Ginger B. Stagg, D. D. S., P.A. v. Lisa Richardson, D. D. S., P.A. ( 2018 )

Opinion issued March 15, 2018
In The
C ourt of Appeals
For The
First District of Texas
————————————
NO. 01-17-00543-CV
———————————
GINGER B. STAGG, D.D.S., P.A., Appellant
V.
LISA RICHARDSON, D.D.S., P.A., Appellee
On Appeal from the 149th District Court
Brazoria County, Texas
Trial Court Case No. 83644-CV
MEMORANDUM OPINION
This suit arises out of a dispute between two partners over the terms of an
agreement dissolving their former dental practice. The trial court granted summary
judgment, determining that one partner properly retained $25,000 in operating
capital upon dissolution of the partnership. Because we conclude that the agreement
required the partner to pay that capital to the outgoing partner, we reverse the trial
court’s judgment, render judgment that Ginger Stagg, D.D.S., P.A. recover $25,000
from Lisa Richardson, D.D.S., P.A., and remand this cause to the trial court for the
award of fees, costs, interest, and the entry of a final judgment consistent with this
opinion.
BACKGROUND
Lisa Richardson and Ginger Stagg are dentists who individually formed
professional associations, which in turn formed a pediatric dental partnership in July
2009. At that time, Stagg purchased a 50% interest in the partnership from
Richardson for $735,000. By February 2016, the partnership was no longer
harmonious and litigation ensued. Richardson and Stagg entered into a mediated
settlement agreement providing for the dissolution of their dental practice. Under
its terms, Richardson agreed to buy Stagg’s interest in the practice for $1,000,000.
Once this sum was paid, Stagg was required to leave the practice within 10 days.
Stagg also was to receive “an additional amount for any production outstanding at
the time she leaves, which shall be computed based on the normal percentage for
any amounts collected on the outstanding production.”
Richardson and Stagg subsequently learned, however, that their practice did
not maintain the records needed to calculate the outstanding amount due to Stagg
under the agreement. So they executed an addendum specifying a new method of
2
computation. The addendum provided that the partnership’s accountant would
“perform the customary partner-splits analysis that incorporates Stagg’s production”
and that Richardson would “pay Stagg the ‘Net Amount Due to [Stagg].’”
The partnership’s accountant made the required partner-splits analysis. In
relevant part, the accountant calculated as follows:
Total Dr. Richardson Dr. Stagg
Net Amount Due to Each
64,043.64 29,270.00 34,773.64
Doctor
Operating capital to be
(50,000.00) (25,000.00) (25,000.00)
retained in partnership
Available Cash to Each
14,043.64 4,270.00 9,773.64
Doctor
Richardson contended that she owed Stagg only the “available cash” amount,
or $9,773.64, which she paid. Stagg contended that she was entitled to the “Net
Amount Due,” or $34,773.64, under the partner-splits analysis. Both sides moved
for summary judgment. The trial court denied Stagg’s motion and granted
Richardson’s.
DISCUSSION
Both sides agree that the terms of the addendum are unambiguous. Stagg
contends that the addendum’s phrase “Net Amount Due to [Stagg]” refers to Stagg’s
portion of the “Net Amount Due to Each Doctor” required by the addendum.
3
Richardson responds that her purchase of Stagg’s partnership interest included the
partnership’s operating capital and that she therefore only owes the “Available Cash
Due to [Stagg]” under the addendum.
A. Standard of review
We review summary judgments de novo. Travelers Ins. Co. v. Joachim, 315
S.W.3d 860, 862 (Tex. 2010). When the parties file cross-motions for summary
judgment and the material facts are not in dispute, we consider their motions and the
summary-judgment record and render the judgment that the trial court should have
rendered. See Myrad Props. v. LaSalle Bank Nat’l Ass’n, 300 S.W.3d 746, 753 (Tex.
2009); City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 (Tex. 2000).
We likewise review unambiguous agreements de novo. Kachina Pipeline Co.
v. Lillis, 471 S.W.3d 445, 449 (Tex. 2015). The parties’ intent, as expressed in the
language of their agreement, is controlling. Plains Expl. & Prod. Co. v. Torch
Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex. 2015). We consider the
agreement’s language as a whole, attempting to give effect to all of its provisions so
that none are rendered meaningless. See Apache Deepwater v. McDaniel Partners,
485 S.W.3d 900, 906 (Tex. 2016). Thus, we read the agreement’s words and phrases
together and in context, not in isolation from one another. Hysaw v. Dawkins, 483
S.W.3d 1, 13 (Tex. 2016). Unless the agreement shows that the parties used a term
in a technical or different sense, we give its provisions their plain, ordinary, and
4
generally accepted meaning. Loya v. Loya, 526 S.W.3d 448, 451 (Tex. 2017). The
parties may not rely on extrinsic evidence to prove some meaning other than what
their agreement states. See First Bank v. Brumitt, 519 S.W.3d 95, 109–10 (Tex.
2017). We may consider the circumstances surrounding the agreement’s formation
in ascertaining the common, ordinary meaning of its unambiguous language but we
cannot look to surrounding circumstances to add to, alter, or contradict the
agreement’s terms. Id. at 110. We must enforce a valid, unambiguous agreement
as the parties wrote it. See El Paso Field Servs. v. MasTec N. Am., 389 S.W.3d 802,
810–11 (Tex. 2012). We cannot rewrite the parties’ bargain in the guise of
interpreting their agreement. Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 239 (Tex.
2016); Gilbert Tex. Constr. v. Underwriters at Lloyd’s London, 327 S.W.3d 118,
126–27 (Tex. 2010).
B. Analysis
The addendum to the settlement agreement required the dissolved
partnership’s accountant to make “the customary partner-splits analysis” and
specified that Richardson would “pay Stagg the ‘Net Amount Due to [Stagg]’”
generated by this partner-splits analysis. The addendum does not define the meaning
of “‘Net Amount Due to [Stagg].’” But the capitalization of the words, the enclosure
of the phrase in quotation marks, and the use of brackets all indicate that the phrase
“‘Net Amount Due to [Stagg]’” is terminology borrowed directly from the partner-
5
splits analysis, which the addendum references as the basis for the calculation of the
additional sum owed to Stagg. The partner-splits analysis, in turn, has a line entitled
“Net Amount Due to Each Doctor” accompanied by a separate entry for Stagg in the
amount of “34,773.64.” The addendum’s phrase “‘Net Amount Due to [Stagg]’”
therefore unambiguously refers to the partner-splits analysis’s amount of
“34,773.64.” See In re Deepwater Horizon, 470 S.W.3d 452, 460 (Tex. 2015) (when
contract refers to another document, court looks to the incorporated document to
extent necessary to interpret the contract); Ins. Co. of State of Penn. v. Roberts, 506
S.W.3d 498, 504–05 (Tex. App.—Houston [1st Dist.] 2016, pet. denied) (same); cf.
Trico Mar. Servs. v. Stewart & Stevenson Tech. Servs., 73 S.W.3d 545, 548–51 (Tex.
App.—Houston [1st Dist.] 2002, orig. proceeding) (contract did not plainly
reference separate, unsigned paper containing arbitration clause and arbitration
clause therefore was not incorporated by reference into contract).
Richardson does not dispute that the addendum must be read in conjunction
with the partner-splits analysis. She contends, however, that the phrase “‘Net
Amount Due to [Stagg]’” unambiguously refers to Stagg’s share of the “Available
Cash to Each Doctor” specified in the partner-splits analysis rather than her share of
the “Net Amount Due to Each Doctor.” We reject Richardson’s proposed
interpretation because it disregards the addendum’s use of capitalization, quotation
marks, and brackets in the operative phrase and would improperly render these
6
features of the addendum’s identifying language meaningless. Moreover, the phrase
“Available Cash” does not appear in the parties’ addendum.
Richardson argues that consideration of the settlement agreement and
addendum as a whole demonstrates that the latter’s “‘Net Amount Due to [Stagg]’”
must refer to “Available Cash” because Richardson purchased Stagg’s partnership
interest, which, she contends, encompasses the $25,000 that Richardson withheld
from Stagg. But to adopt this interpretation, we would have to imply additional
contractual terms that contradict the addendum’s express language on this subject
about the division of working capital during the post-termination period. The
addendum does not say that Richardson shall pay Stagg the “‘Net Amount Due to
[Stagg]’” less the operating capital that customarily would have been retained by the
now-dissolved partnership, and we cannot rewrite the addendum to do so. See
Fischer, 479 S.W.3d at 239; Gilbert Tex. Constr., 327 S.W.3d at 126–27; see also
WesternGeco, L.L.C. v. Input/Output, Inc., 246 S.W.3d 776, 783–84 (Tex. App.—
Houston [14th Dist.] 2008, no pet.) (trial court erred in implying term in settlement
agreement that contradicted an express provision).
We hold that the plain language of the addendum to the parties’ settlement
agreement unambiguously required Richardson to pay Stagg the additional sum of
$34,773.64 rather than the available cash of $9,773.64. Accordingly, the trial court
7
erred in denying Stagg’s motion for summary judgment and granting Richardson’s
motion for summary judgment.
CONCLUSION
We reverse the judgment of the trial court, render judgment that Stagg recover
$25,000 from Richardson, and remand this cause to the trial court for the award of
fees, costs, interest, and the entry of a final judgment consistent with this opinion.
Jane Bland
Justice
Panel consists of Justices Bland, Lloyd, and Caughey.
8