Solomon v. Greenblatt
| Decision Date | 02 April 1991 |
| Docket Number | No. 05-90-00356-CV,05-90-00356-CV |
| Parties | Lillian G. SOLOMON, Appellant, v. Walter GREENBLATT, Individually, and Greenblatt & Associates, Inc., Appellees. |
| Court | Texas Court of Appeals |
Allen Landerman, Dallas, for appellant.
Michael D. Mosher, Dallas, for appellees.
Before McCLUNG 1, THOMAS, and OVARD, JJ.
This is a breach of contract case that requires interpretation of the Texas Insurance Code. The lawsuit arose from a dispute between Walter Greenblatt, an insurance agent/broker, and Dr. Lillian Solomon, a psychologist. Pursuant to two lifetime contracts, Solomon provided business consulting services to Greenblatt and to his corporation. Several years ago, Greenblatt stopped requesting consulting services and refused to pay Solomon. She sued on the two contracts. One contract obligated Greenblatt individually. The other agreement bound his corporation, Greenblatt and Associates, Inc. Greenblatt counterclaimed for fraud. The trial court granted Greenblatt a partial summary judgment that the contract between Solomon and himself individually violated the Texas Insurance Code and was therefore unenforceable. The parties proceeded on the remaining claims. After a bench trial, the trial court entered take-nothing judgments on all claims. Lillian Solomon perfected this appeal. We reverse the partial summary judgment and the take-nothing judgment against Solomon's remaining breach of contract claim. We remand this cause to the trial court for further proceedings.
Walter Greenblatt sells insurance. He is an agent for one insurance company and a broker for several others. Greenblatt has held a Texas insurance license since 1951. Dr. Lillian Solomon is a psychologist (now retired) who specialized in child psychology. Prior to studying psychology, Solomon worked for many years in a variety of businesses. She managed retail stores, served as an administrative assistant in the highway department, and did bookkeeping for an insurance agent or broker. She also managed a wholesale firm. Solomon began her psychology practice in 1962. In 1968, Dr. Solomon began treating Greenblatt's seven-year-old son for psychological underdevelopment. During the course of his son's therapy, Greenblatt mentioned to Solomon that despite his efforts he could not earn enough money to cover all his expenses. Solomon told Greenblatt that she had a business background, and she offered some business advice.
Greenblatt found Solomon's business advice helpful and hired her to provide business consulting services on a regular basis. At first he paid her $30 an hour and later paid her instead a monthly retainer. She advised him about personnel management, time management, and effective selling techniques. She did not meet with Greenblatt's clients and she never gave advice on insurance policies. She concentrated on streamlining management in Greenblatt's office and on improving his effectiveness as a salesman. Before major sales presentations, Solomon would discuss with Greenblatt ways to tailor a presentation strategy to a particular prospect. His business prospered.
In 1977, Greenblatt and Solomon entered into a consulting services contract, "the individual contract." (See Appendix A.) Under the individual contract, Solomon agreed "to provide Greenblatt with management consulting services in the insurance business, at such times and at such places as Greenblatt and Solomon shall mutually agree." Greenblatt obligated himself personally to pay Solomon a fixed yearly fee, plus a percentage of his "net insurance income" over a minimum level as compensation for Solomon's services. The contract expressly terminated all prior agreements between Solomon and Greenblatt. The agreement recited that it would last until the death of either party, and it included provisions for handling the disability of either Solomon or Greenblatt.
In 1978, Greenblatt formed a corporation to enable him to sell policies that he could not carry as an individual. Greenblatt channeled a portion of his business through the corporation. Solomon continued performance under the individual contract. Greenblatt wanted her to share in the prosperity of the corporation. He drafted a new contract, "the corporate contract," which named the corporation, Greenblatt and Associates, Inc., instead of Greenblatt individually as the buyer of the management consulting services. (See Appendix B.) The corporate contract supplemented but did not replace the individual contract. The agreement provided that Greenblatt and Associates, Inc. would pay Solomon $1000 per month until her death or until the death or disability of Greenblatt. Solomon agreed under the corporate contract to give the company first call on up to ten hours per week of her time. Solomon also agreed to provide her own working facilities, including secretarial help, and to keep confidential some of the information she might learn while doing work for the corporation.
Solomon retired from her child psychology practice in 1985 and moved to New Jersey. She testified that she continued to perform under the two contracts after leaving Texas. On November 30, 1986, Greenblatt dissolved Greenblatt and Associates, Inc. for tax and business reasons. He continued to receive residual commissions for insurance policies sold through the corporation. Greenblatt and Associates, Inc. stopped paying Solomon sometime in the fall of 1986, after paying $9500 over the course of the year. Greenblatt last used Solomon's services in April 1987. He has not requested performance or paid her since that time.
Solomon filed suit to enforce payment under the two contracts. Greenblatt answered that the individual contract violated the Texas Insurance Code and was therefore unenforceable. He argued that the corporate contract was void for lack of consideration. Greenblatt counterclaimed for fraud and breach of fiduciary duty. The trial court awarded Greenblatt summary judgment on the individual contract. The trial court agreed with Greenblatt that the percentage of "net insurance income" portion of the individual contract constituted a commission-splitting agreement with a person who lacked an insurance license, and he accepted Greenblatt's argument that Texas law prohibits sharing commissions from the sale of insurance with unlicensed persons. See generally TEX.INS.CODE ANN. arts. 21.01, 21.07(1)(b) (Vernon 1981 and Supp.1991). The case proceeded to trial on the remaining causes of action. Solomon testified that she is still capable of performance and that she is available to perform if allowed. Greenblatt testified that once Solomon left Texas, she could no longer provide the face-to-face consultancy that he required.
At the conclusion of the trial, the trial court read his findings of fact and conclusions of law. He found that Greenblatt and Solomon had both signed the individual contract and the corporate contract. He found that Solomon had performed no services under either contract by "mutual consent" since October 1987. The trial court also found that Greenblatt and Associates, Inc. dissolved and that the corporation had not been Greenblatt's alter ego. Finally, the trial court found Lillian Solomon's life expectancy to be eleven years. The trial court concluded that: (1) Greenblatt was not liable under the individual contract because a) it was merely an agreement to agree and insufficiently definite to be enforceable, and b) Solomon was not entitled to share in the profits of an insurance business; (2) no consideration existed for the corporate contract because Solomon performed the same services under both contracts; (3) any liability Greenblatt might have under the corporate contract would be limited to $1500; (4) Greenblatt was not individually liable for the debts of the dissolved corporation since there was no alter ego relationship; and (5) the evidence was insufficient to support a finding on Greenblatt's net income either individually or through the corporation after its dissolution.
Solomon raises seven points of error on appeal. The first point attacks the partial summary judgment and subsequent trial court holding that the Texas Insurance Code renders the individual contract unenforceable. The first point also challenges the conclusion that the individual contract was merely an agreement to agree. The second point of error asserts that the trial court erred in determining that Solomon take nothing on her claim against the corporation. The third, fourth, and fifth points of error amplify the second. Solomon argues that the corporate contract was supported by consideration, that nothing limited the corporation's liability under the contract to $1500, and that Greenblatt was subject to personal liability for the corporation's debts after its dissolution. The sixth point faults the trial court for not allowing her to amend her pleadings during the trial. She sought to increase her damages claim on the corporate contract from $2500 to $156,000. She argues that the trial court abused his discretion by denying leave to amend. The seventh point of error complains that the trial court improperly sustained three objections to evidence of damages owing on the individual contract in excess of the $16,932 originally pleaded. Solomon contends that the trial court admitted evidence of greater damages at several points during the trial, and that, therefore, the question of greater damages was tried by consent. Greenblatt challenges all of Solomon's points of error but raises no cross-points.
We will organize our analysis of Solomon's points of error thematically, but we will follow roughly the order she has laid out. We begin with the individual contract, proceed to the corporate contract, and finally address the issues related to the pleading of damages.
The individual contract (see Appendix...
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