Arthur Ware, Individually and as Potter County Judge v. Terry Miller, Potter County Constable, Precinct 2 , 134 S.W.3d 381 ( 2003 )

NO. 07-03-0089-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL C

DECEMBER 18, 2003

______________________________



ARTHUR WARE, INDIVIDUALLY AND AS POTTER COUNTY JUDGE, JOHN STRADLEY, INDIVIDUALLY AND AS POTTER COUNTY COMMISSIONER, MANNY PEREZ-VILLASENOR, INDIVIDUALLY AND AS POTTER COUNTY COMMISSIONER, STRICKLAND WATKINS, INDIVIDUALLY AND AS POTTER COUNTY COMMISSIONER, IRIS SANDERS LAWRENCE, INDIVIDUALLY AND AS POTTER COUNTY COMMISSIONER, AND POTTER COUNTY, TEXAS, APPELLANTS

V.

TERRY MILLER, POTTER COUNTY CONSTABLE, PRECINCT 2, APPELLEE

_________________________________

FROM THE 108^TH DISTRICT COURT OF POTTER COUNTY;

NO. 88,221-E; HONORABLE ABE LOPEZ, JUDGE

_______________________________

Before JOHNSON, C.J., and QUINN and REAVIS, JJ.

OPINION

Arthur Ware, Potter County Judge, and John Stradley, Manny Perez-Villasenor, Strickland Watkins, and Iris Sanders Lawrence, individually and as Commissioners or former Commissioners of Potter County, appellants, present this appeal from a judgment signed February 10, 2003, following a non-jury trial on the merits which, although it denied Terry Miller any recovery for damages, awarded $90,824.25 attorney's fees, plus other fees. Presenting four issues, ⁽¹⁾ Arthur Ware et al. contend (1) Miller's declaratory judgment claim presents a moot question; (2) the award of attorney's fees under the Declaratory Judgments Act ⁽²⁾ was not authorized where the declarations sought were the same as the essential elements of the mandamus claim previously denied; (3) Arthur Ware, et al., as individuals, are entitled to legislative immunity from liability for attorney's fees based on their budgetary actions; and (4) Miller was not entitled to declaratory judgment concerning the reasonableness of his Constable's salary because he did not (a) serve any process, (b) attend the justice court for his precinct, (c) make any arrests, or (d) submit any reports concerning criminal activity during his term of office. For the reasons expressed below, the judgment of the trial court is vacated and the appeal is dismissed.

By his original petition filed during the final month of his term of office, Miller commenced the underlying action to recover reasonable compensation for his term as Constable and mandamus relief under Article XVI, section 61 of the Texas Constitution and Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (Tex. 1981). In addition, Miller sought declaratory relief, including attorney's fees. By order signed December 21, 2001, in addition to denying Arthur Ware et al.'s motion for summary judgment, the trial court granted Miller's motion for partial summary judgment and directed that a writ of mandamus be issued commanding the Commissioners Court to set and pay a reasonable salary for Miller as Constable for 24 months, including all employee benefits provided to elected officials of Potter County. Upon Arthur Ware et al.'s interlocutory appeal, ⁽³⁾ we concluded

• •the trial court erred in denying Arthur Ware et al.'s plea to the jurisdiction as to Miller's claim for damages;
• •mandamus relief was not appropriate; and
• •legislative immunity protected the Commissioners from liability in their individual capacities.

Because the December 21, 2001 order was only a partial summary judgment and interlocutory, without addressing Miller's request for declaratory relief, we reversed the partial summary judgment and order directing the issuance of a writ of mandamus, rendered judgment for Arthur Ware et al. on Miller's claim for recovery of a reasonable salary, ordered a severance, and remanded the proceedings seeking declaratory relief to the trial court.

After remand, Arthur Ware et al. filed a supplemental plea to the jurisdiction contending that Miller's declaratory judgment action was moot; however, the supplemental plea was denied by the trial court. ⁽⁴⁾ After the severance and remand, Miller did not amend his pleadings to raise any new claims but instead, proceeded to a non-jury trial on the merits based on his prior pleadings on February 10, 2003. Following presentation of the evidence, ⁽⁵⁾ upon conclusion of the hearing, the trial court signed its judgment. Among other things, the trial court concluded that Miller was entitled to a reasonable salary and that Arthur Ware et al. had the legal obligation to set a reasonable salary for him pursuant to Article XVI, section 61; however, the judgment did not make any monetary award of salary or damages to Miller. As material here, the judgment also provided that Miller:

is entitled to recover reasonable attorney's fees and expenses in the sum of $90,824.25 pursuant to § 37.009 of the Texas Civil Practice & Remedies Code. The judgment for attorneys [sic] fees shall run jointly and severally against all Defendants herein with the following additional sums in the event of an appeal:

(a) $7,500 attorneys [sic] fee [sic] in the event of an appeal to the Court of appeals; and

(b) $7,500 attorneys [sic] fees in the event of an appeal to the Texas Supreme Court.

All sums awarded to Plaintiff shall bear interest at the rate of 10% per annum from the date of judgment until paid, for recovery of which let execution issue as to the individual Defendants. No execution shall issue as to Potter County or its property. In the event this judgment is not observed by Defendant, Potter County, Texas, acting by and through its commissioners court, the Court, without affecting the finality of this judgment, will entertain requests for supplemental relief in accordance with § 37.011 Tex. Civ. Prac. & Rem. Code Ann. Costs of court are taxed against Defendants. All relief requested in this cause and not specifically and expressly granted herein is hereby DENIED.

Findings of fact and conclusions of law were not requested and except as contained in the judgment, no conclusions of law were made by the trial court.

By their first issue, Arthur Ware et al. contend that Miller's claim for declaratory judgment upon remand was moot. We agree. A case is moot when (1) a party seeks a judgment to resolve a controversy, but no controversy exists, or (2) judgment is sought on a matter which, when rendered for any reason cannot have a practical legal effect on an existing controversy. Texas Health Care Info. Council v. Seton Health Plan, Inc., 94 S.W.3d 841, 847-48 (Tex.App.-Austin 2002, no pet.); see also Campus Communications, Inc. d/b/a A & M Magazine v. Texas A & M University System, No. 01-02-00878-CV, 2003 WL 21027936, at *1 (Tex.App.-Houston [1st Dist. May 8, 2003, no pet. h.) (dismissing the appeal because the issues before it were moot).

Under article II, section 1 of the Texas Constitution, Texas courts do not have any jurisdiction to issue advisory opinions. See Valley Baptist Medical Center v. Gonzalez, 33 S.W.3d 821, 822 (Tex. 2000). Moreover, in State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994), the Court re-announced that the Uniform Declaratory Judgments Act was merely a procedural device "for deciding cases already within a court's jurisdiction" and that a request for declaratory relief "cannot confer jurisdiction on the court, nor can it change the basic character of a suit."

Declaratory judgment actions cannot be used to resolve hypothetical or contingent situations. Firemen's Ins. Co. v. Burch, 442 S.W.2d 331, 333 (Tex. 1968). In Valley Baptist, the discovery dispute was rendered moot when the Medical Center presented a representative for deposition. 33 S.W.3d at 822. Similarly, Miller's action for declaratory judgment based on his pre severance pleadings was rendered moot because of our first decision.

Because the District Court erroneously assumed jurisdiction of Miller's request for declaratory judgment, we vacate the trial court's judgment and dismiss the appeal. Tex. R. App. P. 43.2 (e). Our disposition of this issue pretermits consideration of the remaining issues.

Don H. Reavis

Justice

Quinn, J., concurs in the result.

1. Issues are restated.

2. Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001-37.011 (Vernon 1997 & Supp. 2004).

3. See Ware v. Miller, 82 S.W.3d 795 (Tex.App.--Amarillo 2002, pet. denied).

4. The order denying the plea to the jurisdiction concluded, "[a]fter considering the pleadings, the arguments of counsel and the evidence relevant to the jurisdictional issues, the Court has determined that the remaining claim under the Uniform Declaratory Judgments Act is justiciable and is not moot. The plea to the jurisdiction, therefore, must be denied."

5. Because Arthur Ware et al. do not challenge the sufficiency of the evidence or contend the trial court abused its discretion in awarding attorney's fees, we need not detail the evidence presented at the hearing.

Corporation Act further provides that when a merger takes effect, "all rights, title and interests to all real estate and other property owned by each domestic or foreign corporation and by each other entity that is a party to the merger shall be allocated to and vested in one or more of the surviving or new domestic or foreign corporations and other entities as provided in the plan of merger without reversion or impairment, without further act or deed, and without any transfer or assignment having occurred . . . ." Tex. Bus. Corp. Ann. art. 5.06A(2) (Vernon Supp. 2002). The comment to that article further states in relevant part:

In 1987, Article 5.06 was amended to make clear that while a merger vests the rights, privileges, immunities and franchises of the merged corporation in the surviving corporation, this is accomplished without a transfer or assignment having occurred. Prior to the 1987 amendment of TBCA, Article 5.06A, it was possible that a merger could have been viewed to constitute a transfer in the context of a contract or license that required prior approval for a transfer or assignment.

Id. cmt. Appellees assert that the transfer herein occurred under the common law doctrine of assignment by operation of law in the manner discussed in this comment.

In support of this argument, appellees cite us to the case of TXO Production Co. v. M.D. Mark, Inc., 999 S.W.2d 137 (Tex.App.--Houston [14^th Dist.] 1999, pet. denied), for the proposition that a merger does not violate a non-assignment clause in a contract. In that case, TXO Production Company (TXO) and PGI entered into a series of contracts that allowed TXO to use seismic data owned by PGI. Under the contracts, the data was not to be made available to third parties. When TXO merged with Marathon Oil Co., PGI sought to charge a transfer fee to allow Marathon to use the data. The court discussed case law in other jurisdictions which have found a merger not to be a violation of a non-assignment provision in insurance policies and real estate leases. In its discussion, the court noted that courts disfavor forfeiture in leases. Id. at 140. Two other factors relied upon by the court in deciding that a fee was not owed were the parties' failure to state that the non-assignment provision was triggered by a merger and the intent expressed by the legislature that a prohibited transfer would not be implied by a merger. Id. at 143.

We note the distinction between that case and the one before us in that there was no dispute in the former as to the definition of merger which is really the issue which we must decide. The construction of an unambiguous contract is a matter of law. Elliott - Williams Co., Inc. v. Diaz, 9 S.W.3d 801, 803 (Tex. 1999). In making that construction, we must do so from a utilitarian standpoint bearing in mind the particular business activity sought to be served. Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 530 (Tex. 1987). The meaning of a particular word in a contract depends on the kind and character of the contract, its purposes and circumstances, and the context. Enchanted Estates Community Assn., Inc. v. Timberlake Imp. Dist., 832 S.W.2d 800, 802 (Tex.App.--Houston [1^st Dist.] 1992, no writ).

It has been held that for a non-assignability clause to prevent assignment, it must be proved that the grantor relied on the personal trust, confidence, skill, character, or credit of another party. Eland Energy, Inc. v. Rowden Oil & Gas, Inc., 914 S.W.2d 179, 187 (Tex.App.--San Antonio 1995, writ denied). While there is no evidence that appellant relied on any of those features in this instance, the agreement does permit another party to succeed to the rights of Kodak in certain situations. Therefore, we must determine if the situation before us was intended to be one of those in which a succession of rights was to occur.

The agreement provides that the permission granted is to be personal to the grantee. Thus, the intent was that some unrelated third party was not to be able to assert the rights given to Kodak. However, recognizing that corporate restructuring does happen, in the event of such a situation through merger or consolidation with or into another corporation or if another corporation acquires substantially all of the assets of Kodak, the resulting company was to succeed to Kodak's rights. While appellant argues that the placement of the word "merger" indicates that it is not intended to mean anything other than the combination of two entities into one, it could also be argued that the placement of the word was intended to mean something different than "consolidation with or into another corporation" or there would have been no need to use both phrases.

The apparent reason for this provision was so that the possession or control of the property would not be substantially changed, and therefore there would be no greater risk to the landowner who has sought to protect himself by a non-assignability clause. In this instance, Texas Eastman Company, with which appellant had already executed an amendment of the agreement, was a division of Chemical, which was a wholly owned business of Kodak. Chemical was then created into a separate corporate entity, the shares of which were distributed to the shareholders of Kodak. The services provided by the new corporation are the same. Thus, appellant will, in effect, be dealing with the same group she dealt with before, only now its assets are owned by a separate corporation which was formerly an unincorporated division of Kodak. We do not see that the purpose of the non-assignability provision is abrogated by this event. We also recognize legislative intent, expressed prior to the transaction that is the subject of this lawsuit, that the definition of merger should be a broad one and that a merger should not violate a non-assignability clause. We further recognize that the law does not favor forfeitures, and we should therefore only construe an agreement to result in forfeiture if there can be no other construction. See Reilly, 727 S.W.2d at 530; TBS Exco, Inc. v. E. N. Smith, III Energy Corp., 818 S.W.2d 417, 422 (Tex.App.--Texarkana 1991, no writ); Cambridge Oil Co. v. Huggins,765 S.W.2d 540, 543 (Tex.App.--Corpus Christi 1989, writ denied).

Therefore, bearing in mind the kind of contract, its purpose, and public policy considerations, we believe the only reasonable construction of the contract is that the transaction involved does not violate the non-assignability provision of this agreement, and that the new corporation succeeded to the rights and obligations of Kodak. The summary judgment is affirmed.

John T. Boyd

Senior Justice

Do not publish.

1. John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignment. Tex. Gov't Code Ann. § 75.002(a)(1) (Vernon Supp. 2002).