Smith v. Ferguson

• Decision Date: 01 February 2005
• Docket Number: No. 05-99-01770-CV.,05-99-01770-CV.
• Citation: 160 S.W.3d 115
• Parties: Elizabeth SMITH, Appellant, v. Searcy M. FERGUSON, Jr. and S.M. Ferguson, Inc., Appellees.
• Court: Texas Supreme Court

160 S.W.3d 115

Elizabeth SMITH, Appellant, v. Searcy M. FERGUSON, Jr. and S.M. Ferguson, Inc., Appellees.

No. 05-99-01770-CV.

Court of Appeals of Texas, Dallas.

February 1, 2005.

Rehearing Overruled April 29, 2005.

COPYRIGHT MATERIAL OMITTED

Christopher M. Weil, Weil & Petrocchi, P.C., Jeffrey Wallace Hellberg, Jr., Dallas, for appellant.

Marshall M. Searcy, Kelly, Hart & Hallman, P.C., Fort Worth, for appellee.

Before Justices BRIDGES, FRANCIS, and LANG-MIERS.

OPINION

Opinion by Justice BRIDGES.

Elizabeth Smith appeals the judgment denying her counterclaim against her ex-husband, Searcy M. Ferguson, Jr., in which she asserts that Ferguson is liable for unpaid property taxes on a property she was awarded in the parties' divorce. Ferguson cross-appeals, asserting the trial court erred in granting summary judgment against him on a number of causes of action he brought as plaintiff against Smith. We affirm the denial of recovery by Smith on her counterclaim and affirm the trial court's summary judgment against Ferguson on his claims against Smith.

Facts

In January 1987, Smith and Ferguson agreed to a final judgment and decree of divorce, which incorporated an Agreement Incident to Divorce (AID) dated November 1986. Controversies between the parties ensued, and after multiple suits were filed, the parties settled a number of disputes in 1988 through a settlement agreement (1988 Agreement). Subsequently, to settle other disputes, the parties signed a letter agreement dated August 29, 1989 (1989 Agreement). Under one clause of the 1989 Agreement, Ferguson agreed he would not "reopen" the divorce case or the AID.

Disputes between the parties continued, and on November 8, 1994, Ferguson sued Smith. Under the AID, Smith was awarded a valuable diamond ring. Ferguson initially asserted a claim for conversion of the ring, which was purchased during an attempted reconciliation in 1984.¹ Ferguson also alleged that, during the attempted reconciliation, Smith and a confederate broke into Ferguson's office, stole valuable confidential business and banking records, and maliciously destroyed property to cover up the theft. Accordingly, he asserts, through Smith's failure to disclose material facts and her deceit, she fraudulently induced both the purchase of the ring and his entering into a lop-sided property settlement; neither would have happened had he known of Smith's break-in and deception during the attempted reconciliation. He alleges also that Smith fraudulently concealed the facts so that he first learned in 1993 of Smith's involvement in the break-in and her deceit during the reconciliation period in 1984.

Ferguson later added causes of action alleging Smith breached particular contractual obligations under the AID, including assertions that (1) Smith blocked Ferguson's transfer of community-owned stock, (2) she failed to assume the obligation for the lien on the Southampton property awarded her in the divorce, and (3) she failed to file a proper income tax return for 1986, the last year of the marriage. Smith counterclaimed for, among other things,² payment of ad valorem property taxes on a piece of property on Second Avenue in Dallas, which Smith was awarded in the divorce. In the 1988 Agreement, Ferguson had agreed to pay back taxes on that property.

In March 1998, the trial court entered an interlocutory summary judgment against Ferguson, dismissing his claims that are the subject of this appeal.³ After a bench trial in July 1999, the trial court denied Smith recovery on her counterclaim for payment of taxes on the Second Avenue Property. Smith brought this appeal, and Ferguson cross-appealed.

While this appeal was pending, Ferguson filed a petition in bankruptcy, and this case was abated for nearly three years. Ferguson filed a motion to reinstate the case, which the Court granted.

Smith's Counterclaim for Payment of Property Taxes

As part of the 1988 Agreement, Ferguson agreed to the following contractual obligations:

Ferguson agrees to pay and obtain discharge for all ad valorem taxes due for all tax years prior to 1987 for that certain real property located on Second Avenue, Dallas, Texas ... and Ferguson does further agree that he shall satisfy and obtain a discharge and release from all taxing authorities claiming past due taxes in association with such property for the tax years prior to 1987 on or before December 15, 1988.

The provision goes on to include an indemnity obligation:

Ferguson does further hereby agree to indemnify and hold Smith harmless from any and all claims, demands, actions, and lawsuits, including all expenses, costs, and attorney's fees associated with the defense thereof, arising out of taxes due to any taxing authority related to the Second Avenue Property for tax years prior to 1987.

With respect to the indemnity provision, it was undisputed that, in 1995, various taxing authorities brought an in rem action for payment of property taxes on the Second Avenue Property, dating from 1970 through 1978. Smith conceded at oral argument that her indemnity claim was premature, as the tax case was pending at the time. We agree with Smith, and thus we have no indemnity issue to decide in this appeal.

We turn to the contractual obligation to pay and obtain a discharge and release of tax obligations by December 15, 1988. A party asserting a breach of contract claim must sue no later than four years after the day the claim accrues. Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002).

Ferguson argues that the four-year statute of limitations ran on that obligation on December 15, 1992, over two years before Smith filed her counterclaim on January 11, 1995. Smith asserts that her claim was revived under section 16.069 of the civil practice and remedies code, which provides as follows:

If a counterclaim or cross claim arises out of the same transaction or occurrence that is the basis of an action, a party to the action may file the counterclaim or cross claim even though as a separate action it would be barred by limitation on the date the party's answer is required.

Tex. Civ. Prac. & Rem.Code Ann. § 16.069(a) (Vernon 1997). Smith contends that her claim for payment of taxes arose "out of the same transaction or occurrence" as Ferguson's claim, in that all claims arose out of the divorce and subsequent settlement agreements.

For a counterclaim to arise out of the "same transaction or occurrence" as the original claim, there must be a "logical relationship" between the claims. The essential facts on which the counterclaim is based must be significantly and logically relevant to both claims. Frazier v. Havens, 102 S.W.3d 406, 411 n. 3 (Tex.App.-Houston [14th Dist.] 2003, no pet.); see Jack H. Brown & Co. v. Northwest Sign Co., 718 S.W.2d 397, 400 (Tex.App.-Dallas 1986, writ ref'd n.r.e.) (construing identical language used in civil-procedure rule 97(a) concerning compulsory counterclaims). One court has held that a claim concerning the interpretation of a particular provision in a deed was not logically related to a counterclaim attacking the validity or legality of the entire deed. Freeman v. Cherokee Water Co., 11 S.W.3d 480, 483 (Tex.App.-Texarkana 2000, pet. denied).

Smith's cause of action is based on a provision in the 1988 Agreement concerning the payment of taxes on the Second Avenue Property. Ferguson did not allege any cause of action specifically related to that issue. Rather, he alleged that Smith breached specific, unrelated provisions of the AID and committed fraud. The facts essential to Smith's tax claim are not significantly or logically related to Ferguson's claims and thus did not "arise out of the same transaction or occurrence" under section 16.069. Tex. Civ. Prac. & Rem.Code Ann. § 16.069(a). Accordingly, the trial court properly denied Smith recovery on her counterclaim for back taxes.

Summary Judgment Disposing of Ferguson's Causes of Action

The trial court granted summary judgment, without stating reasons, on Ferguson's claims for "Breach/Fraud," including federal income tax issues, and "Indemnity —FDIC/Southampton." The trial court went on to conclude that these claims were barred and Ferguson was estopped by agreement from bringing them, citing specifically Ferguson's agreement in the 1989 Agreement not to reopen the divorce case or the AID.

We review a traditional summary judgment under well-established standards. Tex.R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). The movant 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. Id. To decide whether a disputed material fact issue exists, we take as true the evidence favorable to the non-movant. Id. We indulge every reasonable inference, and resolve any doubts, in favor of the non-movant. Id.

Release and "Estoppel by Agreement"

Ferguson argues that the "release" language from the 1989 Agreement—that he would not "reopen" the divorce or AID—does not encompass his claims and neither did the 1989 settlement agreement bar litigation of his claims through collateral estoppel.

To release effectively a claim in Texas, the instrument must "mention" the claim to be released. Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 938 (Tex.1991). Even if the claims exist when the release is executed, any claims not clearly within the subject matter of the release are not discharged. Id. Brady, nonetheless, does not require that the parties anticipate and identify each potential cause of action relating to the subject matter of the release. Keck, Mahin & Cate v. Nat'l Union Fire Ins. Co., 20 S.W.3d 692, 698 (Tex.2000). In Keck, the language at issue released "all claims whatsoever," whether existing or arising in the future, that were attributable to legal services rendered during a specified time period. Id. at 697. The Court held that language effectively released a legal malpractice claim...