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 2006-03

Alan Grant Bode as of Estate of Robert E. Bode, and S.O.T.A.T., Inc. v. Frank's International, Inc., and Frank's Casing Crew and Rental Tools, Inc. ( 2006 )


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  • Opinion issued March 23, 2006













      In The

    Court of Appeals

    For The

    First District of Texas




    NO. 01-04-00545-CV




    ALAN GRANT BODE, AS EXECUTOR OF ESTATE OF ROBERT E. BODE, AND S.O.T.A.T., INC., Appellants


    V.


    FRANK’S INTERNATIONAL, INC. AND FRANK’S CASING CREW AND RENTAL TOOLS, INC., Appellees




    On Appeal from the 165th District Court

    Harris County, Texas

    Trial Court Cause No. 2002-02215




    MEMORANDUM OPINION


              Appellants, Alan Grant Bode, as Executor of the Estate of Robert E. Bode, and S.O.T.A.T., Inc. (collectively Bode), appeal from a judgment entered by the trial court following a bench trial ordering that Bode take nothing from appellees, Frank’s International, Inc. and Frank’s Casing Crew and Rental Tools, Inc. (collectively Franks), and that the joint venture agreement between Bode and Franks was no longer enforceable against Franks. Bode’s sole issue on appeal asserts that the trial court erred by concluding that the joint venture agreement was not enforceable. Franks contends that Bode’s appeal was untimely and that we therefore lack jurisdiction over the appeal. We conclude that Bode timely perfected his appeal. We further conclude that there is sufficient evidence to support the trial court’s judgment. We therefore affirm.

    Background

              Robert E. Bode (Robert) developed a product called the Mud Miser, which is used on oil rigs to recapture used drilling mud and keep it from spilling onto the rig floor, preserving the mud for reuse. On April 14, 1993, on behalf of his company, Plug Monitor International Inc. (PMI), Robert entered into a joint venture agreement (the Hot-Hed Agreement) with Hot-Hed, Inc. (Hot-Hed), which transferred worldwide marketing rights for the Mud Miser to Hot-Hed in exchange for royalty payments to PMI. On April 15, 1993, Robert, also on behalf of PMI, entered into an international agreement with Hot-Hed International S.A. (the Hot-Hed International Agreement), also transferring worldwide marketing rights for the Mud Miser in exchange for royalty payments and 50% of the net profits for sales of Mud Misers. On July 21, 1993, Robert assigned “all rights, titles, interests, and privileges” in the Hot-Hed Agreement and the Hot-Hed International Agreement, “including patents pending” to Hot-Hed de Mexico S.A. de C.V. (Hot-Hed Mexico).

              Robert received a patent for the Mud Miser in March, 1994. On March 30, 1994, PMI notified Hot-Hed that, effective April 1, 1994, PMI was dissolving the Hot-Hed Agreement due to Hot-Hed’s purported failure to perform its obligations under the Hot-Hed Agreement. On the same day, Hot-Hed responded to PMI’s letter, indicating that it was “seeking legal counsel to advise us as to how to initiate a lawsuit on our behalf against PMI” and “Mr. Bodie’s [sic] choice to dissolve the joint venture at this time is most disappointing to us.” Further, Dan Parascin, president of Hot-Hed, testified at trial that in his opinion, the Hot-Hed Agreement still existed and that Hot-Hed was still operating under the agreement throughout the time of trial.

              On August 4, 1994, Robert entered into a joint venture agreement with Franks (the Joint Venture Agreement) purporting to assign Franks a one-half ownership interest in intellectual property rights relating to the Mud Miser and convey “exclusive marketing rights” in the Mud Miser in exchange for $50,000 and 25% royalty payments. Paragraph 7.01 of the Joint Venture Agreement contains a warranty representing that Robert

    is the sole owner of and has good and marketable title to the Intellectual Property rights relating to the Products, and, to Bode’s knowledge, no other person or persons, entity or corporation, has any claim, right, title, interest, or lien in, to, or on the Intellectual Property rights relating to the Products.


    On September 8, 1994, Franks recorded an assignment of the one-half ownership interest in the Mud Miser patent with the U.S. Patent and Trademark Office.          In May, 2000, Franks stopped making royalty payments to Bode when Keith Mosing, chief executive officer for Franks, discovered that Bode had a worldwide marketing agreement with Hot-Hed. Subsequently, Bode filed suit, asserting claims for breach of contract, breach of fiduciary duty and breach of the duties of care and loyalty. Franks filed an answer and counterclaim, alleging breach of contract, negligent representation, and fraud, and asserting various affirmative defenses. Following a bench trial, the trial court rendered judgment that both parties take nothing on their claims and that the Joint Venture Agreement is no longer enforceable against Franks. On April 2, 2004, in response to Bode’s motion to modify judgment, the trial court modified its judgment to state that the Joint Venture Agreement is no longer enforceable against either Bode or Franks. On June 7, 2004, the trial court entered its findings of fact and conclusions of law.

    Timeliness of Appeal and

    Validity of Findings of Fact and Conclusions of Law


              Franks contends that this appeal was not timely perfected because the modified judgment was signed on April 2, 2004, and Bode only had 30 days after the judgment was signed to perfect his appeal, i.e., until May 3, 2004. Franks further contends that the trial court’s findings of fact and conclusions of law entered June 7, 2004, are invalid because Bode did not renew his request for findings of fact and conclusions of law after the trial court modified its judgment. Therefore, according to Franks, the trial court’s 30 day plenary power pursuant to Rule of Civil Procedure 329b(d) started anew when the trial court’s modified judgment was signed on April 2, 2004, and would have expired on May 3, 2004, one day before Bode perfected his appeal. Further, Franks contends that the trial court’s plenary power would have already expired by the time it filed its findings of fact and conclusions of law on June 7, 2004, making them invalid.

              Generally, a notice of appeal must be filed within 30 days after the judgment is signed. Tex. R. App. P. 26.1(a). An exception to this rule applies when findings of fact and conclusions of law are requested and either required by the Rules of Civil Procedure or could be properly considered by the appellate court; then, the notice of appeal must be filed within 90 days after the judgment is signed. Tex. R. App. P. 26.1(a)(4). In a case tried without a jury, any party may request, within 20 days after the trial judgment is signed, that the trial court prepare findings of fact and conclusions of law. Tex. R. Civ. P. 296. A premature request for findings of fact and conclusions of law shall be deemed to have been filed on the date of but subsequent to the time of signing the judgment. Tex. R. Civ. P. 306c. There is no requirement that a party renew a request for findings of fact and conclusions of law after a judgment has been modified. See Harris County Hosp. Dist. v. Estrada, 831 S.W.2d 876, 878 (Tex. App.—Houston [1st Dist.] 1992, no writ). Further, we may treat actions taken before an appealable order is signed as relating to an appeal of that order and give them effect as if they had been taken after the order was signed. Tex. R. App. P. 27.2.

              Bode timely requested findings of fact and conclusions of law before the trial court’s entry of its modified judgment on April 2, 2004. Accordingly, Bode’s request for findings of fact and conclusions of law was deemed to have been filed after the trial court signed its modified judgment on April 2, 2004, and the notice of appeal was thus due within 90 days after that date. Bode filed his notice of appeal on May 4, 2004, 32 days after entry of the trial court’s modified judgment, and therefore within the 90 day period. Further, because the trial court’s plenary power did not expire until 90 days from April 2, 2004, the trial court had plenary power when it entered its findings of fact and conclusions of law on June 7, 2004.

              We hold that Bode timely perfected his appeal, that we thus have jurisdiction over his appeal, and that the findings of fact and conclusions of law are properly before this Court.

    Sufficiency of the Evidence

              Bode contends that the trial court erred when it concluded that the Joint Venture Agreement was not enforceable against Franks. Bode asserts that Franks did not establish a legal basis for the trial court’s conclusion that the contract was not enforceable, Franks was not entitled to rescission or offset, did not plead and prove damages, waived its affirmative defenses by failing to request and secure findings of fact, and breached the contract, causing damages to Bode. Bode further asserts that Bode did not breach the contract or make any misrepresentations to Franks.

              The elements of a valid contract are (1) an offer, (2) an acceptance, (3) a meeting of the minds, (4) each party’s consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). When one party to a contract commits material breach of that contract, the other party is discharged or excused from any obligation to perform. Herter v. Wolfe, 961 S.W.2d 1, 4 (Tex. App.—Houston [1st Dist.] 1995, writ denied). To determine the materiality of a breach, courts will consider the extent to which the nonbreaching party is deprived of the benefit that it could have reasonably anticipated from full performance. Id. A breach of a covenant for right to convey title occurs at the moment of its creation, because the covenant warrants that the transferor is the owner of that which is being transferred. Compton v. Trico Oil Co., 120 S.W.2d 534, 537 (Tex. Civ. App.—Dallas 1938, writ ref’d). If the transferor does not have good title, therefore, delivery of the contract which contains such a covenant causes an instantaneous breach. Id.

              Upon Franks’s request, the trial court entered findings of fact and conclusions of law. The trial court entered a single finding of fact that stated, “The intellectual property and other rights purported to be sold, transferred or assigned to Frank’s International, Inc., in the August 5, 1994 Joint Venture Agreement had previously been sold, transferred or assigned to other entities.” The trial court also entered a single conclusion of law that stated, “The August 5, 1994 Joint Venture Agreement is not enforceable against Defendants.”

              The trial court’s finding of fact expressly found that Bode did not have the rights to the property that it purportedly sold to Franks, which was a factual statement that showed that Bode breached its warranty to Franks under the Joint Venture Agreement that it had good and marketable title to the Mud Miser products. Because Bode did not transfer any rights to Franks under the Joint Venture Agreement, Franks was deprived of any benefits that it would have reasonably anticipated from full performance of the Joint Venture Agreement. Herter, 961 S.W.2d at 4. Therefore, the breach of warranty was a material breach, which excused any obligation of Franks to perform. Id. We conclude that because the trial court found that no benefits were transferred to Franks under the Joint Venture Agreement, the trial court held that Bode materially breached the contract, thus excusing Franks obligation to perform.

              Bode also contends that Franks did not establish a legal basis for the trial court’s conclusion that the Joint Venture Agreement was not enforceable. We must therefore determine whether any evidence of probative force supports the trial court’s finding or whether the finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust.

              Findings of fact in a case tried to the trial court have the same force and effect as a jury’s verdict on questions and are reviewable for legal and factual sufficiency. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991); Min v. Avila, 991 S.W.2d 495, 500 (Tex. App.—Houston [1st Dist.] 1999, no pet.). The trial court’s conclusions of law are reviewable de novo. McDermott v. Cronin, 31 S.W.3d 617, 623 (Tex. App.—Houston [1st Dist.] 2000, no pet.). When, as here, the appellate record contains a complete reporter’s record of the trial, the trial court’s findings of fact are not conclusive, but subject to the same, well-settled standards that govern legal and factual sufficiency challenges to jury findings. Comm’n of Contracts of the Gen. Executive Comm. of the Petroleum Workers Union v. Arriba, Ltd., 882 S.W.2d 576, 582 (Tex. App.—Houston [1st Dist.] 1994, no writ); In the Interest of M.J.Z., 874 S.W.2d 724, 728 (Tex. App.—Houston [1st Dist.] 1994, no writ).

              In analyzing the legal sufficiency of the evidence to support findings on which Franks had the burden of proof, therefore, we consider only the evidence and inferences tending to support the challenged finding and disregard all inferences to the contrary. See Alm v. Aluminum Co. of Am., 717 S.W.2d 588, 593 (Tex.1986); Arriba, 882 S.W.2d at 582. If any evidence of probative force supports the finding, we must overrule the challenge and uphold the finding. S. States Transp., Inc. v. State, 774 S.W.2d 639, 640 (Tex. 1989); Arriba, 882 S.W.2d at 582. In reviewing this challenge, we first examine the record for evidence that supports the trial court’s finding and disregard contrary evidence. See Arriba, 882 S.W.2d at 582. If no evidence supports the finding, we then examine the entire record to determine whether it establishes the contrary proposition as a matter of law. Id.

              In determining the factual sufficiency of the evidence to support findings on which Franks had the burden of proof, as here, we must weigh all the evidence, both supporting and conflicting with the finding, and may set the finding aside only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); In re King’s Estate, 244 S.W.2d 660, 661 (Tex. 1951); Arriba, 882 S.W.2d at 582. In reviewing this challenge, we again examine the evidence to determine if some evidence supports the trial court’s finding. See Arriba, 882 S.W.2d at 582. If some evidence supports the finding, we must then determine, in light of the entire record, whether the finding is so contrary to the great weight and preponderance of the evidence that the finding is clearly wrong and manifestly unjust, or whether the great weight and preponderance of the evidence supports nonexistence of the finding. Cain, 709 S.W.2d at 176.

              Bode contends that the Hot-Hed Agreement was dissolved and as a result, Robert was free to enter into the Joint Venture Agreement with Franks. However, Bode does not contest the validity of the assignment to Hot-Hed Mexico (the Assignment). If a written instrument, such as an assignment, is so worded that it can be given a certain or definite legal meaning or interpretation, then the court will construe the contract as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). When a party has assigned his or her contract claims to a third party, the assignor no longer has any justiciable interest in those claims as a matter of law. See River Consulting v. Sullivan, 848 S.W.2d 165, 169–70 (Tex. App.—Houston [1st Dist.] 1992, writ denied) (holding appellant had no justiciable interest in matter when contract claims had been assigned and claims independent of contract were not pleaded).

              The record shows that the Assignment conveys all of PMI’s “rights, titles, interests, and privileges in and to” the Hot-Hed Agreement and the Hot-Hed International Agreement to Hot-Hed Mexico, “including patents pending.” In the Hot-Hed Agreement and Hot-Hed International Agreement, Bode conveyed “worldwide marketing rights of the Mud Miser Tool” and “full world-wide marketing rights,” respectively, to Hot-Hed and Hot-Hed International. Subsequently, in the Joint Venture Agreement, Bode conveyed “exclusive marketing rights” and “one-half of the intellectual property rights” to Franks.

              The record supports the trial court’s finding that Bode had no rights to the Mud Miser to convey to Franks and that Bode therefore breached its warranty to convey title to Franks. The record shows that the Assignment transferred full marketing rights, including patent rights associated with the Hot-Hed and Hot-Hed International Agreements, to Hot-Hed Mexico. Accordingly, the record supports the trial court’s finding that as a result of executing a valid assignment to Hot-Hed Mexico, Bode transferred all rights in the Mud Miser to Hot-Hed Mexico and was therefore left with no contract claims against Hot-Hed. Having transferred its rights to Hot-Hed Mexico, Bode would have no authority to dissolve the Hot-Hed Agreement. The record also supports the trial court’s finding that Bode’s transfer of all interests in the Hot-Hed Agreement and the Hot-Hed International Agreement to Hot-Hed Mexico left Bode with nothing to transfer to Franks, and as a result, Bode materially breached the Joint Venture Agreement by breaching its warranty to convey title. See Compton, 120 S.W.2d at 537.

              Considering all inferences tending to support the trial court’s finding and disregarding all contrary inferences, we conclude that there is evidence to support the trial court’s finding that Bode transferred the intellectual property and other rights set forth in the Joint Venture Agreement to entities other than Franks. We further conclude that this finding is not so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust because the record shows that the Assignment left Bode with nothing to transfer to Franks.

              We conclude that the trial court did not err in its conclusion that the Joint Venture Agreement is not enforceable because of Bode’s material breach. We need not address Bode’s remaining contentions that Franks was not entitled to damages, because these issues are not before us. Specifically, Franks does not complain on appeal that it was entitled to rescission, offset or contract damages, none of which were awarded by the trial court. Bode, as the breaching party, cannot complain about Franks’s entitlement to such damages.

              We overrule Bode’s sole issue.

    Conclusion

              We affirm the judgment of the trial court.

     

     

                                                                 Elsa Alcala

                                                                 Justice


    Panel consists of Chief Justice Radack and Justices Alcala and Bland.