Shea arising from a dispute over the terms of a contract. We affirm in part and reverse and remand in part.

In 1975, Jack O'Shea learned of an opportunity to develop a gas pipeline project in Alabama from an ad in the Wall Street Journal. O'Shea telephoned Winfred Lott, the Alabama promoter, to gain details of the plan. He then approached his neighbor, Louis Fritz, to see if Fritz was interested in constructing the pipeline. Fritz was president of Coronado Transmission Company, which he owned jointly with William K. Anderson. Fritz was not interested in being the contractor for such pipeline but was interested in forming a company in which he would have an equity interest. On August 4, 1976, after months of negotiations, Coronado Transmission Company, O'Shea, and Lott signed a Pre-Incorporation Agreement whereby they agreed to form the Alatex Pipeline Corporation within 120 days to construct the pipeline. Under this agreement, Lott and O'Shea were described as agents of Coronado whose relative ownership of the Alatex Pipeline stock would depend solely on the services they would perform in obtaining financing for the project. In financing the project, there was to be no personal obligation on the part of Fritz, Anderson or Coronado. The agreement provided that if O'Shea was unable to obtain financing for the project, he would own 5% of the Alatex stock. The agreement also provided that the agents had the option of exchanging their stock ownership for a net revenue interest after payout of the pipeline system had been realized by Alatex. If O'Shea was able to finance the entire project by means of debt financing, he would be entitled to 25% of the Alatex stock. Another provision addressed the respective percentages if equity financing was obtained. The agreement gave O'Shea thirty days to arrange financing. Ultimately, O'Shea was unable to arrange financing for the project and the corporation called for in the Pre-Incorporation Agreement (Alatex) was never formed.

On November 23, 1976, Coronado and several individuals entered into a limited partnership for the construction of the pipeline. Coronado became the general partner and the three others were named as limited partners. As a result of this agreement, Coronado was entitled to 45/70 of the revenues from the pipeline project. O'Shea was not a party to this agreement.

On March 15, 1977, after the pipeline had been constructed, O'Shea signed a Net Revenue Interest Agreement (hereinafter referred to as NRIA) with Coronado which specifically terminated the Pre-Incorporation Agreement and provided O'Shea with 5% of Coronado's revenues from the pipeline once Coronado recouped its investment costs. In May, 1979, pursuant to this agreement, O'Shea received his first check from Coronado. The check was for 5% of Coronado's 45/70 revenues from the pipeline. O'Shea returned the check to Coronado and claimed that the agreement entitled him to 5% of the total pipeline revenues. Coronado then sought a Declaratory Judgment to determine its obligation to O'Shea, based on the NRIA. O'Shea filed a counter-claim against Coronado for damages based in part on alleged violations of the Deceptive Trade Practices-Consumer Protection Act, 17.41 et seq. Tex.Rev.Civ.Stat.Ann. (Vernon's Supp.1982). The counter-claim also alleged fraud, failure of consideration and ambiguity. ¹ Thereafter, O'Shea amended his counter-claim and joined WRD '76 Ltd., F.M. Whitley and Leland W. Carter. These are Coronado's limited partners that financed the project after O'Shea failed to arrange the financing. Coronado moved for summary judgment, which O'Shea opposed. The trial court granted Coronado's summary judgment both on its suit for Declaratory Judgment and on O'Shea's counter-claim. The trial court also dismissed the suit as to Fritz, Anderson, WRD '76 Ltd., Whitley and Carter.

The summary judgment evidence was the Pre-Incorporation Agreement, the NRIA, and the depositions of O'Shea, Anderson, Fritz and Coronado's limited partners. No affidavits were filed.

On appeal, O'Shea contends in point 1 that the trial court erred in granting the summary judgment in Coronado's favor because the NRIA is "unambiguous", and should be construed in O'Shea's favor; in point of error 2, O'Shea contends that the NRIA is "ambiguous"; points 3, 4, 5 and 6 allege that the trial court committed error in granting the summary judgment because there exist fact issues of fraud, failure of consideration, non-disclosure by a fiduciary and mutual mistake; and point 7 alleges that the trial court error in dismissing the claims against the individual defendants.

Declaratory Judgment--Summary Judgment

The well-established rule is that a summary judgment should be granted only if the summary judgment record establishes a right thereto as a matter of law. Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.1970). In Wilcox v. St. Mary's University of San Antonio, Inc., 531 S.W.2d 589 (Tex.1976), the court held that, in reviewing a summary judgment record, appellate courts must apply the following rules:

1. The movant for summary judgment ... has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.

2. In deciding whether or not there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true.

3. Every reasonable inference must be indulged in favor of the non-movants and any doubts resolved in their favor.

This court must therefore determine whether there are issues to be tried; it should not attempt to weigh the evidence or determine its credibility. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (1952).

The non-movant must expressly present to the trial court any reasons seeking to avoid movant's entitlement, such as those set out in Tex.R.Civ.P. 93 and 94, (verified pleas and affirmative defenses) and he must present summary judgment proof when necessary to establish a fact issue. The movant is not required to negate all possible issues of law and fact that could be raised by the non-movant in the trial court but were not. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex.1979).

The rule is that where the plaintiff moves for summary judgment in an action in which the defendant has pled an affirmative defense, he is entitled to have his summary judgment if he demonstrates by evidence that there is no material factual issue upon the elements of his claim, unless his opponent comes forward with a showing that there is such a disputed fact issue upon the affirmative defense. Hudnall v. Tyler Bank and Trust Company, 458 S.W.2d 183 (Tex.1970); Gulf, Colorado & Santa Fe Railway Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1959).

Our initial attention must be focused on whether the trial court erred in finding the NRIA unambiguous. The question of whether a contract is ambiguous is one of law to be determined by the court. Vermillion Construction Company v. Fidelity & Deposit Company of Maryland, 526 S.W.2d 744 (Tex.Civ.App.--Corpus Christi 1975, no writ); Louisiana-Pacific Corp. v. Cain, 519 S.W.2d 528 (Tex.Civ.App.--Beaumont 1974, writ ref'd n.r.e.); Davis v. Andrews, 361 S.W.2d 419 (Tex.Civ.App.--Dallas 1962, writ ref'd n.r.e.). The interpretation of a contract becomes a fact question only, when after application of pertinent rules of construction, there remains a genuine uncertainty as to which of two meanings is proper. Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951); Sale v. Contran Corporation, 486 S.W.2d 161 (Tex.Civ.App.--Dallas 1972, writ ref'd n.r.e.). However, if a written contract is so worded that it can be given a certain or definite legal meaning or interpretation, it is not ambiguous. Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 731 (Tex.1982); Lewis v. East Texas Finance Company, 136 Tex. 149, 146 S.W.2d 977, 980 (1941).

In Sun Oil Co., supra at 731, the Supreme Court, citing City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515 (Tex.1968), said:

"In Pinehurst, we found the contract to be unambiguous and wrote:

It is the general rule of the law of contracts that where an unambiguous writing has been entered into between the parties, the courts will give effect to the intention of the parties as expressed or as is apparent in the writing. In the usual case, the instrument alone will be deemed to express the intention of the parties for it is objective, not subjective, intent that controls. 432 S.W.2d at 518."

When a contract contains an ambiguity which can only be resolved by reference to extrinsic evidence or where there is doubt to the true meaning of an ambiguous instrument, the granting of a motion for summary judgment is improper. Thompson v. Hambrick, 508 S.W.2d 949 (Tex.Civ.App.--Dallas 1974, writ ref'd n.r.e.); Robert v. E.C. Milstead Ranching, Inc., 469 S.W.2d 429 (Tex.Civ.App.--Beaumont 1971, writ ref'd n.r.e.).

With the above rules in mind, we must now turn to the NRIA which is the center of this dispute. Paragraph II of the agreement, which is the portion of the agreement that defines O'Shea's percentage, provides:

"Coronado does hereby convey and assign to each Agent severally and individually, an undivided interest equal to five...